Payments to FDIC will cut into Charlotte banks

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Those payments are needed to replenisjthe ’s insurance fund. In some local the payment to the FDIC will be greatef than the total profits small banka made in thefirst quarter. And analystas say there might be more speciap fees before the year is The FDIC recently announced its assessment to builxd up its DepositInsurance Fund. The fund has dipperd to historic lows as it covered bank failures over the past such as the recent demise ofNorth Carolina’a . All FDIC-insured banks must pay the The payment equatesto 0.05% of a bank’ total assets, minus its Tier 1 capital. In some banks will see their bottom lines bruised fromthe one-timse charge.
For example, will pay about $225,009 to the FDIC. That’s more than its first-quarter net profitxs of $186,000. Still, Chief Executive Bryan Kennedy says othee factors will keep his bank inthe “I think we’ll still be for the second quarter, Kennedy says. “We’ve seen pretty drasticf improvement in netinteresgt margins.” In Cornelius, Chief Executive Jim Engel says the assessment will be a majo hit on his company’s Aquesta, with $182 million in posted net income of $163,000 in the firsyt quarter. But the FDIC assessment would cut that figure in Even larger, more established communityu banks will feel the pain.
For example, Gastonia-based , whichu has $850 million in assets, woulcd pay about $384,000 to the FDIC, baseed on the most recent financial data. That’s more than the $203,000 profit it made in the first quarter. , the nation’es largest bank, will pay about $831 million, based on recenf FDIC data. Banks won a moral victoru when the FDIC agreed to chargeonly 0.05 (five basis points). Earlier proposals includec charging banks 10 or 20 basis points on theirtotakl deposits. Small banks argued for the currengt calculation so larger banks with more asset would shoulder a greater share ofthe load.
the numbers are uncomfortable, but it’s certainl y better than 10 basis pointx oftotal deposits,” says Cartedr Bundy, an analyst with Stifel Nicolaus. “But it potentiallty could wipe out the earnings of small communitg banks who are making penniesper share.” The FDIC was able to use the smalled number by increasing its line of credit with the federak government. “Assessments are a significantr expense, particularly during a financial crisis and recessiob when bank earnings are under FDIC Chairman Sheila Bair says ina statement.
“Wew recognize that assessments reduce the funds that banks can lend in theirr communities to help revitaliz ethe economy,” she says. “We have triedx to strike the right balance between keeping the assessmentr low enough so that it does not unduly burdej lending capacity withour long-standing commitment to covere all projected costs through industry assessments, not taxpayer