| Savannah Morning News Nov. 14--Savannah bankers will kiss more than 2009 goodbye come New Year's Eve. SAVE MONEY ON TRAVEL DEALS They will smooch away millions of dollars in cash reserves to prepay three year's worth of Federal Deposit Insurance Corporation premiums. The FDIC's board of directors approved the plan Thursday. The prepaid fees due Dec. 31 will add an estimated $45 billion to the FDIC's deposit insurance fund, which has fallen below mandated levels because of the 120 bank failures so far this year. "We are obligated and committed to funding the insurance fund", The Coastal Bank's Thomas Wiley said. "My biggest concern is once it's funded, how that money is spent. It needs to be spent efficiently." Search online bankruptcy database. Those worries are well-founded: The prepayments mark the second unscheduled assessment issued to banks this year by the FDIC. Banks paid a "special one-time assessment" in September. The prepayments won't impact balance sheets the same way the special assessment did. The banks will record the prepayment as an asset on their end-of-year reports and write off the cash gradually over the next three years as an expense. Even so, prepaying fees leaves banks with less money to loan out or to invest. "We won't make any money off these fees", First Chatham Bank's Brian Foster said. "Cash is cash, and it's still king." The prepayment plan also will speed up the closure of struggling banks, Foster said. A peer recently told him he would include his bank's keys along with the premium check because the check would bounce. "Prepaying is better than some alternatives, but it will put pressure on some banks whose cash position is tight already", The Savannah Bank's John Helmken II said. "To prepay three years worth of fees? Wow, that's a lot of cash." Most local banks are still calculating their exact payment. Helmken's Savannah Bank, the healthiest local community bank based on profitability, will pay between $4 million and $5 million. Mega-banks like Bank of America and Wells Fargo will write checks for more than $3 billion. Despite the boggling numbers, the public should not be alarmed by the move. Most banks have been stockpiling cash and liquid assets since the start of the economic downturn last year. And even those depositors who have money in banks that fail won't lose their savings: The FDIC exists to protect depositors, insuring accounts up to $250,000. "The prepayment plan is an acceptable plan because it does reach the objective of the fund, which is to build cash reserve and protect depositors", Darby Bank's Ray Fisher Jr. said. "No customer in the FDIC's 70-year history has ever lost a penny of insured money. And they never will." The concern lies with the bankers, not their depositors. All expressed hope that prepaying three years worth of fees means they won't write the FDIC any more premium checks before 2013. No more special assessments or other unexpected assessments. Any additional funding the FDIC needs should come from the United States Treasury, they say. The FDIC has a $500 billion line of credit with the government. "I wish they would say, 'You're going to prepay three years, and that means no special assessments", but we'll have to wait and see", Savannah Bank's Helmken said. "But no one thinks this is the save-all, end-all in terms of the FDIC fund. At least not until there's some stabilization out there and improvement."
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