FDIC Quarterly Banking Profile
DEPOSIT INSURANCE FUND TRENDS
FIRST QUARTER 2018
Deposit Insurance Fund Increases by $2.3 Billion Estimated Insured Deposits Grow by 2.6 Percent DIF Reserve Ratio Is Unchanged at 1.30 Percent
The Deposit Insurance Fund (DIF) balance increased by $2.3 billion, to $95.1 billion, during the first quarter. Assessment income of $2.9 billion, which includes temporary assessment surcharges on large banks, was the main driver of the fund balance increase. Interest on investments of $338 million and a negative provision for insurance losses of $65 million also added to the fund. Operating expenses of $433 million and unrealized losses on available-for-sale securities of $496 million partially offset the increase in the fund balance. No banks failed during the quarter.
The deposit insurance assessment base—average consolidated total assets minus average tangible equity—increased by 0.4 percent in the first quarter and by 3.1 percent over 12 months.12 Total estimated insured deposits increased by 2.6 percent in the first quarter of 2018 and by 3.7 percent year-over-year. The DIF's reserve ratio (the fund balance as a percent of estimated insured deposits) was 1.30 percent on March 31, 2018, unchanged from year-end 2017 due primarily to strong first quarter growth in estimated insured deposits. The reserve ratio increased by ten 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 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