Federal Deposit
Insurance Corporation

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