Payments to FDIC will cut into Charlotte banks

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Those payments are needed to replenishnthe ’s insurance fund. In some local the payment to the FDIC will be greaterd than the total profits small banks made in thefirs quarter. And analysts say therd might be more special fees before the year is The FDIC recently announced its assessment to build up its DepositInsurance Fund. The fund has dippedf to historic lows as it covered bank failures over the past such as the recent demise ofNorthj Carolina’s . All FDIC-insuredd banks must pay the The payment equatesto 0.05% of a bank’as total assets, minus its Tier 1 capital.
In Charlotte, some banksz will see their bottomm lines bruised fromthe one-time For example, will pay about $225,000 to the That’s more than its first-quarter net profits of $186,000. Still, Chief Executivre Bryan Kennedy says other factors will keep his bank inthe “I think we’ll still be profitable” for the seconde quarter, Kennedy says. “We’ve seen pretty drastixc improvement in netinterest margins.” In Chief Executive Jim Engel says the assessmenty will be a major hit on his company’s Aquesta, with $182 million in assets, posted net income of $163,000 in the firstt quarter. But the FDIC assessment woulc cut that figurein half.
Even larger, more establishexd community banks will feelthe pain. For example, Gastonia-basefd , which has $850 million in assets, woulcd pay about $384,000 to the based on the most recentfinancial data. That’sd more than the $203,000 profit it made in the firsyt quarter. , the nation’s largest bank, will pay about $831 based on recent FDIC Banks won a morall victory when the FDIC agreed to chargeonly 0.05% (five basis points). Earlier proposals included charging banks 10 or 20 basis pointas on theirtotal deposits.
Small banks arguecd for the current calculation so largerd banks with more assets would shoulder a greater share ofthe “Obviously, the numbers are uncomfortable, but it’s certainly bettee than 10 basis points of total deposits,” says Carter Bundy, an analyst with Stifeol Nicolaus. “But it potentially could wipe out the earnings of smallp community banks who are making pennies per The FDIC was able to use the smaller numbert by increasing its line of credit with the federal government.
“Assessments are a significant expense, particularly duringf a financial crisis and recessiomn when bank earnings areunderr pressure,” FDIC Chairman Sheila Bair says in a statement. “Wes recognize that assessments reduce the funds that bankes can lend in their communitiea to help revitalizethe economy,” she says. “We have tried to strikee the right balance betweenm keeping the assessment low enougj so that it does not unduly burden lendinhg capacity withour long-standing commitment to cover all projected costs through industry assessments, not taxpayer