Even with $1.1 billion in 2017 losses, DIF inches closer to reserve ratio target, annual report shows

Posting losses of $1.1 billion, but which were absorbed by premium assessments on insured banks, the Federal Deposit Insurance Corp. (FDIC) Deposit Insurance Fund (DIF) finished fiscal year 2017 with a reserve ratio of 1.28% — up 15 basis points from the previous year, the agency stated in its annual report, published Friday.

In its 2017 annual report, the FDIC states that — at year-end — the DIF held $92.7 billion in reserves, compared to $83.2 billion at year-end 2016 (an 11.4% increase). “Assessment revenue, including assessment surcharges on large banks, drove the growth in the DIF,” the agency stated.

Assessment revenue was $10.6 billion for 2017, compared to $10.0 billion for 2016, the FDIC said. “The combination of a higher assessment base, assessment surcharges on larger institutions, and lower regular assessment rates for all [insured depository institutions] resulted in the net increase in assessment revenue of $608 million,” the agency said.

Comprehensive income, the FDIC said, was $9.6 billion last year, compared to $10.6 billion in 2016 — a $975 million decrease.

The reserve ratio is within 7 basis points of its target of 1.35%, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) of 2010. Under that law, the insurance fund has until September 2020 to reach the target.

However, as outlined in the report, the FDIC expects the fund to reach the 1.35% reserve ratio target this year.

The report notes that, at the end of FY 2017 (in September), the FDIC insured deposits of $7.1 trillion in more than 580 million accounts at 5,738 institutions, supervised 3,669 institutions, and managed 367 active receiverships with total assets of nearly $5 billion.

In other areas, the agency stated in its 2017 report:

  • As of year-end 2017, it had conducted 1,611 statutorily required risk management examinations of insured institutions, including reviews for Bank Secrecy Act (BSA) compliance, and all required follow-up examinations for FDIC-supervised problem institutions, “within prescribed time frames.”
  • Conducted 1,168 statutorily required Community Reinvestment Act (CRA)/compliance examinations (770 joint CRA/compliance examinations, 393 compliance-only examinations, and five CRA-only examinations).
  • Performed 3,614 specialty examinations (which, the FDIC said, include reviews for BSA compliance) within prescribed time frames.

All told, the FDIC said, it conducted 6,393 exams in 2017, down 7.24% from 2016, and down 13.32% from 2015.

Overall at year-end, the agency said, it is the primary federal regulator for 3,636 FDIC-insured, state-chartered institutions that are not members of the Federal Reserve System (known as “state nonmember” institutions).

2017 FDIC Annual Report

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