Federal Deposit Insurance Corporation 

550 17th Street, N.W., Washington, D.C. 20429-9990 Deputy to the Chairman and CFO 

 

 November 9, 2012 

MEMORANDUM TO: The Board of Directors 

FROM: Steven O. App 

Deputy to the Chairman and 

Chief Financial Officer 

Craig R. Jarvill 

Director, Division of Finance 

SUBJECT: Third Quarter 2012 CFO Report to the Board 

The attached report highlights the Corporation’s financial activities and results for the quarter ended 

September 30, 2012. 

Executive Summary 

 During the third quarter of 2012, the Deposit Insurance Fund (DIF) balance increased by $2.5 

billion, from $22.7 billion to $25.2 billion. This quarterly increase was primarily due to $2.8 

billion in assessment revenue and a decrease in the provision for insurance losses of $84 

million, partially offset by $442 million in operating expenses. Over the eleven consecutive 

quarters since the beginning of 2010, the fund balance has increased a total of $46.1 billion. 

 During the third quarter of 2012, the FDIC was named receiver for 12 failed institutions. The 

combined assets at inception for these institutions totaled approximately $2.0 billion with a 

total estimated loss of $483 million. The corporate cash outlay during the third quarter for 

these failures was approximately $606 million. 

 

 Through September 30, 2012, overall Corporate Operating Budget expenditures were below 

budget by 21 percent ($496 million), largely due to substantial under-spending in the 

Receivership Funding budget component. That component was $391 million or 38 percent, 

under budget, while the Ongoing Operations component was $105 million, or 8 percent under 

budget. The variance in the Receivership Funding component was primarily due to less costly 

resolutions and lower-than-anticipated asset management, marketing, and contract support 

costs for failed bank resolutions. 

 
2

I. Corporate Fund Financial Results (See pages 9 - 10 for detailed data and charts.) 

Deposit Insurance Fund 

 For the nine months ended September 30, 2012, the DIF’s comprehensive income totaled 

$13.4 billion compared to comprehensive income of $15.2 billion for the same period last year. 

This $1.8 billion year-over-year decrease was mostly due to a $5.1 billion year-to-year swing in 

loss provisions (a negative $879 million in 2012 vs. a negative $5.9 billion in 2011), offset by a 

$4.0 billion increase in recognition of Debt Guarantee Program (DGP) deferred revenue and 

an $829 million decrease in assessment revenue. 

 The provision for insurance losses was negative $879 million for nine months of 2012. The 

negative provision primarily resulted from a $1.2 billion reduction in the contingent loss reserve 

due to the improvement in the financial condition of institutions that were previously identified 

to fail offset by a $299 million increase in the estimated losses for banks that had previously 

failed. 

Assessments 

 During the third quarter of 2012, the DIF recognized a total of $2.8 billion in assessment 

revenue. The estimate for third quarter 2012 insurance coverage totaled $3.0 billion—$2.4 

billion was recognized for those institutions that prepaid assessments and $660 million was 

recorded as a receivable from those institutions that did not have prepaid assessments 

available for offset. Additionally, the DIF recognized a net adjustment of $182 million that 

reduced assessment revenue. This adjustment consisted of $20 million in prior period 

amendments and a $202 million decrease to the estimate for second quarter 2012 insurance 

coverage recorded at June 30, 2012. The latter adjustment was due to lower than estimated 

growth in the assessment base and lower average assessment rates. 

 On September 28, 2012, the FDIC collected $374 million in DIF assessments for second 

quarter 2012 insurance coverage. Unearned revenue (prepaid assessments) totaled $9.2 

billion on September 30, 2012.

 
3

FSLIC Resolution Fund (FRF) 

 On October 19, 2012, the FRF paid $181 million as a result of a settlement in one goodwill 

case, leaving two active goodwill cases. 

II. Investment Results (See pages 11 - 12 for detailed data and charts.)

Total DIF Portfolio Liquidity 

 The total liquidity available to the DIF is the sum of the DIF investment portfolio ($37.5 billion) 

and the DGP investment portfolio ($1.1 billion). Consequently, the total liquidity (total market 

value including accrued interest) of both DIF-related investment portfolios stood at $38.6 billion 

on September 30, 2012, down $3.8 billion from $42.4 billion on December 31, 2011. 

DIF Investment Portfolio 

 On September 30, 2012, the DIF investment portfolio stood at $37.5 billion (total market 

value), substantially similar to its December 31, 2011, balance of $37.6 billion. Outflows for 

funding initial resolution payments, operating expenses, and other payments related to 

receivership activities were largely offset by receivership dividends, net transfers from the 

DGP investment portfolio, assessments, and other inflows. 

 On September 30, 2012, the DIF investment portfolio’s yield was 0.44 percent, up three basis 

points from its December 31, 2011, yield of 0.41 percent. During the first three quarters of 

2012, newly purchased Treasury securities, including some higher yielding Treasury InflationProtected Securities (TIPS) and overnight investments, had higher yields than maturing 

securities, hence the rise in portfolio yield. 

 

4.59%

0.49% 0.40% 0.41% 0.44%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

2008 2009 2010 2011 Sept‐2012

Percentage

DIF Investment Portfolio Total Yield

 

 In accordance with the approved third quarter 2012 DIF portfolio investment strategy, staff 

purchased a total of eight short-maturity conventional Treasury securities on three occasions. 

The eight securities had a total par value of $8.6 billion, a weighted average yield of 0.24 

percent, and a weighted average maturity (WAM) of 1.00 year. 

Year-end
4

DGP Investment Portfolio 

 On September 30, 2012, the DGP investment portfolio stood at $1.1 billion (total market 

value), down substantially from its December 31, 2011, balance of $4.8 billion, primarily due to 

the June 2012 transfer of DGP funds into the DIF investment portfolio reported last quarter. In 

accordance with the approved third quarter 2012 DGP portfolio investment strategy, staff 

purchased one Treasury bill with a par value of $400 million, a yield of 0.12 percent, and a 

maturity date of December 27, 2012 (equating to a maturity of 0.36 years). 

III. Budget Results (See pages 13 - 14 for detailed data.) 

Approved Budget Modifications 

The 2012 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other 

officials the authority to make certain modifications to the 2012 Corporate Operating Budget. 

In accordance with the authority delegated by the Board of Directors, the CFO in July 2012 

approved the reallocation of existing budget authority within the Ongoing Operations and 

Receivership Funding components of the 2012 Corporate Operating Budget following the midyear reassessment of actual and projected spending. The budgets for all major expense 

categories and most divisions and offices were adjusted in this reallocation. 

These reallocations increased the Ongoing Operations budgets of the Division of Information 

Technology (DIT) and the Division of Resolutions and Receiverships (DRR) by $6 million and 

$3 million, respectively. The increase in DIT supplied additional funding for software licensing 

agreements, equipment purchases, and contractor supported IT services. The increase in 

DRR provided additional funding for the development of operational policies and procedures 

for the orderly liquidation of a financial company under Title II of the Dodd-Frank Act, 

benchmarking services to support the receivership billing rate setting process, and higher-than 

projected regular and relocation travel expenses. Offsetting those increases were budget 

reductions of $6 million in the Office of the Inspector General (OIG), $2 million in the Division 

of Insurance and Research (DIR), and $1 million in the Corporate Unassigned contingency 

reserve for the Ongoing Operations budget component. The Division of Administration (DOA) 

decreased its Receivership Funding budget by nearly $3 million because of the decline in 

receivership and resolution activities. Those funds increased the Corporate Unassigned 

contingency reserve in the Receivership Funding budget component. 

Following these reallocations, the amounts remaining available within the Corporate 

Unassigned budgets for the Ongoing Operations and Receivership Funding budget 

components are $20,323,210 and $115,612,907, respectively. None of these modifications 

changed the total 2012 Corporate Operating Budget as approved by the Board in December 

2011. 

Approved Staffing Modifications 

The 2012 Budget Resolution delegated to the CFO the authority to modify approved 2012 

staffing authorizations for divisions and offices, as long as those modifications did not increase 

the total approved 2012 Corporate Operating Budget. The following staffing adjustments were 

made during the third quarter in accordance with the authority delegated by the Board of 

Directors. None of these modifications changed the total 2012 Corporate Operating Budget 

approved by the Board. 
5

 In July 2012, the CFO approved an increase of two authorized non-permanent 

Program Manager positions in the Division of Risk Management Supervision (RMS) to 

work on the Virtual Supervisory Information (ViSION) Modernization and Examination 

Tools Suite (ETS) projects. 

 In July and August 2012, following the Senate’s confirmation of a second Director 

(Appointive) on the Board of Directors, the CFO approved the establishment of three 

permanent positions in the Executive Offices to provide for the new Director and his 

staff support. In addition, the CFO authorized one permanent position in RMS to 

provide leadership for the FDIC’s Minority Depository Institutions (MDI) program. 

Spending Variances 

Significant spending variances by major expense category and division/office are discussed 

below. Significant spending variances for the nine months ending September 30, 2012, are 

defined as those that either (1) exceed the YTD budget by $1 million and represent more than 

two percent of a major expense category or total division/office budget; or (2) are under the 

YTD budget for a major expense category or division/office by an amount that exceeds $2 

million and represents more than four percent of the major expense category or total 

division/office budget. 

Significant Spending Variances by Major Expense Category 

Ongoing Operations 

There were significant spending variances in all major expense categories in the Ongoing 

Operations component of the 2012 Corporate Operating Budget through the third quarter 

2012. 

 Salaries & Compensation expenditures were $40 million, or 5 percent, less than budgeted. 

RMS ($15 million), the Legal Division ($4 million), DRR ($3 million), OIG ($3 million), the 

Division of Consumer Protection (DCP) ($2 million), the Office of Complex Financial 

Institutions (CFI) ($2 million), and DIR ($2 million) all spent less than budgeted in this 

expense category, largely due to vacancies in budgeted non-permanent positions. 

 Outside Services – Personnel expenditures were $28 million, or 13 percent, less than 

budgeted. The CIO Council spent $6 million less than budgeted. This variance was 

largely due to delays in beginning a number of planned projects and a determination that 

certain projects should be funded through the Corporation’s Investment Budget. CFI spent 

$5 million less than budgeted as it continued to refine its contracting requirements. DOA 

spent $3 million less than budgeted because it erroneously charged too large a percentage 

of its background investigation expenses to the Receivership Funding budget component 

rather than the Ongoing Operations budget component. That error will be corrected in the 

fourth quarter. DOA also experienced delays in starting work on a contracted human 

resources project. Furthermore, the Department of Justice (DOJ) did not request 

reimbursement in September, as budgeted by the Legal Division, for its projected FY 2013 

defensive goodwill litigation expenses. 

 Travel expenditures were approximately $10 million, or 12 percent, less than budgeted. 

RMS spent $5 million less than budgeted, primarily due to the large number of vacant, 

non-permanent examination positions for which travel funds were budgeted but not used. 

Corporate University (CU-CEP) spent $2 million less than budgeted because one 
6

scheduled CEP class was canceled, and the travel funds budgeted for that class were also 

not used. 

 Building expenditures were approximately $7 million, or 10 percent, less than budgeted, 

largely due to scheduling delays in the upgrade of the electric system for the National Data 

Center at Virginia Square; delays in awarding the San Francisco Regional Office (SFRO) 

boiler replacement contract; lower-than-anticipated expenses for Headquarters (HQ) 

cabling and interior construction costs; reduced utilities consumption; a reduction in 

monthly lease payments resulting from operating expense reconciliations and real estate 

tax-credits; fewer office moves than budgeted; lower-than-projected building operating 

expenses; and a delay in the Headquarters HVAC replacement project due to changes in 

the design schedule. 

 Equipment expenditures were approximately $14 million, or 22 percent, less than 

budgeted. DIT spent $9 million less than budgeted primarily because of delays in planned 

purchases of hardware and software, including hardware/software for the technical refresh 

and IMAC projects. Those purchases are now expected to occur in the fourth quarter 2012 

and will reduce this budget surplus. In addition, DOA spent $4 million less than budgeted 

due to intentional deferment of furniture purchases until later in the year. 

 Outside Services – Other expenditures were approximately $3 million, or 23 percent, less 

than budgeted. DOA spent $2 million less than budgeted because of lower than expected 

mail-related services; significant savings from a reduction in catering expenses resulting 

from the change in the FDIC’s meetings and conferences policies; and reduced printing of 

deposit insurance materials pending clarification on the need for possible changes in the 

content of those materials.

 Other Expenses were $4 million, or 30 percent, less than budgeted. The variance was 

mostly due to significant underutilization of Professional Learning Accounts by employees, 

and lower-than-projected corporate office supply purchases by DOA. 

Receivership Funding 

The Receivership Funding component of the 2012 Corporate Operating Budget includes 

funding for expenses that are incurred in conjunction with institution failures and the 

management and disposition of the assets and liabilities of the ensuing receiverships, except 

for salary and benefits and related expenses for permanent employees assigned to the 

receivership management function. 

There were significant spending variances in six of the seven major expense categories 

through the third quarter in the Receivership Funding component of the 2012 Corporate 

Operating Budget: 

 Salaries and Compensation ($41 million, or 21 percent, less than budgeted). 

 Outside Services-Personnel ($278 million, or 40 percent, less than budgeted). 

 Travel ($11 million, or 40 percent, less than budgeted). 

 Buildings ($39 million, or 55 percent, less than budgeted). 

 Outside Services-Other ($3 million, or 37 percent, less than budgeted). 
7

 Other Expenses ($21 million, or 45 percent, less than budgeted). 

The variance in the Salaries and Compensation category was attributable to vacancies in 

budgeted non-permanent positions, primarily in the temporary satellite offices. The variance in 

the Outside Services-Personnel expense category was due to less costly resolutions and 

lower-than-anticipated asset management, marketing, and contract support costs for failed 

bank resolutions. The variance in the Travel category was due to lower-than-budgeted failed 

bank activity. The variance in the Buildings expense category occurred as a result of shorterthan-expected operations at the site of failed banks. The variance in the Outside Service – 

Other category was due to lower than anticipated costs for advertising, insurance, mail, and 

bank service fees. The variance in the Other Expenses category was attributable to the 

sooner-than-anticipated transfer of banking operations into the Dallas office and the earlierthan-expected disposition of failed banks’ assets. This reduced the FDIC’s costs of 

administering banking operations at failed bank sites (including office contractor expenses). 

Significant Spending Variances by Division/Office1

Fourteen organizations had significant spending variances through the end of the third quarter 

2012: 

 DRR spent $363 million, or 39 percent, less than budgeted. Approximately $357 million of 

this under spending was in the Receivership Funding Budget component due to lowerthan-anticipated resolutions and receivership workload, as explained above. 

 The Legal Division spent $32 million, or 14 percent, less than budgeted. This variance 

was due to under spending of approximately $19 million for outside legal services in the 

Outside Services – Personnel expense category in the Receivership Funding budget 

component and $12 million in the Salaries and Compensation expense category ($4 million 

in the Ongoing Operations budget component and $8 million in the Receivership Funding 

budget component), mostly due to vacancies in budgeted non-permanent positions and 

slower-than-projected hiring to fill those vacancies. 

 DOA spent $24 million, or 12 percent, less than budgeted. This variance was largely 

attributable to scheduling changes related to the upgrade of the electric system for the 

National Data Center at Virginia Square; delays in awarding the SFRO boiler replacement 

contract; lower-than-anticipated costs for Headquarters cabling and interior construction 

costs; lower-than-budgeted utilities consumption; reductions in monthly lease payments; 

fewer office moves; delays in expenses for the Headquarters HVAC replacement project; 

under spending in the Equipment expense category due to intentional rescheduling of 

furniture purchases; delays in a planned human resources project; reduced mail costs due 

to lower-than-expected mail related services; significant savings on catering expenses due 

to changes in the Corporation’s meetings and conferences policies; reduced printing of 

deposit insurance materials pending likely revisions to those materials; and lower-thanexpected expenses to support bank closings, due in part to the smaller average size of 

bank failures. 

 RMS spent $23 million, or 6 percent, less than budgeted. This variance was largely 

attributable to vacancies in budgeted non-permanent examination positions and lower than 

budgeted examination travel expenses resulting from those vacancies. 

 

1

 Information on division/office variances reflects variances in both the Corporate Operating and Investment 

Budgets. 
8

 DIT spent $11 million, or 5 percent, less than budgeted. This variance was largely 

attributable to delays in hardware and software purchases. Equipment and software 

purchases for the technical refresh and Information Management and Compliance (IMAC) 

projects during the fourth quarter 2012 are expected to reduce this budget surplus. 

 CIO Council spent $9 million, or 15 percent, less than budgeted. This variance was largely 

due to delays in beginning a number of planned projects and a determination that certain 

projects should be funded through the Corporation’s Investment Budget. In addition, 

actual year-to-date spending on the IMAC project has fallen below the budget expectations 

because of delayed software purchases. 

 CFI spent $7 million, or 15 percent, less than budgeted. This variance was attributable to 

lower-than-budgeted spending for contractual services and a higher-than-expected attrition 

rate. 

 DCP spent $6 million, or 5 percent less than budgeted. This variance was primarily 

attributable to a $2 million variance in Salaries and Compensation due to vacancies in 

budgeted non-permanent examination positions; a $2 million variance in Outside ServicesPersonnel due to under spending for Money Smart and consumer research contracts; and 

a $900 thousand variance in Travel expenses due to less-than-budgeted spending for 

regular duty and relocation travel in Washington and the regional offices. 

 The Corporation’s Executive Support Offices spent approximately $4 million, or 19 percent, 

less than budgeted. This variance was mostly attributable to lower-than-budgeted 

spending for contract services by the Office of Minority and Women Inclusion and the 

Office of Communications, and slower-than-projected hiring. 

 DIR spent $4 million, or 12 percent, less than budgeted, primarily attributable to vacancies 

in budgeted positions and slower-than-projected hiring to fill those vacancies ($2 million). 

Also, spending for contractual services was lower-than-budgeted ($1 million) due to delays 

in the development of a plan to create the ability to more effectively access and perform 

analysis on new large datasets to better support risk analysis and research activities within 

the FDIC and a revised strategy that will rely less on contractors for the failed bank Insight 

project.

 Corporate University spent $4 million, or 25 percent, less than budgeted in its Corporate 

Employee Program budget (CU-CEP). This variance was primarily due to the cancellation 

of one scheduled CEP class and the reduced need for funds for Salaries and 

Compensation (including overtime) and Travel resulting from that cancellation. 

 The Division of Finance (DOF) spent $4 million, or 12 percent, less than budgeted. This 

variance was attributable to vacancies in budgeted positions and slower-than-expected 

hiring. 

 The OIG spent $3 million, or 12 percent, less than budgeted, because of vacancies in 

budgeted positions and lower-than-projected travel expenses. 

 None of the $3 million budgeted for Government Litigation was spent because DOJ did not 

yet request the reimbursement of expenses for projected FY 2013 expenses associated 

with defensive goodwill litigation. 
FDIC CFO REPORT TO THE BOARD – Third Quarter 2012 

Fund Financial Results ($ in Millions) 

9

Balance Sheet

Quarterly Year-Over-Year

Sep-12 Jun-12 Change Sep-11 Change

Cash and cash equivalents 1,587 $ 4,137 $ (2,550) $ 9,929 $ (8,342) $ 

Cash and investments - restricted - systemic risk 1,115 945 170 7,393 (6,278) 

Investment in U.S. Treasury obligations, net 35,460 33,314 2,146 25,370 10,090 

Trust preferred securities 2,255 2,314 (59) 2,179 76 

Assessments receivable, net 660 454 206 231 429 

Receivables and other assets - systemic risk 1,568 1,723 (155) 1,834 (266) 

Interest receivable on investments and other assets, net 462 449 13 320 142 

Receivables from resolutions, net 18,948 21,855 (2,907) 29,316 (10,368) 

Property and equipment, net 379 386 (7) 401 (22) 

Total Assets $ 65,577 62,434 $ (3,143) $ 76,973 $ (14,539) $ 

Accounts payable and other liabilities 346 348 (2) 369 (23) 

Unearned revenue - prepaid assessments 9,219 11,474 (2,255) 20,360 (11,141) 

Liabilities due to resolutions 21,215 24,185 (2,970) 31,492 (10,277) 

Debt Guarantee Program liabilities - systemic risk - - - 110 (110) 

Deferred revenue - systemic risk 2,682 2,668 14 9,101 (6,419) 

Postretirement benefit liability 188 188 - 166 22 

Contingent liability for anticipated failures 3,556 4,017 (461) 7,247 (3,691) 

Contingent liability for systemic risk - - - 15 (15) 

Contingent liability for litigation losses 4 4 - 300 (296) 

Total Liabilities $ 42,884 37,210 $ (5,674) $ 69,160 $ (31,950) $ 

FYI: Unrealized gain (loss) on U.S. Treasury investments, net 65 (1) 66 41 24 

FYI: Unrealized gain (loss) on trust preferred securities 293 352 (59) 218 75 

FYI: Unrealized postretirement benefit (loss) gain (34) (34) - (19) (15) 

Fund Balance $ 22,693 25,224 $ 2,531 $ 7,813 $ 17,411 $ 

Deposit Insurance Fund

Of the total $46.1 billion 

increase in the fund 

balance, the primary 

contributors were $36.6 

billion in assessments, 

$6.1 billion in negative 

provision for insurance 

losses, and $6.6 billion 

in TLGP revenue, offset 

by $4.5 billion in 

operating expenses.

$13.6 $13.5

$9.5

$0.8 

$4.4 

0.9 

($1.6) ($1.6) ($1.3)

$0.0

$2.6 $4.0

-$10

-$5

$0

$5

$10

$15

$20

$25

2010 2011 Sep-2012

Dollars in Billions

Assessments Provision for losses Operating expenses TLGP revenue

Fund Balance ending ($7,352) $11,827 $25,224

The fund balance increased by $46.1 billion from a negative $20.9 billion at yearend 2009 to a positive $25.2 billion at September 30, 2012 .
10

Fund Financial Results - continued ($ in Millions) 

September 30, 2012

DIF Receivership Assets‐In‐Liquidation Portfolio

(Dollars in Billions)

December 31, 2009

Total Portfolio = $18.1 Total Portfolio = $41.3 

Selected Financial Data

Quarterly Year-Over-Year

Sep-12 Jun-12 Change Sep-11 Change

Cash and cash equivalents 3,594 $ 3,596 $ (2) $ 3,528 $ 66 $ 

Accumulated deficit (124,460) (124,461) 1 (124,275) (185) 

Total resolution equity 3,596 3,595 1 3,551 45 

Total revenue 4 2 6 (2) 

Operating expenses 4 3 3 1 

Goodwill litigation expenses 181 181 33 148 

Payment of tax benefits - - 26 (26) 

Net Income (Loss) (180) $ (180) $ (51) $ (129) $ 

FSLIC Resolution Fund

Receivership Selected Statistics September 2012 vs. September 2011

$ in millions

Sep-12 Sep-11 Change Sep-12 Sep-11 Change Sep-12 Sep-11 Change

Total Receiverships 462 410 52 4 8 (4) 466 418 48 

Assets in Liquidation 18,158 $ 22,379 $ (4,221) $ 7 $ 22 $ (15) $ 18,165 $ 22,401 $ (4,236) $ 

YTD Collections 6,337 $ 9,885 $ (3,548) $ 18 $ 8 $ 10 $ 6,355 $ 9,893 $ (3,538) $ 

YTD Dividend/Other Pymts - Cash 3,917 $ 7,389 $ (3,472) $ - $ - $ - $ 3,917 $ 7,389 $ (3,472) $ 

DIF FRF ALL FUNDS

Income Statement (year-to-date)

Quarterly Year-Over-Year

Sep-12 Jun-12 Change Sep-11 Change

Assessments earned 9,460 $ 6,627 $ 2,833 $ 10,289 $ (829) $ 

Systemic risk revenue (4) (3) (1) (35) 31 

Interest on U.S. Treasury obligations 93 101 (8) 95 (2) 

Other revenue 4,218 4,160 58 232 3,986 

Total Revenue $ 10,885 13,767 $ 2,882 $ 10,581 $ 3,186 $ 

Operating expenses 1,309 867 442 1,291 18 

Systemic risk expenses (4) (3) (1) (35) 31 

Provision for insurance losses (879) (795) (84) (5,947) 5,068 

Insurance and other expenses 3 2 1 3 - 

Total Expenses and Losses $ 71 429 $ 358 $ (4,688) $ 5,117 $ 

Net Income $ 10,814 13,338 $ 2,524 $ 15,269 $ (1,931) $ 

Unrealized gain (loss) on U.S. Treasury investments, net 17 (49) 66 14 3 

Unrealized gain (loss) on trust preferred securities 42 101 (59) (118) 160 

Unrealized postretirement benefit gain (loss) - - - - - 

Comprehensive Income $ 10,866 13,397 $ 2,531 $ 15,165 $ (1,768) $ 

Deposit Insurance Fund
11

9/30/12 12/31/11 Change

Par Value $36,573 $36,784 ($211)

Amortized Cost $37,223 $37,337 ($114)

Total Market Value (including accrued interest) $37,520 $37,580 ($60)

Primary Reserve 1 $37,520 $37,580 ($60)

Primary Reserve % of Total Portfolio 100.0% 100.0% 0.0%

Yield-to-Maturity 2 0.44% 0.41% 0.03%

Weighted Average Maturity (in years) 0.66 0.66 0.00

Effective Duration (in years) 3

 Total Portfolio 0.62 0.62 0.00

 Available-for-Sale Securities 0.68 0.73 0.05%

 Held-to-Maturity Securities 4 not applicable not applicable not applicable

9/30/12 12/31/11 Change

Debt Guarantee Program

 Par Value $1,113 $4,764 ($3,651)

 Book Value $1,113 $4,807 ($3,694)

 Total Market Value (including accrued interest) $1,113 $4,827 ($3,714)

 Yield-to-Maturity 0.08% 0.11% (0.03%)

 Weighted Average Maturity (in years) 0.09 0.21 (0.12)

FRF-FSLIC

 Book Value 5 $3,424 $3,377 $47

 Yield-to-Maturity 0.05% 0.00% 0.05%

 Weighted Average Maturity overnight overnight no change

9/30/12 12/31/11 Change

Book Value 6 $16,852 $17,052 ($200)

Effective Annual Yield 0.12% 0.10% 0.02%

Weighted Average Maturity (in days) 23 9 14

2

 The Yield-to-Maturity includes the potential yield of Treasury Inflation-Protected Securities (TIPS), which presently assumes 

an average 2.0% annual increase in the CPI over the remaining life of each TIPS.

3

 For each TIPS, an estimated 80 percent "yield beta" factor is applied to its real yield duration to arrive at an estimated 

effective duration.

Deposit Insurance Fund Portfolio Summary

(Dollar Values in Millions)

1

 Primary Reserve is the total market value (including accrued interest) of overnight investments, available-for-sale 

securities, and held-to-maturity securities maturing within three months.

National Liquidation Fund (NLF) Investment Portfolio Summary

(Dollar Values in Millions)

4

 In early August 2008, management reclassified all of the DIF portfolio's HTM securities as AFS securities effective as of 

June 30, 2008, because the FDIC could no longer assert it had the positive intent and ability to hold its HTM securities until 

their maturity dates.

6

 Due to the short-term nature of the NLF, the portfolio's Book and Market Values are identical for reporting purposes.

Summary of Other Corporate Investment Portfolios

(Dollar Values in Millions)

5

 Due to the current short-term nature of this portfolio, its respective Par, Book, and Market Values are identical for reporting 

purposes.
12

Deposit Insurance Fund

Purchase up to $9 billion (par value) of available-for-sale (AFS) securities with 

maturity dates between December 31, 2012, and December 31, 2015, subject to the 

following additional restrictions: no more than $6 billion (par value) of such 

securities shall have maturity dates beyond December 31, 2013; no more than $4 

billion (par value) of such securities shall have maturity dates beyond December 31, 

2014; and no more than $4 billion (adjusted par value) of such securities shall 

consist of Treasury Inflation-Protected Securities.

Purchase up to $10 billion (par value) of available-for-sale (AFS) securities with 

maturity dates between March 31, 2013, and March 31, 2016, subject to the 

following additional restrictions: no more than $7 billion (par value) of such 

securities shall have maturity dates beyond March 31, 2014; no more than $4 billion 

(par value) of such securities shall have maturity dates beyond March 31, 2015; and 

no more than $4 billion (adjusted par value) of such securities shall consist of 

Treasury Inflation-Protected Securities.

Debt Guarantee Program

Invest all available funds in overnight investments and/or in short-maturity AFS 

Treasury bills with maturities not exceeding December 27, 2012.

No strategy changes for the fourth quarter of 2012.

National Liquidation Fund

Maintain an overnight deposit target floor balance within a range of $100 million to 

$300 million. Strategically invest the remaining funds in the zero- to 12-month 

 maturity sector. 

No strategy changes for the fourth quarter of 2012.

Strategy Changes for 4th Quarter 2012

Investment Strategies

Strategy for 3rd Quarter 2012

Strategy for the 3rd Quarter 2012

Strategy Changes for 4th Quarter 2012

Strategy for 3rd Quarter 2012

Strategy Changes for 4th Quarter 2012
13

1) Budgets for investment projects are approved on a multi-year basis; the year-to-date budget amount reflects the 2012 spending estimates 

for approved projects. 

Annual YTD YTD % of YTD YTD

Major Expense Category Budget Budget Expenditures Budget Used Variance

 Corporate Operating Budget 

Ongoing Operations

Salaries & Compensation $1,146,274 $854,721 $814,754 95% ($39,967)

Outside Services - Personnel 302,488 207,496 179,880 87% (27,616)

Travel 110,780 81,253 71,215 88% (10,038)

Buildings 91,594 66,755 59,923 90% (6,832)

Equipment 91,320 61,989 48,224 78% (13,765)

Outside Services - Other 18,976 14,189 10,860 77% (3,329)

Other Expenses 19,346 11,898 8,381 70% (3,517)

Total Ongoing Operations $1,780,779 $1,298,300 $1,193,237 92% ($105,063)

Receivership Funding

Salaries & Compensation $248,759 $192,049 $151,536 79% ($40,513)

Outside Services - Personnel 1,035,101 688,331 410,745 60% (277,586)

Travel 34,601 26,374 15,750 60% (10,624)

Buildings 93,326 70,938 32,196 45% (38,742)

Equipment 13,019 8,422 9,175 109% 753

Outside Services - Other 10,640 8,254 5,192 63% (3,062)

Other Expenses 64,554 47,869 26,428 55% (21,441)

Total Receivership Funding $1,500,000 $1,042,237 $651,022 62% ($391,215)

Total Corporate Operating Budget $3,280,779 $2,340,537 $1,844,259 79% ($496,278)

Investment Budget 1 $15,572 $11,375 $9,110 80% ($2,265)

Grand Total $3,296,351 $2,351,912 $1,853,369 79% ($498,543)

Executive Summary of 2012 Budget and Expenditures

by Major Expense Category

Through September 30, 2012

(Dollars in Thousands)
14

1) Executive Support includes the Offices of Minority and Women Inclusion, Communications (formerly Public Affairs), Ombudsman,

Legislative Affairs, Corporate Risk Management, and International Affairs.

2) Executive Offices include the offices of the Chairman, Vice Chairman, Independent Director, Deputy to the Chairman and Chief

Operating Officer, Deputy to the Chairman and Chief Financial Officer, and Deputy to the Chairman for External Affairs.

3) Budgets for investment projects are approved on a multi-year basis; the year-to-date budget amount reflects the 2012 spending estimates 

for approved projects. 

Annual YTD YTD % of YTD YTD

Division/Office Budget Budget Expenditures Budget Used Variance

 Corporate Operating Budget 

 Resolutions & Receiverships $1,231,672 $929,836 $566,731 61% ($363,105)

 Risk Management Supervision 535,067 400,022 377,202 94% (22,820)

 Legal 304,470 227,898 196,343 86% (31,555)

 Information Technology 285,997 200,244 191,186 95% (9,058)

 Administration 272,750 203,708 179,477 88% (24,231)

 Depositor & Consumer Protection 159,841 118,943 113,343 95% (5,600)

 CIO Council 84,521 59,202 50,366 85% (8,836)

 Complex Financial Institutions 61,207 45,473 38,536 85% (6,937)

 Insurance & Research 43,604 32,219 28,209 88% (4,010)

 Finance 41,637 30,880 27,264 88% (3,616)

 Inspector General 35,743 25,442 22,355 88% (3,087)

 Executive Support 1 31,082 22,816 18,573 81% (4,243)

 Corporate University - Corporate 23,408 17,109 15,326 90% (1,783)

 Corporate University - CEP 19,468 14,405 10,746 75% (3,659)

 Executive Offices 2 11,676 9,640 8,603 89% (1,037)

 Government Litigation 2,700 2,700 0 0% (2,700)

 Corporate Unassigned 135,936 0 0 N/A 0

 Total, Corporate Operating Budget $3,280,779 $2,340,537 $1,844,259 79% ($496,278)

 Investment Budget 3

 Information Technology $14,436 $10,646 $8,443 79% ($2,203)

 Risk Management Supervision 531 419 431 103% 12

 Corporate University - Corporate 345 310 217 70% (93)

 Resolutions and Receivership 10 0 17 N/A 17

 Administration 250 0 2 N/A 2

 Total, Investment Budget 3 $15,572 $11,375 $9,110 80% ($2,265)

 Combined Division/Office Budgets

 Resolutions & Receiverships $1,231,682 $929,836 $566,748 61% ($363,088)

 Risk Management Supervision 535,598 400,441 377,633 94% (22,808)

 Information Technology 300,433 210,890 199,629 95% (11,261)

 Legal 304,470 227,898 196,343 86% (31,555)

 Administration 273,000 203,708 179,477 88% (24,231)

 Depositor & Consumer Protection 159,841 118,943 113,345 95% (5,598)

 CIO Council 84,521 59,202 50,366 85% (8,836)

 Complex Financial Institutions 61,207 45,473 38,536 85% (6,937)

 Insurance & Research 43,604 32,219 28,209 88% (4,010)

 Finance 41,637 30,880 27,264 88% (3,616)

 Inspector General 35,743 25,442 22,355 88% (3,088)

 Executive Support 1 31,082 22,816 18,573 81% (4,243)

 Corporate University - Corporate 23,753 17,419 15,543 89% (1,876)

 Corporate University - CEP 19,468 14,405 10,746 75% (3,659)

 Executive Offices 2 11,676 9,640 8,603 89% (1,037)

 Government Litigation 2,700 2,700 0 0% (2,700)

 Corporate Unassigned 135,936 0 0 N/A 0

 Grand Total $3,296,351 $2,351,912 $1,853,369 79% ($498,543)

Executive Summary of 2012 Budget and Expenditures

by Budget Component and Division/Office

Through September 30, 2012

(Dollars in Thousands)