In: Finance
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. Further, the institutions have the following financial ratios and CAMELS ratings: Use Table.
Institution 1 | Institution 2 | |||||
Tier I leverage ratio (%) | 8.81 | 7.94 | ||||
Loans past due 30–89 days/gross assets (%) | 0.64 | 0.75 | ||||
Nonperforming assets/gross assets (%) | 0.54 | 0.69 | ||||
Net loan charge-offs/gross assets (%) | 0.47 | 0.51 | ||||
Net income before taxes/risk-weighted assets (%) | 2.34 | 2.05 | ||||
Adjusted brokered deposits ratio (%) | 0.00 | 15.75 | ||||
CAMELS components: | ||||||
C | 1 | 1 | ||||
A | 2 | 2 | ||||
M | 1 | 2 | ||||
E | 1 | 3 | ||||
L | 1 | 1 | ||||
S | 1 | 1 | ||||
Pricing Multiplier | |
Uniform Amount | 4.861 |
Tier I leverage ratio (%) | (0.056) |
Loans past due 30-89 days/gross assets (%) |
0.575 |
Nonperforming assets/gross assets (%) | 1.074 |
Net loan charge-offs/gross assets (%) | 1.210 |
Net income before taxes/risk-weighted assets (%) | (0.764) |
Adjusted brokered deposits ratio (%) | 0.065 |
Weighted average CAMELS component ratings | 1.095 |
Calculate the initial deposit insurance assessment rate for each institution. (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.161)) |
Institution 1 | Institution 2 | |
Initial assessment rate | ? | ? |