An update on the Deposit Insurance Fund (DIF) restoration plan, the fund’s 2025 designated reserve ratio and a delay in implementation of revised official sign requirements are on the agenda for Thursday’s open meeting of the Federal Deposit Insurance Corp. (FDIC) Board.
The current DIF designated reserve ratio (DRR) of total reserves to savings insured was set last October at 2%. The Subpart A amendments to the FDIC’s official sign and advertising rule took effect this April and currently has a compliance deadline of Jan. 1, 2025.
The last update on the DIF restoration plan was in April, when staff reported the fund’s reserve ratio grew from 1.11% in June 2023 to 1.15% in December; and that it remained on track to return to its statutory minimum of 1.35% before its statutory deadline of Sept. 30, 2028.
There were no changes in April to the restoration plan, adopted in 2020 after the fund reserve ratio (ratio of the fund balance to insured deposits) had dropped to 1.3%; federal law requires such a plan when the fund falls below its statutory minimum. The plan made no change in assessment rate schedules then in place. But in June 2022, with projections suggesting the fund would not meet its required minimum on time, the board amended the plan and increased deposit insurance assessment rates by 2 basis points for all insured institutions. The increase became effective in the first quarterly assessment period of 2023.
By June 2023, the DIF ratio had dropped to 1.11% (down from 1.25% at year-end 2022). The FDIC attributed that to increased loss provisions, including for three bank failures in 2023 (of Silicon Valley Bank [SVB] of Santa Clara, Calif., and Signature Bank of New York, N.Y., in 2023 and First Republic Bank of San Francisco in May), coupled with strong insured deposit growth. To address the failures, the board last November approved a special assessment on 114 banks having large amounts of uninsured deposits.
Only the DIF restoration plan is included in the discussion agenda for Thursday’s meeting. The other two items will be dealt with by summary action unless a board member asks that it be moved to the discussion agenda. The meeting is slated for 10 a.m. Eastern and will viewable by webcast.