Chief Financial Officer's (CFO) Report to the Board
I. Financial Results - Second Quarter 2018
Deposit Insurance Fund (DIF)
- For the six months ending June 30, 2018, the DIF's comprehensive income totaled $4.8 billion compared to comprehensive income of $4.4 billion for the same period last year. This $415 million increase was primarily the result of a $738 million decrease in provision for insurance losses and a $241 million increase in interest on U.S. Treasury securities, partially offset by a $653 million reduction to comprehensive income from unrealized losses on U.S. Treasury securities (year-to-date 2018 unrealized loss of $658 million versus year-to-date 2017 unrealized loss of $5 million).
- The provision for insurance losses was a negative $206 million for the first half of 2018, compared to a positive $532 million for the same period last year. The negative provision for 2018 primarily resulted from reductions to the estimated losses for prior year failures, whereas the positive provision for 2017 was largely attributable to higher-than-anticipated estimated losses for current year failures, as compared to the related contingent liability at year-end 2016.
- During the first half of 2018, DIF incurred a $658 million unrealized loss on its portfolio of U.S. Treasury securities as a result of yields rising considerably across all investable maturity sectors of the Treasury yield curve. This rise resulted in declines in the securities’ market values relative to their book values.
- During June, the DIF recognized assessment revenue of $2.6 billion. Of this amount, $1.4 billion represented the estimate for the second quarter 2018 insurance coverage and $1.3 billion represented estimated surcharges on banks with $10 billion or more in assets. Additionally, the DIF recognized an $81 million adjustment for lower-than-estimated collections for the first quarter 2018 insurance coverage (regular assessments: $75 million and surcharges: $6 million), which decreased assessment revenue. This adjustment was primarily due to lower-than-estimated assessment rates.
- On June 29, 2018, the FDIC collected $1.4 billion in DIF regular assessments and $1.3 billion in surcharge assessments for first quarter 2018 insurance coverage.