Federal Deposit Insurance Corporation 

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

 

 March 30, 2012 

MEMORANDUM TO: The Board of Directors 

FROM: Steven O. App 

Deputy to the Chairman and 

Chief Financial Officer 

Craig Jarvill 

Director, Division of Finance 

SUBJECT: Fourth Quarter 2011 CFO Report to the Board 

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

December 31, 2011. 

Executive Summary

 During the fourth quarter of 2011, the Deposit Insurance Fund (DIF) balance increased by $4.0 

billion, from $7.8 billion to $11.8 billion (unaudited). This quarterly increase was primarily due 

to $3.2 billion in assessment revenue and $2.6 billion in revenue from excess Debt Guarantee 

Program (DGP) fees previously held as systemic risk deferred revenue, partially offset by a 

$1.5 billion increase in the provision for insurance losses and by $334 million in operating 

expenses. Over the eight consecutive quarters since the beginning of 2010, the fund balance 

has increased a total of $32.7 billion. 

 During the fourth quarter of 2011, the FDIC was named receiver for 18 failed institutions. The 

combined assets at inception for these institutions totaled approximately $4.7 billion with a 

total estimated loss of $1.1 billion. The corporate cash outlay during the fourth quarter for 

these failures was approximately $595 million. 

 

 Through December 31, 2011, overall Corporate Operating Budget expenditures were below 

budget by 27 percent ($1.1 billion), largely due to substantial under spending in the 

Receivership Funding budget component. That component was $0.9 billion, or 42 percent, 

under budget, while the Ongoing Operations component was only $0.1 billion, or 7 percent, 

under budget. The variance in the Receivership Funding component was primarily the result 

of lower-than-budgeted spending for contractual services and operations at the site of failed 

financial institutions. 

 

 
2

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

Deposit Insurance Fund (DIF) 

 For 2011, the DIF’s comprehensive income totaled $19.2 billion compared to comprehensive 

income of $13.5 billion during 2010. This $5.7 billion year-over-year increase was primarily 

due to a $3.6 billion decrease in the provision for insurance losses and $2.6 billion in revenue 

from excess DGP fees previously held as systemic risk deferred revenue, partially offset by a 

year-to-date net change in the fair value of available-for-sale securities of $285 million (U.S. 

Treasury obligations and trust preferred securities) and a $112 million decrease in 

assessments earned. 

 As of year-end 2011, the DIF recognized revenue of $2.6 billion for a portion of DGP 

guarantee fees previously collected and held as systemic risk deferred revenue. In addition, 

an equal amount of restricted DGP cash and investments were transferred to the DIF 

investment portfolio. The $2.6 billion relates to fees on debt guarantees that have expired. 

Because of uncertainties surrounding the outlook for the economy and financial markets, the 

FDIC will continue to defer recognition of the remaining $5.7 billion in systemic risk deferred 

revenue. The last DGP debt guarantee will expire on December 31, 2012. 

 The provision for insurance losses was negative $4.4 billion for 2011. The negative provision 

for 2011 primarily resulted from a reduction in the contingent loss reserve due to the 

improvement in the financial condition of institutions that were previously identified to fail and a 

reduction in the estimated losses for institutions that failed in prior years. 

FSLIC Resolution Fund (FRF) 

 On December 29, 2011, the FRF paid $50 million as a result of a settlement in the American 

Savings goodwill case. Five goodwill related cases remain active as of year-end 2011. 

 In December, FRF recorded a $44 million receivable for tax benefits as a result of a former 

FSLIC assistance agreement. This receivable was collected in February 2012. 

Assessments 

 The DIF recognized $3.2 billion in estimated assessment revenue for fourth quarter 2011 

insurance coverage. Of this amount, $3.0 billion was recognized for those institutions that 

prepaid assessments and $282 million was recorded as a receivable from those institutions 

that did not prepay assessments. Assessment revenue was reduced by $113 million as a 

result of actual third quarter assessment collections being slightly lower than estimates that 

were recorded at September 30, 2011, due to lower than estimated growth in the assessment 

base and average assessment rates. 
3

 

Quarterly Assessments Premiums

(based on insurance coverage period) 

$3,298

$3,404

$3,450

$3,432

$3,397

$3,262

$3,302

$3,461

$8,622

$2,593

$1,087

$3,196

$3,323

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11

$ in Millions

 On December 30, 2011, the FDIC collected $230 million in DIF assessments for third quarter 

2011 insurance coverage. The DIF recognized $13.5 billion in assessment revenue for 2011. 

DIF Unearned Revenue (remaining prepaid assessments) totals $17.4 billion at December 31, 

2011. 

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

Total DIF Portfolio Liquidity 

 The total liquidity (total market value including accrued interest) of both DIF-related investment 

portfolios stood at $42.4 billion on December 31, 2011, down $3.8 billion from $46.2 billion on 

December 31, 2010. 

 

Total DIF - Related Investment Portfolio Liquidity (End-of-Quarter)

$31.7

$66.1

$44.0 $42.9 $42.4 $43.7 $46.2 $45.5 $45.0

$63.3

$23.4

$29.7 $33.0

$0

$10

$20

$30

$40

$50

$60

$70

4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11

$ in Billions

Estimated

Includes $5.5 billion 

Special Assessment 
4

DIF Investment Portfolio 

 The DIF investment portfolio’s total market value decreased by $2.0 billion during 2011. The 

decrease was primarily the result of having to fund 92 bank failures during 2011, although it 

should be noted that 58 of these failures were resolved as cash-conserving loss-share 

transactions, requiring substantially lower initial resolution payments, thus helping to mitigate 

the decline in the DIF portfolio’s balance. Moreover, during 2011, the DIF received $8.9 billion 

in dividends and other payments from its receiverships, thus mitigating the DIF portfolio’s 

decline. 

 On December 31, 2011, the DIF investment portfolio’s yield was 0.41 percent, up a basis point 

from its December 31, 2010, yield of 0.40 percent. The DIF investment portfolio’s total return 

for 2011 was about 35 basis points, about 641 basis points less than the 6.76 percent total 

return of its benchmark, the Merrill Lynch 1 – 10 Year Treasury Index (Index). Given that most 

longer-maturity Treasury yields decreased (that is, Treasury security prices rose) during 2011, 

the DIF portfolio’s large balances of comparatively low yielding overnight investments and 

short-term Treasury bills and notes could not keep pace with the rise in Treasury prices, hence 

the underperformance compared to the Index (on average, the Index has longer-duration 

conventional Treasury securities). 

 

 In accordance with the approved fourth quarter 2011 investment strategy, staff purchased a 

total of six Treasury securities on two occasions during the fourth quarter of 2011. Staff 

purchased three short-maturity Treasury notes and purchased three short-maturity Treasury 

Inflation-Protected Securities (TIPS). The six securities had a total par value of $8.8 billion, a 

weighted average yield of 0.29 percent (including the TIPS at their potential yield), and a 

weighted average maturity (WAM) of 0.93 years. 

DGP Investment Portfolio 

 On December 31, 2011, the DGP investment portfolio stood at about $4.8 billion (total market 

value), down from its December 31, 2010, balance of $6.6 billion. This decrease in the DGP 

portfolio was principally due to the DIF recognizing $2.6 billion in deferred revenue (see 

discussion above), offset by the net transfer of approximately $700 million during 2011 from 

the DIF portfolio to the DGP portfolio, reversing payments made by the DGP to the DIF for 

Transaction Account Guarantee Program claims. At year end, the DGP portfolio had a yield to 

maturity of 0.11 percent and a WAM of 0.21 years. In accordance with the approved fourth 

quarter 2011 investment strategy for the DGP portfolio, staff purchased three short-maturity 

Treasury securities during the fourth quarter of 2011. The securities had a total par value of 

$2.1 billion, a weighted average yield of 0.17 percent, and a WAM of 0.81 years. 

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

Approved Budget Modifications 

The 2011 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other 

officials the authority to reallocate funds within the 2011 Corporate Operating Budget, provided 

that such reallocations did not increase the total amount approved for either the Ongoing 

Operations or Receivership Funding budget components. The following budget reallocations 

were approved during the fourth quarter in accordance with the authority delegated by the Board 

of Directors. None of these modifications changed the 2011 Ongoing Operations or Receivership 

Funding budgets or the total 2011 Corporate Operating Budget approved by the Board. 
5

 In November 2011, the CFO approved the reallocation of $250,000 in budget authority from 

the Corporate Unassigned budget to the CIO Council’s Ongoing Operations budget. These 

funds were needed to make system changes and enhancements in connection with 

implementation of new assessment regulations required under the Dodd-Frank Act (DFA) and 

to enhance datamarts used by the new Office of Complex Financial Institutions (CFI) to 

monitor systemically-important financial institutions in conjunction with the Corporation’s new 

orderly liquidation responsibilities under DFA. (The CIO Council was ultimately unable to 

utilize all of the additional funds before the end of the year). 

 In December 2011, the CFO approved the reallocation of $235,000 in budget authority from 

the Corporate Unassigned budget to the Outside Services – Personnel budget of the Chief 

Financial Officer to pay higher-than-projected expenses associated with the 2010 audit 

conducted by the Government Accountability Office. In addition, the CFO approved the 

reallocation of $5,600 in budget authority within the Ongoing Operations budget of the 

Executive Offices to provide additional travel funds for the Chief Risk Officer and to address 

other minor funding needs within the Executive Offices. 

Spending Variances 

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

Significant spending variances for the year ending December 31, 2011, are defined as those that 

either (a) exceed the annual budget for a major expense category or total division/office budget, or (b) 

are under the annual budget for a major expense category or division/office by an amount that 

exceeds $1 million and represents more than three 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 from the annual budget in all major expense categories in 

the Ongoing Operations component of the 2011 Corporate Operating Budget: 

 Salaries and Compensation expenditures were $63 million, or 6 percent, less than budgeted. 

The Division of Risk Management Supervision (RMS) spent $18 million less than budgeted, 

primarily due to the large number of authorized vacancies that were unfilled during the first 

eight months of the year. RMS did not fill these vacancies because its risk management 

supervisory workload was substantially lower at the beginning of 2011 than had been projected 

during the 2011 planning and budget process. After monitoring its workload during the first half 

of the year, it requested at mid-year that its authorized staffing (and associated budget) be 

reduced by over 200 positions. In addition, the Legal Division ($8 million), the Division of 

Resolutions and Receivership (DRR) ($7 million), and CFI ($5 million) all spent less than 

budgeted in this expense category, largely due to vacancies and delays in hiring. 

 Outside Services-Personnel expenditures were $39 million, or 15 percent, less than budgeted. 

Approximately $8 million of this variance was attributable to under spending by DRR on several 

planned projects that were delayed or did not occur in 2011. CFI spent $8 million less than 

budgeted mainly due to slower-than-projected hiring which caused delays in defining contract 

support requirements. In addition, the Legal Division spent substantially less than budgeted for 

the ongoing Goodwill litigation (reimbursed to the Department of Justice) and for outside 

counsel services to support the division’s open bank activities. The Office of Inspector General 

(OIG) spent $4 million less than budgeted because it was operating under a continuing 

resolution for much of the quarter and because fewer Material Loss Reviews (MLRs) were 
6

conducted than planned because of an increase in the minimum MLR threshold enacted in 

DFA. 

 Travel expenditures were $7 million, or 7 percent, less than budgeted. Corporate University 

(CU) spent $3 million less than budgeted due to less travel than originally planned by Financial 

Institution Specialists Corporate Employee Program (CEP) as the result of the cancellation of 

one scheduled class and changes in CEP rotational assignments. OIG spent $2 million less 

than budgeted due to a lower-than-budgeted on-board staffing level throughout the year that 

resulted in less regular duty and relocation travel expenses during the year. DOA spent 

approximately $1 million less than budgeted due to significant savings realized by identifying 

alternatives to travel, including increased video conferencing and online communications. 

 

 Buildings expenditures were $3 million, or 4 percent, less than budgeted, largely due to 

postponement of renovations in the Student Residence Center, lower than anticipated 

expenses for the Headquarters (HQ) space realignment, lower than anticipated facilities 

maintenance and repair expenses, a reduction in energy consumption, and tenant improvement 

allowance savings in the Kansas Regional Office, Cincinnati Field Office, and Chicago Regional 

Office. 

 Equipment expenditures were approximately $2 million, or 2 percent, greater than budgeted, 

primarily due to equipment purchases made to support CIO Council and IT Security projects for 

which the required funds were budgeted in the Outside Services-Personnel expense category. 

 Outside Services-Other expenditures were $8 million, or 34 percent, less than budgeted. The 

Office of Public Affairs (OPA) spent $5 million less than budgeted after a decision to redirect the 

office’s attention from the overdraft awareness campaign to newer initiatives. In addition, DOA 

spent $3 million less than budgeted due to lower per unit shipping costs realized by using the 

General Services Administration’s (GSA) Strategic Source initiative, significant savings from 

obtaining flexible parcel insurance to cover all FDIC freight shipments, and delays in printing 

projects related to deposit insurance and Money Smart. 

 Other Expenses were $5 million, or 23 percent, less than budgeted. The variance was mostly 

due to significant underutilization of Professional Learning Account funds by individual 

employees throughout the Corporation. 

Receivership Funding

The Receivership Funding component of the 2011 Corporate Operating Budget includes funding 

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

and disposition of the assets and liabilities of the ensuing receiverships, except for salary and 

benefits expenses for permanent employees assigned to the receivership management function. 

There were significant spending variances in all major expense categories through the fourth 

quarter in the Receivership Funding component of the 2011 Corporate Operating Budget: 

 Salaries & Compensation ($44 million, or 13 percent, less than budgeted). 

 Outside Services-Personnel ($608 million, or 43 percent, less than budgeted). 

 Travel ($19 million, or 39 percent, less than budgeted). 

 Buildings ($137 million, or 63 percent, less than budgeted). 
7

 Equipment ($6 million, or 27 percent, less than budgeted). 

 Outside Services-Other ($15 million, or 55 percent, less than budgeted). 

 Other Expenses ($101 million, or 65 percent, less than budgeted). 

All of these variances were attributable to the fact that there were fewer insured institution failures 

during the year than anticipated when the 2011 Receivership Funding budget was developed. 

Significant Spending Variances by Division/Office1

Thirteen organizational units had significant annual spending variances for 2011. 

 DRR spent $805 million, or 43 percent, less than budgeted, mostly due to less-thanbudgeted spending for resolution and receivership management activities for the reasons 

identified above. 

 RMS spent $23 million, or 4 percent, less than budgeted. The variance was largely within 

the Salaries and Compensation expense category ($18 million), as explained above. In 

addition, Other Expenses were under budget by $2 million due to underutilization of 

Professional Learning Accounts by RMS employees. 

 

 DOA spent $23 million, or 8 percent, less than budgeted. Almost half ($10 million) of this 

variance was due to under spending in the Receivership Funding budget component to 

support the closing of failed financial institutions. In addition, in the Ongoing Operations 

budget component, substantial savings were realized through lower per unit shipping costs; 

use of flexible parcel insurance for all FDIC freight shipments; lower negotiated insurance 

rates; postponement of renovations in the Student Residence Center; lower-thananticipated expenses for HQ space realignments, lower facility maintenance and repair 

costs; and reductions in energy consumption and tenant improvement allowances in several 

regional and field offices. 

 The Legal Division spent $17 million, or 5 percent, less than budgeted. This variance was 

largely due to under spending in the Salaries and Compensation expense category due to 

slower-than-projected hiring to fill budgeted positions. 

 DIT spent $13 million, or 5 percent, less than budgeted. Approximately $8 million of this 

variance was in the Receivership Funding budget component and was largely attributable to 

lower than projected expenses for bank closing activities and associated contractor support. 

In addition, DIT spent $3 million less than budgeted for internal operations due to vacancies 

in budgeted positions. 

 CFI spent $12 million, or 30 percent, less than budgeted. This variance was attributable to 

lower-than-budgeted spending for contracting services and slower-than-projected hiring to 

fill budgeted positions. 

 The Office of the Inspector General (OIG) spent $11 million, or 27 percent, less than 

budgeted. The OIG was under a continuing resolution that restricted its spending authority 

during the first quarter of the Fiscal Year 2012 which effectively limited OIG spending to the 

level of the Fiscal Year 2011 appropriation. This funding limitation caused delays in filling 

 

1

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

Budgets. 
8

vacant authorized positions and executing certain procurement actions that resulted in 

lower-than-anticipated expenditures in the fourth quarter. 

 Executive Support Offices spent $10 million, or 27 percent, less than budgeted. This 

variance was mostly attributable to lower-than-budgeted expenses in OPA for its overdraft 

awareness campaign as explained above, and delays in hiring within the Executive Support 

Offices. 

 The Division of Finance spent $5 million, or 12 percent, less than budgeted. This variance 

was attributable to slower-than-expected hiring. 

 The Division of Insurance and Research spent $4 million, or 9 percent, less than budgeted. 

This variance was attributable to unexpected attrition in economist positions and delays in 

establishing its flexible data environment. 

 Corporate University spent $2 million, or 7 percent, less than budgeted in its overall 

organizational budget (CU-Corporate), primarily due to slower than projected hiring for 

budgeted positions. It also spent $4 million, or 17%, less than budgeted in its Corporate 

Employee Program budget (CU-CEP). This variance included under spending of 

approximately $2 million for travel expenses and approximately $1 million for Salaries and 

Compensation for new Financial Institution Specialists due to the cancellation of one 

planned CEP class, changes in rotational assignments in the program, and fewer bank 

failures than projected. 

 The CIO Council spent $3 million, or 4 percent, less than budgeted. This variance was 

primarily attributable to less-than-anticipated spending on initiatives to support 

implementation of DFA (they were unable to spend the additional funds provided under the 

approved budget change referenced above) and late award of a contract for the Customer 

Communication and Tracking System (CCATS). 

 The Executive Offices spent $1 million, or 15 percent, less than budgeted. This variance 

was attributable to slower-than-expected hiring. 

 The Corporate Unassigned budget of $112 million lapsed unused on December 31, 2011. 

This source of funds was established to provide an unallocated contingency reserve to 

meet unanticipated or unbudgeted resource requirements. 
FDIC CFO REPORT TO THE BOARD – Fourth Quarter 2011

Fund Financial Results ($ in Millions) 

9

Downward Trend in Net Receivables from Resolutions

$28,549 

$49,684

$38,409

$29,748 $29,126 $29,316

$29,533

$50,451

$39,091

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11

Dollars in Millions

Quarter-end

•Since year-end 2009, the net 

receivables from resolutions has 

declined by $9.9 B to $28.5 B at yearend 2011. 

•During 2010, the net receivables 

declined by $8.9 B primarily due to the 

receipt of cash & non-cash dividends 

totaling $19.3 B from prior year failures 

and a $1.3 B increase in the estimated 

losses for prior year failures, partially 

offset by $11.1 B of net receivables 

from current year failures.

•During 2011, the net receivables 

declined by $1.0 B primarily due to the 

receipt of cash & non-cash dividends 

totaling $7.8 B, offset by $5.4 B of net 

receivables from current year failures 

and a $0.7 B decrease in the estimated 

losses for prior year failures.

Balance Sheet

Unaudited Quarterly Audited Year-Over-Year

Dec-11 Sep-11 Change Dec-10 Change

Cash and cash equivalents 3,278 $ 9,929 $ (6,651) $ 27,077 $ (23,799) $ 

Cash and investments - restricted - systemic risk 4,827 7,393 (2,566) 6,647 (1,820) 

Investment in U.S. Treasury obligations, net 33,863 25,370 8,493 12,371 21,492 

Trust preferred securities 2,213 2,179 34 2,298 (85) 

Assessments receivable, net 282 231 51 218 64 

Receivables and other assets - systemic risk 1,948 1,834 114 2,269 (321) 

Interest receivable on investments and other assets, net 488 320 168 260 228 

Receivables from resolutions, net 28,549 29,316 (767) 29,533 (984) 

Property and equipment, net 402 401 1 416 (14) 

Total Assets $ 76,973 75,850 $ (1,123) $ 81,089 $ (5,239) $ 

Accounts payable and other liabilities 374 369 5 514 (140) 

Unearned revenue - prepaid assessments 17,400 20,360 (2,960) 30,057 (12,657) 

Liabilities due to resolutions 32,791 31,492 1,299 30,512 2,279 

Debt Guarantee Program liabilities - systemic risk 117 116 1 29 88 

Deferred revenue - systemic risk 6,640 9,101 (2,461) 9,055 (2,415) 

Postretirement benefit liability 188 166 22 166 22 

Contingent liability for anticipated failures 6,511 7,247 (736) 17,688 (11,177) 

Contingent and actual liability for systemic risk 2 9 (7) 120 (118) 

Contingent liability for litigation losses 1 300 (299) 300 (299) 

Total Liabilities $ 69,160 64,024 $ (5,136) $ 88,441 $ (24,417) $ 

FYI: Unrealized gain (loss) on U.S. Treasury investments, net 48 41 7 27 21 

FYI: Unrealized gain (loss) on trust preferred securities 251 218 33 336 (85) 

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

Fund Balance $ 7,813 11,826 $ 4,013 $ (7,352) $ 19,178 $ 

Deposit Insurance Fund
P rim ary Contributors to the Change in the Fund B alance

3,642 3,210

3,498 3,484

3,163

(1,533)

763

(2,446)

3,089

2,095

657

4,939

3,897 4,013

6,329

($3,000)

($2,000)

($1,000)

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

4Q10 1Q11 2Q11 3Q11 4Q11

$ in Millions

A ssessments Prov is ion f or Los s es Change in Fund Balanc e

10

Fund Financial Results - continued ($ in Millions) 

Actual Fund Balance $(7,352) $(1,023) $3,916 $7,813 $11,826

Selected Financial Data

Unaudited Quarterly Audited Year-Over-Year

Dec-11 Sep-11 Change Dec-10 Change

Cash and cash equivalents 3,533 $ 3,528 $ 5 $ 3,548 $ (15) $ 

Accumulated deficit (124,281) (124,275) (6) (124,224) (57) 

Total resolution equity 3,595 3,551 44 3,568 27 

Total revenue 5 6 (1) 13 (8) 

Operating expenses 5 3 2 4 1 

Goodwill litigation expenses 83 33 50 (53) 136 

Payment/Recovery of tax benefits (18) 26 (44) (63) 45 

Net Income (Loss) (56) $ (51) $ (5) $ 124 $ (180) $ 

FSLIC Resolution Fund

 Receivership Selected Statistics December 2011 vs. December 2010

$ in millions

Dec-11 Dec-10 Change Dec-11 Dec-10 Change Dec-11 Dec-10 Change

Total Receiverships 426 336 90 5 8 (3) 431 344 87 

Assets in Liquidation 20,891 $ 26,974 $ (6,083) $ 22 $ 25 $ (3) $ 20,913 $ 26,999 $ (6,086) $ 

YTD Collections 12,334 $ 25,456 $ (13,122) $ 10 $ 17 $ (7) $ 12,344 $ 25,473 $ (13,129) $ 

YTD Dividend/Other Pymts - Cash 8,876 $ 13,557 $ (4,681) $ - $ - $ - $ 8,876 $ 13,557 $ (4,681) $ 

DIF FRF ALL FUNDS

Income Statement (year-to-date)

Unaudited Quarterly Audited Year-Over-Year

Dec-11 Sep-11 Change Dec-10 Change

Assessments earned 13,498 $ 10,289 $ 3,209 $ 13,610 $ (112) $ 

Systemic risk revenue (131) (35) (96) (673) 542 

Interest on U.S. Treasury obligations 120 95 25 205 (85) 

Other revenue 2,854 232 2,622 238 2,616 

Total Revenue $ 10,581 16,341 $ 5,760 $ 13,380 $ 2,961 $ 

Operating expenses 1,625 1,291 334 1,593 32 

Systemic risk expenses (131) (35) (96) (673) 542 

Provision for insurance losses (4,414) (5,947) 1,533 (848) (3,566) 

Insurance and other expenses 4 3 1 3 1 

Total Expenses and Losses $ (4,688) (2,916) $ 1,772 $ 75 $ (2,991) $ 

Net Income (Loss) 15,269 19,257 3,988 13,305 5,952 

Unrealized gain (loss) on U.S. Treasury investments, net 21 14 7 (115) 136 

Unrealized gain (loss) on trust preferred securities (85) (118) 33 336 (421) 

Unrealized postretirement benefit gain (loss) (15) - (15) (16) 1 

Comprehensive Income (Loss) $ 15,165 19,178 $ 4,013 $ 13,510 $ 5,668 $ 

Deposit Insurance Fund
11

12/31/11 12/31/10 Change

Par Value $36,784 $39,430 ($2,646)

Amortized Cost $37,337 $39,483 ($2,146)

Total Market Value (including accrued interest) $37,580 $39,550 ($1,970)

Primary Reserve 1 $37,580 $39,550 ($1,970)

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

Year-to-Date Total Return (Portfolio) 0.347% 0.196% not applicable

Year-to-Date Total Return (Benchmark) 2 6.756% 5.219% not applicable

Total Return Variance (in basis points) (640.9) (502.3) not applicable

Yield-to-Maturity 3 0.41% 0.40% 0.01%

Weighted Average Maturity (in years) 0.66 0.16 0.50

Effective Duration (in years) 4

 Total Portfolio 0.62 0.15 0.47

 Available-for-Sale Securities 0.73 0.46 0.27

 Held-to-Maturity Securities 5 not applicable not applicable not applicable

12/31/11 12/31/10 Change

Debt Guarantee Program

 Par Value $4,764 $6,630 ($1,866)

 Book Value $4,807 $6,646 ($1,839)

 Total Market Value (including accrued interest) $4,827 $6,647 ($1,820)

 Yield-to-Maturity 0.11% 0.10% 0.01%

 Weighted Average Maturity 0.21 0.14 0.07

Transaction Account Guarantee Program

 Book Value $0 $0 $0

 Yield-to-Maturity not applicable not applicable not applicable

 Weighted Average Maturity (in years) not applicable not applicable not applicable

FRF-FSLIC

 Book Value 6 $3,377 $3,397 ($20)

 Yield-to-Maturity 0.00% 0.05% (0.05%)

 Weighted Average Maturity overnight overnight no change

12/31/11 12/31/10 Change

Book Value 7 $17,052 $17,506 ($454)

Effective Annual Yield 0.10% 0.13% (0.03%)

Weighted Average Maturity (in days) 9 6 3

National Liquidation Fund (NLF) Investment Portfolio Summary

(Dollar Values in Millions)

5

 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.

7

 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)

6

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

purposes.

3

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

average 1.8% annual increase in the CPI over the remaining life of each TIPS.

4

 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.

2

 The benchmark is the total return of the Merrill Lynch 1-10 Year U.S. Treasury Index.
12

Deposit Insurance Fund

Purchase up to $12 billion (par value) of available-for-sale (AFS) securities with maturity dates between 

March 31, 2012, and September 30, 2014, subject to the following additional restrictions: no more than 

$8 billion (par value) of such securities shall have maturity dates beyond September 30, 2012; and no 

more than $4 billion (par value) of such securities shall have maturity dates beyond September 30, 

2013; and no more than $6 billion of such securities shall consist of Treasury Inflation-Protected 

Securities.

Purchase up to $6 billion (par value) of available-for-sale (AFS) securities with maturity dates between 

June 30, 2012, and December 31, 2014, subject to the following additional restrictions: no more than $4 

billion (par value) of such securities shall have maturity dates beyond December 31, 2012; and no more 

than $2 billion (par value) of such securities shall have maturity dates beyond December 31, 2013; and 

no more than $3 billion of such securities shall consist of Treasury Inflation-Protected Securities.

Debt Guarantee Program

Purchase up to $3 billion (par value) of AFS securities with maturity dates between March 31, 2012, 

and September 30, 2014.

Purchase up to $2 billion (par value) of AFS securities with maturity dates between June 30, 2012, and 

December 31, 2014.

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 First Quarter of 2012

Strategy Changes for 1st Quarter 2012

Investment Strategies

Strategy for 4th Quarter 2011

Strategy for the 4th Quarter 2011

Strategy Changes for 1st Quarter 2012

Strategy for 4th Quarter 2011

Strategy Changes for 1st Quarter 2012
13

1) Budgets for investment projects are approved on a multi-year basis; the year-to-date budget amount reflects the 2011 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 $1,091,454 $1,091,454 $1,028,660 94% ($62,794)

Outside Services - Personnel 262,109 262,110 222,758 85% (39,352)

Travel 104,994 104,994 98,019 93% (6,975)

Buildings 80,693 80,693 77,779 96% (2,914)

Equipment 89,160 89,160 91,351 102% 2,191

Outside Services - Other 24,609 24,609 16,170 66% (8,439)

Other Expenses 21,659 21,659 16,720 77% (4,939)

Total Ongoing Operations $1,674,679 $1,674,679 $1,551,457 93% ($123,222)

Receivership Funding

Salaries & Compensation $330,679 $330,678 $286,606 87% ($44,072)

Outside Services - Personnel 1,402,772 1,402,772 794,363 57% (608,409)

Travel 48,727 48,727 29,785 61% (18,942)

Buildings 217,994 217,994 80,599 37% (137,395)

Equipment 20,224 20,224 14,705 73% (5,519)

Outside Services - Other 26,516 26,516 11,900 45% (14,616)

Other Expenses 155,517 155,517 54,504 35% (101,013)

Total Receivership Funding $2,202,429 $2,202,429 $1,272,462 58% ($929,967)

Total Corporate Operating Budget $3,877,108 $3,877,108 $2,823,919 73% ($1,053,189)

Investment Budget 1 $8,014 $8,014 $7,686 96% ($328)

Grand Total $3,885,122 $3,885,122 $2,831,605 73% ($1,053,517)

(Dollars in Thousands)

Executive Summary of 2011 Budget and Expenditures

by Major Expense Category

Through December 31, 2011
14

1) Executive Support includes the Offices of Minority and Women Inclusion, Public Affairs, Ombudsman, Legislative Affairs, Enterprise 

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, Corporate Risk Management, 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 2011 spending estimates 

for approved projects. 

Annual YTD YTD % of YTD YTD

Division/Office Budget Budget Expenditures Budget Used Variance

 Corporate Operating Budget 

 Risk Management Supervision $528,371 $528,371 $505,566 96% ($22,805)

 Depositor & Consumer Protection 148,196 148,196 143,429 97% (4,767)

 Information Technology 267,265 267,265 254,984 95% (12,281)

 Administration 285,289 285,289 262,491 92% (22,798)

 Resolutions & Receiverships 1,894,658 1,894,658 1,089,183 57% (805,474)

 Legal 313,954 313,954 297,276 95% (16,678)

 Insurance & Research 41,390 41,390 37,605 91% (3,786)

 Finance 38,434 38,434 33,688 88% (4,746)

 Inspector General 40,200 40,200 29,252 73% (10,948)

 Corporate University - CEP 22,598 22,598 18,755 83% (3,843)

 Corporate University - Corporate 22,869 22,869 21,175 93% (1,694)

 Executive Support 1 37,155 37,155 27,260 73% (9,895)

 Executive Offices 2 9,904 9,904 8,431 85% (1,473)

 Complex Financial Institutions 38,790 38,790 26,970 70% (11,820)

 Government Litigation 4,796 4,796 9 0% (4,787)

 CIO Council 70,812 70,812 67,846 96% (2,967)

 Corporate Unassigned 112,427 112,427 0 0% (112,427)

 Total, Corporate Operating Budget $3,877,108 $3,877,108 $2,823,919 73% ($1,053,189)

 Investment Budget 3

 Information Technology $8,014 $8,014 $7,686 96% ($328)

 Total, Investment Budget 3 $8,014 $8,014 $7,686 96% ($328)

 Combined Division/Office Budgets

 Risk Management Supervision $528,371 $528,371 $505,566 96% ($22,805)

 Depositor & Consumer Protection 148,196 148,196 143,429 97% (4,767)

 Information Technology 275,279 275,279 262,670 95% (12,609)

 Administration 285,289 285,289 262,491 92% (22,798)

 Resolutions & Receiverships 1,894,658 1,894,658 1,089,183 57% (805,474)

 Legal 313,954 313,954 297,276 95% (16,678)

 Insurance & Research 41,390 41,390 37,605 91% (3,786)

 Finance 38,434 38,434 33,688 88% (4,746)

 Inspector General 40,200 40,200 29,252 73% (10,948)

 Corporate University - CEP 22,598 22,598 18,755 83% (3,843)

 Corporate University - Corporate 22,869 22,869 21,175 93% (1,694)

 Executive Support 1 37,155 37,155 27,260 73% (9,895)

 Executive Offices 2 9,904 9,904 8,431 85% (1,473)

 Complex Financial Institutions 38,790 38,790 26,970 70% (11,820)

 Government Litigation 4,796 4,796 9 0% (4,787)

 CIO Council 70,812 70,812 67,846 96% (2,967)

 Corporate Unassigned 112,427 112,427 0 0% (112,427)

 Grand Total $3,885,122 $3,885,122 $2,831,605 73% ($1,053,517)

Executive Summary of 2011 Budget and Expenditures

by Budget Component and Division/Office

Through December 31, 2011

(Dollars in Thousands)