On April 26, the FDIC voted to approve a final rule that amends how small banks – those with less than $10 billion in total assets – are assessed for deposit insurance. The rule will (i) revise the financial ratios method, basing it on a statistical model that estimates the probability of failure over three years; (ii) update the financial measures used in the financial ratios method to ensure consistency with the statistical model; and (iii) eliminate risk categories for established small banks and use the financial ratios method to determine assessment rates for the small banks. According to FDIC Chairman Martin J. Gruenberg, the final rule will “allow future assessments to better differentiate riskier banks from safer banks . . . . [and] will better allocate the costs of maintaining a strong Deposit Insurance Fund.” The FDIC first published a proposed rule regarding the deposit insurance assessment of small banks in June 2015, and issued a revised proposal in January 2016. Intended to be revenue neutral, the final rule is effective July 1, 2016 with the following caveat: “[i]f the reserve ratio reaches 1.15 percent before that date, the assessment system described in the final rule will become operative July 1, 2016. If the reserve ratio has not reached 1.15 percent by that date, the assessment system described in the final rule will become operative the first day of the calendar quarter after the reserve ratio reaches 1.15 percent.”