Saturday, December 22, 2012

FDIC Deposit Insurance Fund Balance at 4-Year High



FDIC Deposit Insurance Fund The FDIC Deposit Insurance Fund (DIF) balance and related Provision for Insurance Losses (PIL) indicate continued improvement through the 3 months ended September 30, 2012. During the 2008 financial system crisis and the Great Recession, the Provision for Insurance Losses increased, and therefore 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 as occurring on this blog.

FDIC Deposit Insurance Fund by Quarter The FDIC Deposit Insurance Fund balance was +$25.2 billion at the quarter ending 9-30-12. This is the 6th consecutive quarterly positive balance, after 7 consecutive negative quarters, and a 16-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 -$20.86 billion at the QE 12-31-09. The Provision for Insurance Losses (PIL), the cost of seizing and liquidating failed banks, was a negative -$84 million at QE 9-30-12. The PIL peaked at +$21.69 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, December 4, 2012) The condition of the Deposit Insurance Fund (DIF) continues to improve. The DIF increased by $2.5 billion during the third quarter to $25.2 billion (unaudited), the eleventh consecutive quarterly increase. Accrued assessment income increased the fund by $2.8 billion. A negative provision for insurance losses and unrealized gains on available-for-sale securities added $91 million to the fund balance. Operating and other expenses, net of other revenue, reduced the fund by $393 million. For the first nine months of 2012, 43 insured institutions failed, with combined assets of $9.5 billion, at a current estimated cost to the DIF of $2.3 billion. The DIF reserve ratio was 0.35 percent at September 30, up from 0.32 percent at June 30, 2012, and from 0.12 percent four quarters ago.

$XLF $DIA $SPY $IWM $QQQ $MACRO $FED

Seeking Alpha