Tim Zimmerman: Reaping benefits of hard-fought successes


“This law is welcome news for qualifying community banks, and it’s due exclusively to our industry’s grassroots outreach.”

Community bankers know that hard work pays off, but sometimes not right away. For instance, take a recent bit of good news for community banks that has been years in the making.

The FDIC recently alerted community banks with assets under $10 billion of their share in approximately $750 million in deposit-insurance assessment credits because the Deposit Insurance Fund (DIF) reserve ratio surpassed 1.35 percent. These banks are eligible for credits due to a 2016 agency rule implementing an ICBA-advocated provision dating all the way back to the Dodd-Frank Act of 2010.

That law requires the FDIC to offset the cost of increasing the reserve ratio from 1.15 percent to 1.35 percent on institutions with less than $10 billion in assets. Under the agency’s final rule, these community banks can redeem their credits once the DIF reserve ratio reaches 1.38 percent, hence the messages from the FDIC to community bankers across the nation last month on their share.

Did you know?

After reaching a low of negative $20.9 billion in the third quarter of 2009, the Deposit Insurance Fund balance now stands at
$100.2 billion.

This is certainly welcome news for qualifying community banks across the country, and it’s due exclusively to our industry’s grassroots outreach. We were the only ones who advocated the change as part of long-sought deposit-insurance reforms, and we did so with the long term in mind.

At the time of the original debate, the DIF was in negative territory amid the fallout of the Wall Street financial crisis. Looking at the big picture, ICBA and community banks fought hard to ensure Main Street institutions wouldn’t be stuck footing the cost of the higher reserve ratio. It’s been years in the making, but the industry is finally reaping the benefits of that success.

This is nothing new for community bankers—we are used to years-long fights for policy gains. Consider many of the provisions of last year’s S.2155 relief law, such as relief from qualified mortgage, Home Mortgage Disclosure Act and appraisal requirements, which played out over multiple Congresses. Our campaigns to simplify the call report and regulatory capital rules remain unfinished.

With many advocacy initiatives ahead of us in 2019, we will all need to keep engaged and work hard to wage these battles with the knowledge that we can ultimately achieve success. We are faced with new challenges and threats to our franchises almost daily. I appreciate your service and dedication, and I look forward to working with you to ensure a bright future for community banks!

Tim Zimmerman Chairman, ICBA. Tim Zimmerman is CEO of Standard Bank, Monroeville, Pa. Connect with Tim @TimZimPgh