Deposit Insurance Assessments
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.
Small Bank Credits & One-Time Assessment Credits (OTAC)
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%. The first small bank credits were applied on the September 30, 2019 FDIC Quarterly Certified Statement Invoice (“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.
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.
Large Bank Surcharges
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) instituted 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, and, at that point, 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 these invoices with payment dates beginning with December 30, 2016 and ending with December 30, 2018, when the Reserve Ratio requirement was met. For more information on Dodd-Frank and surcharges see Financial Institution Letter FIL-58-2016 and 12 CFR 327.11.