Main Street Matters ICBA Blog

Assessment Credits Bring a Happy New Year

Dec 18, 2018

By Chris Cole

With the holidays almost here, community banks recently received some good news that has been years in the making.

The FDIC announced that the Deposit Insurance Fund reserve ratio has surpassed 1.35 percent, triggering approximately $750 million in assessment credits for community banks with assets under $10 billion. These banks are eligible for credits because of a 2016 FDIC rule implementing an ICBA-advocated provision in the Dodd-Frank Act of 2010.

The law requires the FDIC to offset the cost of increasing the reserve ratio from 1.15 percent to 1.35 percent on institutions with assets of less than $10 billion. Under the agency’s final rule, these community banks can redeem their credits once the DIF reserve ratio reaches 1.38 percent.

Well, it’s been a long time coming, but eligible banks can count on receiving their credits soon. The agency said it plans to notify affected banks of their individual credit amount next month, with credits automatically applying each quarter that the reserve ratio is at least 1.38 percent.

It’s not exactly a holiday bonus, but welcome news nonetheless for affected community banks across the country. And it’s due exclusively to ICBA and the nation’s community bankers, who advocated the change as part of long-sought deposit insurance reforms that will help them better serve their local communities in the new year and beyond.

Chris Cole is ICBA executive vice president and senior regulatory counsel.