Wednesday, June 13, 2012

FDIC Deposit Insurance Fund Balance at 10-Quarter High

The FDIC Deposit Insurance Fund (DIF) balance and related Provision for Insurance Losses (PIL) indicate continued improvement through the 3 months ended March 31, 2012. During the 2008 financial system crisis and the Great Recession, the Provision for Insurance Losses increased, and the DIF decreased, as a result of bank failures and the resulting costs of seizure and liquidation. However, the FDIC problem bank list remains very high which indicates ongoing bank failures and DIF costs. Bank failures and the related charts of total failures and cost to the FDIC Deposit Insurance Fund are posted weekly on this blog.

FDIC Deposit Insurance Fund by Quarter The FDIC Deposit Insurance Fund balance was +$15.3 billion at the quarter ending 3-31-12. This is the 4th consecutive quarterly positive balance, after 7 consecutive negative quarters, and a 13-quarter high. The peak balance was +$52.84 billion at QE 3-31-08. This was before the 2008 USA financial system crisis and Great Recession. The low balance was a negative -$20.9 billion at the QE 12-31-09. The Provision for Insurance Losses (PIL), the cost of seizing and liquidating failed banks, was a mere +$12 million at QE 3-31-12. The PIL peaked at +$21.7 billion for the QE 9-30-09. Prior to the QE 3-31-08, the PIL was an immaterial amount, positive or negative, of less than $100 million each quarter.

DIF Balance Continues Positive (FDIC Quarterly Banking Profile, May 24, 2012) The DIF balance increased in the first quarter to $15.3 billion (unaudited) from $11.8 billion (audited) in the fourth quarter, the ninth consecutive quarterly increase. Accrued assessment income added $3.7 billion. Interest earnings and unrealized gains on available-for-sale securities added $180 million, and all other income (net of expenses) added another $63 million. Operating expenses and insurance loss provisions subtracted $472 million, resulting in a first-quarter increase in the DIF balance of $3.5 billion.

FDIC Problem Bank List Decreases to 9-Quarter Low

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