Executive Summary - First Quarter 2005

This report highlights the Corporation's financial activities and results for the three months of 2005.

• Overall, the deposit insurance funds remained financially sound and exhibited healthy earnings during the first quarter 2005. Additionally, the estimated level of probable and reasonably estimable failure activity at the end of the first quarter remains at or near historically low levels for both insurance funds. However, as a result of significant declines in loss provisions during 2004 (that added substantially to 2004 comprehensive income) and reductions in unrealized gains on available-for-sale securities in the current year, there is a significant decline in year-over-year first quarter comprehensive income for BIF and a moderate decline for SAIF.



• The continued emphasis on expediting the liquidation of the remaining non-cash assets of the FSLIC Resolution Fund (FRF) continues to yield tangible results. At March 31, 2005, the book value of FRF assets in liquidation stands at only $63 million and staff projects that this book value could be reduced by approximately $30 million by year-end.

• As noted in our prior CFO reports to the Board, there are a number of ongoing, corporate-wide initiatives that will begin to yield tangible operating cost savings beginning in 2006:
  
  
  • Over 500 employees will leave the Corporation under the buyout program that is currently underway. Notices have also been issued to employees in the Division of Resolutions and Receiverships and the Division of Information Technology indicating that reductions-in-force will be conducted in September to address any staffing surpluses remaining in those divisions. These staffing reductions, in combination with ongoing efforts to closely manage our vacancies, will help us meet our year-end 2005 staffing targets and yield substantial operating budget savings in 2006 and beyond.
    
    
  • We are on target to complete and occupy the new Virginia Square facility during the first quarter of 2006. Consolidating many of our headquarters staff into this new facility will allow us to realize many operational efficiencies and to avoid the high costs of continuing to occupy rented space in downtown Washington, DC.
    
    
  • A number of major new information systems have or are scheduled to come on line during 2005. These new systems will yield greater operational efficiencies as well as allow us to avoid the high costs of maintaining the expensive and outdated legacy systems that they are replacing. These initiatives will result in substantial permanent reductions in our current cost structure.