The FDIC has issued new guidelines describing the process that it will follow to determine whether to make an adjustment to the score used to calculate the deposit insurance assessment rate for a large or highly complex institution, to determine the size of any adjustment, and to notify an institution of an adjustment. The assessment rate adjustment guidelines adopted on September 13 apply only to depository institutions with $10 billion or more in assets. Under the new guidelines, two types of information will be most significant in determining whether to make an adjustment. The first is information indicating that a scorecard factor is too high or too low. The second is information not directly captured in the scorecard, including complementary quantitative risk measures and qualitative risk considerations. The FDIC said that it will consult with an institution’s primary federal regulator and state banking supervisor, if applicable, before making or removing an adjustment, and that institutions will have an opportunity to respond before a score is increased or a decrease is removed. The FDIC said that it will focus on identifying institutions for which a combination of risk measures and other information suggests either materially higher or lower risk than their total scores indicate.

Nutter Notes:  The FDIC established a new methodology for calculating deposit insurance assessment rates for highly complex and other large insured institutions in a final rule adopted on February 7, 2011. The new methodology combines CAMELS ratings and financial measures to produce a score that is converted into an institution’s assessment rate. The rule allows the FDIC to adjust an institution’s total score by 15 points, up or down. The FDIC began using the new methodology for quarters beginning on or after April 1, 2011. According to the new guidelines, an institution subject to the new methodology may request that the FDIC adjust its assessment rate by submitting a written request supported by evidence of a material risk or risk-mitigating factor that is not adequately accounted for in the institution’s scorecard. The guidelines also provide examples of circumstances that might give rise to an adjustment. Any request for an adjustment should be delivered to the FDIC no later than 35 days after the end of the quarter for which the adjustment is requested. Requests received after the deadline may not be considered until the following quarter.