Martin J. Gruenberg
Chairman, Federal Deposit Insurance Corporation
Update of Projected Deposit Insurance Fund Losses, Income, and
Reserve Ratios for the Restoration Plan
March 21, 2017
The Deposit Insurance Fund balance rose to 83.2 billion dollars at year-
end 2016, an increase of 10.6 billion dollars over the year. The Fund
reserve ratio at December 31 stood at 1.20 percent. This is the highest
reserve ratio in nine years.
The improvement in the Deposit Insurance Fund in 2016 mirrors
the largely positive performance of the banking industry during the year.
Revenue and net income were higher, asset quality improved, and the
number of unprofitable and problem banks continued to decline.
Growth in the Fund also reflects implementation of the plan
adopted by the FDIC Board last year to raise the reserve ratio to the higher
minimum set by the Dodd-Frank Act – 1.35 percent – by the statutory
deadline of September 30, 2020. The law places the burden of this
requirement on large banks – those with assets of 10 billion dollars or
more. Under the plan, large banks will pay surcharges to help raise the
Chairman, Federal Deposit Insurance Corporation
Update of Projected Deposit Insurance Fund Losses, Income, and
Reserve Ratios for the Restoration Plan
March 21, 2017
The Deposit Insurance Fund balance rose to 83.2 billion dollars at year-
end 2016, an increase of 10.6 billion dollars over the year. The Fund
reserve ratio at December 31 stood at 1.20 percent. This is the highest
reserve ratio in nine years.
The improvement in the Deposit Insurance Fund in 2016 mirrors
the largely positive performance of the banking industry during the year.
Revenue and net income were higher, asset quality improved, and the
number of unprofitable and problem banks continued to decline.
Growth in the Fund also reflects implementation of the plan
adopted by the FDIC Board last year to raise the reserve ratio to the higher
minimum set by the Dodd-Frank Act – 1.35 percent – by the statutory
deadline of September 30, 2020. The law places the burden of this
requirement on large banks – those with assets of 10 billion dollars or
more. Under the plan, large banks will pay surcharges to help raise the
reserve ratio from 1.15 percent to the 1.35 percent statutory minimum,
after which the surcharges will cease.
Small banks will also receive credits for the portion of their
assessments that contribute to the increase in the reserve ratio from 1.15
percent to 1.35 percent.
The staff currently projects that the reserve ratio should reach 1.35
percent in 2018, about two years ahead of the statutory deadline. By
meeting this target earlier than the mandate, we reduce the risk that the
FDIC will have to raise deposit insurance assessment rates unexpectedly
in the event of a future period of stress and help ensure stable and
predictable assessments.
I believe that the FDIC is taking a balanced approach to meeting
the statutory requirement to build the Deposit Insurance Fund up to the
minimum reserve ratio. I would like to thank the staff for their diligent
work to achieve this goal.
after which the surcharges will cease.
Small banks will also receive credits for the portion of their
assessments that contribute to the increase in the reserve ratio from 1.15
percent to 1.35 percent.
The staff currently projects that the reserve ratio should reach 1.35
percent in 2018, about two years ahead of the statutory deadline. By
meeting this target earlier than the mandate, we reduce the risk that the
FDIC will have to raise deposit insurance assessment rates unexpectedly
in the event of a future period of stress and help ensure stable and
predictable assessments.
I believe that the FDIC is taking a balanced approach to meeting
the statutory requirement to build the Deposit Insurance Fund up to the
minimum reserve ratio. I would like to thank the staff for their diligent
work to achieve this goal.