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Summary Trends and Results -
Third Quarter 2004
| Financial Results |
Comments |
| I. Financial Statements |
- Reserve Ratios are above the 1.25 designated reserve ratio (DRR),
with provision for losses still decreasing in BIF and up only slight in SAIF.
Moderate insured deposit growth may result in lower reserve ratios going
forward.
- OPEX coverage ratio (Interest Revenue/Operating Expenses), which had been on the decline, appears to be leveling off and may head higher with the potential for investment yield increases and steady to lower operating expenses.
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| II. Investments |
- Consensus forecasts predict an increase in Treasury yields. However, should the recent softness in the economy continue, yields could conceivably remain at current historically low levels for at least the near term.
- If yields do incease, this could lead to increased interest revenue over the long run. Over the short run, increasing yields would likely accelerate the erosion of existing unrealized gains on AFS securities. However, regardless of changes in yields, these unrealized gains will
be reduced due to the passage of time.
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| III. Budget |
- Actual spending is still well below YTD operating budget. Preliminary indications from the 2005 budget formulation process are that spending will likely be contained at or below 2004 budgeted levels.
- Investment budget underspending is due primarily to unanticipated schedule delays in several major IT projects as well as some timing differences.
- Efficiency gains from several large scale systems development efforts should be realized as
these systems come online during 2005.
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| Overall |
- Balance sheet and income statement show solid results.
- Both insurance funds experiencing strong cash flows.
- Both the bank and thrift industries are projected to remain relatively
healthy in 2005.
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