Deposit Insurance Assessments
Recent Changes in Assessments
Assessment Regulatory Changes
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) instituted several changes to assessments once the Reserve Ratio reached 1.15%. The Reserve Ratio is the total of the Deposit Insurance Fund (DIF) divided by the total estimated insured deposits of the industry. The Reserve Ratio reached 1.15% effective June 30, 2016. Please see: Financial Institution Letter FIL-58-2016 for more information on the assessment changes listed below.
Lower Assessment Rates
- On July 1, 2016, the initial base assessment rates for all insured institutions were reduced from 5 to 35 basis points to 3 to 30 basis points. Total base assessment rates after possible adjustments were reduced from 2.5 to 45 basis points to 1.5 to 40 basis points. Click here for the new rate schedule.
Large Bank Surcharges & Small Bank Credits
- Dodd-Frank required large institutions (generally those with $10 billion or more in assets) to bear the burden of raising the Reserve Ratio from 1.15% to 1.35%. Large institution assessment surcharges were collected on the FDIC Quarterly Certified Statement Invoices (invoices) with payment dates beginning with December 30, 2016 and ending with December 30, 2018, when the Reserve Ratio requirement was met.
Once the Reserve Ratio was at or above 1.38%, small banks were awarded assessment credits for the portion of their assessments that contributed to the growth in the Reserve Ratio from 1.15% to 1.35%. See below for more information on credits.
Revised Small Bank Pricing
- Small bank pricing for deposit insurance was first applied on the invoice payable on December 30, 2016. The new pricing system: (1) eliminates all risk categories and uses the Financial Ratios Method to determine assessment rates for all small established institutions; (2) uses CAMELS composite ratings to set minimum and maximum assessment rates for an institution: (3) revises the Financial Ratios Method so that is it based on a statistical model estimating the probability of failure over three years; and (4) does not require institutions to report any additional data.
Other Significant Assessment Changes
- End of FICO Assessments
The FDIC, as agent for the Financing Corporation (FICO), collected FICO Assessments to pay interest on the 30-year FICO bonds. The bonds were issued between 1987 and 1989 and the final bond issue matured in September 2019. The Federal Housing Finance Agency issued a rule regarding the final FICO assessments. The rule specified that the final assessment be collected on the invoice payable on March 29, 2019. The rule also specified that amendments to Reports of Condition and Income (Call Reports) made after March 26, 2019 do not result in changes to a bank’s previously-paid FICO assessments. Please see FICO Assessment Final Rule.
- End of Small Bank Credits and the One-Time Assessment Credits (OTAC)
The first small bank credits were applied on the September 30, 2019 invoice when the Reserve Ratio requirement was met. Credit applications continued on the December 30, 2019, March 30, 2020, and June 30, 2020 invoices as long as an institution had a remaining credit balance to apply. The final remittance of the value of any remaining small bank credits was applied on the September 30, 2020 invoice. Additionally, institutions with any remaining OTAC balances were also remitted the value of those balances on the September 30, 2020 invoice. All credit balances have been remitted and both credit programs have ended. For more information, please see: Federal Register Notice 11/27/2019.
- Paycheck Protection Program (PPP) and Money Market Mutual Fund Liquidity Facility (MMLF) mitigation
Effective June 26, 2020, the FDIC adopted a Final Rule to mitigate the effect on deposit insurance assessments when an insured institution participates in either or both the Paycheck Protection Program (PPP) and Money Market Mutual Fund Liquidity Facility (MMLF). Under the rule, the FDIC provides adjustments to the risk based premium formula and certain of its risk ratios, and provides an offset to an insured institution’s total assessment amount due for the increase to its assessment base attributable to participation in the PPP and MMLF. For more information, please select Paycheck Protection Program (PPP) and Money Market Mutual Fund Liquidity Facility (MMLF) Mitigation.