The Federal Deposit Insurance Corporation (FDIC) released its latest update on the Restoration Plan for the agency’s Deposit Insurance Fund (DIF).
In the semiannual update, the FDIC projects that the reserve ratio remains on track to reach the statutory minimum of 1.35 percent ahead of the Sept. 30, 2028, deadline.
Since the last update, the DIF reserve ratio increased by 6 basis points, rising from 1.15 percent on Dec. 31, 2023, to 1.21 percent on June 30, 2024. This is due to the growth in the DIF balance and slower-than-average insured deposit growth.
“The increase in the DIF balance was primarily driven by assessments earned, which reflect the 2-basis point increase in initial base assessment rate schedules that became effective at the beginning of 2023,” FDIC Chairman Martin Gruenberg said. “Had this rate increase not been in effect prior to the failure of three large regional banks in 2023, which resulted in $19.6 billion in losses to the DIF, the Board likely would have had to consider a more sizeable rate increase in order to restore the reserve ratio to 1.35 percent with less time remaining before the statutory deadline.”
The Federal Deposit Insurance Act (FDI Act) requires the FDIC to adopt a restoration plan when the DIF’s reserve ratio falls below 1.35 percent. The reserve ratio is the fund balance relative to insured deposits.