Deposit insurance has been the stabilizing force of our nation’s banking system for more than 85 years. It promotes public confidence by providing safe and secure depositories for small businesses and individuals alike.
Banks Under $10 Billion Awarded Assessment Credits
ICBA supported the FDIC’s final rule which surcharged banks with assets over $10 billion to pay for raising the DIF reserve ratio from 1.15 percent to 1.35 percent, as required by the Dodd-Frank Act. In the second quarter of 2019, banks with assets less than $10 billion began receiving FDIC assessment credits of approximately $764 million provided that the DIF reserve ratio is maintained at 1.35 percent.
In a victory for ICBA, Congress passed S. 2155 in 2018 which ensures that reciprocal deposits of an insured depository institution are not considered to be “brokered deposits,” or funds obtained by or through a deposit broker under the Federal Deposit Insurance Act. This legislation will allow reciprocal deposits to serve as a stable source of funding for community banks. Because reciprocal deposits have been wrongly classified as brokered deposits, it has been difficult for community banks to utilize them to their full potential. This new law supports local depositors while ensuring stable funding for community lending.
ICBA commends the FDIC for substantially mitigating the impact of SBA PPP lending on FDIC insurance assessments. For instance, nearly every ratio that determines a small bank’s assessment rate excludes PPP loans because of the FDIC’s recent rule changes. These ratios include: the net income before taxes to total assets ratio, the nonperforming loans and leases to gross assets ratio, the other real estate owned to gross assets ratio, the brokered deposit ratio, the one-year asset growth measure, and the loan mix index (LMI). Furthermore, the assessment base used to determine assessments excludes PPP loans.
However, there is one ratio that does not exclude PPP loans—the Tier 1 leverage ratio. ICBA believes that the FDIC should also have excluded PPP loans from the Tier 1 leverage ratio to fully mitigate the impact of PPP lending on FDIC insurance assessments. Loans made under any future PPP lending program should be excluded from the Tier 1 leverage ratio.
|Comment Letter to the FDIC on Brokered Deposits||FDIC||06/09/20|
|Comments on Interactive Bank Deposit Insurance Application||FDIC||11/26/19|
|Comment Letter on Interest Rate Restrictions||FDIC||11/04/19|
|Comments on Small Bank Assessment Credits||FDIC||09/29/19|
|Comment Letter on Brokered Deposits and Interest Rate Restrictions||FDIC||05/07/19|
|Comment Letter on Square’s Refiled Deposit-Insurance Application||FDIC||01/18/19|
|Comment Letter on FDIC Proposed Rulemaking Regarding Reciprocal Deposit Treatment||FDIC||10/26/18|