This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Bank Stocks May Get Hit by FDIC Fees

The Federal Deposit Insurance Corp.'s bank insurance fund is being depleted by a steady drumbeat of bank failures, forcing it to assess higher fees to the banks when they can least afford it.

Forty-two U.S. banks and thrifts have failed since the start of 2008, including 17 already this year. Combined with the FDIC's decision in October to increase its coverage to accounts up to $250,000, from the previous $100,000, the situation has put a strain on the fund.

The fund totaled $18.9 billion at the end of 2008, declining $15.7 billion in the fourth quarter. As a result, the FDIC said it would charge banks up to an extra 20-basis point assessment on deposits, in addition to deposit insurance premiums already being collected, beginning Sept. 30.

At year end, 252 insured institutions made the problem list with combined assets of $159 billion.

As banks filed annual reports this week, a similar theme emerged: The cost of doing business is going up.

Union Bancshares (UNG) wrote that it "expects the higher FDIC insurance assessments to unfavorably impact future periods," estimating an additional $1.1 million in 2009 noninterest expenses.

Hawthorn Bancshares (HWBK - Get Report) and Farmers National Bank (FNMB) also noted in regulatory filings that the fees would impact profitability.

Commonwealth Bancshares (CWBS) maintained in its annual report that an increase isn't certain, but noted the challenges the FDIC faces in raising its fees -- indicating it is monitoring the situation.

With national banks like Citigroup (C - Get Report) and Bank of America (BAC - Get Report) in receipt of $45 billion each in federal bailout money and hundreds of billions more in guarantees on shaky assets, many look to smaller and community banks as a source of strength that could lead a recovery in the sector.

That recovery could be all the more difficult, as the entire system bears the costs of the sins of its weakest players.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $17.48 0.00%
C $54.21 0.00%
HWBK $14.91 0.00%
UNG $8.71 0.00%
AAPL $117.81 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs