Letter to Stakeholders 3rd quarter
2007
Sheila C. Bair
Chairman
Depositor Protection
FDIC-insured commercial banks and savings institutions reported net income of
$36.7 billion in the second quarter of 2007, $1.3 billion (3.4 percent) below the
level one year ago but still the fourth best quarterly earnings ever reported.
Estimated insured deposits decreased by $11.3 billion in the second quarter
of 2007. The Deposit Insurance Fund (DIF) balance increased by $482 million
(0.9 percent) to $51.2 billion. The ratio of the DIF to estimated insured deposits
increased by one basis point, ending the second quarter of 2007 at 1.21 percent.
The DIF earned assessment income of $140 million in the second quarter of 2007.
The FDIC estimates that assessment income earned increased to $170 million
in the third quarter of 2007.
The FDIC was appointed receiver of NetBank, Alpharetta, Georgia, on
September 28, 2007. The failed bank was an Internet bank and did not
have any physical branches. Depositors of NetBank became depositors
of ING Bank, FSB, Wilmington, Delaware.
Mission Support
The federal financial regulatory agencies and the Conference of State Bank
Supervisors issued the Statement on Loss Mitigation Strategies for Servicers
of Residential Mortgages, encouraging institutions (federal & state supervised)
to pursue strategies to mitigate losses while preserving homeownership for
borrowers that are delinquent or in default, or are in imminent risk of default,
to the extent possible and appropriate.
The FDIC – working through its new Alliance for Economic Inclusion (AEI) initiative–
and the NeighborWorks® Center for Foreclosure Solutions have partnered to
promote foreclosure-prevention strategies for consumers at risk of foreclosure
from subprime and nontraditional mortgage lending. The partnership will focus
its efforts in nine markets around the country that are served by both organizations.
The FDIC and the Peoples’ Bank of China signed a Memorandum of Understanding
(MOU) forging an international working relationship to develop and expand methods
of interaction on economic and financial issues. The MOU is a positive step in
establishing a deposit insurance system in China.
In July, the FDIC convened its second meeting of the Advisory Committee on
Economic Inclusion (ComE-IN) focusing on the subprime mortgage situation.
FDIC hosted the first executive training program sponsored by the International
Association of Deposit Insurers in July 2007. The four-day conference which
drew 35 representatives from 23 countries was an opportunity to focus on two
main topics – developing effective claims and recoveries processes and creating
effective deposit insurance agencies.
In August, the FDIC hosted a national conference for federally insured minority
depository institutions with presentations that included “Broadening Access
to the Financial Mainstream” and “The Power of Partnerships; Opportunities
for NeighborWorks® and Minority Community Bankers.”
Resource Management
The FDIC issued a special edition of FDIC Consumer News featuring “51 Ways
to Save Hundreds on Loans and Credit Cards.” The article offers simple, practical
tips that can help consumers cut the costs of borrowing money.
The FDIC Quarterly reported on the results of two studies – the feasibility and
consequences of privatizing deposit insurance and the effectiveness of the FDIC’s
Money Smart financial education program.
Our Priorities
Design: FDIC/DOA/CSB/Graphic Design Unit
This edition of our Letter to Stakeholders highlights the FDIC’s activities and accomplishments
during the third quarter of 2007. As we enter the final quarter, the banking industry remains
strong, despite persistent troubles in the subprime mortgage market. We are continuing to work
with other regulators in urging banks and mortgage servicers to restructure loans, where
feasible, to avoid foreclosure and keep consumers in their homes. For more information about
the FDIC, please visit our Web site at www.fdic.gov.
Financial data is unaudited
Data includes NetBank, Alpharetta, GA
Our Key Indices Most Current Data
Supervision
YTD 9/30/2006 9/30/2007
Total Number of FDIC Supervised Institutions 5,243 5,210
Bank Examinations:
Safety and Soundness 1,811 1,706
Compliance and CRA 1,517 1,347
Insurance and Other Applications Approved 2,414 2,304
Formal and Informal Enforcement Actions 333 300
Insurance
Updated Quarterly
($ billions) Q2 2002 Q2 2003 Q2 2004 Q2 2005 Q2 2006 Q2 2007
# Insured Inst. 9,482 9,282 9,092 8,881 8,790 8,626
$ Insured Inst. $ 8,048 $ 8,934 $ 9,660 $ 10,485 $ 11,539 $ 12,278
Insured Deposits $ 3,310 $ 3,438 $ 3,532 $ 3,758 $ 4,040 $ 4,230
Fund Balances $ 42.5 $ 44.9 $ 46.5 $ 48.0 $ 49.6 $ 51.2
Reserve Ratios % 1.28 % 1.31 % 1.32 % 1.28 % 1.23 % 1.21
# Problem Inst. 136 125 102 74 50 61
$ Problem Inst. $ 39.7 $ 31.8 $ 25.9 $ 21.7 $ 5.5 $ 23.1
Receiverships
Deposit Insurance Fund
YTD ($ millions) Q2 2006 Q2 2007 % Change Q3 2006 Q3 2007 % Change
Total
Receiverships 26 24 -8% 26 25 - 4%
Assets in
Liquidation $ 351 $ 321 -9% $ 345 $ 2,085 504%
Collections $ 57 $ 47 -18% $ 74 $ 56 -24%
Dividends Paid $ 116 $ 252 117% $ 116 $ 252 117%
Income
Deposit Insurance Fund
YTD ($ millions) Q2 2006 Q2 2007 % Change Q3 2006 Q3 2007 % Change
Assessment
Income $ 12 $ 234 1850% $ 22 $ 404 1736%
Interest $ 1,143 $ 1,315 15% $ 1,765 $ 1,955 11%
Comprehensive
Income $ 967 $ 1,062 10% $ 1,395 $ 1,589 14%
Resources
Budget / Expenditures On Board Staff
Major Target
Ongoing Recvrship Invstment Y/E
($ millions) Total Operations Funding Funding Q3 2007 2007
Annual Budget $ 1,122 $ 1,032 $ 75 $ 15 4,560 4,725
YTD Expended $ 732 $ 717 $ 6 $ 9
•
•
2007
Sheila C. Bair
Chairman
Depositor Protection
FDIC-insured commercial banks and savings institutions reported net income of
$36.7 billion in the second quarter of 2007, $1.3 billion (3.4 percent) below the
level one year ago but still the fourth best quarterly earnings ever reported.
Estimated insured deposits decreased by $11.3 billion in the second quarter
of 2007. The Deposit Insurance Fund (DIF) balance increased by $482 million
(0.9 percent) to $51.2 billion. The ratio of the DIF to estimated insured deposits
increased by one basis point, ending the second quarter of 2007 at 1.21 percent.
The DIF earned assessment income of $140 million in the second quarter of 2007.
The FDIC estimates that assessment income earned increased to $170 million
in the third quarter of 2007.
The FDIC was appointed receiver of NetBank, Alpharetta, Georgia, on
September 28, 2007. The failed bank was an Internet bank and did not
have any physical branches. Depositors of NetBank became depositors
of ING Bank, FSB, Wilmington, Delaware.
Mission Support
The federal financial regulatory agencies and the Conference of State Bank
Supervisors issued the Statement on Loss Mitigation Strategies for Servicers
of Residential Mortgages, encouraging institutions (federal & state supervised)
to pursue strategies to mitigate losses while preserving homeownership for
borrowers that are delinquent or in default, or are in imminent risk of default,
to the extent possible and appropriate.
The FDIC – working through its new Alliance for Economic Inclusion (AEI) initiative–
and the NeighborWorks® Center for Foreclosure Solutions have partnered to
promote foreclosure-prevention strategies for consumers at risk of foreclosure
from subprime and nontraditional mortgage lending. The partnership will focus
its efforts in nine markets around the country that are served by both organizations.
The FDIC and the Peoples’ Bank of China signed a Memorandum of Understanding
(MOU) forging an international working relationship to develop and expand methods
of interaction on economic and financial issues. The MOU is a positive step in
establishing a deposit insurance system in China.
In July, the FDIC convened its second meeting of the Advisory Committee on
Economic Inclusion (ComE-IN) focusing on the subprime mortgage situation.
FDIC hosted the first executive training program sponsored by the International
Association of Deposit Insurers in July 2007. The four-day conference which
drew 35 representatives from 23 countries was an opportunity to focus on two
main topics – developing effective claims and recoveries processes and creating
effective deposit insurance agencies.
In August, the FDIC hosted a national conference for federally insured minority
depository institutions with presentations that included “Broadening Access
to the Financial Mainstream” and “The Power of Partnerships; Opportunities
for NeighborWorks® and Minority Community Bankers.”
Resource Management
The FDIC issued a special edition of FDIC Consumer News featuring “51 Ways
to Save Hundreds on Loans and Credit Cards.” The article offers simple, practical
tips that can help consumers cut the costs of borrowing money.
The FDIC Quarterly reported on the results of two studies – the feasibility and
consequences of privatizing deposit insurance and the effectiveness of the FDIC’s
Money Smart financial education program.
Our Priorities
Design: FDIC/DOA/CSB/Graphic Design Unit
This edition of our Letter to Stakeholders highlights the FDIC’s activities and accomplishments
during the third quarter of 2007. As we enter the final quarter, the banking industry remains
strong, despite persistent troubles in the subprime mortgage market. We are continuing to work
with other regulators in urging banks and mortgage servicers to restructure loans, where
feasible, to avoid foreclosure and keep consumers in their homes. For more information about
the FDIC, please visit our Web site at www.fdic.gov.
Financial data is unaudited
Data includes NetBank, Alpharetta, GA
Our Key Indices Most Current Data
Supervision
YTD 9/30/2006 9/30/2007
Total Number of FDIC Supervised Institutions 5,243 5,210
Bank Examinations:
Safety and Soundness 1,811 1,706
Compliance and CRA 1,517 1,347
Insurance and Other Applications Approved 2,414 2,304
Formal and Informal Enforcement Actions 333 300
Insurance
Updated Quarterly
($ billions) Q2 2002 Q2 2003 Q2 2004 Q2 2005 Q2 2006 Q2 2007
# Insured Inst. 9,482 9,282 9,092 8,881 8,790 8,626
$ Insured Inst. $ 8,048 $ 8,934 $ 9,660 $ 10,485 $ 11,539 $ 12,278
Insured Deposits $ 3,310 $ 3,438 $ 3,532 $ 3,758 $ 4,040 $ 4,230
Fund Balances $ 42.5 $ 44.9 $ 46.5 $ 48.0 $ 49.6 $ 51.2
Reserve Ratios % 1.28 % 1.31 % 1.32 % 1.28 % 1.23 % 1.21
# Problem Inst. 136 125 102 74 50 61
$ Problem Inst. $ 39.7 $ 31.8 $ 25.9 $ 21.7 $ 5.5 $ 23.1
Receiverships
Deposit Insurance Fund
YTD ($ millions) Q2 2006 Q2 2007 % Change Q3 2006 Q3 2007 % Change
Total
Receiverships 26 24 -8% 26 25 - 4%
Assets in
Liquidation $ 351 $ 321 -9% $ 345 $ 2,085 504%
Collections $ 57 $ 47 -18% $ 74 $ 56 -24%
Dividends Paid $ 116 $ 252 117% $ 116 $ 252 117%
Income
Deposit Insurance Fund
YTD ($ millions) Q2 2006 Q2 2007 % Change Q3 2006 Q3 2007 % Change
Assessment
Income $ 12 $ 234 1850% $ 22 $ 404 1736%
Interest $ 1,143 $ 1,315 15% $ 1,765 $ 1,955 11%
Comprehensive
Income $ 967 $ 1,062 10% $ 1,395 $ 1,589 14%
Resources
Budget / Expenditures On Board Staff
Major Target
Ongoing Recvrship Invstment Y/E
($ millions) Total Operations Funding Funding Q3 2007 2007
Annual Budget $ 1,122 $ 1,032 $ 75 $ 15 4,560 4,725
YTD Expended $ 732 $ 717 $ 6 $ 9
•
•