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2008 Annual Report
2008 Annual Report
II. Financial Highlights
Deposit Insurance Fund Performance
From 1989 through 2005, amounts represent the sum of separate Bank Insurance Fund and Savings Association Insurance Fund amounts. Source: Commercial Bank Call and Thrift Financial Reports
The DIF’s comprehensive loss totaled $35.1 billion for 2008 compared to comprehensive income of $2.2 billion for the previous year. As a result, the DIF balance declined from $52.4 billion to $17.3 billion as of December 31, 2008. The year-over-year decrease of $37.3 billion in comprehensive income was primarily due to a $41.7 billion increase in the provision for insurance losses offset in part by a $2.3 billion increase in assessment revenue; a $1.8 billion increase in the unrealized gain on available-for-sale securities; and a $775 million increase in the realized gain on the sale of securities.
The provision for insurance losses was $41.8 billion in 2008. The total provision consists mainly of the provision for future failures ($23.9 billion) and the losses estimated at failure for the 25 resolutions occurring during 2008 ($17.9 billion), the largest of which was the $10.7 billion estimated loss for the IndyMac resolution.
Assessment revenue was $3.0 billion for 2008 compared with $643 million for 2007. This increase of $2.3 billion was mostly due to the reduction in the amount of one-time assessment credits available for use. In 2008, $1.4 billion in one-time credits offset $4.4 billion in gross assessment premiums; whereas in the previous year, $3.1 billion in one-time credits were applied against $3.7 billion in gross assessment premiums
Prior to 2006, amounts represent the sum of separate Bank Insurance Fund and Savings Association Insurance Fund amounts.
Corporate Operating Budget
Given the recent challenges facing the industry, as evidenced in the overall CAMELS deterioration and an up-tick in financial institution failure activity, the FDIC is determined to ensure that it is adequately prepared to effectively fulfill its mission in 2009. Consequently, in December 2008, the Board of Directors approved a 2009 Corporate Operating Budget of approximately $2.24 billion, consisting of $1.24 billion for ongoing operations and $1.0 billion for receivership funding. The level of approved ongoing operations budget is approximately $189 million (17.9 percent) higher than actual 2008 ongoing operations expenses, while the approved receivership funding budget is $850 million (564.6 percent) higher than the $150 million of actual 2008 receivership funding expenses.
As in prior years, the 2009 budget was formulated primarily on the basis of an analysis of projected workload for each of the Corporation’s three major business lines and its major program support functions. The most significant factor contributing to the proposed increase in the ongoing operations component is the projected increase in the Corporation’s supervisory workload in 2009 and the planned staffing increases to address that workload. The 2009 ongoing operations budget also includes increased funds for additional resolutions staff, travel, office space, and equipment for these additional staff. Under this budget, the Corporation will focus largely on its core mission responsibilities in 2009 and will not devote significant resources to non-core discretionary activities. In addition, the 2009 receivership funding budget allows for substantially increased resources for contractor support as well as non-permanent increases in authorized staffing for resolutions and receiverships, legal, and other organizations should workload requirements in these areas require an immediate response.
The Corporation undertook significant capital investments during the 2003-2008 period, the largest of which was the expansion of its Virginia Square office facility. All others involved the development and implementation of major IT systems. Investment spending totaled $260 million during this period, peaking at $108 million in 2004. Spending for investment projects in 2008 totaled approximately $26 million. In 2009, investment spending is estimated to total $4 million.
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