The Bancorp Reclassifies Deposits in Compliance with FDIC FAQs (Jan. 21, 2015)
The Bancorp Inc., parent of The Bancorp Bank, disclosed last week in a short regulatory filing that it reclassified deposits as “brokered” as a result of FAQs issued by the FDIC on Dec. 24, 2014. The FAQs—which, for practical purposes, have the effect of a rule of law—require reclassification of deposits underlying many types of prepaid cards, as newly documented by the FDIC.
As discussed in the Paybefore Viewpoint, “FDIC’s Brokered Deposits FAQs – Implications Range from Limited to Significant for Prepaid Issuers: It All Depends” by John ReVeal and Judith Rinearson, Bryan Cave LLP, the effect of the FAQs on a prepaid issuer depends on a number of factors in the bank’s composite profile. The attorneys predict many prepaid issuers will face higher FDIC insurance premium costs, as The Bancorp disclosed, as a result of complying with the FAQs. The Bancorp’s regulatory filing indicated the added cost will amount to 10 basis points applied against the average liabilities of its bank and noted that its capital ratios remain unaffected by the reclassification. The filing added that the [insurance premium] “surcharge will in the future terminate, depending upon the FDIC’s evaluation of the Bank.”
Earlier last week, Meta Financial Group, parent of MetaBank, announced it reclassified as brokered “up to” $1.3 billion in deposits, effective the quarter ending Dec. 31, 2014, as a result of the FDIC’s “guidance” delivered through the FAQs. It also indicated it does not anticipate the guidance “will have an adverse impact” on its statements of financial condition or statements of operations. Meta noted the financial estimates provided in its announcement, which included unaudited results for its fiscal 2015 first quarter, were preliminary.