Chief Financial Officer's (CFO) Report to the Board
I. Corporate Fund Financial Results - Fourth Quarter 2016
Deposit Insurance Fund (DIF)
- The DIF balance was $83.2 billion at year-end 2016, an increase of $10.6 billion from $72.6 billion at year-end 2015. The DIF’s comprehensive income totaled $10.6 billion for 2016 compared to comprehensive income of $9.8 billion during 2015. This $742 million year-over-year increase was primarily due to a $1.1 billion increase in assessment revenue and a $249 million increase in interest revenue, partially offset by $683 million lower negative provision for insurance losses.
- The provision for insurance losses was negative $1.6 billion for 2016, compared to negative $2.3 billion for 2015. The negative provision for 2016 primarily resulted from a decrease of $1.7 billion in the estimated losses for institutions that failed in current and prior years, partially offset by a $97 million increase in the contingent liability for anticipated failures. The $1.7 billion decrease in the estimated losses from failures was primarily attributable to (1) unanticipated recoveries of $545 million in litigation settlements, professional liability claims, and tax refunds by the receiverships; (2) a $584 million decrease in the receiverships’ shared-loss liability; (3) a $406 million decrease in projected future receivership expenses and receivership legal and representation and warranty liabilities; and (4) a $231 million decrease resulting from greater-than-anticipated collections from receiverships’ asset sales and updated estimated recovery rates applied to the remaining assets in liquidation.
- During December, the DIF recognized a total of $2.7 billion in assessment revenue. Of this amount, $1.5 billion represented the estimate for fourth quarter 2016 insurance coverage. Also, the DIF recognized $1.2 billion in estimated large bank surcharges for the fourth quarter 2016. Additionally, the DIF recognized an adjustment of $20 million that increased assessment revenue. This adjustment consisted of a $45 million increase from prior period amendments and a $25 million decrease to the estimate for third quarter 2016 insurance coverage recorded at September 30, 2016. The latter adjustment was primarily due to lower than estimated assessment rates for several large banks.
- On December 30, 2016, the FDIC collected $1.5 billion in DIF regular assessments and $1.2 billion in surcharge assessments for third quarter 2016 insurance coverage.