FDIC: Deposit Insurance Fund reserve ratio on track to reach statutory goal

The Deposit Insurance Fund balance was $117 billion as of June 30, the FDIC said today in the second of its semiannual updates on the DIF restoration plan. Increased loss provisions—including for the bank failures that occurred in March and May—and strong insured deposit growth resulted in a decline in the reserve ratio from 1.25% on Dec. 31, 2022, to 1.1% on June 30, it added. Despite the decline, the FDIC projects that the reserve ratio is likely to reach the statutory minimum of 1.35% by the statutory deadline of Sept. 30, 2028.

The FDIC established the restoration plan in 2020 to restore the DIF reserve ratio to at least 1.35% by the deadline. The decline in the DIF balance does not include the cost of protecting uninsured deposits as a result of the FDIC’s systemic risk determination announced following the failures of Silicon Valley Bank and Signature Bank, as the agency is required by statute to recover those losses through one or more special assessments, Chairman Martin Gruenberg said. The FDIC announced in November that the assessment would be collected at an annual rate of approximately 13.4 basis points—3.36 basis points quarterly—for an anticipated eight quarterly assessment periods. No bank with total assets below $5 billion will pay the assessment.