Although the total amount of SAIF-insured deposits is lower now than at the inception of the fund in 1989, insured deposits have been increasing since 1996 (Figure 1, next page). SAIF-insured deposits increased by 2.3 percent during the six months ending on June 30, 2002. In contrast to BIF-insured deposits, which declined during the second quarter of 2002, SAIF insured deposits grew by 0.95 percent.

It takes approximately $6 billion in estimated insured deposit growth to create a 1 basis point change in the SAIF reserve ratio, all other things held constant. With the reserve ratio at 1.38 percent on June 30, 2002, it would take approximately $89 billion in insured deposit growth to reduce the fund to the Designated Reserve Ratio level, all else being equal. As of June 30, 2002, $89 billion is over 10 percent of estimated insured deposits. It is unlikely that deposit growth alone could drive the reserve ratio below 1.25 percent during the upcoming assessment period. Significant insurance losses in addition to sustained rapid deposit growth would be required to cause the reserve ratio fall below its target in the near term.