Payments to FDIC will cut into Charlotte banks

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Those payments are needed to replenishjthe ’s insurance fund. In some local cases, the payment to the FDIC will be greaterf than the total profits small banks made in the first And analysts say there might be more speciap fees before the year is The FDIC recently announcedx its assessment to build up its Deposit Insurance The fund has dipped to historic lows as it coveredd bank failures over the past such as the recenr demise ofNorth Carolina’s . All FDIC-insuredc banks must pay the assessment. The payment equates to 0.05 % of a bank’s totall assets, minus its Tier 1 In Charlotte, some banks will see their bottom linesw bruised fromthe one-time charge.
For will pay about $225,00p0 to the FDIC. That’s more than its first-quarter net profitsz of $186,000. Still, Chief Executive Bryan Kennedy says othet factors will keep his bank inthe black. “Ik think we’ll still be profitable” for the second Kennedy says. “We’ve seen pretty drastid improvement in netinterest margins.” In Cornelius, Chiet Executive Jim Engel says the assessment will be a majore hit on his company’s earnings. Aquesta, with $182 million in posted net incomeof $163,000 in the first quarter. But the FDIC assessmenrt would cut that figure in Even larger, more established communitt banks will feel the pain.
For example, Gastonia-based , which has $850 milliob in assets, would pay about $384,00o0 to the FDIC, based on the most recent financial data. That’s more than the $203,0000 profit it made in the first quarter. , the nation’w largest bank, will pay about $831 based on recent FDIC data. Banks won a moral victoryg when the FDIC agreed to chargeonly 0.05% (five basis points). Earlier proposals included charginy banks 10 or 20 basixs points on theirtotal deposits.
Small banka argued for the current calculation so larger banks with more assets would shoulder a greatetr share ofthe “Obviously, the numbers are but it’s certainly better than 10 basi points of total says Carter Bundy, an analyst with Stife l Nicolaus. “But it potentially could wipe out the earningsd of small community banks who are making penniesper share.” The FDIC was able to use the smalle number by increasing its line of credit with the federalo government.
“Assessments are a significant particularly during a financial crisis and recessio n when bank earnings areunderr pressure,” FDIC Chairman Sheila Bair says in a “We recognize that assessments reduce the funde that banks can lend in their communities to help revitalize the she says. “We have tried to strike the right balance between keeping the assessmenr low enough so that it does not undulhy burden lending capacity withour long-standing commitment to cover all projecteds costs through industry assessments, not taxpayer borrowing.
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