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2005 Annual Report Highlights

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I. Management's Discussion and Analysis - The Year in Review

Receivership Management
The FDIC has the unique mission of protecting depositors of insured banks and savings associations. No insured depositor has ever experienced a loss in a FDIC-insured institution due to a failure.

Once an institution is closed by its chartering authority – the state for state-chartered institutions, the Office of the Comptroller of the Currency (OCC) for national banks and the Office of Thrift Supervision (OTS) for federal savings associations –the FDIC is responsible for resolving that failed bank or savings association. The FDIC staff gathers data about the troubled institution, estimates the potential loss to the insurance fund(s) from various resolution alternatives, solicits and evaluates bids from potential acquirers, and recommends the least-costly resolution method to the FDIC's Board of Directors.

Resolving Financial Institutions Failures
During 2005, there were no institution failures. This is the first calendar year in the history of the FDIC during which no insured institutions failed.

Liquidation Highlights 2003-2005
Dollars in billions (except where noted)
 
2005*
2004
2003
Total Resolved Banks
0
3
3
Assets of Resolved Banks
$ 0.00
$ 0.15
$ 1.10
Total Resolved Savings Associations
0
1
0
Assets of Resolved Savings Associations
$ 0.00
$ 0.01
$ 0.00
Net Collections from Assets in Liquidation^
$ 0.37
$ 0.38
$ 1.70
Total Assets in Liquidation^
$ 0.44
$ 0.61
$ 0.81
Total Dividends Paid*
$ 0.44
$ 0.38
$ 1.06
Savings Over Cost of Liquidation#
$ 0
11.6 million
28.2 million
*No failures in 2005.
^Includes activity from thrifts resolved by the former Federal Savings and Loan Insurance Corporation and the Resolution Trust Corporation.
#Least Cost Test Savings.

Protecting Insured Depositors
Although the focus of the FDIC in recent years has shifted from resolving large numbers of failed institutions to addressing existing and emerging risks in insured depository institutions, the FDIC continues to protect deposits in those institutions that fail. The FDIC's ability to attract healthy institutions to assume deposits and purchase assets of failed banks and savings associations minimizes the disruption to customers and allows some assets to be returned to the private sector immediately. Assets remaining after resolution are liquidated by the FDIC in an orderly manner and the proceeds are used to pay creditors, including depositors whose accounts exceeded the insured $100,000 limit. During 2005, the FDIC paid dividends of 77.9 percent of the deposit amount exceeding the insured limit. These dividends paid in 2005 are up 4.9 percent from 2004.

Professional Liability Recoveries
The FDIC staff works to identify potential claims against directors and officers, accountants, appraisers, attorneys and other professionals who may have contributed to the failure of an insured financial institution. Once a claim is deemed viable and cost effective to pursue, FDIC initiates legal action against the appropriate parties. During the year, the FDIC recovered approximately $65 million from these professional liability suits. In addition, as part of the sentencing process for those convicted of criminal wrongdoing against failed institutions, the court may order a defendant to pay restitution to the receivership. The FDIC, working in conjunction with the U.S. Department of Justice, collected more than $6 million in criminal restitution during the year. The FDIC's caseload at the end of 2005 included investigations, lawsuits and ongoing settlement collections involving 21 claims and 106 other active collections, down from 233 at the beginning of 2005. At the end of 2005, there were 995 pending restitution orders, down from 1,181. This includes RTC orders that the FDIC inherited on January 1, 1996.



Last Updated 07/19/2006 communications@fdic.gov