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Summary
Trends and Results -
First Quarter 2005
| Financial Results |
Comments |
| I. Financial Statements |
- Deposit Insurance Fund reserve ratios remain moderately above
the 1.25 designated reserve ratio (DRR), however, if insured deposit
growth continues to increase at historically average rates, it could
result in lower reserve ratios going forward. As of December 31, 2004,
BIF's and SAIF's reserve ratios were 1.30 percent and 1.34
percent respectively.
- BIF's fund balance increased modestly during the first
quarter of 2005 (by approximately 0.1 percent) to $34.82 billion while
SAIF's fund balance increased by $73 million (0.6 percent)
to $12.8 billion. As noted above, these rates of fund growth may
not
be enough to offset the increase in BIF- and SAIF-estimated insured
deposits experienced during the three months ending March 31,
2005.
- OPEX coverage ratios (Interest Revenue/Operating Expenses),
which have generally been on the decline since 2001, appear
to be leveling off and may head modestly higher (notwithstanding the
slight
decline in these ratios during the first quarter of 2005) with
the potential for generally steady higher investment portfolio revenue
and steady-to-lower operating expenses going forward.
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| II. Investments |
- The BIF and SAIF portfolios’ book values increased during
the first quarter of 2005. Moreover, as a result of higher Treasury yields
on securities purchased during the quarter, the BIF portfolio’s yield
increased by 11 basis points, rising to 4.77 percent; similarly, the SAIF
portfolio's yield also increased by 11 basis points, rising to 4.80
percent.
- If market yields continue to increase, this should lead to increased
interest revenue over the long run. Over the short run, increasing
yields will accelerate the erosion of existing net unrealized gains
on AFS securities.
Moreover, regardless of changes in yields, existing net unrealized
gains will be reduced due to the passage of time.
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| III. Budget |
- Approximately $236 million was spent in the Ongoing Operations
component of the Corporate Operating Budget, which was about $10 million
(4 percent) below the budget for the first quarter. Spending was somewhat
lower than projected for outside services, personnel, travel, and facilities-related
expenses.
- No financial institution failures occurred during the first
quarter 2005. As a result, about $3 million was spent
in the Receivership Funding component of the Corporate Operating Budget,
which
was
about $16 million (86 percent) below the budgeted level for
first quarter.
- Spending on approved investment projects was $16 million,
which was $2 million (12 percent) below estimated
2005 spending for the first quarter on those projects. A
detailed quarterly
report
on
the status of those projects, except Virginia
Square Phase II, is provided separately to the Board by the
Capital
Investment Review
Committee.
That report will address the variance at the
individual project level.
- The table on page 12 compares actual expenditures to the
approved Corporate Operating Budget by major expense category
and budget component
for the three months ending March 31, 2005. The table on
page 13 compares actual expenditures by each division/office in their
combined
operating
and investment budgets to their budget/spending estimates
for the
same period.
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| Overall |
- Insurance fund balance sheets and income statements continue to
show solid results.
- Both insurance funds continue to experience strong cash flows.
- Both the bank and thrift industries are projected to remain
relatively healthy in 2005.
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