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I.
Corporate Fund Financial Statement Results -
First Quarter 2007
DIF
- For the three months ending
March 31, 2007, DIF’s comprehensive
income totaled $580 million compared to $596 million last year,
a decrease of 2.7 percent. Excluding the recognition of exit fees earned
of $346
million (a one-time adjustment), comprehensive income actually
rose by $330 million from a year ago. This year-over-year increase
is primarily
due to increases in the following line items: $89 million increase
in assessments earned, $89 million increase in interest earned on investment
securities, and a $138 million higher contribution to year-to-date
comprehensive
income from unrealized gain/(loss) on AFS securities, net.
- DIF reported
an 18.6 percent ($89 million) increase in interest income during
the first quarter of 2007 compared to a year ago, primarily stemming
from
higher inflation compensation related to the DIF’s holdings of
Treasury Inflation-Protected Securities (TIPS). In addition, the DIF
reported an unrealized gain on AFS securities of $81 million during
the first quarter of 2007, compared to an unrealized loss of $57 million
during the first quarter of 2006. The first quarter 2007 unrealized
gain stemmed from a decline in market yields, despite the lower duration
for the AFS securities held in the DIF ’s investment portfolio.
- DIF recorded
a $94 million receivable for estimated net deposit insurance
assessments due from insured institutions for first quarter 2007 insurance
coverage.
Starting this quarter, the FDIC must estimate assessment revenue,
and establish a corresponding receivable, because assessment premiums
are
now collected a quarter after the insurance coverage period (a
change from the previous 'payment in advance' requirement). The FDIC
has developed
an estimation methodology based on institution assessment base
and rate results, and available assessment credits, for the prior quarter,
adjusted for significant changes in the current quarter and a
modest
deposit growth factor. The first quarter 2007 receivable of $94
million was the result of netting $820 million in assessment credits
estimated
to be used by financial institutions against estimated gross
assessment revenue of $914 million. However, this estimate may differ
from the
amount collected in June 2007 since the invoice amount will be
based on actual first quarter 2007 assessment base, rate, and credit
results.
FRF
- FRF reported a net loss of $19 million for the first quarter of
2007 as a result of several offsetting factors. The FRF incurred $107.3
million in Goodwill litigation expenses due to the payment of a $32.8 million
Goodwill
judgment and the accrual of a $74.5 million estimated loss for a second
Goodwill case. These Goodwill litigation expenses were partially offset by
1) $41 million
in interest earned on U.S. Treasury overnight securities, 2) $20 million
in criminal restitution income, 3) $13 million in FSLIC assistance agreement
tax benefits, and 4) the net effect of a $22.5 million payment for a Guarini
litigation settlement and the reversal of a $27.1 million loss reserve
for
this same case. This Guarini settlement concludes the last of the eight
Guarini cases originally filed against the government seeking damages.
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