Chris Cole: Assessment credits finally paying off

It’s been a long time coming, but community banks recently received good news that deposit-insurance assessment credits are headed straight for their bottom line.

By Chris Cole, ICBA

The FDIC recently announced that the Deposit Insurance Fund (DIF) reserve ratio has reached 1.38%, triggering the distribution of approximately $764 million in assessment credits for community banks with assets under $10 billion. The FDIC started to apply those credits in September to offset the 2019 second-quarter bank assessments.

The FDIC was required to offset the cost of increasing the reserve ratio from 1.15% to 1.35% on financial institutions with assets of less than $10 billion by surcharging banks with more than $10 billion in assets and providing assessment credits to smaller banks. Those surcharges ended and the assessments credits were awarded last year when the DIF reached a reserve ratio of 1.35%. Under the FDIC’s final rule, the FDIC will automatically apply the credits to banks with assets less than $10 billion once the DIF reserve ratio reaches 1.38%, which the FDIC recently confirmed.

Since when?

Community banks with less than $10 billion in assets are eligible for credits because of a 2016 FDIC rule implementing an ICBA-advocated provision in the Dodd-Frank Act of 2010. It’s been years in the making, but the industry is finally reaping the benefits of that success.

This welcome bit of deposit-insurance news is due exclusively to ICBA, state association and community bank 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 success of community banks 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 deposit-insurance bill for a crisis they didn’t cause.

What’s next?

These DIF credits will be automatically applied each quarter that the reserve ratio is at least 1.35%, meaning that banks with assets of less than $10 billion can continue counting on this meaningful cost savings as they serve local communities nationwide.

Meanwhile, ICBA and community bankers will continue working with Congress and regulators on behalf of other needed policy reforms. As the FDIC announcement shows, our advocacy campaigns can be years in the making, but they ultimately pay off.

This article was originally published on ICBA’s Main Street Matters blog.

Chris Cole (, is ICBA’s executive vice president and senior regulatory counsel