V.

FINANCIAL SECTION
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 132 

Federal Deposit Insurance Corporation

Deposit Insurance Fund Balance Sheet 

As of December 31

(Dollars in Thousands)

ASSETS

 Cash and cash equivalents $ 4,872,657 $ 2,599,206

 Investment in U.S. Treasury securities (Amortized Cost of 

 $18,958,454 and $125,427,772) (Note 3) 18,928,885 122,442,357

 Assessments receivable (Note 12) 3,235,766 2,159,249

 Special assessments receivable (Note 5) 20,423,184 0

 Interest receivable on investments and other assets, net 145,780 688,061

 Receivables from resolutions, net of allowances of 

 $69,361,715 and $40,047,224 (Note 4) 97,778,346 520,555

 Property and equipment, net (Note 6) 319,733 360,141

 Operating lease right-of-use assets (Note 7) 80,747 92,406

Total Assets $ 145,785,098 $ 128,861,975

LIABILITIES

 Accounts payable and other liabilities (Note 8) $ 410,515 $ 268,216

 Operating lease liabilities (Note 7) 101,617 111,205

 Liabilities due to resolutions (Note 9) 22,513,085 846

 Postretirement benefit liability (Note 16) 255,574 231,781

 Contingent liabilities:

 Anticipated failure of insured institutions (Note 10) 725,877 31,233

 Litigation losses (Note 10) 450 800

Total Liabilities 24,007,118 644,081

 Off-balance-sheet exposure (Note 17)

FUND BALANCE

 Accumulated Net Income 121,797,208 131,176,093

ACCUMULATED OTHER COMPREHENSIVE INCOME

 Unrealized (loss) on U.S. Treasury securities, net (Note 3) (29,569) (2,985,415)

 Unrealized postretirement benefit gain (Note 16) 10,341 27,216

Total Accumulated Other Comprehensive (Loss) (19,228) (2,958,199)

Total Fund Balance 121,777,980 128,217,894

Total Liabilities and Fund Balance $ 145,785,098 $ 128,861,975

The accompanying notes are an integral part of these financial statements.

2023 2022
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FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 133 

Federal Deposit Insurance Corporation

Deposit Insurance Fund Statement of Income and Fund Balance 

For the Years Ended December 31

(Dollars in Thousands)

REVENUE

 Assessments (Note 12) $ 33,188,017 $ 8,310,816

 Interest on U.S. Treasury securities 2,735,999 1,246,302

 Return of unclaimed insured deposits (Note 13) 16,714 37,913

 Other revenue 55,057 11,635

Total Revenue 35,995,787 9,606,666

EXPENSES AND LOSSES

 Operating expenses (Note 14) 2,125,978 1,882,884

 Provision for insurance losses (Note 15) 40,950,768 (82,964)

 Realized loss on sale of investments, net (Note 3) 2,291,859 0

 Insurance and other expenses 6,067 3,531

Total Expenses and Losses 45,374,672 1,803,451

Net (Loss) Income (9,378,885) 7,803,215

OTHER COMPREHENSIVE INCOME

 Unrealized gain (loss) on U.S. Treasury securities, net 2,955,846 (2,836,300)

 Unrealized postretirement benefit (loss) gain (Note 16) (16,875) 109,939

Total Other Comprehensive Gain (Loss) 2,938,971 (2,726,361)

Comprehensive (Loss) Income (6,439,914) 5,076,854

Fund Balance - Beginning 128,217,894 123,141,040

Fund Balance - Ending $ 121,777,980 $ 128,217,894

The accompanying notes are an integral part of these financial statements.

2023 2022
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FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 134 

Federal Deposit Insurance Corporation

Deposit Insurance Fund Statement of Cash Flows

For the Years Ended December 31

(Dollars in Thousands)

OPERATING ACTIVITIES

Provided by:

 Assessments $ 11,684,277 $ 7,862,116

 Interest on U.S. Treasury securities 2,719,799 3,127,123

 Recoveries from financial institution resolutions 43,143,054 470,381

 Return of unclaimed insured deposits 17,583 37,913

 Miscellaneous receipts 5,437 1,833

Used by:

 Operating expenses (2,086,522) (1,806,647)

 Disbursements for financial institution resolutions (157,962,304) (3,568)

 Miscellaneous disbursements (5,847) (802)

Net Cash (Used) Provided by Operating Activities (102,484,523) 9,688,349

INVESTING ACTIVITIES

Provided by:

 Maturity of U.S. Treasury securities 37,625,000 48,400,000

 Sale of U.S. Treasury securities 79,819,109 0

Used by:

 Purchase of U.S. Treasury securities (12,671,211) (60,978,672)

 Purchase of property and equipment (14,924) (73,412)

Net Cash Provided (Used) by Investing Activities 104,757,974 (12,652,084)

Net Increase (Decrease) in Cash and Cash Equivalents 2,273,451 (2,963,735)

Cash and Cash Equivalents - Beginning 2,599,206 5,562,941

Cash and Cash Equivalents - Ending $ 4,872,657 $ 2,599,206

The accompanying notes are an integral part of these financial statements.

2023 2022
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FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 135 

DEPOSIT INSURANCE FUND 

NOTES TO THE FINANCIAL STATEMENTS 

December 31, 2023 and 2022 

1 

1. Operations of the Deposit Insurance Fund

OVERVIEW

The Federal Deposit Insurance Corporation (FDIC) is the

independent deposit insurance agency created by Congress 

in 1933 to maintain stability and public confidence in the

nation’s banking system. Provisions that govern the FDIC’s 

operations are generally found in the Federal Deposit

Insurance (FDI) Act, as amended (12 U.S.C. 1811, et seq). In

accordance with the FDI Act, the FDIC, as administrator of the

Deposit Insurance Fund (DIF), insures the deposits of banks

and savings associations (insured depository institutions). In 

cooperation with other federal and state agencies, the FDIC

promotes the safety and soundness of insured depository 

institutions (IDIs) by identifying, monitoring, and addressing

risks to the DIF. Federally chartered IDIs are supervised by the

Office of the Comptroller of the Currency; state chartered IDIs

that are members of the Federal Reserve are supervised by

the Federal Reserve and their state supervisors; and state

chartered IDIs that are not members of the Federal Reserve

are supervised by the FDIC and their state supervisors.

In addition to being the administrator of the DIF, the FDIC is

the administrator of the Federal Savings and Loan Insurance

Corporation (FSLIC) Resolution Fund (FRF). The FRF is a

resolution fund responsible for the sale of the remaining

assets and the satisfaction of the liabilities associated with 

the former FSLIC and the former Resolution Trust

Corporation. The FDIC maintains the DIF and the FRF 

separately to support their respective functions.

Pursuant to the Dodd-Frank Wall Street Reform and

Consumer Protection Act of 2010 (Dodd-Frank Act), the FDIC 

also manages the Orderly Liquidation Fund (OLF). 

Established as a separate fund in the U.S. Treasury (Treasury), 

the OLF is inactive and unfunded until the FDIC is appointed

as receiver for a covered financial company. A covered

financial company is a failing financial company (for example,

a bank holding company or nonbank financial company) for

which a systemic risk determination has been made as set 

forth in section 203 of the Dodd-Frank Act. This systemic risk

determination is distinct from the systemic risk

determination discussed in Note 5.

The Dodd-Frank Act (Public Law 111-203) granted the FDIC

authority to establish a widely available program to

guarantee obligations of solvent IDIs or solvent depository 

institution holding companies (including affiliates) upon a

liquidity event determination during times of severe 

economic distress. The program would not be funded by the

DIF but rather by fees and assessments paid by all

participants in the program. If fees are insufficient to cover 

losses or expenses, the FDIC must impose a special 

assessment on participants as necessary to cover the 

shortfall. Any excess funds at the end of the liquidity event

program would be deposited in the General Fund of the

Treasury.

The Dodd-Frank Act also created the Financial Stability

Oversight Council of which the Chairman of the FDIC is a

member and expanded the FDIC’s responsibilities to include 

supervisory review of resolution plans (known as living wills)

and backup examination authority for systemically important

bank holding companies and nonbank financial companies

supervised by the Federal Reserve Board. The living wills

provide for an entity’s rapid and orderly resolution in the

event of material financial distress or failure.

OPERATIONS OF THE DIF

The FDIC, as administrator of the DIF, insures the deposits of 

IDIs and resolves failed IDIs upon appointment of the FDIC as 

receiver in a manner that will result in the least possible cost 

to the DIF.

The DIF is primarily funded from deposit insurance

assessments and interest earned on investments in U.S. 

Treasury securities. Other available funding sources, if

necessary, are borrowings from the Treasury, the Federal 

Financing Bank (FFB), Federal Home Loan Banks, and IDIs.

The FDIC has borrowing authority of $100 billion from the

Treasury and a Note Purchase Agreement (Agreement) with 

the FFB to enhance the DIF’s ability to fund deposit insurance.

Under the FFB Agreement, the maximum principal amount of

any Note that is offered for purchase by the FDIC to the FFB 

shall not cause the FDIC to exceed the Maximum Obligation

Limitation (MOL).

The MOL is a statutory formula that limits the amount of

obligations the DIF can incur to the sum of its cash, 90 percent

of the fair market value of other assets, and the amount

authorized to be borrowed from the Treasury. The MOL for 

the DIF was $210.0 billion and $227.5 billion as of December

31, 2023 and 2022, respectively.
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FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 136 

DEPOSIT INSURANCE FUND

2 

OPERATIONS OF RESOLUTION ENTITIES 

The FDIC, as receiver, is responsible for managing and

disposing of the assets of failed institutions in an orderly and

efficient manner. The assets held by receiverships,

conservatorships, and bridge institutions (collectively,

resolution entities), and the claims against them, are 

accounted for separately from the DIF assets and liabilities to 

ensure that proceeds from these entities are distributed

according to applicable laws and regulations. Therefore,

income and expenses attributable to resolution entities are

accounted for as transactions of those entities. The FDIC, as

administrator of the DIF, bills resolution entities for services

provided on their behalf.

2. Summary of Significant Accounting Policies

GENERAL

The financial statements include the financial position,

results of operations, and cash flows of the DIF and are 

presented in accordance with U.S. generally accepted

accounting principles (GAAP). These statements do not

include reporting for assets and liabilities of resolution

entities because these entities are legally separate and

distinct, and the DIF does not have any ownership or 

beneficial interests in them. Periodic and final accounting

reports of resolution entities are furnished to courts,

supervisory authorities, and others upon request.

USE OF ESTIMATES

The preparation of the financial statements in conformity

with GAAP requires management to make estimates and

assumptions that affect the reported amounts of assets and

liabilities, revenue and expenses, and disclosure of 

contingent liabilities and other contingencies. Actual results

could differ from these estimates. Where it is reasonably 

possible that changes in estimates will cause a material 

change in the financial statements in the near term, the

nature and extent of such potential changes in estimates have

been disclosed. The more significant estimates include the

assessments receivable and associated revenue; the special

assessments receivable and associated revenue; the

allowance for credit losses on receivables from resolutions

(including shared-loss agreements); guarantee obligations; 

the postretirement benefit obligation; and the estimated

losses for anticipated failures.

CASH EQUIVALENTS

Cash equivalents are short-term, highly liquid investments 

consisting primarily of U.S. Treasury Overnight Certificates. 

INVESTMENT IN U.S. TREASURY SECURITIES

The FDI Act requires that the DIF funds be invested in 

obligations of the United States or in obligations guaranteed

as to principal and interest by the United States. The

Secretary of the Treasury must approve all such investments

in excess of $100,000 and has granted the FDIC approval to 

invest the DIF funds only in U.S. Treasury obligations that are

purchased or sold based on market prices exclusively through 

the Treasury’s Bureau of the Fiscal Service’s Government

Account Series program.

The DIF’s investments in U.S. Treasury securities are classified

as available-for-sale (AFS). Securities designated as AFS are

presented at fair value and disclosed at amortized cost.

Unrealized gains and losses are reported as other

comprehensive income. Any realized gains and losses are

included in the Statement of Income and Fund Balance as 

components of net income. Income on securities is

calculated and recorded daily using the straight-line method 

(see Note 3).

REVENUE RECOGNITION FOR ASSESSMENTS

Assessment revenue is recognized for the quarterly period of 

insurance coverage based on an estimate. The estimate is

derived from an institution’s regular risk-based assessment

rate and assessment base for the prior quarter adjusted for

certain changes in supervisory examination ratings for larger 

institutions, modest assessment base growth and average

assessment rate adjustment factors. At the subsequent

quarter-end, the estimated revenue amounts are adjusted

when actual assessments for the covered period are 

determined for each institution (see Note 12).

CAPITAL ASSETS AND DEPRECIATION

The FDIC buildings are depreciated on a straight-line basis

over a 35- to 50-year estimated life. Building improvements

are capitalized and depreciated over the estimated useful life

of the improvements. Leasehold improvements are

capitalized and depreciated over the lesser of the remaining

life of the lease or the estimated useful life of the

improvements, if determined to be material. Capital assets 

depreciated on a straight-line basis over a five-year estimated

useful life include mainframe equipment; furniture, fixtures,

and general equipment; and internal-use software.

Computer equipment is depreciated on a straight-line basis

over a three-year estimated useful life (see Note 6).

LEASES

The Balance Sheet presents operating leases in the

“Operating lease right-of-use assets” and “Operating lease

liabilities” line items. Operating lease liabilities and right-of-
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FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 137 

 

 

NOTES TO THE FINANCIAL STATEMENTS

3 

use (ROU) assets are recognized based on the present value of 

the future minimum lease payments over the lease term at

the commencement date. The FDIC has elected to use its riskfree rate at the commencement date in determining the

present value of future payments for all classes of underlying

assets, unless the rate implicit in the lease is readily 

determinable.

The operating lease ROU asset also includes lease 

prepayments and excludes lease incentives received. The

lease term includes options to extend or terminate the lease

when it is reasonably certain that the FDIC will exercise that 

option. For the DIF, the FDIC recognizes lease expense on a

straight-line basis over the lease term. For lease

arrangements that contain both lease and nonlease

components, the FDIC has elected to account for them as a

single lease component for all classes of underlying assets

(see Note 7).

ALLOWANCE FOR CREDIT LOSSES

The allowance for credit losses on receivables from

resolutions includes management’s estimate of all expected

credit losses based on past events, current conditions, and

reasonable and supportable forecasts about the future, as 

applicable (see Note 4).

PROVISION FOR INSURANCE LOSSES 

The provision for insurance losses primarily represents

changes in the allowance for credit losses on receivables from 

resolutions and the contingent liability for anticipated failure 

of insured institutions (see Note 15).

REPORTING ON VARIABLE INTEREST ENTITIES 

The FDIC conducts a qualitative assessment of its relationship

with variable interest entities (VIEs) as required by the

Financial Accounting Standards Board Accounting Standards

Codification (FASB ASC) Topic 810, Consolidation. This

assessment is conducted to determine if the FDIC, in its 

corporate capacity, has (1) the power to direct the activities

that most significantly affect the economic performance of 

the VIE and (2) an obligation to absorb losses of the VIE or the 

right to receive benefits from the VIE that could potentially be

significant to the VIE. When a variable interest holder has met 

both of these tests, the enterprise is considered the primary 

beneficiary and must consolidate the VIE.

In accordance with the provisions of FASB ASC Topic 810, an

assessment of the terms of the legal agreement for the VIE is 

conducted to determine whether any of the terms had been 

activated or modified in a manner that would cause the FDIC,

in its corporate capacity, to be characterized as a primary

beneficiary. In making that determination, management

considers which, if any, activities were significant to the VIE. 

In 2023, the receivership related to the failure of First Republic

Bank engaged in a structured transaction, which resulted in

the issuance of a note obligation that the FDIC guaranteed, in 

its corporate capacity. As the guarantor of this note

obligation for the structured transaction, the FDIC, in its 

corporate capacity, holds an interest in a VIE. It was 

determined that the structured transaction did not include

significant activities and that the design of the entity was the

best indicator of which party was the primary beneficiary. As

such, the conclusion of the qualitative assessment of the

FDIC’s relationship with the VIE as required by ASC Topic 810 

is that the FDIC, in its corporate capacity, has not engaged in 

any activity that would cause the FDIC to be characterized as 

a primary beneficiary to the VIE with which it was involved as 

of December 31, 2023. Therefore, consolidation is not

required for the December 31, 2023 DIF financial statements. 

Note 8, under FDIC Guaranteed Debt of a Structured

Transaction, fully describes the FDIC’s involvement with the

VIE. 

RELATED PARTIES 

The nature of related parties and a description of related

party transactions are discussed in Note 1 and disclosed

throughout the financial statements and notes.

APPLICATION OF RECENT ACCOUNTING STANDARDS

In June 2016, the FASB issued Accounting Standards Update

2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments. The

guidance replaces the incurred loss impairment model with a

new expected credit loss model for financial assets measured

at amortized cost and for off-balance-sheet credit exposures.

The guidance also amends the AFS debt securities

impairment model by requiring the use of an allowance to 

record estimated credit losses (and subsequent recoveries) 

related to AFS debt securities when their fair value is less than 

their amortized cost basis due to credit losses.

Topic 326 was effective for the DIF on January 1, 2023 and did

not have a material impact on the DIF. However, presentation 

changes were required to the “Investment in U.S. Treasury

securities” and “Receivables from resolutions, net” line items 

on the Balance Sheet.

Other recent accounting standards have been deemed not

applicable or material to the financial statements as 

presented.
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FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 138 

DEPOSIT INSURANCE FUND

4 

RECLASSIFICATION

In 2023, the FDIC reclassified amounts out of “Accounts

payable and other liabilities” into a new line item “Liabilities 

due to resolutions” on the Balance Sheet due to materiality. 

For comparative purposes, the FDIC conformed 2022 to the 

new presentation. 

3. Investment in U.S. Treasury Securities 

The “Investment in U.S. Treasury securities” line item on the Balance Sheet consisted of the following components by maturity 

(dollars in thousands). 

December 31, 2023

Yield at

Maturity Purchase

Within 1 year 4.66% $ 19,100,000 $ 18,958,454 $ 8,541 $ (38,110) $ 18,928,885

Total $ 19,100,000 $ 18,958,454 $ 8,541 $ (38,110) (a) $ 18,928,885

Value

Face Carrying

Amount

Net Unrealized

Holding

Gains

Fair

Value

Unrealized

Holding

Losses

U.S. Treasury notes and bonds

(a) These unrealized losses occurred as a result of changes in market interest rates. The FDIC does not intend to sell the securities and is not likely to be required to sell them before 

recovery of their amortized cost basis. However, the $38 million reported as total unrealized losses occurred over a period of 12 months or longer, with an aggregate related fair value 

of $5.5 billion applied to the affected securities. The aggregate related fair value of all securities with unrealized losses was $5.5 billion as of December 31, 2023. 

December 31, 2022

Yield at

Maturity Purchase

Within 1 year 0.67% $ 62,125,000 (a) $ 62,596,907 $ 0 $ (1,214,092) $ 61,382,815

After 1 - 5 years 2.81% 64,150,000 62,830,865 16,308 (1,787,631) 61,059,542

Total $ 126,275,000 $ 125,427,772 $ 16,308 $ (3,001,723) (b) $ 122,442,357

U.S. Treasury notes and bonds

Fair

Value

Unrealized

Holding

Losses

Carrying

Amount

Net Unrealized

Holding

Value Gains

Face

(a) Includes three securities totaling $3.0 billion, which matured on Saturday, December 31, 2022. Settlements occurred the next business day, January 3, 2023. 

(b) These unrealized losses occurred as a result of changes in market interest rates. As of December 31, 2022, the FDIC does not intend to sell the securities and is not likely to be required 

to sell them before recovery of their amortized cost basis. However, $2.2 billion of the $3.0 billion reported as total unrealized losses occurred over a period of 12 months or longer, with 

an aggregate related fair value of $62.8 billion applied to the affected securities. The aggregate related fair value of all securities with unrealized losses was $112.9 billion as of December 

31, 2022. 

In 2023, the FDIC sold securities designated as AFS for total 

proceeds of $79.8 billion. The gross realized gains and losses 

on these sales were $135 million and $2.4 billion, respectively, 

which resulted in a total net loss of $2.3 billion. The cost of 

the sold securities was determined based on specific 

identification. The net loss was recognized in the “Realized 

loss on sale of investments, net” line item on the Statement 

of Income and Fund Balance. The FDIC reclassified the $2.3 

billion out of accumulated other comprehensive income to 

the “Realized loss on sale of investments, net” line item, 

representing net unrealized losses recorded as of December 

31, 2022 ($2.2 billion) and net holding losses arising during the 

current period ($76 million). The reclassification of net losses 

had no net effect on the 2023 comprehensive loss on the DIF 

Statement of Income and Fund Balance. 

4. Receivables from Resolutions, Net

The receivables from resolutions result from DIF payments to 

cover obligations to insured depositors (subrogated claims), 

advances to resolution entities for working capital, and

administrative expenses paid on behalf of resolution entities. 

Any related allowance for credit losses represents the

difference between the funds advanced and/or obligations 

incurred and the expected repayment. Estimated future

payments on losses incurred on assets sold to an acquiring 

institution under a shared-loss agreement (SLA) are factored 

into the computation of the expected repayment. Assets held 

by resolution entities (including structured transactionrelated assets from current and prior year failures) are the 

main source of repayment of the DIF’s receivables from 

resolutions. 
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FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 139 

 

 

NOTES TO THE FINANCIAL STATEMENTS

5 

As of December 31, 2023, the FDIC, as receiver, managed 74 

active receiverships, including 7 receiverships established in 

2023. The resolution entities held assets with a total book 

value of $115.2 billion as of December 31, 2023 and $943

million as of December 31, 2022. Of these assets, cash,

investments, and other receivables total $30.6 billion and 

$909 million, respectively. Other assets held by resolution 

entities are assets in liquidation of $84.6 billion as of 

December 31, 2023 and $34 million as of December 31, 2022.

Estimated cash recoveries from the management and

disposition of assets in liquidation that are used to determine

the allowance for credit losses are based on asset recovery 

rates from several sources, which may include the following:

actual or pending institution-specific asset disposition data, 

failed institution-specific asset valuation data, aggregate 

asset valuation data on several recently failed or troubled

institutions, sampled asset valuation data, and empirical 

asset recovery data based on failures since 2007.

Methodologies for determining the asset recovery rates

incorporate estimating future cash recoveries, net of 

applicable liquidation cost estimates, and discounting based

on market-based risk factors applicable to a given asset’s type

and quality. The resulting estimated asset recoveries are then 

used to derive the allowance for credit losses on the

receivables from these resolutions.

For failed institutions resolved using a purchase and

assumption transaction with an accompanying SLA, the 

projected future shared-loss payments and the end of

agreement true-up recoveries on the covered residential and

commercial loan assets sold to the acquiring institution under

the agreement are considered in determining the allowance

for credit losses on the receivables from these resolutions.

True-up recoveries are projected to be received at expiration 

in accordance with the terms of the SLA. The shared-loss cost 

projections are based on the covered assets’ intrinsic value,

which is determined using financial models that consider the

quality, condition and type of covered assets, current and

future market conditions, risk factors and estimated asset

holding periods. The shared-loss cost projections were

primarily based on third-party valuations estimating the

cumulative loss of covered assets.

Note that estimated asset recoveries on assets in liquidation

are regularly evaluated during the year, but remain subject to

uncertainties because of potential changes in economic and

market conditions, which may cause the DIF’s actual 

recoveries to vary significantly from current estimates.

PURCHASE AND ASSUMPTION TRANSACTIONS WITH

SHARED-LOSS AGREEMENTS

During 2023, the FDIC resolved three failures using purchase 

and assumption resolution transactions with accompanying

SLAs on total assets of $229.3 billion purchased by financial 

institution acquirers. The acquirers assumed all of the 

deposits and purchased most of the assets of the failed

institutions. The majority of the commercial and residential

loan assets were purchased under an SLA, where the FDIC

agrees to share in future losses and recoveries experienced by 

the acquirer on those assets covered under the agreement.

SLAs are used by the FDIC to keep assets in the private sector 

and to minimize disruptions to loan customers. 

Losses on the covered assets are shared between the acquirer

of the failed institution and the FDIC, in its receivership

capacity, of the failed institution when losses occur through 

the sale, foreclosure, loan modification, or write-down of

loans in accordance with the terms of the SLA. The

agreements cover a seven- to eight-year period with the

receiver covering 50 to 95 percent of the losses incurred by the

acquiring bank. As mentioned above, the estimated sharedloss liability is accounted for by the receiver and is included in

the calculation of the DIF’s allowance for credit losses against

the corporate receivable from the resolution. As shared-loss

claims are asserted and proven, receiverships satisfy these 

shared-loss payments using available liquidation funds

and/or by drawing on amounts due from the DIF for funding

the deposits assumed by the acquirer (see Note 9). 

As of December 31, 2023, no shared-loss payments have been

made. In addition, the receiverships are estimated to pay $2.4

billion over the duration of these SLAs. 

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the DIF to

concentrations of credit risk are receivables from resolutions.

The repayment of these receivables is primarily influenced by 

recoveries on assets held by receiverships and payments on 

covered assets under SLAs. The majority of the remaining

assets in liquidation ($84.6 billion) and current shared-loss 

covered assets ($229.3 billion), which together total $314

billion, are primarily concentrated in commercial loans

($122.7 billion), residential loans ($106.8 billion), structured 

transaction-related assets ($66.7 billion), and securities

($12.9 billion). 




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FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 140 

DEPOSIT INSURANCE FUND

6 

5. Special Assessments Receivable 

In accordance with Section 13(c)(4)(G) of the FDI Act, on March 

12, 2023, the Secretary of the Treasury, acting on the 

recommendation of the FDIC Board of Directors and the 

Board of Governors of the Federal Reserve System and after 

consultation with the President of the United States, invoked 

the statutory systemic risk exception to allow the FDIC to 

complete its resolution of both Silicon Valley Bank, Santa 

Clara, CA, and Signature Bank, New York, NY, in a manner that 

protected uninsured depositors. Section 13(c)(4)(G) of the 

FDI Act also provides the FDIC with discretion in the design of 

a time period for any special assessments to recover the 

losses to the DIF as a result of the systemic risk 

determination. Accordingly, in November 2023, the FDIC 

Board issued a final rule to impose a special assessment on 

applicable IDIs to recover the loss to the DIF arising from the 

protection of uninsured depositors in connection with the 

systemic risk determination. 

The assessment base for the special assessments will be 

equal to an IDI’s estimated uninsured deposits, reported as of 

December 31, 2022, adjusted to exclude the first $5 billion in 

estimated uninsured deposits from the IDI, or for IDIs that are 

part of a holding company with one or more subsidiary IDIs, 

at the banking organization level. This special assessment 

will be collected at an annual rate of approximately 13.4 basis 

points, over eight quarterly assessment periods beginning 

with the first quarterly assessment period of 2024. 

As of December 31, 2023, the DIF recorded a receivable of 

$20.4 billion, representing the estimated loss arising from the 

full coverage of uninsured deposits. No allowance for credit 

losses is recognized for the special assessments receivable 

because historical credit loss information, adjusted for 

current conditions and reasonable and supportable 

forecasts, results in an expectation that the receivable will be 

paid. In addition, the DIF recognized assessment revenue of 

$20.4 billion that fully offset the estimated losses arising from 

the full coverage of uninsured deposits; therefore, there was 

no impact to the Fund Balance of the DIF. Because the 

estimated loss pursuant to the systemic risk determination 

will be periodically adjusted, the FDIC retains the ability to: 

cease collection early, 

extend the special assessment collection period one or 

more quarters beyond the initial eight-quarter 

collection period to collect the difference between 

actual or estimated losses and the amounts collected, 

and 

 impose a final shortfall special assessment on a onetime basis after the receiverships for Silicon Valley

Bank and Signature Bank terminate.

6. Property and Equipment, Net 

Depreciation expense was $35 million and $39 million for 2023 

and 2022, respectively. The “Property and equipment, net” 

line item on the Balance Sheet consisted of the following 

components (dollars in thousands). 

Land $ 37,352 $ 37,352

Buildings (including building and

leasehold improvements) 384,381 385,151

Application software (includes work-inprocess) 84,679 111,172

Furniture, fixtures, & equipment 34,263 33,108

Accumulated depreciation (220,942) (206,642)

Total $ 319,733 $ 360,141

December 31

2023

December 31

2022

7. Leases

The FDIC has operating leases for office space, a data center, 

and certain equipment. The lease agreements generally 

contain escalation clauses resulting in upward adjustments in 

lease payments, usually on an annual basis. Many leases 

contain one or more options to extend, with renewal terms 

that can extend the lease term from one to five years, and 

some leases may include options to terminate. The following 

table provides relevant information regarding FDIC operating 

leases for the years ended December 31, 2023 and 2022 

(dollars in thousands). 

Operating lease cost $ 37,874 $ 39,782

Cash paid for amounts included in the 

measurement of operating leases $ 37,945 36,099

ROU assets obtained in exchange for new

operating lease liabilities $ 23,612 40,046

Weighted Average

 Remaining lease term (in years) 4.38 5.15

 Discount rate 2.57% 2.05%

December 31

2023

December 31

2022
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 141 

 

 

NOTES TO THE FINANCIAL STATEMENTS

7 

The following table provides a maturity analysis of the FDIC’s

operating lease liabilities as of December 31, 2023 (dollars in 

thousands).

2024 $ 34,379

2025 25,653

2026 11,932

2027 10,161

2028 7,238

2029/Thereafter 20,669

Total future minimum lease payments $ 110,032

Less: Imputed interest (8,415)

Total operating lease liabilities $ 101,617

2023

December 31

As of December 31, 2023, the FDIC has additional operating

leases with future payments totaling $2 million for office

space, which commence after December 31, 2023, and are not

included in the amounts presented above.

8. Other Liabilities 

FDIC GUARANTEED DEBT OF A STRUCTURED TRANSACTION 

In 2023, the FDIC, as receiver, used a structured transaction (a

Securitization and, hereafter, trust) to sell a $50 billion 

Purchase Money Note (PMN) issued by JP Morgan Chase Bank,

N.A. (JP Morgan), which is supported by a pool of mortgage 

loans (underlying collateral) acquired by JP Morgan through 

the related receivership and sale of First Republic Bank to JP 

Morgan. This resulted in the issuance of a single note (Note)

issued by the trust and sold to the FFB. This transaction with

FFB is not associated with the FFB Agreement that is

described in Note 1. In exchange for a fee, the FDIC, in its

corporate capacity, guarantees the timely payment of the

principal and interest due on the Note, with the guarantee

expected to terminate in 2028 when the Note matures. If the

FDIC is required to perform under its guarantee, it acquires an

interest in the cash flows of the trust equal to the amount of 

guarantee payments made plus accrued interest. Moreover,

the trust has established an interest reserve (reserve account)

to pay any interest shortfalls (the difference between the

coupon rate collected on the PMN and the anticipated coupon 

rate on the Note) and the Note may be paid prior to maturity.

In exchange for its guarantee, the FDIC, in its corporate 

capacity, received a $125 million fee which is recorded as 

deferred revenue included in the “Accounts payable and

other liabilities” line item and recognized as revenue on a

straight-line basis over the term of the Note. As of December

31, 2023, the amount of deferred revenue recorded was $117

million.

As of December 31, 2023, the maximum loss exposure is the

total outstanding Note of $50 billion. The FDIC’s exposure as

guarantor is protected by (1) JP Morgan’s strength as a

counterparty and commitment under the PMN, (2) overcollateralization of the PMN’s underlying collateral, (3) the 

funded reserve account to cover interest shortfalls, and (4) an

option to prepay the Note at par prior to maturity. As such,

the FDIC considers the likelihood of having to fund the Note

as remote and has estimated no credit losses over the life of 

the guarantee; therefore, no liability is required to be

recorded.

Except as discussed above, the DIF recorded no other

structured transaction-related assets or liabilities on its

balance sheet. To date, the FDIC, in its corporate capacity,

has not provided, and does not intend to provide, any form of 

financial or other type of support for the structured

transaction that it was not previously contractually required

to provide.

9. Liabilities Due to Resolutions

As of December 31, 2023 and 2022, the DIF recorded liabilities

totaling $20.2 billion and $85 thousand, respectively, to

resolution entities representing the agreed-upon value of

assets transferred from the receiverships, at the time of

failure, to the acquiring institutions for use in funding the

deposits assumed by the acquiring institutions. The DIF

satisfies these liabilities by sending cash directly to a

receivership to pay claims, liabilities, and other expenses of 

the receiverships or by offsetting receivables from resolutions

when a receivership declares a dividend.

In addition, there were $2.3 billion and $761 thousand in

unpaid deposit claims related to multiple receiverships as of 

December 31, 2023 and 2022, respectively. The DIF pays these 

liabilities when the claims are proven.

10. Contingent Liabilities 

ANTICIPATED FAILURE OF INSURED INSTITUTIONS

The DIF records a contingent liability and a loss provision for

DIF-insured institutions that are likely to fail when the liability

is probable and reasonably estimable, absent some favorable
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FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 142 

DEPOSIT INSURANCE FUND

8 

event such as obtaining additional capital or merging. The

contingent liability is derived by applying expected failure 

rates and loss rates to the institutions based on supervisory 

ratings, balance sheet characteristics, and projected capital 

levels.

The banking industry remained resilient through the third 

quarter of 2023 amidst rising interest rates and economic

uncertainty. Five financial institutions failed during 2023,

with total assets of $532.2 billion, and an estimated loss on 

insured deposits to the DIF at December 31, 2023 of $20.0

billion. According to the third quarter 2023 financial data

submitted by FDIC-insured institutions, the banking industry

reported year-to-date net income of $218.6 billion, an

increase of 11.7 percent from the same period a year ago. The

increase in net income resulted from an increase in net

interest income exceeding growth in provision expenses and

noninterest expenses.

Provisions for credit losses reported by the banking industry 

for the first nine months of 2023 were $61.7 billion, versus 

$30.9 billion reported for the same time period a year ago. 

This change reflects loan growth as well as new economic

uncertainties. Despite these uncertainties, credit quality

metrics remained stable. The total noncurrent loan rate was 

0.82 percent as of September 30, 2023, up 10 basis points from

the same quarter in 2022 but well below the most recent high 

of 5.47 percent in March 31, 2010. 

The rising interest-rate environment has improved bank

margins. As of third quarter 2023, the quarterly net interest

margin (NIM) rose to 3.30 percent, up 16 basis points from a

year ago and up 74 basis points since the Federal Reserve 

began to increase the federal funds rate in first quarter 2021.

Growth in interest income outpaced growth in interest

expense, pushing net interestincome for the first nine months

of 2023 up $67.4 billion (14.8 percent) from the same period a

year ago. 

Due to the increase in net income and modest decline in riskweighted assets, risk-based capital ratios improved in the

third quarter 2023 from the same quarter in 2022. Total riskbased capital improved 53 basis points to 15.36 percent.

The contingent liability increased to $726 million as of 

December 31, 2023, compared to $31 million as of December

31, 2022. The increase reflects deterioration in financial 

conditions at a small number of troubled institutions. 

In addition to the recorded contingent liability, the FDIC has

identified risks in the financial services industry that could

result in additional losses to the DIF, should potentially

vulnerable insured institutions ultimately fail. As a result of 

these risks, the FDIC believes that it is reasonably possible

that the DIF could incur additional estimated losses of

approximately $4.0 billion as of December 31, 2023,

compared to $273 million at December 31, 2022. The actual 

losses, if any, will largely depend on future economic and

market conditions and could differ materially from this

estimate.

Elevated inflation and interest rates, along with ongoing

geopolitical uncertainties may cause bank profitability, credit

quality, and loan growth to weaken. The FDIC continues to

evaluate risks to affected institutions in light of existing

economic and financial conditions, and the extent to which

such risks may put stress on the resources of the insurance

fund. 

LITIGATION LOSSES

The DIF records an estimated loss for unresolved legal cases 

to the extent that those losses are considered probable and

reasonably estimable. The FDIC recorded probable litigation 

losses of $450 thousand and $800 thousand for the DIF as of 

December 31, 2023 and 2022, respectively. In addition, the 

FDIC has identified no reasonably possible losses from 

unresolved cases as of December 31, 2023 and 2022.

11. Other Contingencies

PURCHASE AND ASSUMPTION INDEMNIFICATION

In connection with purchase and assumption agreements for

resolutions, the FDIC, in its receivership capacity, generally

indemnifies the purchaser of a failed institution’s assets and

liabilities in the event a third party asserts a claim against the

purchaser unrelated to the explicit assets purchased or 

liabilities assumed at the time of failure. The FDIC, in its 

corporate capacity, is a secondary guarantor if a receivership

is unable to pay. These indemnifications generally extend for

a term of six years after the date of institution failure. The

FDIC is unable to estimate the maximum potential liability for

these types of guarantees as the agreements do not specify a 

maximum amount and any payments are dependent upon 

the outcome of future contingent events, the nature and

likelihood of which cannot be determined at this time. During

2023 and 2022, the FDIC, in its corporate capacity, made no

indemnification payments under such agreements, and no

amount has been accrued in the accompanying financial 

statements with respect to these indemnification guarantees.




FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 143 

 

 

NOTES TO THE FINANCIAL STATEMENTS

9 

12. Assessments

The FDIC deposit insurance assessment system is mandated 

by section 7 of the FDI Act and governed by part 327 of title 12 

of the Code of Federal Regulations (12 CFR Part 327). The riskbased system requires the payment of quarterly assessments 

by all IDIs. 

In response to the Dodd-Frank Act, the FDIC implemented 

several changes to the assessment system and developed a 

comprehensive, long-term fund management plan. The longterm fund management plan is designed to restore and 

maintain a positive fund balance for the DIF even during a 

banking crisis and achieve moderate, steady assessment 

rates throughout any economic cycle. The DIF reserve ratio, 

which is the ratio of the DIF balance to estimated insured 

deposits, is a key measure of fund adequacy. Summarized 

below are key longer-term provisions of the plan. 

The FDIC Board of Directors designates a reserve ratio 

for the DIF and publishes the designated reserve ratio 

(DRR) before the beginning of each calendar year, as 

required by the FDI Act. Accordingly, in November 

2023, the FDIC published a notice maintaining the DRR 

at 2 percent for 2024. The DRR is an integral part of the 

FDIC’s comprehensive, long-term management plan 

for the DIF and is viewed as a long-range, minimum 

goal for the reserve ratio. 

The FDIC suspended dividends indefinitely, and, in lieu 

of dividends, prescribes progressively lower 

assessment rates when the reserve ratio exceeds 2 

percent and 2.5 percent. 

The Dodd-Frank Act increased the minimum reserve ratio for 

the DIF to 1.35 percent, up from the previous statutory 

minimum of 1.15 percent. If the reserve ratio falls below 1.35 

percent, or the FDIC projects that it will within six months, the 

FDIC generally must implement a Restoration Plan that will 

return the DIF to 1.35 percent within eight years. In 

September 2020, the FDIC established a Restoration Plan, 

maintaining the assessment rate schedules in place at the 

time, when the reserve ratio fell below 1.35 percent, to 1.30 

percent as of June 30, 2020, due to extraordinary insured 

deposit growth in the first and second quarters of 2020. In 

June 2022, the FDIC adopted an Amended Restoration Plan 

that would increase assessment rates because the reserve 

ratio was at risk of not reaching the statutory minimum of 1.35 

percent by the statutory deadline of September 30, 2028. 

In October 2022, the FDIC Board issued a final rule related to

increasing assessment rates. Under the rule, the FDIC

increased the initial base deposit insurance assessment rates 

for all IDIs by 2 basis points, beginning with the first quarterly 

assessment period of 2023. The increase in the assessment

rates will remain in effect unless and until the reserve ratio

meets or exceeds 2 percent in order to support progress 

towards the 2 percent DRR. 

ASSESSMENT REVENUE 

Annual assessment rates averaged approximately 6.1 cents 

and 4.0 cents per $100 of the assessment base in 2023 and 

2022, respectively. The assessment base is generally defined 

as average consolidated total assets minus average tangible 

equity (measured as Tier 1 capital) of an IDI during the 

assessment period. 

The “Assessments receivable” line item on the Balance Sheet 

of $3.2 billion and $2.2 billion represents the estimated 

premiums due from IDIs for the fourth quarter of 2023 and 

2022, respectively. No allowance for credit losses is 

recognized for Assessments Receivable because historical 

credit loss information, adjusted for current conditions and 

reasonable and supportable forecasts, results in an 

expectation that the receivable will be paid. The actual 

deposit insurance assessments for the fourth quarter of 2023 

will be billed and collected at the end of the first quarter of 

2024. The DIF recognized $33.2 billion and $8.3 billion as 

assessment revenue from institutions during 2023 and 2022, 

respectively. The year-over-year increase of $24.9 billion was 

primarily due to special assessments of $20.4 billion. 

PENDING LITIGATION FOR UNDERPAID ASSESSMENTS 

On January 9, 2017, the FDIC filed suit in the United States 

District Court for the District of Columbia (and amended this 

complaint on April 7, 2017), alleging that Bank of America, 

N.A. (BoA) underpaid its insurance assessments for multiple 

quarters based on the underreporting of counterparty 

exposures. In total, the FDIC alleges that BoA underpaid 

insurance assessments by $1.12 billion, including interest for 

the quarters ending March 2012 through December 2014. The 

FDIC invoiced BoA for $542 million and $583 million 

representing claims in the initial suit and the amended 

complaint, respectively. BoA has failed to pay these past due 

amounts. Pending resolution of this matter, BoA has fully 

pledged security with a third-party custodian pursuant to a 

security agreement with the FDIC. As of December 31, 2023, 

the total amount of unpaid assessments (including accrued 

interest) was $1.26 billion. For the years ending December 31, 

2023 and 2022, the impact of this litigation is not reflected in 

the financial statements of the DIF.
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 144 

DEPOSIT INSURANCE FUND

10 

RESERVE RATIO 

As of September 30, 2023 and December 31, 2022, the DIF 

reserve ratio was 1.13 percent and 1.25 percent, respectively. 

13. Return of Unclaimed Insured Deposits

The Unclaimed Deposits Amendments Act of 1993 (UDAA), 

Public Law 103-44, amended the FDI Act effective June 28, 

1993 (codified as 12 U.S.C. § 1822 (e)). In accordance with the 

UDAA, the FDIC delivers to the appropriate states insured 

bank deposits not claimed within 18 months of the date when 

the FDIC initiates payment of insured deposits as a part of a 

bank failure, unless the appropriate state declines to accept 

custody. After receipt, states have custody of the deposits for 

10 years, during which time a state treats deposits as 

unclaimed property. At the end of the 10 years, states are 

required to transfer any remaining unclaimed deposits to the 

FDIC and those deposits become the FDIC’s property. As of 

December 31, 2023 and 2022, states have returned $17 million 

and $38 million, respectively, of unclaimed insured deposits 

to the FDIC, which the DIF recognized as revenue. 

14. Operating Expenses 

The “Operating expenses” line item on the Statement of 

Income and Fund Balance consisted of the following

components (dollars in thousands). 

Salaries and benefits $ 1,488,361 $ 1,343,042

Outside services 306,070 269,741

Travel 53,409 20,528

Buildings and leased space 86,360 75,649

Software/Hardware maintenance 154,511 119,780

Depreciation of property and equipment 35,094 38,858

Other 25,843 22,993

Subtotal 2,149,648 1,890,591

Less: Expenses billed to resolution 

entities and others (23,670) (7,707)

Total $ 2,125,978 $ 1,882,884

December 31

2023

December 31

2022

15. Provision for Insurance Losses 

The “Provision for insurance losses” line item on the Statement of Income and Fund Balance is impacted by the Balance Sheet 

line item activity depicted in the table below. The table primarily analyzes the changes in estimated losses for actual and 

anticipated failures (dollars in millions). 

December 31, 2023

Balance at January 1, 2023 $ 0 $ 40,568 $ (40,047) $ (31) $ (1) $ (1)

 Estimated losses on insured and uninsured deposits for 

current year failures 40,370 (40,370)

 Change in contingent liability for anticipated failures, net 1 695 (695)

 Adjustments to estimated losses for prior year failures (105) 105

 Disbursements for failures 2 393,148 (277,988)

 Recoveries from resolutions 3 (257,953) 257,763

 Write-offs for inactivated receiverships (4) (10,533) 10,537

 Other (5) 1,910 413 1 (2,287)

Balance at December 31, 2023 $ 40,951 $ 167,140 $ (69,362) $ (726) $ 0 $ (22,513)

for Insurance

Losses

from

Resolutions

Liabilities

due to

Resolutions

Allowance

for Credit

Losses

Provision Receivables

Anticipated 

 Failures 

Contingent Liabilities for:

Litigation 

Losses

1

Represents institutions that were added or removed from the contingent liability, as well as the change in the contingent liability for institutions that remained in the liability year-overyear. 

2

Includes $278 billion of non-cash transactions from receiverships (see Note 9). 

3

Includes $257.8 billion of non-cash dividends from receiverships (see Note 9). 
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 145 

 

 

NOTES TO THE FINANCIAL STATEMENTS

11 

December 31, 2022

Balance at January 1, 2022 $ 0 $ 56,228 $ (55,343) $ (21) $ 0 $ (1)

 Change in contingent liability for anticipated failures, net 1 10 (10)

 Adjustments to estimated losses for prior year failures (87) 87

 Disbursements for prior year failures 10

 Recoveries from resolutions (459) 0

 Write-offs for inactivated receiverships (3) (13,719) 13,722

 Other (3) (1,492) 1,487 (1) 0

Balance at December 31, 2022 $ (83) $ 40,568 $ (40,047) $ (31) $ (1) $ (1)

Provision Receivables Allowance Contingent Liabilities for:

for Insurance from for Credit Anticipated 

Losses Resolutions Losses Failures 

Liabilities

due to

Resolutions

Litigation 

Losses

1

Represents institutions that were added or removed from the contingent liability, as well as the change in the contingent liability for institutions that remained in the liability year-overyear. 

16. Employee Benefits 

PENSION BENEFITS AND SAVINGS PLANS 

Eligible FDIC employees (permanent and term employees 

with appointments exceeding one year) are covered by the 

federal government retirement plans, either the Civil Service 

Retirement System (CSRS) or the Federal Employees 

Retirement System (FERS). Although the DIF contributes a 

portion of pension benefits for eligible employees, it does not 

account for the assets of either retirement system. The DIF 

also does not have actuarial data for accumulated plan 

benefits or the unfunded liability relative to eligible 

employees. These amounts are reported on and accounted 

for by the U.S. Office of Personnel Management (OPM). 

Under the Federal Thrift Savings Plan (TSP), the FDIC 

provides FERS employees with an automatic contribution of 

1 percent of pay and an additional matching contribution up 

to 4 percent of pay. CSRS employees also can contribute to 

the TSP, but they do not receive agency matching 

contributions. In addition, under an FDIC-sponsored pre-tax 

and after-tax 401k savings plan, eligible FDIC employees are 

provided with an automatic contribution of 4 percent of pay, 

regardless of their participation in the plan, and an additional 

matching contribution up to 1 percent of pay. The expenses 

for these plans are presented in the table below (dollars in 

thousands). 

Civil Service Retirement System $ 499 $ 286

Federal Employees Retirement System (Basic Benefit) 173,957 159,473

Federal Thrift Savings Plan 43,978 39,851

FDIC Savings Plan 45,905 40,259

Total $ 264,339 $ 239,869

December 31

2023

December 31

2022

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The DIF has no postretirement health insurance liability since 

all eligible retirees are covered by the Federal Employees 

Health Benefits (FEHB) program. The FEHB is administered 

and accounted for by OPM. In addition, OPM pays the 

employer share of the retiree’s health insurance premiums. 

The FDIC provides certain life and dental insurance coverage 

for its eligible retirees, the retirees’ beneficiaries, and covered 

dependents. Retirees eligible for life and dental insurance 

coverage are those who have qualified due to (1) immediate 

enrollment upon appointment or five years of participation in 

the plan and (2) eligibility for an immediate annuity. The life 

insurance program provides basic coverage at no cost to 

retirees and allows for converting optional coverage to directpay plans. For the dental coverage, retirees are responsible 

for a portion of the premium. 

The FDIC has elected not to fund the postretirement life and 

dental benefit liabilities. As a result, the DIF recognized the 

underfunded status (the difference between the accumulated 

postretirement benefit obligation and the plan assets at fair 

value) as a liability. Since there are no plan assets, the plan’s 
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 146 

DEPOSIT INSURANCE FUND

12 

benefit liability is equal to the accumulated postretirement

benefit obligation.

Postretirement benefit obligation, gain and loss, and expense

information included in the Balance Sheet and Statement of

Income and Fund Balance are summarized as follows (dollars

in thousands). 

Accumulated postretirement benefit obligation

recognized in Postretirement benefit liability $ 255,574 $ 231,781

Cumulative net actuarial gain recognized in

accumulated other comprehensive income: Unrealized

postretirement benefit gain $ 10,341 $ 27,216

Amounts recognized in other comprehensive income:

Unrealized postretirement benefit (loss) gain

Actuarial (loss) gain $ (16,875) $ 109,939

Net periodic benefit costs recognized in Operating

expenses

 Service cost $ 3,446 $ 6,208

 Interest cost 11,666 8,122

 Net amortization out of other comprehensive

 income (280) 3,521

 Total $ 14,832 $ 17,851

December 31

2022

December 31

2023

The year-over-year increase in the accumulated

postretirement benefit obligation (APBO) of $24 million is 

primarily attributable to net periodic benefit costs of $15

million and a decrease in the discount rate that increased the

APBO by $9 million. The discount rate, used to present value

expected benefit payments, decreased from 5.27 percent to

5.04 percent at year-end 2023 to reflect changes in the

economic environment.

The annual postretirement contributions and benefits paid

are included in the table below (dollars in thousands).

Employer contributions $ 7,913 $ 7,731

Plan participants' contributions $ 1,229 $ 1,197

Benefits paid $ (9,142) $ (8,928)

December 31

2022

December 31

2023

The expected contributions for the year ending December 31,

2024 are $11 million. Expected future benefit payments for

each of the next 10 years are presented in the following table

(dollars in thousands).

2024 2025 2026 2027 2028 2029-2033

$10,311 $10,985 $11,649 $12,223 $12,656 $69,408

Assumptions used to determine the amount of the

accumulated postretirement benefit obligation and the net

periodic benefit costs are summarized as follows.

December 31 December 31

2023 2022

Discount rate for future benefits (benefit obligation) 5.04% 5.27%

Rate of compensation increase 6.95% 7.79%

Discount rate (benefit cost) 5.27% 2.82%

Dental health care cost-trend rate

 Assumed for next year 3.50% 3.50%

 Ultimate 3.50% 3.50%

 Year rate will reach ultimate 2024 2023

17. Off-Balance-Sheet Exposure 

DEPOSIT INSURANCE 

Estimates of insured deposits are derived primarily from

quarterly financial data submitted by IDIs to the FDIC and

represent the accounting loss that would be realized if all IDIs

were to fail and the acquired assets provided no recoveries.

As of September 30, 2023 and December 31, 2022, estimated

insured deposits for the DIF were $10.6 trillion and $10.3

trillion, respectively.

18. Fair Value of Financial Instruments

As of December 31, 2023 and 2022, financial assets recognized

and measured at fair value on a recurring basis include cash

equivalents (see Note 2) of $4.9 billion and $2.6 billion,

respectively, and the investment in U.S. Treasury securities

(see Note 3) of $18.9 billion and $122.4 billion, respectively.

The valuation is considered a Level 1 measurement in the fair

value hierarchy, representing quoted prices in active markets

for identical assets. Other financial assets and liabilities,

measured at amortized cost, are the receivables from

resolutions, assessments receivable, interest receivable on 

investments, other short-term receivables, and accounts

payable and other liabilities.
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 147 

 

 

NOTES TO THE FINANCIAL STATEMENTS

13 

19. Information Relating to the Statement of Cash Flows

The following table presents a reconciliation of net income to

net cash from operating activities (dollars in thousands).

Operating Activities

Net (Loss) Income: $ (9,378,885) $ 7,803,215

Adjustments to reconcile net (loss) income to net

cash (used) provided by operating activities:

Amortization of U.S. Treasury securities (595,440) 1,851,255

Depreciation on property and equipment 35,095 38,858

Retirement of property and equipment 3,799 1,540

Adjustment for cloud computing assets 16,440 0

Provision for insurance losses 40,950,768 (82,964)

Realized loss on sale of securities, net 2,291,859 0

Unrealized (loss) gain on postretirement benefits (16,875) 109,939

Change in Assets and Liabilities:

(Increase) in assessments receivable, net (1,076,517) (448,700)

(Increase) in special assessments receivable (20,423,184) 0

Decrease in interest receivable and other assets 542,816 30,667

(Increase) Decrease in receivables from resolutions (137,514,801) 458,420

Decrease (Increase) in operating lease right-of-use assets 11,659 (7,168)

Increase in accounts payable and other liabilities 142,299 12,811

(Decrease) Increase in operating lease liabilities (9,588) 20,248

Increase in liabilities due to resolutions 22,512,239 46

Increase (Decrease) in postretirement benefit liability 23,793 (99,818)

Net Cash (Used) Provided by Operating Activities $ (102,484,523) $ 9,688,349

December 31

2023

December 31

2022

20. Subsequent Events 

Subsequent events have been evaluated through February 

15, 2024, the date the financial statements are available to be 

issued. 

FDIC GUARANTEED DEBT OF STRUCTURED TRANSACTIONS

In January 2024, the FDIC, as receiver for Silicon Valley Bridge

Bank, N.A. (SVBB), used structured transactions to sell $10.5 

billion of Ginnie Mae Project Loan Securities and a $36.1 

billion Purchase Money Note (PMN) issued by First-Citizens

Bank & Trust Company (FCB). The PMN is supported by a pool 

of loans acquired by FCB through the receivership and sale of

SVBB. The trusts facilitating these structured transactions

issued Notes totaling $43.3 billion that were sold to the FFB. 

Estimated asset recoveries from these structured-transaction 

assets were used to derive the allowance for credit loss on the

DIF’s receivable from the SVBB resolution and the related

special assessments receivable as of December 31, 2023.

These transactions with FFB are not associated with the FFB 

Agreement that is described in Note 1. 

In exchange for fees received in January 2024 of $147 million,

the FDIC, in its corporate capacity, guaranteed the timely

payment of the principal and interest due on the Notes, with 

the guarantees expected to terminate in 2033 and 2028 when 

the Notes mature. 

The FDIC’s exposure as guarantor is protected by (1) the overcollateralization of the Notes’ underlying collateral, (2) the

option to prepay or terminate the Notes at par prior to 

maturity, (3) funded reserve accounts for the PMN to cover 

interest shortfalls, (4) full recourse obligation of FCB to pay

interest and principal on the PMN through maturity, and (5)

FCB’s capacity to meet its financial obligations. As such, the

FDIC considers the likelihood of having to fund the Notes as

remote.

DIVIDENDS FROM RECEIVERSHIPS 

In January 2024, DIF received approximately $43.5 billion in

dividends from the SVBB and Signature Bridge Bank

receiverships ($41.5 billion and $2.0 billion, respectively) as 

repayment of the DIF’s receivables from resolutions (see Note

4).
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 148 

Federal Deposit Insurance Corporation

FSLIC Resolution Fund Balance Sheet 

As of December 31

(Dollars in Thousands)

ASSETS

 Cash and cash equivalents $ 969,142 $ 922,224

 Other assets, net 161 161

Total Assets $ 969,303 $ 922,385

LIABILITIES

 Accounts payable and other liabilities $ 11 $ 6

Total Liabilities 11 6

RESOLUTION EQUITY (NOTE 5)

 Contributed capital 125,469,317 125,469,317

 Accumulated deficit (124,500,025) (124,546,938)

Total Resolution Equity 969,292 922,379

Total Liabilities and Resolution Equity $ 969,303 $ 922,385

The accompanying notes are an integral part of these financial statements.

2023 2022
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 149 

Federal Deposit Insurance Corporation

FSLIC Resolution Fund Statement of Income and Accumulated Deficit

For the Years Ended December 31

(Dollars in Thousands)

REVENUE

 Interest on U.S. Treasury securities $ 46,777 $ 14,524

 Other revenue 419 352

Total Revenue 47,196 14,876

EXPENSES AND LOSSES

 Operating expenses 322 250

 Losses related to thrift resolutions (39) 65

Total Expenses and Losses 283 315

Net Income 46,913 14,561

Accumulated Deficit - Beginning (124,546,938) (124,561,499)

Accumulated Deficit - Ending $ (124,500,025) $ (124,546,938)

The accompanying notes are an integral part of these financial statements.

2023 2022
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 150 

Federal Deposit Insurance Corporation

FSLIC Resolution Fund Statement of Cash Flows

For the Years Ended December 31

(Dollars in Thousands)

OPERATING ACTIVITIES

Provided by:

Interest on U.S. Treasury securities $ 46,777 $ 14,524

Recoveries from thrift resolutions 472 351

Used by:

Operating expenses (331) (276)

Net Cash Provided by Operating Activities 46,918 14,599

Net Increase in Cash and Cash Equivalents 46,918 14,599

Cash and Cash Equivalents - Beginning 922,224 907,625

Cash and Cash Equivalents - Ending $ 969,142 $ 922,224

The accompanying notes are an integral part of these financial statements.

2023 2022
FSLIC RESOLUTION FUND 

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





FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 151 

NOTES TO THE FINANCIAL STATEMENTS 

December 31, 2023 and 2022 

1. Operations/Dissolution of the FSLIC Resolution Fund

OVERVIEW 

The Federal Deposit Insurance Corporation (FDIC) is the 

independent deposit insurance agency created by Congress 

in 1933 to maintain stability and public confidence in the 

nation’s banking system. Provisions that govern the FDIC’s 

operations are generally found in the Federal Deposit 

Insurance (FDI) Act, as amended (12 U.S.C. 1811, et seq). In 

accordance with the FDI Act, the FDIC, as administrator of the 

Deposit Insurance Fund (DIF), insures the deposits of banks 

and savings associations (insured depository institutions). In 

cooperation with other federal and state agencies, the FDIC 

promotes the safety and soundness of insured depository 

institutions by identifying, monitoring, and addressing risks 

to the DIF. 

In addition to being the administrator of the DIF, the FDIC is 

the administrator of the Federal Savings and Loan Insurance 

Corporation (FSLIC) Resolution Fund (FRF). As such, the FDIC 

is responsible for the sale of remaining assets and 

satisfaction of liabilities associated with the former FSLIC 

and the former Resolution Trust Corporation (RTC). The FDIC 

maintains the DIF and the FRF separately to support their 

respective functions. 

The FSLIC was created through the enactment of the 

National Housing Act of 1934. The Financial Institutions 

Reform, Recovery, and Enforcement Act of 1989 (FIRREA) 

abolished the insolvent FSLIC and created the FRF. At that 

time, the assets and liabilities of the FSLIC were transferred 

to the FRF – except those assets and liabilities transferred to 

the newly created RTC – effective on August 9, 1989. Further, 

the FIRREA established the Resolution Funding Corporation 

(REFCORP) to provide part of the initial funds used by the RTC 

for thrift resolutions by authorizing REFCORP to issue debt 

obligations. The REFCORP issued debt obligations in the 

form of long-term bonds ranging in maturity from 2019 to 

2030. 

The RTC Completion Act of 1993 terminated the RTC as of 

December 31, 1995. All remaining assets and liabilities of the 

RTC were transferred to the FRF on January 1, 1996. The FRF 

consists of two distinct pools of assets and liabilities: one 

composed of the assets and liabilities of the FSLIC 

transferred to the FRF upon the dissolution of the FSLIC (FRFFSLIC), and the other composed of the RTC assets and 

liabilities (FRF-RTC). The assets of one pool are not available

to satisfy obligations of the other.

OPERATIONS/DISSOLUTION OF THE FRF 

The FRF will continue operations until all of its assets are sold 

or otherwise liquidated and all of its liabilities are satisfied. 

Any funds remaining in the FRF-FSLIC will be paid to the U.S. 

Treasury. Any remaining funds of the FRF-RTC will be 

distributed to the REFCORP to pay interest on the REFCORP 

bonds. In addition, the FRF-FSLIC has available until 

expended $602 million in appropriations to facilitate, if 

required, efforts to wind up the resolution activity of the FRFFSLIC. 

The FDIC has extensively reviewed and cataloged the FRF's 

remaining assets and liabilities. Some of the unresolved 

issues are:

criminal restitution orders (generally have from 1 to 

16 years remaining to enforce); 

collections of judgments obtained against officers

and directors and other professionals responsible

for causing or contributing to thrift losses (generally

have up to 10 years remaining to enforce, unless the

judgments are renewed or are covered by the 

Federal Debt Collections Procedures Act, which will 

result in significantly longer periods for collection of 

some judgments); 

liquidation/disposition of residual assets purchased 

by the FRF from terminated receiverships; and

Affordable Housing Disposition Program monitoring

(the last agreement expires no later than 2045; see

Note 4). 

The FRF could realize recoveries from criminal restitution 

orders and professional liability claims. However, any 

potential recoveries are not reflected in the FRF’s financial

statements, given the significant uncertainties surrounding

the ultimate outcome. 

On April 1, 2014, the FDIC concluded its role as receiver, on 

behalf of the FRF, when the last active receivership was 
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 152 

NOTES TO THE FINANCIAL STATEMENTS

terminated. In total, 850 receiverships were liquidated by the 

FRF and the RTC. To facilitate receivership terminations, the

FRF, in its corporate capacity, acquired the remaining

receivership assets that could not be liquidated during the

life of the receiverships due to restrictive clauses and other 

impediments. These assets are included in the “Other assets,

net” line item on the Balance Sheet. 

During the years of receivership activity, the assets held by 

receivership entities, and the claims against them, were 

accounted for separately from the FRF’s assets and liabilities

to ensure that receivership proceeds were distributed in

accordance with applicable laws and regulations. Also, the 

income and expenses attributable to receiverships were 

accounted for as transactions of those receiverships. The

FDIC, as administrator of the FRF, billed receiverships for

services provided on their behalf.

2. Summary of Significant Accounting Policies

GENERAL

The financial statements include the financial position,

results of operations, and cash flows of the FRF and are 

presented in accordance with U.S. generally accepted 

accounting principles (GAAP). During the years of 

receivership activity, these statements did not include 

reporting for assets and liabilities of receivership entities

because these entities were legally separate and distinct, and 

the FRF did not have any ownership or beneficial interest in 

them.

The FRF is a limited-life entity, however, it does not meet the 

requirements for presenting financial statements using the

liquidation basis of accounting. According to Accounting

Standards Codification Topic 205, Presentation of Financial

Statements, a limited-life entity should apply the liquidation

basis of accounting only if a change in the entity’s governing

plan has occurred since its inception. By statute, the FRF is a

limited-life entity whose dissolution will occur upon the 

satisfaction of all liabilities and the disposition of all assets.

No changes to this statutory plan have occurred since 

inception of the FRF.

USE OF ESTIMATES

The preparation of the financial statements in conformity 

with GAAP requires management to make estimates and

assumptions that affect the reported amounts of assets and

liabilities, revenue and expenses, and disclosure of 

contingent liabilities. Actual results could differ from these

estimates. Where it is reasonably possible that changes in

estimates will cause a material change in the financial

statements in the near term, the nature and extent of such 

potential changes in estimates have been disclosed. The 

estimate for the Affordable Housing Disposition Program 

indemnifications is considered significant (see Note 4).

CASH EQUIVALENTS

Cash equivalents are short-term, highly liquid investments

consisting primarily of U.S. Treasury Overnight Certificates. 

RELATED PARTIES 

The nature of related parties and a description of related

party transactions are discussed in Note 1 and disclosed

throughout the financial statements and notes.

APPLICATION OF RECENT ACCOUNTING STANDARDS

Recent accounting standards have been deemed not 

applicable or material to the financial statements as 

presented.

3. Goodwill Litigation

In United States v. Winstar Corp., 518 U.S. 839 (1996), the 

Supreme Court held that when it became impossible 

following the enactment of FIRREA in 1989 for the federal

government to perform certain agreements to count 

goodwill toward regulatory capital, the plaintiffs were 

entitled to recover damages from the United States. The

contingent liability associated with the nonperformance of

these agreements was transferred to the FRF on August 9, 

1989, upon the dissolution of the FSLIC.

The FRF can draw from an appropriation provided by Section

110 of the Department of Justice Appropriations Act, 2000

(Public Law 106-113, Appendix A, Title I, 113 Stat. 1501A-3,

1501A-20), such sums as may be necessary for the payment 

of judgments and compromise settlements in the goodwill

litigation. This appropriation is to remain available until

expended. 

All known goodwill cases have been litigated, including the 

last remaining goodwill case that was resolved in 2015.

However, a determination regarding the continued need for 

the appropriation will be made as the FRF winds up its

operations. 

4. Affordable Housing Disposition Program

Required by FIRREA under section 501, the Affordable 

Housing Disposition Program (AHDP) was established in 1989 

to ensure the preservation of affordable housing for low-
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 153 

FSLIC RESOLUTION FUND 

income households. The FDIC, in its capacity as

administrator of the FRF-RTC, assumed responsibility for

monitoring property owner compliance with land use 

restriction agreements (LURAs). To enforce the property

owners’ LURA obligation, the RTC, prior to its dissolution, 

entered into Memoranda of Understanding with 34 

monitoring agencies to oversee these LURAs. As of December 

31, 2023, 20 monitoring agencies oversee these LURAs. The 

FDIC, through the FRF, has agreed to indemnify the

monitoring agencies for all losses related to LURA legal

enforcement proceedings.

From 2006 through 2018, two lawsuits against property

owners resulted in $23 thousand in legal expenses, which

were fully reimbursed due to successful litigation. In 2019, 

new litigation against two property owners has thus far 

resulted in legal expenses of $46 thousand. In 2022, one of

the litigation cases was settled and the FDIC was reimbursed 

$7 thousand. The maximum potential exposure to the FRF

cannot be estimated as it is contingent upon future legal

proceedings. However, loss mitigation factors include: 

(1) the indemnification may become void if the FDIC is not

immediately informed upon receiving notice of any legal

proceedings and (2) the FDIC is entitled to reimbursement of 

any legal expenses incurred for successful litigation against a

property owner. AHDP guarantees will continue until the

termination of the last LURA, or 2045 (whichever occurs first). 

As of December 31, 2023 and 2022, no contingent liability for 

this indemnification has been recorded.

5. Resolution Equity

As stated in the Overview section of Note 1, the FRF is 

composed of two distinct pools: the FRF-FSLIC and the FRFRTC. The FRF-FSLIC consists of the assets and liabilities of

the former FSLIC. The FRF-RTC consists of the assets and

liabilities of the former RTC. Pursuant to legal restrictions,

the two pools are maintained separately and the assets of 

one pool are not available to satisfy obligations of the other.

Contributed capital, accumulated deficit, and resolution 

equity consisted of the following components by each pool

(dollars in thousands).

December 31, 2023

Contributed capital $ 43,864,980 $ 81,604,337 $ 125,469,317

Accumulated deficit (42,921,160) (81,578,865) (124,500,025)

Total Resolution Equity $ 943,820 $ 25,472 $ 969,292

FRF

FRF-FSLIC FRF-RTC Consolidated

December 31, 2022

Contributed capital $ 43,864,980 $ 81,604,337 $ 125,469,317

Accumulated deficit ($42,968,050) ($81,578,888) (124,546,938)

Total Resolution Equity $ 896,930 $ 25,449 $ 922,379

FRF 

FRF-FSLIC FRF-RTC Consolidated

CONTRIBUTED CAPITAL

The FRF-FSLIC and the former RTC received $43.5 billion and

$60.1 billion from the U.S. Treasury, respectively, to fund

losses from thrift resolutions prior to July 1, 1995. 

Additionally, the FRF-FSLIC issued $670 million in capital

certificates to the Financing Corporation (a mixed-ownership 

government corporation established to function solely as a

financing vehicle for the FSLIC) and the RTC issued $31.3 

billion of these instruments to the REFCORP. FIRREA

prohibited the payment of dividends on any of these capital

certificates. Through December 31, 2023, the FRF-FSLIC

received a total of $2.3 billion in goodwill appropriations, the

effect of which increased contributed capital. 

Through December 31, 2023, the FRF-RTC had returned $4.6

billion to the U.S. Treasury and made payments of $5.2 billion

to the REFCORP. The most recent payment to the REFCORP 

was in July of 2020 for $20 million. In addition, the FDIC 

returned $2.6 billion to the U.S. Treasury on behalf of the FRFFSLIC in 2013. These actions reduced contributed capital.

ACCUMULATED DEFICIT 

The accumulated deficit represents the cumulative excess of 

expenses and losses over revenue for activity related to the

FRF-FSLIC and the FRF-RTC. Approximately $29.8 billion and 

$87.9 billion were brought forward from the former FSLIC 

and the former RTC on August 9, 1989, and January 1, 1996, 

respectively. Since the dissolution dates, the FRF-FSLIC

accumulated deficit increased by $13.1 billion, whereas the

FRF-RTC accumulated deficit decreased by $6.3 billion. 

6. Fair Value of Financial Instruments

At December 31, 2023 and 2022, the FRF’s financial assets

measured at fair value on a recurring basis are cash

equivalents (see Note 2) of $944 million and $897 million,

respectively. Cash equivalents are Special U.S. Treasury

Certificates with overnight maturities valued at prevailing

interest rates established by the U.S. Treasury’s Bureau of the 

Fiscal Service. The valuation is considered a Level 1

measurement in the fair value hierarchy, representing

quoted prices in active markets for identical assets.
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 154 

NOTES TO THE FINANCIAL STATEMENTS

7. Information Relating to the Statement of Cash Flows

The following table presents a reconciliation of net income to

net cash from operating activities (dollars in thousands).

Operating Activities

Net Income: $ 46,913 $ 14,561

Change in Assets and Liabilities:

Decrease in other assets, net 0 40

Increase (Decrease) in accounts

payable and other liabilities 5 (2)

Net Cash Provided by Operating

Activities $ 46,918 $ 14,599

2023

December 31

2022

December 31

8. Subsequent Events

Subsequent events have been evaluated through February

15, 2024, the date the financial statements are available to be

issued. Based on management’s evaluation, there were no

subsequent events requiring disclosure. 
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 155 

441 G St. N.W. 

Washington, DC 20548 

Independent Auditor’s Report 

To the Board of Directors of the Federal Deposit Insurance Corporation 

In our audits of the 2023 and 2022 financial statements of the Deposit Insurance Fund (DIF) and 

of the Federal Savings and Loan Insurance Corporation (FSLIC) Resolution Fund (FRF), both of 

which the Federal Deposit Insurance Corporation (FDIC) administers,1 we found 

• the financial statements of the DIF and of the FRF as of and for the years ended 

December 31, 2023, and 2022, are presented fairly, in all material respects, in accordance 

with U.S. generally accepted accounting principles; 

• FDIC maintained, in all material respects, effective internal control over financial reporting 

relevant to the DIF and to the FRF as of December 31, 2023; and 

• with respect to the DIF and to the FRF, no reportable noncompliance for 2023 with 

provisions of applicable laws, regulations, contracts, and grant agreements we tested. 

The following sections discuss in more detail (1) our report on the financial statements and on 

internal control over financial reporting and other information included with the financial 

statements;2 (2) our report on compliance with laws, regulations, contracts, and grant 

agreements; and (3) agency comments. 

Report on the Financial Statements and on Internal Control over Financial Reporting 

Opinions on the Financial Statements 

In accordance with Section 17 of the Federal Deposit Insurance Act, as amended,3 and the 

Government Corporation Control Act,4 we have audited the financial statements of the DIF and 

of the FRF, both of which FDIC administers. The financial statements of the DIF comprise the 

balance sheets as of December 31, 2023, and 2022; the related statements of income and fund 

balance and of cash flows for the years then ended; and the related notes to the financial 

statements. The financial statements of the FRF comprise the balance sheets as of 

December 31, 2023, and 2022; the related statements of income and accumulated deficit and of 

cash flows for the years then ended; and the related notes to the financial statements. In our 

opinion, 

1A third fund managed by FDIC, the Orderly Liquidation Fund, established by Section 210(n) of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376, 1506 (2010), is unfunded and did 

not have any transactions from its inception in 2010 through 2023. 

2Other information consists of information included with the financial statements, other than the auditor’s report. 

3Act of September 21, 1950, Pub. L. No. 797, § 2[17], 64 Stat. 873, 890, classified as amended at 12 U.S.C. § 1827. 

431 U.S.C. §§ 9101-9110. 
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 156 

• the DIF’s financial statements present fairly, in all material respects, the DIF’s financial 

position as of December 31, 2023, and 2022, and the results of its operations and its cash 

flows for the years then ended, in accordance with U.S. generally accepted accounting 

principles, and 

• the FRF’s financial statements present fairly, in all material respects, the FRF’s financial 

position as of December 31, 2023, and 2022, and the results of its operations and its cash 

flows for the years then ended, in accordance with U.S. generally accepted accounting 

principles. 

Opinions on Internal Control over Financial Reporting 

We also have audited FDIC’s internal control over financial reporting relevant to the DIF and to 

the FRF as of December 31, 2023, based on criteria established under 31 U.S.C. § 3512(c), (d), 

commonly known as the Federal Managers’ Financial Integrity Act of 1982 (FMFIA). 

In our opinion, 

• FDIC maintained, in all material respects, effective internal control over financial reporting 

relevant to the DIF as of December 31, 2023, based on criteria established under FMFIA, 

and 

• FDIC maintained, in all material respects, effective internal control over financial reporting 

relevant to the FRF as of December 31, 2023, based on criteria established under FMFIA. 

FDIC made progress during 2023 in addressing a significant deficiency5 that we reported in our 

prior year audits.6 Specifically, FDIC sufficiently addressed the deficiencies in contract

documentation and payment review process controls such that we no longer consider the 

remaining control deficiencies in this area, individually or collectively, to represent a significant 

deficiency as of December 31, 2023. 

During our 2023 audit, we identified other deficiencies in FDIC’s internal control over financial 

reporting that we do not consider to be material weaknesses or significant deficiencies. 

Nonetheless, these deficiencies warrant FDIC management’s attention. We have communicated 

these matters to FDIC management and, where appropriate, will report on them separately. 

Basis for Opinions 

We conducted our audits in accordance with U.S. generally accepted government auditing 

standards. Our responsibilities under those standards are further described in the Auditor’s 

Responsibilities for the Audits of the Financial Statements and Internal Control over Financial 

Reporting section of our report. We are required to be independent of FDIC and to meet our 

5A deficiency in internal control exists when the design or operation of a control does not allow management or 

employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, 

misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal 

control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entity’s 

financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a 

deficiency, or combination of deficiencies, in internal control over financial reporting that is less severe than a material 

weakness, yet important enough to merit the attention by those charged with governance. 

6GAO, Financial Audit: Federal Deposit Insurance Corporation Funds’ 2022 and 2021 Financial Statements, GAO-23-

105570 (Washington, D.C.: Feb. 16, 2023). 
•

•

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FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 157 

other ethical responsibilities, in accordance with the relevant ethical requirements relating to our 

audits. We believe that the audit evidence we have obtained is sufficient and appropriate to 

provide a basis for our audit opinions. 

Responsibilities of Management for the Financial Statements and Internal Control over Financial 

Reporting 

FDIC management is responsible for 

• the preparation and fair presentation of the financial statements in accordance with U.S. 

generally accepted accounting principles; 

preparing and presenting other information included in FDIC’s annual report, and ensuring 

the consistency of that information with the audited financial statements; 

• designing, implementing, and maintaining effective internal control over financial reporting 

relevant to the preparation and fair presentation of financial statements that are free from 

material misstatement, whether due to fraud or error; 

• assessing the effectiveness of internal control over financial reporting based on the criteria 

established under FMFIA; and 

its assessment about the effectiveness of internal control over financial reporting as of 

December 31, 2023, included in the accompanying Management’s Report on Internal 

Control over Financial Reporting in appendix I. 

In preparing the financial statements, management is required to evaluate whether there are 

conditions or events, considered in the aggregate, that raise substantial doubt about the DIF’s 

and the FRF’s ability to continue as going concerns for a reasonable period of time. 

Auditor’s Responsibilities for the Audits of the Financial Statements and Internal Control over 

Financial Reporting 

Our objectives are to (1) obtain reasonable assurance about whether the financial statements 

as a whole are free from material misstatement, whether due to fraud or error, and whether 

effective internal control over financial reporting was maintained in all material respects, and (2) 

issue an auditor’s report that includes our opinions. 

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore 

is not a guarantee that an audit of the financial statements or an audit of internal control over 

financial reporting conducted in accordance with U.S. generally accepted government auditing 

standards will always detect a material misstatement or a material weakness when it exists. The 

risk of not detecting a material misstatement resulting from fraud is higher than for one resulting 

from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or 

the override of internal control. Misstatements, including omissions, are considered to be 

material if there is a substantial likelihood that, individually or in the aggregate, they would 

influence the judgment made by a reasonable user based on the financial statements. 

In performing an audit of financial statements and an audit of internal control over financial 

reporting in accordance with U.S. generally accepted government auditing standards, we: 

• Exercise professional judgment and maintain professional skepticism throughout the audits. 

• Identify and assess the risks of material misstatement of the financial statements, whether 

due to fraud or error, and design and perform audit procedures responsive to those risks. 
•

•

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FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 158 

Such procedures include examining, on a test basis, evidence regarding the amounts and 

disclosures in the financial statements. 

• Obtain an understanding of internal control relevant to our audit of the financial statements 

in order to design audit procedures that are appropriate in the circumstances. 

Obtain an understanding of internal control relevant to our audit of internal control over 

financial reporting, assess the risks that a material weakness exists, and test and evaluate 

the design and operating effectiveness of internal control over financial reporting based on 

the assessed risk. Our audit of internal control also considered FDIC’s process for 

evaluating and reporting on internal control over financial reporting based on criteria 

established under FMFIA. We did not evaluate all internal controls relevant to operating 

objectives as broadly established under FMFIA, such as those controls relevant to preparing 

performance information and ensuring efficient operations. We limited our internal control 

testing to testing controls over financial reporting. Our internal control testing was for the 

purpose of expressing an opinion on whether effective internal control over financial 

reporting was maintained, in all material respects. Consequently, our audit may not identify 

all deficiencies in internal control over financial reporting that are less severe than a material 

weakness. 

• Evaluate the appropriateness of accounting policies used and the reasonableness of 

significant accounting estimates made by management, as well as evaluate the overall 

presentation of the financial statements. 

• Perform other procedures we consider necessary in the circumstances. 

Conclude whether, in our judgment, there are conditions or events, considered in the 

aggregate, that raise substantial doubt about the DIF’s and the FRF’s ability to continue as 

going concerns for a reasonable period of time. 

We are required to communicate with those charged with governance regarding, among other 

matters, the planned scope and timing of the audit, significant audit findings, and certain internal 

control-related matters that we identified during the financial statement audit. 

Definition and Inherent Limitations of Internal Control over Financial Reporting 

An entity’s internal control over financial reporting is a process effected by those charged with 

governance, management, and other personnel. The objectives of internal control over financial 

reporting are to provide reasonable assurance that 

• transactions are properly recorded, processed, and summarized to permit the preparation of 

financial statements in accordance with U.S. generally accepted accounting principles, and 

assets are safeguarded against loss from unauthorized acquisition, use, or disposition, and 

• transactions are executed in accordance with provisions of applicable laws, regulations, 

contracts, and grant agreements, noncompliance with which could have a material effect on 

the financial statements. 

Because of its inherent limitations, internal control over financial reporting may not prevent, or 

detect and correct, misstatements due to fraud or error. We also caution that projecting any 

evaluation of effectiveness to future periods is subject to the risk that controls may become 
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 159 

inadequate because of changes in conditions, or that the degree of compliance with the policies 

or procedures may deteriorate. 

Other Information 

FDIC’s other information contains a wide range of information, some of which is not directly 

related to the financial statements. This information is presented for purposes of additional 

analysis and is not a required part of the financial statements. The other information comprises 

the following sections of FDIC’s 2023 agency financial report: Mission, Vision, and Values; 

Message from the Chairman; Message from the Chief Financial Officer; Management’s 

Discussion and Analysis; Performance Results Summary; Financial Highlights; Budget and 

Spending; Risk Management and Internal Controls; and Appendices. Management is 

responsible for the other information included in FDIC’s annual report. The other information 

does not include the financial statements and our auditor’s report thereon. Our opinion on the 

DIF’s and the FRF’s financial statements does not cover the other information, and we do not 

express an opinion or any form of assurance thereon. 

In connection with our audit of the financial statements, our responsibility is to read the other 

information and consider whether a material inconsistency exists between the other information 

and the financial statements, or the other information otherwise appears to be materially 

misstated. If, based on the work performed, we conclude that an uncorrected material 

misstatement of the other information exists, we are required to describe it in our report. 

Report on Compliance with Laws, Regulations, Contracts, and Grant Agreements 

In connection with our audits of the financial statements of the DIF and of the FRF, we tested 

compliance with selected provisions of applicable laws, regulations, contracts, and grant 

agreements consistent with our auditor’s responsibilities discussed below. 

Results of Our Tests for Compliance with Laws, Regulations, Contracts, and Grant Agreements 

Our tests for compliance with selected provisions of applicable laws, regulations, contracts, and 

grant agreements disclosed no instances of noncompliance for 2023 that would be reportable, 

with respect to the DIF and to the FRF, under U.S. generally accepted government auditing 

standards. However, the objective of our tests was not to provide an opinion on compliance with 

applicable laws, regulations, contracts, and grant agreements. Accordingly, we do not express 

such an opinion. 

Basis for Results of Our Tests for Compliance with Laws, Regulations, Contracts, and Grant 

Agreements 

We performed our tests of compliance in accordance with U.S. generally accepted government 

auditing standards. 

Responsibilities of Management for Compliance with Laws, Regulations, Contracts, and Grant 

Agreements 

FDIC management is responsible for complying with applicable laws, regulations, contracts, and 

grant agreements. 
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 160 

 

Auditor’s Responsibilities for Tests of Compliance with Laws, Regulations, Contracts, and Grant 

Agreements 

Our responsibility is to test compliance with selected provisions of applicable laws, regulations, 

contracts, and grant agreements that have a direct effect on the determination of material 

amounts and disclosures in the financial statements of the DIF and of the FRF, and to perform 

certain other limited procedures. Accordingly, we did not test compliance with all provisions of 

laws, regulations, contracts, and grant agreements. We caution that noncompliance may occur 

and not be detected by these tests.

Intended Purpose of Report on Compliance with Laws, Regulations, Contracts, and Grant 

Agreements 

The purpose of this report is solely to describe the scope of our testing of compliance with 

selected provisions of applicable laws, regulations, contracts, and grant agreements, and the 

results of that testing, and not to provide an opinion on compliance. This report is an integral 

part of an audit performed in accordance with U.S. generally accepted government auditing 

standards in considering compliance. Accordingly, this report on compliance with laws, 

regulations, contracts, and grant agreements is not suitable for any other purpose.

Agency Comments 

In commenting on a draft of this report, FDIC stated that it was pleased to receive unmodified 

opinions for the 32nd consecutive year on the DIF’s and the FRF’s financial statements, and 

noted that we reported that FDIC had effective internal control over financial reporting and that 

there was no reportable noncompliance with tested provisions of applicable laws, regulations, 

contracts, and grant agreements. FDIC also stated that it was pleased to report that it effectively 

remediated a significant deficiency in internal control over contract documentation and contract 

payment review processes. FDIC stated that while its controls have improved, FDIC reiterated 

its commitment to sound financial management and will continue to look for opportunities to 

improve. The complete text of FDIC’s response is reprinted in appendix II. 

M. Hannah Padilla

Director 

Financial Management and Assurance 

February 15, 2024 
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FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 161 

APPENDIX I
FINANCIAL SECTION

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT 2023 162 

APPENDIX II

Federal Deposit Insurance Corporation

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

February 15, 2024

Ms. M. Hannah Padilla

Director, Financial Management and Assurance

U.S. Government Accountability Office

441 G Street, NW

Washington, D.C. 20548

Re: FDIC Management Response to the 2023 and 2022 Financial Statements Audit Report

Dear Ms. Padilla:

Thank you for the opportunity to review and comment on the U.S. Government Accountability Office’s (GAO's)

draft report titled, Financial Audit: Federal Deposit Insurance Corporation Funds’ 2023 and 2022 Financial 

Statements, GAO-24-106490. We are pleased that the Federal Deposit Insurance Corporation (FDIC) has

received unmodified opinions for the thirty-second consecutive year on the financial statements of its funds:

the Deposit Insurance Fund (DIF) and the FSLIC Resolution Fund (FRF). GAO also reported the FDIC maintained,

in all material respects, effective internal control over financial reporting, and that there was no reportable

noncompliance with provisions of applicable laws, regulations, contracts, and grant agreements that were

tested.

The FDIC is pleased to report that we effectively remediated a significant deficiency in internal control over

contract documentation and contract payment review processes. In 2023, we created targeted training and 

procedures for reviewing and approving contractor invoices; implemented oversight to ensure contracting

policies and procedures are followed and contract documentation is complete and accurate; established the

Division of Administration’s quality assurance group, dedicated to quality review processes; and enhanced

overall the FDIC’s interdivisional monitoring capability. While our controls have improved, I want to reiterate

our commitment to sound financial management and we will continue to look for opportunities to improve.

In complying with audit standards that require management to provide a written assessment about the

effectiveness of its internal control over financial reporting, the FDIC has prepared Management’s Report on

Internal Control over Financial Reporting. The report acknowledges management’s responsibility for

establishing and maintaining internal control over financial reporting and provides the FDIC's conclusion

regarding the effectiveness of its internal control.

We want to thank the GAO staff for their professionalism and dedication during the audit and look forward to

the FDIC continuing our positive and productive relationship during the 2024 audit. If you have any questions or 

concerns, please do not hesitate to contact me.

Sincerely,

Bret D. Edwards

Deputy to the Chairman

 and Chief Financial Officer

BRET

EDWARDS

Digitally signed by 

BRET EDWARDS