The drastic increase of bank failures seen over the past year has caused the reserve ratio of the FDIC’s Deposit Insurance Fund (“DIF”) to drop from 1.19% as of March 30, 2008 to 0.76% as of September 30. The FDIC, anticipating more bank failures in the near future, announced a Restoration Plan in October for the DIF that would increase the reserve ratio to 1.15% in the next five years. To accomplish this, the FDIC realized that it would also need to increase assessment rates. The FDIC released a final rule yesterday that will increase the current assessment rates by 7 basis points for the first quarter assessment period beginning January 1, 2009. The assessment rate schedule for the first assessment period is as follows:

  • Risk Category I: minimum 12 basis points / maximum 14 basis points
  • Risk Category II: 17 basis points
  • Risk Category III: 35 basis points
  • Risk Category IV: 50 basis points  

This rule only increases the current rate for the first quarter of 2009 assessment period. The FDIC anticipates adopting another final rule early in 2009 that will become effective April 1, 2009 and have the effect of changing the way the FDIC’s assessment system differentiates for risk, make corresponding changes to assessment rates beginning with the second quarter of 2009, and make certain technical and other changes to the assessment rules.