Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Two depository institutions have composite CAMELS ratings of 1 or 2 and are well capitalized. Thus, each instituion falls into the FDIC Risk Category 1
Two depository institutions have composite CAMELS ratings of 1 or 2 and are "well capitalized." Thus, each instituion falls into the FDIC Risk Category 1 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 Further, the institutions have the following financial rations and CAMELS ratings:
Instituion A | Institution B | |
Tier I leverage ratio (%) | 10.25 | 7.00 |
Loans past due 30-89 days/gross assets (%) | 0.60 | 0.82 |
Nonperforming assets/gross assets (%) | 0.45 | 0.90 |
Net loan charge-offs/gross assets (%) | 0.08 | 0.25 |
Net income before taxes/risk-weighted assets (%) | 2.40 | 1.65 |
Adjusted brokered deposits ratio (%) | 0.00 | 25.89 |
CAMELS components: | ||
C | 1 | 2 |
A | 1 | 1 |
M | 1 | 1 |
E | 2 | 1 |
L | 1 | 3 |
S | 2 | 3 |
Calculate the initial deposit insurance assessment for each instituttion.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started