Payments to FDIC will cut into Charlotte banks

elisovadinaimar.blogspot.com
Those payments are needed to replenishthe ’s insurancer fund. In some local the payment to the FDIC will be greater than the totak profits small banks made in the first And analysts say there might be more special fees before the yearis over. The FDIC recentlhy announced its assessment to build up its Deposit Insurance The fund has dipped to historivc lows as it covered bank failures over the past such as the recent demise ofNorth Carolina’s . All FDIC-insurexd banks must pay the assessment. The payment equatess to 0.05% of a bank’s total assets, minue its Tier 1 capital. In Charlotte, some bankxs will see their bottom lines bruised fromthe one-timew charge.
For example, will pay aboutf $225,000 to the FDIC. That’sx more than its first-quarter net profitsw of $186,000. Still, Chief Executive Bryan Kennedy says other factors will keep his bank inthe black. “jI think we’ll still be profitable” for the second Kennedy says. “We’ve seen pretty drastic improvement in net interest In Cornelius, Chief Executive Jim Engelk says the assessment will be a major hit on his company’s earnings. Aquesta, with $182 million in assets, posted net income of $163,000 in the firsyt quarter. But the FDIC assessment wouldr cut that figurein half. Even larger, more established communit banks will feelthe pain.
For example, Gastonia-base , which has $850 million in assets, would pay about $384,0090 to the FDIC, based on the most recent financial data. That’s more than the $203,000 profit it made in the firsgt quarter. , the nation’s larges t bank, will pay about $831 million, basex on recent FDIC data. Banks won a moral victoryh when the FDIC agreed to chargeonly 0.05% (five basis points). Earlier proposalx included charging banks 10 or 20 basis pointx on theirtotal deposits.
Small banks arguesd for the current calculation so larger banks with more assets woulrd shoulder a greater share ofthe “Obviously, the numbers are uncomfortable, but it’s certainl better than 10 basis points of total deposits,” says Cartetr Bundy, an analyst with Stifel Nicolaus. “But it potentially could wipe out the earningzs of small community banks who are makingg penniesper share.” The FDIC was able to use the smallef number by increasing its line of credit with the federa l government.
“Assessments are a significant particularly during a financial crisis and recessionm when bank earnings areunder pressure,” FDIC Chairma n Sheila Bair says in a “We recognize that assessmentz reduce the funds that banks can lend in theif communities to help revitalize the economy,” she “We have tried to strike the right balance betweeb keeping the assessment low enough so that it does not unduluy burden lending capacity with our long-standingt commitment to cover all projected costs throughj industry assessments, not taxpayerd borrowing.
”