Federal Deposit Insurance Corporation
550 17th Street, N.W., Washington, D.C. 20429-9990 Deputy to the Chairman and CFO
March 2, 2016
MEMORANDUM TO: The Board of Directors
FROM: Steven O. App
Deputy to the Chairman and
Chief Financial Officer
Craig R. Jarvill
Director, Division of Finance
SUBJECT: Fourth Quarter 2015 CFO Report to the Board
The attached report highlights the Corporation’s financial activities and results for the quarter ended
December 31, 2015.
Executive Summary
• During the fourth quarter of 2015, the DIF balance increased by $2.5 billion, from $70.1 billion
to $72.6 billion. The quarterly increase was primarily due to $2.2 billion of assessment
revenue and a $930 million decrease in the provision for insurance losses, partially offset by
$447 million of operating expenses and by an unrealized loss on U.S. Treasury investments of
$321 million.
• During the fourth quarter of 2015, the FDIC was named receiver for 2 failed institutions. The
combined assets at inception for these institutions totaled $291 million with an estimated loss
of $25 million. The corporate cash outlay during the fourth quarter for these failures was
approximately $45 million.
• Overall Corporate Operating Budget expenditures through December 31, 2015, were below
budget by 10 percent ($235 million). Spending in the Ongoing Operations component was
$121 million, or 7 percent, under budget, largely due to underspending in the salaries and
compensation and contractual services categories. The variance in the Receivership Funding
component was $114 million, or 22 percent, under budget, primarily due to lower-than-
budgeted contract expenses for failed bank resolutions and lower-than-anticipated asset
management and marketing costs.
550 17th Street, N.W., Washington, D.C. 20429-9990 Deputy to the Chairman and CFO
March 2, 2016
MEMORANDUM TO: The Board of Directors
FROM: Steven O. App
Deputy to the Chairman and
Chief Financial Officer
Craig R. Jarvill
Director, Division of Finance
SUBJECT: Fourth Quarter 2015 CFO Report to the Board
The attached report highlights the Corporation’s financial activities and results for the quarter ended
December 31, 2015.
Executive Summary
• During the fourth quarter of 2015, the DIF balance increased by $2.5 billion, from $70.1 billion
to $72.6 billion. The quarterly increase was primarily due to $2.2 billion of assessment
revenue and a $930 million decrease in the provision for insurance losses, partially offset by
$447 million of operating expenses and by an unrealized loss on U.S. Treasury investments of
$321 million.
• During the fourth quarter of 2015, the FDIC was named receiver for 2 failed institutions. The
combined assets at inception for these institutions totaled $291 million with an estimated loss
of $25 million. The corporate cash outlay during the fourth quarter for these failures was
approximately $45 million.
• Overall Corporate Operating Budget expenditures through December 31, 2015, were below
budget by 10 percent ($235 million). Spending in the Ongoing Operations component was
$121 million, or 7 percent, under budget, largely due to underspending in the salaries and
compensation and contractual services categories. The variance in the Receivership Funding
component was $114 million, or 22 percent, under budget, primarily due to lower-than-
budgeted contract expenses for failed bank resolutions and lower-than-anticipated asset
management and marketing costs.
2
I. Corporate Fund Financial Results (See pages 7 - 8 for detailed data and charts.)
Deposit Insurance Fund
• The DIF balance ended the year at $72.6 billion, an increase of $9.8 billion from $62.8 billion
at year-end 2014. The DIF’s comprehensive income totaled $9.8 billion for 2015 compared to
comprehensive income of $15.6 billion during 2014. This $5.8 billion year-over-year decrease
was primarily due to a $6.0 billion lower negative provision for insurance losses, partially offset
by a $191 million increase in assessment revenue and a $140 million increase in interest
revenue.
• The provision for insurance losses was negative $2.3 billion for 2015, compared to negative
$8.3 billion for 2014. The negative provision for 2015 primarily resulted from a decrease of
$2.2 billion in the estimated losses for institutions that failed in current and prior years, which
was primarily attributable to (1) unanticipated recoveries of $1.0 billion in litigation settlements,
professional liability claims, and tax refunds by the receiverships; (2) a $1.4 billion decrease in
the receiverships’ shared-loss liability; (3) an adjustment of $501 million for lower-than-
anticipated loss estimates at time of failure for all current year failures; and (4) a $715 million
increase in receivership legal and representation and warranty liabilities and projected future
receivership expenses. For the receiverships’ shared-loss liability, in 2015, covered asset
balances decreased by $23.1 billion as a result of loan amortizations and pay-downs as well
as the expiration of 113 commercial shared-loss agreements and the early termination of 66
shared-loss agreements. The composition of the remaining covered asset portfolio primarily
consists of performing single family assets, which have historically experienced significantly
lower losses than commercial assets.
FSLIC Resolution Fund
• During 2015, the FRF paid $514 million to resolve the remaining goodwill case after the United
States Court of Federal Claims awarded the plaintiff additional mitigation damages and
estimated tax liabilities. These awards were in addition to the previous award of $356 million,
for which the FRF had recorded a contingent liability and offsetting receivable as of December
31, 2014.
Assessments
• During December, the DIF recognized a total of $2.2 billion in assessment revenue. The
estimate for fourth quarter 2015 insurance coverage also totaled $2.2 billion. Additionally, the
DIF recognized a net adjustment of $11 million that decreased assessment revenue. This
adjustment consisted of $20 million increase in prior period amendments offset by a $31
million decrease to the estimate for third quarter 2015 insurance coverage recorded at
September 30, 2015. The latter adjustment was primarily due to lower than estimated
assessment base and rates.
• On December 30, 2015, the FDIC collected $2.2 billion in DIF assessments for third quarter
2015 insurance coverage.
I. Corporate Fund Financial Results (See pages 7 - 8 for detailed data and charts.)
Deposit Insurance Fund
• The DIF balance ended the year at $72.6 billion, an increase of $9.8 billion from $62.8 billion
at year-end 2014. The DIF’s comprehensive income totaled $9.8 billion for 2015 compared to
comprehensive income of $15.6 billion during 2014. This $5.8 billion year-over-year decrease
was primarily due to a $6.0 billion lower negative provision for insurance losses, partially offset
by a $191 million increase in assessment revenue and a $140 million increase in interest
revenue.
• The provision for insurance losses was negative $2.3 billion for 2015, compared to negative
$8.3 billion for 2014. The negative provision for 2015 primarily resulted from a decrease of
$2.2 billion in the estimated losses for institutions that failed in current and prior years, which
was primarily attributable to (1) unanticipated recoveries of $1.0 billion in litigation settlements,
professional liability claims, and tax refunds by the receiverships; (2) a $1.4 billion decrease in
the receiverships’ shared-loss liability; (3) an adjustment of $501 million for lower-than-
anticipated loss estimates at time of failure for all current year failures; and (4) a $715 million
increase in receivership legal and representation and warranty liabilities and projected future
receivership expenses. For the receiverships’ shared-loss liability, in 2015, covered asset
balances decreased by $23.1 billion as a result of loan amortizations and pay-downs as well
as the expiration of 113 commercial shared-loss agreements and the early termination of 66
shared-loss agreements. The composition of the remaining covered asset portfolio primarily
consists of performing single family assets, which have historically experienced significantly
lower losses than commercial assets.
FSLIC Resolution Fund
• During 2015, the FRF paid $514 million to resolve the remaining goodwill case after the United
States Court of Federal Claims awarded the plaintiff additional mitigation damages and
estimated tax liabilities. These awards were in addition to the previous award of $356 million,
for which the FRF had recorded a contingent liability and offsetting receivable as of December
31, 2014.
Assessments
• During December, the DIF recognized a total of $2.2 billion in assessment revenue. The
estimate for fourth quarter 2015 insurance coverage also totaled $2.2 billion. Additionally, the
DIF recognized a net adjustment of $11 million that decreased assessment revenue. This
adjustment consisted of $20 million increase in prior period amendments offset by a $31
million decrease to the estimate for third quarter 2015 insurance coverage recorded at
September 30, 2015. The latter adjustment was primarily due to lower than estimated
assessment base and rates.
• On December 30, 2015, the FDIC collected $2.2 billion in DIF assessments for third quarter
2015 insurance coverage.