64314 Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 

1See 12 U.S.C. 1817 and 1819. 

2Under the FDI Act, a restoration plan must 

restore the reserve ratio to at least 1.35 percent 

within 8 years of establishing the restoration plan, 

absent extraordinary circumstances. See 12 U.S.C. 

1817(b)(3)(E). The reserve ratio is calculated as the 

ratio of the net worth of the DIF to the value of the 

aggregate estimated insured deposits at the end of 

a given quarter. See 12 U.S.C. 1813(y)(3). See also 

87 FR 39518 (July 1, 2022). 

3See 12 CFR 327.10(c) and (d). 

4See 75 FR 66273 (Oct. 27, 2010) and 76 FR 

10672 (Feb. 25, 2011). As used in this final rule, the 

term ‘‘bank’’ is synonymous with the term ‘‘insured 

depository institution’’ as it is used in section 

3(c)(2) of the FDI Act, 12 U.S.C. 1813(c)(2). 

5See 12 U.S.C. 1817(b)(3)(B). 

6See 12 U.S.C. 1817(b)(3)(E). 

7See 85 FR 59306 (Sept. 21, 2020). 

8See FDIC Restoration Plan Semiannual Update, 

June 21, 2022. Available at https://www.fdic.gov/ 

news/board-matters/2022/2022-06-21-notice-sum-bmem.pdf. 

9See 87 FR 39518 (July 1, 2022). 

10Section 7(b)(3)(A) of the FDI Act, 12 U.S.C. 

1817(b)(3)(A). The DRR is expressed as a percentage 

of estimated insured deposits. 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 327 

RIN 3064–AF83 

Assessments, Revised Deposit 

Insurance Assessment Rates 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Final rule. 

SUMMARY: The FDIC is adopting a final 

rule to increase initial base deposit 

insurance assessment rate schedules by 

2 basis points, beginning the first 

quarterly assessment period of 2023. 

The increase in the assessment rate 

schedules will increase the likelihood 

that the reserve ratio will reach the 

statutory minimum of 1.35 percent by 

the statutory deadline of September 30, 

2028, consistent with the FDIC’s 

Amended Restoration Plan, and is 

intended to support growth in the 

Deposit Insurance Fund (DIF or fund) in 

progressing toward the FDIC’s long-term 

goal of a 2 percent Designated Reserve 

Ratio (DRR). 

DATES: The final rule is effective January 

1, 2023. 

FOR FURTHER INFORMATION CONTACT: 

Michael Spencer, Associate Director, 

Financial Risk Management Branch, 

202–898–7041, michspencer@fdic.gov; 

Ashley Mihalik, Chief, Banking and 

Regulatory Policy, 202–898–3793, 

amihalik@fdic.gov; Kayla Shoemaker, 

Senior Policy Analyst, 202–898–6962, 

kashoemaker@fdic.gov; Sheikha Kapoor, 

Senior Counsel, 202–898–3960, 

skapoor@fdic.gov; Ryan McCarthy, 

Senior Attorney, 202–898–7301, 

rymccarthy@fdic.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Legal Authority and Policy Objectives 

The FDIC, under its general 

rulemaking authority in Section 9 of the 

Federal Deposit Insurance Act (FDI Act), 

and its specific authority under Section 

7 of the FDI Act to set assessments, is 

adopting a final rule to increase initial 

base deposit insurance assessment rate 

schedules by 2 basis points, effective 

January 1, 2023, and beginning the first 

quarterly assessment period of 2023 

(i.e., January 1 through March 31, 

2023).1

The increase in the initial base 

assessment rate schedules will increase 

assessment revenue in order to rebuild 

the DIF, which is used to pay deposit 

insurance in the event of failure of an 

insured depository institution (IDI), and 

is intended to achieve complementary 

objectives. 

Most immediately, the increase in the 

assessment rate schedules is intended to 

increase the likelihood that the reserve 

ratio will reach the statutory minimum 

of 1.35 percent within the deadline set 

by statute, consistent with the 

Restoration Plan, as amended by the 

FDIC’s Board of Directors (Board) on 

June 21, 2022 (Amended Restoration 

Plan).2 Once the DIF reaches 1.35 

percent, the FDIC will no longer operate 

under a restoration plan. Any 

subsequent decline in the reserve ratio 

below the statutory minimum would, 

therefore, require the Board to establish 

a new restoration plan with an 

additional eight years to restore the 

reserve ratio. Alternatively, in the event 

that the industry experiences a 

downturn before the FDIC has exited its 

current Restoration Plan, the FDIC 

might have to consider larger 

assessment increases to meet the 

statutory requirement in a more 

compressed timeframe and under less 

favorable conditions. 

Additionally, the increase in 

assessment rate schedules would 

support growth in the DIF in 

progressing toward the 2 percent DRR. 

Therefore, the assessment rate schedules 

adopted as part of this final rule will 

remain in effect unless and until the 

reserve ratio meets or exceeds 2 percent, 

absent further Board action. 

Progressively lower assessment rate 

schedules will become effective when 

the reserve ratio exceeds 2 percent and 

2.5 percent.3 This continued growth in 

the DIF is intended to reduce the 

likelihood that the FDIC would need to 

consider a potentially pro-cyclical 

assessment rate increase, and to increase 

the likelihood of the DIF remaining 

positive through potential future 

periods of significant losses due to bank 

failures, consistent with the FDIC’s 

long-term fund management plan.4 A 

sufficiently large fund is a necessary 

precondition to maintaining a positive 

fund balance during a banking crisis 

and allowing for long-term, steady 

assessment rates. Accomplishing these 

objectives will continue to ensure 

public confidence is maintained in 

federal deposit insurance. 

B. Restoration Plan 

Extraordinary growth in insured 

deposits during the first and second 

quarters of 2020 caused the DIF reserve 

ratio to decline below the statutory 

minimum of 1.35 percent.5 On June 30, 

2020, the reserve ratio was 1.30 percent. 

The FDI Act requires that the Board 

adopt a restoration plan when the DIF 

reserve ratio falls below the statutory 

minimum of 1.35 percent or is expected 

to within 6 months.6 On September 15, 

2020, the Board adopted the Restoration 

Plan to restore the DIF to at least 1.35 

percent by September 30, 2028.7

In its June 21, 2022, semiannual 

update to the Board, FDIC projections of 

the reserve ratio under different 

scenarios indicated that the reserve ratio 

was at risk of not reaching 1.35 percent 

by September 30, 2028, the end of the 

statutory 8-year period.8 The scenarios 

were based on data and analysis 

updated through March 31, 2022, the 

most recent data available at the time of 

the semiannual update, and 

incorporated different rates of insured 

deposit growth and weighted average 

assessment rates, including sustained 

elevated insured deposit balances and 

lower assessment rates than previously 

anticipated. On June 21, 2022, the Board 

approved the Amended Restoration 

Plan, which reflects an increase in 

initial base deposit insurance 

assessment rate schedules of 2 basis 

points, beginning the first quarterly 

assessment period of 2023.9

Under the Amended Restoration Plan, 

the FDIC will update its analysis and 

projections for the fund balance and 

reserve ratio at least semiannually and, 

if necessary, recommend modifications 

to the Amended Restoration Plan. 

C. Designated Reserve Ratio 

The FDI Act requires that the Board 

designate a reserve ratio for the DIF and 

publish the DRR before the beginning of 

each calendar year.10 The Board must 

set the DRR in accordance with its 

analysis of certain statutory factors: risk 

of losses to the DIF; economic 


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11Section 7(b)(3)(C) of the FDI Act, 12 U.S.C. 

1817(b)(3)(C). 

12See 75 FR 66272 (Oct. 27, 2010) (October 2010 

NPR) and 76 FR 10672 (Feb. 25, 2011). 

13See 75 FR 66273 and 76 FR 10675. 

14The analysis set out in the October 2010 NPR 

sought to determine what assessment rates would 

have been needed to maintain a positive fund 

balance during the last two crises. This analysis 

used an assessment base derived from domestic 

deposits to calculate assessment income. The DoddFrank Wall Street Reform and Consumer Protection 

Act, however, required the FDIC to change the 

assessment base to average consolidated total assets 

minus average tangible equity. In the December 

2010 final rule establishing a 2 percent DRR, the 

FDIC undertook additional analysis to determine 

how the results of the original analysis would 

change had the new assessment base been in place 

from 1950 to 2010. Both the analyses in the October 

2010 NPR and the December 2010 final rule show 

that the fund reserve ratio would have needed to 

be approximately 2 percent or more before the onset 

of the crises to maintain both a positive fund 

balance and stable assessment rates. The updated 

analysis in the December 2010 final rule, like the 

analysis in the October 2010 NPR, assumed, in lieu 

of dividends, that the long-term industry average 

nominal assessment rate would be reduced by 25 

percent when the reserve ratio reached 2 percent, 

and by 50 percent when the reserve ratio reached 

2.5 percent. Eliminating dividends and reducing 

rates successfully limits rate volatility whichever 

assessment base is used. See 75 FR 66273 and 75 

FR 79288 (Dec. 20, 2010) (December 2010 final 

rule). 

15See 75 FR 79286 (Dec. 20, 2010), codified at 12 

CFR 327.4(g), see also Notice of Designated Reserve 

Ratio for 2023, available at https://www.fdic.gov/ 

news/board-matters/2022/2022-10-18-notice-sum-cfr.pdf. 

16See 75 FR 66273 and 75 FR 79287. 

17See 12 U.S.C. 1817(b). 

18See 12 CFR 327.3(b)(1). 

19See 12 CFR 327.5. 

20See 12 CFR 327.16(a) and (b). 

21As used in this final rule, the term ‘‘small 

bank’’ is synonymous with the term ‘‘small 

institution’’ and the term ‘‘large bank’’ is 

synonymous with the term ‘‘large institution’’ or 

‘‘highly complex institution,’’ as the terms are 

defined in 12 CFR 327.8(e), (f), and (g), respectively. 

22See 12 CFR 327.16(a); see also 81 FR 32180 

(May 20, 2016). 

23See 12 CFR 327.16(b); see also 76 FR 10672 

(Feb. 25, 2011) and 77 FR 66000 (Oct. 31, 2012). 

24See 12 CFR 327.16(e). 

25See 12 CFR 327.16(b)(3); see also Assessment 

Rate Adjustment Guidelines for Large and Highly 

Complex Institutions, 76 FR 57992 (Sept. 19, 2011). 

26See 87 FR 39388 (July 1, 2022). 

27See 12 CFR 327.10(c) and (d). 

conditions generally affecting IDIs; 

preventing sharp swings in assessment 

rates; and any other factors that the 

Board determines to be appropriate.11

In 2010, the FDIC proposed and later 

adopted a comprehensive, long-term 

management plan for the DIF with the 

following goals: (1) reduce the procyclicality in the existing risk-based 

assessment system by allowing 

moderate, steady assessment rates 

throughout economic and credit cycles; 

and (2) maintain a positive fund balance 

even during a banking crisis by setting 

an appropriate target fund size and a 

strategy for assessment rates and 

dividends.12 Based on the FDIC’s 

experience through two banking crises, 

the analysis concluded that a long-term 

moderate, steady assessment rate of 5.29 

basis points would have been sufficient 

to prevent the fund from becoming 

negative during the crises.13 The FDIC 

also found that the fund reserve ratio 

would have had to exceed 2 percent 

before the onset of the last two crises to 

achieve these results.14

The FDIC’s comprehensive, long-term 

fund management plan combines the 

moderate, steady assessment rate with a 

DRR of 2 percent. The Board set the 

DRR at 2 percent in 2010, and following 

consideration of the statutory factors, it 

has voted annually since then to 

maintain the 2 percent DRR. The FDIC 

is concurrently publishing in the 

Federal Register the Notice of 

Designated Reserve Ratio for 2023.15

The DRR was established as part of a 

plan to maintain a positive DIF balance, 

even during a banking crisis, by 

allowing the fund to grow sufficiently 

large during times of favorable banking 

conditions. Additionally, in lieu of 

dividends, the long-term plan prescribes 

progressively lower assessment rates 

that will become effective when the 

reserve ratio exceeds 2 percent and 2.5 

percent.16

D. Risk-Based Deposit Insurance 

Assessments 

Pursuant to Section 7 of the FDI Act, 

the FDIC has established a risk-based 

assessment system through which it 

charges all IDIs an assessment amount 

for deposit insurance.17

Under the FDIC’s regulations, an IDI’s 

assessment is equal to its assessment 

base multiplied by its risk-based 

assessment rate.18 Generally, an IDI’s 

assessment base equals its average 

consolidated total assets minus its 

average tangible equity.19 An IDI’s riskbased assessment rate is determined 

each quarter based on supervisory 

ratings and information collected on the 

Consolidated Reports of Condition and 

Income (Call Report) or the Report of 

Assets and Liabilities of U.S. Branches 

and Agencies of Foreign Banks (FFIEC 

002), as appropriate. An IDI’s 

assessment rate is calculated using 

different methods based on whether the 

IDI is a small, large, or highly complex 

institution.20 For assessment purposes, 

a small bank is generally defined as an 

institution with less than $10 billion in 

total assets, a large bank is generally 

defined as an institution with $10 

billion or more in total assets, and a 

highly complex bank is generally 

defined as an institution that has $50 

billion or more in total assets and is 

controlled by a parent holding company 

that has $500 billion or more in total 

assets, or is a processing bank or trust 

company.21

Assessment rates for established small 

banks are calculated based on eight risk 

measures that are statistically significant 

in predicting the probability of an 

institution’s failure over a three-year 

horizon.22 Large and highly complex 

institutions are calculated using a 

scorecard approach that combines 

CAMELS ratings and certain forwardlooking financial measures to assess the 

risk that a large or highly complex bank 

poses to the DIF.23

All institutions are subject to 

adjustments to their assessment rates for 

certain liabilities that can increase or 

reduce loss to the DIF in the event the 

bank fails.24 In addition, the FDIC may 

adjust a large bank’s total score, which 

is used in the calculation of its 

assessment rate, based upon significant 

risk factors not adequately captured in 

the appropriate scorecard.25

E. The Proposed Rule 

On June 21, 2022, the Board adopted 

a notice of proposed rulemaking (the 

proposed rule, or proposal) to increase 

initial base deposit insurance 

assessment rate schedules uniformly by 

2 basis points, beginning the first 

quarterly assessment period of 2023.26

The proposed change was intended to 

increase assessment revenue in order to 

raise the reserve ratio to the statutory 

minimum threshold of 1.35 percent 

within 8 years of the Restoration Plan’s 

initial establishment, as required by 

statute, and consistent with the 

Amended Restoration Plan, and to 

support growth in the DIF in 

progressing toward the 2 percent DRR. 

In lieu of dividends, the progressively 

lower assessment rate schedules 

currently in the regulation would 

remain unchanged and would come into 

effect without further action by the 

Board when the fund reserve ratio at the 

end of the prior assessment period 

reaches 2 percent and 2.5 percent, 

respectively.27 The FDIC did not 

propose changes to the rate schedules 

that come into effect when the reserve 

ratio reaches 2 and 2.5 percent. 

II. Discussion of Comments Received on 

the Proposed Rule 

In response to the proposed rule, the 

FDIC received a total of 171 comment 

letters. Of these, 102 were from IDIs or 

holding companies of IDIs, 10 were from 

trade associations, one was from 


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28See comments on the proposal. Available at 

https://www.fdic.gov/resources/regulations/federalregister-publications/2022/2022-assessmentsrevised-deposit-insurance-assessment-rates-3064- 

af83.html. Two late comment letters were received 

after the comment period closed on August 20, 

2022. The views presented in the comment letters 

are addressed in this section. 

29 In its December 14, 2021, semiannual update to 

the Board, the FDIC estimated that excess insured 

deposits that flowed into banks as the result of 

actions taken by monetary and fiscal authorities, 

and by individuals, businesses, and financial 

market participants in response to the pandemic 

totaled approximately $1.13 trillion. This estimate 

reflects the amount of insured deposits as of 

September 30, 2021, in excess of the amount that 

would have resulted if insured deposits had grown 

at the pre-pandemic average rate of 4.5 percent 

since December 31, 2019. By September 30, 2021, 

deposit balances would have fully reflected the 

more significant actions taken by monetary and 

fiscal authorities in response to the COVID–19 

pandemic. September 2021 was also the first month 

that the personal savings rate declined to a level 

within the range reported during the year prior to 

the pandemic. Rather than receding, as previously 

expected, these excess insured deposits have grown 

by about $43 billion through June 30, 2022. 

members of Congress, and 58 were from 

other interested parties, primarily 

individuals affiliated with community 

banks.28

While many commenters expressed 

support for the continued strength and 

resilience of the DIF, the vast majority 

of the comment letters expressed 

concern over the burden of the proposed 

increase in assessment rate schedules of 

2 basis points on the banking industry, 

particularly community banks. Nearly 

half of all commenters stated that the 

proposed increase in assessment rate 

schedules of 2 basis points is 

unnecessary for the reserve ratio to 

reach the statutory minimum of 1.35 

percent by the statutory deadline, with 

most disagreeing with one or more of 

the assumptions underlying the 

projections that informed the proposal. 

Many suggested alternatives to adjust, 

delay or rescind the proposed increase 

in assessment rate schedules of 2 basis 

points, or implement a risk- or sizebased approach to increasing 

assessment rates. Two commenters were 

generally supportive in recognition of 

the need to restore the reserve ratio to 

the statutory minimum and to reach the 

long-term goal of a 2 percent DRR. 

Comments on Insured Deposit Growth 

Assumption 

Many commenters disagreed with 

annual insured deposit growth rates 

assumed in the scenario analysis that 

informed the proposal, though many 

broadly discussed trends in deposits 

and did not specifically address insured 

deposits. These commenters generally 

observed that deposits appear to be 

declining or normalizing and expect a 

similar trend going forward. Some 

commenters maintained that the factors 

that boosted deposits over the past few 

years have all reversed. Commenters 

addressed factors influencing deposit 

levels including higher interest rates, a 

normalizing spread between money 

market rates and deposit rates leading to 

enhanced competition from money 

market funds, quantitative tightening, 

increased costs, reduced savings rates, 

and the conclusion of pandemic reliefrelated fiscal stimulus in the first 

quarter of 2021. One commenter stated 

that to the extent excess deposits still 

exist, they are invested in the safest 

asset classes, mitigating the need for a 

buffer above the statutory minimum 

reserve ratio. 

The FDIC’s analysis and related 

assumptions focus only on insured 

deposit growth rather than total deposit 

growth because the reserve ratio is 

measured as the net worth of the DIF 

relative to the value of aggregate 

estimated insured deposits at the end of 

a given quarter. While most commenters 

did not distinguish between total 

deposits and insured deposits, it is 

important to note that insured deposit 

growth is difficult to predict and can 

differ, sometimes substantially, from 

total deposit growth in both magnitude 

and direction. For example, in the first 

half of 2022, total deposits decreased by 

0.7 percent, while insured deposits 

increased by 1.6 percent. 

In the scenario analysis that informed 

the proposal, and as updated in this 

final rule and described further in the 

section on Projections for the Fund 

Balance and Reserve Ratio, the FDIC 

assumed annual insured deposit growth 

rates of 3.5 and 4.0 percent. These 

insured deposit growth rates represent 

retention of a range of excess insured 

deposits resulting from the pandemic. 

The assumption of a 4.0 percent annual 

growth rate reflects retention of all of 

the estimated $1.13 trillion of excess 

deposits in insured accounts, with this 

amount not contributing to further 

growth, while the remaining balance of 

insured deposits continues to grow at 

the pre-pandemic average annual rate of 

4.5 percent.29 Alternatively, a 3.5 

percent annual growth rate assumption 

reflects banks retaining almost two 

thirds of the estimated excess insured 

deposits resulting from the pandemic, 

with this amount not contributing to 

further growth, while the remaining 

balance of insured deposits grows at the 

pre-pandemic average annual rate of 4.5 

percent. 

While insured deposits declined by 

0.7 percent in the second quarter of 

2022, it is the FDIC’s view that that the 

decline does not necessarily indicate 

that the excess insured deposits that 

resulted from various fiscal policy 

programs implemented during the 

pandemic are receding beyond the 

scenarios described above in the nearterm. In fact, a decline in insured 

deposits in the second quarter is not 

unusual. As illustrated in Chart 1, 

insured deposits declined in the second 

quarter in six out of the last nine years. 

Importantly, even with the decline in 

insured deposits during the second 

quarter of 2022, insured deposit 

balances remain elevated in comparison 

to what the balance of insured deposits 

would have been had they grown at the 

pre-pandemic average annual rate of 4.5 

percent, indicating that none of the 

excess insured deposits resulting from 

the pandemic have receded. Rather than 

receding, as previously expected, excess 

deposits have risen from an estimated 

$1.13 trillion at the end of the second 

quarter of 2021 to $1.17 trillion through 

the second quarter of 2022. 

Chart 1. Historical Second Quarter 

Insured Deposit Growth 


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30The FDIC publicly reports on DIF indicators 

and performance, including investment portfolio 

performance, each quarter through the FDIC 

Quarterly Banking Profile and annually in the 

FDIC’s Annual Report. FDIC Quarterly Banking 

Profile available at https://www.fdic.gov/analysis/ 

quarterly-banking-profile/index.html. FDIC Annual 

Report available at https://www.fdic.gov/about/ 

financial-reports/reports/index.html. 

It is possible that insured deposits 

could grow faster or slower than the 3.5 

percent to 4 percent range assumed for 

this analysis. If insured deposits grow at 

a slower rate, as a number of 

commenters argued would happen, the 

statutory minimum reserve ratio would 

be achieved sooner, and if insured 

deposits grow at a faster rate, the 

statutory minimum reserve ratio would 

be achieved later. Generally speaking, 

this final rule is not based on the 

assumption that the most favorable 

future scenarios for the reserve ratio will 

materialize, but addresses the need to 

achieve the statutory minimum reserve 

ratio given the conditions that currently 

exist. 

In this regard, insured deposits 

increased by 4.3 percent between 

second quarter 2021 and second quarter 

2022, a growth rate that is higher than 

the rate of insured deposit growth 

assumed in both scenarios in the 

analysis supporting the proposal and 

this final rule. Between the first quarter 

of 2020 and the first quarter of 2022, 

annual insured deposit growth rates 

ranged between 4.8 percent and 16.6 

percent, and averaged 10.6 percent, 

more than double the pre-pandemic 

average of 4.5 percent. While recent 

insured deposit growth rates more 

closely align with historical averages, 

these growth rates are applied to a total 

balance of insured deposits that is still 

elevated from the pandemic response 

efforts. For these reasons, the FDIC 

continues to view the assumed annual 

insured deposit growth rates of 3.5 and 

4.0 percent as reasonable, while 

recognizing that insured deposit growth 

is difficult to project and depends on 

several factors detailed in the section on 

Deposit Balance Trends below. 

Comments on Investment Income 

Assumption 

Seven commenters disagreed with the 

FDIC’s assumption of zero investment 

income on the DIF portfolio. Some 

commenters challenged the assumption 

based on recent increases in interest 

rates and the Federal Open Market 

Committee’s outlook for the overnight 

rate over the longer term. Other 

commenters generally stated that 

forecasts do not reflect current 

conditions and were made at a time 

when volatility was high and 

uncertainty was significant. A few 

commenters specified that an increase 

in assessment rates is not warranted 

because of a decrease in the reserve ratio 

due to unrealized losses on the DIF 

portfolio. 

In the FDIC’s view, an assumption of 

zero net investment contributions— 

defined for purposes of this final rule to 

include both interest income and 

unrealized gains or losses—remains a 

reasonably conservative assumption 

over the near-term. Elevated unrealized 

losses resulted in negative net 

investment contributions of $339 

million in the fourth quarter of 2021, 

and $1,495 million and $322 million in 

the first and second quarters of 2022, 

respectively.30 Moving into the third 

quarter of 2022, interest rates have 

continued to rise and unrealized losses 

will likely continue to reduce net 

investment contributions, below the 

assumed amount of zero. Future market 

movements may temporarily increase 

unrealized losses. 

While net investment contributions 

have been relatively flat to slightly 

negative since the Restoration Plan was 

first established in September 2020, 

interest rate increases have gradually 

lifted interest income on the DIF 

portfolio in recent months and over time 

unrealized losses should eventually be 

outpaced by higher levels of interest 

income. However, given the uncertainty 

of the timing and magnitude of interest 

rate increases and the effects on the DIF 

portfolio, it is the FDIC’s view that zero 

net investment contributions remains a 

reasonably conservative assumption 

over the near-term. In the longer-term, 


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Chart 1. Historical Second Quarter Insured Deposit Growth 

Quarterly Insured Deposit Growth 

2.0% 

1.5% 

1.0% 

0.5% 

0.0% 

-0.01% 

-0.20% 

-0.5% 

-1.0% 

-0.82% 

2013 2014 2015 

8.06% 

2016 2017 2018 2019 2020 2021 

Second Quarter 

-0.71% 

2022 
64318 Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 

31Projections for reaching the 2 percent DRR 

assume net investment contributions to the DIF of 

zero until the reserve ratio reaches 1.35 percent. Net 

investment contributions assumptions are then 

based on market-implied forward rates from that 

point forward. Applying this assumption for the 

entire projection period does not significantly 

accelerate the achievement of a 2 percent DRR (the 

reserve ratio would reach 2 percent in 2031 instead 

of 2032). 

32See 12 U.S.C. 1823(a). The Secretary of the 

Treasury must approve all such investments in 

excess of $100,000 and has granted the FDIC 

approval to invest the DIF funds only in U.S. 

Treasury obligations that are purchased or sold 

exclusively through the Treasury’s Bureau of the 

Fiscal Service’s Government Account Series 

program. 

33See Federal Deposit Insurance Corporation 

Corporate Investment Policy (2018), available at 

https://www.fdic.gov/deposit/insurance/corporateinvestment-policy.pdf. 

34 In June 2020, the FDIC adopted a final rule that 

mitigates the deposit insurance assessment effects 

of participating in the Paycheck Protection Program 

(PPP) established by the Small Business 

Administration (SBA), and the Paycheck Protection 

Program Liquidity Facility (PPPLF) and Money 

Market Mutual Fund Liquidity Facility (MMLF) 

established by the Board of Governors of the 

Federal Reserve System. See 85 FR 38282 (June 26, 

2020). 

projections for reaching the 2 percent 

DRR already assume positive net 

investment contributions after the 

reserve ratio reaches 1.35 percent, based 

on market-implied forward rates, and 

including additional net investment 

contributions in the near-term had little 

effect on the analysis for reaching the 2 

percent DRR.31 When rates stabilize and 

interest income begins to outpace 

unrealized losses on the DIF portfolio, 

resulting in positive net investment 

contributions, the FDIC will consider 

revisiting assumptions in future 

semiannual updates accordingly. 

Net investment contributions have 

played a secondary role in overall DIF 

growth, relative to assessment revenue. 

From 2013 to 2021, for example, 

assessment revenue was more than eight 

times net investment contributions. 

Over that period, the DIF grew by about 

$90 billion. Net investment 

contributions were approximately $9 

billion and assessment revenue was 

almost $76 billion, illustrating the 

importance of assessment revenue 

relative to net investment contributions 

in determining the outcome of the DIF. 

This is consistent with the objectives of 

the DIF investment portfolio, which 

prioritize preservation of funds 

available to absorb losses from bank 

failures over maximizing investment 

income. While the FDIC realizes that the 

larger fund balance and higher interest 

rate environment relative to those 

experienced from 2013 to 2021 could 

result in a more meaningful 

contribution to the growth of the DIF, 

the timing and amount are highly 

uncertain. 

For these reasons, the FDIC continues 

to view the assumption of zero net 

investment contributions in the nearterm as reasonable. Relying on 

projections based on a higher rate of 

return in the near-term could prove 

overly optimistic given the uncertainty 

in the potential effects of future 

movements in monetary policy and the 

potential for further unrealized losses 

on securities in the DIF portfolio prior 

to the statutory deadline. 

Several commenters additionally 

asserted that if the FDIC is not able to 

responsibly manage its investments, the 

solution should not be to shift the 

burden to banks. 

Management of the DIF portfolio is 

governed by statute and the Corporate 

Investment Policy. The FDI Act requires 

that DIF funds be invested in obligations 

of the United States or in obligations 

guaranteed as to principal and interest 

by the United States.32 In managing the 

DIF investment portfolio, the 

Corporation’s stated objectives include 

‘‘managing money in a professional 

manner, consistent with maintaining 

confidence in the deposit insurance 

program and with the Corporation’s 

strategic objective that the Deposit 

Insurance Fund remains viable.’’ 33 DIF 

funds may be invested in Treasury 

securities with maturities up to 12 

years; however, current holdings are 

shorter to ensure liquidity, without 

necessitating the sale of securities. 

Comments on Effect on the Banking 

Industry 

147 commenters expressed concern 

for the impact to bank profitability, 

operating expenses, and capital. Most of 

these commenters requested adjustment, 

delay, or rescission of the proposed rate 

increase. A few of these commenters 

expressed concern that the proposed 

increase in assessment rate schedules of 

2 basis points represented a sharp or 

dramatic increase in assessment rates, 

which some of these commenters argued 

is inconsistent with the legislative 

language and spirit of the assessment 

rate-related provisions of the FDI Act. 

Several commenters also maintained 

that analysis included in the proposal 

on the effect of the rate increase on 

capital and earnings underestimated the 

potential impact on institutions or did 

not fully evaluate the potential effects 

on certain cohorts of institutions, 

including IDIs with total assets between 

$750 million and $10 billion. One 

commenter expressed that uncertainty 

does not justify the proposed 

burdensome assessment rate increase. 

A number of comments from smaller 

institutions and their holding 

companies and trade groups stated that 

the increase in assessment rates would 

be difficult for community banks to 

absorb, particularly if the economy 

enters a recessionary period, and that 

the proposal will disproportionately 

burden community banks that do not 

pose significant risk to the DIF. A few 

of these commenters stated that an 

increase in assessments exacerbates the 

competitive disadvantage of community 

banks relative to credit unions and felt 

the increase would further accelerate 

consolidation in the industry. Some of 

these commenters requested that that 

the FDIC consider excluding pandemicrelated deposit balance increases when 

applying the increase in assessment 

rates.34

It is the FDIC’s view that the proposed 

increase in assessment rate schedules of 

2 basis points does not represent a sharp 

or dramatic increase. As illustrated in 

Chart 2, increasing assessment rates by 

2 basis points in the most recent quarter 

would have resulted in a weighted 

average assessment rate that is 

consistent with assessment rates from 

recent history. 

Chart 2. Historical Weighted Average 

Assessment Rates Compared with the 

Most Recent Weighted Average 

Assessment Rate with an Increase of 

2 Basis Points 


lotter on DSK11XQN23PROD with RULES2
Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 64319 

35See 75 FR 66273 and 76 FR 10675. 36See Public Law 111–203, section 331(b), 124 

Stat. 1376, 1539 (codified at 12 U.S.C. 1817(b)). 37See 156 Cong. Rec. S3296–99 (daily ed. May 6, 

2010) (statements of Sens. Hutchison and Tester) 

and 76 FR 10672, 10701 (February 25, 2011). The 

statements by members of Congress made clear that 

Congress expressly intended this result and viewed 

the new assessment base as a better measure of risk 

than the previous base of domestic deposits. All 

else equal, the larger assessment base would have 

increased assessments paid by virtually every bank. 

However, in implementing the new assessment base 

the FDIC also adjusted the range of risk-based 

assessment rates to produce approximately the 

same revenue under the new base as would have 

been raised under the old base. 

38Earnings or income are annual income before 

assessments and taxes. Annual income is assumed 

to equal income from July 1, 2021, through June 30, 

2022. The Tax Cuts and Jobs Act of 2017 placed a 

limitation on tax deductions for FDIC premiums for 

banks with total consolidated assets between $10 

and $50 billion and disallowed the deduction 

entirely for banks with total assets of $50 billion or 

more. See the Tax Cuts and Jobs Act, Public Law 

115–97 (Dec. 22, 2017). For assessment purposes, a 

Continued 

In addition, an increase in assessment 

rate schedules of 2 basis points would 

bring the average assessment rate close 

to the moderate steady assessment rate 

of 5.29 basis points that would have 

been required in a simulated fund 

analysis covering the years 1950 

through 2010, to maintain a positive DIF 

balance over that period, including 

through two banking crises.35 During 

the 2008 financial crisis, the FDIC 

uniformly raised assessments by 7 basis 

points and, as part of a Restoration Plan 

in place at the time, levied a special 

assessment of 5 basis points. 

In response to comments that 

community banks will be 

disproportionately burdened by the 

assessment increase relative to large 

banks, the FDIC notes that in 2010, the 

Dodd-Frank Act required that the FDIC 

amend its regulations to redefine the 

assessment base to more closely 

approximate a bank’s total liabilities, 

rather than only its domestic deposits.36

As Congress intended, the revised 

assessment base and accompanying 

change in rates shifted more of the total 

burden of assessments to the largest 

banks from the rest of the industry.37

Consistent with that approach, a 

uniform increase of 2 basis points with 

no change to assessment base is 

expected to generate over 80 percent of 

additional assessment revenue from 

banks with more than $10 billion in 

assets, approximately proportional to 

their share of industry assets. 

As some commenters note, the 

increase in assessment rates may affect 

some institutions more than others. 

Because deposit insurance assessments 

are risk-based, for the least risky 

institutions—those paying the lowest 

rate—an increase in assessment rate 

schedules of 2 basis points would result 

in a greater percent increase in 

assessments, compared with institutions 

that are assigned a higher assessment 

rate. The proposed increase in 

assessment rate schedules is uniform 

and applies to all IDIs, so the resulting 

assessment rates will continue to be the 

lowest for institutions determined to be 

the least risky, and higher for riskier 

institutions. Given the results for the 

entire industry summarized in Tables 9 

and 10 in the section on Capital and 

Earnings Analysis and Expected Effects 

below, the FDIC does not believe the 

rule will have material distributional 

effects. 

As described in the section on Capital 

and Earnings Analysis and Expected 

Effects below, for the industry as a 

whole, the FDIC estimates that a 

uniform increase in assessment rate 

schedules of 2 basis points would 

decrease Tier 1 capital by an estimated 

0.1 percent but would not directly result 

in any institutions becoming 

undercapitalized or critically 

undercapitalized. The FDIC also 

estimates that a uniform increase in 

assessment rate schedules of 2 basis 

points would reduce income slightly by 

an average of 1.2 percent, which 

includes an average of 1.0 percent for 

small banks and an average of 1.3 

percent for large and highly complex 

institutions.38 As summarized in Tables 


lotter on DSK11XQN23PROD with RULES2ER24OC22.001</GPH>

Chart 2. Historical Weighted Average Assessment Rates Compared with the Most 

Recent Weighted Average Assessment Rate with an Increase of2 Basis 

Points 

Basis Points 

12 

10 

8 

6 

4 

2 

-Weighted Average Assessment Rate 

---Most Recent Assessment Rate+ 2 Basis Points 

o~------------------------------

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2022 

QI Q2 
64320 Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 

small bank is generally defined as an IDI with less 

than $10 billion in total assets. 

39This commenter references a recent FDIC 

working paper with findings that suggest that 

deposit insurance premiums can be a significant 

driver of bank credit pro-cyclicality. See R. Hess 

and J. Rhee, FDIC Center for Financial Research 

Working Paper No. 2022–10, ‘‘The Procyclicality of 

FDIC Deposit Insurance Premiums,’’ August 2022, 

available at https://www.fdic.gov/analysis/cfr/ 

working-papers/2022/cfr-wp2022-10.pdf. 40See 12 U.S.C. 1817(b)(3)(E). 

8 through 10 in the section on Capital 

and Earnings Analysis and Expected 

Effects below, approximately 4 percent 

of profitable institutions are projected to 

experience an increase in assessments of 

5 percent of income or more, including 

less than one percent of large and highly 

complex institutions and less than 5 

percent of profitable small banks. The 

increase in assessment rate schedules is 

projected to have an insignificant effect 

on institutions’ capital levels and is 

unlikely to have a material effect 

relative to income for almost all 

institutions. 

The banking industry continues to 

report favorable credit quality, earnings, 

and capital levels, supporting its ability 

to meet the country’s banking needs 

while navigating the challenges 

presented by inflationary pressures, 

rising interest rates, and the end of 

pandemic support programs for 

borrowers. The banking industry has 

reported strong earnings in recent 

quarters, remained resilient through the 

second quarter of 2022 despite the 

extraordinary challenges of the 

pandemic, and is well positioned to 

absorb a modest increase in assessment 

rate schedules of 2 basis points. 

In fact, 32 commenters cited the 

strength of the banking industry in 

advocating for adjustment, delay, or 

rescission of the proposed assessment 

rate increase, stating that the relative 

strength of the banking industry, and 

higher levels of capital and reserves, 

mean that there is likely little need for 

additional funds to cover potential 

losses in the near-term. 

Several commenters stated that it 

would be difficult to absorb the 

proposed increase in assessment rates in 

the event of an economic downturn. A 

few of these commenters stated that the 

timing of the proposed increase is 

increasingly likely to coincide with the 

beginning of a recession and therefore 

risks causing exactly the type of procyclical increase that Congress sought to 

avoid. In particular, one commenter 

expressed concern that raising 

assessment rates could destabilize the 

banking sector at a time when its 

services are critical, particularly as there 

are significant uncertainties looking 

forward.39

The FDIC recognizes that the banking 

industry faces significant downside 

risks. Future economic and banking 

conditions remain uncertain due to high 

inflation, rising interest rates, slowing 

economic growth, and geopolitical 

uncertainty. Higher interest rates may 

also erode real estate and other asset 

values as well as hamper borrowers’ 

loan repayment ability. Any of these 

uncertainties present challenges and 

could have longer-term effects on the 

condition and performance of the 

economy and the banking industry. 

In the FDIC’s view, now is a 

reasonable time for a modest increase in 

assessment rate schedules, while the 

banking industry is strong, as it 

continues to report favorable credit 

quality, earnings, and capital levels, and 

is experiencing a prolonged period 

without bank failures. The FDIC 

working paper referenced by one 

commenter documents the pro-cyclical 

effect of deposit insurance premiums on 

bank lending during the financial crisis 

of 2008–2009. A modest increase in 

assessment rate schedules while the 

banking industry is strong is consistent 

with the findings of the working paper, 

reducing the likelihood that the FDIC 

would need to consider a larger increase 

in assessment rates when the banking 

industry is experiencing a downturn. 

Adoption of an increase in assessment 

rate schedules will allow for the reserve 

ratio to be restored to the statutory 

minimum and then will generate a 

buffer to absorb unexpected losses, 

accelerated insured deposit growth, or 

lower average assessment rates that may 

materialize. The FDIC believes that the 

additional revenue collected under the 

proposed increase in assessment rate 

schedules will strengthen the DIF’s 

ability to withstand potential future 

periods of significant losses due to bank 

failures and will reduce the likelihood 

that the FDIC would need to increase 

assessment rates or impose a special 

assessment during a potential future 

banking crisis. 

Comments on Alternatives 

Most commenters suggested the FDIC 

adjust, delay, or rescind the proposed 2 

basis point increase in assessment rate 

schedules. Most commenters advocating 

for rescission of the proposal expressed 

concerns over the expected effects or 

suggested that if assumptions 

underlying projections were changed 

and applied using updated data, the 

resulting analysis may show that there 

is no risk that the reserve ratio would 

not reach the 1.35 percent statutory 

minimum, and therefore any increase in 

assessment rates would be unnecessary. 

Those advocating for delay often 

recommended this alternative so that 

the data and assumptions underlying 

the proposal could be revisited after 

trends related to insured deposit growth 

or investment contributions become 

clearer. 

Other alternatives that were 

recommended included revising the 

proposal to end the increase in 

assessment rates after the reserve ratio 

reaches 1.35 percent, implementing a 

lower rate increase based on different or 

updated assumptions, and 

implementing a series of incremental 

increases while retaining the flexibility 

to adjust rates. 

The FDIC is not adopting these 

suggested alternatives to delay, rescind, 

or reduce the proposed increase in 

assessment rate schedules of 2 basis 

points. As described in the section on 

Projections for the Fund Balance and 

Reserve Ratio below, applying the same 

assumptions used in the proposal but 

using data through June 30, 2022, the 

latest data available at the time of 

publication, the FDIC continues to 

project that, absent an increase in 

assessment rates, the reserve ratio is at 

risk of not reaching the statutory 

minimum of 1.35 percent by the 

statutory deadline of September 30, 

2028. 

When the FDIC first established the 

Restoration Plan in September 2020, the 

reserve ratio stood at 1.30 percent. The 

reserve ratio increased in only two out 

of the eight quarters in which the 

Restoration Plan has been in place and 

regressed over that period to 1.26 

percent as of June 30, 2022. 

The FDIC has a statutory obligation to 

restore the reserve ratio to the statutory 

minimum of 1.35 percent within 8 years 

of establishing the Restoration Plan.40

Further, the FDIC is neither required nor 

expected to wait until near the statutory 

deadline to do so. Reaching the 

statutory minimum reasonably promptly 

and in advance of the statutory deadline 

strengthens the fund so that it can better 

withstand unexpected losses and reduce 

the likelihood of pro-cyclical 

assessments. In the FDIC’s view, now is 

a reasonable time for a modest rate 

increase, while the banking industry is 

strong and experiencing a prolonged 

period without bank failures. The 

proposed increase in assessment rate 

schedules of 2 basis points will bring 

the average assessment rate close to the 

moderate steady assessment rate of 5.29 

basis points that would have been 

required in a simulated fund analysis 

covering the years from 1950 through 

2010 to maintain a positive DIF balance 

throughout that time period, including 


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Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 64321 

41See 75 FR 66273 and 76 FR 10675. 

42See 12 U.S.C. 1817(b)(1). 

43See 71 FR 69282 (November 30, 2006) and 12 

U.S.C. 1817(b)(1)(D). 

44See 12 U.S.C. 1817(b)(1). 

45See 12 U.S.C. 1817(b)(1). 

46See 71 FR 69282 (November 30, 2006) and 12 

U.S.C. 1817(b)(1)(D). 

through two banking crises.41 Restoring 

the fund to its minimum reserve ratio, 

and continuing to build it towards the 

2 percent DRR, reduces the risk that the 

FDIC would need to consider a larger 

increase in assessments at a later time 

when banking and economic conditions 

may be less favorable and when the 

industry might least be able to afford it. 

The FDIC has considered the 

alternatives raised by commenters along 

with other reasonable and possible 

alternatives to the rule described below 

in the section on Alternatives 

Considered, but believes, on balance, 

that an increase in assessment rate 

schedules of 2 basis points, with such 

increase remaining in effect unless and 

until the reserve ratio meets or exceeds 

2 percent, is the most appropriate and 

most straightforward manner in which 

to achieve the objectives of the 

Amended Restoration Plan and the longterm fund management plan. 

Comments Proposing Risk- or SizeBased Alternatives to Increasing Rates 

While most commenters suggested 

alternatives to adjust, delay, or rescind 

the proposed 2 basis point increase in 

assessment rate schedules for the 

reasons described above, 33 commenters 

urged the FDIC to alternatively consider 

implementing a risk- or size-based 

approach to increasing assessment rates. 

Most of these commenters requested 

that the increase in assessment rates be 

tailored to apply higher rates to larger or 

more complex banks, or banks that pose 

a greater risk to the DIF. Several 

commenters requested a specific carveout from the rate increase for 

community banks, particularly 

community banks that are well 

capitalized, or that the FDIC give weight 

to improvements in bank safety and 

soundness in proposing rate increases. 

One commenter specifically proposed a 

risk-based approach to increasing 

assessment rates to further incent 

appropriate balance sheet risk 

management practices. Another 

commenter generally opposed the 

proposal in part based on the belief that 

the statutory minimum reserve ratio of 

1.35 percent is insufficient to absorb 

losses in the event of the failure of a 

systemically important financial 

institution (SIFI) and recommended the 

establishment of a separate fund for 

SIFIs. 

Under the FDI Act, the FDIC is 

required to establish an assessment 

system for all banks based on risk.42 As 

authorized by law and pursuant to 

rulemakings, the FDIC has implemented 

separate risk-based pricing methods for 

large and small banks.43 Under the facts 

and circumstances, as well as the 

statutory factors that the FDIC is 

required to consider treating IDIs with 

the same or similar risk profiles 

differently from each other for 

assessments purposes may not conform 

to those relevant factors in this 

particular instance, and may not be 

appropriate given the FDIC’s policy 

objectives with respect to long-term 

fund management. 

The FDIC has considered the risk- and 

size-based alternatives raised by 

commenters along with other reasonable 

and possible alternatives to the rule 

described below in the section on 

Alternatives Considered, but believes, 

on balance, that the proposed uniform 

increase in assessment rate schedules of 

2 basis points is the most appropriate 

and most straightforward manner in 

which to achieve the objectives of the 

Amended Restoration Plan and the longterm fund management plan. While the 

2 basis point increase in assessment 

rates would generally result in a 

uniform increase across assessment rate 

schedules, the FDIC continues to 

maintain a risk-based deposit insurance 

assessment system, meaning that 

assessment rates for individual 

institutions are determined based on the 

risk posed to the DIF.44

Comment on Expected Effects on 

Community Development Financial 

Institutions and Minority Depository 

Institutions 

One comment letter expressed 

concern about the proposal’s potential 

to erode community benefits from 

economic recovery and racial equity 

motivated investments supported by 

Community Development Financial 

Institutions (CDFIs) and Minority 

Depository Institutions (MDIs) preparing 

to increase their deposit levels in 

response to these investments. This 

commenter requested that the FDIC 

provide an exemption from the increase 

in assessment rates for CDFI and MDI 

banks. 

MDIs play a unique role in promoting 

economic viability in minority and lowor moderate-income communities. The 

FDIC has long recognized the unique 

role and importance of MDIs. The 

FDIC’s MDI Program strives to preserve 

minority-owned and minority-led 

financial institutions, encourage the 

creation of new MDIs, and provide 

training, technical assistance, and 

educational programs for MDIs. The 

FDIC also facilitates collaborative 

strategies with public and private 

partners to help build capacity and 

scale. The Minority Depository 

Institutions Subcommittee of the FDIC’s 

Advisory Committee on Community 

Banking (CBAC) provides advice to the 

CBAC regarding the FDIC’s MDI 

program; offers a platform for MDIs to 

promote collaboration, partnerships, 

and best practices; and identifies ways 

to highlight the work of MDIs in their 

communities. 

CDFIs play a critical role in 

expanding economic opportunity in 

low-income communities by providing 

access to financial products and services 

for local residents and businesses. The 

FDIC supports the work CDFIs do to 

revitalize distressed communities, and 

the agency has long been committed to 

promoting economic inclusion by 

helping to build and strengthen positive 

connections between insured financial 

institutions and consumers, depositors, 

small businesses, and communities. The 

FDIC’s Advisory Committee on 

Economic Inclusion was established to 

provide the agency with advice and 

recommendations on important 

initiatives focused on expanding access 

to banking services by underserved 

populations. 

The FDIC has placed significant 

emphasis on and resources to preserve, 

promote, and build capacity in MDIs 

and CDFIs, and mission-driven banks 

continue to be an important focal point 

for the FDIC. As explained above in the 

section addressing Comments Proposing 

Risk- or Size-Based Alternatives to 

Increasing Rates, under the FDI Act, the 

FDIC is required to establish an 

assessment system for all banks based 

on risk.45 As authorized by law and 

pursuant to rulemakings, the FDIC has 

implemented separate risk-based pricing 

methods for large and small banks.46

Under the facts and circumstances, as 

well as the statutory factors that the 

FDIC is required to consider treating 

IDIs with the same or similar risk 

profiles differently from each other for 

assessments purposes may not conform 

to those relevant factors in this 

particular instance, and may not be 

appropriate given the FDIC’s policy 

objectives with respect to long-term 

fund management. 

Comments on Expected Effects Due to 

Deposit Growth From Pandemic Relief 

Several commenters expressed the 

view that community banks should not 

be punished for elevated deposit levels 


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64322 Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 

47See 85 FR 38282 (June 26, 2020). 

48See 75 FR 79286 (Dec. 20, 2010), codified at 12 

CFR 327.4(g). 49See Notice of Designated Reserve Ratio for 

2023, available at https://www.fdic.gov/news/boardmatters/2022/2022-10-18-notice-sum-c-fr.pdf. 50See 12 CFR 327.10(f). 

that were driven by pandemic relief 

measures, including participation in the 

Paycheck Protection Program (PPP). 

In recognition that the PPP 

established by the Small Business 

Administration, and the Paycheck 

Protection Program Liquidity Facility 

and Money Market Mutual Fund 

Liquidity Facility established by the 

Board of Governors of the Federal 

Reserve System, were put into place to 

provide financing to small businesses, 

liquidity to small business lenders and 

the broader credit markets, and to help 

stabilize the financial system in a time 

of significant economic strain, in June 

2020, the FDIC adopted a final rule, 

applicable to all IDIs, that mitigates the 

deposit insurance assessment effects of 

participating in these programs.47 The 

FDIC continues to provide assessment 

relief pursuant to that final rule. 

Comments on Effect on Consumers 

Several commenters expressed 

concern that the proposed increase in 

assessment rates may restrain credit, 

reduce product and service offerings, 

slow deposit rate increases, or result in 

higher or new fees to customers, to the 

detriment of consumers and businesses. 

In particular, one commenter expressed 

concern that larger banks focused on 

profits may push deposit customers 

away to decrease their assessment 

liability, which could create additional 

burden on the unbanked and 

underbanked. 

It is the FDIC’s view that now is a 

reasonable time to modestly raise rates 

while the banking industry is strong, 

rather than to delay and potentially be 

forced into a larger increase at a time 

when banking and economic conditions 

may be less favorable. 

Comments on the Designated Reserve 

Ratio 

Twenty-three commenters urged the 

FDIC to consider why 2 percent is the 

DRR or update the analysis underlying 

this goal. Many of these commenters 

stated that the 2 percent DRR was 

determined prior to the full 

implementation of the current 

prudential standards, safety and 

soundness safeguards, and capital 

requirements and that these 

enhancements mitigate the risk of bank 

failures on a scale that would 

significantly reduce the DIF. As noted 

above in the Comments on Alternatives, 

a few commenters challenged the 

proposed increase of 2 basis points on 

the basis that the statute only requires 

that the reserve ratio reach 1.35 percent 

whereas the rate increase would remain 

in place until the reserve ratio reaches 

2 percent. Several of these commenters 

recommended that the FDIC reconsider 

and follow the statute to achieve 1.35 

percent and, at that time, end or reassess 

the need for any rate increase. 

The FDIC believes a 2 percent DRR 

complements enhancements in the 

regulatory framework, including the 

Dodd-Frank Act and Basel III, and that 

these enhancements in combination 

with a 2 percent DRR would make the 

financial sector more resilient and 

reduce the likelihood of future crises. 

While the FDIC hopes that these 

enhancements will make financial crises 

less likely and reduce losses to the DIF, 

it would be imprudent for the FDIC to 

assume that banking crises are a thing 

of the past. The 2008 banking crisis 

occurred despite extensive legislative 

changes to the banking and regulatory 

system that were made in response to 

the crisis of the late 1980s and early 

1990s. 

After considering updated analysis of 

the statutory factors, the Board set the 

DRR at 2 percent again in October 2022 

and the FDIC is concurrently publishing 

in the Federal Register the Notice of 

Designated Reserve Ratio for 2023. The 

2 percent DRR is an integral part of the 

FDIC’s comprehensive, long-range 

management plan for the DIF. A fund 

that is sufficiently large continues to be 

a necessary precondition to maintaining 

a fund balance during a banking crisis 

and allowing for long-term, steady 

assessment rates.48 The updated 

analysis of the statutory factors is 

described in detail in the Memorandum 

to the Board on the Designated Reserve 

Ratio for 2023, published to the FDIC’s 

website.49

For these reasons, the FDIC has 

determined that it is appropriate for the 

new assessment rate schedules to 

remain in effect unless and until the 

reserve ratio meets or exceeds 2 percent, 

absent further Board action. The 

proposed rate increase would accelerate 

the timeline for the reserve ratio to 

reach 2 percent, after which point lower 

rate schedules will go into effect. 

III. The Final Rule 

A. Description of the Final Rule 

After careful consideration of the 

comments received on the proposal and 

analysis of the applicable statutory 

factors, updated with the most recent 

data available, the FDIC is adopting as 

final, and without change, the proposed 

rule to increase initial base deposit 

insurance assessment rate schedules 

uniformly by 2 basis points, beginning 

the first quarterly assessment period of 

2023. Under the final rule, the new 

assessment rate schedules will remain 

in effect unless and until the reserve 

ratio meets or exceeds 2 percent, absent 

further Board action. 

Under the final rule, the FDIC is 

retaining the Board’s flexibility to adopt 

higher or lower total base assessment 

rates without the necessity of further 

notice-and-comment rulemaking, 

provided that the Board cannot increase 

or decrease rates from one quarter to the 

next by more than 2 basis points, and 

cumulative increases and decreases 

cannot be more than 2 basis points 

higher or lower than the total base 

assessment rates set forth in the 

assessment rate schedules.50 Retention 

of this flexibility continues to allow the 

Board to act in a timely manner to fulfill 

its mandate to raise the reserve ratio, 

particularly in light of the uncertainty 

related to insured deposit growth and 

the economic outlook. Maintaining the 

ability to adjust rates within limits 

without notice-and-comment 

rulemaking is consistent with the FDIC’s 

well-established practice and will allow 

the FDIC to act expeditiously to adjust 

rates in the face of constantly changing 

conditions. 

B. Assessment Rate Schedules 

Beginning the First Quarterly 

Assessment Period of 2023 

Assessment Rates for Established 

Small Institutions and Large and Highly 

Complex Institutions Beginning the 

First Assessment Period of 2023 

Pursuant to the FDIC’s authority to set 

assessments, the initial and total base 

assessment rates applicable to 

established small institutions and large 

and highly complex institutions set 

forth in Tables 1 and 2 below will take 

effect beginning the first quarterly 

assessment period of 2023. 


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Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 64323 

51See 12 CFR 327.16(e). 52See 75 FR 66283 and 76 FR 10686. 

TABLE 1—INITIAL BASE ASSESSMENT RATE SCHEDULE BEGINNING THE FIRST ASSESSMENT PERIOD OF 2023, WHERE THE

RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD IS LESS THAN 2 PERCENT 1

Established small institutions 

Large & 

highly complex 

institutions 

CAMELS Composite 

1 or 2 3 4 or 5 

Initial Base Assessment Rate .......................................................... 5 to 18 8 to 32 18 to 32 5 to 32 

1All amounts are in basis points annually. Initial base rates that are not the minimum or maximum rate will vary between these rates. 

An institution’s total base assessment 

rate may vary from the institution’s 

initial base assessment rate as a result of 

possible adjustments for certain 

liabilities that can increase or reduce 

loss to the DIF in the event the 

institution fails.51 These adjustments do 

not reflect a change and are consistent 

with the current assessment regulations. 

After applying all possible adjustments, 

the minimum and maximum total base 

assessment rates applicable to 

established small institutions and large 

and highly complex institutions 

beginning the first quarterly assessment 

period of 2023 are set out in Table 2 

below. 

TABLE 2—TOTAL BASE ASSESSMENT RATE SCHEDULE (AFTER ADJUSTMENTS) 1 BEGINNING THE FIRST ASSESSMENT PERIOD OF 2023, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD IS LESS THAN 2 

PERCENT 2

Established small institutions 

Large & highly 

complex 

institutions 

CAMELS composite 

1 or 2 3 4 or 5 

Initial Base Assessment Rate .......................................................... 5 to 18 8 to 32 18 to 32 5 to 32 

Unsecured Debt Adjustment 3 .......................................................... ¥5 to 0 ¥5 to 0 ¥5 to 0 ¥5 to 0 

Brokered Deposit Adjustment .......................................................... N/A N/A N/A 0 to 10 

Total Base Assessment Rate ................................................... 2.5 to 18 4 to 32 13 to 32 2.5 to 42 

1The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2All amounts are in basis points annually. Total base rates that are not the minimum or maximum rate will vary between these rates. 3The unsecured debt adjustment cannot exceed the lesser of 5 basis points or 50 percent of an insured depository institution’s initial base assessment rate; thus, for example, an insured depository institution with an initial base assessment rate of 5 basis points will have a maximum unsecured debt adjustment of 2.5 basis points and cannot have a total base assessment rate of lower than 2.5 basis points. 

The rates applicable to established 

small institutions and large and highly 

complex institutions in Tables 1 and 2 

above will remain in effect unless and 

until the reserve ratio meets or exceeds 

2 percent. In lieu of dividends, and 

pursuant to the FDIC’s authority to set 

assessments, progressively lower initial 

and total base assessment rate schedules 

applicable to established small 

institutions and large and highly 

complex institutions as currently set 

forth in 12 CFR 327.10(c) and (d) will 

come into effect without further action 

by the Board when the fund reserve 

ratio at the end of the prior assessment 

period reaches 2 percent and 2.5 

percent, respectively. The FDIC did not 

propose and is not adopting changes to 

these progressively lower assessment 

rate schedules. 

Assessment Rates for New Small 

Institutions Beginning the First 

Assessment Period of 2023 

Pursuant to the FDIC’s authority to set 

assessments, the initial and total base 

assessment rates applicable to new 

small institutions set forth in Tables 3 

and 4 below will take effect beginning 

the first quarterly assessment period of 

2023. New small institutions will 

remain subject to the assessment 

schedules in Tables 3 and 4, even when 

the reserve ratio reaches 2 percent or 2.5 

percent, until they no longer are new 

depository institutions, consistent with 

current assessment regulations. As 

stated in the 2010 NPR describing the 

long-term comprehensive fund 

management plan, and adopted in the 

2011 Final Rule, the lower assessment 

rate schedules applicable when the 

reserve ratio reaches 2 percent and 2.5 

percent do not apply to any new 

depository institutions; these 

institutions will remain subject to the 

assessment rates shown below, until 

they no longer are new depository 

institutions.52

TABLE 3—INITIAL BASE ASSESSMENT RATE SCHEDULE BEGINNING THE FIRST ASSESSMENT PERIOD OF 2023 AND FOR

ALL SUBSEQUENT ASSESSMENT PERIODS, APPLICABLE TO NEW SMALL INSTITUTIONS 1

Risk category I Risk category II Risk category III Risk category IV 

Initial Assessment Rate ................................................................... 9 14 21 32 

1All amounts for all risk categories are in basis points annually. 


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64324 Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 

53See 76 FR 10672 (Feb. 25, 2011) and 81 FR 

32180 (May 20, 2016). In 2016, the FDIC amended 

its rules to refine the deposit insurance assessment 

system for established small IDIs (i.e., those small 

IDIs that have been federally insured for at least five 

years). The final rule preserved the lower overall 

range of initial base assessment rates adopted in 

2011 pursuant to the long-term fund management 

plan. 

54See 81 FR 32180 (May 20, 2016). 

TABLE 4—TOTAL BASE ASSESSMENT RATE SCHEDULE (AFTER ADJUSTMENTS) 1 BEGINNING THE FIRST ASSESSMENT

PERIOD OF 2023 AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS, APPLICABLE TO NEW SMALL INSTITUTIONS 2

Risk category I Risk category II Risk category III Risk category IV 

Initial Assessment Rate ................................................................... 9 14 21 32 

Brokered Deposit Adjustment (added) ............................................ N/A 0 to 10 0 to 10 0 to 10 

Total Base Assessment Rate ................................................... 9 14 to 24 21 to 31 32 to 42 

1The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2All amounts for all risk categories are in basis points annually. Total base rates that are not the minimum or maximum rate will vary between 

these rates. 

Assessment Rates for Insured Branches 

of Foreign Banks Beginning the First 

Assessment Period of 2023 

Pursuant to the FDIC’s authority to set 

assessments, the initial and total base 

assessment rates applicable to insured 

branches of foreign banks set forth in 

Table 5 below will take effect beginning 

the first quarterly assessment period of 

2023. 

TABLE 5—INITIAL AND TOTAL BASE ASSESSMENT RATE SCHEDULE 1 BEGINNING THE FIRST ASSESSMENT PERIOD OF

2023, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD IS LESS THAN 2 PERCENT, 

APPLICABLE TO INSURED BRANCHES OF FOREIGN BANKS 2

Risk category I Risk category II Risk category III Risk category IV 

Initial and Total Assessment Rate ................................................... 5 to 9 14 21 32 

1The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2All amounts for all risk categories are in basis points annually. Initial and total base rates that are not the minimum or maximum rate will vary 

between these rates. 

The rates applicable to insured 

branches of foreign banks in Table 5 

above will remain in effect unless and 

until the reserve ratio meets or exceeds 

2 percent. In lieu of dividends, and 

pursuant to the FDIC’s authority to set 

assessments, progressively lower initial 

and total base assessment rate schedules 

applicable to insured branches of 

foreign banks as currently set forth in 12 

CFR 327.10(e)(2)(ii) and (iii) will come 

into effect without further action by the 

Board when the fund reserve ratio at the 

end of the prior assessment period 

reaches 2 percent and 2.5 percent, 

respectively. The FDIC did not propose 

and is not adopting changes to these 

progressively lower assessment rate 

schedules. 

C. Conforming, Technical, and Other 

Amendments to the Assessment 

Regulations Conforming Amendments 

The FDIC is adopting conforming 

amendments in §§ 327.10 and 327.16 of 

the FDIC’s assessment regulations to 

effectuate the modifications described 

above. These conforming amendments 

will ensure that the uniform increase in 

initial base deposit insurance 

assessment rate schedules of 2 basis 

points is properly incorporated into the 

assessment regulation provisions 

governing the calculation of an IDI’s 

quarterly deposit insurance assessment. 

The FDIC is adopting revisions to 

§ 327.10 to reflect the assessment rate 

schedules that are applicable before and 

after the effective date of this final rule 

(i.e., January 1, 2023). The FDIC also is 

revising the uniform amounts for small 

banks and insured branches in 

§§ 327.16(a) and (d), respectively, to 

reflect the 2 basis point increase. Aside 

from the revisions to reflect the 

assessment rate schedules, no additional 

revisions are required for the regulatory 

text applicable to large or highly 

complex banks because the formula in 

§ 327.16(b) used to calculate their 

quarterly assessment rates incorporates 

the minimum and maximum initial base 

assessment rates then in effect. 

Technical Amendments 

As a technical change, the FDIC is 

rescinding certain rate schedules in 

§ 327.10 that are no longer in effect. 

FDIC regulations provided for changes 

to deposit insurance assessment rates 

the quarter after the reserve ratio first 

reached or surpassed 1.15 percent, 

which occurred in the third quarter of 

2016.53 The FDIC is rescinding the 

outdated and obsolete provisions of, and 

revising references to, the superseded 

assessment rate schedules in its 

regulations. These changes impose no 

new requirements on FDIC-supervised 

institutions. 

The FDIC also is rescinding in its 

entirety § 327.9—Assessment Pricing 

Methods, as such section is no longer 

applicable. The relevant section that 

includes the method for calculating riskbased assessments for all IDIs, 

particularly established small banks, is 

now in § 327.16, which was adopted by 

the Board in a final rule on April 26, 

2016. That final rule became applicable 

the calendar quarter in which the 

reserve ratio of the DIF reached 1.15 

percent, i.e., the third quarter of 2016.54

The FDIC also will make technical 

amendments to remove all references to 

§ 327.9. 

Other Amendments 

Under the final rule, the FDIC is 

adopting additional amendments to 

update and conform Appendix A to 

subpart A of part 327—Method to 

Derive Pricing Multipliers and Uniform 

Amount in accordance with the current 

assessment regulations. Specifically, the 

FDIC is removing sections I through V, 


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Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 64325 

55See 81 FR 32180 (May 20, 2016). 56See 81 FR 6153–6155 (Feb. 4, 2016). 57See 81 FR 32181. 58See 81 FR 32191; see also 81 FR 6116–17 (Feb. 

4, 2016). Note, subsequent to the adoption of the 

2016 final rule, the FDIC made other conforming 

and technical amendments to the assessment 

regulations at 12 CFR part 327 resulting from other 

rulemakings. The content of Appendix E does not 

need to be updated to reflect such conforming and 

other technical amendments and will be 

incorporated into the current Appendix A without 

change. See 83 FR 14565 (Apr. 5, 2018), 84 FR 1346 

(Feb. 4, 2019), and 85 FR 71227 (Nov. 9, 2020). 59 12 U.S.C. 1817(b)(2)(A). 60See Section 7(b)(2)(B) of the FDI Act, 12 U.S.C. 

1817(b)(2)(B). 

61The risk factors referred to in factor (iv) include 

the probability that the Deposit Insurance Fund will 

incur a loss with respect to the institution, the 

likely amount of any such loss, and the revenue 

needs of the Deposit Insurance Fund. See Section 

7(b)(1)(C) of the FDI Act, 12 U.S.C. 1817(b)(1)(C). 

62See FDIC Restoration Plan Semiannual Update, 

June 21, 2022. Available at https://www.fdic.gov/ 

news/board-matters/2022/2022-06-21-notice-sum-bmem.pdf. 

which were superseded by the 2016 

final rule revising the method to 

calculate risk-based assessment rates for 

established small IDIs.55 The FDIC is 

replacing the current language of 

sections I through V of Appendix A to 

subpart A of part 327 with the content 

of a previously proposed, but 

inadvertently not adopted, Appendix 

E—Method to Derive Pricing Multipliers 

and Uniform Amount. Appendix E was 

published in the 2016 revised notice of 

proposed rulemaking refining the 

deposit insurance assessment system for 

established small IDIs.56 Appendix E 

was inadvertently not included in the 

final rule. 

Under the 2016 final rule, initial base 

assessment rates for established small 

banks are calculated by applying 

statistically derived pricing multipliers 

to weighted CAMELS components and 

financial ratios; then adding the 

products to a uniform amount.57 The 

content of Appendix E describes the 

statistical model on which the revised 

and current pricing method is based 

and, accordingly, revises the method to 

derive the pricing multipliers and 

uniform amount used to determine the 

assessment rate schedules currently in 

effect.58

The revisions to Appendix A to 

subpart A of part 327 will result in: the 

removal of the superseded language 

currently in sections I through V; the 

addition of the language of Appendix E 

from the 2016 revised notice of 

proposed rulemaking reflecting the 

revised and current pricing method; and 

the retention of the current language 

(without change) of section VI 

(Description of Scorecard Measures) that 

applies to large and highly complex 

institutions. 

D. Analysis 

In setting assessment rates, the Board 

is authorized to set assessments for IDIs 

in such amounts as the Board may 

determine to be necessary or 

appropriate.59 In setting assessment 

rates, the Board has considered the 

following factors as required by 

statute: 60

(i) The estimated operating expenses 

of the DIF. 

(ii) The estimated case resolution 

expenses and income of the DIF. 

(iii) The projected effects of the 

payment of assessments on the capital 

and earnings of IDIs. 

(iv) The risk factors and other factors 

taken into account pursuant to section 

7(b)(1) of the FDI Act (12 U.S.C. 

1817(b)(1)) under the risk-based 

assessment system, including the 

requirement under such section to 

maintain a risk-based system.61

(v) Other factors the Board has 

determined to be appropriate. 

The following summarizes the factors 

considered in adopting a uniform 

increase in initial base assessment rate 

schedules of 2 basis points. 

Assessment Revenue Needs 

Under the Amended Restoration Plan, 

the FDIC is monitoring deposit balance 

trends, potential losses, and other 

factors that affect the reserve ratio. The 

most recent semiannual update to the 

Board was provided on June 21, 2022, 

with data as of March 31, 2022, and the 

next semiannual update is anticipated 

for later this year and is expected to 

cover data as of September 30, 2022.62

For purposes of this final rule, the FDIC 

updated analysis and projections using 

data as of June 30, 2022. Table 6 shows 

the components of the reserve ratio for 

the fourth quarter of 2021 through the 

second quarter of 2022. In the second 

quarter of 2022, slight attrition in 

insured deposits coupled with positive 

growth in the DIF balance resulted in a 

3 basis point increase in the reserve 

ratio to 1.26 percent as of June 30, 2022. 

While assessment revenue was the 

primary contributor to growth in the 

DIF, since the beginning of 2021, the 

weighted average assessment rate for all 

IDIs has been consistently below the 

average of 4.0 basis points when the 

Restoration Plan was first adopted in 

2020. The weighted average assessment 

rate was approximately 3.8 basis points 

for the assessment period ending June 

30, 2022. The DIF has experienced low 

losses from bank failures, with no banks 

failing since October 2020. Unrealized 

losses on available-for-sale securities in 

the DIF portfolio contributed to a 

relatively flat DIF balance in the first 

quarter of 2022 and continued to slow 

growth in the second quarter. As of June 

30, 2022, the DIF balance totaled $124.5 

billion, up $1.4 billion from one quarter 

earlier. 

TABLE 6—FUND BALANCE, ESTIMATED INSURED DEPOSITS, AND RESERVE RATIO

[Dollar amounts in billions] 

4Q 2021 1Q 2022 2Q 2022 

Beginning Fund Balance ............................................................................................................. $121.9 $123.1 $123.0 

Plus: Net Assessment Revenue ........................................................................................... $2.0 $1.9 $2.1 

Plus: Other Income a ............................................................................................................ ($0.3) ($1.5) ($0.3) 

Less: Loss Provisions ........................................................................................................... (*) $0.1 ($0.1) 

Less: Operating Expenses ................................................................................................... $0.5 $0.5 $0.5 

Ending Fund Balance b ................................................................................................................ $123.1 $123.0 $124.5 

Estimated Insured Deposits ......................................................................................................... $9,745.8 $9,974.7 $9,903.8 

Q–O–Q Growth in Estimated Insured Deposits .......................................................................... 1.62% 2.35% ¥0.71% 

Ending Reserve Ratio .................................................................................................................. 1.26% 1.23% 1.26% 

* Absolute value less than $50 million. 

a Includes interest earned on investments, unrealized gains/losses on available-for-sale securities, realized gains on sale of investments, and 

all other income, net of expenses. b Components of fund balance changes may not sum to totals due to rounding. 


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64326 Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 

63FDIC, Annual Report 2021, Assets and Deposits 

of Failed or Assisted Insured Institutions and 

Losses to the Deposit Insurance Fund, 1934–2021, 

page 190, available at https://www.fdic.gov/about/ 

financial-reports/reports/2021annualreport/2021- 

arfinal.pdf. 

64 ‘‘Problem’’ institutions are institutions with a 

CAMELS composite rating of ‘‘4’’ or ‘‘5’’ due to 

financial, operational, or managerial weaknesses 

that threaten their continued financial viability. 

65September Blue Chip Economic Forecast. 

66September Blue Chip Economic Forecast. 

While insured deposit growth showed 

signs of normalizing in the second 

quarter, aggregate balances remain 

significantly elevated, relative to prepandemic levels. Insured deposits 

increased by 4.3 percent over the last 

year, a growth rate that is higher than 

the rate of insured deposit growth 

assumed in both scenarios in the 

analysis supporting the proposal and 

this final rule. In recognition that 

sustained elevated insured deposit 

balances, lower than anticipated 

weighted average assessment rates, and 

other factors have affected the ability of 

the reserve ratio to return to 1.35 

percent before September 30, 2028, and 

to accelerate the timeline for achieving 

the long-term goal of a 2 percent DRR, 

the FDIC is adopting a final rule to 

increase initial base deposit insurance 

assessment rate schedules uniformly by 

2 basis points. The new assessment rate 

schedules will remain in effect unless 

and until the reserve ratio meets or 

exceeds 2 percent. 

Deposit Balance Trends 

The recent moderation in insured 

deposit growth rates relative to the first 

half of 2020 and the first quarter of 

2021, and as described above in the 

Response to Comments Received on the 

Proposed Rule section, was attributable 

in part to a decline in personal savings 

as support from direct federal 

government stimulus programs ended 

and higher inflation increased nominal 

consumer spending. In addition, higher 

interest rates may have caused certain 

types of deposits to shift into higheryielding alternatives. Over the last year, 

insured deposits increased by 4.3 

percent, slightly below the prepandemic average of 4.5 percent, but in 

excess of the insured deposit growth 

rates assumed in both scenarios in the 

analysis supporting the proposal and 

this final rule. While recent insured 

deposit growth rates more closely align 

with historical averages, these growth 

rates are applied to a total balance of 

insured deposits that is still elevated 

from the pandemic response efforts, 

further increasing insured deposit 

balances. 

The outlook for insured deposit 

growth remains uncertain and depends 

on several factors, including the outlook 

for consumer spending and incomes. 

Any unexpected economic weakness or 

concerns about slower than expected 

economic growth may cause businesses 

and consumers to maintain caution in 

spending and keep deposit levels 

elevated in order to have the ability to 

cover expenses on hand or increase 

precautionary savings. Similarly, 

unexpected financial market stress 

could prompt another round of investor 

risk aversion that could lead to caution 

on spending and increase savings and 

insured deposits. On the other hand, 

prolonged higher inflation may cause 

consumer spending to remain elevated 

as consumers pay more for goods and 

services. 

In contrast, tighter monetary policy 

may inhibit growth of insured deposits 

in the banking system. Despite the 

recent increases in the short-term 

benchmark rate set by the Federal 

Reserve, most IDIs have little incentive 

to raise interest rates on deposit 

accounts and spur deposit growth in the 

near-term, given the still elevated levels 

of deposit balances. If competition for 

deposits remains subdued and rates 

paid on deposit accounts remain low, 

depositors may shift balances away from 

deposit accounts and into higheryielding alternatives, including money 

market funds. 

More than a year has passed since the 

period of extraordinary growth in 

insured deposits prompted by the last 

round of fiscal stimulus, and while the 

banking industry reported slight 

attrition in insured deposits in the 

second quarter of 2022, aggregate 

balances remain significantly elevated, 

as noted above. Insured deposits 

declined by 0.7 percent in the second 

quarter of 2022. While this may be 

indicative of the beginning of slower 

growth in insured deposits going 

forward, a decline in the second quarter 

is consistent with seasonal, quarterly 

growth in insured deposits, which have 

declined in the second quarter in six out 

of the last nine years. As a result, the 

reserve ratio continues to be below the 

statutory minimum of 1.35 percent and 

is at risk of not returning to that level 

by the statutory deadline of September 

30, 2028. The FDIC will continue to 

closely monitor depositor behavior and 

the effects on insured deposits through 

future Restoration Plan semiannual 

updates. 

Case Resolution Expenses (Insurance 

Fund Losses) 

Losses from past and future bank 

failures affect the reserve ratio by 

lowering the fund balance. In recent 

years, the DIF has experienced low 

losses from IDI failures. On average, four 

IDIs per year failed between 2016 and 

2021, at an average annual cost to the 

fund of about $208 million.63 No banks 

have failed thus far in 2022, marking 23 

consecutive months without a bank 

failure and the eighth year in a row with 

few or no failures. Based on currently 

available information about banks 

expected to fail in the near-term; 

analyses of longer-term prospects for 

troubled banks; and trends in CAMELS 

ratings, failure rates, and loss rates; the 

FDIC projects that failures over the next 

five years would cost the fund 

approximately $1.8 billion. 

The total number of institutions on 

the FDIC’s Problem Bank List was 40 at 

the end of the second quarter of 2022, 

the lowest level since publication of the 

FDIC’s Quarterly Banking Profile began 

in 1984.64 Currently, the FDIC expects 

the number of problem banks to remain 

at low levels in the near-term. 

The banking industry faces significant 

downside risks. Future economic and 

banking conditions remain uncertain 

due to high inflation, rising interest 

rates, slowing economic growth, and 

geopolitical uncertainty. Higher interest 

rates may also erode real estate and 

other asset values as well as hamper 

borrowers’ loan repayment ability. Any 

of these uncertainties could present 

challenges and could have longer-term 

effects on the condition and 

performance of the economy and the 

banking industry. 

Gross domestic product (GDP) growth 

has weakened in the first half of 2022, 

contracting in both first and second 

quarters after expanding 5.7 percent in 

2021. Despite the slowdown in growth 

in the first half of 2022, consumer 

spending continued to grow, and the 

labor market remained strong. 

However, the economic outlook is 

weak overall. The September Blue Chip 

Economic Forecast calls for GDP growth 

of 1.2 percent in third quarter, 1.6 

percent for full year 2022 and 0.6 

percent for 2023.65 Many forecasters 

increased their odds of a mild recession 

occurring in 2022 or 2023.66

The banking industry remained 

resilient through the second quarter of 

2022 despite the extraordinary 

challenges of the pandemic, and is well 

positioned to absorb a modest increase 

in assessment rate schedules of 2 basis 

points. Given these economic 

uncertainties, in the FDIC’s view, now 

is a reasonable time to modestly raise 

rates while the banking industry is 

strong, rather than to delay and 

potentially have to consider a larger 

increase in assessments at a later time 


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Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 64327 

67The estimate of $1.13 trillion of excess insured 

deposits reflects the amount of insured deposits as 

of September 30, 2021, in excess of the amount that 

would have resulted if insured deposits had grown 

at the pre-pandemic average rate of 4.5 percent 

since December 31, 2019. 

68For simplicity, the analysis shown in Table 7 

assumes that: (1) the assessment base grows 4.5 

percent, annually; (2) net investment contributions 

to the deposit insurance fund balance are zero; (3) 

operating expenses grow at 1 percent per year; and 

(4) failures for the five-year period from 2022 to 

2026 would cost approximately $1.8 billion. 

when banking and economic conditions 

may be less favorable. 

Operating Expenses and Investment 

Income 

FDIC operating expenses remain 

steady, while a prolonged period of low 

investment returns has limited growth 

in the DIF. 

Operating expenses partially offset 

increases in the DIF balance. Operating 

expenses have remained steady, ranging 

between $450 and $475 million per 

quarter since the Restoration Plan was 

first adopted in September 2020, and 

totaling $460 million as of June 30, 

2022. 

Growth in the fund balance has been 

limited by a prolonged period of low net 

investment contributions. Recently, as a 

result of the rising interest rate 

environment and market expectations 

leading up to the rate increases, the DIF 

has also experienced elevated 

unrealized losses on securities. Elevated 

unrealized losses coupled with 

relatively low interest earned on 

investments resulted in negative net 

investment contributions in the fourth 

quarter of 2021, and the first and second 

quarters of 2022. Prior to the pandemic 

between 2015 and 2019, quarterly net 

investment contributions averaged $322 

million, well above the average net 

investment contributions of $4.5 million 

from 2020 through mid-2022. 

Unrealized losses were due to rising 

yields as market participants reacted to 

expectations of increased inflation and 

tighter monetary policy. Moving into the 

third quarter of 2022, interest rates have 

continued to rise and continued 

unrealized losses could temper fund 

balance growth. Future market 

movements may temporarily increase 

unrealized losses to the extent that 

market participants have not already 

priced in these actions or the Federal 

Reserve take more aggressive action 

than is currently expected in fighting 

inflation. While the FDIC expects that 

these unrealized losses should 

eventually be outpaced by higher levels 

of interest income over the longer-term 

as future cash proceeds are reinvested at 

higher rates, the timing of this is 

uncertain. 

Projections for the Fund Balance and 

Reserve Ratio 

In its consideration of increasing the 

assessment rate schedules, the FDIC 

sought to increase the likelihood that 

the reserve ratio would reach the 

statutory minimum of 1.35 percent by 

the statutory deadline of September 30, 

2028, and to support growth in the DIF 

in progressing toward the long-term goal 

of a 2 percent DRR. With these 

objectives in mind, the FDIC updated its 

analysis and projections for the fund 

balance and reserve ratio using data 

through June 30, 2022, the latest 

available as of the date of publication, 

to estimate how changes in insured 

deposit growth and assessment rates 

affect when the reserve ratio would 

reach the statutory minimum of 1.35 

percent and the DRR of 2 percent. 

Based on this analysis, the FDIC 

continues to project that, absent an 

increase in assessment rates, the reserve 

ratio is at risk of not reaching the 

statutory minimum of 1.35 percent by 

the statutory deadline of September 30, 

2028. In estimating how soon the 

reserve ratio would reach 1.35 percent, 

the FDIC developed two scenarios that 

assume different levels of insured 

deposit growth and average assessment 

rates, both of which the FDIC views as 

reasonable based on current and 

historical data. For insured deposit 

growth, the FDIC assumed annual 

growth rates of 4.0 percent and 3.5 

percent, respectively. Even with the 

second quarter decline in insured 

deposits, annual insured deposit growth 

was 4.3 percent, exceeding both growth 

rates assumed in the analysis. 

These insured deposit growth rates 

represent a retention of a range of excess 

insured deposits resulting from the 

pandemic. The assumption of a 4.0 

percent annual growth rate reflects 

retention of all of the estimated $1.13 

trillion of excess deposits in insured 

accounts, with this amount not 

contributing to further growth, while the 

remaining balance of insured deposits 

continues to grow at the pre-pandemic 

average annual rate of 4.5 percent.67

Alternatively, a 3.5 percent annual 

growth rate assumption reflects banks 

retaining nearly two-thirds of the 

estimated excess insured deposits 

resulting from the pandemic, with this 

amount not contributing to further 

growth, while the remaining balance of 

insured deposits grows at the prepandemic average annual rate of 4.5 

percent. 

The two scenarios also apply different 

assumptions for average annual 

assessment rates. The weighted average 

assessment rate for all banks during 

2019, prior to the pandemic, was about 

3.5 basis points and rose to 4.0 basis 

points, on average, during 2020. The 

weighted average assessment rate for all 

IDIs was approximately 3.8 basis points 

for the assessment period ending June 

30, 2022. For the scenario in which all 

excess insured deposits are retained, the 

FDIC assumed a lower assessment rate 

of 3.5 basis points, and for the scenario 

in which some excess insured deposits 

recede, the FDIC assumed an assessment 

rate of 4.0 basis points. 

In finalizing the increase in the 

assessment rate schedules, the FDIC 

updated projections of the date that the 

reserve ratio would likely reach the 

statutory minimum of 1.35 percent in 

each scenario, shown in Table 7 below 

to include one additional quarter of data 

finalized following the publication of 

the proposed rule.68 Under Scenario A, 

which assumes annual insured deposit 

growth of 4.0 percent and an average 

annual assessment rate of 3.5 basis 

points, the FDIC projects that the 

reserve ratio would reach 1.35 percent 

in the second quarter of 2034, after the 

statutory deadline of September 30, 

2028. 


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64328 Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 

69Projections for reaching the 2 percent DRR 

assume net investment contributions to the DIF 

portfolio of zero until the reserve ratio reaches 1.35 

percent. Net investment contributions assumptions 

are then based on market-implied forward rates 

from that point forward. Applying this assumption 

for the entire projection period does not 

significantly accelerate the achievement of a 2 

percent DRR (the reserve ratio would reach 2 

percent in 2031 instead of 2032). 

TABLE 7—SCENARIO ANALYSIS: EXPECTED TIME TO REACH A 1.35 PERCENT RESERVE RATIO

Annual 

insured deposit 

growth rate 

[percent] 

Average annual 

assessment rate 

[basis points] 

Date the reserve ratio reaches 

1.35 percent 

No change in 

annual average 

assessment rate 

Application of 

2 BPS increase in 

annual average 

assessment rate 

(beginning 

1Q 2023) 

Scenario A ....................................... 4.0 3.5 2Q 2034 4Q 2024 

Scenario B ....................................... 3.5 4.0 4Q 2026 2Q 2024 

In Scenario B, which assumed annual 

insured deposit growth of 3.5 percent 

and an average annual assessment rate 

of 4.0 basis points, the FDIC projects 

that the reserve ratio would reach 1.35 

percent in the fourth quarter of 2026, 

only seven quarters before the statutory 

deadline. Even under these relatively 

favorable conditions, which assume 

lower insured deposit growth and a 

higher average assessment rate than 

experienced over the last year, the 

reserve ratio reaches the statutory 

minimum of 1.35 percent relatively 

close to the statutory deadline. While 

the FDIC projects that the reserve ratio 

would reach the statutory minimum 

before the deadline in this scenario, any 

number of uncertain factors—including 

unexpected losses, accelerated insured 

deposit growth, or lower weighted 

average assessment rates due to 

improving risk profiles of institutions— 

could materialize between now and the 

fourth quarter of 2026, and prevent the 

reserve ratio from reaching the statutory 

minimum by the statutory deadline. 

Updating the analysis incorporated in 

the proposal to include the latest data 

available, as of June 30, 2022, had 

minimal effect on the date the reserve 

ratio reaches 1.35 percent. Updated 

analysis reflecting a decline in insured 

deposits of 0.7 percent resulted in the 

reserve ratio projections reaching 1.35 

percent one quarter earlier under 

Scenario A, and 2 quarters earlier under 

Scenario B. 

Both scenarios apply assumptions for 

insured deposit growth and average 

assessment rates that the FDIC views as 

reasonable based on current and 

historical data, and that do not widely 

differ from each other in magnitude. 

Actual insured deposit growth and 

assessment rates could more closely 

align with one scenario or the other, 

exceed or fall short of assumptions, or 

fall in between the two. As described 

above in the Response to Comments 

Received on the Proposed Rule and Case 

Resolution Expenses (Insurance Fund 

Losses) sections, the assumptions, 

including assumptions related to net 

investment contributions and losses to 

the DIF, are subject to uncertainty. If 

insured deposits grow at a slower rate 

than assumed, the statutory minimum 

reserve ratio would be achieved sooner 

than projected. On the other hand, if 

insured deposits grow at a faster rate, 

average assessment rates decline, or 

losses materialize, the statutory 

minimum reserve ratio would be 

achieved later than projected. 

Net investment contributions— 

defined for purposes of this final rule to 

include both interest income and 

unrealized gains or losses—have played 

a secondary role relative to assessment 

revenue in overall DIF growth. Elevated 

unrealized losses resulted in negative 

net investment contributions of $339 

million in the fourth quarter of 2021, 

and $1,495 million and $322 million in 

the first and second quarters of 2022, 

respectively. Moving into the third 

quarter of 2022, interest rates have 

continued to rise and unrealized losses 

will likely continue to reduce net 

investment contributions, below the 

assumed amount of zero. When rates 

stabilize and interest income begins to 

outpace unrealized losses on the DIF 

portfolio, the positive net investment 

contributions would help grow the DIF 

and may accelerate achievement of the 

statutory minimum reserve ratio to some 

extent. On the other hand, as long as 

elevated unrealized losses persist and 

continue to result in negative net 

investment contributions, the statutory 

minimum reserve ratio may be achieved 

later than projected. 

While net investment contributions 

have been relatively flat to slightly 

negative since the Restoration Plan was 

first established in September 2020, 

interest rate increases have gradually 

lifted interest income on the DIF 

portfolio in recent months and over time 

unrealized losses should eventually be 

outpaced by higher levels of interest 

income. However, given the uncertainty 

of the timing and magnitude of interest 

rate increases and the effects on the DIF 

portfolio, it is the FDIC’s view that zero 

net investment contributions remains a 

reasonably conservative assumption 

over the near-term. In the longer-term, 

projections for reaching the 2 percent 

DRR already assume positive net 

investment contributions after the 

reserve ratio reaches 1.35 percent, based 

on market-implied forward rates, and 

including additional net investment 

contributions in the near-term had little 

effect on the analysis for reaching the 2 

percent DRR.69 When rates stabilize and 

interest income begins to outpace 

unrealized losses on the DIF portfolio, 

resulting in positive net investment 

contributions, the FDIC will consider 

revisiting assumptions in future 

semiannual updates accordingly. 

The FDIC recognizes that relatively 

minor changes in the underlying 

assumptions result in considerably 

different outcomes, as the reserve ratio 

is projected to reach the statutory 

minimum of 1.35 percent in 2034 in 

Scenario A, compared to 8 years earlier 

in Scenario B. The disparity between 

outcomes under these scenarios 

demonstrates the sensitivity of the 

projections to slight variations in any 

key variable and the need to adopt an 

increase in assessment rate schedules 

now in order to generate a buffer to 

absorb unexpected losses, accelerated 

insured deposit growth, or lower 

average assessment rates. 

Given these uncertainties, the FDIC 

also updated projections of the DIF 

balance and associated reserve ratio 

under each scenario, applying the 2 

basis point increase in average 

assessment rates beginning in the first 

assessment period of 2023. Updated 

projections indicate that the increase of 

2 basis points would improve the 

likelihood that the reserve ratio will 

reach the statutory minimum ahead of 


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Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 64329 

70After September 30, 2028, the deadline to 

restore the reserve ratio to the 1.35 percent 

minimum, insured deposits are assumed to grow at 

the pre-pandemic annual average of 4.5 percent. 

71The analysis shown in Chart 3 is based on the 

assumptions used in Scenario B through the 

projected quarter that the reserve ratio meets or 

exceeds 1.35 percent. Afterward, the analysis 

assumes: (1) net investment contributions to the 

fund based on market-implied forward rates; (2) the 

assessment base grows 4.5 percent, annually; (3) 

operating expenses grow at 1 percent per year; and 

(4) failures for the five-year period from 2022 to 

2026 cost approximately $1.8 billion, with a low 

level of losses each year thereafter. The uniform 

increase in assessment rates of 1 or 2 basis points 

from the current rate schedule is assumed to take 

effect on January 1, 2023. 

72See 75 FR 66281. 

73See 75 FR 66273 and 76 FR 10675. 

the statutory deadline, building in a 

buffer in the event of uncertainties as 

described above that could stall or 

counter growth in the reserve ratio. 

Under both scenarios described above, 

an increase in assessment rates of 2 

basis points is projected to result in the 

reserve ratio reaching the statutory 

minimum of 1.35 percent approximately 

two years from now. Updating the 

analysis incorporated in the proposal to 

include the latest data available, as of 

June 30, 2022, despite the 0.7 percent 

decline in insured deposits, had 

minimal effect on the date the reserve 

ratio reaches 1.35 percent after applying 

the 2 basis point increase. 

Once the DIF reaches 1.35 percent, 

the FDIC will no longer operate under 

a restoration plan. Any subsequent 

decline in the reserve ratio below the 

statutory minimum would, therefore, 

require the Board to establish a new 

restoration plan with an additional eight 

years to restore the reserve ratio. 

Alternatively, in the event that the 

industry experiences a downturn before 

the FDIC has exited its current 

Restoration Plan, the FDIC might have 

to consider larger assessment increases 

to meet the statutory requirement in a 

more compressed timeframe and under 

less favorable conditions. 

The FDIC also updated analysis of the 

effects of the increase in the assessment 

rate schedules in supporting growth in 

the DIF in progressing toward the 2 

percent DRR to include data from June 

30, 2022. For this analysis, the FDIC 

assumed a near-term annual insured 

deposit growth rate of 3.5 percent and 

a weighted average assessment rate of 

4.0 basis points.70 These assumptions 

reflect the ranges of insured deposit 

growth and assessment rates used in 

Scenario B, described above, and result 

in the shortest projected timeline to 

reach a 2 percent reserve ratio. As 

illustrated in Chart 3, even under these 

relatively favorable conditions, absent 

an increase in assessment rates, the 

projected reserve ratio would not reach 

2 percent until 2042, about twenty years 

from now.71 When the FDIC proposed 

the long-term, comprehensive fund 

management plan in 2010, it estimated 

that the reserve ratio would reach 2 

percent in 2027.72

Using the same assumptions, an 

increase in assessment rates would 

significantly accelerate the timeline for 

achieving a 2 percent DRR. An increase 

in assessment rates of 2 basis points 

would accelerate the timeline by 11 

years, to 2031. 

Chart 3. Expected Time to Reach a 2 

Percent Reserve Ratio 

The 2 basis point increase in 

assessment rates brings the average 

assessment rate of 3.8 basis points, as of 

June 30, 2022, close to the moderate 

steady assessment rate that would have 

been required to maintain a positive DIF 

balance from 1950 to 2010, and 

identified as part of the long-term, 

comprehensive fund management plan 

in 2011.73 Upon achieving the 2 percent 

DRR, progressively lower assessment 

rate schedules will take effect. The 2 

basis point increase accelerates the 

timeline for achieving the 2 percent 

DRR, reduces the likelihood that the 

FDIC would need to consider a 

potentially pro-cyclical assessment rate 

increase, and increases the likelihood of 

the DIF remaining positive through 

potential future periods of significant 

losses due to bank failures, consistent 

with the FDIC’s long-term fund 

management plan. 

Capital and Earnings Analysis and 

Expected Effects 

This analysis estimates the effect on 

the capital and earnings of IDIs of the 

uniform increase in initial base 

assessment rate schedules of 2 basis 

points. For this analysis, data as of June 

30, 2022, are used to calculate each 

bank’s assessment base and risk-based 

assessment rate, absent the increase in 

assessment rates. The base and rate are 


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Chart 3. Expected Time to Reach a 2 Percent Reserve Ratio 

Projected Reserve Ratio 

2.25% 

2.00% 

1.75% 

1.50% 

Average Assessment Rate 

Year Reserve Ratio Projected to Reach 2.0 

Percent 

-6.0 bps - -5.0 bps ---4.0 bps 

2031 2034 2042 

1.25% -==----------------------------~ 

2021 2024 2027 2030 2033 2036 2039 2042 2045 
64330 Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 

74All income statement items used in this 

analysis were adjusted for the effect of mergers. 

Institutions for which four quarters of non-zero 

earnings data were unavailable, including insured 

branches of foreign banks, were excluded from this 

analysis. 

75The Tax Cuts and Jobs Act of 2017 placed a 

limitation on tax deductions for FDIC premiums for 

banks with total consolidated assets between $10 

and $50 billion and disallowed the deduction 

entirely for banks with total assets of $50 billion or 

more. See the Tax Cuts and Jobs Act, Public Law 

115–97 (Dec. 22, 2017). 

76The analysis does not incorporate any tax 

effects from an operating loss carry forward or carry 

back. 77The analysis uses 4 percent as the threshold 

because IDIs generally need to maintain a leverage 

ratio of 4.0 percent or greater to be considered 

‘‘adequately capitalized’’ under Prompt Corrective 

Action Standards, in addition to the following 

requirements: (i) total risk-based capital ratio of 8.0 

percent or greater; (ii) Tier 1 risk-based capital ratio 

of 6.0 percent or greater; (iii) common equity tier 

1 capital ratio of 4.5 percent or greater; and (iv) does 

not meet the definition of ‘‘well capitalized.’’ 

Beginning January 1, 2018, an advanced approaches 

or Category III FDIC-supervised institution will be 

deemed to be ‘‘adequately capitalized’’ if it satisfies 

the above criteria and has a supplementary leverage 

ratio of 3.0 percent or greater, as calculated in 

accordance with 12 CFR 324.10. See 12 CFR 

324.403(b)(2). For purposes of this analysis, equity 

to assets is used as the measure of capital adequacy. 

78Estimates and projections are based on the 

assumptions used in Scenario B. 

79Earnings or income are annual income before 

assessments and taxes. Annual income is assumed 

to equal income from July 1, 2021, through June 30, 

2022. 

assumed to remain constant throughout 

the one-year projection period.74

The analysis assumes that pre-tax 

income for the four quarters beginning 

on the effective date of the rate increase, 

January 1, 2023, is equal to income 

reported from July 1, 2021, through June 

30, 2022, adjusted for mergers. The 

analysis also assumes that the effects of 

changes in assessments are not 

transferred to customers in the form of 

changes in borrowing rates, deposit 

rates, or service fees. Since deposit 

insurance assessments are a taxdeductible operating expense for some 

institutions, increases in the assessment 

expense can lower taxable income.75

Therefore, the analysis considers the 

effective after-tax cost of assessments in 

calculating the effect on capital.76

An institution’s earnings retention 

and dividend policies influence the 

extent to which assessments affect 

equity levels. If an institution maintains 

the same dollar amount of dividends 

when it pays a higher deposit insurance 

assessment under the final rule, equity 

(retained earnings) will be less by the 

full amount of the after-tax cost of the 

increase in the assessment. This 

analysis instead assumes that an 

institution will maintain its dividend 

rate (that is, dividends as a fraction of 

net income) unchanged from the 

weighted average rate reported over the 

four quarters ending June 30, 2022. In 

the event that the ratio of equity to 

assets falls below 4 percent, however, 

this assumption is modified such that 

an institution retains the amount 

necessary to reach a 4 percent minimum 

and distributes any remaining funds 

according to the dividend payout rate.77

The FDIC estimates that a uniform 

increase in initial base assessment rate 

schedules of 2 basis points would 

contribute approximately $4.4 billion in 

annual assessment revenue in 2023.78

Given the assumptions in the analysis, 

for the industry as a whole, the FDIC 

estimates that, on average, a uniform 

increase in assessment rates of 2 basis 

points would decrease Tier 1 capital by 

an estimated 0.1 percent. The increase 

in assessment rates is estimated to cause 

no banks whose ratio of equity to assets 

would have equaled or exceeded 4 

percent under the current assessment 

rate schedule to fall below that 

percentage (becoming undercapitalized), 

and no banks whose ratio of equity to 

assets would have exceeded 2 percent 

under the current rate schedule to fall 

below that percentage, becoming 

critically undercapitalized. 

The banking industry has reported 

strong earnings in recent quarters. In the 

second quarter of 2022, banks saw a rise 

in net income over the prior quarter due 

to growth in net interest income, which 

resulted from a combination of loan 

growth and rising interest rates. The net 

interest margin for the industry 

increased from the prior quarter by 26 

basis points and from the year-ago 

quarter by 29 basis points to 2.80 

percent. The average return-on-assets 

ratio (ROA) of 1.08 increased 7 basis 

points from the prior quarter, but is 

down from a decade-high of 1.38 

percent in first quarter 2021. The 

banking industry remained resilient 

through the second quarter of 2022 

despite the extraordinary challenges of 

the pandemic, and is well positioned to 

absorb a modest increase in assessment 

rate schedules of 2 basis points. 

The effect of the change in 

assessments on an institution’s income 

is measured by the change in deposit 

insurance assessments as a percent of 

income before assessments and taxes 

(hereafter referred to as ‘‘income’’). This 

income measure is used in order to 

eliminate the potentially transitory 

effects of taxes on profitability. The 

FDIC analyzed the impact of assessment 

changes on institutions that were 

profitable in the period covering the 12 

months before June 30, 2022. 

Given the assumptions in the 

analysis, for the industry as a whole, the 

FDIC estimates that the annual increase 

in assessments will reduce income 

slightly by an average of 1.2 percent, 

which includes an average of 1.0 

percent for small banks and an average 

of 1.3 percent for large and highly 

complex institutions.79

Table 8 shows that approximately 96 

percent of profitable institutions are 

projected to have an increase in 

assessments of less than 5 percent of 

income. Another 4 percent of profitable 

institutions are projected to have an 

increase in assessments equal to or 

exceeding 5 percent of income. 

TABLE 8—ESTIMATED ANNUAL EFFECT OF THE ASSESSMENT RATE INCREASE ON INCOME FOR ALL PROFITABLE

INSTITUTIONS 1

Change in assessments as percent of income Number of 

institutions 

Percent of 

institutions 

Assets of 

institutions 

[$ billions] 

Percent of 

assets 

Over 30% ......................................................................................................... 9 <1 6 <1 

20% to 30% ..................................................................................................... 8 <1 11 <1 

10% to 20% ..................................................................................................... 46 1 48 <1 

5% to 10% ....................................................................................................... 138 3 27 <1 

Less than 5% ................................................................................................... 4,373 96 23,471 100 

No Change ....................................................................................................... 1 <1 <1 <1 


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Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 64331 

TABLE 8—ESTIMATED ANNUAL EFFECT OF THE ASSESSMENT RATE INCREASE ON INCOME FOR ALL PROFITABLE

INSTITUTIONS 1—Continued 

Change in assessments as percent of income Number of 

institutions 

Percent of 

institutions 

Assets of 

institutions 

[$ billions] 

Percent of 

assets 

Total .......................................................................................................... 4,575 100 23,563 100 

1 Income is defined as annual income before assessments and taxes. Annual income is assumed to equal income from July 1, 2021, through 

June 30, 2022, adjusted for mergers. Profitable institutions are defined as those having positive merger-adjusted income for the 12 months ending June 30, 2022. Excludes 9 insured branches of foreign banks and 7 institutions reporting fewer than 4 quarters of reported earnings. Some 

columns do not add to total due to rounding. 

Among profitable small institutions, 

95 percent are projected to have an 

increase in assessments of less than 5 

percent of income, as shown in Table 9. 

The remaining 5 percent of profitable 

small institutions are projected to have 

an increase in assessments equal to or 

exceeding 5 percent of income. As 

shown in Table 10, 99 percent of 

profitable large and highly complex 

institutions are projected to have an 

increase in assessments below 5 percent 

of income. 

TABLE 9—ESTIMATED ANNUAL EFFECT OF THE ASSESSMENT RATE INCREASE ON INCOME FOR PROFITABLE SMALL

INSTITUTIONS 1

Change in assessments as percent of income Number of 

institutions 

Percent of 

institutions 

Assets of 

institutions 

[$ billions] 

Percent of 

assets 

Over 30% ......................................................................................................... 9 <1 6 <1 

20% to 30% ..................................................................................................... 8 <1 11 <1 

10% to 20% ..................................................................................................... 45 1 7 <1 

5% to 10% ....................................................................................................... 138 3 27 1 

Less than 5% ................................................................................................... 4,231 95 3,445 99 

No Change ....................................................................................................... 1 <1 <1 <1 

Total .......................................................................................................... 4,432 100 3,495 100 

1 Income is defined as annual income before assessments and taxes. Annual income is assumed to equal income from July 1, 2021, through 

June 30, 2022, adjusted for mergers. Profitable institutions are defined as those having positive merger-adjusted income for the 12 months ending June 30, 2022. Some columns do not add to total due to rounding. For assessment purposes, a small institution is generally defined as an 

institution with less than $10 billion in total assets. 

TABLE 10—ESTIMATED ANNUAL EFFECT OF THE ASSESSMENT RATE INCREASE ON INCOME FOR PROFITABLE LARGE AND

HIGHLY COMPLEX INSTITUTIONS 1

Change in assessments as percent of income Number of 

institutions 

Percent of 

institutions 

Assets of 

institutions 

($ billions) 

Percent of 

assets 

Over 30% ......................................................................................................... 0 0 0 0 

20% to 30% ..................................................................................................... 0 0 0 0 

10% to 20% ..................................................................................................... 1 1 41 <1 

5% to 10% ....................................................................................................... 0 0 0 0 

Less than 5% ................................................................................................... 142 99 20,027 100 

No Change ....................................................................................................... 0 0 0 0 

Total .......................................................................................................... 143 100 20,068 100 

1 Income is defined as annual income before assessments and taxes. Annual income is assumed to equal income from July 1, 2021, through 

June 30, 2022, adjusted for mergers. Profitable institutions are defined as those having positive merger-adjusted income for the 12 months ending June 30, 2022. Some columns do not add to total due to rounding. For assessment purposes, a large bank is generally defined as an institution with $10 billion or more in total assets, and a highly complex bank is generally defined as an institution that has $50 billion or more in total 

assets and is controlled by a parent holding company that has $500 billion or more in total assets, or is a processing bank or trust company. 

Strengthening the DIF 

As discussed above, the increase in 

assessment rate schedules is projected 

to have an insignificant effect on 

institutions’ capital levels and is 

unlikely to have a material effect 

relative to income for almost all 

institutions. However, the resulting 

increase in assessment revenue, 

combined across all institutions, is 

projected to grow the DIF by over $4 

billion a year. This growth will 

strengthen the DIF’s ability to withstand 

potential future periods of significant 

losses due to bank failures and reduce 

the likelihood that the FDIC would need 

to increase assessment rates during a 

future banking crisis. Accelerating the 

time in which the reserve ratio will 

reach the statutory minimum of 1.35 

percent and the DRR of 2 percent will 

allow the banking industry to remain a 

source of strength for the economy 

during a potential future downturn and 

will continue to ensure public 

confidence in federal deposit insurance. 

E. Alternatives Considered 

The FDIC has considered the 

reasonable and possible alternatives to 

meet the requirement that the reserve 

ratio reach the statutory minimum by 


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64332 Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 

80Estimates and projections related to the onetime special assessment assume that: (1) insured 

deposit growth is 4 percent annually; (2) the 

average assessment rate before any rate increase is 

3.5 basis points; (3) losses to the DIF from bank 

failures total $1.8 billion from 2022 to 2026; (4) the 

assessment base grows 4.5 percent, annually; (5) net 

investment contributions to the deposit insurance 

fund balance are zero; and (6) operating expenses 

grow at 1 percent per year. 

81Earnings or income are annual income before 

assessments, taxes, and extraordinary items. Annual 

income is assumed to equal income from July 1, 

2021, through June 30, 2022. 

the statutory deadline, but believes, on 

balance, that an increase in assessment 

rate schedules of 2 basis points is the 

most appropriate and most 

straightforward manner in which to 

achieve the objectives of the Amended 

Restoration Plan and the long-term fund 

management plan. 

Alternative 1: Maintain Current 

Assessment Rate Schedule 

The first alternative the FDIC 

considered is to maintain the current 

schedule of assessment rates. As 

described above, the FDIC projected that 

the reserve ratio would reach the 

statutory minimum of 1.35 percent in 

the second quarter of 2034, after the 

statutory deadline under Scenario A, 

which assumes annual insured deposit 

growth of 4.0 percent and an average 

annual assessment rate of 3.5 basis 

points. Under Scenario B, which 

assumes insured deposit growth of 3.5 

percent and an average assessment rate 

of 4.0 basis points, the FDIC projected 

that the reserve ratio would reach the 

statutory minimum of 1.35 percent in 

the fourth quarter of 2026. 

As described above, the FDIC rejected 

maintaining the current schedule of 

assessment rates. Absent an increase in 

assessment rates, under Scenario A, 

growth in the DIF would not be 

sufficient for the reserve ratio to reach 

the statutory minimum of 1.35 percent 

ahead of the required deadline. While 

the reserve ratio would reach the 

statutory minimum ahead of the 

required deadline under Scenario B, 

growth in the fund resulting from 

current assessment rates could be offset 

if unexpected losses materialize, 

insured deposit growth accelerates, or 

risk profiles of institutions improve, 

resulting in lower assessment rates. 

Additionally, relative to the other 

alternatives and the increase in 

assessment rate schedules of 2 basis 

points, maintaining the current 

schedule of assessment rates would not 

result in any acceleration of growth in 

the DIF in progressing toward the 

FDIC’s long-term goal of a 2 percent 

DRR. Absent an increase in assessment 

rates and assuming annual insured 

deposit growth of 3.5 percent and a 

weighted average assessment rate of 4.0 

basis points, the FDIC projected that the 

reserve ratio would achieve the 2 

percent DRR in 2042, eleven years later 

than if the FDIC were to apply an 

increase in assessment rate schedules of 

2 basis points beginning in 2023. 

Alternative 2: Increase in Assessment 

Rates of 1 Basis Point 

A second alternative the FDIC 

considered is to increase initial base 

assessment rate schedules uniformly by 

1 basis point. The FDIC projected that 

a 1 basis point increase in the average 

assessment rate would result in the 

reserve ratio reaching the statutory 

minimum in the second quarter of 2026 

under Scenario A and in the fourth 

quarter of 2024 under Scenario B. 

The FDIC rejected this alternative in 

favor of a 2 basis point increase in 

assessment rate schedules. Reaching the 

statutory minimum reserve ratio in 

2026, as projected under Scenario A, 

would be very close to the statutory 

deadline and could result in the FDIC 

having to consider higher assessment 

rates in the face of a future downturn or 

industry stress. While a 1 basis point 

increase under Scenario B is projected 

to result in the reserve ratio reaching 

1.35 percent in the fourth quarter of 

2024, the increase in associated 

assessment revenue would generate a 

smaller buffer to absorb unexpected 

losses, accelerated insured deposit 

growth, or lower average assessment 

rates that could materialize over this 

period. 

Additionally, the FDIC projected that 

a 1 basis point increase in assessment 

rate schedules would result in the 

reserve ratio achieving the 2 percent 

DRR in approximately 2034, about 3 

years later than if the FDIC were to 

apply an increase in assessment rate 

schedules of 2 basis points beginning in 

2023. 

Alternative 3: One-Time Special 

Assessment of 4.5 Basis Points 

A third alternative would be to 

impose a one-time special assessment of 

4.5 basis points, applicable to the 

assessment base of all IDIs. Utilizing 

data as of June 30, 2022, and assuming 

an effective date of January 1, 2023, the 

FDIC estimated that a one-time special 

assessment of 4.5 basis points would 

contribute approximately $9.7 billion in 

annual assessment revenue and the 

reserve ratio would reach 1.35 percent 

the quarter following the effective date 

(i.e., the second assessment period of 

2023).80 Accordingly, the FDIC 

estimated that, on average, a one-time 

special assessment of 4.5 basis points 

would decrease Tier 1 capital by an 

estimated 0.5 percent and reduce the 

annual earnings of IDIs by 

approximately 2.8 percent, in 

aggregate.81

While a one-time special assessment 

of 4.5 basis points is projected to 

increase the DIF reserve ratio to 1.35 

percent the most quickly and precisely, 

and would significantly mitigate the 

potential that the FDIC would need to 

consider a pro-cyclical increase in 

assessment rates, it is estimated to result 

in a quarterly assessment expense that 

is more than eight times greater than the 

proposal. Additionally, while the 

reserve ratio is projected to be restored 

to 1.35 percent immediately under this 

alternative, the risk would remain that 

it could fall back below the statutory 

minimum shortly thereafter if a 

sufficient cushion is not built in. This 

would result in the establishment of a 

new restoration plan. Further, a onetime special assessment would not 

meaningfully accelerate the timeline for 

achieving the 2 percent DRR. 

In the FDIC’s view, an increase in 

assessment rate schedules of 2 basis 

points appropriately balances several 

considerations, including the goal of 

reaching the statutory minimum reserve 

ratio reasonably promptly, 

strengthening the fund to reduce the 

risk that the FDIC would need to 

consider a potentially pro-cyclical 

assessment increase in the event of a 

future downturn or industry stress 

before the statutory deadline, at a time 

when the banking industry is better 

positioned to absorb a modest increase 

in assessment rate schedules, and 

improving the timeline for achieving a 

2 percent DRR to strengthen the fund to 

withstand potential future banking 

crises. 

A discussion on other alternatives 

proposed through comments received 

on the notice of proposed rulemaking is 

provided above in the section on 

Comments on Alternatives. 

IV. Effective Date of the Final Rule 

The FDIC is issuing this final rule 

with an effective date of January 1, 

2023, and applicable beginning the first 

quarterly assessment period of 2023 

(i.e., January 1 through March 31, 2023, 

with an invoice payment date of June 

30, 2023). 

V. Administrative Law Matters 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires an agency, in 

connection with a final rule, to prepare 

and make available for public comment 


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Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 64333 

82 5 U.S.C. 601 et seq. 

83The SBA defines a small banking organization 

as having $750 million or less in assets, where an 

organization’s assets are determined by averaging 

the assets reported on its four quarterly financial 

statements for the preceding year. See 13 CFR 

121.201 (as amended by 87 FR 18627, effective May 

2, 2022). In its determination, the SBA counts the 

receipts, employees, or other measure of size of the 

concern whose size is at issue and all of its 

domestic and foreign affiliates. See 13 CFR 121.103. 

Following these regulations, the FDIC uses a 

banking organization’s affiliated and acquired 

assets, averaged over the preceding four quarters, to 

determine whether the banking organization is 

‘‘small’’ for the purposes of RFA. 

84 5 U.S.C. 601. 

85Based on Call Report data as of June 30, 2022, 

the most recent period for which small entities can 

be identified. 

86 Id. 

87 Id. 

88 Id. For purposes of the RFA, the FDIC generally 

considers a significant effect to be a quantified 

effect in excess of 5 percent of total annual salaries 

and benefits per institution, or 2.5 percent of total 

noninterest expenses. 

89 44 U.S.C. 3501–3521. 

90 12 U.S.C. 4802(a). 

91 12 U.S.C. 4802(b). 

92Public Law 106–102, section 722, 113 Stat. 

1338, 1471 (1999), 12 U.S.C. 4809. 

93 5 U.S.C. 801 et seq. 

94 5 U.S.C. 801(a)(3). 

95 5 U.S.C. 804(2). 

a final regulatory flexibility analysis that 

describes the impact of a final rule on 

small entities.82 However, a regulatory 

flexibility analysis is not required if the 

agency certifies that the final rule will 

not have a significant economic impact 

on a substantial number of small 

entities. The Small Business 

Administration (SBA) has defined 

‘‘small entities’’ to include banking 

organizations with total assets of less 

than or equal to $750 million.83 Certain 

types of rules, such as rules of particular 

applicability relating to rates, corporate 

or financial structures, or practices 

relating to such rates or structures, are 

expressly excluded from the definition 

of ‘‘rule’’ for purposes of the RFA.84

Because the final rule relates directly to 

the rates imposed on IDIs for deposit 

insurance, the final rule is not subject to 

the RFA. Nonetheless, the FDIC is 

voluntarily presenting information in 

this RFA section. 

The final rule is expected to affect all 

FDIC-insured depository institutions. 

According to recent Call Report data, 

there are currently 4,780 IDIs holding 

approximately $24 trillion in assets.85

Of these, approximately 3,394 IDIs 

would be considered small entities for 

the purposes of RFA.86 These small 

entities hold approximately $882 billion 

in assets. 

The final rule will increase initial 

base assessment rate schedules for these 

small entities by 2 basis points. In 

aggregate, the total annual amount paid 

in assessments by small entities will 

increase by approximately $160 million, 

from $317 million to $475 million.87

At the individual bank level, few 

institutions will be significantly affected 

by the final rule. Fewer than 350 small 

entities will experience annual 

assessment increases greater than 

$100,000, and none will experience 

annual assessment increases greater 

than $150,000. When compared to the 

banks’ expenses, the annual assessment 

increases are significant for only a 

handful of small entities: only five small 

entities will experience annual 

assessment increases greater than 2.5 

percent of their noninterest expenses, 

and only two will experience annual 

assessment increases greater than 5 

percent of what they paid in employee 

salaries and benefits.88

The FDIC invited comments regarding 

the supporting information provided in 

the RFA section in the proposed rule, 

but did not receive comments on this 

topic. 

B. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(PRA) states that no agency may 

conduct or sponsor, nor is the 

respondent required to respond to, an 

information collection unless it displays 

a currently valid Office of Management 

and Budget (OMB) control number.89

The FDIC’s OMB control numbers for its 

assessment regulations are 3064–0057, 

3064–0151, and 3064–0179. The final 

rule does not create any new, or revise 

any of these existing, assessment 

information collections pursuant to the 

PRA; consequently, no information 

collection request will be made to the 

OMB for review. 

C. Riegle Community Development and 

Regulatory Improvement Act 

Section 302(a) of the Riegle 

Community Development and 

Regulatory Improvement Act of 1994 

(RCDRIA) requires that the Federal 

banking agencies, including the FDIC, in 

determining the effective date and 

administrative compliance requirements 

of new regulations that impose 

additional reporting, disclosure, or other 

requirements on IDIs, consider, 

consistent with principles of safety and 

soundness and the public interest, any 

administrative burdens that such 

regulations would place on depository 

institutions, including small depository 

institutions, and customers of 

depository institutions, as well as the 

benefits of such regulations.90 In 

addition, section 302(b) of RCDRIA 

requires new regulations and 

amendments to regulations prescribed 

by a Federal banking agency that impose 

additional reporting, disclosures, or 

other new requirements on IDIs 

generally to take effect on the first day 

of a calendar quarter that begins on or 

after the date on which the regulations 

are published in final form, with certain 

exceptions, including for good cause.91

The amendments to the FDIC’s 

deposit insurance assessment 

regulations under this final rule do not 

impose additional reporting, disclosure, 

or other new requirements on insured 

depository institutions, including small 

depository institutions, or on the 

customers of depository institutions. 

Accordingly, section 302 of RCDRIA 

does not apply. The FDIC invited 

comments regarding the application of 

RCDRIA in the proposed rule, but did 

not receive comments on this topic. 

Nevertheless, the requirements of 

RCDRIA have been considered in setting 

the final effective date. 

D. Plain Language 

Section 722 of the Gramm-LeachBliley Act 92 requires the Federal 

banking agencies to use plain language 

in all proposed and final rulemakings 

published in the Federal Register after 

January 1, 2000. FDIC staff believes the 

final rule is presented in a simple and 

straightforward manner. The FDIC 

invited comment regarding the use of 

plain language in the proposed rule but 

did not receive any comments on this 

topic. 

E. The Congressional Review Act 

For purposes of the Congressional 

Review Act, the OMB makes a 

determination as to whether a final rule 

constitutes a ‘‘major’’ rule.93

If a rule is deemed a ‘‘major rule’’ by 

the OMB, the Congressional Review Act 

generally provides that the rule may not 

take effect until at least 60 days 

following its publication.94

The Congressional Review Act defines 

a ‘‘major rule’’ as any rule that the 

Administrator of the Office of 

Information and Regulatory Affairs of 

the OMB finds has resulted in or is 

likely to result in: (A) an annual effect 

on the economy of $100,000,000 or 

more; (B) a major increase in costs or 

prices for consumers, individual 

industries, Federal, State, or Local 

government agencies or geographic 

regions; or (C) significant adverse effects 

on competition, employment, 

investment, productivity, innovation, or 

on the ability of United States-based 

enterprises to compete with foreignbased enterprises in domestic and 

export markets.95


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The OMB has determined that the 

final rule is a major rule for purposes of 

the Congressional Review Act. As 

required by the Congressional Review 

Act, the FDIC will submit the final rule 

and other appropriate reports to 

Congress and the Government 

Accountability Office for review. 

List of Subjects in 12 CFR Part 327 

Bank deposit insurance, Banks, 

banking, Savings associations. 

For the reasons stated in the 

preamble, the Federal Deposit Insurance 

Corporation amends 12 CFR part 327 as 

follows: 

PART 327—ASSESSMENTS 

■ 1. The authority for 12 CFR part 327 

continues to read as follows: 

Authority: 12 U.S.C. 1813, 1815, 1817–19, 

1821. 

■ 2. Amend § 327.4 by revising 

paragraphs (a) and (c) to read as follows: 

§ 327.4 Assessment rates. 

(a) Assessment risk assignment. For 

the purpose of determining the annual 

assessment rate for insured depository 

institutions under § 327.16, each 

insured depository institution will be 

provided an assessment risk assignment. 

Notice of an institution’s current 

assessment risk assignment will be 

provided to the institution with each 

quarterly certified statement invoice. 

Adjusted assessment risk assignments 

for prior periods may also be provided 

by the Corporation. Notice of the 

procedures applicable to reviews will be 

included with the notice of assessment 

risk assignment provided pursuant to 

this paragraph (a). 

* * * * * 

(c) Requests for review. An institution 

that believes any assessment risk 

assignment provided by the Corporation 

pursuant to paragraph (a) of this section 

is incorrect and seeks to change it must 

submit a written request for review of 

that risk assignment. An institution 

cannot request review through this 

process of the CAMELS ratings assigned 

by its primary federal regulator or 

challenge the appropriateness of any 

such rating; each federal regulator has 

established procedures for that purpose. 

An institution may also request review 

of a determination by the FDIC to assess 

the institution as a large, highly 

complex, or a small institution 

(§ 327.16(f)(3)) or a determination by the 

FDIC that the institution is a new 

institution (§ 327.16(g)(5)). Any request 

for review must be submitted within 90 

days from the date the assessment risk 

assignment being challenged pursuant 

to paragraph (a) of this section appears 

on the institution’s quarterly certified 

statement invoice. The request shall be 

submitted to the Corporation’s Director 

of the Division of Insurance and 

Research in Washington, DC, and shall 

include documentation sufficient to 

support the change sought by the 

institution. If additional information is 

requested by the Corporation, such 

information shall be provided by the 

institution within 21 days of the date of 

the request for additional information. 

Any institution submitting a timely 

request for review will receive written 

notice from the Corporation regarding 

the outcome of its request. Upon 

completion of a review, the Director of 

the Division of Insurance and Research 

(or designee) or the Director of the 

Division of Supervision and Consumer 

Protection (or designee) or any 

successor divisions, as appropriate, 

shall promptly notify the institution in 

writing of his or her determination of 

whether a change is warranted. If the 

institution requesting review disagrees 

with that determination, it may appeal 

to the FDIC’s Assessment Appeals 

Committee. Notice of the procedures 

applicable to appeals will be included 

with the written determination. 

* * * * * 

■ 3. Amend § 327.8 by revising 

paragraphs (e)(2), (f), (k)(1) introductory 

text, and (l) through (p) to read as 

follows: 

§ 327.8 Definitions. 

* * * * * 

(e) * * * 

(2) Except as provided in paragraph 

(e)(3) of this section and § 327.17(e), if, 

after December 31, 2006, an institution 

classified as large under paragraph (f) of 

this section (other than an institution 

classified as large for purposes of 

§ 327.16(f)) reports assets of less than 

$10 billion in its quarterly reports of 

condition for four consecutive quarters, 

excluding assets as described in 

§ 327.17(e), the FDIC will reclassify the 

institution as small beginning the 

following quarter. 

* * * * * 

(f) Large institution. An institution 

classified as large for purposes of 

§ 327.16(f) or an insured depository 

institution with assets of $10 billion or 

more, excluding assets as described in 

§ 327.17(e), as of December 31, 2006 

(other than an insured branch of a 

foreign bank or a highly complex 

institution) shall be classified as a large 

institution. If, after December 31, 2006, 

an institution classified as small under 

paragraph (e) of this section reports 

assets of $10 billion or more in its 

quarterly reports of condition for four 

consecutive quarters, excluding assets 

as described in § 327.17(e), the FDIC 

will reclassify the institution as large 

beginning the following quarter. 

* * * * * 

(k) * * * 

(1) Merger or consolidation involving 

new and established institution(s). 

Subject to paragraphs (k)(2) through (5) 

of this section and § 327.16(g)(3) and (4), 

when an established institution merges 

into or consolidates with a new 

institution, the resulting institution is a 

new institution unless: 

* * * * * 

(l) Risk assignment. Under § 327.16, 

for all new small institutions and 

insured branches of foreign banks, risk 

assignment includes assignment to Risk 

Category I, II, III, or IV, and for insured 

branches of foreign banks within Risk 

Category I, assignment to an assessment 

rate or rates. For all established small 

institutions, and all large institutions 

and all highly complex institutions, risk 

assignment includes assignment to an 

assessment rate. 

(m) Unsecured debt. For purposes of 

the unsecured debt adjustment as set 

forth in § 327.16(e)(1) and the 

depository institution debt adjustment 

as set forth in § 327.16(e)(2), unsecured 

debt shall include senior unsecured 

liabilities and subordinated debt. 

(n) Senior unsecured liability. For 

purposes of the unsecured debt 

adjustment as set forth in § 327.16(e)(1) 

and the depository institution debt 

adjustment as set forth in § 327.16(e)(2), 

senior unsecured liabilities shall be the 

unsecured portion of other borrowed 

money as defined in the quarterly report 

of condition for the reporting period as 

defined in paragraph (b) of this section. 

(o) Subordinated debt. For purposes 

of the unsecured debt adjustment as set 

forth in § 327.16(e)(1) and the 

depository institution debt adjustment 

as set forth in § 327.16(e)(2), 

subordinated debt shall be as defined in 

the quarterly report of condition for the 

reporting period; however, subordinated 

debt shall also include limited-life 

preferred stock as defined in the 

quarterly report of condition for the 

reporting period. 

(p) Long-term unsecured debt. For 

purposes of the unsecured debt 

adjustment as set forth in § 327.16(e)(1) 

and the depository institution debt 

adjustment as set forth in § 327.16(e)(2), 

long-term unsecured debt shall be 

unsecured debt with at least one year 

remaining until maturity; however, any 

such debt where the holder of the debt 

has a redemption option that is 

exercisable within one year of the 


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reporting date shall not be deemed longterm unsecured debt. 

* * * * * 

§ 327.9 [Removed and Reserved] 

■ 4. Remove and reserve § 327.9. 

■ 5. Amend § 327.10 as follows: 

■ a. Remove paragraph (a); 

■ b. Redesignate paragraph (b) as 

paragraph (a) and revise it; 

■ c. Add new paragraph (b); 

■ d. Remove paragraph (e)(1)(i); 

■ e. Redesignate paragraph (e)(1)(ii) as 

paragraph (e)(1)(i) and revise it; 

■ f. Add new paragraph (e)(1)(ii); 

■ g. Revise paragraph (e)(1)(iii); 

■ h. Add paragraph (e)(1)(iv); 

■ i. Revise paragraph (e)(2)(i); 

■ j. Redesignate paragraphs (e)(2)(ii) and 

(iii) as (e)(2)(iii) and (iv), respectively; 

and 

■ k. Add new paragraph (e)(2)(ii). 

The revisions and additions read as 

follows: 

§ 327.10 Assessment rate schedules. 

(a) Assessment rate schedules for 

established small institutions and large 

and highly complex institutions 

applicable in the first assessment period 

after June 30, 2016, where the reserve 

ratio of the DIF as of the end of the prior 

assessment period has reached or 

exceeded 1.15 percent, and in all 

subsequent assessment periods through 

the assessment period ending December 

31, 2022, where the reserve ratio of the 

DIF as of the end of the prior assessment 

period is less than 2 percent. 

(1) Initial base assessment rate 

schedule for established small 

institutions and large and highly 

complex institutions. In the first 

assessment period after June 30, 2016, 

where the reserve ratio of the DIF as of 

the end of the prior assessment period 

has reached or exceeded 1.15 percent, 

and for all subsequent assessment 

periods through the assessment period 

ending December 31, 2022, where the 

reserve ratio as of the end of the prior 

assessment period is less than 2 percent, 

the initial base assessment rate for 

established small institutions and large 

and highly complex institutions, except 

as provided in paragraph (f) of this 

section, shall be the rate prescribed in 

the schedule in the following table: 

TABLE 1 TO PARAGRAPH (a)(1) INTRODUCTORY TEXT—INITIAL BASE ASSESSMENT RATE SCHEDULE BEGINNING THE FIRST

ASSESSMENT PERIOD AFTER JUNE 30, 2016, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD HAS REACHED 1.15 PERCENT, AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS THROUGH THE ASSESSMENT PERIOD ENDING DECEMBER 31, 2022, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD IS LESS THAN 2 PERCENT 1

Established small institutions 

Large & 

highly complex 

institutions 

CAMELS composite 

1 or 2 3 4 or 5 

Initial Base Assessment Rate .......................................................... 3 to 16 6 to 30 16 to 30 3 to 30 

1All amounts are in basis points annually. Initial base rates that are not the minimum or maximum rate will vary between these rates. 

(i) CAMELS composite 1- and 2-rated 

established small institutions initial 

base assessment rate schedule. The 

annual initial base assessment rates for 

all established small institutions with a 

CAMELS composite rating of 1 or 2 

shall range from 3 to 16 basis points. 

(ii) CAMELS composite 3-rated 

established small institutions initial 

base assessment rate schedule. The 

annual initial base assessment rates for 

all established small institutions with a 

CAMELS composite rating of 3 shall 

range from 6 to 30 basis points. 

(iii) CAMELS composite 4- and 5- 

rated established small institutions 

initial base assessment rate schedule. 

The annual initial base assessment rates 

for all established small institutions 

with a CAMELS composite rating of 4 or 

5 shall range from 16 to 30 basis points. 

(iv) Large and highly complex 

institutions initial base assessment rate 

schedule. The annual initial base 

assessment rates for all large and highly 

complex institutions shall range from 3 

to 30 basis points. 

(2) Total base assessment rate 

schedule after adjustments. In the first 

assessment period after June 30, 2016, 

that the reserve ratio of the DIF as of the 

end of the prior assessment period has 

reached or exceeded 1.15 percent, and 

for all subsequent assessment periods 

through the assessment period ending 

December 31, 2022, where the reserve 

ratio for the prior assessment period is 

less than 2 percent, the total base 

assessment rates after adjustments for 

established small institutions and large 

and highly complex institutions, except 

as provided in paragraph (f) of this 

section, shall be as prescribed in the 

schedule in the following table: 

TABLE 2 TO PARAGRAPH (a)(2) INTRODUCTORY TEXT—TOTAL BASE ASSESSMENT RATE SCHEDULE (AFTER ADJUSTMENTS) 1 BEGINNING THE FIRST ASSESSMENT PERIOD, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR

ASSESSMENT PERIOD HAS REACHED 1.15 PERCENT, AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS THROUGH

THE ASSESSMENT PERIOD ENDING DECEMBER 31, 2022, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR

ASSESSMENT PERIOD IS LESS THAN 2 PERCENT 2

Established small institutions 

Large & 

highly complex 

institutions 

CAMELS composite 

1 or 2 3 4 or 5 

Initial Base Assessment Rate .......................................................... 3 to 16 6 to 30 16 to 30 3 to 30 

Unsecured Debt Adjustment ............................................................ ¥5 to 0 ¥5 to 0 ¥5 to 0 ¥5 to 0 

Brokered Deposit Adjustment .......................................................... N/A N/A N/A 0 to 10 


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TABLE 2 TO PARAGRAPH (a)(2) INTRODUCTORY TEXT—TOTAL BASE ASSESSMENT RATE SCHEDULE (AFTER ADJUSTMENTS) 1 BEGINNING THE FIRST ASSESSMENT PERIOD, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR

ASSESSMENT PERIOD HAS REACHED 1.15 PERCENT, AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS THROUGH

THE ASSESSMENT PERIOD ENDING DECEMBER 31, 2022, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR

ASSESSMENT PERIOD IS LESS THAN 2 PERCENT 2—Continued 

Established small institutions 

Large & 

highly complex 

institutions 

CAMELS composite 

1 or 2 3 4 or 5 

Total Base Assessment Rate ................................................... 1.5 to 16 3 to 30 11 to 30 1.5 to 40 

1The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2All amounts are in basis points annually. Total base rates that are not the minimum or maximum rate will vary between these rates. 

(i) CAMELS composite 1- and 2-rated 

established small institutions total base 

assessment rate schedule. The annual 

total base assessment rates for all 

established small institutions with a 

CAMELS composite rating of 1 or 2 

shall range from 1.5 to 16 basis points. 

(ii) CAMELS composite 3-rated 

established small institutions total base 

assessment rate schedule. The annual 

total base assessment rates for all 

established small institutions with a 

CAMELS composite rating of 3 shall 

range from 3 to 30 basis points. 

(iii) CAMELS composite 4- and 5- 

rated established small institutions total 

base assessment rate schedule. The 

annual total base assessment rates for all 

established small institutions with a 

CAMELS composite rating of 4 or 5 

shall range from 11 to 30 basis points. 

(iv) Large and highly complex 

institutions total base assessment rate 

schedule. The annual total base 

assessment rates for all large and highly 

complex institutions shall range from 

1.5 to 40 basis points. 

(b) Assessment rate schedules for 

established small institutions and large 

and highly complex institutions 

beginning the first assessment period of 

2023, where the reserve ratio of the DIF 

as of the end of the prior assessment 

period is less than 2 percent. 

(1) Initial base assessment rate 

schedule for established small 

institutions and large and highly 

complex institutions. Beginning the first 

assessment period of 2023, where the 

reserve ratio of the DIF as of the end of 

the prior assessment period is less than 

2 percent, the initial base assessment 

rate for established small institutions 

and large and highly complex 

institutions, except as provided in 

paragraph (f) of this section, shall be the 

rate prescribed in the schedule in the 

following table: 

TABLE 3 TO PARAGRAPH (b)(1) INTRODUCTORY TEXT—INITIAL BASE ASSESSMENT RATE SCHEDULE BEGINNING THE FIRST

ASSESSMENT PERIOD OF 2023, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD IS

LESS THAN 2 PERCENT 1

Established small institutions 

Large & 

highly complex 

institutions 

CAMELS composite 

1 or 2 3 4 or 5 

Initial Base Assessment Rate .......................................................... 5 to 18 8 to 32 18 to 32 5 to 32 

1All amounts are in basis points annually. Initial base rates that are not the minimum or maximum rate will vary between these rates. 

(i) CAMELS composite 1- and 2-rated 

established small institutions initial 

base assessment rate schedule. The 

annual initial base assessment rates for 

all established small institutions with a 

CAMELS composite rating of 1 or 2 

shall range from 5 to 18 basis points. 

(ii) CAMELS composite 3-rated 

established small institutions initial 

base assessment rate schedule. The 

annual initial base assessment rates for 

all established small institutions with a 

CAMELS composite rating of 3 shall 

range from 8 to 32 basis points. 

(iii) CAMELS composite 4- and 5- 

rated established small institutions 

initial base assessment rate schedule. 

The annual initial base assessment rates 

for all established small institutions 

with a CAMELS composite rating of 4 or 

5 shall range from 18 to 32 basis points. 

(iv) Large and highly complex 

institutions initial base assessment rate 

schedule. The annual initial base 

assessment rates for all large and highly 

complex institutions shall range from 5 

to 32 basis points. 

(2) Total base assessment rate 

schedule after adjustments. Beginning 

the first assessment period of 2023, 

where the reserve ratio of the DIF as of 

the end of the prior assessment period 

is less than 2 percent, the total base 

assessment rates after adjustments for 

established small institutions and large 

and highly complex institutions, except 

as provided in paragraph (f) of this 

section, shall be as prescribed in the 

schedule in the following table: 


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TABLE 4 TO PARAGRAPH (b)(2) INTRODUCTORY TEXT—TOTAL BASE ASSESSMENT RATE SCHEDULE (AFTER ADJUSTMENTS) 1 BEGINNING THE FIRST ASSESSMENT PERIOD OF 2023, WHERE THE RESERVE RATIO AS OF THE END OF THE

PRIOR ASSESSMENT PERIOD IS LESS THAN 2 PERCENT 2

Established small institutions 

Large & Highly 

Complex Institutions CAMELS composite 

1 or 2 3 4 or 5 

Initial Base Assessment Rate .......................................................... 5 to 18 8 to 32 18 to 32 5 to 32 

Unsecured Debt Adjustment ............................................................ ¥5 to 0 ¥5 to 0 ¥5 to 0 ¥5 to 0 

Brokered Deposit Adjustment .......................................................... N/A N/A N/A 0 to 10 

Total Base Assessment Rate ................................................... 2.5 to 18 4 to 32 13 to 32 2.5 to 42 

1The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2All amounts are in basis points annually. Total base rates that are not the minimum or maximum rate will vary between these rates. 

(i) CAMELS composite 1- and 2-rated 

established small institutions total base 

assessment rate schedule. The annual 

total base assessment rates for all 

established small institutions with a 

CAMELS composite rating of 1 or 2 

shall range from 2.5 to 18 basis points. 

(ii) CAMELS composite 3-rated 

established small institutions total base 

assessment rate schedule. The annual 

total base assessment rates for all 

established small institutions with a 

CAMELS composite rating of 3 shall 

range from 4 to 32 basis points. 

(iii) CAMELS composite 4- and 5- 

rated established small institutions total 

base assessment rate schedule. The 

annual total base assessment rates for all 

established small institutions with a 

CAMELS composite rating of 4 or 5 

shall range from 13 to 32 basis points. 

(iv) Large and highly complex 

institutions total base assessment rate 

schedule. The annual total base 

assessment rates for all large and highly 

complex institutions shall range from 

2.5 to 42 basis points. 

* * * * * 

(e) * * * 

(1) * * * 

(i) Assessment rate schedules for new 

large and highly complex institutions 

once the DIF reserve ratio first reaches 

1.15 percent on or after June 30, 2016, 

and through the assessment period 

ending December 31, 2022. In the first 

assessment period after June 30, 2016, 

where the reserve ratio of the DIF as of 

the end of the prior assessment period 

has reached or exceeded 1.15 percent, 

and for all subsequent assessment 

periods through the assessment period 

ending December 31, 2022, new large 

and new highly complex institutions 

shall be subject to the initial and total 

base assessment rate schedules provided 

for in paragraph (a) of this section. 

(ii) Assessment rate schedules for new 

large and highly complex institutions 

beginning the first assessment period of 

2023 and for all subsequent periods. 

Beginning in the first assessment period 

of 2023 and for all subsequent 

assessment periods, new large and new 

highly complex institutions shall be 

subject to the initial and total base 

assessment rate schedules provided for 

in paragraph (b) of this section. 

(iii) Assessment rate schedules for 

new small institutions beginning the 

first assessment period after June 30, 

2016, where the reserve ratio of the DIF 

as of the end of the prior assessment 

period has reached or exceeded 1.15 

percent, and for all subsequent 

assessment periods through the 

assessment period ending December 31, 

2022—(A) Initial base assessment rate 

schedule for new small institutions. In 

the first assessment period after June 30, 

2016, where the reserve ratio of the DIF 

as of the end of the prior assessment 

period has reached or exceeded 1.15 

percent, and for all subsequent 

assessment periods through the 

assessment period ending December 31, 

2022, the initial base assessment rate for 

a new small institution shall be the rate 

prescribed in the schedule in the 

following table: 

TABLE 9 TO PARAGRAPH (e)(1)(iii)(A) INTRODUCTORY TEXT—INITIAL BASE ASSESSMENT RATE SCHEDULE BEGINNING THE

FIRST ASSESSMENT PERIOD, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD HAS

REACHED 1.15 PERCENT, AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS THROUGH THE ASSESSMENT PERIOD

ENDING DECEMBER 31, 2022 1

Risk category I Risk category II Risk category III Risk category IV 

Initial Assessment Rate ................................................................... 7 12 19 30 

1All amounts for all risk categories are in basis points annually. 

(1) Risk category I initial base 

assessment rate schedule. The annual 

initial base assessment rates for all new 

small institutions in Risk Category I 

shall be 7 basis points. 

(2) Risk category II, III, and IV initial 

base assessment rate schedule. The 

annual initial base assessment rates for 

all new small institutions in Risk 

Categories II, III, and IV shall be 12, 19, 

and 30 basis points, respectively. 

(B) Total base assessment rate 

schedule for new small institutions. In 

the first assessment period after June 30, 

2016, that the reserve ratio of the DIF as 

of the end of the prior assessment 

period has reached or exceeded 1.15 

percent, and for all subsequent 

assessment periods through the 

assessment period ending December 31, 

2022, the total base assessment rates 

after adjustments for a new small 

institution shall be the rate prescribed 

in the schedule in the following table: 


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64338 Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 

TABLE 10 TO PARAGRAPH (e)(1)(iii)(B) INTRODUCTORY TEXT—TOTAL BASE ASSESSMENT RATE SCHEDULE (AFTER ADJUSTMENTS) 1 BEGINNING THE FIRST ASSESSMENT PERIOD AFTER JUNE 30, 2016, WHERE THE RESERVE RATIO AS

OF THE END OF THE PRIOR ASSESSMENT PERIOD HAS REACHED 1.15 PERCENT, AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS THROUGH THE ASSESSMENT PERIOD ENDING DECEMBER 31, 2022 2

Risk category I Risk category II Risk category III Risk category IV 

Initial Assessment Rate ................................................................... 7 12 19 30 

Brokered Deposit Adjustment (added) ............................................ N/A 0 to 10 0 to 10 0 to 10 

Total Base Assessment Rate ................................................... 7 12 to 22 19 to 29 30 to 40 

1The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2All amounts for all risk categories are in basis points annually. Total base rates that are not the minimum or maximum rate will vary between 

these rates. 

(1) Risk category I total assessment 

rate schedule. The annual total base 

assessment rates for all new small 

institutions in Risk Category I shall be 

7 basis points. 

(2) Risk category II total assessment 

rate schedule. The annual total base 

assessment rates for all new small 

institutions in Risk Category II shall 

range from 12 to 22 basis points. 

(3) Risk category III total assessment 

rate schedule. The annual total base 

assessment rates for all new small 

institutions in Risk Category III shall 

range from 19 to 29 basis points. 

(4) Risk category IV total assessment 

rate schedule. The annual total base 

assessment rates for all new small 

institutions in Risk Category IV shall 

range from 30 to 40 basis points. 

(iv) Assessment rate schedules for 

new small institutions beginning the 

first assessment period of 2023 and for 

all subsequent assessment periods—(A) 

Initial base assessment rate schedule for 

new small institutions. Beginning in the 

first assessment period of 2023 and for 

all subsequent assessment periods, the 

initial base assessment rate for a new 

small institution shall be the rate 

prescribed in the schedule in the 

following table, even if the reserve ratio 

equals or exceeds 2 percent or 2.5 

percent: 

TABLE 11 TO PARAGRAPH (e)(1)(iv)(A) INTRODUCTORY TEXT—INITIAL BASE ASSESSMENT RATE SCHEDULE BEGINNING

THE FIRST ASSESSMENT PERIOD OF 2023 AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS 1

Risk category I Risk category II Risk category III Risk category IV 

Initial Assessment Rate ................................................................... 9 14 21 32 

1All amounts for all risk categories are in basis points annually. 

(1) Risk category I initial base 

assessment rate schedule. The annual 

initial base assessment rates for all new 

small institutions in Risk Category I 

shall be 9 basis points. 

(2) Risk category II, III, and IV initial 

base assessment rate schedule. The 

annual initial base assessment rates for 

all new small institutions in Risk 

Categories II, III, and IV shall be 14, 21, 

and 32 basis points, respectively. 

(B) Total base assessment rate 

schedule for new small institutions. 

Beginning in the first assessment period 

of 2023 and for all subsequent 

assessment periods, the total base 

assessment rates after adjustments for a 

new small institution shall be the rate 

prescribed in the schedule in the 

following table, even if the reserve ratio 

equals or exceeds 2 percent or 2.5 

percent: 

TABLE 12 TO PARAGRAPH (e)(1)(iv)(B) INTRODUCTORY TEXT—TOTAL BASE ASSESSMENT RATE SCHEDULE (AFTER ADJUSTMENTS)1 BEGINNING THE FIRST ASSESSMENT PERIOD OF 2023 AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS 2

Risk category I Risk category II Risk category III Risk category IV 

Initial Assessment Rate ................................................................... 9 14 21 32 

Brokered Deposit Adjustment (added) ............................................ N/A 0 to 10 0 to 10 0 to 10 

Total Base Assessment Rate ................................................... 9 14 to 24 21 to 31 32 to 42 

1 The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2 All amounts for all risk categories are in basis points annually. Total base rates that are not the minimum or maximum rate will vary between 

these rates. 

(1) Risk category I total assessment 

rate schedule. The annual total base 

assessment rates for all new small 

institutions in Risk Category I shall be 

9 basis points. 

(2) Risk category II total assessment 

rate schedule. The annual total base 

assessment rates for all new small 

institutions in Risk Category II shall 

range from 14 to 24 basis points. 

(3) Risk category III total assessment 

rate schedule. The annual total base 

assessment rates for all new small 

institutions in Risk Category III shall 

range from 21 to 31 basis points. 


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Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 64339 

(4) Risk category IV total assessment 

rate schedule. The annual total base 

assessment rates for all new small 

institutions in Risk Category IV shall 

range from 32 to 42 basis points. 

(2) * * * 

(i) Beginning the first assessment 

period after June 30, 2016, where the 

reserve ratio of the DIF as of the end of 

the prior assessment period has reached 

or exceeded 1.15 percent, and for all 

subsequent assessment periods through 

the assessment period ending December 

31, 2022, where the reserve ratio as of 

the end of the prior assessment period 

is less than 2 percent. In the first 

assessment period after June 30, 2016, 

where the reserve ratio of the DIF as of 

the end of the prior assessment period 

has reached or exceeded 1.15 percent, 

and for all subsequent assessment 

periods through the assessment period 

ending December 31, 2022, where the 

reserve ratio as of the end of the prior 

assessment period is less than 2 percent, 

the initial and total base assessment 

rates for an insured branch of a foreign 

bank, except as provided in paragraph 

(f) of this section, shall be the rate 

prescribed in the schedule in the 

following table: 

TABLE 13 TO PARAGRAPH (e)(2)(i) INTRODUCTORY TEXT—INITIAL AND TOTAL BASE ASSESSMENT RATE SCHEDULE 1 BEGINNING THE FIRST ASSESSMENT PERIOD AFTER JUNE 30, 2016, WHERE THE RESERVE RATIO AS OF THE END OF

THE PRIOR ASSESSMENT PERIOD HAS REACHED 1.15 PERCENT, AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS

THROUGH THE ASSESSMENT PERIOD ENDING DECEMBER 31, 2022, WHERE THE RESERVE RATIO AS OF THE END OF

THE PRIOR ASSESSMENT PERIOD IS LESS THAN 2 PERCENT 2

Risk category I Risk category II Risk category III Risk category IV 

Initial and Total Assessment Rate ................................................... 3 to 7 12 19 30 

1The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2All amounts for all risk categories are in basis points annually. Initial and total base rates that are not the minimum or maximum rate will vary 

between these rates. 

(A) Risk category I initial and total 

base assessment rate schedule. The 

annual initial and total base assessment 

rates for an insured branch of a foreign 

bank in Risk Category I shall range from 

3 to 7 basis points. 

(B) Risk category II, III, and IV initial 

and total base assessment rate schedule. 

The annual initial and total base 

assessment rates for Risk Categories II, 

III, and IV shall be 12, 19, and 30 basis 

points, respectively. 

(C) All insured branches of foreign 

banks in any one risk category, other 

than Risk Category I, will be charged the 

same initial base assessment rate, 

subject to adjustment as appropriate. 

(ii) Assessment rate schedule for 

insured branches of foreign banks 

beginning the first assessment period of 

2023, where the reserve ratio of the DIF 

as of the end of the prior assessment 

period is less than 2 percent. Beginning 

the first assessment period of 2023, 

where the reserve ratio of the DIF as of 

the end of the prior assessment period 

is less than 2 percent, the initial and 

total base assessment rates for an 

insured branch of a foreign bank, except 

as provided in paragraph (f) of this 

section, shall be the rate prescribed in 

the schedule in the following table: 

TABLE 14 TO PARAGRAPH (E)(2)(II) INTRODUCTORY TEXT—INITIAL AND TOTAL BASE ASSESSMENT RATE SCHEDULE 1 BEGINNING THE FIRST ASSESSMENT PERIOD OF 2023, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD IS LESS THAN 2 PERCENT 2

Risk category I Risk category II Risk category III Risk category IV 

Initial and Total Assessment Rate ................................................... 5 to 9 14 21 32 

1The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2All amounts for all risk categories are in basis points annually. Initial and total base rates that are not the minimum or maximum rate will vary 

between these rates. 

(A) Risk category I initial and total 

base assessment rate schedule. The 

annual initial and total base assessment 

rates for an insured branch of a foreign 

bank in Risk Category I shall range from 

5 to 9 basis points. 

(B) Risk category II, III, and IV initial 

and total base assessment rate schedule. 

The annual initial and total base 

assessment rates for Risk Categories II, 

III, and IV shall be 14, 21, and 32 basis 

points, respectively. 

(C) Same initial base assessment rate. 

All insured branches of foreign banks in 

any one risk category, other than Risk 

Category I, will be charged the same 

initial base assessment rate, subject to 

adjustment as appropriate. 

* * * * * 

■ 6. Amend § 327.11 by revising 

paragraph (c)(3)(i) to read as follows: 

§ 327.11 Surcharges and assessments 

required to raise the reserve ratio of the DIF 

to 1.35 percent. 

* * * * * 

(c) * * * 

(3) * * * 

(i) Fraction of quarterly regular 

deposit insurance assessments paid by 

credit accruing institutions. The fraction 

of assessments paid by credit accruing 

institutions shall equal quarterly deposit 

insurance assessments, as determined 

under § 327.16, paid by such 

institutions for each assessment period 

during the credit calculation period, 

divided by the total amount of quarterly 

deposit insurance assessments paid by 

all insured depository institutions 

during the credit calculation period, 

excluding the aggregate amount of 

surcharges imposed under paragraph (b) 

of this section. 

* * * * * 

■ 7. Amend § 327.16 as follows: 

■ a. Redesignate paragraphs (a)(1)(i)(A) 

through (C) as (a)(1)(i)(B) through (D), 

respectively; 

■ b. Add new paragraph (a)(1)(i)(A); 


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64340 Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 

■ c. Revise newly redesignated 

paragraph (a)(1)(i)(B); 

■ d. Redesignate paragraphs (d)(4)(ii)(A) 

through (C) as (d)(4)(ii)(B) through (D), 

respectively; 

■ e. Add new paragraph (d)(4)(ii)(A); 

and 

■ f. Revise newly redesignated 

paragraph (d)(4)(ii)(B). 

The revisions and additions read as 

follows: 

§ 327.16 Assessment pricing methods— 

beginning the first assessment period after 

June 30, 2016, where the reserve ratio of the 

DIF as of the end of the prior assessment 

period has reached or exceeded 1.15 

percent. 

* * * * * 

(a) * * * 

(1) * * * 

(i) * * * 

(A) 7.352 whenever the assessment 

rate schedule set forth in § 327.10(a) is 

in effect; 

(B) 9.352 whenever the assessment 

rate schedule set forth in § 327.10(b) is 

in effect; 

* * * * * 

(d) * * * 

(4) * * * 

(ii) * * * 

(A) ¥5.127 whenever the assessment 

rate schedule set forth in § 327.10(a) is 

in effect; 

(B) ¥3.127 whenever the assessment 

rate schedule set forth in § 327.10(b) is 

in effect; 

* * * * * 

■ 8. Amend appendix A to subpart A of 

part 327 as follows: 

■ a. Revise sections I through III; 

■ b. Remove sections IV and V; and 

■ c. Redesignate section VI as section 

IV; 

The revisions read as follows: 

Appendix A to Subpart A of Part 327— 

Method To Derive Pricing Multipliers 

and Uniform Amount 

I. Introduction 

The uniform amount and pricing 

multipliers are derived from: 

• A model (the Statistical Model) that 

estimates the probability of failure of an 

institution over a three-year horizon; 

• The minimum initial base assessment 

rate; 

• The maximum initial base assessment 

rate; 

• Thresholds marking the points at which 

the maximum and minimum assessment 

rates become effective. 

II. The Statistical Model 

The Statistical Model estimates the 

probability of an insured depository 

institution failing within three years using a 

logistic regression and pooled time-series 

cross-sectional data;1 that is, the dependent 

variable in the estimation is whether an 

insured depository institution failed during 

the following three-year period. Actual 

model parameters for the Statistical Model 

are an average of each of three regression 

estimates for each parameter. Each of the 

three regressions uses end-of-year data from 

insured depository institutions’ quarterly 

reports of condition and income (Call Reports 

and Thrift Financial Reports or TFRs2) for 

every third year to estimate probability of 

failure within the ensuing three years. One 

regression (Regression 1) uses insured 

depository institutions’ Call Report and TFR 

data for the end of 1985 and failures from 

1986 through 1988; Call Report and TFR data 

for the end of 1988 and failures from 1989 

through 1991; and so on, ending with Call 

Report data for the end of 2009 and failures 

from 2010 through 2012. The second 

regression (Regression 2) uses insured 

depository institutions’ Call Report and TFR 

data for the end of 1986 and failures from 

1987 through 1989, and so on, ending with 

Call Report data for the end of 2010 and 

failures from 2011 through 2013. The third 

regression (Regression 3) uses insured 

depository institutions’ Call Report and TFR 

data for the end of 1987 and failures from 

1988 through 1990, and so on, ending with 

Call Report data for the end of 2011 and 

failures from 2012 through 2014. The 

regressions include only Call Report data and 

failures for established small institutions. 1Tests for the statistical significance of 

parameters use adjustments discussed by 

Tyler Shumway (2001) ‘‘Forecasting 

Bankruptcy More Accurately: A Simple 

Hazard Model,’’ Journal of Business 74:1, 

101–124. 2Beginning in 2012, all insured depository 

institutions began filing quarterly Call 

Reports and the TFR was no longer filed. 

Table A.1 lists and defines the explanatory 

variables (regressors) in the Statistical Model. 

TABLE A.1—DEFINITIONS OF MEASURES USED IN THE FINANCIAL RATIOS METHOD

Variables Description 

Leverage Ratio (%) ......................... Tier 1 capital divided by adjusted average assets. (Numerator and denominator are both based on the definition for prompt corrective action.) 

Net Income before Taxes/Total Assets (%).Income (before applicable income taxes and discontinued operations) for the most recent twelve months 

divided by total assets.1

Nonperforming Loans and Leases/ 

Gross Assets (%).

Sum of total loans and lease financing receivables past due 90 or more days and still accruing interest and 

total nonaccrual loans and lease financing receivables (excluding, in both cases, the maximum amount 

recoverable from the U.S. Government, its agencies or government-sponsored enterprises, under guarantee or insurance provisions) divided by gross assets.2 3

Other Real Estate Owned/Gross 

Assets (%).

Other real estate owned divided by gross assets.2

Brokered Deposit Ratio ................... The ratio of the difference between brokered deposits and 10 percent of total assets to total assets. For institutions that are well capitalized and have a CAMELS composite rating of 1 or 2, reciprocal deposits 

are deducted from brokered deposits. If the ratio is less than zero, the value is set to zero. 

Weighted Average of C, A, M, E, L, 

and S Component Ratings.

The weighted sum of the ‘‘C,’’ ‘‘A,’’ ‘‘M,’’ ‘‘E’’, ‘‘L’’, and ‘‘S’’ CAMELS components, with weights of 25 percent each for the ‘‘C’’ and ‘‘M’’ components, 20 percent for the ‘‘A’’ component, and 10 percent each for 

the ‘‘E’’, ‘‘L’’, and ‘‘S’’ components. In instances where the ‘‘S’’ component is missing, the remaining 

components are scaled by a factor of 10/9.4

Loan Mix Index ............................... A measure of credit risk described below. 

One-Year Asset Growth (%) ........... Growth in assets (adjusted for mergers 5) over the previous year in excess of 10 percent.6 If growth is less 

than 10 percent, the value is set to zero. 

1For purposes of calculating actual assessment rates (as opposed to model estimation), the ratio of Net Income before Taxes to Total Assets 

is bounded below by (and cannot be less than) –25 percent and is bounded above by (and cannot exceed) 3 percent. For purposes of model estimation only, the ratio of Net Income before Taxes to Total Assets is defined as income (before income taxes and extraordinary items and other 

adjustments) for the most recent twelve months divided by total assets. 2For purposes of calculating actual assessment rates (as opposed to model estimation), ‘‘Gross assets’’ are total assets plus the allowance for 

loan and lease financing receivable losses (ALLL); for purposes of estimating the Statistical Model, for years before 2001, when allocated transfer risk was not included in ALLL in Call Reports, allocated transfer risk is included in gross assets separately. 3 Delinquency and non-accrual data on government guaranteed loans are not available for the entire estimation period. As a result, the Statistical Model is estimated without deducting delinquent or past-due government guaranteed loans from the nonperforming loans and leases to 

gross assets ratio. 


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3An exception is ‘‘Real Estate Loans Residual,’’ 

which consists of real estate loans held in foreign 

offices. Few small insured depository institutions 

report this item and a statistically reliable estimate 

of the weighted average charge-off rate could not be 

obtained. Instead, a weighted average of the 

weighted average charge-off rates of the other real 

estate loan categories is used. (The other categories 

are construction & development, multifamily 

residential, nonfarm nonresidential, 1–4 family 

residential, and agricultural real estate.) The weight 

for each of the other real estate loan categories is 

based on the aggregate amount of the loans held by 

small insured depository institutions as of 

December 31, 2014. 

4The ZiT values have the same rank ordering as 

the probability measures PiT. 

4The component rating for sensitivity to market risk (the ‘‘S’’ rating) is not available for years before 1997. As a result, and as described in the 

table, the Statistical Model is estimated using a weighted average of five component ratings excluding the ‘‘S’’ component where the component 

is not available. 5Growth in assets is also adjusted for acquisitions of failed banks. 

6For purposes of calculating actual assessment rates (as opposed to model estimation), the maximum value of the One-Year Asset Growth 

measure is 230 percent; that is, asset growth (merger adjusted) over the previous year in excess of 240 percent (230 percentage points in excess of the 10 percent threshold) will not further increase a bank’s assessment rate. 

The financial variable measures used to 

estimate the failure probabilities are obtained 

from Call Reports and TFRs. The weighted 

average of the ‘‘C,’’ ‘‘A,’’ ‘‘M,’’ ‘‘E,’’ ‘‘L,’’, and 

‘‘S’’ component ratings measure is based on 

component ratings obtained from the most 

recent bank examination conducted within 

24 months before the date of the Call Report 

or TFR. 

The Loan Mix Index assigns loans to the 

categories of loans described in Table A.2. 

For each loan category, a charge-off rate is 

calculated for each year from 2001 through 

2014. The charge-off rate for each year is the 

aggregate charge-off rate on all such loans 

held by small institutions in that year. A 

weighted average charge-off rate is then 

calculated for each loan category, where the 

weight for each year is based on the number 

of small-bank failures during that year.3 A 

Loan Mix Index for each established small 

institution is calculated by: (1) multiplying 

the ratio of the institution’s amount of loans 

in a particular loan category to its total assets 

by the associated weighted average charge-off 

rate for that loan category; and (2) summing 

the products for all loan categories. Table A.2 

gives the weighted average charge-off rate for 

each category of loan, as calculated through 

the end of 2014. The Loan Mix Index 

excludes credit card loans. 

TABLE A.2—LOAN MIX INDEX

CATEGORIES

Weighted 

charge-off 

rate percent 

Construction & Development .... 4.4965840 

Commercial & Industrial ........... 1.5984506 

Leases ...................................... 1.4974551 

Other Consumer ....................... 1.4559717 

Loans to Foreign Government 1.3384093 

Real Estate Loans Residual ..... 1.0169338 

Multifamily Residential .............. 0.8847597 

Nonfarm Residential ................. 0.7286274 

TABLE A.2—LOAN MIX INDEX

CATEGORIES—Continued 

Weighted 

charge-off 

rate percent 

1–4 Family Residential ............. 0.6973778 

Loans to Depository Banks ...... 0.5760532 

Agricultural Real Estate ............ 0.2376712 

Agriculture ................................. 0.2432737 

For each of the three regression estimates 

(Regression 1, Regression 2 and Regression 

3), the estimated probability of failure (over 

a three-year horizon) of institution i at time 

T is 

where 

where the b variables are parameter 

estimates. As stated earlier, for actual 

assessments, the b values that are 

applied are averages of each of the 

individual parameters over three 

separate regressions. Pricing multipliers 

(discussed in the next section) are based 

on ZiT.4

III. Derivation of Uniform Amount and 

Pricing Multipliers 

The uniform amount and pricing 

multipliers used to compute the annual 

initial base assessment rate in basis points, 

RiT, for any such institution i at a given time 

T will be determined from the Statistical 

Model as follows: 


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Equation 1 

PiT = 1/ ((1 + exp(-ZiT)) 

Equation 2 

Z;r = ~o + ~1 (Leverage RatioiT) + ~2 (Nonperforming loans and leases ratioiT) + 

~3 (Other real estate owned ratio;r) + ~4 (Net income before taxes ratioiT) + ~5 

(Brokered deposit ratioiT) + ~6 (Weighted average CAMELS component ratingiT) 

+ ~7 (Loan mix index;r) + ~s (One-year asset growthir) 

Equation 3 

RiT = ao + m * ZiT subject to Min :s; RiT :s; Max5 
64342 Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 

5RiT is also subject to the minimum and 

maximum assessment rates applicable to 

established small institutions based upon their 

CAMELS composite ratings. 

where a0 and a1 are a constant term and a 

scale factor used to convert ZiT to an 

assessment rate, Max is the maximum 

initial base assessment rate in effect and 

Min is the minimum initial base 

assessment rate in effect. (RiT is 

expressed as an annual rate, but the 

actual rate applied in any quarter will be 

RiT/4.) 

Solving equation 3 for minimum and 

maximum initial base assessment rates 

simultaneously, 

Min = a0 + a1 * ZN and Max = a0 + a1 * ZX

where ZX is the value of ZiT above which the 

maximum initial assessment rate (Max) 

applies and ZN is the value of ZiT below 

which the minimum initial assessment 

rate (Min) applies, results in values for 

the constant amount, a0, and the scale 

factor, a1: 

The values for ZX and ZN will be selected 

to ensure that, for an assessment period 

shortly before adoption of a final rule, 

aggregate assessments for all established 

small institutions would have been 

approximately the same under the final rule 

as they would have been under the 

assessment rate schedule that—under rules 

in effect before adoption of the final rule— 

will automatically go into effect when the 

reserve ratio reaches 1.15 percent. As an 

example, using aggregate assessments for all 

established small institutions for the third 

quarter of 2013 to determine ZX and ZN, and 

assuming that Min had equaled 3 basis points 

and Max had equaled 30 basis points, the 

value of ZX would have been 0.87 and the 

value of ZN ¥6.36. Hence based on equations 

4 and 5, 

a0 = 26.751 and 

a1 = 3.734. 

Therefore from equation 3, it follows that 

Substituting equation 2 produces an 

annual initial base assessment rate for 

institution i at time T, RiT, in terms of the 

uniform amount, the pricing multipliers and 

model variables: 


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Equation 4 

and Equation 5 

Equation 6 

Rir= 26.751 + 3.734 * ZiT subject to 3 ::S Rir:S 30 

Equation 7 

Rir= [26.751 + 3.734 * ~o] + 3.734 * [~1 (Leverage ratio;r)] + 3.734 * ~2 

(Nonperforming loans and leases ratioiT) + 3.734 * ~3 (Other real estate owned 

ratioiT) + 3.734 * ~4 (Net income before taxes ratio;r) + 3.734 * ~5 (Brokered 

deposit ratiOiT) + 3.734 * ~6 (Weighted average CAMELS component ratingiT) + 

3.734 * ~7 (Loan mix indeXiT) + 3.734 * ~s (One-year asset growthir) 
Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Rules and Regulations 64343 

6As stated above, RiT is also subject to the 

minimum and maximum assessment rates 

applicable to established small institutions based 

upon their CAMELS composite ratings. 

again subject to 3≤ RiT ≤30 6

where 26.751 + 3.734 * b0 equals the uniform 

amount, 3.734 * bj is a pricing multiplier 

for the associated risk measure j, and T 

is the date of the report of condition 

corresponding to the end of the quarter 

for which the assessment rate is 

computed. 

* * * * * 

Federal Deposit Insurance Corporation. 

By order of the Board of Directors. 

Dated at Washington, DC, on October 18, 

2022. 

James P. Sheesley, 

Assistant Executive Secretary. 

[FR Doc. 2022–22985 Filed 10–20–22; 11:15 am] 

BILLING CODE 6714–01–P 


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