Chief Financial Officer's (CFO) Report to the Board
I. Corporate Fund Financial Results - Third Quarter 2016
Deposit Insurance Fund (DIF)
- For the nine months ending September 30, 2016, the DIF’s comprehensive income totaled $8.1 billion compared to comprehensive income of $7.3 billion for the same period last year. This $769 million increase was primarily due to a $612 million increase in assessment revenue, a $187 million increase in interest on U.S. Treasury securities, and a $94 million increase in the unrealized gain on U.S. Treasury securities.
- Provision for insurance losses was a negative $1.2 billion as of the third quarter of 2016, primarily resulting from a decrease in the estimated losses for institutions that failed in current and prior years. The main components of this reduction were: 1) $477 million in unanticipated recoveries from litigation settlements, professional liability claims, and tax refunds by the receiverships; 2) a $318 million decrease in the receiverships’ shared-loss liability due to both the early termination of numerous shared-loss agreements (SLAs) during the year, which resulted in lower-than-anticipated losses on covered assets, and the unanticipated recoveries from SLAs where the commercial loss coverage has expired but the recovery period remains active; 3) a $291 million reduction in projected future receivership expenses and legal and representation and warranty liabilities; and 4) a $133 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 September, the DIF recognized a total of $2.6 billion in assessment revenue. Of this amount, $1.4 billion represented the estimate for third quarter 2016 insurance coverage. Also, the DIF recognized $1.2 billion in estimated large bank surcharges for the third quarter 2016. Additionally, the DIF recognized an adjustment of $47 million that decreased assessment revenue. This adjustment consisted of a $2 million decrease from prior period amendments and a $45 million decrease to the estimate for second quarter 2016 insurance coverage recorded at June 30, 2016. The latter adjustment was primarily due to lower than estimated assessment rates for several large banks.
- On September 30, 2016, the FDIC collected $2.2 billion in DIF assessments for second quarter 2016 insurance coverage.