Banks ready to pay FDIC fees early

Local bankers said they are resigned to the fact that they'll have to pay early hundreds of thousands of dollars in fees to replenish a federal fund that protects the deposits of millions of the nation's bank customers.

The Federal Deposit Insurance Corp. said Tuesday that it has proposed a rule requiring banks to pay their assessments to the Deposit Insurance Fund years early.

Specifically, the rule, expected to take effect after a monthlong comment period, calls for banks to pay their assessments, or FDIC insurance premiums, for 2010, 2011 and 2012 in the fourth quarter.

FDIC spokesman Greg Hernandez said there are exceptions for banks that would be pushed to the brink of failure by paying the assessments.

The advanced assessment payments are expected to boost the deposit insurance fund by $45 billion. That fund has been depleted by a rash of bank failures that so far total 95 this year.

Bankers said while they don't necessarily like the idea, it's better than having to pay a special assessment, or money on top of what they've already budgeted for assessments.

"It doesn't have as much negative impact," said Mark Keeny, CEO of Kingman-based Citizens Bank of Kansas.

But Kevin Chase, chairman of Derby-based Verus Bank, said he's not so sure.

"There's just that unknown about will these prepaid dollars that go into the system do the trick," Chase said.

The one thing that really hurts, he said, is that paying three years of assessments early means that some of bank's money that would be used for assessments a couple years later can't be put to work in the meantime.

"We cannot invest that into loans or to bonds," Keeny said.

Verus' Chase said he wasn't immediately certain what the impact would be to his $102 million bank.

"That takes earning assets off the book," Chase said. "We can certainly handle it, and we certainly understand the value of having FDIC insurance in place."

Keeny said he's taking the early assessments in stride. He was a bank examiner when he started his banking career 20 years ago, toward the end of the last banking and thrift crisis.

"The end result of that was assessments remained high for a number of years," he said. Once the deposit insurance fund reserves were replenished, assessments fell.

"It's just going to be a matter of time, getting through this," Keeny said.