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Deposit Insurance Assessments

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Assessment Changes since 2016

Paycheck Protection Program (PPP) & Money Market Mutual Fund Liquidity Facility (MMLF) Mitigation

Events in the first quarter of 2020 significantly and adversely impacted the global economy and financial markets. The spread of the Coronavirus Disease (COVID–19) dramatically slowed economic activity in many countries including the United States. Sudden disruptions in financial markets put increasing liquidity pressure on money market mutual funds and raised the cost of credit for most borrowers. In response, on March 27, 2020, the U.S. government passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

The CARES Act created the Paycheck Protection Program (PPP). PPP loans are fully guaranteed as to principal and accrued interest by the Small Business Administration (SBA). SBA guarantees are backed by the full faith and credit of the U.S. Government.

In order to prevent the disruption in the money markets from destabilizing the financial system, on March 18, 2020, the Board of Governors of the Federal Reserve System authorized the Federal Reserve Bank of Boston (FRBB) to establish the Money Market Mutual Fund Liquidity Facility (MMLF). Under the MMLF, the FRBB is able to extend nonrecourse loans to eligible borrowers to purchase assets from money market mutual funds.

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 PPP and 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 detailed information on the FDIC rule and its effects on risk-based deposit insurance assessments, please select Paycheck Protection Program (PPP) and Money Market Mutual Fund Liquidity Facility (MMLF) Mitigation.

Legislation 2011 - 2016
Assessment collections changed when the Reserve Ratio reached 1.15% effective June 30, 2016. The Reserve Ratio is the total of the Deposit Insurance Fund (DIF) divided by the total estimated insured deposits of the industry. Legislative rulings and corresponding assessment changes included:

The timeline for the assessment changes was as follows:
The Reserve Ratio reached 1.15% effective as of June 30, 2016, therefore:

The Reserve Ratio reached 1.36% effective as of September 30, 2018, therefore:

Assessment Rate Schedule
Effective 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.

Total Base Assessment Rates for established institutions (insured 5 or more years)*
All amounts are in basis points annually

 

 

Established Small Institutions
CAMELS Composite

 

Large & Highly
Complex
    Institutions **

1 or 2
3
4 or 5

Initial Base Assessment Rate

3 to 16

6 to 30

16 to 30

3 to 30

Unsecured Debt Adjustment ***

-5 to 0

-5 to 0

-5 to 0

-5 to 0

Brokered Deposit Adjustment

N/A

N/A

N/A

0 to 10

Total Base Assessment Rate

1.5 to 16

3 to 30

11 to 30

1.5 to 40

*   Total base rates that are not the minimum or maximum rate will vary between these rates. Total base assessment rates do not include the Depository Institution Debt Adjustment (“DIDA”).
**  See 12 CFR 327.8(f) and (g) for the definition of large and highly complex institutions.
*** The unsecured debt adjustment cannot exceed the lesser of 5 basis points or 50 percent of an insured depository institution’s initial base assessment rate; thus, for example, an insured depository institution with an initial base assessment rate of 3 basis points will have a maximum unsecured debt adjustment of 1.5 basis points and cannot have a total base assessment rate lower than 1.5 basis points. The unsecured debt adjustment does not apply to new institutions or insured branches.

Large Institution Surcharges
Large institution surcharges were collected on the deposit insurance invoices dated December 30, 2016 through December 30, 2018. Key aspects of the surcharges included:

Small Bank Credits
Since large institution surcharges were collected for nine quarters, the regular quarterly assessments paid by small institutions (generally institutions with less than $10 billion in total consolidated assets) during that period also contributed to raising the Reserve Ratio from 1.15% to 1.35%.  The FDIC provided small bank assessment “credits” to eligible small institutions for the portion of their assessments that contributed to the Reserve Ratio growth.  Key aspects of these credits include:

Small Institution Pricing Changes
Effective July 1, 2016, changes took place to the pricing system for established small institutions and appeared on the December 30, 2016 invoice.  The new pricing system

Please see the Assessment Rate Calculators for determining assessments for your institution.  Questions on the calculators should be emailed to RRPSAdministrator@fdic.gov.
More information on the new small institution pricing system can be found in Financial Institution Letter FIL-28-2016 and in the Recommendation and Summary memorandum.

For a Reserve Ratio history, go to Statistics at a Glance and click on “FDIC Historical Trends.”


Final FICO Assessments

FICO Assessments Final Regulation
The FDIC, as agent for the Financing Corporation (FICO), collected FICO Assessments from FDIC-insured institutions to pay interest on FICO bonds.  The 30-year FICO bonds were issued between 1987 and 1989 to recapitalize the (former) Federal Savings & Loan Insurance Corporation (FSLIC).  The FICO bond maturity schedule is below.

The Federal Housing Finance Agency (FHFA), the agency authorized by Congress to prescribe regulations relating to FICO, issued a rule regarding the final FICO assessments. The rule specified the following:

  1. The determination of the final FICO assessment collection.  The final collection was on the March 29, 2019 FDIC Quarterly Certified Statement Invoice.
  2. 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.

Only FICO assessments are affected by the FHFA rule. The FHFA rule does not affect the FDIC’s policy on deposit insurance assessments, which will continue in the normal manner. Please refer to the FDIC’s policy regarding assessment adjustments.

For more information on this regulation, please contact the FHFA.  Contact information is found in the final regulation (see the link below).

Helpful Web Links & Documents
FICO Assessment Final Rule
FICO Rate History
FICO Bond Maturity Schedule