Federal Deposit Insurance Corporation
550 17th Street, N.W., Washington, D.C. 20429-9990 Deputy to the Chairman and CFO
November 11, 2019
MEMORANDUM TO: The Board of Directors
FROM: Bret Edwards
Deputy to the Chairman
and Chief Financial Officer
SUBJECT: Third Quarter 2019 CFO Report to the Board
The attached report highlights the FDIC’s financial activities and results for the quarter ended
September 30, 2019.
Executive Summary
• During the third quarter of 2019, the Deposit Insurance Fund (DIF) balance rose to $108.9 billion, up
$1.5 billion from the June 30, 2019, balance of $107.4 billion. The quarterly increase was primarily due
to $1.1 billion in assessment revenue, $630 million in interest and unrealized gains on U.S. Treasury
securities, and a $192 million increase in negative provision for insurance losses, partially offset by
$443 million in operating expenses.
• The reserve ratio, which is the ratio of the DIF balance to estimated insured deposits, was 1.41 percent
for the third quarter of 2019, compared to the second quarter 2019 reserve ratio of 1.40 percent.
• Through September 30, 2019, overall FDIC Operating Budget expenditures were below the year-to-
date budget by nine percent ($136 million). This variance was primarily the result of underspending in
the Salaries and Compensation, Outside Services – Personnel, and Equipment expense categories in
the Ongoing Operations budget component and the Outside Services – Personnel expense category in
the Receivership Funding budget component.
550 17th Street, N.W., Washington, D.C. 20429-9990 Deputy to the Chairman and CFO
November 11, 2019
MEMORANDUM TO: The Board of Directors
FROM: Bret Edwards
Deputy to the Chairman
and Chief Financial Officer
SUBJECT: Third Quarter 2019 CFO Report to the Board
The attached report highlights the FDIC’s financial activities and results for the quarter ended
September 30, 2019.
Executive Summary
• During the third quarter of 2019, the Deposit Insurance Fund (DIF) balance rose to $108.9 billion, up
$1.5 billion from the June 30, 2019, balance of $107.4 billion. The quarterly increase was primarily due
to $1.1 billion in assessment revenue, $630 million in interest and unrealized gains on U.S. Treasury
securities, and a $192 million increase in negative provision for insurance losses, partially offset by
$443 million in operating expenses.
• The reserve ratio, which is the ratio of the DIF balance to estimated insured deposits, was 1.41 percent
for the third quarter of 2019, compared to the second quarter 2019 reserve ratio of 1.40 percent.
• Through September 30, 2019, overall FDIC Operating Budget expenditures were below the year-to-
date budget by nine percent ($136 million). This variance was primarily the result of underspending in
the Salaries and Compensation, Outside Services – Personnel, and Equipment expense categories in
the Ongoing Operations budget component and the Outside Services – Personnel expense category in
the Receivership Funding budget component.
2
I. Financial Results (See pages 7 – 8 for detailed data and charts.)
Deposit Insurance Fund
For the nine months ending September 30, 2019, the DIF's comprehensive income totaled $6.3 billion,
compared to comprehensive income of $7.5 billion for the same period last year. This decline was
primarily the result of a $4.5 billion decrease in assessment revenue, partially offset by an $871 million
increase in negative provision for insurance losses and a $2.5 billion increase in interest and fair
value adjustments on U.S. Treasury securities.
Assessment revenue was $3.7 billion for the first three quarters of 2019, compared to $8.2 billion
for the same period last year. The $4.5 billion year-over-year decrease was primarily due to the
cessation of the surcharge assessment on large institutions effective October 1, 2018, as a result
of the reserve ratio exceeding the required minimum of 1.35 percent as of September 30, 2018.
The provision for insurance losses was a negative $1.2 billion for the first nine months of 2019,
compared to a negative $327 million for the same period last year. The negative provision for 2019
primarily resulted from a $574 million reduction of receiverships’ shared-loss liability estimates, $443
million in unanticipated recoveries from litigation settlements and professional liability claims by
receiverships, and a $103 million reduction in future receivership expense estimates.
Assessments
During September, the DIF recognized $1.1 billion of assessment revenue for the estimate of third
quarter 2019 insurance coverage. Gross assessment revenue of $1.35 billion was reduced by $237
million for expected small bank assessment credit usage. Additionally, the DIF recognized a $3.8
million reduction in assessment revenue for the estimated versus actual 2nd quarter 2019 assessment
collection.
On September 30, 2019, the FDIC collected $1.1 billion in DIF assessments for second quarter 2019
insurance coverage.
II. Investment Results (See pages 9 – 10 for detailed data and charts.)
DIF Investment Portfolio
As of September 30, 2019, the total liquidity (also total market value) of the DIF investment portfolio
stood at $105.7 billion, up $6.7 billion from its December 31, 2018, balance of $99.0 billion. During the
first three quarters of the year, interest revenue, receivership dividends, and deposit insurance
assessment collections far exceeded resolution-related outlays and operating expenses.
On September 30, 2019, the DIF investment portfolio’s yield was 1.80 percent, down 25 basis points
from its 2.05 percent yield on December 31, 2018.
In accordance with the approved third quarter 2019 DIF portfolio investment strategy, staff purchased a
total of 17 short-maturity conventional Treasury securities, all designated as available-for-sale. The 17
securities had a total par value of $16.5 billion, a weighted average yield of 1.85 percent, and a
weighted average maturity of 1.40 years.
I. Financial Results (See pages 7 – 8 for detailed data and charts.)
Deposit Insurance Fund
For the nine months ending September 30, 2019, the DIF's comprehensive income totaled $6.3 billion,
compared to comprehensive income of $7.5 billion for the same period last year. This decline was
primarily the result of a $4.5 billion decrease in assessment revenue, partially offset by an $871 million
increase in negative provision for insurance losses and a $2.5 billion increase in interest and fair
value adjustments on U.S. Treasury securities.
Assessment revenue was $3.7 billion for the first three quarters of 2019, compared to $8.2 billion
for the same period last year. The $4.5 billion year-over-year decrease was primarily due to the
cessation of the surcharge assessment on large institutions effective October 1, 2018, as a result
of the reserve ratio exceeding the required minimum of 1.35 percent as of September 30, 2018.
The provision for insurance losses was a negative $1.2 billion for the first nine months of 2019,
compared to a negative $327 million for the same period last year. The negative provision for 2019
primarily resulted from a $574 million reduction of receiverships’ shared-loss liability estimates, $443
million in unanticipated recoveries from litigation settlements and professional liability claims by
receiverships, and a $103 million reduction in future receivership expense estimates.
Assessments
During September, the DIF recognized $1.1 billion of assessment revenue for the estimate of third
quarter 2019 insurance coverage. Gross assessment revenue of $1.35 billion was reduced by $237
million for expected small bank assessment credit usage. Additionally, the DIF recognized a $3.8
million reduction in assessment revenue for the estimated versus actual 2nd quarter 2019 assessment
collection.
On September 30, 2019, the FDIC collected $1.1 billion in DIF assessments for second quarter 2019
insurance coverage.
II. Investment Results (See pages 9 – 10 for detailed data and charts.)
DIF Investment Portfolio
As of September 30, 2019, the total liquidity (also total market value) of the DIF investment portfolio
stood at $105.7 billion, up $6.7 billion from its December 31, 2018, balance of $99.0 billion. During the
first three quarters of the year, interest revenue, receivership dividends, and deposit insurance
assessment collections far exceeded resolution-related outlays and operating expenses.
On September 30, 2019, the DIF investment portfolio’s yield was 1.80 percent, down 25 basis points
from its 2.05 percent yield on December 31, 2018.
In accordance with the approved third quarter 2019 DIF portfolio investment strategy, staff purchased a
total of 17 short-maturity conventional Treasury securities, all designated as available-for-sale. The 17
securities had a total par value of $16.5 billion, a weighted average yield of 1.85 percent, and a
weighted average maturity of 1.40 years.