WASHINGTON The Federal Deposit Insurance Corp. expects its premium income to fall by nearly 8% in 2014, compared to last year, as banks continue to improve, the agency said Tuesday.
FDIC assessments which rise and fall with the level of banks' risk exposure are projected to total $9 billion this year, down from $9.7 billion in 2013. The agency reported the projections as part of its semiannual update on trends in the Deposit Insurance Fund.
"The decrease in projected revenue results from improvement in banking industry performance and conditions reflected in measures that determine risk-based premium rates," the FDIC said. "The DIF projections assume that the average risk-based premium rate will continue to decline gradually over the next few years as the banking industry continues to strengthen."
The agency, meanwhile, left unchanged its projection for future losses to the DIF resulting from bank failures. The FDIC said losses during the five-year period from 2013 through 2017 are expected to total about $4 billion, which was the same projection for that period reported in October.
The FDIC also reported no change in charting how quickly it anticipates restoring insurance reserves to pre-crisis levels. The insurance fund, which as of Dec. 31 held enough reserves to cover 0.79% of insured deposits, is on pace to hit a 1.15% reserve ratio in 2019. Under a restoration plan required by the Dodd-Frank Act, the ratio must hit 1.35% by Sept. 30, 2020.
Still, despite improved conditions for both the DIF and the industry, FDIC Chairman Martin Gruenberg said the level of troubled institutions remains elevated, justifying continued vigilance.
"The size of the problem bank caseload still remains high by historical standards, underscoring the value of these periodic reports to monitor the fund's progress," Gruenberg said.