WASHINGTON - Banks overcharged for deposit insurance can now figure for themselves exactly how large a refund they are owed. All it takes is basic math - and some 14-digit numbers.

The Federal Deposit Insurance Corp. detailed how to calculate the refund in a six-page letter to banks last week. The formula allows banks to determine their exact refund rather than waiting for the FDIC to do it for them.

Allan Long, assistant director of the FDIC's division of finance, said the numbers used to determine the refund amounts were stretched out for 14 digits beyond the decimal point to make the results as accurate as possible.

"When you start rounding the numbers too much, it can really make a difference in your refund," Mr. Long explained.

The industry will get a total of $1.5 billion in refunds because banks have been overpaying for deposit insurance since May, the FDIC announced last week. The agency determined that the Bank Insurance Fund reached its reserve target of $1.25 for every $100 of insured deposits in May, so banks have been paying too much since June 1. By law, the bank fund had to reach the 1.25% ratio before premiums could be lowered or refunds offered.

For second-quarter refunds, banks should subtract the premium due for June (based on 4 cents per $100 of domestic deposits for most banks) from the total premium paid from January through June using the old assessment rate (23 cents for most banks).

Or banks can multiply the appropriate 14-digit number, supplied by the FDIC in the letter, by the assessment base and subtract from the amount paid in January.

Mr. Long said the effective rate for more than 90% of banks, those deemed by the FDIC to be well managed and well capitalized, is 0.00099166666667.

For third-quarter payments, banks can multiply the new 4-cent rate by the assessment base reported on their Jan. 31, 1995, certified statement and then subtract the result from the amount paid in June.

A separate formula was needed to figure third-quarter refunds, Mr. Long said, because rather than blending the new and old rates, the FDIC is simply adjusting the rate for the entire period.

Banks can expect to receive their refunds on Friday in the form of an electronic credit to their automated clearing house accounts.

Institutions also will receive documentation showing how each quarter's refund was calculated, along with a copy of their January 1995 certified statement and May 1995 invoice. This information will be mailed no later than Sept. 15, the FDIC letter said.

Banks that need more information on these refunds can call the FDIC for help at 1-800-759-6596.

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