FDIC Quarterly Banking Profile
DEPOSIT INSURANCE FUND TRENDS
FIRST QUARTER 2017
Deposit Insurance Fund Increases by $1.8 billion Estimated Insured Deposits Grow by 2.3 Percent DIF Reserve Ratio Is Unchanged at 1.20 Percent Three Insured Institutions Fail
The Deposit Insurance Fund (DIF) balance increased by $1.8 billion, to $84.9 billion, during the first quarter. Assessment income of $2.7 billion, which includes temporary assessment surcharges on large banks, drove the fund balance increase. Interest on investments of $227 million also added to the fund balance. A provision for insurance losses of $765 million and operating expenses of $442 million partially offset the rise in the fund balance. Three insured institutions failed in the first quarter, with combined assets of $554 million.
The deposit insurance assessment base—average consolidated total assets minus average tangible equity—increased by 0.4 percent in the first quarter and by 4.2 percent over 12 months.12 Total estimated insured deposits increased by 2.3 percent in the first quarter of 2017 and by 6.2 percent year-over-year. The DIF's reserve ratio (the fund balance as a percent of estimated insured deposits) was 1.20 percent on March 31, 2017, unchanged from year-end 2016 due in part to strong first quarter growth in estimated insured deposits. The reserve ratio increased by seven basis points from one year earlier.
By law, the reserve ratio must reach a minimum of 1.35 percent by September 30, 2020. The law also requires that, in setting assessments, the FDIC offset the effect of the increase in the reserve ratio from 1.15 percent to 1.35 percent on banks with less than $10 billion in assets. To satisfy these requirements, large banks are subject to a temporary surcharge of 4.5 basis points of their assessment base, after making certain adjustments.34 Surcharges began in the third quarter of 2016 and will continue through the quarter in which the reserve ratio first meets or exceeds 1.35 percent. If, however, the reserve ratio has not reached 1.35 percent by the end of 2018, large banks will pay a shortfall assessment in early 2019 to close the gap.
Small banks will receive credits to offset the portion of their assessments that help to raise the reserve ratio from 1.15 percent to 1.35 percent. When the reserve ratio is at or above 1.38 percent, the FDIC will automatically apply a small bank's credits to reduce its regular assessment up to the entire amount of the assessment.
TABLE II-C. Problem Institutions and Failed Institutions