FDIC Quarterly Banking Profile
DEPOSIT INSURANCE FUND TRENDS
SECOND QUARTER 2019
Deposit Insurance Fund Increases by $2.6 Billion DIF Reserve Ratio Rises 4 Basis Points to 1.40 Percent Small Bank Credits Will Be Applied to Second Quarter Assessments
During the second quarter, the Deposit Insurance Fund (DIF) balance increased by $2.6 billion to $107.4 billion. Assessment income of $1.2 billion and unrealized gains on available-for-sale securities of $694 million were the largest drivers of the increase. Negative provisions for losses added $610 million and interest earned on investments added $535 million, while operating expenses reduced the fund by $459 million. One small institution with total assets of $37 million failed during the second quarter of 2019.
The deposit insurance assessment base—average consolidated total assets minus average tangible equity—increased by 0.7 percent in the second quarter and by 3.7 percent over 12 months.1 2 Total estimated insured deposits decreased by 0.1 percent in the second quarter of 2019 but rose by 4.6 percent year over year.
The strong growth in the fund balance, combined with flat insured deposit growth, increased the DIF reserve ratio (the fund balance as a percent of estimated insured deposits) to 1.40 percent on June 30, 2019, the highest level since September 30, 1999. The second quarter reserve ratio is 4 basis points higher than at March 31, 2019, and 7 basis points higher than the previous year.
Small banks earned a total of $765 million in credits for the portion of their assessments that contributed to growth in the reserve ratio from 1.15 percent to 1.35 percent. The credits are automatically applied to offset the assessments of small banks when the reserve ratio is at least 1.38 percent.3 Therefore, the FDIC will apply approximately $320 million of credits to offset the second quarter assessments of small banks, which will be due September 30, 2019.
TABLE II-C. Problem Institutions and Failed Institutions
3In August 2019, the FDIC Board of Directors authorized a notice of proposed rulemaking (NPR) that would require the FDIC to apply the small bank credits in any assessment quarter in which the reserve ratio is at least 1.35 percent.