Bank Insurance Fund
With banks experiencing another record-breaking year of profitability and only one bank
failure, 1997 was another positive year for the BIF. The BIF has climbed steadily from a
negative balance of $7 billion in 1991 to $28.3 billion in 1997. The 1997 year-end fund
balance represents a 5.4 percent increase over the 1996 balance of $26.9 billion.
BIF-insured deposits grew by 2.4 percent in 1997. The BIF's reserve ratio increased from
1.34 to 1.38 percent of insured deposits during the year.
The law requires the FDIC to establish a risk-based assessment system. For the first
semiannual assessment period of 1997, the Board retained the rates approved in the second
assessment period of 1996: a range of 0 to 27 cents annually per $100 of assessable
deposits. Under the 1996 rate schedule, 94.8 percent of BIF-insured institutions paid no
assessments. The Board approved the same rate schedule for the second semiannual
assessment period of 1997, when 95.2 percent
of BIF-insured institutions were in the lowest-risk category and paid no assessments. The
lowest average assessment rate in the history of FDIC deposit insurance resulted, with an
average 1997 BIF rate of 0.08 cents per $100 of assessable deposits, down from 0.24 cents
per $100 in 1996.
In addition, as a direct result of the continued low assessment
rate schedule and the concentration of institutions in the lowest-risk category, interest
earned on U.S. Treasury investments ($1.5 billion) in 1997 greatly exceeded assessment
revenue ($25 million) as the source of BIF revenue.
The only BIF-insured institution to fail during the year had
assets of $25.9 million. In contrast, five BIF-insured banks with assets totaling $183
million failed in 1996. Estimated insurance losses in 1997 were $4 million, compared to
$43 million in estimated losses for 1996.
Investments in U.S. Treasury obligations
continued to be the main component of the BIF's total assets, at 93 percent, rising from
81 percent during the previous year. The BIF's financial position continued to improve:
Cash and investments at year-end were 86 times the BIF's total liabilities, up from 51
times the BIF's total liabilities in 1996.
Savings Association Insurance Fund
The SAIF ended 1997 with a balance of $9.4 billion, a 5.6 percent increase over the 1996
balance of $8.9 billion. Insured deposits increased by 1.0 percent in 1997. During the
year, the SAIF's reserve ratio grew from 1.30 of insured deposits to 1.36 percent.