ABA staff experts estimate that the FDIC’s insurance fund likely reached 1.15 percent of insured deposits by the end of June. While the agency will not know for sure until it receives all data from second-quarter Call Reports in mid-August, reaching the 1.15 percent level would trigger changes to the FDIC’s deposit insurance assessments as required by Dodd-Frank beginning this quarter.
Once the 1.15 percent threshold is reached, the assessment schedule for banks with less than $10 billion in assets will decline by at least 2 basis points, and up to 5 basis points for banks with high risk ratings. Banks that experience growth in excess of 10 percent over a one-year period or are heavily funded by brokered deposits will see increased assessments. Banks with loan portfolios concentrated in construction and development or, to a lesser extent, commercial and industrial or consumer loans will also see increases, while banks with concentrations in agricultural finance will pay less. Additionally, the weighting of tier 1 capital in the assessment rate formula will significantly increase.
For the 107 banks with more than $10 billion in assets, crossing the 1.15 percent threshold will trigger “surcharge assessments” of 4.5 basis points. The surcharge assessments are expected to remain in place for 8 quarters or until the fund reaches at least 1.35 percent. For more information, contact ABA’s Rob Strand.
