I. Corporate Fund Financial Results - Second Quarter 2012

Deposit Insurance Fund (DIF)

• For the six months ended June 30, 2012, the DIF’s comprehensive income totaled $10.9 billion compared to comprehensive income of $11.3 billion for the same period last year.  This $0.4 billion year-over-year decrease was mostly due to a $4.4 billion year-to-year swing in loss provisions (a negative $795 million in 2012 vs. a negative $5.2 billion in 2011), offset by a $4.0 billion increase in recognition of DGP deferred revenue.

• The DIF recognized revenue of $4.0 billion for a portion of DGP guarantee fees previously held as systemic risk deferred revenue.  The $4.0 billion relates to fees associated with debt that matured in the first half of 2012.  In addition, an equal amount of cash was transferred from “Cash and investments - restricted - systemic risk” to DIF’s “Cash and cash equivalents”.  The DIF had previously recognized $2.6 billion in revenue at year-end 2011 relating to fees on debt guarantees that had expired.  Through June 30, 2012, $6.6 billion has been transferred from systemic risk deferred revenue and $1.7 billion remains as deferred.

• The remaining guaranteed debt outstanding from the DGP is $47.3 billion at June 30, 2012, down from the year-end 2011 balance of $167.4 billion.  The last guaranteed debt covered under the DGP will expire on December 31, 2012. 

• The provision for insurance losses was negative $795 million for the first half of 2012.  The negative provision primarily resulted from a $876 million reduction in the contingent loss reserve due to the improvement in the financial condition of institutions that were previously identified to fail offset by a $78 million increase in the estimated losses for banks that had previously failed.

Assessments

• During the second quarter of 2012, the DIF recognized a total of $2.9 billion in assessment revenue.  Of this amount, $3.2 billion represented the estimate for second quarter 2012 insurance coverage—$2.7 billion was recognized for those institutions that prepaid assessments and $454 million was recorded as a receivable from those institutions that did not have prepaid assessments available for offset.  Additionally, a net adjustment of $236 million was recognized that reduced assessment revenue.  This adjustment consisted of $30 million in prior period amendments and a $266 million decrease to the estimate for first quarter 2012 insurance coverage that was recorded at March 31, 2012.  The latter adjustment was due to lower than estimated growth in the assessment base and lower average assessment rates.

• On June 29, 2012, the FDIC collected $273 million in DIF assessments for first quarter 2012 insurance coverage.  Unearned revenue (prepaid assessments) totaled $11.5 billion on June 30, 2012.

Quarterly Assessments Permiums based on insurance coverage period ($ in millions)
Quarter	Quarterly Assessments Premiums
4th Qtr 2008	$1,087
1st Qtr 2009	$2,593
2nd Qtr 2009	$3,196
3rd Qtr 2009	$8,622
4th Qtr 2009	$3,262
1st Qtr 2010	$3,302
2nd Qtr 2010	$3,461
3rd Qtr 2010	$3,397
4th Qtr 2010	$3,432
1st Qtr 2011	$3,450
2nd Qtr 2011	$3,404
3rd Qtr 2011	$3,298
4th Qtr 2011	$3,385
1st Qtr 2012	$3,142
2nd Qtr 2012	$3,168

FSLIC Resolution Fund (FRF)

• During the second quarter, the FRF’s cash and cash equivalents increased by $17 million primarily due to the release of the cash collateral related to a reserve held by Fannie Mae.  The reserve resulted from swap transactions where the former Resolution Trust Corporation (RTC) received mortgage-backed securities in exchange for multi-family mortgage loans.  The RTC supplied credit enhancement cash reserves for the mortgage loans to cover future credit losses over the remaining life of the loans.  Pursuant to the agreement with Fannie Mae, the FRF will remain responsible for reimbursement to Fannie Mae for losses on the pool of mortgage loans.  There have been no losses in the last ten years and the likelihood of future losses is remote.