Federal Deposit Insurance Corporation 

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

 

 August 9, 2011 

MEMORANDUM TO: The Board of Directors 

FROM: Steven O. App 

Deputy to the Chairman and 

 Chief Financial Officer 

Craig Jarvill 

Acting Director, Division of Finance 

SUBJECT: Second Quarter 2011 CFO Report to the Board 

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

June 30, 2011. 

Executive Summary

 For the second quarter of 2011, the Deposit Insurance Fund (DIF) balance increased by $4.9 

billion, from negative $1.0 billion to a positive $3.9 billion. This quarterly increase was 

primarily due to $3.2 billion in assessment revenues and a $2.1 billion decrease in the provision 

for insurance losses, offset by $463 million in operating expenses. The second quarter of 2011 

was the first quarter since June 30, 2009 that the DIF ended with a positive fund balance. 

 During the second quarter of 2011, the FDIC was named receiver for 22 failed institutions. The 

combined assets at inception for these institutions totaled approximately $9.6 billion with a 

total estimated loss of $2.0 billion. The corporate cash outlay during the second quarter for 

these failures was approximately $1.3 billion. 

 

 Through June 30, 2011, overall Corporate Operating Budget expenditures were below budget 

by 22 percent ($405.7 million). This variance was primarily the result of lower-than-budgeted 

resolutions activity during the first half of the year. 

 
2

I. Corporate Fund Financial Results (See pages 8 - 9 for detailed data and charts.) 

Deposit Insurance Fund (DIF) 

 For the six months ended June 30, 2011, the DIF’s comprehensive income totaled $11.3 billion 

compared to comprehensive income of $5.6 billion for the same period last year. This $5.7 

billion year-over-year increase was mostly due to the decrease in the provision for insurance 

losses. 

 The provision for insurance losses was negative $5.2 billion for the first half of 2011. The 

negative provision primarily resulted from a $2.7 billion reduction in the contingent loss 

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

identified to fail; a $1.7 billion reduction in the estimated losses for banks that have failed 

where recent liquidation activity yielded recoveries higher than previously estimated; and a 

$0.7 billion adjustment for lower-than-anticipated loss estimates at time of failure for banks 

that failed in 2010. 

 During the second quarter of 2011, the DIF recognized $3.2 billion in estimated assessment 

revenue for second quarter 2011 insurance coverage. Of this amount, $3.0 billion was 

recognized for those institutions that prepaid assessments and $205 million was recorded as a 

receivable from those institutions that did not prepay assessments. 

 On June 30, 2011, the FDIC collected $191 million in DIF assessments for first quarter 2011 

insurance coverage from those institutions that had not prepaid their assessments. 

 The assessment base computed by the FDIC used deposit data reported by each insured 

institution through the March 31, 2011 report date. Beginning April 1, 2011, the Dodd-Frank 

Wall Street Reform and Consumer Protection Act (DFA) requires that the base on which 

deposit insurance assessments are charged be revised from domestic deposits to assets. The 

assessment collection date of September 30, 2011, will utilize an assessment base of average 

consolidated total assets minus average tangible equity (defined as Tier 1 Capital). 

II. Investment Results (See pages 10 - 11 for detailed data and charts.)

DIF Investment Portfolio 

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

portfolios stood at $45.0 billion on June 30, 2011, down from $46.2 billion on December 31, 

2010, led by the decline in the DIF investment portfolio as discussed below. 

 The DIF investment portfolio’s total market value decreased by $1.9 billion during the first half 

of 2011, and totaled $37.7 billion on June 30, 2011. The decrease was primarily the result of 

having to fund 48 bank failures during the first half of 2011. However, it should be noted that 

35 of these failures were resolved as cash-conserving shared-loss transactions, requiring 

substantially lower initial resolution payments, thus helping to mitigate the decline in the DIF 

portfolio’s balance. Moreover, during the first half of 2011, the DIF received $5.6 billion in 

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

decline. 
3

 On June 30, 2011, the DIF investment portfolio’s yield was 0.32 percent, down eight basis 

points from its December 31, 2010, yield of 0.40 percent. A primary factor in that decline was 

that in January a substantial portion of higher yielding Treasury Inflation-Protected Securities 

(TIPS) matured, resulting in a drop in the portfolio’s overall yield. The DIF investment 

portfolio’s total return for the year-to-date period was about 26 basis points, about 200 basis 

points less than the 2.27 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 the first half of the year, 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 second quarter 2011 investment strategy, staff purchased a 

total of eight short-maturity Treasury securities on two occasions during the second quarter of 

2011. The securities had a total par value of $7.2 billion, a weighted average yield-to-maturity 

of 0.22 percent, and a weighted average maturity (WAM) of 0.77 years. 

Other Corporate Investment Portfolios 

 On June 30, 2011, the Debt Guarantee Program (DGP) investment portfolio stood at about $7.4 

billion (total market value), up from its December 31, 2010, balance of $6.6 billion. This 

increase was principally due to the net transfer of about $650 million from the DIF portfolio to 

the DGP portfolio (year-to-date), reversing payments made by the DGP to the DIF for 

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

to maturity of 0.21 percent and a WAM of 0.42 years. In accordance with the approved second 

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

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

$1.2 billion, a weighted average yield-to-maturity of 0.23 percent, and a WAM of 0.83 years. 

III. Budget Results (See pages 12 - 13 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 do not increase the total amount approved for either the Ongoing 

Operations or Receivership Funding budget components. The following budget reallocations 

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

of Directors. None of these modifications changed the total 2011 Corporate Operating Budget as 

approved by the Board in December 2010 (and amended by the Board in January 2011): 

 In May 2011, the CFO approved modifications to the Salaries and Compensation budget 

authority of divisions and offices within the Ongoing Operations budget component based 

on an analysis of spending for salaries, bonuses, and fringe benefits during the first quarter. 

That reallocation adjusted budget authority for most divisions and offices while increasing 

the Corporate Unassigned budget by $4,297,545. 
4

 In May 2011, the CFO approved the reallocation of $1,089,261 within the Ongoing 

Operations budget component from the Risk Management Supervision (RMS) and 

Corporate Unassigned budgets (-$651,411 and -$437,850, respectively) to the Depositor 

and Consumer Protection (DCP) budget to support the transfer of six positions from RMS 

to DCP and an increase of four new authorized positions in DCP (these staffing changes are 

explained in more detail below). 

 In May 2011, in anticipation of the FDIC assuming regulatory responsibility for statechartered thrift institutions under the provisions of the DFA, the CFO approved the 

reallocation of $2,459,123 in budget authority within the Ongoing Operations budget 

component from the Corporate Unassigned budget to the budgets of RMS and DCP. This 

adjustment increased budget authority for the Salaries and Compensation (+$2,175,477), 

Travel (+$272,301), and Other Expenses (+$11,345) expense categories in those budgets to 

provide funding for expenses projected to be incurred by Office of Thrift Supervision 

(OTS) employees following their transfer to the FDIC. 

 In May 2011, the CFO approved the reallocation of $141,000 within the Ongoing 

Operations budget component from the Corporate Unassigned budget to the Salaries and 

Compensation budget of the Office of Minority and Women Inclusion (OMWI) to provide 

funding for expenses associated with seven newly-authorized positions in OMWI. 

Following these budget reallocations, the amounts remaining available within the Corporate 

Unassigned budgets for the Ongoing Operations and the Receivership Funding budget 

components were $17,401,532 and $16,350,002, respectively. 

Approved Staffing Modifications 

The 2011 Budget Resolution delegated to the CFO the authority to modify approved 2011 staffing 

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

approved 2011 Corporate Operating Budget. The following changes were approved by the CFO 

in accordance with the authority delegated to him by the Board of Directors: 

 In May 2011, the CFO approved the transfer of six positions from RMS to DCP and the 

establishment of four newly-authorized positions in DCP. When the Board approved the 

establishment of DCP in August 2010, it delegated to the CFO the responsibility for 

determining staffing requirements for certain administrative management functions in DCP 

and determining whether these staffing requirements should be met by the transfer of 

positions from RMS or the establishment of new positions in DCP. After consultation with 

RMS and DCP, the CFO approved the transfer to DCP of two positions from RMS’s 

Internal Control Section and four positions from RMS’s Applied Technology Section; and 

the establishment of four newly-authorized positions in DCP (two each in the 

Administrative Operations Branch and the Operations and Technology Systems Section).

 In May 2011, the CFO approved an increase of 24 authorized positions in RMS and six 

authorized positions in DCP in anticipation of the FDIC assuming regulatory responsibility 

for state chartered thrift institutions under DFA. Most of the new positions are examiner 

positions to be filled by transferees from the OTS. The number of new examiner positions 

was determined using the Examiner Staffing Model.
5

 In May 2011, the CFO approved an increase of seven authorized positions in OMWI. 

These positions will be used to develop standards for equal employment opportunity for the 

Corporation’s workforce, increase the participation of minority- and women-owned 

businesses in the Corporation’s programs and contracts, and develop a new program to 

assess the diversity policies and practices of entities regulated by the FDIC, in accordance 

with the requirements of DFA. 

Spending Variances 

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

below. Significant spending variances for the six months ended June 30, 2011, are defined as 

those that either (1) exceed the YTD budget by $2 million and represent more than three 

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 $3 million 

and represents more than five 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 two of the seven major expense categories during 

the second quarter in the Ongoing Operations component of the 2011 Corporate Operating 

Budget: 

 Outside Services – Personnel expenditures were $16.1 million, or 14 percent, less than 

budgeted. The Office of Complex Financial Institutions (CFI) spent $8.0 million less than 

budgeted, largely due to the office's initial focus on filling its authorized FDIC positions, 

which caused delays in defining contract support requirements. The Division of 

Resolutions and Receiverships (DRR) spent $4.9 million less than budgeted due to lower 

than anticipated expenses for business process improvements, financial advisory services 

for a recovery and resolution project, and an internal review project. In addition, the Office 

of Inspector General (OIG) spent $4.4 million less than budgeted for material loss reviews 

(MLRs) due to an increase included in DFA in the threshold at which MLRs are required. 

 Outside Services – Other expenditures were approximately $3.3 million, or 29 percent, less 

than budgeted. The Office of Public Affairs (OPA) spent $2.0 million less than budgeted, 

largely due to delays in its public education campaign on overdraft programs. 

Receivership Funding

The Receivership Funding component of the 2011 Corporate Operating Budget includes 

funding for expenses incurred in conjunction with institution failures and the management and 

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

benefits and related expenses for permanent employees assigned to the receivership 

management function. 
6

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

the second quarter in the Receivership Funding component of the 2011 Corporate Operating 

Budget: 

 Outside Services-Personnel ($232.8 million, or 35 percent, less than budgeted). 

 Travel ($7.5 million, or 31 percent, less than budgeted). 

 Buildings ($71.5 million, or 58 percent, less than budgeted). 

 Equipment ($4.5 million, or 45 percent, less than budgeted). 

 Outside Services-Other ($4.0 million, or 32 percent, less than budgeted). 

 Other Expenses ($58.0 million, or 63 percent, less than budgeted). 

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

failures during the first six months of the year than budgeted in the Receivership Funding 

budget. 

Significant Spending Variances by Division/Office1

Six organizations had significant spending variances through the end of the second quarter: 

 DRR spent $374.8 million, or 38 percent, less than budgeted, mostly due to less-thanbudgeted spending for resolution and receivership activities, as explained above. 

 DIT spent $9.3 million, or 7 percent, less than budgeted. The majority of the variance 

($6.0 million) occurred in DIT’s Receivership Funding budget and was primarily due to 

lower-than-budgeted resolutions activity. The variance in DIT’s Ongoing Operations 

budget was largely attributable to delays in planned major software maintenance purchases. 

 OIG spent $7.3 million, or 33 percent, less than budgeted. This variance included 

approximately $4.4 million in under spending for Outside Services – Personnel due to the 

MLR threshold change included in DFA, which significantly reduced the number of MLRs 

that OIG is required to conduct. 

 CFI spent $7.2 million, or 46 percent, less than budgeted. This variance was attributable to 

lower-than-budgeted spending for contract services, as explained above. 

 The CIO Council spent $5.8 million, or 22 percent, more than budgeted. This variance 

reflected expenses for unbudgeted projects to support implementation of the new orderly 

liquidation authority given to the FDIC under DFA and several other unfunded projects. 

The overspending occurred after the CFO agreed to allocate additional funds to the CIO 

Council during the mid-year budget review. 

 

1

 Information on division/office variances reflects variances in both the Corporate Operating and Investment Budgets. 
7

 The Executive Support Offices spent approximately $3.2 million, or 19 percent, less than 

budgeted. This variance was largely due to delays in a public education campaign on 

overdraft programs by OPA. 
FDIC CFO REPORT TO THE BOARD – Second Quarter 2011

Fund Financial Results ($ in Millions) 

8

•Cash collections in 2010 and 

2011 are from institutions that 

did not prepay assessments at 

year-end 2009.

•Third quarter 2009 assessment 

collections include a $5.5 billion 

special assessment. 

•DIF collected $45.7 billion in 

prepaid assessments on 

12/30/09, which was recorded 

as a liability and is recognized 

as quarterly revenue as it is 

earned. 

Balance Sheet

Unaudited Unaudited Quarterly Unaudited Year-Over-Year

Jun-11 Mar-11 Change Jun-10 Change

Cash and cash equivalents 16,631 $ 23,496 $ (6,865) $ 18,824 $ (2,193) $ 

Cash and investments - restricted - systemic risk 7,363 6,996 367 5,786 1,577 

Investment in U.S. Treasury obligations, net 20,820 14,894 5,926 19,264 1,556 

Trust preferred securities 2,346 2,345 1 2,130 216 

Assessments receivable, net 205 206 (1) 313 (108) 

Receivables and other assets - systemic risk 1,901 2,243 (342) 3,486 (1,585) 

Interest receivable on investments and other assets, net 279 264 15 165 114 

Receivables from resolutions, net 29,126 29,748 (622) 50,451 (21,325) 

Property and equipment, net 405 407 (2) 391 14 

Total Assets $ 80,599 79,076 $ (1,523) $ 100,810 $ (21,734) $ 

Accounts payable and other liabilities 382 480 (98) 327 55

Unearned revenue - prepaid assessments 23,787 26,766 (2,979) 36,785 (12,998)

Liabilities due to resolutions 30,912 30,883 29 41,863 (10,951)

Deferred revenue - systemic risk 9,131 9,088 43 8,321 810

Postretirement benefit liability 166 166 - 145 21

Contingent liability for anticipated failures 10,349 13,788 (3,439) 27,534 (17,185)

Contingent liabillty for systemic risk 133 151 (18) 782 (649)

Contingent liability for litigation losses 300 300 - 300 - 

Total Liabilities $ 81,622 75,160 $ (6,462) $ 116,057 $ (40,897) $ 

FYI: Unrealized gain (loss) on U.S. Treasury investments, net 37 62 25 62 - 

FYI: Unrealized gain (loss) on trust preferred securities 383 385 2 168 217 

FYI: Unrealized postretirement benefit gain (loss) (19) (19) - (3) (16) 

Fund Balance $ (1,023) 3,916 $ 4,939 $ (15,247) $ 19,163 $ 

Income Statement (year-to-date) 

Unaudited Unaudited Quarterly Unaudited Year-Over-Year

Jun-11 Mar-11 Change Jun-10 Change

Assessments earned 6,647 $ 3,484 $ 3,163 $ 6,520 $ 127 $ 

Systemic risk revenue (25) 5 (30) (138) 113 

Interest on U.S. Treasury obligations 65 28 37 126 (61) 

Other revenue 147 66 81 80 67 

Total Revenue $ 3,583 6,834 $ 3,251 $ 6,588 $ 246 $ 

Operating expenses 858 395 463 727 131 

Systemic risk expenses (25) 5 (30) (138) 113 

Provision for insurance losses (5,184) (3,089) (2,095) 469 (5,653) 

Insurance and other expenses 1 - 1 3 (2) 

Total Expenses and Losses $ (2,689) (4,350) $ (1,661) $ 1,061 $ (5,411) $ 

Net Income (Loss) 6,272 11,184 4,912 $ 5,527 5,657 

Unrealized gain (loss) on U.S. Treasury investments, net 10 35 25 (80) 115 

Unrealized gain (loss) on trust preferred securities 49 47 2 168 (119) 

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

Comprehensive Income (Loss) $ 6,329 11,268 $ 4,939 $ 5,615 $ 5,653 $ 

 

Deposit Insurance Fund

Deposit Insurance Fund

Quarterly Assessments Premiums

(based on insurance coverage period) 

3,196

1,087

2,593

8,622

0 280 265 244 216 206 191 205

2,982 3,037

0 0 0

3,217 3,181 3,226 3,259 2,973

$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

$ in Millions

Cash Collections Prepaid Assessments Estimated

(8.0) (7.4) (15.2)

(20.9) (20.7)

(8.2)

10.4

(1.0) 3.9

17.7 21.3

27.5

44.0 40.7

32.0

38.9

13.8 10.3

-$30

-$20

-$10

$0

$10

$20

$30

$40

$50

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

$ in Billions

Fund Balance Contingent Liability for Anticipated Failures

The Fund Balance as of 6-30-2011 became positive for the first quarter since June 30, 2009.
9

Fund Financial Results - continued ($ in Millions) 

Statement of Cash Flows (year-to-date) 

Unaudited Unaudited Quarterly Unaudited Year-Over-Year

Jun-11 Mar-11 Change Jun-10 Change

Net Income (Loss) $ 11,184 $ 6,272 $ 4,912 $ 5,527 $ 5,657 

Amortization of U.S. Treasury obligations 70 14 56 (17) 87 

Treasury inflation-protected securities inflation adjustment (18) (5) (13) (13) (5)

Depreciation on property and equipment 37 18 19 34 3 

Loss on retirement of property and equipment - - - - - 

Provision for insurance losses (5,184) (3,089) (2,095) 469 (5,653)

Unrealized (loss) gain on postretirement benefits - - - - - 

Change in Operating Assets and Liabilities (7,331) (3,919) (3,412) (26,054) 18,723 

Net Cash Provided by (Used by) Operating Activities $ (1,242) $ (709) $ (533) $ (20,054) $ 18,812 

Maturity of U.S. Treasury obligations 7,976 6,276 1,700 2,643 5,333 

Purchase of property and equipment (25) (8) (17) - (25)

Purchase of U.S. Treasury obligations (18,103) (9,416) (8,687) (18,482) 3,669 

Net Cash Provided by (Used by) Investing Activities $ (10,152) $ (3,148) $ (7,004) $ (15,839) $ 5,687 

Net Increase (Decrease) in Cash and Cash Equivalents (11,394) (3,857) (7,537) (35,913) 24,519 

Cash and Cash Equivalents - Beginning 32,107 32,107 - 60,523 (28,416)

 Unrestricted Cash and Cash Equivalents - Ending 16,631 23,496 (6,865) 18,824 (2,193)

 Restricted Cash and Cash Equivalents - Ending 4,081 4,754 (673) 5,786 (1,705)

Cash and Cash Equivalents - Ending $ 20,713 $ 28,250 $ (7,537) $ 24,610 $ (3,897)

Selected Financial Data

Unaudited Unaudited Quarterly Unaudited Year-Over-Year

Jun-11 Mar-11 Change Jun-10 Change

Cash and cash equivalents $ 3,548 3,525 $ (23) $ 3,497 $ 28 $ 

Accumulated deficit (124,278) (124,224) (54) (124,284) 6 

Total resolution equity 3,568 3,548 (20) 3,570 (22) 

Total revenue 2 3 9 (6) 

Operating expenses 2 2 2 - 

Goodwill litigation expenses 33 - - 33 

Recovery of tax benefits 26 - (58) 84 

Net Income (Loss) $ - (54) $ 65 $ (119) $ 

Deposit Insurance Fund

FSLIC Resolution Fund

 Receivership Selected Statistics June 2011 vs. June 2010

Jun-11 Jun-10 Change Jun-11 Jun-10 Change Jun-11 Jun-10 Change

Total Receiverships 384 265 119 8 8 - 392 273 119 

Assets in Liquidation 24,001 $ 39,469 $ (15,468) $ 25 $ 28 $ (3) $ 24,026 $ 39,497 $ (15,471) $ 

YTD Collections 65,686 $ 10,809 $ 54,877 $ 1 $ 12 $ (11) $ 65,687 $ 10,821 $ 54,866 $ 

YTD Dividend/Other Pymts - Cash $ 4,217 5,554 $ 1,337 $ - $ - $ - $ 5,554 $ 4,217 $ 1,337 $ 

DIF FRF ALL FUNDS

2,606

416

82

594

1,223

820

145 262

20%

31%

24%

21%

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2008 2009 2010 2011

$ in Millions

0%

5%

10%

15%

20%

25%

30%

35%

Avg. Estimated Losses as a % of 

Avg. Assets

Avg. Total Assets 

Avg. Total Estimated Losses

Avg. Est. Losses as a % of Avg. Assets

*

* Excludes WAMU with total assets of $299 billion and zero 

losses.

Bank Failures Average Total Assets and Estimated Losses by Year of Failure
10

6/30/11 12/31/10 Change

Par Value $37,161 $39,430 ($2,269)

Amortized Cost $37,486 $39,483 ($1,997)

 Total Market Value (including accrued interest) $37,653 $39,550 ($1,897)

Primary Reserve1 $37,653 $39,550 ($1,897)

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

Year-to-Date Total Return (Portfolio) 0.263% 0.196% not applicable

Year-to-Date Total Return (Benchmark) 2 2.265% 5.219% not applicable

Total Return Variance (in basis points) (200.2) (502.3) not applicable

Yield-to-Maturity 3 0.32% 0.40% 0.08%

Weighted Average Maturity (in years) 0.49 0.16 0.33

Effective Duration (in years) 4

 Total Portfolio 0.45 0.15 0.30

 Available-for-Sale Securities 0.81 0.46 0.35

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

6/30/11 12/31/10 Change

Debt Guarantee Program

 Par Value $7,281 $6,630 $651

 Book Value $7,343 $6,646 $697

 Total Market Value (including accrued interest) $7,363 $6,647 $716

 Yield-to-Maturity 0.21% 0.10% 0.11%

 Weighted Average Maturity 0.42 0.14 0.28

FRF-FSLIC

 Book Value 6 $3,397 $3,397 $0

 Yield-to-Maturity 0.05% 0.05% 0.00%

 Weighted Average Maturity overnight overnight no change

6/30/11 12/31/10 Change

Book Value 7 $15,685 $17,506 ($1,821)

Effective Annual Yield 0.09% 0.13% 0.04%

Weighted Average Maturity (in days) 12 6 6

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.
11

Deposit Insurance Fund

Purchase up to $20 billion (par value) of available-for-sale (AFS) securities with maturity dates 

between September 30, 2011, and March 31, 2014, subject to the following additional restrictions: no 

more than $15 billion (par value) of such securities shall have maturity dates beyond March 31, 2012; 

and no more than $10 billion (par value) of such securities shall have maturity dates beyond March 

31, 2013.

Purchase up to $15 billion (par value) of available-for-sale (AFS) securities with maturity dates 

between December 31, 2011, and June 30, 2014, subject to the following additional restrictions: no 

more than $10 billion (par value) of such securities shall have maturity dates beyond June 30, 2012; 

and no more than $5 billion (par value) of such securities shall have maturity dates beyond June 30, 

2013; and no more than $5 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 September 30, 

2011, and March 31, 2014. 

Purchase up to $2 billion (par value) of AFS securities with maturity dates between December 31, 

2011, and June 30, 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 third quarter of 2011.

Strategy Changes for 3rd Quarter 2011

Investment Strategies

Strategy as of 2nd Quarter 2011

Strategy Changes for 2nd Quarter 2011

Strategy Changes for 3rd Quarter 2011

Strategy as of 2nd Quarter 2011

Strategy Changes for 3rd Quarter 2011
12

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. The YTD expenditures includes a credit of reimbursed costs from a prior period\s. 

YTD YTD % of 

Major Expense Category Budget Expenditures Budget Used Variance

Corporate Operating Budget 

Ongoing Operations

Salaries & Compensation $507,538 $508,708 100% $1,170

Outside Services - Personnel 116,891 100,832 86% (16,059)

Travel 46,982 47,883 102% 901

Buildings 36,814 36,106 98% (708)

Equipment 42,673 40,902 96% (1,771)

Outside Services - Other 11,689 8,341 71% (3,348)

Other Expenses 8,083 6,001 74% (2,082)

Total Ongoing Operations $770,669 $748,773 97% ($21,896)

Receivership Funding

Salaries & Compensation $157,610 $152,140 97% ($5,470)

Outside Services - Personnel 665,155 432,361 65% (232,794)

Travel 24,380 16,906 69% (7,474)

Buildings 123,440 51,892 42% (71,548)

Equipment 9,878 5,384 55% (4,494)

Outside Services - Other 12,796 8,757 68% (4,039)

Other Expenses 91,674 33,672 37% (58,002)

Total Receivership Funding $1,084,934 $701,112 65% ($383,822)

Total Corporate Operating Budget $1,855,603 $1,449,885 78% ($405,718)

Investment Budget 1 $3,390 $2,938 87% ($453)

Grand Total $1,858,993 $1,452,823 78% ($406,171)

(Dollars in Thousands)

Executive Summary of 2011 Budget and Expenditures

by Major Expense Category

Through June 30, 2011
13

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, 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. 

YTD YTD % of 

Division/Office Budget Expenditures Budget Used Variance

 Corporate Operating Budget 

 Risk Management Supervision $247,207 $250,745 101% $3,538

 Depositor & Consumer Protection 68,540 69,662 102% 1,122

 Information Technology 123,293 114,441 93% (8,851)

 Administration 134,947 127,980 95% (6,967)

 Resolutions & Receiverships 986,843 612,054 62% (374,789)

 Legal 152,392 147,015 96% (5,377)

 Insurance & Research 19,071 18,174 95% (897)

 Finance 18,778 16,655 89% (2,123)

 Inspector General 22,277 14,988 67% (7,289)

 Corporate University - CEP 10,076 10,150 101% 74

 Corporate University - Corporate 9,347 10,056 108% 740

 Executive Support 1 16,965 13,757 81% (3,208)

 Executive Offices 2 3,333 3,055 92% (278)

 Complex Financial Institutions 15,696 8,513 54% (7,183)

 CIO Council 26,838 32,640 122% 5,771

 Total, Corporate Operating Budget $1,855,603 $1,449,885 78% ($405,718)

 Investment Budget 3

 Information Technology $3,390 $2,938 87% ($453)

 Total, Investment Budget 3 $3,390 $2,938 87% ($453)

 Combined Division/Office Budgets

 Risk Management Supervision $247,207 $250,745 101% $3,538

 Depositor & Consumer Protection 68,540 69,662 102% 1,122

 Information Technology 126,683 117,379 93% (9,304)

 Administration 134,947 127,980 95% (6,967)

 Resolutions & Receiverships 986,843 612,054 62% (374,789)

 Legal 152,392 147,015 96% (5,377)

 Insurance & Research 19,071 18,174 95% (897)

 Finance 18,778 16,655 89% (2,123)

 Inspector General 22,277 14,988 67% (7,289)

 Corporate University - CEP 10,076 10,150 101% 74

 Corporate University - Corporate 9,347 10,056 108% 740

 Executive Support 1 16,965 13,757 81% (3,208)

 Executive Offices 2 3,333 3,055 92% (278)

 Complex Financial Institutions 15,696 8,513 54% (7,183)

 CIO Council 26,838 32,640 122% 5,771

 Grand Total $1,858,993 $1,452,823 78% ($406,171)

(Dollars in Thousands)

Executive Summary of 2011 Budget and Expenditures

by Budget Component and Division/Office

Through June 30, 2011