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Please join us as we return to The Allerton Hotel on the Magnificent Mile for the 13th
Annual Vision Conference!
All deadlines have been extended. The conference dates are September 17th-18th. Join us on September 16th for the Vision Workshop to get "hands-on" experience
with the latest BRMEdge Release. If you would like more information you can visit this link or
call Tammy at 847.810.6108.
You can register now
for the conference and workshop. You can also make hotel arrangements by clicking here.
This year's hotel special reduced rate is $169/night - consider staying the weekend!
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FDIC Charges: An Expense Risk
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Dear BRM User,
We have seen an enormous increase in FDIC charges on account analysis statements. In a
comparison of FDIC fees charged on analysis statements for 9 large corporates, we saw an increase of
225.64% in FDIC fees alone from Q1 2009 as compared to Q4 2008! These
companies were charged a total of $637,259 collectively for FDIC fees in Q1 2009. In Q4, 2008 those same companies paid a
total of $195,692 for FDIC fees. In general, we are seeing the increases handled in several ways by the banks, which adds
to the confusion when dealing with multiple banks.
- Some banks are charging monthly, while others are charged quarterly. Banks pay their premiums to the FDIC quarterly.
- For those banks that provide all of the information on how their FDIC charge is derived, there is definitely an increase in the price
being charged, which makes sense due to the rate increase from FDIC. At the same time, the coverage has increased to $250K, so we have the
higher rate on a higher balance limit too, which most banks appear to be using.
- Then there is TAGP (The Transaction Account Guarantee Program). We are seeing the unlimited coverage charged by some banks as a separate line item and other banks simply
blending it into their single FDIC charge service line.
Most, if not all, banks that are sending their FDIC charges on account analysis do not provide the details of how their charges are calculated.
Some charge each month, and others at quarter's end. Some charge pennies per thousand up to $250K in balances, and more pennies per thousand
over $250K. Others just send a charge with no information on how that charge was devised.
We don't suspect at all that there is any funny business going on with any banks as to how they
are coming up with the fees they are charging for FDIC, but they certainly are not making it obvious to corporate customers how these charges
are being calculated. I believe that every treasury analyst responsible for reviewing bank fees needs to make it their business to know with
absolute certainty how each of their banks calculates the fees for FDIC on their account analysis statements, so those fees can be audited
each month or quarter. Anything with a delta of 226% deserves a thorough and constant look.
FDIC fees have been hit with a triple whammy.
- The rate increase was announced last year to replenish the FDIC fund we all knew that was coming.
- At the first sign of trouble, the FDIC raised the limit to $250K, a move that arguably should have been made years ago.
- As things continued to spiral out of control, the FDIC had to punt, and came out guaranteeing all balances on deposit in these accounts.
Nobody really thought about the fees that all of these changes to FDIC were going to cause at
the time, but they were at least in part helpful in stopping the downward spiral the banks appeared to be facing. The three part increase in FDIC
fees coupled with interest on reserves has dramatically altered the account analysis landscape. The treasury analyst that simply pushed
the account analysis statements off to the side in the past will be missing a great deal of expense risk to their company that really didn't
even matter before.
WFG Free Webinar:
The Sky is Falling: Examining
Interest on Reserves in Account Analysis
Join our account analysis expert, Dan Gill, for this one hour webinar that addresses Interest
on Reserves, how it is calculated, why it is occurring, and what You should be doing about it. The date for this presentation is August 12, 2009 at 1:00 p.m. CST. Please register here.
WFG Educational Webinars: You may have received emails about our BRMEdge educational
series. We currently have BRMEdge Basics available from the WFG Updates page. You will need your serial number and email address to login. BRM Support can help you with this process.
We will be posting Task Manager soon!
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