9266 Federal Register / Vol. 60, No. 32 / Thursday, February 16, 1995 / Proposed Rules

1Currently, there is no recapitalization schedule

for the SAIF mandated by statute. However, as of

January 1, 1998, the Board is required to promulgate

a recapitalization schedule that achieves the

designated reserve ratio within 15 years, except that

the Board may extend the recapitalization date to

one which ‘‘will, over time, maximize the amount

of semiannual assessments received by the SAIF,

net of insurance losses incurred by the Fund’’.

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 327

RIN—3064–AB59

Assessments; Retention of Existing

Assessment Rate Schedule for SAIF

Member Institutions

AGENCY: Federal Deposit Insurance

Corporation (FDIC).

ACTION: Proposed rule.

SUMMARY: Based upon the results of its

semiannual review of the

recapitalization of the Savings

Association Insurance Fund (SAIF) and

of the SAIF assessment rates, the Board

of Directors of the FDIC (Board)

proposes to retain the existing

assessment rate schedule applicable to

SAIF-member institutions. The effect of

this proposal would be that the SAIF

assessment rate to be paid by SAIF

members would continue to range from

23 cents per $100 of domestic deposits

to 31 cents per $100 of domestic

deposits, depending on risk

classification. Through this proposed

rulemaking, the FDIC is soliciting

comments on all aspects of its proposal

to retain the existing assessment rate

schedule applicable to SAIF-member

institutions.

DATES: Written comments must be

received by the FDIC on or before April

17, 1995.

ADDRESSES: Written comments shall be

addressed to the Office of the Executive

Secretary, Federal Deposit Insurance

Corporation, 550 17th Street, N.W.,

Washington, D.C. 20429. Comments

may be hand-delivered to Room F–400,

1776 F Street, N.W., Washington, D.C.,

on business days between 8:30 a.m. and

5:00 p.m. (FAX number: 202/898–3838).

Comments will be available for

inspection in Room 7118, 550 17th

Street, N.W., Washington, D.C. between

9:00 a.m. and 4:30 p.m. on business

days.

FOR FURTHER INFORMATION CONTACT:

James R. McFadyen, Senior Financial

Analyst, Division of Research and

Statistics (202/898–7027), Federal

Deposit Insurance Corporation,

Washington, D.C. 20429.

SUPPLEMENTARY INFORMATION:

I. Background: SAIF Assessment Rates

Section 7(b) of the Federal Deposit

Insurance Act (FDI Act) (12 U.S.C.

1817(b)) requires that, if the SAIF

reserve ratio is below the designated

reserve ratio of 1.25 percent, the FDIC

shall set assessments to increase the

reserve ratio to the designated reserve

ratio.1 Section 7(b) of the FDI Act also

requires a minimum SAIF assessment

that is at least as much as would be

raised by an average assessment rate of

18 basis points. The minimum

assessment requirement is in effect as

long as the SAIF is not fully capitalized

or has outstanding borrowings under

section 14 of the FDI Act. If either of

these two conditions exists as of January

1, 1998, the minimum assessment

requirement increases to a rate of 23

basis points.

In order to achieve SAIF

recapitalization, the FDIC Board of

Directors (Board) adopted a risk-related

assessment matrix in September 1992

(see Table 1) which has remained

unchanged. Previously, in deciding

against changes in the SAIF assessment

rate, the Board has considered the

SAIF’s expected operating expenses,

case resolution expenditures and

income under a range of scenarios. The

Board also has considered the effect of

an increase in the assessment rate on

SAIF members’ earnings and capital.

When first adopted, the assessment rate

schedule yielded a weighted average

rate of 25.9 basis points. With

subsequent improvements in the

industry and the migration of

institutions to lower rates within the

assessment matrix, the average rate has

declined to 24 basis points (based on

risk-based assessment categories as of

January 1, 1995 and the assessment base

as of September 30, 1994—see Table 2).

TABLE 1.—SAIF-MEMBER ASSESSMENT RATE SCHEDULE FOR THE

FIRST SEMIANNUAL ASSESSMENT

PERIOD OF 1995

[Basis points]

Capital group

Supervisory subgroup

A B C

Well capitalized ............. 23 26 29

Adequately capitalized .. 26 29 30

Undercapitalized ........... 29 30 31

TABLE 2.—SAIF-MEMBER ASSESSMENT RATE DISTRIBUTION AS OF SEPTEMBER 30, 1994*

[Billions of dollars]

Capital group

Supervisory subgroup

A B C

Amount Percent Amount Percent Amount Percent

Well capitalized ........................................................ Number .............................. 1,585 85.6 139 7.5 35 1.9

Assets ................................ $526.5 70.7 $109.9 14.8 $20.4 2.7

Base ................................... 386.6 72.3 74.5 13.9 15.3 2.9

Adequately capitalized ............................................. Number .............................. 28 1.5 34 1.8 21 1.1

Assets ................................ $25.5 3.4 $22.0 3.0 $32.9 4.4

Base ................................... 15.7 2.9 15.9 3.0 21.5 4.0

Under capitalized ..................................................... Number .............................. 0 0.0 0 0.0 10 0.5

Assets ................................ $0.0 0.0 $0.0 0.0 $7.4 1.0

Base ................................... 0.0 0.0 0.0 0.0 5.7 1.1

*‘‘Base’’ is the amount of deposits subject to SAIF assessments.

The primary source of funds for the

SAIF is assessment revenue from SAIFmember institutions. Since the creationof the fund and through the end of 1992,

however, all assessments from SAIFmember institutions were diverted to
Federal Register / Vol. 60, No. 32 / Thursday, February 16, 1995 / Proposed Rules 9267

2From 1989 through 1992, more than 90 percent

of SAIF assessment revenue went to the FSLIC

Resolution Fund (FRF), the Resolution Funding

Corporation (REFCORP) and the Financing

Corporation (FICO).

other needs as required by the Financial

Institutions Reform, Recovery, and

Enforcement Act of 1989 (FIRREA).2

Only assessment revenue generated

from Bank Insurance Fund (BIF)

member institutions that acquired SAIFinsured deposits under section 5(d)(3) of

the FDI Act (12 U.S.C. 1815(d)(3)) (socalled ‘‘Oakar’’ banks) was deposited in

the SAIF throughout this period.

SAIF-member assessment revenue

began flowing into the SAIF on January

1, 1993. However, the Financing

Corporation (FICO) has a priority claim

on SAIF-member assessments in order

to service FICO bond obligations. Under

existing statutory provisions, FICO has

assessment authority through 2019, the

maturity year of its last bond issuance.

At approximately $779 million per year,

the FICO draw is substantial,

representing nearly 45 percent of

estimated assessment revenue for 1995,

or 11 basis points of the average

assessment rate of 24 basis points. The

SAIF had a balance of $1.8 billion

(unaudited) on December 31, 1994. With

primary resolution responsibility

residing with the Resolution Trust

Corporation (RTC), there have been few

demands on the SAIF, but the authority

of the RTC to place failed thrifts in

conservatorship or establish

receiverships expires June 30, 1995.

In addition to assessment revenues

and investment income, there are at

least two other potential sources of

funds for the SAIF. First, the FDIC has

a $30 billion line of credit available

with the Department of the Treasury

(Treasury) for deposit insurance

purposes, although the SAIF has

required no extension of credit. Second,

the Resolution Trust Corporation

Completion Act (RTCCA) authorized the

appropriation of up to $8 billion in

Treasury funds to pay for losses

incurred by the SAIF during fiscal years

1994 through 1998, to the extent of the

availability of appropriated funds and

provided that certain certifications are

made to the Congress by the Chairman

of the FDIC. Among these, the Chairman

must certify that the FDIC Board has

determined that:

(1) SAIF members are unable to pay

additional semiannual assessments at the

rates required to cover losses and to meet the

repayment schedule for any amount

borrowed from the Treasury for insurance

purposes under the FDIC’s line of credit

without adversely affecting the SAIF

members’ ability to raise capital or to

maintain the assessment base; and

(2) An increase in assessment rates for

SAIF members to cover losses or meet any

repayment schedule could reasonably be

expected to result in greater losses to the

Government.

The RTC’s resolution activities and

the thrift industry’s substantial

reduction of troubled assets in recent

years have resulted in a relatively sound

industry as the July 1, 1995 date for

SAIF resolution responsibility

approaches. However, with a balance of

$1.8 billion beginning 1995, the SAIF

does not have a large cushion with

which to absorb the costs of thrift

failures. The FDIC has significantly

reduced its projections of failed-thrift

assets for 1995 and 1996, but the failure

of a single large institution or an

economic downturn leading to higher

than anticipated losses could render the

fund insolvent.

Furthermore, there may soon be a

substantial differential between BIF and

SAIF premiums. The BIF is expected to

be recapitalized during 1995, at which

time BIF premiums can be reduced far

below current levels. Largely due to the

FICO obligation, the SAIF is not likely

to be recapitalized until 2002 (this

projection is discussed below in section

III). A premium differential may have

adverse consequences for SAIF

members, including reduced earnings

and an impaired ability to raise funds in

the capital markets. Among the weakest

thrifts, this differential could result in

competitive pressures that would lead

to additional failures. An analysis over

a five year time span suggests that any

such increase in failures is likely to be

sufficiently small as to be manageable

by the SAIF under current interest-rate

and asset quality conditions. Moreover,

the analysis indicates that under harsher

interest-rate and asset-quality

assumptions, these economic factors

would have a significantly greater effect

on SAIF-member failure rates than

would a premium differential.

While the premium differential is not

expected to lead to significant failures

in the near term, it may lead to other

adverse results. A premium differential

would also create a powerful incentive

for SAIF-insured institutions to

minimize premium costs by shrinking

the base against which assessments are

levied (currently domestic deposits).

This can be accomplished, despite the

moratorium on conversions of SAIFinsured deposits to BIF-insured deposits

at these institutions, by substituting

nondeposit liabilities for SAIF-insured

deposits. These nondeposit liabilities

are readily available and include

Federal Home Loan Bank (FHLB)

advances and reverse repurchase

agreements. The net result could be an

acceleration of the shrinkage of the

assessment base, thereby reducing

assessment revenue. This could threaten

the ability to service the FICO obligation

sometime near or after the year 2000

and, over the longer term, frustrate the

capitalization of the SAIF. As shown in

the following table, the assessment base

has been declining steadily since the

fund was established in 1989, although

the decline was at a slower rate in 1994.

TABLE 3.—SAIF ASSESSMENT BASE AND INSURED DEPOSITS*

[Dollar amounts in billions]

Assessment base Percent change Est. Insured deposits Percent change

1989 .................................................................................. $950.3 $882.9 6.0

1990 .................................................................................. 877.7 ¥7.6 830.0 ¥6.0

1991 .................................................................................. 820.2 ¥6.5 776.4 ¥6.5

1992 .................................................................................. 760.5 ¥7.3 729.5 ¥6.0

1993 .................................................................................. 729.4 ¥4.1 695.6 ¥4.6

1994 .................................................................................. 716.3 ¥1.8 687.3 ¥1.2

*Includes conservatorships and Sasser institutions; adjusted for Oakar deposits. End-of-period domestic deposits are used to approximate the

SAIF assessment base. The actual assessment base may be slightly less than domestic deposits due to float adjustments, but period-to-period

changes should be similar. Table 3 presents end-of-period figures (the comparable table in earlier proposals used averages) to reflect the quarterly billing system which becomes effective the second quarter of 1995.
9268 Federal Register / Vol. 60, No. 32 / Thursday, February 16, 1995 / Proposed Rules

3See Notice of FDIC General Counsel’s Opinion

No. 7, 60 FR 7055 (Feb. 6, 1995).

4 Id.

5Under section 5(d)(3) of the FDI Act, as

amended by FDICIA, SAIF-insured deposits

acquired by a BIF member are adjusted annually by

the acquiring institution’s overall deposit growth

rate (excluding the effects of other mergers or

acquisitions).

6Excluding RTC conservatorships and one selfliquidating institution.

The FDIC’s Legal Division has opined

that SAIF assessments paid by BIFmember Oakar banks should remain in

the SAIF and are not subject to FICO

draws.3 Further, the Legal Division has

opined that SAIF assessments paid by

any former savings association that (i)

has converted from a savings association

charter to a bank charter, and (ii)

remains a SAIF member in accordance

with section 5(d)(2)(G) of the FDI Act

(12 U.S.C. 1815(d)(2)(G)) (a so-called

‘‘Sasser’’ bank), are likewise not subject

to draws by FICO.4 On September 30,

1994, BIF-member Oakar banks held

23.3 percent of the SAIF assessment

base (see Table 4), and SAIF-member

Sasser banks held an additional 6.9

percent. While the pace of Oakar

acquisitions is likely to slow

substantially as RTC resolution activity

winds down in 1995, Oakar deposits

may continue to grow at the same rate

as BIF-member deposits and become a

greater proportion of the SAIF

assessment base.5 This has the potential

result of SAIF’s having insufficient

assessments to cover the FICO

obligation. The rate of Sasser

conversions is difficult to predict and is

partially dependent on state laws, but

any future conversions would also

decrease the proportion of SAIF

assessment revenues available to FICO.

These factors are considered in the

projections of SAIF’s recapitalization in

section III.

TABLE 4.—SAIF-INSURED DEPOSITS

HELD BY BIF-MEMBER OAKAR

BANKS AS A PERCENT OF SAIF

MEMBER DOMESTIC DEPOSITS*

Year Percent

1991 ...................................... 7.5

1992 ...................................... 9.7

1993 ...................................... 18.4

9/94 ....................................... 23.3

*End-of-period figures; domestic deposits

are adjusted for Oakar deposits.

II. Condition and Performance of SAIFMember Institutions

SAIF-member institutions numbered

1,869 on September 30, 1994, including

1,794 thrift institutions and 75

commercial banks.6 While the total

number of institutions is down from

year-end 1993, there is evidence of a

growing industry. For the first three

quarters of 1994, these institutions

increased their total assets by $6.8

billion (0.9 percent) based on loan

growth of $6.3 billion. Total capital

grew at an even faster pace for the nine

months, raising the equity-to-assets ratio

to 7.90 percent from 7.74 percent. The

industry continued to pare troubled

assets during 1994. Noncurrent loans

and other real estate owned declined

from 1.91 percent of total assets at the

beginning of 1994 to 1.43 percent by

September 30.

The industry earned a return on assets

of 0.62 percent for the first three

quarters of 1994. While this is less than

the ROA of 0.72 percent earned in 1993,

the earlier year included large one-time

accounting gains. Also, some

institutions incurred large restructuring

charges in 1994 in order to dispose of

troubled assets, which has positioned

them for higher profits in subsequent

periods. Earnings in 1994 were

hampered by smaller net interest

margins, which fell from 3.35 for all of

1993 to 3.24 for the first nine months of

1994. In the rising interest-rate

environment, institutions’ funding costs

rose faster than asset yields, although

institutions with higher proportions of

adjustable-rate mortgages should be able

to reprice a portion of these loans

within six months.

This discussion has focused on the

improving condition of the SAIFmember thrift industry, but any such

discussion must mention the relatively

weak economic conditions still

confronting a large segment of the

industry. Twenty-three percent of all

SAIF member’s total assets are

concentrated in the nation’s seven

largest thrift institutions, all of which

are headquartered in California. This

state, in general, has lagged behind most

of the nation in recovering from the

most recent recession, and many

California thrifts have significant

exposure in the weakest areas of

southern California. Additionally, a few

large institutions have raised

supervisory concerns due to low

earnings and relatively high levels of

risk in their loan portfolios.

Consequently, despite the improving

health of the thrift industry, the SAIF

still faces significant risk relative to the

fund’s current reserve level.

The current assessment rate schedule

for SAIF-member institutions has a

spread of 8 basis points from the lowest

rate to the highest rate, dependent on

supervisory factors and capitalization. A

proposed assessment rate schedule for

BIF-member institutions would increase

the spread for BIF members from the

current 8 basis points to 27 basis points.

This would be accomplished by

maintaining the current maximum rate

of 31 basis points and dropping the

minimum, most favorable rate to 4 basis

points. Thus, the weakest BIF members

would incur no additional deposit

insurance cost. In order to apply a

similar 27-basis point spread to SAIF

members, it would be necessary to raise

the highest SAIF assessment rate to 45

to 50 basis points (based on a lowest

rate of 18 to 23 basis points). Because

85 percent of SAIF members would

continue to pay the lowest rate, the

revenue benefit of a 27-basis point

spread would be limited. However, a

spread of that magnitude could have

significant adverse consequences for the

SAIF by greatly increasing expenses of

its weakest members and, in all

likelihood, causing additional failures.

III. New Projections for the SAIF

In November 1994, the FDIC’s

interdivisional Bank and Thrift Failure

Working Group (Working Group)

estimated failed SAIF-insured

institution assets at $3 billion for 1995

and $2 billion for 1996. The 1995

estimate of $3 billion is based on the

FDIC Division of Supervision’s

projected failure of specific institutions

that likely would occur in the second

half of the year, when SAIF assumes

resolution responsibility from the RTC.

The 1995 and 1996 estimates were used

in updating the Division of Research

and Statistics’ projections of failed thrift

assets, the fund balance and reserve

ratios.

The updated projection indicates the

SAIF reserve ratio will reach 1.25

percent in 2002, which is unchanged

from the previous projection. Also, this

projection indicates the fund will not

encounter problems meeting the FICO

obligation through 2012, the last year of

the projection. The results are shown in

Table 5.

The following assumptions were

used:

• Failed-institution assets are based

on the Working Group’s estimates for

1995 ($3 billion) and 1996 ($2 billion).

Beyond 1996, the assumed failed-asset

rate for SAIF will be 22 basis points, or

about $2 billion per year. This is lower

than the historical loss rate for the BIF

because of the thrift industry’s current

low level of problem assets.

• The nominal loss rate on failed

thrift assets will be 13 percent.

• The asset growth rate for SAIF

members will be zero, based on the

industry’s recent experience.

• The SAIF assessment base will

continue to shrink, at 2 percent per year.

Under current conditions, the
Federal Register / Vol. 60, No. 32 / Thursday, February 16, 1995 / Proposed Rules 9269

7 Deposit Flows at SAIF- and BIF-Insured

Institutions: December 1988 to September 1992,

Policy Research Division, Office of Thrift

Supervision, January 1993.

assessment base for better capitalized

thrifts is expected to be stable. Deposit

shrinkage was more prevalent at weaker

thrifts during periods when some bettermanaged thrifts experienced deposit

growth.7 However, the emergence of a

BIF/SAIF premium differential may

encourage less reliance on SAIFassessable liabilities. The higher overall

shrinkage rates of recent years are not

expected to continue because a

significant portion of the shrinkage was

due to depositor flight from the

declining or low deposit interest rates

which prevailed from 1990 to the latter

part of 1994. Another portion of the

shrinkage can be attributed to deposit

runoff at conservatorships and

weakened thrifts.

• The Oakar deposit purchase rate

will be zero, but Oakar deposits will

grow at 2 percent per year, the estimated

growth rate for BIF-member deposits.

Under FDICIA, Oakar deposits are

adjusted annually by the acquiring

institution’s overall deposit growth rate.

A significant portion of Oakar deposits

were acquired from the RTC, and these

opportunities have all but disappeared.

The Riegle-Neal Interstate Banking and

Branching Efficiency Act of 1994

authorizes a bank holding company to

acquire out-of-state banks beginning

September 29, 1995, and authorizes a

bank to establish de novo out-of-state

branches beginning June 1, 1997 if the

host state expressly permits interstate

branching through the establishment of

de novo branches. Thus, banks may no

longer be confined to the acquisition of

failed or failing charters to enter states

previously closed to them.

• The average assessment rate will be

24 basis points until the SAIF is

recapitalized, after which assessment

rates are reduced to the level necessary

to maintain the reserve ratio at 1.25

percent.

TABLE 5.—SAIF FUND BALANCE AND RESERVE RATIO PROJECTIONS

Year-end

Fund balance ($ billions) Reserve ratio*

9/94 Projection1/95 current

projection**

9/94 Projection (percent)

1/95 current

projection

(percent)

1994 .................................................................................................................. $2.2 $1.8 0.31 0.26

1995 .................................................................................................................. 2.9 2.4 0.43 0.35

1996 .................................................................................................................. 3.7 3.3 0.55 0.49

1997 .................................................................................................................. 4.4 4.1 0.67 0.61

1998 .................................................................................................................. 5.1 4.8 0.79 0.74

1999 .................................................................................................................. 5.7 5.6 0.92 0.86

2000 .................................................................................................................. 6.4 6.5 1.05 1.00

2001 .................................................................................................................. 7.1 7.3 1.19 1.14

2002 .................................................................................................................. 7.3 8.0 1.25 1.25

2003 .................................................................................................................. 6.8 7.9 1.25 1.25

2004 .................................................................................................................. 7.0 7.8 1.25 1.25

2005 .................................................................................................................. 6.8 7.8 1.25 1.25

2006 .................................................................................................................. 6.7 7.7 1.25 1.25

2007 .................................................................................................................. 6.5 7.7 1.25 1.25

2008 .................................................................................................................. 6.4 7.6 1.25 1.25

2009 .................................................................................................................. 6.3 7.6 1.25 1.25

2010 .................................................................................................................. 6.2 7.6 1.25 1.25

2011 .................................................................................................................. 6.0 7.5 1.25 1.25

2012 .................................................................................................................. 5.9 7.5 1.25 1.25

*After reaching 1.25 percent of insured deposits, the fund balance is maintained at 1.25 percent of insured deposits.

** The estimated year-end 1994 fund balance is less than was shown for September because of loss reserves set aside in the fourth quarter.

The 1/95 projected fund balance incorporates an Oakar deposit growth factor, whereas the 9/94 projection did not.

As stated earlier, the Board has the

authority to reduce SAIF assessment

rates to an average of 18 basis points

until January 1, 1998, at which time the

average rate would rise to 23 basis

points until recapitalization occurs.

Projections made under this scenario

(and using the same other assumptions

as above) indicate that the SAIF would

recapitalize in 2004, or two years later

than under the existing rate schedule.

IV. FDIC Proposal Regarding SAIFMember Assessment Rates

Given the fund’s relatively low

balance and the imminent transfer of

resolution authority from the RTC to the

SAIF on July 1, the SAIF must be built

as quickly as possible to its mandated

reserve level. It is recognized that a

differential between BIF and SAIF

premiums could adversely affect some

SAIF members, but the thrift industry

has demonstrated its ability to generate

additional capital and reduce troubled

assets while paying deposit insurance

premiums at the current levels. Also, a

shrinking assessment base is producing

declining revenue, which would be cut

even further by lower assessment rates.

The FDIC staff has recommended that

assessment rates within the risk-related

assessment rate matrix remain at their

current levels for the second semiannual

assessment period of 1995. The Board

believes that the minimum rate should

not be reduced from the current 23 basis

points, and that an increase in the

current spread of 8 basis points from the

lowest to the highest assessment rates

would adversely impact weakened

institutions already in danger of failure.

V. Summary

Under the existing SAIF assessment

rate schedule, which yields an average

assessment rate of 24 basis points, the

fund is projected to recapitalize in the

year 2002, which is unchanged from

prior projections. The Board has the

authority to reduce SAIF assessment

rates to 18 basis points until January 1,

1998, after which the average rate must

remain at 23 basis points or higher until

recapitalization is achieved. Reducing

the average rate to 18 basis points is

presently projected to delay SAIF

recapitalization for two years, until

2004. Although the industry is relatively

healthy, FDIC staff has recommended
9270 Federal Register / Vol. 60, No. 32 / Thursday, February 16, 1995 / Proposed Rules

that the Board retain the existing

assessment rate schedule for the second

semiannual assessment period of 1995

so that recapitalization is accomplished

as soon as possible. The SAIF had an

estimated balance of $1.8 billion

(unaudited) at year-end 1994, and SAIF

assumes resolution responsibility from

the RTC on July 1, 1995. Although

estimated failed-institution assets

appear manageable for 1995 and 1996,

the SAIF remains vulnerable in the

short run to a single large-institution

failure and to any significant increase in

anticipated loss rates.

VI. Request for Public Comment

Based upon the results of its

semiannual review of the

recapitalization of the SAIF and of the

SAIF assessment rates, the FDIC is

inclined to retain the existing

assessment rate schedule applicable to

SAIF-member institutions. The FDIC

wishes to have the benefit of public

comment before ending its review for

this period, however. The FDIC

therefore requests comment as to

whether it is appropriate for the FDIC to

retain the existing assessment rate

schedule applicable to SAIF-members,

or whether the rates should be lowered

to the statutory minimum of 18 basis

points or some point in between. The

FDIC is interested in receiving analyses

exploring the impact a differential

between BIF and SAIF premiums might

have on SAIF members, and the FDIC

invites comment as to whether the

current spread of 8 basis points from the

lowest to the highest assessment rates

should be retained for SAIF members.

The FDIC solicits comment as to how

lower SAIF rates would impact current

efforts to recapitalize the SAIF. The

FDIC further invites comments as to

whether current rates are sufficient to

recapitalize the SAIF in an expeditious

manner.

VII. Paperwork Reduction Act

No collection of information pursuant

to section 3504(h) of the Paperwork

Reduction Act of 1980 (44 U.S.C. 3501

et seq.) are contained in this proposed

rule. Consequently, no information has

been submitted to the Office of

Management and Budget (OMB) for

review.

VIII. Regulatory Flexibility Analysis

The Board hereby certifies that the

proposed rule would not have a

significant economic impact on a

substantial number of small entities

within the meaning of the Regulatory

Flexibility Act (5 U.S.C. 601, et seq.).

This proposed rule will not necessitate

the development of sophisticated

recordkeeping or reporting systems by

small institutions nor will small

institutions need to seek out the

expertise of specialized accountants,

lawyers, or managers to comply with

this proposed rule. Therefore, the

provisions of that Act regarding an

initial and final regulatory flexibility

analysis (Id. at 603 and 604) do not

apply here.

List of Subjects in 12 CFR Part 327

Assessments, Bank deposit insurance,

Banks, Banking, Financing Corporation,

Savings associations.

For the reasons set forth in the

preamble, the Board of Directors of the

Federal Deposit Insurance Corporation

proposes to amend part 327 of title 12

of the Code of Federal Regulations as

follows:

PART 327—ASSESSMENTS

1. The authority citation for part 327

continues to read as follows:

Authority: 12 U.S.C. 1441, 1441b, 1817–

1819.

2. Paragraph (c)(1) of § 327.9 as added

at 59 FR 67165, effective April 1, 1995,

will be retained without change. The

text of paragraph (c)(1) is republished

for the convenience of the reader to read

as follows:

§ 327.9 Assessment rate schedules.

* * * * *

(c) SAIF members. (1) Subject to

§ 327.4(c), the annual assessment rate

for each SAIF member shall be the rate

designated in the following schedule

applicable to the assessment risk

classification assigned by the

Corporation under § 327.4(a) to that

SAIF member (the schedule utilizes the

group and subgroup designations

specified in § 327.4(a)):

SCHEDULE

Capital group

Supervisory

subgroup

A B C

1 .................................... 23 26 29

2 .................................... 26 29 30

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* * * * *

By the order of the Board of Directors.

Dated at Washington, D.C., this 31 day of

January, 1995.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Acting Executive Secretary.

[FR Doc. 95–3669 Filed 2–15–95; 8:45 am]

BILLING CODE 6714–01–P

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 327

RIN 3064–AB58

Assessments; New Assessment Rate

Schedule for BIF Member Institutions

AGENCY: Federal Deposit Insurance

Corporation.

ACTION: Proposed Rule.

SUMMARY: The Board of Directors

(Board) of the Federal Deposit Insurance

Corporation (FDIC) is proposing to

amend its regulation on assessments to

establish a new assessment rate

schedule of 4–31 basis points for

members of the Bank Insurance Fund

(BIF) to apply to the semiannual period

in which the reserve ratio of the BIF

reaches the designated reserve ratio

(DRR) of 1.25% of total estimated

insured deposits and to semiannual

periods thereafter. The Board is further

proposing to amend the assessment risk

classification framework to widen the

existing assessment rate spread from 8

basis points to 27 basis points.

When the DRR is achieved, the Board

is required to set rates to maintain the

reserve ratio at the DRR. Based on

current projections, the reserve ratio is

expected to reach the DRR between May

1 and July 31, 1995. Therefore, the

Board is proposing to lower assessment

rates to maintain the reserve ratio at the

DRR and to maintain a risk-based

assessment system. The Board is further

proposing to amend the assessments

regulation to establish a procedure for

adjusting the proposed rate schedule

semiannually as necessary to maintain

the DRR at 1.25%.

DATES: Written comments must be

received by the FDIC on or before April

17, 1995.

ADDRESSES: Written comments shall be

addressed to the Office of the Executive

Secretary, Federal Deposit Insurance

Corporation, 550 17th Street NW.,

Washington, DC 20429. Comments may

be hand-delivered to room F–400, 1776

F Street NW., Washington, DC 20429, on

business days between 8:30 a.m. and 5

p.m. (FAX number: (202) 898–3838).

Comments will be available for

inspection in room 7118, 550 17th

Street, NW., Washington, DC, between 9

a.m. and 4:30 p.m. on business days.

FOR FURTHER INFORMATION CONTACT:

Christine Blair, Financial Economist,

Division of Research (202) 898–3936; or

Connie Brindle, Chief, Assessment

Operations Section, Division of Finance,

(703) 516–5553; or Lisa Stanley, Senior

Counsel, Legal Division (202) 898–7494;