10 FDIC 2010 ANNUAL REPORT

I

am pleased 

to present 

the Federal 

Deposit Insurance 

Corporation’s (FDIC) 

2010 Annual Report

(also referred to as 

the Performance and 

Accountability Report). 

The report covers 

financial and program performance information, 

and summarizes our successes for the year. The 

FDIC takes pride in providing timely, reliable, and 

meaningful information to its many stakeholders.

For the nineteenth consecutive year, the U.S. 

Government Accountability Office (GAO) issued 

unqualified audit opinions for the two funds 

administered by the Corporation: the Deposit 

Insurance Fund (DIF) and the Federal Savings and 

Loan Insurance Corporation (FSLIC) Resolution 

Fund (FRF). These unqualified audit opinions 

validate our efforts to ensure that the financial 

statements of the funds for which we are stewards 

are fairly presented. I applaud the hard work and 

dedication of the FDIC staff.

At the conclusion of 2010 and moving forward 

into 2011, the DIF balance remains negative. The 

DIF’s 2010 financial statements reflect the effect 

of a difficult banking environment, in which 157 

banks failed. This total exceeds all bank failures 

between 1993 and 2008, and is the highest annual 

number since 1992, when 179 failures occurred.

Financial Results for 2010

For 2010, the DIF’s comprehensive income was 

$13.5 billion compared to a comprehensive loss 

of $38.1 billion during 2009. This year-overyear change of $51.6 billion was primarily due 

to a $58.6 billion decline in the provision for 

insurance losses, partially offset by a $4.1 billion 

decrease in assessments earned (largely attributable 

to the 2009 special assessment). 

The provision for insurance losses was negative 

$848 million for 2010, compared to positive 

$57.7 billion for 2009. The 2009 provision 

reflected the significant losses estimated to be 

incurred by the DIF from the 2009 and future 

failures. In contrast, the 2010 negative provision 

is primarily impacted by a reduction in the 

contingent loss reserve due to the improvement 

in the financial condition of institutions that were 

previously identified to fail and adjustments to the 

estimated losses for banks that have failed.

The DIF’s total liquidity declined by $19.9 

billion, or 30 percent, to $46.2 billion during 

2010. The decrease was primarily the result 

of disbursing $28.8 billion to fund 157 bank 

failures during 2010, although it should be noted 

that 130 of these failures were resolved as cashconserving loss-share transactions (in which the 

acquirers purchased substantially all of the failed 

institutions’ assets and the FDIC and the acquirers 

entered into loss-share agreements) requiring 

lower initial resolution funding. Moreover, during 

2010, the DIF received $13.6 billion in dividends 

and other payments from its receiverships, which 

helped to mitigate the DIF liquidity’s decline.

Message from the Chief 

Financial Officer
FDIC 2010 ANNUAL REPORT 11

In accordance with the requirements of the 

Federal Managers’ Financial Integrity Act of 1982, 

the FDIC’s management conducted its annual 

assessment and concluded that the system of 

internal controls, taken as a whole, complies with 

internal control standards prescribed by GAO 

and provides reasonable assurance that the related 

objectives are being met. In 2009, GAO identified 

a material weakness in internal controls related 

to estimating losses to the DIF from resolution 

transactions involving loss-share agreements, in 

addition to a significant deficiency existing over 

information systems. The FDIC worked hard 

during 2010, implementing control improvements 

and comprehensive control enhancements to 

address these issues. I am proud to report that 

these are not repeat findings for 2010.

Our performance in 2010 gives us confidence 

that we can meet the challenges of an everchanging banking industry. In 2011, we will 

continue to focus on effective cost management, 

and maintaining a strong enterprise-wide risk 

management and internal control program. These 

include identifying and addressing risks to the 

insurance fund; implementing the Dodd-Frank 

Wall Street Reform and Consumer Protection Act; 

and providing Congress, other regulatory agencies, 

insured depository institutions, and the public 

with critical and timely information and analyses 

on the financial condition of both the banking 

industry and the FDIC-managed funds.

Sincerely,

Steven O. App