F E D E R A L D E P O S I T I N S U R A N C E C O R P O R A T I O N 53

Chapter Two 2Financial Highlig

Deposit Insurance

Fund Performance

The FDIC administers the Deposit Insurance Fund 

(DIF) and the FSLIC Resolution Fund (FRF), which 

fulfills the obligations of the former Federal 

Savings and Loan Insurance Corporation (FSLIC) 

and the former Resolution Trust Corporation 

(RTC). The following summarizes the condition of 

the DIF. (See the accompanying tables on FDICDIF Insured Deposits and Deposit Insurance Fund 

Reserve Ratios on the following page.) 

The DIF’s comprehensive loss totaled $35.1 billion 

for 2008 compared to comprehensive income of 

$2.2 billion for the previous year. As a result, the 

DIF balance declined from $52.4 billion to $17.3 

billion as of December 31, 2008. The year-over-year 

decrease of $37.3 billion in comprehensive income 

1970 1980 1990 2000

FDIC-DIF Insured Deposits (estimated 197

(Dollars in billions)

From 1989 through 2005, amounts represent the sum of separate Bank Insurance Fund and Savings Association Insurance Fund amounts.

Source: Commercial Bank Call and Thrift Financial Reports

4,000

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2008

$ 4,500
54 2 0 0 8 A n n u l R e p or

was primarily due to a $41.7 billion increase in the 

provision for insurance losses offset in part by a 

$2.3 billion increase in assessment revenue; a $1.8 

billion increase in the unrealized gain on availablefor-sale securities; and a $775 million increase in 

the realized gain on the sale of securities.

The provision for insurance losses was $41.8 billion 

in 2008. The total provision consists mainly of the 

provision for future failures ($23.9 billion) and the 

losses estimated at failure for the 25 resolutions 

occurring during 2008 ($17.9 billion), the largest of 

which was the $10.7 billion estimated loss for the 

IndyMac resolution.

Assessment revenue was $3.0 billion for 2008 compared with $643 million for 2007. This increase of 

$2.3 billion was mostly due to the reduction in the 

amount of one-time assessment credits available for 

use. In 2008, $1.4 billion in one-time credits offset 

$4.4 billion in gross assessment premiums; whereas 

in the previous year, $3.1 billion in one-time credits 

were applied against $3.7 billion in gross 

assessment premiums.

Corporate Operating Budg

The FDIC segregates its corporate operating budget 

and expenses into two discrete components — 

ongoing operations and receivership funding. The 

receivership funding component represents expenses 

resulting from financial institution failures and is, 

therefore, largely driven by external forces, while the 

ongoing operations component accounts for all other 

operating expenses and tends to be more controllable 

and estimable. Corporate Operating Expenses totaled 

$1.205 billion in 2008, including $1.055 billion in 

ongoing operations and $150 million for receivership 

funding. This represented approximately 99 percent 

of the approved budget for ongoing operations and 

100 percent of the approved budget for receivership 

funding for the year. The numbers above will not tie 

to the DIF and FRF Financials due to differences on 

how certain items, such as capital expenditures and 

depreciation, are classified. 

0

0.2

0.4

0.6

0.8

1

1.2

1.4

6/05 9/05 12/05 3/06 6/06 9/06 12/06 3/07 6/07 9/07 12/07 3/08 6/08 9/08 12/08

Deposit Insurance Fund Reser

(Fund Balances as a Percent of Estimated Insured Deposits)

Prior to 2006, amounts represent the sum of separate Bank Insurance Fund and Savings Association Insurance Fund amounts.
F E D E R A L D E P O S I T I N S U R A N C E C O R P O R A T I O N 55

CHAPTER 2 ★ Fi nan cial H i ghl

Selected Statistics – Deposit In

(Dollars in millions)

For the years ended December 31

2008 2007 2006

Financial Resul

Revenue $7,306 $3,196 $2,644

Operating Expenses 1,033 993 951

Insurance and Other Expenses (includes provision for loss) 43,306 98 (46

Net (Loss) Income (37,033) 2,105 1,

Comprehensive (Loss) Income (35,137) 2,248 1,

Insurance Fund Balance $17,276 $52,413 $50,16

Fund as a Percentage of Insured Deposits (reserve ratio) 0.36% 1.22% 1.21

Selected Statist

Total DIF-Member Institutions* 8,305 8,534 8,

Problem Institutions 252 77 5

Total Assets of Problem Institutions $159,405 $22,189 $8,

Institution Failures 25 3 

Total Assets of Failed Institutions in Year♦ $371,945 $2,615

Number of Active Failed Institution Receiverships 41 22

Given the recent challenges facing the industry, as 

evidenced in the overall CAMELS deterioration 

and an up-tick in financial institution failure 

activity, the FDIC is determined to ensure that it is 

adequately prepared to effectively fulfill its mission 

in 2009. Consequently, in December 2008, the 

Board of Directors approved a 2009 Corporate 

Operating Budget of approximately $2.24 billion, 

consisting of $1.24 billion for ongoing operations 

and $1.0 billion for receivership funding. The level 

of approved ongoing operations budget is 

approximately $189 million (17.9 percent) higher 

than actual 2008 ongoing operations expenses, 

while the approved receivership funding budget is 

$850 million (564.6 percent) higher than the 

$150 million of actual 2008 receivership 

funding expenses.

As in prior years, the 2009 budget was formulated 

primarily on the basis of an analysis of projected 

workload for each of the Corporation’s three major 

business lines and its major program support 

functions. The most significant factor contributing 

to the proposed increase in the ongoing operations 

component is the projected increase in the 

Corporation’s supervisory workload in 2009 and 

the planned staffing increases to address that 

workload. The 2009 ongoing operations budget also 

includes increased funds for additional resolutions 

staff, travel, office space, and equipment for these 

additional staff. Under this budget, the Corporation 

will focus largely on its core mission responsibilities 

in 2009 and will not devote significant resources to 

non-core discretionary activities. In addition, the 

2009 receivership funding budget allows for substantially increased resources for contractor support 

as well as non-permanent increases in authorized 

staffing for resolutions and receiverships, legal, and 

other organizations should workload requirements 

in these areas require an immediate response.

* Commercial banks and savings institutions. Does not include U.S. branches of foreign banks.

♦ Total Assets data are based upon the last Call Report filed by the institution prior to failure.
56 2 0 0 8 A n n u l R e p or

Investment Spendi

The FDIC instituted a separate Investment Budget 

in 2003. It has a disciplined process for reviewing 

proposed new investment projects and managing 

the construction and implementation of approved 

projects. All of the projects in the current 

investment portfolio are major IT system 

initiatives. Proposed IT projects are carefully 

reviewed to ensure that they are consistent with the 

Corporation’s enterprise architecture. The project 

approval and monitoring processes also enable the 

FDIC to be aware of risks to the major capital 

investment projects and facilitate appropriate, 

timely intervention to address these risks 

throughout the development process. An investment portfolio performance review is provided to 

the FDIC’s Board of Directors quarterly.

The Corporation undertook significant capital 

investments during the 2003-2008 period, the 

largest of which was the expansion of its Virginia 

Square office facility. All others involved the 

development and implementation of major IT 

systems. Investment spending totaled $260 million 

during this period, peaking at $108 million in 2004. 

Spending for investment projects in 2008 totaled 

approximately $26 million. In 2009, investment 

spending is estimated to total $4 million. 

0

20

40

60

80

100

$120

2003

$27

2004

108

2005

62

2006

25

2007

12

2008

26

Investment Spending 2003 –

Dollars in millions