Our Position

Deposit Insurance

Position

  • Our nation’s federal deposit insurance system is critical to depositor confidence in the banking system, to the protection of small depositors, and to the funding base of community banks. A strong Deposit Insurance Fund (DIF) is important to maintaining public confidence that the FDIC has adequate resources to protect the nation’s depositors.

  • ICBA commends the FDIC for remaining flexible during the pandemic and establishing a Deposit Insurance Fund Restoration Plan that provides until September 30, 2028 to restore the DIF reserve ratio to 1.35percent. This will allow deposits to return to pre-pandemic levels without increasing insurance assessments.

  • ICBA supported S. 2155 which ensures that reciprocal deposits are not considered brokered deposits under the Federal Deposit Insurance Act.

  • ICBA commends the FDIC for substantially mitigating the impact of SBA PPP lending on FDIC insurance assessments.

Background

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.

Deposit Insurance Fund Restoration Plan. The Federal Deposit Insurance Act requires the FDIC to maintain a minimum reserve ratio for the DIF of 1.35 percent and to establish a Deposit Insurance Fund Restoration Plan if the reserve ratio falls below the statutory minimum.

Due to economic stimulus measures enacted in response to the pandemic, and elevated savings rates during this time, quarterly deposit growth rates outpaced deposit growth in the DIF causing the reserve ratio to decline below the required 1.35 percent minimum. ICBA commends the FDIC for establishing a Deposit Insurance Fund Restoration Plan that provides sufficient time and flexibility for the surge of insured deposits to recede and normalize without increasing community bank insurance assessments.

SBA 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.

Staff Contact

Christopher Cole

Executive Vice President, Senior Regulatory Counsel

Washington, DC

Email

Jenna Burke

Senior Vice President and Senior Regulatory Counsel

Washington, DC

Email

ICBA Statement on FDIC Proposal to Raise Deposit Insurance Assessment Rates

June 21, 2022

ICBA Press Release Banner 2020

Washington, D.C. (June 21, 2022) — Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey issued the following statement on today’s Federal Deposit Insurance Corp. proposal to increase deposit insurance assessment rates.

“ICBA and the nation’s community banks are closely reviewing today’s FDIC proposal to amend its Deposit Insurance Fund Restoration Plan by increasing deposit insurance assessment rates by 2 basis points on all insured depository institutions.

“Due to economic stimulus measures enacted in response to the pandemic, deposit growth is outpacing Deposit Insurance Fund growth, causing the DIF reserve ratio to decline below the required 1.35 percent minimum. Today’s FDIC proposal is designed to increase the likelihood that the DIF reserve reaches the statutory minimum of 1.35 percent by the September 2028 deadline.

“ICBA has supported the FDIC’s previous DIF Restoration Plan to provide sufficient time and flexibility for the surge of insured deposits to normalize without increasing community bank insurance assessments. However, we are concerned that today’s proposal to raise assessment rates by 2 basis points will have a significant impact on many community banks, which fund deposit insurance through their quarterly assessments.

“We look forward to working with the FDIC to mitigate the potential adverse impact on community banks while at the same time ensuring that the Deposit Insurance Fund reserve ratio meets its statutory minimum of 1.35 percent by Sept. 30, 2028.”

About ICBA

The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.

With nearly 50,000 locations nationwide, community banks constitute roughly 99 percent of all banks, employ nearly 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding nearly $5.9 trillion in assets, over $4.9 trillion in deposits, and more than $3.5 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.

###

Letters to Regulators and Congress

Title Recipient Date
FDIC 10/11/22
FDIC 10/11/22
FDIC 08/20/22
FDIC 08/20/22
FDIC 10/04/21
FDIC 07/09/21
FDIC 06/09/20