FDIC: Banks Meet Deposit Insurance Fund Reserve Ratio Ahead of Schedule
NOV 30, 2018 - 6:35 am
The FDIC announced that the Deposit Insurance Fund Reserve Ratio reached 1.36%, exceeding the statutorily required minimum reserve ratio of 1.35% ahead of the September 30, 2020, deadline required under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
FDIC regulations provide for two changes to deposit insurance assessments upon reaching the minimum: 1) surcharges on insured depository institutions with total consolidated assets of $10 billion or more (large banks) will cease; and 2) small banks will receive assessment credits for the portion of their assessments that contributed to the growth in the reserve ratio from between 1.15% and 1.35%, to be applied when the reserve ratio is at or above 1.38%.
Large Bank Surcharges
The last quarterly surcharge will be reflected in large banks’ December 2018 assessment invoices, which cover the assessment period from July 1 through September 30.
March 2019 assessment invoices, which cover the assessment period from October 1, 2018, through December 31, 2018, no longer will include a quarterly surcharge.
Small Bank Credits
Small banks will receive credits for the portion of their assessments that contributed to growth in the reserve ratio between 1.15% and 1.35%.
The FDIC estimates the aggregate amount of credits to be approximately $750 million.
The FDIC plans to notify each small bank of its individual credit amount in January 2019 through FDICconnect.
Credits automatically will be applied each quarter that the reserve ratio is at least 1.38%, up to the full amount of a small bank’s credit or assessment, whichever is less.
No Change to Assessment Rates
Assessment rates, which declined for all banks when the reserve ratio first surpassed 1.15% in the third quarter of 2016, will remain unchanged.
Assessment rates are scheduled to decrease when the reserve ratio exceeds 2%.
Commercial lenders will face many new and unique challenges over the coming months as the full effects of the coronavirus pandemic are felt throughout the economy. For commercial customers, cash flow, liquidity and credit tightening dramatically across industries is the... read more
Sale-leasebacks are common in the industry, but these transactions can cause accounting issues under ASC 842. Shawn Halladay outlines the key issues and accounting requirements surrounding this product as well as strategies to overcome potential obstacles. Customers enter sale-leasebacks for... read more