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Summary
Trends and Results -
First Quarter 2007
| Financial Results |
Comments |
| I. Financial
Statements |
- During the first quarter of 2007, DIF’s net receivables
from resolutions declined by $108 million, or 20 percent, to $431 million.
This reduction is primarily due to collections from receiverships totaling
$112 million to repay payments made by the DIF to cover the obligations
to insured depositors ($56 million from Superior Bank, $33 million from
Hamilton Bank, and $23 million from Southern Pacific Bank) that was
partially offset by the recordation of a $15 million net receivable
from the failure of Metropolitan Savings Bank. By year-end 2007, absent
any new, substantial failure activity, DIF’s net receivables from
resolutions is expected to further decline by approximately $142 million,
or 33 percent, to $289 million, assuming favorable resolution of various
receivership asset dispositions, litigation efforts, and payment of
dividends.
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II. Investments |
- The DIF portfolio’s par value increased by 1.22 percent
during the first quarter of 2007, and totaled $47.051 billion on March 31,
2007. Moreover, while the securities that were purchased during this period
had slightly lower yields than maturing securities, this factor was more
than offset by higher yielding overnight investments. Consequently, the
DIF portfolio’s yield increased by three basis points during the first
quarter of 2007, rising to 4.92 percent as of March 31, 2007, from 4.89
percent as of December 31, 2006.
- Expectations are for Treasury market yields to continue to trade
generally within the range exhibited during the first quarter of 2007,
but with the potential for a modest rise from quarter-end levels. This,
coupled with a growing DIF portfolio balance, should lead to increased
interest revenue over the long run. Over the short run, any increase in
yields will accelerate the erosion of existing net unrealized gains on
available-for-sale (AFS) securities. Moreover, regardless of changes in
yields, existing net unrealized gains will be reduced due to the passage
of time (that is, any unrealized gains or losses vanish as AFS securities
approach their maturity dates).
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| III. Budget |
- Approximately $227 million was spent in the Ongoing Operations
component of the 2007 Corporate Operating Budget, which was $16 million
(7 percent) below the budget for the three months ending March 31, 2007.
The Outside Services - Personnel expense category was $7 million below
its year-to-date budget, and represents 42 percent of the total Ongoing
Operations
variance.
- Approximately $2 million was spent in the Receivership Funding
component of the 2007 Corporate Operating Budget, which was $17 million
(89 percent) below the budget for the three months ending March 31,
2007. The Outside Services - Personnel expense category was $14 million
below its year-to-date budget, and represents 85 percent of the total
Receivership Funding variance.
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