Bank deposit insurance assessment rate schedules will increase uniformly by 2 basis points beginning in the first quarterly assessment period of 2023 following adoption Tuesday of a final rule by the agency board that oversees the insurance program.
The Federal Deposit Insurance Corporation (FDIC) Board adopted the final rule as it was proposed in June. The agency said the revised rate schedules will be effective on Jan. 1 and applicable to the first quarterly assessment period of 2023 (i.e., Jan. 1 through March 31, 2023, with an invoice payment date of June 30). The revised rate schedules are applicable to all insured depository institutions.
The agency projected that the assessment rates increase would have an “insignificant effect” on institutions’ capital levels. It said the increase is estimated to reduce income slightly by annual average of 1.2% and should not impact lending or credit availability in any meaningful way.
According to the FDIC, the final rule is intended to increase the likelihood that the reserve ratio of the Deposit Insurance Fund (DIF) reaches the statutory minimum of 1.35% by the statutory deadline of Sept. 30, 2028, consistent with the amended restoration plan as adopted by the FDIC Board.
In a release, the agency said the rule also reduces the likelihood that it would need to consider a “potentially pro-cyclical assessment rate increase (i.e., raise assessments when banking and economic conditions may be less favorable).”
In other action, the board maintained the designated reserve ratio (DRR) of total reserves to savings insured for the DIF at 2% for 2023. The agency said Tuesday’s action raising the assessment rate is intended to support growth in the DIF toward the FDIC’s long-term goal of a 2% DRR.
“Growing the DIF increases the likelihood of the DIF remaining positive throughout periods of significant losses due to bank failures, consistent with the FDIC’s long-term fund management plan,” the agency said. “Therefore, the new assessment rate schedules will remain in effect unless and until the reserve ratio meets or exceeds 2%, absent further Board action. Progressively lower assessment rate schedules will take effect when the reserve ratio reaches 2%, and again when it reaches 2.5%.”