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entitled 'Financial Audit: Federal Deposit Insurance Corporation 
Funds' 2014 and 2013 Financial Statements' which was released on 
February 12, 2015. 

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United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

February 2015: 

Financial Audit: 

Federal Deposit Insurance Corporation Funds' 2014 and 2013 Financial 
Statements: 

GAO-15-289: 

GAO Highlights: 

Highlights of GAO-15-289, 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 of 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 for 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 applicable laws, regulations,
contracts, and grant agreements. 

What GAO Found: 

In GAO's opinion, the Federal Deposit Insurance Corporation (FDIC) 
fairly presented, in all material respects, the 2014 and 2013 
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
to the FRF as of December 31, 2014. Further, GAO did not find any 
reportable instances of noncompliance with provisions of applicable 
laws, regulations, contracts, and grant agreements it tested. 

The banking industry continued to improve in 2014 as discussed in note 
7 to the DIF's financial statements. During 2014, 18 insured 
institutions with combined assets of $2.9 billion failed. The losses 
to the DIF from failures that occurred in 2014 were lower than the 
amount accrued at the end of 2013, as the aggregate number and size of 
institution failures in 2014—-and their estimated cost to the DIF-—
were less than anticipated. However, the DIF's contingent liability for
anticipated failures increased from $1.2 billion at December 31, 2013, 
to $1.8 billion at December 31, 2014, due to the increase in the 
exposure to loss from certain troubled institutions. As discussed in 
note 17 to the DIF's financial statements, through February 5, 2015, 2 
institutions have failed thus far during 2015. 

The financial condition of the DIF also improved in 2014. As of 
December 31, 2014, the DIF had a fund balance of $62.8 billion, 
compared to a fund balance of $47.2 billion at December 31, 2013. The 
DIF's ratio of reserves to estimated insured deposits as of September 
30, 2014, was 0.89 percent, compared to 0.79 percent at December 31, 
2013. This improvement was primarily attributable to revenue earned in 
2014 and, as noted above, lower losses from failed institutions than 
estimated at December 31, 2013, and lower estimated losses for 
institutions that failed in prior years. FDIC's long-range plan is to 
maintain the reserve ratio at a minimum 2 percent. 

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 establishing sound financial management 
has been and will remain a top priority. 

View [hyperlink, http://www.gao.gov/products/GAO-15-289]. For more 
information, contact James R. Dalkin at (202) 512-3133 or 
dalkinj@gao.gov. 

[End of section] 

Contents: 

Letter: 

Independent Auditor's Report3: 

Report on the Financial Statements and on Internal Control over 
Financial Reporting: 

Report on Compliance with Laws, Regulations, Contracts, and Grant 
Agreements: 

Agency Comments: 

Deposit Insurance Fund's Financial Statements: 

FSLIC Resolution Fund's Financial Statements: 

Appendix I: Management's Report on Internal Control Over Financial 
Reporting: 

Appendix II: Comments from the Federal Deposit Insurance Corporation: 

Abbreviations: 

DIF: Deposit Insurance Fund: 

FDIC: Federal Deposit Insurance Corporation: 

FMFIA: Federal Managers' Financial Integrity Act of 1982: 

FRFFSLIC: Resolution Fund: 

FSLIC: Federal Savings and Loan Insurance Corporation: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

February 12, 2015: 

The Honorable Richard Shelby: 
Chairman: 
The Honorable Sherrod Brown: 
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 of the FSLIC 
Resolution Fund (FRF) as of, and for the years ended December 31, 2014, 
and 2013. These financial statements are the responsibility of the 
Federal Deposit Insurance Corporation (FDIC), the administrator of the 
two funds. 

This report contains our (1) opinions that the financial statements of 
the DIF and of the FRF are fairly presented, in all material respects; 
(2) opinions that FDIC maintained, in all material respects, effective 
internal control over financial reporting relevant to the DIF and to 
the FRF as of December 31, 2014; and (3) conclusion that we found no 
reportable instances of noncompliance with provisions of applicable 
laws, regulations, contracts, and grant agreements 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, the report is available at no charge on the GAO 
website at [hyperlink, http://www.gao.gov]. 

If you or your staffs 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: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

Independent Auditor's Report: 

To the Board of Directors The Federal Deposit Insurance Corporation: 

In our audits of the 2014 and 2013 financial statements of the Deposit 
Insurance Fund (DIF) and of 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 of the FRF as of and for the 
years ended December 31, 2014, and 2013, 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 to the FRF as of 
December 31, 2014; and: 

* no reportable noncompliance for 2014 with provisions of applicable 
laws, regulations, contracts, and grant agreements we tested. 

The following sections discuss in more detail (1) our report on the 
financial statements and on internal control over financial reporting, 
including an emphasis of matter related to improvements in the banking 
industry's and the DIF's financial condition; (2) our report on 
compliance with laws, regulations, contracts, and grant agreements; and 
(3) agency comments. 

Report on the Financial Statements and on Internal Control over 
Financial Reporting: 

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 of the FRF, both of which are 
administered by FDIC. The financial statements for the DIF comprise the 
balance sheets as of December 31, 2014, and 2013; 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 financial 
statements for the FRF comprise the balance sheets as of December 31, 
2014, and 2013; 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 to the FRF as 
of December 31, 2014, based on criteria established under 31 U.S.C. § 
3512(c), (d), commonly known as the Federal Managers' Financial 
Integrity Act (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, 2014, based on its 
evaluation, included in the accompanying Management's Report on 
Internal Control Over Financial Reporting in appendix I. 

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 to 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. 

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 over financial reporting 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 over Financial 
Reporting: 

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 
applicable laws, regulations, contracts, and grant agreements 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 on Financial Statements: 

In our opinion: 

* The DIF's financial statements present fairly, in all material 
respects, the DIF's financial position as of December 31, 2014, and 
2013, and 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, 2014, and 
2013, and the results of its operations and its cash flows for the 
years then ended, in accordance with U.S. generally accepted accounting 
principles. 

Emphasis of Matter: 

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

As discussed in note 7 to the DIF's financial statements, the banking 
industry continued to improve in 2014. During 2014, 18 insured 
institutions with combined assets of $2.9 billion failed. The losses to 
the DIF from failures that occurred in 2014 were lower than the amount 
accrued at the end of 2013, as the aggregate number and size of 
institution failures in 2014--and their estimated cost to the DIF--were 
less than anticipated. However, the DIF's contingent liability for 
anticipated failures increased from $1.2 billion at December 31, 2013, 
to $1.8 billion at December 31, 2014 due to the increase in the 
exposure to loss from certain troubled institutions. As discussed in 
note 17 to the DIF's financial statements, through February 5, 2015, 2 
institutions have failed thus far during 2015. 

The financial condition of the DIF also improved in 2014. As of 
December 31, 2014, the DIF had a fund balance of $62.8 billion, 
compared to a fund balance of $47.2 billion at December 31, 2013. The 
DIF's ratio of reserves to estimated insured deposits as of September 
30, 2014, was 0.89 percent, compared to 0.79 percent at December 31, 
2013. This improvement was primarily attributable to revenue earned in 
2014 and, as noted above, lower losses from failed institutions than 
estimated at December 31, 2013, and lower estimated losses for 
institutions that failed in prior years. FDIC's long-range plan is to 
maintain the reserve ratio at a minimum 2 percent. 

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

Opinions on Internal Control over Financial Reporting: 

In our opinion: 

* FDIC maintained, in all material respects, effective internal control 
over financial reporting relevant to the DIF as of December 31, 2014, 
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, 2014, 
based on criteria established under FMFIA. 

During our 2014 audit, we identified deficiencies in FDIC's internal 
control over financial reporting that we do not consider to be material 
weaknesses or significant deficiencies.[Footnote 3] Nonetheless, these 
deficiencies warrant FDIC management's attention. We have communicated 
these matters to FDIC management and, where appropriate, will report on 
them separately. 

Report on Compliance with Laws, Regulations, Contracts, and Grant 
Agreements: 

In connection with our audits of the financial statements of the DIF 
and of the FRF, both of which are administered by the FDIC, we tested 
compliance with selected provisions of applicable laws, regulations, 
contracts, and grant agreements consistent with our auditor's 
responsibility discussed below. We caution that noncompliance may occur 
and not be detected by these tests. 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, 
regulations, contracts, and grant agreements. 

Auditor's Responsibility: 

Our responsibility is to test compliance with selected provisions of 
applicable laws, regulations, contracts, and grant agreements that have 
a direct effect on the determination of material amounts and 
disclosures in the financial statements of the DIF and of the FRF, and 
perform certain other limited procedures. Accordingly, we did not test 
FDIC's compliance with all applicable laws, regulations, contracts, and 
grant agreements. 

Results of Our Tests for Compliance with Laws, Regulations, Contracts, 
and Grant Agreements: 

Our tests for compliance with selected provisions of applicable laws, 
regulations, contracts, and grant agreements disclosed no instances of 
noncompliance for 2014 that would be reportable under U.S. generally 
accepted government auditing standards. However, the objective of our 
tests was not to provide an opinion on compliance with applicable laws, 
regulations, contracts, and grant agreements. Accordingly, we do not 
express such an opinion. 

Intended Purpose of Report on Compliance with Laws, Regulations, 
Contracts, and Grant Agreements: 

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

Agency Comments: 

In commenting on a draft of this report, FDIC noted that it was pleased 
that we provided unmodified opinions on the DIF's and the FRF's 
financial statements and that we reported that FDIC had effective 
internal control over financial reporting and complied with tested 
provisions of applicable laws, regulations, contracts, and grant 
agreements. 

FDIC also stated that it will continue to take steps to strengthen and 
improve 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. The complete text of 
FDIC's response is reprinted in appendix II. 

Signed by: 

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

February 5, 2015: 

[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 from its 
inception in 2010 through 2014. 

[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] 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. 

[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: 
2014: $1,914,520; 
2013: $3,543,270. 

Investment in U.S. Treasury obligations (Note 3):
2014: $48,805,846; 
2013: $38,510,500. 

Assessments receivable, net (Note 8):
2014: $2,003,424; 
2013: $2,227,735. 

Interest receivable on investments and other assets, net:
2014: $651,894; 
2013: $511,428. 

Receivables from resolutions, net (Note 4):
2014: $18,181,498; 
2013: $16,344,991. 

Property and equipment, net (Note 5):
2014: $372,419; 
2013: $377,223. 

Total Assets:
2014: $72,929,601; 
2013: $61,515,147. 

Liabilities: 

Accounts payable and other liabilities:
2014: $291,006; 
2013: $300,575. 

Liabilities due to resolutions (Note 6): 
2014: $7,799,279; 
2013: $12,625,982. 

Postretirement benefit liability (Note 13): 
2014: $243,419; 
2013: $193,591. 

Contingent liabilities for: 

Anticipated failure of insured institutions (Note 7): 
2014: $1,814,770; 
2013: $1,198,960. 

Litigation losses (Note 7): 
2014: $950; 
2013: $5,200. 

Total Liabilities: 
2014: $10,149,424; 
2013: $14,324,308. 

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

Fund Balance: 

Accumulated Net Income: 
2014: $62,786,786; 
2013: $47,186,974. 

Accumulated Other Comprehensive Income: 

Unrealized gain on U.S. Treasury investments, net (Note 3): 
2014: $51,142; 
2013: $20,215. 

Unrealized postretirement benefit loss (Note 13): 
2014: ($57,751); 
2013: ($16,350). 

Total Accumulated Other Comprehensive Income: 
2014: ($6,609); 
2013: $3,865. 

Total Fund Balance: 
2014: $62,780,177; 
2013: $47,190,839. 

Total Liabilities and Fund Balance: 
2014: $72,929,601; 
2013: $61,515,147. 

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

[End of Balance Sheet] 

Statement of Income and Fund Balance: 

Deposit Insurance Fund (DIF): 

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 8): 
2014: $8,656,082; 
2013: $9,734,173. 

Interest on U.S. Treasury obligations: 
2014: $281,924; 
2013: $103,363. 

Other revenue (Note 9): 
2014: $27,059; 
2013: $163,154. 

Gain on sale of trust preferred securities (Note 10): 
2014: $0; 
2013: $458,176. 

Total Revenue: 
2014: $8,965,065; 
2013: $10,458,866. 

Expenses and Losses: 

Operating expenses (Note 11): 
2014: $1,664,344; 
2013: $1,608,717. 

Provision for insurance losses (Note 12): 
2014: ($8,305,577); 
2013: ($5,659,388). 

Insurance and other expenses: 
2014: $6,486; 
2013: $4,799. 

Total Expenses and Losses: 
2014: ($6,634,747); 
2013: ($4,045,872). 

Net Income: 
2014: $15,599,812; 
2013: $14,504,738. 

Other Comprehensive Income: 

Unrealized loss on U.S. Treasury investments, net: 
2014: $30,927; 
2013: ($13,604). 

Unrealized postretirement benefit gain (loss) (Note 13): 
2014: ($41,401); 
2013: $44,097. 

Unrealized (loss) gain on trust preferred securities (Note 10): 
2014: $0; 
2013: ($302,159). 

Total Other Comprehensive (Loss) Income: 
2014: ($10,474); 
2013: ($271,666). 

Comprehensive Income: 
2014: $15,589,338; 
2013: $14,233,072. 

Fund Balance - Beginning: 
2014: $47,190,839; 
2013: $32,957,767. 

Fund Balance - Ending: 
2014: $62,780,177; 
2013: $47,190,839. 

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

[End of Statement of Income and Fund Balance] 

Statement of Cash Flows: 

Deposit Insurance Fund (DIF): 

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

Dollars In Thousands: 

Operating Activities: 

Provided by: 

Assessments: 
2014: $8,873,123; 
2013: $7,111,902. 

Interest on U.S. Treasury obligations: 
2014: $1,450,39; 
2013: $1,080,157. 

Dividends and interest on trust preferred securities: 
2014: $0; 
2013: $154,393. 

Recoveries from financial institution resolutions: 
2014: $4,099,804; 
2013: $5,696,453. 

Miscellaneous receipts: 
2014: $78,558; 
2013: $79,773. 

Used by: 

Operating expenses: 
2014: ($1,586,858); 
2013: $(1,558,229). 

Disbursements for financial institution resolutions: 
2014: ($1,860,014); 
2013: $(3,857,214). 

Refunds of prepaid assessments (Note 8): 
2014: $0; 
2013: $(5,850,135. 

Miscellaneous disbursements: 
2014: ($15,385); 
2013: ($17,228). 

Net Cash Provided (Used) by Operating Activities: 
2014: $11,040,167; 
2013: $2,839,872. 

Investing Activities: 

Provided by: 

Maturity of U.S. Treasury obligations: 
2014: $17,158,275; 
2013: $27,704,523. 

Sale of trust preferred securities (Note 10): 
2014: $0; 
2013: $2,420,000. 

Used by: 

Purchase of property and equipment: 
2014: ($55,295); 
2013: ($57,390). 

Purchase of U.S. Treasury obligations: 
2014: ($29,771,897); 
2013: ($32,464,096). 

Net Cash (Used) Provided by Investing Activities: 
2014: ($12,668,917); 
2013: ($2,396,963). 

Net Increase (Decrease) in Cash and Cash Equivalents: 
2014: ($1,628,750); 
2013: $442,909. 

Cash and Cash Equivalents - Beginning: 
2014: $3,543,270; 
2013: $3,100,361. 

Cash and Cash Equivalents - Ending: 
2014: $1,914,520; 
2013: $3,543,270. 

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

[End of Statement of Cash Flows] 

Notes to the Financial Statements: 

Deposit Insurance Fund: 

December 31, 2014 and 2013: 

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 FDIC's operations are generally found in 
the Federal Deposit Insurance (FDI) Act, as amended (12 U.S.C. 1811, 
et seq). In accordance with 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 (IDIs) 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 to being the administrator of the DIF, the FDIC is the 
administrator of the FSLIC Resolution Fund (FRF). The FRF is a 
resolution fund responsible for the sale of the remaining assets and 
the satisfaction of the liabilities associated with the former Federal 
Savings and Loan Insurance Corporation (FSLIC) and the former 
Resolution Trust Corporation. The FDIC maintains the DIF and the FRF 
separately to support their respective functions. 

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection 
Act of 2010 (Dodd-Frank Act), the FDIC also manages 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 covered 
financial company is a failing financial company (for example, 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 (Public Law 111-203) granted the FDIC authority to 
establish a widely available program to guarantee obligations of 
solvent IDIs or solvent depository institution holding companies 
(including affiliates) upon the systemic risk 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 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. 

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 $162.0 billion and $146.0 billion as of December 31, 2014 and 
2013, 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 according to applicable laws and regulations. Therefore, 
income and expenses attributable to resolution entities are accounted 
for as transactions of those entities. The FDIC bills resolution 
entities for services provided on their behalf. 

2. Summary of Significant Accounting Policies: 

General: 

These financial statements include 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). 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 or beneficial 
interests in them. Periodic and final accounting 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 assessments receivable and 
associated revenue; the allowance for loss on receivables from 
resolutions (including shared-loss agreements); guarantee obligations 
for structured transactions; 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 FDI Act requires that the DIF funds 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 Fiscal Service'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 daily 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, as well as modest assessment base growth and average 
assessment rate adjustment factors. 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 8). 

Capital Assets And Depreciation: 

The FDIC buildings are depreciated on a straight-line basis over a 35-
to 50-year estimated life. Building improvements are capitalized and 
depreciated over the estimated useful life of the improvements. 
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. Computer equipment is 
depreciated on a straight-line basis over a three-year estimated 
useful life. 

Reporting On Variable Interest Entities: 

The 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. As the guarantor of 
note obligations for several structured transactions, the FDIC, in its 
corporate capacity, holds an interest in many 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 affect 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 that 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 conclusion of these analyses was that the FDIC, in its corporate 
capacity, has not engaged in any activity that would cause the FDIC to 
be characterized as a primary beneficiary to any VIE with which it was 
involved as of December 31, 2014 and 2013. Therefore, consolidation is 
not required for the 2014 and 2013 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 FDIC if payments are made on guarantee claims. Ongoing 
analyses will be required to monitor consolidation implications under 
ASC 810. 

The FDIC's involvement with VIEs is fully described in Note 7. 

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: 

In May 2014, the Financial Accounting Standards Board issued 
Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with 
Customers (Topic 606). The ASU will require an entity to recognize 
revenue based on the amount it expects to be entitled for the transfer 
of promised goods or services. For the DIF, the new standard is 
effective for annual periods beginning after December 15, 2017. The 
FDIC does not expect this new ASU to have a material impact on the DIF. 

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

3. Investment in U.S. Treasury Obligations: 

Investments in U.S. Treasury obligations, totaled $49.8 billion as of 
December 31, 2014, and $38.5 billion as of December 31, 2013. As of 
December 31, 2014 and 2013, the DIF held $2.5 billion and $4.6 
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). 

Table: Total Investment in U.S. Treasury Obligations at December 31, 
2014: 

Dollars In Thousands: 

U.S. Treasury notes and bonds: 

Maturity: Within 1 year: 
Yield at Purchase (a): 0.28%; 
Face Value: $12,450,000; 
Net Carrying Amount: $12,861,127; 
Unrealized Holding Gains: $2,291; 
Unrealized Holding Losses: ($4,516); 
Fair Value: $12,858,902. 

Maturity: After 1 year through 5 years: 
Yield at Purchase (a): 0.91%; 
Face Value: $33,901,209; 
Net Carrying Amount: $34,393,283; 
Unrealized Holding Gains: $86,212; 
Unrealized Holding Losses: ($5,759); 
Fair Value: $34,473,736. 

U.S. Treasury Inflation-Protected Securities: 

Maturity: Within 1 year: 
Yield at Purchase (a): -1.03%; 
Face Value: $1,500,000; 
Net Carrying Amount: $1,759,237; 
Unrealized Holding Gains: $0; 
Unrealized Holding Losses: ($17,120); 
Fair Value: $1,742,117. 

Maturity: After 1 year through 5 years: 
Yield at Purchase (a): -0.43%; 
Face Value: $700,000; 
Net Carrying Amount: $741,057; 
Unrealized Holding Gains: $0; 
Unrealized Holding Losses: ($9,966); 
Fair Value: $731,091. 

Total: 
Face Value: $48,551,209; 
Net Carrying Amount: $49,754,704; 
Unrealized Holding Gains: $88,503; 
Unrealized Holding Losses: ($37,361)(b); 
Fair Value: $49,805,846. 

(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, 
issued by the Congressional Budget Office and Blue Chip Economic 
Indicators in early 2014. 

(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 securities 
and is not likely to be required to sell them before their maturity 
date, thus, the FDIC does not consider these securities to be other 
than temporarily impaired at December 31, 2014. The aggregate related 
fair value of securities with unrealized losses was $19.0 billion as of 
December 31, 2014. 

[End of table] 

Table: Total Investment in U.S. Treasury Obligations at December 31, 
2013: 

Dollars In Thousands: 

U.S. Treasury notes and bonds: 

Maturity: Within 1 year: 
Yield at Purchase (a): 0.23%; 
Face Value: $14,300,000; 
Net Carrying Amount: $14,552,418; 
Unrealized Holding Gains: $4,167; 
Unrealized Holding Losses: ($31); 
Fair Value: $14,556,554. 

Maturity: After 1 year through 5 years: 
Yield at Purchase (a): 0.70%; 
Face Value: $18,351,209; 
Net Carrying Amount: $19,382,202; 
Unrealized Holding Gains: $24,408; 
Unrealized Holding Losses: ($14,013); 
Fair Value: $19,392,597. 

U.S. Treasury Inflation-Protected Securities: 

Maturity: Within 1 year: 
Yield at Purchase (a): -0.86%; 
Face Value: $2,150,000; 
Net Carrying Amount: $2,464,330; 
Unrealized Holding Gains: $1,050; 
Unrealized Holding Losses: ($1,130); 
Fair Value: $2,464,250. 

Maturity: After 1 year through 5 years: 
Yield at Purchase (a): -0.99%; 
Face Value: $1,800,000; 
Net Carrying Amount: $2,091,335; 
Unrealized Holding Gains: $5,788; 
Unrealized Holding Losses: ($24); 
Fair Value: $2,097,099. 

Total: 
Face Value: $36,601,209; 
Net Carrying Amount: $38,490,285; 
Unrealized Holding Gains: $35,413; 
Unrealized Holding Losses: ($15,198)(b); 
Fair Value: $38,510,500. 

(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 2013. 

(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 securities 
and is not likely to be required to sell them before their maturity 
date, thus, the FDIC does not consider these securities to be other 
than temporarily impaired at December 31, 2013.U.S. 

[End of table] 

4. Receivables from Resolutions, Net: 

Table: Receivables from Resolutions, Net at December 31: 

Dollars In Thousands: 

Receivables from closed banks: 
2014: $98,360,904; 
2013: $106,291,226. 

Allowance for losses: 
2014: ($80,179,406); 
2013: ($89,946,235). 

Total: 
2014: $18,181,498; 
2013: $16,344,991. 

[End of table] 

The receivables from resolutions result from DIF payments 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 7) are the 
main source of repayment of the DIF's receivables from resolutions. 

As of December 31, 2014, the FDIC had 481 active receiverships, 
including 18 established in 2014. The DIF resolution entities held 
assets with a book value of $29.7 billion as of December 31, 2014, and 
$38.4 billion as of December 31, 2013 (including $22.0 billion and 
$27.1 billion, respectively, of cash, investments, receivables due 
from the DIF, and other receivables). Ninety-nine percent of the 
current asset book value of $29.7 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 since 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 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 2014, the shared-loss cost estimates 
were updated for all 281 active SLAs. 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 updated shared-loss cost projections on the remaining 
agreements were based on a random sample of institutions selected for 
new third-party loss estimations, and valuation results from the 
sampled institutions were aggregated and extrapolated to the non-
sampled institutions by asset type and performance status. 

Also reflected in the allowance for loss calculation are end-of-
agreement SLA “true-up” recoveries. True-up recoveries are projected 
to be received at expiration in accordance with the terms of the SLA, 
if actual losses at expiration are lower than originally estimated. 

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, which may 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 304 failures using 
whole bank purchase and assumption resolution transactions with 
accompanying SLAs on total assets of $216.5 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. The FDIC uses SLAs to keep assets 
in the private sector and to minimize disruptions to loan customers. 

Losses on the covered assets of failed institutions are shared between 
the acquirer and the FDIC, in its receivership capacity, when losses 
occur through the sale, foreclosure, loan modification, or charge-off 
of loans under the terms of the SLA. The majority of the agreements 
cover commercial and single-family loans over a five- to ten-year 
shared-loss period, respectively, with the receiver covering 80 
percent of the losses incurred by the acquirer and the acquiring 
institution 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. Recoveries by the 
acquirer on covered commercial and single-family SLA losses are also 
shared over an eight- to ten-year period, respectively. Note that 
future recoveries on SLA losses are not factored into the DIF 
allowance for loss calculation because the amount and timing of such 
receipts are not determinable. 

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 6). 

Receiverships with SLAs made cumulative shared-loss payments totaling 
$28.2 billion, (comprised of $31.8 billion in losses, net of $3.6 
billion of recoveries) as of year-end 2014 and $26.4 billion 
(comprised of $29.1 billion in losses, net of $2.7 billion of 
recoveries) as of year-end 2013. Estimates of additional payments, net 
of true-up recoveries, by DIF receiverships over the duration of the 
SLAs were $3.9 billion on total remaining covered assets of $54.6 
billion at December 31, 2014, and $12.3 billion on total remaining 
covered assets of $78.2 billion as of December 31, 2013. 

Concentration Of Credit Risk: 

Financial instruments that potentially subject the DIF to 
concentrations of credit risk are receivables from resolutions. The 
repayment of these receivables is primarily influenced by recoveries 
on assets held by DIF receiverships and payments on the covered assets 
under SLAs. The majority of the remaining assets in liquidation ($7.7 
billion) and current shared-loss covered assets ($54.6 billion), which 
together total $62.3 billion, are concentrated in commercial loans 
($22.0 billion), residential loans ($31.0 billion), and structured 
transaction-related assets as described in Note 7 ($5.2 billion). Most 
of the assets originated from failed institutions located in 
California ($20.5 billion), Florida ($7.2 billion), Puerto Rico ($7.2 
billion), Alabama ($4.6 billion), Illinois ($3.8 billion), and Georgia 
($3.6 billion). 

5. Property and Equipment, Net: 

Table: Property and Equipment, Net at December 31: 

Dollars In Thousands: 

Land: 
2014: $37,352; 
2013: $37,352. 

Buildings (including building and leasehold improvements): 
2014: $326,067; 
2013: $314,775. 

Application software (includes work-in-process): 
2014: $142,907; 
2013: $149,115. 

Furniture, fixtures, and equipment: 
2014: $104,761; 
2013: $142,621. 

Accumulated depreciation: 
2014: ($238,668); 
2013: ($266,640). 

Total: 
2014: $372,419; 
2013: $377,223. 

The depreciation expense was $60 million and $73 million for 2014 and 
2013, respectively. 

[End of table] 

6. Liabilities Due to Resolutions: 

As of December 31, 2014 and 2013, the DIF recorded liabilities 
totaling $7.8 billion and $12.6 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 sending cash directly to the receivership to 
fund shared-loss and other expenses or by offsetting receivables from 
resolutions when the receivership declares a dividend. 

In addition, as of December 31, 2014 and 2013, the DIF recorded 
liabilities of $12 million and $29 million, respectively, in unpaid 
deposit claims related to multiple receiverships, which are offset by 
receivables included in the “Receivables from resolutions, net” line 
item on the Balance Sheet. The DIF pays these liabilities when the 
claims are approved. 

7. 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. 

The banking industry's financial condition and performance continued 
to improve in 2014. According to the quarterly financial data 
submitted by DIF-insured institutions, the industry reported total net 
income of $116.0 billion for the first nine months of 2014, an increase 
of 1.1 percent over the comparable period one year ago. The industry's 
capital levels also continued to improve, and noncurrent loans 
declined, as the industry's ratio of noncurrent loans-to-total loans 
fell to its lowest level since the second quarter of 2008. 

Losses to the DIF from failures that occurred in 2014 were lower than 
the contingent liability at the end of 2013, as the aggregate number 
and size of institution failures in 2014 were less than anticipated. 
However, the contingent liability increased from $1.2 billion at 
December 31, 2013 to $1.8 billion at December 31, 2014, as the effect 
of an increase in the failure rates for certain institutions 
contributing to the contingent liability more than offset the removal 
of the liability for institutions that failed in 2014. 

In addition to the recorded contingent liabilities, the FDIC has 
identified risks 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 approximately $1.7 billion as of 
December 31, 2014, as compared to $3.0 billion as of year-end 2013. 
The actual losses, if any, will largely depend on future economic and 
market conditions and could differ materially from this estimate. 

During 2014, 18 institutions failed with combined assets of $2.9 
billion at the date of failure. Recent trends in supervisory ratings 
and market data suggest that the financial performance and condition 
of the banking industry should continue to improve over the coming 
year. However, exposure to interest rate risk, reliance on short-term 
sources of funding, and limited opportunities for revenue growth will 
continue to stress the industry. Additionally, key risks continue to 
weigh on the economic outlook as well, including the impact of rising 
interest rates as they return to more normal levels; fiscal challenges 
at federal, state, and local levels; and global economic risks. The 
FDIC continues to evaluate ongoing risks to affected institutions in 
light of existing economic and financial conditions, and the extent to 
which such risks may 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 $950 
thousand and $5 million for the DIF as of December 31, 2014 and 2013, 
respectively. In addition, the FDIC has determined that there are no 
reasonably possible losses from unresolved cases at year-end 2014, 
compared to $125 thousand at year-end 2013. 

Other Contingencies: 

IndyMac Federal Bank Representation and Indemnification Contingent 
Liability: 

On March 19, 2009, the FDIC as receiver for IndyMac Federal Bank 
(IMFB) and certain subsidiaries (collectively, Sellers) sold 
substantially all of the assets, which included mortgage loans and 
servicing rights, of IMFB and its respective subsidiaries to OneWest 
Bank and its affiliates (the “Acquirers”). The Sellers made certain 
representations customarily made by commercial parties in similar 
transactions. The FDIC, in its corporate capacity, guaranteed the 
receivership's indemnification obligations under the sale agreements. 
Until the periods for asserting claims under these arrangements have 
expired and all indemnification claims are quantified and paid, losses 
could continue to be incurred by the receivership and, in turn, the 
DIF. 

Under the sales agreements, the Acquirers have rights to assert claims 
to recover losses incurred as a result of third-party claims and 
breaches of representations. Assets sold subject to representation and 
warranty indemnification total $171.6 billion. The IndyMac 
receivership has paid cumulative claims totaling $21 million through 
December 31, 2014, and $15 million through December 31, 2013. 
Additional quantified claims asserted and under review have been 
accrued in the amount of $6 million and $7 million as of December 31, 
2014 and 2013, respectively. The FDIC is evaluating the likelihood of 
additional losses for alleged breaches as follows: 

* Potential losses could be incurred for failures by the servicer to 
initiate foreclosure within a prescribed timeframe with respect to 
certain government guaranteed loans, resulting in the refusal of the 
guarantor to pay interest otherwise payable to the investors on such 
loans. Review and evaluation is in process for approximately $32 
million as of December 31, 2014 and 2013, in reasonably possible 
losses. 

* The Acquirers' rights to assert additional claims as a result of 
certain third-party claims and breaches of representations expired on 
March 19, 2011 and March 19, 2014. As of the expiration date of these 
notice periods, 199 thousand claims relating to potential breaches 
were received. As of December 31, 2014, 40 thousand claims remain and 
preserve the Acquirer's right to claim losses over the life of the 
loan. These remaining claims require review to determine whether a 
breach exists and, if so, if a cure will result in a loss. As a 
result, potential losses cannot be estimated. 

* The Acquirers' rights to assert claims to recover losses incurred as 
a result of breaches of loan seller representations extend to March 
19, 2019 for the Fannie Mae and Ginnie Mae reverse mortgage servicing 
portfolios (unpaid principal balance of $14.2 billion at December 31, 
2014, compared to $15.2 billion at December 31, 2013). The likelihood 
of loss is reasonably possible. However, while claims filed prior to 
this date reserve the right to recover losses over the life of the 
loan, this exposure is currently not estimable. 

* Fannie Mae has demanded repurchase of 585 loans with current 
principal balances of $93 million. These claims are under review to 
determine their validity. In addition, during 2014, the IMFB 
receivership agreed to repurchase 264 loans totaling $44 million in 
principal balance; however, a contingent liability has not been 
established as the amount and timing of any resulting losses is 
currently not determinable. An agreement among the sellers, the FDIC 
and Fannie Mae provides for the deferral of repurchases claimed by 
Fannie Mae, and that the parties will negotiate in good faith to 
attempt to resolve all outstanding and projected liabilities to Fannie 
Mae sometime before March 19, 2015. 

In addition to the alleged breaches discussed above, the FDIC believes 
it is likely that additional losses will be incurred. However 
quantifying the contingent liability associated with the liabilities 
to investors and indemnification for breaches of sale agreement 
representations is subject to a number of uncertainties, including 
market conditions, the occurrence of borrower defaults and resulting 
foreclosures and losses. Because of these and other uncertainties that 
surround the liability associated with the quantification of possible 
losses, the FDIC has determined that, while additional losses are 
probable, the amount is not currently 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 2014 and 2013, 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. 

The LLCs issued notes to the receiverships to partially fund the 
purchased assets. In many instances, the FDIC, in its corporate 
capacity, guaranteed notes issued by the LLCs. This guarantee covers 
the timely payment of principal and interest due on the notes. In 
exchange for the guarantee, the DIF receives a guarantee fee from the 
LLCs. If the FDIC is required to perform under the guarantee, it 
acquires an interest in the cash flows of the LLC equal to the amount 
of guarantee payments made plus accrued interest. Equity holders 
receive cash flows from the LLCs once all expenses have been paid, the 
guaranteed notes have been satisfied, and the FDIC has been reimbursed 
for any guarantee payments. 

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. 

Since 2009, private investors 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 held the remaining 50- 
to 60-percent equity interest in the LLCs and, in most cases, the 
guaranteed notes. At December 31, 2014, only one guaranteed note with 
an outstanding balance of $10 million remained, which matures in 2020. 
At December 31, 2013, there were two guaranteed notes with outstanding 
balances totaling $99 million. 

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 senior and/or 
subordinated debt instruments and 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 $6.2 billion in cash and the receiverships hold the 
subordinated debt instruments and owner trust or residual 
certificates. In exchange for a fee, 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. 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. The subordinated note holders and 
owner trust or residual certificates holders receive cash flows from 
the entity only after all expenses have been paid, the guaranteed 
notes have been satisfied, and the FDIC has been reimbursed for any 
guarantee payments. 

All Structured Transactions with FDIC Guaranteed Debt: 

Through December 31, 2014, 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 $8.8 billion to 14 
LLCs and 11 trusts. The LLCs and trusts subsequently issued notes 
guaranteed by the FDIC in an original principal amount of $10.6 
billion. Since March 2013, there have been no new guarantee 
transactions. As of December 31, 2014 and 2013, the DIF collected 
guarantee fees totaling $250 million and $231 million, respectively, 
and recorded a receivable for additional guarantee fees of $42 million 
and $66 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. 
As of December 31, 2014 and 2013, the amount of deferred revenue 
recorded was $42 million and $66 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 3.3 
percent) of the expected guarantee payments by the FDIC, 
reimbursements to the FDIC for guarantee payments, and guarantee fee 
collections. It is reasonably possible that the DIF could be required 
to make a guarantee payment of approximately $29 million for an SSGN 
transaction at note maturity in 2020. Any guarantee payment made would 
be fully reimbursed from the proceeds of the liquidation of the SSGN's 
underlying collateral. For all of the remaining transactions, the 
estimated 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, 2014 and 2013, the maximum loss exposure was $10 
million and $99 million for LLCs and $2.1 billion and $2.8 billion for 
trusts, respectively, representing the sum of all outstanding debt 
guaranteed by the FDIC. 

8. Assessments: 

The framework for the FDIC deposit insurance assessment system is 
mandated by section 7 of the FDI Act, and the provisions for 
implementation are contained in part 327 of title 12 of the Code of 
Federal Regulations. The FDI Act requires a risk-based assessment 
system and payment of assessments by all IDIs. 

In response to the Dodd-Frank Act, 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. 

* 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. The FDIC will 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. 

* The FDIC adopted a final rule that suspends dividends indefinitely, 
and, in lieu of dividends, adopts lower assessment rate schedules when 
the reserve ratio reaches 1.15 percent, 2 percent, and 2.5 percent. 

* The FDIC adopted a final rule that amends and clarifies some 
definitions of higher-risk assets as used in deposit insurance pricing 
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 final rule became effective on April 1, 2013. 

* The Federal Deposit Insurance Act (FDI Act) requires that the FDIC 
Board of Directors designate a reserve ratio for the DIF and publish 
the designated reserve ratio (DRR) before the beginning of each 
calendar year. Accordingly, in October 2014, the FDIC adopted a final 
rule maintaining the DRR at 2 percent for 2015. 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. 

Assessment Revenue: 

Annual assessment rates averaged approximately 6.8 cents per $100 of 
the assessment base and 7.8 cents per $100 of the assessment base for 
2014 and 2013, respectively. The assessment base is generally defined 
as the average consolidated total assets minus the average tangible 
equity (measured as Tier 1 capital) of the IDI during the assessment 
period. 

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 each 
interim quarter, an institution's risk-based deposit insurance 
assessment was offset by the available amount of prepaid assessments. 
The final offset of prepaid assessments occurred for the period ending 
March 31, 2013, and in June 2013, as required by regulation, the DIF 
refunded $5.9 billion of unused prepaid assessments to IDIs. 

The “Assessments receivable, net” line item on the Balance Sheet of 
$2.0 billion and $2.2 billion represents the estimated premiums due 
from IDIs for the fourth quarter of 2014 and 2013, respectively. The 
actual deposit insurance assessments for the fourth quarter of 2014 
will be billed and collected at the end of the first quarter of 2015. 
During 2014 and 2013, $8.7 billion and $9.7 billion, respectively, 
were recognized as assessment revenue from institutions. 

Reserve Ratio: 

As of September 30, 2014 and December 31, 2013, the DIF reserve ratio 
was 0.89 percent and 0.79 percent, respectively, 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. As of December 
31, 2014 and 2013, approximately $793 million and $792 million, 
respectively, was collected and remitted to the FICO. 

9. Other Revenue: 

Table: Other Revenue for the Years Ended December 31: 

Dollars In Thousands: 

Dividends and interest on Citigroup trust preferred securities (Note 
10): 
2014: $0; 
2013: $124,726. 

Guarantee fees for structured transactions (Note 7): 
2014: $19,662; 
2013: $33,051. 

Other: 
2014: $7,397; 
2013: $5,377. 

Total: 
2014: $27,059; 
2013: $163,154. 

[End of table] 

10. Gain on Sale of 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. On December 23, 2009, 
Citigroup terminated this guarantee agreement, citing improvements in 
its financial condition. The FDIC did not incur any losses as a result 
of the guarantee and retained $2.225 billion (liquidation amount) of 
the $3.025 billion in trust preferred securities (TruPS) received as 
consideration for the period of guarantee coverage. The DIF recorded 
the TruPS at their fair value and recognized revenue of $1.962 billion 
upon termination of the agreement. 

To facilitate a sale of the retained TruPS, the FDIC exchanged the 
TruPS on September 9, 2013, for $2.420 billion (principal amount) of 
Citigroup marketable subordinated notes. The exchange resulted in a 
realized gain to the DIF of $458 million, reported in the “Gain on 
sale of trust preferred securities” line item on the Statement of 
Income and Fund Balance. FDIC reclassified the $458 million out of 
accumulated other comprehensive income to “Gain on sale of trust 
preferred securities,” representing the sum of unrealized gains 
recorded as of December 31, 2012, ($302 million) and holding gains 
arising during 2013 ($156 million). The resulting net effect on the 
DIF Statement of Income and Fund Balance was a $156 million increase 
to the 2013 comprehensive income. 

On September 10, 2013, the subordinated notes were sold to the 
institutional fixed income market for the principal amount of $2.420 
billion, resulting in the recognition of $1.6 million for one day of 
accrued interest on the subordinated notes, which is included in the 
2013 “Other revenue” line item on the Statement of Income and Fund 
Balance (see Note 9). Also included in the 2013 “Other revenue” line 
item is $123.1 million for dividends and interest earned on the TruPS 
in 2013 prior to their disposition (see Note 9). 

11. Operating Expenses: 

Operating expenses were $1.7 billion and $1.6 billion for 2014 and 
2013, respectively. The chart below lists the major components of 
operating expenses. 

Table: Operating Expenses for the Years Ended December 31: 

Dollars In Thousands: 

Salaries and benefits: 
2014: $1,252,167; 
2013: $1,292,551. 

Outside services: 
2014: $263,649; 
2013: $326,040. 

Travel: 
2014: $93,720; 
2013: $96,056. 

Buildings and leased space: 
2014: $96,596; 
2013: $91,469. 

Software/Hardware maintenance: 
2014: $58,844; 
2013: $56,297. 

Depreciation of property and equipment: 
2014: $59,634; 
2013: $72,828. 

Other: 
2014: $28,999; 
2013: $29,505. 

Subtotal: 
2014: $1,853,609; 
2013: $1,964,746. 

Less: Services billed to resolution entities: 
2014: ($189,265); 
2013: ($356,029). 

Total: 
2014: $1,664,344; 
2013: $1,608,717. 

[End of table] 

12. Provision for Insurance Losses: 

The provision for insurance losses was a negative $8.3 billion for 
2014, compared to negative $5.7 billion for 2013. The negative 
provision for 2014 primarily resulted from a decrease of $9.1 billion 
in the estimated losses for institutions that failed in current and 
prior years, partially offset by an increase of $850 million in the 
contingent liability for anticipated failures due to the deterioration 
in the financial condition of certain troubled institutions. 

As described in Note 4, the estimated recoveries from assets held by 
receiverships and estimated payments related to assets sold by 
receiverships to acquiring institutions under shared-loss agreements 
(SLAs) are used to derive the loss allowance on the receivables from 
resolutions. The $9.1 billion reduction in the estimated losses from 
failures was primarily attributable to two components. The first 
component was unanticipated recoveries of $1.8 billion in litigation 
settlements, professional liability claims, and tax refunds by the 
receiverships. These are not recognized until the cash is received 
since significant uncertainties surround their recovery. 

The second component of the reduction in the estimated losses from 
failures was a $6.7 billion decrease in the receiverships' shared-loss 
liability that resulted from decreases in covered asset balances, 
lower future loss rate estimates, and unanticipated recoveries on SLA 
losses. Covered asset balances decreased by $23.6 billion during 2014 
with lower than anticipated losses. These lower than anticipated 
losses were due to loan amortizations and pay-downs, resulting from the 
improvement in the condition of real estate markets where shared-loss 
assets are concentrated, and the expiration of 83 commercial asset 
shared-loss coverage agreements in 2014, thereby ending the loss claim 
period. The reduction in future loss rate estimates resulted from the 
improvement in the real estate markets and the composition of the 
remaining covered asset portfolios, which primarily consist of 
performing single family assets. These assets have historically 
experienced significantly lower losses than commercial assets. 
Finally, unanticipated recoveries of approximately $958 million on 
previous shared-loss claims, which are not estimated due to their 
uncertainty, were received by the receiverships during 2014. 

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. The U.S. Office of 
Personnel Management (OPM) reports on and accounts for these amounts. 

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. 

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

Dollars In Thousands: 

Civil Service Retirement System: 
2014: $4,698; 
2013: $5,430. 

Federal Employees Retirement System (Basic Benefit): 
2014: $99,954; 
2013: $99,553. 

FDIC Savings Plan: 
2014: $37,304; 
2013: $37,816. 

Federal Thrift Savings Plan: 
2014: $35,144; 
2013: $35,686. 

Total: 
2014: $177,100; 
2013: $178,485. 

[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. OPM administers and accounts for the FEHB. 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 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, 2014 
and 2013, the liability was $243 million and $194 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 $58 
million and $16 million at December 31, 2014 and 2013, 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 2014 and 2013 were 
$14 million and $18 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/gains and prior 
service costs for 2014 and 2013 of negative $41 million and $44 
million, respectively, are reported as other comprehensive income in 
the “Unrealized postretirement benefit (loss) gain” 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 4.0 
percent, the rate of compensation increase of 3.8 percent, and the 
dental coverage trend rate of 4.9 percent. The discount rate of 4.0 
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 $203 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 
$56 million and $52 million for 2014 and 2013, respectively. 

Table: Leased Space Commitments: 

Dollars In Thousands: 

2015: $46,502; 
2016: $45,842; 
2017: $41,387; 
2018: $30,900; 
2019: $26,433; 
2020/Thereafter: $12,291. 

[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, 2014 
and December 31, 2013, estimated insured deposits for the DIF were 
$6.1 trillion and $6.0 trillion, respectively. 

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 (see Note 2) and 
the investment in U.S. Treasury obligations (see Note 3). The 
following tables present the DIF's financial assets measured at fair 
value as of December 31, 2014 and 2013. 

Table: Assets Measured at Fair Value at December 31, 2014: 

Dollars In Thousands: 

Assets: 

Cash equivalents(1): 
Fair Value Measurements Using: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$1,900,105; 
Significant Other Observable Inputs (Level 2): [Empty]; 
Significant Unobservable Inputs (Level 3): [Empty]; 
Total Assets at Fair Value: $1,900,105. 

Available-for-Sale Debt Securities: 

Investment in U.S. Treasury Obligations(2): 
Fair Value Measurements Using: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$49,805,846; 
Significant Other Observable Inputs (Level 2): [Empty]; 
Significant Unobservable Inputs (Level 3): [Empty]; 
Total Assets at Fair Value: $$49,805,846. 

Total Assets: 
Fair Value Measurements Using: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$51,705,951; 
Significant Other Observable Inputs (Level 2): $0; 
Significant Unobservable Inputs (Level 3): $0
Total Assets at Fair Value: $$51,705,951. 

(1) Cash equivalents are Special U.S. Treasury Certificates with 
overnight maturities valued at prevailing interest rates established 
by the Bureau of the Fiscal Service. 

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

[End of table] 

Table: Assets Measured at Fair Value at December 31, 2013: 

Dollars In Thousands: 

Assets: 

Cash equivalents(1): 
Fair Value Measurements Using: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$3,534,305; 
Significant Other Observable Inputs (Level 2): [Empty]; 
Significant Unobservable Inputs (Level 3): [Empty]; 
Total Assets at Fair Value: $3,534,305 

Available-for-Sale Debt Securities: 

Investment in U.S. Treasury Obligations(2): 
Fair Value Measurements Using: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$38,510,500; 
Significant Other Observable Inputs (Level 2): [Empty]; 
Significant Unobservable Inputs (Level 3): [Empty]; 
Total Assets at Fair Value: $38,510,500. 

Total Assets: 
Fair Value Measurements Using: 
Quoted Prices in Active Markets for Identical Assets (Level 1): 
$42,044,805; 
Significant Other Observable Inputs (Level 2): $0; 
Significant Unobservable Inputs (Level 3): $0
Total Assets at Fair Value: $42,044,805. 

(1) Cash equivalents are Special U.S. Treasury Certificates with 
overnight maturities valued at prevailing interest rates established 
by the Bureau of the Fiscal Service. 

(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, and 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. Information Relating to the Statement of Cash Flows: 

Table: Reconciliation of Net Income to Net Cash from Operating 
Activities for the Years Ended December 31: 

Dollars In Thousands: 

Operating Activities: 

Net Income: 
2014: $15,599,812; 
2013: $14,504,738. 

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

Amortization of U.S. Treasury obligations: 
2014: $1,387,067; 
2013: $1,139,456. 

Treasury Inflation-Protected Securities inflation adjustment: 
2014: ($37,865); 
2013: ($35,300). 

Gain on sale of trust preferred securities: 
2014: $0; 
2013: ($458,176). 

Depreciation on property and equipment: 
2014: $59,634; 
2013: $72,829. 

Loss on retirement of property and equipment: 
2014: $564; 
2013: $220. 

Provision for insurance losses: 
2014: ($8,305,577); 
2013: ($5,659,388). 

Unrealized gain (loss) on postretirement benefits: 
2014: ($41,401
0; 
2013: $44,097. 

Change in Assets and Liabilities: 

(Increase) in assessments receivable, net: 
2014: $224,311; 
2013: ($1,220,883). 

(Increase) Decrease in interest receivable and other assets: 
2014: ($137,462); 
2013: ($75,014). 

Decrease in receivables from resolutions: 
2014: $7,077,627; 
2013: $10,406,392. 

(Decrease) in accounts payable and other liabilities: 
2014: ($9,569); 
2013: ($49,045). 

(Decrease) Increase in postretirement benefit liability: 
2014: $49,828; 
2013: ($30,635). 

(Decrease) in liabilities due to resolutions: 
2014: ($4,826,703); 
2013: ($8,547,803). 

(Decrease) in unearned revenue - prepaid assessments: 
2014: $0; 
2013: ($1,576,417). 

(Decrease) Increase in refunds of prepaid assessments: 
2014: $0; 
2013: ($5,675,199). 

Net Cash Provided (Used) by Operating Activities: 
2014: $11,040,167; 
2013: $2,839,872. 

[End of table] 

17. Subsequent Events: 

Subsequent events have been evaluated through February 5, 2015, the 
date the financial statements are available to be issued. 

2015 Failures Through February 5, 2015: 

Through February 5, 2015, two insured institutions failed in 2015 with 
total losses to the DIF estimated to be $10 million. 

[End of Deposit Insurance Fund's Financial Statements section] 

FSLIC Resolution Fund's Financial Statements: 

Balance Sheet: 

FSLIC Resolution Fund (FRF): 

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

Dollars In Thousands: 

Assets: 

Cash and cash equivalents (Note 1): 
2014: $870,943; 
2013: $871,612. 

Receivables from U.S. Treasury for goodwill litigation (Note 3): 
2014: $356,455
2013: $356,455. 

Other Assets,, net: 
2014: $904; 
2013: $1,183. 

Total Assets: 
2014: $1,228,302; 
2013: $1,229,250. 

Liabilities: 

Accounts payable and other liabilities: 
2014: $370; 
2013: $790. 

Contingent liabilities for goodwill litigation (Note 4): 
2014: $356,455; 
2013: $356,455. 

Total Liabilities: 
2014: $356,825; 
2013: $357,245. 

Resolution Equity (Note 5): 

Contributed capital: 
2014: $125,332,156; 
2013: $125,332,156. 

Accumulated deficit: 
2014: ($124,460,679); 
2013: ($124,460,151). 

Total Resolution Equity: 
2014: $871,477; 
2013: $872,005. 

Total Liabilities and Resolution Equity: 
2014: $1,228,302; 
2013: $1,229,250. 

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

[End of Balance Sheet] 

Statement of Income and Accumulated Deficit: 

FSLIC Resolution Fund (FRF): 

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: 
2014: $229; 
2013: $1,196. 

Other revenue: 
2014: $948; 
2013: $1,953. 

Total Revenue: 
2014: $1,177; 
2013: $3,149. 

Expenses and Losses: 

Operating expenses: 
2014: $2,326; 
2013: $2,350. 

Provision for losses: 
2014: ($792); 
2013: ($1,255). 

Goodwill litigation expenses (Note 4): 
2014: $0; 
2013: $500. 

Other expenses: 
2014: $171; 
2013: $2,070. 

Total Expenses and Losses: 
2014: $1,705; 
2013: $3,665. 

Net Loss: 
2014: ($528); 
2013: ($516). 

Accumulated Deficit - Beginning: 
2014: ($124,460,151); 
2013: ($124,459,635). 

Accumulated Deficit - Ending: 
2014: ($124,460,679); 
2013: ($124,460,151). 

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 (FRF): 

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

Dollars In Thousands: 

Operating Activities: 

Provided by: 

Interest on U.S. Treasury obligations: 
2014: $229; 
2013: $1,196. 

Recoveries from financial institution resolutions: 
2014: $1,886; 
2013: $5,148. 

Recovery of tax benefits: 
2014: $0; 
2013: $130. 

Miscellaneous receipts: 
2014: $197; 
2013: $52. 

Used by: 

Operating expenses: 
2014: ($2,981); 
2013: ($3,921). 

Payments for goodwill litigation (Note 4): 
2014: $0; 
2013: ($500). 

Miscellaneous disbursements: 
2014: $
2013: $0. 

Net Cash Provided (Used) by Operating Activities: 
2014: ($669); 
2013: $2,105. 

Financing Activities: 

Provided by: 

U.S. Treasury payments for goodwill litigation (Note 4): 
2014: $0; 
2013: $500. 

Used by: 

Return of U.S. Treasury funds (Note 5): 
2014: $0; 
2013: ($2,600,000). 

Payment to Resolution Funding Corporation (Note 5): 
2014: $0; 
2013: ($125,000). 

Net Cash (Used) Provided by Financing Activities: 
2014: $0; 
2013: ($2,724,500). 

Net (Decrease) Increase in Cash and Cash Equivalents: 
2014: ($669); 
2013: ($2,722,395). 

Cash and Cash Equivalents - Beginning: 
2014: $871,612; 
2013: $3,594,007. 

Cash and Cash Equivalents - Ending: 
2014: $870,943; 
2013: $871,612. 

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

[End of Statement of Cash Flows] 

Notes to the Financial Statements: 

FSLIC Resolution Fund: 

December 31, 2014 and 2013: 

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 FDIC's operations are generally found in 
the Federal Deposit Insurance (FDI) Act, as amended (12 U.S.C. 1811, 
et seq). In accordance with 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 (IDIs) by 
identifying, monitoring, and addressing risks to the DIF. 

In addition to being the administrator of the DIF, the FDIC is the 
administrator of the FSLIC Resolution Fund (FRF). As such, the FDIC 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 FDIC maintains the DIF and the FRF separately 
to support their respective functions. 

The FSLIC was created 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 and 
created the FRF. At that time, the assets and liabilities of the FSLIC 
were transferred 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 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 (FRF-RTC). 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 extensively reviewed and cataloged the FRF's remaining 
assets and liabilities. Some of the issues and items that remain open 
in the FRF are (1) criminal restitution orders (generally have from 1 
to 17 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 up to 7 years remaining to enforce, unless the 
judgments are renewed or are covered by the Federal Debt Collections 
Procedures Act, which will result in significantly longer periods for 
collection for some judgments); (3) liquidation/disposition of 
residual assets purchased by the FRF from terminated receiverships; 
(4) three remaining assistance agreements entered into by the former 
FSLIC (FRF could continue to receive or refund overpayments of tax 
benefits sharing in future years); (5) goodwill litigation (no final 
date for resolution has been established; see Note 3); and (6) 
affordable housing disposition program monitoring (last agreement 
expires no later than 2045; see Note 3). The FRF could potentially 
realize recoveries from tax benefits sharing, criminal restitution 
orders, and professional liability claims; however, any associated 
recoveries are not reflected in the FRF's financial statements, given 
the significant uncertainties surrounding the ultimate outcome. 

On April 1, 2014, the FDIC concluded its role as receiver of FRF 
receiverships when the last active receivership was terminated. In 
total, 850 receiverships were liquidated by the FRF and the RTC. To 
facilitate receivership terminations, the FRF, in its corporate 
capacity, acquired any remaining receivership assets. These assets are 
included in the “Other Assets, net” line item on the Balance Sheet. 

During the years of receivership activity, the assets held by 
receivership entities, and the claims against them, were accounted for 
separately from the FRF's assets and liabilities to ensure that 
receivership proceeds were distributed in accordance with applicable 
laws and regulations. Also, the income and expenses attributable to 
receiverships were accounted for as transactions of those 
receiverships. The FDIC billed receiverships for services provided on 
their behalf. 

2. Summary of Significant Accounting Policies: 

General: 

These financial statements include 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). During the 
years of receivership activity, these statements did not include 
reporting for assets and liabilities of receivership entities because 
these entities were legally separate and distinct, and the FRF did not 
have any ownership or beneficial interest in them. 

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 valuation of other assets 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 estimated losses 
related to 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: 

Accounting Standards Update No. 2013-07, Presentation of Financial 
Statements - Liquidation Basis of Accounting, modifies Accounting 
Standards Codification Topic 205, Presentation of Financial 
Statements, to require an entity to prepare its financial statements 
using the liquidation basis of accounting when liquidation is 
imminent. The requirements became effective for annual reporting 
periods beginning after December 15, 2013. 

The FDIC has determined that the FRF does not meet the requirements 
for presenting financial statements using the liquidation basis of 
accounting. According to the standard, a limited-life entity should 
apply the liquidation basis of accounting only if a change in the 
entity's governing plan has occurred since its inception. By statute, 
the FRF is a limited-life entity whose dissolution will occur upon the 
satisfaction of all liabilities and the disposition of all assets. No 
changes to this statutory plan have occurred since inception of the FRF.
Other recent accounting pronouncements have been deemed not applicable 
or material to the financial statements as presented. 

3. 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. The 
contingent liability associated with the nonperformance of these 
agreements was transferred to the FRF on August 9, 1989, upon the 
dissolution of the FSLIC. 

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. 

The FRF paid $500 thousand to the plaintiffs in one goodwill case in 
2013, representing a reimbursement for a tax liability of the 
plaintiffs as a result of the settlement they received in 2012. The 
FRF received appropriations from the U.S. Treasury to fund this 
payment. 

As of December 31, 2014 and 2013, one case remains active and pending 
against the United States based on alleged breaches of the agreements 
stated above. For this case, a contingent liability and an offsetting 
receivable of $356 million was recorded as of December 31, 2014 and 
2013. 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. Additionally, for a 
case that was fully adjudicated in 2012, an estimated loss of $8 
million, which represents estimated tax liabilities, is also 
reasonably possible. 

In addition, the FRF-FSLIC pays the goodwill litigation expenses 
incurred by the Department of Justice (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 2014, 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 2015 expenses. 

Other Contingencies: 

Paralleling the goodwill cases were similar cases alleging that the 
government breached agreements regarding tax benefits associated with 
certain FSLIC-assisted acquisitions. All eight of those 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. The entity's federal income 
tax return for the 2006 taxable year has been amended and remains 
subject to examination by the Internal Revenue Service (IRS). To date, 
there has been no assertion by the IRS of taxation for an issue 
covered by the guarantee. As of December 31, 2014, no liability has 
been recorded, and the FRF does not expect to fund any payment under 
this guarantee. 

Fannie Mae Guarantee: 

On May 21, 2012, the FDIC, in its capacity as administrator 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. Based on the most 
current data available, as of September 30, 2014, the maximum exposure 
on this indemnification is the current unpaid principal balance of the 
remaining 58 multi-family loans totaling $5.8 million. Based on a 
contingent liability assessment of this portfolio as of September 30, 
2014, the majority of the loans are at least 76 percent amortized, and 
all are scheduled to mature within one to six years. Since all of the 
loans are performing and no losses have occurred since 2001, future 
payments on this indemnification are not expected. As a result, no 
contingent liability for this indemnification has been recorded as of 
December 31, 2014. 

Affordable Housing Disposition Program: 

Required by FIRREA under section 501, the Affordable Housing 
Disposition Program (AHDP) was established in 1989 to ensure the 
preservation of affordable housing for low-income households. The 
FDIC, in its capacity as administrator of the FRF-RTC, assumed
responsibility for monitoring property owner compliance with land use 
restriction agreements (LURAs). To enforce the property owners' LURA 
obligation, the RTC, prior to its dissolution, entered into Memoranda 
of Understanding with 28 monitoring agencies to oversee these LURAs. 
The FDIC, through the FRF, has agreed to indemnify the monitoring 
agencies for all losses related to LURA legal enforcement proceedings. 
Since 2006, the FDIC has entered into two litigations against property 
owners and has paid $23 thousand in legal expenses, of which $13 
thousand has been reimbursed due to successful litigation. The maximum 
potential exposure to the FRF cannot be estimated as it is contingent 
upon future legal proceedings. However, loss mitigation factors 
include: (1) the indemnification may become void if the FDIC is not 
immediately informed upon receiving notice of any legal proceedings 
and (2) the FDIC is entitled to reimbursement of any legal expenses 
incurred for successful litigation against a property owner. AHDP 
guarantees will continue until the termination of the last of the
LURAs, or 2045 (whichever occurs first). As of December 31, 2014, no 
contingent liability for this indemnification has been recorded. 

4. Resolution Equity: 

As stated in the Overview section of Note 1, the FRF is composed 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. 

Table: Resolution Equity at December 31, 2014: 

Dollars In Thousands: 

Contributed capital - beginning: 
FRF: $43,707,819; 
FRF-FSLIC: $81,624,337; 
FRF-RTC Consolidated: $125,332,156. 

Contributed capital - ending: 
FRF: $43,707,819; 
FRF-FSLIC: $81,624,337; 
FRF-RTC Consolidated: $125,332,156. 

Accumulated deficit: 
FRF: ($42,879,590); 
FRF-FSLIC: ($81,581,089); 
FRF-RTC Consolidated: ($124,460,679). 

Total: 
FRF: $828,229; 
FRF-FSLIC: $43,248; 
FRF-RTC Consolidated: $871,477. 

[End of table] 

Table: Resolution Equity at December 31, 2013: 

Dollars In Thousands: 

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

Less: Payment to REFCORP: 
FRF-FSLIC: $0; 
FRF-RTC: ($125,000); 
FRF Consolidated: ($125,000). 

Less: Return of U.S. Treasury funds: 
FRF-FSLIC: ($2,600,000); 
FRF-RTC: $0; 
FRF Consolidated: ($2,600,000). 

Add: U.S. Treasury payment for goodwill litigation: 
FRF-FSLIC: $500; 
FRF-RTC: $0; 
FRF Consolidated: $500. 

Contributed capital - ending: 
FRF-FSLIC: $43,707,819; 
FRF-RTC: $81,624,337; 
FRF Consolidated: $125,332,156. 

Accumulated deficit: 
FRF-FSLIC: ($42,879,951); 
FRF-RTC: ($81,580,200); 
FRF Consolidated: ($124,460,151). 

Total: 
FRF-FSLIC: $827,868; 
FRF-RTC: $44,137; 
FRF Consolidated: $872,005. 

[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 $500 thousand in U.S. Treasury payments for 
goodwill litigation in 2013. In addition, $356 million was accrued for 
as receivables as of December 31, 2014 and 2013. Through December 31, 
2014, 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, 2014, the FRF-RTC had returned $4.6 billion to 
the U.S. Treasury and made payments of $5.1 billion to the REFCORP. 
The most recent payment to the REFCORP was in July of 2013 for $125 
million. In addition, the FDIC returned $2.6 billion to the U.S. 
Treasury on behalf of the FRF-FSLIC in 2013. These actions serve to 
reduce contributed capital. 

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. 

5. Disclosures about the Fair Value of Financial Instruments: 

At December 31, 2014 and 2013, the FRF's financial assets measured at 
fair value on a recurring basis are cash equivalents of $827 million 
and $826 million, respectively. Cash equivalents are Special U.S. 
Treasury Certificates with overnight maturities valued at prevailing 
interest rates established by the Bureau of the Fiscal Service. The 
valuation is considered a Level 1 measurement in the fair value 
hierarchy, representing quoted prices in active markets for identical 
assets. 

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 receivables from U.S. Treasury
for goodwill litigation and accounts payable and other liabilities. 

Assets purchased by the FRF from terminated receiverships (see Note 1) 
and included in the “Other Assets, net” line item on the Balance Sheet 
are primarily valued using projected cash flow analyses; however, 
these valuations do not represent an estimate of fair value. These
assets (ranging in age up to 25 years), could not be liquidated during 
the life of the receiverships due to restrictive clauses and other 
impediments. Because these impediments remain, there is no market for 
these assets. Consequently, it is not practicable to provide an
estimate of fair value. 

6. Information Relating to the Statement of Cash Flows: 

Table: Reconciliation of Net Loss to Net Cash from Operating 
Activities for the Years Ended December 31: 

Dollars In Thousands: 

Operating Activities: 

Net Loss: 
2014: ($528); 
2013: ($516). 

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

Provision for insurance losses: 
2014: ($792); 
2013: ($1,255). 

Change in Assets and Liabilities: 

Decrease in receivables from resolutions and other assets: 
2014: $1,071; 
2013: $5,528. 

(Decrease) in accounts payable and other liabilities: 
2014: ($420); 
2013: ($1,652). 

Net Cash Provided (Used) by Operating Activities: 
2014: ($669); 
2013: $2,105. 

[End of table] 

7. Subsequent Events: 

Subsequent events have been evaluated through February 5, 2015, the 
date the financial statements are available to be issued, and 
management determined that there are no items to disclose. 

[End of FSLIC Resolution Fund's Financial Statements section] 

Appendix I: Management's Report on Internal Control Over Financial 
Reporting: 

FDIC: 
Federal Deposit Insurance Corporation: 
Office of the Chairman: 
550 17th Street NW: 
Washington, D.C. 20429-9990: 

Management's Report on Internal Control Over Financial Reporting: 

The Federal Deposit Insurance Corporation's (FDIC's) internal control 
over financial reporting relevant to the Deposit Insurance Fund (DIF) 
and the FSLIC Resolution Fund (FRF) 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 the applicable laws, 
regulations, contracts, and grant agreements that could have a direct 
and material effect on the financial statements. 

FDIC management is responsible for 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. FDIC 
management evaluated the effectiveness of the FDIC's internal control 
over financial reporting relevant to the DIF and the FRF as of 
December 31, 2014, based on the criteria established under 31 U.S.C. 
3512(c), (d) (commonly known as the Federal Managers' Financial 
Integrity Act (FMFIA). FDIC management performed this evaluation 
through its corporate risk management program that seeks to comply 
with the spirit of the following laws, standards, and guidance from the
Office of Management and Budget (OMB) among others: 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 evaluation, management concludes that, as of 
December 31, 2014, FDIC's internal control over financial reporting 
relevant to the DIF and the FRF was effective. 

Signed by: 

Martin J. Gruenberg: 
Chairman: 

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

February 5, 2015: 

[End of section] 

Appendix II: 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. 20429-5090: 

February 5, 2015: 

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

Re: FDIC Management Response to the GAO 2014 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' 2014 and 
2013 Financial Statements, GAO-15-289. We are pleased that the Federal 
Deposit Insurance Corporation (FDIC) has received unmodified 
(unqualified) opinions for the twenty-third consecutive year on the 
financial statements of its funds: the Deposit Insurance Fund (D11) 
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 applicable 
laws, regulations, contracts, and grant agreements that were tested. 

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 concentrate 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. 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 another productive and 
successful relationship during the 2015 audit. If you have any 
questions or concerns, please do not hesitate to contact me. 

Sincerely, 

Signed by: 

Steven 0. App: 
Deputy to the Chairman and Chief Financial Officer: 

[End of section] 

[End of section] 

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