Assessment Dividends, 73158-73165 [E8-28405]
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73158
Federal Register / Vol. 73, No. 232 / Tuesday, December 2, 2008 / Rules and Regulations
‘‘Second offense.’’ and adding
‘‘Subsequent offenses.’’ in its place.
■ e. Paragraph (c)(2)(ii) is amended by
removing ‘‘December 31, 2004’’ and
adding ‘‘December 31, 2008’’ in its
place.
■ f. Paragraph (c)(2)(ii) is amended by
removing $27,500 and adding $32,000
in its place.
■ g. Paragraph (c)(2)(iii)(B) is amended
by removing $27,500 and adding
$32,000 in its place.
■ h. Paragraph (c)(2)(iii)(B) is amended
by removing ‘‘December 31, 2004’’ and
adding ‘‘December 31, 2008’’ in its
place.
■ i. Paragraph (c)(2)(iii)(C) is amended
by removing $1,250,000 and adding
$1,375,000 in its place.
■ j. Paragraph (c)(2)(iii)(C) is amended
by removing ‘‘December 31, 2004’’ and
adding ‘‘December 31, 2008’’ in its
place.
■ k. Paragraph (c)(3) introductory text is
amended by removing ‘‘December 31,
2004’’ and adding ‘‘December 31, 2008’’
in its place.
■ l. Paragraph (c)(3)(i) introductory text
is amended by removing $6,500 and
adding $7,500 in its place, by removing
$32,500 and adding $37,500 in its place,
and by removing $1,250,000 wherever it
appears and adding $1,375,000 in its
place.
■ m. Paragraph (c)(3)(ii) is amended by
removing $27,000 and adding $32,000
in its place and by removing $1,250,000
and adding $1,375,000 in its place.
■ n. Paragraph (c)(3)(iii) is amended by
removing $6,500 and adding $7,500 in
its place.
■ o. Paragraph (c)(3)(vi) is amended by
removing $11,000 and adding $16,000
in its place.
■ p. Paragraph (c)(3)(ix) is amended by
removing $6,500 and adding $7,500 in
its place, by removing $32,500 and
adding $37,500 in its place, and by
removing $1,250,000 wherever it
appears and adding $1,375,000 in its
place.
■ q. Paragraph (c)(3)(xiv) is amended by
removing $6,500 and adding $7,500 in
its place, by removing $65,000 wherever
it appears and adding $70,000 in its
place, by removing $325,000 and adding
$350,000 in its place, by removing
$130,000 and adding $140,000 in its
place, and by removing $625,000 and
adding $675,000 in its place.
■ r. Paragraph (c)(3)(xv) is amended by
removing $6,500 and adding $7,500 in
its place.
■ s. Paragraph (c)(3)(xvi) is amended by
removing $125,000 and adding $135,000
in its place.
■ t. A new paragraph (c)(3)(xvii) is
added as set forth below:
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§ 308.132
Assessment of penalties.
*
*
*
*
*
(c) * * *
(2) * * *
(i) * * * Pursuant to the Debt
Collection Improvement Act of 1996, for
violations of paragraph (c)(2)(i) which
occur after December 31, 2008, the
following maximum Tier One penalty
amounts contained in paragraphs
(c)(2)(i)(A) and (B) of this section shall
apply for each day that the violation
continues.
*
*
*
*
*
(3) * * *
(xvii) Civil money penalties assessed
for violation of one-year restriction on
Federal examiners of financial
institutions. Pursuant to section 10(k) of
the Federal Deposit Insurance Act (12
U.S.C. 1820(k)), the Board of Directors
or its designee may assess a civil money
penalty of up to $250,000 against any
covered former Federal examiner of a
financial institution who, in violation of
section 1820(k) and within the one-year
period following termination of
government service as an employee,
serves as an officer, director, or
consultant of a financial or depository
institution, a holding company, or of
any other entity listed in section 10(k),
without the written waiver or
permission by the appropriate Federal
banking agency or authority under
section 1820(k)(5). Pursuant to the Debt
Collection Improvement Act of 1996, for
any violation of section 10(k) which
occurs after December 31, 2008, the
maximum penalty amount will increase
to $275,000.
By order of the Board of Directors, Federal
Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. E8–28407 Filed 12–1–08; 8:45 am]
BILLING CODE 6714–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 327
RIN 3064–AD27
Assessment Dividends
Federal Deposit Insurance
Corporation (‘‘FDIC’’).
ACTION: Final rule.
AGENCY:
SUMMARY: The FDIC is adopting a final
rule to implement the assessment
dividend requirements in the Federal
Deposit Insurance Reform Act of 2005
(the Reform Act) and the Federal
Deposit Insurance Reform Conforming
Amendments Act of 2005 (the
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Amendments Act). The final rule will
take effect on January 1, 2009. It is the
follow-up to the temporary final rule on
assessment dividends that the FDIC
issued in October 2006, which expires
on December 31, 2008.
DATES:
Effective Date: January 1, 2009.
FOR FURTHER INFORMATION CONTACT:
Munsell W. St.Clair, Chief, Banking and
Regulatory Policy Section, Division of
Insurance and Research, (202) 898–
8967; Missy Craig, Senior Program
Analyst, Division of Insurance and
Research, (202) 898–8724; Donna
Saulnier, Manager, Assessment Policy
Section, Division of Finance, (703) 562–
6167; Joseph A. DiNuzzo, Counsel,
Legal Division, (202) 898–7349; or
Sheikha Kapoor, Senior Attorney, Legal
Division, (202) 898–3960.
SUPPLEMENTARY INFORMATION:
I. Background
A. Reform Act Requirements
Section 7(e)(2) of the Federal Deposit
Insurance Act (the FDI Act), as amended
by the Reform Act, requires the FDIC,
under most circumstances, to declare
dividends from the Deposit Insurance
Fund (the fund or the DIF) when the DIF
reserve ratio (the Reserve Ratio) at the
end of a calendar year equals or exceeds
1.35 percent. When the Reserve Ratio
equals or exceeds 1.35 percent, and is
not higher than 1.50 percent, the FDIC
generally must declare one-half of the
amount in the DIF in excess of the
amount required to maintain the
Reserve Ratio at 1.35 percent as
dividends to be paid to insured
depository institutions. The FDIC Board
of Directors (the Board) may suspend or
limit dividends to be paid, however, if
it determines in writing, after taking a
number of statutory factors into account,
that: 1
1. The DIF faces a significant risk of
losses over the next year; and
2. It is likely that such losses will be
sufficiently high as to justify a finding
by the Board that the Reserve Ratio
should temporarily be allowed to grow
without requiring dividends when the
1 The statutory factors that the Board must
consider are:
1. National and regional conditions and their
impact on insured depository institutions;
2. Potential problems affecting insured depository
institutions or a specific group or type of depository
institution;
3. The degree to which the contingent liability of
the Corporation for anticipated failures of insured
institutions adequately addresses concerns over
funding levels in the Deposit Insurance Fund; and
4. Any other factors that the Board determines are
appropriate.
12 U.S.C. 1817(e)(2)(F).
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Reserve Ratio is between 1.35 and 1.50
percent or to exceed 1.50 percent.2
When the Reserve Ratio exceeds 1.50
percent at the end of a calendar quarter,
the FDI Act requires the FDIC, absent
certain limited circumstances
(discussed in footnote 2), to declare a
dividend equal to the excess of the
amount required to maintain the
Reserve Ratio at 1.50 percent as
dividends to be paid to insured
depository institutions.
If the Board decides to suspend or
limit dividends, it must submit, within
270 days of making the determination,
a report to the Committee on Banking,
Housing, and Urban Affairs of the
Senate and to the Committee on
Financial Services of the House of
Representatives. The report must
include a detailed explanation for the
determination and a discussion of the
factors required to be considered.3
The FDI Act directs the FDIC to
consider each insured depository
institution’s relative contribution to the
DIF (or any predecessor deposit
insurance fund) when calculating such
institution’s share of any dividend.
More specifically, when allocating
dividends, the Board must consider:
1. The ratio of the assessment base of
an insured depository institution
(including any predecessor) on
December 31, 1996, to the assessment
base of all eligible insured depository
institutions on that date;
2. The total amount of assessments
paid on or after January 1, 1997, by an
insured depository institution
(including any predecessor) to the DIF
(and any predecessor fund); 4
3. That portion of assessments paid by
an insured depository institution
(including any predecessor) that reflects
higher levels of risk assumed by the
institution; and
4. Such other factors as the Board
deems appropriate.
The Reform Act expressly requires the
FDIC to prescribe by regulation the
method for calculating, declaring and
2 This provision allows the FDIC’s Board to
suspend or limit dividends in circumstances where
the Reserve Ratio exceeds 1.5 percent, if the Board
makes a determination to continue a suspension or
limitation that it imposed initially when the reserve
ratio was between 1.35 and 1.5 percent.
3 See section 5 of the Amendments Act. Public
Law 109–173, 119 Stat. 3601, which was signed
into law by the President on February 15, 2006.
4 This factor is limited to deposit insurance
assessments paid to the DIF (or previously to the
Bank Insurance Fund (the BIF) or the Savings
Association Insurance Fund (the SAIF)) and does
not include assessments paid to the Financing
Corporation (FICO) used to pay interest on
outstanding FICO bonds, although the FDIC collects
those assessments on behalf of FICO. Beginning in
1997, the FDIC collected separate FICO assessments
from both SAIF and BIF members.
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paying dividends. The dividend
regulation must include provisions
allowing an insured depository
institution a reasonable opportunity to
challenge administratively the amount
of dividends it is awarded. Under the
Reform Act, any review by the FDIC
pursuant to these administrative
procedures is final and not subject to
judicial review.
B. The Temporary Final Rule on
Assessment Dividends
In October 2006, the FDIC issued a
temporary final rule to implement the
dividend requirements of the Reform
Act (the Temporary Final Rule).5
The Temporary Final Rule, which
expires on December 31, 2008, provides
definitions and details on how an
institution may request FDIC review of
a determination of the institution’s
dividend and how an institution may
appeal the FDIC’s response to that
request. In the Temporary Final Rule,
the FDIC adopted a simple system for
allocating any dividends that might be
declared during the two-year duration of
the regulation. Any dividends awarded
before January 1, 2009, will be
distributed simply in proportion to an
institution’s 1996 assessment base ratio,
as determined pursuant to the one-time
assessment credit rule.6
C. The Advance Notice of Proposed
Rulemaking and Notice of Proposed
Rulemaking
At the time it adopted the Temporary
Final Rule, the FDIC stated its intention
to initiate a second, more
comprehensive notice-and-comment
rulemaking on dividends beginning
with an advanced notice of proposed
rulemaking to explore alternative
methods for distributing future
dividends after the temporary dividend
rules expires on December 31, 2008. The
publication of the assessment dividend
advance notice of rulemaking in
September 2007 (the ANPR)
commenced that process.7 Subsequently
in March 2008, based upon comments
received on the ANPR, the FDIC issued
a proposed rule on the distribution of
future dividends (the NPR).8
II. The Final Rule
The FDIC is adopting a final rule
identical to the proposed rule, with a
few exceptions described below.
The FDIC received three comment
letters on the proposed rule: two from
banking trade associations and one from
5 71
FR 61385 (October 18, 2006).
CFR 327.53. No dividend has or will be
issued under the Temporary Final Rule.
7 72 FR 53181 (September 18, 2007).
8 73 FR 15459 (Mar. 24, 2008).
6 12
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a savings association. The savings
association generally supported the
proposed rule. One trade association
stated that the proposal generally met
the specifications that the association
had suggested in its comments on the
ANPR, although the association would
not endorse the NPR. The other trade
association supported many specific
provisions of the proposed rule. Each of
the comments had some specific
suggestions that are discussed further
below.
Annual Determination of Whether
Dividends Are Required/Declaration of
Dividends
The process under the final rule for
the annual determination of dividends
and declaration of dividends is identical
with the process under the proposed
rule. The FDIC will determine annually
whether the reserve ratio at the end of
the prior year equaled or exceeded 1.35
percent of estimated insured deposits or
1.50 percent, thereby triggering a
dividend requirement. If a dividend is
triggered, the FDIC will determine,
based on statutory factors, whether
payment of dividends should be limited
or suspended. If the FDIC does not limit
or suspend payment, or does not renew
such a determination, the aggregate
amount of the dividend under the final
rule will be determined as provided by
the Reform Act. The FDIC will declare
any dividend on or before May 10th of
the year following the year in which the
reserve ratio exceeded 1.35 percent or
1.50 percent.9
The FDIC received one specific
comment on this part of the proposal.
One of the trade associations endorsed
an accelerated annual process for
determination and distribution of
dividends.
Allocation of Dividends
The final rule adopts the proposed
rule’s methodology for allocation of
dividends. The total dividend in any
year will be divided into two parts. One
of the two parts will be allocated based
on the ratio of each institution’s
(including any predecessors’) 1996
assessment base compared to the total of
all existing eligible institutions’ 1996
9 The two banking trade associations generally
promoted conservative fund management as the
optimal strategy for solving the dividend allocation
issue. They both stated that FDIC fund management
should ensure that the fund be kept beneath the
1.35 percent statutory level so that dividends were
not triggered. Low, smooth, steady premiums that
prevent a dividend trigger would obviate the issue
of how to equitably distribute dividends between
the older and newer segments of the banking
industry. One of the associations stated that such
a policy would benefit the insurance fund, the
industry in general, and consumers.
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assessment bases (an institution’s 1996
assessment base share). The other part
of the total dividend will be allocated
based on each institution’s (including
any predecessors’) ratio of cumulative
eligible premiums over the previous five
years to the total of cumulative eligible
premiums paid by all existing
institutions (or their predecessors) over
the previous five years (an institution’s
eligible premium share). The part of any
potential dividend that will be allocated
based upon 1996 assessment base shares
will decline steadily from 100 percent to
zero over 15 years; the part of any
potential dividend that will be allocated
based upon eligible premium shares
will increase steadily over the same 15year period from zero to 100 percent.
After the 15-year period, any dividend
will be allocated solely based on eligible
premium shares.
The 15-year period will run from the
end of 2006 to the end of 2021 and will
govern dividends based upon the
reserve ratio at the end of the years 2008
through 2021. Actual dividends, if any,
will be allocated and paid the following
year. Table A shows the change in the
allocation of potential dividends over
time.
TABLE A—TOTAL DIF DIVIDEND DISTRIBUTION TABLE
Part of total DIF dividend
determined by:
Based upon the DIF reserve ratio at year-end
1996 Assessment
base shares
2006 .............................................................................................................................................................
2007 .............................................................................................................................................................
2008 .............................................................................................................................................................
2009 .............................................................................................................................................................
2010 .............................................................................................................................................................
2011 .............................................................................................................................................................
2012 .............................................................................................................................................................
2013 .............................................................................................................................................................
2014 .............................................................................................................................................................
2015 .............................................................................................................................................................
2016 .............................................................................................................................................................
2017 .............................................................................................................................................................
2018 .............................................................................................................................................................
2019 .............................................................................................................................................................
2020 .............................................................................................................................................................
2021 .............................................................................................................................................................
Thereafter ....................................................................................................................................................
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The FDIC received three comments on
the proposed method of allocating
dividends. One banking trade
association supported the balanced
consideration of alternative dividend
allocation schemes, taking into account
the significant premiums paid in the
early 1990s to recapitalize the FDIC. The
second banking trade association stated
that the FDIC proposal was a reasonable
compromise between the fund balance
method and the payments method
described in the ANPR and that the
proposed rule generally responded to
their wishes that the method be simple
but detailed enough so that community
banks understood it, and that it not be
subject to sudden or unexpected
changes.10 It suggested one additional
10 The ANPR sought comment on two general
approaches to allocating dividends—the fund
balance method and the payments method. The two
allocation methods potentially differed most
significantly in the way they balanced two of the
statutory factors that the Board must consider—an
institutions’ relative 1996 assessment bases and
assessments paid after 1996—and, thus, in the way
each method would treat older versus newer
institutions. The terms ‘‘older’’ and ‘‘newer,’’
however, do not simply refer to age. An institution
that had a large 1996 assessment base compared to
its current assessment base is considered an older
institution, and an institution that had no
assessment base in 1996 or only a small assessment
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change: That the 15-year phase-out
period begin in 2009 rather than 2006 as
banks were operating under the existing
rule on dividends for the years 2006
through 2008.
The commenting savings association
generally supported the provisions of
the proposed rule but recommended
that the FDIC use a 10-year rather than
a 15-year transition period. The bank
stated that parity dictated a 10-year
phase-in period since a 10-year period
elapsed with no general collection of
premiums, and it would be punitive to
other organizations to continue to count
an institution’s assessment credits after
they have been used to offset premiums.
The FDIC continues to believe that the
15-year phase-out transition period,
beginning in 2006, is a reasonable
compromise between the legitimate
points of view of older and newer
banking institutions and thus
recommends adopting the allocation
method proposed in the NPR.
Eligible Premiums
As under the proposed rule, an
eligible premium will be defined as that
base compared to its present assessment base is
considered a newer institution.
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1 (100.0%)
14/15 (93.3%)
13/15 (86.7%)
4/5 (80.0%)
11/15 (73.3%)
2/3 (66.7%)
3/5 (60.0%)
8/15 (53.3%)
7/15 (46.7%)
2/5 (40.0%)
1/3 (33.3%)
4/15 (26.7%)
1/5 (20.0%)
2/15 (13.3%)
1/15 (6.7%)
0 (0%)
0%
Eligible premium
shares
0 (0%)
1/15 (6.7%)
2/15 (13.3%)
1/5 (20.0%)
4/15 (26.7%)
1/3 (33.3%)
2/5 (40.0%)
7/15 (46.7%)
8/15 (53.3%)
3/5 (60.0%)
2/3 (66.7%)
11/15 (73.3%)
4/5 (80.0%)
13/15 (86.7%)
14/15 (93.3%)
1 (100.0%)
100.0%
part of an assessment that was charged
at no more than the maximum rate then
applicable to a Risk Category I
institution. Whether an institution paid
its assessment in cash or offset it with
assessment credits will not affect its
eligible premium. An institution’s
eligible premium will include eligible
premiums paid by a predecessor.
The final rule clarifies that eligible
premiums would not include any
assessments or fees paid by insured
depository institutions for the
Temporary Liquidity Guarantee Program
or any emergency special assessments
paid by insured depository institutions
pursuant to the systemic risk provisions
of the Federal Deposit Insurance Act,
whether related to the Temporary
Liquidity Guarantee Program or not. 11
The FDIC received three comments on
this part of the proposal. The banking
trade associations supported the
proposal. The commenting savings
association suggested that the FDIC only
count payments made with ‘‘real
dollars’’ rather than assessment credits
in calculating eligible premiums.
11 The systemic risk emergency special
assessment provision is Section 13(c)(4)(G) of the
FDI Act, 12 U.S.C. 1823(c)(4)(G).
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The FDIC continues to believe that
allowing an eligible premium to include
premiums offset with assessment credits
is also part of the reasonable
compromise between the legitimate
points of view of older and newer
banking institutions and thus
recommends adopting the definition of
an eligible premium proposed in the
NPR. In any event, most assessment
credits have already been used. Staff
estimates that at the end of 2008 only
four percent of the original assessment
credits will remain. Given the small
likelihood of a dividend within the next
several years, including premiums offset
with assessment credits within the
definition of an eligible premium will
have little practical effect for most
institutions.
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Definition of a ‘‘Predecessor’’ Insured
Depository Institution
Under the final rule, consistent with
the requirements of the Reform Act, the
allocation of dividends to an insured
depository institution will in part be
based on the 1996 assessment base ratio
of, and the post-1996 assessments paid
by, insured depository institutions of
which the insured depository institution
is the successor. As in the Temporary
Final Rule, the final rule defines a
predecessor insured depository
institution by cross referencing the
definition of successor insured
depository institution in the one-time
assessment credit rule. (See 12 CFR 327,
subpart B.) In effect, a predecessor
institution is the mirror image of a
successor institution. Notably, the
definition of successor in the one-time
credit regulation includes a de facto
rule, applicable in transactions in which
an insured depository institution
assumes substantially all of the deposit
liabilities and acquires substantially all
of the assets of another insured
depository institution.
The FDIC received one specific
comment on this part of the proposal.
The banking trade association that
submitted the comment supported the
proposal.
Notification and Payment of Dividends
The process for notifying institutions
of their dividend amounts and paying
dividends will be as proposed in the
NPR, with one minor change. The FDIC
will advise each institution of its
dividend as soon as practicable after the
Board’s declaration of a dividend on or
before May 10th. However, individual
dividend amounts will be paid to
institutions on June 30 (in connection
with the deposit insurance assessment
process), rather than within 45 days
after the issuance of the special notice
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(or as soon as practicable thereafter) as
proposed in the NPR.
This change is intended to simplify
the distribution process. Dividends will
be paid through the Automated Clearing
House (ACH) and offset against
assessment payments. If an institution
owes additional assessments, there will
be a net debit (resulting in payment to
the FDIC). Conversely, if the FDIC owed
additional dividend amounts, there will
be a net credit (resulting in payment
from the FDIC).
Under the final rule, the FDIC will
freeze the payment of any disputed
portion of dividends. Any adjustment to
an individual institution’s dividend
resulting from its request for review will
be handled through ACH in the same
manner as existing procedures for
underpayment or overpayment of
assessments.
The proposed final rule states that the
FDIC intends, beginning no later than
2010, to include with its quarterly
assessment invoices the institution’s
1996 assessment base share and its
rolling five-year eligible premium share.
The FDIC received only one specific
comment on this part of the proposal.
The banking trade association that
submitted the comment supported the
‘‘acceleration of the annual process for
determination and distribution of
dividends, so that any dividends will be
distributed in the first quarter following
the year-end declaration.’’ Staff notes
that dividends cannot be declared at
year-end, since the year-end fund
reserve ratio will not be known until
some time in the following February.
However, under the final rule,
dividends will be distributed in the
same quarter as the declaration (when
the Board declares a dividend in the
second quarter, since payment will be
made on June 30th), and will be always
be distributed as least as soon as the
quarter after the declaration.
Requests for Review
The final rule’s provisions for
challenging dividend shares and
amounts are as proposed in the NPR and
are similar to those in the Temporary
Final Rule, except that they reflect the
FDIC’s intention to provide, beginning
in 2010, quarterly dividend-related
information with each assessment
invoice. Under the final rule, if a
dividend is declared before 2010, an
institution will have 30 days from the
date of the notice of its dividend to
request review.
Once the quarterly invoice updates
become available, an institution
generally will have 90 days from the
date of the invoice to request review of
that dividend-related information,
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73161
except in a year in which a dividend is
declared. If the FDIC declares a
dividend, the institution will have 30
days from the date of its notice of
dividend amount to request review
either of that amount or of any
dividend-related information in its
March invoice for that year; the
institution will not have the full 90-day
period following the March invoice to
request review.
The rule requires that, when quarterly
dividend-related information becomes
available in 2010, an institution will
have to request review of its dividendrelated information within 90 days of
the first invoice that fails to reflect
accurate information. If it does not
submit a timely request for review, it
will be barred from subsequently
requesting review of that information.
The requirement that insured
depository institutions monitor their
dividend-related information quarterly
and promptly request review is
necessitated by the proposed timing for
the payment of dividends. In the
absence of such a strict quarterly
requirement, the FDIC would have
needed to reconsider both the timing of
dividend payment and possibly the
look-back period for calculating
institutions’ dividend shares, which at 5
years is longer than the 3-year
recordkeeping requirement in the FDI
Act and longer than the 3-year statute of
limitations for bringing an action on
assessment underpayments and
overpayments.
The rule requires that at the time of
the request for review the requesting
institution must notify all institutions
that will be directly and materially
affected, and that it provide those
institutions with copies of the request
for review, supporting documentation,
and FDIC procedures for requests for
review. The FDIC will make reasonable
efforts to determine that these
institutions had been identified and
notified.
Institutions will then have 30 days to
submit a response and any supporting
documentation to the FDIC’s Division of
Finance, copying the institution making
the original request for review. If an
institution notified through this process
does not submit a timely response, that
institution will be foreclosed from
subsequently disputing the information
submitted by any other institution on
the transaction(s) at issue in the review
process. The FDIC may request
additional information as part of its
review, and the institution from which
such information is requested will be
required to supply that information
within 21 days of the date of the FDIC’s
request.
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The rule requires a written response
from the FDIC’s Director of the Division
of Finance (the Director), or his or her
designee, notifying the requesting
institution and any materially affected
institutions of the determination of the
Director as to whether the requested
change is warranted, whenever feasible:
(1) Within 60 days of receipt by the
FDIC of the request for review; (2)
within 60 days of the date of the last
response to the notification if additional
institutions are notified by the
requesting institution or the FDIC; or (3)
within 60 days of its receipt of the
additional information, whichever date
is latest.
If a requesting institution disagrees
with the determination of the Director,
that institution may appeal to the FDIC’s
Assessment Appeals Committee (the
AAC). Notice of the procedures
applicable to appeals to the AAC will be
included with the Director’s written
determination. Under the final rule, an
appeal to the AAC must be filed within
30 calendar days of the date of the
Director’s written determination. The
AAC’s determination will be final and
not subject to judicial review.
The FDIC will freeze temporarily the
distribution of any dividend amount in
dispute for the institutions involved in
the challenge until the challenge is
resolved.
The FDIC received specific comments
on this part of the proposal from only
one source. The banking trade
association that submitted the comment
supported ‘‘quarterly notification of
each bank’s share of future dividends’’
and ‘‘clarification of the dispute
resolution process to be consistent with
that for risk-based premium
classification.’’
The association also requested that
the quarterly notification provide
enough information for banks to
understand how their dividend shares
were computed. Given that a bank will
be provided with a relatively short time
period of 90 days to challenge its share,
the notification needed to provide
sufficient data so that a bank could
readily check its allocation, and the
notification should provide the deadline
for filing a challenge. Staff concurs with
this request. It is staff’s intention that
the quarterly notification will provide
the necessary data.
Additional Comments on the Proposed
Rule
One of the banking trade associations
also recommended that the FDIC
establish a rule regarding the
transferability of claims on future
dividends; specifically, it recommended
that the FDIC permit sales of dividend
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20:11 Dec 01, 2008
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shares and promulgate rules clarifying
the regulatory implications. The FDIC
agrees that these claims should be
transferable and has so provided in the
final rule. However, the transfer of these
claims will remain a matter of contract
solely between the interested parties.
The FDIC will pay dividends to
institutions according to the FDIC’s
records without regard to whether
claims on dividends have been
transferred. Thus, the FDIC will not
track sales or recognize assignments for
payment purposes, since doing so
would be labor-intensive and require a
substantial amount of resources. As the
FDIC expects that only a very limited
number of institutions will be interested
in transferring claims to future
dividends, it would be inequitable to
make the entire banking industry
subsidize the costs of tracking sales and
recognizing assignments.
III. Regulatory Analysis and Procedure
A. Solicitation of Comments on Use of
Plain Language
Section 722 of the Gramm-LeachBliley Act, Public Law 106–102, 113
Stat. 1338, 1471 (Nov. 12, 1999),
requires the Federal banking agencies to
use plain language in all proposed and
final rules published after January 1,
2000. We received no comments on how
to make this rule easier to understand.
The Regulatory Flexibility Act
(‘‘RFA’’) requires a federal agency
publishing a final rulemaking to prepare
and make available for public comment
an initial regulatory flexibility analysis
that describes the impact of the rule on
small entities. 5 U.S.C. 603(a). Pursuant
to regulations issued by the Small
Business Administration (13 CFR
121.201), a ‘‘small entity’’ includes a
bank holding company, commercial
bank or savings association with assets
of $165 million or less (collectively,
small banking organizations). The RFA
provides that an agency is not required
to prepare and publish a regulatory
flexibility analysis if the agency certifies
that the rule will not have a significant
impact on a substantial number of small
entities. 5 U.S.C. 605(b).
Pursuant to section 605(b) of the RFA,
the FDIC certifies that the final rule will
not have a significant economic impact
on a substantial number of small
entities. The final rule will provide the
procedures for the FDIC’s declaration,
distribution, and payment of dividends
to insured depository institutions under
the circumstances set forth in the FDI
Act. While each insured depository
institution will have the opportunity to
Frm 00010
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C. Paperwork Reduction Act
No collections of information
pursuant to the Paperwork Reduction
Act (44 U.S.C. Ch. 3501 et seq.) are
contained in the final rule.
D. The Treasury and General
Government Appropriations Act, 1999—
Assessment of Federal Regulations and
Policies on Families
The FDIC has determined that the
final rule will not affect family wellbeing within the meaning of section 654
of the Treasury and General
Government Appropriations Act,
enacted as part of the Omnibus
Consolidated and Emergency
Supplemental Appropriations Act of
1999 (Pub. L. 105–277, 112 Stat. 2681).
List of Subjects in 12 CFR Part 327
Bank deposit insurance, Banks,
Banking, Savings associations.
Authority and Issuance
For the reasons set forth in the
preamble, chapter III of title 12 of the
Code of Federal Regulations is amended
by revising subpart C of part 327 to read
as follows:
■
B. Regulatory Flexibility Act
PO 00000
request review of the amount of its
dividend each time a dividend is
declared, the final rule will rely on
information already collected and
maintained by the FDIC in the regular
course of business. The final rule will
not directly or indirectly impose any
reporting, recordkeeping or compliance
requirements on insured depository
institutions.
PART 327—ASSESSMENTS
Subpart C—Implementation of
Dividend Requirements
Sec.
327.50 Purpose and scope.
327.51 Definitions.
327.52 Annual dividend determination.
327.53 Allocation and payment of
dividends.
327.54 Requests for review.
Authority: 12 U.S.C. 1817(e)(2), (4).
§ 327.50
Purpose and scope.
(a) Scope. This subpart C of part 327
implements the dividend provisions of
section 7(e)(2) of the Federal Deposit
Insurance Act, 12 U.S.C. 1817(e)(2), and
applies to insured depository
institutions.
(b) Purpose. This subpart C of part
327 provides the rules for:
(1) The FDIC’s annual determination
of whether to declare a dividend and the
aggregate amount of any dividend;
(2) The FDIC’s determination of the
amount of each insured depository
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institution’s share of any declared
dividend;
(3) The time and manner for the
FDIC’s payments of dividends; and
(4) An institution’s appeal of the
FDIC’s determination of its dividend
amount.
§ 327.51
Definitions.
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For purposes of this subpart:
(a) Assessment base share means an
insured depository institution’s 1996
assessment base ratio divided by the
total of all existing, eligible insured
depository institution’s shares of the
1996 assessment base (rounded to 14
decimal places).
(b) Board has the same meaning as
under subpart B of this part.
(c) DIF means the Deposit Insurance
Fund.
(d)(1) An eligible premium means an
assessment paid by an insured
depository institution (or its
predecessor) that did not exceed, for the
applicable assessment period, the
maximum assessment applicable in that
assessment period to a Risk Category 1
institution under subpart A of this part.
(2) An eligible premium does not
include any assessments or fees paid by
insured depository institutions for the
Temporary Liquidity Guarantee
Program. An eligible premium also does
not include any emergency special
assessments paid by insured depository
institutions pursuant to section
13(c)(4)(G) of the Federal Deposit
Insurance Act, 12 U.S.C. 1823(c)(4)(G),
whether to repay any loss to the FDIC
as a consequence of the Temporary
Liquidity Guarantee Program or for any
other reason.
(e) An insured depository institution’s
eligible premium share means that
institution’s cumulative eligible
premiums over the previous five years
(ending on December 31st of the year
prior to the year in which the dividend
is declared) divided by the cumulative
total of all eligible premiums paid by all
existing insured depository institutions
or their predecessors over that five-year
period (rounded to 14 decimal places).
(f) An insured depository institution’s
1996 assessment base ratio means an
institution’s 1996 assessment base ratio,
as determined pursuant to § 327.33 of
this part, adjusted as necessary to reflect
subsequent transactions in which the
institution succeeds to another
institution’s assessment base ratio, or a
transfer of the assessment base ratio
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pursuant to § 327.34. The 1996
assessment base ratio shall be rounded
to seven decimal places.
(g) Predecessor, when used in the
context of insured depository
institutions, refers to the institution
merged with or into a resulting
institution or acquired by an institution
under § 327.33(c) under the de facto
rule, consistent with the definition of
successor in § 327.31.
§ 327.52
Annual dividend determination.
(a) If the DIF reserve ratio as of
December 31st of 2008 or any later year
equals or exceeds 1.35 percent, then on
or before May 10th of the following
year, the Board shall determine whether
to declare a dividend based upon the
reserve ratio of the DIF as of December
31st of the preceding year, and the
amount of the dividend, if any.
(b) Except as provided in paragraph
(d) of this section, if the reserve ratio of
the DIF equals or exceeds 1.35 percent
of estimated insured deposits and does
not exceed 1.50 percent, the Board shall
declare the amount that is equal to onehalf of the amount in excess of the
amount required to maintain the reserve
ratio at 1.35 percent as the aggregate
dividend to be paid to insured
depository institutions.
(c) Except as provided in paragraph
(d) of this section, if the reserve ratio of
the DIF exceeds 1.50 percent of
estimated insured deposits, the Board
shall declare the amount in excess of the
amount required to maintain the reserve
ratio at 1.50 percent as the aggregate
dividend to be paid to insured
depository institutions and shall declare
a dividend under paragraph (b) of this
section.
(d)(1) The Board may suspend or limit
a dividend otherwise required to be
paid if the Board determines that:
(i) A significant risk of losses to the
DIF exists over the next one-year period;
and
(ii) It is likely that such losses will be
sufficiently high as to justify the Board
concluding that the reserve ratio should
be allowed:
(A) To grow temporarily without
requiring dividends when the reserve
ratio is between 1.35 and 1.50 percent;
or
(B) To exceed 1.50 percent.
(2) In making a determination under
this paragraph, the Board shall consider:
(i) National and regional conditions
and their impact on insured depository
institutions;
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73163
(ii) Potential problems affecting
insured depository institutions or a
specific group or type of depository
institution;
(iii) The degree to which the
contingent liability of the FDIC for
anticipated failures of insured
institutions adequately addresses
concerns over funding levels in the DIF;
and
(iv) Any other factors that the Board
may deem appropriate.
(3) Within 270 days of making a
determination under this paragraph, the
Board shall submit a report to the
Committee on Financial Services and
the Committee on Banking, Housing,
and Urban Affairs, providing a detailed
explanation of its determination,
including a discussion of the factors
considered.
(e) The Board shall annually review
any determination to suspend or limit
dividend payments and must either:
(1) Make a new finding justifying the
renewal of the suspension or limitation
under paragraph (d) of this section, and
submit a report as required under
paragraph (d)(3) of this section; or
(2) Reinstate the payment of
dividends as required by paragraph (b)
or (c) of this section.
§ 327.53 Allocation and payment of
dividends.
(a)(1) The allocation of any dividend
among insured depository institutions
shall be based on the institution’s 1996
assessment base share and the
institution’s eligible premium share.
(2) As set forth in the following table,
the part of a dividend allocated based
upon an institution’s 1996 assessment
base share shall decline steadily from
100 percent to zero over fifteen years,
and the part of a dividend allocated
based upon an institution’s eligible
premium share shall increase steadily
over the same fifteen-year period from
zero to 100 percent. The 15-year period
shall begin as if it had applied to a
dividend based upon the reserve ratio at
the end of 2006 and shall end with
respect to any dividend based upon the
reserve ratio at the end of 2021.
Dividends based upon the reserve ratio
as of December 31, 2021, and thereafter
shall be allocated among insured
depository institutions based solely on
eligible premium shares.
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TOTAL DIF DIVIDEND DISTRIBUTION TABLE
Part of total DIF dividend
determined by:
Based upon the DIF reserve ratio at year-end
1996 Assessment
base shares
2006 1 ...........................................................................................................................................................
2007 1 ...........................................................................................................................................................
2008 .............................................................................................................................................................
2009 .............................................................................................................................................................
2010 .............................................................................................................................................................
2011 .............................................................................................................................................................
2012 .............................................................................................................................................................
2013 .............................................................................................................................................................
2014 .............................................................................................................................................................
2015 .............................................................................................................................................................
2016 .............................................................................................................................................................
2017 .............................................................................................................................................................
2018 .............................................................................................................................................................
2019 .............................................................................................................................................................
2020 .............................................................................................................................................................
2021 .............................................................................................................................................................
Thereafter ....................................................................................................................................................
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1 The
1 (100.0%)
14/15 (93.3%)
13/15 (86.7%)
4/5 (80.0%)
11/15 (73.3%)
2/3 (66.7%)
3/5 (60.0%)
8/15 (53.3%)
7/15 (46.7%)
2/5 (40.0%)
1/3 (33.3%)
4/15 (26.7%)
1/5 (20.0%)
2/15 (13.3%)
1/15 (6.7%)
0 (0%)
0 (0%)
Eligible premium
shares
0 (0%)
1/15 (6.7%)
2/15 (13/3%)
1/5 (20.0%)
4/15 (26.7%)
1/3 (33.3%)
2/5 (40.0%)
7/15 (46.7%)
8/15 (53.3%)
3/5 (60.0%)
2/3 (66.7%)
11/15 (73.3%)
4/5 (80.0%)
13/15 (86.7%)
14/15 (93.3%)
1 (100.0%)
1 (100%)
15-year period shall be computed as if it had applied to dividends based upon the reserve ratios at the end of 2006 and 2007.
(b) The FDIC shall notify each insured
depository institution of the amount of
such institution’s dividend payment
based on its share as determined
pursuant to paragraph (a) of this section.
Notice shall be given as soon as
practicable after the Board’s declaration
of a dividend through a special notice
of dividend.
(c) The FDIC shall pay individual
dividend amounts, unless they are the
subject of a request for review under
§ 327.54, to insured depository
institutions on June 30 of the year the
dividend is declared. The FDIC shall
notify institutions whether dividends
will offset the next collection of
assessments at the time of the invoice.
An institution’s dividend amount will
be settled with that institution’s
assessment. Any excess dividend
amount will be a net credit to the
institution and will be deposited into
the deposit account designated by the
institution for assessment payment
purposes pursuant to subpart A of this
part. If the dividend amount is less than
the amount of assessment due, then the
institution’s account will be directly
debited by the FDIC to reflect the net
amount owed to the FDIC as an
assessment.
(d) If an insured depository
institution’s dividend amount is subject
to review under § 327.54, and that
request is not finally resolved prior to
the dividend payment date, the FDIC
shall withhold the payment of the
disputed portion of the dividend
amount involved in the request for
review. Adjustments to an individual
institution’s dividend amount based on
the final determination of a request for
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20:11 Dec 01, 2008
Jkt 217001
review will be handled in the same
manner as assessment underpayments
and overpayments.
(e) An institution may sell, assign, or
otherwise transfer its right to a current
or future dividend. However, the FDIC
will pay dividend amounts to insured
institutions without regard to any such
sale, assignment or transfer, regardless
of whether the FDIC has received notice
of the sale, assignment or transfer.
§ 327.54
Requests for review.
(a) An insured depository institution
may submit a request for review of the
FDIC’s determination of the institution’s
1996 assessment base share and/or its
eligible premium share as shown on the
institution’s quarterly assessment
invoice. Such requests shall be subject
to the provisions of § 327.3(f)(3) of this
part, except for the invoice provided by
the FDIC in March of any calendar year
in which the FDIC declares a dividend.
If the FDIC declares a dividend, any
request for review of an institution’s
1996 assessment base share and/or its
eligible premium share as shown on the
institution’s March quarterly assessment
invoice must be filed within 30 days of
the date that the FDIC notifies the
institution of its dividend amount. If an
institution does not submit a timely
request for review for the first invoice in
which the dividend-related information
that forms the basis for the request
appears, the institution shall be barred
from subsequently requesting review of
that information.
(b) An insured depository institution
may submit a request for review of the
FDIC’s determination of the institution’s
dividend amount as shown on the
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special notice of dividend. Such review
may be requested if:
(1) The institution disagrees with the
calculation of the dividend as stated on
the special notice of dividend; or
(2) The institution believes that the
1996 assessment base ratio attributed to
the institution is inaccurate or has not
been adjusted to include the 1996
assessment base ratio of an institution
acquired by merger or transfer pursuant
to §§ 327.33 and 327.34 of this part and
§ 327.51(g), and the institution has not
had a prior opportunity to request
review or appeal under subpart B of this
part or paragraph (a) of this section; or
(3) The institution believes that the
special notice does not fully or
accurately reflect its eligible premiums
or those of any of its predecessors and
the institution has not had a prior
opportunity to request review or appeal
under subpart B of this part or
paragraph (a) of this section.
(c) Any such request for review under
paragraph (b) of this section must be
submitted within 30 days of the date of
the special notice of dividend for which
a change is requested. The request for
review shall be submitted to the
Division of Finance and shall provide
documentation sufficient to support the
change sought by the institution. If an
institution does not submit a timely
request for review, that institution may
not subsequently request review of its
dividend amount, subject to paragraph
(d) of this section. At the time of filing
with the FDIC, the requesting institution
shall notify, to the extent practicable,
any other insured depository institution
that would be directly and materially
affected by granting the request for
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review and provide such institution
with copies of the request for review,
the supporting documentation, and the
FDIC’s procedures for requests under
this subpart. The FDIC shall make
reasonable efforts, based on its official
systems of records, to determine that
such institutions have been identified
and notified.
(d) During the FDIC’s consideration of
a request for review, the amount of
dividend in dispute will not be paid.
(e) Within 30 days of receiving notice
of the request for review under
paragraph (b) of this section, those
institutions identified as potentially
affected by the request for review may
submit a response to such request, along
with any supporting documentation, to
the Division of Finance, and shall
provide copies to the requesting
institution. If an institution that was
notified under paragraph (c) of this
section does not submit a response to
the request for review, that institution
may not subsequently:
(1) Dispute the information submitted
by any other institution on the
transaction(s) at issue in that review
process; or
(2) Appeal the decision by the
Director of the Division of Finance.
(f) If additional information is
requested of the requesting or affected
institutions by the FDIC, such
information shall be provided by the
institution within 21 days of the date of
the FDIC’s request for additional
information.
(g) Any institution submitting a
timely request for review under
paragraph (b) of this section will receive
a written response from the FDIC’s
Director of the Division of Finance
(‘‘Director’’), or his or her designee,
notifying the affected institutions of the
determination of the Director as to
whether the requested change is
warranted, whenever feasible:
(1) Within 60 days of receipt by the
FDIC of the request for review;
(2) If additional institutions have been
notified by the requesting institution or
the FDIC, within 60 days of the date of
the last response to the notification; or
(3) If additional information has been
requested by the FDIC, within 60 days
of receipt of the additional information,
whichever is later. Notice of the
procedures applicable to appeals under
paragraph (g) of this section will be
included with the Director’s written
determination.
(h) An insured depository institution
may appeal the determination of the
Director to the FDIC’s Assessment
Appeals Committee on the same
grounds as set forth under paragraph (b)
of this section. Any such appeal must be
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20:11 Dec 01, 2008
Jkt 217001
submitted within 30 calendar days from
the date of the Director’s written
determination. The decision of the
Assessment Appeals Committee shall be
the final determination of the FDIC.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. E8–28405 Filed 12–1–08; 8:45 am]
BILLING CODE 6714–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2008–1251; Directorate
Identifier 2008–SW–61–AD; Amendment 39–
15756; AD 2008–22–53]
RIN 2120–AA64
Airworthiness Directives; MD
Helicopters, Inc. Model MD900
Helicopters
Federal Aviation
Administration, DOT.
ACTION: Final rule; request for
comments.
AGENCY:
SUMMARY: This document supersedes
AD 2008–18–52 and publishes in the
Federal Register an amendment
adopting Emergency Airworthiness
Directive (AD) 2008–22–53 which was
sent previously to all known U.S.
owners and operators of MD
Helicopters, Inc. (MDHI) Model MD900
helicopters by individual letters. This
AD requires turning ON both Vertical
Stabilizer Control System (VSCS)
switches and turning OFF the autopilot
(AP/SAS) switch; pulling certain AP/
SAS circuit breakers; installing a
placard near the AP/SAS master switch;
installing an airspeed limitation placard
on the instrument panel; and making
changes to the Rotorcraft Flight Manual
(RFM). This AD is prompted by 4
occurrences in which the left VSCS
adapter tubes failed on the MD900
helicopters and the vertical stabilizer
became uncontrollable, resulting in
reduced yaw control of the helicopter.
There were no injuries, but in one
occurrence, due to the high speed quick
yaw, the helicopter lost a window and
a door. The actions specified by this AD
are intended to prevent loss of yaw
control and subsequent loss of control of
the helicopter.
DATES: Effective December 17, 2008, to
all persons except those persons to
whom it was made immediately
effective by Emergency AD 2008–22–53,
PO 00000
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73165
issued on October 23, 2008, which
contained the requirements of this
amendment.
Comments for inclusion in the Rules
Docket must be received on or before
February 2, 2009.
ADDRESSES: Use one of the following
addresses to submit comments on this
AD:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov. Follow the
instructions for submitting comments.
• Fax: 202–493–2251.
• Mail: U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue, SE.,
Washington, DC 20590.
• Hand Delivery: U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue, SE.,
Washington, DC 20590, between 9 a.m.
and 5 p.m., Monday through Friday,
except Federal holidays.
You may get the service information
identified in this AD from MD
Helicopters Inc., Attn: Customer
Support Division, 4555 E. McDowell
Rd., Mail Stop M615, Mesa, Arizona
85215–9734, telephone 1–800–388–
3378, fax 480–346–6813, or on the Web
at https://www.mdhelicopters.com.
Examining the Docket: You may
examine the docket that contains the
AD, any comments, and other
information on the Internet at https://
www.regulations.gov, or in person at the
Docket Operations office between 9 a.m.
and 5 p.m., Monday through Friday,
except Federal holidays. The Docket
Operations office (telephone (800) 647–
5527) is located in Room W12–140 on
the ground floor of the West Building at
the street address stated in the
ADDRESSES section. Comments will be
available in the AD docket shortly after
receipt.
FOR FURTHER INFORMATION CONTACT: Eric
D. Schrieber, FAA, Los Angeles Aircraft
Certification Office, Aviation Safety
Engineer, Airframe Branch, 3960
Paramount Blvd., Lakewood, California
90712, telephone 562–627–5348, fax
562–627–5210.
SUPPLEMENTARY INFORMATION: On August
20, 2008, we issued Emergency AD
2008–18–51 for 500N, 600N, and
MD900 helicopters. Emergency AD
2008–18–51 was prompted by reports
that 2 MD900 helicopters experienced
failed VSCS adapter tubes. In one case,
the helicopter experienced an
uncommanded yaw, resulting in loss of
a window and a door. The Emergency
AD required several actions related to
the Yaw Stability Augmentation System
(YSAS) for the Model 500N and 600N
E:\FR\FM\02DER1.SGM
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]]>Agencies
[Federal Register Volume 73, Number 232 (Tuesday, December 2, 2008)]
[Rules and Regulations]
[Pages 73158-73165]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-28405]
-----------------------------------------------------------------------
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 327
RIN 3064-AD27
Assessment Dividends
AGENCY: Federal Deposit Insurance Corporation (``FDIC'').
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The FDIC is adopting a final rule to implement the assessment
dividend requirements in the Federal Deposit Insurance Reform Act of
2005 (the Reform Act) and the Federal Deposit Insurance Reform
Conforming Amendments Act of 2005 (the Amendments Act). The final rule
will take effect on January 1, 2009. It is the follow-up to the
temporary final rule on assessment dividends that the FDIC issued in
October 2006, which expires on December 31, 2008.
DATES: Effective Date: January 1, 2009.
FOR FURTHER INFORMATION CONTACT: Munsell W. St.Clair, Chief, Banking
and Regulatory Policy Section, Division of Insurance and Research,
(202) 898-8967; Missy Craig, Senior Program Analyst, Division of
Insurance and Research, (202) 898-8724; Donna Saulnier, Manager,
Assessment Policy Section, Division of Finance, (703) 562-6167; Joseph
A. DiNuzzo, Counsel, Legal Division, (202) 898-7349; or Sheikha Kapoor,
Senior Attorney, Legal Division, (202) 898-3960.
SUPPLEMENTARY INFORMATION:
I. Background
A. Reform Act Requirements
Section 7(e)(2) of the Federal Deposit Insurance Act (the FDI Act),
as amended by the Reform Act, requires the FDIC, under most
circumstances, to declare dividends from the Deposit Insurance Fund
(the fund or the DIF) when the DIF reserve ratio (the Reserve Ratio) at
the end of a calendar year equals or exceeds 1.35 percent. When the
Reserve Ratio equals or exceeds 1.35 percent, and is not higher than
1.50 percent, the FDIC generally must declare one-half of the amount in
the DIF in excess of the amount required to maintain the Reserve Ratio
at 1.35 percent as dividends to be paid to insured depository
institutions. The FDIC Board of Directors (the Board) may suspend or
limit dividends to be paid, however, if it determines in writing, after
taking a number of statutory factors into account, that: \1\
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\1\ The statutory factors that the Board must consider are:
1. National and regional conditions and their impact on insured
depository institutions;
2. Potential problems affecting insured depository institutions
or a specific group or type of depository institution;
3. The degree to which the contingent liability of the
Corporation for anticipated failures of insured institutions
adequately addresses concerns over funding levels in the Deposit
Insurance Fund; and
4. Any other factors that the Board determines are appropriate.
12 U.S.C. 1817(e)(2)(F).
1. The DIF faces a significant risk of losses over the next year;
and
2. It is likely that such losses will be sufficiently high as to
justify a finding by the Board that the Reserve Ratio should
temporarily be allowed to grow without requiring dividends when the
[[Page 73159]]
Reserve Ratio is between 1.35 and 1.50 percent or to exceed 1.50
percent.\2\
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\2\ This provision allows the FDIC's Board to suspend or limit
dividends in circumstances where the Reserve Ratio exceeds 1.5
percent, if the Board makes a determination to continue a suspension
or limitation that it imposed initially when the reserve ratio was
between 1.35 and 1.5 percent.
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When the Reserve Ratio exceeds 1.50 percent at the end of a
calendar quarter, the FDI Act requires the FDIC, absent certain limited
circumstances (discussed in footnote 2), to declare a dividend equal to
the excess of the amount required to maintain the Reserve Ratio at 1.50
percent as dividends to be paid to insured depository institutions.
If the Board decides to suspend or limit dividends, it must submit,
within 270 days of making the determination, a report to the Committee
on Banking, Housing, and Urban Affairs of the Senate and to the
Committee on Financial Services of the House of Representatives. The
report must include a detailed explanation for the determination and a
discussion of the factors required to be considered.\3\
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\3\ See section 5 of the Amendments Act. Public Law 109-173, 119
Stat. 3601, which was signed into law by the President on February
15, 2006.
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The FDI Act directs the FDIC to consider each insured depository
institution's relative contribution to the DIF (or any predecessor
deposit insurance fund) when calculating such institution's share of
any dividend. More specifically, when allocating dividends, the Board
must consider:
1. The ratio of the assessment base of an insured depository
institution (including any predecessor) on December 31, 1996, to the
assessment base of all eligible insured depository institutions on that
date;
2. The total amount of assessments paid on or after January 1,
1997, by an insured depository institution (including any predecessor)
to the DIF (and any predecessor fund); \4\
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\4\ This factor is limited to deposit insurance assessments paid
to the DIF (or previously to the Bank Insurance Fund (the BIF) or
the Savings Association Insurance Fund (the SAIF)) and does not
include assessments paid to the Financing Corporation (FICO) used to
pay interest on outstanding FICO bonds, although the FDIC collects
those assessments on behalf of FICO. Beginning in 1997, the FDIC
collected separate FICO assessments from both SAIF and BIF members.
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3. That portion of assessments paid by an insured depository
institution (including any predecessor) that reflects higher levels of
risk assumed by the institution; and
4. Such other factors as the Board deems appropriate.
The Reform Act expressly requires the FDIC to prescribe by regulation
the method for calculating, declaring and paying dividends. The
dividend regulation must include provisions allowing an insured
depository institution a reasonable opportunity to challenge
administratively the amount of dividends it is awarded. Under the
Reform Act, any review by the FDIC pursuant to these administrative
procedures is final and not subject to judicial review.
B. The Temporary Final Rule on Assessment Dividends
In October 2006, the FDIC issued a temporary final rule to
implement the dividend requirements of the Reform Act (the Temporary
Final Rule).\5\
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\5\ 71 FR 61385 (October 18, 2006).
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The Temporary Final Rule, which expires on December 31, 2008,
provides definitions and details on how an institution may request FDIC
review of a determination of the institution's dividend and how an
institution may appeal the FDIC's response to that request. In the
Temporary Final Rule, the FDIC adopted a simple system for allocating
any dividends that might be declared during the two-year duration of
the regulation. Any dividends awarded before January 1, 2009, will be
distributed simply in proportion to an institution's 1996 assessment
base ratio, as determined pursuant to the one-time assessment credit
rule.\6\
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\6\ 12 CFR 327.53. No dividend has or will be issued under the
Temporary Final Rule.
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C. The Advance Notice of Proposed Rulemaking and Notice of Proposed
Rulemaking
At the time it adopted the Temporary Final Rule, the FDIC stated
its intention to initiate a second, more comprehensive notice-and-
comment rulemaking on dividends beginning with an advanced notice of
proposed rulemaking to explore alternative methods for distributing
future dividends after the temporary dividend rules expires on December
31, 2008. The publication of the assessment dividend advance notice of
rulemaking in September 2007 (the ANPR) commenced that process.\7\
Subsequently in March 2008, based upon comments received on the ANPR,
the FDIC issued a proposed rule on the distribution of future dividends
(the NPR).\8\
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\7\ 72 FR 53181 (September 18, 2007).
\8\ 73 FR 15459 (Mar. 24, 2008).
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II. The Final Rule
The FDIC is adopting a final rule identical to the proposed rule,
with a few exceptions described below.
The FDIC received three comment letters on the proposed rule: two
from banking trade associations and one from a savings association. The
savings association generally supported the proposed rule. One trade
association stated that the proposal generally met the specifications
that the association had suggested in its comments on the ANPR,
although the association would not endorse the NPR. The other trade
association supported many specific provisions of the proposed rule.
Each of the comments had some specific suggestions that are discussed
further below.
Annual Determination of Whether Dividends Are Required/Declaration of
Dividends
The process under the final rule for the annual determination of
dividends and declaration of dividends is identical with the process
under the proposed rule. The FDIC will determine annually whether the
reserve ratio at the end of the prior year equaled or exceeded 1.35
percent of estimated insured deposits or 1.50 percent, thereby
triggering a dividend requirement. If a dividend is triggered, the FDIC
will determine, based on statutory factors, whether payment of
dividends should be limited or suspended. If the FDIC does not limit or
suspend payment, or does not renew such a determination, the aggregate
amount of the dividend under the final rule will be determined as
provided by the Reform Act. The FDIC will declare any dividend on or
before May 10th of the year following the year in which the reserve
ratio exceeded 1.35 percent or 1.50 percent.\9\
The FDIC received one specific comment on this part of the
proposal. One of the trade associations endorsed an accelerated annual
process for determination and distribution of dividends.
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\9\ The two banking trade associations generally promoted
conservative fund management as the optimal strategy for solving the
dividend allocation issue. They both stated that FDIC fund
management should ensure that the fund be kept beneath the 1.35
percent statutory level so that dividends were not triggered. Low,
smooth, steady premiums that prevent a dividend trigger would
obviate the issue of how to equitably distribute dividends between
the older and newer segments of the banking industry. One of the
associations stated that such a policy would benefit the insurance
fund, the industry in general, and consumers.
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Allocation of Dividends
The final rule adopts the proposed rule's methodology for
allocation of dividends. The total dividend in any year will be divided
into two parts. One of the two parts will be allocated based on the
ratio of each institution's (including any predecessors') 1996
assessment base compared to the total of all existing eligible
institutions' 1996
[[Page 73160]]
assessment bases (an institution's 1996 assessment base share). The
other part of the total dividend will be allocated based on each
institution's (including any predecessors') ratio of cumulative
eligible premiums over the previous five years to the total of
cumulative eligible premiums paid by all existing institutions (or
their predecessors) over the previous five years (an institution's
eligible premium share). The part of any potential dividend that will
be allocated based upon 1996 assessment base shares will decline
steadily from 100 percent to zero over 15 years; the part of any
potential dividend that will be allocated based upon eligible premium
shares will increase steadily over the same 15-year period from zero to
100 percent. After the 15-year period, any dividend will be allocated
solely based on eligible premium shares.
The 15-year period will run from the end of 2006 to the end of 2021
and will govern dividends based upon the reserve ratio at the end of
the years 2008 through 2021. Actual dividends, if any, will be
allocated and paid the following year. Table A shows the change in the
allocation of potential dividends over time.
Table A--Total DIF Dividend Distribution Table
------------------------------------------------------------------------
Part of total DIF dividend
determined by:
Based upon the DIF reserve ratio -------------------------------------
at year-end 1996 Assessment Eligible premium
base shares shares
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2006.............................. 1 (100.0%) 0 (0%)
2007.............................. 14/15 (93.3%) 1/15 (6.7%)
2008.............................. 13/15 (86.7%) 2/15 (13.3%)
2009.............................. 4/5 (80.0%) 1/5 (20.0%)
2010.............................. 11/15 (73.3%) 4/15 (26.7%)
2011.............................. 2/3 (66.7%) 1/3 (33.3%)
2012.............................. 3/5 (60.0%) 2/5 (40.0%)
2013.............................. 8/15 (53.3%) 7/15 (46.7%)
2014.............................. 7/15 (46.7%) 8/15 (53.3%)
2015.............................. 2/5 (40.0%) 3/5 (60.0%)
2016.............................. 1/3 (33.3%) 2/3 (66.7%)
2017.............................. 4/15 (26.7%) 11/15 (73.3%)
2018.............................. 1/5 (20.0%) 4/5 (80.0%)
2019.............................. 2/15 (13.3%) 13/15 (86.7%)
2020.............................. 1/15 (6.7%) 14/15 (93.3%)
2021.............................. 0 (0%) 1 (100.0%)
Thereafter........................ 0% 100.0%
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The FDIC received three comments on the proposed method of
allocating dividends. One banking trade association supported the
balanced consideration of alternative dividend allocation schemes,
taking into account the significant premiums paid in the early 1990s to
recapitalize the FDIC. The second banking trade association stated that
the FDIC proposal was a reasonable compromise between the fund balance
method and the payments method described in the ANPR and that the
proposed rule generally responded to their wishes that the method be
simple but detailed enough so that community banks understood it, and
that it not be subject to sudden or unexpected changes.\10\ It
suggested one additional change: That the 15-year phase-out period
begin in 2009 rather than 2006 as banks were operating under the
existing rule on dividends for the years 2006 through 2008.
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\10\ The ANPR sought comment on two general approaches to
allocating dividends--the fund balance method and the payments
method. The two allocation methods potentially differed most
significantly in the way they balanced two of the statutory factors
that the Board must consider--an institutions' relative 1996
assessment bases and assessments paid after 1996--and, thus, in the
way each method would treat older versus newer institutions. The
terms ``older'' and ``newer,'' however, do not simply refer to age.
An institution that had a large 1996 assessment base compared to its
current assessment base is considered an older institution, and an
institution that had no assessment base in 1996 or only a small
assessment base compared to its present assessment base is
considered a newer institution.
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The commenting savings association generally supported the
provisions of the proposed rule but recommended that the FDIC use a 10-
year rather than a 15-year transition period. The bank stated that
parity dictated a 10-year phase-in period since a 10-year period
elapsed with no general collection of premiums, and it would be
punitive to other organizations to continue to count an institution's
assessment credits after they have been used to offset premiums.
The FDIC continues to believe that the 15-year phase-out transition
period, beginning in 2006, is a reasonable compromise between the
legitimate points of view of older and newer banking institutions and
thus recommends adopting the allocation method proposed in the NPR.
Eligible Premiums
As under the proposed rule, an eligible premium will be defined as
that part of an assessment that was charged at no more than the maximum
rate then applicable to a Risk Category I institution. Whether an
institution paid its assessment in cash or offset it with assessment
credits will not affect its eligible premium. An institution's eligible
premium will include eligible premiums paid by a predecessor.
The final rule clarifies that eligible premiums would not include
any assessments or fees paid by insured depository institutions for the
Temporary Liquidity Guarantee Program or any emergency special
assessments paid by insured depository institutions pursuant to the
systemic risk provisions of the Federal Deposit Insurance Act, whether
related to the Temporary Liquidity Guarantee Program or not. \11\
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\11\ The systemic risk emergency special assessment provision is
Section 13(c)(4)(G) of the FDI Act, 12 U.S.C. 1823(c)(4)(G).
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The FDIC received three comments on this part of the proposal. The
banking trade associations supported the proposal. The commenting
savings association suggested that the FDIC only count payments made
with ``real dollars'' rather than assessment credits in calculating
eligible premiums.
[[Page 73161]]
The FDIC continues to believe that allowing an eligible premium to
include premiums offset with assessment credits is also part of the
reasonable compromise between the legitimate points of view of older
and newer banking institutions and thus recommends adopting the
definition of an eligible premium proposed in the NPR. In any event,
most assessment credits have already been used. Staff estimates that at
the end of 2008 only four percent of the original assessment credits
will remain. Given the small likelihood of a dividend within the next
several years, including premiums offset with assessment credits within
the definition of an eligible premium will have little practical effect
for most institutions.
Definition of a ``Predecessor'' Insured Depository Institution
Under the final rule, consistent with the requirements of the
Reform Act, the allocation of dividends to an insured depository
institution will in part be based on the 1996 assessment base ratio of,
and the post-1996 assessments paid by, insured depository institutions
of which the insured depository institution is the successor. As in the
Temporary Final Rule, the final rule defines a predecessor insured
depository institution by cross referencing the definition of successor
insured depository institution in the one-time assessment credit rule.
(See 12 CFR 327, subpart B.) In effect, a predecessor institution is
the mirror image of a successor institution. Notably, the definition of
successor in the one-time credit regulation includes a de facto rule,
applicable in transactions in which an insured depository institution
assumes substantially all of the deposit liabilities and acquires
substantially all of the assets of another insured depository
institution.
The FDIC received one specific comment on this part of the
proposal. The banking trade association that submitted the comment
supported the proposal.
Notification and Payment of Dividends
The process for notifying institutions of their dividend amounts
and paying dividends will be as proposed in the NPR, with one minor
change. The FDIC will advise each institution of its dividend as soon
as practicable after the Board's declaration of a dividend on or before
May 10th. However, individual dividend amounts will be paid to
institutions on June 30 (in connection with the deposit insurance
assessment process), rather than within 45 days after the issuance of
the special notice (or as soon as practicable thereafter) as proposed
in the NPR.
This change is intended to simplify the distribution process.
Dividends will be paid through the Automated Clearing House (ACH) and
offset against assessment payments. If an institution owes additional
assessments, there will be a net debit (resulting in payment to the
FDIC). Conversely, if the FDIC owed additional dividend amounts, there
will be a net credit (resulting in payment from the FDIC).
Under the final rule, the FDIC will freeze the payment of any
disputed portion of dividends. Any adjustment to an individual
institution's dividend resulting from its request for review will be
handled through ACH in the same manner as existing procedures for
underpayment or overpayment of assessments.
The proposed final rule states that the FDIC intends, beginning no
later than 2010, to include with its quarterly assessment invoices the
institution's 1996 assessment base share and its rolling five-year
eligible premium share.
The FDIC received only one specific comment on this part of the
proposal. The banking trade association that submitted the comment
supported the ``acceleration of the annual process for determination
and distribution of dividends, so that any dividends will be
distributed in the first quarter following the year-end declaration.''
Staff notes that dividends cannot be declared at year-end, since the
year-end fund reserve ratio will not be known until some time in the
following February. However, under the final rule, dividends will be
distributed in the same quarter as the declaration (when the Board
declares a dividend in the second quarter, since payment will be made
on June 30th), and will be always be distributed as least as soon as
the quarter after the declaration.
Requests for Review
The final rule's provisions for challenging dividend shares and
amounts are as proposed in the NPR and are similar to those in the
Temporary Final Rule, except that they reflect the FDIC's intention to
provide, beginning in 2010, quarterly dividend-related information with
each assessment invoice. Under the final rule, if a dividend is
declared before 2010, an institution will have 30 days from the date of
the notice of its dividend to request review.
Once the quarterly invoice updates become available, an institution
generally will have 90 days from the date of the invoice to request
review of that dividend-related information, except in a year in which
a dividend is declared. If the FDIC declares a dividend, the
institution will have 30 days from the date of its notice of dividend
amount to request review either of that amount or of any dividend-
related information in its March invoice for that year; the institution
will not have the full 90-day period following the March invoice to
request review.
The rule requires that, when quarterly dividend-related information
becomes available in 2010, an institution will have to request review
of its dividend-related information within 90 days of the first invoice
that fails to reflect accurate information. If it does not submit a
timely request for review, it will be barred from subsequently
requesting review of that information.
The requirement that insured depository institutions monitor their
dividend-related information quarterly and promptly request review is
necessitated by the proposed timing for the payment of dividends. In
the absence of such a strict quarterly requirement, the FDIC would have
needed to reconsider both the timing of dividend payment and possibly
the look-back period for calculating institutions' dividend shares,
which at 5 years is longer than the 3-year recordkeeping requirement in
the FDI Act and longer than the 3-year statute of limitations for
bringing an action on assessment underpayments and overpayments.
The rule requires that at the time of the request for review the
requesting institution must notify all institutions that will be
directly and materially affected, and that it provide those
institutions with copies of the request for review, supporting
documentation, and FDIC procedures for requests for review. The FDIC
will make reasonable efforts to determine that these institutions had
been identified and notified.
Institutions will then have 30 days to submit a response and any
supporting documentation to the FDIC's Division of Finance, copying the
institution making the original request for review. If an institution
notified through this process does not submit a timely response, that
institution will be foreclosed from subsequently disputing the
information submitted by any other institution on the transaction(s) at
issue in the review process. The FDIC may request additional
information as part of its review, and the institution from which such
information is requested will be required to supply that information
within 21 days of the date of the FDIC's request.
[[Page 73162]]
The rule requires a written response from the FDIC's Director of
the Division of Finance (the Director), or his or her designee,
notifying the requesting institution and any materially affected
institutions of the determination of the Director as to whether the
requested change is warranted, whenever feasible: (1) Within 60 days of
receipt by the FDIC of the request for review; (2) within 60 days of
the date of the last response to the notification if additional
institutions are notified by the requesting institution or the FDIC; or
(3) within 60 days of its receipt of the additional information,
whichever date is latest.
If a requesting institution disagrees with the determination of the
Director, that institution may appeal to the FDIC's Assessment Appeals
Committee (the AAC). Notice of the procedures applicable to appeals to
the AAC will be included with the Director's written determination.
Under the final rule, an appeal to the AAC must be filed within 30
calendar days of the date of the Director's written determination. The
AAC's determination will be final and not subject to judicial review.
The FDIC will freeze temporarily the distribution of any dividend
amount in dispute for the institutions involved in the challenge until
the challenge is resolved.
The FDIC received specific comments on this part of the proposal
from only one source. The banking trade association that submitted the
comment supported ``quarterly notification of each bank's share of
future dividends'' and ``clarification of the dispute resolution
process to be consistent with that for risk-based premium
classification.''
The association also requested that the quarterly notification
provide enough information for banks to understand how their dividend
shares were computed. Given that a bank will be provided with a
relatively short time period of 90 days to challenge its share, the
notification needed to provide sufficient data so that a bank could
readily check its allocation, and the notification should provide the
deadline for filing a challenge. Staff concurs with this request. It is
staff's intention that the quarterly notification will provide the
necessary data.
Additional Comments on the Proposed Rule
One of the banking trade associations also recommended that the
FDIC establish a rule regarding the transferability of claims on future
dividends; specifically, it recommended that the FDIC permit sales of
dividend shares and promulgate rules clarifying the regulatory
implications. The FDIC agrees that these claims should be transferable
and has so provided in the final rule. However, the transfer of these
claims will remain a matter of contract solely between the interested
parties. The FDIC will pay dividends to institutions according to the
FDIC's records without regard to whether claims on dividends have been
transferred. Thus, the FDIC will not track sales or recognize
assignments for payment purposes, since doing so would be labor-
intensive and require a substantial amount of resources. As the FDIC
expects that only a very limited number of institutions will be
interested in transferring claims to future dividends, it would be
inequitable to make the entire banking industry subsidize the costs of
tracking sales and recognizing assignments.
III. Regulatory Analysis and Procedure
A. Solicitation of Comments on Use of Plain Language
Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, 113
Stat. 1338, 1471 (Nov. 12, 1999), requires the Federal banking agencies
to use plain language in all proposed and final rules published after
January 1, 2000. We received no comments on how to make this rule
easier to understand.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA'') requires a federal agency
publishing a final rulemaking to prepare and make available for public
comment an initial regulatory flexibility analysis that describes the
impact of the rule on small entities. 5 U.S.C. 603(a). Pursuant to
regulations issued by the Small Business Administration (13 CFR
121.201), a ``small entity'' includes a bank holding company,
commercial bank or savings association with assets of $165 million or
less (collectively, small banking organizations). The RFA provides that
an agency is not required to prepare and publish a regulatory
flexibility analysis if the agency certifies that the rule will not
have a significant impact on a substantial number of small entities. 5
U.S.C. 605(b).
Pursuant to section 605(b) of the RFA, the FDIC certifies that the
final rule will not have a significant economic impact on a substantial
number of small entities. The final rule will provide the procedures
for the FDIC's declaration, distribution, and payment of dividends to
insured depository institutions under the circumstances set forth in
the FDI Act. While each insured depository institution will have the
opportunity to request review of the amount of its dividend each time a
dividend is declared, the final rule will rely on information already
collected and maintained by the FDIC in the regular course of business.
The final rule will not directly or indirectly impose any reporting,
recordkeeping or compliance requirements on insured depository
institutions.
C. Paperwork Reduction Act
No collections of information pursuant to the Paperwork Reduction
Act (44 U.S.C. Ch. 3501 et seq.) are contained in the final rule.
D. The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families
The FDIC has determined that the final rule will not affect family
well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, enacted as part of the Omnibus
Consolidated and Emergency Supplemental Appropriations Act of 1999
(Pub. L. 105-277, 112 Stat. 2681).
List of Subjects in 12 CFR Part 327
Bank deposit insurance, Banks, Banking, Savings associations.
Authority and Issuance
0
For the reasons set forth in the preamble, chapter III of title 12 of
the Code of Federal Regulations is amended by revising subpart C of
part 327 to read as follows:
PART 327--ASSESSMENTS
Subpart C--Implementation of Dividend Requirements
Sec.
327.50 Purpose and scope.
327.51 Definitions.
327.52 Annual dividend determination.
327.53 Allocation and payment of dividends.
327.54 Requests for review.
Authority: 12 U.S.C. 1817(e)(2), (4).
Sec. 327.50 Purpose and scope.
(a) Scope. This subpart C of part 327 implements the dividend
provisions of section 7(e)(2) of the Federal Deposit Insurance Act, 12
U.S.C. 1817(e)(2), and applies to insured depository institutions.
(b) Purpose. This subpart C of part 327 provides the rules for:
(1) The FDIC's annual determination of whether to declare a
dividend and the aggregate amount of any dividend;
(2) The FDIC's determination of the amount of each insured
depository
[[Page 73163]]
institution's share of any declared dividend;
(3) The time and manner for the FDIC's payments of dividends; and
(4) An institution's appeal of the FDIC's determination of its
dividend amount.
Sec. 327.51 Definitions.
For purposes of this subpart:
(a) Assessment base share means an insured depository institution's
1996 assessment base ratio divided by the total of all existing,
eligible insured depository institution's shares of the 1996 assessment
base (rounded to 14 decimal places).
(b) Board has the same meaning as under subpart B of this part.
(c) DIF means the Deposit Insurance Fund.
(d)(1) An eligible premium means an assessment paid by an insured
depository institution (or its predecessor) that did not exceed, for
the applicable assessment period, the maximum assessment applicable in
that assessment period to a Risk Category 1 institution under subpart A
of this part.
(2) An eligible premium does not include any assessments or fees
paid by insured depository institutions for the Temporary Liquidity
Guarantee Program. An eligible premium also does not include any
emergency special assessments paid by insured depository institutions
pursuant to section 13(c)(4)(G) of the Federal Deposit Insurance Act,
12 U.S.C. 1823(c)(4)(G), whether to repay any loss to the FDIC as a
consequence of the Temporary Liquidity Guarantee Program or for any
other reason.
(e) An insured depository institution's eligible premium share
means that institution's cumulative eligible premiums over the previous
five years (ending on December 31st of the year prior to the year in
which the dividend is declared) divided by the cumulative total of all
eligible premiums paid by all existing insured depository institutions
or their predecessors over that five-year period (rounded to 14 decimal
places).
(f) An insured depository institution's 1996 assessment base ratio
means an institution's 1996 assessment base ratio, as determined
pursuant to Sec. 327.33 of this part, adjusted as necessary to reflect
subsequent transactions in which the institution succeeds to another
institution's assessment base ratio, or a transfer of the assessment
base ratio pursuant to Sec. 327.34. The 1996 assessment base ratio
shall be rounded to seven decimal places.
(g) Predecessor, when used in the context of insured depository
institutions, refers to the institution merged with or into a resulting
institution or acquired by an institution under Sec. 327.33(c) under
the de facto rule, consistent with the definition of successor in Sec.
327.31.
Sec. 327.52 Annual dividend determination.
(a) If the DIF reserve ratio as of December 31st of 2008 or any
later year equals or exceeds 1.35 percent, then on or before May 10th
of the following year, the Board shall determine whether to declare a
dividend based upon the reserve ratio of the DIF as of December 31st of
the preceding year, and the amount of the dividend, if any.
(b) Except as provided in paragraph (d) of this section, if the
reserve ratio of the DIF equals or exceeds 1.35 percent of estimated
insured deposits and does not exceed 1.50 percent, the Board shall
declare the amount that is equal to one-half of the amount in excess of
the amount required to maintain the reserve ratio at 1.35 percent as
the aggregate dividend to be paid to insured depository institutions.
(c) Except as provided in paragraph (d) of this section, if the
reserve ratio of the DIF exceeds 1.50 percent of estimated insured
deposits, the Board shall declare the amount in excess of the amount
required to maintain the reserve ratio at 1.50 percent as the aggregate
dividend to be paid to insured depository institutions and shall
declare a dividend under paragraph (b) of this section.
(d)(1) The Board may suspend or limit a dividend otherwise required
to be paid if the Board determines that:
(i) A significant risk of losses to the DIF exists over the next
one-year period; and
(ii) It is likely that such losses will be sufficiently high as to
justify the Board concluding that the reserve ratio should be allowed:
(A) To grow temporarily without requiring dividends when the
reserve ratio is between 1.35 and 1.50 percent; or
(B) To exceed 1.50 percent.
(2) In making a determination under this paragraph, the Board shall
consider:
(i) National and regional conditions and their impact on insured
depository institutions;
(ii) Potential problems affecting insured depository institutions
or a specific group or type of depository institution;
(iii) The degree to which the contingent liability of the FDIC for
anticipated failures of insured institutions adequately addresses
concerns over funding levels in the DIF; and
(iv) Any other factors that the Board may deem appropriate.
(3) Within 270 days of making a determination under this paragraph,
the Board shall submit a report to the Committee on Financial Services
and the Committee on Banking, Housing, and Urban Affairs, providing a
detailed explanation of its determination, including a discussion of
the factors considered.
(e) The Board shall annually review any determination to suspend or
limit dividend payments and must either:
(1) Make a new finding justifying the renewal of the suspension or
limitation under paragraph (d) of this section, and submit a report as
required under paragraph (d)(3) of this section; or
(2) Reinstate the payment of dividends as required by paragraph (b)
or (c) of this section.
Sec. 327.53 Allocation and payment of dividends.
(a)(1) The allocation of any dividend among insured depository
institutions shall be based on the institution's 1996 assessment base
share and the institution's eligible premium share.
(2) As set forth in the following table, the part of a dividend
allocated based upon an institution's 1996 assessment base share shall
decline steadily from 100 percent to zero over fifteen years, and the
part of a dividend allocated based upon an institution's eligible
premium share shall increase steadily over the same fifteen-year period
from zero to 100 percent. The 15-year period shall begin as if it had
applied to a dividend based upon the reserve ratio at the end of 2006
and shall end with respect to any dividend based upon the reserve ratio
at the end of 2021. Dividends based upon the reserve ratio as of
December 31, 2021, and thereafter shall be allocated among insured
depository institutions based solely on eligible premium shares.
[[Page 73164]]
Total DIF Dividend Distribution Table
------------------------------------------------------------------------
Part of total DIF dividend
determined by:
Based upon the DIF reserve ratio -------------------------------------
at year-end 1996 Assessment Eligible premium
base shares shares
------------------------------------------------------------------------
2006 \1\.......................... 1 (100.0%) 0 (0%)
2007 \1\.......................... 14/15 (93.3%) 1/15 (6.7%)
2008.............................. 13/15 (86.7%) 2/15 (13/3%)
2009.............................. 4/5 (80.0%) 1/5 (20.0%)
2010.............................. 11/15 (73.3%) 4/15 (26.7%)
2011.............................. 2/3 (66.7%) 1/3 (33.3%)
2012.............................. 3/5 (60.0%) 2/5 (40.0%)
2013.............................. 8/15 (53.3%) 7/15 (46.7%)
2014.............................. 7/15 (46.7%) 8/15 (53.3%)
2015.............................. 2/5 (40.0%) 3/5 (60.0%)
2016.............................. 1/3 (33.3%) 2/3 (66.7%)
2017.............................. 4/15 (26.7%) 11/15 (73.3%)
2018.............................. 1/5 (20.0%) 4/5 (80.0%)
2019.............................. 2/15 (13.3%) 13/15 (86.7%)
2020.............................. 1/15 (6.7%) 14/15 (93.3%)
2021.............................. 0 (0%) 1 (100.0%)
Thereafter........................ 0 (0%) 1 (100%)
------------------------------------------------------------------------
\1\ The 15-year period shall be computed as if it had applied to
dividends based upon the reserve ratios at the end of 2006 and 2007.
(b) The FDIC shall notify each insured depository institution of
the amount of such institution's dividend payment based on its share as
determined pursuant to paragraph (a) of this section. Notice shall be
given as soon as practicable after the Board's declaration of a
dividend through a special notice of dividend.
(c) The FDIC shall pay individual dividend amounts, unless they are
the subject of a request for review under Sec. 327.54, to insured
depository institutions on June 30 of the year the dividend is
declared. The FDIC shall notify institutions whether dividends will
offset the next collection of assessments at the time of the invoice.
An institution's dividend amount will be settled with that
institution's assessment. Any excess dividend amount will be a net
credit to the institution and will be deposited into the deposit
account designated by the institution for assessment payment purposes
pursuant to subpart A of this part. If the dividend amount is less than
the amount of assessment due, then the institution's account will be
directly debited by the FDIC to reflect the net amount owed to the FDIC
as an assessment.
(d) If an insured depository institution's dividend amount is
subject to review under Sec. 327.54, and that request is not finally
resolved prior to the dividend payment date, the FDIC shall withhold
the payment of the disputed portion of the dividend amount involved in
the request for review. Adjustments to an individual institution's
dividend amount based on the final determination of a request for
review will be handled in the same manner as assessment underpayments
and overpayments.
(e) An institution may sell, assign, or otherwise transfer its
right to a current or future dividend. However, the FDIC will pay
dividend amounts to insured institutions without regard to any such
sale, assignment or transfer, regardless of whether the FDIC has
received notice of the sale, assignment or transfer.
Sec. 327.54 Requests for review.
(a) An insured depository institution may submit a request for
review of the FDIC's determination of the institution's 1996 assessment
base share and/or its eligible premium share as shown on the
institution's quarterly assessment invoice. Such requests shall be
subject to the provisions of Sec. 327.3(f)(3) of this part, except for
the invoice provided by the FDIC in March of any calendar year in which
the FDIC declares a dividend. If the FDIC declares a dividend, any
request for review of an institution's 1996 assessment base share and/
or its eligible premium share as shown on the institution's March
quarterly assessment invoice must be filed within 30 days of the date
that the FDIC notifies the institution of its dividend amount. If an
institution does not submit a timely request for review for the first
invoice in which the dividend-related information that forms the basis
for the request appears, the institution shall be barred from
subsequently requesting review of that information.
(b) An insured depository institution may submit a request for
review of the FDIC's determination of the institution's dividend amount
as shown on the special notice of dividend. Such review may be
requested if:
(1) The institution disagrees with the calculation of the dividend
as stated on the special notice of dividend; or
(2) The institution believes that the 1996 assessment base ratio
attributed to the institution is inaccurate or has not been adjusted to
include the 1996 assessment base ratio of an institution acquired by
merger or transfer pursuant to Sec. Sec. 327.33 and 327.34 of this
part and Sec. 327.51(g), and the institution has not had a prior
opportunity to request review or appeal under subpart B of this part or
paragraph (a) of this section; or
(3) The institution believes that the special notice does not fully
or accurately reflect its eligible premiums or those of any of its
predecessors and the institution has not had a prior opportunity to
request review or appeal under subpart B of this part or paragraph (a)
of this section.
(c) Any such request for review under paragraph (b) of this section
must be submitted within 30 days of the date of the special notice of
dividend for which a change is requested. The request for review shall
be submitted to the Division of Finance and shall provide documentation
sufficient to support the change sought by the institution. If an
institution does not submit a timely request for review, that
institution may not subsequently request review of its dividend amount,
subject to paragraph (d) of this section. At the time of filing with
the FDIC, the requesting institution shall notify, to the extent
practicable, any other insured depository institution that would be
directly and materially affected by granting the request for
[[Page 73165]]
review and provide such institution with copies of the request for
review, the supporting documentation, and the FDIC's procedures for
requests under this subpart. The FDIC shall make reasonable efforts,
based on its official systems of records, to determine that such
institutions have been identified and notified.
(d) During the FDIC's consideration of a request for review, the
amount of dividend in dispute will not be paid.
(e) Within 30 days of receiving notice of the request for review
under paragraph (b) of this section, those institutions identified as
potentially affected by the request for review may submit a response to
such request, along with any supporting documentation, to the Division
of Finance, and shall provide copies to the requesting institution. If
an institution that was notified under paragraph (c) of this section
does not submit a response to the request for review, that institution
may not subsequently:
(1) Dispute the information submitted by any other institution on
the transaction(s) at issue in that review process; or
(2) Appeal the decision by the Director of the Division of Finance.
(f) If additional information is requested of the requesting or
affected institutions by the FDIC, such information shall be provided
by the institution within 21 days of the date of the FDIC's request for
additional information.
(g) Any institution submitting a timely request for review under
paragraph (b) of this section will receive a written response from the
FDIC's Director of the Division of Finance (``Director''), or his or
her designee, notifying the affected institutions of the determination
of the Director as to whether the requested change is warranted,
whenever feasible:
(1) Within 60 days of receipt by the FDIC of the request for
review;
(2) If additional institutions have been notified by the requesting
institution or the FDIC, within 60 days of the date of the last
response to the notification; or
(3) If additional information has been requested by the FDIC,
within 60 days of receipt of the additional information, whichever is
later. Notice of the procedures applicable to appeals under paragraph
(g) of this section will be included with the Director's written
determination.
(h) An insured depository institution may appeal the determination
of the Director to the FDIC's Assessment Appeals Committee on the same
grounds as set forth under paragraph (b) of this section. Any such
appeal must be submitted within 30 calendar days from the date of the
Director's written determination. The decision of the Assessment
Appeals Committee shall be the final determination of the FDIC.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. E8-28405 Filed 12-1-08; 8:45 am]
BILLING CODE 6714-01-P
