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WASHINGTON-The Federal Deposit Insurance Corp. Board recently voted to keep premiums rates where they are for the second quarter, but warned that there is a potential for an increase at the November meeting. “Although the FDIC anticipates continuing favorable prospects for the bank and thrift industries in the near term, it projects the reserve ratios for both its funds – the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF) – to decline over the coming year due to expected insured deposit growth,” a statement from the bank and thrift insurer read. “Staff projected a range of possible outcomes for the reserve ratios over the next semiannual assessment period; a best estimate is that the BIF will end the year at 1.26% and the SAIF at 1.31%.” The FDIC estimated that the BIF reserves were down to 1.27% as of the first quarter from 1.30% at year-end, and the SAIF was at 1.33% down from 1.34% in the same time frame. “If staff projections regarding the decline of the BIF reserve ratio are correct,” the FDIC warned, “the Board of Directors will be faced with the decision in November 2005 to raise premiums on BIF-insured deposits before the Designated Reserve Ratio falls below 1.25 percent in the first half of 2006 or to wait until May 2006, after the ratio has fallen below the target.”

 

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