24

II. Financial Highlights

Deposit Insurance Fund

Performance

The FDIC administers two deposit

insurance funds – the Bank Insurance

Fund (BIF) and the Savings Association

Insurance Fund (SAIF) – and manages

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

FDIC's insurance funds. (See the

accompanying tables on FDICInsured Deposits, Insurance Fund

Reserve Ratios and Risk-Related

Premiums on the following pages.) 

The BIF reported comprehensive

income (net income plus current

period unrealized gains/losses on

available-for-sale (AFS) securities) 

of $680 million in 2005 compared to

$1.004 billion in 2004. This reduction

of $324 million was primarily due to

an increase in unrealized losses on

AFS securities of $279 million, lower

recoveries of prior years’ provisions

for insurance losses of $143 million,

an increase in operating expenses 

of $25 million, and a decrease in

assessment revenues of $43 million,

offset by an increase of $161 million

in interest revenue on U.S. Treasury

obligations. As of December 31, 2005,

the fund balance was $35.5 billion,

up from $34.8 billion at year-end

2004.

The SAIF reported comprehensive

income of $409 million in 2005, 

compared to $480 million in 2004.

This reduction of $71 million was 

primarily due to an increase in 

unrealized losses on AFS securities 

of $93 million and lower recoveries 

of prior years’ provisions for insurance

losses of $50 million, offset by 

a $73 million increase in interest

revenue on U.S. Treasury obligations.

As of December 31, 2005, the fund 

balance was $13.1 billion, up from

$12.7 billion at year-end 2004.

For both BIF and SAIF, higher interest

revenue on U.S. Treasury obligations

stemmed from higher overnight and

short-term Treasury yields as well

as higher inflation compensation on

Treasury Inflation Protected Securities.

However, the higher interest revenue

was more than offset by an increase

in unrealized losses that resulted

from a rise in Treasury market yields

on short- to intermediate-maturity

AFS securities during 2005.
25

SAIF-Insured

BIF-Insured

3,500

3,000

2,500

2,000

1,500

1,000

500

0

● All amounts are yearend except 2005 is as of 9/30/05. 

Source: Commercial Bank Call Reports and Thrift Financial Reports

Operating Expenses

Corporate Operating Budget expenses

totaled $990 million in 2005, including

$979 million in ongoing operations and

$11 million for receivership funding.

This represented approximately 

95 percent of the approved budget

for ongoing operations and 15 percent

of the approved budget for receivership funding. 

In December 2005, the Board of

Directors approved a 2006 Corporate

Operating Budget of approximately

$1.05 billion, including $975 million

for ongoing operations. The level 

of approved Corporate Operating

Budget for 2006 is more than 

5 percent lower than the Corporate

Operating Budget for 2005 due to

savings achieved through continued

staffing reductions and the realization

of other efficiencies. The Corporate

Operating Budget includes funding

for a number of major new initiatives,

including increased funding for 

consumer protection activities; 

continued implementation of the

Corporate Employee Program; 

several new learning initiatives 

consistent with the Corporation’s

commitment to an environment of

continuous employee growth and

development; and several projects

to explore increased automation 

of the bank examination process.

Investment Spending

The FDIC has a disciplined process

for reviewing proposed new 

investment projects and managing

the implementation of approved 

projects. Most 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 and include an appropriate

return on investment for the insurance

funds. The process also enables 

the FDIC to be aware of risks to the

major capital investment projects

and facilitates appropriate, timely

intervention to address these risks

throughout the development process.

An investment portfolio performance

review of the major capital investments is provided to the FDIC’s

Board of Directors quarterly. 

1960 70 80 90 2000

FDIC-Insured Deposits (estimated 1960-2005) ●

Dollars in billions

05

During 2005, the Corporation 

completed and implemented three

projects in its investment portfolio.

Spending for investment projects in

2005 totaled approximately $62 million,

but is expected to drop significantly

in 2006. The Board of Directors did

not approve any new investment

projects in 2005.
26

1.45

1.40

1.35

1.30

1.25 (target ratio)

0

6/03 9/03 12/03 3/04 6/04 9/04 12/04 3/05 6/05 9/05 

Insurance Fund Reserve Ratios Fund Balances as a Percent of Insured Deposits

BIF

SAIF
27

Risk-Related Premiums

The following tables show the number and percentage of institutions insured by the Bank Insurance Fund

(BIF) and the Savings Association Insurance Fund (SAIF), according to risk classifications effective for 

the first semiannual assessment period of 2005. Each institution is categorized based on its capital group

(1, 2, or 3) and supervisory subgroup (A, B, or C), which is generally determined by on-site examinations.

Assessment rates are basis points, cents per $100 of assessable deposits, per year.

BIF Supervisory Subgroups●

Capital Group A B C

1. Well Capitalized:

Assessment Rate 0 3 17

Number of Institutions 7,307 (94.2%) 344 (4.4%) 47 (0.6%)

2. Adequately Capitalized:

Assessment Rate 3 10 24

Number of Institutions 49 (0.6%) 5 (0.1%) 7 (0.1%)

3. Undercapitalized:

Assessment Rate 10 24 27

Number of Institutions 0 (0.0%) 0 (0.0%) 2 (0.0%)

SAIF Supervisory Subgroups▲

1. Well Capitalized:

Assessment Rate 0 3 17

Number of Institutions 1,034 (93.5%) 58 (5.2%) 11 (1.0%)

2. Adequately Capitalized:

Assessment Rate 3 10 24

Number of Institutions 3 (0.3%) 0 (0.0%) 0 (0.0%)

3. Undercapitalized:

Assessment Rate 10 24 27

Number of Institutions 0 (0.0%) 0 (0.0%) 0 (0.0%)

BIF data exclude SAIF-member “Oakar” institutions that hold BIF-insured deposits. The assessment rates reflect the

rates for BIF-assessable deposits, which remained the same throughout 2005.

SAIF data exclude BIF-member “Oakar” institutions that hold SAIF-insured deposits. The assessment rates reflect the

rates for SAIF-assessable deposits, which remained the same throughout 2005.

●

▲