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Chief Financial Officer's (CFO) Report to the Board

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Chief Financial Officer's (CFO) Report to the Board Home
Executive Summary
   •  Summary Trends and Results
I. Corporate Fund Financial Results

   •  BIF & SAIF Balance Sheet
   •  BIF & SAIF Income Statement
   •  BIF & SAIF Statements of Cash Flows
   •  FRF Statements of Cash Flows
II. Investments Results & Prospective Strategies

   •  Deposit Insurance Fund Portfolio Summary
   •  Approved Investment Strategy
III. Budget Results

   •  Budget & Expenditures by Major Expense Categories
   •  Budget & Expenditures by Budget Component, Division & Office
Printable Version

Summary Trends and Results - Third Quarter 2007

Financial Results Comments
I. Financial Statements
  • On September 28, 2007, NetBank was closed by the Office of Thrift Supervision and the FDIC was named receiver. As of September 30, the DIF estimated that the pending insured deposit claim liability would total $1.834 billion. Coupled with an initial loss estimate of $108 million, the projected net receivable from NetBank is $1.726 billion as of the end of the third quarter 2007. This net receivable estimate should decline as significant liquidation activity occurs during the fourth quarter of 2007.

    Of the $2.237 billion in total assets at inception, ING Bank purchased $464 million, while the FDIC retained $1.773 billion of assets, mainly comprising real estate loans, lease receivables, and a mortgage subsidiary. In October 2007, the receivership sold approximately $627 million in real estate loans and $439 million in lease receivables; this brings the remaining NetBank asset book value to $707 million.

    Of the $1.834 billion in estimated insured deposits, ING Bank assumed insured deposits of $1.374 billion and FDIC retained $460 million in brokered deposits. The DIF expects to complete the funding of the insured brokered deposits by November 2007. Given the significant proceeds received and anticipated asset sales, FDIC, as receiver for NetBank, declared a 50 percent dividend in September 2007. This will reduce the DIF’s net receivable from $1.726 billion to approximately $800 million during the fourth quarter. Further reductions will be made as liquidation proceeds are recovered and dividends paid to claimants over the next several months.

II. Investments
  • DIF investment portfolio’s amortized cost (book value) increased by three percent during the first nine months of 2007, and totaled $50.562 billion on September 30, 2007. During the period, newly purchased securities had slightly higher average yields than those of maturing securities. Consequently, the DIF portfolio’s yield increased by three basis points during the first nine months of 2007, rising to 4.92 percent as of September 30, 2007, from 4.89 percent as of December 31, 2006.
  • Expectations are for Treasury market yields to initially trend lower, with the potential to rise from current levels over the course of the fourth quarter. Notwithstanding the recent lower trend in such Treasury yields, the growing DIF investment portfolio balance should lead to increased interest revenue over the long run.
III. Budget
  • Approximately $717 million was spent in the Ongoing Operations component of the 2007 Corporate Operating Budget, which was $55 million (7 percent) below the budget for the nine months ending September 30, 2007. The Outside Services - Personnel expense category was $28 million below its year-to-date budget, and represented 51 percent of the total Ongoing Operations variance.
  • Approximately $6 million was spent in the Receivership Funding component of the 2007 Corporate Operating Budget, which was $50 million (89 percent) below the budget for the nine months ending September 30, 2007. The Outside Services - Personnel expense category was $42 million below its year-to-date budget, and represented 84 percent of the total Receivership Funding variance.


Last Updated 11/30/2007 dofbusinesscenter@fdic.gov