PPP and Your FDIC Assessment

By Bruce Rumbold on May, 13 2020
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Bruce Rumbold

Manager | Risk Advisory Services

Business Interest Limitations

The FDIC announced proposed rule-making yesterday to provide relief for potential increases in a bank’s FDIC deposit insurance assessment as a result of holding loans in the SBA’s Paycheck Protection Program (PPP), the Paycheck Protection Program Lending Facility (PPPLF) and Money Market Mutual Fund Liquidity Facility (MMLF) programs established by the Board of Governors of the Federal Reserve System. This would cover all activities in the second quarter and cover all insured depository institutions (IDI). 

The proposal would, in effect, mitigate the affects of granting / pledging these loans by excluding them as assets under the FDICs assessment calculation. Remember, there was previously a joint regulatory pronouncement that these loans/pledged securities also would not affect regulatory capital.

An IDI’s assessment base and assessment rate are determined each quarter based on supervisory ratings and information collected on the Consolidated Reports of Condition and Income (Call Report) or the Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 002), as appropriate. Generally, an IDI’s assessment base equals its average consolidated total assets minus its average tangible equity.29 An IDI’s assessment rate is calculated using different methods based on whether the IDI is a small, large, or highly complex institution.

Comments on the proposed rule will be accepted for seven days after publication in the Federal Register.

See the entire proposed regulatory release here:

https://www.fdic.gov/news/board/2020/2020-05-12-notational-fr.pdf

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