Federal Deposit Insurance Corporation
550 17th Street, N.W., Washington, D.C. 20429-9990 Deputy to the Chairman and CFO
February 21, 2020
MEMORANDUM TO: The Board of Directors
FROM: Bret Edwards
Deputy to the Chairman
and Chief Financial Officer
SUBJECT: Fourth Quarter 2019 CFO Report to the Board
The attached report highlights the FDIC’s financial activities and results for the quarter ended
December 31, 2019.
Executive Summary
• During the fourth quarter of 2019, the Deposit Insurance Fund (DIF) balance rose to $110.3 billion, up
$1.4 billion from the September 30, 2019, balance of $108.9 billion. The quarterly increase was
primarily due to $1.3 billion in assessment revenue and $531 million in interest on U.S. Treasury
securities, partially offset by $460 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 fourth quarter of 2019, unchanged from third quarter 2019.
• During the fourth quarter of 2019, the FDIC was named receiver for three failed financial institutions.
The combined assets at inception for these failed institutions were $179 million with estimated losses
to the DIF as of December 31, 2019, of $9 million. The corporate cash outlay during the fourth quarter
for these failures was approximately $156 million.
• Through December 31, 2019, overall FDIC Operating Budget expenditures were below the full-year
budget by nine percent ($180 million). This variance was primarily the result of underspending in the
Salaries and Compensation, Outside Services – Personnel, Travel, and Buildings and Leased Space
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
February 21, 2020
MEMORANDUM TO: The Board of Directors
FROM: Bret Edwards
Deputy to the Chairman
and Chief Financial Officer
SUBJECT: Fourth Quarter 2019 CFO Report to the Board
The attached report highlights the FDIC’s financial activities and results for the quarter ended
December 31, 2019.
Executive Summary
• During the fourth quarter of 2019, the Deposit Insurance Fund (DIF) balance rose to $110.3 billion, up
$1.4 billion from the September 30, 2019, balance of $108.9 billion. The quarterly increase was
primarily due to $1.3 billion in assessment revenue and $531 million in interest on U.S. Treasury
securities, partially offset by $460 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 fourth quarter of 2019, unchanged from third quarter 2019.
• During the fourth quarter of 2019, the FDIC was named receiver for three failed financial institutions.
The combined assets at inception for these failed institutions were $179 million with estimated losses
to the DIF as of December 31, 2019, of $9 million. The corporate cash outlay during the fourth quarter
for these failures was approximately $156 million.
• Through December 31, 2019, overall FDIC Operating Budget expenditures were below the full-year
budget by nine percent ($180 million). This variance was primarily the result of underspending in the
Salaries and Compensation, Outside Services – Personnel, Travel, and Buildings and Leased Space
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 6 – 7 for detailed data and charts.)
Deposit Insurance Fund
• The DIF’s comprehensive income totaled $7.7 billion for 2019 compared to comprehensive income of
$9.9 billion during 2018. The decline was primarily due to a $4.6 billion decrease in assessment
revenue partially offset by a $723 million increase in negative provision for insurance losses and a $1.8
billion increase in interest and unrealized gains on U.S. Treasury securities.
• Assessment revenue was $4.9 billion for 2019, compared to $9.5 billion for 2018. The $4.6 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. In addition, assessment revenue was
reduced in 2019 for actual and expected small bank assessment credit usage of $704 million.
• The provision for insurance losses was a negative $1.3 billion for 2019, compared to a negative $563
million for 2018. The negative provision for 2019 primarily resulted from a $575 million reduction of
receiverships’ shared-loss liability estimates, $465 million in unanticipated recoveries from litigation
settlements and professional liability claims by receiverships, and a $118 million reduction in future
receivership expense estimates.
Assessments
• During December, the DIF recognized $1.2 billion of assessment revenue for the estimate of fourth
quarter 2019 insurance coverage. Gross assessment revenue of $1.387 billion was reduced by $145
million for expected small bank assessment credit usage. Additionally, the DIF recognized a $35 million
adjustment for higher-than-estimated collections for the third quarter 2019 insurance coverage, which
increased assessment revenue.
• On December 30, 2019, the FDIC collected $1.1 billion in DIF assessments for third quarter 2019
insurance coverage.
II. Investment Results (See pages 8 – 9 for detailed data and charts.)
DIF Investment Portfolio
• On December 31, 2019, the total liquidity (also total market value) of the DIF investment portfolio stood
at $107.0 billion, up $8.1 billion from its December 31, 2018, balance of $99.0 billion. During the year,
interest revenue, receivership dividends, and deposit insurance assessment collections far exceeded
resolution-related outlays and operating expenses.
• On December 31, 2019, the DIF investment portfolio’s yield was 1.98 percent, down 7 basis points
from its 2.05 percent yield on December 31, 2018. The new Treasury securities purchased during the
year had lower yields than the maturing securities’ yields.
• In accordance with the approved fourth quarter 2019 DIF portfolio investment strategy, staff purchased
a total of 11 short-maturity conventional Treasury securities. The 11 securities had a total par value of
$12.0 billion, a weighted average yield of 1.741 percent, and a weighted average maturity of 1.06
years.
I. Financial Results (See pages 6 – 7 for detailed data and charts.)
Deposit Insurance Fund
• The DIF’s comprehensive income totaled $7.7 billion for 2019 compared to comprehensive income of
$9.9 billion during 2018. The decline was primarily due to a $4.6 billion decrease in assessment
revenue partially offset by a $723 million increase in negative provision for insurance losses and a $1.8
billion increase in interest and unrealized gains on U.S. Treasury securities.
• Assessment revenue was $4.9 billion for 2019, compared to $9.5 billion for 2018. The $4.6 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. In addition, assessment revenue was
reduced in 2019 for actual and expected small bank assessment credit usage of $704 million.
• The provision for insurance losses was a negative $1.3 billion for 2019, compared to a negative $563
million for 2018. The negative provision for 2019 primarily resulted from a $575 million reduction of
receiverships’ shared-loss liability estimates, $465 million in unanticipated recoveries from litigation
settlements and professional liability claims by receiverships, and a $118 million reduction in future
receivership expense estimates.
Assessments
• During December, the DIF recognized $1.2 billion of assessment revenue for the estimate of fourth
quarter 2019 insurance coverage. Gross assessment revenue of $1.387 billion was reduced by $145
million for expected small bank assessment credit usage. Additionally, the DIF recognized a $35 million
adjustment for higher-than-estimated collections for the third quarter 2019 insurance coverage, which
increased assessment revenue.
• On December 30, 2019, the FDIC collected $1.1 billion in DIF assessments for third quarter 2019
insurance coverage.
II. Investment Results (See pages 8 – 9 for detailed data and charts.)
DIF Investment Portfolio
• On December 31, 2019, the total liquidity (also total market value) of the DIF investment portfolio stood
at $107.0 billion, up $8.1 billion from its December 31, 2018, balance of $99.0 billion. During the year,
interest revenue, receivership dividends, and deposit insurance assessment collections far exceeded
resolution-related outlays and operating expenses.
• On December 31, 2019, the DIF investment portfolio’s yield was 1.98 percent, down 7 basis points
from its 2.05 percent yield on December 31, 2018. The new Treasury securities purchased during the
year had lower yields than the maturing securities’ yields.
• In accordance with the approved fourth quarter 2019 DIF portfolio investment strategy, staff purchased
a total of 11 short-maturity conventional Treasury securities. The 11 securities had a total par value of
$12.0 billion, a weighted average yield of 1.741 percent, and a weighted average maturity of 1.06
years.