# Two depository institutions have composite CAMELS ratings of 1 or 2 and are well capitalized. Thus, each

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## Question:

Two depository institutions have composite CAMELS ratings of $1$ or $2$ and are "well capitalized." Thus, each institution falls into the FDIC Risk Category I deposit insurance assessment scheme. Weights for the CAMELS components to calculate the weighted average CAMELS rating are $25$ percent, $20$ percent, $25$ percent, $10$ percent, $10$ percent, and $10$ percent for the C$,$ A$,$ M$,$ E$,$ L$,$ and S components, respectively. Further, the institutions have the following financial ratios and CAMELS ratings:

Institution A Institution B

Financial Ratios:

Leverage Ratio $8\mathrm{.}65\text{}7\mathrm{.}78$

Nonperforming Loans and Leases$/$Gross Assets $0\mathrm{.}38\text{}0\mathrm{.}53$

Other Real Estate Owned$/$Gross Assets $0\mathrm{.}55\text{}0\mathrm{.}42$

Net Income Before Taxes$/$Total Assets $2\mathrm{.}18\text{}2\mathrm{.}00$

Brokered Deposit Ratio $1\mathrm{.}50\text{}3\mathrm{.}30$

One$-$Year Asset Growth $6\mathrm{.}05\text{}6\mathrm{.}90$

Loans as a Percent of Total Assets:

Construction & Development $0\mathrm{.}43\text{}0\mathrm{.}33$

Commercial & Industrial $12\mathrm{.}36\text{}15\mathrm{.}05$

Leases $1\mathrm{.}30\text{}0\mathrm{.}90$

Other Consumer $17\mathrm{.}50\text{}17\mathrm{.}20$

Loans to Foreign Government $0\mathrm{.}15\text{}0\mathrm{.}45$

Real Estate Loans Residual $0\mathrm{.}00\text{}0\mathrm{.}00$

Multifamily Residential $0\mathrm{.}65\text{}1\mathrm{.}10$

Nonfarm Nonresidential $0\mathrm{.}00\text{}0\mathrm{.}00$

$14$ Family Residential $40\mathrm{.}47\text{}38\mathrm{.}85$

Loans to Depository Banks $0\mathrm{.}45\text{}2\mathrm{.}35$

Agricultural Real Estate $3\mathrm{.}80\text{}1\mathrm{.}50$

Agriculture $6\mathrm{.}20\text{}1\mathrm{.}20$

CAMELS components:

C $2\text{}1$

A $1\text{}3$

M $1\text{}1$

E $2\text{}3$

L $1\text{}1$

S $1\text{}1$

Calculate the initial deposit insurance assessment rate for each institution.