Footnote 1:  Appendix III describes how the Capital Groups and Supervisory Subgroups are determined.

Footnote 2:  See the Glossary in Appendix V for FDICIA’s definition of a risk-based assessment system.

Footnote 3:  FDICIA, Section 302(f), authorized the FDIC to promulgate regulations governing the transition from the assessment system in effect at the date of the statute’s enactment to the risk-based assessment system.

Footnote 4:  For the first semiannual assessment period, the supervisory cutoff date is September 30th of the previous year. For the second semiannual assessment period, the supervisory cutoff date is March 31st of the current year.

Footnote 5:  For the purposes of this report, “financial reports” are the Reports of Condition and Income (Call Reports), Reports of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks, or Thrift Financial Reports.

Footnote 6:  SCOR is the Statistical CAMELS Off-Site Rating (SCOR) model. SCOR uses the balance-sheet and income-statement information that banks are required to report quarterly to their primary federal supervisor (Call Reports). The SCOR model attempts to predict CAMELS ratings by relating 12 financial ratios to each bank’s future composite rating (similar models are developed for the component ratings).

Footnote 7:  Appendix III describes the factors to be considered before changing a Supervisory Subgroup.

Footnote 8:  The definitions of Capital Group categories in Part 327, Assessments, of the FDIC Rules and Regulations differ from the definitions of capital categories in Part 325, Capital Maintenance. Part 327 defines Capital Group categories for insurance assessment purposes exclusively on the basis of capital ratios reported in an institution’s financial reports except for insured branches of foreign institutions, which must meet certain other requirements. Part 325 defines an institution’s capital category for certain purposes other than insurance assessment. Part 325 defines capital categories by ratios similar to those defined in Part 327; however, a number of significant differences exist. For example, under Part 325 an institution is not designated as “well capitalized” if the institution is subject to a written agreement, regardless of the capital ratio.

Footnote 9:  A capital component rating of 4 indicates a deficient level of capital such that the viability of the institution may be threatened. A capital component rating of 5 indicates a critically deficient level of capital such that the institution's viability is threatened. Immediate assistance from shareholders or other external sources of financial support is required.

Footnote 10:  Financial institutions with a composite rating of 4 generally exhibit unsafe and unsound practices or conditions. The weaknesses and problems are not being satisfactorily addressed or resolved by the board of directors and management. Institutions in this group pose a risk to the deposit insurance fund, and failure is a distinct possibility. Financial institutions with a composite rating of 5 exhibit extremely unsafe and unsound practices or conditions. The volume and severity of problems are beyond management's ability or willingness to control or correct. Immediate outside financial or other assistance is needed in order for the financial institution to be viable. Institutions in this group pose a significant risk to the deposit insurance fund, and failure is highly probable.

Footnote 11:  In the 3 years prior to failure, these three institutions received composite and capital component ratings of 3 or worse from the FDIC.

Footnote 12:  The article is entitled, Risk Measurement, Actuarially-Fair Deposit Insurance Premiums and the FDIC’s Risk-Related Premium System. This analysis did not include insured thrifts.

Footnote 13:  Excluded from these no-cost failures were banks that failed due to the exercise of the FDIC’s cross-guarantee authority.

Footnote 14:  New insured depository institutions coming into existence after the insurance assessment report date specified are included in this group for the first semiannual period for which the institutions are required to pay assessments. For purposes of assessment risk classification, an insured branch of a foreign bank is deemed to be “well capitalized” if the insured branch: (1) maintains the pledge of assets required and (2) maintains the eligible assets prescribed at 108 percent or more of the average book value of the insured branch's third-party liabilities for the quarter ending on the report date specified.

Footnote 15:  For purposes of assessment risk classification, an insured branch of a foreign bank is deemed to be “adequately capitalized” if the insured branch: (1) maintains the pledge of assets required, (2) maintains the eligible assets prescribed at 106 percent or more of the average book value of the insured branch's third-party liabilities for the quarter ending on the report date specified, and (3) does not meet the definition of a “well capitalized,” insured branch of a foreign bank.