FDIC proposes significant increases in deposit insurance assessments

The FDIC today signaled an intent to aggressively raise deposit insurance assessment rates, proposing a two basis-point increase beginning in the first quarterly assessment period of 2023. The proposed increase—which would remain in effect until the Deposit Insurance Fund reserve ratio meets the FDIC’s long-term goal of 2%—would amount to a 54% increase in the current average assessment rate.

In a memo regarding the assessment rate increase, FDIC staff noted that “for the industry as a whole, staff estimate that the estimated annual increase in assessments would average 1% of income, which includes an average of 0.9% for small banks and an average of 1% percent for large and highly complex institutions.”

The FDIC in 2020 had approved a DIF restoration plan to restore the reserve ratio to the statutory minimum of 1.35% in 2028. However, a sustained increase in insured deposits due to the pandemic and major unrealized losses in its securities portfolio caused the reserve ratio to decline to 1.23% as of March 31. The FDIC staff concluded that raising the assessment rate as proposed would provide a buffer to assure that the DIF achieves the 2028 target and accelerate capitalization of the fund toward the long-term 2% goal.

The proposed amended restoration plan will be open for public comment until Aug. 20. ABA is carefully reviewing the proposal and will submit comments in consultation with its members.