<PAGE>

                          SECURITIES AND EXCHANGE COMMISSION
                                 Washington, DC 20549
                                                
                                      FORM 10-K

(Mark One)      /x/ Annual Report pursuant to Section 13 or 15(d) of
                       the Securities and Exchange Act of 1934
                       for fiscal year ended December 31, 1996
                                          or
                / / Transition Report pursuant to Section 13 or 15(d)
                         of the Securities Exchange Act 1934
               for the transaction period from __________to ___________

                          Commission File Number:  333-16397
                                                    
                               FDIC REMIC TRUST 1996-C1
                (Exact name of registrant as specified in its charter)

                New York                                  04-334-2274 
    ----------------------------------------           -------------------
    (State or other jurisdiction                       (I.R.S. Employer
    of incorporation or organization)                  Identification No.)

    c/o State Street Bank and Trust Company
    Corporate Trust Department
    225 Franklin Street
          Boston, MA                                         02110      
    -----------------------------------------          -------------------
    (Address of Principal Executive Offices)                Zip Code

                                  (202) 664-5500                        
                --------------------------------------------------
                Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:  None.

Securities registered pursuant to Section 12(g) of the Act:  None.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  

                              Yes/x/           No/ /

Aggregate market value of voting stock held by non-affiliates of the registrant
as of April 13, 1997.

                               Not Applicable.

Number of shares of common stock outstanding as of April 13, 1997.

                               Not Applicable.

Registrant has not been involved in bankruptcy proceedings during the proceeding
five years, and is not reporting as a corporate issuer.

The following documents are incorporated by reference into this Form 10-K.


                                    None. 
               
                                      
 
<PAGE>


                             FDIC REMIC TRUST 1996 C-1
                                      FORM 10-K

                                        INDEX

                                                                           Page
PART I.
   
    Item 1.   Business....................................................    1
    Item 2.   Properties..................................................    1
    Item 3.   Legal Proceedings...........................................    1
    Item 4.   Submission of Matters to a Vote of Security Holders.........    1
    
PART II.

    Item 5.   Market for Registrant's Common Equity and Related
               Stockholder Matters............................................1
    Item 6.   Selected Financial Data.....................................    1
    Item 7.   Management's Discussion and Analysis of Financial
               Condition and Results of Operations............................1
    Item 8.   Financial Statements and Supplementary Data.................    1
    Item 9.   Changes In and Disagreements With Accountants on
               Accounting and Financial Disclosure............................2

PART III.

    Item 10.  Directors and Executive Officers of the Registrant..........    2
    Item 11.  Executive Compensation......................................    2
    Item 12.  Security Ownership of Certain Beneficial Owners and Management. 2
    Item 13.  Certain Relationships and Related Transactions..............    2

PART IV.

    Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.2

SIGNATURES.................................................................   4
   
    Supplemental Information to be Furnished with Reports Filed Pursuant
     to Section 15(d) of the Securities Exchange Act of 1934 of Registrants
     Which Have Not Registered Securities Pursuant to Section 12 of such Act.4
    
INDEX OF EXHIBITS...........................................................  5
                                   
                                      

<PAGE>

                                   PART I


Item 1.  Business

Not Applicable.

Item 2.  Properties

   

An Annual Statement of Compliance delivered by the servicer for the two pools 
of mortgages or participation interests constituting the property of  the 
FDIC REMIC Trust 1996-C1 (referred to herein as the "Trust" or the 
"Registrant") is not available currently but will be subsequently filed on 
Form 8K.

    

Item 3.  Legal Proceedings

   

The Registrant knows of no material pending legal proceedings involving 
either of the two pools of mortgages or participation interests constituting 
the property of  the Trust, or the Registrant, the Servicer or the Trustee 
with respect to the pools other than ordinary routine litigation, if any, 
incidental to the Trustee's, the Servicer's or the Registrant's duties under 
the Pooling and Servicing Agreement dated as of December 1, 1996 and not 
material when taken as a whole.

    

Item 4.  Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote or consent of the holders of the 
Registrant's Commercial Mortgage Pass-Through Certificates, Series 1996-C1 
(the "Certificates") during the period covered by this report.

                                    PART II

Item 5.  Market for the Registrant's Common Equity and Related Stockholder 
Matters

   

The Registrant does not issue stock.  Presently, there is no established trading
market for the Certificates known to the Registrant.  As of April 7, 1997, 
there are 95 holders of all Classes of the Certificates, including
direct participants of the Depository Trust Company ("DTC") but excluding Cede &
Co., DTC's nominee.

    

Item 6.  Selected Financial Data

Not Applicable.

Item 7.  Management's Discussion and Analysis of Financial Condition and
Results of Operations

Not Applicable.

Item 8.  Financial Statements and Supplementary Data

   

Annual Statement of Compliance........................Not available currently.
                                       Will be subsequently filed on Form 8-K.

    

   
Independent Accountant's Report on Servicer's Servicing Activities.............
                                                       Not available currently.
                                        Will be subsequently filed on Form 8-K.
    

   
The following financial statements of the Bank Insurance Fund of the 
Federal Deposit Insurance Corporation, as guarantor under a Limited Guaranty 
Agreement dated as of December 1, 1996, are filed as part of this report on 
pages F-1 through F-18 hereto:

    Report of Independent Public Accountants
    Statements of Income and the Fund Balance for the years ended December 31, 
    1996, 1995 and 1994
    Statements of Financial Position for the years ended 
    December 31, 1996 and 1995 
    Statements of Cash for the years ended December 31, 1996, 1995 and 1994 
    Notes to Financial Statements
    
                                      1
<PAGE>

Item 9.  Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure

   

The Registrant knows of no changes or disagreements with accountants on 
accounting and financial disclosure.
    

Item 10. Directors and Executive Officers of the Registrant

Not Applicable.

Item 11. Executive Compensation

Not Applicable.

                                      PART  III

Item 12. Security Ownership of Certain Beneficial Owners and Management

   
Security Ownership of Certain Beneficial Owners................See Exhibit 99
    

Item 13. Certain Relationships and Related Transactions

Not Applicable.

                                       PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

         (a)(1) Financial Statements 

         The Annual Statement of Compliance by the Servicer and Independent
         Accountant's Report on  Servicer's Servicing Activities are not 
         currently available but will be filed subsequently on Form 8-K.

         The following financial statements of the Bank Insurance Fund of the
         Federal Deposit Insurance Corporation, the guarantor of certain
         distributions on the Certificates, are filed as part of this report:

         Report of Independent Public Accountants
         Statements of Income and the Fund Balance for the years ended 
           December 31, 1996, 1995 and 1994
         Statements of Financial Position for 
           the years ended December 31, 1996 and 1995
         Statements of Cash for the years ended December 31, 1996, 1995 and 
           1994
         Notes to Financial Statements

         (a)(2) Financial Statement Schedules

         None.
   

         (a)(3) Exhibits
         Unless otherwise indicated, the following exhibits required by 
         Item 601 of Regulation S-K and previously furnished to the Commission 
         as exhibits to a Report on Form 8-K with a Date of Report of 
         December 20, 1996 and filed on January 13, 1997, are incorporated 
         into this Form 10-K by reference:
    

                                      2

<PAGE>

         4.   Pooling and Servicing Agreement dated as of December 1, 1996, by
              and among the Federal Deposit Insurance Corporation in its
              corporate capacity, and in its capacities as administrator of the
              Bank Insurance Fund and as Receiver of certain state and
              federally chartered depository institutions, Banc One Management
              and Consulting Corporation, as Servicer, and State Street Bank
              and Trust Company, as Trustee.

         10.  Limited Guaranty Agreement dated as of December 1, 1996, by and
              between the Federal Deposit Insurance Corporation, solely in its
              corporate capacity, and State Street Bank and Trust Company, not
              in its individual capacity but solely as trustee of FDIC REMIC
              Trust 1996-C1.
   
         23.* Consent of Independent Public Accountants, Arthur Anderson, LLP

         99.* Security Ownership of Certain Beneficial Owners and Management.

    (b)  No Reports on Form 8-K were filed by the Registrant with the Commission
         during the last quarter of the period covered by this report.
 ----------------------
 * Filed herewith.

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO 
SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 OF REGISTRANTS WHICH 
HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF SUCH ACT.

The Registrant has not sent an annual report or proxy material to the holders 
of its Certificates.  The Registrant will not be sending an annual report or 
proxy materials to the holders of its Certificates subsequent to the filing 
of this Form 10-K.

    

                                      3

<PAGE>

                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

   
                                  FDIC REMIC TRUST 1996 C-1 (the "Trust Fund")
                                  (Registrant)

Dated:  April 14, 1997            By:  State Street Bank and Trust Company,
                                        solely in its capacity as Trustee of
                                        the Trust Fund and not individually

                                  By:  /s/ David Duclos
                                       -----------------------------------------
                                       David Duclos, Assistant Vice President

    



                                      4

<PAGE>

                                INDEX OF EXHIBITS

   

4.   Pooling and Servicing Agreement dated as of December 1, 1996, by and 
     among the Federal Deposit Insurance Corporation in its corporate capacity, 
     and in its capacities as administrator of the Bank Insurance Fund and as 
     Receiver of certain state and federally chartered depository institutions, 
     Banc One Management and Consulting Corporation, as Servicer, and State 
     Street Bank and Trust Company, as Trustee.

10.  Limited Guaranty Agreement dated as of December 1, 1996, by and between 
     the Federal Deposit Insurance Corporation, solely in its corporate 
     capacity, and State Street Bank and Trust Company, not in its individual
     capacity but solely as trustee of FDIC REMIC Trust 1996-C1.

23*     Consent of Independent Public Accountants, 
        Arthur Anderson, LLP.

99.*     Security Ownership of Certain Beneficial Owners, 
         as of April 7, 1997 (with original principal
         balances).
--------------------------
 * Filed herewith
    

                                      5

<PAGE>

                       INDEX TO INDEPENDENT ACCOUNTANT'S REPORT
                           AND FINANCIAL STATEMENTS OF THE
                       FEDERAL DEPOSIT INSURANCE CORPORATION'S
                                 BANK INSURANCE FUND




                                                        Page of Sequentially
                                                           Numbered Pages  
                                                        ----------------------
   
Report of Independent Public Accountants..............             F-1

Statements of Income and the Fund Balance for
 the years ended December 31, 1996, 1995 and 1994.....             F-2

Statements of Financial Position for the years
 ended December 31, 1996 and 1995.....................             F-3

Statements of Cash Flows for the years ended December 31, 
1996, 1995 and 1994...................................             F-4

Notes to Financial Statements.........................             F-5
    


                                      6
<PAGE>

                                  ARTHUR 
                                 ANDERSEN

                  REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
Federal Deposit Insurance Corporation:

We have audited the accompanying statements of financial position of the 
Federal Deposit Insurance Corporation's Bank Insurance Fund (the "Fund") as 
of December 31, 1996 and 1995, and the related statements of income and the 
fund balance and cash flows for each of the three years in the period ended 
December 31, 1996.  These financial statements are the responsibility of the 
Fund's management.  Our responsibility is to express an opinion on these 
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform an audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement.  An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements.  
An audit also includes assessing the overall financial statement 
presentation.  We believe that our audits provide a reasonable basis for our 
opinion.

   

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of the Fund as of December 31, 
1996 and 1995, and the results of its operations and its cash flows for each 
of the three years in the period ended December 31, 1996, in conformity with 
generally accepted accounting principles.
    

                                           /s/ Arthur Andersen LLP

Washington, D.C.
March 21, 1997


                                       F-1

<PAGE>
Federal Deposit Insurance Corporation
Bank Insurance Fund Statements of Income and the Fund Balance
 
<TABLE>
<CAPTION>
   
                                                                    FOR THE YEAR ENDED
                                                                        DECEMBER 31
                                                        
DOLLARS IN THOUSANDS                                        1996           1995           1994
--------------------                                    -------------  -------------  -------------
<S>                                                     <C>            <C>            <C>         
Revenue
Assessments (Note 10).................................  $      72,662  $   2,906,943  $   5,590,644
                                                        
Interest on U.S. Treasury investments.................      1,267,134      1,068,395        521,473
                                                        
Revenue from corporate owned assets...................         69,879         58,585        140,821
                                                        
Other revenue (Note 7)................................        245,585         55,176        214,086
                                                        
                                                        -------------  -------------  -------------
Total Revenue.........................................      1,655,260      4,089,099      6,467,024
                                                        -------------  -------------  -------------
                                                        -------------  -------------  -------------
Expenses and Losses
Operating expenses....................................        505,299        470,625        423,196
                                                        
Reduction in provision for insurance losses (Note
  9)..................................................       (325,206)       (33,167)    (2,873,419)
                                                        
Corporate owned asset expenses........................         73,819         73,599        137,632
                                                        
Interest and other insurance expenses.................            667        (27,874)        53,493
                                                        
                                                        -------------  -------------  -------------
Total Expenses and Losses.............................        254,579        483,183     (2,259,098)
                                                        -------------  -------------  ------------- 
                                                        
Net Income............................................      1,400,681      3,605,916      8,726,122
                                                        -------------  -------------  ------------- 

Fund Balance - Beginning..............................     25,453,698     21,847,782     13,121,660
                                                        -------------  -------------  ------------- 

Fund Balance--Ending..................................  $  26,854,379  $  25,453,698  $  21,847,782
                                                        -------------  -------------  ------------- 
                                                        -------------  -------------  ------------- 
    
</TABLE>


   The accompanying notes are an integral part of these financial statements.
 
                                       
                                       F-2

<PAGE>
Federal Deposit Insurance Corporation
Bank Insurance Fund Statements of Financial Position

<TABLE>
<CAPTION>
   
                                                                                                  DECEMBER 31
DOLLARS IN THOUSANDS                                                                      1996                    1995
--------------------                                                                   ----------------------------------
<S>                                                                                    <C>                    <C>    
Assets

Cash and cash equivalents...........................................................   $   258,132            $   531,308
Investment in U.S. Treasury obligations, net (Note 3)...............................    22,083,494             20,762,046
(Market value of investments at December 31, 1996 and December 31, 1995
was $22.1 billion and $20.9 billion, respectively)
Interest receivable on investments and other assets, net............................       384,824                406,804
Receivables from bank resolutions, net (Note 4).....................................     4,341,154              4,143,040
Investment in corporate owned assets, net (Note 5)..................................        63,406                180,293
Property and buildings, net (Note 6)................................................       148,400                151,740
                                                                                       ----------------------------------
Total Assets........................................................................   $27,279,410          $  26,175,231
                                                                                       ----------------------------------

Liabilities and the Fund Balance

Accounts payable and other liabilities..............................................      $240,185          $     224,626
ESTIMATED LIABILITIES FOR: (NOTES 8 AND 9)
Anticipated failure of insured institutions.........................................        75,000                 279,000
Assistance agreements...............................................................        50,817                  55,941
Asset securitization guarantees.....................................................        44,279                 126,151
Litigation losses...................................................................        14,750                  35,815
                                                                                        ----------------------------------
Total Liabilities                                                                          425,031                 721,533


COMMITMENTS AND CONTINGENCIES (NOTES 13 AND 14)
Fund Balance........................................................................    26,854,379              25,453,698
                                                                                        ----------------------------------
Total Liabilities and the Fund Balance.............................................    $27,279,410           $  26,175,231
                                                                                        ----------------------------------
                                                                                        ----------------------------------
    
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       
                                       F-3

<PAGE>
Federal Deposit Insurance Corporation
Bank Insurance Fund Statements of Cash Flows
 
<TABLE>
<CAPTION>
                                                                                           FOR THE YEAR ENDED             
                                                                                               DECEMBER 31                
                                                                                ----------------------------------------  
DOLLARS IN THOUSANDS                                                                1996          1995           1994     
--------------------                                                            -----------  -------------  ------------  
<S>                                                                             <C>          <C>            <C>           
Cash Flows from Operating Activities                                                                                      
  Cash provided from:                                                                                                     
    Assessments............................................................     $    73,961  $   2,796,114  $  5,709,912  
    Interest on U.S. Treasury investments..................................       1,303,629        875,226       458,606  
    Recoveries from bank resolutions.......................................         624,502      5,059,751     5,336,125  
    Recoveries from corporate owned assets.................................         355,913        211,691       694,401  
    Miscellaneous receipts.................................................          34,329         36,084        22,337  
  Cash used for:                                                                                                          
    Operating expenses.....................................................        (489,372)      (442,101)     (485,963) 
    Disbursements for bank resolutions.....................................        (632,930)    (1,596,391)   (2,791,417) 
    Disbursements for corporate owned assets...............................        (205,775)      (159,299)     (173,601) 
    Miscellaneous disbursements............................................         (16,810)       (23,929)         (658) 
                                                                                -----------  -------------  ------------  
                                                                                                                          
Net Cash Provided by Operating Activities (Note 16)........................       1,047,447      6,757,146     8,769,742  
                                                                                -----------  -------------  ------------  
                                                                                -----------  -------------  ------------  
Cash Flows from Investing Activities                                                                                      
  Cash provided from:                                                                                                     
    Maturity of U.S. Treasury obligations..................................       8,350,000      3,830,000       800,000  
  Cash used for:                                                                                                          
    Purchase of U.S. Treasury obligations..................................     (9,670,623)   (11,675,925)   (8,431,525)  
                                                                                -----------  -------------  ------------  
Net Cash Used by Investing Activities                                           (1,320,623)    (7,845,925)   (7,631,525)  
                                                                                -----------  -------------  ------------  
                                                                                -----------  -------------  ------------  
Cash Flows from Financing Activities                                                                                      
  Cash used for:                                                                                                          
    Repayments of indebtedness incurred from bank resolutions..............              0         (1,369)            0   
                                                                                -----------  -------------  ------------  
      Net Cash Used by Financing Activities................................              0         (1,369)            0   
                                                                                -----------  -------------  ------------  
                                                                                -----------  -------------  ------------  
Net (Decrease) Increase in Cash and Cash Equivalents.......................       (273,176)    (1,090,148)    1,138,217   
                                                                                -----------  -------------  ------------  
                                                                                -----------  -------------  ------------  
Cash and Cash Equivalents--Beginning.......................................        531,308      1,621,456       483,239   
                                                                                -----------  -------------  ------------  
                                                                                -----------  -------------  ------------  
Cash and Cash Equivalents--Ending..........................................     $  258,132   $    531,308   $ 1,621,456   
                                                                                -----------  -------------  ------------  
                                                                                -----------  -------------  ------------  
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       
                                       F-4

<PAGE>
NOTES TO FINANCIAL STATEMENTS
BANK INSURANCE FUND
December 31, 1996, 1995 and 1994
   
-----------------------------------------------------------------------------
    
1. LEGISLATIVE HISTORY AND OPERATIONS OF THE BANK INSURANCE FUND
-----------------------------------------------------------------------------
LEGISLATIVE HISTORY
The U.S. Congress created the Federal Deposit Insurance Corporation (FDIC)
through enactment of the Banking Act of 1933. The FDIC was created to restore
and maintain public confidence in the nation's banking system.
 
More recently, the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (FIRREA) was enacted to reform, recapitalize and consolidate the
federal deposit insurance system. The FIRREA created the Bank Insurance Fund
(BIF), the Savings Association Insurance Fund (SAIF) and the FSLIC Resolution
Fund (FRF). It also designated the FDIC as the administrator of these three
funds. All three funds are maintained separately to carry out their respective
mandates.
 
The BIF and SAIF are insurance funds responsible for protecting depositors
in operating banks and thrift institutions from loss due to failure of the
institution. The FRF is a resolution fund responsible for winding up the affairs
of the former Federal Savings and Loan Insurance Corporation (FSLIC) and
liquidating the assets and liabilities transferred from the former Resolution
Trust Corporation (RTC).
 
Pursuant to FIRREA, an active institution's insurance fund membership and
primary federal supervisor are generally determined by the institution's charter
type. Deposits of BIF-member institutions are mostly insured by the BIF; BIF
members are predominantly commercial and savings banks supervised by the FDIC,
the Office of the Comptroller of the Currency, or the Federal Reserve. Deposits
of SAIF-member institutions are mostly insured by the SAIF; SAIF members are
predominantly thrifts supervised by the Office of Thrift Supervision (OTS). The
Oakar amendment to the Federal Deposit Insurance Act (FDI Act) allows BIF and
SAIF members to acquire deposits insured by the other insurance fund without
changing insurance fund coverage for the acquired deposits.
 
Other significant legislation includes the Omnibus Budget Reconciliation Act
of 1990 (1990 OBR Act) and the Federal Deposit Insurance Corporation Improvement
Act of 1991 (FDICIA). These acts made changes to the FDIC's assessment authority
(see Note 10) and borrowing authority (see "Operations of the BIF" below). The
FDICIA also requires the FDIC to: 1) resolve troubled institutions in a manner
that will result in the least possible cost to the deposit insurance funds and
2) maintain the insurance funds at 1.25 percent of insured deposits or a higher
percentage as circumstances warrant.
 
RECENT LEGISLATION
The Deposit Insurance Funds Act of 1996 (DIFA 1996) was enacted to provide
for: 1) the capitalization of the SAIF to its designated reserve ratio of 1.25
percent by means of a one-time special assessment on SAIF-insured deposits; 2)
the expansion of the assessment base for payments of the interest on obligations
issued by the Financing Corporation (FICO) to include all FDIC-insured
institutions, i.e., banks and thrifts; 3) beginning January 1, 1997, the
imposition of a FICO assessment rate for banks that is one-fifth of that paid by
thrifts; 4) the payment of the approximately $790 million annual FICO interest
obligation on a pro rata basis between banks and thrifts after December 31,
1999; 5) the refund of amounts in the BIF in excess of the designated reserve
ratio with such refund not to exceed the previous semi-annual assessment; 6)
authorization of BIF assessments only if needed to maintain the fund at the
designated reserve ratio; and 7) the merger of the BIF and the SAIF on January
1, 1999, if no insured depository institution is a savings association on that
date.
 
The FICO, established under the Competitive Banking Act of 1987, is a
mixed-ownership government corporation whose sole purpose was to function as a
financing vehicle for the FSLIC.
 
OPERATIONS OF THE BIF
The primary purpose of the BIF is to: 1) insure the deposits and protect the
depositors of BIF-insured banks and 2) resolve failed banks, including managing
and liquidating their assets. In addition, the FDIC, acting on behalf of the
BIF, examines state-chartered banks that are not members of the Federal Reserve
System and 

                                      F-5


<PAGE>
provides and monitors assistance to troubled banks. 

The BIF is primarily funded from the following sources: 1) interest earned
on investments in U.S. Treasury obligations; 2) BIF assessment premiums; 3)
income earned on and funds received from the management and disposition of
assets acquired from failed banks; and 4) U.S. Treasury and Federal Financing
Bank (FFB) borrowings, if necessary.
 
The 1990 OBR Act established the FDIC's authority to borrow working capital
from the FFB on behalf of the BIF and the SAIF. The FDICIA increased the FDIC's
authority to borrow for insurance losses from the U.S. Treasury, on behalf of
the BIF and the SAIF, from $5 billion to $30 billion.
 
The FDICIA also established a limitation on obligations that can be incurred
by the BIF, known as the maximum obligation limitation (MOL). At December 31,
1996, the MOL for the BIF was $49 billion.
   
-----------------------------------------------------------------------------
    
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------------------------------------
GENERAL
These financial statements pertain to the financial position, results of
operations and cash flows of the BIF and are presented in accordance with
generally accepted accounting principles (GAAP). These statements do not include
reporting for assets and liabilities of closed banks for which the BIF acts as
receiver or liquidating agent. Periodic and final accountability reports of the
BIF's activities as receiver or liquidating agent are furnished to courts,
supervisory authorities and others as required.
 
USE OF ESTIMATES
The preparation of the BIF's financial statements in conformity with GAAP
requires FDIC management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from these estimates. Where it is reasonably possible that
changes in estimates will cause a material change in the financial statements in
the near term, the nature and extent of such changes in estimates have been
disclosed.
 
CASH AND CASH EQUIVALENTS
The BIF considers cash equivalents to be short-term, highly liquid
investments with original maturities of three months or less.
 
U.S. TREASURY OBLIGATIONS
Securities are intended to be held to maturity and are shown at book value.
Book value is the face value of securities plus the unamortized premium or less
the unamortized discount. Amortizations are computed on a daily basis from the
date of acquisition to the date of maturity. Interest is calculated on a daily
basis and recorded monthly using the effective interest method.
 
ALLOWANCE FOR LOSSES ON RECEIVABLES FROM
BANK RESOLUTIONS AND INVESTMENT IN
CORPORATE OWNED ASSETS
The BIF records as a receivable the amounts advanced and/or obligations
incurred for resolving troubled and failed banks. The BIF also records as an
asset the amounts advanced for investment in corporate owned assets. Any related
allowance for loss represents the difference between the funds advanced and/or
obligations incurred and the expected repayment. The latter is based on
estimates of discounted cash recoveries from assets of assisted or failed banks,
net of all estimated liquidation costs.
 
LITIGATION LOSSES
The BIF accrues, as a charge to current period operations, an estimate of
probable losses from litigation. The FDIC's Legal Division recommends these
estimates on a case-by-case basis. The litigation loss estimates related to the
BIF in its corporate capacity are included in the "Estimated liabilities for:
Litigation losses." The litigation loss estimates related to receiverships are
included in the allowance for losses for "Receivables from bank resolutions,
net."
 
RECEIVERSHIP OPERATIONS
The FDIC is responsible for controlling and disposing of the assets of
failed institutions in an orderly and efficient manner. The assets, and the
claims against them, are accounted for separately

                                        F-6


<PAGE>




to ensure that liquidation proceeds are distributed in accordance with 
applicable laws and regulations. Also, the income and expenses attributable 
to receiverships are accounted for as transactions of those receiverships. 
Liquidation expenses incurred by the BIF on behalf of the receiverships are 
recovered from those receiverships.
 
COST ALLOCATIONS AMONG FUNDS
Certain operating expenses (including personnel, administrative and other
indirect expenses) not directly charged to each fund under the FDIC's management
are allocated on the basis of the relative degree to which the operating
expenses were incurred by the funds. The cost of furniture, fixtures and
equipment purchased by the FDIC on behalf of the three funds under its
administration is allocated among these funds on a pro rata basis. The BIF
expenses its share of these allocated costs at the time of acquisition because
of their immaterial amounts.
 
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The FDIC established an entity to provide the accounting and administration
of postretirement benefits on behalf of the BIF, the SAIF and the FRF. The BIF
funds its liabilities for these benefits directly to the entity.

   

DISCLOSURE ABOUT RECENT FINANCIAL ACCOUNTING STANDARDS BOARD PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities" in June 1996, effective for
transactions occurring after December 31, 1996. The BIF will generally be
unaffected by its provisions since most transactions subject to SFAS 125 occur
at the receivership level and not at the fund level. To the extent that the BIF
may be affected, the FDIC's current accounting practices are consistent with the
rules contained in SFAS 125. Other recent pronouncements issued by the FASB have
been adopted or are either not applicable or not material to the financial
statements.

    
 
DEPRECIATION
The FDIC has designated the BIF administrator of buildings owned and used in
its operations. Consequently, the BIF includes the cost of these assets in its
financial statements and provides the necessary funding for them. The BIF
charges other funds a rental fee representing an allocated share of its annual
depreciation expense.
 
The Washington, D.C., office buildings and the L. William Seidman Center in
Arlington, Virginia, are depreciated on a straight-line basis over a 50-year
estimated life. The San Francisco condominium offices are depreciated on a
straight-line basis over a 35-year estimated life.
 
RELATED PARTIES
The nature of related parties and a description of related party
transactions are disclosed throughout the financial statements and footnotes.
 
RECLASSIFICATIONS
Reclassifications have been made in the 1995 financial statements to conform
to the presentation used in 1996.

                                   F-7

<PAGE>
   
-----------------------------------------------------------------------------
    
3. INVESTMENT IN U.S. TREASURY OBLIGATIONS, NET
-----------------------------------------------------------------------------
All cash received by the BIF is invested in U.S. Treasury obligations with
maturities exceeding three months unless the cash is used: 1) to defray
operating expenses; 2) for outlays related to assistance to banks and
liquidation activities; or 3) for investments in U.S. Treasury one-day special
certificates which are cash equivalents.

-----------------------------------------------------------------------------
U.S. Treasury Obligations at December 31, 1996
-----------------------------------------------------------------------------
 
DOLLARS IN THOUSANDS
 
<TABLE>
<CAPTION>
                                                           UNREALIZEDD      UNREALIZED
                             YIELD          BOOK             HOLDING          HOLDING          MARKET           FACE
MATURITY                  AT PURCHASE       VALUE              GAINS           LOSSES           VALUE           VALUE
                          -----------    ------------      -----------     -------------     -----------     ------------
<S>                       <C>            <C>               <C>             <C>               <C>             <C>    
Less than one year.....      6.02%       $  5,805,090       $  15,032       $   (6,934)      $ 5,813,188     $  5,800,000
1-3 years..............      5.62%          8,339,386           8,499          (37,429)        8,310,456        8,320,000
3-5 years..............      6.10%          4,811,582          21,306          (30,560)        4,802,328        4,770,000
5-10 years.............      6.51%          3,127,436          38,415             (328)        3,165,523        3,100,000
                          -----------    ------------      -----------     -------------     -----------     ------------
Total..................                  $ 22,083,494       $  83,252       $  (75,251)      $22,091,495     $ 21,990,000
                          -----------    ------------      -----------     -------------     -----------     ------------
                          -----------    ------------      -----------     -------------     -----------     ------------
</TABLE>

------------------------------------------------------------------------------
U.S. Treasury Obligations at December 31, 1995
------------------------------------------------------------------------------
DOLLARS IN THOUSANDS
 
<TABLE>
<CAPTION>
                                                           UNREALIZEDD      UNREALIZED
                             YIELD          BOOK             HOLDING          HOLDING          MARKET           FACE
MATURITY                  AT PURCHASE      VALUE              GAINS           LOSSES            VALUE           VALUE
                          -----------    ------------      -----------     -------------     -----------     ------------
<S>                       <C>            <C>               <C>             <C>               <C>             <C>    
Less than one year(a)...     5.53%       $  6,750,414       $  19,934       $   (5,262)      $ 6,765,086     $  6,750,000
1-3 years...............     5.88%         12,318,436         147,762          (24,776)       12,441,422       12,350,000
3-5 years...............     5.59%          1,693,196          15,613                0         1,708,809        1,690,000
                          -----------    ------------      -----------     -------------     -----------     ------------
Total...................                 $ 20,762,046       $ 183,309       $  (30,038)      $20,915,317     $ 20,790,000
                          -----------    ------------      -----------     -------------     -----------     ------------
                          -----------    ------------      -----------     -------------     -----------     ------------
</TABLE>
(a) Includes a $400 million Treasury note which matured on Sunday, December 31,
    1995. Settlement occurred on the next business day, January 2, 1996.
 
At December 31, 1996, the unamortized discount, net of unamortized premium,
was $93 million. At December 31, 1995, the unamortized premium, net of
unamortized discount, was $28 million.


------------------------------------------------------------------------------
4. RECEIVABLES FROM BANK RESOLUTIONS, NET
------------------------------------------------------------------------------

 
The FDIC resolution process results in different types of transactions
depending on the unique facts and circumstances surrounding each failing or
failed institution. Payments to prevent a failure are made to operating
institutions when cost and other criteria are met. Such payments may facilitate
a merger or allow a troubled institution to continue operations. Payments for
institutions that fail are made to cover the institution's obligation to insured
depositors and represent a claim by the BIF against the receiverships' assets.
 
The FDIC, as receiver for failed banks, engages in a variety of strategies
at the time of failure to maximize the return from the sale or disposition of
assets and to minimize realized losses. A failed bank acquirer can purchase
selected assets at the time of resolution and assume full 

                                      F-8
<PAGE>

ownership, benefit and risk related to such assets. The receiver may also engage
in other types of transactions as circumstances warrant. As described in Note 2,
an allowance for loss is established against the receivable from bank 
resolutions.
 
As of December 31, 1996 and 1995, the BIF, in its receivership capacity,
held assets with a book value of $7 billion and $10 billion, respectively. These
assets represent a significant source of repayment of receivables from bank
resolutions. The estimated cash recoveries from the management and disposition
of these assets (excluding cash and miscellaneous receivables of $3.9 billion at
December 31, 1996 and $2.1 billion at December 31, 1995) used to derive the
allowance for losses are based in part on a statistical sampling of receivership
assets. The potential sampling error is not material to the BIF's financial
statements. These estimated recoveries are regularly evaluated, but remain
subject to uncertainties because of changing economic conditions. These factors
could affect the BIF's and other claimants' actual recoveries from the level
currently estimated.

------------------------------------------------------------------------------
RECEIVABLES FROM BANK RESOLUTIONS, NET
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                          DECEMBER 31
DOLLARS IN THOUSANDS                                                  1996           1995
--------------------                                              -------------  -------------
<S>                                                               <C>            <C>
Assets from Open Bank Assistance...............................   $     142,267  $     158,000
Allowance for losses (Note 9)..................................         (49,580)       (57,405)
Receivables from Closed Banks..................................      23,563,609     25,073,165
Allowance for losses (Note 9)..................................     (19,315,142)   (21,030,720)
                                                                      4,248,467      4,042,445
                                                                  -------------  -------------
Total..........................................................   $   4,341,154  $   4,143,040
                                                                  -------------  -------------
                                                                  -------------  -------------
</TABLE>

------------------------------------------------------------------------------
5. INVESTMENT IN CORPORATE OWNED ASSETS, NET
------------------------------------------------------------------------------
The BIF acquires assets in certain troubled and failed bank cases by either
purchasing an institution's assets outright or purchasing the assets under the
terms specified in each resolution agreement. In addition, the BIF can purchase
assets remaining in a receivership to facilitate termination. The majority of
corporate owned assets are real estate and mortgage loans.

   

The BIF recognizes income and expenses on these assets.  Income consists
primarily of the portion of collections on performing mortgages related to
interest earned. Expenses are recognized for administering the management and
liquidation of these assets.
    
-----------------------------------------------------------------------------
INVESTMENT IN CORPORATE OWNED ASSETS, NET
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                             DECEMBER 31
DOLLARS IN THOUSANDS                                                       1996        1995
--------------------                                                    ----------  ----------
<S>                                                                     <C>         <C>
Investment in corporate owned assets................................    $  873,458  $  939,756
Allowance for losses (Note 9).......................................      (810,052)   (759,463)
                                                                        ----------  ----------
Total...............................................................    $   63,406  $  180,293
                                                                        ----------  ----------
                                                                        ----------  ----------
</TABLE>
 
                                         F-9

<PAGE>
-----------------------------------------------------------------------------
6. PROPERTY AND BUILDINGS, NET
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                             DECEMBER 31        
DOLLARS IN THOUSANDS                                                       1996        1995     
--------------------                                                    ----------  ----------  
<S>                                                                     <C>         <C>         
Land................................................................    $   29,631  $   29,631  
Office buildings....................................................       151,442     151,442  
Accumulated depreciation............................................       (32,673)    (29,333)  
                                                                        ----------  ----------  
Total...............................................................    $  148,400  $  151,740  
                                                                        ----------  ----------  
                                                                        ----------  ----------  
</TABLE>

-----------------------------------------------------------------------------
7. OTHER REVENUE
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                  FOR THE YEAR ENDED DECEMBER 31    
DOLLARS IN THOUSANDS                                                                1996       1995        1994     
--------------------                                                             ----------  ---------  ----------  
<S>                                                                              <C>         <C>        <C>         
Interest on subrogated claims and advances....................................   $  230,871  $  37,771  $   66,364  
Income from assistance transactions...........................................        5,980      9,234       6,057  
Other miscellaneous income....................................................        8,734      8,171     141,665  
                                                                                 ----------  ---------  ----------  
Total.........................................................................   $  245,585  $  55,176  $  214,086  
                                                                                 ----------  ---------  ----------  
                                                                                 ----------  ---------  ----------  
</TABLE>
 
    The interest on subrogated claims and advances to financial institutions
includes $205 million in post-insolvency interest. There are a number of BIF
receiverships that have residual funds remaining after paying all regular
claims. Once those claims have been paid, the BIF and other claimants are
eligible to receive interest on their claims against the receivers on a pro rata
basis. Due to the uncertainty of collection, post-insolvency interest is
recognized when received.
 
-------------------------------------------------------------------------------
8. ESTIMATED LIABILITIES FOR:
-------------------------------------------------------------------------------
ANTICIPATED FAILURE OF INSURED INSTITUTIONS
The BIF records an estimated liability and loss provision for banks that are
likely to fail in the foreseeable future (absent some favorable event such as
obtaining additional capital or merging). The estimated liability and
corresponding reduction in provision for insurance losses are recorded in the
period when the liability is deemed probable and reasonably estimable.
 
The estimated liabilities for anticipated failure of insured institutions as
of December 31, 1996 and 1995, were $75 million and $279 million, respectively.
The estimated liability is derived in part from estimates of recoveries from the
management and disposition of the assets of these probable bank failures.
Therefore, they are subject to the same uncertainties as those affecting the
BIF's receivables from bank resolutions (see Note 4). This could affect the
ultimate costs to the BIF from probable bank failures.
 
There are other banks where the risk of failure is less certain, but still
considered reasonably possible. Should these banks fail, management estimates
that the BIF would incur additional losses of about $160 million.
 
The accuracy of these estimates will largely depend on future economic
conditions. In addition, FDIC considers probable losses in setting assessment
rates and, as circumstances warrant, may increase assessment rates to recover
some or all losses due to anticipated bank failures.
 
ASSISTANCE AGREEMENTS
The estimated liabilities for assistance agreements resulted from several
large transactions where problem assets were purchased by an acquiring
institution under an agreement that calls for the FDIC to absorb credit losses
and to pay related costs for funding and asset administration plus an incentive
fee.

                                          F-10
<PAGE>

ASSET SECURITIZATION GUARANTEE
As part of the FDIC's efforts to maximize the return from the sale or
disposition of assets and minimize losses from bank resolutions, the FDIC has
securitized some receivership assets. To facilitate the securitizations, the
FDIC's BIF provided Limited Guarantees to cover certain losses on the
receivership assets up to a specified maximum. In exchange for backing the
limited guarantee, the BIF received assets from the receiverships in an amount
equal to the expected exposure under the guarantee. The deals were initially
structured so that the BIF would neither profit nor suffer a loss as a result of
the limited guarantees.
 
At December 31, 1996 and 1995, the BIF had an estimated liability under the
guarantees of $44 million and $126 million, respectively.
 
During 1996 the BIF returned to receiverships $91.6 million in cash
(including interest of $8.4 million) received for backing the limited guarantee.
The BIF made this refund as a result of lowering the estimate of expected
exposure under one of the guarantees. The following chart summarizes the BIF's
remaining potential exposure under the guarantees.
 
-------------------------------------------------------------------------------
Asset Securitization Guarantees (cumulative inception-to-date balances)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                               MAXIMUM EXPOSURE UNDER
                                    THE GUARANTEE           GUARANTEE CLAIMS PAID     MAXIMUM REMAINING POTENTIAL
DOLLARS IN THOUSANDS                 OBLIGATIONS             THROUGH DECEMBER 31       OBLIGATIONS AT DECEMBER 31
--------------------           ----------------------       ---------------------     ---------------------------
<S>                            <C>                          <C>                       <C>
1996......................           $    481,313                   $   8,651                    $  472,662
1995......................           $    247,748                   $   2,406                    $  245,342
</TABLE>
 
LITIGATION LOSSES
The BIF records an estimated loss for unresolved legal cases to the extent
those losses are considered to be probable in occurrence and reasonably
estimable in amount. In addition to the amount recorded, the FDIC's Legal
Division has determined that losses from unresolved legal cases totaling $314
million are reasonably possible. This includes $18 million in losses for the BIF
in its corporate capacity and $296 million in losses for the BIF related to
receiverships (see Note 2).
 
-------------------------------------------------------------------------------
9. ANALYSIS OF CHANGES IN ALLOWANCE FOR LOSSES AND ESTIMATED LIABILITIES
-------------------------------------------------------------------------------
The reduction in provision for insurance losses includes the normal,
recurring changes in estimates for prior year, current, and anticipated bank
resolutions. In the following charts, transfers include reclassifications from
"Estimated Liabilities for: Anticipated failure of insured institutions" to
"Closed banks." Terminations represent final adjustments to the estimated cost
figures for those bank resolutions that were completed.

                                 F-11

<PAGE>

------------------------------------------------------------------------------
Analysis of Changes in Allowance for Losses and Estimated Liabilities--1996
------------------------------------------------------------------------------

<TABLE>
<CAPTION>
   
                                                           PROVISION FOR INSURANCE LOSSES
                                               BEGINNING   ---------------------------------                 ADJUSTMENTS/   ENDING
                                                BALANCE      CURRENT      PRIOR                 NET CASH      TRANSFERS/    BALANCE
DOLLARS IN MILLIONS                            01/01/96        YEAR       YEARS      TOTAL      PAYMENTS     TERMINATIONS  12/31/96
--------------------------------------------  -----------  -----------  ---------  ---------  -------------  ------------  --------
<S>                                           <C>          <C>          <C>        <C>        <C>            <C>           <C>
Allowance for Losses:
Open bank assistance........................   $      57    $       0   $      (4) $      (4)   $       0      $      (3)  $     50
Corporate owned assets......................         759            0          51         51            0              0        810
Closed banks................................      21,031          (95)        (33)      (128)           0         (1,588)    19,315
                                               -----------       -----         ---  ---------   ---------         ------    -------
Total Allowance for Losses..................      21,847          (95)         14        (81)           0         (1,591)    20,175

Estimated Liabilities for:
Anticipated failure of insured institutions.         279         (204)          0       (204)           0              0         75
Assistance agreements.......................          56            0          (4)        (4)          (1)             0         51
Asset securitization guarantee..............         126          (15)          0        (15)         (81)            14         44
Litigation losses...........................          36            0         (21)       (21)           0              0         15
                                               -----------       -----         ---  ---------   ---------          ------   -------
Total Estimated Liabilities.................         497         (219)        (25)      (244)         (82)            14        185
                                               -----------       -----         ---  ---------   ---------          ------   -------
Reduction in Provision for Insurance Losses.                $    (314)  $     (11) $    (325)  

    
</TABLE>

------------------------------------------------------------------------------
Analysis of Changes in Allowance for Losses and Estimated Liabilities--1995
------------------------------------------------------------------------------

<TABLE>
<CAPTION>
   
                                                            PROVISION FOR INSURANCE LOSSES
                                               BEGINNING   ---------------------------------               ADJUSTMENTS/    ENDING
                                                BALANCE      CURRENT      PRIOR                NET CASH     TRANSFERS/     BALANCE
DOLLARS IN MILLIONS                             01/01/95       YEAR        YEARS      TOTAL     PAYMENTS    TERMINATIONS   12/31/95
---------------------------------------------  -----------  -----------  ---------  ---------  -----------  -------------  --------
<S>                                            <C>          <C>          <C>        <C>        <C>          <C>            <C>
Allowance for Losses:
Open bank assistance........................   $   1,156    $       0   $    (140) $    (140)  $       0     $    (959)    $     57
Corporate owned assets......................         660            0          99         99           0             0          759
Closed banks................................      22,354          (52)        464        412           0        (1,735)      21,031
                                              -----------   ---------    ---------  ---------         ---        ------     -------
Total Allowance for Losses..................      24,170          (52)        423        371           0        (2,694)      21,847

Estimated Liabilities for:
Anticipated failure of insured institutions.         875          131        (570)      (439)          0          (157)         279
Assistance agreements.......................         163            0          14         14        (101)          (20)          56
Asset securitization guarantee..............         128            0           0          0          (2)            0          126
Litigation losses...........................          15            0          21         21           0             0           36
                                              -----------   ---------   ---------  ---------         ---        ------      -------
Total Estimated Liabilities.................       1,181          131        (535)      (404)       (103)         (177)         497
                                              -----------   ---------   ---------  ---------         ---        ------      -------
Increase/(Reduction) in Provision for
  Insurance Losses..........................                $      79   $    (112) $     (33)
    
</TABLE>


                                        F-12

<PAGE>

------------------------------------------------------------------------------
Analysis of Changes in Allowance for Losses and Estimated Liabilities--1994
------------------------------------------------------------------------------

<TABLE>

<CAPTION>
                                                        PROVISION FOR INSURANCE LOSSES
                                           BEGINNING   ---------------------------------                 ADJUSTMENTS/     ENDING
                                            BALANCE      CURRENT      PRIOR                 NET CASH      TRANSFERS/      BALANCE
DOLLARS IN MILLIONS                         01/01/94      YEAR        YEARS      TOTAL      PAYMENTS     TERMINATIONS     12/31/94
----------------------------------------  -----------  -----------  ---------  ---------  -------------  -------------    --------
<S>                                       <C>          <C>          <C>        <C>        <C>            <C>              <C>
Allowance for Losses:
Open bank assistance....................   $     215    $       0   $    (421) $    (421)   $       3      $   1,359      $  1,156
Corporate owned assets..................         742            0         (82)       (82)           0              0           660
Closed banks............................      23,191         (236)       (229)      (465)           0           (372)       22,354
                                          -----------         ---   ---------  ---------    ---------         ------      --------
Total Allowance for Losses..............      24,148         (236)       (732)      (968)           3            987        24,170

Estimated Liabilities for:
Anticipated failure of insured 
 institutions...........................       2,972          406      (2,128)    (1,722)           0           (375)          875
Assistance agreements...................         326            0        (177)      (177)         (37)            51           163
Asset securitization guarantee..........           0            0           0          0            0            128           128
Litigation losses.......................          21            0          (6)        (6)           0              0            15
                                          -----------         ---   ---------  ---------    ---------         ------      --------
Total Estimated Liabilities.............       3,319          406      (2,311)    (1,905)         (37)          (196)        1,181
                                          -----------         ---   ---------  ---------    ---------         ------      --------
Increase/(Reduction) in Provision for
  Insurance Losses......................                $     170   $  (3,043) $  (2,873)
</TABLE>

   
-------------------------------------------------------------------------------
10. ASSESSMENTS 
-------------------------------------------------------------------------------
    

    The 1990 OBR Act removed caps on assessment rate increases and authorized 
the FDIC to set assessment rates for BIF members semiannually, to be applied 
against a member's average assessment base. The FDICIA: 1) required the FDIC 
to implement a risk-based assessment system; 2) authorized the FDIC to 
increase assessment rates for BIF-member institutions as needed to ensure 
that funds are available to satisfy the BIF's obligations; and 3) authorized 
the FDIC to increase assessment rates more frequently than semiannually and 
impose emergency special assessments as necessary to ensure that funds are 
available to repay U.S. Treasury borrowings.
 
    In May 1995, the BIF reached the FDICIA mandated capitalization level of 
1.25 percent of insured deposits.
 
    The DIFA 1996 (see Note 1) provided, among other things, for the 
elimination of the mandatory minimum assessment formerly provided for in the 
FDI Act, and for the expansion of the assessment base for payments on the 
interest on obligations issued by FICO to include all FDIC-insured 
institutions, including banks. Beginning January 1, 1997, banks will start 
paying a FICO-assessment. The FICO-assessment rate on BIF-assessable deposits 
will be one-fifth of the rate paid on SAIF assessable deposits. After 
December 31, 1999, the approximately $790 million annual FICO interest 
obligation will be paid on a pro rata basis between banks and thrifts.
 
    The FICO assessment will have no financial effect on the BIF since the 
FICO claim will be assessed separately from the regular assessment, and the 
FICO assessment is imposed on banks and not on the BIF. The FDIC as 
administrator of the BIF is acting solely as an agent for the FICO to collect 
and remit the FICO assessment to the FICO.
 
    The FDIC uses a risk-based assessment system that charges higher rates to 
those institutions that pose greater risks to the BIF. To arrive at a 
risk-based assessment for a particular institution, the FDIC places each 
institution in one of nine risk categories using a two-step process based 
first on capital ratios and then on other relevant 

                                      F-13
<PAGE>

information. The FDIC Board of Directors (Board) reviews premium rates 
semiannually. The average assessment rate for 1996 was 0.24 cents per $100 of 
insured deposits.
 
    On November 26, 1996, the FDIC Board of Directors voted to retain the BIF 
assessment schedule of 0 to 27 cents per $100 of insured deposits (annual 
rates) for the first semiannual period of 1997.

   
-----------------------------------------------------------------------------
11. PENSION BENEFITS, SAVINGS PLANS, POSTEMPLOYMENT BENEFITS AND ACCRUED 
ANNUAL LEAVE 
-----------------------------------------------------------------------------
    
    Eligible FDIC employees (i.e., all permanent and temporary employees with 
appointments exceeding one year) are covered by either the Civil Service 
Retirement System (CSRS) or the Federal Employee Retirement System (FERS). 
The CSRS is a defined benefit plan, which is offset with the Social Security 
System in certain cases. Plan benefits are determined on the basis of years 
of creditable service and compensation levels. The CSRS-covered employees 
also can contribute to the tax-deferred Federal Thrift Savings Plan (TSP).
 
    The FERS is a three-part plan consisting of a basic defined benefit plan 
that provides benefits based on years of creditable service and compensation 
levels, Social Security benefits and the TSP. Automatic and matching employer 
contributions to the TSP are provided up to specified amounts under the FERS.
 
    Eligible FDIC employees also may participate in an FDIC-sponsored 
tax-deferred savings plan with matching contributions. The BIF pays its share 
of the employer's portion of all related costs.
 
    Although the BIF contributes a portion of pension benefits for eligible 
employees, it does not account for the assets of either retirement system. 
The BIF also does not have actuarial data for accumulated plan benefits or 
the unfunded liability relative to eligible employees. These amounts are 
reported and accounted for by the U.S. Office of Personnel Management.
 
    Due to a substantial decline in the FDIC's workload, the Corporation 
developed a staffing reduction program, a component of which is a voluntary 
separation incentive plan, or buyout. To date, two corporate-wide buyout 
plans have been offered to eligible employees. The first buyout plan did not 
have a material financial effect on the BIF, and management believes the 
second buyout plan will also not have a material financial effect on the fund.
 
    The liability to employees for accrued annual leave is approximately 
$38.9 million and $43.4 million at December 31, 1996 and 1995, respectively.

------------------------------------------------------------------------------
Pension Benefits and Savings Plans Expenses
------------------------------------------------------------------------------
 
<TABLE>

<CAPTION>

                                                                        FOR THE YEAR ENDED
                                                                           DECEMBER 31
DOLLARS IN THOUSANDS                                                 1996       1995     1994
------------------------------------------------------------------  -------  ---------  --------
<S>                                                                 <C>      <C>        <C>
Civil Service Retirement System...................................  $ 9,113  $   9,411  $ 9,988
Federal Employee Retirement System (Basic Benefit)................   34,989     36,741   32,410
FDIC Savings Plan.................................................   19,474     20,545   21,603
Federal Thrift Savings Plan.......................................   12,195     10,264   10,513
                                                                    -------  ---------  -------
Total.............................................................  $75,771    $76,961  $74,514
                                                                    -------  ---------  -------
                                                                    -------  ---------  -------
</TABLE>

                                            F-14

<PAGE>

------------------------------------------------------------------------------
   
12. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
    
------------------------------------------------------------------------------

    The FDIC provides certain health, dental and life insurance coverage for 
its eligible retirees, the retirees' beneficiaries and covered dependents. 
Retirees eligible for health and/or life insurance coverage are those who 
have qualified due to: 1) immediate enrollment upon appointment or five years 
of participation in the plan and 2) eligibility for an immediate annuity. 
Dental coverage is provided to all retirees eligible for an immediate annuity.

    The FDIC is self-insured for hospital/medical, prescription drug, mental 
health and chemical dependency coverage. Additional risk protection was 
purchased from Aetna Life Insurance Company through stop-loss and fiduciary 
liability insurance. All claims are administered on an administrative 
services only basis with the hospital/medical claims administered by Aetna 
Life Insurance Company, the mental health and chemical dependency claims 
administered by OHS Foundation Health Psychcare Inc., and the prescription 
drug claims administered by Caremark.
 
    The life insurance program, underwritten by Metropolitan Life Insurance 
Company, provides basic coverage at no cost to retirees and allows converting 
optional coverages to direct-pay plans. Dental care is underwritten by 
Connecticut General Life Insurance Company and provides coverage at no cost 
to retirees.
 
    The BIF expensed $6.1 million, $18.8 million, and $23.0 million for net 
periodic postretirement benefit costs for the years ended December 31, 1996, 
1995, and 1994, respectively. For measurement purposes for 1996, the FDIC 
assumed the following: 1) a discount rate of 5.75 percent; 2) an average 
long-term rate of return on plan assets of 5.75 percent; 3) an increase in 
health costs in 1996 of 10.75 percent (inclusive of general inflation of 3.00 
percent), decreasing to an ultimate rate in 2000 of 7.75 percent; and 4) an 
increase in dental costs for 1997 and thereafter of 4.00 percent (in addition 
to general inflation). Both the assumed discount rate and health care cost 
rate have a significant effect on the amount of the obligation and periodic 
cost reported.
 
    If the health care cost rate was increased one percent, the accumulated 
postretirement benefit obligation as of December 31, 1996, would have 
increased by 20.4 percent. The effect of this change on the aggregate of 
service and interest cost for 1996 would be an increase of 26.2 percent.

------------------------------------------------------------------------------
Net Periodic Postretirement Benefit Cost
------------------------------------------------------------------------------

<TABLE>

<CAPTION>
                                                                                        FOR THE YEAR ENDED
                                                                                            DECEMBER 31
DOLLARS IN THOUSANDS                                                              1996         1995        1994
------------------------------------------------------------------------------  ---------  ------------  ---------
<S>                                                                             <C>        <C>           <C>
Service cost (benefits attributed to employee service during the year)........  $  15,575   $   22,574   $  25,206
Interest cost on accumulated postretirement benefit obligation................     16,258       14,706      14,323
Net total of other components.................................................     (7,369)      (3,567)     (4,881)
Return on plan assets.........................................................    (18,402)     (14,907)    (11,651)
                                                                                ---------   ----------   ---------
Total.........................................................................  $   6,062   $   18,806   $  22,997
                                                                                ---------   ----------   ---------
                                                                                ---------   ----------   ---------
</TABLE>

    As stated in Note 2, the FDIC established an entity to provide accounting 
and administration on behalf of the BIF, the SAIF, and the FRF. The BIF funds 
its liability and these funds are being managed as "plan assets."

                                       F-15

<PAGE>
 
------------------------------------------------------------------------------
Accumulated Postretirement Benefit Obligation and Funded Status
------------------------------------------------------------------------------

<TABLE>

<CAPTION>

                                                                              DECEMBER 31
DOLLARS IN THOUSANDS                                                        1996       1995
-----------------------------------------------------------------------  ----------  ---------
<S>                                                                      <C>         <C>
Retirees...............................................................  $  136,730  $  79,370
Fully eligible active plan participants................................      12,724     22,401
Other active participants..............................................     152,993    182,408
                                                                         ----------  ---------
Total Obligation.......................................................     302,447    284,179
Less: Plan assets at fair value (a)....................................     335,439    317,037
                                                                         ----------  ---------
(Over) Funded Status...................................................     (32,992)   (32,858)
Unrecognized prior service cost........................................      46,136     57,242
Unrecognized net gain..................................................      26,846     11,954
                                                                         ----------  ---------
Postretirement Benefit Liability Recognized in the Statements of
  Financial Position...................................................  $   39,990  $  36,338
                                                                         ----------  ---------
                                                                         ----------  ---------
</TABLE>
 
------------------------
 
(a) Invested in U.S. Treasury instruments

   
-------------------------------------------------------------------------
13. COMMITMENTS
-------------------------------------------------------------------------
    
    The BIF's allocated share of FDIC's lease commitments totals $138.8 
million for future years. The lease agreements contain escalation clauses 
resulting in adjustments, usually on an annual basis. The allocation to the 
BIF of FDIC's future lease commitments is based upon current relationships of 
the workloads among BIF, SAIF and FRF. Changes in the relative workloads 
among the three funds in future years could change the amount of FDIC's lease 
payments which will be allocated to BIF. The BIF recognized leased space 
expense of $39.9 million, $42.7 million, and $50.9 million for the years 
ended December 31, 1996, 1995, and 1994, respectively.
 
------------------------------------------------------------------------------
Leased Space Fees
------------------------------------------------------------------------------
 
<TABLE>

<CAPTION>

DOLLARS IN THOUSANDS
                                                            2002 AND
1997         1998       1999       2000       2001         THEREAFTER
---------  ---------  ---------  ---------  ---------  ------------------
<S>        <C>        <C>        <C>        <C>        <C>
$38,355     $25,004    $19,390    $16,597    $15,748       $23,742

</TABLE>
 
   
-----------------------------------------------------------------------
14. CONCENTRATION OF CREDIT RISK
-----------------------------------------------------------------------
    
    As of December 31, 1996, the BIF had $23.7 billion and $873 million in 
gross receivables from bank resolutions and investment in corporate owned 
assets, respectively. An allowance for loss of $19.4 billion and $810 
million, respectively, has been recorded against these receivables. The 
receivables arose from bank resolutions. The BIF's maximum exposure to 
possible accounting loss for these receivables is shown in the table below.

                                           F-16

<PAGE>

------------------------------------------------------------------------------
Concentration of Credit Risk at December 31, 1996
------------------------------------------------------------------------------

<TABLE>

<CAPTION>
                                                                  SOUTH-     SOUTH-    NORTH-   MID-
DOLLARS IN MILLIONS                                                EAST       WEST      EAST    WEST   CENTRAL    WEST    TOTAL
--------------------------------------------------------------    --------   -------   ------  ------  -------    ----    -----
<S>                                                               <C>        <C>       <C>     <C>     <C>        <C>     <C>
Receivables from bank resolutions, net and Investment in
  corporate owned assets, net.................................     $89        $297     $3,145   $230     $8       $631    $4,400
 
</TABLE>

-------------------
    (a) The net receivable excludes $2.3 million and $1.9 million, 
        respectively, of the SAIF's allocated share of maximum credit loss 
        exposure from the resolutions of Olympic National Bank, Los Angeles, 
        CA, and the First National Bank of the Panhandle, Panhandle, TX. 
        There is no risk that the SAIF will not meet these obligations.

Insured Deposits

    As of December 31, 1996, the total deposits insured by the BIF is 
approximately $2 trillion. This would be the accounting loss if all 
depository institutions fail and the assets acquired as a result of the 
resolution process provided no recoveries.

   
--------------------------------------------------------------------------
15. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
--------------------------------------------------------------------------
    

    Cash equivalents are short-term, highly liquid investments and are shown 
at current value. The fair market value of the investment in U.S. Treasury 
obligations is disclosed in Note 3 and is based on current market prices. The 
carrying amount of interest receivable on investments, short-term 
receivables, accounts payable and liabilities incurred from bank resolutions 
approximates their fair market value. This is due to their short maturities 
or comparisons with current interest rates.

    The net receivable from bank resolutions primarily involves the BIF's 
subrogated claim arising from payments to insured depositors. The 
receivership assets which will ultimately be used to pay the corporate 
subrogated claim are valued using discount rates which include consideration 
of market risk. These discounts ultimately affect the BIF's allowance for 
loss against the net receivable from bank resolutions. Therefore the 
corporate subrogated claim indirectly includes the effect of discounting and 
should not be viewed as being stated in terms of nominal cash flows.

    Although the value of the corporate subrogated claim is influenced by 
valuation of receivership assets, such receivership valuation is not 
equivalent to the valuation of the corporate claim. Since the corporate claim 
is unique, not intended for sale to the private sector, and has no 
established market, it is not practicable to estimate its fair market value.

    The FDIC believes that a sale to the private sector of the corporate 
claim would require indeterminate, but substantial discounts for an 
interested party to profit from these assets because of credit and other 
risks. In addition, the timing of receivership payments to the BIF on the 
subrogated claim do not necessarily correspond with the timing of collections 
on receivership assets. Therefore the effect of discounting used by 
receiverships should not necessarily be viewed as producing an estimate of 
market value for the net receivables from bank resolutions.

    The majority of the net investment in corporate owned assets (except real 
estate) is comprised of various types of financial instruments (investments, 
loans, accounts receivable, etc.) acquired from failed banks. Like 
receivership assets, corporate owned assets are valued using discount rates 
which include consideration of market risk. However, corporate owned assets 
do not involve the unique aspects of the corporate subrogated claim, and 
therefore the discounting can be viewed as producing a reasonable estimate of 
fair market value.

                                          F-17
<PAGE>

   
-----------------------------------------------------------------------------
16. SUPPLEMENTARY INFORMATION RELATING TO THE STATEMENTS OF CASH FLOWS
-----------------------------------------------------------------------------
    
------------------------------------------------------------------------------
Reconciliation of Net Income to Net Cash Provided by Operating Activities
------------------------------------------------------------------------------
 
<TABLE>

<CAPTION>
   
                                              FOR THE YEAR ENDED
                                                  DECEMBER 31
DOLLARS IN THOUSANDS                    1996         1995          1994
------------------------------------  ---------  ------------  ------------
<S>                                   <C>        <C>           <C> 
Net Income..........................  $1,400,681  $3,605,916   $  8,726,122
                                      ----------  ----------   ------------
Adjustments to Reconcile Net Income
  to Net Cash Provided by Operating
  Activities

Income Statement Items:
Reduction in provision for           
  insurance losses..................    (325,206)    (33,167)    (2,873,419)
Amortization of U.S. Treasury         
  securities........................        (825)    (19,266)        43,145
Depreciation on buildings...........       3,339       3,339          3,339

Change in Assets and Liabilities:
Decrease (Increase) in interest 
 receivable on investments and other 
 assets.............................      22,041    (146,102)      (179,994)
(Increase) Decrease in receivables    
  from bank resolutions.............     (66,360)  3,659,128      5,916,593
Decrease (Increase) in corporate      
  owned assets......................      66,298     (37,452)       566,472
Increase (Decrease) in accounts       
  payable and other liabilities.....      15,500    (112,148)    (3,199,424)
(Decrease) in estimated liabilities   
  for anticipated failure of insured
  institutions......................           0    (157,000)      (375,000)
(Decrease) in estimated liabilities   
  for assistance agreements.........        (721)     (4,048)        13,479
(Decrease) in estimated liabilities   
  for asset securitization
  guarantees........................     (67,300)     (2,054)       128,429
                                      ----------  ----------   ------------
Net Cash Provided by Operating        
  Activities........................  $1,047,447  $6,757,146   $  8,769,742
                                      ----------  ----------   ------------
                                      ----------  ----------   ------------
    
</TABLE>

   
----------------------------------------------------------------------------
17. SUBSEQUENT EVENTS
----------------------------------------------------------------------------
    

    In the first quarter of 1997, management negotiated with the National 
Treasury Employees Union (NTEU) a change in employee health benefits. This 
change involves a conversion from the FDIC health plan to the Federal 
Employees Health Benefits (FEHB) plan. This conversion will involve all 
employees with five or more years until retirement eligibility. Assuming 
enabling legislation is also passed, the conversion will also affect all 
retirees and employees within five years of retirement. Management does not 
expect the conversion, which will become effective on January 1, 1998, to 
result in an accounting loss to the BIF.

                                       F-18