The FDIC plans to increase deposit insurance assessment rates by 2 basis points by Jan. 1, a decision expected to result in increased expenses for banks.
FDIC Chair Martin Gruenberg said during a June 21 meeting that the assessments would vary based on a bank’s condition, size, and other factors, according to American Banker. He expects the increase to have a “modest” impact on industry’s profits, an average estimated annual reduction of less than 2 percent.
According to the FDIC, the increase is necessary to ensure the Deposit Insurance Fund reserve ratio reaches its statutory minimum of 1.35 percent by September 2028, and would ease any pressure to raise assessment rates if the industry faces stress in the coming years. The FDIC is projecting that the 2 basis point increase will enable the 1.35 percent mark to be met by the second quarter of 2024.
The Independent Community Bankers of America pushed back against the plan, saying it would “have a significant impact on many community banks.”
“We look forward to working with the FDIC to mitigate the potential adverse impact on community banks while at the same time ensuring that the Deposit Insurance Fund reserve ratio meets its statutory minimum,” said President and CEO Rebeca Romero Rainey.
The FDIC board voted last year not to raise deposit insurance assessments on banks. At the time, the FDIC board planned to monitor the situation as the pandemic-related surge in deposits was the reason the DIF reserve ratio fell below its statutory minimum of 1.35 percent, despite the DIF reaching a record level of $119 billion.
The FDIC is taking public comments on the plan through Aug. 20.