The FDIC exempted community banks with fewer than $5 billion in assets from its special assessment to recoup losses from the failures of Silicon Valley Bank and Signature Bank.
According to the American Bankers Association, 114 banks will be subject to the special assessment. The assessment will be collected at an annual rate of approximately 13.4 basis points — 3.36 basis points quarterly — for eight quarterly assessment periods beginning in 2024.
Following the announcement, Independent Community Bankers of America President and CEO Rebeca Romero Rainey supports the exemption. “The FDIC’s exemption for the vast majority of community banks recognizes the importance of distinguishing large banks that pose systemic risk to the financial system from the thousands of community banks that serve consumers and small businesses,” she added.
ABA President and CEO Rob Nichols supported exempting most community banks but was concerned “with some aspects of the resolution process and the methodology underlying the assessment.
“We continue to caution against the FDIC’s disproportionate focus on uninsured deposits, a category that comprises a diverse set of depositors that is not by itself a proxy for risk,” he added. “We also believe that this special assessment should not set a precedent for future special assessments.”
The failures of Silicon Valley Bank and Signature Bank resulted in approximately $22.5 billion in losses, $19.2 billion of which was for protecting uninsured depositors after the insurance cap was lifted. According to the FDIC, $16.3 billion of the $18.7 billion hit to the DIF was attributable to the protection of uninsured depositors.