Given the favorable conditions facing depository institutions and
their insurance funds, the FDIC Board of Directors voted today to maintain
premium rates for banks and thrifts at their current low levels through
the end of the year.
Risk-related assessment rates for both the Bank Insurance Fund (BIF)
and the Savings Association Insurance Fund (SAIF) will remain in the range
of 0 to 27 basis points on an annual basis. Because the banking and thrift
industries are generally quite healthy, this means most insured institutions
will continue to pay nothing for their deposit insurance coverage in the
second half of the year, while the riskiest institutions will pay 27
cents for every $100 of assessable deposits.
Approximately 95 percent of all BIF-member institutions are expected
to be listed in the lowest risk category and to continue paying no premiums. Only one-tenth of one
percent are expected to pay the highest rate of 27 cents per $100.
Therefore, just under five percent of the banks will pay premiums
between the highest and the lowest rates. The average annual assessment
rate is projected to be about one-tenth of a cent per $100 of assessable
deposits (0.09 basis points).
The rate schedule approved by the Board is expected to maintain the
BIF's reserve ratio (its reserves as a percentage of its estimated insured
deposits) above the congressionally mandated 1.25 percent throughout 1997.
The BIF reserve ratio was 1.34 percent as of December 31, 1996. That
means the BIF has $1.34 in reserves for every $100 of insured deposits.
As for SAIF-member institutions, nearly 90 percent are expected to pay
no premiums. The average annual assessment rate is projected to be
approximately half a cent per $100 of assessable deposits (0.44 basis
points), which is expected to maintain the SAIF's reserves above the mandated
1.25 percent ratio. The SAIF reserve ratio stood at 1.30 percent as of
December 31, 1996.
A separate levy will be assessed on all FDIC-insured institutions to
bear the cost of bonds sold by the Financing Corporation (FICO) from 1987-89
in support of the former Federal Savings and Loan Insurance Corporation.
The 1996 law that capitalized the SAIF required banks to join thrifts in
paying for FICO interest. However, the new law requires the FICO rate on
BIF-assessable deposits to be one-fifth the rate for SAIF-assessable
deposits until January 1, 2000, or earlier if the two insurance funds
are merged.
The 1996 law makes the FDIC the collection agent for FICO. The FICO
rates for the second half of 1997, which are subject to quarterly adjustment,
will be determined later this month based on first-quarter 1997 financial
information about to be reported by banks and thrifts.
Congress created the Federal Deposit Insurance Corporation in 1933 to restore
public confidence in the nation's banking system. The FDIC insures deposits
at the nation's 11,452 banks and savings associations and it promotes the
safety and soundness of these institutions by identifying, monitoring and
addressing risks to which they are exposed.
FDIC press releases and other information are available on the Internet via
the World Wide Web at www.fdic.gov, and
may also be obtained through the
FDIC's Public Information Center(800-276-6003 or (703) 562-2200).
