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A n n u a l R eport

2000

S a f e g u a r d i n g



F ed era l D e p o sit
I n s ii ran ee C o r p o r a l ion

A m e r i c a ' s

F u t u r e




The Federal D ep osit In suran ce C orporation (FDIC)
is the independent de po sit insurance agency created by
Congress to m aintain s ta b ility and public confidence in
th e nation's banking system.
In its unique role as deposit insurer of banks and savings
associations, and in cooperation w ith the oth e r federal
and state regulatory agencies, the FDIC prom otes the
safety and soundness o f insured depository institutions
and the U.S. financial system by id en tifyin g, m onitoring
and addressing risks to th e deposit insurance funds.
The FDIC prom otes public understanding and sound
public policies by providing fin a n cia l and econom ic
inform ation and analyses. It m inim izes disruptive effects
from the fa ilu re o f banks and savings associations. It
assures fairness in the sale o f fin a n cia l products and the
provision of finan cial services.
The FDIC's long and continuing tra d itio n of public
service is supported and sustained by a highly skilled
and dive rse w o rk fo rc e th a t responds ra p id ly and
successfully to changes in the fin a n cia l environm ent.




Federal Deposit
Insurance Corporation




Federal Deposit Insurance Corporation
Washington, DC 20429-9990

_______

Office of the Chairman

May 31, 2001

Sirs,

|

' g 11

In accordance w ith the provisions of section 17 (a)
of the Federal Deposit Insurance Act,
the Federal Deposit Insurance Corporation
is pleased to subm it its Annual Report
fo r the calendar year 2000.

l®S9te
Sincerely,

Donna Tanoue
C h airm an




T a b l e of C o n t e n t s

•

C h airm an 's S ta te m e n t

2

•

Board o f D irecto rs

4

•

2 0 0 0 -T h e Year of D e p o sit Insurance

8

•

O p e ra tio n s of th e C o rp o ra tio n -T h e Year in R e view

Overview of the Industry
and the Deposit Insurance Funds
Responding to Emerging Risks

16

Technology

18

Gramm-Leach-Bliley Act

19

Diversity Initiatives
•

14

20

F inancial S ta te m e n ts

Bank Insurance Fund (BIF)

25

Savings Association Insurance Fund (SAIF)

45

FSLIC Resolution Fund (FRF)

63

•

K ey S ta tis tic s

•

Resources

89

Organization C hart/O fficials
Corporate Staffing

103

Sources of Information

104

Regional Offices
•

102

105

Index

106

FDIC Chairm an
Donna Tanoue

In good tim es and in bad tim es, the
public can depend on federal deposit
insurance. The men and w om en
of the Federal Deposit Insurance
Corporation know that our mission
is safeguarding America's future.
The seal on the door of every FDICinsured institution represents our
pledge that federal deposit insurance
is one certainty in an uncertain world.
Deposit insurance has served America
w ell. In 1999, the FDIC began a
comprehensive review of the deposit
insurance system to make sure that
it continues to serve America w e lland to explore w ays that it m ight be
strengthened. For more than a year,
w e have analyzed the system 's
weaknesses and how to address
them . This Annual Report begins
w ith an essay discussing the results
of that analysis and our recom m en­
dations for change, w hich w e
issued in April 2001. These recom­
mendations address a number of
unintentional flaw s in the current
system .




For example, the w ay w e price insur­
ance now has a potential procyclical
bias that could undermine economic
and financial stability. W e recommend
changing the way w e charge for insur­
ance, not to raise revenue, but to
allocate costs more evenly over time,
and more fairly among institutions,
based on risk and expected loss.
Bank failures are likely to come in
waves, along w ith serious downturns
in the economy. Under our present
system, however, banks are likely
to be faced w ith steep increases in
deposit insurance prem ium s in an
economic dow nturn when their
earnings are already depressed.
Such prem ium s w ould divert billions
of dollars out of the banking system
and w ould raise the cost of gathering
deposits at a tim e when credit w ould
already be tight. This, in turn, could
cause a further cutback in credit,
resulting in a further slow dow n of
econom ic activity at precisely the
w rong tim e in the business cycle.
By contrast, when the econom y and
the banking system are strong, as
at the present tim e, m ost banks are
paying no prem ium s at all.

This anomaly results from existing
legal restrictions on insurance prem i­
ums tied to the size of the deposit
insurance fund. Currently, the FDIC
is required to maintain its deposit
insurance fund at a statutorily desig­
nated reserve ratio of 1.25 percent
of estim ated insured deposits. W hen
the fund is at or above this ratio, the
FDIC is constrained from charging
prem ium s to m ost highly rated,
well-capitalized institutions. Currently,
over 90 percent of the institutions pay
no prem ium s fo r deposit insurance.
But w hen the fund is below 1.25 per­
cent, the law requires prem ium s to
be increased sharply unless the fund
w ould otherw ise be restored to the
1.25 percent level w ithin one year.
Therefore, w e are recom m ending
that the FDIC have greater flexibility
in charging prem ium s over the
business cycle to sm ooth prem ium
sw ings over tim e. In order not to
distort incentives, these prem ium s
should be priced as accurately as
possible to re fle ct expected loss,
and should not be dependent on the
size of the fund. To avoid enormous
grow th of the deposit insurance fund
during long stretches of good years,
it may be prudent to give rebates to
insured institutions. Because basing
rebates on current deposit levels
w ould exacerbate moral hazardthe faster you grow, the larger the
re b a te -w e are also recom mending
that rebates be based on the past
contributions of insured institutions
to the fund.

The net e ffe ct o f these recom m en­
dations is that there w ould be billions
of additional dollars available to the
banking industry to help fuel economic
grow th at the trough of the business
cycle, and insurance premiums would
more closely reflect risk, ending
subsidization of riskier institutions
by safer ones.
Our recommendations could not come
at a better tim e, positioned as w e
are between a past of unprecedented
prosperity and an uncertain future.
The past decade of econom ic expan­
sion has contributed to a strong,
well-capitalized banking industry. Both
the Bank Insurance Fund (BIF) and the
Savings Association Insurance Fund
(SAIF) are fully capitalized. The
numbers of troubled institutions and
of bank failures are very low by his­
torical standards. Experience teaches,
however, that good tim es do not last
forever. A n d -a s the year 2000
drew to a clo se -sig n s of stress in
the economy w ere emerging, casting
doubt on the ability of banks to
sustain recent grow th rates in the
face of softening loan demand. When
bad tim es return, more banks w ill
fail. If banks fail in greater numbers,
the BIF and the SAIF w ill decline.
Our recom m endations fo r deposit
insurance reform w ill elim inate
inequities, making the deposit
insurance system stronger and fairer.
By providing certainty and stability
in the future, they w ill ensure that
the system w ill continue to serve
the American public well.
To enjoy these benefits, however,
w e need to reform the deposit
insurance system w hile the industry




is strong and the overw helm ing
majority of institutions remain healthy.
W e have a good opportunity to act
now. No one can say how long that
opportunity w ill remain open.
As the C om m issioner fo r Financial
Institutions fo r the State of Hawaii,
I saw runs on financial institutions.
I w itnessed how fragile public confi­
dence can be w ith o u t the certainty
that federal deposit insurance brings.
A fte r nearly three years as FDIC
Chairman, now more than ever
I am convinced o f the importance of
federal deposit insurance and the
need fo r the Corporation to advocate
the recom m endations w e have
proposed.
For me personally, it continues to be
a great honor and privilege to serve
the public as FDIC Chairman, and to
w ork shoulder to shoulder w ith the
men and w om en of the FDIC.
Aside from developing the m ost
far reaching proposals fo r deposit
insurance reform since our founding,
w e w orked to g e th e r in 2000 to
address the risks of subprime lending
by banks. W e initiated im portant
proposals to address the problems
of predatory and payday lending. We
called fo r an early reexamination of
the Community Reinvestment Act.
And w e advanced the public debate
on the need for greater sim plicity
in bank capital regulation-all this in
addition to sounding the appropriate
safety and soundness alarms.
The Annual Reports of many organi­
zations include a recognition of how
the success of the organization rests
on the hard w o rk and dedication of
its employees, but in no case is that
truer than in our own. M any things
set the FDIC apart, but nothing

stands out more than the c o m m it­
m ent of our men and w om en to the
Corporation's mission and their per­
form ance in accomplishing it, many
tim es under harsh conditions. Time
and tim e again duty calls. Every tim e
it does, the men and w om en of the
Corporation answer.
In my years as FDIC Chairman,
nothing brought greater pleasure
and satisfaction than working w ith
my colleagues on the Board and
throughout the C orporation-and
w ith so many leaders of the financial
services industry. I feel privileged
and honored to have had that
opportunity.
I also w a n t to thank A ndrew "S kip"
Hove, Jr., for the many years he gave
to public service as Vice Chairman
of the FDIC from 1990 until his
retirem ent in January, 2001. During
those years, Skip served as Acting
Chairman three tim es and he ably
guided the Corporation through
some of the more difficu lt tim es it
has faced. I salute Skip for all he has
done on behalf of the FDIC and the
American people. In addition, I w ant
to w ish John Reich, FDIC Director,
and Don Powell, the nominee for
FDIC Chairman, all the best as they
take the re in s-a n d the fu tu re of the Corporation into their hands.
There is no better place to serve
America.

O onna Tanoue

Chairman
May, 2001

Board of
Directors

4

FDIC Board of Directors:
Donna Tanoue (seated),
John D. Hawke, Jr.,
Ellen Seidman,
Andrew C. Hove, Jr.
(standing left to right)

A n d re w C. H o ve, Jr.

Mr. Hove w as appointed to his
second term as Vice Chairman of
the FDIC in 1994. His first term as
Vice Chairman began in 1990. Since
1991, Mr. Hove has served as Acting
Chairman of the FDIC three tim es,
m ost recently from June 1, 1997,
w hen Chairman Ricki Heifer resigned,
to May 26, 1998, w hen Donna Tanoue
w as sw orn in as the 17th Chairman.
Before joining the FDIC, Mr. Hove
w as Chairman and Chief Executive
O fficer of the Minden Exchange
Bank & Trust Company, Minden,
Nebraska, w here he served in every
departm ent during his 30 years
w ith the bank.

D o n na Tanoue

Donna Tanoue took office as
the 17th Chairman of the Federal
Deposit Insurance Corporation
on May 26, 1998.
Chairman Tanoue has led the FDIC
on the m ost significant reevaluation
of its mission since the agency was
created in 1933: reforming deposit
insurance to make the system fairer,
m ore effective and more secure.
She has also focused the attention
of the C orporation-and the p u b lic on emerging risks in the financial
institutions industry and has initiated
effective safeguards to assure safety
and soundness in a w ide range of
banking activities, from subprime
lending to on-line banking. In addition,
she has advanced proposals to
protect consumers from predatory
lending and address problems in
payday lending.




Before she became FDIC Chairman,
Ms. Tanoue w as a partner in the
Flawaii law firm of Goodsill Anderson
Quinn & Stifel, w hich she joined in
1987. She specialized in banking,
real estate finance, and governm ent
affairs.
From 1983 to 1987, Ms. Tanoue
was C om m issioner fo r Financial
Institutions for the State of Hawaii.
In that post, she was the primary
state regulator fo r state-chartered
banks, savings and loan associations,
tru st companies, industrial loan
companies, credit unions, and escrow
depository companies. She also
served as Special Deputy A ttorney
General to the D epartm ent of
C om m erce and Consumer Affairs
for the State of Hawaii from 1981
to 1983.
Ms. Tanoue received a J.D. from
G eorgetown University Law Center
in 1981 and a B.A. from the
University of Hawaii in 1977.

Also involved in local governm ent,
Mr. Hove was Mayor of Minden from
1974 until 1982 and was Minden's
Treasurer from 1962 until 1974.
O ther civic activities included serving
as President of the M inden Chamber
of Commerce, President o f the
South Platte United Chambers of
Commerce and positions associated
w ith the University of Nebraska.
Mr. Hove also was active in the
Nebraska Bankers Association and
the American Bankers Association.
Mr. Hove earned his B.S. degree at
the U niversity of Nebraska-Lincoln.
He also is a graduate of the University
of W isconsin-M adison Graduate
School of Banking. A fte r serving as
a U.S. naval officer and naval aviator
from 1956 to 1960, Mr. Hove was
in the Nebraska National Guard
until 1963.

Ellen S eid m a n

Jo h n D. H a w k e , Jr.

Ms. Seidman became Director of the
Office of Thrift Supervision (OTS) on
October 28, 1997. As OTS Director,
Ms. Seidman is also an FDIC Board
member.

Mr. Hawke was sworn in as the
28th Com ptroller of the Currency on
December 8, 1998. A fte r serving 10
m onths under a recess appointment,
he was sw orn in fo r a full five-year
term on O ctober 13, 1999. As
Comptroller, Mr. Hawke serves
as an FDIC Board member.

Ms. Seidman joined the OTS from
the W hite House, w here from 1993
to 1997 she was Special Assistant
to President Clinton for economic
policy at the W hite House National
Economic Council. She chaired the
interagency working group on pen­
sions and dealt w ith such issues as
financial institutions, natural disaster
insurance, bankruptcy and home
ownership.
From 1987 to 1993, Ms. Seidman
served in various positions at Fannie
Mae, ending her career there as
Senior Vice President for Regulation,
Research and Economics. Other prior
positions include Special Assistant
to the Treasury Under Secretary
for Finance from 1986 to 1987, and
Deputy Assistant General Counsel
at the Departm ent of Transportation
from 1979 to 1981. Ms. Seidman
also practiced law for three years
beginning in 1975 w ith Caplin &
Drysdale, a W ashington, DC, law
firm specializing in tax, securities
and bankruptcy issues.
Ms. Seidman received an A.B. degree
in governm ent from Radcliffe College,
an M.B.A. from George Washington
U niversity and a J.D. from George­
to w n University Law Center.




Prior to his appointm ent as Com p­
troller, Mr. Hawke served for three
and a half years as Under Secretary
of the Treasury for Domestic Finance.
He oversaw the developm ent of
policy and legislation in the financial
institutions, debt management and
capital markets areas, and served
as Chairman o f the Advanced
C ounterfeit Deterrence Steering
C om m ittee and as a m em ber of
the board of the Securities Investor
Protection Corporation. Before
Treasury, Mr. Hawke was a senior
partner at the W ashington, DC, law
firm of Arnold & Porter, w hich he
first joined as an associate in 1962.
W hile there, he headed the financial
institutions practice, and from 1987
to 1995, served as the firm 's Chair­
man. In 1975, he left the firm to
serve as General Counsel to the
Board of Governors of the Federal
Reserve System, returning in 1978.
Mr. Hawke graduated from Yale
U niversity in 1954 w ith a B.A. in
English. From 1955 to 1957, he served
on active duty w ith the U.S. Air Force.
A fte r graduating in 1960 from
Columbia University School of Law,
w here he was Editor-in-Chief of the
Columbia Law Review, Mr. Hawke
was a law clerk for Judge E. Barrett
Prettyman on the U.S. Court of

Appeals fo r the District of Columbia
Circuit. From 1961 to 1962, he
served as counsel to the Select
Subcom m ittee on Education in
the House of Representatives.
From 1970 to 1987, Mr. Hawke
taught courses on federal regulation
of banking at Georgetown University
Law Center. He has also taught
courses on bank acquisitions and
financial regulation, and serves as
the Chairman of the Board of Advisors
of the Morin Center for Banking Law
Studies in Boston. Mr. Hawke has
w ritte n extensively on matters
relating to the regulation of financial
institutions, and is the author
of "C om m entaries on Banking
R egulation," published in 1985.
He was a founding m em ber of
the Shadow Financial Regulatory
C om m ittee, and served on the
com m ittee until joining Treasury
in April 1995.

Vice Chairman Hove retired from
the FDIC in January 2001. John Reich,
a form er banker and C hief o f S ta ff
for form er U.S. Senator Connie Mack,
was sw o rn in as an FDIC Board
m e m b e r later that m onth.







2000
The Year
-

of

Deposit

Insurance

2000I lie Year o f Deposit Insurance
Work begun in 2000 to
study deposit insurance
reforms led to final
recommendations
announced at an
April 5, 2001, press
conference by
Chairman Tanoue.

During the year 2000, the FDIC
undertook a major study of its deposit
insurance system . The decision to
conduct the study was not made
in an atm osphere of crisis. The U.S.
econom y was beginning its tenth
year of expansion and running at full
throttle. Bank capital and earnings
w ere at record levels. The FDIC
insurance funds began the year at
a combined $40 billion. The FDIC's
guarantee o f the safety of insured
deposits w a s -a n d is-ironclad.
So w hy the need fo r a study? The
answ er is that w hile the FDIC has
adequate revenues to discharge its
responsibilities, the w ay it is required
to collect those revenues does not
prom ote macroeconom ic stability,
fairness or appropriate economic
incentives. The FDIC's goal during
the year 2000 was not, however,
m erely to critique specific aspects
of the law governing its operations,
but to o ffer a concrete and construc­
tive fram ew ork fo r change.

T h e Issues

Insurance reform w ould require
legislative changes, and one core
recom mendation from the FDIC to
Congress is to resume operating one
insurance fund by merging the Bank
Insurance Fund (BIF) and the Savings
Association Insurance Fund (SAIF).
The tw o funds provide an identical
insurance product, each provides
that product to both banks and thrifts,
and they provide it in some cases to
the same institution. Because BIF
and SAIF prem ium s m ust be set
separately-and in a way that is rigidly
tied to the level of each insurance




fu n d -in s titu tio n s w ith similar risk
characteristics can pay different pre­
m iums. It w ould be entirely possible
fo r one institution to be paying 23
basis points for deposit insurance
w hile a com petitor across the street
that posed similar risk to its insurance
fund was paying nothing. Moreover,
some institutions have both BIF and
SAIF deposits and m ust track them
separately, in order to know w hich
deposits w ould pay prem ium s at
w h a t rate.
Also, existing law restricts the FDIC's
ability either to sm ooth insurance
costs over tim e or allocate those
costs fairly among insured institu­
tions based on the risks they pose.
To understand this constraint, one
m ust go back to the roots of the
FDIC's assessm ent system in the
Federal Deposit Insurance Corporation
Im provem ent A ct of 1991 (FDICIA).
FDICIA required the FDIC to imple­
m ent a risk-based insurance system.
It also required the FDIC to maintain
funds at a designated reserve ratio
(DRR), the ratio of required reserves
to insured deposits, of 1.25 percent.

W hen a fund's reserve ra tio -th e
ratio of a fund's balance to the
deposits it in su re s-fa lls below the
DRR, the FDIC m ust either raise
prem ium s by enough to bring the
reserve ratio back to the DRR w ithin
a year or charge at least 23 cents
per $100 of deposits (23 basis points)
until the reserve ratio meets the DRR.
This requirem ent w orks against the
loss-smoothing that is normally a
feature of insurance. The philosophy
underlying the requirem ent w ould
seem to be that banks should pay
fo r banking crises w hen they o c c u rnot before and not after. The difficulty
w ith this is that during a period of
heightened insurance losses, both
the econom y and banks in general
are likely to be in a distressed condi­
tion. A 23 basis point prem ium at
such a point in the banking cycle
is likely to be a significant drain on
bank net income, thereby retarding
bank lending and econom ic recovery.

R isk -R e la ted Prem ium s

Conversely, w hen the fund exceeds
the DRR, the pendulum sw ings the
other way, and the FDIC is prohibited
from charging any deposit insurance
prem ium s to m ost banks. Under a
provision of the Deposit Insurance
Funds A ct of 1996, well-capitalized
institutions w ith the tw o strongest
examination ratings (1 or 2 on a
5 point scale), a group that comprised
about 92 percent of all insured
institutions at year-end 2000, are
generally exem pt from paying pre­
m ium s w hen the fund exceeds the
DRR.
The FDIC's inability to price risk
w hen the fund exceeds the DRR
presents a number of issues. Insurers
generally price their product to
reflect their risk of loss. The FDIC's
inability to do this encourages new
deposits to enter the system and
enjoy the benefits of deposit insur­
ance w ith o u t shouldering any of the
costs. Since very little in prem ium s
has been collected since 1996, the
deposit insurance system is almost
entirely financed by those institu­
tions that paid prem ium s in the past.
There are currently over 900 new ly
chartered institutions that have never
paid prem iums. There are, moreover,
significant and identifiable differences
in risk exposure among the 92 per­
cent of insured institutions now in
the same risk group, and the current
system in e ffect forces the safer
banks in the group to subsidize the
riskier ones. Finally, some bankers
may take risks they w ould have
avoided if the insurance had been
appropriately priced.




The follow ing tables show the number and percentage of institutions insured by the Bank Insurance
Fund (BIF) and the Savings Association Insurance Fund (SAIF), according to risk classifications effective
fo r the first semiannual assessment period of 2001. Each institution is categorized based on its
capitalization and a supervisory subgroup rating (A, B, or C), w hich is generally determined by on-site
examinations. Assessment rates are basis points, cents per S100 of assessable deposits, per year.
BIF Supervisory Subgroups*

________ c

A

B

0
7,965 (92.7%)

3
383 (4.5%)

17
55 (0.6%)

3
157(1.8% )

10
15(0.2% )

24
7(0.1% )

10
3 (0.0%)

24
2 (0.0%)

27
4 (0.0%)

0
1,184 (88.8%)

3
102 (7.7%)

17
15(1.1% )

3
15(1.1% )

10
10(0.8% )

24
4 (0.3%)

10
1 (0.1%)

24
0 (0.0%)

27
2 (0.2%)

W ell Capitalized:

Assessment Rate
Number of Institutions
Adequately Capitalized:

Assessment Rate
Number of Institutions
Undercapitalized:

Assessment Rate
Number of Institutions

SAIF Supervisory Subgroups*

W ell Capitalized:

Assessment Rate
Number of Institutions
Adequately Capitalized:

Assessment Rate
Number of Institutions
Undercapitalized:

Assessment Rate
Number of Institutions
*

BIF data exclude SAIF-member "Oakar" institutions that hold BIF-insured deposits. The assessment rate reflects
the rate for BIF-assessable deposits, which remained the same throughout 2000.

*

SAIF data exclude BIF-member "Oakar" institutions that hold SAIF-insured deposits. The assessment rate reflects
the rate for SAIF-assessable deposits, which remained the same throughout 2000.

During the year 2000, financial insti­
tutions outside the realm of traditional
banking began to make more use
of FDIC-insured deposits in their
product mix. A fe w major investment
banks began or announced plans to
begin sw eeping large dollar volumes
of brokerage accounts into deposits
in their insured subsidiaries. This is,
of course, another example o f the
continuing erosion of barriers between
com m ercial banking and investm ent
banking. Nevertheless, these institu­
tions paid no insurance prem ium s
and, by lowering the fund's reserve
ratio, increased the likelihood that
other banks w ould face higher pre­
mium s in the fu tu re -a n d this high­
lighted some of the anomalies of
the current system .
There also was spirited discussion
among policymakers during the year
2000 of the appropriate level of
deposit insurance coverage. One
of the purposes of deposit insurance
is to provide unsophisticated investors
w ith a safe place to invest w ith o u t
the burden of m onitoring their banks.
Over tim e, inflation eats away at
the value of deposit insurance. The
question, then, was w hether the
$100,000 coverage limit, w hich had
remained in place since 1980, ought
to be changed.
The debate was couched in fam iliar
term s. Those w h o argued against
higher coverage emphasized the
potential for moral hazard, the danger
that large increases in coverage can
encourage some bankers to exploit
the ability to gather insured deposits
and deploy them to finance risky
activities. On the other hand, there




w ere those w h o asked w hether
the erosion of coverage should be
allowed to continue indefinitely: in
constant dollars, the coverage lim it
at year-end 2000 was alm ost 30 per­
cent below its 1974 level. Both of
these concerns are legitimate, but
the debate highlighted one fact that
w as indisputable. Unlike other feder­
al programs that are indexed, such
as Social Security, Medicare and
taxes, deposit insurance levels are
determ ined at unpredictable intervals
by the outcom e of such a debate.

The recommendations that ultimately
resulted from this process w ere as
follow s:
•

The BIF and the SAIF should be
merged.

•

The current statutory restrictions
on the FDIC's ability to charge
risk-based prem ium s to all institu­
tions should be eliminated: the
FDIC should charge regular prem i­
ums fo r risk regardless of the
level of the fund.

•

Sharp prem ium sw ings triggered
by deviations from the DRR
should be eliminated. If the fund
falls below a target level, premiums
should increase gradually. If it
grow s above a target level, funds
should be rebated gradually.

•

Rebates should be based on past
contributions to the fund, not the
current assessm ent base.

•

The coverage lim it should be
indexed to keep pace w ith inflation.

T h e FDIC's R e c o m m e n d a tio n s

The FDIC devoted considerable tim e
and e ffo rt during the year to analyz­
ing these issues. In April the agency
conducted a roundtable discussion
w ith the leadership of the major
banking trade associations, several
consumer organizations and interested
individuals. In M ay and June,
Chairman Tanoue, Vice Chairman
Flove and senior management of
the FDIC held outreach meetings
w ith bank chief executive officers in
Minneapolis, Dallas and Kansas City.
In August 2000, the agency published
a comprehensive options paper that
discussed various approaches to
deposit insurance pricing, funding
and coverage that m ight replace
the current approaches. A fte r the
release of the options paper, staff
devoted extensive e ffo rts to
narrowing and refining the possible
approaches to produce a workable
package of recom mendations.
There w ere numerous meetings
w ith bankers, trade groups, academ­
ics, outside experts, Capitol Hill and
other interested parties along the
way.

The FDIC had been advocating a
merger of the tw o insurance funds
fo r som e tim e. The resulting $42 bil­
lion fund (based on year-end 2000
financial results) w ould be stronger
than either fund w ould be on its
ow n. A m erger is the only w ay to
eliminate the possibility of prem ium
disparities betw een the deposits
of the tw o funds and the attendant
com petitive inequalities.

Similarly, the FDIC had been sug­
gesting fo r som e tim e that it needs
expanded discretion to price risk. If
deposit insurance premiums continue
to be fixed at zero fo r m ost banks
m ost of the tim e, our deposit insur­
ance system w ill continue to suffer
from the deficiencies described
earlier: premiums will rise dramatically
during periods of economic adversity
because the FDIC w ill be forced to
charge banks for m ost o f the losses
all at once; new deposits w ill impose
risks and costs on other banks w ith ­
out sharing in any of the costs of
operating the system ; the safer
banks in the system w ill subsidize
the riskier ones; and the moral hazard
problems caused by mispriced
deposit insurance w ill be magnified.
In recommending steady risk charges
over tim e, the FDIC recognized the
analytical challenges involved in
im plem enting them . Staff spent
considerable tim e after the release
of the options paper developing a
scoring model for insured institutions
analogous to those used in the private
sector fo r evaluating borrowers'
creditw orthiness. The results w ere
promising.
Collecting prem ium s from all banks
regardless o f the level of the fund
creates the possibility that the fund
w ill g ro w very large. A t w ha t point
the fund becom es too large is an
im portant policy question. An insur­
ance fund allows the FDIC to act
quickly to resolve banking problems
when needed, facilitates paying for
bank failures over tim e rather than
all at once, and buffers the taxpayer




W.W.Reid

Chairman Tanoue and
Vice Chairman Hove,
along w ith senior officials
Arthur J. Murton (left) and
W illiam R. Watson (right),
lead a pane! of industry experts
in a discussion of key deposit
insurance issues at an
FDIC-sponsored roundtable in
Washington on April 25.2000.

against loss. Determ ining an appro­
priate range fo r the insurance fund
involves a tradeoff, because there is
a cost that m ust be w eighed against
these benefits, namely, dollars in
the fund could have been used to
support bank lending.
In coming to its recom mendations,
the FDIC recognized that this policy
tradeoff m ust be confronted and
that, one w ay or another, the size
of the fund has to be managed. The
current system manages the size
o f the fund by eliminating deposit
insurance prem ium s fo r m ost banks
w hen the fund is above the DRR,
and adjusting them upward abruptly
w hen the fund is below the DRR.
The FDIC concluded that a better
w ay to manage the size of the fu n d one that m itigates prem ium volatility
and preserves risk-based pricing —
w ould be to increase prem ium s
gradually rather than abruptly w hen
the fund is below a target, and to
provide gradually increasing rebates
w hen the fund is above a target.

The rebate system advocated by the
FDIC would be a significant departure
from past practice. The reason the
FDIC recom m ended a rebate system
bears re-emphasizing: rebates could
allow the FDIC to price risk at indi­
vidual institutions regardless of the
level of the fund. Under the scheme
the FDIC has operated under since
1933, apart from increases in cover­
age the only w ay to slow the grow th
of the reserve ratio has been to
reduce deposit insurance prem iums.
W ith a rebate system in place to
provide a self-correcting mechanism
to control the grow th o f the fund,
risk-based prem ium s could be
assessed on all institutions regard­
less of the level of the fund.

This argum ent in favor of a rebate
system presum es that the rebates
w ould not them selves distort eco­
nom ic incentives or create new
moral hazard problems. To put the
m atter another way, the FDIC should
not pay banks sim ply to exist, nor
should it pay them to grow. This
reasoning led the FDIC to conclude
that a bank's rebate should depend
on w ha t it has paid into the fund
in the past, and not on its current
assessm ent base.
As noted earlier, developments during
the year 2000 highlighted the concern
raised by rapidly grow ing institutions
that dilute the fund's reserve ratio
and pay nothing for deposit insur­
ance. A t this point it is possible to
summarize how the FDIC's recom ­
mendations w ould address this
issue. First, under the assessm ent
system the FDIC recom mends, a
decrease in the reserve ratio w ould
have, at most, a gradual e ffe ct on
banks' net payments to the FDIC.
This means the effect of new deposit
grow th on other insured institutions
w ould be substantially diminished.
Second, regular risk-based prem iums
for all banks w ould mean that fast
grow ing institutions w ould pay
increasingly larger prem ium s as they
gathered deposits. In addition, fast
grow th, if it posed greater risk, could
result in additional premiums through
the operation of the FDIC's expanded
discretion to price risk.




Finally, w ith rebates based upon
past contributions, w hen the FDIC is
paying rebates, those rebates w ould
be paid in relatively smaller amounts
to fast grow ers and in relatively
greater am ounts to established
institutions or slow er growers. Over
tim e, as all institutions paid assess­
m ents (and as rebates w ere made
based upon past assessments), new
institutions and fast grow ers w ould
build their "rebate shares."
The recom mendation to index cover­
age to inflation was based on a pre­
sum ption that if deposit insurance
is an im portant part of the federal
governm ent's overall program to
ensure financial stability, then its
relative importance ought to be
maintained in a predictable manner.
The FDIC view ed the recom m enda­
tions that resulted from the w ork
done in the year 2000 as a package,
arguing against picking and choosing
some parts of the fram ew ork but not
others. For example, raising cover­
age w ith no change to the pricing
system w ould exacerbate the distor­
tion of incentives that already exists.
Paying rebates w ith o u t changing
pricing would, again, not address the
problems that come from a lack of
prem ium s when the fund exceeds
the DRR, and w ould increase the
need to raise premiums in bad times.

And a poorly designed rebate system
could negate the benefits o f any
deposit insurance pricing system ,
and make incentive problems much
w orse than they are now. For exam­
ple, giving rebates proportional to
a bank's deposits could mean the
FDIC in e ffe ct w ould pay a bank to
exist, and pay it m ore to grow.

Conclusion

The FDIC has protected depositors
and prom oted the safety and sound­
ness of insured depository institutions
fo r over 65 years. The year 2000
marked the end of a decade that
saw both a banking crisis and an
economic b o o m -a n d a decade that
saw major legislative changes to the
FDIC's assessm ent system . The year
2000 was, in short, a good year for
taking stock. The FDIC believes that
the recom m endations fo r depositinsurance reform developed during
the year w ill provide a sound basis
fo r helping the agency achieve its
mission, m ore efficiently and more
fairly, fo r years to come.




O p e r a t i o n s of t he C o r p o r a t i o n
The Ye a r in R e v i e w

FDIC participants in the
"Seminar on Establishing
a Deposit Insurance System"
in Basel, Switzerland, were:
(I to r) James McFadyen,
Christie Sciacca, George Hanc,
Rose Kushmeider, Oetta Voesar,
Claude Rollin. Stanley Ivie
and Christine Blair.

O v e rv ie w of th e In d u stry
an d th e D e p o sit Insuran ce Funds

During 2000, insured commercial
banks and savings institutions reported
a slight decline in earnings perform ­
ance from the record levels of 1999,
higher levels of provision expenses,
and an increase in loan losses from
comm ercial and industrial borrowers.

The year 2000 may w ell be rem em ­
bered as a w atershed in the history
of the FDIC. The Corporation under­
took a comprehensive review of the
deposit insurance system w ith an eye
tow ard addressing its weaknesses.
As part of that effort, the Corporation
com m issioned a national household
survey, conducted by the Gallup
Organization, to measure public
understanding o f-a n d support fo r the deposit insurance program. Also,
the FDIC sponsored global efforts
to establish or improve deposit insur­
ance system s. In May, fo r example,
the Corporation and the Financial
Stability Institute co-hosted a seminar
on these issues in Basel, Switzerland a seminar that drew approximately
150 people w ho represented more
than 60 countries. And in June the
Corporation hosted a meeting in
W ashington, DC, o f th e Financial
Stability Forum's (FSF) Working Group
on Deposit Insurance. The FSF was
created in 1999 by the finance
m inisters and other officials of the
G-7 industrial nations as a w ay to
promote international financial stability
through inform ation exchange and
international cooperation.




In addition to deposit insurance,
the year 2000 m ight be considered
a watershed in other ways. Concerns
began to grow about the condition of
the industry, w hich had experienced
unprecedented profitability during
the 1990s. And, though industry
conditions did not significantly affect
the deposit insurance funds, the
Corporation in 2000 undertook several
safety and soundness initiatives to
address emerging risks. It also devel­
oped contingency plans for the failure
of a very large institution, or an
institution th a t operates on the
Internet. It addressed the effects of
evolving technology, both internally
and externally. The Corporation
invested in its employees through
its diversity program. A n d -w o rk in g
w ith other bank re g u la to rs -it dealt
w ith many of the demands of the
landmark financial modernization
legislation enacted in 1999, the
Gramm-Leach-Bliley Act. In summary,
the FDIC spent the year 2000 respond­
ing to changes in the industry it
insures and supervises, and in
doing so prepared itself for the new
financial w orld technology continues
to create.

Commercial banks' eight consecutive
years of record earnings came to an
end in 2000, as net income of $71.2
billion fell $380 million (0.5 percent)
short of 1999's record total. The
industry's earnings decline was
m ostly attributable to problems at a
fe w large banks. The average return
on assets (ROA) of 1.19 percent was
dow n from the record 1.31 percent
registered in 1999. Even so, 2000
marks the eighth consecutive year
that the industry had an ROA above
one percent. The industry's net
interest margin of 3.95 percent was
the low est level since 1990. In 2000,
securities sales produced net losses
and provision expenses rose sharply
w ith loan-loss provisions totaling
$29.3 billion, an increase of $7.4 billion
(34.1 percent) over 1999. Noninterest
income grow th was sluggish in
2000; however, this w as aided
by slo w e r g ro w th in noninterest
expenses. From 1999 to 2000, the
annualized net charge-off rate on
commercial and industrial (C&l) loans
rose to 1.15 percent, from 0.79 per­
cent a year ago. Noncurrent loans
during 2000 increased by $9.9 billion
(30.0 percent), w ith C&l loans account­
ing fo r $6.1 billion (61.4 percent) of
the increase.

^ S e le c te d S ta tis tic s
J

Insured savings institutions earned
$10.7 billion in 2000, dow n $126 mil­
lion from the record earnings of
1999. This was the third year in a
row that industry earnings w ere over
$10 billion. The average ROA was
0.92 percent, down from 1.00 per­
cent in 1999. Increased noninterest
expenses negated improvem ents
in noninterest income, w hile an
inverted yield curve continued to
put dow nward pressure on th rifts '
net interest margins. Net chargeoffs, at 0.20 percent o f loans, w ere
$349 million (29 percent) higher than
in 1999, but provisions for loan losses
exceeded these charges by over
30 percent in both years.

D o l l a r s

Deposit insurance assessm ent rates
remained unchanged from 1999 for
both the BIF and the SAIF, ranging
from 0 to 27 cents annually per $100
of assessable deposits. Under the
assessm ent rate schedule, 92.7 per­
cent of BIF-member institutions
and 88.8 percent of SAIF-member
institutions w ere in the low est riskassessm ent rate category and paid
no deposit insurance assessments
fo r the first semiannual period of
2001.




■

m i l l i o n s

H

:

For the year ended December 31
2000

1999

1998

Bank Insurance Fund

I

Financial Results

M

Revenue
1 Operating Expenses
I Insurance Losses and Expenses
N et Income
1 Comprehensive Incom e T
1 Insurance Fund Balance
H Fund as a Percentage of Insured Deposits

1j
J
1
I
I

The FDIC administers tw o deposit
insurance fu n d s -th e Bank Insurance
Fund (BIF) and the Savings Association
Insurance Fund (SAIF)-and manages
the FSLIC Resolution Fund (FRF),
which fulfills the obligations of the
form er Federal Savings and Loan
Insurance Corporation (FSLIC)
and the fo rm e r Resolution Trust
Corporation (RTC). The following
summarizes the condition of insured
institutions and the FDIC's insurance
funds.

in

i
■
|
1

$

1,906

1,816

$

773
(128)

1,192

1,261
1,561

(6 )

1,309

( 198)

$ 29,414

1,319
$ 29,612 !

1.36 %

1.35%

2,000
698

(106)

$ 30,975

1.38 %

Selected Statistics

Total BIF-M em ber Institutions
Problem Institutions
Total Assets of Problem Institutions
$
Institution Failures
Total Assets of Current Year Failed Institutions
s
Number of Active Failed Institution Receiverships

8,572

8,834

74

66

11,000

68

4,000
7
1,424

$

6
378

9,031

$

$

5,000

$

370

3

101

51

;

219
■

Savings Association Insurance Fund
Financial Results

Revenue
Operating Expenses
Insurance Losses and Expenses
Net Income
Comprehensive Incom e*
Insurance Fund Balance
Fund as a Percentage of Insured Deposits

1

$

664

601

$

$

584

111

85

189

31

32

364

477

467

478

$

93

441

10,759
1.43%

472

$ 10,281
1.45 %

$

9,840

1.39 %

__________________________________

I

Selected Statistics

Total SAIF-M em ber Institutio n s"
Problem Institutions
Total Assets of Problem Institutions
Institution Failures
Total Assets of Current Year Failed Institutions
N um ber o f A ctive Failed In s titu tio n Receiverships

■

■

1,333

s

30

$ 6,000
1
63
$

3

3

1

s

T

Comprehensive Income is added to conform w ith SFAS No. 130, "Comprehensive Income.”

•
■

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

H

13

13,000

■

1,387

20

1
I
1

$

730

IM
1,430

16
$

6,000

$

0
o
2

I

•

- ■

-v'

- >'

'r

■ -/•

Research by FDIC s ta ff, inclu d­
ing i! to r| s e n io r fin a n c ia l
a nalyst Thom as M urray,
senior a n a ly s t C harles C o llie r
and e c o n o m is t D anie l N u xo ll.
id e n tifie s p o te n tia l risks
to banks and c itie s fro m
c o m m e rc ia l re a l e s ta te
d e v e lo p m e n t

Despite the relatively rapid grow th of
insured deposits, insured institutions
continued to rely increasingly on other
funding alternatives. Insured deposits
as a percentage of dom estic liabilities
continued a steady, nine-year decline,
falling to 51.7 percent at the end of
2000, compared to 52.6 percent a
year earlier and 70 percent in 1992.
A t year-end 2000, the ratio was
46.4 percent fo r in stitu tio n s w ith
total assets greater than $1 billion,
and 74 percent for smaller institutions.

Deposits insured by the FDIC moved
past the $3 trillion level in 2000, to
$3.05 trillion, despite the number
of insured institutions falling below
the 10,000 mark for the firs t time.
Insured deposits rose by 2.1 percent
in the final three m onths of 2000,
bringing the grow th rate for 2000 to
6.5 percent. This annual grow th rate
for federally insured deposits is the
highest since 1986, when deposits
insured by the FDIC and the FSLIC
increased by eight percent. Insured
deposits reported by the 9,924
FDIC-insured institutions rose by
$185 billion in 2000, including a
$73 billion increase (81 percent) in
insured brokered deposits. About
half of the latter am ount was attrib­
utable to tw o insured banks w ith
brokerage affiliates that "s w e e p ”
cash management account balances
into FDIC-insured bank accounts.




By year-end 2000, deposits insured
by the BIF grew at seven percent
and reached $2.3 trillion. This annual
grow th rate fo r BIF-insured deposits
w as the highest since 1989. The BIF
balance w as $31 billion at year-end
2000, or 1.35 percent of estim ated
insured deposits. This w as dow n
from the year-end 1999 reserve ratio
of 1.36 percent as the $1.6 billion
grow th of the fund's balance during
2000 was more than o ffs e t by the
g ro w th of insured deposits.
The reserve ratio of the SAIF was
1.43 percent at year-end 2000,
dow n slightly from 1.45 percent
at year-end 1999. The balance
of the SAIF was $10.8 billion on
D ecember 31, 2000. SAIF-insured
deposits w ere $753 billion at yearend 2000, having grow n 5.8 percent
fo r the year. The annual grow th rate
was the highest since the inception
of the SAIF in 1989.

During 2000, seven FDIC-insured
institutions failed. Six of those insti­
tutions w ere insured by the BIF and
one was insured by the SAIF. The
failed institutions had combined
assets of approximately $408 million.
Losses for the seven failures are
estim ated at $40 million. In 1999,
there w ere eight failures of insured
institutions, w ith total assets of
$1.5 billion and estim ated losses of
$839 million. The contingent liability
fo r anticipated failures of BIFand SAIF-insured institutions as of
December 31, 2000, was $141 million
and $234 million, respectively.

R esp on d in g to E m e rg in g Risks

In the firs t quarter of 2000, the FDIC
announced enhancements to the
Risk-Related Premium System that
w ill provide a more flexible, forwardlooking system that keeps pace
w ith new and emerging risks to the
insurance funds. The enhancements
focus on "o u tlie rs" —institutions w ith
atypically high-risk profiles among
those in the best-rated prem ium
c a te g o ry -to ensure that the FDIC is
making all possible efforts w ithin the
existing deposit insurance system to
maintain the insurance funds' strong
condition. R efinem ents w ere made

Keith Ligon. chief of FDIC
supervision policy for bank
securities, capital markets
and trust activities, discusses
proposed capital rules at an
interagency staff meeting.

to id e n tify the o u tlie r in stitu tio n s
among those in the best-rated
prem ium category, and to determ ine
w h ether there are unresolved super­
visory concerns regarding the riskm anagem ent practices of these
institutions. W here such concerns
are present, the institutions are given
an opportunity to address the defi­
ciencies in their risk-management
practices before higher prem ium s
are assessed.

FD IC -lnsured Deposits (e s tim a te d y e a r-e n d th r o u g h 2 0 0 0 )
D o l l a r s

in

b i l l i o n s
■ SAIF-lnsured
■ BIF-lnsured

1960

70

80

3,000
2,500

2,000
1,500
1,000

500

......... i ll! Mill
Source: Commercial Bank Call Reports and Thrift Financial Reports
Note: For more details, see pages 25 (BIF) and 45 (SAIF).




90

2000

N ew "scre e n s," or models designed
to flag outlier statistics and ratios,
based on quarterly financial data, were
added to the process fo r assigning
assessment risk classifications. These
screens identify institutions in the
best-rated category w ith atypically
high-risk profiles. The screens flag
combinations of rapid loan grow th,
high-yielding loan portfolios, con­
centrations in high-risk assets, and
recent changes in business mix. For
the institutions identified, a supervisory
review is conducted to determ ine
if concerns e xist regarding riskm anagem ent practices. If so, the
in stitu tio n is notified th a t unless
actions are taken to address the
concerns before the next semiannual
assessment period, a higher premium
may be assessed.
During the year, the FDIC developed
a training program to instruct exam­
iners in m ethods of fraud detection
and investigation, desirable skills
w hen technology makes fraud ever
easier to co m m it and harder to
detect. The FDIC also participated in
a num ber of local, state and national
working groups relating to financial
institution fraud and money launder­
ing. These groups seek to improve
inform ation sharing and to develop
uniform policies and approaches
to deterring and detecting fraud.

" '

^

’

5 - 'v
*

Stephen M. Cross, Director
of the FDIC's Division of
Compliance and Consumer
Affairs

In Septem ber 2000, the FDIC, along
w ith the other banking and th rift
agencies, proposed a revision to the
capital treatm ent for residual interests
in securitizations or other transfers
of assets. Residual interests are
typically the assets an institution
retains in connection w ith its securi­
tization activities. The proposed rule
w ould require an institution to hold
a dollar of capital fo r every dollar in
residual interests, and w ould make
related changes in Tier 1 capital.
Lastly, to keep pace w ith the evolving
banking industry, the FDIC continued
its contingency planning fo r possible
future failures. In light of the banking
industry's increasing consolidation
and reliance on and use of the
Internet and electronic comm erce,
the FDIC focused its planning in
2000 on the need to address possible
technological failures and large
insured depository institution failures.
As a result, the FDIC began m odify­
ing its resolution procedures to
address issues associated w ith larger,
more complex, institutions and
electronic banking and comm erce.
Additionally, the FDIC began im ple­
m enting a core training program
to cross-train personnel to maintain
its readiness capacity.




T ech n olo gy

In late 1999, Chairman Tanoue initiat­
ed a project to evaluate the FDIC's
preparedness in continuing to keep
pace w ith the dynamics of bank
technology. The project concluded
in early 2000 w ith the establishm ent
of an internal Bank Technology Group
to help ensure that the FDIC adopts
an integrated approach to risks
and opportunities associated w ith
emerging bank technologies, such
as Internet banking, electronic cash,
electronic lending, and w ireless
banking.
Significant grow th in electronic bank­
ing or "E-Banking" was evidenced
by the 64 percent increase in the
num ber of FDIC-insured banks offer­
ing transactional services over the
Internet (1,850 institutions at yearend 2000 compared to 1,130 a year
earlier), as w ell as the increasing

^ L iq u id a tio n H ig h lig h ts 1 9 9 8 -2 0 0 0
Dollars

in b i l l i o n s
2000

Assets of Failed Banks

1999

6

Total Failed Banks

7
1.42

$

.38

Assets of Failed Savings Associations

$

.03

Net Collections from Assets in Liquidation*

S

.60

[Total Assets in Liquidation*

$

Net Collections from Assets Not in Liquidation*

S

[Total Assets Not in Liquidation*

$ 2.80

Total Failed Savings Associations

1 •

$

1

1998

3
$

0

H H I

$
$

.06
.98

.54

$

1.98

.16

$

.21
$ 5.20

.37

$

0

$
$
$

3.55

$

6.71

Also includes assets from thrifts resolved by the former Federal Savings and Loan Insurance Corporation

2.38

.38

The FDIC in M a ri h hasted
an ntera gency
urn o n th e
privacy o f consum er fin a n cia l
in fo rm a tio n th a t w a s atten ded
by bankers, consum er advo­
cates, reg u la to rs and othe rs
C h a irm a n fan o u t) lia r rig h t!
is s h o w n h ere w ith o th e r
aud ie n ce m em bers

For example, the Corporation began
working w ith the National Association
of Insurance C om m issioners to
explore ways that inform ation can
be shared among the banking and
insurance regulators to improve
regulation. Similar arrangements
w ill be explored w ith securities
regulators.

sophistication of technology used
in E-banking activities. The FDIC at
year-end 2000 had 288 specially
trained electronic banking examiners
and similar specialists nationwide,
and it established the Electronic
Banking Branch in its Division of
Supervision. This new ly created
branch w ill provide oversight of
information system s and E-banking
activities for all state nonm em ber
banks. The FDIC also worked w ith
the Federal Reserve to enhance the
risk-focused examination module
for electronic banking used in bank
examinations. In addition, general
electronic banking training also was
provided to examiners.
And, the FDIC continued to use
technology to improve the failed bank resolution and asset marketing
processes. In 2000, the FDIC
conducted its first teleconference
w ith prospective acquirers for a
failed bank at five locations across
the country; established a secure Web
site allow ing for the rapid sharing
of confidential inform ation w ith
prospective acquirers of a failed
institution; and conducted its first sale
of financial assets over the Internet,
w ith approximately $12.3 million of
loans at a recovery that was 16 per­
cent higher than expected.




G ra m m -L e a c h -B lile y A ct

Under the Gramm-Leach-Bliley Act
(GLBA), banking organizations may
more freely provide a full range of
financial services including brokerage,
underwriting, and even sponsoring
and distributing mutual funds. During
2000, the FDIC took many steps to
deal w ith its demands.

The Corporation also revised its reg­
ulatory standards to reflect aspects
of GLBA that require separate ade­
quate capital for a bank and its secu­
rities subsidiary, and restrict financial
dealings betw een the bank and its
securities affiliate or subsidiary.

j-----------------------------------------------FDIC E xam in ation s 1 9 9 8 2 0 0 0
2000

1999

1998

2,232

2,289
241

2,170

Safety and Soundness:

IT

State Nonmember Banks
Savings Banks
National Banks
State M em ber Banks
Savings Associations

235
17
2

'Y

221
1

7

6

0

0

1

Subtotal

2,486

2,540

2,399

Compliance/Comm unity Reinvestment Act

2,257

2,368

1,989

533

452

542

1,585

1,446

1.335

6,861

6,806

6,265

Trust D e p a r tm e n ts

■Data Processing Facilities
Total

Left:
In W a s h in g to n , DC, and around
th e natio n, FDIC em ployees
g a th e re d to d is c u s s th e
ag e n cy's fir s t D iv e rs ity
S tra te g ic Plan

GLBA also made Federal Home Loan
Bank (FHLB) mem bership available
to more institutions and perm itted
certain FHLB-member institutions to
obtain more advance funding.
In response to these changes, the
FDIC issued supplem ental examina­
tion guidance in A ugust 2000. The
guidance provides an overview of
FHLB advance strategies and pres­
ents a fram ew ork for examining the
effects of these strategies w hen
determ ining the adequacy of an insti­
tution's policies, practices and finan­
cial condition.




Lastly, the FDIC and the other bank­
ing agencies im plem ented regula­
tions protecting consumers purchas­
ing insurance products and annuities
through the bank. The new rules
govern the sale and solicitation of
insurance products and annuities
made by the bank as w ell as by oth­
ers selling on the bank's behalf.
These protections include custom er
disclosures, advertising require­
ments, standards regarding the
physical location w here sales may
occur, and prohibitions against tying
the purchase of insurance products
to the use of any bank product.This
regulation w ill go into e ffe ct late in
2001 .

Right:
D irectors M icke y C ollins (left)
o f the FDIC's O ffice o f D iversity
and Econom ic O pp o rtu n ity and
A.i leas U pton Kea (center) of
th e D ivisio n of A d m in istra tio n
acce pt an a w a rd on b e h a if
o! th e FDIC fro m th e Federal
A sian Pacific A m erican C ouncil
fo r th e agency's excellence
in d iv e rs ity program s.

D ive rs ity In itia tiv e s

In 2000, the FDIC advanced many of
the goals and strategies of its first
corporate Diversity Strategic Plan,
w hich reflects the Corporation's
c om m itm ent to a fair and inclusive
w o rk environm ent. To gauge
employee opinion about the FDIC's
w ork environm ent and culture, the
FDIC engaged the Gallup Organization
to design an organizational assess­
m ent survey that was administered
in 2000. The survey results provided
baseline data fo r planning and
instituting a range of programs and
policy initiatives prom oting and
m aintaining the FDIC's position
as an em ployer o f choice.

Also in 2000, the Corporation:
•

•

•

•

•

Provided diversity training to
6,315 em ployees, representing
about 95 percent of all head­
quarters and field staff.
Established new guidelines
ensuring that groups making
selections fo r m erit prom otions
represent our diverse w orkforce.
Sponsored 200 employees
in a m entoring program in w hich
m ore-experienced employees are
paired w ith less-experienced ones
to share their knowledge and
skills.
Instituted a perm anent Career
M anagem ent Program to help
employees assess and develop
their career plans.
Expanded its Employee Advisory
Resources program w ith a
LifeW orks program -a one-stop
resource fo r consultation,
information, direction and referrals
to help employees balance the
demands of w ork w ith their
personal lives.




C om pliance, Enforcem ent and Other Related Legal A ctions 1 9 9 8 -2 0 0 0

2000

1999

1998

87

110

143

5
19

2
21

Total Number of Actions Initiated by the FDIC
Termination of Insurance
Involuntary Termination

Sec. 8a For Violations, Unsafe/Unsound Practices or Condition

1

Voluntary Termination

Sec.8a By Order Upon Request
Sec.8p No Deposits
Sec.8q Deposits Assumed

0

6
5

Sec. 8b Cease-and-Desist Actions

Notices o f Charges Issued
Consent Orders

4’
26

Sec. 8e Removal/Prohibition of Director or Officer

Notices of Intention to Remove/Prohibit
Consent Orders

3

4

2

17

22

15

3

15
20

41
35

Sec. 8g Suspension/Removal When Charged With Crime
Civil Money Penalties Issued

Sec.7a Call Report Penalties
Sec.8i Civil M oney Penalties

11

Sec. 10c Orders of Investigation
Sec. 19 Denials of Service After Criminal Conviction
Sec. 32 Notices Disapproving Officer/Directors Request for Review 0
Truth in Lending Act Reimbursement Actions

Denials of Requests fo r Relief
Grants o f Relief
Banks M aking Reim bursem ent*
Suspicious Activity Reports (Open and closed institutions)

0
0

1

1

0

0

127

134

161

20,720

22,015

20,229

Other Actions Not Listed

2

Two actions included Sec.8 (c) temporary orders.
One action included a Sec.8 (e) suspension order.
One action involved a denial of request to waive 10-year ban under Sec. 19 (a) (2).
These actions do not constitute the initiation of a formal enforcement action and, therefore, are not included
in the total number of actions initiated.

I

C o n su m er C o m p la in ts
and Inq u iries

FDIC A p p lic a tio n s 1 9 9 8 -2 0 0 0
1999

2000

341

0

0
210
207

41
166
3
1

145
154
5
3

0

N ew Branches

1,286
1,286

Approved
Denied

0
316

Mergers

Approved
Denied
Requests for Consent to Serve*

249
248

19
32

15
233
1
1

v-

295
295
0
1,347...................
1.347
0
'
341

19
32

0

Notices of Change in Control

28

2
31 ................

28

31

Letters of intent Not to Disapprove
Disapproved
Brokered Deposit Waivers

Approved
Denied
Savings Association Activities'

Approved
Denied
State Bank Activities/Investments7

Approved
Denied
Conversions of Mutual Institutions

Non-Objection
Objection
•

*
T

The FDIC investigates and responds
to consum er com plaints of unfair
or deceptive acts or practices by
financial institutions. T h e agency

296
296
0
1,450
1,450
0
390
390
0
304
: 299

205
205

Approved
Denied

Approved
Section
Section
Denied
Section
Section

1998

316

Deposit Insurance

25

0
16 ’

25

0
83

0

80

2 ,

34
0

16

0

..

:

~ .....10

I
9

1

’

0

83
0

0
0

24

23

0

24
0

23
0

8

16

30

8

15
1

30
0

80
0
36
36

0

also responds to inquiries fro m
consum ers, financial institu tion s
and o th e r parties ab o u t consum er
p ro tectio n and fair lending m a tte rs
and deposit insurance. T h e FDIC's
C o n su m er Affairs Program inform s
depositors, financial institu tion s
and o th e rs a b o u t th e FDIC's
re s p o n s ib ilitie s fo r e n fo rcin g
co n s u m e r p ro te c tio n an d fa ir
len d in g la w s an d re g u la tio n s .
In 2000, th e FDIC received nearly
4,500 w ritte n consum er com plaints
against state-chartered n on m em b er
banks. The agency tracks th e
vo lum e and n atu re of co m p laints
to m o n ito r tre n d s and identify
em erg in g issues. N early tw o -th ird s
of th ese co m p laints concerned
c re d it card acco u n ts. T h e m o s t
fre q u e n t c o m p la in ts in v o lv e d
billing disputes and account errors;
loan denials; credit card fees and
service charges; and collection
practices.

Under Section 19 of the Federal Deposit Insurance Act, an insured institution must receive FDIC approval before
employing a person convicted of dishonesty or breach of trust. Under Section 32, the FDIC must approve any
change of directors or senior executive officers at a state nonmember bank that is not in compliance w ith capital
requirements or is otherwise in troubled condition.
Amendments to Part 303 of the FDIC Rules and Regulations changed FDIC oversight responsibility in October 1998.

The FDIC also received over 2,000
w ritte n inquiries fro m consum ers
and o v e r 2 0 0 w r itte n in q u irie s
fro m b an ke rs as to w h e th e r

Section 24 of the FDI Act, generally, precludes an insured state bank from engaging in an activity not permissible
for a national bank and requires notices be filed with the FDIC.

specific financial institutions are
insured by th e FDIC, or questions
a b o u t FDIC d e p o s it in s u ran ce
coverage. O th e r co m m o n inquiries




w e re requests for copies of FDIC
consum er publications, questions
about banking practices and
consum ers' rights under federal
consum er pro tectio n law s, and
questions related to obtaining
a personal credit report.







Federal Deposit Insurance Corporation

iB a n k Insuran ce Fund S ta te m e n ts of Financial Position a t D e ce m b er 31
Dollars

in

Thousands
2000

1999

Assets
Cash and cash equivalents

$

156,396

$

164,455

Investment in U.S. Treasuryobligations.net: (Note 3)
He 1
d-to-m atu rity securities

22,510,892

23,949,655

A vailable-for-sale securities

7,421,597

4,288,410

Interest receivable on investm ents and other assets, net

552,671

467,070

Receivables from bank resolutions, ne t (N ote 4)

349,589

743,011

11,727

20,750

Assets acquired from assisted banks and term inated receiverships, net (Note 5)
Property and equipm ent, net (N ote 6)
Total Assets

303,438
$

31,306,310

260,040

s

29,893.391

$

148,821

Liabilities
Accounts payable and other lia b ilitie s

$

165,972

Contingent liabilities for: (Note 7)
A nticipa ted fa ilu re o f insured in stitution s

141,355

307,000

234

479,208

30,755,569

29,494,950

219,653

(80,767)

30,975,222

Total Liabilities

2,477

331,088

Asset securitization guarantees

10,000

1,605

Litigation losses

10,910

21,922

A ssistance agreem ents

29,414,183

Commitments and off-balance-sheet exposure (Note 12)
Fund Balance
A ccum ulated net income
Unrealized gain/(loss) on available-for-sale securities, net (N ote 3)

Total Fund Balance

Total Liabilities and Fund Balance
The accompanying notes are an integral part o f these financial statements.




$

31.306.310

S

29,893.391

Bank Insurance Fund

1 Bank Insurance Fund S ta te m e n ts o f In co m e and Fund B alance fo r th e Years Ended D e ce m b er 31
Dollars

in T h o u s a n d s
2000

1999

Revenue
Interest on U.S. Treasury obligations

$

Assessm ents (N ote 8)

1,827,404
45,091

Interest on advances and subrogated claim s

Total Revenue

1,733,603
33,333

7,616

Revenue from assets acquired from assisted banks and term inated receiverships
O ther revenue

$

20,626

10,077
15,676

11,484
16,556

1,905,864

1,815,602

Expenses and Losses
O perating expenses

772,918
(152,962)

Total Expenses and Losses

Net Income (Loss)

(198,127)

29,414,183

S

(91,682)

1,561,039

Fund Balance - Beginning




(106,445)

300,420

Comprehensive Income (Loss)

The accompanying notes are an integral part o f these financial statements.

1,922,047

1,260,619

Unrealized gain/(loss) on available-for-sale securities, ne t (N ote 3)

Fund Balance - Ending

4,126

645,245

Interest and other insurance expenses

18,778

8,630

Expenses for assets acquired from assisted banks and term inated receiverships

1,168,749

16,659

Provision fo r insurance losses (N ote 9)

730,394

29,612,310

30,975,222

S

29,414,183

Bank Insurance Fund Statements of Cash Flows for the Years Ended December 31
Dollars

in

Thousands
2000

1999

Cash Flows From Operating Activities
Cash provided by:
Interest on U.S. Treasury obligations

$

Recoveries from bank resolutions

1,775,552

$

1,848,536

755,936

426,348

0

175,720

45,070

46,390

Recoveries on conversion of be ne fit plan
Recoveries from assets acquired from assisted banks and term inated receiverships
Assessm ents

34,692

48,518

M iscellaneous receipts

13,279

19,029

(742,733)

(722,096)

Cash used by:
Operating expenses
Disbursem ents fo r bank resolutions

(388,276)
(22,994)

459,699

2,560,000

2,120,000

430,000

1,060,000

(60,761)

Net Cash Provided by Operating Activities (Note 15)

(7,542)

1,482,378

M iscellaneous disbursem ents

(27,756)

(1,974)

Disbursem ents fo r assets acquired from assisted banks and term inated receiverships

(1,333,622)

(70,886)

Cash Flows From Investing Activities
Cash provided by:
M a tu rity of U.S. Treasury obligations, he ld -to-m atu rity
M a tu rity and sale of U.S. Treasury obligations, available-for-sale
Cash used by:
Purchase of property and equipm ent
Purchase o f U.S. Treasury obligations, he ld -to-m atu rity

(1,239,157)

(1,596,859)

Purchase of U.S. Treasury obligations, available-for-sale

(3,180,519)

(3,925,143)

(1,490,437)

(2,412,888)

(8,059)

(1,953,189)

164,455

2,117,644

Net Cash Used by Investing Activities

Net Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents - Beginning
Cash and Cash Equivalents - Ending
The accompanying notes are an integral part o f these financial statements.




$

156,396

$

164,455

2S

Bank Insurance Fund

Notes to the Financial Statements
December 31, 2000 and 1999

1. Legislative H istory and O perations o f th e Bank Insurance Fund
L e g is la tiv e H is t o r y

The U.S. Congress created the Federal Deposit Insurance
Corporation (FDIC) through enactm ent of the Banking A ct
of 1933. The FDIC was created to restore and maintain
public confidence in the nation's banking system.
The Financial Institutions Reform, Recovery, and
Enforcem ent A ct of 1989 (FIRREA) was enacted to
reform, recapitalize, and consolidate the federal deposit
insurance system. The FIRREA created the Bank Insurance
Fund (BIF), the Savings Association Insurance Fund
(SAIF), and the FSLIC Resolution Fund (FRF). It also
designated the FDIC as the adm inistrator of these funds.
All three funds are maintained separately to carry out
their respective mandates.
The BIF and the SAIF are insurance funds responsible
for protecting insured bank and th rift depositors from loss
due to institution failures. The FRF is a resolution fund
responsible for winding up the affairs of the form er
Federal Savings and Loan Insurance Corporation (FSLIC)
and liquidating the assets and liabilities transferred from
the form er Resolution Trust Corporation (RTC).
Pursuant to FIRREA, an active institution's insurance fund
m em bership and primary federal supervisor are generally
determ ined by the institution's charter type. Deposits of
BIF-member institutions are generally insured by the BIF;
BIF mem bers are predom inantly commercial and savings
banks supervised by the FDIC, the Office of the Comptroller
of the Currency, or the Federal Reserve Board. Deposits
of SAIF-member institutions are generally insured by the
SAIF; SAIF m em bers are predom inantly th rifts supervised
by the O ffice of Thrift Supervision.
In addition to traditional banks and thrifts, several other
categories of institutions exist. The Federal Deposit
Insurance A ct (FDI Act), Section 5(d)(3), provides that a
m em ber of one insurance fund may, w ith the approval
of its primary federal supervisor, merge, consolidate w ith,
or acquire the deposit liabilities of an institution that is a
m em ber of the other insurance fund w ith o u t changing
insurance fund status for the acquired deposits. These
institutions w ith deposits insured by both insurance funds
are referred to as Oakar financial institutions. The FDI Act,
Section 5(d)(2)(G), allows SAIF-member th rifts to convert



to a bank charter and retain their
These institutions are referred to
institutions. The Home O w ners'
Section 5(o), allows BIF-member
to a th rift charter and retain their
These institutions are referred to

SAIF m em bership.
as Sasser financial
Loan A ct (HOLA),
banks to convert
BIF m em bership.
as HOLA thrifts.

O t h e r S ig n if ic a n t L e g is la tio n

The Com petitive Equality Banking A ct of 1987 established
the Financing Corporation (FICO) as a mixed-ownership
governm ent corporation w hose sole purpose was to
function as a financing vehicle for the FSLIC.
The Om nibus Budget Reconciliation A ct of 1990 (1990
OBR Act) and the Federal Deposit Insurance Corporation
Im provem ent A ct of 1991 (FDICIA) made changes to the
FDIC's assessm ent authority (see Note 8) and borrowing
authority. The FDICIA also requires the FDIC to: 1) resolve
failing institutions in a manner that w ill result in the
least possible cost to the deposit insurance funds and
2) maintain the insurance funds at 1.25 percent of insured
deposits or a higher percentage as circumstances warrant.
The Deposit Insurance Funds A ct of 1996 (DIFA) was
enacted to provide for: 1) the capitalization of the SAIF
to its designated reserve ratio (DRR) of 1.25 percent by
means of a one-tim e special assessm ent on SAIF-insured
deposits; 2) the expansion of the assessm ent base for
payments of the interest on obligations issued by the
FICO to include all FDIC-insured banks and thrifts;
3) beginning January 1, 1997, the imposition of a FICO
assessm ent rate on BIF-assessable deposits that is
one-fifth of the rate fo r SAIF-assessable deposits through
the earlier of December 31, 1999, or the date on w hich
the last savings association ceases to exist; 4) the pay­
m ent of the annual FICO interest obligation of approxi­
mately $790 million on a pro rata basis betw een banks
and th rifts on the earlier of January 1, 2000, or the date
on w hich the last savings association ceases to exist;
5) authorization of BIF assessm ents only if needed to
maintain the fund at the DRR; 6) the refund of am ounts
in the BIF in excess of the DRR w ith such refund
not to exceed the previous semiannual assessment;
7) assessm ent rates fo r SAIF m em bers not low er than
the assessm ent rates fo r BIF m em bers w ith comparable

risk; and 8) the m erger of the BIF and the SAIF on
January 1, 1999, if no insured depository institution is a
savings association on that date. Congress did not enact
legislation to either merge the BIF and the SAIF or to
eliminate the th rift charter.
The Gramm-Leach-Bliley A ct (GLBA), was enacted on
November 12, 1999, in order to modernize the financial
services industry (banks, brokerages, insurers, and other
financial services providers). The GLBA lifts restrictions
on affiliations among banks, securities firm s, and insur­
ance companies. It also expands the financial activities
perm issible fo r financial holding companies and insured
depository institutions, their affiliates and subsidiaries.
R e c e n t L e g is la t iv e In it ia t iv e s

Congress continues to focus on legislative proposals
that w ould affect the deposit insurance funds. The FDIC
has proposed an initiative to reform the deposit insurance
system . Some of the proposals, such as deposit insur­
ance pricing and determ ining deposit insurance levels,
may have a significant im pact on the BIF and the SAIF,
if enacted into law. However, these proposals continue
to vary and FDIC management cannot predict w hich
provisions, if any, w ill ultim ately be enacted.
O p e r a tio n s o f t h e B IF

The primary purpose of the BIF is to: 1) insure the deposits
and protect the depositors o f BIF-insured institutions and
2) resolve failed institutions, including managing and liqui­
dating their assets. In addition, the FDIC, acting on behalf
of the BIF, examines state-chartered banks that are not




m em bers o f the Federal Reserve System. Further, the
FDIC can also provide assistance to failing banks and
m onitor compliance w ith assistance agreements.
The BIF is primarily funded from interest earned on
investm ents in U.S. Treasury obligations and BIF
assessm ent prem ium s. Additional funding sources are
U.S. Treasury and Federal Financing Bank (FFB) borrow ­
ings, if necessary. The 1990 OBR A ct established the
FDIC's authority to borrow w orking capital from the FFB
on behalf of the BIF and the SAIF. The FDICIA increased
the FDIC's authority to borrow fo r insurance losses from
the U.S. Treasury, on behalf of the BIF and the SAIF,
from $5 billion to $30 billion.
The FDICIA also established a lim itation on obligations
that can be incurred by the BIF, known as the m aximum
obligation lim itation (MOL). As of December 31, 2000
and Decem ber 31, 1999, the M O L for the BIF was
$53.2 billion and $51.8 billion, respectively.
R e c e iv e r s h ip O p e r a tio n s

The FDIC is responsible fo r managing and disposing of
the assets of failed institutions in an orderly and efficient
manner. The assets held by receivership entities, and
the claims against them , are accounted fo r separately
from BIF assets and liabilities to ensure that liquidation
proceeds are distributed in accordance w ith applicable
laws and regulations. Also, the income and expenses
attributable to receiverships are accounted fo r as trans­
actions of those receiverships. Liquidation expenses paid
by the BIF on behalf of the receiverships are recovered
from those receiverships.

Bank Insurance Fund

■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■
■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■
2. S um m ary o f S ig n ific a n t A ccounting Policies
G e n e ra l

These financial statem ents pertain to the financial posi­
tion, results of operations, and cash flo w s of the BIF and
are presented in accordance w ith generally accepted
accounting principles (GAAP). These statem ents do not
include reporting fo r assets and liabilities of closed banks
fo r w hich the FDIC acts as receiver or liquidating agent.
Periodic and final accountability reports of the FDIC's
activities as receiver or liquidating agent are furnished to
courts, supervisory authorities, and others as required.

and losses are included in Comprehensive Income.
Realized gains and losses are included in the Statem ents
of Income and Fund Balance as com ponents of Net
Income. Interest on both types of securities is calculated
on a daily basis and recorded m onthly using the effective
interest method.
A l lo w a n c e f o r L o s s e s o n R e c e iv a b le s F r o m B a n k
R e s o lu tio n s a n d A s s e ts A c q u ir e d F ro m A s s is te d
B a n k s a n d T e r m in a te d R e c e iv e r s h ip s

FDIC management makes estim ates and assumptions
that a ffect the am ounts reported in the financial state­
m ents and accompanying notes. Actual results could dif­
fe r from these estim ates. W here it is reasonably possible
that changes in estim ates w ill cause a material change in
the financial statem ents in the near term , the nature and
extent of such changes in estim ates have been disclosed.

The BIF records a receivable fo r the am ounts advanced
and/or obligations incurred fo r resolving failing and failed
banks. The BIF also records as an asset the am ounts
paid fo r assets acquired from assisted banks and te rm i­
nated receiverships. Any related allowance for loss repre­
sents the difference betw een the funds advanced and/or
obligations incurred and the expected repayment. The
latter is based on estim ates of discounted cash recover­
ies from the assets of assisted or failed banks, net of all
applicable estim ated liquidation costs.

C a s h E q u iv a le n ts

C o s t A llo c a tio n s A m o n g F u n d s

Cash equivalents are short-term , highly liquid investm ents
w ith original maturities of three m onths or less. Cash
equivalents consist primarily of Special U.S. Treasury
Certificates.

Operating expenses not directly charged to the funds
are allocated to all funds administered by the FDIC using
workload-based-allocation percentages. These percent­
ages are developed during the annual corporate planning
process and through supplem ental functional analyses.

U s e o f E s t im a te s

In v e s t m e n t s in U .S . T r e a s u r y O b lig a tio n s
P o s t r e t ir e m e n t B e n e fits O t h e r T h a n P e n s io n s

Investm ents in U.S. Treasury obligations are recorded pur­
suant to the S tatem ent o f Financial Accounting Standards
(SFAS) No. 115, “Accounting fo r Certain Investm ents in
Debt and Equity Securities." SFAS No. 115 requires that
securities be classified in one of three categories: held-tomaturity, available-for-sale, or trading. The BIF does not
designate any securities as trading. Securities designated
as held-to-maturity are show n at amortized cost.
Am ortized cost is the face value of securities plus the
unamortized prem ium or less the unamortized discount.
Am ortizations are com puted on a daily basis from the
date of acquisition to the date of maturity. Securities
designated as available-for-sale are shown at market
value, w hich approximates fair value. Unrealized gains



The FDIC established an entity to provide the accounting
and administration of postretirem ent benefits on behalf
of the BIF, the SAIF, and the FRF. Each fund has fully paid
its liability fo r these benefits directly to the entity. The
BIF’s prepaid or accrued postretirem ent benefit cost is
presented in the BIF's Statem ents of Financial Position.
D is c lo s u r e A b o u t R e c e n t A c c o u n tin g
P r o n o u n c e m e n ts

Statement of Financial Accounting Standards (SFAS) No. 138,
"Accounting for Certain Derivative Instruments and Certain
Hedging Activities, an am endm ent of SFAS No. 133," was

issued in June 2000. For entities that adopted SFAS
No. 133, "Accounting fo r Derivative Instrum ents
and Hedging Activities" prior to June 15, 2000, Statem ent
138 is effective for all fiscal quarters beginning after
June 15, 2000. SFAS No. 138 amends Statem ent 133
principally fo r certain issues relating to hedging transac­
tions. The adoption of these statem ents has no material
quantitative or qualitative impact on the BIF's Statements
of Financial Position, Income and Fund Balance, and
Cash Flows.

The FDIC has designated the BIF as adm inistrator
of property and equipm ent used in its operations.
Consequently, the BIF includes the cost of these assets
in its financial statem ents and provides the necessary
funding for them . The BIF charges the other funds usage
fees representing an allocated share of its annual depreci­
ation expense. These usage fees are recorded as cost
recoveries, w hich reduce operating expenses.

In September 2000, the Financial Accounting Standards
Board (FASB) issued SFAS No. 140, "Accounting for
Transfers and Servicing o f Financial A ssets and
Extinguishm ents of Liabilities; a replacement of SFAS
No. 125." This statem ent applies to securitization trans­
actions w here the transferor has continuing involvem ent
w ith the transferred assets or the transferee. SFAS
No. 140 is e ffe ctive fo r transfers occurring after
March 31, 2001. However, disclosure requirements
for existing securitizations are effective for fiscal years
ending after December 15, 2000. BIF's disclosures
for its securitization transactions, w hich conform to the
SFAS No. 140 requirements, are discussed in Notes 7
and 12.

The W ashington, D.C. office buildings and the L. W illiam
Seidman Center in Arlington, Virginia, are depreciated on
a straight-line basis over a 50-year estim ated life. The
San Francisco condom inium offices are depreciated
on a straight-line basis over a 35-year estimated life.
Leasehold im provem ents are capitalized and depreciated
over the lesser of the remaining life of the lease or the
estim ated useful life of the im provem ents, if determ ined
to be material. Capital assets depreciated on a straightline basis over a five-year estim ated life include main­
fram e equipm ent; furniture, fixtures, and general equip­
m ent; and internal-use software. Personal com puter
equipm ent is depreciated on a straight-line basis over
a three-year estim ated life.

Other recent accounting pronouncem ents w ere evaluated
and deem ed to be not applicable to the financial
statem ents.

D e p r e c ia tio n

R e la t e d P a r tie s

The nature of related parties and a description of related
party transactions are discussed in Note 1 and disclosed
throughout the financial statem ents and footnotes.

3. In vestm en t in U.S. Treasury O bligations, N et
Cash received by the BIF is invested in non-marketable
Government A ccount Series (GAS) market-based
U.S. Treasury securities w ith maturities exceeding
three m onths. As of D ecem ber 31, 2000 and
D ecember 31, 1999, the book value of investm ents in
U.S. Treasury Obligations, net, was $29.9 billion and
$28.2 billion, respectively. The book value is com puted




by adding the amortized cost of the held-to-m aturity
securities to the m arket value of the available-for-sale
securities. In 2000, the FDIC purchased $1.3 billion of
Treasury inflation-indexed securities (TIIS) for the BIF.
These securities are indexed to increases or decreases
in the Consum er Price Index (CPI).

Bank Insurance Fund

Dollars

in

Thousands
Held-to-Maturity

Maturity

Yield at
Purchase*

Face
Value

5.69%
6.19%

5,965,000

6,178,310

104,475

0

6,282,785

3-5 years

6.59%

4,955,000

5,020,380

264,712

(169)

5,284,923

5-10 years

5.64%

8,068,506

8,287,557

266,541

(26,826)

8,527,272

Total

$

22,008,506

22,510,892

$

$

S

6,851

642,579

$

(598)

Market
Value

Less than one year

$

3,024,645

Unrealized
Holding
Losses

1-3 years

$

3,020,000 T

Unrealized
Holding
Gains

Amortized
Cost

S

(27,593)

$

3,030,898

$ 23,125,878

Available-for-Sale

Maturity

Yield at
Purchase*

Face
Value

776,417

$

194

Unrealized
Holding
Losses

6.40%

3-5 years

6.30%

960,000

981,289

39,830

0

1,021,119

5-10 years

4.80%

4,254,527

4,149,625

151,990

0

4,301,615

Total

$

$

7,304,527

$

29,313,033

28,692

1,294,613

$

7,201,944

(1,053)

775,558

5.59%

1-3 years

1,315,000

$

Market
Value

Less than one year

$

775,000

Unrealized
Holding
Gains

Amortized
Cost

$

220,706

s

29,712,836

$

863,285

1,323,305

S

(1,053)

s

$

(28,646)

s

Total Investment in U.S. Treasury Obligations, Net
Total

$

0

7,421,597

30,547,475

* For Treasury inflation-indexed securities ITIIS), the yields in the above table include their real yields a t purchase, not their effective yields.
Effective yields on TIIS include a weighted average o f Bloomberg's calculation o f yield with an inflation assumption.
The inflation assumption o f 3.4% was the latest year-over-year increase in the Consumer Price Index (CPII on November 30, 2000.
These effective yields are 7 .15% and 7.51% for TIIS classified as held-to-maturity and available-for-sale, respectively.
T Includes one Treasury note totaling $200 million which matured on Sunday, December 31, 2000. Settlement occured on the next business day, January 2, 2001.




1 U .S. Treasury O b lig a tio n s a t D e ce m b er 31, 1999
Dollars

in

Thousands
Held-to-Maturity

Maturity

Yield at
Purchase *

Face
Value

Unrealized
Holding
Gains

Amortized
Cost

Unrealized
Holding
Losses

Market
Value

Less than one year

6.02%

1-3 years

6.06%

6,540,000

6,669,580

7,233

(32,331)

6,644,482

3-5 years

6.45%

4,805,000

5,052,441

18,300

(17,217)

5,053,524

5-10 years

5.88%

9,439,053

9,665,955

58,403

(374,526)

9,349,832

Total

$

$

2,560,000

23,344,053

$

$

2,561,679

23,949,655

$

3,087

$

87,023

$

(2,468)

$ (426,542)

$

2,562,298

$ 23,610,136

Available-for-Sale

Maturity

Yield at
Purchase*

Face
Value

Unrealized
Holding
Gains

Amortized
Cost

Unrealized
Holding
Losses

Market
Value

Less than one year

5.62%

1-3 years

5.36%

625,000

631,662

0

(7,001)

624,661

3-5 years

6.00%

445,000

454,254

0

(6,391)

447,863

5-10 years

5.15%

Total

$

430,000

$

2,977,452
$

4,477,452

431,206

$

2,852,055
$

4,369,177

48

$

0
S

48

(94)

$

(67,329)
$

(80,815)

431,160

2,784,726
S

4,288,410

Total Investment in U.S. Treasury Obligations, Net
Total

*

$

27,821,505

$

28,318,832

$

87,071

S (507,357)

$ 27,898,546

For Treasury inflation-indexed securities ITUS), the yields in the above table include their real yields at purchase, not their effective yields.
Effective yields on TIIS include a weighted average of Bloomberg's calculation o f yield with an inflation assumption.
The inflation assumption o f 2.6% was the latest year-over-year increase in the Consumer Price Index (CPI) on December 14, 1999.
These effective yields are 6.44% and 6.70% for TIIS classified as held-to-maturity and available-for-sale, respectively.

As of December 31, 2000 and 1999, the unamortized prem ium , net of the unamortized discount, was $400 million and
$497 million, respectively.




Bank Insurance Fund

4 . Receivables fro m Bank Resolutions, N e t
The bank resolution process takes d iffe re n t fo rm s
depending on the unique facts and circum stances
surrounding each failing or failed institution. Payments
for institutions that fail are made to cover obligations
to insured depositors and represent claims by the BIF
against the receiverships' assets. There w ere six bank
failures in 2000 and seven in 1999, w ith assets at failure
of $378 million and $1.4 billion, respectively, and BIF
outlays of $301.7 million and $1.2 billion, respectively.
Assets held by the FDIC in its receivership capacity for
closed BIF-insured institutions are the main source of
repaym ent of the BIF's receivables from closed banks.

As of December 31, 2000 and 1999, BIF receiverships held
assets w ith a book value of $510.9 million and $1.9 billion,
respectively (including cash and miscellaneous receivables
of $337 million and $524 million at December 31, 2000
and 1999, respectively). The estim ated cash recoveries
from the management and disposition of these assets
that are used to derive the allowance for losses are based
in part on a statistical sampling of receiver-ship assets.
These estim ated recoveries are regularly evaluated, but
remain subject to uncertainties because of potential
changes in econom ic conditions. These factors could
cause the BIF's and other claimants' actual recoveries
to vary from the level currently estimated.

I R eceivab les fro m Bank R eso lu tion s, N e t a t D e ce m b er 31
Dollars

in

1

Thousands
1999

2000
A ssets from open bank assistance
A llow an ce fo r losses
Net Assets From Open Bank Assistance
Receivables from closed banks
A llow an ce fo r losses
Net Receivables From Closed Banks




$

1,240

$

105,655

(1,240)

(4,196)

0

101,459

9,083,357

15,673,843

(8,733,768)

(15,032,291)

349,589

641,552

5. Assets A cqu ired fro m Assisted Banks and Term inated Receiverships, N e t
The BIF has acquired assets from certain troubled and
failed banks by either purchasing an institution's assets
outright or purchasing the assets under the term s speci­
fied in each resolution agreement. In addition, the BIF
can purchase assets remaining in a receivership to facili­
tate term ination. The m ethodology to estim ate cash
recoveries from these assets, w hich is used to derive
the related allowance fo r losses, is similar to that for
receivables from bank resolutions (see Note 4). The

estim ated cash recoveries are based upon a statistical
sampling of the assets but only include expenses for
the disposition of the assets to represent liquidating
value.
The BIF recognizes revenue and expenses on these
acquired assets. Revenue consists primarily of interest
earned on assets in liquidation. Expenses are recognized
fo r the disposition and administration of these assets.

A ssets A c q u ired fro m A ssisted Banks and T e rm in a te d R eceiverships, N e t a t D e ce m b er 31
Dollars

in T h o u s a n d s
1999

2000
A ssets acquired from assisted banks and te rm in ate d receiverships

$

$

$

11,727

105,136
(84,386)

(44,018)

A llow ance fo r losses
Total

55,745

$

20,750

6. P roperty and Equipm ent, N e t

1 P ro p erty and E q u ip m e n t, N e t a t D e ce m b er 31
Dollars

|

in T h o u s a n d s
1999

2000
Land

$

29,631

$

29,631

168,996

159,188

P C /LAN /W AN equipm ent

46,030

27,748

A pp lication softw a re

73,041

29,671

Buildings

7,370

Furniture, fixtu res, and general equipm ent

10,596

3,357

Accum ulated depreciation
$

48,961

(81,893)

W ork in Progress - A pplication softw are

1,771

36,934

Telephone equipm ent

Total

5,569

19,972

M a in fram e equipm ent

(53,095)

303,438

The depreciation expense was $28.8 million and $12.3 million for 2000 and 1999, respectively.



S

260,040

■■■■■■■■■M H M M M B M nM B M nM N M M M M M B M B M M H H M M M M H nN M aaH i

7. C o n tin g en t Liabilities for:
A n t ic ip a t e d F a ilu r e o f In s u r e d In s t it u t io n s

L it ig a t io n L o s s e s

The BIF records a contingent liability and a loss provision
fo r banks (including Oakar and Sasser financial institu­
tions) that are likely to fail, absent some favorable event
such as obtaining additional capital or merging, w hen the
liability becomes probable and reasonably estimable.

The BIF records an estim ated loss fo r unresolved legal
cases to the extent those losses are considered probable
and reasonably estimable. In addition to the am ount
recorded as probable, the FDIC has determ ined that
losses from unresolved legal cases totaling $75 million
are reasonably possible.

The contingent liabilities for anticipated failure of insured
institutions as of December 31, 2000 and 1999, w ere
$141 million and $307 million, respectively. The contingent
liability is derived in part from estimates of recoveries from
the m anagem ent and disposition of the assets of these
probable bank failures. Therefore, these estim ates are
subject to the same uncertainties as those affecting the
BIF's receivables from bank resolutions (see Note 4).
Several recent bank failures have involved some degree
of fraud, w hich adds uncertainty to estim ates of loss and
recovery rates. These uncertainties, along w ith potential
changes in economic conditions, could a ffect the ultimate
cost to the BIF from probable failures.
There are other banks w here the risk of failure is less
certain, but still considered reasonably possible. Should
these banks fail, the BIF could incur additional estimated
losses ranging from $1 million to $639 million.
The accuracy of these estim ates w ill largely depend
on future economic conditions. The FDIC's Board of
Directors (Board) has the statutory authority to consider
the contingent liability for anticipated failures of insured
institutions w hen setting assessm ent rates.
A s s is ta n c e A g r e e m e n t s

The contingent liabilities for assistance agreem ents result­
ed from several large transactions w here problem assets
w ere purchased by an acquiring institution under an
agreem ent that calls for the FDIC to pay losses incurred
for indemnification and litigation.




In addition, tw o cases are currently pending in the
U.S. Court of Federal Claims against the United States for
actions taken by the FDIC in supervising tw o BIF-insured,
state-chartered mutual savings banks. These tw o cases
allege that the FDIC's conduct in supervising these insti­
tutions breached agreements, w hich caused state regula­
tors to close the institutions. The Court has not yet
ruled on the question of w h e th e r any agreem ents w ere
breached. Flowever, should such a determ ination be
made and the court award either damages or restitution,
it is possible that the BIF w ould be responsible for pay­
m ent of such an award. At this tim e, it is not possible
to estim ate a potential loss to the BIF from these tw o
cases.
A s s e t S e c u r it iz a t io n G u a r a n t e e s

As part of the FDIC's efforts to maximize the return from
the sale or disposition of assets from bank resolutions,
the FDIC has securitized some receivership assets.
To facilitate the securitizations, the BIF provided limited
guarantees to cover certain losses on the securitized
assets up to a specified maximum. In exchange for back­
ing the limited guarantees, the BIF received assets from
the receiverships in an am ount equal to the expected
exposure under the guarantees. A t December 31, 2000
and 1999, the BIF had a contingent liability under the
guarantees of $1.6 million and $2.5 million, respectively.

8. Assessm ents

The 1990 OBR A ct removed caps on assessm ent rate
increases and authorized the FDIC to set assessm ent
rates for BIF m em bers semiannually, to be applied
against a m em ber's average assessm ent base. The
FDICIA: 1) required the FDIC to im plem ent a risk-based
assessm ent system ; 2) authorized the FDIC to increase
assessm ent rates for BIF-member institutions as needed
to ensure that funds are available to satisfy the BIF's
obligations; 3) required the FDIC to build and maintain
the reserves in the insurance funds to 1.25 percent of
insured deposits; and 4) authorized the FDIC to increase
assessm ent rates more frequently than semiannually
and impose emergency special assessments as necessary
to ensure that funds are available to repay U.S. Treasury
borrowings.
The FDIC uses a risk-based assessm ent system that
charges higher rates to those institutions that pose
greater risks to the BIF. To arrive at a risk-based assess­
m ent for a particular institution, the FDIC places each
institution in one of nine risk categories, using a tw o step process based first on capital ratios and then on
other relevant information. The assessm ent rate
averaged approximately 0.14 cents and 0.11 cents per
$100 of assessable deposits for 2000 and 1999, respec­
tively. On November 7, 2000, the Board voted to retain
the BIF assessm ent schedule at the annual rate of 0 to
27 cents per $100 of assessable deposits for the first
semiannual period of 2001. The Board reviews prem ium
rates semiannually.




Since May 1995, the BIF has maintained a capitalization
level at or higher than the DRR of 1.25 percent of insured
deposits. As of December 31, 2000, the capitalization
level for BIF is 1.35 percent of estim ated insured
deposits.
The DIFA (see Note 1) provided, among other things, for
the elimination of the mandatory m inim um assessment
form erly provided fo r in the FDI Act. It also provided for
the expansion of the assessm ent base fo r payments of
the interest on obligations issued by the FICO to include
all FDIC-insured institutions (including banks, thrifts, and
Oakar and Sasser financial institutions). It also made the
FICO assessm ent separate from regular assessments,
effective on January 1, 1997.
BIF-insured banks began paying a FICO assessment
on January 1, 1997. From January 1, 1997, through
December 31, 1999, the FICO assessm ent rate on
BIF-assessable deposits was one-fifth the rate for SAIFassessable deposits. Beginning on January 1, 2000,
the annual FICO interest obligations of approximately
$790 million w ill be paid on a pro rata basis using the
same rate fo r banks and thrifts.
The FICO assessm ent has no financial impact on the
BIF. The FICO assessm ent is separate from the regular
assessments and is imposed on banks and thrifts, not
on the insurance funds. The FDIC, as adm inistrator of
the BIF and the SAIF, is acting solely as a collection agent
for the FICO. During 2000 and 1999, $635 million and
$364 million, respectively, was collected from banks and
rem itted to the FICO.

■HNHBMMBMHHHMEnBHHMBMMMHnHBMHHMHSHMSMHMMMMHHHNHHHHMHHMMBBI

9. Provision fo r Insurance Losses
Provision for insurance losses was negative $153 million
for 2000 and $1.2 billion for 1999. The follow ing chart
lists the major com ponents of the provision for insurance
losses.

I Provision fo r Insuran ce Losses fo r th e Years Ended D e ce m b er 31
Dollars

in

}

Thousands
2000

1999

Valuation Adjustments:
Open bank assistance

$

Closed banks

(2,956)

$

(20,098)

Assets acquired from assisted banks and term inated receiverships

(6,280)
325,836

336

(10,977)

(22,718)

Total Valuation Adjustments

308,579

Contingent Liabilities Adjustments:
A nticipa ted fa ilu re of insured in stitution s

(133,645)

849,000

Assistance agreem ents

(533)

8,792

Litigation losses

3,964

2,294

A sset securitization guarantees

(30)

Total




$

84

(130,244)

Total Contingent Liabilities Adjustments

860,170

(152,962)

S

1,168,749

10. Pension Benefits, Savings Plans, and A ccrued A nnual Leave
Eligible FDIC employees (permanent and term employees
w ith appointm ents exceeding one year) are covered by
either the Civil Service Retirement System (CSRS) or the
Federal Employees Retirement System (FERS). The
CSRS is a defined benefit plan, w hich is o ffse t w ith the
Social Security System in certain cases. Plan benefits are
determ ined on the basis o f years of creditable service and
compensation levels. The CSRS-covered employees also
can contribute to the tax-deferred Federal T hrift Savings
Plan (TSP).
The FERS is a three-part plan consisting o f a basic
defined b e n e fit plan th a t provides benefits based on
years o f creditable service and com pensation levels,
Social S ecurity benefits, and the TSP. A u to m a tic and
matching em ployer contributions to the TSP are provided
up to specified am ounts under the FERS.

IPension
Dollars

Although the BIF contributes a portion of pension
benefits fo r eligible employees, it does not account for
the assets of either retirem ent system . The BIF also
does not have actuarial data fo r accumulated plan bene­
fits or the unfunded liability relative to eligible employees.
These am ounts are reported on and accounted fo r by
the U.S. O ffice of Personnel Management.
Eligible FDIC employees also may participate in a FDICsponsored tax-deferred 401 (k) savings plan w ith matching
contributions. The BIF pays its share of the em ployer's
portion of all related costs.
The BIF's pro rata share of the Corporation's liability to
employees fo r accrued annual leave is approximately
$36.0 million and $38.2 million at December 31, 2000
and 1999, respectively.

j

B enefits and S aving s Plans Expenses fo r th e Years Ended D e ce m b er 31
in T h o u s a n d s
1999

2000
Civil Service R etirem ent System

$

11,503

$

10,270

Federal Employees R etirem ent System (Basic Benefit)

30,454

28,449

FDIC Savings Plan

19,202

17,215

Federal T h rift Savings Plan

12,154

11,018

Total




$

73,313

$

66,952

Bank Insurance Fund

11. P o stretire m e n t Benefits O ther Than Pensions
The FDIC provides certain dental and life insurance cover­
age for its eligible retirees, the retirees' beneficiaries, and
covered dependents. Retirees eligible for life insurance
coverage are those w h o have qualified due to: 1) im m edi­
ate enrollm ent upon appointm ent or five years of partici­
pation in the plan and 2) eligibility fo r an immediate annuity.
Dental coverage is provided to all retirees eligible fo r an
im m ediate annuity.

The life insurance program, underw ritten by M etropolitan
Life Insurance Company, provides basic coverage at no
cost to retirees and allows converting optional coverages
to direct-pay plans. Dental care is u n d e rw ritten by
Connecticut General Life Insurance Company and provides
coverage at no cost to retirees.

I P o s tre tire m e n t B enefits O th e r Than Pensions
Dollars

in

Thousands
2000

1999

Funded Status at December 31
Fair value of plan assets *

$

Less: B enefit obligation

75,696

$

71,286

67,995

75,275

Over/(Under) Funded Status of the Plans

S

7,701

S

(3,989)

Prepaid (accrued) po stretirem ent be ne fit cost recognized in
the Statem ents of Financial Position

$

3,618

$

(3,989)

$

3,945

$

2,468

Expenses and Cash Flows for the Period Ended December 31
N et periodic be ne fit cost
Employer contributions

1.604

1,111

Benefits paid

1.604

1,111

Discount rate

5.25%

4.50%

Expected return on plan assets

5.25%

4.50%

Rate o f com pensation increase

6.30%

3.00%

Weighted-Average Assumptions at December 31

* Invested in U.S. Treasury obligations.

Total dental coverage trend rates w ere assumed to be 7% per year, inclusive of general inflation.
Dental costs w ere assumed to be subject to an annual cap of $2,000.




12. C o m m itm en ts and O ff-B alance-S heet Exposure
C o m m it m e n t s
Leases

The BIF's allocated share of the FDIC’s lease co m m it­
m ents totals $138.4 million fo r future years. The lease
agreem ents contain escalation clauses resulting in adjust­
ments, usually on an annual basis. The allocation to the
BIF of the FDIC's future lease com m itm ents is based

upon current relationships of the w orkloads among the
BIF, the SAIF, and the FRF. Changes in the relative w ork­
loads could cause the am ounts allocated to the BIF in the
future to vary from the am ounts show n below. The BIF
recognized leased space expense of $38.1 million and
$41.5 million fo r the years ended December 31, 2000
and 1999, respectively.

I Lease C o m m itm e n ts
Dollars

in

Thousands

2001

2002

2003

2004

2005

2006/Thereafter

$ 36,547

S 34,802

S 25,635

$ 16,192

$ 10,770

$ 14,424

O f f- B a la n c e - S h e e t E x p o s u r e
Asset S ec u ritiza tio n G u a ra n te es

As discussed in Note 7, the BIF provided certain limited
guarantees to facilitate securitization transactions. The
table below gives the maximum off-balance-sheet exposure
the BIF has under these guarantees.

f

lA ss et S e c u ritiza tio n G u a ra n te e s a t D e ce m b er 31
Dollars

in

Thousands
2000

M axim um exposure under the lim ited guarantees

$

Less: G uarantee claim s paid (inception-to-date)




1999
$

(33,730)

Less: A m ount o f exposure recognized as a contingent lia b ility (see N ote 7)
Maximum Off-Balance-Sheet Exposure Under the Limited Guarantees

406,690

(32,716)

(1,605)
S

371,355

448,881

(2,477)
S

413,688

42

Bank Insurance Fund

D epo sit Insurance

As of Decem ber 31, 2000, deposits insured by the BIF
totaled approximately $2.3 trillion. This w ould be the
accounting loss if all depository institutions w ere to fail
and the acquired assets provided no recoveries.
A s se t Putbacks

Upon resolution of a failed bank, the assets are placed
into receivership and may be sold to an acquirer under
an agreem ent that certain assets may be resold, or "putback,” to the receivership. The values and tim e lim its for
these assets to be putback are defined w ithin each agree­
ment. It is possible that the BIF could be called upon to

fund the purchase o f any or all o f the ''unexpired put­
backs" at any tim e prior to expiration. The FDIC's esti­
mate of the volume of assets subject to repurchase
under existing agreem ents is $73 million. The actual
am ount subject to repurchase should be significantly
low er because the estim ate does not reflect subsequent
collections on or sales of assets kept by the acquirer.
It also does not reflect any decrease due to acts by the
acquirers w hich m ight disqualify assets from repurchase
eligibility. Repurchase eligibility is determ ined by the
FDIC when the acquirer initiates the asset putback
procedures. The FDIC projects that a total of $2.2 million
in book value of assets w ill be putback.

13. C o n cen tratio n o f C re d it Risk
As of December 31, 2000, the BIF had $9.1 billion in
gross receivables from bank resolutions and $55.7 million
in gross assets acquired from assisted banks and te rm i­
nated receiverships. An allowance fo r loss of $8.7 billion
and $44.0 million, respectively, has been recorded against

these assets. The liquidating entities' ability to make
repayments to the BIF is largely influenced by the
econom y of the area in w hich they are located. The
BIF's estim ated maximum exposure to possible account­
ing loss fo r these assets is show n in the table below.

1C o n cen tra tio n of C re d it Risk a t D e ce m b er 31, 2000
Dollars

in

Millions
Southeast

Receivables from bank resolutions, net
A ssets acquired from assisted banks
and term in ate d receiverships, net
Total




Southwest

Northeast

Midwest

Central

West

Total

$174

$6

$39

$9

$63

$58

$349

0

12

0

0

0

0

12

$174

$18

$39

$9

$63

$58

$361

14. Disclosures A b o u t th e Fair V alue o f Financial Instrum ents
Cash equivalents are short-term , highly liquid investm ents
and are shown at current value. The fair market value of
the investm ent in U.S. Treasury obligations is disclosed in
Note 3 and is based on current market prices. The carrying
am ount of interest receivable on investm ents, short-term
receivables, and accounts payable and other liabilities
approximates their fair market value. This is due to their
short maturities or comparisons w ith current interest rates.
The net receivables from bank resolutions primarily include
the BIF's subrogated claim arising from payments to
insured depositors. The receivership assets that w ill ulti­
mately be used to pay the corporate subrogated claim are
valued using discount rates that include consideration of
market risk. These discounts ultim ately affect the BIF's
allowance for loss against the net receivables from bank
resolutions. Therefore, the corporate subrogated claim
indirectly includes the effect of discounting and should not
be viewed as being stated in term s of nominal cash flows.
Although the value of the corporate subrogated claim is
influenced by valuation o f receivership assets (see Note
4), such receivership valuation is not equivalent to the
valuation of the corporate claim. Since the corporate
claim is unique, not intended for sale to the private sector,
and has no established market, it is not practicable to
estim ate its fair market value.




The FDIC believes that a sale to the private sector of the
corporate claim w ould require indeterm inate, but substan­
tial discounts fo r an interested party to profit from these
assets because of credit and other risks. In addition, the
tim ing of receivership payments to the BIF on the subro­
gated claim does not necessarily correspond w ith the
tim ing of collections on receivership assets. Therefore,
the e ffe ct of discounting used by receiverships should
not necessarily be vie w e d as producing an estim ate
o f m arket value fo r the net receivables from bank
resolutions.
The m ajority of the net assets acquired from assisted
banks and term inated receiverships (except real estate)
is com prised of various types of financial instrum ents,
including investm ents, loans and accounts receivables.
Like receivership assets, assets acquired from assisted
banks and term inated receiverships are valued using
discount rates that include consideration of m arket risk.
However, assets acquired from assisted banks and
term inated receiverships do not involve the unique
aspects of the corporate subrogated claim, and there­
fore the discounting can be view ed as producing a
reasonable estim ate of fair market value.

Bank Insurance Fund

1 5 . S u p p le m e n t a r y In f o r m a t i o n R e la t in g t o t h e S t a t e m e n t s o f C a s h F lo w s

I R eco nciliatio n of N e t In co m e to N e t Cash Pro vid ed by O p e ra tin g A c tiv itie s fo r th e Years Ended D e ce m b er 31
Dollars

J

in T h o u s a n d s
1999

2000
Net Income

S

1,260,619

S

(106,445)

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
Income Statement Items:
(152,962)

1,168,749

A m ortization o f U.S. Treasury obligations

128,875

164,880

TIIS in fla tio n adjustm ent

(93,204)

(26,930)

28,799

12,288

1,152

4,476

(Increase) Decrease in in tere st receivable on investm ents and other assets

(85,516)

188,322

Decrease (Increase) in receivables from bank resolutions

602,712

(311,671)

8,686

17,599

Provision fo r insurance losses

D epreciation on property and equipm ent
R etirem ent of capitalized equipm ent

Change in Assets and Liabilities:

Decrease in assets acquired fro m assisted banks and te rm in ate d receiverships

5,244

(45,219)

(219,000)

Increase (Decrease) in accounts payable and other lia b ilitie s
(Decrease) in contingent lia b ilitie s fo r an ticipated fa ilu re o f insured in stitution s

(574,000)

(10,143)

(13,007)

Increase (Decrease) in contingent lia b ilitie s fo r litig a tio n losses

7,958

(14,595)

(Decrease) in contingent lia b ilitie s fo r asset securitization guarantees

(842)

(4,748)

(Decrease) in contingent lia b ilitie s fo r assistance agreem ents

Net Cash Provided by Operating Activities




$

1,482,378

S

459,699

Federal Deposit Insurance Corporation

1 S aving s A ssociation Insurance Fund S ta te m e n ts of Financial Position a t D e ce m b er 31
Dollars

in

|

Thousands
2000

1999

Assets
Cash and cash equivalents

$

Cash and other assets: Restricted fo r SAIF-m em ber e xit fees (N ote 3)
(Includes cash and cash equivalents of $ 40.2 million and $ 23.3 million
at December 31 , 2000 and December 31 , 1999 , respectively)

149,988

$

146,186

283,780

268,490

H eld -to-m atu rity securities

7,950,849

8,080,854

Available-for-sale securities

2,708,965

1,898,718

188,473

153,558

4,147

62,244

Investment in U.S. Treasuryobligations.net: (Note 4)

Interest receivable on investm ents and other assets, net
Receivables from th rift resolutions, net (N ote 5)
Total Assets

$

11,286,202

S

10,610,050

$

7,748

$

4,888

Liabilities
Accounts payable and other lia b ilitie s
Contingent liabilities for: (Note 6)
A nticipated fa ilu re of insured in stitution s

234,083

Litigation losses

56,000

1,943

0

SAIF-member e x it fees and investm ent proceeds held in escrow (N ote 3)

283,780

268,490

Total Liabilities

527,554

329,378

10,676,477

10,312,416

82,171

(31,744)

10,758,648

10,280,672

Commitments and off-balance-sheet exposure (Note 11)
Fund Balance
Accum ulated net income
Unrealized gain/(loss) on available-for-sale securities, ne t (N ote 4)
Total Fund Balance

Total Liabilities and Fund Balance
The accompanying notes are an integral part o f these financial statements.




$

11,286,202

$

10,610,050

46 1

Savinj>>. A ss ocialiou

h iM J r a iic c

Fund

1Savings Association Insurance Fund S ta te m e n ts of Incom e and Fund Balance fo r th e Years Ended D ecem b er 31
Dollars

1

in T h o u s a n d s
2000

1999

Revenue
Interest on U.S. Treasury obligations

$

A ssessm ents (N ote 7)

644,222

$

585,830

19,237

49

664,080

Total Revenue

15,116

621

O ther revenue

600,995

Expenses and Losses
Operating expenses

110,920

92,882

Provision fo r insurance losses (N ote 8)

180,805

30,648

O ther insurance expenses

8,293

Net Income

626

300,018

Total Expenses and Losses

124,156

364,062

476,839

Unrealized gain/(loss) on available-for-sale securities, net (N ote 4)

113,914

(35,998)

Comprehensive Income

477,976

440,841

10,280,672

9,839,831

Fund Balance - Beginning

Fund Balance - Ending
The accompanying notes are an integral part o f these financial statements.




S

10,758,648

$

10,280,672

1 S aving s A ssociation Insurance Fund S ta te m e n ts o f Cash F lo w s fo r th e Years Ended D e ce m b er 31
Dollars

in

Thousands
2000

1999

Cash Flows From Operating Activities
Cash provided by:
Interest on U.S. Treasury obligations

$

606,521

$

606,244

Assessm ents

19,829

15,384

Entrance and e x it fees, including in tere st on e xit fees (N ote 3)

14,414

15,487

Recoveries fro m th rift resolutions

88,451

5,775

60

2,310

M iscellaneous receipts
Cash used by:

(107,137)

Disbursem ents fo r th rift resolutions
M iscellaneous disbursem ents

(91,789)

(39,753)

O perating expenses

(64,494)

(17)
582,368

1,630,000

1,635,000

150,000

Net Cash Provided by Operating Activities (Note 13)

(306)
488,611

425,000

Cash Flows From Investing Activities
Cash provided by:
M a tu rity o f U.S. Treasury obligations, he ld -to-m atu rity
M a tu rity o f U.S. Treasury obligations, available-for-sale
Cash used by:
(1,522,399)

Restricted Cash and Cash Equivalents - Ending
Cash and Cash Equivalents - Ending
The accompanying notes are an integral part o f these financial statements.




721,984

149,988

Unrestricted Cash and Cash Equivalents - Ending

(552,496)

169,488

Cash and Cash Equivalents - Beginning

(1,041,107)

20,653

Net lncrease/(Decrease) in Cash and Cash Equivalents

(1,775,103)

(561,715)

Net Cash Used by Investing Activities

(1,326,004)

(819,316)

Purchase of U.S. Treasury obligations, he ld -to-m atu rity
Purchase of U.S. Treasury obligations, available-for-sale

146,186

40,153
$

190,141

23,302
$

169,488

Notes to the Financial Statements
December 31, 2000 and 1999

1. Legislative H istory and O perations o f th e Savings A ssociation Insurance Fund
Legislative History
The Financial In stitu tio n s Reform , Recovery, and
E nforcem ent A ct o f 1989 (FIRREA) w as enacted to
reform, recapitalize, and consolidate the federal deposit
insurance system . The FIRREA created the Savings
Association Insurance Fund (SAIF), the Bank Insurance
Fund (BIF), and the FSLIC Resolution Fund (FRF). It also
designated the Federal Deposit Insurance Corporation
(FDIC) as the adm inistrator of these funds. All three
funds are maintained separately to carry out their
respective mandates.
The SAIF and the BIF are insurance funds responsible for
protecting insured th rift and bank depositors from loss
due to institution failures. The FRF is a resolution fund
responsible for winding up the affairs of the form er
Federal Savings and Loan Insurance Corporation (FSLIC)
and liquidating the assets and liabilities transferred from
the form er Resolution Trust Corporation (RTC).
Pursuant to the Resolution Trust Corporation Completion
A ct of 1993 (RTC Completion Act), resolution responsibili­
ty transferred from the RTC to the SAIF on July 1, 1995.
Prior to that date, th rift resolutions w ere the responsibility
of the RTC (January 1, 1989 through June 30, 1995) or
the FSLIC (prior to 1989).
Pursuant to FIRREA, an active institution's insurance fund
mem bership and primary federal supervisor are generally
determ ined by the institution's charter type. Deposits
of SAIF-member institutions are generally insured by the
SAIF; SAIF m em bers are predom inantly th rifts supervised
by the O ffice of Thrift Supervision (OTS). Deposits of
BIF-member institutions are generally insured by the
BIF; BIF mem bers are predom inantly commercial and
savings banks supervised by the FDIC, the O ffice of the
Com ptroller of the Currency, or the Federal Reserve
Board.
In addition to traditional th rifts and banks, several other
categories of institutions exist. The Federal Deposit
Insurance A ct (FDI Act), Section 5(d)(3), provides that a
m em ber of one insurance fund may, w ith the approval
of its primary federal supervisor, merge, consolidate w ith,
or acquire the deposit liabilities of an institution that is a
m em ber of the other insurance fund w ith o u t changing



insurance fund status for the acquired deposits. These
institutions w ith deposits insured by both insurance funds
are referred to as Oakar financial institutions. The FDI
Act, Section 5(d)(2)(G), allows SAIF-member th rifts to
convert to a bank charter and retain their SAIF m em ber­
ship. These institutions are referred to as Sasser financial
in stitutions. The Hom e O w n e rs' Loan A ct (HOLA),
Section 5(o), allow s B IF-m em ber banks to convert
to a th rift charter and retain th e ir BIF m em bership.
These in stitu tio n s are referred to as HOLA th rifts.

Other Significant Legislation
The Com petitive Equality Banking A ct of 1987 established
the Financing Corporation (FICO) as a mixed-ownership
governm ent corporation w hose sole purpose was to
function as a financing vehicle fo r the FSLIC.
The Omnibus Budget Reconciliation A ct of 1990 (1990
OBR Act) and the Federal Deposit Insurance Corporation
Im provem ent A ct of 1991 (FDICIA) made changes to the
FDIC's assessm ent authority (see Note 7) and borrowing
authority. The FDICIA also requires the FDIC to:
1) resolve failing institutions in a manner that w ill result
in the least possible cost to the deposit insurance funds
and 2) maintain the insurance funds at 1.25 percent of
insured deposits or a higher percentage as circumstances
warrant.
The Deposit Insurance Funds A ct of 1996 (DIFA) was
enacted to provide for: 1) the capitalization of the SAIF
to its designated reserve ratio (DRR) of 1.25 percent by
means of a one-tim e special assessm ent on SAIF-insured
deposits; 2) the expansion of the assessm ent base for
payments of the interest on obligations issued by the
FICO to include all FDIC-insured th rifts and banks;
3) beginning January 1, 1997, the im position of a FICO
assessm ent rate on SAIF-assessable deposits that is
five tim es the rate for BIF-assessable deposits through
the earlier of Decem ber 31, 1999, or the date on w hich
the last savings association ceases to exist; 4) the pay­
m ent of the annual FICO interest obligation of approxi­
mately $790 million on a pro rata basis betw een thrifts
and banks on the earlier of January 1, 2000, or the date
on w hich the last savings association ceases to exist;
5) authorization of SAIF assessm ents only if needed to

maintain the fund at the DRR; 6) the refund of am ounts
in the SAIF in excess o f the DRR w ith such refund not to
exceed the previous semiannual assessment; 7) assess­
m ent rates fo r SAIF m em bers not low er than the assess­
m ent rates fo r BIF m em bers w ith comparable risk; and
8) the merger of the SAIF and the BIF on January 1, 1999,
if no insured depository institution is a savings association
on that date. Congress did not enact legislation to either
merge the SAIF and the BIF or to elim inate the th rift
charter.
The DIFA required the establishment of a Special Reserve
of the SAIF if, on January 1, 1999, the reserve ratio
exceeded the DRR of 1.25 percent. The reserve ratio
exceeded the DRR by approximately 0.14 percent on
January 1, 1999. As a result, $978 million was placed in
a Special Reserve of the SAIF and was administered by
the FDIC. On November 12, 1999, the Gramm-LeachBliley A ct (GLBA) w as enacted w hich eliminated the SAIF
Special Reserve.
The GLBA was enacted in order to modernize the finan­
cial services industry (banks, brokerages, insurers, and
other financial service providers). The GLBA lifts restric­
tions on affiliations among banks, securities firm s, and
insurance companies. It also expands the financial
activities perm issible fo r financial holding companies
and insured depository institutions, their affiliates and
subsidiaries.

Recent Legislative Initiatives
Congress continues to focus on legislative proposals that
w ould affect the deposit insurance funds. The FDIC has
proposed an initiative to reform the deposit insurance
system. Some of the proposals, such as deposit insurance
pricing and determ ining deposit insurance levels, may
have a significant im pact on the SAIF and the BIF, if
enacted into law. However, these proposals continue
to vary and FDIC management cannot predict w hich
provisions, if any, w ill ultim ately be enacted.




Operations of the SAIF
The primary purpose of the SAIF is to: 1) insure the
deposits and protect the depositors of SAIF-insured insti­
tutions and 2) resolve failed institutions, including manag­
ing and liquidating their assets. In this capacity, the SAIF
has financial responsibility fo r all SAIF-insured deposits
held by SAIF-member institutions and by BIF-member
banks designated as Oakar financial institutions.
The SAIF is primarily funded from interest earned
on investm ents in U.S. Treasury obligations and SAIF
assessm ent prem ium s. Additional funding sources are
borrowings from the U.S. Treasury, the Federal Financing
Bank (FFB), and the Federal Flome Loan Banks, if neces­
sary. The 1990 OBR A ct established the FDIC's authority
to borrow working capital from the FFB on behalf of
the SAIF and the BIF. The FDICIA increased the FDIC's
authority to borrow fo r insurance losses from the U.S.
Treasury, on behalf of the SAIF and the BIF, from $5 billion
to $30 billion. The FDICIA also established a limitation
on obligations that can be incurred by the SAIF, known
as the m axim um obligation lim itation (MOL). As of
D ecem ber 31, 2000 and D ecem ber 31,1999, the
M O L fo r the SAIF w as $18.4 billion and $16.7 billion,
respectively.

Receivership Operations
The FDIC is responsible fo r managing and disposing of
the assets o f failed institutions in an orderly and efficient
manner. The assets held by receivership entities, and
the claims against them , are accounted fo r separately
from SAIF assets and liabilities to ensure that liquidation
proceeds are distributed in accordance w ith applicable
laws and regulations. Also, the income and expenses
attributable to receiverships are accounted fo r as transac­
tions o f those receiverships. Liquidation expenses paid
by the SAIF on behalf o f the receiverships are recovered
from those receiverships.

2. S um m ary o f S ig n ific a n t A ccounting Policies
General
These financial statem ents pertain to the financial position,
results of operations, and cash flo w s of the SAIF and
are presented in accordance w ith generally accepted
accounting principles (GAAP). These statem ents do not
include reporting fo r assets and liabilities of closed th rift
institutions for w hich the FDIC acts as receiver or liquidat­
ing agent. Periodic and final accountability reports of
the FDIC's activities as receiver or liquidating agent are
furnished to courts, supervisory authorities, and others
as required.

Use of Estimates
FDIC m anagem ent makes estim ates and assumptions
that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from
these estim ates. W here it is reasonably possible that
changes in estim ates w ill cause a material change in the
financial statem ents in the near term , the nature and
extent of such changes in estim ates have been disclosed.

Cash Equivalents
Cash equivalents are short-term , highly liquid investm ents
w ith original m aturities of three m onths or less. Cash
equivalents consist prim arily of Special U.S. Treasury
C ertificates.

Investments in U.S. Treasury Obligations
Investm ents in U.S. Treasury obligations are recorded pur­
suant to the S tatem ent of Financial Accounting Standards
(SFAS) No. 115, "Accounting fo r Certain Investm ents in
Debt and Equity Securities.” SFAS No. 115 requires that
securities be classified in one of three categories: held-tomaturity, available-for-sale, or trading. The SAIF does not
designate any securities as trading. Securities designated
as held-to-m aturity are show n at am ortized cost.
Am ortized cost is the face value of securities plus the
unamortized prem ium or less the unamortized discount.
Am ortizations are com puted on a daily basis from the
date of acquisition to the date of maturity. Securities
designated as available-for-sale are show n at market



value, w hich approximates fair value. Unrealized gains
and losses are included in C om prehensive Income.
Realized gains and losses are included in the Statem ents
of Incom e and Fund Balance as com ponents of Net
Income. Interest on both types of securities is calculated
on a daily basis and recorded m onthly using the effective
interest method.

Allowance for Losses on Receivables From Thrift
Resolutions
The SAIF records a receivable fo r the am ounts advanced
and/or obligations incurred fo r resolving failing and failed
thrifts. Any related allowance fo r loss represents the dif­
ference betw een the funds advanced and/or obligations
incurred and the expected repayment. The latter is based
on estim ates of discounted cash recoveries from the
assets of assisted or failed thrifts, net of all applicable
estim ated liquidation costs.

Cost Allocations Among Funds
Operating expenses not directly charged to the funds are
allocated to all funds administered by the FDIC using
workload-based-allocation percentages. These percent­
ages are developed during the annual corporate planning
process and through supplem ental functional analyses.

Postretirement Benefits Other Than Pensions
The FDIC established an e ntity to provide the accounting
and adm inistration of postretirem ent benefits on behalf of
the SAIF, the BIF, and the FRF. Each fund has fully paid
its liability fo r these benefits directly to the entity. The
SAIF's prepaid or accrued postretirem ent benefit cost is
presented in the SAIF's Statem ents o f Financial Position.

Disclosure About Recent Accounting
Pronouncements
S tatem ent of Financial A ccounting Standards (SFAS)
No. 138, “Accounting fo r Certain Derivative Instrum ents
and Certain Hedging Activities, an am endm ent of SFAS
No. 133,” was issued in June 2000. For entities that
adopted SFAS No. 133, “Accounting fo r Derivative

Other recent accounting pronouncem ents w ere evaluated
and deemed to be not applicable to the financial statements.

Instruments and Hedging Activities" prior to June 15, 2000,
Statem ent 138 is effective for all fiscal quarters beginning
after June 15, 2000. SFAS No. 138 amends Statem ent
133 principally fo r certain issues relating to hedging
transactions. The adoption o f these sta te m e n ts has
no material quantitative or qualitative impact on the SAIF's
Statements of Financial Position, Income and Fund
Balance, and Cash Flows.

Related Parties
The nature of related parties and a description of related
party transactions are discussed in Note 1 and disclosed
throughout the financial statem ents and footnotes.

WMBMMBMMMBMWBHWBBMWHWMWBMMMBMWMHIMMIIIIIIIIWWIIBIIM

3. Cash and O ther Assets: R estricted fo r S A IF-M em ber Exit Fees
The SAIF collects entrance and exit fees fo r conversion
transactions when an insured depository institution con­
verts from the BIF to the SAIF (resulting in an entrance
fee) or from the SAIF to the BIF (resulting in an exit fee)
Regulations approved by the FDIC's Board of Directors
(Board) and published in the Federal R egister on
March 21, 1990, directed that exit fees paid to the
SAIF be held in escrow.

The FDIC and the Secretary of the Treasury will determine
when it is no longer necessary to escrow such funds for
the payment of interest on obligations previously issued
by the FICO. These escrowed exit fees are invested in
U.S. Treasury securities pending determination of ow ner­
ship. The interest earned is also held in escrow. There
w ere no conversion transactions during 2000 and 1999
that resulted in an exit fee to the SAIF.

le a s h and O th e r Assets: R estricted fo r S A IF -M e m b e r E xit Fees a t D e ce m b er 31
Dollars

\

in T h o u s a n d s
1999

2000
Cash and cash equivalents

'

'$

23,302
239,975
4,529
684

3

Exit fees receivable




$

4,535

Interest receivable on U.S. Treasury obligations

Total

40,154
239,088

Investm ent in U.S. Treasury obligations, net

s

283,780

s

268,490

52

Havings Association Insurance Fund

1 U .S. T reasu ry O b lig a tio n s a t D e ce m b er 31, 20 00 (R estricted fo r S A IF -M e m b e r E xit Fees)
Dollars

in

I

Thousands
Held-to-Maturity
Unrealized

Unrealized

Yield at

Face

Amortized

Holding

Holding

Maturity

Purchase

Value

Cost

Gains

Losses

Less than 1 year

5.52%

1 -3 years

6.12%

135,000

134,831

2,012

3-5 years

5.79%

20,000

21,189

455

5-10 years

5.20%

Total

$

15,000

$

15,093

64,000 _ _____
$

234,000

$

$

0

$

2,921

Value

(20)

$

0
0

454

67,975
239,088

$

Market

21,644

(373)
$

(393)

15,073
136,843

6J3,056
$

241,616

I U .S. Treasury O b lig a tio n s a t D e ce m b er 31, 1999 (R estricted fo r S A IF -M e m b e r E xit Fees)
Dollars

in

Thousands
Held-to-Maturity
Unrealized

Maturity

Unrealized

Yield at

Face

Amortized

Holding

Holding

Market

Purchase

Value

Cost

Gains

Losses

Value

1-3 years

5.90%

3-5 years

6.30%

55,000

56,131

217

(582)

55,766

5-10 years

5.20%

64,000

68,508

0

(5,265)

63,243

Total

$

S

115,000

234,000

$

$

115,336

239,975

$

S

0

217

$

$

(876)

(6,723)

$

$

114,460

233,469

The unamortized premium, net of the unamortized discount, was $5.1 million and $6.0 million at December 31, 2000
and 1999, respectively.




4. Investm en t in U.S. Treasury O bligations, N e t
book value is com puted by adding the amortized cost of
the held-to-maturity securities to the market value of the
available-for-sale securities. In 2000, the FDIC purchased
$291 million of Treasury inflation-indexed securities (TIIS)
fo r the SAIF. These securities are indexed to increases
or decreases in the Consumer Price Index (CPI).

Cash received by the SAIF is invested in non-marketable
Government A ccount Series (GAS) market-based U.S.
Treasury securities w ith maturities exceeding three months.
As of December 31, 2000 and December 31, 1999, the
book value of investm ents in U.S. Treasury Obligations,
net, w as $10.7 billion and $10 billion, respectively. The

III.S . Treasury O b lig a tio n s a t D e ce m b er 31, 2 0 00 (U n re stric te d )
Dollars

in

Thousands
Held-to-Maturity
Unrealized

Maturity

Purchase

Amortized

Holding

Holding

Value

•

Unrealized

Face

Yield at

Cost

Gains

Losses

6.04%

1,640,000

1,675,585

21,246

0

3-5 years

6.62%

930,000

932,512

49,654

0

982,166

5-10 years

5.64%

3,380,394

3,440,704

117,935

(5,768)

3,552,871

7,950,849

S 191,181

7,849,894

$

$

2,346

$

$

(52)

1,904,342

1-3 years

$

1,902,048

Value

5.98%

Total

$

$

Less than one year

$

1,899,500’

Market

(5,820)

1,696,831

$

8,136,210

A v a ila b le -fo r-S a le

Unrealized
Maturity

Unrealized

Yield at

Face

Amortized

Holding

Holding

Market

Purchase*

Value

Cost

Gains

Losses

Value

Less than one year

5.17%

1-3 years

6.56%

$

80,000

$

80,269

$

439,061

450,000

0

$

(181)

14,005

$

0

80,088
453,066

3-5 years

6.14%

805,000

836,059

30,855

0

866,914

5-10 years

4.43%

1,288,270

1,271,405

37,492

0

1,308,897

Total

S

2,623,270

S

2,626,794

$

82,352

S

(181)

S

(6,001)

S

2,708,965

Total Investment in U.S. Treasury Obligations, Net
Total

S

10,473,164

S

10,577,643

$

273,533

S 10,845,175

For Treasury inflation-indexed securities (TIIS), the yields in the above table include their real yields at purchase, not their effective yields.
Effective yields on TIIS include a weighted average o f Bloomberg's calculation o f yield with an inflation assumption.
The inflation assumption o f 3.4% was the latest year-over-year increase in the Consumer Price Index (CPII on November 30, 2000.
These effective yields are 7 18% and 7.47% for TIIS classified as held-to-maturity and available-for-sale, respectively.
.
T Includes two Treasury notes totaling $150 million which matured on Sunday, December 31,2000. Settlement occurred on the next business day, January 2,2001.




1 U .S. Treasury O b lig a tio n s, N e t a t D e ce m b er 31, 1999 (U n re stric te d )
Dollars

in

H H

Thousands
Held-to-Maturity
Unrealized

Maturity

Unrealized

Yield at

Face

Amortized

Holding

Holding

Purchase*

Value

Cost

Gains

Losses

Less than one year

5.93%

1 -3 years

5.97%

3-5 years

5.34%

5-10 years

5.61%

Total

$

1,630,000

$

2,915,000

1,631,605

$

1,020

$

(1,154)

Market
Value
$

1,631,471

280

705,000

739,940

2,131

(4,218)

737,853

2,713,214
$

2,937,618
2,771,691

5,896

(126,467)

2,651,120

9,327

S (145,860)

7,963,214

$

8,080,854

$

(14,021)

2,923,877

$

7,944,321

Available-for-Sale
Unrealized
Maturity

Unrealized

Yield at

Face

Amortized

Holding

Holding

Market

Purchase*

Value

Cost

Gains

Losses

Value

Less than one year

5.62%

1-3 years

5.17%

80,000

81,096

3-5 years

6.28%

240,000

255,838

5-10 years

5.03%

1,447,582

1,443,149

Total

$

$

150,000

1,917,582

$

$

150,379

1,930,462

$

22

$

0
0
0
$

22

(14)

$

150,387

(1,046)

253,687

(28,555)
$

80,050

(2,151)

1,414,594

(31,766)

$

1,898,718

$ (177,626)

S

9,843,039

Total Investment in U.S. Treasury Obligations, Net
Total

$

9,880,796

S

10,011,316

$

9,349

* For Treasury inflation-indexed securities (TIIS), the yields in the above table include their real yields at purchase, not their effective yields.
Effective yields on TIIS include a weighted average o f Bloomberg's calculation o f yield with an inflation assumption. The inflation assumption o f 2.6% was the
latest year-over-year increase in the Consumer Price Index (CPI) on December 14, 1999. These effective yields are 6.47% and 6.71 % for TIIS classified as held-tomaturity and available-for-sale, respectively.

As of Decem ber 31, 2000 and 1999, the unamortized prem ium, net of the unamortized discount, was $104.5 million
and $130.5 million, respectively.




R H M M H i

■ ■ M M

M

5. Receivables fro m T h rift Resolutions, N e t
The th rift resolution process takes different form s
depending on the unique facts and circumstances
surrounding each failing or failed institution. Payments
for institutions that fail are made to cover obligations
to insured depositors and represent claims by the SAIF
against the receiverships' assets. There was one th rift
failure in 2000 and one in 1999, w ith assets at failure of
$30 million and $63 million, respectively, and SAIF outlays
of $29 million and $63 million, respectively.
Assets held by the FDIC in its receivership capacity for
closed SAIF-insured institutions are the main source of
repaym ent of the SAIF's receivables from closed thrifts.

As of December 31, 2000 and 1999, SAIF receiverships
held assets w ith a book value of $56.1 million and $114
million, respectively (including cash and miscellaneous
receivables of $48.2 m illion and $104.0 m illion at
December 31, 2000, and 1999, respectively). The estimated
cash recoveries from the management and disposition
of these assets that are used to derive the allowance
fo r losses are based, in part, on a statistical sampling
of receivership assets. These estim ated recoveries are
regularly evaluated, but remain subject to uncertainties
because of potential changes in economic conditions.
These factors could cause the SAIF’s and other claimants'
actual recoveries to vary from the level currently estimated.

6. C o n tin g en t Liabilities for:
Anticipated Failure of Insured Institutions
The SAIF records a contingent liability and a loss provision
fo r thrifts (including Oakar and Sasser financial institu­
tions) that are likely to fail, absent some favorable event
such as obtaining additional capital or merging, w hen
the liability becomes probable and reasonably estimable.
The contingent liabilities for anticipated failure of insured
institutions as of December 31, 2000 and 1999, were
$135 million and $56 million, respectively. The contingent
liability is derived in part from estim ates of recoveries
from the management and disposition of the assets of
these probable th rift failures. Therefore, these estim ates
are subject to the same uncertainties as those affecting
the SAIF's receivables from thrift resolutions (see Note 5).
Consequently, this could affect the ultim ate cost to the
SAIF from probable failures.




There are other th rifts w here the risk of failure is less
certain, but still considered reasonably possible. Should
these th rifts fail, the SAIF could incur additional estim ated
losses ranging from $1 million to $255 million.
The accuracy of these estim ates w ill largely depend on
future economic conditions. The Board has the statutory
authority to consider the contingent liability from anticipat­
ed failures of insured institutions w hen setting assessment
rates.

Litigation Losses
The SAIF records an estim ated loss fo r unresolved legal
cases to the extent those losses are considered probable
and reasonably estimable. In addition to the am ount
recorded as probable, the FDIC has determined that losses
from unresolved legal cases totaling $617 thousand are
reasonably possible.

7. Assessm ents
The 1990 OBR A ct removed caps on assessm ent rate
increases and authorized the FDIC to set assessm ent
rates for SAIF m em bers semiannually, to be applied
against a m em ber's average assessm ent base. The
FDICIA: 1) required the FDIC to im plem ent a risk-based
assessm ent system ; 2) authorized the FDIC to increase
assessm ent rates fo r SAIF-member institutions as needed
to ensure that funds are available to satisfy the SAIF's
obligations; 3) required the FDIC to build and maintain the
reserves in the insurance funds to 1.25 percent of insured
deposits; and 4) authorized the FDIC to increase assess­
m ent rates more frequently than semiannually and impose
em ergency special assessm ents as necessary to ensure
that funds are available to repay U.S. Treasury borrowings.
The FDIC uses a risk-based assessm ent system that
charges higher rates to those institutions that pose greater
risks to the SAIF. To arrive at a risk-based assessm ent for
a particular institution, the FDIC places each institution in
one of nine risk categories, using a tw o-step process based
first on capital ratios and then on other relevant information.
The assessment rate averaged approximately 0.24 cents
and 0.20 cents per $100 of assessable deposits for 2000
and 1999, respectively. On November 7, 2000, the Board
voted to retain the SAIF assessm ent schedule at the
annual rate of 0 to 27 cents per $100 of assessable
deposits for the firs t semiannual period of 2001. The
Board reviews prem ium rates semiannually.




The DIFA (see Note 1) provided, among other things, for
the capitalization of the SAIF to its DRR of 1.25 percent
by means of a one-tim e special assessm ent on SAIFinsured deposits. The SAIF achieved its required capital­
ization by means of a $4.5 billion special assessm ent
effective October 1, 1996. Since October 1996, the
SAIF has maintained a capitalization level at or higher
than the DRR of 1.25 percent of insured deposits. As
of December 31, 2000, the capitalization level fo r the
SAIF is 1.43 percent of estim ated insured deposits.
The DIFA provided fo r the elimination of the mandatory
m inim um assessm ent form erly provided for in the FDI
Act. It also provided for the expansion of the assessm ent
base fo r payments of the interest on obligations issued
by the FICO to include all FDIC-insured institutions
(including thrifts, banks, and Oakar and Sasser financial
institutions). It also made the FICO assessm ent separate
from regular assessments, effective on January 1, 1997.
The FICO assessm ent has no financial impact on the
SAIF. The FICO assessm ent is separate from the regular
assessm ents and is imposed on th rifts and banks, not on
the insurance funds. The FDIC, as adm inistrator of the
SAIF and the BIF, is acting solely as a collection agent
fo r the FICO. During 2000 and 1999, $158 million and
$426 million, respectively, w as collected from SAIFm em ber institutions and rem itted to the FICO.

8. Provision fo r Insurance Losses
Provision for insurance losses was $180.8 million and $30.6
m illion fo r Decem ber 31, 2000 and D ecem ber 31, 1999,
respectively. The large provision in 2000 was primarily
attributed to recognizing losses of $186.1 million fo r the

anticipated failure of insured institutions. The follow ing
chart lists the major com ponents of the provision for
insurance losses.

I Provision fo r Insurance Losses fo r th e Years Ended D e ce m b er 31
Dollars

in T h o u s a n d s
2000

Valuation Adjustments:
Closed banks

$

(7,221)

1999
$

(11,352)

(7,221)

(11,352)

186,083

42,000

1,943

Total Valuation Adjustments

0

Contingent Liabilities Adjustments:
A nticipa ted fa ilu re of insured in stitution s
Litigation losses
Total Contingent Liabilities Adjustments
Total




188,026
$

180,805

42,000
$

30,648

9 . Pension B enefits, Savings Plans, and A ccrued A nnual Leave
Eligible FDIC employees (permanent and term employees
w ith appointm ents exceeding one year) are covered by
either the Civil Service R etirem ent System (CSRS) or the
Federal Employees R etirem ent System (FERS). The
CSRS is a defined benefit plan, w hich is o ffse t w ith the
Social Security System in certain cases. Plan benefits are
determ ined on the basis of years of creditable service and
compensation levels. The CSRS-covered employees also
can contribute to the tax-deferred Federal Thrift Savings
Plan (TSP).
The FERS is a three-part plan consisting o f a basic
defined b e n e fit plan that provides ben e fits based on
years of creditable service and com pensation levels,
Social Security benefits, and the TSP. A u to m a tic and
matching em ployer contributions to the TSP are provided
up to specified am ounts under the FERS.

Although the SAIF contributes a portion of pension
benefits fo r eligible employees, it does not account for
the assets of either retirem ent system . The SAIF also
does not have actuarial data fo r accumulated plan bene­
fits or the unfunded liability relative to eligible employees.
These am ounts are reported on and accounted for by
the U.S. O ffice of Personnel Management.
Eligible FDIC employees also may participate in a FDICsponsored tax-deferred 401 (k) savings plan w ith matching
contributions. The SAIF pays its share of the em ployer's
portion of all related costs.
The SAIF's pro rata share of the Corporation's liability
to employees fo r accrued annual leave is approximately
$5.0 million and $4.4 million at Decem ber 31, 2000 and
1999, respectively.

Pension B enefits and S aving s Plans Expenses fo r th e Years Ended D e ce m b er 31
Dollars

in T h o u s a n d s
2000

Civil Service R etirem ent System

"$

1,603

1999
$

1,276

Federal Employees R etirem ent System (Basic Benefit)

4,092

3,268

FDIC Savings Plan

2,594

2,029

Federal T h rift Savings Plan

1,631

1,267

Total




$

9,920

S

7,840

10. P o stretire m e n t Benefits O ther Than Pensions
The FDIC provides certain dental and life insurance cover­
age for its eligible retirees, the retirees' beneficiaries, and
covered dependents. Retirees eligible fo r life insurance
coverage are those w ho have qualified due to: 1) im m edi­
ate enrollm ent upon appointm ent or five years of partici­
pation in the plan and 2) eligibility for an immediate annuity.
Dental coverage is provided to all retirees eligible fo r an
im m ediate annuity.

The life insurance program, underw ritten by Metropolitan
Life Insurance Company, provides basic coverage at no
cost to retirees and allows converting optional coverages
to direct-pay plans. Dental care is u n d e rw ritten by
Connecticut General Life Insurance Company and provides
coverage at no cost to retirees.

I P o s tre tire m e n t B enefits O th e r T h a n Pensions
Dollars

in

Thousands
2000

1999

Funded Status at December 31
Fair value of plan assets*

$

Less: B enefit obligation
Over/(Under) Funded Status of the Plans

Prepaid (accrued) po stretirem ent b e n e fit cost recognized
in th e S tatem ents of Financial Position

5,479

$

4,811

5,160
5,833

$

668

$

(673)

$

101

$

(673)

601

$

483

Expenses and Cash Flows for the Period Ended December 31
N et periodic b e n e fit cost

$

Employer contributions

223

129

Benefits paid

223

129

Weighted-Average Assumptions at December 31
D iscount rate

5.25%

4.50%

Expected return on plan assets

5.25%

4.50%

Rate o f com pensation increase

6.30%

3.00%

* Invested in U.S. Treasury obligations.

Total dental coverage trend rates w ere assumed to be 7% per year, inclusive of general inflation. Dental costs w ere
assumed to be subject to an annual cap of $2,000.




11. C o m m itm en ts and O ff-B alance-S heet Exposure
C om m itm ents
Leases

The SAIF's allocated share of the FDIC's lease co m m it­
m ents totals $19.2 million fo r future years. The lease
agreem ents contain escalation clauses resulting in adjust­
ments, usually on an annual basis. The allocation to the

SAIF of the FDIC's future lease com m itm ents is based
upon current relationships of the workloads among the
SAIF, the BIF, and the FRF. Changes in the relative w ork­
loads could cause the am ounts allocated to the SAIF in
the future to vary from the am ounts show n below. The
SAIF recognized leased space expense o f $5.7 million at
both December 31, 2000 and 1999, respectively.

Lease C o m m itm e n ts
Dollars

in T h o u s a n d s
2001

2002

2003

2004

2005

2006/Thereafter

S 5,074

$ 4,832

$ 3,559

S 2,248

S 1,495

$ 2,003

Off-Balance-Sheet Exposure
D e p o sit Insurance

As of Decem ber 31, 2000, deposits insured by the SAIF
totaled approximately $753 billion. This w ould be the
accounting loss if all depository institutions w e re to fail
and the acquired assets provided no recoveries.

■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■

12. Disclosures A b o u t th e Fair V alue o f Financial Instrum ents
Cash equivalents are short-term , highly liquid investm ents
and are show n at current value. The fair m arket value
of the investm ent in U.S. Treasury obligations is disclosed
in Notes 3 and 4 and is based on current m arket prices.
The carrying am ount of interest receivable on investments,
short-term receivables, and accounts payable and other
liabilities approximates their fair m arket value. This is
due to their short m aturities or comparisons w ith current
interest rates. As explained in Note 3, entrance and
exit fees receivables are net of discounts calculated
using an interest rate comparable to U.S. Treasury Bill or
Government bond/note rates at the tim e the receivables
are accrued.
The net receivables from th rift resolutions primarily include
the SAIF's subrogated claim arising fro m paym ents to
insured depositors. The receivership assets th a t w ill



ultim ately be used to pay the corporate subrogated
claim are valued using discount rates that include consid­
eration of market risk. These discounts ultim ately affect
the SAIF's allowance for loss against the net receivables
from thrift resolutions. Therefore, the corporate subrogated
claim indirectly includes the e ffe c t o f discounting and
should not be view ed as being stated in te rm s of nominal
cash flow s.
Although the value of the corporate subrogated claim is
influenced by valuation of receivership assets (see Note 5),
such receivership valuation is not equivalent to the valua­
tion of the corporate claim. Since the corporate claim
is unique, not intended fo r sale to the private sector, and
has no established market, it is not practicable to estimate
its fair m arket value.

The FDIC believes that a sale to the private sector of
the corporate claim w ould require indeterm inate, but
substantial, discounts fo r an interested party to profit
from these assets because of credit and other risks. In
addition, the tim ing of receivership payments to the SAIF
on the subrogated claim does not necessarily correspond

w ith the tim ing o f collections on receivership assets.
Therefore, the e ffe ct o f discounting used by receiverships
should not necessarily be vie w e d as producing an
estim ate of market value for the net receivables from
th rift resolutions.

13. S up plem en tary In fo rm a tio n R elating to th e S ta te m en ts o f Cash Flows

I R eco nciliatio n of N e t In co m e to N e t Cash Pro vid ed by O p e ra tin g A c tiv itie s fo r th e Years Ended D ecem b er 31
Dollars

in

Thousands
2000

Net Income

$

364,062

1999
$

476,839

Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities
Income Statement Items:
30,648

180,805

Provision fo r insurance losses

32,317

51,708

(36,930)

(11,818)

Decrease in am ortization o f U.S. Treasury oblig ation s (restricted)

887

808

(Increase) in entrance and e xit fees receivable, including interest
receivable on investm ents and other assets

(33,381)

(13,500)

64,716

(41,450)

A m ortization o f U.S. Treasury obligations (unrestricted)
TIIS in fla tio n adjustm ent
Change in Assets and Liabilities:

Decrease (Increase) in receivables from th rift resolutions
Increase in receivables from acquired fins

(240)

0

Increase (Decrease) in accounts payable and other lia b ilitie s

2,842

(2,325)

(Decrease) in contingent lia b ility fo r an ticipated fa ilu re o f insured in stitution s

(8,000)

(17,000)

Increase in e xit fees and investm ent proceeds held in escrow

15,290

14,701

582,368

488,611

Net Cash Provided by Operating Activities




$

S




FSLIC Resolulion Fund

Federal Deposit Insurance Corporation

I FSLIC Resolution Fund Statements of Financial Position at December
Dollars

31

I

in T h o u s a n d s
2000

1999

Assets
Cash and cash equivalents

$

Receivables from th rift resolutions, ne t (N ote 3)

3,514,541

$

2,948,138

416,376

1,336,755

1,811,442

Investm ent in securitization related assets acquired from receiverships (N ote 4)

2,725,243

Assets acquired from assisted th rifts and term inated receiverships, net (N ote 5)

34,616

34,407

Other assets, net (N ote 6)

16,125

36,748

Total Assets

S

5,793,100

$

$

42,618

$

7,081,291

Liabilities
Accounts payable and other lia b ilitie s
Liab ilities from th rift resolutions (N ote 7)

74,872

73,621
296,817

Contingent liabilities for: (Note 8)

A ssistance agreem ents

0

1,445

120,535

Total Liabilities

339

3,045

Litigation losses

372,222

Commitments and concentration o f credit risk (Note 14 and Note 15)

Resolution Equity (Note 11)
C ontributed capital

129,484,926

131,328,499

A ccum ulated d e fic it

(124,267,778)

(124,999,600)

455,417

380,170

(123,812,361)

(124,619,430)

5,672,565

6,709,069

Unrealized gain on available-for-sale securities, net (N ote 4)
A ccum ulated d e ficit, net

________

Total Resolution Equity

Total Liabilities and Resolution Equity
The accompanying notes are an integral part o f these financial statements.




$

5,793,100

$

7,081,291

1FSLIC R e s o lu tio n Fund Statements of Income and Accumulated Deficit for the Years Ended December 31
Dollars

in

Thousands
1999

2000
Revenue
Interest on securitization related assets acquired from receiverships

$

85,511

Interest on U.S. Treasury obligations

145,063

Interest on advances and subrogated claim s (N ote 9)

$

104,232
108,001

158,865

19,033

Revenue fro m assets acquired from assisted th rifts and term inated receiverships

15,607

25,476

Lim ited partnership eq uity interests and other revenue

25,640

23,787

Realized gain on investm ent in securitization related assets acquired
from receiverships (N ote 4)

91,487

93,113

522,173

373,642

74,102

83,317

(438,642)

(278,267)

94,159

80,921

7,114

15,664

Interest expense on notes payable and other expenses

16,133

6,650

Realized loss on investm ent in securitization related assets acquired
from receiverships (N ote 4)

37,485

93,604

(209,649)

1,889

731,822

371,753

75,247

64,494

807,069

436,247

(124,619,430)

(125,055,677)

$ (123,812,361)

$ (124,619,430)

Total Revenue

Expenses and Losses
Operating expenses
Provision fo r losses (N ote 10)
Expenses fo r g o od w ill settlem ents and litig a tio n (N ote 1)
Expenses fo r assets acquired from assisted th rifts and term inated receiverships

Total Expenses and Losses

Net Income
Unrealized gain on available-for-sale securities, net (N ote 4)

Comprehensive Income

Accumulated Deficit - Beginning

Accumulated Deficit - Ending
The accompanying notes are an integral part o f these financial statements.




1

1 FSLIC Resolution Fund Statem ents of Cash Flows for the Years Ended December 31
Dollars

in

Thousands
2000

1999

Cash Flows From Operating Activities
Cash provided by:
Interest on U.S. Treasury obligations

$

Interest on securitization related assets acquired from receiverships

145,063

$

108,001

89,417
1,392,486

Recoveries from th rift resolutions

111,159
592,198

Recoveries from lim ited partnership equity interests

35,616

80,046

Recoveries from assets acquired from assisted th rifts and term in ate d receiverships

51,474

103,699

0

8,166

(78,978)

M iscellaneous receipts

28,332

440

Recoveries on conversion o f be ne fit plan

(97,299)

Cash used by:
Operating expenses

(121,176)

(82,069)

Disbursem ents fo r g o od w ill settlem ents and litig a tio n expenses

(94,159)

(80,921)

Disbursem ents fo r assets acquired from assisted th rifts and term inated receiverships

(38,196)

(40,690)

Disbursem ents fo r th rift resolutions

M iscellaneous disbursem ents

(2)

(6)

1,381,985

730,616

1,027,943

1,752,917

1,027,943

1,752,917

25

1,000

(394,593)

Net Cash Provided by Operating Activities (Note 17)

(4,167,774)

Cash Flows From Investing Activities
Cash provided by:
Investm ent in securitization related assets acquired from receiverships
Net Cash Provided by Investing Activities

Cash Flows From Financing Activities
Cash provided by:
U.S. Treasury paym ents fo r g o o d w ill settlem ents
Cash used for:
Return o f U.S. Treasury paym ents (N ote 11)

(1,448,957)

Cash and Cash Equivalents - Beginning
Cash and Cash Equivalents - Ending
The accompanying notes are an integral part o f these financial statements.




$

(1,683,241)

2,948,138

Net lncrease/(Decrease) in Cash and Cash Equivalents

(4,166,774)

566,403

Net Cash Used by Financing Activities

0

(1,843,525)

Payments to R esolution Funding Corporation (N ote 11)

4,631,379

3,514,541

$

2,948,138

66

FSLIC Resolution Fund

Notes to the Financial Statements
December 31, 2000 and 1999

1. Legislative H istory and O perations o f th e FSLIC Resolution Fund
Legislative History
The U.S. Congress created the Federal Savings and Loan
Insurance Corporation (FSLIC) through the enactm ent
of the National Housing A ct of 1934. The Financial
Institutions Reform, Recovery, and Enforcem ent A ct of
1989 (FIRREA) abolished the insolvent FSLIC, created the
FSLIC Resolution Fund (FRF), and transferred the assets
and liabilities of the FSLIC to the FRF (except those assets
and liabilities transferred to the Resolution Trust Corporation
(RTC), effective on August 9, 1989. The FRF is responsi­
ble for w inding up the affairs of the form er FSLIC.
The FIRREA was enacted to reform, recapitalize, and
consolidate the federal deposit insurance system . In
addition to the FRF, FIRREA created the Bank Insurance
Fund (BIF) and the Savings Association Insurance Fund
(SAIF). It also designated the Federal Deposit Insurance
Corporation (FDIC) as the adm inistrator of these funds.
All three funds are maintained separately to carry out
their respective mandates.
The FIRREA also created the RTC to manage and resolve
all th rifts previously insured by the FSLIC for w hich a
conservator or receiver was appointed during the period
January 1, 1989, through A ugust 8, 1992. The FIRREA
established the Resolution Funding Corporation (REFCORP) to provide part of the initial funds used by the
RTC for th rift resolutions. Additionally, funds w ere appro­
priated fo r RTC resolutions pursuant to FIRREA, the RTC
Funding A ct o f 1991, the RTC Refinancing, Restructuring
and Im provem ent A ct of 1991, and the RTC Completion
A ct of 1993.
The RTC's resolution responsibility was extended through
subsequent legislation from the original term ination date
of A ugust 8, 1992. Resolution responsibility transferred
from the RTC to the SAIF on July 1, 1995.
The RTC Completion A ct of 1993 (RTC Completion Act)
term in ated the RTC as o f D ecem ber 31, 1995. All
remaining assets and liabilities of the RTC w ere transferred
to the FRF on January 1, 1996. Today, the FRF consists
of tw o distin ct pools o f assets and liabilities: one
com posed o f th e assets and liabilities o f th e FSLIC
transferred to the FRF upon the dissolution of the FSLIC
on A ugust 9, 1989 (FRF-FSLIC), and the other composed



of the RTC assets and liabilities transferred to the
FRF on January 1, 1996 (FRF-RTC). The assets of
one pool are not available to satisfy obligations of the
other.
The RTC Completion A ct also made available approxi­
mately $18 billion w o rth of additional funding to the RTC,
of w hich the RTC actually drew dow n $4.6 billion. The
RTC Completion A ct requires the FDIC to return to the
U.S. Treasury any funds that w e re transferred to the RTC
pursuant to the RTC Completion A ct but not needed by
the RTC. During 1999 and 2000, the FRF-RTC returned
$4.2 billion and $391 million, respectively, to fully repay
this appropriation.
The FDIC m ust transfer to the REFCORP the net proceeds
from the FRF's sale of RTC assets, after providing fo r all
outstanding RTC liabilities. Any such funds transferred
to the REFCORP pay the interest on the REFCORP bonds
issued to fund the early RTC resolutions. Any such pay­
m ents benefit the U.S. Treasury, w hich w ould otherw ise
be obligated to pay the interest on the bonds. During
2000, the FRF-RTC paid $1.4 billion to the REFCORP.

Operations of the FRF
The FRF w ill continue operations until all of its assets
are sold or otherw ise liquidated and all of its liabilities are
satisfied. Any funds remaining in the FRF-FSLIC w ill be
paid to the U.S. Treasury. Any remaining funds o f the
FRF-RTC w ill be distributed to the REFCORP to pay
the interest on the REFCORP bonds.
The FRF has been primarily funded from the follow ing
sources: 1) U.S. Treasury appropriations; 2) am ounts bor­
rowed by the RTC from the Federal Financing Bank (FFB);
3) am ounts received from the issuance of capital certifi­
cates to REFCORP; 4) funds received from the manage­
m ent and disposition of assets of the FRF; 5) the FRF's
portion of liquidating dividends paid by FRF receiverships;
and 6) interest earned on Special U.S. Treasury Certificates
purchased w ith proceeds of 4) and 5). If these sources
are insufficient to satisfy the liabilities of the FRF, pay­
m ents w ill be made from the U.S. Treasury in am ounts
necessary, as appropriated by Congress, to carry out the
objectives o f the FRF.

Public Law 103-327 provided $827 million in funding to be
available until expended to facilitate e fforts to w ind up the
resolution activity of the FRF-FSLIC. The FRF received
$165 million under this appropriation on November 2, 1995.
In addition, Public Law 104-208 and Public Law 105-61
authorized the use by the U.S. Departm ent of Justice
(DOJ) of $26.1 million and $33.7 million, respectively,
from the original $827 million in funding, thus reducing
the am ount available to be expended to $602.2 million.
The funding made available to DOJ covers the reimburse­
m ent of reasonable expenses of litigation incurred in the
defense of claims against the United States arising from
the goodwill litigation cases.
Additional goodwill litigation expenses incurred by
DOJ are paid directly from the FRF-FSLIC based
on a M em orandum of Understanding (MOU) dated
October 2, 1998, betw een the FDIC and DOJ. Under
the term s of the MOU, the FRF-FSLIC paid $96.9 million

and $79.1 million to DOJ for fiscal years 2001 and 2000,
respectively. Subsequently, DOJ returns any unused
fiscal year funding to the FRF-FSLIC. Separate funding
fo r goodwill judgm ents and settlem ents is available
through Public Law 106-113 (see Note 8).

Receivership Operations
The FDIC is responsible for managing and disposing of
the assets of failed institutions in an orderly and efficient
manner. The assets held by receivership entities, and
the claims against them , are accounted for separately
from FRF assets and liabilities to ensure that liquidation
proceeds are distributed in accordance w ith applicable
laws and regulations. Also, the income and expenses
attributable to receiverships are accounted for as trans­
actions of those receiverships. Liquidation expenses
incurred by the FRF on behalf of the receiverships are
recovered from those receiverships.

2. S um m ary o f S ig n ific a n t A ccounting Policies
General

Cash Equivalents

These financial statem ents pertain to the financial position,
results of operations, and cash flow s of the FRF and are
presented in accordance w ith generally accepted account­
ing principles (GAAP). These statem ents do not include
reporting for assets and liabilities of closed thrift institutions
for w hich the FDIC acts as receiver or liquidating agent.
Periodic and final accountability reports of the FDIC's
activities as receiver or liquidating agent are furnished
to courts, supervisory authorities, and others as required.

Cash equivalents are short-term , highly liquid investm ents
w ith original m aturities of three m onths or less. Cash
equivalents consist of Special U.S. Treasury Certificates.

Use of Estimates
FDIC management makes estim ates and assumptions
that affect the am ounts reported in the financial state­
ments and accompanying notes. Actual results could dif­
fer from these estimates. W here it is reasonably possible
that changes in estim ates w ill cause a material change
in the financial statem ents in the near term , the nature
and extent of such changes in estim ates have been
disclosed.




Investm ent in Securitization Related Assets
Acquired from Receiverships
The investm ent in securitization related assets acquired
from receiverships is classified as available-for-sale and
is shown at fair value w ith unrealized gains and losses
included in Resolution Equity. Realized gains and losses
are included in the Statem ents of Income and
Accum ulated Deficit as com ponents of Net Income.

Allowance for Losses on Receivables from Thrift
Resolutions and Assets Acquired from Assisted
Thrifts and Terminated Receiverships
The FRF records a receivable fo r the am ounts advanced
and/or obligations incurred fo r resolving troubled and
failed thrifts. The FRF also records as an asset the

KSL1C Resolution Fund

am ounts paid fo r assets acquired from assisted thrifts
and term inated receiverships. Any related allowance
fo r loss represents the difference betw een the funds
advanced and/or obligations incurred and the expected
repayment. The latter is based on estimates of discounted
cash recoveries from the assets of assisted or failed th rift
institutions, net of all applicable estim ated liquidation
costs. Estimated cash recoveries also include dividends
and gains on sales from equity instrum ents acquired in
resolution transactions.

Cost Allocations Among Funds
Operating expenses not directly charged to the funds
are allocated to all funds administered by the FDIC using
workload-based-allocation percentages. These percent­
ages are developed during the annual corporate
planning process and through supplem ental functional
analyses.

In Septem ber 2000, the Financial Accounting Standards
Board (FASB) issued SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguish­
m ents of Liabilities; a replacement of SFAS No. 125."
This statem ent applies to securitization transactions where
the transferor has continuing involvem ent w ith the
transferred assets or the transferee. SFAS No. 140 is
e ffe ctive fo r transfers occurring after March 31, 2001.
However, disclosure requirem ents fo r existing
securitizations are effective for fiscal years ending after
December 15, 2000. FRF's disclosures for its securitiza­
tion transactions, w hich conform to the SFAS No. 140
requirements, are discussed in Note 4.
Other recent accounting pronouncem ents w e re evaluated
and deemed to be not applicable to the financial statements.

Related Parties
L im ite d P artnership E q u ity Interests. Former RTC

Postretirem ent Benefits O ther Than Pensions
The FDIC established an entity to provide the accounting
and administration of postretirem ent benefits on behalf
of the FRF, the BIF, and the SAIF. Each fund has fully paid
its liability for these benefits directly to the entity. The
FRF's prepaid or accrued postretirem ent benefit cost is
presented in the FRF's Statem ents of Financial Position.

Disclosure About Recent Accounting
Pronouncements
Statement of Financial Accounting Standards (SFAS) No. 138,
"Accounting for Certain Derivative Instruments and Certain
Hedging Activities, an amendm ent of SFAS No. 133,"
was issued in June 2000. For entities that adopted
SFAS No. 133, "A ccounting for Derivative Instrum ents
and Hedging A ctivities" prior to June 15, 2000, Statem ent
138 is effective for all fiscal quarters beginning after
June 15, 2000. SFAS N o.138 amends Statem ent 133
principally for certain issues relating to hedging transac­
tions. The adoption of these statem ents has no material
quantitative or qualitative impact on the Corporation's
S tatem ents of Financial Position, Incom e and
A ccum ulated Deficit, and Cash Flows.




receiverships w ere holders of lim ited partnership equity
interests as a result of various RTC sales programs that
included the National Land Fund, M ultiple Investor Fund,
N-Series, and S-Series programs. The m ajority of the
lim ited partnership equity interests have been transferred
from the receiverships to the FRF. These assets are
included in the "O th e r A ssets" line item in the FRF's
Statem ents of Financial Position.
The nature of related parties and a description of related
party transactions are discussed in Footnote 1 and dis­
closed throughout the financial statem ents and footnotes.

Reclassifications
Reclassifications have been made in the 1999 financial
statem ents to conform to the presentation used in 2000.

Restatem ent
The credit enhancem ent reserve included in the "Invest­
m ent in securitization related assets acquired from
receiverships" has been restated to conform w ith SFAS
No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." The change is due to recognizing real­
ized losses that represent an other-than-temporary decline
in fair value. As a result, the cost basis of the asset was

w ritten down to reflect these losses. Further, the unreal­
ized gains and losses on the credit enhancem ent reserve
w e re restated to adjust the cum ulative balance of
credit losses. The im pact of this restatem ent on the
January 1, 1999 accum ulated de ficit is a reduction of
$20.1 million.

Additionally, corrections w ere made to the "Contingent
liability for assistance agreem ents" to reverse amounts
that w ere erroneously calculated. The impact of this
restatem ent on the January 1, 1999 accumulated deficit
is a reduction of $4.4 million.

3. Receivables fro m T h rift Resolutions, N et
The thrift resolution process took different forms depending
on the unique facts and circumstances surrounding each
failing or failed institution. Payments for institutions that
failed w ere made to cover obligations to insured deposi­
tors and represent claims by the FRF against the receiver­
ships' assets. Payments to prevent a failure w ere made
to operating institutions w hen cost and other criteria
w ere met.
Assets held by the FDIC in its receivership capacity for
the form er FSLIC and SAIF-insured institutions are the
main source of repaym ent of the FRF's receivables from
th rift resolutions. As of December 31, 2000 and 1999,

FRF receiverships held assets w ith a book value of $712
million and $2.1 billion, respectively (including cash and
miscellaneous receivables of $493 million and $1.5 billion
at December 31, 2000 and 1999, respectively). The
estim ated cash recoveries from the management and
disposition of these assets that are used to derive the
allowance for losses are based in part on a statistical
sampling of receivership assets. These estim ated recov­
eries are regularly evaluated, but remain subject to
uncertainties because of potential changes in economic
conditions. These factors could cause the FRF's and
other claim ants' actual recoveries to vary from the level
currently estimated.

[Receivables from Thrift Resolutions, N et at December 31
Dollars

in T h o u s a n d s
2000

Assets from open th rift assistance

$

A llow an ce fo r losses

393,697

Receivables from closed th rifts

(371,557)

13,325

22,140

37,883,574

$

(53,656,376)

403,051

Net Receivables From Closed Thrifts

54,970,991

(37,480,523)

A llow an ce fo r losses




$

(371,557)

Net Assets From Open Thrift Assistance

Total

384,882

1999

1,314,615

416,376

$

1,336,755

70

FSLIC Resolution Fund
A ? - \ * '•»< ■>£<?

Representations and W arranties
The RTC provided guarantees, representations, and war­
ranties on approximately $108 billion in unpaid principal bal­
ance of loans sold and approximately $125 billion in unpaid
principal balance of loans under servicing right contracts that
had been sold. In general, the guarantees, representations,
and warranties on loans sold related to the completeness
and accuracy of loan documentation, the quality of the under­
writing standards used, the accuracy of the delinquency
status w hen sold, and the conformity of the loans with
characteristics of the pool in which they were sold. The
representations and warranties made in connection w ith the
sale of servicing rights were limited to the responsibilities of
acting as a servicer of the loans. Future losses on represen­
tations and warranties could be incurred over the remaining
life of the loans sold and could be in effect as long as 20 years.

a*T j

The FRF includes estim ates of corporate losses related to
the receiverships' representations and warranties as part
of the FRF's allowance fo r loss valuation. The allowance
fo r these estim ated losses was $1.6 million and $30 m il­
lion as of Decem ber 31, 2000 and 1999, respectively.
The contingent liability fo r representations and warranties
associated w ith loan sales that involved assets acquired
from assisted th rifts and term inated receiverships is
included in "Accounts payable and other liabilities"
($1.5 million and $4 million for 2000 and 1999, respec­
tively). Based on recent evaluations of the payment
history associated w ith these obligations and the number
of contract expirations anticipated in the near future,
the estim ate of the allowance indicated above, should
be su fficie n t to cover future exposure from these
obligations.

4. In vestm en t in S ec u ritiza tio n Related Assets A cquired fro m Receiverships
Through 1995, the RTC sold, through its mortgage-backed
securities securitization program, $42.4 billion of receiver­
ship, conservatorship, and corporate loans. These loans
w ere secured by various types of real estate including
residential homes, m ulti-fam ily dw ellings and commercial
properties. Each securitization transaction was accom­
plished through the creation of a trust w hich purchased
these loans and issued regular pass-through certificates
to the public through licensed brokerage houses. The
receiverships retained residual pass-through certificates
that w ere entitled to any remaining cash flo w s from the
trusts after satisfying the expenses of the trusts and the
obligations to regular pass-through holders.
To increase the likelihood of full and tim ely distributions
of principal and interest to regular certificate holders and
increase the marketability of the certificates, the various
rating agencies required the RTC to place a portion of the
proceeds from the sale of the regular certificates in credit
enhancement reserve or escrow accounts to cover future
losses from the loans underlying the regular certificates.
Additional protection for the regular certificate holders from
these losses was provided by a clause included in certain
Pooling and Servicing Agreements (PSA) stipulating that
losses experienced by the credit enhancement reserve
over the life of the transactions would be reimbursed from
proceeds expected from the residual certificates. A t the



end of 2000, 15 deals that were structured w ith PSA clauses
stipulating reimbursem ent from the proceeds of the
residual certificates.
In 1996 and 1998, the escrow accounts and residual
certificates w ere transferred from the receiverships to
the FRF for $5.7 billion and $1.4 billion, respectively. Both
transfers w ere o ffse t by am ounts owed by the receiver­
ships to the FRF. During 2000, the FRF received $413
million in proceeds from term inated securitization deals
and $910 million during 1999. Interest income earned on
investm ents in securitization related assets during 2000
w as $85.5 million and $104.2 million during 1999.
Realized gains and losses are recorded based upon the
difference betw een the proceeds at term ination of the
deal and the cost basis of the investment. This calculation is
perform ed fo r both the residual certificates and the credit
enhancem ent reserves. Additionally, realized losses are
recognized on the credit enhancement reserve for a decline
in fair value that is judged to be an other-than-temporary
impairment. Unrealized gains and losses are com puted
quarterly using a cash flow model that projects the estimated
fair values for each transaction based on a forecast of the
projected termination of each deal. This model is updated
w ith current data supplied by the trustees, w hich includes
prepaym ent speed, delinquency rates, and m arket pricing.

1Investm ent in Securitization Related Assets Acquired from Receiverships at December 3 1 , 2000
Dollars

j

in T h o u s a n d s

Cost
Credit enhancem ent accounts

$

Total

799,518

$

248,731

$

S

$ 1,356,025

501,150

Fair
Value

$

(43,645)

..$ " 1,004,604

(2,088)

252,419

556,507

Residual certifica tes

Unrealized
Holding
Losses

Unrealized
Holding
Gains

806,838

(45,733)

$ 1,811,442

I Investm ent in Securitization Related Assets Acquired from Receiverships at December 31, 1999
Dollars

in

Thousands

Cost
Credit enhancem ent accounts

$

Unrealized
Holding
Gains

1,473,172

$ ” 315^629”

871,901
$ 2,345,073

S 427,446

Fair
Value
T

111,817

Residual certifica tes
Total

Unrealized
Holding
Losses

! |7 4 T 5 2 5

0
$

(47,276)

983,718
$

2,725,243

5. Assets A cquired fro m Assisted T h rifts and Term inated Receiverships, N e t
The FRF's assets acquired from assisted th rifts and te rm i­
nated receiverships include: 1) assets the form er FSLIC
and the form er RTC purchased from failing or failed thrifts
and 2) assets the FRF acquired from receiverships and
purchased under assistance agreements. The methodology
to estim ate cash recoveries from these assets, w hich is
used to derive the related allowance fo r losses, is similar
to that for receivables from th rift resolutions (see Note 3).
The estimated cash recoveries are based upon a statistical

sampling of the assets but only include expenses for the
disposition of the assets to represent liquidating value.
The FRF recognizes revenue and expenses on these
acquired assets. Revenue consists primarily of proceeds
from interest earned on assets in liquidation, professional
liability claims, proceeds and/or settlem ents from conflicts
and criminal restitutions, and other liquidation income.
Expenses are recognized for the disposition and adminis­
tration of these assets.

Assets Acquired from Assisted Thrifts and Terminated Receiverships, N et at December 31
Dollars

in T h o u s a n d s

_________ ____________________
Assets acquired from assisted th rifts and term inated receiverships

2000

A llow an ce fo r losses




S

1999

107,617

$ " 148,584

(73,001)

$

(114,177)

34,616

$

34,407

T2

I SI 1C ({('solution Fund

6. O th e r A ssets, N et

O ther Assets, N et at December 31
Dollars

in

Thousands

2000
Accounts receivable

1999

4,815

7,159

309

0

Lim ited partnership eq uity interests

11,001

29,589

Total

16,125

36,748

Due from FDIC fund-BIF

7. Liabilities fro m T h rift Resolutions
Liabilities from th rift resolutions decreased by $223.5 mil­
lion as a result of eliminating the reserve estim ated for
the future costs associated w ith liquidating the assets of
failed thrifts. In prior years, this reserve was appropriate
because of large am ounts of assets held in liquidation
and funding concerns faced by the form er RTC in the mid
and latter 1990s. Because of the rapid w ind-dow n of the
FRF-RTC activity over the past years, funding concerns
have diminished. The net e ffe ct in 2000 of this change
in estim ate is a decrease to the accumulated deficit of
$223.5 million.

In addition, the FSLIC issued prom issory notes and
entered into assistance agreem ents to prevent the
default and subsequent liquidation of certain insured th rift
institutions. These notes and agreem ents required the
FSLIC to provide financial assistance over tim e. Pursuant
to FIRREA, the FRF assumed these obligations. Notes
payable and obligations fo r assistance agreem ents are
presented in the "Liabilities from th rift resolutions" line
item.

8. C o n tin g en t Liabilities for:
Litigation Losses

Additional Contingency

The FRF records an estim ated loss for unresolved legal
cases to the extent those losses are considered probable
and reasonably estimable. In addition to the amount
recorded as probable, the FDIC has determ ined that
losses from unresolved legal cases totaling $10 million
are reasonably possible.

In U n ite d S ta te s v. W in s ta r Corp., 518 U.S. 839 (1996),
the Supreme Court held that when it became im possible
fo llo w in g the e nactm ent of FIRREA in 1989 fo r the
Federal Home Loan Bank Board to perform certain agree­
m ents to count g oodw ill to w a rd regulatory capital, the
p la in tiffs w e re e ntitled to recover damages from the
United States. To date, approximately 120 lawsuits have
been filed against the United States based on alleged
breaches of these agreem ents (Goodwill Litigation).




On July 23, 1998, the U.S. Treasury determined, based
on an opinion of the DOJ's Office of Legal Counsel (OLC)
dated July 22, 1998, that the FRF is legally available to
satisfy all judgm ents and settlem ents in the Goodwill
Litigation involving supervisory action or assistance
agreements. The U.S. Treasury further determ ined
that the FRF is the appropriate source of funds for
payments of any such judgm ents and settlem ents.
The OLC opinion concluded that the nonperformance of
these agreem ents was a contingent liability that was
transferred to the FRF on A ugust 9, 1989, upon the dis­
solution of the FSLIC. Under the analysis set forth in the
OLC opinion, as liabilities transferred on August 9, 1989,
these contingent liabilities for future nonperformance of
prior agreem ents w ith respect to supervisory goodwill
w ere transferred to the FRF-FSLIC, w hich is that portion
of the FRF encompassing the obligations of the form er
FSLIC. The FRF-RTC, w hich encompasses the obliga­
tions of the form er RTC and was created upon the te rm i­
nation of the RTC on December 31, 1995, is not available
to pay any settlem ents or judgm ents arising out of the
Goodwill Litigation.
The lawsuits comprising the Goodwill Litigation are
against the United States and as such are defended by
the DOJ. On January 18, 2001, the DOJ again informed
the FDIC that it is "unable at this tim e to provide a reason­
able estim ate of the aggregate loss to the FRF from the

120 W instar-related cases." The DOJ notes that this
uncertainty arises, in part, from the existence of signifi­
cant unresolved issues pending at the appellate or trial
court level, as w ell as the unique circumstances of each
case.
The FDIC believes that it is probable that additional
amounts, possibly substantial, may be paid from the
FRF-FSLIC as a result of judgm ents and settlem ents in
the Goodwill Litigation. Flowever, based on the response
from the DOJ, the FDIC is unable to estim ate a range
of loss to the FRF-FSLIC from the Goodwill Litigation,
or determ ine w hether any such loss w ould have
a material e ffe ct on the financial condition of the
FRF-FSLIC.
Section 110 of the Departm ent of Justice Appropriations
Act, 2000 (Public Law 106-113, Appendix A, Title I, 113
Stat. 1501A-3, 1501A-20) provides to the FRF-FSLIC such
sums as may be necessary for the payment of judgm ents
and com prom ise settlem ents in the Goodwill Litigation,
to remain available until expended. Even if the Goodwill
Litigation judgm ents and com prom ise settlem ents w ere
to exceed other available resources of the FRF-FSLIC,
an appropriation is available to pay such judgm ents and
settlem ents. In these circumstances, any liabilities for
the Goodwill Litigation should have no material impact
on the financial condition of the FRF-FSLIC.

9. In te res t on Advances and S ubrogated Claim s
During 2000, the FRF received $68.8 million in cash from
RTC receiverships for interest on claims owed RTC arising
out of th rift failures. No accrual was previously recog­
nized on these amounts due to the uncertainty surrounding
the receiverships' ability to pay the interest due on the




Corporate claim. A t year end 2000, the FRF accrued
$90.0 million for interest deemed likely to be received
w ithin the next year from receiverships that have paid
higher priority claims in full.

10. Provision fo r Losses

The provision fo r losses was a negative $439 million and
a negative $278 million fo r 2000 and 1999, respectively.
In 2000, the negative provision was primarily due to:
1) the elimination of the reserve fo r the estimated
future costs associated w ith liquidating the assets of
failed thrifts of $223.5 million (see Note 7) and 2) cash

recoveries from assistance agreem ents of $86 million for
net tax benefits sharing collections and $36 million for the
redem ption of stock warrants. The negative provision in
1999 resulted primarily from decreased losses expected
for assets in liquidation. The follow ing chart lists the
major com ponents of the negative provision fo r losses.

Provision for Losses for the Years Ended December 31
Dollars

in T h o u s a n d s
2000

1999

Valuation Adjustments:
Open th rift assistance

$

(38,049)

$

10,092

(86,001)

Tax benefits sharing recoveries

(110,061)

(14,585)

Total Valuation Adjustments

0

(433,028)

M iscellaneous receivables

16,357

(65,359)

Investm ent in securitization related assets acquired from receiverships

15,907

0

Assets acquired from assisted th rifts and te rm in ate d receiverships

95,000

(5,534)

Estim ated cost associated w ith liquida tin g assets

(284,699)

(223,500)

Closed th rifts

(257,404)

Contingent Liabilities Adjustments:
Litigation losses

(5,614)

(20,863)

Total Contingent Liabilities Adjustments

(5,614)

(20,863)

Total

$

(438,642)

S

(278,267)

11. Resolution E quity

As stated in the Legislative History section of Note 1, the
FRF is comprised of tw o distinct pools: the FRF-FSLIC
and the FRF-RTC. The FRF-FSLIC consists of the assets
and liabilities of the form er FSLIC. The FRF-RTC consists
of the assets and liabilities of the form er RTC. Pursuant
to legal restrictions, the tw o pools are maintained sepa­
rately and the assets of one pool are not available to
satisfy obligations of the other.




The follow ing table show s the contributed capital, accumulated deficit, and resulting resolution equity for each
pool,

Resolution Equity at December 31, 2000
Dollars

in

Thousands

FRF-FSLIC
Contributed capital - beginning

$

M iscellaneous paym ents/adjustm ents

$

87,171,499

$

131,328,499

25

(48)

(23)

0

Less: U.S. Treasury repayments

(394,593)

(394,593)

0

Accumulated deficit, net
$

(82,529,627)

(124,267,778)

455,417

455,417

(41,738,151)

Less: Unrealized gain on available-for-sale securities

129,484,926

0

Accum ulated d e fic it

(1,448,957)

85,327,901

(41,738,151)

Contributed capital - ending

(1,448,957)

44,157,025

Less: REFCORP paym ents

Total

44,157,000 '

FRF
Consolidated

FRF-RTC

(82,074,210)

(123,812,361)

2,418,874

$

3,253,691

$

5,672,565

1 Resolution Equity at December 31, 1999
Dollars

in

Thousands

FRF-FSLIC
Contributed capital - beginning

$

M iscellaneous paym ents/adjustm ents

44,156,000

FRF
Consolidated

FRF-RTC
$

91,334,742

$

135,490.742

1,000

4,531

5,531

Less: U.S. Treasury repayments

0

(4,167,774)

(4,167,774)

Contributed capital - ending

44,157,000

87,171,499

131,328,499

(41,925,270)

(83,074,330)

(124,999,600)

0

380,170

380,170

(41,925,270)

(82,694,160)

(124,619,430)

Accum ulated d e fic it
Less: Unrealized gain on available-for-sale securities
Accumulated deficit, net
Total

$

Contributed Capital
To date, the FRF-FSLIC and the fo rm e r RTC received
$43.5 billion and $60.1 billion from the U.S. Treasury,
respectively. These payments w e re used to fund losses
from th rift resolutions prior to July 1, 1995. Additionally,
the FRF-FSLIC issued $670 million in capital certificates
to the FICO and the RTC issued $31.3 billion of these
instrum ents to the REFCORP. FIRREA prohibited the
paym ent o f dividends on any of these capital certificates.
Through Decem ber 31, 2000, as described in Note 1, the



2,231,730

S

4,477,339

$

6,709,069

FRF-RTC has returned $4,556 billion to the U.S. Treasury
and made payments of $1.4 billion to the REFCORP.
These actions serve to reduce contributed capital.

Accumulated Deficit
The accumulated d eficit represents the cumulative
excess of expenses over revenue fo r activity related to
the form er FSLIC and the form er RTC ($29.7 billion and
$87.9 billion w ere brought forw ard from the FSLIC and
RTC, respectively).

FSLIC Resolution Fund

12. Pension Benefits, Savings Plans, and A ccrued A nnual Leave
Eligible FDIC employees (permanent and term employees
w ith appointm ents exceeding one year) are covered by
either the Civil Service Retirement System (CSRS) or the
Federal Employees Retirement System (FERS). The
CSRS is a defined benefit plan, w hich is o ffse t w ith the
Social Security System in certain cases. Plan benefits are
determ ined on the basis of years of creditable service and
compensation levels. The CSRS-covered employees also
can contribute to the tax-deferred Federal Thrift Savings
Plan (TSP).
The FERS is a three-part plan consisting of a basic defined
benefit plan that provides benefits based on years of
creditable service and compensation levels, Social Security
benefits, and the TSP. Autom atic and matching employer
contributions to the TSP are provided up to specified
am ounts under the FERS.

Although the FRF contributes a portion of pension bene­
fits fo r eligible employees, it does not account for the
assets of either retirem ent system . The FRF also does
not have actuarial data fo r accumulated plan benefits
or the unfunded liability relative to eligible employees.
These am ounts are reported on and accounted for
by the U.S. O ffice of Personnel Management.
Eligible FDIC employees also may participate in a FDICsponsored tax-deferred 401 (k) savings plan w ith matching
contributions. The FRF pays its share of the em ployer's
portion of all related costs.
The FRF's pro rata share of the Corporation's liability to
employees fo r accrued annual leave is approximately
$5.2 million and $6.9 million at Decem ber 31, 2000
and 1999, respectively.

I Pension Benefits and Savings Plans Expenses for the Years Ended December 31
Dollars

in T h o u s a n d s

2000
Civil Service R etirem ent System

$

1,152

1999
$

1,367

Federal Employees R etirem ent System (Basic Benefit)

3,708

4,687

FDIC Savings Plan

2,186

2,619

Federal T h rift Savings Plan

1,408

1,767

T u i.il




$

8,454

$

10,440

1 3 . P o s tre tire m e n t B e n e fits O th e r T h a n P ensions

The FDIC provides certain dental and life insurance cover­
age fo r its eligible retirees, the retirees' beneficiaries and
covered dependents. Retirees eligible for life insurance
coverage are those w ho have qualified due to: 1) im m edi­
ate enrollm ent upon appointm ent or five years of partici­
pation in the plan and 2) e ligibility fo r an im m ediate
annuity. Dental coverage is provided to all retirees
eligible fo r an im m ediate annuity.

The life insurance program, underw ritten by Metropolitan
Life Insurance Company, provides basic coverage at no
cost to retirees and allows converting optional coverages
to direct-pay plans. Dental care is u n d e rw ritten by
Connecticut General Life Insurance Company and provides
coverage at no cost to retirees.

I Postretirem ent Benefits Other Than Pensions
Dol l ar s

f

in T h o u s a n d s
2000

1999

Funded Status at December 31

Fair value of plan assets*
Less: Benefit obligation

$

Over/(Under) Funded Status of the Plans

$

Prepaid (accrued) postretirement benefit cost recognized
in the Statements of Financial Position

15,921

$

14,994
16,130

938

$

(1,136)

$

347

$

(1,136)

$

...552....
232
232

$

563
202
202

14,985

Expenses and Cash Flows for the Period Ended December 31

Net periodic benefit cost
Employer contributions
Benefits paid
Weighted-Average Assumptions at December 31

Discount rate

5.25%

4.50%

Expected return on plan assets
Rate of compensation increase

5.25%
6.30%

4.50%
3.00%

* Invested in U Treasury obligations.
.S.

Total dental coverage trend rates w ere assumed to be 7% per year, inclusive of general inflation. Dental costs w ere
assumed to be subject to an annual cap of $2,000.




14 C o m m itm en ts

Letters of Credit

Leases

The RTC had adopted special policies that included honor­
ing outstanQing conservatorship and receivership collater­
alized letters of credit. This enabled the RTC to minimize
the im pact of its actions on capital markets. In m ost
cases, these letters of credit w ere issued by th rifts that
later failed and w ere used to guarantee tax-exem pt bonds
issued by state and local housing authorities or other
public agencies to finance housing projects fo r low
and m oderate incom e individuals or fam ilies. As of
December 31, 2000 and 1999, securities pledged as col­
lateral to honor these letters of credit totaled $7.5 million
and $7.6 million, respectively. The FRF estim ated corpo­
rate losses related to the receiverships' letters of credit
as part of the allowance for loss valuation. The allowance
fo r these losses was $2.3 million and $1.1 million as of
December 31, 2000 and 1999, respectively.

The FRF's allocated share of the FDIC's lease com m it­
m ents totals $14.2 million fo r future years. The lease
agreem ents contain escalation clauses resulting in adjust­
ments, usually on an annual basis. The allocation to the
FRF of the FDIC's future lease com m itm ents is based
upon current relationships of the w orkloads among the
FRF, the BIF, and the SAIF. Changes in the relative w o rk­
loads could cause the am ounts allocated to the FRF in
the future to vary from the am ounts show n below. The
FRF recognized leased space expense of $5.0 million
and $7.2 million for the years ended Decem ber 31, 2000
and 1999, respectively.

Lease Com m itm ents
Dollars

in

Thousands

2001

2002

2003

2004

2005

2006/Thereafter

$ 3,938

$ 3,778

$ 2,628

$1,507

$1,141

$1,203




15. C o n centratio n o f C red it Risk

As of December 31, 2000, the FRF had gross receivables
from th rift resolutions totaling $38.3 billion, gross assets
acquired from assisted thrifts and terminated receiverships
totaling $107.6 million, and an investm ent in securitization
related assets acquired from receiverships totaling $1.8
billion. The allowance fo r loss against receivables from
th rift resolutions totaled $37.8 billion, and the allowance
against the assets acquired fro m assisted th rifts and
term inated receiverships totaled $73 million.

Cash recoveries may be influenced by econom ic condi­
tions. Similarly, the value of the investm ent in securitiza­
tion related assets acquired from receiverships can be
influenced by the econom y of the area relating to the
underlying loans and other assets. Accordingly, the FRF's
maximum exposure to possible accounting loss is the
recorded (net of allowance) value and is also shown in
the table below.

Concentration of Credit Risk at December 31, 2000
Dollars

in

Millions
Southeast

Southwest

Northeast

Midwest

Central

West

Total

Receivables from th rift resolutions,
net

$

18

$

15

$

42

$

4

$

36

$

301

$

416

A ssets acquired from assisted th rifts
and te rm in ate d receiverships, net

0

34

1

0

0

0

35

Investm ent in securitization related
assets acquired from receiverships
Total

217

342
S

360

$

266

268
$

311

65
$

69

53
S

866

1,811

89

$ 1,167

$ 2,262

16. Disclosures A b o u t th e Fair Value o f Financial Instrum ents

Cash equivalents are short-term , highly liquid investm ents
and are show n at current value. The carrying am ount of
short-term receivables and accounts payable and other
liabilities approximates their fair m arket value. This is
due to their short maturities or comparisons w ith current
interest rates.
The net receivables fro m th rift resolutions prim arily
include the FRF's subrogated claim arising from payments
to insured depositors. The receivership assets that w ill
ultim ately be used to pay the corporate subrogated claim
are valued using discount rates that include consideration
of market risk. These discounts ultim ately a ffect the
FRF's allowance fo r loss against the net receivables from



th rift resolutions. Therefore, the corporate subrogated
claim indirectly includes the e ffe ct of discounting and
should not be view ed as being stated in term s of nominal
cash flow s.
Although the value of the corporate subrogated claim is
influenced by valuation of receivership assets (see Note 3),
such receivership valuation is not equivalent to the valua­
tion of the corporate claim. Since the corporate claim
is unique, not intended for sale to the private sector,
and has no established market, it is not practicable to
estim ate its fair market value.

FSLIC Resolution Fund

“

I

The FDIC believes that a sale to the private sector of the
corporate claim w ould require indeterm inate, but substan­
tial, discounts fo r an interested party to profit from these
assets because of credit and other risks. In addition, the
tim ing of receivership payments to the FRF on the subro­
gated claim does not necessarily correspond w ith the
tim ing o f collections on receivership assets. Therefore,
the e ffe ct of discounting used by receiverships should
not necessarily be view ed as producing an estim ate of
market value for the net receivables from thrift resolutions.
The majority o f the net assets acquired from assisted
th rifts and term inated receiverships (except real estate)
is com prised of various types o f financial instrum ents,
including investm ents, loans, and accounts receivable.
Like receivership assets, assets acquired from assisted

th rifts and term inated receiverships are valued using
discount rates that include consideration of m arket risk.
However, assets acquired from assisted th rifts and term i­
nated receiverships do not involve the unique aspects
of the corporate subrogated claim, and therefore the
discounting can be view ed as producing a reasonable
estim ate of fair market value.
The investm ent in securitization related assets acquired
from receiverships is adjusted to fair value at each report­
ing date using a valuation model that estim ates the
present value of estim ated expected future cash flow s
discounted fo r the various risks involved, including both
m arket and credit risks, as w ell as other attributes of the
underlying assets (see Note 4).

17. S up plem entary In fo rm a tio n R elating to th e S ta te m en ts o f Cash Flows

I Reconciliation of Net Income to Net Cash Provided by Operating Activities for the Years Ended December 31 I
Dollars

in T h o u s a n d s
2000

Net Income

$

1999

731,822

371,753

$

Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities
Income Statement Items:
Provision fo r losses
Prior year appropriation adjustm ents

(438,642)

(278,267)

(48)

4,531

1,282,069

467,338

(38,895)

14,289

5,324

13,788

Change in Assets and Liabilities:
Decrease in receivables from th rift resolutions
(lncrease)/D ecrease in securitization related assets acquired from receiverships
Decrease in assets acquired from assisted th rifts and term in ate d receiverships
Decrease in other assets
(Decrease)/lncrease in accounts payable and other lia b ilitie s
(Decrease)/lncrease in lia b ilitie s from th rift resolutions
Increase in conting ent lia b ilitie s fo r litig a tio n losses
Increase in conting ent lia b ilitie s fo r assistance agreem ents
Net Cash Provided by Operating Activities




85,922

6,092

(30,943)

34,710

(221,944)

92,414

7,215

3,968

105

0

S 1,381,985

$

730,616

Com ptroller General
o f the United States
United States General Accounting O ffice
Washington, D.C. 20548

To the Board o f Directors
Federal Deposit Insurance Corporation

We have audited the statements of financial position as o f December 51, 2000 and
1999, for the three funds administered by the Federal Deposit Insurance Corporation
(FDIC), the related statements o f income and fund balance (accumulated deticit),
and the statements o f cash flows for the years then ended. In our audits o f the Bank
Insurance Fund (BIF), the Savings Association Insurance Fund (SAIF), and the
FSLIC Resolution Fund (FRF), we found
•

the financial statements o f each fund are presented fairly in conformity with
U.S. generally accepted accounting principles;

•

although certain internal controls should be improved, FDIC had effective
internal control over financial reporting (including safeguarding o f assets) and
compliance with laws and regulations; and

•

no reportable noncompliance w ith the laws and regulations that we tested.

The following sections discuss our conclusions in more detail. They also present
information on (1) the scope o f our audits, (2) a reportable condition1 related to
information system general control weaknesses noted during our 2000 audits,
(3) the l'uIure o f FRF, and (4) our evaluation o f FDIC’s comments on a draft o f this
report.
Opinion on Bank Insurance Fund’s Financial Statements

The financial statements including the accompanying notes present fairly, in all
material respects, in conformity with U.S. generally accepted accounting principles,
the Bank Insurance Fund’s financial position as o f December 31, 2000 and 1999, and
the results o f its operations and its cash flows for the years then ended.
Opinion on Savings Association Insurance Fund’s Financial Statements

The financial statements including the accompanying notes present fairly, in all
material respects, in conformity with U.S. generally accepted accounting principles,
the Savings Association Insurance Fund’s financial position as of December 51, 2000
and 1999, and the results o f its operations and its cash flows for the years then ended.

1 Reportable conditions involve m atters com in g to the auditor’s attention that, in the auditor’s judgment,
should be com m unicated because they represent significant deficiencies in the design or operation o f
internal control, and could adversely affect F D IC ’s ability to meet, the control objectives described in
this report.







Opinion on FSLIC Resolution Fund’s Financial Statements

The financial statements including the accompanying notes present fairly, in all
material respects, in conformity with U.S. generally accepted accounting principles,
the FSLIC Resolution Fund’s financial position as o f December 51, 2000 and 1999,
and the results o f its operations and its cash flows for the years then ended.
As discussed in note 8 o f FRFs financial statements, a contingency exists from
approximately 120 lawsuits filed in the United States Court o f Federal Claims
concerning the counting o f goodwill assets as part o f regulatory capital. FDIC has
concluded that it is probable that FRF will be required to pay possibly substantial
amounts as a result o f future judgments and settlements. FDIC is currently unable
to estimate a range o f loss to FRF, or determine whether any such loss would have
a material effect on the financial condition o f FRF. However, funds to pay such
judgments or compromise settlements from these goodwill litigation cases are
made available to the FRF by an indefinite, permanent appropriation as provided
by Section 110 o f the Department of Justice Appropriations Act, 2000.
Opinion on Internal Control

Although certain internal controls should be improved, FDIC management maintained,
in all material respects, effective internal control over financial reporting (including
safeguarding assets) and compliance as o f December 51, 2000, that provided reason­
able assurance that misstatements, losses, or noncompliance, material in relation to
the FDIC’s financial statements would be prevented or detected on a timely basis.
FDIC management asserted that its internal control was effective based on criteria
established under 31 U.S.C. 3512 (Federal Managers’ Financial Integrity Act —
FMFIA).
In making its assertion, FDIC management also fairly stated the need to improve
certain internal controls.
Our work identified weaknesses in FDIC’s Information system general controls, as
described as a reportable condition in a later section o f this report. The weakness
in information system general controls, although not considered material, represents
a significant deficiency in the design or operations o f internal control that could
adversely affect FDIC’s ability to meet its internal control objectives. Although the
weakness did not materially affect the 2000 financial statements, misstatements may
nevertheless occur in other FDIC-reported financial information as a result of the
internal control weakness.
Compliance With Laws and Regulations

Our tests for compliance with selected provisions o f law s and regulations disclosed
no instances o f noncompliance that would be reportable under U.S. generally accept­
ed government auditing standards. However, the objective o f our audits was not to
provide an opinion on overall compliance with laws and regulations. Accordingly,
we do not express such an opinion.
Objectives, Scope, and Methodology

FDIC’s management is responsible for (1) preparing the annual financial statements
in conformity' with U.S. generally accepted accounting principles, (2) establishing,
maintaining, and assessing internal control to provide reasonable assurance that the
broad control objectives o f FM FIA are met, and (3) complying with applicable laws
and regulations.

We arc responsible for obtaining reasonable assurance about whether (1) the finan­
cial statements are presented fairly, in all material respects, in conformity with U.S.
generally accepted accounting principles, and (2) management maintained effective
internal control, the objectives o f which are
•

financial reporting - transactions are properly recorded, processed, and summa­
rized to permit the preparation o f financial statements in conformity with U.S.
generally accepted accounting principles, and assets are safeguarded against loss
from unauthorized acquisition, use, or disposition, and

•

compliance with laws and regulations - transactions are executed in accordance
with laws and regulations that could have a direct and material effect on the
financial statements.

We are also responsible for testing compliance with selected provisions of laws and
regulations that have a direct and material effect on the financial statements.
In order to fulfill these responsibilities, we
•

examined, on a test basis, evidence supporting the amounts and disclosures in the
financial statements;

•

assessed the accounting principles used and significant estimates made by
management;

•

evaluated the overall presentation o f the financial statements;

•

obtained an understanding o f internal control related to financial reporting,
including safeguarding assets, and compliance with laws and regulations, including
the execution o f transactions in accordance with management’s authority;

•

tested relevant internal control over financial reporting, including safeguarding
assets, and compliance, and evaluated the design and operating effectiveness
o f internal control;

•

considered FDIC’s process for evaluating and reporting on internal control based
on criteria established by FMFIA; and

•

tested compliance with selected provisions o f the Federal Deposit Insurance Act,
as amended and the Chief Financial Officers Act o f 1990.

We did not evaluate all internal controls relevant to operating objectives as broadly
defined by FMFIA, such as those controls relevant to preparing statistical reports and
ensuring efficient operations. We limited our internal control testing to controls over
financial reporting and compliance. Because o f inherent limitations in internal con­
trol, misstatements due to error or fraud, losses, or noncompliance may nevertheless
occur and not be detected. We also caution that projecting our evaluation to future
periods is subject to the risk that controls may become inadequate because o f changes
in conditions or that the degree o f compliance with controls may deteriorate.
We did not test compliance with all laws and regulations applicable to FDIC. We lim­
ited our tests o f compliance to those deemed applicable to the financial statements
for the year ended December 51, 2000. We caution that noncompliance may occur
and not be delected by these tests and that such testing may not be sufficient for
other purposes.
YVe conducted our audits from July 2000 through April 6, 2001. We performed our
work in accordance with U.S. generally accepted government auditing standards.
FDIC provided comments on a draft o f this report. They are discussed and evaluated
in a later section of this report.







Reportable Condition

As part o f the financial statement audits, w e reviewed FDIC’s information systems
general controls. The primary objectives o f information system general controls are
to safeguard data, protect computer application programs, prevent system software
from unauthorized access, and ensure continued computer operations in case of
unexpected Interruption. Information system general controls include corporatewide
security program planning and management, access controls, system software, appli­
cation software development and change controls, segregation o f duties, and service
continuity controls. The effectiveness o f application controls2 depends on the effec­
tiveness o f general controls. Both information system general controls and application
controls must be effective to help ensure the reliability, appropriate confidentiality,
and availability o f critical automated Information.
In performing our tests, we identified weaknesses in FDIC’s corporatewide security
program, access controls, segregation o f duties, system software, and service continu­
ity. As we have reported to FDIC in 1998 and 1999, ’ the underlying cause o f many of
these general control weaknesses is rooted in the lack o f a fully implemented and
effective corporatewide security' program. This critical area is generally the foundation
o f an entity’s security control, and reflects the entity’s commitment to addressing
security risks over the long term. In our 1999 report, we provided FDIC with recom­
mended corrective actions and acknowledged that it takes a significant and sustained
effort by FDIC management to establish an effective corporatewide security program.
In response, FDIC management stated its commitment to implement a strong infor­
mation system environment During 2000, we found that FDIC developed plans for
correcting many o f the weaknesses we identified, however, implementation o f these
plans had not occurred as o f December 51, 2000.
The weaknesses in information system general controls can significantly impair
the effectiveness o f all FDIC’s application controls, including financial systems. We
considered the effect o f the information system general control weaknesses and
determined that other management controls mitigated their effect on the financial
statements. Because o f their sensitive nature, the details surrounding these weaknesses
are being communicated to FDIC management, along with our recommendations for
corrective actions, through separate correspondence.
In addition to these weaknesses, we identified less significant matters involving
FDIC’s system of internal accounting control that we will be reporting in separate
correspondence to FDIC management.
Future o f FRF

FDIC, as administrator o f FRF, is responsible for completing the liquidation of the
assets and liabilities o f the former Federal Savings and Loan Insurance Corporation
(FSLIC) and Resolution Trust Corporation (RTC).4 FRF will continue operations until
all o f its assets are sold or otherwise liquidated and all of its liabilities are satisfied. As

2 Application controls consist o f the structure, policies, and procedures that apply to separate, individual
systems, such as accounts payable and general led ger systems.
3Because o f their sensitive nature, in 1998 and 1999 w e comm unicated to FD IC m anagem ent the details
surrounding the weaknesses and vulnerabilities w e identified, along w ith our recom m endations for
corrective action, through separate correspondence.
4 On January 1, 1996, F R F assumed responsibility fo r all rem aining assets and liabilities o f the form er
RTC.

Table 1:
FRF’s Assets and Liabilities as of January 1, 1996, and December 5 1 , 2000
Dollars in Billions
Jan. 1, 1996
Cash and cash equivalents

$

Assets not yet liquidated

1.5

Dec. 51, 2000

Percent
Increase/(Decrease)

$

5.5

155

2.5

(85)

Total Assets

$

15.9
15.4

$

5.8

(62)

Total Liabilities

$

11.2

$

0.1

(99)

shown in lable 1, since 1996 FRF has had a significant decline in lolal assets and
liabilities and, in particular, in the assets not yet liquidated. FDIC expects continued
rapid decline in FRF assets. Through December 51, 2000, FRF has returned $4.6 billion
to the U.S. Treasury and has made $1.4 billion o f payments to the Resolution Funding
Corporation (REFCORP).5
As described in notes 3 and 4 o f FRF’s financial statements, two major components of
the assets not yet liquidated are receivables from thrift resolutions (about $0.5 bil­
lion) and investments in securitization related assets (about $1.8 billion). Most o f the
receivables from thrift resolutions represent amounts advanced and/or obligations
incurred for resolving troubled and failed insured thrifts. FDIC manages and disposes
the assets from failed thrifts through receiverships.*’ Most o f the remaining assets in
these receiverships are cash. FDIC is pursuing the complete liquidation o f these
receiverships during the year 2001 except for those receiverships involved in goodwill
litigation.7 The securitization related assets had a weighted-average remaining lir e
of less than I year on December 51, 2000.
The operations o f FRF will eventually meet a point where maintaining a separate
liquidation entity may not be cost-effective. At that time, there may be some assets
that are not fully liquidated; pending legal liabilities that may lake years to settle;
and certain assets the disposal of which may not be in the best interest o f the United
Stales government. FDIC has a research and evaluation effort underway to identify
the remaining issues that need to be resolved, along with possible disposition strate­
gies, in order to dissolve FRF as contemplated by the Federal Deposit Insurance Act
Also, due lo the unique nature o f several o f these assets and liabilities, FDIC antici­
pates that its effort will include the development o f new disposal plans for its
remaining assets and liabilities.

5 T h e RTC Com pletion Act required FDIC to return to the U.S. Treasury any funds that w ere transferred to
RTC pursuant to the RTC Com pletion Act but not needed by RTC. Th e RTC Com pletion Act m ade available
$18.3 billion o f additional funding. Prior to RTC’s term ination on Decem ber 31,1995, RTC drew down
$4.6 billion o f the $18.3 billion m ade available by the RTC Com pletion Act. T h e full amount o f the appro­
priation transferred to RTC lias been fully repaid. After p roviding for all outstanding RTC liabilities, FDIC
m ust also transfer the net proceeds from the sale o f RTC -related assets to the REFCORP. Any funds trans­
ferred to RE FC O R P are used to pay the interest on R E F C O R P bonds issued
to provide funding fo r the early RTC resolutions.
6 T h e assets held by receiverships, and the claim s against them, are accounted fo r separately from FRF’s
assets and liabilities to ensure that liquidation proceeds are distributed in accordance w ith applicable
laws and regulations.
7 Sec note 8 o f F R F ’s financial statements fo r a description o f good w ill litigation and its impact.







Following are some o f the issues and items remaining in FRF:
•

Over 900 criminal restitution orders are outstanding, in the amount o f approximately
$600 million, which w ill remain open for nearly 20 years. The actual amount that
will ultimately be collected is unknown.8 During 2000, FDIC collected $3.2 million
from these outstanding restitution orders.

•

Over 90 outstanding items, w hich include litigation claims and judgments, were
obtained against officers and directors and other professionals responsible for
causing thrift losses with an estimated recoverable value o f approximately
$80 million. These judgments are renewable based on individual state law.
Generally, the renewals vary from 5 to 10 years and are renewable more than
once.9 FDIC recovered $51.9 million in claims during 2000.

•

Numerous assistance agreements entered into by the former FSLIC will remain
open for many years as those assisted institutions share with FRF their tax savings
that result from the tax free nature o f FSLIC assistance.11 In 2000, FRF collected
1
over $80 million as its share o f these tax savings.

•

Various litigation cases are outstanding. FRF is involved in approximately 700
cases.1 The most numerous, and substantial in terms o f liability involve goodwill
1
litigation.12 To date, approximately 120 lawsuits have been filed against the United
States government. Recause o f appeals and differences in awarding damages in
the cases thus far, the final outcome in the cases and the amount o f any possible
damages remain uncertain. There are also litigation cases in which FRF is the
plaintiff for itself, or is acting in a fiduciary manner on behalf of the receiverships
resulting from failed financial institutions. These pending cases may take years to
settle, and many o f the goodwill cases are still pending from the early 1990s.

•

Potential liabilities may exist due to representations and warranties made to support
the sale o f loans and servicing rights.1 These liabilities could be incurred over the
5
remaining life o f the loans, which could be as long as 20 years.

Only when the remaining asset and liability issues, some o f which are highlighted
above, are resolved can FRF be formally dissolved. FDIC is considering whether
seeking enabling legislation or other measures may be needed to dissolve the
remaining FRF assets and liabilities.

8 U.S. generally accepted accounting principles state that contingencies that result in gains are usually
not reflected in the financial statements to avoid recogn izin g revenue prior to its realization.
9 See footnote 8 o f this reporl.
10 See footnote 8 o f this report.
11 W hereas F R F is involved in approxim ately 700 cases, F D IC records losses fo r only those eases w h ere
the contingent loss is considered probable and reasonably estimable. FD IC also discloses contingent
losses that are reasonably possible. See note 8 o f F R F ’s financial statements.
12 See footnote 7 o f this report.
15 See note 3 o f F R F ’s financial statements fo r a description o f representations and warranties.

FDIC Comments and O ur Evaluation

In commenting on a draft o f this report, FDIC acknowledged the information system
weakness, and stated a commitment to continue its efforts to strengthen its informa­
tion security program and to incorporate GAO’s recommendations into its security
plans for 2001. We plan to evaluate the effectiveness on FDIC’s corrective actions in
information security as part o f our 2001 audit o f FDIC’s financial statements and
internal control.
FDIC also stated that it will continue to monitor the other matters discussed in our
report, including goodwill litigation cases.




David M. Walker

Comptroller General
Of the United States
April 6, 2001







Key

Statistics




Num ber and Deposits of BIF-Insured Banks Closed
Because of Financial Difficulties, 1934 through 2000

D o l l a r s in T h o u s a n d s

D eposits of
Insured Banks

N u m b e r of
Insured Banks

W ithout
disbursements
TotalTotal
by FDIC

With
disbursements
by FDIC

Assets

$4,298,814

$210,347,094

$632,470,043

3 1 1 ,9 5 0
1,268,151
3 3 5 ,0 7 6
26,8 00
1 68,228
6 3 2 ,7 0 0

3 7 8 ,08 8,4 72
1 ,423,819
3 70 ,40 0
25,921
182,502
7 53 ,02 4

1 ,236,488
3 ,1 3 2,1 77
36,893,231
5 3,7 51 ,76 3
1 4,4 73 ,30 0

1 ,392,140
3,5 3 9,3 73
4 4,1 97 ,00 9
6 3,1 19 ,87 0
15,6 60 ,80 0

24,090,551
2 4,9 31 ,30 2
6 ,2 8 1,5 00
6 ,4 7 1,1 00
8,059,441

24,090,551
24,9 31 ,30 2
6 ,2 8 1,5 00
6 ,4 7 1,1 00
8,059,441

2 9,168,596
35,6 97 ,78 9
6 ,8 5 0,7 00
6 ,9 9 1,6 00
8,7 4 1,2 68

W ithout
disbursements
by FDIC

Year

With
disbursements
by FDIC

19

2,078

$214,645,908

6
7
3
1
5
6

3 11 ,95 0
1,268,151
3 35 ,07 6
26,8 00
168,228
6 32 ,70 0

12
41
110
124
168

1 ,236,488
3 ,1 3 2,1 77
4 1,1 50 ,89 8
5 3,7 51 ,76 3
14,4 73 ,30 0

206
2 00
184
138
120

Total
2 000
1999
1998
1997
1996
1995

6
7
3
1
5
6

1994
1993
1992
1991
1990

13
41
120
124
168

1989
1988
1987
1986
1985

206
200
184
138
120

1984
1983
1982
1981
1980

79
48
42
10
10

79
48
42
10
10

2,8 8 3,1 62
5 ,4 4 1,6 08
9 ,9 0 8,3 79
3 ,8 2 6,0 22
2 16 ,30 0

2,8 8 3,1 62
5,4 4 1,6 08
9 ,9 0 8,3 79
3 ,8 2 6,0 22
2 16 ,30 0

3,276,411
7 ,026,923
11,632,415
4 ,8 5 9,0 60
2 36,164

1979
1978
1977
1976
1975

10
7
6
16
13

10
7
6
16
13

110,696
8 54 ,15 4
2 05,208
8 64 ,85 9
3 39 ,57 4

110,696
8 54,154
2 05,208
8 64,859
3 39 ,57 4

1 32,988
9 94,035
2 32,612
1,039,293
4 19 ,95 0

1974
1973
1972
1971
1970

4
6
1
6
7

4
6
1
6
7

1 ,575,832
9 71 ,29 6
20,4 80
132,058
54,806

1,575,832
9 71 ,29 6
20,4 80
132,058
5 4,806

3,8 2 2,5 96
1,309,675
2 2,054
196,520
62,1 47

1969
1968
1967
1966
1965

9
3
4
7
5

9
3
4
7
5

4 0 ,1 3 4
2 2,5 24
10,878
103,523
43,861

4 0 ,1 3 4
22,5 24
10,878
103,523
43,861

43,5 72
25,154
11,993
120,647
58,7 50

1964
1963
1962
1961
1960

7
2
1
5
1

...

7
2
0
5
1

23,4 38
2 3,4 44
3,011
8 ,9 3 6
6 ,930

3,011

23,4 38
23,4 44
0
8 ,936
6 ,930

25,8 49
26,1 79
N /A
9 ,820
7 ,506

1959
1958
1957
1956
1955

3
4
2
2
5

...

3
4

1
...
...

1
2
5

2,593
8 ,2 4 0
11,247
11,330
11,953

10,084

2 ,593
8 ,240
1,163
11,330
11,953

2 ,858
8 ,9 0 5
1,253
12,914
11,985

1954
1953
1952
1951
1950

2
4
3
2
4

...
2
. ..
. ..

2
2
3
2
4

998
44,711
3 ,1 7 0
3 ,408
5,513

9 98
18,262
3 ,1 7 0
3 ,4 0 8
5 ,513

1,138
18,811
2 ,3 8 8
3 ,050
4 ,0 0 5

1949
1948
1947
1946
1945

5
3
5
1
1

1

4
3
5
1
1

6 ,665
10,674
7 ,040
3 47
5 ,695

5 ,475
10,674
7 ,0 4 0
347
5,695

4 ,8 8 6
10,360
6 ,7 9 8
351
6,392

1944
1943
1942
1941

...

|

1940

2
5
20
15
43

2
5
20
15
43

1,915
12,525
19,185
29,7 17
142,430

1,915
12,525
19,185
29,7 17
142,430

2 ,098
14,058
22,2 54
34,8 04
161,898

1939
1938
1937
1936
1935
1934

1

2,097

60
74
77
69
26
9

...

|

60
74
75
69
25
9

157,772
59,6 84
3 3,6 77
27,5 08
13,405
1,968

157,772
59,684
33,3 49
2 7,5 08
13,320
1,968

1 81,514

|
...

I

1
10
...
...

...
...

I

|

. . .

|

1
...

2
1

|

|
|
|

4 ,2 5 7 ,6 6 7

26,4 49

1,190

3 28
85

69,513
4 0,3 70
31,941
17,242
2,661

D o es n o t in clu de in s titu tio n s th a t re ceived FDIC assistan ce and w e re n o t clo sed . A lso d o e s n o t in clu d e in s titu tio n s in sured b y th e S avings A sso cia tio n Insurance Fund (SAIF), w h ic h
w a s e sta b lish ed b y th e Financial In s titu tio n s R e form , Recovery, and E n fo rce m e n t A c t o f 1989.




Recoveries and Losses by the Bank Insurance Fund
on Disbursements for the Protection of Depositors, 1934 through 2000

D o l l a r s in T h o u s a n d s
A ll C ases1

Year

Number
of
banks

Disburse­
ments

Total

2,208

2 00 0
1999
1998
1997
1996
1995

6
7
3
1
5
6

1994
1993
1992
1991
1990

13
41
122
127
169

1989
1988
1987
1986
1985

D ep osit Payoff Cases2
Estimated
Losses

Number
of
banks

Disburse­
ments

Recoveries

Estimated
Additional
Recoveries

Estimated
Losses

S 108,282,625

$ 360,291

$ 38,013,649

603

$ 14,469,299

$ 9,918,765

$ 1,467

$ 4,549,067

8 2,4 45
2 81 ,89 0
52,658
2 0,5 20
130,966
523,695

179,191
121,221
0
0
0
293

38,6 80
8 41,172
2 34,049
5,026
3 8 ,4 2 0
85,0 57

0
0
0
0
0
0

0
0
0
0
0
0

0
0
0
0
0
0

0
0
0
0
0
0

0
0
0
0
0
0

1 ,224,797
1 ,797,297
14,0 84 ,66 3
2 1,412,647
1 0,816,602

1,045,721
1,146,878
10,390,760
1 5,231,388
8,030,281

135
3 ,953
18,042
32,487
1,258

178,941
6 46,466
3,675,861
6 ,1 4 8,7 72
2 ,7 8 5,0 63

0
5
25
21
20

0
2 61 ,20 3
1 ,802,655
1,468,407
2 ,1 8 2,5 83

0
159,268
1 ,309,252
1 ,000,732
1 ,427,687

0
0
631
0
8 36

0
101,935
4 92 ,77 2
4 6 7 ,6 7 5
7 54,060

2 07
2 80
2 03
145
120

11,4 45 ,82 9
12,1 63 ,00 6
5,037,871
4 ,7 9 0,9 69
2 ,9 2 0,6 87

5,2 4 2,8 38
5,2 4 1,2 15
3,014,851
3 ,0 1 5,2 52
1,913,452

3 ,692
0
0
0
0

6 ,1 9 9,2 99
6,921,791
2 ,0 2 3,0 20
1,775,717
1 ,007,235

32
36
51
40
29

2 ,1 1 6,5 56
1 ,252,160
2,1 0 3,7 92
1,155,981
5 23 ,78 9

1 ,262,145
8 22 ,61 2
1,4 0 1,5 88
7 39 ,65 9
4 1 1 ,1 7 5

0
0
0
0
0

854,411
4 2 9 ,5 4 8
7 02 ,20 4
4 16 ,32 2
1 12,614

1984
1983
1982
1981
1980

80
48
42
10
11

7 ,6 9 6,2 15
3,8 0 7,0 82
2 ,2 7 5,1 50
8 88 ,99 9
152,355

6,056,061
2,4 0 0,0 44
1 ,106,579
107,221
121,675

0
19
0
0
o

1,640,154
1,407,019
1,168,571
7 81 ,77 8
30,680

16
9
7
2
3

7 91 ,83 8
148,423
2 77 ,24 0
3 5,7 36
13,732

6 99 ,48 3
122,484
2 06 ,24 7
3 4,5 98
11,427

0
0
0
0
0

9 2 ,3 5 5
2 5,9 39
7 0,9 93
1,138
2 ,305

1979
1978
1977
1976
1975

10
7
6
17
13

90,4 89
5 48,568
26,6 50
5 99,397
332 ,04 6

7 4,372
512,927
2 0,6 54
561,532
292,431

0
0
0
0
0

16,117
35,641
5,996
37,8 65
3 9 ,6 1 5

3
1
0
3
3

9 ,936
817
0
11,416
2 5,9 18

9 ,003
6 13
0
9 ,660
25,8 49

0
0
0
0
0

9 33
2 04
0
1,756
69

1974
1973
1972
1971
1970

5
6
2
7
7

2,4 0 3,2 77
435 ,23 8
16,189
171,646
51,5 66

2,2 5 9,6 33
3 68,852
14,501
171,430
51,2 94

0
0
0
0

0
3
1
5
4

0
16,771
16,189
53,767
29,2 65

0
16,771
14,501
53,5 74
28,993

0
0
0
0

o

143,644
66,3 86
1,688
216
272

0
0
1,688
193
272

1969
1968
1967
1966
1965

9
3
4
7
5

4 2 ,0 7 2
6,476
8,097
10,020
11,479

0
0
0
0
0

162
12
1,010
4 79
663

4
0
4
1
3

7 ,596
0
8,097
735
10,908

7 ,513
0
7,087
7 35
10,391

1964
1963
1962
1961
1960

7
2
0
5

.

1

!

0
0
0
0
0

1,541
286
0
1,501
0

7
2
0
5
1

13,712
19,172
0
6,201
4 ,7 6 5

12,171
18,886
0
4,700
4,765

0
0
0
0
0

1959
1958
1957
1956
1955

0
0
0
0
0

97
28
0
213
230

1,835
2 ,796
1,031
2 ,795
4 ,4 3 8

1,738
2,768
1,031
2,582
4 ,2 0 8

0
o
o
0
0

:

$ 69,908,685

3 00 ,31 6
1 ,244,283
2 86 ,70 7
25,5 46
169,386
6 09 ,04 5
;

Recoveries

Estimated
Additional
Recoveries

|

4 1 ,9 1 0
6 ,464
7,087
9,541
10,816

|

!

!

i

I

0
!

0
0
0
0
0

;

83
0
1,010
0
517

13,712
19,172
0
6,201
4 ,7 6 5

12,171
18,886
0
4 ,700
4 ,765

3
4
1
2
5

1,835
3,051
1,031
3 ,499
7,315

1,738
3 ,023
1,031
3 ,286
7 ,085

1954
1953
1952
1951
1950

2
2
3
2
4

1,029
5 ,359
1,525
1,986
4 ,404

771
5,359
733
1,986
3 ,019

0
0
0
0
0

258
0
792
0
1,385

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

1949
1948
1947
1946
1945

4
3
5
1
1

2 ,685
3 ,1 5 0
2 ,038
274
1,845

2 ,316
2 ,509
1,979
274
1,845

0
0
0
0
0

369
641
59
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
o
0

0
0
0
o
0

0
0
0
0
0

1944

2
5
20
15
43

1,532
7 ,230
11,684
25,061
87,8 99

1,492
7 ,107
10,996
24,4 70
84,1 03

0
0
0
0
0

40
123
688
591
3 ,796

1
4
6
8
19

4 04

364
5,377
1 ,320
12,065
4 ,3 1 3

0
0
0
0
0

40
123
292
213
582

60
74
75
69

81,8 28
34,3 94
20,2 04
15,206

74,6 76
31,9 69
16,532
1 2,873
6,423
734

0
0
0
0
0
0

7 ,152
2 ,425
3,672

20,3 99

0
0
0
0
0
0

5 ,797

1943
1942
1941
1940
1939
1938
1937
1936
1935
1934




25

9

;

9,108
941

|

I

2 ,333
2 ,685
207

i

3
3
1
1
4

5,500
1,612
12,278
4 ,8 9 5

:

42
24

26,1 96
9 ,092
12,365
7 ,735
6 ,026

I

9

941

^

32
50

i

50

7,908
9,718
6 ,397
4 ,2 7 4
7 34

;

1,541
2 86
0
1,501
0

;
!

j
:

c o n tin u e d on n e x t pa g e

97
28
0
213
230

1,184
2 ,647
1 ,338
1,752
207

Recoveries and Losses by the Bank Insurance Fund
on Disbursements for the Protection of Depositors, 1934 through 2000

D o l l a r s in T h o u s a n d s
D eposit A ssum ption Cases

Year

Number
of
banks

Disburse­
ments

Total

1,464

2000
1999
1998
1997
1996
1995

6
7
3
1
5
6

1994
1993
1992
1991
1990

Assistance Transactions1

Recoveries

Estimated
Additional
Recoveries

Estimated
Losses

Number
of
banks

Disburse­
ments

$ 82,182,970

$ 53,790,044

3 00 ,31 6
1,244,283
286,707
25,5 46
169,386
6 09 ,04 5

82,4 45
2 81,890
52,658
20,5 20
130,966
5 23,695

$ 358,805

$ 28,034,121

141

179,191
121,221
0
0
0
293

38,6 80
8 41,172
234 ,04 9

0

13
36
95
103
148

1,224,797
1,536,094
12,2 80 ,52 2
19,9 38 ,12 3
8,6 2 9,0 84

1,045,721
9 87,610
9,0 8 0,2 72
14,227,563
6,5 9 9,9 97

135
3 ,953
17,411
32,4 87
422

1989
1988
1987
1986
1985

174
164
133
98
87

9,3 2 6,7 25
9 ,1 8 0,4 95
2,7 7 3,2 02
3 ,4 7 6,1 40
1,631,166

3,980,441
4 ,2 2 8,8 94
1,612,549
2,2 0 9,9 24
1,095,601

3 ,692
0
0
0
0

1984
1983
1982
1981
1980

62
35
25
5
7

1,373,198
2 ,8 9 3,9 69
2 68,372
79,2 08
138,623

941 ,67 4
1,850,553
2 13,578
71,3 58
110,248

1979
1978
1977
1976
1975

7
6
6
13
10

80,5 53
547,751
26,6 50
587,981
3 06 ,12 8

1974
1973
1972
1971
1970

4
3
0
1
3

1969
1968
1967
1966
1965

S 11,630,356

S 6,199,876

$ 19

$ 5,430,461

0
0
0
0
0

0
0
0
0
0
0

0
0
0
0
0
0

0
0
0
0
0
0

0
0
0
0
0
0

178,941
544,531
3,1 8 2,8 39
5,6 7 8,0 73
2,0 2 8,6 65

0
0
2
3
1

0
0
1,486
6 ,117
4 ,9 3 5

0
0
1,236
3,093
2,597

0
0
0
0
0

0
0
250
3 ,024
2 ,338

5 ,342,592
4,951,601
1,160,653
1 ,266,216
5 35 ,56 5

1
80
19
7
4

2 ,548
1,730,351
160,877
158,848
765,732

252
189,709
714
65,6 69
4 06 ,67 6

o

0
0
0
0
0

4 3 1 ,5 2 4
1 ,043,416
54,794
7 ,850
28,3 75

2
4
10
3
1

5,5 3 1,1 79
7 64 ,69 0
1,729,538
7 74 ,05 5
0

4 ,4 1 4,9 04
4 2 7 ,0 0 7
6 86 ,75 4
1,265
0

0
19
0
0
0

1,116,275
3 37 ,66 4
1,042,784
772,790
0

65,3 69
5 12,314
20,6 54
551,872
2 66,582

0
0
0
0
0

15,184
35,4 37
5,996
36,1 09
39,5 46

0
0
0
1
0

0
0
0
0
0

0
0
0
0
o

0
0
0
0
0

0
0
0
0
0

2,4 0 3,2 77
4 18,467
0
117,879
22,301

2,2 5 9,6 33
352,081
0
117,856
22,301

0
0
0
0
0

143,644
66,3 86
0
23

1
0
1
1
0

!

0
0
0
0

0
0
0
0

o

o

0
0
0
0
0

5
3
0
6
2

3 4,4 76
6 ,476
0
9 ,285
571

34,397
6 ,464
0
8 ,806
4 25

0
0
0
0
0

79
12
0
4 79
146

0
0
0
0
0

I

0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

1959
1958
1957
1956
1955

0
1
0
1
1

0
255
0
704
2 ,877

0
255
0
704
2 ,877

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

1954
1953
1952
1951
1950

2
2
3
2

1,029
5,359
1,525
1,986
4 ,4 0 4

771
5 ,359
7 33
1,986
3 ,019

0
0
0
0
0

258
0
792
0
1,385

o
0
0
0
0

0
0
0
0
0

0
0
0
0
0

1949
1948
1947
1946
1945

4
3
5
1
1

2 ,685
3 ,150
2 ,038
274
1,845

2 ,316
2 ,509
1,979
2 74
1,845

0
0
0
0
0

369
641
59
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
o

0
0
0
0
0

0
0
0
0
0

1944
1943
1942
1941
1940

1
1
14
7
24

1,128
1,730
10,072
12,783
83,0 04

1 ,128
1,730
9 ,676
12,405
7 9,7 90

0
0
0
0
0

0
0
396
378
3 ,214

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

1939
1938
1937
1936
1935
1934

2

Estimated
Losses

1964
1963
1962
1961
1960

1

Recoveries

Estimated
Additional
Recoveries

28
24
25
27
1
0

55,632
25,302
7 ,839
7,471
3 ,082

54,277
24,061
6 ,814
6 ,4 7 6
2 ,149

0
0
0
0
0
0

1,355
1,241
1,025
995
933
0

0
0
0
o
o
0

0
0
0
0

!

o
o

j

0
0
0
0
0
0

0
0
0
o
0
0

0
0
0
0
0
0

i

j

|

4

|

0

|

0

|
|

j

5 ,026
3 8,4 20
8 5,0 57

j

]

|

0
:

0

\

:
;

;
f

o
o
0
0
0

;
I

I
I
I

I
I

0
0
0
0
0

;

I

o

0
0
0
o
o

i

I
;
J

;

:

j

o

;

o
0
0

i

2,296
1,540,642
i
160,163
93,1 79
359,056

;

I

0
0
0
0
0

Totals do n o t in clu de d ollar a m o u n ts fo r fiv e o pe n bank assistan ce tra nsa ctio ns b e tw e e n 1971 and 1980. E xcludes e ig h t tra n sa ctio n s p rio r to 1962 th a t re q uired no d is b u rse m e n ts.
A lso, d isb u rse m e n ts, re co veries, and e s tim a te d additional re co veries do n o t include w o rk in g capital a dvances to and re p a ym e n ts b y rece ivership s.
In clud es in sured d e p o sit tra n s fe r cases.
N ote: B eg in ning w ith th e 1997 A nn u al R eport th e n u m b e r o f banks in th e A ssista n ce Transactions c o lu m n fo r 1988 w a s chan ge d fro m 21 to 8 0 and th e n u m b e r o f banks in th e All
Cases c o lu m n w a s ch an ge d fro m 221 to 2 8 0 to re fle c t th a t one a ssistan ce tra n sa ctio n e nco m p a sse d 60 in stitu tio n s . A lso, ce rtain 1982, 1983, 1989 and 1992 re so lu tio n s p re vio u sly
re p orte d in e ith e r th e D e p o sit P ayo ff o r D e p o sit A s s u m p tio n ca te g ories w e re reclassified.




Incom e and Expenses, Bank Insurance Fund, fro m Beginning of O perations,
S e p te m b e r 11, 1933, th ro u g h D ecem ber 31, 2000

D o l l a r s in M i l l i o n s
Incom e

Expenses and Losses

Year

Total

Assessment
Income

Assessment
Credits

Total

$81,710.5

$53,212.8

$6,709.1

1 ,905.9
1 ,815.6
2,0 0 0.3
1 ,615.6
1 ,655.3
4,089.1

45.1
3 3.3
2 1.7
24.7
72.7
2 ,9 0 6.9

0.0
0.0
0.0
0 .0
0.0
0.0

1 ,860.8
1,782.3
1 ,978.6
1 ,590.9
1 ,582.6
1,182.2

5 ,5 9 0.6 i
5 ,784.3
5 ,5 8 7.8 j
5 ,160.5
2 ,855.3

0.0
0.0
0.0
0.0
0.0

8 76.4
6 46.5
7 13.7
6 29.5
9 83.0

1,885.0 |
1,773.0
1,696.0
1,516.9
1,433.4

0.0
0.0
0.0
0.0
0.0

]

;

I

0 .2 3 6 0 %
0 .2 4 4 0 %
0 .2 3 0 0 %
0 .2 1 2 5 %
0 .1 2 0 0 %

j

1 ,609.6
1 ,574.7
1 ,623.4
1,743.2
1,952.0

0 .0 8 3 3 %
0 .0 8 33 %
0 .0 8 33 %
0 .0 8 33 %
0 .0 8 33 %

\

1994
1993
1992
1991
1990

6,4 6 7.0
6 ,4 3 0 .8
6 ,3 0 1 .5
5 ,7 9 0.0
3,8 3 8.3

1989
1988
1987
1986
1985

3 ,4 9 4 .6
3 ,3 4 7 .7
3 ,3 1 9 .4
3,260.1
3 ,3 8 5 .4

1984
1983
1982
1981
1980

3 ,0 9 9 .5
2,628.1
2 ,5 2 4.6
2 ,0 7 4.7
1,310.4

1,321.5
1,214.9
1,108.9
1,039.0
951.9

0.0
164.0
96.2
117.1
521.1

1,778.0
1,577.2
1,511.9
1,152.8
879.6

0 .0 8 00 %
0 .0 7 14 %
0 .0 7 69 %
0 .0 7 14 %
0 .0 3 70 %

1979
1978
1977
1976
1975

1,090.4
952.1
837.8
7 64.9
689.3

881.0
810.1
731.3
676.1
641.3

5 24.6
443.1
4 1 1 .9
3 79.6
3 62.4

734.0
585.1
518.4
4 6 8 .4
4 1 0 .4

0 .0 3 3 3 %
0 .0 3 85 %
0 .0 3 70 %
0 .0 3 70 %
0 .0 3 5 7 %

1974
1973
1972
1971
1970

668.1
5 61.0
4 6 7 .0
415.3
382.7

587.4
529.4
468.8
417.2
369.3

2 85.4
2 83.4
2 80.3
2 41.4
2 10.0

366.1
315.0
278.5
2 39.5
223.4

0 .0 4 35 %
0 .0 3 85 %
0 .0 3 33 %
0 .0 3 45 %
0 .0 3 57 %

1969
1968
1967
1966
1965

3 3 5 .8
2 95.0
2 63.0
2 41.0
2 14.6

364.2
334.5
303.1
284.3
2 60.5

220.2
202.1
182.4
172.6
158.3

191.8
162.6
142.3
129.3
112.4

0 .0 3 3 3 %
0 .0 3 3 3 %
0 .0 3 33 %
0 .0 3 2 3 %
0 .0 3 23 %

1964
1963
1962
1961
1960

197.1
181.9
161.1
147.3
144.6

238.2
2 20.6
203.4
188.9
180.4

145.2
136.4
126.9
115.5
100.8

104.1
97.7
8 4.6
7 3.9
6 5.0

0 .0 3 23 %
0 .0 3 1 3 %
0 .0 3 13 %
0 .0 3 23 %
0 .0 3 70 %

I




!
j

:

i

;

j
5

I

!

1
1

$8,553.6

$6,955.3

645.2
1 ,922.0
6 91 .5
177.3
254.6
483.2

(153.0)
1,168.7
(37.7)
(503.7)
(325.2)
(33.2)

7 72.9
7 30.4
6 9 7 .6
6 05.2
5 05.3
4 7 0 .6

2 5 .3
2 2.9
3 1.6
7 5.8
7 4.5
4 5 .8

i

1,260.7
(106.4)
1 ,308.8
1 ,438.3
1 ,400.7
3 ,6 0 5 .9

(2,259.1)
(6,791.4)
(625.8)
16,862.3
13,003.3

(2,873.4)
(7,677.4)
(2,259.7)
15,476.2
12,133.1

4 2 3 .2 j
3 88.5
5 7 0 .8 3 i
284.1 !
2 19 .6

191.1
4 9 7 .5
1,063.1
1,102.0
6 50.6

!

8,726.1
13,222.2
6 ,9 2 7.3
(11,072.3)
(9,165.0)

4,346.2
7 ,588.4
3 ,270.9
2 ,9 6 3.7
1,957.9

3 ,8 1 1.3
6 ,2 9 8.3
2,9 9 6.9
2 ,827.7
1,569.0

213.9
223.9
204.9
180.3
179.2

3 21.0
1,066.2
69.1
(44.3)
209.7

(851.6)
(4,240.7)
4 8.5
2 96.4
1 ,427.5

1,633.4
675.1
126.4
3 20.4
(38.1)

151.2
135.7
129.9
127.2
118.2

214.6
159.1
743.5
4 0 0 .5
3.5

1,100.3
1,658.2
1 ,524.8
1 ,226.6
1,226.8

93.7
148.9
113.6
212.3
97.5

(17.2)
36.5
20.8
28.0
27.6

159.2
108.2
59.7
60.3
4 6.0

0 .0 0 1 4 %
0.0011 %
0 .0 0 0 8 %
0 .0 0 0 8 %
0 .0 0 2 4 %
0 .1 2 4 0 %

$35,451.7

1,999.2
9 6 9 .9
9 9 9 .8
848.1
8 3.6

$35,206.8

2 000
1999
1998
1997
1996
1995

Total

Effective
Assessment
Rate1

Provision
for
Losses

$50,954.6

Investment
and Other
Sources

9 7.9
52.5
10.1
13.4
3 .8

59.2
54.4
4 9.6
4 6.9
42.2

2.1
1.3
6 .0 5
0.0
0.0

508.9
4 5 2 .8
4 0 7 .3
3 5 5 .0
3 3 6 .7

34.5
29.1
27.3
19.9
2 2.9

1.0
0.1
2.9
0.1
5.2

3 3.5
29.0
24.4
19.8
17.7

0.0
0.0
0.0
0.0
0.0

3 0 1 .3
2 6 5 .9
235.7
221.1
191.7

18.4
15.1
13.8
14.8
12.5

2.9
0.7
0.1
1.6
0.1

15.5
14.4
13.7
13.2
12.4

0.0
0.0
0.0
0.0
0.0

178.7
166.8
147.3
132.5
132.1

:

Administrative
and Operating
Expenses2

i

j
|

106.8
103.3
89.3
180.4 4
67.7

Interest &
Other Insur.
Expenses

4.1
9.1
3.5
3.9
2.2

Net Income/
(Loss)
$30,755.9

i

c o n tin u e d on n e x t pa g e

996.7
803.2
724.2
5 52.6
591.8

Incom e and Expenses, Bank Insurance Fund, from Beginning of O perations,
S ep tem b er 11, 1933, through D ecem ber 31, 2000

(c o n tin u e d )

D o l l a r s in M i l l i o n s
Incom e

Expenses and Losses

Year

Total

Assessment
Income

Assessment
Credits

Investment
and Other
Sources

Effective
Assessment
Rate 1

Total

Provision
for
Losses

Total

$81,710.5

$53,212.8

$6,709.1

$35,206.8

1959
1958
1957
1956
1955

136.5
126.8
117.3
111.9
105.8

178.2
1 66.8
159.3
155.5
151.5

99.6
9 3.0
90.2
87.3
8 5.4

5 7.9
5 3.0
4 8.2
4 3.7
39.7

0 .0 3 70 %
0 .0 3 7 0 %
0 .0 3 5 7 %
0 .0 3 7 0 %
0 .0 3 7 0 %

$50,954.6

$35,451.7

12.1
11.6
9.7
9.4
9.0

0.2
0.0
0.1
0 .3
0 .3

1954
1953
1952
1951
1950

9 9.7
94.2
88.6
83.5
8 4.8

144.2
138.7
131.0
124.3
122.9

8 1.8
78.5
73.7
70.0
68.7

37.3
34.0
31.3
29.2
30.6

0 .0 3 5 7 %
0 .0 3 5 7 %
0 .0 3 70 %
0 .0 3 70 %
0 .0 3 70 %

7.8
7.3
7.8
6.6
7.8

0.1
0.1
0 .8
0 .0
1.4

1949
1948
1947
1946
1945

151.1
145.6
157.5
130.7
121.0

122.7
119.3
114.4
107.0
93.7

0.0
0.0
0.0
0.0
0.0

28.4
26.3
43.1
2 3.7
2 7.3

0 .0 8 33 %
0 .0 8 33 %
0 .0 8 33 %
0 .0 8 33 %
0 .0 8 3 3 %

6.4
7.0
9.9
10.0
9 .4

0 .3
0 .7
0.1
0.1
0.1

1944
1943
1942
1941
1940

9 9.3
86.6
69.1
6 2.0
55.9

8 0.9
7 0.0
5 6.5
51.4
46.2

0.0
0.0
0.0
0.0
0.0

18.4
16.6

0 .0 8 33 %
0 .0 8 3 3 %

12.6
10.6
9.7

0 .0 8 3 3 %
0 .0 8 3 3 %
0 .0 8 3 3 %

9 .3
9 .8
10.1
10.1
12.9

1939
1938
1937
1936
1935
1933-34

51.2
4 7.7
48.2
4 3.8
20.8
7.0

40.7
38.3
38.8
35.6
11.5
0.0

0.0
0.0
0.0
0.0
0.0
0.0

10.5
9.4
9.4
8.2
9.3
7.0

0 .0 8 3 3 %
0 .0 8 3 3 %
0 .0 8 3 3 %
0 .0 8 3 3 %
0 .0 8 3 3 %
N /A

16.4
11.3
12.2
10.9
11.3
10.0

:

I

!

Administrative
and Operating
Expenses2

Net Income/
(Loss)

$8,553.6

$6,955.3

$30,755.9

11.9
11.6
9.6
9.1
8.7

0.0
0.0
0.0
0.0
0.0

124.4
115.2
107.6
102.5
9 6.8

7.7
7.2
7.0
6.6
6.4
j
:

Interest &
Other Insur.
Expenses

0.0
0.0
0.0
0.0
0.0

9 1.9
8 6.9
8 0.8
76.9
77.0

6 ' 1fi
6.3 ;
9.8
9 .9
9.3

0 .0
0.0
0 .0
0.0
0.0

144.7
138.6
147.6
120.7
111.6

0.0
0.0

0.5
0.6
3.5

9.2
9.6
9.6
9.5
9.4

0.0
0.0
0.0

9 0.0
76.8
59.0
51.9
4 3.0

7.2
2.5
3.7
2.6
2.8
0.2

9.2
8.8
8.5
8.3
8.5
9.8

0.0
0.0
0.0
0.0
0.0
0.0

34.8
36.4
36.0
32.9
9 .5
(3.0)

0.1
0.2

:

1

The e ffe c tiv e rates fro m 1950 th ro u g h 1984 vary fro m th e s ta tu to ry rate o f 0.0 8 33 p e rce n t d ue to a ss e s s m e n t c re d its pro vide d in th o s e years. The s ta tu to ry rate increased to 0.12
p e rce n t in 1990 and to a m in in u m o f 0 .1 5 p e rce n t in 1991. The e ffe c tiv e rates in 1991 and 1992 vary b ecause th e FDIC e xercised n e w a u th o rity to in crease a s se ssm e n ts above th e
s ta tu to ry rate w h e n n eeded. B eg in ning in 1993, th e e ffe c tiv e rate is based on a risk-related p re m iu m sy s te m u nd er w h ic h in s titu tio n s pay a s se ssm e n ts in th e range o f 0 .2 3 p e rce n t
to 0.31 p e rce n t. In M a y 1995, th e BIF reached th e m a n da tory recapitalization level o f 1 .2 5 % . A s a result, th e a s s e s s m e n t rate w a s re d uce d to 4.4 c e n ts per $ 10 0 o f in sured d ep osits
a nd a ss e s s m e n t p re m iu m s to ta lin g $ 1.5 billion w e re re fu n d e d in S e p te m b e r 1995.

2

Th ese expe nse s, w h ic h are p re se n te d as o p e ra ting e xpe nse s in th e S ta te m e n ts o f In co m e and Fund Balance, perta in to th e FDIC in its co rp o ra te ca pa city o n ly and d o n o t include
co s ts th a t are charged to th e failed bank re ce ivership s th a t are m anaged b y th e FDIC. T he re ce ivership e xp e n se s are p re se n te d as part o f th e "R eceivables fro m Bank R e solutions,
n e t' lin e on th e S ta te m e n ts o f Financial P osition. The narrative and graph p re se n te d in th e "C orporate P lanning and B ud g et" se ctio n o f th is re p o rt (n e xt page) s h o w th e agg re ga te
(corporate and re ceivership) e xp e n d itu re s o f th e FDIC.

3

Includ es $ 21 0 m illio n fo r th e c u m u la tive e ffe c t o f an a ccou ntin g ch an ge fo r ce rtain p o s tre tire m e n t b e n e fits.

4

Includ es $ 10 5.6 m illio n n e t loss on g o v e rn m e n t se curities.

5

T his a m o u n t re p rese n ts in te re s t and o th e r insuran ce e xpe nse s fro m 1933 to 1972.

6

Includ es $ 80 .6 m illio n o f in te re s t paid on capital sto c k b e tw e e n 1933 and 1948.




96

Corporate Planning and Budget,
FDIC Expenditures, 1991-2000

D o l l a r s in M i l l i o n s

F D IC E x p e n d it u r e s C o n tin u e D o w n w a r d T r e n d

■ FDIC
■ RTC

; 2,500

2,000

1991

92

93

94

95

Note:
Resolution Trust Corporation (RTC) expenditures became the responsibility of the FDIC on January 1,1996.

The FDIC's Strategic Plan and Annual
Performance Plan provide the basis
for annual planning and budgeting
for needed resources. The 2000
aggregate budget (for corporate
and receivership expenses) was
$1.19 billion, while actual expenditures
fo r the year w e re $1.12 billion,
about $35 m illion less than 1999
expenditures.




Over the past 10 years, the FDIC's
expenditures have risen and declined
in response to its workload. During
the firs t half of the decade, costs
increased as the FDIC became heavily
involved w ith resolving the banking
crisis of the late 1980s and early
1990s. In 1994 and 1995, expendi­
tures declined due to decreasing
resolution and receivership activity,
but tem porarily increased in 1996
in conjunction w ith the absorption
of the Resolution Trust Corporation
(RTC). Total expenditures have
decreased each year since 1996.

The largest com ponent of FDIC
spending is for the costs associated
w ith staffing. The FDIC's staff has
declined each year during the past
five years. S taffing decreased by
about 11 percent in 2000, from
7,266 employees at the beginning
of the year to 6,452 at the end of
the year.

Estim ated Insured D eposits and th e Bank Insurance Fund,
D ecem ber 31, 1934, th ro u g h D ecem ber 31, 2000

Deposits in Insured Banks (Dollars in M illions)
Insurance
C overage

Total D o m estic
D eposits

2 000
1999
1998
1997
1996
1995

$10 0,0 00
100,000
100,000
100,000
100,000
100,000

$ 3,3 26 ,74 5
3 ,0 3 8,3 85
2 ,9 9 6,3 96
2,7 8 5,9 90
2,6 4 2,1 07
2,5 7 5,9 66

1994
1993
1992
1991
1990

100,000
100,000
100,000
100,000
100,000

1989
1988
1987
1986
1985

Est. Insured 2
D eposits

In s u ra n c e F u n d as a P e rc e n ta g e o f

Percentage of
Insured D eposits

D eposit
Insurance Fund

Total D o m estic
Deposits

Est. Insured
D eposits

$ 2,3 01 ,60 4
2 ,1 5 7,5 36
2 ,1 4 1,2 68
2 ,0 5 5,8 74
2,0 0 7,4 47
1,952,543

69.2
71.0
71.5
73.8
76.0
75.8

$30 ,97 5.2
2 9,414.2
2 9,6 12 .3
2 8,2 92 .5
2 6,8 54 .4
2 5,453.7

0.93
0.97
0.99
1.02
1.02
0.99

1.35
1.36
1.38
1.38
1.34
1.30

2,4 6 3,8 13
2,4 9 3,6 36
2 ,5 1 2,2 78
2,5 2 0,0 74
2,5 4 0,9 30

1 ,896,060
1,906,885
1,945,623
1 ,957,722
1,929,612

77.0
76.5
77.4
77.7
7 5.9

2 1,8 47 .8
1 3,121.6
(100.6)
(7,027.9)
4 ,0 4 4.5

0.89
0.53
(0.00)
(0.28)
0.16

1.15
0.69
(0.01)
(0.36)
0.21

100,000
100,000
100,000
100,000
100,000

2 ,465,922
2 ,3 3 0,7 68
2,2 0 1,5 49
2,1 6 7,5 96
1,974,512

1 ,873,837
1 ,750,259
1,658,802
1,634,302
1,503,393

76.0
75.1
75.3
75.4
76.1

13,209.5
14,061.1
18,301.8
18,253.3
17,956.9

0.54
0 .6 0
0.83
0.84
0.91

0 .7 0
0 .8 0
1.10
1.12
1.19

1984
1983
1982
1981
1980

100,000
100,000
100,000
100,000
100,000

1 ,806,520
1 ,690,576
1,544,697
1,409,322
1,324,463

1 ,389,874
1,268,332
1,134,221
9 88 ,89 8
9 48 ,71 7

76.9
75.0
73.4
70.2
71.6

16,529.4
15,429.1
1 3,770.9
12,246.1
1 1,019.5

0.92
0.91
0.89
0.87
0.83

1.19
1.22
1.21
1.24
1.16

1979
1978
1977
1976
1975

40,0 00
40,0 00
40,0 00
4 0 ,0 0 0
4 0 ,0 0 0

1 ,226,943
1 ,145,835
1 ,050,435
9 41 ,92 3
875 ,98 5

8 0 8 ,5 5 5
7 60,706
6 92 ,53 3
6 28 ,26 3
569,101

6 5.9
66.4
6 5.9
66.7
65.0

9,7 9 2.7
8,7 9 6.0
7 ,9 9 2.8
7 ,268.8
6,7 1 6.0

0.80
0.77
0 .7 6
0.77
0.77

1.21
1.16
1.15
1.16
1.18

1974
1973
1972
1971
1970

4 0 ,0 0 0
20,000
20,0 00
20,000
20,000

833,277
7 66 ,50 9
6 97,480
6 10 ,68 5
5 45,198

5 20,309
4 6 5 ,6 0 0
4 1 9 ,7 5 6
3 74 ,56 8
349,581

62.5
60.7
60.2
61.3
64.1

6,124.2
5,6 1 5.3
5,158.7
4 ,7 3 9 .9
4 ,3 7 9 .6

0.73
0.73
0.74
0.78
0.80

1.18
1.21
1.23
1.27
1.25

1969
1968
1967
1966
1965

20,000
15,000
15,000
15,000
10,000

4 95 ,85 8
4 91 ,51 3
4 48 ,70 9
4 01 ,09 6
3 77 ,40 0

3 13 ,08 5
296,701
2 61,149
2 34,150
2 09,690

63.1
60.2
58.2
58.4
55.6

4,051.1
3,7 4 9.2
3,4 8 5.5
3,2 5 2.0
3,0 3 6.3

0.82
0.76
0.78
0.81
0.80

1.29
1.26
1.33
1.39
1.45

1964
1963
1962
1961
1960

10,000
10,000
10,000
10,000
10,000

348,981
3 13 ,30 4
2 97 ,54 8
2 81 ,30 4
2 60 ,49 5

191,787
177,381
170,210
160,309
149,684

55.0
56.6
57.2
57.0
57.5

2,844.7
2,6 6 7.9
2,5 0 2.0
2,3 5 3.8
2 ,222.2

0.82
0 .8 5
0 .8 4
0 .8 4
0 .8 5

1.48
1.50
1.47
1.47
1.48

1959
1958
1957
1956
1955

10,000
10,000
10,000
10,000
10,000

2 47 ,58 9
2 42 ,44 5
2 25,507
2 19,393
2 12 ,22 6

142,131
137,698
127,055
121,008
116,380

57.4
56.8
56.3
55.2
54.8

2,0 8 9.8
1,965.4
1,850.5
1,742.1
1,639.6

0 .8 4
0.81
0.82
0.79
0.77

1.47
1.43
1.46
1.44
1.41

1954
1953
1952
1951
1950

10,000
10,000
10,000
10,000
10,000

2 03,195
193,466
188,142
178,540
167,818

110,973
105,610
101,841
96,7 13
91,3 59

54.6
54.6
54.1
54.2
54.4

1,542.7
1,450.7
1,363.5
1,282.2
1,243.9

0.76
0.75
0.72
0.72
0.74

1.39
1.37
1.34
1.33
1.36

1949
1948
1947
1946
1945

5 ,000
5,000
5,000
5,000
5,000

156,786
153,454
154,096
148,458
157,174

76,589
75,320
76,2 54
73,7 59
67,021

48.8
49.1
4 9.5
4 9.7
4 2.4

1,203.9
1,065.9
1,006.1
1,058.5
929.2

0.77
0.69
0.65
0.71
0.59

1.57
1.42
1.32
1.44
1.39

1944
1943
1942
1941
1940

5 ,000
5 ,000
5 ,000
5 ,000
5 ,000

134,662
1 11,650
8 9,8 69
71,2 09
65,2 88

56,3 98
4 8,4 40
32,8 37
28,2 49
26,6 38

4 1.9
4 3.4
3 6.5
39.7
4 0.8

804.3
703.1
6 1 6 .9
553.5
4 9 6 .0

0 .6 0
0.63
0 .6 9
0 .7 8
0.76

1.43
1.45
1.88
1.96
1.86

1939
1938
1937
1936
1935
1 93 4 3

5 ,000
5 ,000
5 ,000
5 ,000
5,000
5,000

57,485
50,791
48,2 28
50,281
45,1 25
40,0 60

24,650
23,121
22,5 57
22,3 30
20,1 58
18,075

4 2.9
4 5.5
4 6.8
44.4
44.7
45.1

4 52.7
4 2 0 .5
383.1
3 43.4
3 0 6 .0
2 91.7

0.79
0.83
0 .7 9
0 .6 8
0 .6 8
0.73

1.84
1.82
1.70
1.54
1.52
1.61

Y ear 1

1

S tarting in 1990, d e p o sits in in sured banks e xclud e th o s e d e p o s its h eld by Bank Insurance Fund m e m b e rs th a t are in sured by th e S avings A ssociatio n Insurance Fund and include
th o s e d e p o s its h eld b y S avings A sso cia tio n Insurance Fund m e m b e rs th a t are in sured by th e Bank Insurance Fund.

2

E stim a te d in sured d e p o sits re fle c t d ep osit in form atio n as rep orte d in th e fo u rth q ua rte r FDIC Q u a rte rly Banking Profile. B efo re 1991, in sured d e p o sits w e re e stim a te d using p ercentages
d ete rm in e d fro m th e Ju n e 30 Call Reports.

3

Initial coverage w a s $ 2 ,5 0 0 fro m Janu ary 1 to Ju n e 30, 1934.




Incom e and Expenses, Savings A ssociation Insurance Fund, by Year,
fro m B eginning of O p eratio n s, A u gu st 9, 1989, th ro u g h D ecem ber 31, 2000

9S

D o l l a r s in T h o u s a n d s
Expenses and Losses

Incom e
Effective
Assessment
Rate

Total

Provision
for Losses

Interest &
Other Insur.
Expenses

Administrative
and Operating
Expenses

Funding Transfer
from the FSLIC
Resolution Fund

Net Income

$935,557

Investment
and Other
Sources

$264,630

$9,660

$661,267

$139,498

$10,676,478

Year

Total

Assessment
Income

Total

$11,472,537

$8,568,804

$2,903,733

2 000
1999
1998
1997
1996
1995

6 64 ,08 0
6 00 ,99 5
5 83,859
549,912
5,5 0 1,6 84
1 ,139,916

19,237
15,116
15,352
13,914
5,2 2 1,5 60
9 70,027

6 44 ,84 3
5 85,879
5 68,507
5 35,998
2 80,124
169,889

0 .0 0 2%
0 .0 0 2%
0 .0 0 2%
0 .0 0 4%
0 .2 0 4%
0 .2 3 4 %

3 00 ,01 8
124,156
116,629
69,9 86
(28,890)
(281,216)

180,805
30,6 48
31,9 92
(1,879)
(91,636)
(321,000)

8 ,293
626
9
0
128
0

1 10,920
92,8 82
84,6 28
71,8 65
62,6 18
39,7 84

0
0
0
0
0
0

3 64 ,06 2
4 7 6 ,8 3 9
4 6 7 ,2 3 0
4 79 ,92 6
5 ,5 3 0,5 74
1,421,132

1994
1993
1992
1991
1990
1989

1 ,215,289
9 23 ,51 6
178,643
9 6,4 46
18,195
2

1 ,132,102
8 97,692
1 72,079
93,5 30
18,195
0

83,187
25,8 24
6 ,564
2 ,916
0
2

0 .2 4 4 %
0 .2 5 0%
0 .2 3 0%
0 .2 3 0%
0 .2 0 8%
0 .2 0 8%

4 34 ,30 3
46,8 14
2 8,982
63,0 85
56,088
5,602

4 1 4 ,0 0 0
16,531
(14,945)
2 0,1 14
0
0

0
0
(5)
609
0
0

20,3 03
30,2 83
43,9 32
42,3 62
56,0 88
5,602

0
0
35,4 46
42,3 62
56,088
5,602

7 80 ,98 6
8 76,702
185,107
75,723
18,195
2

FDIC-lnsured Institutions
Closed During 2000

D o l l a r s in T h o u s a n d s

Date of
Closing or
Acquisition

Assuming Bank
and Location

$ 74 8

0 6/0 2/0 0

Israel D isco u n t Bank
N e w York, NY

$ 70 ,48 8

$ 11,127

0 1/1 4/0 0

C itize n s Bank
Carlisle, IA

$ 25 ,65 7

$ 25 ,65 8

$3,6 05

0 7/1 4/0 0

S&C Bank o f M in n e so ta
A lm e lu n d , M N

$ 61,247

$ 58,202

$ 56,727

$2,5 00

10/13/00

B ank o f th e O rie n t
San Francisco, CA

5,827

$75,681

$ 72 ,53 4

$ 67 ,05 5

$ 12 ,70 0

0 9/2 9/0 0

C itize n s Bank &
S avings C om pany
R ussellville, A L

N

8 ,157

$93,011

$ 74,104

$ 71 ,64 5

$8,0 00

12/14/00

B anterra Bank
M a rio n , IL

SB

6 ,023

$ 29 ,53 0

$ 28 ,58 3

$ 28 ,58 3

$1,4 02

03 /1 0 /0 0

C itize n s Trust Bank
A tlan ta, G A

Bank
Class

Number of
Deposit
Accounts

Total
Assets

Total
Deposits

FDIC
Disbursements

N

743

$ 10 ,33 3

$ 10 ,11 6

$ 10,117

Hartford-Carlisle Sa vin gs Bank
Carlisle, IA

NM

7 ,700

$ 11 3,3 13

$ 71,337

Town and Country Bank of Almelund
Alm elund, MN

NM

4 ,9 0 0

$ 24,503

Bank of Honolulu
Honolulu, HI

NM

5 ,900

NM

Name and Location

Estimated
Loss1

Bank Insurance Fund
Purchase and Assumption - All Deposits

M onument National Bank
Ridgecrest, CA
Purchase and Assumption - Insured Deposits

Insured Deposit Transfer - Asset Purchase

The Bank of Falkner
Falkner, MS
National State Bank of Metropolis
Metropolis, IL

Savings Association Insurance Fund
Purchase and Assumption - All Deposits

Mutual Federal Sa vin gs Bank of Atlanta
Atlanta, GA

C odes fo r B ank Class:
N M S ta te-cha rte re d bank th a t is n o t a m e m b e r o f th e Federal R eserve S yste m
N

N ational bank

SB

S avings bank

1

E stim a te d lo sses are as o f 12/31/00. E stim a te d lo sses are ro u tin e ly a d ju ste d w ith u pd ate d in fo rm a tio n fro m n e w appraisals and a sse t sales, w h ic h u ltim a te ly a ffe c t th e a sse t values
and p ro je cte d recoveries.




E stim ated Insured D eposits and th e Savings Association Insurance Fund,
D ecem ber 31, 1989, th ro u g h D ecem ber 31, 2000

Deposits in Insured Institutions (Dollars in Millions)
Insurance
Coverage

2000
1999
1998
1997
1996
1995

$ 10 0,0 00
100,000
100,000
1 00,000
1 00,000
100,000

1994
1993
1992
1991
1990
1989

100,000
100,000
100,000
100,000
100,000
100,000

7 20,823
7 26,473
760,902
8 10,664
874 ,73 8
9 48 ,14 4

Deposit Insurance
Fund

Total
Domestic Deposits

Est. Insured
Deposits

91.5
93.1
9 4.4
95.7
96.4
95.8

$ 1 0 ,75 8.6
10,280.7
9 ,8 3 9.8
9 ,368.3
8 ,8 8 8.4
3 ,3 5 7.8

1.31
1.35
1.31
1.30
1.25
0 .4 5

1.43
1.45
1.39
1.36
1.30
0.47

6 92 ,62 6
6 95 ,15 8
7 29,458
776,351
8 30 ,02 8
8 82 ,92 0

$ 8 2 2,6 10
7 64,359
7 51,413
7 21,503
7 08,749
7 42,547

Percentage of
Insured Deposits

$ 7 5 2,7 56
7 11 ,34 5
7 08 ,95 9
6 90,132
6 83,090
7 11,017

Total Domestic
Deposits

Year1

Insurance Fund as a Percentage of

96.1
95.7
95.9
9 5.8
9 4.9
93.1

1,936.7
1,155.7
2 79.0
93.9
18.2
0.0

0.27
0.16
0.04
0.01

0.28
0.17
0.04
0.01

0.00
0.00

0.00
0.00

Est. Insured2
Deposits

1

S tarting in 1990, d e p o sits in in sured in stitu tio n s e xclude th o s e d e p osits h eld b y Savings A ssociatio n Insurance Fund m e m b e rs th a t are in sured b y th e Bank Insurance Fund and include
th o s e d e p o s its held b y Bank Insurance Fund m e m b e rs th a t are in sured by th e S avings A sso cia tio n Insurance Fund.

2

E stim a te d in sured d e p o s its re fle c t d e p o sit in fo rm a tio n as re p orte d in th e fo u rth q u a rte r FDIC Q ua rte rly Banking Profile. B efo re 1991, in sured d e p o s its w e re e s tim a te d using
p e rcen tag es d ete rm in e d fro m th e Ju n e 3 0 Call Reports.

Number, Assets, Deposits, Losses, and Loss to Funds of Insured Thrifts 1
Taken Over or Closed Because of Financial Difficulties, 1989 through 2000

D ollars in Thousands

Estimated
Receivership Loss3

Total

Assets

Deposits

Total

751

$394,111,336

$ 317,624,631

$ 74,536,757

$ 82,047,953

2 000
1999
1998
1997
1996
1995

1
1
0
0
1
2

29,5 30
62,9 56
0
0
32,5 76
4 2 3 ,8 1 9

28,583
63,427
0
0
32,7 45
4 14 ,69 2

1,402
1,343
0
0
2 1,222
28,931

1,402
1,343
0
0
2 1,2 22
28,4 89

2
10
59
144
213
3 18

136,815
6,1 4 7,9 62
4 4,1 96 ,94 6
78,8 98 ,70 4
1 29,66 2,3 98
1 34,51 9,6 30

127,508
4,881,461
34,7 73 ,22 4
65,1 73 ,12 2
98,9 63 ,96 0
1 13,165,909

11,472
2 52 ,83 6
3 ,0 8 2,2 99
8 ,4 3 4,2 88
16,071,715
4 6 ,6 3 1 ,2 4 9

14,599
2 03 ,77 9
3 ,6 8 8,2 50
9 ,2 2 6,6 08
1 9,2 97 ,71 2
4 9,5 64 ,54 9

Year2

1994
1993
1992
1991
1990
1989 5

Loss to Funds4

1

Prior to Ju ly 1, 1995, all th r ift clo sin gs w e re th e re sp o n sib ility o f th e R e solutio n Trust C orp oratio n (RTC). Since th e RTC w a s te rm in a te d on D e ce m b e r 31, 1995, and all a sse ts and
liabilities tra n sfe rre d to th e FSLIC R esolution Fund (FRF), all th e re su lts o f th e th r ift clo sin g a c tiv ity fro m 1989 th ro u g h 1995 are n o w re fle cte d on FRF's books. T he S avings A ssociatio n
Insurance Fund (SAIF) beca m e re sp on sib le fo r all th rifts clo se d a fte r Ju n e 30, 1995; th e re have b een o n ly th re e such failures. A d d itio na lly, SAIF w a s a pp ointe d re ce iver o f o ne th r ift
(H eartland FSLA) on O c to b e r 8, 1993, because, at th a t tim e , RTC's a u th o rity to reso lve FS LIC-insured th rifts had n o t y e t been e xte n d e d b y th e RTC C o m p le tio n A ct.

2

Year is th e ye ar o f failure, n o t th e ye ar o f reso lutio n .

3

The e s tim a te d lo sses re p re se n t th e p ro jecte d loss at th e fu n d level fro m re ce ivership s fo r u n re im b u rse d su brog ate d cla im s o f th e FRF/SAIF and unpaid a dvances to re ce ivership s fro m
th e FRF.

4

The Loss to Funds re p re se n ts th e to ta l re so lu tio n c o s t o f th e failed th rifts in th e SAIF and FRF-RTC fu n d s, w h ic h in clu de s co rp o ra te re ve nu e and e xp e n se ite m s su ch as in te re s t
e xp e n se on Federal Financing Bank d eb t, in te re s t e xpe nse on e s c ro w e d fu n d s, and in te re s t re ve nu e on a dvances to rece ivership s, in a dd itio n to th e e s tim a te d lo sses fo r receivership s.

5

Total fo r 1989 e xclud e s n ine fa ilu re s o f th e fo rm e r FSLIC.










Resources




B oard of D irecto rs

Donna Tanoue
Andrew C Hove, Jr.
.
Ellen Seidman
John D. Hawke, Jr.

O ffice of the Chairm an

Donna Tanoue
Chairman

v

I!

Deputy to th e Chairm an

Jadine Nielsen

C hief of Staff

Mark P Jacobsen

b h ih h h b h b h h h h

O ffice of
In specto r G eneral

C hief Inform ation
O fficer

Gaston L. Gianni, Jr.
Inspector General

Donald C Demitros
.

b
Deputy to the C hairm an
and
C hief O perating O fficer

G en eral Counsel

William F Kroener, III
.

John F Bovenzi
.

I
I

D ivision of
Supervision

jj
1

Michael J. Zamorski
Acting Director

Ih

h

h

h

D ivision of
In suran ce

Arthur J. Murton
Director

D ivision of C om pliance
and Consum er A ffairs

Stephen M. Cross

1 D ivision of Inform ation
1 R esources M a n a g e m e n t
J Donald C. Demitros
II

Director

D ivision of R esearch

I

O ffice of D iversity and

|

Econom ic Opportunity

f
t

J

D. Michael Collins

1|j Director

O ffice of

1

O ffice of Legislative

Pub lic A ffairs

|

A ffairs

Phil Battey

O ffice of the

.1 Alice C Goodman
.

I

Bank Technology

1 Group
Ronald F Bieker
.
’ 3 Christie A. Sciacca
Ombudsman
1I Director
■-...................... J
Ombudsman

Legal D ivision
Wi l l i am F Kroener, III
.

General Counsel

h

and S tatistics

William R Watson
.
Director

i

O ffice of the
E xecutive S ecreta ry

Robert E Feldman
.
Executive Secretary

S taffin g Trends 1991 -2000

24.000
21.000

________________ 1991

93

...

94 ..........95 ........._96_...

97

98_
_

99

2000

7,409

6,775

5,899

2,043

FDIC ■ _____

13,972

15,050

14,219

11,627

9,813

9,151

7,793

7,359

7,266

6,452

Total Staffing

22,586

22,459

20,994

17,526

11,856

9,151

7,793

7,359

7,266

6,452

RTC ■

________ 8,614

92

_______________ _________

Note:
All staffing totals reflect year-end balances.
The Resolution Trust Corporation (RTC) was fully staffed with FDIC employees and, until February 1992, the RTC was managed
by the FDIC Board of Directors. Upon the RTC sunset at year-end 1995, all of its remaining workload and employees were transferred
to the FDIC.




104

Sources of Information

Home Page on the Internet

Public Information Center

www.fdic.gov

801 17th Street, NW
Washington, DC 20434

A w ide range of banking, consumer and financial information
is available on the FDIC's Internet home page. This includes
the FDIC's Electronic Deposit Insurance Estimator, "EDIE,"
w hich estim ates an individual's deposit insurance coverage;
the Institution Directory, financial profiles of FDIC-supervised institutions; C om m unity R einvestm ent A ct evalua­
tions and ratings fo r banks and th rifts supervised by the
FDIC; and Call Reports, banks' reports o f condition and
income. Readers also can access a variety of consum er
pam phlets, FDIC press releases, speeches and other
updates on the agency's activities, as w ell as corporate
databases and custom ized reports of FDIC and banking
industry inform ation. Newly available in 2000 is a page
allowing interested parties to subm it com m ents via the
Internet on proposed regulations. The "A sk FDIC" feature
has been upgraded, enabling the public to more easily iden­
tify and contact the appropriate source of inform ation at the
FDIC.

Phone:
(877) 275-3342 (ASK FDIC), option 4, or
(202) 416-6940
Fax:
(202) 416-2076
E-mail:

FDIC p u b lic a tio n s , press releases, s p e e ch e s and
Congressional testim ony, directives to financial institutions,
policy manuals and other docum ents are available on
request or by subscription through the Public Information
Center. These docum ents include the Quarterly Banking
Profile, Statistics on Banking, Sum m ary o f Deposits and
a variety o f consum er pamphlets.

Office of the Ombudsman
FDIC Call Center

550 17th Street, NW
Washington, DC 20429

Phone:
(877) 275-3342 (ASK FDIC)
(202) 736-0000

Phone:
(877) 275-3342 (ASK FDIC), option 3

TDD:
(800) 925-4618
The FDIC Call Center in W ashington, DC, is the primary tele­
phone point of contact fo r general questions from the bank­
ing com m unity, the public and FDIC employees. The Call
Center directly, or in concert w ith other FDIC subject m atter
experts, responds to questions about deposit insurance
and other consum er issues and concerns, as w ell as ques­
tions about FDIC programs and activities. The Call Center
also makes referrals to other federal and state agencies
as needed. Hours of operation are 8:00 a.m. to 8:00 p.m.
eastern standard tim e. Information also is available in
Spanish.




Fax:
(202) 942-3040 or
(202) 942-3041
E-mail:
ombudsman@fdic.gov
The O ffice of the Om budsman responds to inquiries about
the FDIC in a fair, impartial and tim ely manner. It researches
questions and complaints from bankers, the public and
FDIC employees on a confidential basis. The office also
recommends ways to improve FDIC operations, regulations
and custom er service.

m

Kegionnl Offices
Division of Supervision (DOS)
and
Division of C om pliance and Consumer Affairs (DCA)

DOS
Examines and supervises state-chartered banks
that are not members of the Federal Reserve System.
Provides information about sound banking practices.
DCA
Examines FDIC-supervised banks for compliance
with consumer protection laws and the
Community Reinvestment Act. Informs bankers
and the public about deposit insurance and
other consumer protections.

Atlanta
■

M

M New York

Dallas

One Atlantic Center
1201 W est Peachtree Street, NE
Suite 1800
Atlanta, Georgia 30309
(404) 817-1300

1910 Pacific Avenue
Suite 1900
Dallas, Texas 75201
(214) 754-0098

20 Exchange Place
New York, New York 10005
(917) 320-2500

Alabama
Florida
Georgia
North Carolina
South Carolina
Virginia

Colorado
New Mexico
Oklahoma
Texas

Delaware
District of Columbia
Maryland
New Jersey
New York
Pennsylvania

West Virginia

Puerto Rico
Virgin Islands

_

_

_

Boston

Kansas City

San Francisco

15 Braintree Hill Office Park
Suite 100
Braintree, M assachusetts 02184
(781) 794-5500

2345 Grand Avenue
Suite 1500
Kansas City, Missouri 64108
(816) 234-8000

25 Ecker Street
Suite 2300
San Francisco, California 94105
(415) 546-0160

Connecticut
Maine
Massachusetts
New Hampshire
Rhode Island
Vermont

Iowa
Kansas
Minnesota
Missouri
Nebraska
North Dakota

Alaska
Arizona
California
Guam
Hawaii
Idaho

Chicago
500 W est Monroe Street
Suite 3600
Chicago, Illinois 60661
(312) 382-7500

Illinois
Indiana
Michigan
Ohio
Wisconsin




South Dakota

M Memphis
5100 Poplar Avenue
Suite 1900
M em phis, Tennessee 38137
(901) 685-1603

■

1

Arkansas
Kentucky
Louisiana
Mississippi
Tennessee

Montana
Nevada
Oregon
Utah
Washington
Wyoming

106

Index

22

Applications, 1998-2000

Hawke, John D., Jr.
3, 4, 5, 10

Hove, Andrew (Skip) C., Jr.

Assessments (see Deposit Insurance Premiums)
18

Asset Liquidation

Legislation Enacted (see Gram m-Leach-Bliley Act)

19

Bank Insurance Fund (BIF):
Highlights

15-16

Financial Statements

25-44

Commercial Banks (Financial Performance):
Return on Assets

14

Consumer Complaints and Inquiries

22

Deposit Insurance Premiums:
Risk-Related Premiums

9,16-17
2-3,8-12

Diversity

20-21

Electronic Banking (see Technology)
Emerging Risks

16-18

Enforcement Actions

21

Examinations, 1998-2000

19

Failed Institutions:
FDIC-insured Institutions Closed During 2000
Liquidation Highlights

Savings Associations (Performance):
Return on Assets

15-16
45-61
9
15
4, 5

Staffing:
Staffing Trends 1991-2000

103

Statistical Tables:
Number and Deposits of BIF-lnsured Banks
Closed, 1934-2000

91

Recoveries and Losses by the BIF
on Disbursements for the
Protection of Depositors, 1934-2000

92-93

Income and Expenses, BIF, 1933-2000

94-95

98
18
4-5
96
102
105
104
103

General Accounting Office (GAO)

81-87

Gramm-Leach-Bliley Act

19-20

FDIC Expenditures, 1991-2000

96

Estimated Insured Deposits
and the BIF, 1934-2000

97

Income and Expenses, SAIF, 1989-2000

Federal Savings and Loan Insurance Corporation
Resolution Fund (FRF):
63-80
Financial Statements




Savings Association Insurance Fund (SAIF):
Highlights
Financial Statements
Risk-Related Premiums

Seidman, Ellen

Deposit Insurance Funds (see BIF and SAIF)

Federal Deposit Insurance Corporation (FDIC):
Board of Directors
Corporate Planning and Budget
Organization Chart/Officials
Regional Offices
Sources of Information
Staffing Trends 1991-2000

3, 5

9

Risk-Related Premiums

Deposit Insurance Reform

Reich, John

98

FDIC-insured Institutions Closed During 2000

98

Estimated Insured Deposits
and the SAIF, 1989-2000

99

Number, Assets, Deposits, and Losses
of Insured Thrifts Taken Over
or Closed, 1989-2000

99

Tanoue, Donna
Technology

2-3, 4, 8 ,1 0 ,1 1 ,1 8 , 19
18-19

Published by:
O ffice of
Public Affairs
Phil B a ttey

Director
E liza b e th R. Ford

A ssistant Director
D avid Barr
M a rjo rie C. B rad sh aw
Jay Rosenstein

Co-Editors
Design, Production/Typesetting by:
D ivision o f A d m in is tra tio n
D esign U n it
A d d ie H a rg ro ve

Chief, Design and Printing Unit
Patricia Hughes

Head, Design Group
S am Collicchio

Coordinator, A rt Director/Designer
Production of the
Financial Statem ents by:
D ivision of Finance
Financial S ta te m e n ts S ection




S a m u e l E. Forkkio

Chief
Paul A. Covas

A ssistant Chief
D enise M . H arris

Senior Accountant

H

Slipsips

mm

M

F e d e r a l D e p o s it I n s u r a n c e C o r p o r a t i o n • .">.">() I T lli S tr e e t . WN • W a s h in g t o n . DC.




Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102