Federal Deposit Insurance Corporation
55017th Street N.W. Washington D.C. 20429-9990 Deputy to the Chairman and CFO
May 15, 2017
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: First Quarter 2017 CFO Report to the Board
The attached report highlights the FDIC's financial activities and results for the quarter ended
March 31, 2017.
Executive Summary
• During the first quarter of 2017, the Deposit Insurance Fund (DIF) balance was $84.9 billion,
up $1.8 billion from year-end 2016. The quarterly increase was primarily due to $2.7 billion of
assessment revenue and $227 million of interest on U.S. Treasury securities, partially offset by
$765 million in provision for insurance losses and $442 million of operating expenses.
• The reserve ratio, which is the ratio of the DIF balance to estimated insured deposits, was 1.20
percent for the first quarter 2017, unchanged from the fourth quarter 2016, due in part to
strong growth in estimated insured deposits.
• During the first quarter of 2017, the FDIC was named receiver for three failed institutions. The
combined assets at inception for these failed institutions were $469 million with estimated
losses of $91 million. The corporate cash outlay during the first quarter for these failures was
approximately $101 million.
• Through March 31,2017, overall FDIC Operating Budget expenditures were below budget by
7 percent($36 million). This variance was primarily the result of vacancies in budgeted
positions in the Ongoing Operations component of the budget and lower-than-budgeted usage
of contractual services in the Receivership Funding component of the budget.
55017th Street N.W. Washington D.C. 20429-9990 Deputy to the Chairman and CFO
May 15, 2017
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: First Quarter 2017 CFO Report to the Board
The attached report highlights the FDIC's financial activities and results for the quarter ended
March 31, 2017.
Executive Summary
• During the first quarter of 2017, the Deposit Insurance Fund (DIF) balance was $84.9 billion,
up $1.8 billion from year-end 2016. The quarterly increase was primarily due to $2.7 billion of
assessment revenue and $227 million of interest on U.S. Treasury securities, partially offset by
$765 million in provision for insurance losses and $442 million of operating expenses.
• The reserve ratio, which is the ratio of the DIF balance to estimated insured deposits, was 1.20
percent for the first quarter 2017, unchanged from the fourth quarter 2016, due in part to
strong growth in estimated insured deposits.
• During the first quarter of 2017, the FDIC was named receiver for three failed institutions. The
combined assets at inception for these failed institutions were $469 million with estimated
losses of $91 million. The corporate cash outlay during the first quarter for these failures was
approximately $101 million.
• Through March 31,2017, overall FDIC Operating Budget expenditures were below budget by
7 percent($36 million). This variance was primarily the result of vacancies in budgeted
positions in the Ongoing Operations component of the budget and lower-than-budgeted usage
of contractual services in the Receivership Funding component of the budget.
Financial Results(See pages 6 - 7for detailed data and charts.)
Deposit Insurance Fund
• For the first quarter of 2017,the DIF's comprehensive income totaled $1.8 billion compared to
comprehensive income of $2.5 billion for the same period last year. This $754 million decline
was primarily the result of an $808 million increase in provision for insurance losses and $405
million lower unrealized gain on U.S. Treasury securities, partially offset by a $409 million
increase in assessment revenue and an $80 million increase in interest revenue.
The provision for insurance losses was $765 million for the first quarter of 2017 primarily
resulting from a $976 million increase in the contingent liability for anticipated failures, partially
offset by a $182 million decrease in the estimated losses for actual failures. The latter
adjustment was primarily attributable to unanticipated recoveries of $46 million in professional
liability claims and tax refunds by the receiverships, a $50 million decrease in the
receiverships' shared-loss liabilities, and settlement of receivership representation and
warranty indemnifications for $80 million less than estimated.
Assessments
• During March,the DIF recognized a total of $2.7 billion in assessment revenue. Of this
amount, $1.5 billion represented the estimate for first quarter 2017 insurance coverage. Also,
the DIF recognized $1.2 billion in estimated large bank surcharges for the first quarter 2017.
• On March 30, 2017, the FDIC collected $1.5 billion in DIF assessments and $1.2 billion in
surcharge assessments for fourth quarter 2016 insurance coverage.
II. Investment Results(See pages 8 - 9for detailed data and charts.)
DIF Investment Portfolio
• On March 31, 2017, the total liquidity (also total market value) of the DIF investment portfolio
stood at $78.9 billion, up $3.6 billion from its December 31, 2016, balance of $75.3 billion.
During the quarter, interest revenue, receivership dividends, and deposit insurance
assessment collections exceeded resolution-related outlays and operating expenses.
• On March 31, 2017, the DIF investment portfolio's yield was 1.27 percent, up 15 basis points
from its 1.12 percent yield on December 31, 2016. The new Treasury securities purchased
during the quarter generally had higher yields than the maturing securities' yields, some
considerably higher.
• In accordance with the approved first quarter 2017 DIF portfolio investment strategy, staff
purchased a total of 20 short- to intermediate-maturity conventional Treasury securities, all
designated as available-for-sale. The 20 securities had a total par value of $11.0 billion, a
weighted average yield of 1.80 percent, and a weighted average maturity of 3.96 years.
III. Budget Results(See pages 10 - 11 for detailed data.)
Approved Budget Modifications
The 2017 Budget Resolution delegated to the Chief Financial Officer(CFO)and selected other
officials the authority to make certain modifications to the 2017 FDIC Operating Budget. The following
Deposit Insurance Fund
• For the first quarter of 2017,the DIF's comprehensive income totaled $1.8 billion compared to
comprehensive income of $2.5 billion for the same period last year. This $754 million decline
was primarily the result of an $808 million increase in provision for insurance losses and $405
million lower unrealized gain on U.S. Treasury securities, partially offset by a $409 million
increase in assessment revenue and an $80 million increase in interest revenue.
The provision for insurance losses was $765 million for the first quarter of 2017 primarily
resulting from a $976 million increase in the contingent liability for anticipated failures, partially
offset by a $182 million decrease in the estimated losses for actual failures. The latter
adjustment was primarily attributable to unanticipated recoveries of $46 million in professional
liability claims and tax refunds by the receiverships, a $50 million decrease in the
receiverships' shared-loss liabilities, and settlement of receivership representation and
warranty indemnifications for $80 million less than estimated.
Assessments
• During March,the DIF recognized a total of $2.7 billion in assessment revenue. Of this
amount, $1.5 billion represented the estimate for first quarter 2017 insurance coverage. Also,
the DIF recognized $1.2 billion in estimated large bank surcharges for the first quarter 2017.
• On March 30, 2017, the FDIC collected $1.5 billion in DIF assessments and $1.2 billion in
surcharge assessments for fourth quarter 2016 insurance coverage.
II. Investment Results(See pages 8 - 9for detailed data and charts.)
DIF Investment Portfolio
• On March 31, 2017, the total liquidity (also total market value) of the DIF investment portfolio
stood at $78.9 billion, up $3.6 billion from its December 31, 2016, balance of $75.3 billion.
During the quarter, interest revenue, receivership dividends, and deposit insurance
assessment collections exceeded resolution-related outlays and operating expenses.
• On March 31, 2017, the DIF investment portfolio's yield was 1.27 percent, up 15 basis points
from its 1.12 percent yield on December 31, 2016. The new Treasury securities purchased
during the quarter generally had higher yields than the maturing securities' yields, some
considerably higher.
• In accordance with the approved first quarter 2017 DIF portfolio investment strategy, staff
purchased a total of 20 short- to intermediate-maturity conventional Treasury securities, all
designated as available-for-sale. The 20 securities had a total par value of $11.0 billion, a
weighted average yield of 1.80 percent, and a weighted average maturity of 3.96 years.
III. Budget Results(See pages 10 - 11 for detailed data.)
Approved Budget Modifications
The 2017 Budget Resolution delegated to the Chief Financial Officer(CFO)and selected other
officials the authority to make certain modifications to the 2017 FDIC Operating Budget. The following