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I.
Corporate Fund Financial Statement Results -
Fourth Quarter 2007
DIF
- For 2007, DIF’s
comprehensive income totaled $2.248 billion compared to $1.568 billion
for last year. Excluding the recognition of
exit fees earned of $345 million (a one-time adjustment) from the
2006 results, comprehensive income rose by $1.025 billion, or 84 percent,
from a year ago. This year-over-year increase was primarily due
to a
$611 million increase in assessment revenue, a $299 million increase
in interest revenue, a higher contribution from unrealized gain/loss
on AFS securities of $298 million, offset by a $42 million increase
in operating expenses and a $147 million increase in the provision
for insurance
losses.
- During
the fourth quarter of 2007, DIF’s receivables from resolutions,
net, decreased by $1.249 billion to $808 million primarily due to $1.289
billion in dividends from the NetBank receivership. This decrease was
in part offset by a $53 million increase in the net receivable resulting
from the Miami Valley Bank closing on October 4, 2007.
- The DIF portfolio's interest
revenue was $2.540 billion in 2007, or $299 million higher than the
$2.241 billion of interest
revenue earned in 2006. The largest contributor to the overall
increase in 2007
interest revenue was TIPS inflation compensation of $314 million,
which was $205 million more than the amount earned in 2006. This
increased inflation compensation reflected the comparatively large
increases
in
the CPI during 2007 stemming from rising energy and food prices.
The remaining $94 million year-over-year increase in interest revenue
resulted
from: 1) slightly higher average portfolio yields in 2007 as newly
purchased securities continued to have somewhat higher yields than
those of maturing
securities; and 2) a growing investment portfolio balance. The
DIF’s
AFS portfolio reported a $125 million unrealized gain in 2007 compared
with a $173 million unrealized loss in 2006. During 2007, conventional
Treasury yields and TIPS real yields decreased, resulting in higher
market prices. In contrast, these yields increased during 2006, resulting
in
market price declines.
FRF
- FRF’s net income
for 2007 was $64 million compared to a $203 million loss for 2006.
This change is primarily due to an
increase in criminal restitution income of $19 million, an increase
in the recovery of tax benefits of $33 million, and a decrease
in Goodwill/Guarini litigation expenses of $215 million.
- During the fourth quarter of 2007, FRF accrued a $35 million
contingent liability and offsetting receivable from the U.S.
Treasury for judgments for two Goodwill cases that were fully adjudicated
as
of year-end. These funds were paid in January 2008. For the year
ending December 31, 2007, FRF paid or accrued a total of $440 million
in Goodwill
litigation expenses to resolve eight cases, compared with a total
of $447 million on six Goodwill cases during 2006.
- FRF paid
$225 million to the Resolution Funding Corporation (REFCORP) on October
10, 2007,
bringing total payments to REFCORP to
$4.797 billion. Subsequent to year-end 2007, FRF paid an additional
$225 million to REFCORP on January 10, 2008. The FDIC must transfer
to the REFCORP the net proceeds from the sale of FRF-RTC assets
(once all liabilities of the FRF-RTC have been provided for)
to pay the interest
on REFCORP bonds, which were issued to fund early Resolution
Trust Corporation resolutions. Any such payments benefit the
U.S. Treasury,
which would otherwise be obligated to pay the interest on the bonds.
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