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entitled 'Financial Audit: Federal Deposit Insurance Corporation 
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United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

February 2013: 

Financial Audit: 

Federal Deposit Insurance Corporation Funds' 2012 and 2011 Financial 
Statements: 

GAO-13-291: 

GAO Highlights: 

Highlights of GAO-13-291, a report to congressional committees. 

Why GAO Did This Study: 

Created in 1933 to insure bank deposits and promote sound banking 
practices, FDIC plays an important role in maintaining public 
confidence in the nation’s financial system. FDIC administers the DIF, 
which protects bank and savings deposits, and the FRF, which was 
created to close out the business of the former Federal Savings and 
Loan Insurance Corporation (FSLIC). 

GAO annually audits the financial statements of the DIF and the FRF 
pursuant to Section 17 of the Federal Deposit Insurance Act, as 
amended, and the Government Corporation Control Act. GAO is 
responsible for obtaining reasonable assurance about whether (1) 
FDIC’s financial statements for the DIF and the FRF are presented 
fairly in all material respects, in accordance with U.S. generally 
accepted accounting principles; (2) FDIC maintained effective internal 
control over financial reporting; and (3) there are any reportable 
instances of FDIC noncompliance with tested provisions of laws and 
regulations. 

What GAO Found: 

In GAO’s opinion, the Federal Deposit Insurance Corporation (FDIC) 
fairly presented, in all material respects, the 2012 and 2011 
financial statements for the two funds it administers-—the Deposit 
Insurance Fund (DIF) and the FSLIC Resolution Fund (FRF). Also, in GAO’
s opinion, FDIC maintained, in all material respects, effective 
internal control over financial reporting relevant to the DIF and the 
FRF as of December 31, 2012. Further, GAO did not find any reportable 
instances of noncompliance with provisions of the laws and regulations 
it tested. 

The banking industry continued to recover in 2012. During 2012, 51 
insured institutions with combined assets of $11.8 billion failed. The 
losses to the DIF from failures that occurred in 2012 were lower than 
the amount reserved at the end of 2011. This occurred primarily 
because the aggregate number and size of institution failures in 2012—-
and their estimated cost to the DIF—-were less than anticipated. As 
discussed in note 17 to the DIF’s financial statements, through 
February 14, 2013, two institutions have failed thus far during 2013. 
As of December 31, 2012, the DIF had a fund balance of $33 billion, 
compared to a fund balance of $11.8 billion at December 31, 2011. 
DIF’s ratio of reserves to estimated insured deposits as of the end of 
September of 2012 was 0.35 percent, compared to 0.17 percent at the 
end of 2011. FDIC’s long range target is to maintain the reserve ratio 
at a minimum 2 percent. 

In an effort to counter the system-wide crisis in the nation’s 
financial sector, the FDIC established the Temporary Liquidity 
Guarantee Program (TLGP) on October 14, 2008, for insured depository 
institutions, designated affiliates and certain holding companies. At 
its inception, the TLGP consisted of two components: 1) the 
Transaction Account Guarantee Program (TAG) and 2) the Debt Guarantee 
Program (DGP). The TAG provided unlimited coverage for noninterest-
bearing transaction accounts held by insured depository institutions 
on all deposit amounts exceeding the fully insured limit of $250,000 
through December 31, 2010. The DGP permitted participating entities to 
issue FDIC-guaranteed senior unsecured debt. The FDIC’s guarantee for 
all such debt expired on December 31, 2012. The expiration of the 
guarantee period for the DGP marked the conclusion of the TLGP. As 
established under terms of the TLGP, all excess funds were transferred 
to the DIF. 

What GAO Recommends: 

GAO is not making recommendations in this report. In commenting on a 
draft of this report, FDIC stated that it recognizes the important 
role a strong internal control program plays in achieving the agency’s 
mission, and its dedication to sound financial management has been and 
will remain a top priority. 

View [hyperlink, http://www.gao.gov/products/GAO-13-291]. For more 
information, contact James R. Dalkin at (202) 512-3133 or 
dalkinj@gao.gov. 

[End of section] 

Contents: 

Transmittal Letter: 

Auditor's Report: 
Reports on the Financial Statements and Internal Control: 
Report on Compliance with Laws and Regulations: 
FDIC Comments and Our Evaluation: 

Deposit Insurance Fund's Financial Statements: 
Balance Sheet: 
Statement of Income and Fund Balance: 
Statement of Cash Flows: 
Notes to the Financial Statements: 

FSLIC Resolution Fund's Financial Statements: 
Balance Sheet: 
Statement of Income and Accumulated Deficit: 
Statement of Cash Flows: 
Notes to the Financial Statements: 

Appendix: 

Appendix I: Comments from the Federal Deposit Insurance Corporation: 

Abbreviations: 

CFO: Chief Financial Officer: 

DGP: Debt Guarantee Program: 

DIF: Deposit Insurance Fund: 

FDIC: Federal Deposit Insurance Corporation: 

FMFIA: Federal Managers' Financial Integrity Act of 1982: 

FRF: FSLIC Resolution Fund: 

FSLIC: Federal Savings and Loan Insurance Corporation: 

TAG: Transaction Account Guarantee Program: 

TLGP: Temporary Liquidity Guarantee Program: 

[End of section] 

United States Government Accountability Office: 
Washington, D.C. 20548: 

February 21, 2013: 

The Honorable Tim Johnson: 
Chairman: 
The Honorable Mike Crapo: 
Ranking Member: 
Committee on Banking, Housing, and Urban Affairs: 
United States Senate: 

The Honorable Jeb Hensarling: 
Chairman: 
The Honorable Maxine Waters: 
Ranking Member: 
Committee on Financial Services: 
House of Representatives: 

This report presents the results of our audits of the financial 
statements of the Deposit Insurance Fund (DIF) and the FSLIC 
Resolution Fund (FRF) as of, and for the years ending December 31, 
2012, and 2011. These financial statements are the responsibility of 
the Federal Deposit Insurance Corporation (FDIC), the administrator of 
the two funds. 

This report contains our (1) opinion that the financial statements of 
the DIF and the FRF are fairly presented, in all material respects; 
(2) opinion that FDIC maintained, in all material respects, effective 
internal control over financial reporting relevant to the DIF and the 
FRF as of December 31, 2012; and (3) conclusion that we found no 
reportable compliance issues during 2012 with provisions of laws and 
regulations we tested. 

We are sending copies of this report to the Chairman of the Board of 
Directors of FDIC; the Chairman of the FDIC Audit Committee; the 
Chairman of the Board of Governors of the Federal Reserve System; the 
Comptroller of the Currency; the Secretary of the Treasury; the 
Director of the Office of Management and Budget; and other interested 
parties. In addition, this report will be available at no charge on 
GAO's website at [hyperlink, http://www.gao.gov]. 

If you have any questions concerning this report, please contact me at 
(202) 512-3133 or dalkinj@gao.gov. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. 

Signed by: 

James R. Dalkin: 
Director: 
Financial Management and Assurance: 

[End of section] 

United States Government Accountability Office: 
Washington, D.C. 20548: 

Auditor's Report Independent Auditor's Report: 

To the Board of Directors The Federal Deposit Insurance Corporation: 

In our audits of the 2012 and 2011 financial statements of the Deposit 
Insurance Fund (DIF) and the FSLIC Resolution Fund (FRF), both of 
which are administered by the Federal Deposit Insurance Corporation 
(FDIC)[Footnote 1], we found: 

* the financial statements of the DIF and the FRF as of and for the 
years ended December 31, 2012, and 2011, are presented fairly, in all 
material respects, in accordance with U.S. generally accepted 
accounting principles; 

* FDIC maintained, in all material respects, effective internal 
control over financial reporting relevant to the DIF and the FRF as of 
December 31, 2012; and: 

* no reportable noncompliance with provisions of laws and regulations 
we tested. 

The following sections discuss in more detail (1) our reports on the 
financial statements and internal control, including two matters of 
emphasis related to improvements in the banking industry's and the 
DIF's financial condition, and the expiration of the Temporary 
Liquidity Guarantee Program; (2) our report on compliance with laws 
and regulations; and (3) agency comments and our evaluation. 

Reports on the Financial Statements and Internal Control: 

In accordance with Section 17 of the Federal Deposit Insurance Act, as 
amended, and the Government Corporation Control Act, we have audited 
the financial statements of the DIF and FRF, both of which are 
administered by FDIC. The DIF statements comprise the balance sheets 
as of December 31, 2012 and 2011; the related statements of income and 
fund balance, and cash flows for the years then ended; and the related 
notes to the financial statements. The FRF statements comprise the 
balance sheets as of December 31, 2012 and 2011; the related 
statements of income and accumulated deficit, and cash flows for the 
years then ended; and the related notes to the financial statements. 
We also have audited FDIC's internal control over financial reporting 
relevant to the DIF and the FRF as of December 31, 2012, based on 
criteria established under 31 U.S.C. § 3512(c), (d), commonly known as 
the Federal Managers' Financial Integrity Act of 1982 (FMFIA). 

We conducted our audits in accordance with U.S. generally accepted 
government auditing standards. We believe that the audit evidence we 
obtained is sufficient and appropriate to provide a basis for our 
audit opinions. 

Management's Responsibility: 

FDIC management is responsible for (1) the preparation and fair 
presentation of these financial statements in accordance with U.S. 
generally accepted accounting principles; (2) maintaining effective 
internal control over financial reporting, including the design, 
implementation, and maintenance of internal control relevant to the 
preparation and fair presentation of financial statements that are 
free from material misstatement, whether due to fraud or error; (3) 
evaluating the effectiveness of internal control over financial 
reporting based on the criteria established under FMFIA; and (4) 
providing its assertion about the effectiveness of internal control 
over financial reporting as of December 31, 2012, based on its 
evaluation, included in the accompanying Management Report on Internal 
Control over Financial Reporting in Appendix 1. 

Auditor's Responsibility: 

Our responsibility is to express opinions on these financial 
statements and opinions on FDIC's internal control over financial 
reporting relevant to the DIF and the FRF based on our audits. U.S. 
generally accepted government auditing standards require that we plan 
and perform the audits to obtain reasonable assurance about whether 
the financial statements are free from material misstatement, and 
whether effective internal control over financial reporting was 
maintained in all material respects as of December 31, 2012. 

An audit of financial statements involves performing procedures to 
obtain audit evidence about the amounts and disclosures in the 
financial statements. The procedures selected depend on the auditor's 
judgment, including the auditor's assessment of the risks of material 
misstatement of the financial statements, whether due to fraud or 
error. In making those risk assessments, the auditor considers 
internal control relevant to the entity's preparation and fair 
presentation of the financial statements in order to design audit 
procedures that are appropriate in the circumstances. An audit of 
financial statements also involves evaluating the appropriateness of 
the accounting policies used and the reasonableness of significant 
accounting estimates made by management, as well as evaluating the 
overall presentation of the financial statements. An audit of internal 
control over financial reporting includes obtaining an understanding 
of internal control over financial reporting, assessing the risk that 
a material weakness exists, evaluating the design and operating 
effectiveness of internal control based on the assessed risk, and 
testing relevant internal control over financial reporting. Our audit 
of internal control also considered the entity's process for 
evaluating and reporting on internal control over financial reporting 
based on criteria established under FMFIA. Our audits also included 
performing such other procedures as we considered necessary in the 
circumstances. 

We did not evaluate all internal controls relevant to operating 
objectives as broadly established under FMFIA, such as those controls 
relevant to preparing performance information and ensuring efficient 
operations. We limited our internal control testing to testing 
controls over financial reporting. Our internal control testing was 
for the purpose of expressing an opinion on whether effective internal 
control over financial reporting was maintained, in all material 
respects. Consequently, our audit may not identify all deficiencies in 
internal control over financial reporting that are less severe than a 
material weakness.[Footnote 2] 

Definitions and Inherent Limitations of Internal Control: 

An entity's internal control over financial reporting is a process 
effected by those charged with governance, management, and other 
personnel, the objectives of which are to provide reasonable assurance 
that (1) transactions are properly recorded, processed, and summarized 
to permit the preparation of financial statements in accordance with 
U.S. generally accepted accounting principles, and assets are 
safeguarded against loss from unauthorized acquisition, use, or 
disposition; and (2) transactions are executed in accordance with laws 
and regulations that could have a direct and material effect on the 
financial statements. 

Because of its inherent limitations, internal control over financial 
reporting may not prevent, or detect and correct misstatements due to 
fraud or error. We also caution that projecting any evaluation of 
effectiveness to future periods is subject to the risk that controls 
may become inadequate because of changes in conditions, or that the 
degree of compliance with the policies or procedures may deteriorate. 

Opinions: 

In our opinion: 

* The DIF's financial statements present fairly, in all material 
respects, the DIF's financial position as of December 31, 2012, and 
2011; the results of its operations; and its cash flows for the years 
then ended, in accordance with U.S. generally accepted accounting 
principles. 

* The FRF's financial statements present fairly, in all material 
respects, the FRF's financial position as of December 31, 2012, and 
2011; the results of its operations; and its cash flows for the years 
then ended, in accordance with U.S generally accepted accounting 
principles. 

* FDIC maintained, in all material respects, effective internal 
control over financial reporting relevant to the DIF as of December 
31, 2012, based on criteria established under FMFIA. 

* FDIC maintained, in all material respects, effective internal 
control over financial reporting relevant to the FRF as of December 
31, 2012, based on criteria established under FMFIA. 

In our 2011 audit report[Footnote 3] we reported a significant 
deficiency[Footnote 4] concerning the effectiveness of controls over 
FDIC's process for deriving and reporting estimates of losses to the 
DIF from resolution transactions involving shared loss 
agreements.[Footnote 5] During 2012, FDIC corrected the underlying 
control issues that constituted the significant deficiency. 

During our 2012 audit, we identified deficiencies in FDIC's internal 
control that we do not consider to be material weaknesses or 
significant deficiencies. Nonetheless, these deficiencies warrant FDIC 
management's attention. We have communicated these matters to FDIC 
management and, where appropriate, will report on them separately. 

Emphasis of Matters: 

Improvement in the Banking Industry's and the DIF's Financial 
Condition: 

As discussed in note 8 to DIF's financial statements, the banking 
industry continued to recover in 2012. During 2012, 51 insured 
institutions with combined assets of $11.8 billion failed. The losses 
to the DIF from failures that occurred in 2012 were lower than the 
amount reserved at the end of 2011, as the aggregate number and size 
of institution failures in 2012--and their estimated cost to the DIF--
were less than anticipated. DIF's contingent liability for anticipated 
failures declined from $6.5 billion at December 31, 2011 to $3.2 
billion at December 31, 2012. As discussed in note 17 to the DIF's 
financial statements, through February 14, 2013, two institutions have 
failed thus far during 2013. 

As of December 31, 2012, the DIF had a fund balance of $33 billion, 
compared to a fund balance of $11.8 billion at December 31, 2011. The 
DIF's ratio of reserves to estimated insured deposits as of the end of 
September of 2012 was 0.35 percent, compared to 0.17 percent at the 
end of 2011. This improvement was primarily attributable to increased 
revenue in 2012 and, as noted above, lower losses from failed 
institutions than estimated at December 31, 2011, and a reduction in 
estimated losses from anticipated failures at December 31, 2012. 
FDIC'S long-range target is to maintain the reserve ratio at a minimum 
2 percent. 

Expiration of the Temporary Liquidity Guarantee Program: 

As discussed in note 16 to the DIF's financial statements, in an 
effort to counter the system-wide crisis in the nation's financial 
sector, FDIC established the Temporary Liquidity Guarantee Program 
(TLGP) on October 14, 2008, for insured depository institutions, 
designated affiliates and certain holding companies. At its inception, 
the TLGP consisted of two components: (1) the Transaction Account 
Guarantee Program (TAG) and (2) the Debt Guarantee Program (DGP). The 
TAG provided unlimited coverage for noninterest-bearing transaction 
accounts held by insured depository institutions on all deposit 
amounts exceeding the fully insured limit of $250,000 through December 
31, 2010. The DGP permitted participating entities to issue FDIC-
guaranteed senior unsecured debt through October 31, 2009. FDIC's 
guarantee for all such debt expired on December 31, 2012. The 
expiration of the guarantee period for the DGP marked the conclusion 
of the TLGP. As established under terms of the TLGP, all excess funds 
were transferred to the DIF. Accordingly, in 2012, the DIF recognized 
total "Other revenue" of $5.9 billion related to the TLGP. This 
revenue consisted of $5.2 billion of cash and a net receivable of $693 
million included in "Receivables from resolutions, net." The net 
receivable represents estimated recoveries on payments made under the 
TLGP to cover obligations. 

Our opinion on the DIF's financial statements is not modified with 
respect to these matters. 

Report on Compliance with Laws and Regulations: 

In connection with our audits of the financial statements of the DIF 
and the FRF, both of which are administered by the FDIC, we have 
tested compliance with selected provisions of laws and regulations 
that have a direct and material effect on the DIF and FRF financial 
statements. We performed our tests of compliance in accordance with 
U.S. generally accepted government auditing standards. 

Management's Responsibility: 

FDIC management is responsible for complying with applicable laws and 
regulations. 

Auditor's Responsibility: 

Our responsibility is to test compliance with selected provisions of 
laws and regulations that have a direct and material effect on the 
financial statements. We did not test compliance with all laws and 
regulations applicable to FDIC. We limited our tests of compliance to 
selected provisions of laws and regulations that have a direct and 
material effect on the financial statements for the year ended 
December 31, 2012. We caution that noncompliance may occur and not be 
detected by these tests. 

Compliance with Laws and Regulations: 

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

Intended Purpose of Report on Compliance with Laws and Regulations: 

The purpose of this report is solely to describe the scope of our 
testing of compliance with laws and regulations, and the results of 
that testing, and not to provide an opinion on compliance with laws 
and regulations. This report is an integral part of an audit performed 
in accordance with U.S. generally accepted government auditing 
standards in considering compliance with laws and regulations. 
Accordingly, this report on compliance with laws and regulations is 
not suitable for any other purpose. 

FDIC Comments and Our Evaluation: 

In commenting on a draft of this report, the FDIC's Chief Financial 
Officer (CFO) noted that the agency was pleased that we provided 
unmodified (unqualified) opinions on the DIF and FRF financial 
statements and that we reported that it had effective internal control 
over financial reporting and complied with tested provisions of laws 
and regulations. 

FDIC's CFO also stated that FDIC is pleased that we acknowledged the 
agency's efforts to resolve the prior year significant deficiency 
related to estimating losses to DIF from shared-loss agreements. He 
also commented that FDIC will continue to focus on strengthening and 
improving its internal control environment, and that FDIC will 
continue its dedication to establishing sound financial management as 
a top priority in helping achieve the agency's mission. 

Signed by: 

James R. Dalkin 
Director: 
Financial Management and Assurance: 

February 14, 2013: 

[End of section] 

Deposit Insurance Fund's Financial Statements: 

Balance Sheet: 

Deposit Insurance Fund (DIF): 

Federal Deposit Insurance Corporation: 

Deposit Insurance Fund Balance Sheet at December 31: 

Dollars in Thousands: 

Assets: 

Cash and cash equivalents - unrestricted: 
2012: $3,100,361; 
2011: $3,277,839. 

Cash and cash equivalents - restricted - systemic risk (Note 16): 
(Includes cash/cash equivalents of $0 at December 31, 2012 and 
$1,627,073 at December 31, 2011): 
2012: $0; 
2011: $4,827,319. 

Investment in U.S. Treasury obligations, net: (Note 3): 
2012: $34,868,688; 
2011: $33,863,245. 

Trust preferred securities (Note 5): 
2012: $2,263,983; 
2011: $2,213,231. 

Assessments receivable, net (Note 9): 
2012: $1,006,852; 
2011: $282,247. 

Receivables and other assets - systemic risk (Note 16): 
2012: $0; 
2011: $1,948,151. 

Interest receivable on investments and other assets, net: 
2012: $433,592; 
2011: $488,179. 

Receivables from resolutions, net (Note 4): 
2012: $23,119,554; 
2011: $218,548,396. 

Property and equipment, net (Note 6): 
2012: $392,880; 
2011: $401,915. 

Total Assets: 
2012: $65,185,910; 
2011: $75,850,522. 

Liabilities: 

Accounts payable and other liabilities: 
2012: $349,620; 
2011: $374,164. 

Unearned revenue - prepaid assessments (Note 9): 
2012: $1,576,417; 
2011: $17,399,828. 

Refunds of prepaid assessments (note 9): 
2012: $5,675,199; 
2011: $0. 

Liabilities due to resolutions (Note 7): 
2012: $21,173,785; 
2011: $32,790,512. 

Debt Guarantee Program liabilities - systemic risk (Note 16): 
2012: $0; 
2011: $177,027. 

Deferred revenue - systemic risk (Note 16): 
2012: $0; 
2011: $6,639,954. 

Postretirement benefit liability (Note 13): 
2012: $224,225; 
2011: $187,968. 

Contingent liabilities for: Anticipated failure of insured 
institutions: (Note 8): 
2012: $3,220,697; 
2011: $6,511,321. 

Contingent liabilities for: Systemic risk (Note 16): 
2012: $0; 
2011: $2,216. 

Contingent liabilities for: Litigation losses: (Note 8): 
2012: $8,200; 
2011: $1,000. 

Total Liabilities: 
2012: $32,228,143; 
2011: $64,023,990. 

Commitments and off-balance-sheet exposure (Note 14): 

Fund Balance: 

Accumulated net income: 
2012: $32,682,237; 
2011: $11,560,990. 

Accumulated Other Comprehensive Income: 

Unrealized gain on available-for-sale securities, net (Note 3): 
2012: $33,819; 
2011: $47,697. 

Unrealized postretirement benefit (Loss) Gain (Note 13): 
2012: ($60,448); 
2011: ($33,562). 

Unrealized Gain on trust preferred securities (Note 5): 
2012: $301,159; 
2011: $251,407. 

Total Accumulated Other Comprehensive Income: 
2012: $275,530; 
2011: $265,542. 

Total Fund Balance: 
2012: $32,957,767; 
2011: $11,826,532. 

Total Liabilities and Fund Balance: 
2012: $65,185,910; 
2011: $75,850,522. 

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

[End of statement] 

Statement of Income and Fund Balance: 

Federal Deposit Insurance Corporation: 

Deposit Insurance Fund Statement of Income and Fund Balance for the 
Years Ended December 31: 

Dollars in Thousands: 

Revenue: 

Assessments (Note 9): 
2012: $12,397,022; 
2011: $13,498,587. 

Interest on U.S. Treasury obligations: 
2012: $159,214; 
2011: $127,621. 

Systemic risk revenue (Note 16): 
2012: ($161,135); 
2011: ($131,141). 

Other revenue (Note 10): 
2012: $6,127,211; 
2011: $2,846,929. 

Total Revenue: 
2012: $18,522,312; 
2011: $16,341,996. 

Expenses and Losses: 

Operating expenses (Note 11): 
2012: $1,777,513; 
2011: $1,625,3511. 

Systemic risk expenses (Note 16): 
2012: ($161,135); 
2011: ($131,141). 

Provision for insurance losses (Note 12): 
2012: ($4,222,595); 
2011: ($4,413,629). 

Insurance and other expenses: 
2012: $7,282; 
2011: $3,996. 

Total Expenses and Losses: 
2012: ($2,598,935); 
2011: ($2,915,423). 

Net Income: 
2012: $21,121,247; 
2011: $19,257,419. 

Other Comprehensive Income: 

Unrealized (Loss) Gain on U.S. Treasury investments, net (Note 3): 
2012: ($13,878); 
2011: $20,999. 

Unrealized postretirement benefit loss (Note 13): 
2012: ($26,886); 
2011: ($15,059). 

Unrealized Gain (Loss) on trust preferred securities (Note 5): 
2012: $50,752; 
2011: ($84,587). 

Total Other Comprehensive Income (Loss): 
2012: $9,988; 
2011: ($78,647). 

Total Other Comprehensive Income (Loss): 
2012: $21,131,235; 
2011: $19,178,772. 

Fund Balance - Beginning: 
2012: $11,826,532; 
2011: ($7,352,240). 

Fund Balance - Ending: 
2012: $32,957,767; 
2011: $11,826,532. 

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

Statement of Cash Flows: 

Deposit Insurance Fund: 

Federal Deposit Insurance Corporation: 

Deposit Insurance Fund Statement of Cash Flows for the Years Ended 
December 31: 

Dollars in Thousands: 

Operating Activities: 

Net Income (Loss): 
2012: $21,121,247; 
2011: $19,257,419. 

Adjustments to reconcile net income to net cash provided (used by) 
operating activities: 

Amortization of U.S. Treasury obligations: 
2012: $854,195; 
2011: $388,895. 

Treasury inflation-protected securities (TIPS) inflation adjustment: 
2012: ($98,050); 
2011: ($25,307). 

Depreciation on property and equipment: 
2012: $76,365; 
2011: $77,720. 

Loss on retirement of property and equipment: 
2012: $14; 
2011: $1,326. 

Provision for insurance losses: 
2012: ($4,222,595); 
2011: ($4,413,629). 

Unrealized Loss on postretirement benefits: 
2012: ($26,886); 
2011: ($15,059). 

Change In Operating Assets and Liabilities (Net Provisions for Losses): 

(Increase) in assessments receivable, net: 
2012: ($724,605); 
2011: ($64,354). 

Decrease (Increase)in interest receivable and other assets: 
2012: $51,181; 
2011: ($227,962). 

Decrease (Increase) in receivables from resolutions: 
2012: $6,371,418; 
2011: ($5,802,003). 

Decrease in receivable - systemic risk: 
2012: $1,948,151; 
2011: $321,271. 

(Decrease) in accounts payable and other liabilities: 
2012: ($24,543); 
2011: ($140,123). 

Increase in postretirement benefit liability: 
2012: $36,258; 
2011: $22,094. 

(Decrease) in contingency liabilities - systemic risk: 
2012: ($2,216); 
2011: ($117,777). 

(Decrease) in contingent liabilities - litigation losses: 
2012: $0; 
2011: ($276,000. 

(Decrease) Increase in liabilities due to resolutions: 
2012: ($11,616,727); 
2011: $2,278,635. 

(Decrease) Increase in Debt Guarantee Program liabilities - systemic 
risk: 
2012: ($117,027); 
2011: $87,693. 

[Decrease) Increase in unearned revenue - prepaid assessments: 
2012: ($15,823,411); 
2011: ($12,657,206). 

(Decrease) in deferred revenue - systemic risk: 
2012: ($6,513,828); 
2011: ($2,399,644). 

Net Cash (Used) by Provided by Operating Activities: 
2012: ($3,035,860); 
2011: ($3,704,011). 

Investing Activities: 

Provided by: Maturity of U.S. Treasury obligations: 
2012: $32,132,623; 
2011: $12,976,273. 

Provided by: Sale of U.S. Treasury obligations: 
2012: $2,554,781; 
2011: $0. 

Used by: Purchase of property and equipment: 
2012: ($67,344); 
2011: ($64,896). 

Used by: Purchase U.S. Treasury obligations: 
2012: ($33,388,751); 
2011: ($36,409,429). 

Net Cash Provided (Used) by Investing Activities: 
2012: $1,231,309; 
2011: ($23,498,052). 

Net (Decrease) in Cash and Cash Equivalents: 
2012: ($1,804,551); 
2011: ($27,202,063). 

Cash and Cash Equivalents - Beginning: 
2012: $4,904,912; 
2011: $32,106,975. 

Unrestricted Cash and Cash Equivalents - Ending: 
2012: $3,100,361; 
2011: $3,277,839. 

Restricted Cash and Cash Equivalents - Ending: 
2012: $0; 
2011: $1,627,073. 

Cash and Cash Equivalents - Ending: 
2012: $3,100,361; 
2011: $4,904,912. 

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

[End of statement] 

Notes to the Financial Statements: 

Notes To The Financial Statements: 
Deposit Insurance Fund: 
December 31, 2012 And 2011: 

1. Operations of the Deposit Insurance Fund: 

Overview: 

The Federal Deposit Insurance Corporation (FDIC) is the independent 
deposit insurance agency created by Congress in 1933 to maintain 
stability and public confidence in the nation’s banking system. 
Provisions that govern the operations of the FDIC are generally found 
in the Federal Deposit Insurance (FDI) Act, as amended (12 U.S.C. 
1811, et seq). In carrying out the purposes of the FDI Act, the FDIC, 
as administrator of the Deposit Insurance Fund (DIF), insures the
deposits of banks and savings associations (insured depository 
institutions) from loss due to institution failures. In cooperation 
with other federal and state agencies, the FDIC promotes the safety 
and soundness of insured depository institutions by identifying, 
monitoring and addressing risks to the DIF. Commercial banks, savings 
banks and savings associations (known as “thrifts”) are supervised by 
either the FDIC, the Office of the Comptroller of the Currency, or the 
Federal Reserve Board. 

The FDIC is also the administrator of the FSLIC Resolution Fund (FRF). 
The FRF is a resolution fund responsible for the sale of remaining 
assets and satisfaction of liabilities associated with the former 
Federal Savings and Loan Insurance Corporation (FSLIC) and the former 
Resolution Trust Corporation. The DIF and the FRF are maintained 
separately by the FDIC to support their respective functions. 

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection 
Act of 2010 (Dodd-Frank Act), the FDIC is the manager of the Orderly 
Liquidation Fund (OLF). Established as a separate fund in the U.S. 
Treasury (Treasury), the OLF is inactive and unfunded until the FDIC
is appointed as receiver for a covered financial company (a failing 
financial company, such as a bank holding company or nonbank financial 
company for which a systemic risk determination has been made as set 
forth in section 203 of the Dodd-Frank Act). 

The Dodd-Frank Act granted the FDIC authority to establish a widely 
available program to guarantee obligations of solvent insured 
depository institutions (IDIs) or solvent depository institution 
holding companies (including affiliates) upon the systemic 
determination of a liquidity event during times of severe economic 
distress. The program would not be funded by the DIF but rather by 
fees and assessments paid by all participants in the program. If fees 
are insufficient to cover losses or expenses, the FDIC must impose a 
special assessment on participants as necessary to cover the 
shortfall. Any excess funds at the end of the liquidity event program 
would be deposited in the General Fund of the Treasury. The Dodd-Frank 
Act limits the FDIC’s systemic risk determination authority under 
section 13 of the FDI Act to IDIs for which the FDIC has been 
appointed receiver. Prior to this change, the authority permitted open
bank assistance and the creation of the Temporary Liquidity Guarantee 
Program (TLGP) that expired on December 31, 2012 (see Note 16). 

The Dodd-Frank Act also created the Financial Stability Oversight 
Council (FSOC) of which the Chairman of the FDIC is a member and 
expanded the FDIC’s responsibilities to include supervisory review of 
resolution plans (known as living wills) and backup examination 
authority for systemically important bank holding companies and 
nonbank financial companies. The living wills provide for an entity’s 
rapid and orderly resolution in the event of material financial 
distress or failure. 

Operations Of The DIF: 

The primary purposes of the DIF are to 1) insure the deposits and 
protect the depositors of IDIs and 2) resolve failed IDIs upon 
appointment of the FDIC as receiver, in a manner that will result
in the least possible cost to the DIF (unless a systemic risk 
determination is made). 

The DIF is primarily funded from deposit insurance assessments. Other 
available funding sources, if necessary, are borrowings from the 
Treasury, the Federal Financing Bank (FFB), Federal Home Loan Banks, 
and IDIs. The FDIC has borrowing authority of $100 billion from the 
Treasury and a Note Purchase Agreement with the FFB, not to exceed 
$100 billion, to enhance the DIF’s ability to fund deposit insurance. 

A statutory formula, known as the Maximum Obligation Limitation (MOL), 
limits the amount of obligations the DIF can incur to the sum of its 
cash, 90 percent of the fair market value of other assets, and the 
amount authorized to be borrowed from the Treasury. The MOL for the 
DIF was $132.9 billion and $114.4 billion as of December 31, 2012 and 
2011, respectively. 

Operations Of Resolution Entities: 

The FDIC is responsible for managing and disposing of the assets of 
failed institutions in an orderly and efficient manner. The assets 
held by receiverships, pass-through conservatorships, and bridge 
institutions (collectively, resolution entities), and the claims 
against them, are accounted for separately from the DIF assets and 
liabilities to ensure that proceeds from these entities are 
distributed in accordance with applicable laws and regulations. 
Accordingly, income and expenses attributable to resolution entities 
are accounted for as transactions of those entities. Resolution 
entities are billed by the FDIC for services provided on their behalf. 

2. Summary of Significant Accounting Policies: 

General: 

These financial statements pertain to the financial position, results 
of operations, and cash flows of the DIF and are presented in 
accordance with U.S. generally accepted accounting principles (GAAP). 
As permitted by the Federal Accounting Standards Advisory Board’s 
Statement of Federal Financial Accounting Standards 34, The Hierarchy 
of Generally Accepted Accounting Principles, Including the Application 
of Standards Issued by the Financial Accounting Standards Board, the 
FDIC prepares financial statements in accordance with standards 
promulgated by the Financial Accounting Standards Board (FASB). These 
statements do not include reporting for assets and liabilities of 
resolution entities because these entities are legally separate and 
distinct, and the DIF does not have any ownership interests in them. 
Periodic and final accountability reports of resolution entities are 
furnished to courts, supervisory authorities, and others upon request. 

Use Of Estimates: 

Management makes estimates and assumptions that affect the amounts 
reported in the financial statements and accompanying notes. Actual 
results could differ from these estimates. Where it is reasonably 
possible that changes in estimates will cause a material change in the 
financial statements in the near term, the nature and extent of such 
potential changes in estimates have been disclosed. The more 
significant estimates include the valuation of trust preferred 
securities; the assessments receivable and associated revenue; the 
allowance for loss on receivables from resolutions (including shared-
loss agreements); guarantee obligations for structured transactions;
refunds of prepaid assessments; the postretirement benefit obligation; 
and the estimated losses for anticipated failures, litigation, and 
representations and indemnifications. 

Cash Equivalents: 

Cash equivalents are short-term, highly liquid investments consisting 
primarily of U.S. Treasury Overnight Certificates. 

Investment In U.S. Treasury Obligations: 

The DIF funds are required to be invested in obligations of the United 
States or in obligations guaranteed as to principal and interest by 
the United States. The Secretary of the Treasury must approve all such 
investments in excess of $100,000 and has granted the FDIC approval to 
invest the DIF funds only in U.S. Treasury obligations that are 
purchased or sold exclusively through the Bureau of the Public Debt’s 
Government Account Series program. 

The DIF’s investments in U.S. Treasury obligations are classified as 
available-for-sale. Securities designated as available-for-sale are 
shown at fair value. Unrealized gains and losses are reported as other 
comprehensive income. Realized gains and losses are included in the
Statement of Income and Fund Balance as components of net income. 
Income on securities is calculated and recorded on a daily basis using 
the effective interest or straight-line method depending on the 
maturity of the security. 

Revenue Recognition For Assessments: 

Assessment revenue is recognized for the quarterly period of insurance 
coverage based on an estimate. The estimate is derived from an 
institution’s risk-based assessment rate and assessment base for the 
prior quarter adjusted for the current quarter’s available assessment 
credits, certain changes in supervisory examination ratings for larger 
institutions, and a modest assessment base growth factor. At the 
subsequent quarter-end, the estimated revenue amounts are adjusted when
actual assessments for the covered period are determined for each 
institution (see Note 9). 

Capital Assets And Depreciation: 

The FDIC buildings are depreciated on a straight-line basis over a 35- 
to 50-year estimated life. Leasehold improvements are capitalized and 
depreciated over the lesser of the remaining life of the lease or the 
estimated useful life of the improvements, if determined to be 
material. Capital assets depreciated on a straight-line basis over a 
five-year estimated useful life include mainframe equipment; 
furniture, fixtures, and general equipment; and internal-use software.
Personal computer equipment is depreciated on a straight-line basis 
over a three-year estimated useful life. 

Reporting On Variable Interest Entities: 

FDIC receiverships engaged in structured transactions, some of which 
resulted in the issuance of note obligations that were guaranteed by 
the FDIC in its corporate capacity (see Note 8, Contingent Liabilities 
for: FDIC Guaranteed Debt of Structured Transactions). As the guarantor
of note obligations for several structured transactions, the FDIC in 
its corporate capacity is the holder of a variable interest in a 
number of variable interest entities (VIEs). The FDIC conducts a 
qualitative assessment of its relationship with each VIE as required 
by Accounting Standards Codification (ASC) Topic 810, Consolidation. 
These assessments are conducted to determine if the FDIC in its 
corporate capacity has 1) power to direct the activities that most 
significantly impact the economic performance of the VIE and 2) an 
obligation to absorb losses of the VIE or the right to receive 
benefits from the VIE that could potentially be significant to the 
VIE. When a variable interest holder has met both of these 
characteristics, the enterprise is considered the primary beneficiary 
and must consolidate the VIE. In accordance with the provisions of ASC
810, an assessment of the terms of the legal agreement for each VIE 
was conducted to determine whether any of the terms had been activated 
or modified in a manner which would cause the FDIC in its corporate 
capacity to be characterized as a primary beneficiary. In making that
determination, consideration was given to which, if any, activities 
were significant to each VIE. Often, the right to service collateral, 
to liquidate collateral, or to unilaterally dissolve the limited
liability company (LLC) or trust was determined to be the most 
significant activity. In other cases, it was determined that the 
structured transactions did not include such significant activities
and that the design of the entity was the best indicator of which 
party was the primary beneficiary. The results of each analysis 
identified a party other than the FDIC in its corporate capacity as 
the primary beneficiary. 

The conclusion of these analyses was that the FDIC in its corporate 
capacity has not engaged in any activity that would cause the FDIC in 
its corporate capacity to be characterized as a primary beneficiary to 
any VIE with which it was involved as of December 31, 2012 and 2011.
Therefore, consolidation is not required for the 2012 and 2011 DIF 
financial statements. In the future, the FDIC in its corporate 
capacity may become the primary beneficiary upon the activation of 
provisional contract rights that extend to the Corporation if payments 
are made on guarantee claims. Ongoing analyses will be required in 
order to monitor consolidation implications under ASC 810. 

The FDIC’s involvement with VIEs, in its corporate capacity, is fully 
described in Note 8. 

Related Parties: 

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

Disclosure About Recent Relevant Accounting Pronouncements: 

Recent accounting pronouncements have been deemed to be not applicable 
or material to the financial statements as presented. 

3. Investment in U.S. Treasury Obligations, Net: 

As of December 31, 2012 and 2011, investments in U.S. Treasury 
obligations, net, were $34.9 billion and $33.9 billion, respectively. 
As of December 31, 2012 and 2011, the DIF held $5.3 billion and $5.0 
billion, respectively, of Treasury Inflation-Protected Securities 
(TIPS), which are indexed to increases or decreases in the Consumer 
Price Index for All Urban Consumers (CPI-U). During 2012, the FDIC 
sold securities designated as available-for-sale for total proceeds of 
$2.6 billion. The gross realized gains and losses on these sales were 
$878 thousand and $241 thousand, respectively, which resulted in a 
total net gain of $637 thousand. The cost of these securities sold was 
determined based on specific identification. Since these securities were
purchased on behalf of the TLGP, the realized gain was recognized in 
the “Deferred revenue - systemic risk” line item on the Balance Sheet. 

Total Investment in U.S. Treasury Obligations, Net at December 31, 
2012: 

Dollars In Thousands: 

U.S. Treasury notes and bonds: 

Maturity: Within 1 year; 
Yield at Purchase[A]: 0.34%; 
Face Value: $24,800,000; 
Net Carrying Amount: $25,228393; 
Unrealized Holding Gains: $19,871; 
Unrealized Holding Losses: $0; 
Fair Value: $25,248,264. 

Maturity: After 1 year through 5 years; 
Yield at Purchase[A]: 0.32%; 
Face Value: $4,050,000; 
Net Carrying Amount: $4,341,814; 
Unrealized Holding Gains: $4,569; 
Unrealized Holding Losses: $0; 
Fair Value: $4,346,383. 

U.S. Treasury Inflation-Protected Securities: 

Maturity: Within 1 year; 
Yield at Purchase[A]: -0.86%; 
Face Value: $1,650,000; 
Net Carrying Amount: $1,813,291; 
Unrealized Holding Gains: $0; 
Unrealized Holding Losses: ($9,788)[B]; 
Fair Value: $1,803,503. 

Maturity: After 1 year through 5 years; 
Yield at Purchase[A]: -0.87%; 
Face Value: $2,900,000; 
Net Carrying Amount: $3,451,371; 
Unrealized Holding Gains: $19,167; 
Unrealized Holding Losses: $0; 
Fair Value: $3,470,538. 

Total: 
Face Value: $33,400,000; 
Net Carrying Amount: $34,834,869; 
Unrealized Holding Gains: $43,607; 
Unrealized Holding Losses: ($9,788); 
Fair Value: $34,868,688. 

(a) For TIPS, the yields in the above table are stated at their real 
yields at purchase, not their effective yields. Effective yields on
TIPS include a long-term annual inflation assumption as measured by 
the CPI-U. The long-term CPI-U consensus forecast is 2.0 percent, 
based on figures issued by the Congressional Budget Office and Blue 
Chip Economic Indicators in early 2012. 

(b) The unrealized losses occurred as a result of temporary changes in 
market interest rates. These unrealized losses occurred over a period 
of less than a year. The FDIC does not intend to sell the TIPS and is 
not likely to be required to sell them before their maturity in 2013, 
thus, the FDIC does not consider these securities to be other than 
temporarily impaired at December 31, 2012. 

Total Investment in U.S. Treasury Obligations, Net at December 31, 
2011: 

Dollars in Thousands: 

U.S. Treasury notes and bonds: 

Maturity: Within 1 year; 
Yield at Purchase[A]: 0.27%; 
Face Value: $24,500,000[B]; 
Net Carrying Amount: $24,889,547; 
Unrealized Holding Gains: $17,842; 
Unrealized Holding Losses: ($93); 
Fair Value: $24,907,296. 

Maturity: After 1 year through 5 years; 
Yield at Purchase[A]: 0.93%; 
Face Value: $3,900,000; 
Net Carrying Amount: $3,923,428; 
Unrealized Holding Gains: $38,778; 
Unrealized Holding Losses: $0; 
Fair Value: $3,962,206. 

U.S. Treasury Inflation-Protected Securities: 

Maturity: Within 1 year; 
Yield at Purchase[A]: 0.51%; 
Face Value: $1,200,000; 
Net Carrying Amount: $1,537,664; 
Unrealized Holding Gains: $659; 
Unrealized Holding Losses: ($8); 
Fair Value: $1,538,315. 

Maturity: After 1 year through 5 years; 
Yield at Purchase[A]: -0.92%; 
Face Value: $3,050,000; 
Net Carrying Amount: $3,464,909; 
Unrealized Holding Gains: $0; 
Unrealized Holding Losses: ($9,481); 
Fair Value: $3,455,428. 

Total: 
Face Value: $32,650,000; 
Net Carrying Amount: $33,815,548; 
Unrealized Holding Gains: $57,279; 
Unrealized Holding Losses: ($9,582)[C]; 
Fair Value: $33,863,245. 

[A] For TIPS, the yields in the above table are stated at their real 
yields at purchase, not their effective yields. Effective yields on 
TIPS include a long-term annual inflation assumption as measured by 
the CPI-U. The long-term CPI-U consensus forecast is 1.8 percent, 
based on figures issued by the Congressional Budget Office and Blue 
Chip Economic Indicators in early 2011. 

[B] Includes one Treasury note totaling $1.8 billion which matured on 
Saturday, December 31, 2011. Settlement occurred on the next business 
day, January 3, 2012. 

[C] All unrealized losses occurred as a result of temporary changes in 
market interest rates. These unrealized losses occurred over a period 
of less than a year. Unrealized losses related to the TIPS have 
converted to unrealized gains by January 31, 2012, and unrealized 
losses related to the U.S. Treasury notes and bonds existed on just 
one security that matured with no unrealized loss on January 31, 2012, 
and thus the FDIC does not consider these securities to be other than 
temporarily impaired at December 31, 2011. 

[End of table] 

4. Receivables from Resolutions, Net: 

Receivables from Resolutions, Net at December 31: 

Dollars In Thousands: 

Receivables from closed banks: 
2012: $116,940,999; 
2011: $121,369,428. 

Allowance for losses: 
2012: ($93,821,445); 
2011: ($92,821,032). 

Total: 
2012: $23,119,554; 
2011: $28,548,396. 

[End of table] 

The receivables from resolutions result from payments made by the DIF 
to cover obligations to insured depositors (subrogated claims), 
advances to resolution entities for working capital, and 
administrative expenses paid on behalf of resolution entities. Any 
related allowance for loss represents the difference between the funds 
advanced and/or obligations incurred and the expected repayment. 
Estimated future payments on losses incurred on assets sold to an 
acquiring institution under a shared-loss agreement (SLA) are factored 
into the computation of the expected repayment. Assets held by DIF 
resolution entities (including structured transaction-related assets; 
see Note 8) are the main source of repayment of the DIF’s receivables 
from resolutions. 

As of December 31, 2012, there were 463 active receiverships, 
including 51 established in 2012. As of December 31, 2012 and 2011, 
DIF resolution entities held assets with a book value of $53.5 billion 
and $71.4 billion, respectively (including $36.5 billion and $50.5 
billion, respectively, of cash, investments, receivables due from the 
DIF, and other receivables). Ninety nine percent of the current asset 
book value of $53.5 billion is held by resolution entities established 
since the beginning of 2008. 

Estimated cash recoveries from the management and disposition of 
assets that are used to determine the allowance for losses are based 
on asset recovery rates from several sources including actual or 
pending institution-specific asset disposition data, failed 
institution-specific asset valuation data, aggregate asset valuation 
data on several recently failed or troubled institutions, sampled 
asset valuation data, and empirical asset recovery data based on 
failures as far back as 1990. Methodologies for determining the asset 
recovery rates incorporate estimating future cash recoveries, net of 
applicable liquidation cost estimates, and discounting based on market-
based risk factors applicable to a given asset’s type and quality. The 
resulting estimated cash recoveries are then used to derive the 
allowance for loss on the receivables from these resolutions. 

For failed institutions resolved using a whole bank purchase and 
assumption transaction with an accompanying SLA, the projected future 
shared-loss payments and recoveries on the covered assets sold to the 
acquiring institution under the agreement are considered in 
determining the allowance for loss on the receivables from these 
resolutions. The shared-loss cost projections are based on the covered 
assets’ intrinsic value which is determined using financial models that
consider the quality, condition and type of covered assets, current 
and future market conditions, risk factors and estimated asset holding 
periods. For year-end 2012 financial reporting, the shared-loss cost 
estimates were updated for the majority (93% or 276) of the 298 active 
shared-loss agreements; the remaining 22 were based on recent loss 
estimates. The updated shared-loss cost projections for the larger 
agreements were primarily based on new third-party valuations 
estimating the cumulative loss of covered assets. The remaining 
agreements were stratified by receivership age. A random sample of 
institutions within each age stratum was selected for new third-party 
loss estimations, and valuation results from the sample institutions 
were aggregated and extrapolated to institutions within the like age 
stratum based on asset type and performance status. 

Note that estimated asset recoveries are regularly evaluated during 
the year, but remain subject to uncertainties because of potential 
changes in economic and market conditions. Continuing economic 
uncertainties could cause the DIF’s actual recoveries to vary 
significantly from current estimates. 

Whole Bank Purchase And Assumption Transactions With Shared-Loss
Agreements: 

Since the beginning of 2008, the FDIC resolved 301 failures using 
whole bank purchase and assumption resolution transactions with 
accompanying SLAs on total assets of $214.6 billion purchased by the 
financial institution acquirers. The acquirer typically assumes all of 
the deposits and purchases essentially all of the assets of a failed 
institution. The majority of the commercial and residential loan 
assets are purchased under an SLA, where the FDIC agrees to share in 
future losses and recoveries experienced by the acquirer on those 
assets covered under the agreement. SLAs are used by the FDIC to keep 
assets in the private sector and to minimize disruptions to loan 
customers. 

Losses on the covered assets are shared between the acquirer and the 
FDIC in its receivership capacity of the failed institution when 
losses occur through the sale, foreclosure, loan modification, or 
write-down of loans in accordance with the terms of the SLA. The 
majority of the agreements cover a five- to 10-year period with the 
receiver covering 80 percent of the losses incurred by the acquirer 
and the acquiring bank covering 20 percent. Prior to March 26, 2010,
most SLAs included a threshold amount, above which the receiver 
covered 95 percent of the losses incurred by the acquirer. As 
mentioned above, the estimated shared-loss liability is accounted for 
by the receiver and is included in the calculation of the DIF’s 
allowance for loss against the corporate receivable from the 
resolution. As shared-loss claims are asserted and proven, DIF 
receiverships satisfy these shared-loss payments using available 
liquidation funds and/or by drawing on amounts due from the DIF for 
funding the deposits assumed by the acquirer (see Note 7). 

As of December 31, 2012, 286 receiverships have made shared-loss 
payments totaling $23.3 billion. In addition, DIF receiverships are 
estimated to pay an additional $18.1 billion over the duration of 
these SLAs on $103.7 billion in total remaining covered assets. 

Concentration Of Credit Risk: 

Financial instruments that potentially subject the DIF to 
concentrations of credit risk are receivables from resolutions. The 
repayment of the DIF’s receivables from resolutions is primarily 
influenced by recoveries on assets held by DIF receiverships and 
payments on the covered assets under SLAs. The majority of the $120.7 
billion in remaining assets in liquidation ($17.0 billion) and current 
shared-loss covered assets ($103.7 billion) are concentrated in
commercial loans ($60.0 billion), residential loans ($43.6 billion), 
securities ($3.1 billion), and structured transaction-related assets 
as described in Note 8 ($12.1 billion). Most of the assets in these 
asset types originated from failed institutions located in California 
($34.3 billion), Florida ($14.1 billion), Puerto Rico ($10.9 billion), 
Illinois ($10.5 billion), Georgia ($9.8 billion) and Alabama ($9.0 
billion). 

5. Trust Preferred Securities: 

Pursuant to a systemic risk determination, the Treasury, the FDIC, and 
the Federal Reserve Bank of New York executed terms of a guarantee 
agreement on January 15, 2009 with Citigroup to provide loss 
protection on a pool of approximately $301.0 billion of assets that 
remained on the balance sheet of Citigroup. In consideration for its 
portion of the shared-loss guarantee at inception, the FDIC received 
$3.025 billion of Citigroup’s preferred stock. All shares of the 
preferred stock were subsequently converted to Citigroup Capital 
XXXIII trust preferred securities (TruPs) with a liquidation amount of 
$1,000 per security and a distribution rate of 8 percent per annum 
payable quarterly. The principal amount is due in 2039. 

On December 23, 2009, Citigroup terminated the guarantee agreement, 
citing improvements in its financial condition. The FDIC incurred no 
loss from the guarantee prior to the termination of the agreement. In 
connection with the early termination of the agreement, the FDIC 
agreed to reduce its portion of the $3.025 billion in TruPs by $800 
million. However, pursuant to an agreement between the Treasury and 
the FDIC, the Treasury agreed to return $800 million in 

TruPs on behalf of the FDIC from its portion of Citigroup TruPs 
holdings received as a result of the shared-loss agreement. The FDIC 
retained the $800 million of Citigroup TruPs as security in the event 
payments were required to be made by the DIF for guaranteed debt 
instruments issued by Citigroup and its affiliates under the TLGP. 
Because no payments were required prior to expiration of the TLGP on 
December 31, 2012, the FDIC transferred the $800 million in Citigroup 
TruPs and $183 million in related dividends and interest to the 
Treasury. 

The remaining $2.225 billion (liquidation amount) of TruPs is 
classified as available-for-sale debt securities in accordance with 
FASB ASC Topic 320, Investments – Debt and Equity Securities. At 
December 31, 2012, the fair value of the TruPs was $2.264 billion (see 
Note 15). An unrealized holding gain of $302 million is included in 
accumulated other comprehensive income. 

6. Property and Equipment, Net: 

Property and Equipment, Net at December 31: 

Dollars in Thousands: 

Land: 
2012: $37,352; 
2011: $37,352. 

Buildings (including leasehold improvements): 
2012: $313,221; 
2011: $316,129. 

Application software (includes work-in-process): 
2012: $135,059; 
2011: $130,718. 

Furniture, Fixtures, and equipment: 
2012: $152,280; 
2011: $159,120. 

Accumulated depreciation: 
2012: ($245,032); 
2011: ($241,404). 

Total: 
2012: $392,880; 
2011: $401,915. 

The depreciation expense was $76 million and $78 million for 2012 and 
2011, respectively. 

[End of table] 

7. Liabilities Due to Resolutions: 

As of December 31, 2012 and 2011, the DIF recorded liabilities 
totaling $21.1 billion and $32.7 billion, respectively, to resolution 
entities representing the agreed-upon value of assets transferred from 
the receiverships, at the time of failure, to the acquirers/bridge 
institutions for use in funding the deposits assumed by the 
acquirers/bridge institutions. Ninety-one percent of these liabilities 
are due to failures resolved under whole-bank purchase and assumption
transactions, most with an accompanying SLA. The DIF satisfies these 
liabilities either by directly sending cash to the receivership to 
fund shared-loss and other expenses or by offsetting receivables from 
resolutions when the receivership declares a dividend. 

In addition, there was $56 million and $80 million in unpaid deposit 
claims related to multiple receiverships as of December 31, 2012 and 
2011, respectively. The DIF pays these liabilities when the claims are 
approved. 

8. Contingent Liabilities for: 

Anticipated Failure Of Insured Institutions: 

The DIF records a contingent liability and a loss provision for DIF-
insured institutions that are likely to fail, absent some favorable 
event such as obtaining additional capital or merging, when the 
liability is probable and reasonably estimable. The contingent 
liability is derived by applying expected failure rates and loss rates 
to the institutions based on supervisory ratings, balance sheet
characteristics, and projected capital levels. 

Banking industry performance continued to recover in 2012 at a 
gradual, steady pace. According to the quarterly financial data 
submitted by IDIs, the industry reported total net income of $107.4
billion for the first three quarters of 2012, an increase of 14.9% 
over the first three quarters of 2011. Improving credit performance, 
which has led to lower loan loss provisions, has been primarily 
responsible for most of the improvement in earnings. Losses to the DIF 
from failures that occurred in 2012 fell short of the amount reserved 
at the end of 2011, as the aggregate number and size of institution 
failures in 2012 were less than anticipated. The removal from the 
reserve of institutions that did fail in 2012, as well as projected 
favorable trends in bank supervisory downgrade and failure rates, all 
contributed to a decline by $3.3 billion to $3.2 billion in the 
contingent liability for anticipated failures of insured institutions 
at December 31, 2012. 

In addition to these recorded contingent liabilities, the FDIC has 
identified risk in the financial services industry that could result 
in additional losses to the DIF should potentially vulnerable insured 
institutions ultimately fail. As a result of these risks, the FDIC 
believes that it is reasonably possible that the DIF could incur 
additional estimated losses of up to $6.3 billion for year-end 2012 as 
compared to $10.2 billion for year-end 2011. The actual losses, if 
any, will largely depend on future economic and market conditions and 
could differ materially from this estimate. 

During 2012, 51 institutions failed with combined assets at the date 
of failure of $11.8 billion. Supervisory and market data suggest that 
the financial performance of the banking industry should continue to 
improve over the coming year. However, ongoing asset quality problems 
and limited opportunities for earnings growth will continue to be 
sources of stress on the industry. In addition, two key risks continue 
to weigh on the economic outlook. First, uncertain prospects for the 
European economy have increased volatility in the global financial 
markets, which could trigger increased volatility in the U.S. 
financial markets and adversely affect the U.S. economy. Second, the 
outcome of continued negotiations on the federal debt limit and the 
federal budget in 2013 could significantly affect the U.S. economy 
and, in turn, IDIs. The FDIC continues to evaluate the ongoing risks 
to affected institutions in light of existing economic and financial
conditions, and the extent to which such risks will continue to put 
stress on the resources of the insurance fund. 

Litigation Losses: 

The DIF records an estimated loss for unresolved legal cases to the 
extent that those losses are considered probable and reasonably 
estimable. The FDIC recorded probable litigation losses of $8 million 
and $1 million for the DIF as of December 31, 2012 and 2011, 
respectively, and has determined that there are no reasonably possible 
losses from unresolved cases. 

Other Contingencies: 

IndyMac Federal Bank Representation and Indemnification Contingent 
Liability: 

On March 19, 2009, the FDIC as receiver of IndyMac Federal Bank (IMFB) 
and certain subsidiaries (collectively, sellers) sold substantially 
all of the assets of IMFB and the respective subsidiaries, including 
mortgage loans and mortgage loan servicing rights, to OneWest Bank and 
its affiliates. To maximize sale returns, the sellers made certain 
representations customarily made by commercial parties regarding the 
assets and agreed to indemnify the acquirers for losses incurred as a 
result of breaches of such representations, losses incurred as a 
result of the failure to obtain contractual counterparty consents to 
the sale, and third party claims arising from presale acts and 
omissions of the sellers or the failed bank. Although the 
representations and indemnifications were made by or are obligations 
of the sellers, the FDIC, in its corporate capacity, guaranteed the 
receivership’s indemnification obligations under the sale agreements.
The representations relate generally to ownership of and right to sell 
the assets; compliance with applicable law in the origination of the 
loans; accuracy of the servicing records; validity of loan documents; 
and servicing of the loans serviced for others. Until the periods for 
asserting claims under these arrangements have expired and all 
indemnification claims quantified and paid, losses could continue to 
be incurred by the receivership and, in turn, the DIF, either 
directly, as a result of the FDIC corporate guaranty of the 
receivership’s indemnification obligations, or indirectly, as a result 
of a reduction in the receivership’s assets available to pay the DIF’s 
claims as subrogee for insured accountholders. The acquirers’ rights 
to assert claims to recover losses incurred as a result of breaches of 
loan seller representations extend out to March 19, 2019 for the 
Fannie Mae and Ginnie Mae reverse mortgage servicing portfolios 
(unpaid principal balance of $16.2 billion at December 31, 2012 
compared to $16.7 billion at December 31, 2011), and March 19, 2014 
for the Fannie Mae, Freddie Mac and Ginnie Mae mortgage servicing 
portfolios (unpaid principal balance of $34.3 billion at December 31, 
2012 compared to $38.5 billion at December 31, 2011). The acquirers’ 
rights to assert claims to recover losses incurred as a result of 
other third party claims (including due to pre-March 19, 2009 acts or 
omissions) and breaches of servicer representations, including 
liability with respect to the Fannie Mae, Ginnie Mae and Freddie Mac 
portfolios as well as the private mortgage servicing portfolio and 
whole loans (unpaid principal balance of $53.9 billion at December 31, 
2012 compared to $62.0 billion at December 31, 2011) expired on March 
19, 2011. As of the expiration date of this claim period, notices 
relating to potential defects were received, but they require review 
to determine whether a valid defect exists and, if so, the 
identification and costing of possible cure actions. It is highly
unlikely that all of these potential defects will result in losses. 

The IndyMac receivership has paid a cumulative total of $14 million in 
approved claims through December 31, 2012 and a cumulative total of $5 
million through December 31, 2011. Additional claims asserted, but 
under review, were accrued in the amount of $1 million as of December 
31, 2012 and $2 million as of December 31, 2011. Alleged breaches of 
origination and servicing representations exist, and it is probable 
that the IndyMac receivership and its subsidiary Financial Freedom 
Senior Funding Corporation may incur up to $80 million in losses; these
estimated losses have been accrued as of December 31, 2012. In 
addition, review and evaluation is in process for approximately $32 
million in reasonably possible liabilities with respect to alleged 
breaches of representations and warranties. Potential losses relating 
to origination and servicing representations, which currently cannot 
be quantified, may also be incurred under other agreements with 
investors. 

The FDIC believes it is likely that additional losses will be 
incurred, however quantifying the contingent liability associated with 
the representations and the indemnification obligations is subject to 
a number of uncertainties, including (1) borrower prepayment speeds, 
(2) the occurrence of borrower defaults and resulting foreclosures and 
losses, (3) the assertion by third party investors of claims with 
respect to loans serviced for them, (4) the existence and timing of 
discovery of breaches and the assertion of claims for indemnification 
for losses by the acquirer, (5) the compliance by the acquirer with 
certain loss mitigation and other conditions to indemnification, (6) 
third party sources of loss recovery (such as title companies and 
insurers), (7) the ability of the acquirer to refute claims from 
investors without incurring reimbursable losses, and (8) the cost to 
cure breaches and respond to third party claims. The difficulty in
assessing losses is exacerbated further by the inability to use 
historical default and loss rates as a metric given recent economic 
events. Because of these and other uncertainties that surround the
liability associated with indemnifications and the quantification of 
possible losses, the FDIC has determined that while additional losses 
are probable, the amount is not estimable. 

Purchase and Assumption Indemnification: 

In connection with purchase and assumption agreements for resolutions, 
the FDIC in its receivership capacity generally indemnifies the 
purchaser of a failed institution’s assets and liabilities in the 
event a third party asserts a claim against the purchaser unrelated to 
the explicit assets purchased or liabilities assumed at the time of 
failure. The FDIC in its corporate capacity is a secondary guarantor 
if a receivership is unable to pay. These indemnifications generally
extend for a term of six years after the date of institution failure. 
The FDIC is unable to estimate the maximum potential liability for 
these types of guarantees as the agreements do not specify a maximum 
amount and any payments are dependent upon the outcome of future 
contingent events, the nature and likelihood of which cannot be 
determined at this time. During 2012 and 2011, the FDIC in its 
corporate capacity made no indemnification payments under such
agreements, and no amount has been accrued in the accompanying 
financial statements with respect to these indemnification guarantees. 

FDIC Guaranteed Debt of Structured Transactions: 

The FDIC as receiver uses three types of structured transactions to 
dispose of certain performing and non-performing residential mortgage 
loans, commercial loans, construction loans, and mortgage-backed 
securities held by the receiverships. The three types of structured 
transactions are 1) limited liability companies (LLCs), 2) 
securitizations, and 3) structured sale of guaranteed notes (SSGNs). 

LLCs: 

Under the LLC structure, the FDIC in its receivership capacity 
contributes a pool of assets to a newly-formed LLC and offers for 
sale, through a competitive bid process, some of the equity in the 
LLC. The day-to-day management of the LLC transfers to the highest 
bidder along with the purchased equity interest. In many instances, 
the FDIC in its corporate capacity guarantees notes issued by the 
LLCs. In exchange for a guarantee, the DIF receives a guarantee fee in 
either 1) a lump-sum, up-front payment based on the estimated duration 
of the note or 2) a monthly payment based on a fixed percentage 
multiplied by the outstanding note balance. The terms of these 
guarantee agreements generally stipulate that all cash flows received 
from the entity’s collateral be used to pay, in the following order, 
1) operational expenses of the entity, 2) the FDIC’s contractual 
guarantee fee, 3) the guaranteed notes (or, if applicable, fund the 
related defeasance account for payoff of the notes at maturity), and 
4) the equity investors. If the FDIC is required to perform under 
these guarantees, it acquires an interest in the cash flows of the LLC
equal to the amount of guarantee payments made plus accrued interest 
thereon. Once all expenses have been paid, the guaranteed notes have 
been satisfied, and the FDIC has been reimbursed for any guarantee 
payments, the equity holders receive any remaining cash flows. 

Since 2009, private investors have purchased a 40- to 50-percent 
ownership interest in the LLC structures for $1.6 billion in cash and 
the LLCs issued notes of $4.4 billion to the receiverships to 
partially fund the purchase of the assets. The receiverships hold the 
remaining 50- to 60-percent equity interest in the LLCs and, in most 
cases, the guaranteed notes. The FDIC in its corporate capacity 
guarantees the timely payment of principal and interest due on the 
notes. The terms of the note guarantees extend until the earlier of 1) 
payment in full of the notes or 2) two years following the maturity 
date of the notes. The note with the longest term matures in 2020. In 
the event of note payment default, the FDIC as guarantor is entitled 
to exercise or cause the exercise of certain rights and remedies 
including: 1) accelerating the payment of the unpaid principal amount 
of the notes; 2) selling the assets held as collateral; or 3) 
foreclosing on the equity interests of the debtor. 

Securitizations and SSGNs: 

Securitizations and SSGNs (collectively, “trusts”) are transactions in 
which certain assets or securities from failed institutions are pooled 
and transferred into a trust structure. The trusts issue 1) senior 
and/or subordinated debt instruments and 2) owner trust or residual 
certificates collateralized by the underlying mortgage-backed 
securities or loans. 

Since 2010, private investors purchased the senior notes issued by the 
trusts for $5.7 billion in cash. The receiverships hold 100 percent of 
the subordinated debt instruments and owner trust or residual 
certificates. The FDIC in its corporate capacity guarantees the timely 
payment of principal and interest due on the senior notes, the latest 
maturity of which is 2050. In exchange for the guarantee, the DIF 
receives a monthly payment based on a fixed percentage multiplied by
the outstanding note balance. These guarantee agreements generally 
stipulate that all cash flows received from the entity’s collateral be 
used to pay, in the following order, 1) operational expenses of the 
entity, 2) the FDIC’s contractual guarantee fee, 3) interest on the 
guaranteed notes, 4) principal of the guaranteed notes, and 5) the 
holders of the subordinated notes and owner trust or residual 
certificates. If the FDIC is required to perform under its guarantees, 
it acquires an interest in the cash flows of the trust equal to the 
amount of guarantee payments made plus accrued interest thereon. Once 
all expenses have been paid, the guaranteed notes have been satisfied, 
and the FDIC has been reimbursed for any guarantee payments, the 
subordinated note holders and owner trust or residual certificates 
holders receive the remaining cash flows. 

All Structured Transactions with FDIC Guaranteed Debt: 

Through December 31, 2012, the receiverships have transferred a 
portfolio of loans with an unpaid principal balance of $16.4 billion 
and mortgage-backed securities with a book value of $8.1 billion to 14 
LLCs and 9 trusts. The LLCs and trusts subsequently issued notes 
guaranteed by the FDIC in an original principal amount of $10.1 
billion. As of December 31, 2012 and 2011, the DIF collected guarantee 
fees totaling $218 million and $203 million, respectively, and
recorded a receivable for additional guarantee fees of $95 million and 
$106 million, respectively, included in the “Interest receivable on 
investments and other assets, net” line item on the Balance Sheet. All 
guarantee fees are recorded as deferred revenue, included in the 
“Accounts payable and other liabilities” line item, and recognized as 
revenue primarily on a straight-line basis over the term of the notes. 
At December 31, 2012 and 2011, the amount of deferred revenue recorded
was $101 million and $134 million, respectively. The DIF records no 
other structured-transaction-related assets or liabilities on its 
balance sheet. 

The estimated loss to the DIF from the guarantees is derived from an 
analysis of the net present value (using a discount rate of 3 percent) 
of the expected guarantee payments by the FDIC, reimbursements to the 
FDIC for guarantee payments, and guarantee fee collections. The FDIC
believes that it is reasonably possible that the DIF could incur an 
estimated loss for one transaction of $5.7 million in 2020, net of 
expected guarantee fees of $4.2 million. This estimated loss may vary 
over time as conditions change. For all of the remaining transactions,
the cash flows from the LLC or trust assets provide sufficient 
coverage to fully pay the debts. To date, the FDIC in its corporate 
capacity has not provided, and does not intend to provide, any form of 
financial or other type of support to a trust or LLC that it was not 
previously contractually required to provide. 

As of December 31, 2012 and 2011, the maximum loss exposure was $2.2 
billion and $3.7 billion for LLCs and $3.2 billion and $3.9 billion 
for trusts, respectively, representing the sum of all outstanding debt 
guaranteed by the FDIC in its corporate capacity. Some transactions have
established defeasance accounts to pay off the notes at maturity. As 
of December 31, 2012 and 2011, a total of $1.6 billion and $2.2 
billion, respectively, has been deposited into these accounts. 

9. Assessments: 

The Dodd-Frank Act provided for significant assessment and 
capitalization reforms for the DIF. In response, the FDIC implemented 
several changes to the assessment system and developed a 
comprehensive, long-term fund management plan. The plan is designed to 
restore and maintain a positive fund balance for the DIF even during a 
banking crisis and achieve moderate, steady assessment rates 
throughout any economic cycle. Summarized below are actions taken to
implement assessment system changes and provisions of the 
comprehensive plan. 

Restoration Plan: 

In October 2010, the FDIC adopted a Restoration Plan to ensure that 
the ratio of the DIF fund balance to estimated insured deposits 
(reserve ratio) reaches 1.35 percent by September 30, 2020 in lieu of 
the previous target of 1.15 percent by the end of 2016. In addition, 
the Plan provides for the FDIC to 1) pursue rulemaking regarding the 
method that will be used to offset the impact of the increased reserve 
ratio on small institutions (less than $10 billion in assets) and 2) 
update, at least semiannually, its loss and income projections for the 
fund and, if needed, increase or decrease assessment rates, following 
notice-and-comment rulemaking, if required. 

Designated Reserve Ratio: 

In December 2012, the FDIC adopted a final rule maintaining the 
designated reserve ratio (DRR) at 2 percent, effective January 1, 
2013. The DRR is an integral part of the FDIC’s comprehensive, long-
term management plan for the DIF and is viewed as a long-range,
minimum target for the reserve ratio. 

Calculation Of Assessment: 

In February 2011, the FDIC adopted a final rule, effective on April 1, 
2011, amending part 327 of title 12 of the Code of Federal Regulations 
to 1) redefine the assessment base used for calculating deposit 
insurance assessments from adjusted domestic deposits to average
consolidated total assets minus average tangible equity (measured as 
Tier 1 capital); 2) change the assessment rate adjustments; 3) lower 
the initial base rate schedule and the total base rate schedule for 
all IDIs to collect approximately the same revenue for the DIF as 
would have been collected under the old assessment base; 4) suspend 
dividends indefinitely, and, in lieu of dividends, adopt lower 
assessment rate schedules when the reserve ratio reaches 1.15 percent, 2
percent, and 2.5 percent; and 5) change the risk-based assessment 
system for large IDIs (generally, those institutions with at least $10 
billion in total assets). Specifically, the final rule eliminates risk 
categories and the use of long-term debt issuer ratings for large 
institutions and combines CAMELS ratings and certain forward-looking 
financial measures into two scorecards: one for most large 
institutions and another for large institutions that are structurally 
and operationally complex or that pose unique challenges and risks in 
case of failure (highly complex IDIs). 

In October 2012, the FDIC adopted a final rule which amends and 
clarifies some definitions of higher-risk assets as used in the 
deposit insurance pricing scorecards for large and highly complex IDIs 
by 1) revising the definitions of certain higher-risk assets, 
specifically leveraged loans and subprime consumer loans, 2) 
clarifying when an asset must be identified as higher risk, and 3) 
clarifying the way securitizations are identified as higher risk. The 
goal of this final rule is to ensure that the assessment system 
captures the risk inherent in higher-risk assets without imposing an 
unnecessary reporting burden. The final rule will become effective on 
April 1, 2013 and provides that, until then, large and highly complex 
IDIs will continue to report higher-risk assets using existing 
guidance. 

Assessment Revenue: 

Annual assessment rates averaged approximately 10.1 cents per $100 and 
11.1 cents per $100 of the new assessment base (as described above) 
for all of 2012 and the last three quarters of 2011, respectively. The 
annual assessment rate averaged approximately 17.6 cents per $100 of the
adjusted domestic deposits assessment base for the first quarter of 
2011. 

In December 2009, a majority of IDIs prepaid $45.7 billion of 
estimated quarterly risk-based assessments to address the DIF’s 
liquidity need to pay for projected failures and to ensure that the 
deposit insurance system remained industry-funded. For the fourth 
quarter 2009 and each subsequent quarter, an institution’s risk-based 
deposit insurance assessment was offset by the available amount of 
prepaid assessments, thereby reducing that institution’s prepaid 
assessment balance. By regulation, any remaining prepaid assessments 
must be refunded to the institutions after collection of the amount 
due on June 30, 2013. The final prepaid offset will occur in June 2013 
for the assessment period ending March 31, 2013. Therefore, at 
December 31, 2012, the “Unearned revenue – prepaid assessments” line 
item on the Balance Sheet of $1.6 billion represents the final 
estimated prepaid offset and the “Refunds of prepaid assessments” line 
item reflects the estimate of $5.7 billion that will be returned to 
the institutions in June 2013. Though the combined total for both the 
prepaid offset and refunds will remain unchanged, the estimated amount 
for each component may vary considerably because of the uncertainty 
inherent in projecting the assessment rate and base for IDIs beyond 
the customary 90-day period. 

For those institutions that did not prepay assessments or whose 
prepaid assessments have been exhausted, the “Assessments receivable, 
net” line item on the Balance Sheet of $1.0 billion and $282 million 
as of December 31, 2012 and 2011, respectively, represents the estimated
premiums due from IDIs for the fourth quarter of 2012 and 2011, 
respectively. 

Reserve Ratio: 

As of September 30, 2012, the DIF reserve ratio was 0.35 percent of 
estimated insured deposits. 

Assessments Related To FICO: 

Assessments continue to be levied on institutions for payments of the 
interest on obligations issued by the Financing Corporation (FICO). 
The FICO was established as a mixed-ownership government corporation 
to function solely as a financing vehicle for the former FSLIC. The
annual FICO interest obligation of approximately $790 million is paid 
on a pro rata basis using the same rate for banks and thrifts. The 
FICO assessment has no financial impact on the DIF and is separate 
from deposit insurance assessments. The FDIC, as administrator of the 
DIF, acts solely as a collection agent for the FICO. During 2012 and 
2011, approximately $797 million and $795 million, respectively, was 
collected and remitted to the FICO. 

10. Other Revenue: 

Other Revenue for the Years Ended December 31: 

Dollars in Thousands: 

Temporary Liquidity Guarantee Program revenue (Note 16): 
2012: $5,885,330; 
2011: $2,569,579. 

Dividends and interest on Citigroup trust preferred securities: 
2012: $177,831; 
2011: $178,000. 

Guarantee fees for structured transactions: 
2012: $57,206; 
2011: $92,229. 

Other: 
2012: $6,844; 
2011: $7,121. 

Total: 
2012: $6,127,211; 
2011: $2,846,929. 

[End of table] 

Temporary Liquidity Guarantee Program Revenue: 

Pursuant to a systemic risk determination in October 2008, the FDIC 
established the TLGP (see Note 16). In exchange for guarantees issued 
under the TLGP, the DIF received fees that were set aside, as deferred 
revenue, for potential TLGP losses. As losses occurred, the DIF 
recognized the losses as systemic risk expenses and offset the losses 
by recognizing an equivalent portion of the deferred revenue as 
systemic risk revenue. This accounting practice isolated systemic risk
activities from the normal operating activities of the DIF. 

In accordance with FDIC policy, the DIF recognized revenue during the 
guarantee period when guarantee fees held were determined to be in 
excess of amounts needed to cover potential losses, and, for all 
remaining TLGP assets held as deferred revenue, upon expiration of the 
TLGP on December 31, 2012. As a result, the DIF recognized total 
revenue of $5.9 billion and $2.6 billion in 2012 and 2011, 
respectively. 

11. Operating Expenses: 

Operating expenses were $1.8 billion and $1.6 billion for 2012 and 
2011, respectively. The chart below lists the major components of 
operating expenses. 

Operating Expenses for the Years Ended December 31: 

Dollars In Thousands: 

Salaries and benefits: 
2012: $1,300,697; 
2011: $1,320,991. 

Outside services: 
2012: $337,379; 
2011: $342,502. 

Travel: 
2012: $106,897; 
2011: $115,135. 

Buildings and leased space: 
2012: $91,631; 
2011: $93,630. 

Software/Hardware maintenance: 
2012: $63,108; 
2011: $58,981. 

Depreciation of property and equipment: 
2012: $76,365; 
2011: $77,720. 

Other: 
2012: $21,137; 
2011: $46,652. 

Subtotal: 
2012: $1,997,214; 
2011: $2,055,611. 

Services billed to resolution entities: 
2012: ($219,701); 
2011: ($430,260). 

Total: 
2012: $1,777,513; 
2011: $1,625,351. 

[End of table] 

12. Provision for Insurance Losses: 

Provision for insurance losses was negative $4.2 billion for 2012, 
compared to negative $4.4 billion for 2011. The negative provision for 
2012 primarily resulted from a reduction of $1.4 billion in the 
contingent loss reserve due to the improvement in the financial 
condition of institutions that were previously identified to fail and 
a decrease of $2.8 billion in the estimated losses for institutions 
that failed in the current and prior years. 

13. Employee Benefits: 

Pension Benefits And Savings Plans: 

Eligible FDIC employees (permanent and term employees with 
appointments exceeding one year) are covered by the federal government 
retirement plans, either the Civil Service Retirement System (CSRS) or 
the Federal Employees Retirement System (FERS). Although the DIF
contributes a portion of pension benefits for eligible employees, it 
does not account for the assets of either retirement system. The DIF 
also does not have actuarial data for accumulated plan benefits or the 
unfunded liability relative to eligible employees. These amounts are 
reported on and accounted for by the U.S. Office of Personnel 
Management (OPM). 

Eligible FDIC employees also may participate in a FDIC-sponsored tax-
deferred 401(k) savings plan with matching contributions up to 5 
percent. Under the Federal Thrift Savings Plan (TSP), the FDIC 
provides FERS employees with an automatic contribution of 1 percent of 
pay and an additional matching contribution up to 4 percent of pay. 
CSRS employees also can contribute to the TSP, but they do not receive 
agency matching contributions. 

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

Dollars In Thousands: 

Civil Service Retirement System: 
2012: $5,960; 
2011: $6,140. 

Federal Employees Retirement System (Basic Benefit): 
2012: $97,517; 
2011: $95,846. 

FDIC Savings Plan: 
2012: $37,700; 
2011: $36,645. 

Federal Thrift Savings Plan: 
2012: $34,555; 
2011: $33,910. 

Total: 
2012: $175,732; 
2011: $172,541. 

[End of table] 

Postretirement Benefits Other Than Pensions: 

The DIF has no postretirement health insurance liability since all 
eligible retirees are covered by the Federal Employees Health Benefits 
(FEHB) program. The FEHB is administered and accounted for by the OPM. 
In addition, OPM pays the employer share of the retiree’s health
insurance premiums. 

The FDIC provides certain life and dental insurance coverage for its 
eligible retirees, the retirees’ beneficiaries, and covered 
dependents. Retirees eligible for life and dental insurance coverage
are those who have qualified due to 1) immediate enrollment upon 
appointment or five years of participation in the plan and 2) 
eligibility for an immediate annuity. The life insurance program
provides basic coverage at no cost to retirees and allows converting 
optional coverage to direct-pay plans. For the dental coverage, 
retirees are responsible for a portion of the dental premium. 

The FDIC has elected not to fund the postretirement life and dental 
benefit liabilities. As a result, the DIF recognized the underfunded 
status (the difference between the accumulated postretirement benefit 
obligation and the plan assets at fair value) as a liability. Since 
there are no plan assets, the plan’s benefit liability is equal to the 
accumulated postretirement benefit obligation. At December 31, 2012 
and 2011, the liability was $224 million and $188 million, 
respectively, which is recognized in the “Postretirement benefit 
liability” line item on the Balance Sheet. The cumulative actuarial 
losses (changes in assumptions and plan experience) and prior service 
costs (changes to plan provisions that increase benefits) were $60 
million and $34 million at December 31, 2012 and 2011, respectively. 
These amounts are reported as accumulated other comprehensive income 
in the “Unrealized postretirement benefit loss” line item on the 
Balance Sheet. 

The DIF’s expenses for postretirement benefits for 2012 and 2011 were 
$14 million and $12 million, respectively, which are included in the 
current and prior year’s operating expenses on the Statement of Income 
and Fund Balance. The changes in the actuarial losses and prior service
costs for 2012 and 2011 of $27 million and $15 million, respectively, 
are reported as other comprehensive income in the “Unrealized 
postretirement benefit loss” line item on the Statement of Income and 
Fund Balance. Key actuarial assumptions used in the accounting for the 
plan include the discount rate of 3.75 percent, the rate of 
compensation increase of 4.0 percent, and the dental coverage trend 
rate of 5.6 percent. The discount rate of 3.75 percent is based upon
rates of return on high-quality fixed income investments whose cash 
flows match the timing and amount of expected benefit payments. 

14. Commitments and Off-Balance-Sheet Exposure: 

Commitments: 

Leased Space: 

The FDIC’s lease commitments total $216 million for future years. The 
lease agreements contain escalation clauses resulting in adjustments, 
usually on an annual basis. The DIF recognized leased space expense of 
$54 million and $56 million for the years ended December 31, 2012 and 
2011, respectively. 

Leased Space Commitments: 

Dollars In Thousands: 

2013: $52,160; 
2014: $46,521; 
2015: $36,496; 
2016: $33,509; 
2017: $29,068; 
2018/Thereafter: $18,511. 

[End of table] 

Off-Balance-Sheet Exposure: 

Deposit Insurance: 

Estimates of insured deposits are derived primarily from quarterly 
financial data submitted by IDIs to the FDIC and represent the 
accounting loss that would be realized if all IDIs were to fail
and the acquired assets provided no recoveries. As of September 30, 
2012 and December 31, 2011, estimated insured deposits for the DIF 
were $7.3 trillion and $7.0 trillion, respectively, including $1.5 
trillion and $1.4 trillion, respectively, of noninterest-bearing 
transaction deposits that exceeded the basic limit of $250,000 per 
account. Under the Dodd-Frank Act, noninterest-bearing transaction 
deposits received unlimited deposit insurance coverage from December 31,
2010 through December 31, 2012. Upon expiration of this unlimited 
coverage on December 31, 2012, these deposits pose no further exposure 
to the DIF. 

15. Disclosures about the Fair Value of Financial Instruments: 

Financial assets recognized and measured at fair value on a recurring 
basis at each reporting date include cash equivalents (Note 2), the 
investment in U.S. Treasury obligations (Note 3) and trust preferred 
securities (Note 5). The following tables present the DIF’s financial 
assets measured at fair value as of December 31, 2012 and 2011. 

Assets Measured at Fair Value at December 31, 2012: 

Dollars in Thousands: 

Fair Value Measurements Using: 

Assets: Cash and cash equivalents (Special U.S. Treasuries)[1]: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$3,091,778; 
Significant Other Observable Inputs (Level 2): $0; 
Significant Unobservable Inputs (Level 3): $0; 
Total Assets at Fair Value: $3,091,778. 

Available for Sale Debt Securities: 

Investment in U.S. Treasury Obligations[2]: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$34,868,688; 
Significant Other Observable Inputs (Level 2): $0; 
Significant Unobservable Inputs (Level 3): $0; 
Total Assets at Fair Value: $34,868,688. 

Trust preferred securities: 
Quoted Prices in Active Markets for Identical Assets (Level 1): $0; 
Significant Other Observable Inputs (Level 2): $2,263,983; 
Significant Unobservable Inputs (Level 3): $0; 
Total Assets at Fair Value: $2,263,983. 

Total Assets: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$37,960,466; 
Significant Other Observable Inputs (Level 2): $2,263,983; 
Significant Unobservable Inputs (Level 3): $0; 
Total Assets at Fair Value: $40,224,449. 

[1] Cash equivalents are Special U.S. Treasury Certificates with 
overnight maturities valued at prevailing interest rates established 
by the U.S. Bureau of Public Debt. 

[2] The investment in U.S. Treasury obligations is measured based on 
prevailing market yields for federal government entities. 

[End of table] 

In exchange for prior shared-loss guarantee coverage provided to 
Citigroup, the FDIC and the Treasury received TruPs (see Note 5). At 
December 31, 2012, the fair value of the securities in the amount of 
$2.264 billion was classified as a Level 2 measurement based on an 
FDIC-developed model using observable market data for traded Citigroup 
securities to determine the expected present value of future cash 
flows. Key inputs include market yields on U.S. dollar interest rate 
swaps and discount rates for default, call, and liquidity risks that 
are derived from traded Citigroup securities and modeled pricing 
relationships. 

Assets Measured at Fair Value at December 31, 2011: 

Dollars in Thousands: 

Fair Value Measurements Using: 

Assets: Cash and cash equivalents (Special U.S. Treasuries)[1]: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$3,266,631; 
Significant Other Observable Inputs (Level 2): $0; 
Significant Unobservable Inputs (Level 3): $0; 
Total Assets at Fair Value: $3,266,631. 

Available for Sale Debt Securities: 

Investment in U.S. Treasury Obligations[2]: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$33,863,245; 
Significant Other Observable Inputs (Level 2): $0; 
Significant Unobservable Inputs (Level 3): $0; 
Total Assets at Fair Value: $33,863,245. 

Trust preferred securities: 
Quoted Prices in Active Markets for Identical Assets (Level 1): $0; 
Significant Other Observable Inputs (Level 2): $2,213,231; 
Significant Unobservable Inputs (Level 3): $0; 
Total Assets at Fair Value: $2,213,231. 

Trust preferred securities held for UST (Note 16): 
Quoted Prices in Active Markets for Identical Assets (Level 1): $0; 
Significant Other Observable Inputs (Level 2): $795,769; 
Significant Unobservable Inputs (Level 3): $0; 
Total Assets at Fair Value: $795,769. 

Total Assets: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$37,129,876; 
Significant Other Observable Inputs (Level 2): $3,009,000; 
Significant Unobservable Inputs (Level 3): $0; 
Total Assets at Fair Value: $40,138,876. 

[1] Cash equivalents are Special U.S. Treasury Certificates with 
overnight maturities valued at prevailing interest rates established 
by the U.S. Bureau of Public Debt. 

[2] The investment in U.S. Treasury obligations is measured based on 
prevailing market yields for federal government entities. 

[End of table] 

Some of the DIF’s financial assets and liabilities are not recognized 
at fair value but are recorded at amounts that approximate fair value 
due to their short maturities and/or comparability with current 
interest rates. Such items include interest receivable on investments, 
assessments receivable, other short-term receivables, refunds of 
prepaid assessments, accounts payable, and other liabilities. 

The net receivables from resolutions primarily include the DIF’s 
subrogated claim arising from obligations to insured depositors. The 
resolution entity assets that will ultimately be used to pay the 
corporate subrogated claim are valued using discount rates that 
include consideration of market risk. These discounts ultimately 
affect the DIF’s allowance for loss against the receivables from 
resolutions. Therefore, the corporate subrogated claim indirectly 
includes the effect of discounting and should not be viewed as being 
stated in terms of nominal cash flows. 

Although the value of the corporate subrogated claim is influenced by 
valuation of resolution entity assets (see Note 4), such 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 
estimate a fair value. 

The FDIC believes that a sale to the private sector of the corporate 
claim would require indeterminate, but substantial, discounts for an 
interested party to profit from these assets because of credit and 
other risks. In addition, the timing of resolution entity payments to 
the DIF on the subrogated claim does not necessarily correspond with 
the timing of collections on resolution entity assets. Therefore, the 
effect of discounting used by resolution entities should not 
necessarily be viewed as producing an estimate of fair value for the 
net receivables from resolutions. 

16. Systemic Risk Transactions: 

Pursuant to a systemic risk determination, the FDIC established the 
TLGP (codified in part 370 of title 12 of the Code of Federal 
Regulations) for IDIs, designated affiliates and certain holding
companies on October 14, 2008, in an effort to counter the system-wide 
crisis in the nation’s financial sector. The DIF received fees in 
exchange for guarantees issued under the TLGP and set aside, as 
deferred revenue, all fees for potential TLGP losses. As systemic risk 
expenses were incurred, the DIF reduced deferred revenue and 
recognized an offsetting amount as systemic risk revenue. Also, DIF 
recognized systemic risk revenue when guarantee fees held were 
determined to be in excess of amounts needed to cover potential 
losses. As a result, systemic risk activities were isolated from the 
normal operating activities of the DIF. 

At its inception, the TLGP consisted of two components: 1) the 
Transaction Account Guarantee Program (TAG) and 2) the Debt Guarantee 
Program (DGP). The TAG provided unlimited coverage for noninterest-
bearing transaction accounts held by IDIs on all deposit amounts 
exceeding the fully insured limit of $250,000 through December 31, 
2010. During its existence, the FDIC collected TAG fees of $1.2 
billion. Total subrogated claims arising from obligations to 
depositors with noninterest-bearing transaction accounts were $8.8 
billion, with estimated losses of $2.1 billion. 

The DGP permitted participating entities to issue FDIC-guaranteed 
senior unsecured debt through October 31, 2009. The FDIC’s guarantee 
for all such debt expired no later than December 31, 2012. Through the 
end of the debt issuance period, the DIF collected $8.3 billion of 
guarantee fees and received additional fees of $1.2 billion from 
participating entities that elected to issue senior unsecured non-
guaranteed debt. During the program, guaranteed debt issued totaled 
$618.0 billion and the FDIC paid $153 million in claims for principal 
and interest arising from the default of guaranteed debt obligations 
of six debt issuers. 

The expiration of the guarantee period for the DGP on December 31, 
2012 marked the conclusion of the TLGP. As established under terms of 
the TLGP, all excess funds were transferred to the DIF. Since 
inception, the DIF recognized total “Other revenue” of $8.5 billion
(see Note 10). In 2012, the DIF received $5.2 billion of cash and a 
net receivable of $693 million included in “Receivables from 
resolutions, net”. The net receivable represents estimated recoveries 
on payments under the TLGP to cover obligations. In 2011, the DIF 
received $2.6 billion of cash and U.S. Treasury obligations. 

TLGP Summary (Inception through December 31, 2012): 

Dollars In Thousands: 

Collections: 

Transaction Account Guarantee Program fees $1,156,332; 
Debt Guarantee Program fees: $9,490,993; 
Interest earned on TLGP funds: $42,293; 
Total TLGP Fees and Interest Earned: $10,689,618. 

Payments: 

Transaction Account Guarantee Program claims: ($8,769,873)
Less: Receipts of receivership dividends: $6,016,597
Net Transaction Account Guarantee Program claims: ($2,753,276)
Debt Guarantee Program claims paid: ($153,127)
TLGP operating expenses: ($6,707). 

Total TLGP Claims and Expenses Paid: ($2,913,110); 
Cash Transferred to the DIF: $7,776,508; 
Estimated Recovery on TAG Claims Paid: $693,248; 
Excess TLGP Assets Transferred to the DIF: $8,469,756. 

[End of table] 

17. Subsequent Events: 

Subsequent events have been evaluated through February 14, 2013, the 
date the financial statements are available to be issued. 

2013 Failures Through February 14, 2013: 

Through February 14, 2013, two insured institutions failed in 2013 
with total losses to the DIF estimated to be $43 million. 

[End of section] 

FSLIC Resolution Fund's Financial Statements: 

Balance Sheet: 

Federal Deposit Insurance Corporation: 
FSLIC Resolution Fund Balance Sheet at December 31: 

Dollars in Thousands: 

Assets: 

Cash and cash equivalents: 
2012: $3,594,007; 
2011: $3,533,410. 

Receivables from thrift resolutions and other assets, net (Note 3): 
2012: $5,456; 
2011: $65,163. 

Receivables from U.S. Treasury for goodwill litigation (Note 4): 
2012: $356,455; 
2011: $356,455. 

Total Assets: 
2012: $3,955,918; 
2011: $3,955,028. 

Liabilities: 

Accounts payable and other liabilities: 
2012: $2,442; 
2011: $3,544. 

Contingent liabilities for goodwill litigation (Note 4): 
2012: $356,455; 
2011: $356,455. 

Total Liabilities: 
2012: $358,897; 
2011: $359,999. 

Resolution Equity (Note 5): 

Contributed capital: 
2012: $128,056,656; 
2011: $127,875,656. 

Accumulated deficit: 
2012: ($124,459,635); 
2011: ($124,280,627). 

Total Resolution Equity: 
2012: $3,597,021; 
2011: $3,595,029. 

Total Liabilities and Resolution Equity: 
2012: $3,955,918; 
2011: $3,955,028 

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

[End of table] 

Statement of Income and Accumulated Deficit: 

FSLIC Resolution Fund: 
Federal Deposit Insurance Corporation: 
FSLIC Resolution Fund Statement of Income and Accumulated Deficit for 
the Years Ended December 31: 

Dollars in Thousands: 

Revenue: 

Interest on U.S. Treasury obligations: 
2012: $2,458; 
2011: $1,361. 

Other revenue: 
2012: $2,549; 
2011: $3,257. 

Total Revenue: 
2012: $5,007; 
2011: $4,618. 

Expenses and Losses: 

Operating expenses: 
2012: $4,165; 
2011: $4,660. 

Provision for losses:
2012: ($1,408); 
2011: ($8,578). 

Goodwill litigation expenses (Note 4):
2012: $181,000; 
2011: $82,960. 

Recovery of tax benefits: 
2012: $0; 
2011: ($18,373). 

Other expenses: 
2012: $258; 
2011: $205. 

Total Expenses and Losses: 
2012: $184,015; 
2011: $60,874. 

Net Loss: 
2012: ($179,008); 
2011: ($56,256). 

Accumulated Deficit - Beginning: 
2012: ($124,280,627); 
2011: ($124,224,371). 

Accumulated Deficit - Ending: 
2012: ($124,459,635); 
2011: ($124,280,627). 

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

[End of Statement of Income and Accumulated Deficit] 

Statement of Cash Flows: 

FSLIC Resolution Fund: 
Federal Deposit Insurance Corporation: 
FSLIC Resolution Fund Statement of Cash Flows for the Years Ended 
December 31: 

Dollars in Thousands: 

Operating Activities: 

Net Income (Loss): 
2012: ($179,008); 
2011: ($56,256). 

Adjustments to reconcile net (loss)/income to net cash used by
operating activities: Provision for losses: 
2012: ($1,408); 
2011: ($8,578). 

Change in Operating Assets and Liabilities: 

Decrease (Increase) in receivables from thrift resolutions and other 
assets: 
2012: $61,115; 
2011: ($33,177). 

(Decrease) Increase in accounts payable and other liabilities: 
2012: ($1,102); 
2011: $554. 

Increase in contingent liabilities for goodwill litigation: 
2012: $0; 
2011: $32,960. 

Net Cash Used by Operating Activities: 
2012: ($120,043); 
2011: ($64,497). 

Financing Activities: 

Provided by: U.S. Treasury payments for goodwill litigation (Note 4): 
2012: $181,000; 
2011: $50,000. 

Net Cash Provided by Financing Activities: 
2012: $181,000; 
2011: $50,000. 

Net Increase in Cash and Cash Equivalents: 
2012: $60,597; 
2011: (14,497). 

Cash and Cash Equivalents - Beginning: 
2012: $3,533,410; 
2011: $3,547,907. 

Cash and Cash Equivalents - Ending: 
2012: $3,594,007; 
2011: $3,533,410. 

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

[End of Statement of Cash Flows] 

Notes to the Financial Statements: 

Notes To The Financial Statements: 
FSLIC Resolution Fund: 
December 31, 2012 and 2011: 

1. Operations/Dissolution of the FSLIC Resolution Fund: 

Overview: 

The Federal Deposit Insurance Corporation (FDIC) is the independent 
deposit insurance agency created by Congress in 1933 to maintain 
stability and public confidence in the nation’s banking system. 
Provisions that govern the operations of the FDIC are generally found 
in the Federal Deposit Insurance (FDI) Act, as amended (12 U.S.C. 
1811, et seq). In carrying out the purposes of the FDI Act, the FDIC, 
as administrator of the Deposit Insurance Fund (DIF), insures the 
deposits of banks and savings associations (insured depository 
institutions). In cooperation with other federal and state agencies, 
the FDIC promotes the safety and soundness of insured depository 
institutions by identifying, monitoring and addressing risks to the DIF.
Commercial banks, savings banks and savings associations (known as 
“thrifts”) are supervised by either the FDIC, the Office of the 
Comptroller of the Currency, or the Federal Reserve Board. In 
addition, the FDIC, through administration of the FSLIC Resolution 
Fund (FRF), is responsible for the sale of remaining assets and 
satisfaction of liabilities associated with the former Federal Savings 
and Loan Insurance Corporation (FSLIC) and the former Resolution Trust 
Corporation (RTC). The DIF and the FRF are maintained separately by 
the FDIC to support their respective functions. 

The U.S. Congress created the FSLIC through the enactment of the 
National Housing Act of 1934. The Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 (FIRREA) abolished the insolvent 
FSLIC, created the FRF, and transferred the assets and liabilities of 
the FSLIC to the FRF--except those assets and liabilities transferred 
to the newly created RTC--effective on August 9, 1989. Further, the 
FIRREA established the Resolution Funding Corporation (REFCORP) to 
provide part of the initial funds used by the RTC for thrift 
resolutions. 

The RTC Completion Act of 1993 (RTC Completion Act) terminated the RTC 
as of December 31, 1995. All remaining assets and liabilities of the 
RTC were transferred to the FRF on January 1, 1996. Today, the FRF 
consists of two distinct pools of assets and liabilities: one composed 
of the assets and liabilities of the FSLIC transferred to the FRF upon 
the dissolution of the FSLIC (FRF-FSLIC), and the other composed of 
the RTC assets and liabilities (FRFRTC). The assets of one pool are 
not available to satisfy obligations of the other. 

Operations/dissolution Of The FRF: 

The FRF will continue operations until all of its assets are sold or 
otherwise liquidated and all of its liabilities are satisfied. Any 
funds remaining in the FRF-FSLIC will be paid to the U.S. Treasury. 
Any remaining funds of the FRF-RTC will be distributed to the REFCORP 
to pay the interest on the REFCORP bonds. In addition, the FRF-FSLIC 
has available until expended $602 million in appropriations to 
facilitate, if required, efforts to wind up the resolution activity of 
the FRF-FSLIC. 

The FDIC has conducted an extensive review and cataloging of FRF's 
remaining assets and liabilities. Some of the issues and items that 
remain open in FRF are 1) criminal restitution orders (generally have 
from 1 to 13 years remaining to enforce); 2) collections of settlements
and judgments obtained against officers and directors and other 
professionals responsible for causing or contributing to thrift losses 
(generally have from 2 to 14 years remaining to enforce, unless the 
judgments are renewed, which will result in significantly longer 
periods for collection for some judgments); 3) a few assistance 
agreements entered into by the former FSLIC (FRF could continue to 
receive or refund overpayments of tax benefits sharing through 2014); 
4) goodwill litigation (no final date for resolution has been 
established; see Note 4); and 5) affordable housing program monitoring 
(requirements can exceed 25 years). The FRF could potentially realize 
recoveries from tax benefits sharing of up to approximately $40 million;
however, any associated recoveries are not reflected in FRF’s 
financial statements given the significant uncertainties surrounding 
the ultimate outcome. The FDIC will consider returning a portion of 
the FRF-FSLIC’s remaining funds of $3.4 billion to the U.S. Treasury 
in 2013. 

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 receivership proceeds are distributed in accordance with 
applicable laws and regulations. Also, the income and expenses 
attributable to receiverships are accounted for as transactions of those
receiverships. Receiverships are billed by the FDIC for services 
provided on their behalf. 

2. Summary of Significant Accounting Policies: 

General: 

These financial statements pertain to the financial position, results 
of operations, and cash flows of the FRF and are presented in 
accordance with U.S. generally accepted accounting principles (GAAP). 
As permitted by the Federal Accounting Standards Advisory Board’s 
Statement of Federal Financial Accounting Standards 34, The Hierarchy 
of Generally Accepted Accounting Principles, Including the Application 
of Standards Issued by the Financial Accounting Standards Board, the 
FDIC prepares financial statements in accordance with standards 
promulgated by the Financial Accounting Standards Board (FASB). These
statements do not include reporting for assets and liabilities of 
receivership entities because these entities are legally separate and 
distinct, and the FRF does not have any ownership interests in them. 
Periodic and final accountability reports of receivership entities are
furnished to courts, supervisory authorities, and others upon request. 

Use Of Estimates: 

Management makes estimates and assumptions that affect the amounts 
reported in the financial statements and accompanying notes. Actual 
results could differ from these estimates. Where it is reasonably 
possible that changes in estimates will cause a material change in the 
financial statements in the near term, the nature and extent of such 
changes in estimates have been disclosed. The more significant 
estimates include the allowance for losses on receivables from thrift 
resolutions and the estimated losses for litigation. 

Cash Equivalents: 

Cash equivalents are short-term, highly liquid investments consisting 
primarily of U.S. Treasury Overnight Certificates. 

Provision For Losses: 

The provision for losses represents the change in the estimation of 
the allowance for losses related to the receivables from thrift 
resolutions and other assets. 

Related Parties: 

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

Disclosure About Recent Relevant Accounting Pronouncements: 

Recent accounting pronouncements have been deemed to be not applicable 
or material to the financial statements as presented. 

3. Receivables from Thrift Resolutions and Other Assets, Net: 

Receivables From Thrift Resolutions: 

The receivables from thrift resolutions include payments made by the 
FRF to cover obligations to insured depositors, advances to 
receiverships for working capital, and administrative expenses paid on 
behalf of receiverships. Any related allowance for loss represents the
difference between the funds advanced and/or obligations incurred and 
the expected repayment. Assets held by the FDIC in its receivership 
capacity for the former RTC are a significant source of repayment of 
the FRF’s receivables from thrift resolutions. As of December 31, 
2012, three of the 850 FRF receiverships remain active until their 
liability-related impediments are resolved. 

The FRF receiverships held assets with a book value of $13 million and 
$15 million as of December 31, 2012 and 2011, respectively (which 
primarily consist of cash held for non-FRF, third party creditors). 

Other Assets: 

Other assets decreased by $59 million to $3 million primarily due to 
the collection of a receivable for tax benefits sharing of $44 million 
and the release of the credit enhancement reserves of $13 million (see 
Note 4, Contingent Liabilities for: Guarantees). The tax benefits 
sharing collection represented the FRF’s share of tax savings by 
entities that either entered into assistance agreements with the 
former FSLIC, or have subsequently purchased financial institutions 
that had prior agreements with the FSLIC. 

Receivables From Thrift Resolutions and Other Assets, Net at December 
31: 

Dollars in Thousands: 

Receivables from closed thrifts: 
2012: $869,917; 
2011: $1,800,417. 

Allowance for losses: 
2012: ($867,208); 
2011: ($1,797,154). 

Receivables from Thrift Resolutions, Net: 
2012: $2,709; 
2011: $3,263. 

Other assets: 
2012: $2,747; 
2011: $61,900. 

Total: 
2012: $5,456; 
2011: $65,163. 

[End of table] 

4. Contingent Liabilities for: 

Goodwill Litigation: 

In United States v. Winstar Corp., 518 U.S. 839 (1996), the Supreme 
Court held that when it became impossible following the enactment of 
FIRREA in 1989 for the federal government to perform certain 
agreements to count goodwill toward regulatory capital, the plaintiffs 
were entitled to recover damages from the United States. 

On July 22, 1998, the Department of Justice’s (DOJ's) Office of Legal 
Counsel (OLC) concluded that the FRF is legally available to satisfy 
all judgments and settlements in the goodwill litigation involving 
supervisory action or assistance agreements. OLC determined that 
nonperformance of these agreements was a contingent liability that was 
transferred to the FRF on August 9, 1989, upon the dissolution of the 
FSLIC. On July 23, 1998, the U.S. Treasury determined, based on OLC’s 
opinion, that the FRF is the appropriate source of funds for payments 
of any such judgments and settlements. The FDIC General Counsel 
concluded that, as liabilities transferred on August 9, 1989, these 
contingent liabilities for future nonperformance of prior agreements 
with respect to supervisory goodwill were transferred to the FRF-
FSLIC, which is that portion of the FRF encompassing the obligations 
of the former FSLIC. The FRF-RTC, which encompasses the obligations of 
the former RTC and was created upon the termination of the RTC on 
December 31, 1995, is not available to pay any settlements or 
judgments arising out of the goodwill litigation. 

The FRF can draw from an appropriation provided by Section 110 of the 
Department of Justice Appropriations Act, 2000 (Public Law 106-113, 
Appendix A, Title I, 113 Stat. 1501A-3, 1501A-20) such sums as may be 
necessary for the payment of judgments and compromise settlements in 
the goodwill litigation. This appropriation is to remain available 
until expended. Because an appropriation is available to pay such 
judgments and settlements, any estimated liability for goodwill 
litigation should have a corresponding receivable from the U.S. Treasury
and therefore have no net impact on the financial condition of the FRF. 

For the year ended December 31, 2012, the FRF paid $181 million as a 
result of a settlement in one goodwill case compared to $50 million 
for one goodwill case in 2011. The FRF received appropriations from 
the U.S. Treasury to fund these payments. 

As of December 31, 2012, two remaining cases are active and pending 
against the United States based on alleged breaches of the agreements 
stated above. Of these two remaining cases, a contingent liability and 
an offsetting receivable of $356 million was recorded for one case as 
of December 31, 2012 and 2011. This case is currently before the lower 
court pending remand following appeal. It is reasonably possible that 
for this case the FRF could incur additional estimated losses of $63 
million, representing additional damages contended by the plaintiff.
For the other remaining active case, no awards were given to the 
plaintiffs by the appellate court. This case is fully adjudicated but 
the Court of Federal Claims is considering awarding litigation costs 
to the United States. 

At December 31, 2011, there were five active cases. For three of the 
cases considered active at year end 2011, one was settled and paid 
during 2012 and two were fully adjudicated with no award; in one of 
these two cases the Court of Federal Claims awarded litigation costs 
of $231 thousand to the United States, which was paid in 2012. 

In addition, the FRF-FSLIC pays the goodwill litigation expenses 
incurred by the DOJ, the entity that defends these lawsuits against 
the United States, based on a Memorandum of Understanding (MOU) dated 
October 2, 1998, between the FDIC and the DOJ. FRF-FSLIC pays in 
advance the estimated goodwill litigation expenses. Any unused funds 
are carried over and applied toward the next fiscal year (FY) charges. 
In 2012, FRF-FSLIC did not provide any additional funding to the DOJ 
because the unused funds from prior fiscal years were sufficient
to cover estimated FY 2013 expenses. 

Guarini Litigation: 

Paralleling the goodwill cases were similar cases alleging that the 
government breached agreements regarding tax benefits associated with 
certain FSLIC-assisted acquisitions. These agreements allegedly 
contained the promise of tax deductions for losses incurred on the 
sale of certain thrift assets purchased by plaintiffs from the FSLIC, 
even though the FSLIC provided the plaintiffs with tax-exempt 
reimbursement. A provision in the Omnibus Budget Reconciliation Act of 
1993 (popularly referred to as the “Guarini legislation”) eliminated the
tax deductions for these losses. 

All eight of the original Guarini cases have been settled. However, a 
case settled in 2006 further obligates the FRF-FSLIC as a guarantor 
for all tax liabilities in the event the settlement amount is 
determined by tax authorities to be taxable. The maximum potential 
exposure under this guarantee is approximately $81 million. However, 
the FDIC believes that it is very unlikely the settlement will be 
subject to taxation. More definitive information may be available 
during 2013, after the Internal Revenue Service (IRS) completes its 
Large Case Program audit on the affected entity’s 2006 returns; this 
audit remains ongoing. As of December 31, 2012, no liability has been 
recorded. The FRF does not expect to fund any payment under this 
guarantee. 

Guarantees: 

On May 21, 2012, the FDIC, in its capacity as manager of the FRF, 
entered into an agreement with Fannie Mae for the release of $13 
million of credit enhancement reserves to the FRF in exchange for 
indemnifying Fannie Mae for all future losses incurred on 76 multi-
family mortgage loans. The former RTC supplied Fannie Mae with the 
credit enhancement reserves in the form of cash collateral to cover 
future losses on these mortgage loans through 2020. The maximum 
exposure on this indemnification is the current unpaid principal 
balance of the remaining 73 multi-family loans totaling $10 million. 
Based on a contingent liability assessment of this portfolio, the 
average loan-to-value ratio is 21%, the majority of the loans all of 
the loans are currently in performing status and no losses have 
occurred since 2001, future payments on this indemnification are not 
expected. As a result, the FRF has not recorded a contingent liability 
for this indemnification as of December 31, 2012. 

5. Resolution Equity: 

As stated in the Overview section of Note 1, the FRF is comprised of 
two distinct pools: the FRF-FSLIC and the FRF-RTC. The FRF-FSLIC 
consists of the assets and liabilities of the former FSLIC. The FRF-
RTC consists of the assets and liabilities of the former RTC. Pursuant 
to legal restrictions, the two pools are maintained separately and the 
assets of one pool are not available to satisfy obligations of the 
other. 

The following table shows the contributed capital, accumulated 
deficit, and resulting resolution equity for each pool. 

Resolution Equity at December 31, 2012: 

Dollars In Thousands: 

Contributed capital - beginning: 
FRF-FSLIC: $46,126,319; 
FRF-RTC: $81,749,337; 
FRF Consolidated: $127,875,656. 

Add: U.S. Treasury payments/receivable for goodwill litigation 
FRF-FSLIC: $181,000; 
FRF-RTC: $0; 
FRF Consolidated: $181,000. 

Contributed capital - ending: 
FRF-FSLIC: $46,307,319; 
FRF-RTC: $81,749,337; 
FRF Consolidated: $128,056,656. 

Accumulated deficit: 
FRF-FSLIC: ($42,882,341); 
FRF-RTC: ($81,577,294); 
FRF Consolidated: ($124,459,635). 

Total: 
FRF-FSLIC: $3,424,978; 
FRF-RTC: $172,043; 
FRF Consolidated: $3,597,021. 

[End of table] 

Contributed Capital: 

The FRF-FSLIC and the former RTC received $43.5 billion and $60.1 
billion from the U.S. Treasury, respectively, to fund losses from 
thrift resolutions prior to July 1, 1995. Additionally, the FRF-FSLIC 
issued $670 million in capital certificates to the Financing 
Corporation (a mixed-ownership government corporation established to 
function solely as a financing vehicle for the FSLIC) and the RTC 
issued $31.3 billion of these instruments to the REFCORP. FIRREA 
prohibited the payment of dividends on any of these capital 
certificates. 

FRF-FSLIC received $181 million in U.S. Treasury payments for goodwill 
litigation in 2012. Furthermore, $356 million was accrued for as 
receivables as of December 31, 2012 and 2011. Through December 31, 
2012, the FRF has received or established a receivable for a total of 
$2.2 billion of goodwill appropriations, the effect of which increases 
contributed capital. 

Through December 31, 2012, the FRF-RTC has returned $4.6 billion to 
the U.S. Treasury and made payments of $5.0 billion to the REFCORP. 
These actions serve to reduce contributed capital. The most recent 
payment to the REFCORP was in January of 2008 for $225 million. 

Accumulated Deficit: 

The accumulated deficit represents the cumulative excess of expenses 
and losses over revenue for activity related to the FRF-FSLIC and the 
FRF-RTC. Approximately $29.8 billion and $87.9 billion were brought 
forward from the former FSLIC and the former RTC on August 9, 1989, 
and January 1, 1996, respectively. The FRF-FSLIC accumulated deficit 
has increased by $13.1 billion, whereas the FRF-RTC accumulated 
deficit has decreased by $6.3 billion, since their dissolution dates. 

6. Disclosures about the Fair Value of Financial Instruments: 

The following table presents the FRF’s financial assets measured at 
fair value on a recurring basis as of December 31, 2012 and 2011. 

Assets Measured at Fair Value at December 31, 2012: 

Dollars In Thousands: 

Fair Value Measurements Using: 

Cash and cash equivalents[1]: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$3,425,097; 
Significant Other Observable Inputs (Level 2): $0; 
Significant Unobservable Inputs (Level 3): $0; 
Total Assets at Fair Value: $3,425,097. 

Total Assets: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$3,425,097; 
Significant Other Observable Inputs (Level 2): $0; 
Significant Unobservable Inputs (Level 3): $0; 
Total Assets at Fair Value: $3,425,097. 

(1) Cash equivalents are Special U.S. Treasury Certificates with 
overnight maturities valued at prevailing interest rates established 
by the U.S. Bureau of Public Debt. Cash equivalents are included in 
the "Cash and cash equivalents" line item. 

Assets Measured at Fair Value at December 31, 2011: 

Dollars In Thousands: 

Fair Value Measurements Using: 

Cash and cash equivalents[1]: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$3,377,203; 
Significant Other Observable Inputs (Level 2): $0; 
Significant Unobservable Inputs (Level 3): $0; 
Total Assets at Fair Value: $3,377,203. 

Credit enhancement reserves[2]: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$0; 
Significant Other Observable Inputs (Level 2): $14,431; 
Significant Unobservable Inputs (Level 3): $0; 
Total Assets at Fair Value: $14,431. 

Total Assets: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$3,377,203; 
Significant Other Observable Inputs (Level 2): $14,431; 
Significant Unobservable Inputs (Level 3): $0; 
Total Assets at Fair Value: $3,391,634. 

(1) Cash equivalents are Special U.S. Treasury Certificates with 
overnight maturities valued at prevailing interest rates established 
by the U.S. Bureau of Public Debt. Cash equivalents are included in 
the "Cash and cash equivalents" line item. 

(2) Credit enhancement reserves are valued by performing projected 
cash flow analyses using market-based assumptions. 

[End of table] 

Some of the FRF’s financial assets and liabilities are not recognized 
at fair value but are recorded at amounts that approximate fair value 
due to their short maturities and/or comparability with current 
interest rates. Such items include other short-term receivables and
accounts payable and other liabilities. 

The net receivable from thrift resolutions is influenced by the 
underlying valuation of receivership assets. This corporate receivable 
is unique and the estimate presented is not necessarily indicative of 
the amount that could be realized in a sale to the private sector. Such
a sale would require indeterminate, but substantial, discounts for an 
interested party to profit from these assets because of credit and 
other risks. Consequently, it is not practicable to estimate its fair 
value. 

[End of section] 

Appendix I: Comments from the Federal Deposit Insurance Corporation: 

FDIC: 
Federal Deposit Insurance Corporation: 
Deputy to the Chairman and CFO: 
550 17th Street NW: 
Washington, D.C. 20429-9990: 

February 14, 2013: 

Mr. James Dalkin: 
Director, Financial Management and Assurance: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Re: FDIC Management Response on the GAO 2012 Financial Statements 
Audit Report: 

Dear Mr. Dalkin: 

Thank you for the opportunity to review and comment on the U.S. 
Government Accountability Office's (GAO's) draft report titled, 
Financial Audit: Federal Deposit Insurance Corporation Funds' 2012 and 
2011 Financial Statements, GAO-13-291. We are pleased that the Federal 
Deposit Insurance Corporation (FDIC) has received unmodified 
(unqualified) opinions for the twenty-first consecutive year on the 
financial statements of its funds: the Deposit Insurance Fund (DIF) 
and the FSLIC Resolution Fund (FRF). Also, GAO reported that the FDIC 
had effective internal control over financial reporting and that there 
was no reportable noncompliance with provisions of laws and 
regulations that were tested. Additionally, FDIC is pleased that GAO 
acknowledged our efforts to resolve the prior year significant control
deficiency related to estimating losses to the DIF from shared-loss 
agreements. 

During the audit year, the FDIC management and staff continued to take 
steps to strengthen and improve the internal control environment and 
will continue to focus on this area in the coming audit year. FDIC 
recognizes the important role a strong internal control program plays in
an agency achieving its mission. Our dedication to sound financial 
management has been and will remain a top priority. 

In complying with audit standards that require management to provide a 
written assertion about the effectiveness of its internal control over 
financial reporting, the FDIC has prepared Management's Report on 
Internal Control over Financial Reporting (see attachment). The report 
acknowledges management's responsibility for establishing and 
maintaining internal control over financial reporting and provides the 
FDIC's conclusion regarding the effectiveness of its internal control. 

We want to thank the GAO staff for their professionalism and 
dedication during the audit and look forward to a productive and 
successful relationship during the 2013 audit. If you have any 
questions or concerns, please do not hesitate to contact me. 

Sincerely, 

Signed by: 

Steven O. App: 
Deputy to the Chairman and Chief Financial Officer: 

Attachment: 

Management's Report on Internal Control over Financial Reporting: 

The Federal Deposit Insurance Corporation's (FDIC's) internal control 
over financial reporting is a process effected by those charged with 
governance, management, and other personnel, designed to provide 
reasonable assurance regarding the preparation of reliable financial
statements in accordance with U.S. generally accepted accounting 
principles (GAAP), and compliance with applicable laws and regulations. 

The objective of the FDIC's internal control over financial reporting 
is to reasonably assure that (1) transactions are properly recorded, 
processed and summarized to permit the preparation of financial 
statements in accordance with GAAP, and assets are safeguarded against 
loss from unauthorized acquisition, use, or disposition; and (2) 
transactions are executed in accordance with the laws and regulations 
that could have a direct and material effect on the financial 
statements. 

Management is responsible for establishing and maintaining effective 
internal control over financial reporting. Management assessed the 
effectiveness of the FDIC's internal control over financial reporting 
as of December 31, 2012 through its corporate risk management program
that seeks to comply with the spirit of the following standards, among 
others: Federal Managers' Financial Integrity Act of 1982 (FMFIA); 
Chief Financial Officers Act (CFO Act); Government Performance and 
Results Act (GPRA); Federal Information Security Management Act (FISMA);
and OMB Circular A-123. In addition, other standards that the FDIC 
considers are the framework set forth by the Committee of Sponsoring 
Organizations of the Treadway Commission's Internal Control-Integrated 
Framework and the U.S. Government Accountability Office's (GAO's) 
Standards for Internal Control in the Federal Government. 

Based on the above assessment, management concluded that, as of 
December 31 , 2012, FDIC's internal control over financial reporting 
is effective based upon the criteria established in FMFIA. 

Federal Deposit Insurance Corporation: 
February 14, 2013: 

[End of section] 

Footnotes: 

[1] A third fund managed by FDIC, the Orderly Liquidation Fund, 
established by Section 210 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376, 1506 
(July 21, 2010), is unfunded and did not have any transactions during 
2012 or 2011. 

[2] A material weakness is a deficiency, or combination of 
deficiencies, in internal control over financial reporting such that 
there is a reasonable possibility that a material misstatement of the 
entity's financial statements will not be prevented or detected and 
corrected on a timely basis. A deficiency in internal control exists 
when the design or operation of a control does not allow management or 
employees, in the normal course of performing their assigned 
functions, to prevent or detect and correct misstatements on a timely 
basis. 

[3] GAO, Financial Audit: Federal Deposit Insurance Corporation Funds' 
2011 and 2010 Financial Statements, [hyperlink, 
http://www.gao.gov/products/GAO-12-416], (Washington, D.C.: Apr. 19, 
2012). 

[4] A significant deficiency is a deficiency, or combination of 
deficiencies, in internal control that is less severe than a material 
weakness, yet important enough to merit the attention of those charged 
with governance. 

[5] Under shared loss agreements FDIC sells a failed institution to an 
acquirer with an agreement that FDIC, through the DIF, will share in 
any losses the acquirer experiences in servicing and disposing of 
assets purchased and covered under the shared loss agreement. 
Typically these agreements are structured such that FDIC assumes 80 
percent of any such losses. 

[End of section] 

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