Question

2. Two depository institutions have composite CAMELS ratings of 1 or 2 and are "well capitalized." Thus, each institution falls into the FDIC Risk Category I deposit insurance assessment scheme. Institution A has average total assets of $750 million and average Tier I equity of $75 million. Institution B has average total assets of $1 billion and average Tier I equity of $110 million. Institution A has no unsecured debtor brokered deposits. Institution B has no unsecured debt and an asset growth rate over the last four years of 8 percent. Further, the institutions have the following financial ratios and CAMELS ratings: Institution Institution 8.45 1.65 0.35 Tier I leverage ratio (%) 9.80 Net income before taxes/risk- 2.00 weighted assets (%) Nonperforming loans and leases/gross assets (%) Other real estate-owned gross 0.42 assets (%) Brokered deposits/total assets 2.20 (%) One year asset growth 4.35 Loans as a Percentage of Total Assets: Construction and 0.00 Development Commercial and Industrial 10.56 Leases 0.65 Other Consumer 17.55 Loans to Foreign Government 0.00 Real Estate Loans Residual 0.00 Multifamily Residential 0.00 Nonfarm Nonresidential 0.00 1-4 Family Residential 41.10 Loans to Depository Banks 0.00 Agricultural Real Estate 1.10 Agricultural 0.40 0.00 18.68 2.15 18.95 0.60 0.00 1.10 0.00 33.54 0.50 0.35 0.40
e 442

CAMELS Components:

C

1

2

A

1

1

M

1

1

E

2

1

L

1

3

S

2

3

The DIF reserve ratio is currently 1.30 percent. Calculate the deposit insurance assessment and the dollar value of the deposit insurance premium for each institution.   

Answer 1

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Solutionom Institutional Institution B Tier I leverage ratio (%) 10:25 7.00 loans past due to 30-89 days / gross assets 0.60 0082 0.45 0.90 Non performing Assets / gross Assets(%) wet loan charge off / gross as Sets Caj Nel income before banes , - niska weighted assets 0.08 0.25 2.40 1.65 Adjusted brokened deposits natio 25.89 CAMELS Components I L 5 1 2 3 3