Chief Financial Officer's (CFO) Report to the Board
I. Executive Summary - First Quarter 2020
The attached report highlights the FDIC’s financial activities and results for the quarter ended March 31, 2020.
- During the first quarter of 2020, the Deposit Insurance Fund (DIF) balance rose to $113.2 billion, up $2.9 billion from year-end 2019. The quarterly increase was primarily due to a $1.5 billion unrealized gain on U.S. Treasury securities and $1.4 billion in assessment revenue.
- The reserve ratio, which is the ratio of the DIF balance to estimated insured deposits, was 1.39 percent as of March 31, 2020. The reserve ratio decreased by two basis points from December 31, 2019, as exceptionally strong growth in insured deposits more than offset the growth in the DIF.
- With a fund balance of more than $113 billion as of March 31, 2020, the DIF is currently well-positioned to cover possible short and mid-term risks. However, there remains uncertainty about the effects of the COVID-19 health crisis on the economy and the banking industry over the long-term. Effects from a weakened economic outlook, elevated unemployment levels, and diminished repayment capacity of borrowers may stress the balance sheets of several institutions across the United States. The FDIC continues to evaluate a range of possible outcomes for economic stress, the risks those outcomes pose to insured financial institutions, and the extent to which such risks may draw on the resources of the DIF.
- During the first quarter of 2020, the FDIC was named receiver for one failed financial institution. The assets at inception for this failed institution were $98 million with an estimated loss to the DIF as of March 31, 2020, of $14 million. The corporate cash outlay during the first quarter for this failure was approximately $70 million.
- Through March 31, 2020, overall FDIC Operating Budget expenditures were below the year-to-date budget by about $42.6 million, or eight percent. This variance was primarily the result of underspending in the Salaries and Compensation expense categories in the Ongoing Operations budget component due to unfilled vacancies in authorized positions. This variance may narrow in the second quarter. To ensure preparedness to address the possible emergence of problems within the banking industry, FDIC divisions and offices will give priority during the second quarter to filling authorized vacancies.