FDIC Quarterly Banking Profile
DEPOSIT INSURANCE FUND TRENDS
THIRD QUARTER 2017
Deposit Insurance Fund Increases by $2.9 Billion Insured Deposits Grow by 0.7 Percent DIF Reserve Ratio Rises 4 Basis Points to 1.28 Percent
The Deposit Insurance Fund (DIF) balance increased by $2.9 billion, to $90.5 billion, during the third quarter. Assessment income of $2.6 billion, which includes temporary assessment surcharges on large banks, and a negative provision for insurance losses of $512 million were the largest sources of the increase. Interest earned and other revenue added $275 million, while operating expenses and unrealized losses on available-for-sale securities reduced the fund by $437 million. No banks failed during the quarter. During the first nine months of 2017 six institutions failed, with combined assets of $4.9 billion.
The deposit insurance assessment base—average consolidated total assets minus average tangible equity—increased by 0.8 percent in the third quarter and by 3.0 percent over 12 months.12 Total estimated insured deposits increased by 0.7 percent in the third quarter of 2017 and by 4.0 percent year-over-year. The DIF's reserve ratio (the fund balance as a percent of estimated insured deposits) rose to 1.28 percent on September 30, 2017, from 1.24 percent at June 30, 2017, and 1.18 percent four quarters ago. The September 30, 2017, reserve ratio is the highest for the DIF since June 30, 2005, when the reserve ratio was also 1.28 percent.3
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 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.45 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 least 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