Letter to Stakeholders

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3rd Quarter - 2007

This edition of our Letter to Stakeholders highlights the FDIC’s activities and accomplishments during the third quarter of 2007. As we enter the final quarter, the banking industry remains strong, despite persistent troubles in the subprime mortgage market. We are continuing to work with other regulators in urging banks and mortgage servicers to restructure loans, where feasible, to avoid foreclosure and keep consumers in their homes. For more information about the FDIC, please visit our Web site at www.fdic.gov.

Our Priorities

Depositor Protection

• FDIC-insured commercial banks and savings institutions reported net income of $36.7 billion in the second quarter of 2007, $1.3 billion (3.4 percent) below the level one year ago but still the fourth best quarterly earnings ever reported.
  
  
• Estimated insured deposits decreased by $11.3 billion in the second quarter of 2007. The Deposit Insurance Fund (DIF) balance increased by $482 million (0.9 percent) to $51.2 billion. The ratio of the DIF to estimated insured deposits increased by one basis point, ending the second quarter of 2007 at 1.21 percent.
  
  
• The DIF earned assessment income of $140 million in the second quarter of 2007. The FDIC estimates that assessment income earned increased to $170 million in the third quarter of 2007.
  

• The FDIC was appointed receiver of NetBank, Alpharetta, Georgia, on September 28, 2007. The failed bank was an Internet bank and did not have any physical branches. Depositors of NetBank became depositors of ING Bank, FSB, Wilmington, Delaware.
  

Mission Support

• The federal financial regulatory agencies and the Conference of State Bank Supervisors issued the Statement on Loss Mitigation Strategies for Servicers of Residential Mortgages, encouraging institutions (federal & state supervised) to pursue strategies to mitigate losses while preserving homeownership for borrowers that are delinquent or in default, or are in imminent risk of default, to the extent possible and appropriate.
  
  
• The FDIC – working through its new Alliance for Economic Inclusion (AEI) initiative – and the NeighborWorks® Center for Foreclosure Solutions have partnered to promote foreclosure-prevention strategies for consumers at risk of foreclosure from subprime and nontraditional mortgage lending. The partnership will focus its efforts in nine markets around the country that are served by both organizations.
  
  
• The FDIC and the Peoples’ Bank of China signed a Memorandum of Understanding (MOU) forging an international working relationship to develop and expand methods of interaction on economic and financial issues. The MOU is a positive step in establishing a deposit insurance system in China.
  
  
• In July, the FDIC convened its second meeting of the Advisory Committee on Economic Inclusion (ComE-IN) focusing on the subprime mortgage situation.
  
  
• FDIC hosted the first executive training program sponsored by the International Association of Deposit Insurers in July 2007. The four-day conference which drew 35 representatives from 23 countries was an opportunity to focus on two main topics – developing effective claims and recoveries processes and creating effective deposit insurance agencies.
  
  
• In August, the FDIC hosted a national conference for federally insured minority depository institutions with presentations that included “Broadening Access to the Financial Mainstream” and “The Power of Partnerships; Opportunities for NeighborWorks ® and Minority Community Bankers.”
  

Resource Management

• The FDIC issued a special edition of FDIC Consumer News featuring “51 Ways to Save Hundreds on Loans and Credit Cards.” The article offers simple, practical tips that can help consumers cut the costs of borrowing money.
  
  
• The FDIC Quarterly reported on the results of two studies – the feasibility and consequences of privatizing deposit insurance and the effectiveness of the FDIC’s Money Smart financial education program.
  

Our Key Indices Most Current Data1 Insurance Updated Quarterly ($ Billions)   Q2 '02 Q2 '03 Q2 '04 Q2 '05 Q2 '06 Q2 '07 #-Insured Inst. 9,482 9,282 9,092 8,881 8,790 8,626 $-Insured Inst. $8,048 $8,934 $9,660 $10,485 $11,539 $12,278 Insured Deposits $3,310 $3,438 $3,532 $3,758 $4,040 $4,230 Fund Balances $42.5 $44.9 $46.5 $48.0 $49.6 $51.2 Reserve Ratios 1.28% 1.31% 1.32% 1.28% 1.23% 1.21% # Problem Inst. 136 125 102 74 50 61 $-Problem Inst. $39.7 $31.8 $25.9 $21.7 $5.5 $23.1 Supervision YTD 9/30/2006 9/30/2007 Total Number of FDIC Supervised Institutions 5,243 5,210 Bank Examinations: Safety and Soundness 1,811 1,706 Compliance and CRA 1,517 1,347 Insurance & Other Applications Approved 2,414 2,304 Formal & Informal Enforcement Actions 333 300 Receiverships YTD ($ Millions) Deposit Insurance Fund   Q2 '06 Q2 '07 % change Q3 '06 Q3 '07* % change Total Receiverships 26 24 -8% 26 25 -4% Assets in Liquidation $351 $321 -9% $345 $2,085 504% Collections $57 $47 -18% $74 $56 -24% Dividends Paid $116 $252 117% $116 $252 117% Income YTD ($ Millions) Deposit Insurance Fund   Q2 '06 Q2 '07 % change Q3 '06 Q3 '07 % change Assessment Income $12 $234 1,850% $22 $404 1,736% Interest $1,143 $1,315 15% $1,765 $1,955 11% Comprehensive Income $967 $1,062 10% $1,395 $1,589 14% Resources ($ Millions)   Budget/Expenditures On Board Staff   TOTAL Ongoing Operations Receivership Funding Major Investment Funding Q3 2007 Target Y/E 2007 Annual Budget $1,122 $1,032 $75 $15 4,560 4,725 YTD Expended $732 $717 $6 $9   1 Financial data is unaudited. * Data includes NetBank, Alpharetta, GA. Request Hard Copy Previous Letters to Stakeholders

Last Updated 10/24/2007

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