No change in assessment for bank insurance fund, despite decrease in reserve ratio

Despite the level of reserves in the fund insuring bank deposits falling relative to the savings covered by the insurance, there will be no change in assessment rates paid by banks, the agency overseeing the fund said Thursday.

The Federal Deposit Insurance Corp. (FDIC) Board of Directors, in releasing its second semiannual update of 2023 on the restoration plan for the agency’s Deposit Insurance Fund (DIF), said as of June 30, 2023, the DIF balance stood at $117.0 billion, bringing the reserve ratio of the fund to 1.10%. That’s down considerably from the reserve ratio of 1.25% posted by the DIF at the end of last year.

The agency said the causes for the decrease in the reserve ratio (which essentially represents how much money is in the fund to cover insured deposits), were increased loss provisions, including for bank failures that occurred in March and May (For Silicon Valley Bank (SVB) of Santa Clara, Calif., and Signature Bank of New York, N.Y., both in March, and First Republic Bank of San Francisco in May) coupled with strong insured deposit growth.

However, the agency is sanguine about the BIF’s future. “Despite this decline, the FDIC projects that the reserve ratio is likely to reach the statutory minimum of 1.35% by the statutory deadline of Sept. 30, 2028,” the agency said.

FDIC Board of Directors Released Semiannual Update on Restoration Plan