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Summary
Trends and Results -
Third Quarter 2007
| Financial Results |
Comments |
| I. Financial
Statements |
- On September 28, 2007, NetBank was closed by the Office of
Thrift Supervision and the FDIC was named receiver. As of September
30, the DIF estimated that the pending insured deposit claim liability
would total $1.834 billion. Coupled with an initial loss estimate of
$108 million, the projected net receivable from NetBank is $1.726 billion
as of the end of the third quarter 2007. This net receivable estimate
should decline as significant liquidation activity occurs during the
fourth quarter of 2007.
Of the $2.237 billion in total assets at inception, ING Bank purchased
$464 million, while the FDIC retained $1.773 billion of assets, mainly
comprising real estate loans, lease receivables, and a mortgage subsidiary.
In October 2007, the receivership sold approximately $627 million in
real estate loans and $439 million in lease receivables; this brings
the remaining NetBank asset book value to $707 million.
Of the $1.834 billion in estimated insured deposits, ING Bank assumed
insured deposits of $1.374 billion and FDIC retained $460 million
in brokered deposits. The DIF expects to complete the funding of the
insured
brokered deposits by November 2007. Given the significant proceeds
received and anticipated asset sales, FDIC, as receiver for NetBank,
declared a 50 percent dividend in September 2007. This will reduce
the DIF’s net receivable from $1.726 billion to approximately
$800 million during the fourth quarter. Further reductions will be
made as liquidation proceeds are recovered and dividends paid to
claimants over the next several months.
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II. Investments |
- DIF investment portfolio’s amortized cost (book value) increased
by three percent during the first nine months of 2007, and totaled $50.562
billion on September 30, 2007. During the period, newly purchased securities
had slightly higher average yields than those of maturing securities. Consequently,
the DIF portfolio’s yield increased by three basis points during the
first nine months of 2007, rising to 4.92 percent as of September 30, 2007,
from 4.89 percent as of December 31, 2006.
- Expectations are for Treasury market yields to initially trend
lower, with the potential to rise from current levels over
the course of the fourth quarter. Notwithstanding the recent lower trend
in such Treasury yields, the growing DIF investment portfolio
balance should lead to increased interest revenue over the long run.
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| III. Budget |
- Approximately $717 million was spent in the Ongoing Operations
component of the 2007 Corporate Operating Budget, which was $55 million
(7 percent) below the budget for the nine months ending September 30,
2007. The Outside Services - Personnel expense category was $28 million
below
its year-to-date budget, and represented 51 percent of the total Ongoing
Operations variance.
- Approximately $6 million was spent in the Receivership Funding
component of the 2007 Corporate Operating Budget, which was $50
million (89 percent) below the budget for the nine months ending September
30, 2007. The Outside Services - Personnel expense category was
$42
million below its year-to-date budget, and represented 84 percent
of the total Receivership Funding variance.
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