FDIC says Deposit Insurance Fund restoration ahead of schedule

The FDIC said it projects that the Deposit Insurance Fund reserve ratio remains on track to reach the statutory minimum of 1.35% ahead of the statutory deadline of Sept. 30, 2028.

Details: In the latest semiannual update on the DIF’s Restoration Plan, the FDIC said the DIF reserve ratio increased by 6 basis points since the previous update—from 1.22% as of June 30, 2024, to 1.28% as of Dec. 31, 2024. The agency cited growth in the DIF balance and slower-than-average insured deposit growth.

Background: The FDIC established the Restoration Plan in September 2020 to restore the DIF reserve ratio to at least 1.35% by the statutory deadline after extraordinary deposit growth during the first half of 2020 caused the DIF reserve ratio to decline below the statutory minimum. In June 2022, the FDIC amended the plan following projections that the reserve ratio may not reach the required minimum by the statutory deadline and increased deposit insurance assessment rates by 2 basis points for all insured depository institutions.

ICBA View: ICBA opposes uniform base deposit insurance increases and has consistently urged the FDIC to:

• End the 2-basis-point increase once the DIF reserve ratio reaches 1.35%.

• Lower deposit insurance assessments for community banks if the 2-basis-point increase is no longer needed to reach the minimum statutory reserve ratio after 2026.

ICBA Advocacy: In 2022 comments to the agency, ICBA called on the FDIC to reconsider deposit insurance increases that are drastic, prolonged, and disproportionately affect community banks. In a prior comment letter, ICBA said any assessment increase should focus on the largest institutions by requiring too-big-to-fail entities to pay a systemic risk premium to the DIF instead of raising rates on community banks.