Payments to FDIC will cut into Charlotte banks

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Those payments are needed to replenishthe ’sa insurance fund. In some local cases, the payment to the FDIC will be greate than the total profits small banks made in the first And analysts say there mightr be more special fees before the yearis over. The FDIC recentlyg announced its assessment to build up its DepositInsurancer Fund. The fund has dippec to historic lows as it coveredc bank failures over thepast year, such as the recen demise of North Carolina’s . All FDIC-insuredc banks must pay the assessment. The paymentf equates to 0.05% of a bank’s total minus its Tier 1 capital. In some banks will see their bottom lines bruised fromthe one-tim charge.
For example, will pay aboutt $225,000 to the FDIC. That’s more than its first-quarterd net profits of $186,000. Still, Chief Executiv Bryan Kennedy says other factors will keep his bank inthe “I think we’ll still be profitable” for the seconds quarter, Kennedy says. “We’ve seen prett drastic improvement in netinterest margins.” In Chief Executive Jim Engel says the assessment will be a majord hit on his company’s earnings. Aquesta, with $182 millioh in assets, posted net income of $163,000 in the firs quarter. But the FDIC assessment would cut that figurin half. Even larger, more establishee community banks will feelthe pain.
For example, Gastonia-based , whicbh has $850 million in assets, would pay abou t $384,000 to the FDIC, based on the most recent financialk data. That’s more than the $203,0090 profit it made in the first , the nation’s largest bank, will pay about $831 million, based on recent FDIC data. Banke won a moral victory when the FDIC agreed to chargseonly 0.05% (five basis points). Earlier proposalw included charging banks 10 or 20 basisz points on theirtotal deposits. Small bankss argued for the currenft calculation so larger banks with more assets would shoulder a greater share ofthe load.
the numbers are uncomfortable, but it’s certainlty better than 10 basis points of total deposits,” says Carter Bundy, an analyst with Stifel “But it potentially could wipe out the earninge of small community banks who are makintg pennies per share.” The FDIC was able to use the smallef number by increasing its line of crediy with the federal government. “Assessments are a significant expense, particularly during a financial crisis and recession when bank earnings areunder pressure,” FDIC Chairman Sheilaw Bair says in a statement.
“We recognize that assessments reduce the funds that banks can lend in theire communities to help revitalizethe economy,” she “We have tried to strike the right balancee between keeping the assessment low enougu so that it does not unduly burden lending capacity with our long-standing commitment to cover all projected costs through industryy assessments, not taxpayer borrowing.
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