Bank Insurance Fund (BIF):

• BIF’s comprehensive income was $328 million for the six months ending June 2004, compared to $750 million for the same period last year. This reduction of $422 million was due to a decrease in unrealized gains on available-for-sale securities of $298 million and a reduction in net income of $124 million. The decline in net income primarily resulted from 1) a smaller negative adjustment to the provision for loss of $69 million at June 2004, compared to a negative $142 million adjustment for the same period last year; 2) higher operating expenses of $23 million; and 3) a decrease in interest revenue of $37 million.

• Receivables from bank resolutions decreased by $116 million to $395 million during the first six months of 2004. The decrease was primarily attributable to recoveries of $195 million from payments made to cover obligations to insured depositors of failed banks. This was offset by 1) a $12 million increase in the allowance for loss and 2) payments of $66 million to cover obligations to insured depositors of the three banks that failed during 2004, with total assets at failure of $151 million.
  
  

• BIF’s reserve ratio was 1.32% at March 31, 2004, unchanged from December 31, 2003. During the first quarter the fund balance increased by $382 million, or 1.1%, while the estimated insured deposits increased by $33 billion, or 1.3%.

• Assets in liquidation decreased by $34 million to $313 million since year-end 2003. This is primarily due to $105 million in disposition of assets, offset by $71 million in new assets from three failures in 2004. Seventy percent of the reduction in assets, or $73 million, was in receiverships created from five large failures in the previous two years. These five large failures were Hamilton Bank, Next Bank, Connecticut Bank of Commerce, Southern Pacific Bank, and The First National Bank of Blanchardville.

Savings Association Insurance Fund (SAIF):

• Comprehensive income was $171 million for the six months ending June 2004, compared to $336 million for the same period last year. This decrease of $165 million is primarily due to 1) a decline in unrealized gains on available-for-sale securities of $96 million, and 2) a smaller negative adjustment to the provision for loss of $1 million at June 2004, compared to a negative $66 million adjustment for the same period last year.

• Net receivables from thrift resolutions increased by $1 million to $274 million during the first six months of 2004. One thrift failed during 2004; SAIF made a payment of $6 million to cover obligations to insured depositors, of which $5 million was subsequently recovered.

FSLIC Resolution Fund (FRF):

• As of June 30, 2004, the liability associated with future Goodwill and Guarini litigation judgments and/or settlements cannot be reasonably estimated.  

Guarini Litigation

To date, there have been eight “Guarini” cases. One of these cases was settled during 2002 for $20 thousand. Further, there have been adverse liability determinations in seven cases; of these seven, there have been final decisions in five. The United States Court of Federal Claims has entered an award for the plaintiffs in four of these cases. In the fifth case, the Court awarded no damages; plaintiff has filed a Motion for Reconsideration of this decision. Four cases are on appeal; in the fifth, the time for filing an appeal has not yet run.

• FRF’s comprehensive income was $32 million for the six months ending June 30, 2004, primarily due to interest on U.S. Treasury obligations and activity related to the termination of the final securitization deal in March 2004. These securitizations were investments made by the former RTC in receivership assets.

• FRF paid $14.5 million (including principal of $6.2 million and interest of $8.3 million) to Washington Mutual (WAMU) for overpayment of shared tax benefits received in prior years. WAMU settled its dispute with the IRS regarding the  amount of net operating losses it was entitled to utilize. This liability for the obligations to refund the overpayment was accrued by FRF at year-end 2003.