|
|
Summary
Trends and Results -
Fourth Quarter 2005
| Financial Results |
Comments |
| I. Financial
Statements |
- Deposit insurance fund reserve ratios remain at or above the 1.25
percent designated reserve ratio (as of September 30, 2005);
however, if estimated insured deposits continue to increase in line
with recent
growth rates,
it is
likely that the funds’ reserve ratios (and that of the DIF once
the funds are merged) will trend lower absent the implementation of
across-the-board deposit
insurance assessments.
- As of December 31, 2005, the BIF's and SAIF's coverage ratios (interest
revenues/operating expenses) were 2.02 and 5.23 respectively. For
the combind funds, the ratio would have been 2.42 at year-end.
- No BIF-insured or SAIF-insured institutions failed during
2005—making it the first calendar year in FDIC’s history
with no failure activity. The contingent liability for anticipated
failures for both deposit insurance funds remain at or near historically
low levels given the current and projected health of the banking and
thrift industries ($2 million and $4 million for BIF and SAIF, respectively).
|
| II. Investments |
- For 2005, the BIF and SAIF portfolios’ combined book values
increased by $1.845 billion or 4.1 percent. Moreover, during 2005 the BIF
portfolio’s yield increased by 14 basis points, rising to 4.80 percent,
while the SAIF portfolio’s yield increased by 19 basis points, rising
to 4.88 percent.
- Due to the maturation in 2006 of a large number of U.S. Treasury
securities that were purchased several years ago when yields were
significantly higher, it is unlikely that overall portfolio yields will
increase over the next twelve months.
- Expectations are for Treasury market yields to rise, which 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.
|
| III. Budget |
- Approximately $979 million was spent in the Ongoing Operations
component of the Corporate Operating Budget, which was $48 million (5
percent) below the budget for 2005. The Salary and Compensation expense
category,
which comprises 67 percent of the Ongoing Operations’ budget, was
nearly $30 million (4 percent) below its budget.
|
| Overall |
- During 2005, the deposit 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 during 2006.
- A merger of the funds in early 2006 will result in a single
deposit insurance fund that is financially strong.
|
|
