FDIC'S 1994 FINANCIAL REPORT SHOWS GROWTH IN INSURANCE FUNDS; SPENDING CUT DURING THE YEAR DUE TO REDUCED BANK FAILURE WORK
FOR IMMEDIATE RELEASE
The FDIC announced today that the Bank Insurance Fund (BIF)
ended 1994 with a record balance of $21.8 billion, a 66 percent
increase from the year-end 1993 balance of $13.1 billion. This
exceeds the fund's previous year-end high of $18.3 billion, set
Reasons for the latest improvement include the lowest level
of bank failures since 1981 -- only 13 banks with $1.4 billion
in assets and $139 million in estimated losses to the BIF were
closed during 1994 -- and reduced reserves for anticipated bank
failures. Based on the year-end 1994 balance, BIF's reserves
amount to an estimated $1.15 for every $100 of insured deposits,
compared to 69 cents per $100 just one year before. The FDIC
projects that during mid-1995 the BIF will reach the
congressionally mandated level of $1.25 in reserve for every $100
of insured deposits.
The Savings Association Insurance Fund (SAIF), which the
FDIC administers primarily to protect depositors of thrift
institutions, ended 1994 with a balance of $1.9 billion. This
is a 58 percent increase over the $1.2 billion balance at
year-end 1993. SAIF's reserves at year-end equaled 28 cents for
every $100 of insured deposits, which is up from the 17 cents per
$100 level the previous year, but still far below the $1.25 level
mandated by Congress for each fund. SAIF's growth has been slow
since its inception in 1989 because large portions of the fund's assessment income have been used to pay for the federal cleanup
of the thrift industry. From 1989 through 1992, nearly all
assessment income was diverted to pay these various cleanup
costs, including interest payments on Financing Corporation
Since then, approximately 40 percent of SAIF's assessment income
has continued to be used for the FICO bond payments.
FDIC Chairman Ricki Tigert Helfer said: "In the last three
years, banks and thrifts have had their highest earnings ever,
but to continue prospering they need strong deposit insurance
funds. It is in everyone's interest to work together to arrive
at a fair and reasonable solution to the problems facing the
Savings Association Insurance Fund."
The BIF's financial statements already have received an
unqualified opinion from the U.S. General Accounting Office
(GAO), the official auditor of the FDIC. The financial
statements for the SAIF and the FSLIC Resolution Fund (a third
fund administered by the FDIC) are expected to receive
unqualified audit opinions within the next few weeks.
In a related development, the FDIC released year-end
information on its ongoing efforts to streamline, consolidate and
reduce its operations in response to a declining workload from
failed banks. The agency spent $1.77 billion -- nine percent
below its budget of $1.95 billion for 1994 -- for salaries,
facilities, travel and other expenses for such activities as
examining banks and thrifts, enforcing banking laws and insuring
deposits. Staff was reduced to 11,627 at year-end 1994 from a
high of 15,585 in the second quarter of 1993 -- a 25 percent
decline in 18 months. In addition, the book value of real
estate, loans and other failed-bank assets being liquidated by
the FDIC was reduced by 40 percent in 1994, to $16.7 billion.
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More year-end financial highlights from the FDIC are available
On the Internet: Via the World Wide Web at www.fdic.gov.
By Fax: Use the phone attached to your fax machine, dial
804-642-0003 and follow the voice prompts to request Document No.
By Mail or Messenger: Contact the FDIC's Office of Corporate
Communications at 202-898-6996.