Federal Deposit Insurance Corporation
550 17th Street, N.W., Washington, D.C. 20429-9990 Deputy to the Chairman and CFO
November 12, 2010
MEMORANDUM TO: The Board of Directors
FROM: Steven O. App
Deputy to the Chairman and
Chief Financial Officer
Bret D. Edwards
Director, Division of Finance
SUBJECT: Third Quarter 2010 CFO Report to the Board
The attached report highlights the Corporation’s financial activities and results for the period ending
September 30, 2010.
Executive Summary
During third quarter of 2010, the Deposit Insurance Fund (DIF) balance increased by $7.2
billion to negative $8.0 billion. This increase was primarily due to a $3.6 billion increase in
assessments earned and a $3.8 billion decrease in provision for insurance losses, offset by a
$414 million increase in operating expenses.
During the third quarter of 2010, the FDIC was named receiver for 41 failed institutions. The
combined assets at inception for these institutions totaled approximately $14.0 billion with a
total estimated loss of $2.3 billion. The corporate cash outlay during the third quarter for these
failures was approximately $3.3 billion.
For the nine months ending September 30, 2010, Corporate Operating Budget expenditures
were below budget by 6 percent ($163.9 million). This variance was primarily the result of
lower spending for contractual services and vacancies in budgeted positions in both the
Receivership Funding and the Ongoing Operations components.
Expenditures from the Investment Budget were 62 percent ($0.7 million) below project
spending estimates through September 30, 2010. For the information technology projects that
make up the Investment Budget, detailed quarterly reports are provided separately to the Board
by the Capital Investment Review Committee (CIRC).
550 17th Street, N.W., Washington, D.C. 20429-9990 Deputy to the Chairman and CFO
November 12, 2010
MEMORANDUM TO: The Board of Directors
FROM: Steven O. App
Deputy to the Chairman and
Chief Financial Officer
Bret D. Edwards
Director, Division of Finance
SUBJECT: Third Quarter 2010 CFO Report to the Board
The attached report highlights the Corporation’s financial activities and results for the period ending
September 30, 2010.
Executive Summary
During third quarter of 2010, the Deposit Insurance Fund (DIF) balance increased by $7.2
billion to negative $8.0 billion. This increase was primarily due to a $3.6 billion increase in
assessments earned and a $3.8 billion decrease in provision for insurance losses, offset by a
$414 million increase in operating expenses.
During the third quarter of 2010, the FDIC was named receiver for 41 failed institutions. The
combined assets at inception for these institutions totaled approximately $14.0 billion with a
total estimated loss of $2.3 billion. The corporate cash outlay during the third quarter for these
failures was approximately $3.3 billion.
For the nine months ending September 30, 2010, Corporate Operating Budget expenditures
were below budget by 6 percent ($163.9 million). This variance was primarily the result of
lower spending for contractual services and vacancies in budgeted positions in both the
Receivership Funding and the Ongoing Operations components.
Expenditures from the Investment Budget were 62 percent ($0.7 million) below project
spending estimates through September 30, 2010. For the information technology projects that
make up the Investment Budget, detailed quarterly reports are provided separately to the Board
by the Capital Investment Review Committee (CIRC).
2
The following is an assessment of each of the three major finance areas: financial statements,
investments, and budget.
Trends and Outlook
Financial Results Comments
I. Financial
Statements
As of September 30, 2010, unearned assessment revenue was $33.4
billion, which is the amount remaining from the $45.7 billion in prepaid
assessments collected on December 30, 2009. Estimated assessments
were prepaid by the majority of institutions for the period October 2009
through December 2012, and are recorded as a liability. As a result, the
DIF recognized prepaid assessments of $3.4 billion during the third
quarter of 2010. Additional assessment revenue of $248 million was
recognized for third quarter insurance coverage from institutions that
were exempt from the mandatory prepayments. Therefore, the total
assessment revenue recognized during the third quarter of 2010 was
$3.6 billion.
An institution’s quarterly risk-based deposit insurance assessment
thereafter is offset by the amount prepaid until that amount is exhausted
or until June 30, 2013, when any amount remaining would be returned
to the institution.
The following is an assessment of each of the three major finance areas: financial statements,
investments, and budget.
Trends and Outlook
Financial Results Comments
I. Financial
Statements
As of September 30, 2010, unearned assessment revenue was $33.4
billion, which is the amount remaining from the $45.7 billion in prepaid
assessments collected on December 30, 2009. Estimated assessments
were prepaid by the majority of institutions for the period October 2009
through December 2012, and are recorded as a liability. As a result, the
DIF recognized prepaid assessments of $3.4 billion during the third
quarter of 2010. Additional assessment revenue of $248 million was
recognized for third quarter insurance coverage from institutions that
were exempt from the mandatory prepayments. Therefore, the total
assessment revenue recognized during the third quarter of 2010 was
$3.6 billion.
An institution’s quarterly risk-based deposit insurance assessment
thereafter is offset by the amount prepaid until that amount is exhausted
or until June 30, 2013, when any amount remaining would be returned
to the institution.