Q: What are the interest rate restrictions?
A: Under the FDIC’s regulations, a bank that is not well capitalized generally may not offer deposit rates more than 75 basis points above the “national rate” for deposits of similar size and maturity. The regulations define the national rate as “a simple average of rates paid by all insured depository institutions and branches for which data are available.” On a weekly basis, the FDIC posts the national rates and rate caps at National Rates. If a bank believes that the posted national rates do not represent the actual rates in the bank’s local market area, the bank may seek a determination from the FDIC that the bank is operating in a high-rate area. Assuming that the FDIC makes such a determination, the bank may offer the prevailing market rates instead of the national rates within the local market area. In accepting deposits from outside the local market area, however, the bank must use the national rates.