FDIC announces details of deposit insurance special assessment

The FDIC board today voted 3-2 to propose a special assessment to make up for losses to the Deposit Insurance Fund caused by regulators’ decision to declare a systemic risk exception in the failures of Silicon Valley Bank and Signature Bank. Starting with first quarter of 2024, the FDIC would impose a special assessment on the excess of an independent bank’s estimated uninsured deposits in excess of $5 billion as of last December, or the same for bank holding companies’ consolidated estimated insured deposits (allocated over the subsidiary banks).

The assessment rate will be approximately 12.5 basis points. The special assessment would be collected over eight quarters, based on the estimated cost of the systemic risk declaration. However, the $15.8 billion estimate—lower than originally estimated—would be adjusted quarterly as assets from SVB and Signature are sold and receivership expenses are recovered, which could result in changes to the assessment rate or period.

FDIC staff determined that 113 banking organizations would be subject to the assessment—none with less than $5 billion in assets; 65 between $5 billion and $50 billion; and 48 larger institutions. Those larger than $50 billion would pay more than 95% of the assessment. FDIC staff estimated that, if the special assessment were imposed in one quarter only, the affected banks’ income would be reduced by an average 17.5% and capital would be reduced by less than 1%.

In a statement, American Bankers Association President and CEO Rob Nichols said the association is reviewing the assessment, but it appreciates the FDIC’s decision to exclude most community banks.

“Once we receive input from our members, we will be prepared to provide industry feedback to the FDIC on the special assessment, the timing of the expense, and the ongoing increase in quarterly Deposit Insurance Fund assessments on banks,” Nichols said. “More broadly, we continue to engage with regulators and members of Congress on further measures to enhance confidence in the banking system and financial markets, including increased scrutiny of predatory short selling and a discussion of potential deposit insurance reforms that could allow banks of all sizes to better serve their customers and communities.”