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Chief Financial Officer's (CFO) Report to the Board

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Executive Summary

   •  Summary Trends and Results
I. Corporate Fund Financial Results

   •  DIF Balance Sheet
   •  DIF Income Statement
   •  DIF Statements of Cash Flows
   •  Selected Financial Data
II. Investments Results & Prospective Strategies

   •  Deposit Insurance Fund Portfolio Summary
   •  Approved Investment Strategies
III. Budget Results

   •  Budget & Expenditures by Major Expense Categories
   •  Budget & Expenditures by Budget Component, Division & Office
Printable Version

Executive Summary - Third Quarter 2008

The attached report highlights the Corporation's financial activities and results for the period ending June 30, 2008.

  • The Deposit Insurance Fund (DIF) balance decreased by 23.5 percent ($10.629 billion) to $34.588 billion during the third quarter of 2008. The third quarter 2008 decrease was primarily due to the $11.930 billion increase in the provision for insurance losses mainly related to anticipated failures, partially offset by an $881 million increase in assessment revenue.
  • During the third quarter of 2008, the FDIC was named receiver for nine failed institutions-IndyMac Bank of Pasadena, California; First National Bank of Reno, Nevada; First Heritage Bank of Newport Beach, California; First Priority Bank of Bradenton, Florida; The Columbian Bank and Trust Company of Topeka, Kansas; Integrity Bank of Alpharetta, Georgia; Silver State Bank of Henderson, Nevada; Ameribank, Inc. of Northfork, West Virginia; and Washington Mutual Bank (WaMu) of Henderson, Nevada. The combined total assets at inception for these institutions were $337 billion with an estimated loss totaling $11 billion. The corporate cash outlay during the third quarter for these failures was $22 billion.

    WaMu, with total assets of $299 billion and total deposits of $188 billion, is the largest failed institution in the history of the FDIC. JPMorgan Chase acquired the assets and assumed all the deposits. All depositors were fully protected and there will be no loss to the DIF. IndyMac Bank had assets totaling $28 billion and total deposits of $19 billion and is the fourth largest institution to fail in FDIC history. All insured, non-brokered deposits and substantially all the assets were transferred to IndyMac Federal Bank, FSB, a newly chartered federal financial institution, for which the FDIC has been named conservator. The FDIC will continue to operate the conservatorship until future sale. The current loss estimate for the IndyMac Bank receivership is $8.9 billion. .

  • As of June 30, 2008, the DIF reserve ratio stood at 1.01 percent, which is the lowest reserve ratio for a combined bank and thrift fund since March 1995. Because the fund reserve ratio has fallen below 1.15 percent, the FDIC is required, pursuant to the Federal Deposit Insurance Reform Act of 2005, to establish a restoration plan to restore the reserve ratio to at least 1.15 percent no later than five years after the establishment of the plan. As part of the plan, the Board proposes to increase assessment rates by 7 basis points uniformly, from a range of 5 to 43 basis points to a range of 12 to 50 basis points, for the first quarter 2009 insurance coverage only. Beginning with the second quarter 2009 coverage, the initial assessment rates would range from 10 to 45 basis points. In addition, the FDIC is proposing several adjustments, related to unsecured debt, secured liabilities, and brokered deposits that are designed to ensure that riskier institutions will bear a greater share of the proposed increase in assessment rates, thereby reducing the subsidization of riskier institutions by safer ones.
  • For the nine months ending September 30, 2008, Corporate Operating and Investment Budget related expenditures ran below budget by 4 percent ($32 million) and 14 percent ($3 million), respectively. The variance with respect to the Corporate Operating Budget expenditures was primarily the result of lower spending for contractual services in the Ongoing Operations component of the budget through the third quarter.

On the pages following is an assessment of each of the three major finance areas: financial statements, investments, and budget.



Last Updated 12/15/2008 dofbusinesscenter@fdic.gov