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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 Statement Results

   •  DIF Balance Sheet
   •  DIF Income Statement
   •  DIF 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

I. Corporate Fund Financial Statement Results - Fourth Quarter 2007

DIF

  • For 2007, DIF’s comprehensive income totaled $2.248 billion compared to $1.568 billion for last year. Excluding the recognition of exit fees earned of $345 million (a one-time adjustment) from the 2006 results, comprehensive income rose by $1.025 billion, or 84 percent, from a year ago. This year-over-year increase was primarily due to a $611 million increase in assessment revenue, a $299 million increase in interest revenue, a higher contribution from unrealized gain/loss on AFS securities of $298 million, offset by a $42 million increase in operating expenses and a $147 million increase in the provision for insurance losses.
  • During the fourth quarter of 2007, DIF’s receivables from resolutions, net, decreased by $1.249 billion to $808 million primarily due to $1.289 billion in dividends from the NetBank receivership. This decrease was in part offset by a $53 million increase in the net receivable resulting from the Miami Valley Bank closing on October 4, 2007.
  • The DIF portfolio's interest revenue was $2.540 billion in 2007, or $299 million higher than the $2.241 billion of interest revenue earned in 2006. The largest contributor to the overall increase in 2007 interest revenue was TIPS inflation compensation of $314 million, which was $205 million more than the amount earned in 2006. This increased inflation compensation reflected the comparatively large increases in the CPI during 2007 stemming from rising energy and food prices. The remaining $94 million year-over-year increase in interest revenue resulted from: 1) slightly higher average portfolio yields in 2007 as newly purchased securities continued to have somewhat higher yields than those of maturing securities; and 2) a growing investment portfolio balance. The DIF’s AFS portfolio reported a $125 million unrealized gain in 2007 compared with a $173 million unrealized loss in 2006. During 2007, conventional Treasury yields and TIPS real yields decreased, resulting in higher market prices. In contrast, these yields increased during 2006, resulting in market price declines.

FRF

  • FRF’s net income for 2007 was $64 million compared to a $203 million loss for 2006. This change is primarily due to an increase in criminal restitution income of $19 million, an increase in the recovery of tax benefits of $33 million, and a decrease in Goodwill/Guarini litigation expenses of $215 million.
  • During the fourth quarter of 2007, FRF accrued a $35 million contingent liability and offsetting receivable from the U.S. Treasury for judgments for two Goodwill cases that were fully adjudicated as of year-end. These funds were paid in January 2008. For the year ending December 31, 2007, FRF paid or accrued a total of $440 million in Goodwill litigation expenses to resolve eight cases, compared with a total of $447 million on six Goodwill cases during 2006.
  • FRF paid $225 million to the Resolution Funding Corporation (REFCORP) on October 10, 2007, bringing total payments to REFCORP to $4.797 billion. Subsequent to year-end 2007, FRF paid an additional $225 million to REFCORP on January 10, 2008. The FDIC must transfer to the REFCORP the net proceeds from the sale of FRF-RTC assets (once all liabilities of the FRF-RTC have been provided for) to pay the interest on REFCORP bonds, which were issued to fund early Resolution Trust Corporation resolutions. Any such payments benefit the U.S. Treasury, which would otherwise be obligated to pay the interest on the bonds.







Last Updated 02/21/2008 dofbusinesscenter@fdic.gov