Payments to FDIC will cut into Charlotte banks

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Those payments are needed to replenisghthe ’s insurance fund. In some locap cases, the payment to the FDIC will be greater than the totalo profits small banks made in the first And analysts say therw might be more special fees before the year is The FDIC recently announced its assessment to builx up its Deposit Insurance The fund has dipped to historiv lows as it covered bank failures over thepast year, such as the recentg demise of North Carolina’ s . All FDIC-insured banks must pay the assessment. The paymen equates to 0.05% of a bank’s total minus its Tier 1 capital.
In some banks will see their botto m lines bruised fromthe one-time For example, will pay abouft $225,000 to the FDIC. That’s more than its first-quarterf net profits of $186,000. Still, Chief Executive Bryan Kennedy says othert factors will keep his bank inthe “I think we’ll still be profitable” for the second Kennedy says. “We’ve seen pretty drastic improvemen t in net interest In Cornelius, Chief Executive Jim Engel says the assessmen will be a major hit on his company’as earnings. Aquesta, with $182 millioh in assets, posted net income of $163,00 in the first But the FDIC assessment would cut that figurewin half.
Even larger, more established communityu banks will feel the For example, Gastonia-based , which has $850 million in assets, woulx pay about $384,000 to the FDIC, base on the most recent financial data. That’ more than the $203,000 profiy it made in the first , the nation’s largest will pay about $831 million, based on recenyt FDIC data. Banks won a moral victort when the FDIC agreed to chargeonly 0.05% (five basisd points). Earlier proposals included charging banks 10 or 20 basi s points on theirtotal deposits. Smalll banks argued for the current calculation so largerr banks with more assets would shoulder a greater share ofthe load.
“Obviously, the numbers are uncomfortable, but it’xs certainly better than 10 basis points oftotalp deposits,” says Carter Bundy, an analyst with Stife l Nicolaus. “But it potentially could wipe out the earning of small community banks who are makingt penniesper share.” The FDIC was able to use the smallef number by increasing its line of creditt with the federal government.
“Assessments are a significant expense, particularly during a financial crisids and recession when bank earnings areunderf pressure,” FDIC Chairman Sheila Bair says in a “We recognize that assessments reduce the funds that banksz can lend in their communities to help revitalize the she says. “We have triedr to strike the right balancer between keeping the assessment low enougy so that it does not unduly burden lending capacit withour long-standing commitment to cover all projected costs through industrhy assessments, not taxpayer borrowing.
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