Federal Deposit Insurance Corporation 

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

 

 May 17, 2010 

MEMORANDUM TO: The Board of Directors 

FROM: Steven O. App 

Deputy to the Chairman and 

 Chief Financial Officer 

Bret D. Edwards 

Director, Division of Finance 

SUBJECT: First Quarter 2010 CFO Report to the Board 

The attached report highlights the Corporation’s financial activities and results for the period ending 

March 31, 2010. 

Executive Summary

 For the first quarter of 2010, the Deposit Insurance Fund (DIF) balance increased by $145 

million to negative $20.7 billion. This increase was primarily due to $3.3 billion in 

assessments earned, offset by $3.0 billion in the provision for insurance losses. This is the first 

quarterly increase in the fund balance since the first quarter of 2008. 

 During the first quarter of 2010, the FDIC was named receiver for 41 failed institutions. The 

combined assets at inception for these institutions totaled approximately $22.3 billion with a 

total estimated loss of $6.3 billion. 

 For the period ending March 31, 2010, expenditures from the Corporate Operating Budget ran 

below budget by 9 percent ($79.4 million). This variance was primarily the result of lower 

spending for contractual services and vacancies in budgeted positions in both the Receivership 

Funding and the Ongoing Operations components. 
2

The following is an assessment of each of the three major finance areas: financial statements, 

investments, and budget. 

Trends and Outlook

Financial Results Comments 

I. Financial 

Statements  Since the fourth quarter 2008, the FDIC has resolved 128 institutions 

using a Whole Bank Purchase and Assumption resolution transaction 

with an accompanying Loss Share Agreement on the assets purchased 

by the acquirer. Under the terms of the agreements, losses on the 

covered assets are shared between the acquirer and the FDIC in its 

capacity as receiver of the failed institution. As of March 31, 2010, DIF 

receiverships are estimated to pay approximately $25.7 billion over the 

life of these loss-share agreements (typically 5 to 10 years) on 

approximately $143.0 billion in total covered assets. The estimated 

liability for loss-share is accounted for by the receiver and is considered 

in the determination of the DIF’s allowance for loss against the 

corporate receivable from the resolution. To date, 65 receiverships have 

made loss-share payments totaling $2.6 billion. 
3

Trends and Outlook

Financial Results Comments 

II. Investments  The total liquidity (total market value plus accrued interest) of all DIFrelated investment portfolios stood at $63.3 billion on March 31, 2010, 

down from $66.1 billion on December 31, 2009, led primarily by the 

decline in the DIF investment portfolio as discussed below. 

 The DIF investment portfolio’s amortized cost (book value) decreased 

by $2.2 billion during the first quarter of 2010, and totaled $57.1 billion 

on March 31, 2010. The decrease was the result of having to fund 41 

bank failures during the quarter, although it should be noted that 35 of 

these failures were resolved as loss-share transactions (in which the 

acquirers purchased substantially all of the failed institutions’ assets and 

the FDIC and the acquirers entered into loss-share agreements) 

requiring little or no initial resolution funding, thus helping to mitigate 

the decline in the DIF portfolio’s balance. Moreover, during the 

quarter, the DIF received $3.4 billion in dividends, repayment of 

borrowings, and expense reimbursements from its receiverships. This 

also helped to mitigate the DIF portfolio’s decline. Nevertheless, the 

DIF portfolio’s balance is expected to decline considerably over the 

next several quarters. 

 At the end of the first quarter, the DIF investment portfolio’s yield was 

0.49 percent; this is unchanged from its December 31, 2009 yield. 

While during the quarter, $1.4 billion in higher yielding securities 

matured, this was offset by an increase in the yield on overnight 

investments, rising from 0.02 percent on December 31, 2009 to 0.13 

percent on March 31, 2010. 

 Short-maturity conventional Treasury market yields increased modestly 

during the first quarter of 2010, while most intermediate- to longermaturity conventional Treasury yields declined modestly (after having 

increased during the fourth quarter of 2009). The longer-maturity 

declines appeared to reflect such factors as subdued inflation trends and 

stable inflation expectations; the ultra-low federal funds target rate and 

continuing investor expectations that the rate will remain low for some 

time; and some concerns over the strength and longevity of the nascent 

economic expansion. According to consensus expectations, Treasury 

yields are expected to increase modestly during the remainder 2010 and 

2011. 
4

Trends and Outlook

Financial Results Comments 

III. Budget  Approximately $303.4 million was spent in the Ongoing Operations 

component of the 2010 Corporate Operating Budget, which was $42.7 

million (12 percent) below the budget for the three months ending 

March 31, 2010. Actual expenses in the Salaries and Compensation and 

Outside Services – Personnel categories were $22.5 million and $11.6 

million, respectively, below their year-to-date budgets and accounted 

for most of this variance. 

 Approximately $455.3 million was spent in the Receivership Funding 

component of the 2010 Corporate Operating Budget, which was $36.6 

million (7 percent) below the budget for the three months ending March 

31, 2010. 

I. Corporate Fund Financial Results (See pages 11-12 for detailed data and charts.) 

Deposit Insurance Fund (DIF) 

 For the three months ending March 31, 2010, the DIF’s comprehensive income totaled $145 

million compared to a comprehensive loss of $4.3 billion for the same period last year. This 

$4.4 billion increase in the year-over-year amounts was mostly due to a $3.6 billion decrease in 

the provision for insurance losses and a $663 million increase in assessment revenue. 

 The provision for insurance losses was $3.0 billion for the first quarter of 2010. The total 

provision consists mainly of the decrease in the provision for future failures ($3.3 billion) and 

the losses estimated at failure for the 41 resolutions occurring during 2010 ($6.3 billion). 

 The fair value of the trust preferred securities increased by $178 million to $2.1 billion as of 

March 31, 2010, representing 96 percent of the $2.2 billion par value of these securities. 

FSLIC Resolution Fund (FRF) 

 The FRF paid Goodwill judgments for two cases in the aggregate amount of $11.1 million that 

were accrued in 2009. 

II. Investments

Investment Results (See pages 13-14 for detailed data and charts.)

DIF Investment Portfolio 

 The amortized cost (book value) of the DIF investment portfolio decreased by $2.2 billion 

during the first quarter of 2010, or by 3.7 percent, from $59.3 billion on December 31, 2009, to 

$57.1 billion on March 31, 2010. Similarly, the DIF portfolio’s primary reserve (total market 

value plus accrued interest) decreased by $2.3 billion or by 3.9 percent, from $59.5 billion on 

December 31, 2009, to $57.2 billion on March 31, 2010. During the quarter, resolution outlays 

and operating expenses exceeded receivership payments and assessment collections. 
5

 The DIF investment portfolio's total return for the first quarter of 2010 was 0.06 percent, 

approximately 107 basis points lower than its benchmark, the Merrill Lynch 1 – 10 Year U.S. 

Treasury Index (Index), which had a total return of 1.13 percent during the same period. Given 

that most longer-maturity Treasury yields declined during the first quarter (that is, their prices 

rose), the DIF portfolio’s large cash balance invested in low-yielding overnight investments 

was a drag on performance relative to the Index’s longer-duration conventional Treasury 

securities. 

 In accordance with the approved first quarter 2010 investment strategy, which strove to balance 

the need for liquidity against the desire to pick up some yield by investing in short-maturity 

Treasuries, staff purchased a total of nine short-maturity Treasury bills (T-Bills) during the first 

quarter of 2010. The nine securities had a total par value of $11.7 billion, a weighted average 

yield-at-cost of 0.22 percent, and a weighted average maturity (WAM) of 0.48 years. 

Other Corporate Investment Portfolios 

 During the first quarter of 2010, the book value of the Debt Guarantee Program (DGP) 

investment portfolio decreased from $6.4 billion on December 31, 2009, to $6.1 billion on 

March 31, 2010. Although the DGP portfolio received $207 million in reimbursements from 

the Transaction Account Guarantee (TAG) Program assessments at quarter end, the DGP 

reimbursed $562 million to the DIF portfolio for claims against the TAG program during the 

quarter. In accordance with the approved first quarter 2010 investment strategy for the DGP 

portfolio, staff purchased two short-maturity T-Bills for the portfolio. The securities had a total 

par value of $1.4 billion, a weighted average yield-at-cost of 0.24 percent, and a WAM of 0.57 

years. 

 On March 31, 2010, as mentioned above, the FDIC collected about $207 million in fees related 

to the TAG Program under the Temporary Liquidity Guarantee Program. Again, these funds 

were immediately transferred to the DGP investment portfolio for reimbursement of claims and 

expenses, so the TAG Program investment portfolio had no balance at quarter end. 

National Liquidation Fund Investment Portfolio 

 During the first quarter of 2010, the National Liquidation Fund (NLF) investment portfolio 

balance increased by a substantial $4.5 billion, or by 62.6%, from $7.2 billion on December 31, 

2009, to $11.7 billion on March 31, 2010, as asset sales and funds from additional resolutions 

exceeded dividends and expenses. Moreover, during the first quarter of 2010, the NLF made 

approximately $3.4 billion in dividend and other related payments to the DIF.

The Treasury Market 

 Short-maturity conventional Treasury market yields increased modestly during the first quarter 

of 2010, but most longer-maturity conventional Treasury yields declined modestly (after having 

increased during the fourth quarter of 2009). The three-month T-Bill yield increased by 6 basis 

points, while the six-month T-Bill increased by 4 basis points. The yield on the two-year 

Treasury note, which also is very sensitive to actual and anticipated changes in the federal 

funds rate, declined by a modest 12 basis points, still reflecting consensus forecasts for no 

significant change in the federal funds target rate over the near term. Intermediate- to longer-
6

maturity Treasury security yields declined, albeit modestly. The yield on the five-year 

Treasury note decreased by 14 basis points, while the yield on the ten-year Treasury note 

decreased by just 1 basis point. The thirty-year Treasury bond yield actually increased by 7 

basis points. The conventional Treasury yield curve steepened further during the first quarter. 

On March 31, 2010, the two-year to ten-year yield curve had a 281-basis point positive spread 

(slightly higher than the 270-basis point spread at the beginning of the quarter). Over the past 

five years, this spread has averaged 102 basis points. 

Prospective Strategies 

 Similar to the first quarter investment strategy, although with smaller investment security 

maturity limits, the approved second quarter 2010 DIF investment strategy calls for purchasing 

up to $15.0 billion of shorter-term Treasury securities with maturities between July 1, 2010, 

and March 31, 2011. This strategy attempts to balance the need to maintain sufficient portfolio 

liquidity for the funding of potential near-term resolutions against the yield pick-up that can be 

obtained by investing in short-maturity Treasury securities. 

 For the Debt Guarantee Program, similar to its first quarter investment strategy, the second 

quarter 2010 investment strategy calls for purchasing up to $2.0 billion of Treasury securities 

with maturities between July 1, 2010, and March 31, 2011. Again, this strategy attempts to 

balance the need to maintain sufficient portfolio liquidity against the yield pick-up that can be 

obtained by investing in short-maturity Treasury securities. 

III. Budget Results (See pages 15 - 16 for detailed data.) 

Approved Budget Modifications 

The 2010 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other 

officials the authority to make certain modifications to the 2010 Corporate Operating Budget. 

The following budget reallocations were made during the first quarter in accordance with the 

authority delegated by the Board of Directors (these reallocations did not change the total 2010 

Corporate Operating Budget approved by the Board): 

 In January 2010, the Division of Supervision and Consumer Protection (DSC), the Division 

of Information Technology (DIT), the Division of Administration (DOA), the Chief 

Information Officer (CIO) Council, and the Office of International Affairs (OIA) 

reallocated budget authority among major expense categories within their approved 

budgets. The most significant realignments within the Ongoing Operations budget 

component increased the Equipment budget authority in DIT by $1.6 million, funded 

largely by reductions in Outside Services – Personnel. DSC reduced its budget for Travel 

by $2.1 million, primarily to provide increased budget authority for the Outside Services – 

Personnel and Other Expenses expense categories. DIT and DOA also made realignments 

within the Receivership Funding budget component, the most significant of which was a 

$20.1 million reduction in Equipment by DIT to reallocate those funds to the Outside 

Services – Personnel, and Outside Services – Other expense categories. 

 In January 2010, in support of efforts to increase the FDIC’s outreach to Minority and 

Women Owned Businesses (MWOBs), the CFO approved the reallocation of $1.1 million 
7

in budget authority from the Corporate Unassigned budget to the Outside Services - 

Personnel budget of the Office of Diversity and Economic Opportunity (ODEO). The 

realignment decreased the available balance in the Corporate Unassigned budget from 

$15.0 million to $13.9 million. 

 In February 2010, the CFO approved the reallocation of budget authority within the 

Ongoing Operations budget component to provide funding for an increase in authorized 

staffing for the Office of Inspector General (OIG) approved by the Chairman. The 

reallocations reduced the Corporate Unassigned budget by over $1.1 million and increased 

the OIG’s Salaries and Compensation budget by the same amount. The realignment further 

decreased the available balance in the Corporate Unassigned budget from $13.9 million to 

approximately $12.8 million. Thus, the total amount in the Corporate Unassigned budget at 

the end of the first quarter was $12.8 million in Ongoing Operations and $175.8 million in 

Receivership Funding (as approved by the Board of Directors in December 2009), for a 

corporate total of $188.6 million. 

Approved Staffing Modifications 

The 2010 Budget Resolution delegated to the CFO the authority to modify Authorized 2010 

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

approved 2010 Corporate Operating Budget. The following changes were approved by the 

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

 In January 2010, the CFO approved an increase of six permanent positions and a decrease 

of six non-permanent positions in DIT’s authorized 2010 staffing to correct for the 

misclassification of those positions during the 2010 budget formulation process. No budget 

adjustment was necessary in conjunction with this corrective action. 

 In February 2010, following the Chairman’s approval of an amended budget request for the 

OIG, the CFO approved an increase of 30 positions (6 permanent, 24 non-permanent) in the 

OIG. These additional positions are required to address projected increases in the OIG’s 

workload and are consistent with the Fiscal Year 2011 appropriation request submitted to 

the Congress by the OIG. A budget adjustment was also made in conjunction with this 

approval (see above). 

 

 In February 2010, the CFO approved the increase of one authorized permanent position in 

the Office of Legislative Affairs (OLA). The additional position was needed to address the 

current elevated legislative workload that is expected to continue indefinitely. A 

reallocation of existing budget authority is expected to be made to fund this staffing 

increase after the end of the first quarter. 

 In March 2010, the CFO approved an increase of four authorized non-permanent positions 

in the Office of the Ombudsman (OO). The additional positions will allow OO to perform 

duties in the newly-established temporary Midwest Satellite Office. A reallocation of 

existing budget authority is expected to be made to fund this staffing increase after the end 

of the first quarter. 

 

 In March 2010, the CFO approved a net increase of seven authorized positions in DSC. 

This included 11 new permanent positions in the Complex Financial Institutions Branch to 
8

enhance Large Insured Depository Institution (LIDI) and other offsite analyses of large 

insured institutions and one new permanent Senior Policy Analyst position in the Policy 

Branch. These increases were partially offset by the elimination of five previouslyapproved positions (4 permanent, 1 non-permanent) for Capital Markets Expert and Large 

Bank Specialist positions that DSC did not fill in 2009. A reallocation of existing budget 

authority is expected to be made to fund this staffing increase after the end of the first 

quarter. 

Spending Variances 

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

below. Significant spending variances for the three months ending March 31, 2010, are defined 

as those that either (1) exceed the YTD budget by $3 million and represent more than 5 percent 

for a major expense category or total division/office budget; or (2) are under the YTD budget 

for a major expense category or division/office by an amount that exceeds $5 million and 

represents more than 10 percent of the major expense category or total division/office budget. 

Significant Spending Variances by Major Expense Category 

Ongoing Operations

There was a significant spending variance in only one major expense category during the first 

quarter in the Ongoing Operations component of the 2010 Corporate Operating Budget: 

 Outside Services - Personnel expenditures were $11.6 million, or 21 percent, less than 

budgeted. The variance was largely due to under spending of the IT budget by the CIO 

Council and DIT. The CIO Council’s spending for systems maintenance and discretionary 

small enhancements was $4 million less than budgeted, and DIT’s spending for internal 

operations was nearly $4 million under budget. These variances were largely attributable to 

Federal holidays and weather-related office closings in the Washington, DC, area and 

delays in starting some internal DIT initiatives during the first quarter. Slower-thananticipated spending on human resources contractor support services and scheduling 

adjustments related to the roll-out of the FDIC strategic human capital plan and the EM/CM 

PMR program also contributed to the variance in this category by DOA. 

Receivership Funding

The Receivership Funding component of the 2010 Corporate Operating Budget includes 

funding for expenses that are incurred in conjunction with institution failures and the 

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

salary and benefits expenses for permanent employees assigned to the receivership 

management function. 

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

the first quarter in the Receivership Funding component of the 2010 Corporate Operating 

Budget: 

 Salaries and Compensation ($18.7 million, or 32 percent, less than budgeted). 
9

 Outside Services – Personnel ($88.5 million, or 25 percent, less than budgeted). 

 Travel ($5.8 million, or 40 percent, less than budgeted). 

 Buildings ($15.9 million, or 45 percent, more than budgeted). 

 Outside Services – Other ($41.6 million, or 691 percent, more than budgeted). 

 Other Expenses ($17.7 million, or 114 percent, more than budgeted). 

The variance in the Outside Services – Personnel and Travel expense categories were 

attributable to fewer-than-anticipated resolutions during the first quarter of 2010. The variance 

in the Salaries and Compensation category was attributable to timing in the hiring of nonpermanent staff. Greater-than-budgeted spending occurred in the Buildings and Other 

Expenses categories as a result of longer than expected operations at receivership locations and 

the greater number of field sites in operation. This included approximately $43.6 million in 

unbudgeted guarantee fee costs, incurred in conjunction with a Limited Liability Company 

(LLC) transaction that were recorded to the Outside Services – Other expense category during 

the first quarter. 

Significant Spending Variances by Division/Office1

Two organizations had significant spending variances through the end of the first quarter: 

 DIT spent $10.5 million, or 18 percent, less than budgeted. This variance was largely 

attributable to delays in receiving hardware/software maintenance purchases, postponement 

of contractor services due to inclement weather and delays in beginning some internal 

initiatives, budgeted positions that remained vacant at the end of the quarter, and other 

salary budget timing issues. 

 DOA spent $8.1 million, or 13 percent, less than budgeted. This variance was largely 

attributable to fewer resolutions than anticipated during the first quarter, budgeted positions 

that remained vacant and other salary budget timing issues, and lower-than-budgeted 

spending for contractor support expenses for hiring and staffing-related services. 

Scheduling adjustments related to the roll-out of the FDIC strategic human capital plan and 

the EM/CM PMR program also contributed to the variance. 

Other Matters 

In accordance with the requirements of the 2010 Budget Resolution, an analysis of 2010 

funding requirements for employee salaries and compensation was completed after the close of 

the first quarter. The analysis determined that those costs had been over-estimated during the 

preparation of the 2010 Corporate Operating Budget by approximately $10.4 million and $3.9 

million in the Ongoing Operations and Receivership Funding budget components, respectively. 

The CFO elected to reserve this surplus budget authority in the Corporate Unassigned budget as 

a contingency to address possible unbudgeted requirements later this year. This budget 

 

1

 Information on division/office variances reflects variances in both the Corporate Operating and Investment Budgets. 
10

authority could be needed if the pending financial reform legislation is enacted and expands the 

FDIC’s existing statutory responsibilities or if additional funding is needed for temporary 

examiner promotions or the 2010 leave buyback program. These figures will be included in the 

second quarter CFO Report to the Board. 
FDIC CFO REPORT TO THE BOARD – First Quarter 2010

Fund Financial Results ($ in Millions) 

11

Balance Sheet

Unaudited Unaudited Quarterly Unaudited Year-Over-Year

Mar-10 Dec-09 Change Mar-09 Change

Cash & cash equivalents - unrestricted $ 54,092 41,094 $ $ 1,636 (12,998) $ 39,458 $ 

Cash & investments - restricted - systemic risk 6,431 6,077 6,086 (354) (9)

Investment in U.S. Treasury obligations, net 5,487 15,792 10,305 24,909 (9,117)

Trust preferred securities 1,962 2,140 178 - 2,140 

Assessments receivable, net 280 268 2,550 (12) (2,282)

Receivables and other assets, net - systemic risk 3,299 3,165 3,708 (134) (543)

Interest receivable on investments and other assets, net 221 134 342 (87) (208)

Receivables from resolutions, net 38,409 39,091 682 18,145 20,946 

Property, buildings and other capitalized assets, net 388 386 372 (2) 14 

Total Assets $ 110,569 108,147 $ $ 57,748 (2,422) $ 50,399 $ 

Accounts payable and other liabilities 351 274 77 753 (402)

Unearned revenue - prepaid assessments 39,718 42,727 (3,009) 39,718 -

Liabilities due to resolutions 38,362 34,712 3,650 5,420 32,942

Deferred revenue - systemic risk 7,999 7,847 152 8,396 (397)

Postretirement benefit liability 145 145 - 114 31

Contingent Liabilities: future failures 40,720 44,014 (3,294) 12,261 28,459

Contingent Liabillties: systemic risk 1,269 1,412 (143) 1,399 (130)

Contingent Liabilities: litigation losses & other 300 300 - 200 100

Total Liabilities $ 131,431 128,864 $ $ 44,741 (2,567) $ 84,123 $ 

FYI: Unrealized gain/(loss) on U.S. Treasury investments, net 142 113 1,919 (29) (1,806)

FYI: Unrealized gain/(loss) on trust preferred securities - 178 178 - 178 

FYI: Unrealized postretirement benefit gain/(loss) (3) - (3) 25 (28)

FUND BALANCE $ (20,862) (20,717) $ 145 $ 13,007 $ (33,724) $ 

Income Statement (year-to-date) 

Unaudited Unaudited Unaudited Year-Over-Year

Mar-10 Dec-09 Mar-09 Change

Assessments earned $ 17,717 3,278 $ 2,615 $ 663 $ 

Systemic risk revenue 1,722 49 73 (24)

Interest earned on U.S. Treasury obligations 704 62 212 (150)

Realized gain on sale of securities 1,389 - 136 (136)

Other revenue 3,174 23 2 21 

Total Revenue $ 24,706 3,412 $ 3,038 $ 374 $ 

Operating expenses (includes depreciation expense) 1,271 345 266 79 

Systemic risk expenses 1,722 49 73 (24)

Provision for insurance losses 57,712 3,021 6,637 (3,616)

Other expenses 4 1 - 1 

Total Expenses & Losses $ 60,709 3,416 $ 6,976 $ $ (3,560)

Net Income/(Loss) (4) (36,003) 3,934 (3,938) 

Unrealized gain/(loss) on U.S. Treasury investments, net (29) (2,108) 302 (331) 

Unrealized gain/(loss) on trust preferred securities - 178 - 178 

Unrealized postretirement benefit gain/(loss) - - (27) - 

YTD Comprehensive Income/(Loss) $ (38,138) 145 $ (4,269) $ 4,414 $ 

 

Deposit Insurance Fund

Deposit Insurance Fund

1.1 1.1

0.2

1.6 2

0.005

1.6

3.4

$7.9 $8.1

$1.5

$4.4

$9.7

$20.5

$6.6

$17.8

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

$22

2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10

$ in Billions

Cash Received Cash Outlays

 Quarterly Cash Receipts (Dividends/Payments) from Receiverships and Cash Outlays for Current/Prior Quarter Resolutions

Total DIF Liquidity at Quarter End

(Total Market Value plus Accrued Interest, including TLGP Funds)

$53.2

$31.7 $33.0 $29.7

$63.3

$23.4

$33.9

$66.1

$0

$10

$20

$30

$40

$50

$60

$70

2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10

$ in Billions
12

Fund Financial Results - continued ($ in Millions) 

$20.8

Statements of Cash Flows (year-to-date) 

Unaudited Unaudited Unaudited Year-Over-Year

Mar-10 Dec-09 Mar-09 Change

Net (Loss)/Income $ (4) $ (36,003) $ (3,938) $ 3,934 

Amortization of U.S. Treasury obligations (unrestricted) 3 212 80 (77)

TIPS Inflation Adjustment (4) 11 57 (61)

Depreciation on property and equipment 18 71 15 3 

Loss on retirement of property and equipment - 1 - - 

Provision for insurance losses 3,021 57,712 6,637 (3,616)

Unrealized (loss)/gain on postretirement benefits - (28) - - 

(Gain) on sale of UST obligations - (1,389) (136) 136 

Guarantee termination fee from Citigroup - (1,962) - - 

Systemic risk expenses - - 32 (32)

Net change in operating assets and liabilities (4,656) 17,081 (1,031) (3,625)

Net Cash Provided by/(Used by) Operating Activities $ (1,622) $ 35,706 $ 1,716 $ (3,338)

Investments matured and sold 1,355 21,432 2,619 (1,264)

Investments purchased (includes purchase of property and 

equipment) (13,085) (4) (2) (13,083)

Net Cash Provided by/(Used by) Investing Activities $ (11,730) $ 21,428 $ 2,617 $ (14,347)

Net Increase/(Decrease) in Cash and Cash Equivalents (13,352) 57,134 4,333 (17,685)

Cash and Cash Equivalents at beginning of year 60,523 3,389 3,389 57,134 

 Unrestricted Cash and Cash Equivalents - Ending 41,094 54,092 1,636 39,458 

 Restricted Cash and Cash Equivalents - Ending 6,077 6,431 6,086 (9)

Cash and Cash Equivalents - Ending $ 47,171 $ 60,523 $ 7,722 $ 39,449 

Selected Financial Data

Unaudited Unaudited Quarterly Unaudited Year-Over-Year

Mar-10 Dec-09 Change Mar-09 Change

Cash and cash equivalents $ 3,470 3,476 $ 6 $ 3,467 $ 9 $ 

Accumulated deficit, net (124,328) 20 (124,348) (123,944) (384)

Resolution equity 3,500 3,520 20 3,498 22 

Total revenue 8 6 5 1 

Operating expenses 5 1 1 - 

Goodwill/Guarini litigation expenses 409 - - - 

Net (Loss)/Income $ (400) 20 $ 4 $ 16 $ 

Deposit Insurance Fund

FSLIC Resolution Fund

 Receivership Selected Statistics March 2010 vs. March 2009

Year-to-Date ($ in millions) Mar-10 Mar-09 Change Mar-10 Mar-09 Change Mar-10 Mar-09 Change

Total Receiverships 220 61 159 8 8 - 228 69 159 

Assets in Liquidation 36,843 $ 16,061 $ 20,782 $ 29 $ 34 $ (5) $ 36,872 $ 16,095 $ 20,777 $ 

Collections 7,285 $ 1,614 $ 5,671 $ 8 $ 4 $ 4 $ 7,293 $ 1,618 $ 5,675 $ 

Dividends Paid - Cash 3,256 $ 3,838 $ (582) $ - $ - $ - $ 3,256 $ 3,838 $ (582) $ 

DIF FRF ALL FUNDS

National Liquidation Fund (NLF) Balance

$0.6

$5.7 $6.2 $6.0

$11.7

$3.4

$2.9

$7.2

$0

$2

$4

$6

$8

$10

$12

$14

2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10

$ in Billions

*The NLF includes all funds held by the FDIC in its receivership capacity.

*
13

3/31/10 12/31/09 Change

Par Value $57,065 $59,268 ($2,203)

Amortized Cost $57,068 $59,286 ($2,218)

Market Value $57,181 $59,428 ($2,247)

Primary Reserve 1 $57,214 $59,525 ($2,311)

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

Year-to-Date Total Return (Portfolio) 0.056% 0.306% not applicable

Year-to-Date Total Return (Benchmark) 2 1.133% (1.411%) not applicable

Total Return Variance (in basis points) (107.7) 171.7 not applicable

Yield-to-Maturity 3 0.49% 0.49% 0.00%

Weighted Average Maturity (in years) 0.15 0.08 0.07

Effective Duration (in years) 4

 Total Portfolio 0.14 0.06 0.08

 Available-for-Sale Securities 0.49 0.66 (0.17)

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

3/31/10 12/31/09 Change

Debt Guarantee Program

 Par Value $6,079 $6,431 ($352)

 Book Value $6,077 $6,431 ($354)

 Market Value $6,077 $6,431 ($354)

 Yield-to-Maturity 0.16% 0.02% 0.14%

 Weighted Average Maturity overnight overnight no change

Transaction Account Guarantee Program

 Book Value 6 $0 $0 $0

 Yield-to-Maturity not applicable not applicable not applicable

 Weighted Average Maturity not applicable not applicable not applicable

Other Systemic Risk Reserves 7

 Book Value 6 $0 $192 ($192)

 Yield-to-Maturity not applicable 0.02% not applicable

 Weighted Average Maturity not applicable overnight not applicable

FRF-FSLIC

 Book Value 6 $3,329 $3,330 ($1)

 Yield-to-Maturity 0.13% 0.02% 0.11%

 Weighted Average Maturity overnight overnight no change

3/31/10 12/31/09 Change

Book Value 8 $11,741 $7,223 $4,518

Effective Annual Yield 0.09% 0.11% (0.02%)

Weighted Average Maturity (in days) 22 5 17

National Liquidation Fund (NLF) Investment Portfolio Summary

(Dollar Values in Millions)

5

 In early August 2008, management reclassified all of the DIF portfolio's HTM securities as AFS securities effective as of June

30, 2008, because the FDIC could no longer assert it had the positive intent and ability to hold its HTM securities until their

maturity dates.

8

 Due to the short-term nature of the NLF, the portfolio's Book and Market Values are identical for reporting purposes.

Summary of Other Corporate Investment Portfolios

(Dollar Values in Millions)

7

 All funds in this portfolio ($192 million) were transferred to the DIF investment portfolio on January 7, 2010, as a result of the 

December 23, 2009, termination agreement of the Citigroup asset guarantee program.

6

 Due to the current short-term nature of these portfolios, each of their respective Par, Book, and Market Values are identical for 

reporting purposes.

3

 The Yield-to-Maturity includes the potential yield of Treasury Inflation-Protected Securities (TIPS), which assumes an average

1.1% annual increase in the CPI over the remaining life of each TIPS.

4

 For each TIPS, an estimated 80 percent "yield beta" factor is applied to its real yield duration to arrive at an estimated 

effective duration.

Deposit Insurance Fund Portfolio Summary

(Dollar Values in Millions)

1

 Primary Reserve is the total market value (including accrued interest) of overnight investments, available-for-sale securities, 

and held-to-maturity securities maturing within three months.

2

 The benchmark is the total return of the Merrill Lynch 1-10 Year U.S. Treasury Index.
14

Purchase up to $25 billion (par value) of available-for-sale (AFS) securities with maturity dates 

between April 1, 2010, and December 31, 2010, subject to the following additional restrictions: no 

more than $20 billion (par value) of such securities shall have maturity dates beyond June 30, 2010; 

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

September 30, 2010.

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

between July 1, 2010, and March 31, 2011, subject to the following additional restrictions: no more 

than $10 billion (par value) of such securities shall have maturity dates beyond September 30, 2010; 

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

31, 2010.

Purchase up to $3 billion (par value) of AFS securities with maturity dates between April 1, 2010, and 

December 31, 2010. 

Purchase up to $2 billion (par value) of AFS securities with maturity dates between July 1, 2010, and 

March 31, 2011. 

NATIONAL LIQUIDATION FUND

Maintain an overnight deposit target floor balance within a range of $15 million to $25 million.

Strategically invest the remaining funds in the zero- to 12-month maturity sector.

No changes to strategy.

Strategy Changes for 2nd Quarter 2010

Investment Strategies

Strategy as of 1st Quarter 2010

Strategy as of 1st Quarter 2010

DEPOSIT INSURANCE FUND

Strategy Changes for 2nd Quarter 2010

DEBT GUARANTEE PROGRAM

Strategy as of 1st Quarter 2010

Strategy Changes for 2nd Quarter 2010
15

1) Budgets for investment projects are approved on a multi-year basis; the year-to-date budget amount reflects the 2010 spending estimates 

for approved projects. 

YTD YTD % of 

Major Expense Category Budget Expenditures Budget Used Variance

Corporate Operating Budget 

Ongoing Operations

Salaries & Compensation $226,461 $203,971 90% ($22,490)

Outside Services - Personnel 54,968 43,331 79% (11,637)

Travel 20,654 18,391 89% (2,263)

Buildings 18,300 16,680 91% (1,620)

Equipment 17,620 15,207 86% (2,413)

Outside Services - Other 4,597 3,199 70% (1,398)

Other Expenses 3,511 2,583 74% (928)

Total Ongoing Operations $346,111 $303,362 88% ($42,749)

Receivership Funding

Salaries & Compensation $58,126 $39,422 68% ($18,704)

Outside Services - Personnel 356,099 267,582 75% (88,517)

Travel 14,539 8,763 60% (5,776)

Buildings 35,493 51,357 145% 15,864

Equipment 6,150 7,349 119% 1,199

Outside Services - Other 6,021 47,635 791% 41,614

Other Expenses 15,525 33,241 214% 17,716

Total Receivership Funding $491,953 $455,349 93% ($36,604)

Total Corporate Operating Budget $838,064 $758,711 91% ($79,353)

Investment Budget 1 $1,089 $721 66% ($368)

Grand Total $839,153 $759,432 90% ($79,721)

(Dollars in Thousands)

Executive Summary of 2010 Budget and Expenditures

by Major Expense Category

Through March 31, 2010
16

1) Executive Support includes the Offices of Diversity and Economic Opportunity, Public Affairs, Ombudsman, Legislative Affairs,

Enterprise Risk Management, and International Affairs.

2) Executive Offices include the offices of the Chairman, Vice Chairman, Independent Director, Deputy to the Chairman and Chief

Operating Officer, Deputy to the Chairman and Chief Financial Officer, and Deputy to the Chairman for External Affairs.

3) Budgets for investment projects are approved on a multi-year basis; the year-to-date budget amount reflects the 2010 spending estimates 

for approved projects. 

YTD YTD % of 

Division/Office Budget Expenditures Budget Used Variance

 Corporate Operating Budget 

 Supervision & Consumer Protection $138,883 $125,876 91% ($13,007)

 Information Technology 55,629 45,524 82% (10,105)

 Administration 63,960 55,867 87% (8,093)

 Resolutions & Receiverships 454,287 419,151 92% (35,136)

 Legal 58,558 57,281 98% (1,277)

 Insurance & Research 9,679 8,639 89% (1,040)

 Finance 9,705 7,103 73% (2,602)

 Inspector General 9,068 7,029 78% (2,039)

 Corporate University - CEP FIS 7,485 7,318 98% (167)

 Corporate University - Other 4,223 4,074 96% (149)

 Executive Support 1 8,140 6,973 86% (1,167)

 Executive Offices 2 2,201 1,574 72% (627)

 CIO Council 16,246 12,302 76% (3,944)

 Total, Corporate Operating Budget $838,064 $758,711 91% ($79,353)

 Investment Budget 3

 Information Technology $1,001 $649 65% ($352)

 Resolutions & Receiverships 63 67 106% 4

 Insurance & Research 25 5 20% (20)

 Total, Investment Budget 3 $1,089 $721 66% ($368)

 Combined Division/Office Budgets

 Supervision & Consumer Protection $138,883 $125,876 91% ($13,007)

 Information Technology 56,630 46,173 82% (10,457)

 Administration 63,960 55,867 87% (8,093)

 Resolutions & Receiverships 454,350 419,218 92% (35,132)

 Legal 58,558 57,281 98% (1,277)

 Insurance & Research 9,704 8,644 89% (1,060)

 Finance 9,705 7,103 73% (2,602)

 Inspector General 9,068 7,029 78% (2,039)

 Corporate University - CEP FIS 7,485 7,318 98% (167)

 Corporate University - Other 4,223 4,074 96% (149)

 Executive Support 1 8,140 6,973 86% (1,167)

 Executive Offices 2 2,201 1,574 72% (627)

 CIO Council 16,246 12,302 76% (3,944)

 Grand Total $839,153 $759,432 90% ($79,721)

Executive Summary of 2010 Budget and Expenditures

by Budget Component and Division/Office

Through March 31, 2010

(Dollars in Thousands)