FEDERAL DEPOSIT INSURANCE CORPORATION

2019 ANNUAL REPORT
ANNUAL 

REPORT

FEDERAL DEPOSIT INSURANCE CORPORATION 

550 17th Street NW, Washington, DC 20429 OFFICE OF THE CHAIRMAN 

February 13, 2020 

Dear Sir/Madam, 

Te Federal Deposit Insurance Corporation (FDIC) is pleased to submit its 2019 Annual Report (also referred to as 

the Performance and Accountability Report), which includes the audited fnancial statements of the Deposit Insurance 

Fund and the Federal Savings and Loan Insurance Corporation (FSLIC) Resolution Fund. Tis report is produced 

in accordance with: 

♦ Section 17(a) of the Federal Deposit Insurance Act, 

♦ the Chief Financial Ofcers Act of 1990, Public Law 101-576, 

♦ the Government Performance and Results Act of 1993 (as amended) and the GPRA Modernization Act of 2010, 

♦ Section 5 (as amended) of the Inspector General Act of 1978, 

♦ the Reports Consolidation Act of 2000, and 

♦ the Fraud Reduction and Data Analytics Act of 2015. 

In accordance with the Reports Consolidation Act of 2000, the FDIC assessed the reliability of the performance data 

contained in this report. We found no material inadequacies and the data are considered to be complete and reliable. 

Based on internal management evaluations, and in conjunction with the results of independent fnancial statement 

audits, we can provide reasonable assurance that the objectives of Section 2 (internal controls) and Section 4 (fnancial 

management systems) of the Federal Managers’ Financial Integrity Act of 1982 have been achieved, and that the FDIC 

has no material weaknesses. We are committed to maintaining efective internal controls corporate-wide in 2020. 

Sincerely, 

Jelena McWilliams 

Chairman 

Te President of the United States 

Te President of the United States Senate 

Te Speaker of the United States House of Representatives 

2 
2019

ANNUAL REPORT

 

 

 

 

 

 

 

TABLE OF CONTENTS 

Mission, Vision, and Values.......................................................................................................................................... 4 

Message from the Chairman ........................................................................................................................................ 5 

Message from the Chief Financial Officer................................................................................................................... 9 

FDIC Senior Leaders ................................................................................................................................................... 10 

In Memoriam .................................................................................................................................................................11 

I. Management’s Discussion and Analysis......................................................................................................... 13 

Overview.................................................................................................................................................................................. 15 

Deposit Insurance..................................................................................................................................................................... 15 

Supervision .............................................................................................................................................................................. 16 

Supervision Policy .................................................................................................................................................................... 23 

Innovation/Financial Technology ............................................................................................................................................. 28 

Community Banking Initiatives ............................................................................................................................................... 30 

Activities Related to Large and Complex Financial Institutions ................................................................................................ 34 

Depositor and Consumer Protection ........................................................................................................................................ 37 

Failure Resolution and Receivership Management .................................................................................................................... 44 

Information Technology ........................................................................................................................................................... 46 

Diversity and Inclusion............................................................................................................................................................. 47 

International Outreach ............................................................................................................................................................ 49 

Efective Management of Strategic Resources............................................................................................................................ 50 

II. Performance Results Summary ....................................................................................................................... 53 

Summary of 2019 Performance Results by Program ................................................................................................................. 55 

Performance Results by Program and Strategic Goal................................................................................................................. 55 

Prior Years’ Performance Results ............................................................................................................................................... 65 

III. Financial Highlights........................................................................................................................................... 79 

Deposit Insurance Fund Performance....................................................................................................................................... 81 

IV. Budget and Spending........................................................................................................................................ 85 

FDIC Operating Budget .......................................................................................................................................................... 87 

2019 Budget and Expenditures by Program ............................................................................................................................. 88 

Investment Spending................................................................................................................................................................ 89 

V. Financial Section ............................................................................................................................................... 91 

Deposit Insurance Fund (DIF) ................................................................................................................................................. 92 

FSLIC Resolution Fund (FRF)............................................................................................................................................... 106 

Government Accountability Ofce Auditor’s Report .............................................................................................................. 113 

Management’s Report on Internal Control over Financial Reporting ...................................................................................... 118 

Management’s Response to the Auditor’s Report..................................................................................................................... 119 

VI. Risk Management and Internal Controls ....................................................................................................... 121 

Program Evaluation ................................................................................................................................................................ 123 

Fraud Reduction and Data Analytics Act of 2015................................................................................................................... 124 

Management Report on Final Actions .................................................................................................................................... 124 

VII. Appendices ...................................................................................................................................................... 129 

A. Key Statistics...................................................................................................................................................................... 131 

B. More About the FDIC....................................................................................................................................................... 145 

C. Ofce of Inspector General’s Assessment of the Management and Performance Challenges Facing the FDIC.................... 154 

D. Acronyms and Initialisms .................................................................................................................................................. 192 

3 
MISSION, VISION, AND VALUES

MISSION 

The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress 

to maintain stability and public confidence in the nation’s financial system by:

♦ Insuring deposits,

♦ Examining and supervising fnancial institutions for safety and soundness and

consumer protection,

♦ Making large and complex fnancial institutions resolvable, and

♦ Managing receiverships.

VISION 

Te FDIC is a recognized leader in promoting sound public policies; addressing risks in the nation’s fnancial 

system; and carrying out its insurance, supervisory, consumer protection, resolution planning, and receivership 

management responsibilities. 

VALUES 

Te FDIC and its employees have a tradition of distinguished public service. Six core values guide us in 

accomplishing our mission: 

Integrity We adhere to the highest ethical and professional standards. 

Competence We are a highly skilled, dedicated, and diverse workforce that is empowered to 

achieve outstanding results. 

Teamwork We communicate and collaborate efectively with one another and with other 

regulatory agencies. 

Effectiveness We respond quickly and successfully to risks in insured depository institutions and 

the fnancial system. 

Accountability We are accountable to each other and to our stakeholders to operate in a fnancially 

responsible and operationally efective manner. 

Fairness We respect individual viewpoints and treat one another and our stakeholders with 

impartiality, dignity, and trust. 

FEDERAL DEPOSIT INSURANCE CORPORATION 

4 
2019

MESSAGE FROM THE CHAIRMAN

 

MESSAGE FROM THE CHAIRMAN 

2019 was my frst full year as Federal Deposit Insurance 

Corporation (FDIC) Chairman, and I am proud of all 

that we have accomplished thanks to the hard work and 

dedication of the FDIC’s talented workforce. We continue 

to fulfll our vital mission to maintain stability and public 

confdence in the nation’s fnancial system by achieving 

high standards in all areas of operation: insuring deposits, 

examining and supervising fnancial institutions for safety 

and soundness and consumer protection, making large and 

complex fnancial institutions resolvable, and managing 

receiverships. 

Te banking industry remains strong and well-positioned 

to support economic growth. In 2019, net income, net 

operating revenue, and loan growth were positive, and 

the number of banks on the FDIC’s problem bank list 

declined to its lowest level since 2007. Te Deposit 

Insurance Fund grew to over $110 billion at year end, and 

the reserve ratio increased to 1.41 percent as of the third 

quarter, the highest level since 1999. 

During 2019, 13 new banks opened their doors while 

only four banks failed, and the FDIC approved nine 

applications for deposit insurance. 

Over the past year, the FDIC has focused on three 

overarching goals: 

1. Strengthening the banking system as it continues to 

evolve; 

2. Tailoring regulations to ensure that our rules are 

commensurate with the risk profle of the institutions 

we supervise; and 

3. Encouraging innovation at the FDIC and community 

banks. 

STRENGTHENING THE 

BANKING SYSTEM 

Over the past year, the FDIC has worked to strengthen 

the banking system by modernizing our approach to 

supervision and regulation. Tese eforts seek to enhance 

efciency and transparency while maintaining the safety 

and soundness of the system. 

When I joined the agency, I asked staf to identify rules 

and regulations that have not been updated in 10 or more 

years. To have a strong fnancial system – and strong 

economic growth – banks must be able to meet the needs 

of consumers and businesses across the nation. Tis 

ability, in turn, requires that regulators modernize our 

rules as the industry evolves. 

Last year, we began a comprehensive review of our 

longstanding regulatory framework for brokered deposits, 

which was implemented in 1989. Tose regulations have 

not been revised to meaningfully address the signifcant 

changes in technology, business models, and products 

across the fnancial services industry over those 30 years. 

Our review resulted in a proposal that would establish a 

new, transparent framework for determining what qualifes 

5 
ANNUAL 

REPORT

MESSAGE FROM THE CHAIRMAN

as a brokered deposit. Tese changes would have a real 

impact on how banks deliver products and services to 

consumers, including the more than 20 million unbanked 

Americans who could have greater access to banking 

services. 

We also worked with our regulatory partners to issue 

a proposal to modernize our regulations under the 

Community Reinvestment Act (CRA), which have not 

been substantively updated for nearly 25 years. Te 

proposal, which seeks to encourage greater lending and 

investment in low- and moderate-income communities 

where there is signifcant need for credit, would clarify 

what activities qualify for CRA credit. In addition, the 

proposal would recognize the evolution of the banking 

system, including the emergence of digital banks, by 

adding a test to determine whether banks need to establish 

additional CRA assessment areas. We look forward 

to receiving feedback on these proposals as we work to 

improve and fnalize them in 2020. 

With respect to supervision, FDIC examination teams are 

leveraging technology to reduce the amount of time they 

spend on-site at supervised institutions. Tis reduces the 

compliance burden for institutions – especially community 

banks – without sacrifcing the quality of our supervision. 

We also took several steps to support de novo bank 

formation, including revamping our internal processes to 

provide more transparency and help organizers navigate 

the deposit insurance application process. Te results we 

have seen thus far are encouraging with nine new deposit 

insurance applications approved in 2019 and 14 in 2018 – 

the largest numbers since 2008. 

In addition, we established two new subcommittees to our 

Community Bank Advisory Committee: 

♦ Subcommittee on Supervision Modernization, 

comprised of bankers, technologists, former 

regulators, and legal experts to consider how the 

FDIC can improve the efciency of the examination 

process; and 

♦ Subcommittee on Minority Depository Institutions 

(MDIs), comprised of FDIC-regulated institutions 

to focus on the unique nature, needs and benefts 

of MDIs and a supervisory framework that can 

support them. 

TAILORING REGULATIONS 

As we continue to think about ways to strengthen the 

banking system, the appropriate calibration of our 

regulatory framework remains a top priority. It is critical 

that regulators continuously evaluate whether our rules are 

appropriately addressing risks in our fnancial system as 

the system itself and the regulated entities within it evolve 

over time. 

In 2019, the FDIC completed all of its statutorily 

mandated rules pursuant to the Economic Growth, 

Regulatory Relief, and Consumer Protection Act, 

including an interagency rule that establishes four riskbased categories for determining capital and liquidity 

requirements.  Tis framework better aligns our regulatory 

requirements for large banks with their risk profles, taking 

into account their size and complexity. In addition, we 

issued a rule to improve the efciency and efectiveness 

of the resolution planning process. Under both rules, the 

largest, most systemically important institutions remain 

subject to the most stringent standards, and requirements 

for all other institutions are tiered based on each bank’s 

risk profle. 

Simultaneously, we are taking steps to reduce regulatory 

burden at community banks, recognizing that community 

bankers should focus more time on the business of 

banking and less time navigating complex regulatory 

issues. In November, we issued a rule that establishes a 

simple leverage ratio for qualifying community banks. 

Te rule provides meaningful regulatory compliance 

burden relief by allowing these banks to avoid complex 

risk-based capital calculations and reporting. In addition, 

we issued a rule that simplifes the Call Report for 

community banks and expands eligibility to fle the 

streamlined Call Report. 

FOSTERING INNOVATION 

Perhaps no issue is more important – or more central to 

the future of banking – than technological innovation. 

Regulators must be proactive in engaging with all 

stakeholders, including banks, consumer groups, trade 

associations, and technology companies to understand 

and help foster the safe adoption of technology across the 

banking system, especially at community banks. 

Te cost of innovation and regulatory uncertainty are 

the two primary hurdles that are keeping community 

banks from developing and utilizing new technologies. 

6 
2019

MESSAGE FROM THE CHAIRMAN

 

Partnerships with fnancial technology companies, or 

fntechs, can help community banks overcome the frst 

hurdle, but in order for them to overcome the second, the 

FDIC must ensure that our regulatory framework enables 

those partnerships. 

In 2019, we established a new ofce – the FDIC Tech Lab, 

or FDiTech – to address these issues. FDiTech’s goal is 

to eliminate regulatory uncertainty through engagement 

and technical assistance, while encouraging the market 

to develop technology that improves the operations of 

fnancial institutions. Trough events like tech sprints and 

pilot programs, FDiTech will collaborate with banks and 

technology companies to tackle difcult challenges facing 

the fnancial services industry and the FDIC. 

Importantly, FDiTech will also engage directly with 

community banks to discuss how technological 

developments could impact their businesses. As part of 

this efort and to further expand on the eforts of the 

Subcommittee on Supervision Modernization, we plan 

to host a series of community bank-focused roundtables 

that will bring bankers together with technologists and 

technology service providers. 

It is my goal that the FDIC lays the foundation for the 

next chapter of banking by encouraging innovation 

that meets consumer demand, promotes community 

banking, reduces compliance burdens, and modernizes our 

supervision. 

PROMOTING DIVERSITY 

AND INCLUSION 

My personal and professional experiences have 

underscored the importance of a workplace that is free 

from discrimination and that supports diversity and 

inclusion. In furtherance of the FDIC’s longstanding 

commitment to diversity and inclusion, we have created 

an executive-level taskforce on diversity to help to ensure 

our recruiting resources, hiring decisions, interviewing 

processes, retention eforts, and advancement pools refect 

a purposeful and intentional efort to leverage diversity to 

maintain a high-performing workforce. 

Te racial and gender diversity of the FDIC workforce 

continues to increase, and we will work to consistently 

improve diversity at all levels of the agency, fostering an 

environment without barriers in which all employees feel 

welcomed, valued, respected, and engaged. 

LOOKING AHEAD 

When I joined the FDIC, I committed to visiting all 

50 states to engage with bankers, state regulators, and 

consumers on their own turf. Trough the end of 2019, 

I had visited 28 states and received invaluable feedback 

regarding the challenges banks face in diferent parts of 

the country. In 2020, we will continue to advance the 

goals of strengthening our banking system, fostering 

innovation, and ensuring that banks can meet the needs of 

businesses and consumers across the nation. 

Tese are ambitious goals, and I know that the dedicated 

employees of the FDIC will rise to the challenge. I remain 

honored to serve alongside the men and women of the 

FDIC who endeavor every day to fulfll our vital mission. 

Sincerely, 

Jelena McWilliams 

7 
2019

MESSAGE FROM THE CHIEF FINANCIAL OFFICER

MESSAGE FROM THE 

CHIEF FINANCIAL OFFICER 

I am pleased to present the 

FDIC’s 2019 Annual Report, 

which covers fnancial 

and program performance 

information and summarizes 

our successes for the year. 

For 28 consecutive years, 

the U.S. Government 

Accountability Ofce has 

issued unmodifed audit 

opinions for the two funds 

administered by the FDIC: the Deposit Insurance Fund 

(DIF) and the Federal Savings and Loan Insurance 

Corporation (FSLIC) Resolution Fund (FRF). We take 

pride in our accomplishments and continue to consistently 

demonstrate discipline and accountability as stewards 

of these funds. We remain proactive in the execution of 

sound fnancial management and in providing reliable and 

timely fnancial data to enhance decision-making. 

2019 FINANCIAL AND 

PROGRAM RESULTS 

Te DIF balance rose to a record $110.3 billion as of 

December 31, 2019, compared to the year-end 2018 

balance of $102.6 billion. Te Fund balance increase 

was primarily due to assessment revenue, earnings on 

investments, and reductions in losses from prior year 

failures. Four insured fnancial institutions failed in 2019, 

with total assets of $209 million. 

Te DIF U.S. Treasury securities investment portfolio 

balance was $100.1 billion as of December 31, 2019, an 

increase of $7.4 billion over the year-end 2018 portfolio 

balance of $92.7 billion. Interest revenue on DIF 

investments was $2.1 billion for 2019, compared to 

$1.6 billion for 2018. 

In 2019, the FDIC continued to reduce operating 

costs. Te FDIC Operating Budget for 2019 totaled 

approximately $2.04 billion—a decrease of $49 million 

(2.3 percent) from 2018. Actual 2019 spending totaled 

approximately $1.86 billion. Te FDIC Board of Directors 

recently approved a 2020 FDIC Operating Budget totaling 

$2.02 billion, down $26 million (1.3 percent) from the 

2019 budget. Including 2020, the annual operating 

budget has declined for ten consecutive years, consistent 

with a steadily declining workload. 

Te FDIC also continues to reduce stafng levels as 

internal resource needs are realigned to refect banking 

industry changes and conditions. Te FDIC’s authorized 

full-time equivalent stafng dropped from 6,083 in 2018 

to 5,915 in 2019, a 2.8 percent reduction. Authorized 

stafng for 2020 is 5,755 full-time equivalent positons, a 

2.7 percent reduction from 2019. 

Te FDIC continued to implement its enterprise risk 

management (ERM) program in 2019 by communicating 

a risk appetite statement to all employees, developing a 

corporate risk profle and risk inventory, and initiating an 

ERM training program.  We will continue to enhance the 

ERM program in 2020 through regional ofce outreach 

and by further integrating the program into the FDIC’s 

strategic planning and budgeting processes. 

I appreciate the FDIC professionals who plan, execute, and 

account for the agency’s resources. Teir commitment 

to ensuring sound fnancial management provides the 

foundation for our strong stewardship and ensures reliable 

fnancial information is available to our stakeholders. 

Sincerely, 

Bret D. Edwards 

9 
ANNUAL 

REPORT

FDIC SENIOR LEADERS 

Seated (left to right): Howard G. Whyte, Bret D. Edwards, Director Martin J. Gruenberg, Chairman Jelena McWilliams, Arleas Upton Kea, 

Arthur J. Murton, and Doreen R. Eberley. 

Standing 1st Row (left to right): Mark E. Pearce, Kymberly K. Copa, Zachary N. Brown, Jay N. Lerner, Chad Davis, Ricardo Delfn, Nicholas Podsiadly, 

and Brandon Milhorn. 

2nd Row (left to right): Suzannah L. Susser, Diane Ellis, Russell G. Pittman, Saul Schwartz, M. Anthony Lowe, Robert D. Harris, and Andy Jiminez. 

Not pictured: Maureen E. Sweeney and Amy C. Tompson. 

10 FDIC SENIOR LEADERS 
2019

IN MEMORIAM 

ANDREW C. HOVE 

We at the FDIC were saddened by the August 18, 2019, 

passing of Andrew C. Hove, former FDIC Vice Chairman. 

Mr. Andrew “Skip” Hove served as the FDIC’s frst Vice 

Chairman and as its longest-serving Acting Chairman 

during the years of the banking and savings and loan crises 

and their aftermath. 

Mr. Hove demonstrated calm, thoughtful, decisive, and 

collegial leadership throughout his FDIC tenure. Sworn 

in as Vice Chairman in 1990 against the backdrop of the 

banking and savings and loan crises, he also served as 

Acting Chairman three times. Troughout, Mr. Hove 

steered the FDIC into safer waters, prompting stability not 

only within the fnancial services industry, but within the 

FDIC itself. 

Mr. Hove brought three decades of experience as 

a community banker to the FDIC, and guided the 

Corporation from the perilous depths of the dual crises 

to a period of recovery for both industries. Under 

his leadership as Acting Chairman, the FDIC’s Bank 

Insurance Fund recovered from a $7 billion defcit in 

1991 to reach nearly $22 billion in 1994. 

Mr. Hove also prevented a potential panic during the 

1992 election cycle, when fears of a “December surprise” 

—that a meltdown in the banking industry similar to 

what had occurred in the savings and loan industry would 

follow the November election—began to mount. To 

counter such fears, Mr. Hove pre-emptively led a public 

information campaign to assure Congress, the media, and 

depositors that the banking industry had in fact turned 

a corner. Mr. Hove was proven right; no meltdown 

occurred. A downward spiral in public confdence had 

been averted. 

Vice Chairman Hove was honored for his years of service 

and his enthusiastic support of training and education 

when the FDIC dedicated the Hove Auditorium at 

Virginia Square. He was admired as a man of integrity, 

honesty, wisdom, kindness, modesty, and generosity. He 

was a public servant in the truest sense of the word. Te 

FDIC mourns the loss of a faithful public servant. 

IN MEMORIAM 11 
I. 

MANAGEMENT'S DISCUSSION AND ANALYSIS 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

 

OVERVIEW 

During 2019, the FDIC continued to fulfll its missioncritical responsibilities. In addition, the agency is 

working to further strengthen the banking system, 

modernize its approach to supervision, and increase 

transparency surrounding its programs. Te FDIC also 

continued to engage in several community banking and 

community development initiatives. 

Cybersecurity remained a high priority for the FDIC in 

2019; the agency worked to strengthen infrastructure 

resiliency, enhance data governance, help fnancial 

institutions mitigate risk, and respond to cyber 

threats. Tis Annual Report highlights these and other 

accomplishments during the year. 

DEPOSIT INSURANCE 

As insurer of bank and savings association deposits, the 

FDIC must continually evaluate and efectively manage 

how changes in the economy, fnancial markets, and 

banking system afect the adequacy and the viability of 

the Deposit Insurance Fund (DIF). 

Long-Term Comprehensive Fund 

Management Plan 

In 2010 and 2011, the FDIC developed a comprehensive, 

long-term DIF management plan designed to reduce 

the efects of cyclicality and achieve moderate, steady 

assessment rates throughout economic and credit cycles, 

while also maintaining a positive fund balance, even 

during a banking crisis. 

Under the long-term DIF management plan, to increase 

the probability that the fund reserve ratio (the ratio of 

the fund balance to estimated insured deposits) would 

reach a level sufcient to withstand a future crisis, the 

FDIC Board set the Designated Reserve Ratio (DRR) of 

the DIF at 2.0 percent. Te FDIC views the 2.0 percent 

DRR as a long-term goal and the minimum level needed 

to withstand future crises of the magnitude of past crises. 

In December 2019, the Board voted to maintain the 2.0 

percent ratio for 2020. 

Additionally, as part of the long-term DIF management 

plan, the FDIC has suspended dividends indefnitely 

when the fund reserve ratio exceeds 1.5 percent. In lieu 

of dividends, the plan prescribes progressively lower 

assessment rates that will become efective when the 

reserve ratio exceeds 2.0 percent and 2.5 percent. 

State of the Deposit Insurance Fund 

Four small institutions with total assets of $209 million 

failed in 2019. Despite these failures, the fund balance 

continued to grow through 2019, as it has every quarter 

after the end of 2009. Assessment revenue was the 

primary contributor to the increase in the fund balance, 

while earnings on investments, unrealized gains on 

investment securities held by the DIF, and a reduction in 

losses from past failures were also signifcant contributors 

to growth in 2019. Te fund reserve ratio rose to 

1.41 percent at September 30, 2019, from 1.36 percent 

a year earlier. 

Minimum Reserve Ratio 

Section 334 of the Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank Act), which 

increased the minimum reserve ratio of the DIF from 

1.15 percent to 1.35 percent, mandates that the reserve 

ratio reach that level by September 30, 2020. 

To achieve this ratio, the FDIC imposed surcharges on the 

quarterly assessments of insured depository institutions 

(IDIs) with total consolidated assets of $10 billion or more 

(i.e., large banks). Te surcharge equaled an annual rate of 

4.5 basis points applied to an institution’s regular quarterly 

deposit insurance assessment base after subtracting 

$10 billion, with additional adjustments for banks with 

afliated IDIs. 

As of September 30, 2018, the reserve ratio exceeded the 

required minimum of 1.35 percent, and the surcharges 

were suspended. 

Application of Small Bank Assessment Credits 

Because the Dodd-Frank Act mandates that the FDIC 

ofset the efect of the increase in the reserve ratio on 

small banks (i.e., banks with assets less than $10 billion), 

these banks were exempt from the surcharges. Also in 

accordance with the Dodd-Frank Act, FDIC regulations 

provide assessment credits to small banks for the portion 

of their regular assessments that contributed to growth in 

the reserve ratio between 1.15 percent and 1.35 percent. 

Te FDIC awarded these banks an aggregate amount of 

approximately $765 million in credits after the reserve 

15 
ANNUAL 

REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

ratio surpassed 1.35 percent as of September 30, 2018. 

Te FDIC notifed all eligible banks of their respective 

assessment credit amounts in January 2019. 

FDIC regulations provide that the FDIC will 

automatically apply assessment credits to reduce a small 

bank’s regular assessment up to the entire amount 

beginning in the frst assessment period in which the 

reserve ratio is at least 1.38 percent. Te reserve ratio 

increased to 1.40 percent as of June 30, 2019, thereby 

exceeding 1.38 percent for the frst time since small 

bank assessment credits were awarded, and was 1.41 

percent as of September 30, 2019. As a result, the FDIC 

automatically applied approximately $559 million of small 

bank assessment credits to ofset banks’ second and third 

quarter 2019 assessments. After applying these credits, 

$206 million in small bank credits remain. 

In November 2019, the FDIC approved a fnal rule 

amending the deposit insurance assessment regulations 

that govern the use of small bank assessment credits 

and one-time assessment credits (OTACs) by certain 

IDIs.1

 Under the fnal rule, the FDIC will apply small 

bank assessment credits to quarterly deposit insurance 

assessments as long as the DIF reserve ratio is at least 1.35 

percent (instead of, as originally provided, 1.38 percent). 

In addition, after small bank assessment credits have been 

applied for four quarterly assessment periods, and as long 

as the reserve ratio is at least 1.35 percent, the FDIC will 

remit the full nominal value of any remaining small bank 

assessment credits and OTACs in lump-sum payments 

to each IDI holding such credits in the next assessment 

period. 

SUPERVISION 

Supervision and consumer protection are cornerstones of 

the FDIC’s eforts to ensure the stability of, and public 

confdence in, the nation’s fnancial system. Te FDIC’s 

supervision program promotes the safety and soundness 

of FDIC-supervised fnancial institutions, protects 

consumers’ rights, and promotes community investment 

initiatives. 

Examination Program 

Te FDIC’s strong bank examination eforts are at the 

core of its supervisory program. As of December 31, 

2019, the FDIC was the primary federal regulator for 

3,347 FDIC-insured, state-chartered institutions that were 

not members of the Federal Reserve System (generally 

referred to as “state nonmember” institutions). Trough 

risk management (safety and soundness), consumer 

compliance, Community Reinvestment Act (CRA), 

and other specialty examinations, the FDIC assesses an 

institution’s operating condition, management practices 

and policies, and compliance with applicable laws 

and regulations. 

As of December 31, 2019, the FDIC conducted 1,458 

statutorily required risk management examinations, 

including reviews of Bank Secrecy Act (BSA) compliance, 

and all required follow-up examinations for FDICsupervised problem institutions, within prescribed time 

frames. Te FDIC also conducted 1,147 statutorily 

required CRA/consumer compliance examinations 

(933 joint CRA/consumer compliance examinations, 210 

consumer compliance-only examinations, and four CRAonly examinations). In addition, the FDIC performed 

3,270 specialty examinations (which include reviews for 

BSA compliance) within prescribed time frames. 

Te table on the following page illustrates the number of 

examinations by type, conducted from 2017 through 2019. 

Risk Management 

All risk management examinations have been conducted 

in accordance with statutorily-established time frames. 

As of September 30, 2019, 55 insured institutions with 

total assets of $48.8 billion were designated as problem 

institutions—defned as those institutions having a 

composite CAMELS2

 rating of 4 or 5—for safety and 

soundness purposes. By comparison, on September 30, 

2018, there were 71 problem institutions with total assets 

of $53.3 billion. Tis represents a 23 percent decline 

in the number of problem institutions and an 8 percent 

decrease in problem institution assets. 

1

 Te Federal Deposit Insurance Reform Act of 2005 (FDI Reform Act) required the FDIC to provide OTACs to IDIs that existed on December 31, 1996, and paid 

a deposit insurance assessment prior to that date, or that were successors to such an institution. Te purpose of the OTAC, which was described as a “transitional” 

credit when it was enacted, was to recognize the contributions that certain institutions made to capitalize the Bank Insurance Fund and Savings Association 

Insurance Fund, which had been recently merged into the DIF. 

2

 Te CAMELS composite rating represents an institution's adequacy of Capital, quality of Assets, capability of Management, quality and level of Earnings, 

adequacy of Liquidity, and Sensitivity to market risk, and ranges from “1” (strongest) to “5” (weakest). 

16 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

0 

FDIC EXAMINATIONS 

2019 2018 2017 

Risk Management (Safety and Soundness): 

State Nonmember Banks 1,310 1,333 1,440 

Savings Banks 148 159 171 

State Member Banks 0 0 

Savings Associations 0 0 

National Banks 0 0 

Subtotal–Risk Management Examinations 1,458 1,492 1,611 

CRA/Consumer Compliance Examinations: 

Consumer Compliance/Community Reinvestment Act 933 876 770 

Consumer Compliance-only 210 337 393 

CRA-only 4 2 5 

Subtotal–CRA/Compliance Examinations 1,147 1,215 1,168 

Specialty Examinations: 

Trust Departments 313 308 347 

Information Technology and Operations 1,466 1,503 1,627 

Bank Secrecy Act 1,491 1,523 1,640 

Subtotal–Specialty Examinations 3,270 3,334 3,614 

TOTAL 5,875 6,041 6,393 

For the 12 months ended September 30, 2019, 28 

institutions with aggregate assets of $4.5 billion were 

removed from the list of problem fnancial institutions, 

while 12 institutions with aggregate assets of $1.6 billion 

were added to the list. Te FDIC is the primary federal 

regulator for 39 of the 55 problem institutions, with total 

assets of $4.4 billion. 

In 2019, the FDIC’s Division of Risk Management 

Supervision (RMS) initiated 100 formal enforcement 

actions and 119 informal enforcement actions. 

Enforcement actions against institutions included, but 

were not limited to, 17 actions under Section 8(b) of the 

Federal Deposit Insurance Act (FDI Act), one of which 

was a notice of charges, three civil money penalties 

(CMPs), and 83 memoranda of understanding (MOUs). 

Of these enforcement actions against institutions, fve 

consent orders, three CMPs and 18 MOUs were based, 

in whole or in part, on apparent violations of BSA and 

anti-money laundering (AML) laws and regulations. In 

addition, enforcement actions were also initiated against 

individuals. Tese actions included, but were not limited 

to, 34 removal and prohibition actions under Section 

8(e) of the FDI Act (33 consent orders and one notice of 

intention to remove/prohibit), fve actions under Section 

8(b) of the FDI Act, and 10 CMPs, (nine orders to pay 

restitution and one notice of assessment), including two 

CMPs related to BSA. 

Te FDIC conducts risk examination through a riskfocused, forward-looking supervision program. Te 

objective of a risk-focused examination is to evaluate 

the safety and soundness of the fnancial institution by 

assessing its risk management systems, fnancial condition, 

and compliance with applicable laws and regulations, 

while focusing on the bank’s highest risks. Te riskfocused examination process seeks to strike an appropriate 

balance between evaluating the condition of an institution 

at a certain point in time and evaluating the soundness of 

the institution’s processes for managing risk in all phases 

of the economic cycle. By evaluating an institution’s 

risk management practices, examiners look beyond the 

fnancial condition of a bank at a point in time, to how 

well it can respond to changing market conditions given its 

particular risk profle. 

Examiners communicate their views about changes 

needed in its practices, operations or fnancial condition 

through supervisory recommendations, including 

Matters Requiring Board Attention (MRBA). A 

0 

0 

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principal purpose of supervisory recommendations is to 

communicate supervisory concerns to a bank so that it 

can make appropriate changes in its practices, operations, 

or fnancial condition and thereby avoid more formal 

remedies in the future, such as enforcement actions. RMS 

tracks bank managements’ responsiveness to MRBAs 

through examination follow up activities. 

For example, in 2019, a total of 312 institutions were 

assigned a composite CAMELS rating of 2 and had 

MRBAs identifed in the examination reports. To ensure 

that MRBAs are being appropriately addressed at these 

institutions, the FDIC timely reviews progress reports 

and follows up with bank management as needed. More 

specifcally, within six months of issuing the examination 

reports, the FDIC conducted appropriate follow up and 

review of these MRBAs at 301 (96.5 percent) of these 

institutions. Follow up and review of the MRBAs at the 

remaining 11 institutions (3.5 percent) occurred more than 

six months after issuing the examination reports primarily 

due to delayed responses from some banks, as well as the 

need for additional information in order to complete a 

full review. 

Consumer Compliance 

As of December 31, 2019, 36 insured state nonmember 

institutions (collectively, with total assets of $33 billion), 

about 1 percent of all supervised institutions, were problem 

institutions for consumer compliance, CRA, or both. All 

of the problem institutions for consumer compliance were 

rated “4” for consumer compliance purposes, with none 

rated “5.” For CRA purposes, the majority were rated 

“Needs to Improve”; only two were rated “Substantial 

Noncompliance.” As of December 31, 2019, all follow-up 

examinations for problem institutions were performed 

on schedule. 

As of December 31, 2019, the FDIC conducted and 

achieved all required consumer compliance and CRA 

examinations and, when violations were identifed, 

completed follow-up visits and implemented appropriate 

enforcement actions in accordance with FDIC policy. 

In completing these activities, the FDIC achieved its 

internally established time standards for the issuance of 

fnal examination reports and enforcement actions. 

Overall, FDIC examiners concluded that the vast majority 

of FDIC-supervised institutions were rated satisfactory 

or better for consumer compliance and demonstrated the 

ability to maintain efective programs to manage their 

consumer compliance responsibilities. Some noteworthy 

issues that emerged from 2019 consumer compliance 

examinations include continuing concerns about banks’ 

monitoring of third-party service providers and their 

implementation of the Truth in Lending Act (TILA) – 

Real Estate Settlement Procedures Act (RESPA) Integrated 

Disclosure Rule (TRID). Te TRID implementation 

issues were the most frequently cited violations of TILA 

in 2019.  In response, the FDIC developed and hosted 

a banker teleconference on Understanding the TRID 

Rule (see discussion under the Technical Assistance 

Program section). 

As of December 31, 2019, the FDIC’s Division of 

Depositor and Consumer Protection (DCP) initiated 19 

formal enforcement actions and 15 informal enforcement 

actions to address consumer compliance examination 

fndings. Tis included three consent orders to strengthen 

consumer compliance management systems, 16 CMPs, 

and 11 MOUs. Te CMPs were issued against institutions 

to address violations of the Flood Disaster Protection 

Act, the RESPA, and Section 5 of the Federal Trade 

Commission Act for unfair or deceptive acts or practices. 

Te CMP orders totaled in excess of $2.1 million. In 

addition to the consumer refunds resulting from the 

assistance provided by the FDIC’s Consumer Response 

Center (see discussion under the Consumer Complaints 

and Inquiries section), consumer compliance examination 

fndings resulted in banks making voluntary restitution of 

approximately $4.7 million to over 19,000 consumers and 

TILA reimbursements of approximately $1.3 million to 

more than 6,000 consumers. 

Consumer Compliance Supervision Strategic Plan   

DCP has established a Supervision Strategic Plan to 

identify near-term initiatives that are aligned with 

long-term objectives. Te Supervision Strategic Plan 

for consumer compliance is built around four pillars: 

Technology and Financial Innovation, Supervisory 

Efciency, Emerging Risk Identifcation, and 

Communication Efectiveness. DCP established 20 

key near-term initiatives in alignment with these pillars, 

and set forth strategies to leverage technology, expand 

industry engagement, and efciently conduct risk-focused 

examination activities to pursue these initiatives. DCP 

will continue to advance these strategic priorities, and is 

updating the plan to refect 2021 – 2024 initiatives and 

goals. Current development of plans for 2021 – 2024 

initiatives will continue to advance strategic priorities. 

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MANAGEMENT'S DISCUSSION AND ANALYSIS

 

 

External stakeholders—in particular, community banks— 

will beneft from the plan through continued transparency 

in the supervisory process, which includes changes to 

examination report formats, access to information and 

resources, tools that will improve the exchange of data 

and documents with the FDIC, and increased engagement 

with the FDIC’s exceptionally knowledgeable and wellequipped examiners. 

Large Bank Supervision Program 

Te Large Bank Supervision Branch (LBSB) within 

RMS addresses the growing complexity of large banking 

organizations with assets from $10 billion to $100 billion 

of all charters, plus all FDIC-supervised banks over 

$10 billion. Tis branch is responsible for supervisory 

oversight and ongoing monitoring, while supporting the 

insurance business line. For state nonmember banks with 

assets exceeding $10 billion, the FDIC generally applies a 

continuous examination program, whereby dedicated staf 

conduct ongoing on-site supervisory examinations and 

institution monitoring. 

Te Large Insured Depository Institution (LIDI) 

Program remains the primary instrument for of-site 

monitoring of IDIs supervised by LBSB, as well as 

select banks supervised by the Division of Complex 

Institution Supervision and Resolution (CISR) where the 

FDIC has on-site examination staf. Te LIDI Program 

provides a comprehensive process to standardize data 

capture and reporting for large and complex institutions 

nationwide, allowing for quantitative and qualitative 

risk analysis. In 2019, the LIDI Program covered 122 

institutions with total assets of $6.8 trillion. Te LIDI 

Program supports efective large bank supervision by 

using individual institution information to focus resources 

on higher-risk areas, determine the need for supervisory 

action, and support insurance assessments and resolution 

planning. 

Te Shared National Credit (SNC) Program is an 

interagency initiative administered jointly by the FDIC, 

the Ofce of the Comptroller of the Currency (OCC), and 

the Federal Reserve Board (FRB) to promote consistency 

in the regulatory review of large, syndicated credits, as 

well as to identify risk in this market, which comprises a 

large volume of domestic commercial lending. In 2019, 

outstanding credit commitments identifed in the SNC 

Program totaled $4.8 trillion. Te FDIC, FRB, and 

OCC report the results of their review in an annual, joint 

public statement. 

In the third and fourth quarter of 2018, the LBSB 

completed a horizontal commercial loan underwriting 

review at 32 large FDIC-supervised institutions to 

further understand and assess recent commercial loan 

underwriting practices. In July 2019, the overall fndings 

and observations from that review were shared via a letter 

to each covered bank’s Chief Executive Ofcer. 

Operational Risk Supervision Program 

Information Technology and Cybersecurity 

Te FDIC examines information technology (IT), 

including cybersecurity, at each bank it supervises as part 

of the risk management examination. Examiners assign 

an IT rating using the Federal Financial Institutions 

Examination Council’s (FFIEC) Uniform Rating System 

for Information Technology (URSIT), and the IT rating 

is incorporated into the management component of 

the CAMELS rating, in accordance with the FFIEC’s 

Uniform Financial Institutions Rating System. 

During 2019, the FDIC collaborated with the FRB 

and state banking departments to enhance the 

Information Technology Risk Examination (InTREx) 

Program used to conduct fnancial institution IT 

examinations. For example, the InTREx information 

technology profle used to risk-focus IT examinations 

was streamlined, and redundancies in examiner questions 

were eliminated. 

Te FDIC also enhanced its examinations of service 

providers. For example, the interagency Cybersecurity 

Examination Program became a standard component of 

the most signifcant service provider examinations. Te 

FDIC, FRB, and OCC, also horizontally reviewed the 

contracts between fnancial institutions and large service 

providers to evaluate how well the agreements provide for 

protecting customer nonpublic personal information. 

Te FDIC collaborated with the other FFIEC member 

entities3

 to update the FFIEC IT Examination Handbook 

booklet titled Business Continuity Management. 

3

 FFIEC member agencies include the FDIC, FRB, National Credit Union Administration (NCUA), OCC, and Consumer Financial Protection Bureau (CFPB). 

Te FFIEC also includes a State Liaison Committee (SLC) as a voting member; the SLC includes representatives from the Conference of State Bank Supervisors 

(CSBS), American Council of State Savings Supervisors (ACSSS), and National Association of State Credit Union Supervisors (NASCUS). 

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Examiners use this booklet as a reference, and it contains 

detailed procedures for examining more complex 

entities. Finally, the FDIC, FRB, and OCC conducted 

IT examinations of services provided to banks by third 

parties, with a particular focus on the strength of the 

contracts between banks and their service providers. 

Te FDIC also continued to build its IT examination 

workforce. For example, an entry-level IT and Cyber 

Risk Management Analyst position was created. Te new 

analysts will focus only on IT (including cybersecurity) 

examinations, and are expected to reach profciency at 

those tasks quicker than examiners who have broader 

responsibilities. Te FDIC also updated its advanced IT 

training for safety and soundness examiners. Examiners 

take this training to prepare them to examine the most 

complex institutions and service providers. 

Te FDIC actively engages with both the public and 

private sectors to assess emerging cybersecurity threats 

and other operational risk issues. Te information 

obtained from these engagements is shared with fnancial 

institutions and examiners, when appropriate. FDIC 

staf meet regularly with the Financial and Banking 

Information Infrastructure Committee (FBIIC), the 

Financial Services Sector Coordinating Council for 

Critical Infrastructure Protection, the Department 

of Homeland Security (DHS), the Financial Services 

Information Sharing and Analysis Center, other regulatory 

agencies, and law enforcement to share information 

regarding emerging issues and to coordinate responses. 

For example, in June 2019, the FDIC sent a DHS 

cybersecurity alert to all FDIC-supervised institutions 

highlighting the need for them to defend against a rise 

in malicious cyber activity directed at the United States. 

Additionally, in October 2019, the FDIC and other FFIEC 

members conducted a webinar to raise awareness about 

the increased frequency of email compromise fraud. Te 

webinar featured a guest speaker from the Financial 

Crimes Enforcement Network (FinCEN), which has 

researched this type of fraud. 

Bank Secrecy Act/Anti-Money Laundering 

Troughout 2019, the FDIC, FRB, and OCC and the 

Department of the Treasury (including FinCEN), focused 

on improving the efciency and efectiveness of the Bank 

Secrecy Act/Anti-Money Laundering (BSA/AML) regime. 

In July 2019, the agencies issued a joint statement to clarify 

the risk-focused approach to BSA/AML supervision. Te 

FDIC, FRB, OCC, Treasury, and FinCEN also issued 

a statement on providing fnancial services to customers 

engaged in hemp-related businesses. 

Te FFIEC made signifcant progress in updating the 

FFIEC BSA/AML Examination Manual that is expected 

to be released in early 2020. Revised sections of the 

manual reinforce instructions to examiners regarding 

depository institutions’ policies, procedures, and processes 

designed to reasonably meet the requirements of the 

BSA and safeguard institutions from money laundering, 

terrorist fnancing, and other illicit fnancial activity. 

Te manual emphasizes that examiners should tailor the 

BSA/AML examination scope and planned procedures to 

the money laundering/terrorist fnancing risk profle of the 

depository institution. 

Cyber Fraud and Financial Crimes 

Te FDIC has undertaken a number of initiatives in 2019 

to protect the banking industry from criminal fnancial 

activities.  Tese include developing a fnancial crimes 

conference that will be held in 2020 for examiners, 

lawyers, and others from federal banking and law 

enforcement agencies. Another initiative helped fnancial 

institutions identify and shut down “phishing” websites 

that attempt to fraudulently obtain an individual’s 

confdential personal or fnancial information. Finally, in 

August 2019, the FDIC published a Consumer News article 

that ofered tips consumers can use to protect themselves 

from fake check scams. 

Examiner Training and Development 

Examiner training continued to be a top priority in 2019. 

Te FDIC strives to deliver efective and efcient onthe-job, classroom, and computer-based instruction. A 

cadre of highly trained and skilled instructors provides 

classroom learning to FDIC examination staf, as well as 

staf of regulatory partners from international and state 

agencies. Oversight of the training program is provided by 

senior and mid-level management to ensure that content 

and delivery are efective, appropriate, and current. Te 

FDIC works in collaboration with partners across the 

organization and with the FFIEC to ensure that emerging 

risks and topics are incorporated and conveyed timely. 

Examination staf at all levels beneft from targeted and 

tenure-appropriate content. Te FDIC also recognizes 

the critical role peer-to-peer knowledge transfer plays in 

preserving institutional knowledge and experience, and 

encourages opportunities for employees to learn from 

each other. 

20 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

In 2019, the FDIC held training for all of its 

commissioned risk management examiners and case 

managers on a variety of topics, including root cause 

analysis, emerging technologies, model risk management, 

and operational risk. In addition, the FDIC launched 

refresher foundational training for all examinationrelated staf on the Bank Secrecy Act; this training will be 

completed in frst quarter 2020. 

In addition, a Current Expected Credit Losses (CECL) 

Examiner Training and Development Plan was launched 

in 2018 to begin a multi-year initiative to ensure 

examination staf understand the requirements of the 

new credit losses accounting standard, and are consistent 

in conveying the FDIC’s expectations with respect to 

banks’ CECL implementation eforts. 

Te FDIC has also undertaken a multi-year project 

to expand and strengthen its examiner development 

programs for specialty areas, such as IT, BSA/AML, trust, 

capital markets, and accounting. As banks become more 

specialized, enhancing examiner skills in these areas is 

key to ensuring an efective examination program. Te 

goal of this project is to standardize the skills needed to 

examine banks of varying levels of risk and complexity 

in each specialty area, and to develop on-the-job training 

(OJT) programs to provide opportunities for examiners to 

acquire higher-level competencies in these specialty areas. 

In 2019, the FDIC released the second of its IT OJT 

programs and continued to develop specialty OJT 

programs in accounting, capital markets, BSA/AML, 

and trust. 

Minority Depository Institution Activities 

Te preservation and promotion of minority depository 

institutions (MDIs) remains a long-standing and high 

priority for the FDIC. In 2019, the FDIC expanded 

engagement with MDIs and continued to promote and 

support MDI and Community Development Financial 

Institution (CDFI bank) industry-led strategies to 

better serve their communities. Tese strategies include 

increasing collaboration between MDIs and other fnancial 

institutions; partnering to share costs, raise capital, or 

pool loans; and making innovative use of available federal 

programs. Te FDIC supports these eforts through 

research, outreach, and engagement to better understand 

MDI issues, as well as by providing technical assistance 

and education and training for MDI and CDFI banks. 

During 2019, the FDIC published a research study, 

Minority Depository Institutions: Structure, Performance, 

and Social Impact that explores changes in FDIC-insured 

MDIs, their role in the fnancial services industry, and 

their impact on the communities they serve. Te study 

showed that MDI fnancial performance improved 

signifcantly over the past fve years; MDIs consolidated 

signifcantly, but more gradually than community banks 

overall; and MDIs are important service providers to lowor moderate-income and minority communities. 

Te FDIC established a new MDI Subcommittee of the 

Advisory Committee on Community Banking (CBAC), 

which held its inaugural meeting in December 2019. 

Te subcommittee provides an opportunity for minority 

bankers to discuss key issues and share feedback directly 

with FDIC Board Members and senior management. 

In addition, the FDIC added additional MDI bankers to 

the CBAC membership to further bring MDI perspectives 

and issues to the table. 

Troughout 2019, the FDIC hosted three roundtables 

with large banks and MDI bankers to foster collaboration 

in support of the continued vibrancy of MDIs and 

their communities. During the roundtables, executives 

from 29 large banks and 24 MDIs discussed potential 

partnerships including fnancial support, lending activities, 

or service activities including technical assistance. 

Each roundtable outlined how both MDIs and other 

institutions may realize business and regulatory benefts 

by developing partnerships, drawing upon the FDIC’s 

Resource Guide for Collaboration with Minority Depository 

Institutions published in December 2017. In addition, 

the FDIC clarifed how relationships with MDIs receive 

consideration under the Community Reinvestment Act. 

Te FDIC is following up to monitor the outcomes of 

the roundtables and highlight successful partnerships at 

future roundtables. 

One of the FDIC’s statutory goals is to preserve the 

minority character of MDIs in failed bank acquisitions. 

In 2019, the FDIC hosted three workshops and two 

webinars with MDI bankers to discuss the failed bank 

bidding process and special marketing procedures for 

MDIs. In addition, the FDIC implemented a new 

marketing procedure that provides a two-week window 

exclusively for MDIs. During this window, the FDIC 

contacts all qualifed MDIs on the bid list to ensure they 

received an invitation to bid, and provides full access to 

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FDIC Chairman McWilliams is introduced to Alden J. McDonald’s son, 

Todd McDonald at the June 2019 Interagency MDI and CDFI Bank 

Conference. Alden McDonald founded Liberty Bank and Trust in 1972 

in New Orleans, Louisiana. 

the data room if an MDI is interested. Te FDIC also 

describes in detail the failing bank transaction and ofers 

to provide technical assistance on the bidding process. 

Following the two-week period, the FDIC invites all other 

qualifed bidders to the failing bank project. 

One MDI failed in 2019, and the acquirer was another 

MDI. In fact FDIC’s research shows that over a 17-year 

period, most of the assets of merged and failed MDIs have 

been acquired by other MDIs. Of the nearly $23 billion 

in MDI failed-bank assets during this period, 86 percent 

were acquired by another minority bank. 

In June 2019, the FDIC hosted the interagency MDI and 

CDFI bank conference, Focus on the Future: Prospering 

in a Changing Industry, in collaboration with the OCC 

and FRB. Te conference featured a dialogue with 

federal leadership, who provided updates on programs 

and policies that can help MDI and CDFI banks achieve 

their goals. Minority bank CEOs discussed strategies for 

their customers, employees, and communities in order 

to succeed in today’s marketplace. Experts discussed 

innovation, collaboration, supervision, and FDIC 

research. Interactive workshops addressed topics such as 

cybersecurity and threat-monitoring tools and resources, 

understanding MDIs and their markets, succession 

management, federal programs supporting MDIs, the 

benefts of participating in the CDFI Fund’s programs, 

and preserving the minority character in failing bank 

transactions. 

Te FDIC also continuously pursued eforts to improve 

communication and interaction with MDIs and to 

respond to the concerns of minority bankers in 2019. 

Te FDIC maintains active outreach with MDI trade 

groups and ofers to arrange annual meetings between 

FDIC regional management and each MDI’s board of 

directors to discuss issues of interest. Te FDIC routinely 

contacts MDIs to ofer return visits and technical 

assistance following the conclusion of FDIC safety and 

soundness, consumer compliance, CRA, and specialty 

examinations to help bank management understand 

and implement examination recommendations. Tese 

return visits, normally conducted within 90 to 120 days 

after the examination, are intended to provide useful 

recommendations or feedback for improving operations, 

not to identify new issues. 

Trough its public website (www.fdic.gov), the FDIC 

invites inquiries and provides contact information for any 

MDI to request technical assistance at any time. 

In 2019, the FDIC provided 134 individual technical 

assistance sessions on nearly 50 risk management, 

consumer compliance, and resolution topics, including: 

♦ Accounting, 

♦ Bank Secrecy Act and Anti-Money Laundering, 

♦ Community Reinvestment Act, 

♦ Compliance management, 

♦ Funding and liquidity, 

♦ Information technology risk management 

and cybersecurity, 

♦ Internal audit, and 

♦ Failed bank acquisition. 

Chairman McWilliams (center) in discussion with John Hope Bryant, 

founder, Chairman and CEO of Operation HOPE, and Evelyn Smalls, 

President and CEO of United Bank of Philadelphia at the National 

Bankers Association Annual Convention in October 2019. 

22 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

Te FDIC also held outreach, training, and educational 

programs for MDIs through conference calls and regional 

banker roundtables. In 2019, topics of discussion for 

these sessions included many of those listed above, as well 

as collaboration and partnerships, the CECL accounting 

methodology, IT vendor management, cybersecurity, 

CRA, innovation, BSA, CDFI Fund Programs, and 

emerging technology. 

SUPERVISION POLICY 

Te goal of supervision policy is to provide clear, 

consistent, meaningful, and timely information to 

fnancial institutions and examiners. 

Risk-Focused Supervision Program 

During 2019, the FDIC undertook an efort to 

memorialize its long-standing practices regarding riskfocused, forward-looking supervision. Te result of this 

efort was referenced in RMS’s August 2019 update to 

the Risk Management Manual of Examination Policies, 

which incorporated a new section titled “Risk-Focused, 

Forward-Looking Safety and Soundness Supervision.” 

Te new section describes the FDIC’s long-standing 

philosophy and methods for supervising institutions by 

focusing on institutions and the areas within institutions 

presenting the greatest risks. It also describes principles for 

communication, risk-tailoring of examination procedures, 

examination planning, and of-site examination 

activities that are followed during safety and soundness 

examinations. 

As part of this efort, RMS also implemented more 

robust examination planning procedures, including 

increasing the amount of notice bankers are provided 

before examinations begin and allowing examiners more 

time to understand the institution and tailor procedures 

to the institution’s risk profle accordingly. Additionally, 

procedures for loan review have been enhanced and 

electronic document-transfer systems with institutions 

have been improved. 

Current Expected Credit Losses 

Implementation 

In June 2016, the Financial Accounting Standards Board 

(FASB) introduced the CECL methodology for estimating 

allowances for credit losses, replacing the current incurredloss methodology. 

Since then, the FDIC has worked collaboratively with the 

FRB, OCC, FASB, Securities and Exchange Commission 

(SEC), and CSBS to answer questions regarding the 

implementation of CECL. 

♦ Te FDIC participated on the FFIEC Task Force 

on Reports that developed revisions to the Call 

Report and other FFIEC reports to address the 

changes in the accounting for credit losses under 

the new standard. Because the standard could be 

early adopted by institutions efective January 1, 

2019, these revisions were implemented for quarterly 

reports as of March 31, 2019, and take efect for 

annual reports as of December 31, 2019. Institutions 

were notifed of the fnal reporting changes in an 

interagency FFIEC Financial Institution Letter (FIL) 

and an FDIC-only FIL. 

♦ In December 2018, the FDIC, FRB and OCC issued 

the CECL Regulatory Capital fnal rule revising the 

regulatory capital rules for the implementation of, 

and capital transition to, the CECL methodology. 

Te fnal rule allows banks to transition the day-one 

efects of the credit losses accounting standard on 

regulatory capital over three years. Te fnal rule also 

revises the agencies’ regulatory capital rule and other 

rules to take into consideration diferences between 

the new accounting standard and existing U.S. 

generally accepted accounting principles. 

♦ In April 2019, the FDIC, FRB, OCC, and NCUA 

issued an updated set of frequently asked questions 

(FAQs) that focus on the application of the new credit 

losses accounting standard and related regulatory 

reporting. Tis updated set includes the initial set of 

FAQs issued in December 2016 and the second set 

of FAQs issued in September 2017. Certain of the 

previously issued FAQs were updated in response to 

recent developments. An appendix includes links to 

relevant resources that are available to institutions to 

assist with the implementation of CECL. 

♦ In April 2019, the FDIC, FRB, OCC, NCUA, FASB, 

SEC, and CSBS conducted a webinar covering one 

possible simplifed method of calculating allowances 

under CECL, which is known as the Weighted 

Average Remaining Maturity (WARM) Method. 

In January 2019, the FASB issued a Staf questions 

and answers (Q&A) document confrming that the 

WARM method is one of many acceptable methods 

that can be used to estimate allowances for less 

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complex fnancial asset pools under CECL. Te 

webinar also discussed the use of reasonable and 

supportable forecasts when estimating allowances. 

Management of Credit Risk, Liquidity 

Risk, and Interest-Rate Risk 

Te economy is in its eleventh year of expansion. Amid 

increasing competition for loans, a large majority of 

insured institutions continue to grow their loan portfolios, 

albeit more slowly than in prior years. Some institutions 

have increased existing concentrations, leaving them with 

greater exposure to market sector changes. 

Loan growth, accompanied by a reduction in holdings 

of liquid assets and increased reliance on funding 

sources other than traditionally stable deposits, is 

particularly prevalent among institutions with rising or 

elevated concentration levels. Competition for deposits 

is increasing and intensifed by long-term trends like 

declining rural populations and consumers’ adoption of 

innovative fnancial technology. 

A lengthy period of historically low interest rates and 

tightening net interest margins have created incentives for 

insured depository institutions to reach for yield in their 

lending and investment portfolios by extending portfolio 

durations, potentially increasing their vulnerability to 

higher interest rates. Long-term rates have been falling in 

recent years, resulting in a fatter yield curve and, in 2019, 

the yield curve temporarily inverted. Te uncertainty in 

the direction of rates and shape of the yield curve create 

a challenging environment for managing exposure to 

interest-rate risk. 

Trough regular on-site examinations and interim contacts 

with state nonmember institutions, FDIC staf regularly 

engage in dialogue with institution management about the 

need to ensure that their practices to manage credit risk, 

liquidity risk, and interest-rate risk are efective. Where 

appropriate, FDIC staf work with institutions that have 

signifcant exposure to these risks and encourage them to 

take appropriate risk-mitigating steps. Te FDIC employs 

of-site monitoring to help identify institutions that may 

have heightened exposure to these risks, and follows up 

with them to better understand their risk profles. 

Troughout 2019, the FDIC conducted outreach and 

ofered technical assistance regarding these risk issues. 

Te FDIC also published Supervisory Insights articles on 

the risks associated with potential transitions in fnancial 

instrument reference rates and the risk management 

practices of insured banks with commercial real estate loan 

concentrations and leveraged lending. FDIC examiners 

continue to assess how well banks are managing the 

risks associated with credit and funding concentrations. 

Te fndings of these assessments are shared with bank 

management in the Report of Examination. 

CAMELS Request for Information 

In October 2019, the FDIC and FRB issued a request 

for information and comments from interested parties 

regarding the consistency of ratings assigned by the 

agencies under the Uniform Financial Institutions Rating 

System (more commonly known as CAMELS ratings).  

Te agencies are also requesting feedback on the use of 

CAMELS ratings by the agencies in their bank application 

and enforcement action processes. Comments are due by 

February 28, 2020. 

Applications Procedures Manual 

During 2019, the FDIC issued updated, public facing 

sections of the Applications Procedures Manual. Te 

manual provides comprehensive direction to FDIC staf 

assigned to review and process applications, notices, and 

other requests (collectively, applications) submitted to the 

FDIC.  In June, 17 sections of the manual were released, 

and in December an additional 18 sections were released. 

As part of Chairman McWilliams’ “Trust Trough 

Transparency” initiative, making the manual publicly 

available provides greater transparency to the banking 

industry and other interested parties regarding the FDIC’s 

application processes. As appropriate, the manual will be 

updated periodically for changes in laws, regulations, and 

processes. FDIC-insured institutions and other interested 

parties may access application-related information through 

the FDIC’s Bank Applications webpage located at https:// 

www.fdic.gov/regulations/applications/. 

Supervisory Guidance 

Regulatory Relief - Areas Afected by Severe Storms 

During 2019, the FDIC issued eight advisories through 

FILs to provide guidance to fnancial institutions in areas 

afected by hurricanes, tornadoes, fooding, wildfres, 

and other severe storms, and to facilitate recovery. In 

24 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

these advisories, the FDIC encouraged banks to work 

constructively with borrowers experiencing fnancial 

difculties as a result of natural disasters, and clarifed 

that prudent extensions or modifcations of loan terms 

in such circumstances can contribute to the health 

of communities and serve the long-term interests of 

lending institutions. 

Allowance for Credit Losses 

On October 17, 2019, the three banking agencies and the 

NCUA, with input from CSBS, issued for public comment 

a proposed Interagency Policy Statement on Allowances for 

Credit Losses (ACLs) in response to CECL, the new credit 

losses accounting standard. Te proposed policy statement 

would replace the agencies’ December 2006 Interagency 

Policy Statement on the Allowance for Loan and Lease 

Losses (ALLL) and the July 2001 Policy Statement on 

Allowance for Loan and Lease Losses Methodologies 

and Documentation for Banks and Savings Institutions 

(collectively, the 2006 and 2001 ALLL Policy Statements). 

Te comment period closed December 16, 2019. 

♦ Te principles outlined in the policy statement on 

ACLs would become of interest to an institution 

upon the institution’s adoption of the CECL. 

♦ Once CECL is efective for all institutions, the 

agencies will rescind the 2006 and 2001 ALLL 

Policy Statements. 

♦ Te proposed new policy statement addresses most of 

the topics covered in the 2006 and 2001 ALLL Policy 

Statements, but in the context of CECL. Tus, the 

new policy statement describes: 

• Te measurement of expected credit losses under 

CECL and the accounting for impairment 

on available-for-sale (AFS) debt securities in 

accordance with the new credit losses accounting 

standard; 

• Principles related to designing, documenting, 

and validating expected credit loss estimation 

processes, including the internal controls over 

these processes; 

• Maintaining appropriate ACLs; 

• Te responsibilities of boards of directors and 

management; and 

• Examiner reviews of ACLs. 

Credit Risk Review 

In October 2019, the FDIC, jointly with the FRB, OCC, 

and NCUA, issued a request for comment on proposed 

Guidance for Credit Risk Review Systems.  Te proposed 

supervisory guidance updates and reafrms, as a standalone document, the elements of an efective credit risk 

review system currently contained in the Interagency 

Policy Statement on the Allowance for Loan and Lease Losses 

(Attachment 1 - Loan Review Systems), issued in 2006. 

Te proposed supervisory guidance also refects current 

industry credit review practices and terminology associated 

with the CECL methodology.  Te comment period closed 

on December 16, 2019. 

Codifcation of Section 19 Statement of Policy  

On November 18, 2019, the FDIC approved an NPR to 

codify the Section 19 Statement of Policy (SOP) in the 

FDIC’s regulations and seek public comment on all 

aspects of the Section 19 SOP.  Section 19 of the FDI 

Act generally prohibits individuals convicted of certain 

crimes from becoming employed by, or participating in 

the afairs of, an IDI. Specifcally, the proposal seeks 

comment on whether and how the FDIC should expand 

the criteria for what constitutes a de minimis ofense. 

Tis proposal also supports the ongoing initiative among 

the federal fnancial regulators to address the appropriate 

role of supervisory guidance compared to notice and 

comment rulemakings.  Te comment period closes on 

March 16, 2020. 

Regulatory Tailoring 

Tailoring of Capital and Liquidity Standards 

In October 2019, the FDIC, FRB and OCC approved 

a fnal rule to tailor the regulatory capital and liquidity 

requirements for large depository institution holding 

companies, U.S. intermediate holding companies 

of foreign banking organizations (U.S. IHCs), and 

certain depository institutions. Under the fnal rule, the 

requirements for U.S. Global-Systemically Important 

Banks (U.S. G-SIBs) are unchanged and these institutions 

remain subject to the most stringent standards. However, 

the fnal rule tailors the capital and liquidity requirements 

for all other banking organizations with greater than $100 

billion in total consolidated assets, commensurate with 

their size, complexity, and potential systemic risks. Te 

fnal rule is consistent with considerations and factors 

set forth under section 165 of the Dodd-Frank Act, as 

amended by the Economic Growth, Regulatory Relief, and 

Consumer Protection Act (EGRRCPA). 

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Te fnal rule established risk-based categories for 

determining the tailored regulatory capital and 

liquidity requirements applicable to large U.S. banking 

organizations and the U.S. IHCs. Under the fnal rule, 

banking organizations fall into one of four categories 

based on fve risk-based indicators: total assets, crossjurisdictional activity, short-term wholesale funding, 

nonbank assets, and of-balance sheet exposure. 

In addition to tailoring the agencies’ capital requirements, 

the fnal rule tailors the application of the liquidity 

coverage ratio, which was fnalized in 2014 and requires 

large banking organizations to hold a minimum amount 

of high-quality liquid assets that can be easily and 

quickly converted into cash to meet net cash outfows 

over a 30-day stress period. Te fnal rule will also tailor 

the application of the net stable funding ratio, which the 

agencies plan to fnalize in 2020 and would apply a 

one-year liquidity standard that examines the stability 

of a bank’s funding profle. 

Capital Simplifcations 

In May 2019, the FDIC, FRB, and OCC approved 

a fnal rule to simplify aspects of the capital rule for 

non-advanced approaches banking organizations, which 

responds to industry feedback on the Economic Growth 

and Regulatory Paperwork Reduction Act (EGRPRA). 

Te fnal rule simplifes the treatment of threshold 

deduction items and increases the individual common 

equity tier 1 deduction thresholds for mortgage servicing 

assets, certain deferred tax assets, and investments in the 

capital of other fnancial institutions. Te fnal rule also 

simplifes the calculation of minority interests includable 

in regulatory capital and makes a number of technical 

corrections. 

Volcker Rule 

In July 2019, the FDIC, FRB, OCC, SEC, and 

Commodity Futures Trading Commission (CFTC) 

published a fnal rule pursuant to Section 203 of 

EGRRCPA to amend Section 13 of the Bank Holding 

Company Act, commonly referred to as the Volcker Rule, 

by exempting community banks from the requirements 

of the rule. To qualify for the exclusion, neither the 

bank nor any controlling company may have more than 

$10 billion in total consolidated assets, or total trading 

assets and trading liabilities of more than 5 percent of 

total consolidated assets, as reported on the most recent 

regulatory fling. Te fnal rule also implements Section 

204 of EGRRCPA to amend the restrictions applicable 

to the naming of a hedge fund or private equity fund to 

permit certain banking entities that are not banks or bank 

holding companies to share a name with the fund under 

certain circumstances. 

In November 2019, the FDIC, FRB, OCC, SEC, and 

CFTC published a fnal rule to simplify and tailor 

requirements under the Volcker Rule, which generally 

prohibits banking entities from engaging in proprietary 

trading and from owning or controlling hedge funds or 

private equity funds. Te fnal rule tailors compliance 

requirements based on the size of a frm’s trading assets 

and liabilities, with the most stringent requirements 

applied to banking entities with the most trading 

activity. Te rule also provides greater clarity, certainty, 

and objectivity about what activities are prohibited by 

the Volcker Rule. Te fnal rule has an efective date of 

January 1, 2020, and a compliance date of January 1, 

2021. However, a banking entity may voluntarily comply, 

in whole or in part, with the changes to the rule prior to 

January 1, 2021. 

A pending Notice of Proposed Rulemaking (NPR) is 

planned for early 2020 to address the outstanding issues 

related to the prohibitions and restrictions on investments 

in private equity and hedge funds (i.e., “covered funds”). 

Brokered Deposits 

In the thirty years since Congress enacted restrictions on 

brokered deposits, the banking industry has undergone 

dramatic changes. Technology, law, business models, and 

product ranges have evolved. In 2018, the FDIC decided 

to undertake a comprehensive review of its brokered 

deposits regulation. Te FDIC approved an advance 

notice of proposed rulemaking (ANPR) on December 

18, 2018, to seek comment on both the brokered deposit 

regulation and restrictions on interest rates. Te ANPR 

was published in the Federal Register on February 6, 2019. 

Te FDIC accepted comments on the ANPR until May 7, 

2019, and received more than 130 comments. Te FDIC 

then divided the brokered deposit rulemaking process into 

two sections: the frst will address possible changes in the 

interest rate restrictions; the second will address specifc 

brokered deposit issues. Te FDIC approved an NPR on 

brokered deposits in December 2019 that would establish 

a new framework for regulating brokered deposits. 

26 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

Te FDIC will be seeking comments for 60 days after 

publication in the Federal Register. 

Interest Rate Restrictions 

On August 20, 2019, the FDIC approved an NPR on 

interest rate restrictions applicable to institutions that 

are less than well capitalized. Te NPR was published 

in the Federal Register on September 4, 2019. In the 

NPR, the FDIC proposed changing the calculation of the 

national rate cap, as well as greatly simplifying the local 

rate cap for less than well-capitalized institutions 

in areas where prevailing rates may exceed the national 

rate or cap. Te FDIC accepted comments through 

November 8, 2019. 

Community Bank Leverage Ratio 

In November 2019, the FDIC, FRB, and OCC approved 

a fnal rule to implement Section 201 of EGRRCPA 

to establish a community bank leverage ratio (CBLR) 

framework designed to reduce burden for qualifying 

community banks that opt into the framework. Te 

framework provides a simple measure of capital adequacy 

for qualifying community banks and allows them to 

alleviate the burden of calculating and reporting risk-based 

capital ratios. If a qualifying community bank exceeds 

a CBLR of 9 percent, it is deemed to meet the generally 

applicable leverage and risk-based capital requirements and 

the well-capitalized ratio requirements under the prompt 

corrective action regulatory capital framework. Eligible 

banks may elect to adopt the framework beginning 

in 2020 and do so simply through reporting on their 

quarterly Call Report. 

In September 2019, the FDIC approved a fnal rule 

amending the deposit insurance assessment system to 

address the application of the leverage ratio for qualifying 

community banks. 

Appraisal Treshold for Residential Real Estate Loans 

In October 2019, the FDIC, FRB, and OCC published 

a fnal rule to amend the agencies’ regulations requiring 

appraisals for certain real estate-related transactions. Te 

fnal rule raises the threshold from $250,000 to $400,000 

at which appraisals are required for residential real estaterelated transactions. Te fnal rule also makes conforming 

changes to exempt certain transactions secured by 

residential property in rural areas from the agencies’ 

appraisal requirement pursuant to the EGRRCPA. 

Pursuant to the Dodd-Frank Act, the fnal rule amends 

the agencies’ appraisal regulations to require institutions 

to subject appraisals performed for federally related 

transactions to appropriate review for compliance with the 

Uniform Standards of Professional Appraisal Practice. 

Federal Interest Rate Authority 

In November 2019, the FDIC approved an NPR to clarify 

the federal law governing interest rates state banks may 

charge their customers. Te FDIC’s proposal would 

codify longstanding legal interpretations of the FDI Act 

and provides that a permissible interest rate on a loan, as 

permitted by the law where the bank is located, would not 

be afected by subsequent events, such as a change in state 

law, a change in the relevant commercial paper rate, or the 

sale/assignment/transfer of the loan. Comments will be 

accepted on this proposal until February 4, 2020. 

Management Interlocks 

Part 348 of the FDIC’s Rules and Regulations generally 

restricts the ability of a management ofcial to serve 

at more than one depository organization to foster 

competition. Since 1996, the Major Assets Prohibition 

prevented a management ofcial of a bank with total assets 

greater than $2.5 billion from serving at an unafliated 

bank with total assets of $1.5 billion. On October 10, 

2019, the FDIC, FRB, and OCC fnalized a rule to 

increase both lower and upper thresholds to $10 billion. 

Tus, only banks above the threshold are required to 

seek an exemption to permit a prohibited management 

interlock. 

Supplementary Leverage Ratio 

In November 2019, the FDIC approved a fnal rule for 

custodial banking organizations, pursuant to Section 402 

of EGRRCPA, which amends the Supplementary Leverage 

Ratio of the regulatory capital rule. Te fnal rule allows 

large banking organizations predominantly engaged 

in custody, safekeeping, and asset-servicing activities 

to exclude certain central bank deposits from total 

leverage exposure when calculating their supplementary 

leverage ratio. 

High Volatility Commercial Real Estate 

In November 2019, the FDIC approved a fnal rule to 

revise the risk-based capital defnition for high volatility 

commercial real estate (HVCRE) loans, which are a subset 

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MANAGEMENT'S DISCUSSION AND ANALYSIS

 

 

 

of acquisition, development, and construction loans. Te 

fnal rule implements the changes outlined in Section 

214 of EGRRCPA and provides interpretation on certain 

aspects of the HVCRE exposure defnition. Te fnal 

rule also addresses the public comments received on a July 

2019 interagency proposal that clarifes whether certain lot 

development loans qualify for the 1-4 family exemption. 

Derivatives 

In November 2019, the FDIC, FRB, and OCC approved 

the Standardized Approach for Counterparty Credit Risk 

(SA-CCR) fnal rule. Te framework provided in the 

SA-CCR fnal rule is required for banking organizations 

subject to the advanced approaches, but other institutions 

may elect to use it. Te SA-CCR fnal rule amends the 

regulatory capital rule and implements a new approach for 

calculating the exposure amount for derivative contracts. 

Specifcally, the fnal rule implements a new framework 

for calculating derivatives’ exposure at default, in addition 

to the previously available Current Exposure Method 

and Internal Models Method (IMM). Te fnal rule also 

amends capital requirements associated with the IMM, 

bank exposures to central counterparties, and the leverage 

ratio to the degree they are impacted, and introduces a 

number of derivatives-related technical amendments. 

In November 2019, the FDIC, FRB, OCC, Federal 

Housing Finance Agency (FHFA), and Farm Credit 

Administration (FCA) published a proposed rule that 

would amend the swap margin rule, which establishes 

capital and margin requirements for non-cleared swaps. 

Specifcally, the proposal would: 

♦ Preserve the status quo for legacy swaps transferred to 

or by a covered swap entity in the event of the U.K. 

withdrawal from the E.U. without a Withdrawal 

Agreement (i.e., Brexit); 

♦ Preserve the status quo for legacy swaps amended as 

part of the London Inter-bank Ofered Rate (LIBOR) 

transition; 

♦ Modify inter-afliate margin treatment to repeal 

initial margin requirements but retain the variation 

margin requirements; and 

♦ Extend the compliance period for certain smaller 

counterparties and clarifes the existing trading 

documentation requirements in the swap 

margin rule. 

Ofce of Trift Supervision Regulations 

Te FDIC also streamlined and clarifed certain 

regulations through the Ofce of Trift Supervision 

(OTS) rule integration process. Under Section 316(b) of 

the Dodd-Frank Act, former OTS rules remain in efect 

“until modifed, terminated, set aside, or superseded in 

accordance with applicable law” by the relevant successor 

agency, a court of competent jurisdiction, or operation 

of law. When the FDIC republished the transferred 

OTS regulations as new FDIC regulations applicable to 

state savings associations, the FDIC stated in the Federal 

Register notice that its staf would evaluate the transferred 

OTS rules and might later recommend incorporating them 

into other FDIC rules, amending them, or rescinding 

them. Tis process began in 2013 and continues, 

involving publication in the Federal Register of a series of 

NPRs and fnal rules. 

In June 2019, the FDIC removed a transferred rule 

regarding lending and investment that is duplicative 

of standards in existing FDIC regulations. Te fnal 

rulemaking also removed rules related to the registration 

of residential mortgage loan originators in light of Title X 

of the Dodd-Frank Act, which transferred this authority 

to the CFPB. In November 2019, the FDIC removed 

transferred rules regarding the maintenance of depositrelated records and, in December 2019, removed the 

transferred rules regarding regulatory reporting standards 

and accounting requirements and operations of state 

savings associations. Te fnal rulemaking also made 

conforming amendments to existing FDIC regulations 

so that all FDIC-supervised institutions would follow 

substantially the same regulations and guidance regarding 

their operation. Staf will continue to review the 

remaining six transferred regulations. 

INNOVATION/FINANCIAL 

TECHNOLOGY 

Te FDIC continuously monitors developments in 

technology to better understand how it may afect the 

fnancial industry. 

FinTech and the Future of 

Banking Conference 

In April 2019, the FDIC and Duke University’s Fuqua 

School of Business and Innovation and Entrepreneurship 

Initiative jointly sponsored the Fintech and the Future of 

28 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

Treasury Secretary Steven Mnuchin and FDIC Chairman McWilliams in 

discussion at the April 2019 Fintech and the Future of Banking Conference. 

Banking conference. Te event drew broad interest from 

representatives of banks, nonbanks, technology service 

providers, federal regulatory and other government 

agencies, Congress, nonproft organizations, and research 

institutions, with approximately 275 people in attendance. 

Treasury Secretary Steven Mnuchin and FDIC 

Chairman Jelena McWilliams opened the conference 

with a conversation about the role of fnancial technology 

and innovation in banking, and Comptroller of the 

Currency Joseph M. Otting followed with a discussion 

of fntech from a regulatory perspective. Troughout 

the conference, prominent academic experts presented 

highlights from research focused on technology’s impact 

on lending, fnancial advice, and competition alongside 

the perspectives of senior leaders in policy and industry. 

Separate policy discussions also explored the topics of 

regulatory innovation and fntech funding. 

FDiTech and FDIC Emerging 

Technology Steering Committee 

In 2019, Chairman McWilliams established the 

FDIC Tech Lab, or FDiTech. Te FDIC is currently 

seeking a Chief Innovation Ofcer to lead this new 

ofce, and has worked over the last year to establish 

a concept of operations to support engagement with 

stakeholders and innovative approaches to technology 

development to support the FDIC and the fnancial 

services industry. Trough these eforts, FDiTech will 

focus on its mission to: 

♦ Engage bankers, fntechs, technologists, and other 

regulators on innovations that will lay the foundation 

for banking’s future; 

♦ Conduct “tech sprints” and pilot projects to test 

emerging technologies in cooperation with states and 

afected federal regulators; 

♦ Support and promote the adoption of new 

technologies by fnancial institutions, particularly at 

community banks; and 

♦ Expand banking services to the unbanked, 

underbanked, and individuals in underserved 

communities through new technologies. 

In addition to FDiTech, the FDIC’s Emerging Technology 

Steering Committee has provided focused resources on 

the importance of technology on the fnancial services 

landscape. Te committee is comprised of the Directors 

of RMS, DCP, Division of Insurance and Research 

(DIR), Division of Resolutions and Receiverships (DRR), 

and Division of Complex Institution Supervision and 

Resolution, as well as the General Counsel, the Chief 

Risk Ofcer, the Chief Financial Ofcer and the Chief 

Information Ofcer. 

In 2019, the Emerging Technology Steering Committee 

continued work on its established objectives: 

♦ Comprehend, assess, and monitor the current 

emerging technology activities, risks, and trends; 

♦ Evaluate the projected impact to the banking system, 

the deposit insurance system, efective regulatory 

oversight, economic inclusion, and consumer 

protection; 

♦ Oversee internal working groups monitoring 

particular aspects of emerging technology; 

♦ Recommend follow-up actions, as appropriate, and 

monitor implementation; and 

♦ Help formulate strategies to respond to opportunities 

and challenges presented by emerging technology, 

and to ensure developments align with regulatory 

goals. 

Te FDIC also participates on several working groups 

related to fnancial technology: 

♦ Te Basel Committee on Banking Supervision’s Task 

Force on Financial Technology, which focuses on the 

impact of fnancial technology on banks’ business 

models, risk management, and implications for bank 

supervision; 

♦ Te Financial Stability Oversight Council (FSOC) 

Digital Assets Working Group, which is examining 

29 
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Te 19th Annual Bank Research Conference featured a poster session with 

six additional papers. Here, an attendee listens to a researcher as he describes 

his project. 

potential policy areas as they relate to digital assets 

and the application of distributed ledger technology; 

♦ An interagency fntech discussion forum, which 

focuses on issues related to consumer compliance; 

♦ Te Global Financial Innovation Network, which 

seeks to provide a more efcient way for innovative 

frms to interact with regulators, helping them 

navigate between countries as they look to scale 

new ideas; 

♦ Te US-UK Financial Innovation Partnership, which 

focuses on regulatory and commercial engagements 

by encouraging collaboration in the private sector, 

sharing information and expertise about regulatory 

practices, and promoting growth and innovation; and 

♦ Te Financial Stability Board Financial Innovation 

Network, which looks at FinTech innovations from 

the perspective of fnancial stability. 

Center for Financial Research 

Te FDIC’s Center for Financial Research (CFR) 

encourages, supports, and conducts innovative research 

on topics that inform the FDIC’s key functions of deposit 

insurance, supervision, and the resolution of failed banks. 

CFR researchers published papers in leading banking, 

fnance, and economics journals, including the American 

Economic Review, the Review of Economic Dynamics, and 

Te Journal of Law and Economics. In addition, CFR 

researchers presented their research at major conferences, 

regulatory institutions, and universities. 

Te CFR also developed and maintained many fnancial 

models used throughout the FDIC, including of-site 

models that inform the examination process. CFR 

economists also provided ongoing support to RMS 

through on-site examinations. 

In September 2019, the CFR and the Journal of Financial 

Services Research jointly sponsored the 19th Annual Bank 

Research Conference. FDIC Chairman McWilliams 

kicked-of the conference by highlighting the importance 

of scholarly research in providing a solid foundation on 

which to make good public policy. Te conference has 

become a premier forum in its feld. 

Conference organizers received more than 400 submissions 

for the 25 available presentation slots, and approximately 

200 participants attended. Discussion sessions focused 

on capital regulation, the efect of regulation on banks, 

deposit insurance, resolution of failed banks, liquidity 

regulation, systemic risk, fntech, and leveraged lending, 

among other topics. 

COMMUNITY BANKING 

INITIATIVES 

Community banks provide traditional, relationship-based 

banking services in their local communities, and as the 

primary federal supervisor for the majority of community 

banks, the FDIC has a particular responsibility for the 

safety and soundness of this segment of the banking 

system. 

As defned for FDIC research purposes, community banks 

made up 92 percent of all FDIC-insured institutions at 

mid-year 2019. While these banks hold just 12 percent of 

banking industry assets, community banks are of critical 

importance to the U.S. economy and local communities 

across the nation. Tey hold 41 percent of the industry’s 

small loans to farmers and businesses, making them the 

lifeline to entrepreneurs and small enterprises of all types. 

Tey hold the majority of bank deposits in U.S. rural 

counties and micropolitan counties with populations up to 

50,000. In fact, as of June 2019, community banks held 

more than 75 percent of deposits in more than 1,200 U.S. 

counties. In more than 600 of these counties, the only 

banking ofces available to consumers were those operated 

by community banks. 

30 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

 

 

Community Banking Research 

Te FDIC pursues an ambitious, ongoing agenda of 

research and outreach focused on community banking 

issues. Since the 2012 publication of the FDIC 

Community Banking Study, FDIC researchers have 

published more than a dozen additional studies on topics 

ranging from small business fnancing to the factors that 

have driven industry consolidation over the past 30 years. 

Te FDIC Quarterly Banking Profle (QBP) includes 

a section focused specifcally on community bank 

performance, providing a detailed statistical picture of 

the community banking sector that can be accessed by 

analysts, other regulators, and bankers themselves. Te 

most recent report shows that net income at community 

banks continued to grow at a healthy annual rate in the 

frst nine months of 2019. 

Te long-term trend of consolidation has done little to 

diminish the role of community banks in the banking 

industry. Just over 71 percent of the community banks 

that merged during the period September 2018 through 

September 2019 were acquired by other community 

banks. On a merger-adjusted basis, loan growth at 

community banks exceeded growth at noncommunity 

banks in every year between 2012 and 2019. (See the 

chart below.) From June 2018 to June 2019, currently 

operating noncommunity banks closed far more ofces 

than they acquired. In contrast, currently operating 

community banks acquired ofces and opened more 

ofces, on net, during the year. (See the table on the 

following page.) 

Community Bank Advisory Committee 

Te FDIC’s CBAC is an ongoing forum for discussing 

current issues and receiving valuable feedback from the 

industry. Te committee, which met three times during 

2019, is composed of as many as 18 community bank 

executives from around the country. It is a valuable 

resource for information on a wide range of topics, 

including examination policies and procedures, capital 

and other supervisory issues, credit and lending practices, 

deposit insurance assessments and coverage, and regulatory 

compliance issues. 

COMMUNITY BANK LOAN GROWTH HAS OUTPACED 

NONCOMMUNITY BANK LOAN GROWTH 

FOR EIGHT CONSECUTIVE YEARS 

Merger Adjusted Annual Growth in Total Loans and Leases 

Source: FDIC. 

Note: Data as of third quarter for 2019, data as of year-end for all other years. 

-10

-5

0

5

10

15

-8.9% 

2006 2016

11.2% 

7.0% 

9.5% 9.3% 

-2.1% 

-0.3% 

-2.3% 

2.1% 

-0.9% 

2.0% 

3.4%2.9% 

5.0% 

2.1% 

8.6% 

4.7% 

8.6% 

6.0% 

3.9% 

7.7% 

4.1% 

6.5% 

4.4% 

6.0% 

2007 2008 2009 2010 2011 

Community Banks 

Noncommunity Banks 

2012 2014 2015 2017 2018 2019 2013 

10% 

0% 

-5% 

5% 

15% 

-10% 

9.0% 8.3% 

4.8% 

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COMMUNITY BANKS ADDED OFFICES WHILE NONCOMMUNITY BANKS 

CLOSED OFFICES FROM JUNE 2018 TO JUNE 2019 

Offices of 

CurrentlyOperating 

Banks in 

June 2018 

Offices of 

Acquired 

Banks 

Number of 

Offices in 

June 2018 

(Mergeradjusted) 

New 

Offices 

Opened 

Offices 

Closed 

Net Offices 

Purchased 

or Sold 

Number of 

Offices in 

June 2019 

Community Banks 29,092 518 29,610 628 401 26 29,863 

Noncommunity Banks 56,990 1,426 58,416 498 2,387 -26 56,501 

TOTAL 86,082 1,944 88,026 1,126 2,788 0 86,364 

Source: FDIC Summary of Deposits Data as of June 2019 

At each of the 2019 Advisory Committee meetings, 

there was a discussion of local banking conditions, an 

update from the FDIC Ombudsman, a supervisory policy 

update, and an update on the Supervision Modernization 

Subcommittee. Further, at the March meeting, 

representatives from FinCEN provided a briefng on the 

use of bank flings required by the BSA, and FDIC staf 

discussed the 2017 FDIC National Survey of Unbanked 

and Underbanked Households. At the July 2019 meeting, 

discussion included FDIC and U.S. Small Business 

Administration (SBA) collaboration eforts; the FDIC’s 

Money Smart fnancial education materials; and fndings 

of the 2019 research study, Minority Depository Institutions: 

Structure, Performance, and Social Impact. At the October 

2019 meeting, FDIC staf also discussed the 2019 Risk 

Review, current fnancial performance of community 

banks, small bank assessment credits, and tools and 

resources relating to Opportunity Zones. 

Supervision Modernization Subcommittee 

In 2019, the FDIC established the Subcommittee on 

Supervision Modernization to support the CBAC. Te 

subcommittee, which met three times during 2019, is 

composed of individuals from technology frms, academia, 

and banks.  Te subcommittee considered how the FDIC 

can leverage technology and refne processes to make the 

examination program more efcient, as well as manage 

and train a geographically dispersed workforce. 

As part of the subcommittee, a working group reviewed 

workfows of the consumer compliance and risk 

management examination processes from planning an 

examination through conducting examination completion 

activities, while identifying concerns and opportunities for 

improvement in the current processes. At the September 

2019 meeting, the working group considered the types 

of data used and data availability in presenting their 

recommendations to subcommittee members. 

Te subcommittee is evaluating recommendations to 

explore technology solutions that would use advanced 

data analytics in loan reviews, update and enhance 

several existing software platforms, expand the learning 

and development experience to include a virtual learning 

environment for the current and future examination 

workforce, and evaluate hiring specialists to examine 

advanced data analytics and new technology that exists 

today. Te subcommittee will make its recommendations 

to the CBAC early in 2020. 

MDI Subcommittee 

As noted in the “Minority Depository Institutions 

Activities” section, the FDIC established a new MDI 

Subcommittee of the CBAC to bring forward the 

perspectives of minority bankers and to focus on the 

issues, tools, and resources that are unique to MDIs. 

De Novo Banks 

Troughout 2019, the FDIC continued multiple initiatives 

aimed at streamlining the deposit insurance application 

process. Based on feedback received in response to a 

2018 Request for Information and a nationwide series of 

six roundtable events, the FDIC clarifed that applicants 

need not identify a specifc location for the proposed 

institution’s main ofce or all senior executive ofcers at 

the time an application is submitted. Tese changes can 

signifcantly reduce the costs of the application process, 

while not impeding the FDIC’s review of the application 

or the public’s ability to comment on the application. 

In addition, after revising the process for reviewing 

deposit insurance proposals to provide initial feedback 

to organizers on draft applications prior to submission, 

the FDIC began engaging in more fulsome pre-fling 

discussions with organizers. 

32 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

Te FDIC also updated its delegations of authority so 

that the vast majority of deposit insurance applications 

for traditional community banks can be approved at the 

Regional Ofce level without requiring input from the 

Washington Ofce. Consistent with the FDIC’s updated 

timeframes and guidelines, Regional Ofces should issue 

most decisions on deposit insurance applications for 

traditional community banks within 120 days from receipt 

of a substantially complete application. 

To help organizers through the application process, 

the FDIC issued updated versions of its Applying for 

Deposit Insurance – A Handbook for Organizers of De 

Novo Institutions, and Deposit Insurance Applications 

Procedures Manual, and released a supplement to FDIC 

procedures to address non-community and nonbank 

deposit insurance proposals. Te handbook addresses 

organizers’ informational needs, and ofers information for 

navigating the application process. Te manual provides 

comprehensive instructions to staf regarding the deposit 

insurance application process. 

Te FDIC also updated and publicly issued its Applications 

Procedures Manual, which includes an overview section 

that conveys important instructions regarding the review 

and processing of deposit insurance applications and 

other types of flings. Tis information should also prove 

helpful to organizers as they consider and develop a fling. 

Technical Assistance Program 

As part of the Community Banking Initiative, the FDIC 

continued to provide a robust technical assistance program 

for bank directors, ofcers, and employees. Te technical 

assistance program includes Directors’ College events held 

across the country, industry teleconferences and webinars, 

and a video program. 

In 2019, to better understand the needs of community 

banks, the FDIC issued a Request for Information seeking 

feedback on the FDIC’s methods and eforts to provide 

technical assistance. Te FDIC requested information 

on additional steps the agency could take to support 

efective management and operation of FDIC-supervised 

institutions through technical assistance and collaboration 

on safety and soundness and consumer compliance 

matters. Te agency received 18 responses. Responses 

afrmed the value of the technical assistance videos, 

commented favorably on a pilot topic-based resource 

page for bankers, and provided valuable suggestions 

for webinars and teleconferences. Based in part on the 

feedback received, the FDIC expects to announce several 

new or revised technical assistance initiatives in 2020. 

In 2019, the FDIC hosted Directors’ College events in fve 

of its six regions. Tese events were typically conducted 

jointly with state trade associations, and addressed 

issues such as corporate governance, regulatory capital, 

community banking, concentrations management, 

consumer protection, BSA, and interest-rate risk, among 

other topics. 

Te FDIC also ofers a series of banker events, in order 

to maintain open lines of communication and to keep 

bank management and staf informed regarding 

important banking regulatory and emerging issues of 

interest to community bankers. In 2019, the FDIC 

ofered 14 teleconferences or webinars focused on the 

following topics: 

♦ Understanding Reasonably Expected Market Area 

(REMA) and Community Reinvestment Act (CRA) 

Assessment area, 

♦ Liquidity and funding risk management, 

♦ Current Expected Credit Losses (CECL) accounting 

methodology, 

♦ Te impact of rising interest rates on asset/liability 

management, 

♦ Money Smart for Small Businesses, 

♦ Regulatory and accounting update, 

♦ Common exam fndings, 

♦ Update on consumer compliance and CRA, 

♦ Information sharing on standardized export of 

imaged loan documents, 

♦ Building collaboration between fnancial institutions 

and law enforcement to prevent and address elder 

fnancial abuse, 

♦ Understanding and mitigating RESPA Section 

8(a) risks, 

♦ Understanding the requirements of the Truth 

In Lending Act (Regulation Z) and Real Estate 

Settlement Procedures Act (Regulation X) Integrated 

Disclosure Rule (TRID Rule), 

♦ Final Private Flood Insurance Rule (along with the 

OCC, FRB, and FCA), and 

♦ Fair Lending interagency webinar. 

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Economic Growth and Regulatory 

Paperwork Reduction Act 

EGRPRA directs the federal banking agencies and the 

FFIEC to conduct a joint review of regulations every 10 

years to determine whether any of those regulations are 

outdated or unnecessary. 

In March 2017, the FFIEC submitted a report to Congress 

describing actions the member entities had already taken 

to address comments received during the EGRPRA 

process as well as actions they planned to take in the 

future. During 2019, the FDIC along with the other 

FFIEC member entities, continued to work together to 

reduce burden in the areas of Capital Simplifcations, 

Management Interlocks, and OTS Regulations, which 

were raised during the EGRPRA review process. 

ACTIVITIES RELATED TO 

LARGE AND COMPLEX 

FINANCIAL INSTITUTIONS 

Te FDIC is committed to addressing the unique 

challenges associated with the supervision, insurance, 

and potential resolution of large and complex fnancial 

institutions (LCFIs). Te agency’s ability to analyze 

and respond to risks in these institutions is particularly 

important, as they comprise a signifcant share of banking 

industry assets and deposits. In order to centralize 

and integrate the FDIC’s operations related to the 

supervision and resolution of large and complex fnancial 

institutions, including systemically important fnancial 

institutions (SIFIs), fnancial market utilities (e.g., 

central counterparties), and all FDIC-insured depository 

institutions with assets above $100 billion for which the 

FDIC is not the primary federal regulatory authority, 

the FDIC’s Chairman formed the Division of Complex 

Institution Supervision and Resolution (CISR) efective 

July 21, 2019. At CISR’s inception, the then–Ofce of 

Complex Financial Institutions (OCFI), RMS, and DRR 

transferred to CISR all branches having responsibility for 

supervision and monitoring and resolution planning and 

execution for LCFIs in the CISR portfolio. 

Te FDIC’s Complex Financial Institution (CFI) Group 

and Large Bank Supervision Branch, now both within 

CISR, perform ongoing risk monitoring of Global 

Systemically Important Banks (G-SIBs), large Foreign 

Banking Organizations (FBOs), and FSOC-designated 

nonbank fnancial companies; provide backup supervision 

of the frms’ related IDIs; and evaluate the frms’ required 

resolution plans. Te CFI Group also performs certain 

analyses that support the FDIC’s role as an FSOC 

member. 

Resolution Plans – Title I Living Wills 

In 2018, the EGRRCPA revised the application of 

resolution planning requirements by raising the $50 billion 

asset threshold to $250 billion, and provided the FRB with 

discretion to apply resolution planning requirements to 

frms with $100 billion or more and less than $250 billion 

in total consolidated assets. 

In November 2019, the FDIC and FRB published a 

fnal rule to implement EGRRCPA by establishing three 

categories of frms for purposes of resolution planning: 

(1) U.S. and foreign banking organizations with $250 

billion or more in total consolidated assets, (2) U.S. 

banking organizations identifed as U.S. G-SIBs, and 

(3) any designated nonbank fnancial companies that the 

FSOC has determined under section 113 of the DoddFrank Act should be supervised by the FRB. 

In the resolution plan rule, the FRB determined to 

exercise its discretion under EGRRCPA to apply resolution 

planning requirements to the following frms: 

♦ U.S. bank holding companies with a) average total 

consolidated assets equal to $100 billion or more 

and less than $250 billion and b) $75 billion or more 

in any of the following risk-based indicators: crossjurisdictional activity, total nonbank assets, weighted 

short-term wholesale funding, or of-balance sheet 

exposure; and 

♦ Foreign banking organizations with a) total global 

assets equal to $100 billion or more and less than 

$250 billion, b) average combined U.S. assets equal 

to $100 billion or more, and c) $75 billion or more in 

any of the four risk-based indicators measured based 

on combined U.S. operations. 

Te fnal rule uses categories established by the agencies’ 

tailoring rule to separate frms into three fling groups for 

the purpose of calibrating the timing of resolution plan 

submissions, and plan content. 

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Large Bank Holding Companies with 

Substantial Nonbank Assets 

Te eight domestic G-SIBs—Bank of America 

Corporation, Bank of New York Mellon Corporation, 

JPMorgan Chase & Co., State Street Corporation, Wells 

Fargo & Company, Goldman Sachs Group, Inc., Morgan 

Stanley, and Citigroup, Inc.—submitted resolution plans 

on or before July 1, 2019. On December 17, 2019, the 

FDIC and FRB issued letters to the eight frms providing 

their review fndings and information about areas where 

additional work needs to be done to improve resolvability. 

On July 26, 2019, the agencies extended the next full 

resolution plan submission date for four of the FBOs— 

Barclays PLC, Credit Suisse Group AG, Deutsche Bank 

AG, and UBS AG—to July 21, 2021. Tese banks 

remain required to submit limited plans by July 1, 2020, 

describing how they have addressed the shortcomings 

identifed in December 2018 and providing updates 

concerning certain resolution projects. 

Other Large Bank Holding Company Filers 

In December 2018, 82 foreign-based banking 

organizations submitted resolution plans. In July 2019, 

the FDIC, jointly with the FRB, provided feedback and 

extensions of the next due date for resolution plans to July 

2021. At the same time, 15 domestic frms also received 

extensions to July 2021. Tese extensions will give the 

banks additional time to prepare their plans in light of 

resolution plan rule changes proposed by the agencies in 

April 2019. 

Insured Depository Institution 

Resolution Plans 

Section 360.10 of the FDIC Rules and Regulations 

requires an IDI with total assets of $50 billion or more, to 

periodically submit to the FDIC a plan for its resolution 

in the event of its failure (the “IDI rule”). Te IDI 

rule requires covered IDIs to submit a resolution plan 

that would allow the FDIC, as receiver, to resolve the 

institution under Sections 11 and 13 of the FDI Act in 

an orderly manner that enables prompt access to insured 

deposits, maximizes the return from the sale or disposition 

of the failed IDI’s assets, and minimizes losses realized 

by creditors. Te resolution plan must also describe how 

a proposed strategy will be least costly to the Deposit 

Insurance Fund. 

Forty-one large insured banks covered by the IDI rule 

submitted their resolution plans by July 1, 2018. In April 

2019, the FDIC issued an ANPR seeking comments on 

ways to tailor the IDI rule requirements and deferred 

future IDI Plan submissions until the completion of 

revisions to the rule. 

Monitoring and Measuring 

Systemic Risks 

Te FDIC monitors risks related to G-SIBs and large 

FBOs at the frm level and industry wide to inform 

supervisory planning and response, policy and guidance 

considerations, and resolution planning eforts. As part 

of this monitoring, the FDIC analyzes each company’s 

risk profle, governance and risk management capabilities, 

structure and interdependencies, business operations and 

activities, management information system capabilities, 

and recovery and resolution capabilities. 

Te FDIC continues to work closely with the other federal 

banking agencies to analyze institution-specifc and 

industry-wide conditions and trends, emerging risks and 

outliers, risk management, and the potential risk posed 

to fnancial stability by G-SIBs and large FBOs and large 

nonbank fnancial companies. To support risk monitoring 

that informs supervisory and resolution planning eforts, 

the FDIC has developed systems and reports that make 

extensive use of structured and unstructured data. 

Monitoring reports are prepared on a routine and adhoc basis and cover a variety of aspects that include risk 

components, business lines and activity, market trends, 

and product analysis. 

Additionally, the FDIC has implemented and continues 

to expand upon various monitoring systems, including 

the Systemic Monitoring System (SMS) and the SIFI 

Risk Report (SRR). Te SMS provides an individual risk 

profle and assessment for each G-SIB and large FBO by 

evaluating the level and change in metrics that serve as 

important indicators of overall risk. Te SMS supports 

the identifcation of emerging and outsized risks within 

individual frms and the prioritization of supervisory and 

monitoring activities. Te SMS also serves as an early 

warning system of fnancial vulnerability. Information 

from SMS and other FDIC-prepared reports is used to 

prioritize activities relating to SIFIs and to coordinate 

supervisory and resolution-related activities with the other 

banking agencies. Te SRR identifes key vulnerabilities 

of systemically important frms, gauges the proximity 

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of these frms to a resolution event, and independently 

assesses the appropriateness of supervisory CAMELS 

ratings for the insured deposit institutions held by 

these frms. 

Te FDIC also conducts semi-annual “Day of Risk” 

meetings to present, discuss, and prioritize the review of 

emerging risks. In some cases, these discussions can lead 

to shifts in supervisory focus or priorities. 

Back-up Supervision Activities for 

IDIs of Systemically Important 

Financial Institutions 

Risk monitoring is enhanced by the FDIC’s back-up 

supervision activities. In its back-up supervisory role, 

as outlined in Sections 8 and 10 of the FDI Act, the 

FDIC has expanded resources and has developed and 

implemented policies and procedures to guide back-up 

supervisory activities. Tese activities include performing 

analyses of industry conditions and trends, supporting 

insurance pricing, participating in supervisory activities 

with other regulatory agencies, and exercising examination 

and enforcement authorities when necessary. 

At institutions where the FDIC is not the primary federal 

regulator, FDIC staf work closely with other regulatory 

authorities to identify emerging risks and assess the overall 

risk profle of large and complex institutions. Te FDIC 

has assigned dedicated staf to IDIs of G-SIBs and large 

FBOs and certain other large IDIs to enhance riskidentifcation capabilities and facilitate the communication 

of supervisory information. Tese individuals work with 

the staf of the FRB and OCC in monitoring risk at their 

assigned institutions. 

Trough December 2019, FDIC staf participated in 117 

targeted examination activities with the FRB or OCC 

in G-SIBS, large FBOs, and large regional banks. Te 

reviews included, but were not limited to, engagement 

in the evaluation of corporate governance, BSA/AML 

compliance, credit risk, model risk management, market 

risk, interest rate risk, capital adequacy, asset management, 

and third party risk management. FDIC staf also 

participated in various interagency horizontal review 

activities, including the FRB’s Comprehensive Capital 

Analysis and Review, Comprehensive Liquidity Analysis 

and Review, as well as reviews of model risk management, 

risk appetite and risk limits, and cyber and operational 

resiliency. 

Title II Orderly Liquidation Authority 

Under the Dodd-Frank Act, failed or failing fnancial 

companies are expected to fle for reorganization or 

liquidation under the U.S. Bankruptcy Code, similar to 

what any failed or failing nonfnancial company would 

fle. If resolution under the Bankruptcy Code would result 

in serious adverse efects to U.S. fnancial stability, Title 

II of the Dodd-Frank Act provides a back-up authority 

for resolving a company for which the bankruptcy process 

is not viable. Tere are strict parameters on the use of 

the Title II Orderly Liquidation Authority, however, 

and it can only be invoked under a statutorily prescribed 

recommendation and determination process, coupled with 

an expedited judicial review process. 

Resolution Strategy Development 

Te FDIC has undertaken institution-specifc strategic 

planning to carry out its orderly liquidation authorities 

with respect to the largest G-SIBs operating in the 

United States. Te strategic plans and optionality being 

developed for these frms are informed by the Title 

I plan submissions. Further, the FDIC is updating 

its systemic resolution framework to incorporate 

enhanced frm capabilities established through the 

Title I planning process and other domestic and foreign 

resolution planning and policy developments. Te 

FDIC continues to build out process documents to 

facilitate the implementation of a Title II resolution. In 

addition, work continues in the development of resolution 

strategies for fnancial market utilities, particularly central 

counterparties (CCPs). 

Cross-Border Eforts 

Cross-border cooperation and advance planning are 

critical components of resolution planning for G-SIBs 

due to the international nature of their services and 

their extensive operations overseas. In 2019, the FDIC 

continued its robust engagement with foreign authorities 

to deepen mutual understanding of the complex legal 

and operational issues related to cross-border resolution. 

Tis work is underpinned by an understanding that 

transparency and confdence in resolution planning will 

serve as a stabilizing force during times of stress. 

Te FDIC continued to enhance cooperation on crossborder resolution through institution specifc engagement 

as well as through bilateral and multilateral outreach, 

including through international forums such as the 

36 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

Financial Stability Board’s Resolution Steering Group and 

its subgroups on banks, insurance, and fnancial market 

infrastructures. 

With regard to the FDIC’s institution specifc engagement, 

the FDIC co-chaired cross-border crisis management 

groups (CMGs) of supervisors and resolution authorities 

for U.S. G-SIBs and participated as a host authority in 

CMGs for foreign G-SIBs. Tis year, as part of the CMG 

work for U.S. G-SIBs, FDIC and FRB staf launched a 

pilot workshop to provide additional background to host 

CMG members regarding the U.S. bankruptcy framework 

and resolution under Title II of the Dodd-Frank Act. 

Tese CMG eforts improve resolution preparedness 

by strengthening our working relationships with key 

authorities, providing a forum to share institution-specifc 

concerns and plans for the resolution, and supporting 

information-sharing arrangements. 

Te FDIC continued its bilateral and multilateral 

outreach through ongoing resolution-related dialogues 

with key foreign counterparts. In April 2019, the FDIC 

hosted senior ofcials representing resolution, regulatory, 

and supervisory authorities; central banks; and fnance 

ministries from the U.S., U.K., and the European Banking 

Union for a planned exercise to enhance understanding 

of one another’s resolution regimes and strengthen 

coordination on cross-border resolution. Tis meeting 

built upon two prior trilateral exercises in 2014 and 

2016 and continued staf work across the jurisdictions 

is on-going. 

Te FDIC also participated in the joint U.S.-E.U. 

Financial Regulatory Forum meetings and the U.S.-U.K. 

Financial Regulatory Working Group meetings, discussing 

cross-border issues relevant to bank and CCP resolution 

and fnancial stability. Te FDIC also progressed 

resolution planning for CCPs by working with domestic 

and international supervisors and resolution authorities to 

understand risks and to try to identify resolution options 

for U.S. CCPs, in addition to working within international 

groups on related issues. 

Systemic Resolution Advisory 

Committee 

Te FDIC created the Systemic Resolution Advisory 

Committee (SRAC) in 2011 to receive advice and 

recommendations on a broad range of issues regarding the 

resolution of systemically important fnancial companies 

pursuant to the Dodd-Frank Act. 

Members of the SRAC have a wide range of experience, 

including managing complex frms, serving as bankruptcy 

judges, and working in the legal system, accounting feld, 

and academia. Te SRAC Charter was renewed in 2019. 

Planning continues for the next SRAC meeting, which is 

tentatively scheduled for the frst quarter of 2020. 

DEPOSITOR AND CONSUMER 

PROTECTION 

A major component of the FDIC’s mission is to ensure 

that fnancial institutions treat consumers and depositors 

fairly, and operate in compliance with federal consumer 

protection, anti-discrimination, and community 

reinvestment laws. Te FDIC also promotes economic 

inclusion to build and strengthen positive connections 

between insured fnancial institutions and consumers, 

depositors, small businesses, and communities. 

Promoting Economic Inclusion 

Te FDIC is strongly committed to promoting access 

to a broad array of responsible and sustainable banking 

products to meet consumers’ fnancial needs. In support 

of this goal, the FDIC: 

♦ Conducts research on unbanked and underbanked 

populations; 

♦ Researches strategies, products, and services that 

banks can use to meet the needs of lower-income 

consumers; 

♦ Supports partnerships to promote consumer access to 

and use of banking services; 

♦ Advances fnancial education and literacy; and 

♦ Facilitates partnerships to support community and 

small business development. 

Advisory Committee on Economic Inclusion 

Te Advisory Committee on Economic Inclusion 

(ComE-IN) provides the FDIC with advice and 

recommendations on important initiatives to expand 

access to mainstream banking services to underserved 

populations. Tis includes reviewing basic retail fnancial 

services (e.g., low-cost, SAFE transaction accounts; 

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MANAGEMENT'S DISCUSSION AND ANALYSIS

Appalachia Working Group members. 

afordable small-dollar loans; and savings accounts), as 

well as demand-side factors such as consumers’ perceptions 

of mainstream fnancial institutions. In October 2019, 

the ComE-IN held a meeting that included discussions 

of opportunities to engage underserved populations, an 

update on mortgage markets, and developments with the 

potential to expand access to consumer credit. 

FDIC National Survey of Unbanked and 

Underbanked Households and Related Research 

As part of its ongoing commitment to expanding 

economic inclusion in the United States, the FDIC works 

to fll the research and data gap regarding household 

participation in mainstream banking and the use of 

nonbank fnancial services. In addition, Section 7 of 

the Federal Deposit Insurance Reform Conforming 

Amendments Act of 2005 mandates that the FDIC 

regularly report on underserved populations and 

bank eforts to bring individuals and families into the 

mainstream banking system. In response, the FDIC 

regularly conducts and reports on surveys of households 

and banks to inform the public and enhance the 

understanding of fnancial institutions, policymakers, 

regulators, researchers, academics, and others. 

In 2019, the FDIC fnalized and administered the 2019 

FDIC National Survey of Unbanked and Underbanked 

Households. Tis version of the survey includes revisions 

intended to improve data quality by streamlining the 

survey instrument and provide additional insights into the 

experiences of unbanked and underbanked consumers. 

Te FDIC continued to maintain a dedicated website at 

https://economicinclusion.gov, that features survey results 

and data, and provides users with the ability to generate 

custom tabulations and access a wide range of preformatted information, including new fve-year estimates 

that provide additional granularity for state and 

local results. 

Public Awareness of Deposit 

Insurance Coverage 

An important part of the FDIC’s deposit insurance 

mission is to ensure that bankers and consumers have 

access to accurate information about the FDIC’s rules for 

deposit insurance coverage. Te FDIC has an extensive 

deposit insurance education outreach program consisting 

of seminars for bankers, a web-based calculator for 

estimating deposit insurance coverage as well as written 

and other web-based resources targeted to both bankers 

and consumers. For example, bankers and consumers 

can use the FDIC’s BankFind tool to verify whether a 

website is operated by a legitimate FDIC-member bank. 

Trough December 31, 2019, the FDIC identifed and 

took appropriate action on more than 65 websites, some 

of which included the Member FDIC logo but were not 

operated by FDIC-member banks. 

During 2019, the FDIC continued its eforts to educate 

bankers and consumers about the rules and requirements 

for FDIC insurance coverage. For example, as of 

December 31, 2019, the FDIC conducted four telephone 

seminars for bankers on deposit insurance coverage, 

reaching an estimated 4,725 bankers participating at 

38 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

 

 

    

approximately 1,350 bank sites throughout the country. 

Te FDIC also features deposit insurance training videos 

that are available on the FDIC’s website and YouTube 

channel. Additionally, the FDIC operated the Electronic 

Deposit Insurance Estimator (EDIE), which had 751,418 

user sessions in 2019. 

As of December 31, 2019, the FDIC Call Center received 

99,835 telephone calls, of which 25,365 were identifed 

as deposit insurance-related inquiries. In addition to 

telephone inquiries about deposit insurance coverage, the 

FDIC received 1,524 written inquiries from consumers 

and bankers. Of these inquiries, 99 percent received 

responses within two weeks, as required by corporate 

policy. 

Rulemaking and Guidance 

Loans in Areas Having Special Flood Hazards 

In February 2019, the FDIC, OCC, FRB, NCUA, and 

FCA issued a fnal private food insurance rule to amend 

regulations regarding Loans in Areas Having Special Flood 

Hazards pursuant to the Biggert-Waters Flood Insurance 

Reform Act (the B-W Act).4 

Te fnal rule requires regulated lending institutions to 

accept a private food insurance policy that meets both 1) 

the statutory defnition of “private food insurance,” and 

2) the mandatory purchase requirement. Te fnal rule 

includes a streamlined compliance aid provision to assist 

regulated lending institutions with evaluating policies. 

In addition, the fnal rule provides that institutions may 

accept private food insurance policies that do not meet 

the B-W Act’s criteria for mandatory acceptance, provided 

certain conditions are met, including that the policy (1) 

provides coverage in the amount required by the food 

insurance purchase requirement, (2) is issued by an insurer 

that is licensed, admitted, or not disapproved by a state 

insurance regulator, (3) covers both lenders and borrowers 

as loss payees, and (4) provides sufcient protection of 

the loan consistent with general safety and soundness 

principles, which is documented in writing. 

Furthermore, the fnal rule allows lending institutions 

to accept certain food coverages provided by mutual aid 

societies as long as certain conditions are met, including 

a determination by an institution’s primary supervisory 

agency that such policies meet the requirement for 

food insurance for purposes of federal food insurance 

legislation. 

Home Mortgage Disclosure Act 

In April 2019, the FDIC and other FFIEC members 

issued a revised version of A Guide to HMDA Reporting: 

Getting It Right. Te 2019 edition applies to 2019 HMDA 

data reported in 2020 and includes a summary of the 

EGRRCPA amendments to HMDA and the 2018 HMDA 

rule. Te guide was designed to help fnancial institutions 

better understand the HMDA requirements, including 

data collection and reporting provisions. 

Consumer Compliance Supervisory Highlights 

Te inaugural issue of the FDIC Consumer Compliance 

Supervisory Highlights was released in June 2019.  Te 

purpose of this publication is to enhance transparency 

regarding the FDIC’s consumer compliance supervisory 

activities.  Te publication includes a high-level overview 

of consumer compliance issues identifed during 2018 

through the FDIC’s supervision of state non-member 

banks and thrifts.  Additionally, this issue features articles 

of interest to examiners, bankers, and supervisors.  It 

provides examples that may be useful in mitigating risks 

and serves as a resource for supervised institutions to help 

stay up-to-date on issues identifed during examinations. 

Transparency and Accountability Report 

Te frst annual Transparency and Accountability Report was 

published in spring 2019. Tis report highlights the public 

outreach activities of the Consumer Response Center and 

Deposit Insurance section. It details consumer contacts 

about deposit insurance coverage and account-titling 

specifcs. It also references summary data on the various 

consumer contacts about operating fnancial institutions 

under FDIC jurisdiction. Te report focuses on the public 

interactions along with providing educational insight to 

the public. 

Additionally, metrics on requests from the public for 

FDIC assistance are updated and published monthly on 

the FDIC’s Transparency and Accountability webpage 

(https://www.fdic.gov/transparency/consumers.html). 

Included on the webpage is the volume of public inquiries 

and the timeliness in responding to those requests. 

4 84 FR 4953 (Feb. 20, 2019). 

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Updated Examination Procedures 

Updated examination procedures were communicated 

through revisions to the FDIC Consumer Compliance 

Examination Manual that is publicly available on the 

FDIC’s website, including procedures on: 

♦ Interagency Home Mortgage Disclosure Act 

Examination Procedures: Tese procedures 

incorporate amendments to HMDA made by the 

EGRRCPA, the 2018 HMDA rule, and amendments 

to Regulation C made by CFPB’s fnal rules issued 

in 2015 and 2017. Te procedures also incorporate 

the FFIEC HMDA Examiner Transaction 

Testing Guidelines. 

♦ Loans in Areas Having Special Flood Hazards: 

Tese procedures refect statutory and regulatory 

amendments made by the B-W Act and the agency’s 

fnal rule on private food insurance, including 

provisions pertaining to the mandatory and 

discretionary acceptance of private food insurance 

by fnancial institutions, and the qualifcation and 

acceptance of mutual aid society plans in satisfaction 

of the food insurance purchase requirement. 

♦ Protecting Tenants at Foreclosure Act: Tese 

procedures address the permanent reinstatement of 

the Protecting Tenants at Foreclosure Act (PTFA) 

due to the enactment of the EGRRCPA. Examiners 

will use the procedures in assessing the quality of 

an institution’s compliance management system 

regarding the PTFA, including notice requirements 

and the timing of eviction. 

♦ Fair Lending Scope and Conclusions Memorandum: 

Sections and questions of the memorandum were 

revised to refect changes to pre-examination 

interview questions and information requests made 

during the examination planning process. 

♦ Consumer Compliance Examinations and TirdParty Risk: Tese sections were updated to add 

information on the Interagency Statement Clarifying 

the Role of Guidance and make minor conforming 

technical changes. 

♦ Truth in Lending Act and Electronic Fund Transfer 

Act: Tese chapters were updated to incorporate the 

CFPB’s amendments to Regulation E and Regulation 

Z related to Prepaid Accounts, efective April 1, 

2019. Subsequently, the FDIC adopted the revised 

interagency examination procedures to incorporate 

these amendments. 

Community and Small Business 

Development and Affordable 

Mortgage Lending 

As of December 31, 2019, the FDIC engaged with banks 

and community organizations through more than 230 

outreach events. Tese events increased shared knowledge 

and supported collaboration between fnancial institutions 

and other community, housing, and small business 

development resources. 

Te FDIC’s work emphasized sharing information to 

support bank eforts to prudently provide afordable 

mortgages, small business credit, and access to SAFE 

accounts and fnancial education. As part of this efort, 

the FDIC launched the Afordable Mortgage Lending 

Center in 2016, a website (https://www.fdic.gov/ 

consumers/community/mortgagelending) that houses 

various resources, including the Afordable Mortgage 

Lending Guide, a three-part guide designed to help 

community banks identify afordable mortgage products. 

Te Afordable Mortgage Lending Center had more than 

19,497 subscribers as of December 31, 2019. Materials 

from the center have been downloaded more than 15,600 

times, and the site has had more than 82,000 page views 

since its inception. 

In addition, the FDIC sponsored sessions with the 

FRB and OCC covering basic and advanced CRA 

training for banks. Te agencies also ofered basic CRA 

training for community-based organizations as well as 

seminars on establishing efective bank and community 

collaborations. Te FDIC also focused on encouraging 

community development initiatives in rural communities. 

Tis work included workshops to highlight housing 

needs and programs, economic development programs, 

and community development fnancial institution 

collaborations, such as those serving Native American 

communities. Te FDIC Community Afairs Branch 

and SBA Ofce of Entrepreneurial Development signed a 

MOU in April 2019 to continue eforts focused on small 

business. As of December 31, 2019, the FDIC sponsored 

69 small business events and activities with more than 

1,500 attendees. 

Advancing Financial Education 

Efective fnancial education helps people gain the skills 

and confdence necessary to establish and sustain a 

banking relationship, achieve fnancial goals, and improve 

40 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

fnancial well-being. Trough Money Smart, the FDIC 

ofers non-copyrighted, high-quality, free fnancial 

education resources for banks, community organizations, 

and other stakeholders to train people of all ages and 

small businesses. First launched in 2001 as an instructorled curriculum for adults, it now features materials to 

train people of all ages. Regular updates ensure that 

Money Smart benefts from user feedback and current 

instructional best practices. Te FDIC helps organizations 

efectively use the curriculum, including through the 

Money Smart Alliance, which facilitates quarterly 

webinars for the more than 1,400 member organizations. 

Youth Financial Education 

Te FDIC released an enhanced Money Smart for Young 

People curriculum in December 2019, providing updated 

tools to engage educators, parents, and young people in 

the fnancial education process. Te curriculum now 

benefts from insights that we received from 26 educators 

who taught 83 sessions using Money Smart for Young 

People as part of a special project in 2018. In addition, 

as part of our ongoing collaboration with the CFPB, the 

curriculum helps educators identify opportunities to use 

some of the CFPB’s Building Blocks Activities, which the 

CFPB developed through research to help promote lifelong 

learning and fnancial skills development. 

Money Smart for Older Adults 

Te CFPB and the FDIC also released an updated 

Spanish-language version of the Money Smart for Older 

Adults curriculum. Its goal is to help prevent elder 

fnancial exploitation by raising awareness of fraud and 

scams among older adults and their caregivers. Money 

Smart for Older Adults also encourages advance planning 

and informed fnancial decision-making. Te updates 

provide new information and resources to help older adults 

and their caregivers recognize and prevent fraud, scams, 

and other types of fnancial exploitation. More than one 

million copies of the curriculum have been ordered in 

English or Spanish since its original release in 2013. 

Recognizing the impact of Money Smart for Older Adults, 

the American Society on Aging honored the curriculum 

with the 2019 Gloria Cavanaugh Award for Excellence 

in Training and Education. Te award is presented to an 

individual or program that has demonstrated continued 

excellence in training and education in the feld of 

aging. One non-proft in Texas that regularly uses 

Money Smart for Older Adults provided feedback from 

dozens of participants who ofered comments such as, “[t] 

his course was a lifesaver for me,” “[n]o other place that 

I know of to get all this information,” “the information 

helped to initiate conversations with friends who may be 

unaware of steps to take care for themselves,” and “the 

information opened my eyes to things I was not aware of.” 

Money Smart for Adults 

Te FDIC expanded the reach of the updated Money 

Smart for Adults, which was released in late 2018, through 

several enhancements in response to requests by users. 

Updated curricula were released in Chinese, Korean, 

Spanish, and Vietnamese. Te Financial Industry 

Regulatory Authority (FINRA) also reviewed the 

curriculum and confrmed its consistency with FINRA 

standards, a step pursued in response to feedback to 

make it easier for FINRA-regulated entities to conduct 

educational workshops with the curriculum. 

A self-paced online learning game, “How Money Smart Are 

You?” is set for release in 2020. Using a gameshow format, 

the new product will allow people to build their fnancial 

skills and knowledge at their own pace, with an option 

to receive certifcates of completion. Te website for the 

new game will also include a fnancial glossary, frequently 

asked questions, and fllable tools to augment fnancial 

knowledge. Insights from users in targeted audiences of 

adults with low- to moderate-incomes have helped improve 

the product, as feld testing of draft games was conducted 

in Phoenix, Arizona; Atlanta, Georgia; Bethesda, 

Maryland; Columbus, Ohio; and at the World Institute on 

Disability in Berkeley, California. 

Money Smart for Small Business 

Money Smart for Small Business is a product developed 

jointly by the FDIC and the SBA. For several months, 

the SBA and FDIC worked with other federal agencies; 

entrepreneurs; and small business training, counseling, 

and lending organizations, including fnancial institutions, 

to update the Banking Services and Credit Building 

modules. Te purpose of the revision was to address 

important information gaps identifed by entrepreneurs 

and organizations serving small businesses and to provide 

practical tools to enhance the learning experience, such as 

the addition of a case study, checklists, a more attractive 

graphic design, and other useful features. 

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Money Smart Outreach 

During 2019, more than 4,000 prospective trainers 

were trained on how to use Money Smart, including 

representatives of banks, Volunteer Income Tax Assistance 

program sites, nonproft program managers, and others. 

For example, the FDIC collaborated with a national bank 

to deliver two Money Smart webinar training sessions 

for more than 300 bank employees on Money Smart for 

Adults so that they can efectively use it throughout the 

communities they serve. 

Te FDIC leads the Money Smart Alliance to scale 

promising practices through periodic webinars and 

facilitate collaboration between members. More than 327 

organizations joined the Alliance during 2019, bringing 

the total number of members to 1,409. One example of 

how Alliance members use Money Smart includes the 

University of Wyoming Extension’s use of Money Smart for 

Adults with its Master Money Manager Coach initiative to 

help fnancially at-risk individuals improve their fnancial 

situation across Wyoming. Another example involves a 

community bank in Pennsylvania collaborating with a 

non-proft organization to provide Money Smart for Adults 

training to non-violent ofenders fnishing jail sentences. 

Tis program ofers to connect the participants with 

appropriate basic banking services, which assists with their 

reintegration into society. 

Te FDIC also builds the capacity of organizations to use 

Money Smart through Money Smart News, a publication 

for fnancial educators to provide updates and ideas 

for implementation. For example, the publication 

highlighted Bank On South Alabama, a group of fnancial 

institutions, community groups, and government entities 

that promotes greater bank account access. Partnering 

fnancial institutions and their employees volunteer to help 

nonprofts bring the Money Smart program to their clients 

in shelters, substance abuse centers, and other locations. 

As an example, once a week for fve weeks, bankers taught 

Money Smart to students participating in a summer youth 

program. Tese sessions helped people who might not 

otherwise have had an opportunity to engage with a bank 

to learn about fnances and how to open a bank account. 

Another Money Smart News article highlighted one bank’s 

advice for other trainers based on its experience having 

conducted 1,000 Money Smart workshops during the 

previous year. 

Money Smart News also highlighted the 75 banks in the 

Youth Banking Network that continued to share ideas and 

approaches on how to better connect fnancial education to 

savings accounts for school-aged children. Tis diverse set 

of banks includes those with assets just over $50 million 

to those with assets over $350 billion, with a mix of 

banks operating in rural, suburban, and urban areas. Te 

banks are at various stages, ranging from those building 

an internal business case for pursuing youth savings 

collaboration to banks with well-established programs that 

are seeking to expand them in scope or quality. One bank 

in the Network shared that its fnancial education eforts 

have resulted in about $130 million of new deposits for the 

bank from adults and youth. 

FDIC staf encourage fnancial education to be used as 

a tool for other work. For example, the FDIC and the 

CFPB cohosted the “Building Collaboration between 

Financial Institutions and Law Enforcement to Prevent 

and Address Elder Financial Abuse” webinar on July 25, 

2019, drawing more than 4,300 registrations. During the 

presentation, Money Smart for Older Adults was promoted 

as a tool to foster local collaboration and education, and 

feedback after the session from banks confrmed examples 

of its use. Moreover, the FDIC participated in a Twitter 

event hosted by the Federal Emergency Management 

Agency (FEMA) during Financial Capability Month. 

Te chat had more than 36 million potential impressions. 

Furthermore, the Money Smart website was also redesigned 

to improve the user experience, including new videos. Te 

Money Smart related webpages had more than 250,000 

views during the year. 

In addition to Money Smart, the FDIC’s Consumer News 

is a monthly, digital educational publication that provides 

practical guidance on how to become a smarter and safer 

user of fnancial services. Tere were 13 issues published 

online in 2019, including an extra, special edition issue 

in February for America Saves Week. Te FDIC is also 

adding Consumer Resource Guides, which are plain 

language educational materials to explain how banking 

regulations impact consumers. Consumers can also take 

advantage of the FDIC Information and Support Center’s 

searchable Knowledge Center at https://ask.fdic.gov/ 

fdicinformationandsupportcenter/s/public-information, 

where they can search for topics of interest and recent 

news stories. 

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MANAGEMENT'S DISCUSSION AND ANALYSIS

Partnerships for Access to 

Mainstream Banking 

Te FDIC supported community development and 

economic inclusion partnerships at the local level by 

providing technical assistance and information resources 

throughout the country, with a focus on unbanked 

and underbanked households and low- and moderateincome communities. Community Afairs staf support 

economic inclusion through work with the Alliances for 

Economic Inclusion (AEI), Bank On initiatives, and other 

coalitions originated by local and state governments, and 

in collaboration with federal partners and many local 

and national non-proft organizations. Te FDIC also 

partners with other fnancial regulatory agencies to provide 

information and technical assistance on community 

development to banks and community leaders across 

the country. 

In the 12 AEI communities and in other areas, the 

FDIC helped working groups of bankers and community 

leaders develop responses to the fnancial capability 

and services needs in their communities. To integrate 

fnancial capability into community services more 

efectively, the FDIC supported seminars and training 

sessions for community service providers and assetbuilding organizations, workshops for fnancial coaches 

and counselors, promotion of savings opportunities for 

low- and moderate-income people and communities, 

initiatives to expand access to savings accounts for all ages, 

outreach to bring larger numbers of people to expanded 

tax preparation assistance sites, and education for business 

owners to help them become bankable. 

Te FDIC conducted three forums in Spanish in Los 

Angeles and San Jose, California and Reno, Nevada 

to inform and educate banks, and identify local 

stakeholders to support community eforts to improve 

fnancial resiliency of the Spanish-speaking community. 

Additionally, the FDIC provided how-to guidance 

in establishing an in-school bank branch at a Native 

American Asset Building Conference in Niagara Falls, 

New York. 

Te FDIC supports coalitions working on access and 

use of SAFE and afordable accounts nationwide.  In 

2019, Community Afairs staf provided technical 

assistance to 35 Bank On coalitions to promote banking 

access.  Specifcally, the FDIC convened 20 outreach 

events engaging 515 representatives from banks, local 

governments, and community organizations to help them 

understand opportunities and to advance strategies to 

expand access to SAFE and afordable deposit accounts 

and engage unbanked and underbanked consumers. 

As of December 31, 2019, the FDIC hosted more than 

54 events that provided opportunities for partners to 

collaborate on increasing access to bank accounts and 

credit services, opportunities to build savings and improve 

credit histories, and initiatives to signifcantly strengthen 

the fnancial capability of community service providers 

that directly serve consumers with low or moderate 

incomes and small businesses. 

Consumer Complaints and Inquiries 

Te FDIC helps consumers by receiving, investigating, 

and responding to consumer complaints about FDICsupervised institutions and answering inquiries about 

banking laws and regulations, FDIC operations, and other 

related topics. In addition, the FDIC provides analytical 

reports and information on complaint data for internal 

and external use, and conducts outreach activities to 

educate consumers. 

Te FDIC recognizes that consumer complaints and 

inquiries play an important role in the development of 

strong public and supervisory policy. Assessing and 

resolving these matters helps the agency identify trends or 

problems afecting consumer rights, understand the public 

perception of consumer protection issues, formulate policy 

that aids consumers, and foster confdence in the banking 

system by educating consumers about the protection 

they receive under certain consumer protection laws 

and regulations. 

Consumer Complaints by Topic and Issue 

Te FDIC receives complaints and inquiries by telephone, 

fax, U.S. mail, e-mail, and online through the FDIC’s 

website. In 2019, the FDIC handled 18,401 written 

and telephonic complaints and inquiries. Of the 12,943 

involving written correspondence, 5,253 were referred 

to other agencies and 7,690 were handled by the FDIC. 

Te FDIC responded to 99 percent of written complaints 

within time frames established by corporate policy, and 

acknowledged 100 percent of all consumer complaints 

and inquiries within 14 days. As part of the complaint 

43 
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and inquiry handling process, the FDIC works with the 

other federal fnancial regulatory agencies to ensure that 

complaints and inquiries are forwarded to the appropriate 

agencies for response. Te FDIC carefully analyzes the 

topics and issues involved in complaints about FDICsupervised institutions. Te number of complaints 

received about a specifc bank topic and issue can serve as 

a red fag to prompt further review of practices that may 

raise consumer protection or supervisory concerns. 

In 2019, the four most frequently identifed topics 

in consumer complaints and inquiries about FDICsupervised institutions concerned checking accounts 

(24 percent), consumer/business credit cards (17 

percent), consumer lines of credit/installment loans 

(14 percent), and residential real estate (9 percent). 

Issues most commonly cited in correspondence about 

checking accounts were concerns for refusing to provide 

service, the error resolution process for disputes, and 

account discrepancies or transaction errors. Consumer 

correspondence about credit cards most often raised 

issues regarding reporting of account information, billing 

disputes, and fees. Consumer loan complaints and 

inquiries most frequently described issues with reporting 

of account information, collection practices, and billing 

disputes. Correspondence regarding residential real estate 

related to disclosures, inaccurate appraisal reports, and 

foreclosure and modifcation issues. 

Te FDIC also investigated 51 Fair Lending complaints 

alleging discrimination during 2019. Te number of 

discrimination complaints investigated has fuctuated 

over the past several years but averaged approximately 

69 complaints per year between 2014 and 2019. Over this 

period, 48 percent of the issues identifed in complaints 

investigated alleged discrimination based on the race, 

color, national origin, or ethnicity of the applicant or 

borrower; 14 percent involved the sex of the applicant or 

borrower; 13 percent related to discrimination allegations 

based on age; and 7 percent concerned handicap. 

Consumer refunds generally involve the fnancial 

institution ofering a voluntary credit to the consumer’s 

account, often as a direct result of complaint investigations 

and identifcation of a banking error or violation of law. 

Trough December 2019, consumers received more than 

$412,426 in refunds from fnancial institutions as a 

result of the assistance provided by the FDIC’s Consumer 

Response Center. 

FAILURE RESOLUTION AND 

RECEIVERSHIP MANAGEMENT 

Te FDIC has the unique mission of protecting depositors 

of insured banks and savings associations. No depositor 

has ever experienced a loss on the insured amount of 

his or her deposits in an FDIC-insured institution due 

to a failure. When an institution closes, its chartering 

authority—the state for state-chartered institutions 

and the OCC for national banks and federal savings 

associations—typically appoints the FDIC as receiver, 

responsible for resolving the failed institution. 

Te FDIC employs a variety of strategies and business 

practices to resolve a failed institution. Tese strategies 

and practices are typically associated with either the 

resolution process or the receivership process. Depending 

on the characteristics of the institution, the FDIC may 

utilize several of these methods to ensure the prompt 

and smooth payment of deposit insurance to insured 

depositors, to minimize the impact on the DIF, and to 

speed dividend payments to uninsured depositors and 

other creditors of the failed institution. 

Te resolution process involves evaluating and marketing 

a failing institution, soliciting and accepting bids for the 

sale of the institution, determining which bid (if any) is 

least costly to the DIF, and working with the acquiring 

institution through the closing process. 

To minimize disruption to the local community, the 

resolution process must be performed as quickly and 

efciently as possible. Te FDIC uses two basic resolution 

methods: purchase and assumption transactions and 

deposit payofs. 

Te purchase and assumption (P&A) transaction is the 

most commonly used resolution method.  Typically, 

in a P&A transaction, a healthy institution purchases 

certain assets and assumes certain liabilities of the failed 

institution, including the option of acquiring either all 

deposits or only the insured portion.  Because each failing 

bank situation is diferent, P&A transactions provide 

fexibility to structure resolution transactions that result 

in obtaining the highest value for the failed institution.  

For example, a P&A transaction could include a sharedloss feature, in which the FDIC as receiver agrees to share 

losses on certain assets with the acquirer for a specifed 

period of time (e.g., fve to 10 years).  Te FDIC used 

shared-loss P&A transactions extensively during periods 

44 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

of economic distress, when asset values became highly 

uncertain.  Shared-loss P&A transactions have not been 

ofered since 2013; however, the FDIC continues to 

monitor agreements that remain in place. At year-end 

2019, there were 59 receiverships with active shared-loss 

agreements. Total assets covered by shared-loss agreements 

were reduced by $5.4 billion to $4.2 billion. 

Financial Institution Failures 

During 2019, there were four institution failures, 

compared to no failures in 2018. In all four transactions, 

the FDIC successfully contacted all known, qualifed, 

and interested bidders to market these institutions, and 

all depositors had access to insured funds within one 

business day. 

Further, there were no losses on insured deposits, and no 

appropriated funds were required to pay insured deposits. 

Te following chart provides a comparison of failure 

activity over the past three years. 

FAILURE ACTIVITY 

Dollars in Billions 

2019 2018 2017 

Total Institutions 4 0 8 

Total Assets of $0.2 $0.0 $5.1 

Failed Institutions* 

Total Deposits of $0.2 $0.0 $4.7 

Failed Institutions* 

Estimated Loss to the DIF $0.03 $0.0 $1.2 

*Total assets and total deposits data are based on the last quarterly 

report filed by the institution prior to failure.

Asset Management and Sales 

As part of its resolution process, the FDIC tries to sell 

as many assets as possible to an assuming institution. 

Assets that are retained by the receivership are promptly 

valued and liquidated in order to maximize the return to 

the receivership estate. During 2019, for 95 percent of 

failed institutions, at least 90 percent of the book value of 

marketable assets was marketed for sale within 90 days of 

an institution’s failure for cash sales, and within 120 days 

for structured sales. 

Cash sales of all assets for 2019 totaled $482 million in 

book value. 

As a result of the FDIC’s marketing and collection eforts, 

the book value of assets in inventory decreased by $654 

million (56 percent) in 2019. Total assets in liquidation 

have not been lower than $1 billion since April 2008. 

Te following chart shows the beginning and ending 

balances of these assets by asset type. 

ASSETS-IN-LIQUIDATION INVENTORY 

BY ASSET TYPE 

Dollars in Millions 

Asset Type 12/31/19 12/31/18 12/31/17 

Securities $10 $50 $160 

Consumer Loans 0 0 8 

Commercial Loans 1 34 50 

Real Estate Mortgages 19 67 139 

Other Assets/Judgments 44 151 260 

Owned Assets 3 3 47 

Net Investments in 

Subsidiaries 

31 19 157 

Structured and 

Securitized Assets 

416 854 1,449 

TOTAL $524 $1,178 $2,271 

Receivership Management Activities 

Te FDIC, as receiver, manages failed insured depository 

institutions and oversees their subsidiaries with the goal 

of expeditiously winding up their afairs. Te oversight 

and prompt termination of receiverships help to preserve 

value for the uninsured depositors and other creditors 

by reducing overhead and other holding costs. Assets 

remaining after resolution are liquidated by the FDIC 

in an orderly manner, and the proceeds are used to 

pay receivership claimants, including depositors whose 

accounts exceeded the insurance limit. During 2019, 

receiverships paid dividends of $1.2 million to depositors 

whose accounts exceeded the insurance limit. 

Once the assets of a failed institution have been sold 

and its liabilities extinguished, the fnal distribution 

of any proceeds is made, and the FDIC terminates 

the receivership. In 2019, the total number of active 

receiverships under management decreased by 28 

(10 percent) to 248. Further, the FDIC terminated 

more than 75 percent of new receiverships within three 

years of the date of failure. 

45 
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MANAGEMENT'S DISCUSSION AND ANALYSIS

Te following chart shows overall receivership activity for 

the FDIC in 2019. 

RECEIVERSHIP ACTIVITY 

New Receiverships 

Receiverships Terminated 

Active Receiverships as of 12/31/19 

Active Receiverships as of 12/31/18 272 

4 

28 

248 

Professional Liability and 

Financial Crimes Recoveries 

Te FDIC investigates bank failures to identify potential 

claims against directors, ofcers, securities underwriters 

and issuers, fdelity bond insurance carriers, appraisers, 

attorneys, accountants, mortgage loan brokers, title 

insurance companies, and other professionals who may 

have caused losses to insured depository institutions and 

FDIC receiverships. Te FDIC will pursue meritorious 

claims that are expected to be cost-efective. 

During 2019, the FDIC recovered $626.4 million from 

professional liability claims and settlements. Te FDIC 

authorized one professional liability lawsuit during 2019. 

As of December 31, 2019, the FDIC’s caseload included 11 

professional liability lawsuits (down from 21 at year-end 

2018), eight residential mortgage malpractice and fraud 

lawsuits (down from nine), and open investigations in 51 

claim areas out of nine institutions. Te FDIC completed 

investigations and made decisions on 91 percent of the 

investigations related to failures that reached the 18-month 

point after the institution’s failure date in 2019, thereby 

exceeding its annual performance target. 

As part of the sentencing process, for those convicted 

of criminal wrongdoing against an insured institution 

that later failed, a court may order a defendant to 

pay restitution or to forfeit funds or property to the 

receivership. Te FDIC, working with the U.S. 

Department of Justice in connection with criminal 

restitution and forfeiture orders issued by federal courts 

and independently in connection with restitution orders 

issued by the state courts, collected $9.96 million in 

2019. As of December 31, 2019, there were 2,187 active 

restitution and forfeiture orders (decreased from 2,346 

at year-end 2018). Tis includes 56 orders held by the 

Federal Savings and Loan Insurance Corporation (FSLIC) 

Resolution Fund (i.e., orders arising out of failed fnancial 

institutions that were in receivership or conservatorship by 

the FSLIC or the Resolution Trust Corporation). 

INFORMATION TECHNOLOGY 

Information technology (IT) is an essential component 

in virtually all FDIC business processes. Tis integration 

with the business provides opportunities for efciencies 

but also requires an awareness of potential risks. In 2019, 

the Chief Information Ofcer Organization (CIOO) 

focused its eforts on managing information security risk, 

strengthening infrastructure resiliency, and modernizing 

FDIC applications and systems to support the FDIC’s 

business processes and key stakeholders. 

Managing Information Security Risk 

Te FDIC’s information security program is integral to 

the agency’s ability to carry out its mission of maintaining 

stability and public confdence in the nation’s fnancial 

system.  

Te FDIC continues to strengthen its information security 

functions in accordance with the Federal Information 

Security Modernization Act of 2014 (FISMA) and in 

alignment with the standards and guidance provided 

by the National Institute of Standards and Technology 

(NIST). For example, in 2019 the FDIC: 

♦ Continued progress towards optimizing the Security 

Operations Center (SOC) including implementation 

of new capabilities to monitor and analyze network 

trafc and cloud usage for indications of information 

security risk; 

♦ Implemented a Privacy Continuous Monitoring 

(PCM) strategy, which strengthens privacy controls 

and facilitates ongoing privacy reviews to ensure 

personally identifable information (PII) is efectively 

managed and protected; 

♦ Enhanced monitoring capabilities over platforms 

supporting core business functions consistent with 

leading risk management practices for information 

security; 

♦ Updated and published 34 System of Record Notices 

(SORNs) in the Federal Register and implemented 

delegation of SORN publication authority to align 

with federal guidance; and 

46 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

 

 

♦ Introduced new policies and procedures for patching, 

risk assessments, remediation plans, and frewall and 

network security to further strengthen information 

security and privacy risk management. 

Information Security continues to be a top management 

priority at the FDIC. 

Strengthening Infrastructure Resiliency 

Te FDIC must be able to provide and maintain an 

acceptable level of service in the face of threats and 

challenges to normal computer and network operations. 

Treats and challenges for services can range from simple 

misconfgurations to unforeseen large-scale natural 

disasters or targeted attacks. Te FDIC works to ensure 

that its infrastructure can anticipate, absorb, adapt to, and/ 

or rapidly recover from a potentially disruptive event. 

To continue to support a resilient and efective 

infrastructure, in 2019, the FDIC executed a 

comprehensive initiative to expand and enhance its 

existing disaster recovery and business continuity 

capabilities. Te FDIC’s eforts were particularly focused 

on ensuring that designated IT systems and applications 

that support mission-essential functions could be recovered 

within targeted timeframes. As part of this multi-year 

project, the FDIC completed the migration of key IT 

systems and applications to a new and larger backup 

data center (BDC). Tis efort strengthens resiliency 

by extending geographic proximity of the FDIC’s BDC 

from its primary data center. Te new facility introduced 

new security capabilities including enterprise logging and 

expanded data loss prevention. 

Additional enhancements include rapid restoration 

(failover) of mission-critical business applications. 

Automated foundational restoration processes minimize 

manual intervention, and equipment is maintained in a 

higher availability mode to enable faster restoration. As 

a result, the FDIC is better positioned to preempt and 

rapidly recover from an outage or threat. Te CIOO 

completed a test of failover functionality in October 2019 

that identifed lessons that will continue to strengthen 

the BDC. 

Te FDIC also implemented a Resiliency and Performance 

Improvement Project to improve resiliency and 

performance of its IT infrastructure. Te project allows 

faster restoration of network services and is part of 

the series of controls in place to support efective 

disaster recovery. 

Modernizing IT and Enhancing 

Data Governance 

Te FDIC is committed to promoting efcient operations, 

treating data as a strategic asset, and providing IT 

resources that support its workforce and improve the 

FDIC’s engagement with regulated institutions. To meet 

these key needs, in 2019 the FDIC: 

♦ Developed and began implementing a comprehensive 

integrated fve-year IT Modernization Plan to support 

several business drivers including Bank Supervision 

Modernization, Financial Crisis Preparedness, and 

the treatment of data as a corporate resource. Te 

IT Modernization Plan supports a cost-efective, 

agile technology environment that fosters business 

innovation and efciencies. 

♦ Completed an Enterprise Architecture Target 

statement that outlines the basis for developing the 

FDIC’s future IT environment in order to guide IT 

decision-making and support the FDIC in executing 

its mission. 

♦ Launched a Cloud Technology Migration 

Modernization project and migrated applications 

for two of the Corporation’s Divisions (Division of 

Resolutions and Receiverships and the Division of 

Insurance and Research). 

♦ Launched an Enterprise Data Governance Initiative 

to provide strategic direction on the FDIC’s data 

strategy, where trusted data are easily used and 

securely shared to support the FDIC’s mission. 

♦ Created a new Chief Data Ofcer position to provide 

strategic leadership to the FDIC’s data strategy. 

DIVERSITY AND INCLUSION 

Consistent with the provisions of the Dodd-Frank Act, the 

FDIC maintains its commitment to provide diversity and 

inclusion in employment opportunities and all business 

areas of the FDIC. Te Ofce of Minority and Women 

Inclusion (OMWI) supports the FDIC’s mission through 

outreach eforts to ensure the fair inclusion and utilization 

of minority- and women-owned businesses (MWOBs), 

law frms (MWOLFs), and investors in contracting and 

investment opportunities. OMWI is also responsible for 

assessing the diversity policies and practices of FDICregulated fnancial institutions. 

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Te FDIC Diversity and Inclusion (D&I) Strategic Plan is 

evaluated and updated regularly and delineates strategies 

to promote workforce and workplace inclusion and 

sustainability of diversity and inclusion eforts. Te 

D&I Executive Advisory Council (EAC) oversees the 

plan’s implementation and promotes the coordination 

and awareness of diversity and inclusion initiatives as an 

FDIC priority. Additionally, employees provide input on 

these eforts by serving on the regional and headquarters 

Chairman’s Diversity Advisory Councils or joining one of 

the nine Employee Resource Groups. 

Minority- and Women-Owned 

Business Outreach 

OMWI’s outreach eforts also ensure the fair inclusion 

and utilization of MWOBs, MWOLFs, and investors in 

contracting and investment opportunities. In 2019, the 

FDIC awarded 152 (29.3 percent) contracts to MWOBs 

out of a total of 518 issued. Te FDIC awarded contracts 

with a combined value of $554.0 million in 2019, of which 

31.3 percent ($173.5 million) were awarded to MWOBs, 

compared to 24.5 percent for all of 2018. Te FDIC paid 

$98.3 million of its total contract payments (21.1 percent) 

to MWOBs, under 287 MWOB contracts. 

In 2019, the FDIC participated in a total of 18 business 

expos, one-on-one matchmaking sessions, and panel 

presentations. At these events, FDIC staf provided 

information and responded to inquiries regarding FDIC 

business opportunities for minorities and women. In 

addition to targeting MWOBs, these eforts also 

targeted veteran-owned and small disadvantaged 

businesses. Vendors were provided with the FDIC’s 

general contracting procedures, prime contractors’ 

contact information, and forecasts of possible upcoming 

solicitations. Also, vendors were encouraged to register 

through the FDIC’s Contractor Resource List (the 

principal database for vendors interested in doing business 

with the FDIC). 

On December 5, 2019, the FDIC and the other 

OMWI agencies partnered with the Minority Business 

Development Agency and the Northern Virginia 

Procurement Technical Assistance Center to host the 

“Connections Tat Count” technical assistance event 

in Arlington, Virginia. Technical assistance events are 

designed to provide information, resources, and tools 

to MWOBs in order to build and expand their federal 

contracting opportunities. It is also a forum for MWOBs 

to network with representatives from various sources of 

business assistance, as well as OMWI representatives. In 

addition, the sponsoring agencies and various procurement 

trade organizations exhibited at the event. 

Minority- and Women-Owned 

Law Firm Outreach 

Te Legal Division’s legal contracting program endeavors 

to maximize the participation of both minority- and 

women-owned law frms (MWOLFs), minority and 

women partners, and associates employed at majority 

owned frms (Diverse Attorneys). Tis approach is 

consistent with Section 342 of the Dodd-Frank Act that 

encourages diversity and inclusion at all levels. For both 

MWOLFs and Diverse Attorneys, FDIC legal matters 

provide important learning and professional client 

development opportunities that can be quite meaningful 

to career advancement. For 2019, the Legal Division 

had an aggregate 34.0 percent diversity and inclusion 

participation rate in legal contracting as set forth below. 

Te FDIC made 20 referrals to MWOLFs, which 

accounted for 32.2 percent of all legal referrals. Total 

payments to MWOLFs were $3.4 million in 2019, 

which is 10.7 percent of all payments to outside counsel, 

compared to 7.7 percent for all of 2018. In 2019, Diverse 

Attorneys earned $7.4 million in legal fees, which is 

23.3 percent of all payments to outside counsel. Taken 

together, FDIC paid $10.8 million to MWOLF frms and 

Diverse Attorneys out of a total of $31.7 million dollars 

spent on outside counsel services in 2019. Tis number 

represents 34.0 percent of total outside counsel fees, which 

is a signifcant increase from 2018, in which there was a 

27.5 percent aggregate participation rate, despite the steep 

decline in overall outside counsel spending. 

Te keystone of the Legal Division diversity and inclusion 

outreach is the FDIC’s partnerships with minority bar 

associations and specialized stakeholder organizations. 

In 2019, the FDIC Legal Division participated in seven 

minority bar association conferences and three stakeholder 

events in support of maximizing the participation 

of MWOLFs and Diverse Attorneys in FDIC legal 

contracting. Te Legal Division divided its stakeholder 

event participation into events concentrating on outreach 

to MWOLF frms and focusing on outreach to Diverse 

Attorneys who work at majority owned law frms. 

48 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

 

 

In 2019, National Association of Minority and Women 

Owned Law Firms again formally recognized the FDIC 

in a press release as a principal member of, and major 

contributor to, its Inclusion Initiative, a collaborative 

program among law departments of major corporations 

designed to increase the participation of MWOLF frms in 

legal contracting. Te FDIC participates in the Inclusion 

Initiative along with major corporations. 

Te Legal Division understands the value of integrating 

FDIC in-house counsel in its legal contracting diversity 

and inclusion. Also in 2019, the Legal Division presented 

a Legal Contracting Diversity and Inclusion Workshop for 

the closed bank oversight attorneys at the Dallas Regional 

Ofce. Tese attorneys are responsible for assigning work 

to outside counsel. Te program included a review of the 

prior year’s legal contracting statistics, planned projects, 

question and answers, and the solicitation of ideas from 

the attorneys for improving the selection and retention of 

outside counsel. 

Pursuant to Section 342 of the Dodd-Frank Act, which 

requires an assessment of legal contractors’ internal 

workforce diversity practices, the Legal Division conducted 

12 compliance reviews of the top-billing law frms (both 

non-minority-owned and MWOLFs). Te reviews 

included questions that focused on associate and partner 

recruitment, retention rates of minority and women 

associates and partners, and partnership ofers to minority 

and women attorneys working on FDIC legal matters. 

Te reviews are instrumental in gathering diversity data 

for ongoing monitoring eforts as well as the exchange of 

ideas to enhance diversity initiatives. 

In addition to the outreach eforts noted above, the Legal 

Division continues to provide technical assistance to other 

related government agencies on developing MWOLF 

outreach programs that mirror the FDIC’s program. 

Te Legal Division evaluated and approved three new 

MWOLF applications in 2019. Firms from various 

geographic areas were added to the FDIC List of 

Counsel Available in order to be eligible to receive legal 

contracting work. 

Financial Institution Diversity 

Te FDIC’s Financial Institution Diversity program is 

responsible for assessing the diversity policies and practices 

of FDIC-regulated fnancial institutions. Te FDIC 

OMWI worked closely with the OMWIs from the OCC, 

FRB, CFPB, NCUA, SEC, and the Department of the 

Treasury to further implement Section 342(b)(2)(C) of the 

Dodd-Frank Act, which required the agencies to develop 

standards to assess the diversity policies and practices of 

the entities they regulate. After publishing Joint Standards 

in 2015, the FDIC developed a diversity self-assessment 

instrument to assist FDIC-regulated fnancial institutions 

in systematically assessing their diversity programs. 

Te FDIC began collecting voluntary self-assessments 

from its regulated fnancial institutions in 2017. Te 

FDIC received 95 of 805 (11.8 percent) self-assessments in 

2017 for the 2016 reporting period. In 2018, the FDIC 

received 137 of 820 (16.7 percent) self-assessments from 

its regulated institutions for the 2017 reporting period. In 

2019, the FDIC received 133 of 784 (17 percent) selfassessments from its regulated institutions for the 2018 

reporting period. OMWI analyzed the self-assessment 

responses for the 2016 – 2018 reporting periods and 

posted this analysis on its internal and external websites. 

OMWI hosted an outreach event on October 24, 2019, 

jointly with the other OMWI agencies for their respective 

regulated entities. Te event was entitled “Financial 

Regulatory Agencies Diversity Summit” and was held 

in Chicago, Illinois. Additionally, on November 20, 

2019, the FDIC participated in a webinar hosted by the 

American Bankers Association titled, “What Bankers 

Need to Know about the Diversity Self-Assessment.” 

Both events focused on the value of conducting voluntary 

self-assessments, annually submitting assessment results 

to OMWI Directors, and making diversity information 

transparent to the public. Te OMWI agencies also 

outlined how the self-assessments will be used to identify 

leading trends and establish benchmarks that will assist 

fnancial institutions in assessing and enhancing their 

diversity programs. 

Information related to diversity and inclusion at the FDIC 

can be found at www.fdic.gov/about/diversity. 

INTERNATIONAL OUTREACH 

Te FDIC continues to play a leading role in supporting 

the global development of deposit insurance, bank 

supervision, and bank resolution systems. Tis included 

working closely with regulatory and supervisory authorities 

from around the world, as well as international standardsetting bodies and multilateral organizations, such as the 

International Association of Deposit Insurers (IADI), 

49 
ANNUAL 

REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

the Association of Supervisors of Banks of the Americas 

(ASBA), the Basel Committee on Banking Supervision 

(BCBS), the Financial Stability Board (FSB), the 

International Monetary Fund (IMF), and the World Bank. 

Te FDIC engaged with foreign regulatory counterparts 

by hosting visiting ofcials, conducting training seminars, 

delivering technical assistance abroad, and fulflling the 

commitments of FDIC membership in international 

organizations. Te FDIC also advanced policy objectives 

with key jurisdictions by participating in high-level 

interagency dialogues. 

International Association of Deposit Insurers 

FDIC ofcials and subject matter experts provided 

continuing support for IADI programs in 2019. Tis 

included chairing IADI’s Training and Conference 

Technical Committee, which provided support for 

developing and facilitating technical assistance workshops 

for the African, European, Eurasian, Asia-Pacifc, 

Caribbean, North American, and Latin American regions 

of IADI. Te FDIC also chaired IADI’s Diferential 

Premium Systems Technical Committee, which is drafting 

a paper evaluating the efectiveness of diferential deposit 

insurance premium systems. Te FDIC also participated 

in reviews of IADI members’ self-assessments of 

compliance with the Core Principles. Te FDIC assisted in 

the development of IADI’s Biennial Research Conference, 

which provides a forum for researchers and deposit 

insurance and bank resolution practitioners to meet to 

discuss issues facing deposit insurers. It also assisted in 

development of the annual conference for ofcials and 

senior management of deposit insurance authorities in 

conjunction with the IADI Annual General Meeting. 

Led and supported by FDIC executives and senior staf, 

IADI technical assistance and training activities reached 

approximately 500 participants during 2019. 

Association of Supervisors of Banks of the Americas 

Senior FDIC staf chaired the ASBA Training and 

Technical Committee in 2019, which designs and 

implements ASBA’s training strategy, promoting the 

adoption of sound banking supervision policies and 

practices among its members. Te training program 

reached more than 500 member participants in 2019. 

Basel Committee on Banking Supervision 

Te FDIC supports and contributes to the development 

of international standards, guidelines, and sound 

practices for prudential regulation and supervision of 

banks through its longstanding membership in BCBS. 

Te contribution includes actively participating in 

many of the committee groups, working groups, and 

task forces established by BCBS to carry out its work, 

which focused on policy development, supervision and 

implementation, macroprudential supervision, accounting, 

and consultation. 

International Capacity Building 

During the year, the FDIC provided direct assistance 

to many foreign organizations through the provision 

of technical expertise. Tese engagements included 

providing staf experts to provide training in bank 

resolution and planning for the European Union’s Single 

Resolution Board, assisting the Serbia Deposit Insurance 

Agency in developing its target fund model, and assisting 

the IMF in Manila, Philippines. Te FDIC also hosted 

more than 147 visiting regulators and other government 

ofcials from 34 countries during the year. Two sessions 

of “FDIC 101: An Introduction to Deposit Insurance, 

Bank Supervision, and Resolutions,” a structured learning 

program for senior foreign ofcials, were ofered in 2019 

and attended by 56 participants from more than 38 

organizations. Te FDIC piloted a new two-week training 

program called “Te Bank Resolution Experience,” which 

is an in-depth training on the FDIC’s resolution functions 

designed to educate staf-level practitioners from foreign 

counterparts with resolution authority. Te pilot was 

attended by 22 participants from 15 organizations. Te 

FDIC’s Corporate University also makes supervisory 

courses available to foreign participants and trained 

89 students this year. 

EFFECTIVE MANAGEMENT OF 

STRATEGIC RESOURCES 

Te FDIC recognizes that it must efectively manage 

its human, fnancial, and technological resources 

to successfully carry out its mission and meet the 

performance goals and targets set forth in its annual 

performance plan. Te FDIC must align these strategic 

resources with its mission and goals and deploy them 

where they are most needed to enhance its operational 

efectiveness and minimize potential fnancial risks to the 

DIF. Following are the FDIC’s major accomplishments 

in improving operational efciency and efectiveness 

during 2019. 

50 
2019

MANAGEMENT'S DISCUSSION AND ANALYSIS

Human Capital Management 

Te FDIC’s human capital management programs are 

designed to attract, train, develop, reward, and retain a 

highly skilled, diverse, and results-oriented workforce. In 

2019, the FDIC workforce planning initiatives emphasized 

the need to plan for employees to fulfll current and future 

capability and leadership needs. Tis focus ensures that 

the FDIC has a workforce positioned to meet today’s core 

responsibilities and prepared to fulfll its mission in the 

years ahead. 

Strategic Workforce Planning and Readiness 

Te FDIC understands that succession planning is critical 

to ensure that gaps in employee aspiration, engagement, 

and readiness for senior leadership positions are addressed. 

Te FDIC dedicates resources to strengthen and expand 

its internal pipeline of employees who aspire to higherlevel positions, have the necessary leadership and technical 

skills, and are prepared to assume future leadership roles.  

Te FDIC conducted succession planning survey 

research that established a baseline of career aspirations, 

engagement, and readiness of corporate graded (CG) 

12-15 employees for mission-critical leadership positions. 

In 2019, this baseline was used to inform FDIC’s career 

development planning strategies and broader workforce 

planning strategies and investments.  In addition, the 

baseline is being used to inform individual Divisions as 

they plan and implement succession planning activities 

tailored to meet their Divisions’ unique workforce needs.   

During the past few years, the FDIC has witnessed an 

uptick of retirements in management and leadership 

positions, requiring a greater emphasis on knowledge 

transfer and long-term succession planning. To ensure 

that these critical skills are sustained, the FDIC is 

developing new career paths that encompass emerging 

skills, while ofering leadership training and career 

development opportunities designed to increase the 

internal candidate pool of potential leaders at all levels. 

Te FDIC is also undertaking innovative approaches to 

attract and retain entry-level examiners with specialty and 

emerging skillsets. 

Trough these eforts, the FDIC workforce will be even 

better positioned to respond to dynamic fnancial and 

technological challenges, now and in the future.  

Examiner Recruiting, Hiring, and Training 

From 2005 through 2019, the FDIC’s Corporate Employee 

Program (CEP) sponsored the development of newlyhired Financial Institution Specialists (FIS) in entrylevel positions. During the frst-year rotation within the 

program, FISs gained experience and knowledge in the 

core business of the FDIC and then were placed within 

RMS or DCP, where they continued their career path 

to become commissioned examiners. More than 1,050 

employees have become commissioned examiners after 

successfully completing the program’s requirements. 

In an efort to make the examination processes and 

procedures more efcient and efective, evaluate the 

training and commissioning processes, promote diversity 

and engagement, and ensure that the vast institutional 

knowledge held by examiners today is passed on to future 

examiners, newly hired FISs now will be assigned directly 

into a discipline: risk management or consumer protection.  

After a centralized orientation, newly-hired FISs will 

experience task-based, on-the-job training while working 

toward commission.  

Employee Learning and Development 

Te FDIC is committed to training and developing its 

employees throughout their careers to enhance technical 

profciency and leadership capacity, supporting career 

progression and succession management. Te FDIC is 

in the midst of modernizing learning and development, 

including expanding virtual and online oferings, 

integrating modern learning technology, and modernizing 

the training center. Te FDIC develops and implements 

comprehensive curricula for its business lines to prepare 

employees to meet new challenges. Such training, ofered 

Corporate University Associate Professor Dr. Alphronzo Moseley, right, leads 

a roundtable discussion on the FDIC’s leadership development program for 

frst-line supervisors. 

51 
ANNUAL 

REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

via a range of delivery modes, positions the FDIC’s 

Corporate University to be a virtual university with a 

physical presence. 

Employees working to become commissioned examiners or 

resolutions and receiverships specialists attend a prescribed 

set of specialized, internally developed and instructed 

courses. Post-commission, employees continue to further 

their knowledge in specialty areas with more advanced 

courses. Te FDIC is revising examiner classroom 

training to better support on-the-job application and 

is developing resolution and receivership training to 

support readiness and compliance training and converting 

instructor led courses to web-based training. 

Te FDIC also ofers a comprehensive leadership 

development program that combines core courses, 

electives, and other enrichment opportunities to develop 

employees at all levels. From new employees to new 

executives, the FDIC provides employees with targeted 

opportunities that align with key leadership competencies. 

In addition to a broad array of internally developed and 

administered courses, the FDIC provides its employees 

with funds to participate in external training to support 

their career development. 

Employee Engagement 

Te FDIC continually evaluates its human capital 

programs and strategies to ensure that it remains an 

employer of choice, and that all of its employees are fully 

engaged and aligned with the mission. Te FDIC uses 

the Federal Employee Viewpoint Survey mandated by 

Congress to solicit information from employees, and takes 

an agency-wide approach to address key issues identifed 

in the survey. Te FDIC consistently scores highly in all 

categories of the Partnership for Public Service Best Places 

to Work in the Federal Government® list for mid-size federal 

Photo credit: Partnership for Public Service 

Internal Ombudsman Robert Harris and Deputy to the Chairman and 

Chief Financial Ofcer Bret Edwards receive the award for one of the Best 

Places to Work in the Federal Government for mid-sized federal agencies 

from Max Stier, President and CEO of Partnership for Public Service. 

agencies. In 2019, the FDIC was recognized for the 

tenth consecutive year as one of the top federal agencies. 

Efective leadership is the primary factor driving employee 

satisfaction and commitment in the federal workplace, 

according to a report by the Partnership for Public Service. 

Te FDIC engages employees through formal mechanisms 

such as the TEAM (Transparency, Empowerment, 

Accountability, Mission) FDIC initiative that empowers 

employees to identify and implement short-term projects 

that positively impact the FDIC workplace and support 

the FDIC’s mission; Chairman’s Diversity Advisory 

Councils; and Employee Resource Groups; and informally 

through working groups, team discussions, and daily 

employee-supervisor interactions. Employee engagement 

plays an important role in empowering employees and 

helps maintain, enhance, and institutionalize a positive 

workplace environment. 

52 
II. 

PERFORMANCE RESULTS SUMMARY 
2019

PERFORMANCE RESULTS SUMMARY

 

SUMMARY OF 2019 PERFORMANCE RESULTS BY PROGRAM 

Te FDIC successfully achieved 48 of the 49 annual performance targets established in its 2019 Annual Performance Plan. 

One target was not achieved, which involved a fnal rulemaking regarding a liquidity standard. Tere were no instances 

in which 2019 performance had a material adverse efect on the successful achievement of the FDIC’s mission or its 

strategic goals and objectives regarding its major program responsibilities. 

PERFORMANCE RESULTS BY PROGRAM AND STRATEGIC GOAL 

2019 INSURANCE PROGRAM RESULTS 

Strategic Goal: Insured depositors are protected from loss without recourse to taxpayer funding. 

# ANNUAL 

PERFORMANCE GOAL INDICATOR TARGET RESULTS 

1 

2 

Respond promptly to all 

IDI closings and related 

emerging issues. 

Disseminate data and 

analyses on issues and 

risks afecting the fnancial 

services industry to bankers, 

supervisors, the public, and 

other stakeholders on an 

ongoing basis. 

Number of business 

days after an institution 

failure that depositors 

have access to insured 

funds. 

Insured depositor 

losses resulting from 

a fnancial institution 

failure. 

Scope and timeliness 

of information 

dissemination on 

identifed or potential 

issues and risks. 

Depositors have access to insured ACHIEVED. 

funds within one business day if the SEE PG. 45. 

failure occurs on a Friday. 

Depositors have access to insured ACHIEVED. 

funds within two business days if the SEE PG. 45. 

failure occurs on any other day of the 

week. 

Depositors do not incur any losses on ACHIEVED. 

insured deposits. SEE PG. 45. 

No appropriated funds are required to ACHIEVED. 

pay insured depositors. SEE PG. 45. 

Disseminate results of research and ACHIEVED. 

analyses in a timely manner through SEE PGS. 28-31. 

regular publications, ad hoc reports, 

and other means. 

Undertake industry outreach ACHIEVED. 

activities to inform bankers and other SEE PGS. 28-31. 

stakeholders about current trends, 

concerns, available resources, and 

FDIC performance metrics. 

55 
ANNUAL 

REPORT

PERFORMANCE RESULTS SUMMARY

 

2019 INSURANCE PROGRAM RESULTS (continued) 

3 

4 

5 

Strategic Goal: Insured depositors are protected from loss without recourse to taxpayer funding. 

# ANNUAL 

PERFORMANCE GOAL INDICATOR TARGET RESULTS 

Monitor the status of the 

DIF reserve ratio and analyze 

the factors that afect fund 

growth. Adjust assessment 

rates, as necessary. 

Expand and strengthen the 

FDIC’s participation and 

leadership role in supporting 

robust and efective deposit 

insurance programs, 

resolution strategies, and 

banking systems worldwide. 

Updated fund balance 

projections and 

recommended changes 

to assessment rates, as 

necessary. 

Activities to expand 

and strengthen 

engagement with 

strategically important 

foreign jurisdictions 

and key international 

organizations and 

associations, and to 

advance the FDIC’s 

global leadership 

and participation on 

deposit insurance, 

institution supervision, 

resolution practices and 

international fnancial 

safety net issues. 

Provision of technical 

assistance and training 

to foreign counterparts. 

Provide updated fund balance ACHIEVED. 

projections to the FDIC Board of SEE PGS. 15-16. 

Directors semiannually. 

Recommend changes to deposit ACHIEVED. 

insurance assessment rates to the SEE PGS. 15-16. 

FDIC Board of Directors as necessary. 

Foster strong relationships with ACHIEVED. 

international banking regulators, SEE PGS. 49-50. 

deposit insurers, and other relevant 

authorities by engaging with 

strategically important jurisdictions 

and organizations on international 

fnancial safety net issues. 

Provide leadership and expertise to ACHIEVED. 

key international organizations and SEE PGS. 49-50. 

associations that promote sound 

deposit insurance and efective bank 

supervision and resolution practices. 

Promote international standards ACHIEVED. 

and expertise in fnancial regulatory SEE PGS. 49-50. 

practices and stability through the 

provision of technical assistance and 

training to global fnancial system 

authorities. 

Ensure timely consideration 

and efcient processing of 

de novo deposit insurance 

applications. 

Updated policies, 

procedures, and 

guidance. 

Conduct six regional roundtable 

discussions to explain and solicit 

feedback on the de novo application 

process, and implement additional 

changes, as appropriate, based on that 

feedback. 

Ensure the de novo deposit insurance 

application process is streamlined and 

transparent. 

ACHIEVED. 

SEE PGS. 32-33. 

ACHIEVED. 

SEE PGS. 32-33. 

56 
2019

PERFORMANCE RESULTS SUMMARY

 

2019 INSURANCE PROGRAM RESULTS (continued) 

Strategic Goal: Insured depositors are protected from loss without recourse to taxpayer funding. 

# ANNUAL 

PERFORMANCE GOAL INDICATOR TARGET RESULTS 

6 Market failing institutions 

to all known qualifed and 

Scope of qualifed 

and interested bidders 

Contact all known qualifed and 

interested bidders. 

ACHIEVED. 

SEE PG. 45. 

interested potential bidders. solicited. 

7 Provide educational 

information to IDIs and 

Timeliness of responses 

to deposit insurance 

Respond within two weeks to 95 

percent of written inquiries from 

ACHIEVED. 

SEE PG. 39. 

their customers to help coverage inquiries. consumers and bankers about FDIC 

them understand the rules deposit insurance coverage. 

for determining the amount 

of insurance coverage on 

deposit accounts. 

Initiatives to increase 

public awareness of 

Conduct at least four telephone or 

in-person seminars for bankers on 

ACHIEVED 

SEE PGS. 38-39. 

deposit insurance deposit insurance coverage. 

coverage changes. 

57 
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REPORT

PERFORMANCE RESULTS SUMMARY

 

1 

2019 SUPERVISION PROGRAM RESULTS 

Strategic Goal: FDIC-insured institutions are safe and sound. 

# ANNUAL 

PERFORMANCE GOAL INDICATOR TARGET RESULTS 

Conduct on-site risk 

management examinations 

to assess the overall fnancial 

condition, management 

practices and policies, and 

compliance with applicable 

laws and regulations of 

FDIC-supervised depository 

institutions. When problems 

are identifed, promptly 

implement appropriate 

corrective programs and 

follow up to ensure that 

identifed problems are 

corrected. 

Percentage of required 

examinations conducted 

in accordance with 

statutory requirements 

and FDIC policy. 

Follow-up actions on 

identifed problems. 

Conduct all required risk 

management examinations within the 

timeframes prescribed by statute and 

FDIC policy. 

For at least 90 percent of IDIs that are 

assigned a composite CAMELS rating 

of 2 and for which the examination 

report identifes “Matters Requiring 

Board Attention” (MRBAs), review 

progress reports and follow up with 

the institution within six months of 

the issuance of the examination report 

to ensure that all MRBAs are being 

addressed. 

ACHIEVED. 

SEE PG.16. 

ACHIEVED. 

SEE PGS. 17-18. 

2 Assist in protecting the Percentage of required Conduct all BSA examinations within ACHIEVED. 

infrastructure of the U.S. examinations conducted the timeframes prescribed by statute SEE PG. 16. 

banking system against in accordance with and FDIC policy. 

terrorist fnancing, money statutory requirements 

laundering, and other and FDIC policy. 

fnancial crimes. 

58 
2019

PERFORMANCE RESULTS SUMMARY

 

3 

2019 SUPERVISION PROGRAM RESULTS (continued) 

Strategic Goal: FDIC-insured institutions are safe and sound. 

# ANNUAL 

PERFORMANCE GOAL INDICATOR TARGET RESULTS 

institutions have sufcient 

loss-absorbing capacity to 

remain resilient under stress 

while reducing complexity 

and maximizing efciency. 

standards that ensure 

Establish regulatory capital Simplifcation of 

capital standards for 

community banks. 

U.S. implementation of 

internationally agreed 

regulatory standards. 

Implementation of 

other changes to capital 

requirements directed 

by the Congress. 

Complete, by September 30, 2019, 

rulemaking for a community bank 

leverage ratio and conforming changes 

to the deposit insurance assessment 

process. 

Finalize aspects of the interagency 

capital simplifcation proposal issued 

in September 2017, including changes 

to the regulatory capital treatment of 

mortgage servicing assets, deferred 

tax assets, investment in the capital 

instruments of other fnancial 

institutions, and minority interest. 

Issue interagency fnal rules to adopt 

the statutory defnition of high 

volatility commercial real estate for 

risk based capital. 

Reevaluate and take appropriate 

actions on Basel III requirements for 

small banks that do not meet or are 

not eligible for the community bank 

leverage ratio. 

Issue a fnal rule, by December 31, 

2019, to implement the Net Stable 

Funding Ratio (NSFR). 

Issue interagency fnal rules to tailor 

capital requirements for large fnancial 

institutions. 

Issue interagency rulemaking 

to remove certain central bank 

deposits from the denominator of 

the supplementary leverage ratio for 

custodial banks. 

ACHIEVED. 

SEE PG. 27. 

ACHIEVED. 

SEE PG. 26. 

ACHIEVED. 

SEE PGS. 27-28. 

ACHIEVED. 

SEE PG. 26. 

NOT ACHIEVED. 

SEE PG. 26. 

ACHIEVED. 

SEE PGS. 25-26. 

ACHIEVED. 

SEE PG. 27. 

59 
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PERFORMANCE RESULTS SUMMARY

 

2019 SUPERVISION PROGRAM RESULTS (continued) 

Strategic Goal: FDIC-insured institutions are safe and sound. 

# ANNUAL 

PERFORMANCE GOAL INDICATOR TARGET RESULTS 

4 Implement strategies Enhance the 

to promote enhanced cybersecurity awareness 

cybersecurity and business and preparedness of the 

continuity within the banking industry. 

banking industry. 

Continue to conduct horizontal 

reviews that focus on the IT risks 

in large and complex supervised 

institutions and in technology service 

providers. 

ACHIEVED. 

SEE PGS. 19-20. 

Continue to use the Cybersecurity 

Examination Program for the 

most signifcant service provider 

examinations. 

ACHIEVED. 

SEE PGS. 19-20. 

Improve the analysis and sharing 

of cybersecurity-related threat 

information with fnancial 

institutions. 

ACHIEVED. 

SEE PGS. 19-20. 

60 
2019

PERFORMANCE RESULTS SUMMARY

 

2019 SUPERVISION PROGRAM RESULTS (continued) 

Strategic Goal: Consumers’ rights are protected, and FDIC-supervised institutions invest in their communities. 

# ANNUAL 

PERFORMANCE GOAL INDICATOR TARGET RESULTS 

1 Conduct on-site CRA 

and consumer compliance 

examinations to assess 

Percentage of 

examinations conducted 

in accordance with the 

Conduct all required examinations 

within the timeframes established. 

ACHIEVED. 

SEE PG. 18. 

compliance with applicable 

laws and regulations 

by FDIC-supervised 

institutions. When 

violations are identifed, 

promptly implement 

appropriate corrective 

programs and follow up 

to ensure that identifed 

problems are corrected. 

timeframes prescribed 

by FDIC policy. 

Implementation of 

corrective programs. 

Conduct visits and/or follow-up 

examinations in accordance with 

established FDIC processes to 

ensure that the requirements of 

any corrective program have been 

implemented and are efectively 

addressing identifed violations. 

ACHIEVED. 

SEE PG. 18. 

2 Efectively investigate and 

respond to written consumer 

complaints and inquiries 

about FDIC-supervised 

fnancial institutions. 

Timely responses to 

written consumer 

complaints and 

inquiries. 

Respond to 95 percent of written 

consumer complaints and inquiries 

within timeframes established by 

policy, with all complaints and 

inquiries receiving at least an initial 

acknowledgement within two weeks. 

ACHIEVED. 

SEE PGS. 43-44. 

Public availability 

of information on 

consumer complaints. 

Publish, through the Consumer 

Response Center (CRC), an annual 

report regarding the nature of the 

FDIC’s interactions with consumers 

ACHIEVED. 

SEE PG. 39. 

and depositors. 

Publish, on the FDIC’s website, and ACHIEVED. 

regularly update metrics on requests 

from the public for FDIC assistance. 

SEE PG. 39. 

61 
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PERFORMANCE RESULTS SUMMARY

 

2019 SUPERVISION PROGRAM RESULTS (continued) 

Strategic Goal: Consumers’ rights are protected, and FDIC-supervised institutions invest in their communities. 

# ANNUAL 

PERFORMANCE GOAL INDICATOR TARGET RESULTS 

3 Promote economic inclusion Completion of planned 

and access to responsible initiatives. 

fnancial services through 

supervisory, research, policy, 

and consumer/community 

afairs initiatives. 

Administer the 2019 Survey of 

the Unbanked and Underbanked 

Households. 

Conduct outreach to institutions 

and the public to expand the 

availability and usage of low-cost 

transaction accounts tailored to the 

needs of unbanked and underbanked 

households. 

Expand the reach of the new Money 

Smart for Adults through online 

resources, translating the curriculum 

into other languages, and outreach. 

Strengthen connections between 

small businesses and FDIC-insured 

institutions. 

Increase engagement and 

collaboration with, and provide 

support for, Minority Depository 

Institutions (MDIs). 

ACHIEVED. 

SEE PG. 38. 

ACHIEVED. 

SEE PGS. 37-38. 

ACHIEVED. 

SEE PG. 41. 

ACHIEVED. 

SEE PG. 40. 

ACHIEVED. 

SEE PGS. 21-23. 

62 
2019

PERFORMANCE RESULTS SUMMARY

 

1 

2019 SUPERVISION PROGRAM RESULTS (continued) 

Strategic Goal: Large and complex fnancial institutions are resolvable under the Bankruptcy Code. 

# ANNUAL 

PERFORMANCE GOAL INDICATOR TARGET RESULTS 

Rulemaking for 

resolution planning 

requirements. 

Identify and address risks 

in large, complex fnancial 

institutions, including those 

designated as systemically 

important. 

Compliance with the 

statutory and regulatory 

requirements under 

Title I of the DoddFrank Act and Section 

360.10 of the FDIC 

Rules and Regulations. 

Risk monitoring of 

large, complex fnancial 

institutions, bank 

holding companies, and 

designated nonbanking 

frms. 

Complete interagency rulemaking 

with the FRB to tailor application 

of resolution planning requirements 

under Section 165(d) of the DoddFrank Act. 

Issue an ANPR to tailor and make 

adjustments to the FDIC’s resolution 

planning requirements for IDIs. 

In collaboration with the FRB, 

review all resolution plans subject to 

the requirements of Section 165(d) 

of Dodd-Frank Act to ensure their 

conformance to statutory and other 

regulatory requirements. Identify 

and provide feedback to frms on 

potential impediments in those plans 

to resolution under the Bankruptcy 

Code. 

Review resolution plans subject to the 

requirements of Section 360.10 of the 

Insured Depository Institutions (IDI) 

Rule to ensure their conformance to 

other regulatory requirements. 

Conduct ongoing risk analysis and 

monitoring of large, complex fnancial 

institutions to understand and assess 

their structure, business activities, risk 

profles, and resolution and recovery 

plans. 

ACHIEVED. 

SEE PG. 34. 

ACHIEVED. 

SEE PG. 35. 

ACHIEVED. 

SEE PG. 35. 

ACHIEVED. 

SEE PG. 35. 

ACHIEVED. 

SEE PGS. 35-36. 

63 
ANNUAL 

REPORT

PERFORMANCE RESULTS SUMMARY

 

1 

2019 RECEIVERSHIP MANAGEMENT PROGRAM RESULTS 

4 

Strategic Goal: Resolutions are orderly and receiverships are managed efectively. 

# ANNUAL 

PERFORMANCE GOAL INDICATOR TARGET RESULTS 

Value, manage, and market 

assets of failed institutions 

and their subsidiaries in a 

timely manner to maximize 

net return. 

ACHIEVED. 

SEE PG. 45. 

Percentage of the assets 

marketed for each failed 

institution. 

For at least 95 percent of insured 

institution failures, market at least 

90 percent of the book value of the 

institution’s marketable assets within 

90 days of the failure date (for cash 

sales) and within 120 days of the date 

that the pool of similar assets is of 

sufcient size to bring to market (for 

structured sales). 

2 Manage the receivership 

estate and its subsidiaries 

Timely termination of 

new receiverships. 

Terminate at least 75 percent of new 

receiverships that are not subject to 

ACHIEVED. 

SEE PG. 45. 

toward an orderly loss-share agreements, structured sales, 

termination. or other legal impediments within 

three years of the date of failure. 

3 Conduct investigations into 

all potential professional 

Percentage of 

investigated claim areas 

For 80 percent of all claim areas, 

make a decision to close or pursue 

ACHIEVED. 

SEE PG. 46. 

liability claim areas for all for which a decision has professional liability claims within 18 

failed IDIs and decide as been made to close or months of the failure of an insured 

promptly as possible to pursue the claim. depository institution. 

close or pursue each claim, 

considering the size and 

complexity of the institution. 

Ensure the FDIC’s 

operational readiness to 

administer the resolution of 

large fnancial institutions, 

including those designated as 

systemically important. 

Refnement of 

resolution plans and 

strategies. 

Continued crossborder coordination 

and cooperation in 

resolution planning. 

Continue to refne plans to ensure 

the FDIC’s operational readiness to 

administer the resolution of large, 

complex fnancial institutions. 

Continue to deepen and strengthen 

bilateral working relationships 

with key foreign jurisdictions, both 

on a bilateral basis and through 

multilateral fora. 

ACHIEVED. 

SEE PG. 36. 

ACHIEVED. 

SEE PGS. 36-37. 

64 
2019

PERFORMANCE RESULTS SUMMARY

PRIOR YEARS’ PERFORMANCE RESULTS 

Refer to the respective full Annual Report of prior years, located on the FDIC’s website for more information on 

performance results for those years. Shaded areas indicate no such target existed for that respective year. 

INSURANCE PROGRAM RESULTS 

Strategic Goal: Insured depositors are protected from loss without recourse to taxpayer funding. 

ANNUAL PERFORMANCE GOALS AND TARGETS 2018 2017 2016 2015 2014 

1. Respond promptly to all insured fnancial institution 

closings and related emerging issues. 

♦ Depositors have access to insured funds within 

one business day if the failure occurs on a Friday. 

N/A – NO 

FAILURES. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

♦ Depositors have access to insured funds within two 

business days if the failure occurs on any other day 

of the week. 

N/A – NO 

FAILURES. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

♦ Depositors do not incur any losses on 

insured deposits. 

N/A – NO 

FAILURES. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

♦ No appropriated funds are required to pay 

insured depositors. 

N/A – NO 

FAILURES. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

2. Disseminate data and analyses on issues and risks 

afecting the fnancial services industry to bankers, 

supervisors, the public, and other stakeholders on 

an ongoing basis. 

♦ Disseminate results of research and analyses in 

a timely manner through regular publications, 

ad hoc reports, and other means. 

ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

♦ Undertake industry outreach activities to inform 

bankers and other stakeholders about current trends, 

concerns, and other available FDIC resources. 

ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

3. Adjust assessment rates, as necessary, to achieve a 

DIF reserve ratio of at least 1.35 percent of estimated 

insured deposits by September 30, 2020. 

♦ Provide updated fund balance projections to the 

FDIC Board of Directors by June 30, 2018, and 

December 31, 2018. 

ACHIEVED. 

♦ Provide updated fund balance projections to the 

FDIC Board of Directors by June 30, 2017, and 

December 31, 2017. 

ACHIEVED. 

♦ Provide updated fund balance projections to the 

FDIC Board of Directors by June 30, 2016, and 

December 31, 2016. 

ACHIEVED. 

♦ Provide updated fund balance projections to the 

FDIC Board of Directors by June 30, 2015, and 

December 31, 2015. 

ACHIEVED. 

65 
ANNUAL 

REPORT

PERFORMANCE RESULTS SUMMARY

INSURANCE PROGRAM RESULTS (continued) 

Strategic Goal: Insured depositors are protected from loss without recourse to taxpayer funding. 

Annual Performance Goals and Targets 2018 2017 2016 2015 2014 

♦ Provide updated fund balance projections to the 

FDIC Board of Directors by June 30, 2014, and 

December 31, 2014. 

ACHIEVED. 

♦ Provide progress reports to the FDIC Board of 

Directors by June 30, 2018, and December 31, 2018. ACHIEVED. 

♦ Provide progress reports to the FDIC Board of 

Directors by June 30, 2017, and December 31, 2017. ACHIEVED. 

♦ Provide progress reports to the FDIC Board of 

Directors by June 30, 2016, and December 31, 2016. ACHIEVED. 

♦ Provide progress reports to the FDIC Board of 

Directors by June 30, 2015, and December 31, 2015. ACHIEVED. 

♦ Provide progress reports to the FDIC Board of 

Directors by June 30, 2014, and December 31, 2014. ACHIEVED. 

♦ Recommend changes to deposit insurance assessment 

rates to the FDIC Board of Directors as necessary. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

4. Expand and strengthen the FDIC’s participation and 

leadership role in supporting robust and efective deposit 

insurance programs, resolution strategies, and banking 

systems worldwide. 

♦ Foster strong relationships with international banking 

regulators, deposit insurers, and other relevant 

authorities by engaging with strategically important 

jurisdictions and organizations on international 

fnancial safety net issues. 

ACHIEVED. ACHIEVED. ACHIEVED. 

♦ Provide leadership and expertise to key international 

organizations and associations that promote sound 

deposit insurance and efective bank supervision and 

resolution practices. 

ACHIEVED. ACHIEVED. 

♦ Promote international standards and expertise in 

fnancial regulatory practices and stability through the 

provision of technical assistance and training to global 

fnancial system authorities. 

ACHIEVED. ACHIEVED. 

♦ Continue to play leadership roles within key 

international organizations and associations and 

promote sound deposit insurance, bank supervision, 

and resolution practices. 

ACHIEVED. 

♦ Promote continued enhancement of international 

standards and expertise in fnancial regulatory 

practices and stability through the provision of 

technical assistance and training to global fnancial 

system authorities. 

ACHIEVED. 

66 
2019

PERFORMANCE RESULTS SUMMARY

INSURANCE PROGRAM RESULTS (continued) 

Strategic Goal: Insured depositors are protected from loss without recourse to taxpayer funding. 

Annual Performance Goals and Targets 2018 2017 2016 2015 2014 

♦ Develop and foster closer relationships with bank 

supervisors in the reviews through the provision of 

technical assistance and by leading governance eforts 

in the Association of Supervisors of Banks of the 

Americas (ASBA). 

ACHIEVED. 

♦ Maintain open dialogue with counterparts in 

strategically important jurisdictions, international 

fnancial organizations and institutions, and partner 

U.S. agencies; and actively participate in bilateral 

interagency regulatory dialogues. 

ACHIEVED. 

♦ Maintain open dialogue with counterparts in 

strategically important jurisdictions, international 

fnancial organizations and institutions, and partner 

U.S. agencies. 

ACHIEVED. 

♦ Maintain a leadership position in the International 

Association of Deposit Insurers (IADI) by conducting 

workshops and performing assessments of deposit 

insurance systems based on the methodology for 

assessment of compliance with the IADI Core 

Principles for Efective Deposit Insurance Systems 

(Core Principles), developing and conducting training 

on priority topics identifed by IADI members, and 

actively participating in IADI’s Executive Council 

and Standing Committees. 

ACHIEVED. ACHIEVED. 

♦ Maintain open dialogue with the Association of 

Supervisors of Banks of the Americas (ASBA) to 

develop and foster relationships with bank supervisors 

in the region by providing assistance when necessary. 

ACHIEVED. 

♦ Engage with authorities responsible for resolutions 

and resolutions planning in priority foreign 

jurisdictions and contribute to the resolution-related 

agenda of the Financial Stability Board (FSB) through 

active participation in the FSB’s Resolution Steering 

Group (ReSG). 

ACHIEVED. 

♦ Engage with authorities responsible for resolutions 

and resolutions planning in priority foreign 

jurisdictions. 

ACHIEVED. 

♦ Contribute to the resolution-related agenda of the 

Financial Stability Board (FSB) through active 

participation in the FSB’s Resolution Steering Group 

and its working groups. 

ACHIEVED. 

67 
ANNUAL 

REPORT

PERFORMANCE RESULTS SUMMARY

INSURANCE PROGRAM RESULTS (continued) 

Strategic Goal: Insured depositors are protected from loss without recourse to taxpayer funding. 

Annual Performance Goals and Targets 2018 2017 2016 2015 2014 

♦ Actively participate in bilateral interagency regulatory 

dialogues. ACHIEVED. 

♦ Support visits, study tours, secondments, and longerterm technical assistance and training programs for 

representatives for foreign jurisdictions to strengthen 

their deposit insurance organizations, central banks, 

bank supervisors, and resolution authorities. 

ACHIEVED. ACHIEVED. 

5. Market failing institutions to all known qualifed and 

interested potential bidders. 

♦ Contact all known qualifed and interested bidders. N/A – NO 

FAILURES. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

6. Provide educational information to insured depository 

institutions and their customers to help them 

understand the rules for determining the amount of 

insurance coverage on deposit accounts. 

♦ Respond within two weeks to 95 percent of written 

inquiries from consumers and bankers about FDIC 

deposit insurance coverage. 

ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

♦ Conduct at least four telephone or in-person seminars 

for bankers on deposit insurance coverage. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

♦ Conduct at least 12 telephone or in-person seminars 

for bankers on deposit insurance coverage. ACHIEVED. 

♦ Complete and post on the FDIC website videos 

for bankers and consumers on deposit insurance 

coverage. 

ACHIEVED. 

68 
2019

PERFORMANCE RESULTS SUMMARY

SUPERVISION PROGRAM RESULTS 

Strategic Goal: FDIC-insured institutions are safe and sound. 

ANNUAL PERFORMANCE GOALS AND TARGETS 2018 2017 2016 2015 2014 

1. Conduct on-site risk management examinations to assess 

the overall fnancial condition, management practices 

and policies, and compliance with applicable laws and 

regulations of FDIC-supervised depository institutions. 

When problems are identifed, promptly implement 

appropriate corrective programs, and follow up to ensure 

that identifed problems are corrected. 

♦ Conduct all required risk management examinations 

within the time frames prescribed by statute and 

FDIC policy. 

ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

♦ For at least 90 percent of institutions that are assigned 

a composite CAMELS rating of 2 and for which the 

examination report identifes “Matters Requiring 

Board Attention” (MRBAs), review progress reports 

and follow up with the institution within six months 

of the issuance of the examination report to ensure 

that all MRBAs are being addressed. 

ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

♦ Implement formal or informal enforcement 

actions within 60 days for at least 90 percent of 

all institutions that are newly downgraded to a 

composite Uniform Financial Institutions Rating of 

3, 4, or 5. 

SUBSTANTIALLY 

ACHIEVED. 

2. Assist in protecting the infrastructure of the U.S. 

banking system against terrorist fnancing, money 

laundering, and other fnancial crimes. 

♦ Conduct all Bank Secrecy Act examinations within 

the time frames prescribed by statute and FDIC 

policy. 

ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

3. Ensure that regulatory capital standards promote banks’ 

resilience under stress and the confdence of their 

counterparties. 

♦ Finalize a Notice of Proposed Rulemaking (NPR) 

for a simplifed risk-based capital framework for 

community banks. 

NOT 

ACHIEVED. 

♦ Finalize the Basel III Net Stable Funding Ratio 

(NSFR). 

NOT 

ACHIEVED. 

69 
ANNUAL 

REPORT

PERFORMANCE RESULTS SUMMARY

SUPERVISION PROGRAM RESULTS (continued) 

Strategic Goal: FDIC-insured institutions are safe and sound. 

Annual Performance Goals and Targets 2018 2017 2016 2015 2014 

4. More closely align regulatory capital standards with risk 

and ensure that capital is maintained at prudential levels. 

♦ Issue a Notice of Proposed Rulemaking (NPR) for a 

simplifed capital framework for community banks. ACHIEVED. 

♦ Issue a fnal rule implementing the Basel III Net 

Stable Funding Ratio. 

NOT 

ACHIEVED. 

♦ Publish in 2016, a Notice of (proposed) Rulemaking 

on the Basel III Net Stable Funding Ratio. ACHIEVED. 

♦ Publish by December 31, 2015, an interagency 

Notice of Proposed Rulemaking on implementation 

of the Basel III Net Stable Funding Ratio. 

NOT 

ACHIEVED. 

♦ Finalize Basel III reporting instructions in time to 

ensure that institutions that are using the advanced 

approaches can implement Basel III in the frst 

quarter of 2014 and that all IDIs can implement the 

standardized approach in the frst quarter of 2015. 

ACHIEVED. 

♦ Publish a fnal Basel Liquidity Coverage Rule, 

in collaboration with other regulators by 

December 31, 2014. 

ACHIEVED. 

♦ Publish a fnal rule implementing the Basel III capital 

accord in collaboration with other regulators, by 

December 31, 2014. 

ACHIEVED. 

♦ Finalize, in collaboration with other regulators, an 

enhanced U.S. supplementary leverage ratio standard 

by December 31, 2014. 

ACHIEVED. 

5. Implement strategies to promote enhanced information 

security, cybersecurity, and business continuity within 

the banking industry. 

♦ Continue implementation of a horizontal review 

program that focuses on the IT risks in large and 

complex supervised institutions and Technology 

Service Providers (TSPs). 

ACHIEVED. ACHIEVED. 

♦ Continue implementation of the Cybersecurity 

Examination Program for the most signifcant service 

provider examinations. 

ACHIEVED. 

♦ Revise and implement by December 31, 2017, the 

Cybersecurity Examination Tool for TSPs. ACHIEVED. 

♦ Establish a horizontal review program that focuses 

on the IT risks in large and complex supervised 

institutions and Technology Service providers (TSPs). 

ACHIEVED. 

70 
2019

PERFORMANCE RESULTS SUMMARY

SUPERVISION PROGRAM RESULTS (continued) 

Strategic Goal: FDIC-insured institutions are safe and sound. 

Annual Performance Goals and Targets 2018 2017 2016 2015 2014 

♦ Complete by June 30, 2016, examiner training and 

implement by September 30, 2016, the new IT 

examination work program to enhance focus on 

information security, cybersecurity, and business 

continuity. 

ACHIEVED. 

♦ Enhance the technical expertise of the IT supervisory 

workforce. ACHIEVED. 

♦ Working with FFIEC counterparts, update 

and strengthen IT guidance to the industry on 

cybersecurity preparedness. 

ACHIEVED. 

♦ Working with the FFIEC counterparts, update 

and strengthen IT examination work programs for 

institutions and technology service providers (TSPs) 

to evaluate cybersecurity preparedness and cyber 

resiliency. 

ACHIEVED. 

♦ Improve information sharing on identifed 

technology risks among the IT examination 

workforces of FFIEC member agencies. 

ACHIEVED. 

♦ In coordination with the FFIEC, implement 

recommendations to enhance the FDIC’s supervision 

of the IT risks at insured depository institutions and 

their technology service providers. 

ACHIEVED. 

6. Identify and address risks in fnancial institutions 

designated as systemically important. 

♦ Conduct ongoing risk analysis and monitoring of 

SIFIs to understand their structure, business activities 

and risk profles, and their resolution and recovery 

capabilities. 

ACHIEVED. 

♦ Complete, in collaboration with the Federal 

Reserve Board and in accordance with statutory and 

regulatory timeframes, all required actions associated 

with the review of resolution plans submitted by 

fnancial companies subject to the requirements of 

Section 165 (d) of the Dodd-Frank Act. 

ACHIEVED. 

♦ Hold at least one meeting of the Systemic Resolution 

Advisory Committee to obtain feedback on resolving 

SIFIs. 

ACHIEVED. 

71 
ANNUAL 

REPORT

PERFORMANCE RESULTS SUMMARY

SUPERVISION PROGRAM RESULTS (continued) 

Strategic Goal: Consumers’ rights are protected, and FDIC-supervised institutions invest in their communities. 

ANNUAL PERFORMANCE GOALS AND TARGETS 2018 2017 2016 2015 2014 

1. Conduct on-site CRA and consumer compliance 

examinations to assess compliance with applicable 

laws and regulations by FDIC-supervised depository 

institutions. When violations are identifed, promptly 

implement appropriate corrective programs and follow 

up to ensure that identifed problems are corrected. 

♦ Conduct all required examinations within the time 

frames established by FDIC policy. 

SUBSTANTIALLY 

ACHIEVED. 

ACHIEVED. ACHIEVED. ACHIEVED. 

♦ Conduct visits and/or follow-up examinations in 

accordance with established FDIC policies to ensure 

that the requirements of any required corrective 

program have been implemented and are efectively 

addressing identifed violations. 

SUBSTANTIALLY 

ACHIEVED. 

ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

♦ Conduct 100 percent of required examinations 

within the time frames established by FDIC policy. 

SUBSTANTIALLY 

ACHIEVED. 

2. Efectively investigate and respond to written consumer 

complaints and inquiries about FDIC-supervised 

fnancial institutions. 

♦ Respond to 95 percent of written consumer 

complaints and inquiries within time frames 

established by policy, with all complaints and 

inquiries receiving at least an initial acknowledgment 

within two weeks. 

ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

3. Promote economic inclusion and access to responsible 

fnancial services through supervisory, research, policy, 

and consumer/community afairs initiatives. 

♦ Publish the results of the 2017 FDIC National 

Survey of Unbanked and Underbanked Households. ACHIEVED. 

♦ Complete planning for the 2019 FDIC National 

Survey of Unbanked and Underbanked Households. ACHIEVED. 

72 
2019

PERFORMANCE RESULTS SUMMARY

SUPERVISION PROGRAM RESULTS (continued) 

Strategic Goal: FDIC-insured institutions are safe and sound. 

Annual Performance Goals and Targets 2018 2017 2016 2015 2014 

♦ Continue to promote broader access to and use of 

low-cost transaction and savings accounts to build 

banking relationships that will meet the needs of 

unbanked and underbanked households by increasing 

the current level of engagement from 10 communities 

to 15 communities. 

ACHIEVED. 

♦ Launch the revised Money Smart for Adults 

curriculum. ACHIEVED. 

♦ Revise and administer the 2017 FDIC National 

Survey of Unbanked and Underbanked Households. ACHIEVED. 

♦ Continue and expand eforts to promote broader 

awareness of the availability of low-cost transaction 

accounts consistent with the FDIC’s Model SAFE 

transaction account template. 

ACHIEVED. 

♦ Complete and pilot a revised, instructor-led Money 

Smart for Adults product. ACHIEVED. 

♦ Publish the results of the 2015 FDIC National 

Survey of Unbanked and Underbanked Household. ACHIEVED. 

♦ Complete and present to the Advisory Committee 

on Economic Inclusions (ComE-IN) a report on the 

pilot Youth Savings Program (YSP) conducted jointly 

with the CFPB. 

ACHIEVED. 

♦ Revise, test, and administer the 2015 FDIC National 

Survey of Unbanked and Underbanked Household. ACHIEVED. 

♦ Publish the results of the 2013 FDIC National Survey 

of Unbanked and Underbanked Households (conducted 

jointly with the U.S. Census Bureau). 

ACHIEVED. 

♦ Promote broader awareness of the availability of lowcost transaction accounts consistent with the FDIC’s 

Model SAFE transaction account template. 

ACHIEVED. 

♦ Support the Advisory Committee on Economic 

Inclusion in expanding the availability and awareness 

of low-cost transaction accounts, consistent with the 

FDIC’s SAFE account template. 

ACHIEVED. 

♦ Implement the strategy outlined in the work plan 

approved by the Advisory Committee on Economic 

Inclusion to support the expanded availability of 

SAFE accounts and the responsible use of technology, 

to expand banking services to the underbanked. 

ACHIEVED. 

73 
ANNUAL 

REPORT

PERFORMANCE RESULTS SUMMARY

SUPERVISION PROGRAM RESULTS (continued) 

Strategic Goal: FDIC-insured institutions are safe and sound. 

Annual Performance Goals and Targets 2018 2017 2016 2015 2014 

♦ In partnership with the Consumer Financial 

Protection Bureau, enhance fnancial capability 

among school-age children through (1) development 

and delivery of tailored fnancial education materials; 

(2) resources and outreach targeted to youth, parents, 

and teachers; and (3) implementation of a pilot youth 

savings program. 

ACHIEVED. 

♦ Facilitate opportunities for banks and community 

stakeholders to address issues concerning access to 

fnancial services, community development, and 

fnancial education. 

ACHIEVED. 

74 
2019

PERFORMANCE RESULTS SUMMARY

SUPERVISION PROGRAM RESULTS (continued) 

Strategic Goal: Large and complex fnancial institutions are resolvable in an orderly manner under bankruptcy. 

ANNUAL PERFORMANCE GOALS AND TARGETS 2018 2017 2016 2015 2014 

1. Identify and address risks in large and complex fnancial 

institutions, including those designated as systemically 

important. 

♦ In collaboration with the FRB continue to review 

all resolution plans subject to the requirements 

of Section 165(d) of the DFA to ensure their 

conformance to statutory and other regulatory 

requirements. Identify potential impediments in 

those plans to resolution under the Bankruptcy Code. 

ACHIEVED. ACHIEVED. ACHIEVED. 

♦ Continue to review all resolution plans subject 

to the requirements of Section 360.10 of the IDI 

rule to ensure their conformance to statutory and 

other regulatory requirements. Identify potential 

impediments to resolvability under the Federal 

Deposit Insurance (FDI) Act. 

ACHIEVED. ACHIEVED. ACHIEVED. 

♦ Conduct ongoing risk analysis and monitoring of 

large, complex fnancial institutions to understand 

and assess their structure, business activities, risk 

profles, and resolution and recovery plans. 

ACHIEVED. ACHIEVED. ACHIEVED. 

♦ Conduct ongoing risk analysis and monitoring of 

large, complex fnancial institutions to understand 

and assess their structure, business activities, risk 

profles, and resolution and recovery plans. 

ACHIEVED. 

♦ Complete, in collaboration with the FRB and in 

accordance with statutory and regulatory time frames, 

a review of resolution plans submitted by individual 

fnancial companies subject to the requirements of 

section 165 (d) of DFA and Part 360.10 of the FDIC 

Rules and Regulations. 

ACHIEVED. 

75 
ANNUAL 

REPORT

PERFORMANCE RESULTS SUMMARY

RECEIVERSHIP MANAGEMENT PROGRAM RESULTS 

Strategic Goal: Resolutions are orderly and receiverships are managed efectively. 

ANNUAL PERFORMANCE GOALS AND TARGETS 2018 2017 2016 2015 2014 

1. Value, manage, and market assets of failed institutions 

and their subsidiaries in a timely manner to maximize 

net return. 

♦ For at least 95 percent of insured institution failures, 

market at least 90 percent of the book value of the 

institution’s marketable assets within 90 days of the 

failure date (for cash sales) or 120 days of the date 

that the pool of similar assets is of sufcient size to 

bring to market (for structured sales). 

N/A – NO 

FAILURES. 

♦ For at least 95 percent of insured institution failures, 

market at least 90 percent of the book value of the 

institution’s marketable assets within 90 days of the 

failure date (for cash sales) or 120 days of the failure 

date (for structured sales). 

ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

2. Manage the receivership estate and its subsidiaries 

toward an orderly termination. 

♦ Terminate at least 75 percent of new receiverships 

that are not subject to loss-share agreements, 

structured sales, or other legal impediments, within 

three years of the date of failure. 

N/A – NO 

FAILURES. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

3. Conduct investigations into all potential professional 

liability claim areas for all failed insured depository 

institutions, and decide as promptly as possible, to 

close or pursue each claim, considering the size and 

complexity of the institution. 

♦ For 80 percent of all claim areas, make a decision 

to close or pursue professional liability claims within 

18 months of the failure date of an insured depository 

institution. 

ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. ACHIEVED. 

4. Ensure the FDIC’s operational readiness to administer 

the resolution of large fnancial institutions, including 

those designated as systemically important. 

♦ Continue to refne plans to ensure the FDIC’s 

operational readiness to administer the resolution 

of large fnancial institutions under Title II of the 

DFA, including those nonbank fnancial companies 

designated as systemically important. 

ACHIEVED. ACHIEVED. 

♦ Refne plans to ensure the FDIC’s operational 

readiness to administer the resolution of large 

fnancial institutions including those designated as 

systemically important. 

ACHIEVED. 

76 
2019

PERFORMANCE RESULTS SUMMARY

RECEIVERSHIP MANAGEMENT PROGRAM RESULTS (continued) 

Strategic Goal: Resolutions are orderly and receiverships are managed efectively. 

Annual Performance Goals and Targets 2018 2017 2016 2015 2014 

♦ Continue to deepen and strengthen bilateral working 

relationships with key foreign jurisdictions. ACHIEVED. ACHIEVED. ACHIEVED. 

♦ Hold a meeting of the Systemic Resolution Advisory 

Committee in early 2016 to obtain feedback on 

resolving SIFIs. 

ACHIEVED. 

5. Ensure the FDIC’s operational readiness to resolve a 

large, complex fnancial institution using the orderly 

liquidation authority in Title II of the DFA. 

♦ Update and refne frm-specifc resolutions plans and 

strategies and develop operational procedures for the 

administration of a Title II receivership. 

ACHIEVED. 

♦ Prepare for an early 2016 meeting of the Systemic 

Resolution Advisory Committee to obtain feedback 

on resolving SIFIs. 

ACHIEVED. 

♦ Continue to deepen and strengthen bilateral working 

relationships with key foreign jurisdictions. ACHIEVED. ACHIEVED. 

77 
III. 

FINANCIAL HIGHLIGHTS 
2019

FINANCIAL HIGHLIGHTS

In its role as insurer of bank and savings association 

deposits, the FDIC promotes the safety and soundness of 

insured depository institutions. Te following fnancial 

highlights address the performance of the Deposit 

Insurance Fund. 

DEPOSIT INSURANCE 

FUND PERFORMANCE 

Te DIF balance was $110.3 billion at December 31, 2019, 

an increase of $7.7 billion from the year-end 2018 balance 

of $102.6 billion. Te DIF’s comprehensive income totaled 

$7.7 billion for 2019 compared to comprehensive income 

of $9.9 billion during 2018. Te $2.2 billion year-overyear decrease was primarily due to a $4.6 billion decrease 

in assessment revenue partially ofset by a $1.8 billion 

increase in interest and unrealized gains on U.S. Treasury 

securities. 

Assessment revenue was $4.9 billion for 2019, compared 

to $9.5 billion for 2018. Te $4.6 billion year-overyear decrease was primarily due to the cessation of the 

surcharge assessment on large institutions efective 

October 1, 2018, as a result of the reserve ratio exceeding 

the required minimum of 1.35 percent as of September 

30, 2018. In addition, assessment revenue was reduced in 

2019 for actual and expected small bank assessment credit 

usage of $704 million. 

Te DIF’s interest revenue on U.S. Treasury securities 

for 2019 was $2.1 billion, compared to $1.6 billion 

in 2018. Te $484 million year-over-year increase 

resulted primarily from a steady growth in the investment 

portfolio balance. 

In addition, the DIF recognized an unrealized gain on 

U.S. Treasury securities of $1.2 billion, up from a $136 

million unrealized loss in 2018. Te unrealized gain in 

2019 was the result of yields declining across all maturity 

sectors of the Treasury yield curve, resulting in increases in 

the securities’ market values relative to their book values. 

Te provision for insurance losses was a negative $1.3 

billion for 2019, compared to negative $563 million 

for 2018. Te negative provision for 2019 primarily 

resulted from a decrease to the estimated losses for 

prior year failures, attributable to: (1) a decrease in 

receivership shared-loss liability cost estimates of $575 

million primarily due to lower-than-anticipated losses on 

covered assets, reductions in shared-loss cost estimates 

from expirations and early terminations of shared-loss 

agreements during the year, and higher true-up recoveries 

(projected to be received at expiration if actual losses 

at expiration are lower than originally estimated); (2) 

$465 million of unanticipated recoveries received by 

receiverships from litigation settlements and professional 

liability claims; and (3) a $118 million reduction in future 

receivership expense estimates. 

Te DIF’s cash, cash equivalents, and U.S. Treasury 

investment portfolio balances increased by $7.6 billion 

during 2019 to $106.1 billion at year-end 2019, from $98.5 

billion at year-end 2018. Tis increase was primarily due 

to assessment collections of $5.1 billion, interest received 

on U.S. Treasury securities of $2.0 billion, and recoveries 

from resolutions of $1.7 billion, less operating expenses 

paid of $1.7 billion. 

81 
ANNUAL 

REPORT

FINANCIAL HIGHLIGHTS

ESTIMATED DIF INSURED DEPOSITS 

Dollars in Billions 

3-11 

6-11 

9-11 

12-11 

3-12 

6-12 

9-12 

12-12 

3-13 

6-13 

9-13 

12-13 

3-14 

6-14 

9-14 

12-14 

3-15 

6-15 

9-15 

12-15 

3-16 

6-16 

9-16 

12-16 

3-17 

6-17 

9-17 

12-17 

3-18 

6-18 

9-18 

12-18 

3-19 

6-19 

9-19 

$8,000 

$7,000 

$6,000 

$5,000 

$4,000 

$3,000 

$2,000 

$1,000 

0 

SOURCE: Commercial Bank Call and Thrift Financial Reports 

Note: Beginning in fourth quarter 2010 through fourth quarter 2012, estimated insured deposits include the entire balance of noninterestbearing transaction accounts. 

DEPOSIT INSURANCE FUND RESERVE RATIOS 

Fund Balance as a Percent

of Estimated Insured Deposits

0.4 

0.6 

0.8 

1.2 

1.4 

1.0 

0.2 

0.0 

-0.2 

3-11 

6-11 

9-11 

12-11 

3-12 

6-12 

9-12 

12-12 

3-13 

6-13 

9-13 

12-13 

3-14 

6-14 

9-14 

12-14 

3-15 

6-15 

9-15 

12-15 

3-16 

6-16 

9-16 

12-16 

3-17 

6-17 

9-17 

12-17 

3-18 

6-18 

9-18 

12-18 

3-19 

6-19 

9-19 

82 
2019

FINANCIAL HIGHLIGHTS

DEPOSIT INSURANCE FUND SELECTED STATISTICS 

Dollars in Millions 

For the years ended December 31 

2019 2018 2017 

Financial Results 

Revenue $7,095 $11,171 $11,664 

Operating Expenses 1,796 1,765 1,739 

Insurance and Other Expenses (includes provision for losses) (1,282) (560) (181) 

Net Income 6,582 9,966 10,105 

Comprehensive Income 7,738 9,861 9,586 

Insurance Fund Balance $110,347 $102,609 $92,747 

Fund as a Percentage of Insured Deposits (reserve ratio) 1.41%1 1.36% 1.30% 

Selected Statistics 

Total DIF-Member Institutions2 5,2561 5,406 5,670 

Problem Institutions 551 60 95 

Total Assets of Problem Institutions $48,7791 $48,489 $13,939 

Institution Failures 4 0 

Total Assets of Failed Institutions in Year3 $209 $0 $5,082 

Number of Active Failed Institution Receiverships 248 272 338 

1 As of September 30, 2019. 

2

 Commercial banks and savings institutions. Does not include U.S. insured branches of foreign banks. 

3 Total Assets data are based upon the last Call Report filed by the institution prior to failure.

8 

83 
IV. 

BUDGET AND SPENDING 
2019

FDIC OPERATING BUDGET 

Te FDIC segregates its corporate operating budget 

and expenses into three discrete components: ongoing 

operations, receivership funding, and the Ofce of 

Inspector General (OIG). Te receivership funding 

component represents expenses resulting from fnancial 

institution failures and is, therefore, largely driven by 

external forces and is less controllable and estimable. 

FDIC operating expenditures totaled $1.9 billion in 2019, 

including $1.8 billion in ongoing operations, $75 million 

in receivership funding, and $38 million for the OIG. 

Tis represented approximately 96 percent of the approved 

budget for ongoing operations, 43 percent of the approved 

budget for receivership funding, and 88 percent of the 

approved budget for the OIG for the year. 

Te approved 2020 FDIC Operating Budget of 

approximately $2.0 billion consists of $1.9 billion for 

ongoing operations, $75 million for receivership funding, 

and $43 million for the OIG. Te level of approved 

ongoing operations budget for 2020 is approximately 

$74 million (4.1 percent) higher than the 2019 ongoing 

operations budget, while the approved receivership 

funding budget is $100 million (57 percent) lower than 

the 2019 receivership funding budget. Te 2020 OIG 

budget is unchanged from the 2019 OIG budget. 

As in prior years, the 2020 budget was formulated 

primarily on the basis of an analysis of projected workload 

for each of the FDIC’s three major business lines and its 

program support functions. Te most signifcant factor 

contributing to the decrease in the FDIC Operating 

Budget is the improving health of the industry and 

the resultant reduction in failure related workload. 

Although savings in this area are being realized, the 

2020 receivership funding budget provides resources for 

contractor support should workload in these areas require 

an immediate response. 

FDIC EXPENDITURES 

Dollars in Millions 

$3,500 

$3,000 

$2,500 

$2,000 

$1,500 

$1,000 

$500 

$0 

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 

BUDGET AND SPENDING 87 
ANNUAL 

REPORT

BUDGET AND SPENDING

Te FDIC’s Strategic Plan and Annual Performance Plan 

provide the basis for annual planning and budgeting for 

needed resources. Te 2019 aggregate budget (for ongoing 

operations, receivership funding, OIG, and investment 

spending) was $2.04 billion, while actual expenditures for 

the year were $1.86 billion, about $34 million less than 

2018 expenditures. 

Over the past decade the FDIC’s expenditures have 

varied in response to workload. During the last several 

years, expenditures have fallen, largely due to decreasing 

resolution and receivership activity. To a lesser extent 

decreased expenses have resulted from supervision-related 

costs associated with the oversight of fewer troubled 

institutions. 

2019 BUDGET AND EXPENDITURES BY PROGRAM 

(Support Allocated) 

Dollars in Millions 

$1,200 

$900 

$600 

$300 

$0 

Supervision 

and Consumer 

Protection 

Program 

Receivership 

Management 

Program 

2019 BUDGET AND 

EXPENDITURES BY PROGRAM 

(Excluding Investments) 

Te FDIC budget for 2019 totaled approximately $2.04 

billion. Budget amounts were allocated as follows: $1.06 

billion, or 52 percent, to the Supervision and Consumer 

Protection program; $394 million, or 19 percent, to the 

Receivership Management program; $323 million, or 16 

percent, to the Insurance program; and $264 million, 

Budget Expenditures 

Insurance General and 

Program Administrative 

or 13 percent, to Corporate General and Administrative 

expenditures. 

Actual expenditures for the year totaled $1.86 billion. 

Actual expenditures amounts were allocated as follows: 

$1.06 billion, or 57 percent, to the Supervision and 

Consumer Protection program; $252 million, or 

14 percent, to the Receivership Management program; 

$324 million, or 17 percent, to the Insurance program; 

and $225 million, or 12 percent, to Corporate General 

and Administrative expenditures. 

88 
2019

BUDGET AND SPENDING

 

INVESTMENT SPENDING 

Te FDIC instituted a separate Investment Budget in 

2003 to provide enhanced governance of major multiyear development eforts. It has a disciplined process 

for reviewing proposed new investment projects and 

managing the construction and implementation of 

approved projects. Proposed IT projects are carefully 

reviewed to ensure that they are consistent with the 

FDIC’s enterprise architecture. Te project 

approval and monitoring processes also enable the FDIC 

to be aware of risks to the major capital investment 

projects and facilitate appropriate, timely intervention to 

address these risks throughout the development process. 

An investment portfolio performance review is provided to 

the FDIC’s Board of Directors on a quarterly basis. From 

2010-2019, investment spending totaled $103 million and 

is estimated at $11 million for 2020. 

INVESTMENT SPENDING 

Dollars in Millions 

$25 

$20 

$15 

$10 

$5 

$0 

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 

89 
V. 

FINANCIAL SECTION 
ANNUAL 

REPORT

FINANCIAL SECTION

 

DEPOSIT INSURANCE FUND (DIF) 

Federal Deposit Insurance Corporation 

Deposit Insurance Fund Balance Sheet 

As of December 31 

(Dollars in Thousands) 2019 2018 

ASSETS

 Cash and cash equivalents 

 Investment in U.S. Treasury securities (Note 3) 

 Assessments receivable (Note 9) 

 Interest receivable on investments and other assets, net 

$ 5,990,765 

100,071,880 

1,241,968 

1,020,947 

$ 5,773,995

92,708,356

1,376,341

549,791

 Receivables from resolutions, net (Note 4) 

 Property and equipment, net (Note 5) 

Total Assets 

2,669,270 

329,828 

$ 111,324,658 

3,058,241

328,530 

$ 103,795,254 

LIABILITIES

 Accounts payable and other liabilities 

 Liabilities due to resolutions (Note 6) 

 Postretirement benefit liability (Note 12) 

 Contingent liabilities:

 Anticipated failure of insured institutions (Note 7) 

 Guarantee payments and litigation losses (Notes 7 and 8) 

Total Liabilities 

$ 214,451 

346,271 

289,462 

93,505 

34,031 

977,720 

$ 198,072

604,776

235,935

113,936

33,611 

1,186,330

 Commitments and off-balance-sheet exposure (Note 13) 

FUND BALANCE

 Accumulated Net Income 109,820,102 103,238,013 

ACCUMULATED OTHER COMPREHENSIVE INCOME

 Unrealized gain (loss) on U.S. Treasury securities, net (Note 3) 587,268 (615,549)

 Unrealized postretirement benefit (loss) (Note 12) (60,432) (13,540) 

Total Accumulated Other Comprehensive Income (Loss) 526,836 (629,089) 

Total Fund Balance 110,346,938 102,608,924 

Total Liabilities and Fund Balance $ 111,324,658 $ 103,795,254 

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

92 
 

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) 2019 2018 

REVENUE

 Assessments (Note 9) $ 4,939,063 $ 9,526,723

 Interest on U.S. Treasury securities 2,116,504 1,632,863

 Other revenue 39,745 11,208 

Total Revenue 7,095,312 11,170,794 

EXPENSES AND LOSSES

 Operating expenses (Note 10) 1,795,605 1,764,748

 Provision for insurance losses (Note 11) (1,285,531) (562,622)

 Insurance and other expenses 3,149 3,102 

Total Expenses and Losses 513,223 1,205,228 

Net Income 6,582,089 9,965,566 

OTHER COMPREHENSIVE INCOME

 Unrealized gain (loss) on U.S. Treasury securities, net 1,202,817 (136,187)

 Unrealized postretirement benefit (loss) gain (Note 12) (46,892) 32,050 

Total Other Comprehensive Income (Loss) 1,155,925 (104,137) 

Comprehensive Income 7,738,014 9,861,429 

Fund Balance - Beginning 102,608,924 92,747,495 

Fund Balance - Ending $ 110,346,938 $ 102,608,924 

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

93 
ANNUAL 

REPORT

FINANCIAL SECTION

 

DEPOSIT INSURANCE FUND (DIF) 

Federal Deposit Insurance Corporation 

Deposit Insurance Fund Statement of Cash Flows 

For the Years Ended December 31 

(Dollars in Thousands) 2019 2018 

OPERATING ACTIVITIES 

Provided by:

 Assessments $ 5,079,563 $ 10,766,890

 Interest on U.S. Treasury securities 1,988,763 1,837,400

 Recoveries from financial institution resolutions 1,674,857 3,254,230

 Miscellaneous receipts 27,895 18,290 

Used by:

 Operating expenses (1,746,598) (1,744,274)

 Disbursements for financial institution resolutions (256,773) (353,448)

 Miscellaneous disbursements (2,262) (3,694) 

Net Cash Provided by Operating Activities 6,765,445 13,775,394 

INVESTING ACTIVITIES 

Provided by:

 Maturity of U.S. Treasury securities 34,250,000 27,354,816 

Used by:

 Purchase of U.S. Treasury securities (40,749,953) (37,140,141)

 Purchase of property and equipment (48,722) (45,272) 

Net Cash (Used) by Investing Activities (6,548,675) (9,830,597) 

Net Increase in Cash and Cash Equivalents 216,770 3,944,797 

Cash and Cash Equivalents - Beginning 5,773,995 1,829,198 

Cash and Cash Equivalents - Ending $ 5,990,765 $ 5,773,995 

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

94 
 

 

 

 

 

 

 

 

 

 

 

 

 

DEPOSIT INSURANCE FUND 

NOTES TO THE FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

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 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 

supervised by the Federal Reserve Board. 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 and interest earned on investments in U.S. 

Treasury securities. 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 $209.5 billion and 

$201.8 billion as of December 31, 2019 and 2018, respectively. 

OPERATIONS OF RESOLUTION ENTITIES 

The FDIC, as receiver, is responsible for managing and 

disposing of the assets of failed institutions in an orderly and 

efficient manner. The assets held by receiverships, 

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 

95 
ANNUAL 

REPORT

FINANCIAL SECTION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEPOSIT INSURANCE FUND 

accounted for as transactions of those entities. The FDIC, as 

administrator of the DIF, bills resolution entities for services 

provided on their behalf. 

2. Summary of Significant Accounting Policies 

GENERAL 

The 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 

The preparation of the financial statements in conformity with 

GAAP requires management to make estimates and 

assumptions that affect the reported amounts of assets and 

liabilities, revenue and expenses, and disclosure of contingent 

liabilities. 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 (which considers the impact of shared-loss 

agreements); the guarantee obligations for structured 

transactions; the postretirement benefit obligation; and the 

estimated losses for anticipated failures. 

CASH EQUIVALENTS 

Cash equivalents are short-term, highly liquid investments 

consisting primarily of U.S. Treasury Overnight Certificates. 

INVESTMENT IN U.S. TREASURY SECURITIES 

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 Treasury’s Bureau of the Fiscal 

Service’s Government Account Series program. 

The DIF’s investments in U.S. Treasury securities are classified 

as available-for-sale (AFS). Securities designated as AFS are 

shown at fair value. Unrealized gains and losses are reported 

as other comprehensive income. Any 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 (see Note 3). 

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 regular risk-based assessment 

rate and assessment base for the prior quarter adjusted for 

certain changes in supervisory examination ratings for larger 

institutions, modest assessment base growth and average 

assessment rate adjustment factors, and any assessment 

credits expected to be applied. At the subsequent quarterend, the estimated revenue amounts are adjusted when actual 

assessments for the covered period are determined for each 

institution (see Note 9). 

CAPITAL ASSETS AND DEPRECIATION 

The FDIC buildings are depreciated on a straight-line basis 

over a 35- to 50-year estimated life. 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 threeyear estimated useful life (see Note 5). 

PROVISION FOR INSURANCE LOSSES 

The provision for insurance losses primarily represents 

changes in the allowance for losses on receivables from 

closed banks and the contingent liability for anticipated 

failure of insured institutions (see Note 11). 

REPORTING ON VARIABLE INTEREST ENTITIES 

The 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 the Financial Accounting Standards Board 

(FASB) Accounting Standards Codification (ASC) Topic 810, 

Consolidation. These assessments are conducted to 

determine if the FDIC, in its corporate capacity, has (1) the 

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 

96 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 FASB ASC Topic 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 VIE 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, 2019 

and 2018. Therefore, consolidation is not required for the 

December 31, 2019 and 2018 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 FASB ASC Topic 

810. 

The FDIC’s involvement with VIEs is fully described in Note 8 

under FDIC Guaranteed Debt of Structured Transactions. 

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. 

APPLICATION OF RECENT ACCOUNTING STANDARDS 

In June 2016, the FASB issued ASU 2016-13, Financial 

Instruments—Credit Losses (Topic 326): Measurement of Credit 

Losses on Financial Instruments. The ASU will replace the 

incurred loss impairment model with a new expected credit 

loss model for financial assets measured at amortized cost 

and for off-balance-sheet credit exposures. The guidance 

also amends the AFS debt securities impairment model by 

requiring the use of an allowance to record estimated credit 

losses (and subsequent recoveries) related to AFS debt 

securities. In November 2019, the FASB issued ASU 2019-10, 

Financial Instruments—Credit Losses (Topic 326), Derivatives 

and Hedging (Topic 815), and Leases (Topic 842): Effective 

Dates, that changed the effective date of ASU 2016-13 for the 

DIF to January 1, 2023. The FDIC does not expect the ASU to 

NOTES TO THE FINANCIAL STATEMENTS 

have a material effect on the DIF’s financial position and 

results of operations. However, changes to the balance sheet 

and certain disclosures will be required. 

Other recent accounting standards have been deemed not 

applicable or material to the financial statements as 

presented. 

3. Investment in U.S. Treasury Securities 

The “Investment in U.S. Treasury securities” line item on the 

Balance Sheet consisted of the following components by 

maturity (dollars in millions). 

December 31, 2019 Net Unrealized Unrealized 

Yield at Face Carrying Holding Holding Fair 

Maturity Purchase Value Amount Gains Losses Value 

U.S. Treasury notes and bonds 

Within 1 year 1.93% $ 45,550 $ 45,928 $ 50 $ (11) $ 45,967 

2.08% 52,900 53,557 555 (7) 54,105 After 1 year 

through 5 years 

Total (a) $ 98,450 $ 99,485 $ 605 $ (18) $ 100,072 

(a) These unrealized losses occurred as a result of temporary changes in market interest rates. 

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, 2019. As of December 31, 2019, securities with a 

continuous unrealized loss position of less than 12 months had an aggregate related fair 

value and unrealized loss of $8.6 billion and $8 million, respectively. For those with a 

continuous unrealized loss position of 12 months or longer, their aggregate related fair value 

and unrealized losses were $13.1 billion and $10 million, respectively. 

December 31, 2018 Net Unrealized Unrealized 

Yield at Face Carrying Holding Holding Fair 

Maturity Purchase Value Amount Gains Losses Value 

U.S. Treasury notes and bonds 

Within 1 year 1.90% $ 28,950 $ 28,997 $ 0 $ (104) $ 28,893 

2.08% 64,650 64,327 137 (649) 63,815 After 1 year 

through 5 years 

(a) Total $ 93,600 $ 93,324 $ 137 $ (753) $ 92,708 

(a) These unrealized losses occurred as a result of temporary changes in market interest rates. 

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, 2018. As of December 31, 2018, securities with a 

continuous unrealized loss position of less than 12 months had an aggregate related fair 

value and unrealized loss of $21.6 billion and $77 million, respectively. For those with a 

continuous unrealized loss position of 12 months or longer, their aggregate related fair value 

and unrealized losses were $53.1 billion and $676 million, respectively. 

4. Receivables from Resolutions, Net 

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 

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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 

resolution entities (including structured transaction-related 

assets; see Note 8) are the main source of repayment of the 

DIF’s receivables from resolutions. The “Receivables from 

resolutions, net” line item on the Balance Sheet consisted of 

the following components (dollars in thousands). 

December 31 

2019 

December 31 

2018 

68,267,737 

(65,209,496) 

Receivables from closed banks $ 63,981,989 $ 

Allowance for losses (61,312,719) 

Total $ 2,669,270 $ 3,058,241 

As of December 31, 2019, the FDIC, as receiver, managed 248 

active receiverships; four new receiverships were established 

in 2019. The resolution entities held assets with a book value 

of $3.4 billion as of December 31, 2019, and $5.1 billion as of 

December 31, 2018 (including $2.9 billion and $4.0 billion, 

respectively, of cash, investments, receivables due from the 

DIF, and other receivables). 

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, which may include the following: actual or pending 

institution-specific asset disposition data, failed institutionspecific 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 2007. 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 shared-loss payments and the end of agreement 

true-up recoveries on the covered residential and commercial 

loan assets sold to the acquiring institution under the 

agreement are considered in determining the allowance for 

loss on the receivables from these resolutions. The sharedloss cost projections are based on the covered assets’ intrinsic 

value, which is determined using financial models that 

consider the quality and type of covered assets, current and 

future market conditions, risk factors, and estimated asset 

holding periods. 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. 

For December 31, 2019, the shared-loss cost estimates were 

updated for 59 receiverships with active SLAs. Note that all 

commercial asset shared-loss coverage expired as of year-end 

2018. The updated shared-loss cost projections on the $4.2 

billion of remaining residential shared-loss covered assets 

were based on the FDIC’s historical loss experience that also 

factors in the remaining time period of shared-loss coverage. 

In 2019, there were three changes to the calculation of the 

allowance for loss on receivables from resolutions. The 

calculation for estimating the servicing fee component of the 

true-up recoveries was updated from an upfront estimate of 

initial assets to an estimate based on actual asset balances 

over the life of the agreement to more closely reflect end-ofagreement expected results. In addition, shared-loss cost 

projections are based on the FDIC’s historical loss experience 

and no longer include pending sales activity; this change was 

made to address the seasoned nature of this portfolio. Finally, 

the projection of future receivership expenses was adjusted to 

reflect lower expected liquidation cost estimates. The effect 

of these changes resulted in a reduction of $213 million to the 

estimated losses for failed institutions. 

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 through 2013, the FDIC resolved 

304 failures using whole bank purchase and assumption 

resolution transactions with accompanying SLAs on total 

assets of $215.6 billion purchased by the financial institution 

acquirers. The acquirer typically assumed all of the deposits 

and purchased essentially all of the assets of a failed 

institution. The majority of the commercial and residential 

loan assets were purchased under an SLA, where the FDIC 

agreed to share in future losses and recoveries experienced 

by the acquirer on those assets covered under the agreement. 

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 

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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 singlefamily 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, 

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). 

Receivership shared-loss transactions are summarized as 

follows (dollars in thousands). 

Remaining shared-loss covered assets 

December 31 

2019 

December 31 

2018 

$ 4,205,256 $ 9,602,069 

Shared-loss payments made to date, $ 29,116,846 $ 29,088,461

 net of recoveries

 Estimated remaining shared-loss liability $ 31,458 $ 566,194

 Estimated true-up recoveries $ (477,130) $ (390,987) 

Projected shared-loss payments,

 net of true-up recoveries $ (445,672) $ 175,207 

The $5.4 billion reduction in the 

covered assets from 2018 to 2019 is primarily due to the 

liquidation of covered assets from active SLAs and natural or 

early termination of SLAs impacting 22 receiverships during 

2019. As of December 31, 2019, the shared-loss coverage 

period has expired for $3.8 billion or 91 percent of the total 

remaining covered assets, however, related balances are 

included in the above table pending receipt and disposition 

of final claim certificates. Projected remaining shared-loss 

payments are less than estimated end-of-agreement true-up 

recoveries in 2019 as the majority of the expected shared-loss 

payments by receiverships with SLAs nearing expiration have 

already been paid. 

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 receiverships and payments on 

 remaining shared-loss 

NOTES TO THE FINANCIAL STATEMENTS 

the covered assets under SLAs. Of the $519 million of assets 

in liquidation and $4.2 billion of shared-loss covered assets as 

of December 31, 2019, 19 percent or $900 million, were 

related to receiverships that have fully repaid DIF’s 

subrogated claims, thereby mitigating further loss exposure. 

The remaining assets primarily originated from failed 

institutions located in California ($3.2 billion). 

5. Property and Equipment, Net 

Depreciation expense was $49 million and $51 million for 

2019 and 2018, respectively. The “Property and equipment, 

net” line item on the Balance Sheet consisted of the following 

components (dollars in thousands). 

December 31 

2019 

December 31 

2018 

Land $ 37,352 $ 37,352 

Buildings (including building and leasehold improvements) 342,071 328,787 

Application software (includes work-in-process) 108,006 103,543 

Furniture, fixtures, and equipment 66,970 66,889 

Accumulated depreciation (224,571) (208,041) 

Total $ 329,828 $ 328,530 

6. Liabilities Due to Resolutions 

As of December 31, 2019 and 2018, the DIF recorded liabilities 

totaling $343 million and $601 million, 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-five 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 a 

receivership to fund shared-loss and other expenses or by 

offsetting receivables from resolutions when a receivership 

declares a dividend. 

In addition, there were $3 million and $4 million in unpaid 

deposit claims related to multiple receiverships as of 

December 31, 2019 and 2018, respectively. The DIF pays 

these liabilities when the claims are approved. 

7. Contingent Liabilities 

ANTICIPATED FAILURE OF INSURED INSTITUTIONS 

The DIF records a contingent liability and a loss provision for 

DIF-insured institutions that are likely to fail when the liability 

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is probable and reasonably estimable, absent some favorable 

event such as obtaining additional capital or merging. 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 

were generally positive in 2019. According to the most recent 

quarterly financial data submitted by DIF-insured institutions, 

the industry’s capital levels continued to improve, and the 

percentage of total loans that were noncurrent at September 

30 is at its lowest level since second quarter 2007. The 

industry reported total net income of $180.3 billion for the 

first nine months of 2019, an increase of 1.5 percent over the 

comparable period one year ago. 

Consistent with the positive performance of the banking 

industry, the contingent liability remained relatively stable as 

of December 31, 2019 compared to December 31, 2018. The 

DIF recorded contingent liabilities totaling $94 million and 

$114 million as of December 31, 2019 and 2018, respectively. 

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 $57 million as of December 31, 2019, 

compared to $227 million as of year-end 2018. The actual 

losses, if any, will largely depend on future economic and 

market conditions and could differ materially from this 

estimate. 

Four financial institutions failed in 2019, with total assets of 

$209 million and an estimated loss to the DIF at December 31, 

2019, of $31 million. 

The improvement in financial performance and condition of 

the banking industry of the past year should continue if 

market conditions remain favorable. However, the operating 

environment poses several key challenges. Interest rates 

declined in the first half of 2019, and there are signs of 

growing credit and liquidity risk. Revenue growth and net 

interest margins have benefited from interest rate hikes in 

recent years; however, margins may be squeezed now as 

short-term interest rates have declined. Economic conditions 

that challenge the banking sector include the impact of slower 

global economic growth; the impact of trade tariffs on 

manufacturing and exports; the impact of continued weak 

commodity prices on local markets; and the risk of market 

volatility from global economic and geopolitical 

developments. 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 $200 thousand for the DIF as of December 31, 2019 

and 2018. In addition, the FDIC has identified no reasonably 

possible losses from unresolved cases as of December 31, 

2019 and 2018. 

8. Other Contingencies 

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 

2019 and 2018, 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, used structured transactions 

(securitizations and structured sales of guaranteed notes 

(SSGNs) or collectively, “trusts”) to dispose of residential 

mortgage loans, commercial loans, and mortgage-backed 

securities held by the receiverships. 

For these transactions, certain loans or securities from failed 

institutions were pooled and transferred into a trust structure. 

The trusts issued senior and/or subordinated debt 

instruments and owner trust or residual certificates 

collateralized by the underlying mortgage-backed securities 

or loans. 

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NOTES TO THE FINANCIAL STATEMENTS 

From March 2010 through March 2013, the receiverships 

transferred a portfolio of loans with an unpaid principal 

balance of $2.4 billion and mortgage-backed securities with a 

book value of $6.4 billion to the trusts. Private investors 

purchased the senior notes issued by the trusts for $6.2 billion 

in cash and the receiverships held 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, with the last guarantee expected to 

terminate in 2022. 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 certificate holders receive cash flows from the 

trust only after all expenses have been paid, the guaranteed 

notes have been satisfied, and the FDIC has been reimbursed 

for any guarantee payments. 

The following table provides the maximum loss exposure to 

the FDIC, as guarantor, total guarantee fees collected, 

guarantee fees receivable, and other information related to 

the FDIC guaranteed debt for the trusts as of December 31, 

2019 and 2018 (dollars in millions). 

December 31 

2019 

December 31 

2018 

Number of trusts 

Initial 11 11 

Current 6 8 

Trust collateral balances 

Initial $ 8,780 $ 8,780 

Current $ 878 $ 1,643 

Guaranteed note balances 

Initial $ 6,196 $ 6,196 

Current (maximum loss exposure) $ 195 $ 404 

Guarantee fees collected to date $ 166 $ 163 

Amounts recognized in Interest 

receivable on investments and other 

assets, net 

Receivable for guarantee payments, 

net 

Receivable for guarantee fees $ 1 $ 4 

$ 32 $ 28 

Amounts recognized in Contingent 

liabilities: Guarantee payments and 

litigation losses 

Contingent liability for guarantee 

payments $ 34 $ 33 

Amounts recognized in Accounts 

payable and other liabilities 

Deferred revenue for guarantee feesa $ 1 $ 4 

(a) All guarantee fees are recorded as deferred revenue and recognized as revenue primarily 

on a straight-line basis over the term of the notes. 

Except as presented above, the DIF records no other 

structured transaction-related assets or liabilities on its 

balance sheet. 

ESTIMATED LOSS FROM GUARANTEE PAYMENTS 

Any estimated loss to the DIF from the guarantees is based 

on an analysis of the expected guarantee payments by the 

FDIC, net of reimbursements to the FDIC for such guarantee 

payments. The DIF recorded a contingent liability of $34 

million as of December 31, 2019 for estimated payments 

under the guarantee for one SSGN transaction, up from $33 

million at December 31, 2018. As guarantor, the FDIC, in its 

corporate capacity, is entitled to reimbursement from the 

trust for any guarantee payments; therefore, a corresponding 

receivable has been recorded. The related allowance for loss 

on this receivable is $2 million and $5 million as of December 

31, 2019 and 2018, reflecting the expected shortfall of 

proceeds available for reimbursement after liquidation of the 

SSGN’s underlying collateral at note maturity. Guarantee 

payments are expected to be made at note maturity in 

December 2020. 

For all of the remaining transactions, the estimated cash flows 

from the 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 for structured transactions 

that it was not previously contractually required to provide. 

9. Assessments 

The FDIC deposit insurance assessment system is mandated 

by section 7 of the FDI Act and governed by part 327 of title 

12 of the Code of Federal Regulations (12 CFR Part 327). The 

risk-based system requires the payment of quarterly 

assessments by all IDIs. 

In response to the Dodd-Frank Act, the FDIC implemented 

several changes to the assessment system, amended its 

Restoration Plan (which is required when the ratio of the DIF 

balance to estimated insured deposits, or reserve ratio, is 

below the statutorily mandated minimum), and developed a 

comprehensive, long-term fund management plan. 

The Dodd-Frank Act established the minimum reserve ratio 

for the DIF at 1.35 percent, up from the previous statutory 

minimum of 1.15 percent. If the reserve ratio falls below 1.35 

percent, or the FDIC projects that it will within 6 months, the 

FDIC generally must implement a restoration plan that will 

return the DIF to 1.35 percent within 8 years. 

The long-term fund management plan is designed to restore 

and maintain a positive fund balance for the DIF even during 

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a banking crisis and achieve moderate, steady assessment 

rates throughout any economic cycle. Summarized below are 

key longer-term provisions of the plan. 

• The FDIC Board of Directors designates a reserve ratio 

for the DIF and publishes the designated reserve ratio 

(DRR) before the beginning of each calendar year, as 

required by the FDI Act. Accordingly, in December 

2019, the FDIC published a notice maintaining the DRR 

at 2 percent for 2020. 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. 

• The FDIC suspended dividends indefinitely, and, in lieu 

of dividends, prescribes progressively lower 

assessment rates when the reserve ratio exceeds 2 

percent and 2.5 percent. 

As noted above, the Dodd-Frank Act increased the minimum 

reserve ratio from 1.15 percent to 1.35 percent. This increase 

was required to be achieved by September 30, 2020, and the 

Dodd-Frank Act mandated that the FDIC offset the effect of 

increasing the minimum reserve ratio on institutions with less 

than $10 billion in total assets (small banks). To implement 

this requirement, the FDIC imposed a surcharge to the regular 

quarterly assessments of IDIs with $10 billion or more in total 

consolidated assets (large banks) beginning with the quarter 

ending September 30, 2016, and provided for credits to small 

banks for their contribution to the growth in the reserve ratio 

from 1.15 percent to 1.35 percent. 

As of September 30, 2018, the reserve ratio of the DIF 

exceeded the required minimum of 1.35 percent by reaching 

1.36 percent. As a result, the requirements of the amended 

Restoration Plan were achieved, the surcharge assessment on 

large banks ended effective October 1, 2018, and small bank 

assessment credits of $765 million were awarded. As long as 

the reserve ratio is at a prescribed level, small bank credits are 

automatically applied to reduce the regular quarterly deposit 

insurance assessment up to the full amount of the credits or 

assessment, whichever is less. 

In November 2019, the FDIC approved a final rule that 

amended the requirements for applying small bank 

assessment credits, effective beginning with the third quarter 

2019 assessments. Under the rule, once the FDIC begins 

applying small bank credits to quarterly assessments when 

the reserve ratio is at least 1.38 percent, credits will be applied 

for three additional quarters when the reserve ratio is at least 

1.35 percent. The final rule also requires the FDIC to remit the 

full nominal value of any remaining small bank credits to each 

IDI holding such credits after four quarterly assessment 

periods of application in the next assessment period in which 

the reserve ratio is at least 1.35 percent. 

In the second quarter of 2019, the reserve ratio rose to 1.40 

percent and the FDIC began applying small bank credits 

against quarterly assessments. Of the total $765 million 

credits awarded, $559 million were applied in 2019 to reduce 

assessments paid by small banks. In addition, the year-end 

2019 assessment receivable and related assessment revenue 

have been reduced by $145 million, reflecting expected credit 

use in the fourth quarter assessment collection at the end of 

March 2020. If the reserve ratio remains at least 1.35 percent 

for the first quarter of 2020, an estimated $55 million in 

assessment credits will be applied against the first quarter 

assessment. The FDIC estimates that approximately $6 million 

in small bank credits will be remitted. 

ASSESSMENT REVENUE 

Annual assessment rates averaged approximately 3.1 cents 

per $100 of the assessment base during 2019. Annual 

assessment rates averaged approximately 7.2 cents per $100 

of the assessment base through September 30, 2018. Annual 

assessment rates averaged approximately 3.5 cents per $100 

for the fourth quarter of 2018, reflecting the end of surcharges 

on larger institutions beginning October 1, 2018. The 

assessment base is generally defined as average consolidated 

total assets minus average tangible equity (measured as Tier 

1 capital) of an IDI during the assessment period. 

The “Assessments receivable” line item on the Balance Sheet 

of $1.2 billion and $1.4 billion represents the estimated 

premiums due from IDIs for the fourth quarter of 2019 and 

2018, respectively. The actual deposit insurance assessments 

for the fourth quarter of 2019 will be billed and collected at 

the end of the first quarter of 2020. During 2019 and 2018, 

$4.9 billion and $9.5 billion, respectively, were recognized as 

assessment revenue from institutions, including $3.8 billion in 

surcharges from large IDIs in 2018. In total, surcharges of 

$11.2 billion were collected over nine quarters. 

PENDING LITIGATION FOR UNDERPAID ASSESSMENTS 

On January 9, 2017, the FDIC filed suit in the United States 

District Court for the District of Columbia (and amended this 

complaint on April 7, 2017), alleging that Bank of America, 

N.A. (BoA) underpaid its insurance assessments for multiple 

quarters based on the underreporting of counterparty 

exposures. In total, the FDIC alleges that BoA underpaid 

insurance assessments by $1.12 billion, including interest for 

the quarters ending March 2012 through December 2014. 

The FDIC invoiced BoA for $542 million and $583 million 

representing claims in the initial suit and the amended 

complaint, respectively. BoA has failed to pay these past due 

amounts. Pending resolution of this matter, BoA has fully 

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NOTES TO THE FINANCIAL STATEMENTS 

pledged security with a third-party custodian pursuant to a 

security agreement with the FDIC. As of December 31, 2019, 

the total amount of unpaid assessments (including accrued 

interest) was $1.18 billion. For the years ending December 31, 

2019 and 2018, the impact of this litigation is not reflected in 

the financial statements of the DIF. 

RESERVE RATIO 

As of September 30, 2019 and December 31, 2018, the DIF 

reserve ratio was 1.41 percent and 1.36 percent, respectively. 

ASSESSMENTS RELATED TO FICO 

Assessments are levied on institutions for payments of the 

interest on bond obligations issued by the Financing 

Corporation (FICO). The FDIC collected the final FICO 

assessment in March 2019 pursuant to a final rule issued in 

December 2018 by the Federal Housing Finance Agency, the 

agency authorized by Congress to prescribe regulations 

relating to the FICO. The FICO was established as a mixedownership government corporation to function solely as a 

financing vehicle for the former FSLIC. 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. Interest 

obligations collected and remitted to the FICO were $47 

million and $460 million for 2019 and 2018, respectively. 

10. Operating Expenses 

The “Operating expenses” line item on the Statement of 

Income and Fund Balance consisted of the following 

components (dollars in thousands). 

December 31 

2018 

Salaries and benefits $ 1,225,753 $ 1,221,138 

Outside services 268,093 268,693 

Travel 80,684 89,443 

Buildings and leased space 89,552 86,795 

Software/Hardware maintenance 94,761 83,276 

Depreciation of property and equipment 48,547 51,316 

Other 27,175 26,666 

1,827,327 

(62,579) 

$ 1,764,748 

December 31 

2019 

Subtotal 1,834,565 

Less: Expenses billed to resolution entities and others (38,960) 

Total $ 1,795,605 

11. Provision for Insurance Losses 

The provision for insurance losses was a negative $1.3 billion 

for 2019, compared to negative $563 million for 2018. The 

negative provision for 2019 primarily resulted from a decrease 

to the estimated losses for prior year failures. 

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. Summarized 

below are the three primary components that comprise the 

majority of the decrease in estimated losses for prior year 

failures. 

• Receivership shared-loss liability cost estimates 

decreased $575 million primarily due to lower-thananticipated losses on covered assets, reductions in 

shared-loss cost estimates from expirations and 

early terminations of SLAs during the year, and 

higher true-up recoveries (projected to be received 

at expiration if actual losses at expiration are lower 

than originally estimated). 

• Receiverships received $465 million of unanticipated 

recoveries from litigation settlements and 

professional liability claims. These recoveries are 

typically not recognized in the allowance for loss 

estimate until the cash is received by receiverships, 

or collectability is assured, since significant 

uncertainties surround their recovery. 

• Reduction in projected future receiverships 

expenses, resulted in a loss estimate decrease of 

$118 million. 

12. Employee Benefits 

PENSION BENEFITS AND SAVINGS PLANS 

Eligible FDIC employees (permanent and term employees 

with appointments exceeding one year) are covered by the 

federal government retirement plans, either the Civil Service 

Retirement System (CSRS) or the Federal Employees 

Retirement System (FERS). Although the DIF contributes a 

portion of pension benefits for eligible employees, it does not 

account for the assets of either retirement system. The DIF 

also does not have actuarial data for accumulated plan 

benefits or the unfunded liability relative to eligible 

employees. These amounts are reported on and accounted 

for by the U.S. Office of Personnel Management (OPM). 

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DEPOSIT INSURANCE FUND 

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. 

Eligible FDIC employees may also participate in an FDICsponsored tax-deferred 401(k) savings plan with an automatic 

contribution of 1 percent of pay and an additional matching 

contribution up to 4 percent of pay. The expenses for these 

plans are presented in the table below (dollars in thousands). 

$ 1,806 $ 2,089 

111,926 

35,564 

39,466 

2018 

December 31 

$ 189,045 

December 31 

2019 

Civil Service Retirement System 

Federal Employees Retirement System (Basic Benefit) 116,899 

Federal Thrift Savings Plan 36,149 

FDIC Savings Plan 39,873 

Total $ 194,727 

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 

The DIF has no postretirement health insurance liability since 

all eligible retirees are covered by the Federal Employees 

Health Benefits (FEHB) program. The FEHB is administered 

and accounted for by the OPM. In addition, OPM pays the 

employer share of the retiree’s health insurance premiums. 

The FDIC provides certain life and dental insurance coverage 

for its eligible retirees, the retirees’ beneficiaries, and covered 

dependents. Retirees eligible for life and dental insurance 

coverage are those who have qualified due to (1) immediate 

enrollment upon appointment or five years of participation in 

the plan and (2) eligibility for an immediate annuity. The life 

insurance program provides basic coverage at no cost to 

retirees and allows for converting optional coverage to directpay 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. 

Postretirement benefit obligation, gain and loss, and expense 

information included in the Balance Sheet and Statement of 

Income and Fund Balance are summarized as follows (dollars 

in thousands). 

December 31 

2019 

Accumulated postretirement benefit obligation 

recognized in Postretirement benefit liability $ 289,462 

Amounts recognized in accumulated other 

comprehensive income: Unrealized postretirement 

benefit loss 

Cumulative net actuarial loss 

Prior service cost 0

 Total $ (60,432) 

Amounts recognized in other comprehensive income: 

Unrealized postretirement benefit (loss) gain 

Actuarial (loss) gain 

Prior service credit 385

 Total $ (46,892) 

Net periodic benefit costs recognized in Operating 

expenses

 Interest cost 10,360

 Net amortization out of other comprehensive

 income 385

 Total $ 14,520 

The year-over-year increase in the accumulated 

postretirement benefit obligation as of December 31, 2019, is 

primarily attributable to a decrease in the discount rate. 

The annual postretirement contributions and benefits paid are 

included in the table below (dollars in thousands). 

December 31 

2018 

$ 235,935 

$ ( 60,432) $ (13,155) 

(385) 

$ (13,540) 

$ ( 47,277) $ 31,475 

575 

$ 32,050 

 Service cost $ 3,775 $ 4,625 

9,334 

2,064 

$ 16,023 

December 31 

2019 

December 31 

2018 

Employer contributions $ 7,885 $ 7,354 

Plan participants' contributions $ 871 $ 846 

Benefits paid $ (8,756) $ (8,200) 

The expected contributions for the year ending December 31, 

2020, are $9 million. Expected future benefit payments for 

each of the next 10 years are presented in the following table 

(dollars in thousands). 

2020 2021 2022 2023 2024 2025-2029 

$8,297 $8,841 $9,400 $9,962 $10,550 $60,730 

104 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assumptions used to determine the amount of the 

accumulated postretirement benefit obligation and the net 

periodic benefit costs are summarized as follows. 

December 31 

2019 

December 31 

2018 

Discount rate for future benefits (benefit obligation) 3.46% 4.81% 

Rate of compensation increase 3.49% 3.49% 

Discount rate (benefit cost) 4.81% 4.03% 

Dental health care cost-trend rate

 Assumed for next year 3.50% 3.80%

 Ultimate 3.50% 3.80%

 Year rate will reach ultimate 2020 2019 

13. Commitments and Off-Balance-Sheet Exposure 

COMMITMENTS: 

Leased Space 

The DIF leased space expense totaled $45 million and $44 

million for 2019 and 2018. The FDIC’s lease commitments 

total $134 million for future years. The lease agreements 

contain escalation clauses resulting in adjustments, usually on 

an annual basis. Future minimum lease commitments are as 

follows (dollars in thousands). 

2020 2021 2022 2023 2024 2025/Thereafter 

$42,603 $33,603 $20,774 $18,304 $16,824 $1,724 

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, 2019 and December 31, 2018, estimated 

insured deposits for the DIF were $7.7 trillion and $7.5 trillion, 

respectively. 

14. Fair Value of Financial Instruments 

As of December 31, 2019 and 2018, financial assets 

recognized and measured at fair value on a recurring basis 

include cash equivalents (see Note 2) of $6 billion and $5.7 

billion, respectively, and the investment in U.S. Treasury 

securities (see Note 3) of $100.1 billion and $92.7 billion, 

respectively. The valuation is considered a Level 1 

measurements in the fair value hierarchy, representing 

quoted prices in active markets for identical assets. Other 

financial assets and liabilities, measured at amortized cost, are 

NOTES TO THE FINANCIAL STATEMENTS 

the receivables from resolutions, assessments receivable, 

interest receivable on investments, other short-term 

receivables, and accounts payable and other liabilities. 

15. Information Relating to the Statement of Cash Flows 

The following table presents a reconciliation of net income to 

net cash from operating activities (dollars in thousands). 

December 31 December 31 

2019 2018 

Operating Activities 

Net Income: $ 6,582,089 $ 9,965,566 

Adjustments to reconcile net income to net cash provided

 by operating activities: 

Amortization of U.S. Treasury securities 339,247 246,725 

Treasury Inflation-Protected Securities inflation adjustment 0 (2,980) 

Depreciation on property and equipment 48,547 51,316 

Loss on retirement of property and equipment (1,124) (524) 

Provision for insurance losses (1,285,531) (562,622) 

Unrealized (loss) gain on postretirement benefits (46,892) 32,050 

Change in Assets and Liabilities:

 Decrease in assessments receivable 134,373 1,258,045

 (Increase) in interest receivable and other assets (470,766) (43,889)

 Decrease in receivables from resolutions 1,653,681 3,493,375

 Increase (Decrease) in accounts payable and other liabilities 16,379 (38,899)

 Increase (Decrease) in postretirement benefit liability 53,527 (23,381)

 Increase (Decrease) in contingent liabilities -

 guarantee payments and litigation losses 420 (904)

 (Decrease) in liabilities due to resolutions (258,505) (598,484) 

Net Cash Provided by Operating Activities $ 6,765,445 $ 13,775,394 

16. Subsequent Events 

Subsequent events have been evaluated through February 6, 

2020, the date the financial statements are available to be 

issued. Based on management’s evaluation, there were no 

subsequent events requiring disclosure. 

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FSLIC RESOLUTION FUND (FRF) 

Federal Deposit Insurance Corporation 

FSLIC Resolution Fund Balance Sheet 

As of December 31 

(Dollars in Thousands) 2019 2018 

ASSETS

 Cash and cash equivalents $ 922,911 $ 901,562

 Other assets, net 525 746 

Total Assets $ 923,436 $ 902,308 

LIABILITIES

 Accounts payable and other liabilities $ 16 $ 9 

Total Liabilities 16 9 

RESOLUTION EQUITY (NOTE 5)

 Contributed capital 125,489,317 125,489,317

 Accumulated deficit (124,565,897) (124,587,018) 

Total Resolution Equity 923,420 902,299 

Total Liabilities and Resolution Equity $ 923,436 $ 902,308 

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

106 
FSLIC RESOLUTION FUND (FRF) 

Federal Deposit Insurance Corporation 

FSLIC Resolution Fund Statement of Income and Accumulated Deficit 

For the Years Ended December 31 

2018 

18,673 $ 15,818

808 

16,626 

425

0

(313) 

112 

Net Income 21,121 16,514 

Accumulated Deficit - Beginning (124,587,018) (124,603,532) 

Accumulated Deficit - Ending $ (124,565,897) $ (124,587,018) 

(Dollars in Thousands) 2019 

REVENUE

 Interest on U.S. Treasury securities $

 Other revenue (Note 6) 1,775 

Total Revenue 20,448 

EXPENSES AND LOSSES

 Operating expenses 523

 Recovery of tax benefits (Note 7) (1,200)

 Losses related to thrift resolutions 4 

Total Expenses and Losses (673) 

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

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FSLIC RESOLUTION FUND (FRF) 

Federal Deposit Insurance Corporation 

FSLIC Resolution Fund Statement of Cash Flows 

For the Years Ended December 31 

(Dollars in Thousands) 2019 2018 

OPERATING ACTIVITIES 

Provided by: 

Interest on U.S. Treasury securities $ 18,673 $ 15,818 

Recovery of tax benefits 1,200 0 

Recoveries from thrift resolutions 1,835 832 

Miscellaneous receipts 0 3 

Used by: 

Operating expenses (358) (452) 

Miscellaneous disbursements (1) (19) 

Net Cash Provided by Operating Activities 21,349 16,182 

Net Increase in Cash and Cash Equivalents 21,349 16,182 

Cash and Cash Equivalents - Beginning 901,562 885,380 

Cash and Cash Equivalents - Ending $ 922,911 $ 901,562 

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

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FSLIC RESOLUTION FUND 

NOTES TO THE FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

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 by authorizing REFCORP to issue debt obligations. 

The REFCORP issued debt obligations in the form of longterm bonds ranging in maturity from 2019 to 2030. 

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 (FRFFSLIC), 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 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 FRFFSLIC. 

The FDIC has extensively reviewed and cataloged the FRF's 

remaining assets and liabilities. Some of the unresolved 

issues are: 

• criminal restitution orders (generally have from 1 to 

27 years remaining to enforce); 

• collections of judgments obtained against officers 

and directors and other professionals responsible for 

causing or contributing to thrift losses (generally 

have up to 10 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 of 

some judgments); 

• liquidation/disposition of residual assets purchased 

by the FRF from terminated receiverships; 

• a potential tax liability associated with a fully 

adjudicated goodwill litigation case (see Note 3); and 

• Affordable Housing Disposition Program monitoring 

(the last agreement expires no later than 2045; see 

Note 4). 

The FRF could realize recoveries from criminal restitution 

orders and professional liability claims. However, any 

potential 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, on 

behalf of the FRF, 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 the remaining 

receivership assets that could not be liquidated during the life 

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FSLIC RESOLUTION FUND 

of the receiverships due to restrictive clauses and other 

impediments. 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, as administrator of the FRF, billed receiverships for 

services provided on their behalf. 

2. Summary of Significant Accounting Policies 

GENERAL 

The 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. 

The FRF is a limited-life entity, however, it does not meet the 

requirements for presenting financial statements using the 

liquidation basis of accounting. According to Accounting 

Standards Codification Topic 205, Presentation of Financial 

Statements, 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. 

USE OF ESTIMATES 

The preparation of the financial statements in conformity with 

GAAP requires management to make estimates and 

assumptions that affect the reported amounts of assets and 

liabilities, revenue and expenses, and disclosure of contingent 

liabilities. 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 estimates for other assets, 

goodwill litigation, and indemnifications are considered 

significant. 

CASH EQUIVALENTS 

Cash equivalents are short-term, highly liquid investments 

consisting primarily of U.S. Treasury Overnight Certificates. 

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. 

APPLICATION OF RECENT ACCOUNTING STANDARDS 

Recent accounting standards have been deemed not 

applicable or material to the financial statements as 

presented. 

3. 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 will have a corresponding receivable from 

the U.S. Treasury and therefore have no net impact on the 

financial condition of the FRF. 

The last remaining goodwill case was resolved in 2015. 

However, for another case fully adjudicated in 2012, an 

estimated loss of $4 million as of December 31, 2019, 

compared to $5 million as of year-end 2018, for the courtordered reimbursement of potential tax liabilities to the 

plaintiff is reasonably possible. 

The FRF-FSLIC paid goodwill litigation expenses incurred by 

the Department of Justice (DOJ), the entity that defended 

these lawsuits against the United States, based on a 

Memorandum of Understanding dated October 2, 1998, 

between the FDIC and the DOJ. These expenses were paid in 

advance by the FRF-FSLIC and any unused funds were carried 

over by the DOJ and applied toward the next fiscal year 

110 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

charges. The DOJ returned all unused funds in September 

2016 except for $250 thousand retained to cover future 

administrative expenses. In September 2019, after reducing 

for expenses incurred, the DOJ returned the remaining $234 

thousand of unused funds to the FRF-FSLIC (see Note 6). 

4. 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 lowincome 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 34 monitoring agencies 

to oversee these LURAs. As of December 31, 2019, 24 

monitoring agencies oversee these LURAs. The FDIC, through 

the FRF, has agreed to indemnify the monitoring agencies for 

all losses related to LURA legal enforcement proceedings. 

From 2006 through 2018, two lawsuits against property 

owners resulted in $23 thousand in legal expenses, which 

were fully reimbursed due to successful litigation. In 2019, 

new litigation against two property owners has thus far 

resulted in legal expenses of $7 thousand. 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 

LURA, or 2045 (whichever occurs first). As of December 31, 

2019 and 2018, no contingent liability for this indemnification 

has been recorded. 

5. Resolution Equity 

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

composed of two distinct pools: the FRF-FSLIC and the FRFRTC. 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. 

NOTES TO THE FINANCIAL STATEMENTS 

Contributed capital, accumulated deficit, and resolution 

equity consisted of the following components by each pool 

(dollars in thousands). 

December 31, 2019 

FRF-FSLIC FRF-RTC FRF Consolidated 

Contributed capital -

beginning 

Contributed capital -

ending 

$ 43,864,980 

43,864,980 

$ 81,624,337 

81,624,337 

$ 125,489,317 

125,489,317 

Accumulated deficit 

Total Resolution 

Equity 

(42,986,401) 

$ 878,579 

(81,579,496) 

$ 44,841 

(124,565,897) 

$ 923,420 

December 31, 2018 

FRF-FSLIC FRF-RTC FRF Consolidated 

Contributed capital -

beginning $ 43,864,980 $ 81,624,337 $ 125,489,317 

Contributed capital -

ending 

Accumulated deficit (43,006,464) (81,580,554) (124,587,018) 

Total Resolution 

Equity $ 858,516 $ 43,783 $ 902,299 

43,864,980 81,624,337 125,489,317 

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. Through December 31, 2019, the FRF-FSLIC 

received a total of $2.3 billion in goodwill appropriations, the 

effect of which increased contributed capital. 

Through December 31, 2019, 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 FRFFSLIC in 2013. These actions reduced 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. Since the dissolution dates, the FRF-FSLIC 

accumulated deficit increased by $13.2 billion, whereas the 

FRF-RTC accumulated deficit decreased by $6.3 billion. 

111 
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FSLIC RESOLUTION FUND 

6. Other Revenue 

Other revenue primarily represents recoveries from assets 

acquired from terminated receiverships, such as professional 

liability and criminal restitution claims, and unclaimed 

property escheatments. Additionally, in 2019, the return of 

unused goodwill litigation expense funds from the DOJ is 

included. Other revenue was $2 million for 2019, compared 

to $808 thousand for 2018. 

7. Recovery of Tax Benefits 

Recovery of tax benefits represents receipts based on 

underlying tax provisions from entities that either entered into 

assistance agreements with the former FSLIC, or have 

subsequently purchased financial institutions that had prior 

agreements with the FSLIC. In 2019, FRF received $1 million 

from the settlement of the last remaining FSLIC tax benefits 

sharing agreement. 

8. Fair Value of Financial Instruments 

At December 31, 2019 and 2018, the FRF’s financial assets 

measured at fair value on a recurring basis are cash 

equivalents (see Note 2) of $878 million and $857 million, 

respectively. Cash equivalents are Special U.S. Treasury 

Certificates with overnight maturities valued at prevailing 

interest rates established by the U.S. Treasury’s 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. 

9. Information Relating to the Statement of Cash Flows 

The following table presents a reconciliation of net income to 

net cash from operating activities (dollars in thousands). 

December 31 

2018 

December 31 

2019 

Operating Activities 

Net Income: $ 21,121 $ 16,514 

Change in Assets and 

Liabilities: 

Decrease (Increase) in 

other assets 221 (249) 

Increase (Decrease) in 

accounts payable and 

other liabilities 7 (83) 

Net Cash Provided by 

Operating Activities $ 21,349 $ 16,182 

10. Subsequent Events 

Subsequent events have been evaluated through February 6, 

2020, the date the financial statements are available to be 

issued. Based on management’s evaluation, there were no 

subsequent events requiring disclosure. 

112 
 

 

 

GOVERNMENT ACCOUNTABILITY OFFICE 

AUDITOR’S REPORT 

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 2019 and 2018 financial statements of the Deposit Insurance Fund (DIF) and 

of the Federal Savings and Loan Insurance Corporation (FSLIC) Resolution Fund (FRF), both of 

which the Federal Deposit Insurance Corporation (FDIC) administers,1 we found 

• the financial statements of the DIF and of the FRF as of and for the years ended 

December 31, 2019, and 2018, 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, 2019; and 

• with respect to the DIF and to the FRF, no reportable noncompliance for 2019 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 and other information included with the financial 

statements;2 (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,3 and the 

Government Corporation Control Act,4 we have audited the financial statements of the DIF and 

of the FRF, both of which FDIC administers. The financial statements of the DIF comprise the 

balance sheets as of December 31, 2019, and 2018; the related statements of income and fund 

balance and of cash flows for the years then ended; and the related notes to the financial 

statements. The financial statements of the FRF comprise the balance sheets as of 

December 31, 2019, and 2018; the related statements of income and accumulated deficit and of 

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, 2019, based on criteria established under 31 U.S.C. § 3512(c), (d), 

commonly known as the Federal Managers’ Financial Integrity Act (FMFIA). 

1A third fund managed by FDIC, the Orderly Liquidation Fund, established by Section 210(n) 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 2019. 

2Other information consists of information included with the financial statements, other than the auditor’s report. 

3Act of September 21, 1950, Pub. L. No. 797, § 2[17], 64 Stat. 873, 890, classified as amended at 12 U.S.C. § 1827. 

431 U.S.C. §§ 9101-9110. 

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GOVERNMENT ACCOUNTABILITY OFFICE 

AUDITOR’S REPORT (continued) 

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) preparing and 

presenting other information included in documents containing the audited financial statements 

and auditor’s report, and ensuring the consistency of that information with the audited financial 

statements; (3) 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; (4) evaluating the effectiveness of internal control over financial reporting based 

on the criteria established under FMFIA; and (5) its assessment about the effectiveness of 

internal control over financial reporting as of December 31, 2019, 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. We are also responsible for applying certain limited 

procedures to other information included with the financial statements. 

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 involves performing procedures to obtain 

evidence about whether a material weakness exists.5 The procedures selected depend on the 

auditor’s judgment, including the assessment of the risk that a material weakness exists. An 

audit of internal control over financial reporting also includes obtaining an understanding of 

internal control over financial reporting and evaluating and testing the design and operating 

effectiveness of internal control over financial reporting based on the assessed risk. Our audit of 

internal control also considered FDIC’s process for evaluating and reporting on internal control 

5A 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. 

114 
GOVERNMENT ACCOUNTABILITY OFFICE 

AUDITOR’S REPORT (continued) 

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. 

Definition 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 provisions of 

applicable laws, regulations, contracts, and grant agreements, noncompliance with which could 

have a 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, 2019, and 2018, and the results of its operations and its cash 

flows for the years then ended, in accordance with U.S. generally accepted accounting 

principles, and 

• the FRF’s financial statements present fairly, in all material respects, the FRF’s financial 

position as of December 31, 2019, and 2018, and the results of its operations and its cash 

flows for the years then ended, in accordance with U.S. generally accepted accounting 

principles. 

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, 2019, based on criteria established under FMFIA, 

and 

• FDIC maintained, in all material respects, effective internal control over financial reporting 

relevant to the FRF as of December 31, 2019, based on criteria established under FMFIA. 

115 
ANNUAL 

REPORT

FINANCIAL SECTION

 

GOVERNMENT ACCOUNTABILITY OFFICE 

AUDITOR’S REPORT (continued) 

During our 2019 audit, we identified deficiencies in FDIC’s internal control over financial 

reporting that we do not consider to be material weaknesses or significant deficiencies.6 

Nonetheless, these deficiencies warrant FDIC management’s attention. We have communicated 

these matters to FDIC management and, where appropriate, will report on them separately. 

Other Matters 

Other Information 

FDIC’s other information contains a wide range of information, some of which is not directly 

related to the financial statements. This information is presented for purposes of additional 

analysis and is not a required part of the financial statements. We read the other information 

included with the financial statements in order to identify material inconsistencies, if any, with 

the audited financial statements. Our audit was conducted for the purpose of forming opinions 

on the DIF’s and the FRF’s financial statements. We did not audit and do not express an opinion 

or provide any assurance on the other information. 

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 FDIC administers, 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 to 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 2019 that would be reportable, 

with respect to the DIF and to the FRF, 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. 

6A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting 

that is less severe than a material weakness, yet important enough to merit attention by those charged with 

governance. 

116 
GOVERNMENT ACCOUNTABILITY OFFICE 

AUDITOR’S REPORT (continued) 

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 stated that it was pleased to receive unmodified 

opinions on the DIF’s and the FRF’s financial statements, and noted that we reported that FDIC 

had effective internal control over financial reporting and that there was no reportable 

noncompliance with tested provisions of applicable laws, regulations, contracts, and grant 

agreements. FDIC also stated that it recognizes the essential role a strong internal control 

program plays in an agency achieving its mission and that its commitment to sound financial 

management has been and will remain a top priority. The complete text of FDIC’s response is 

reprinted in appendix II. 

James R. Dalkin 

Director 

Financial Management and Assurance 

February 6, 2020 

117 
ANNUAL 

REPORT

FINANCIAL SECTION

Appendix I 

MANAGEMENT’S REPORT ON INTERNAL CONTROL 

OVER FINANCIAL REPORTING 

118 

FDI 

FDII 

Federal Deposit Insurance Corporation 

550 17th Street NW, Washington, D.C. 20429-9990 

Management's Report on Internal Control over Financial Reporting 

Office of the Chairman 

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 offinancial 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 provisions of applicable laws, regulations, 

contracts, and grant agreements, noncompliance with which could have a material effect on the 

financial statements. 

FDIC management is responsible for establishing and 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, 2019, 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 (0MB) among others: FMFIA; Chief Financial 

Officers Act (CFO Act); Government Performance and Results Act (GPRA); Federal Information Security 

Management Act (FISMA); and 0MB 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 

Standards for Internal Control in the Federal Government. 

Based on the above evaluation, management concludes that, as of December 31, 2019, FDIC's internal 

control over financial reporting relevant to the DIF and the FRF was effective. 

~ fc- VJ \/ ' 1/ , '· / l 1-A,,v .!!(l)ltt;./(_jy? 

Jelena McWilliams c ___ .... --~- -·- -~·=· 

__,Piairman 

:3cd S2 ~~~> Bret D. Edwards 

Deputy to the Chairman 

and Chief Financial Officer 

February 6, 2020 
February 6, 2020 

Mr. James Daikin 

Director, Financial Management and Assurance 

U.S. Government Accountability Office 

441 G Street, NW 

Washington, D.C. 20548 

Re: FDIC Management Response to the 2019 and 2018 Financial Statements Audit Report 

Dear Mr. Daikin: 

FDIC management and staff worked to improve the internal control environment during the year 

and will continue to focus on this area in the corning audit year. FDIC recognizes the essential 

role a strong internal control program plays in an agency achieving its mission. Our commitment 

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

In complying with audit standards that require management to provide a written assessment 

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 FD/C'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 positive and productive relationship during the 2020 audit. If you have 

any questions or concerns, please do not hesitate to contact me. 

Sincerely, 

2019

FINANCIAL SECTION

Appendix II 

MANAGEMENT’S RESPONSE TO 

THE AUDITOR’S REPORT 

119 

Bret D. Edwards 

Deputy to the Chairman 

and Chief Financial Officer 

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' 2019 and 2018 Financial Statements, GAO-20-328R. We are pleased that the Federal 

Deposit Insurance Corporation (FDIC) has received unmodified opinions for the twenty-eighth 

consecutive year on the financial statements of its funds: the Deposit Insurance Fund (DIF) and 

the FSLIC Resolution Fund (FRF). Also, GAO reported that the FDIC had effective internal 

control over financial reporting, and that there was no reportable noncompliance with provisions 

of applicable laws, regulations, contracts, and grant agreements that were tested. 

FDII 

Federal Deposit Insurance Corporation 

550 17th Street NW, Washinglon, D.C. 20429-9990 Deputy to the Chairman and CFO 
VI. 

RISK MANAGEMENT AND INTERNAL CONTROLS 
2019

RISK MANAGEMENT AND INTERNAL CONTROLS

 

 

Te FDIC uses several means to identify and address 

enterprise risks, maintain comprehensive internal controls, 

ensure the overall efectiveness and efciency of operations, 

and otherwise comply as necessary with the following 

federal standards, among others: 

♦ Chief Financial Ofcers Act (CFO Act) 

♦ Federal Managers’ Financial Integrity Act (FMFIA) 

♦ Federal Financial Management Improvement Act 

(FFMIA) 

♦ Government Performance and Results Act (GPRA) 

♦ Federal Information Security Modernization Act of 

2014 (FISMA) 

♦ OMB Circular A-123 

♦ GAO’s Standards for Internal Control in the Federal 

Government 

As a foundation for these eforts, the Division of Finance, 

Risk Management and Internal Controls Branch (DOFRMIC) oversees a corporate-wide program of risk 

management and internal control activities and works 

closely with FDIC division and ofce management. 

Te FDIC has made a concerted efort to identify and 

assess fnancial, reputational, and operational risks and 

incorporate corresponding controls into day-to-day 

operations. Te program also requires that divisions and 

ofces document comprehensive procedures, thoroughly 

train employees, and hold supervisors accountable for 

performance and results. Divisions and ofces monitor 

compliance through periodic management reviews 

and various activity reports distributed to all levels of 

management. Te FDIC also takes seriously FDIC Ofce 

of Inspector General and GAO audit recommendations 

and strives to implement agreed upon actions promptly. 

Te FDIC has received unmodifed opinions on its 

fnancial statement audits for 28 consecutive years, and 

these and other positive results refect the efectiveness of 

the overall internal control program. 

In 2019, DOF-RMIC continued to enhance the FDIC’s 

Enterprise Risk Management program. ERM program 

accomplishments include, but were not limited to: 

♦ Enhancing the ERM program’s governance structure, 

♦ Confrming the FDIC’s risk appetite statement and 

risk profle, 

♦ Relaunching the Model Risk Management program, 

and 

♦ Providing Project Risk Manager support for certain 

complex IT projects. 

During 2020, DOF-RMIC will continue enhancing the 

ERM program. DOF-RMIC will focus on raising ERM 

awareness in the FDIC regional ofces, better integrating 

the ERM program with FDIC’s strategic planning and 

budget process, enhancing the internal control program, 

and exploring opportunities for process improvements. 

PROGRAM EVALUATION 

DOF-RMIC periodically evaluates selected program areas 

responsible for achieving FDIC strategic objectives and 

performance goals. During 2019, DOF-RMIC evaluated 

DRR processes responsible for achieving two Insurance 

Program strategic objectives and related performance 

goals. 

Strategic Objective and Related Performance 

Goal Evaluated: 

♦ Te FDIC resolves failed IDIs in the manner leastcostly to the DIF. 

• Market failing institutions to all known qualifed 

and interested potential bidders. 

Te FDIC maintains a database of qualifed and interested 

potential bidders for failed fnancial institutions. In 

developing the potential bidders list, the FDIC identifes 

well-capitalized and well-managed banks that are expected 

to be interested in acquiring the failing institution. 

During 2019, four fnancial institutions failed. FDIC 

marketed these institutions using a secured web-based 

virtual data room. Tis approach allowed the FDIC to 

efectively and efciently market the failing institution 

and its assets to potential bidders in a confdential manner. 

We confrmed in each case that the marketing process was 

competitive and multiple interested banks submitted bids. 

123 
ANNUAL 

REPORT

RISK MANAGEMENT AND INTERNAL CONTROLS

  

Strategic Objective and Related Performance 

Goals Evaluated: 

♦ Customers of failed IDIs have timely access to 

insured funds and fnancial services. 

• Depositors have access to insured funds within 

one business day if the failure occurs on a Friday. 

• Depositors have access to insured funds within 

two business days if the failure occurs on any 

other day of the week. 

• Depositors do not incur any losses on insured 

deposits. 

• No appropriated funds are required to pay 

insured depositors. 

Te FDIC has procedures in place to ensure that 

customers have timely access to insured funds and 

fnancial services, such as automated teller machines, safe 

deposit boxes, and wire services. If an institution failure 

occurs on a Friday, FDIC’s target for access to insured 

funds by customers is one business day. If a failure occurs 

on any other day of the week, the target is two business 

days. We confrmed that procedures were up-to-date and 

appropriate. In 2019, four banks failed. Te acquiring 

institution in three of the failures assumed all deposits 

and the fourth acquiring institution assumed insured 

deposits only. In all cases, DRR completed the deposit 

insurance determination timely and the acquiring 

institutions re-opened for business by the frst business 

day immediately following the Friday failure. Moreover, 

no depositors incurred losses on insured deposits and no 

appropriated funds were used to pay insured deposits. 

FRAUD REDUCTION AND DATA 

ANALYTICS ACT OF 2015 

Te Fraud Reduction and Data Analytics Act of 2015 was 

signed into law on June 30, 2016. Te law is intended 

to improve federal agency fnancial and administrative 

controls and procedures to assess and mitigate fraud risks, 

and to improve federal agencies’ development and use of 

data analytics for the purpose of identifying, preventing, 

and responding to fraud, including improper payments. 

Te FDIC’s enterprise risk management and internal 

control program considers the potential for fraud and 

incorporates elements of Principle 8—Assess Fraud 

Risk—from the GAO Standards of Internal Control in the 

Federal Government. Te FDIC implemented a Fraud Risk 

Assessment Framework as a basis for identifying potential 

fnancial fraud risks and schemes and ensuring that 

preventive and detective controls are present and working 

as intended. Examples of transactions more susceptible to 

fraud include contractor payments, wire transfers, travel 

card purchases, and cash receipts. 

As part of the Framework, management identifes potential 

fraud areas and implements and evaluates key controls as 

proactive measures for fraud prevention. Although no 

system of internal control provides absolute assurance, 

the FDIC’s system of internal control provides reasonable 

assurance that key controls are adequate and working 

as intended. Monitoring activities include supervisory 

approvals, management reports, and exception reporting. 

FDIC management performs due diligence in areas of 

suspected or alleged fraud. At the conclusion of due 

diligence, the matter is either closed or referred to the 

Ofce of Inspector General for investigation. 

During 2019, there was no systemic fraud identifed within 

the FDIC. 

MANAGEMENT REPORT ON 

FINAL ACTIONS 

As required under the provisions of Section 5 (as amended) 

of the Inspector General Act of 1978, the FDIC must 

report information on fnal action taken by management 

on certain audit reports. Te tables on the following 

pages provide information on fnal action taken by 

management on audit reports for the federal fscal year 

period October 1, 2018, through September 30, 2019. 

124 
2019

RISK MANAGEMENT AND INTERNAL CONTROLS

TABLE 1: 

MANAGEMENT REPORT ON FINAL ACTION ON AUDITS 

WITH DISALLOWED COSTS FOR FISCAL YEAR 2019 

Dollars in Thousands 

(Tere were no audit reports in this category.) 

TABLE 2: 

MANAGEMENT REPORT ON FINAL ACTION ON AUDITS WITH RECOMMENDATIONS 

TO PUT FUNDS TO BETTER USE FOR FISCAL YEAR 2019 

Dollars in Thousands 

(Tere were no audit reports in this category.) 

TABLE 3: 

AUDIT REPORTS WITHOUT FINAL ACTIONS BUT WITH MANAGEMENT DECISIONS 

OVER ONE YEAR OLD FOR FISCAL YEAR 2019 

Report No. and 

Issue Date OIG Audit Recommendation Management Action Disallowed Costs 

AUD-16-001 Te Acting CIO should assess the Te CIOO updated its assessment $0 

10/28/2015 Information Security Manager (ISM) 

Outsourced Information Service 

Provider Assessment Methodology 

processes supporting information service 

provider assessments to determine and 

implement any needed improvements to 

ensure timely completion of assessments. 

methodology to help ensure timely 

completion of assessments and 

completed assessments consistent with its 

implementation plan. 

Status: Completed. 

Undergoing OIG review. 

AUD-17-001 OIG recommends that the CIO should Te CIOO developed and documented its $0 

11/2/2016 review existing resource commitments 

and priorities for addressing data 

communications Plans of Action and 

Milestones (POA&Ms) and take 

appropriate steps to ensure they are 

addressed in a timely manner. 

policy risk tolerance levels and timeframes 

for remediating POA&Ms. Te FDIC has 

achieved a substantial reduction in several 

aging POA&M performance metrics. 

Additional time is needed to refne and 

meet performance benchmarks. 

Due Date: 6/26/2020. 

EVAL-17-007 Te Director, DOA should incorporate DOA established procedures and protocols $0 

9/18/2017 a risk assessment of individual separating 

employees into the FDIC’s pre-exit 

clearance process. 

for incorporating an employee-specifc risk 

assessment as part of the pre-exit clearance 

process. 

Status: Subsequently closed. 

125 
ANNUAL 

REPORT

RISK MANAGEMENT AND INTERNAL CONTROLS

TABLE 3: 

AUDIT REPORTS WITHOUT FINAL ACTIONS BUT WITH MANAGEMENT DECISIONS 

OVER ONE YEAR OLD FOR FISCAL YEAR 2019 (continued) 

Report No. and 

Issue Date OIG Audit Recommendation Management Action Disallowed Costs 

AUD-18-001 

10/25/2017 

Te CIO should implement the 

Information Security Risk Advisory 

(ISRA) Council’s responsibilities to 

develop a method and strategy for use 

by FDIC divisions and ofces in the 

classifcation of risk ratings and risk 

profles of corporate applications and 

systems. 

Te CIO should implement the ISRA 

Council’s responsibilities to develop and 

communicate the FDIC’s information 

security risk tolerance level and risk 

profle used to prioritize risk mitigation 

activities. 

Te CIO should ensure that the 

improvements to the FDIC’s patch 

management process result in systems 

being patched in accordance with 

FDIC’s patch management policy and 

National Institute of Standards and 

Technology recommended practices. 

Te CIOO developed a new methodology 

for categorizing applications and systems 

based on their risk profle. However, 

additional time is needed to fully 

implement the new methodology. 

Due Date: 1/31/2020 

Te FDIC issued its Corporate Risk 

Appetite Statement, which includes a 

discussion of technology risk. Te CIOO 

developed risk tolerances and metrics for 

monitoring key risk indicators. 

Due Date: 1/28/2020 

Te FDIC established patch management 

risk tolerances and is monitoring to 

ensure that systems are patched within 

established timeframes. In addition, 

the FDIC updated its patching policy 

to incorporate a new process for 

documenting deferrals and acceptances 

of risk, when appropriate. Further, the 

FDIC developed work instructions 

to ensure the process of monitoring 

vulnerabilities and tolerance levels is 

repeatable. 

Status: Subsequently closed. 

$0 

126 
2019

RISK MANAGEMENT AND INTERNAL CONTROLS

TABLE 3: 

AUDIT REPORTS WITHOUT FINAL ACTIONS BUT WITH MANAGEMENT DECISIONS 

OVER ONE YEAR OLD FOR FISCAL YEAR 2019 (continued) 

Report No. and 

Issue Date OIG Audit Recommendation Management Action Disallowed Costs 

AUD-18-001 Te CIO should review and enhance Te FDIC revised its standard operating $0 

10/25/2017 the FDIC’s vulnerability scanning procedure for addressing authentication 

(continued) processes to ensure that issues associated 

with conducting credentialed scans are 

resolved in a timely manner. 

failures. Te procedure now requires 

evidence of successful authentication 

prior to closing change control tickets 

generated as a result of authentication 

failures. Te FDIC still needs to 

demonstrate consistent, efective 

performance of the new procedures. 

Due Date: 5/29/2020 

Te CIO should develop an approach 

and implementing procedures for 

evaluating risk associated with known 

security weaknesses and vulnerabilities 

to ensure they collectively remain within 

established risk tolerance levels. 

Te CIOO developed standard risk 

tolerances for information security 

vulnerabilities, developed a framework 

to quantify risk, and integrated these 

items into the CIOO’s risk management 

processes. Additionally, the CIOO 

updated its Information Security Risk 

Management directive to align roles, 

responsibilities, and expectations for 

reporting risk levels that approach or 

exceed risk tolerance limits. Te CIOO 

will fnalize and publish the directive once 

the directives review process is complete. 

Due Date: 5/29/2020 

127 
ANNUAL 

REPORT

RISK MANAGEMENT AND INTERNAL CONTROLS

TABLE 3: 

AUDIT REPORTS WITHOUT FINAL ACTIONS BUT WITH MANAGEMENT DECISIONS 

OVER ONE YEAR OLD FOR FISCAL YEAR 2019 (continued) 

Report No. and 

Issue Date OIG Audit Recommendation Management Action Disallowed Costs 

AUD-18-004 Te CIO should implement an Te CIO implemented an enterprise $0 

7/26/18 enterprise architecture that is part of the 

FDIC’s IT Governance Framework and 

used to guide IT decision-making. 

architecture that is part of the FDIC’s IT 

Governance Framework and used to guide 

IT decision-making. 

Status: Subsequently closed. 

Te CIO should incorporate the revised 

IT governance processes into applicable 

FDIC policies, procedures, and charters. 

Te CIO should identify and document 

the IT resources and expertise needed to 

execute the FDIC’s IT Strategic Plan. 

Te CIOO combined existing IT 

governance policies into one overarching 

directive which will defne the FDIC’s IT 

decision-making framework for governing 

and managing IT resources for enterprise 

architecture, IT strategy, IT planning, 

data management, and IT project 

management. Te CIOO will fnalize and 

publish the directive once the directives 

review process is complete. 

Due Date: 3/31/2020 

Te CIOO developed a workforce 

planning guide that outlines the process 

that will be used to document the IT 

resources and expertise needed to execute 

the FDIC’s IT Strategic Plan. Te CIOO 

will perform the IT workforce assessment 

against future IT workforce needs as 

defned in the FDIC’s IT Modernization 

Plan and target IT architecture. 

Due Date: 9/30/2020 

EVAL-18-004 Te Director, Division of Risk RMS issued a comprehensive document $0 

8/8/2018 Management Supervision should 

issue a comprehensive policy guidance 

document defning Forward-Looking 

Supervision, including its purpose, goals, 

roles, and responsibilities. 

describing its risk-focused supervision 

program, including how the FDIC 

implemented Forward-Looking 

Supervision concepts. 

Status: Subsequently closed. 

128 
VII. 

APPENDICES 
2019

APPENDICES

A. KEY STATISTICS 

FDIC ACTIONS ON FINANCIAL INSTITUTIONS APPLICATIONS 

2019 2018 2017 

Deposit Insurance 15 17 12 

Approved1 15 17 12 

Denied 0 0 0 

New Branches 548 533 500 

Approved 548 533 500 

Denied 0 0 

Mergers 243 224 218 

Approved 243 224 218 

Denied 0 0 0 

Requests for Consent to Serve2 87 120 104 

Approved 87 120 104 

Section 19 5 7 1 

Section 32 82 113 103 

Denied 0 0 

Section 19 0 0 

Section 32 0 0 

Notices of Change in Control 12 21 17 

Letters of Intent Not to Disapprove 12 21 17 

Disapproved 0 0 0 

Brokered Deposit Waivers 3 5 12 

Approved 3 5 11 

Denied 0 0 1 

Savings Association Activities3 2 0 1 

Approved 2 0 1 

Denied 0 0 0 

State Bank Activities/Investments4 20 9 2 

Approved 20 9 2 

Denied 0 0 0 

Conversion of Mutual Institutions 4 2 

Non-Objection 4 2 5 

Objection 0 0 0 

0 

0 

0 

0 

5 

1

 Includes deposit insurance application filed on behalf of (1) newly organized institutions, (2) existing uninsured financial services companies 

seeking establishment as an insured institution, and (3) interim institutions established to facilitate merger or conversion transactions, and 

applications to facilitate the establishment of thrift holding companies. 

2

 Under Section 19 of the Federal Deposit Insurance (FDI) Act, an insured institution must receive FDIC approval before employing a person 

convicted of dishonesty or breach of trust. Under Section 32, the FDIC must approve any change of directors or senior executive officers at a 

state nonmember bank that is not in compliance with capital requirements or is otherwise in troubled condition. 

3

 Section 28 of the FDI Act, in general, prohibits a federally-insured state savings association from engaging in an activity not permissible for a 

federal savings association and requires notices or applications to be filed with the FDIC.

4

 Section 24 of the FDI Act, in general, prohibits a federally-insured state bank from engaging in an activity not permissible for a national bank and 

requires notices or applications to be filed with the FDIC.

131 
ANNUAL 

REPORT

APPENDICES

COMBINED RISK AND CONSUMER ENFORCEMENT ACTIONS 

2019 2018 2017 

0 

0 

9 

Total Number of Actions Initiated by the FDIC 182 177 231

Termination of Insurance 17 8 

Involuntary Termination 0 0 

Sec. 8a For Violations, Unsafe/Unsound Practices or Conditions 0 0 

Voluntary Termination 17 8 

Sec. 8a By Order Upon Request 0 0 0 

Sec. 8p No Deposits 12 7 8 

Sec. 8q Deposits Assumed 5 1 1 

Sec. 8b Cease-and-Desist Actions 24 23 26 

Notices of Charges Issued 1 1 0 

Orders to Pay Restitution 0 5 4 

Consent Orders 18 17 14 

Personal Cease and Desist Orders 5 0 

Sec. 8e Removal/Prohibition of Director or Ofcer 34 52 

Notices of Intention to Remove/Prohibit 1 2 

Consent Orders 33 50 

Sec. 8g Suspension/Removal When Charged With Crime 0 0 

Civil Money Penalties Issued 29 25 

Sec. 7a Call Report Penalties 0 0 0 

Sec. 8i Civil Money Penalties 27 23 42 

Sec. 8i Civil Money Penalty Notices of Assessment 2 2 5 

Sec. 10c Orders of Investigation 11 6 9 

Sec. 19 Waiver Orders 64 59 

Approved Section 19 Waiver Orders 64 59 

Denied Section 19 Waiver Orders 0 0 

Sec. 32 Notices Disapproving Ofcer/Director’s Request for Review 0 0 

Truth-in-Lending Act Reimbursement Actions 58 91 135 

Denials of Requests for Relief 0 0 

Grants of Relief 0 0 

Banks Making Reimbursement1 58 91 135 

Suspicious Activity Reports (Open and closed institutions)1 225,270 193,585 182,647 

Other Actions Not Listed2 3 4 4 

1 These actions do not constitute the initiation of a formal enforcement action and, therefore, are not included in the total number of actions initiated. 

2 The Other Actions Not Listed were, in 2019: 3 Supervisory Prompt Corrective Action Directives and 1 Other Formal Action; in 2018: 2 Supervisory 

Prompt Corrective Action Directives, 1 Temporary Cease and Desist Order and 1 Other Formal Action; and 2017: 1 Supervisory Prompt Corrective 

Action Directive and 3 Other Formal Actions. 

9 

8 

65 

7 

58 

0 

47 

71 

71 

0 

0 

0 

0 

132 
2019

APPENDICES

ESTIMATED INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND, 

DECEMBER 31, 1934, THROUGH SEPTEMBER 30, 20191 

Dollars in Millions (except Insurance Coverage)

Deposits in Insured 

Institutions2 

Insurance Fund as 

a Percentage of 

Year 

Insurance 

Coverage2 

Total Domestic 

Deposits 

Est. Insured 

Deposits 

Percentage 

of Domestic 

Deposits 

Deposit 

Insurance 

Fund 

Total 

Domestic 

Deposits 

Est. Insured 

Deposits 

2019 $250,000 $13,018,939 $7,736,888 59.4 $108,939.7 0.84 1.41 

2018 250,000 12,659,395 7,525,393 59.4 102,608.9 0.81 1.36 

2017 250,000 12,129,503 7,156,067 59.0 92,747.5 0.76 1.30 

2016 250,000 11,693,371 6,917,200 59.2 83,161.5 0.71 1.20 

2015 250,000 10,952,922 6,518,675 59.5 72,600.2 0.66 1.11 

2014 250,000 10,410,687 6,195,554 59.5 62,780.2 0.60 1.01 

2013 250,000 9,825,479 5,998,238 61.0 47,190.8 0.48 0.79 

2012 250,000 9,474,720 7,402,053 78.1 32,957.8 0.35 0.45 

2011 250,000 8,782,291 6,973,483 79.4 11,826.5 0.13 0.17 

2010 250,000 7,887,858 6,301,542 79.9 (7,352.2) (0.09) (0.12) 

2009 250,000 7,705,354 5,407,773 70.2 (20,861.8) (0.27) (0.39) 

2008 100,000 7,505,408 4,750,783 63.3 17,276.3 0.23 0.36 

2007 100,000 6,921,678 4,292,211 62.0 52,413.0 0.76 1.22 

2006 100,000 6,640,097 4,153,808 62.6 50,165.3 0.76 1.21 

2005 100,000 6,229,753 3,890,930 62.5 48,596.6 0.78 1.25 

2004 100,000 5,724,621 3,622,059 63.3 47,506.8 0.83 1.31 

2003 100,000 5,223,922 3,452,497 66.1 46,022.3 0.88 1.33 

2002 100,000 4,916,078 3,383,598 68.8 43,797.0 0.89 1.29 

2001 100,000 4,564,064 3,215,581 70.5 41,373.8 0.91 1.29 

2000 100,000 4,211,895 3,055,108 72.5 41,733.8 0.99 1.37 

1999 100,000 3,885,826 2,869,208 73.8 39,694.9 1.02 1.38 

1998 100,000 3,817,150 2,850,452 74.7 39,452.1 1.03 1.38 

1997 100,000 3,602,189 2,746,477 76.2 37,660.8 1.05 1.37 

1996 100,000 3,454,556 2,690,439 77.9 35,742.8 1.03 1.33 

1995 100,000 3,318,595 2,663,873 80.3 28,811.5 0.87 1.08 

1994 100,000 3,184,410 2,588,619 81.3 23,784.5 0.75 0.92 

1993 100,000 3,220,302 2,602,781 80.8 14,277.3 0.44 0.55 

1992 100,000 3,275,530 2,677,709 81.7 178.4 0.01 0.01 

1991 100,000 3,331,312 2,733,387 82.1 (6,934.0) (0.21) (0.25) 

1990 100,000 3,415,464 2,784,838 81.5 4,062.7 0.12 0.15 

1989 100,000 3,412,503 2,755,471 80.7 13,209.5 0.39 0.48 

1988 100,000 2,337,080 1,756,771 75.2 14,061.1 0.60 0.80 

1987 100,000 2,198,648 1,657,291 75.4 18,301.8 0.83 1.10 

1986 100,000 2,162,687 1,636,915 75.7 18,253.3 0.84 1.12 

133 
ANNUAL 

REPORT

APPENDICES

ESTIMATED INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND, 

DECEMBER 31, 1934, THROUGH SEPTEMBER 30, 20191 (continued) 

Dollars in Millions (except Insurance Coverage) 

Deposits in Insured 

Institutions2 

Insurance Fund as 

a Percentage of 

Year 

Insurance 

Coverage2 

Total Domestic 

Deposits 

Est. Insured 

Deposits 

Percentage 

of Domestic 

Deposits 

Deposit 

Insurance 

Fund 

Total 

Domestic 

Deposits 

Est. Insured 

Deposits 

1985 100,000 1,975,030 1,510,496 76.5 17,956.9 0.91 1.19 

1984 100,000 1,805,334 1,393,421 77.2 16,529.4 0.92 1.19 

1983 100,000 1,690,576 1,268,332 75.0 15,429.1 0.91 1.22 

1982 100,000 1,544,697 1,134,221 73.4 13,770.9 0.89 1.21 

1981 100,000 1,409,322 988,898 70.2 12,246.1 0.87 1.24 

1980 100,000 1,324,463 948,717 71.6 11,019.5 0.83 1.16 

1979 40,000 1,226,943 808,555 65.9 9,792.7 0.80 1.21 

1978 40,000 1,145,835 760,706 66.4 8,796.0 0.77 1.16 

1977 40,000 1,050,435 692,533 65.9 7,992.8 0.76 1.15 

1976 40,000 941,923 628,263 66.7 7,268.8 0.77 1.16 

1975 40,000 875,985 569,101 65.0 6,716.0 0.77 1.18 

1974 40,000 833,277 520,309 62.4 6,124.2 0.73 1.18 

1973 20,000 766,509 465,600 60.7 5,615.3 0.73 1.21 

1972 20,000 697,480 419,756 60.2 5,158.7 0.74 1.23 

1971 20,000 610,685 374,568 61.3 4,739.9 0.78 1.27 

1970 20,000 545,198 349,581 64.1 4,379.6 0.80 1.25 

1969 20,000 495,858 313,085 63.1 4,051.1 0.82 1.29 

1968 15,000 491,513 296,701 60.4 3,749.2 0.76 1.26 

1967 15,000 448,709 261,149 58.2 3,485.5 0.78 1.33 

1966 15,000 401,096 234,150 58.4 3,252.0 0.81 1.39 

1965 10,000 377,400 209,690 55.6 3,036.3 0.80 1.45 

1964 10,000 348,981 191,787 55.0 2,844.7 0.82 1.48 

1963 10,000 313,304 177,381 56.6 2,667.9 0.85 1.50 

1962 10,000 297,548 170,210 57.2 2,502.0 0.84 1.47 

1961 10,000 281,304 160,309 57.0 2,353.8 0.84 1.47 

1960 10,000 260,495 149,684 57.5 2,222.2 0.85 1.48 

1959 10,000 247,589 142,131 57.4 2,089.8 0.84 1.47 

1958 10,000 242,445 137,698 56.8 1,965.4 0.81 1.43 

1957 10,000 225,507 127,055 56.3 1,850.5 0.82 1.46 

1956 10,000 219,393 121,008 55.2 1,742.1 0.79 1.44 

1955 10,000 212,226 116,380 54.8 1,639.6 0.77 1.41 

1954 10,000 203,195 110,973 54.6 1,542.7 0.76 1.39 

1953 10,000 193,466 105,610 54.6 1,450.7 0.75 1.37 

1952 10,000 188,142 101,841 54.1 1,363.5 0.72 1.34 

134 
2019

APPENDICES

ESTIMATED INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND, 

DECEMBER 31, 1934, THROUGH SEPTEMBER 30, 20191 (continued) 

Dollars in Millions (except Insurance Coverage) 

Deposits in Insured 

Institutions2 

Insurance Fund as 

a Percentage of 

Year 

Insurance 

Coverage2 

Total Domestic 

Deposits 

Est. Insured 

Deposits 

Percentage 

of Domestic 

Deposits 

Deposit 

Insurance 

Fund 

Total 

Domestic 

Deposits 

Est. Insured 

Deposits 

1951 10,000 178,540 96,713 54.2 1,282.2 0.72 1.33 

1950 10,000 167,818 91,359 54.4 1,243.9 0.74 1.36 

1949 5,000 156,786 76,589 48.8 1,203.9 0.77 1.57 

1948 5,000 153,454 75,320 49.1 1,065.9 0.69 1.42 

1947 5,000 154,096 76,254 49.5 1,006.1 0.65 1.32 

1946 5,000 148,458 73,759 49.7 1,058.5 0.71 1.44 

1945 5,000 157,174 67,021 42.6 929.2 0.59 1.39 

1944 5,000 134,662 56,398 41.9 804.3 0.60 1.43 

1943 5,000 111,650 48,440 43.4 703.1 0.63 1.45 

1942 5,000 89,869 32,837 36.5 616.9 0.69 1.88 

1941 5,000 71,209 28,249 39.7 553.5 0.78 1.96 

1940 5,000 65,288 26,638 40.8 496.0 0.76 1.86 

1939 5,000 57,485 24,650 42.9 452.7 0.79 1.84 

1938 5,000 50,791 23,121 45.5 420.5 0.83 1.82 

1937 5,000 48,228 22,557 46.8 383.1 0.79 1.70 

1936 5,000 50,281 22,330 44.4 343.4 0.68 1.54 

1935 5,000 45,125 20,158 44.7 306.0 0.68 1.52 

1934 5,000 40,060 18,075 45.1 291.7 0.73 1.61 

1

For 2019, figures are as of September 30; all other prior years are as of December 31. Prior to 1989, figures are for the Bank Insurance Fund 

(BIF) only and exclude insured branches of foreign banks. For 1989 to 2005, figures represent the sum of the BIF and Savings Association 

Insurance Fund (SAIF) amounts; for 2006 to 2019, figures are for DIF. Amounts for 1989-2019 include insured branches of foreign banks. Prior to 

year-end 1991, insured deposits were estimated using percentages determined from June Call and Thrift Financial Reports. 

2 The year-end 2008 coverage limit and estimated insured deposits do not reflect the temporary increase to $250,000 then in effect under the 

Emergency Economic Stabilization Act of 2008. The Dodd-Frank Wall Street Reform and Consumer Protection (Dodd-Frank) Act made this 

coverage limit permanent. The year-end 2009 coverage limit and estimated insured deposits reflect the $250,000 coverage limit. The Dodd-Frank 

Act also temporarily provided unlimited coverage for non-interest bearing transaction accounts for two years beginning December 31, 2010. 

Coverage for certain retirement accounts increased to $250,000 in 2006. Initial coverage limit was $2,500 from January 1 to June 30, 1934.

135 
ANNUAL 

REPORT

APPENDICES

-

INCOME AND EXPENSES, DEPOSIT INSURANCE FUND, 

FROM BEGINNING OF OPERATIONS, 

SEPTEMBER 11, 1933, THROUGH DECEMBER 31, 2019 

Dollars in Millions 

Income Expenses and Losses 

Year Total 

Assessment 

Income 

Assessment 

Credits 

Investment 

and Other 

Effective 

Assessment 

Rate1 Total 

Provision 

for 

Ins. Losses 

Admin. 

and 

Operating 

Expenses2 

Interest 

& Other 

Ins. 

Expenses 

Funding 

Transfer 

from the 

FSLIC 

Resolu 

tion Fund 

Net Income/ 

(Loss) 

TOTAL $260,559.2 $190,764.4 $12,096.5 $81,891.3 $151,024.5 $106,443.1 $35,109.3 $9,472.2 $139.5 $109,674.2 

2019 7,095.3 5,642.7 703.6 2,156.2 0.0313% 513.2 (1,285.5) 1,795.6 3.1 0 6,582.1 

2018 11,170.8 9,526.7 0.0 1,644.1 0.0626% 1,205.2 (562.6) 1,764.7 3.1 0 9,965.6 

2017 11,663.7 10,594.8 0.0 1,068.9 0.0716% 1,558.2 (183.1) 1,739.4 2.0 0 10,105.5 

2016 10,674.1 9,986.6 0.0 687.5 0.0699% 150.6 (1,567.9) 1,715.0 3.5 0 10,523.5 

2015 9,303.5 8,846.8 0.0 456.7 0.0647% (553.2) (2,251.3) 1,687.2 10.9 0 9,856.7 

2014 8,965.1 8,656.1 0.0 309.0 0.0663% (6,634.7) (8,305.5) 1,664.3 6.5 0 15,599.8 

2013 10,458.9 9,734.2 0.0 724.7 0.0775% (4,045.9) (5,659.4) 1,608.7 4.8 0 14,504.8 

2012 18,522.3 12,397.2 0.2 6,125.3 0.1012% (2,599.0) (4,222.6) 1,777.5 (153.9) 0 21,121.3 

2011 16,342.0 13,499.5 0.9 2,843.4 0.1115% (2,915.4) (4,413.6) 1,625.4 (127.2) 0 19,257.4 

2010 13,379.9 13,611.2 0.8 (230.5) 0.1772% 75.0 (847.8) 1,592.6 (669.8) 0 13,304.9 

2009 24,706.4 17,865.4 148.0 6,989.0 0.2330% 60,709.0 57,711.8 1,271.1 1,726.1 0 (36,002.6) 

2008 7,306.3 4,410.4 1,445.9 4,341.8 0.0418% 44,339.5 41,838.8 1,033.5 1,467.2 0 (37,033.2) 

2007 3,196.2 3,730.9 3,088.0 2,553.3 0.0093% 1,090.9 95.0 992.6 3.3 0 2,105.3 

2006 2,643.5 31.9 0.0 2,611.6 0.0005% 904.3 (52.1) 950.6 5.8 0 1,739.2 

2005 2,420.5 60.9 0.0 2,359.6 0.0010% 809.3 (160.2) 965.7 3.8 0 1,611.2 

2004 2,240.3 104.2 0.0 2,136.1 0.0019% 607.6 (353.4) 941.3 19.7 0 1,632.7 

2003 2,173.6 94.8 0.0 2,078.8 0.0019% (67.7) (1,010.5) 935.5 7.3 0 2,241.3 

2002 2,384.7 107.8 0.0 2,276.9 0.0023% 719.6 (243.0) 945.1 17.5 0 1,665.1 

2001 2,730.1 83.2 0.0 2,646.9 0.0019% 3,123.4 2,199.3 887.9 36.2 0 (393.3) 

2000 2,570.1 64.3 0.0 2,505.8 0.0016% 945.2 28.0 883.9 33.3 0 1,624.9 

1999 2,416.7 48.4 0.0 2,368.3 0.0013% 2,047.0 1,199.7 823.4 23.9 0 369.7 

1998 2,584.6 37.0 0.0 2,547.6 0.0010% 817.5 (5.7) 782.6 40.6 0 1,767.1 

1997 2,165.5 38.6 0.0 2,126.9 0.0011% 247.3 (505.7) 677.2 75.8 0 1,918.2 

1996 7,156.8 5,294.2 0.0 1,862.6 0.1622% 353.6 (417.2) 568.3 202.5 0 6,803.2 

1995 5,229.2 3,877.0 0.0 1,352.2 0.1238% 202.2 (354.2) 510.6 45.8 0 5,027.0 

1994 7,682.1 6,722.7 0.0 959.4 0.2192% (1,825.1) (2,459.4) 443.2 191.1 0 9,507.2 

1993 7,354.5 6,682.0 0.0 672.5 0.2157% (6,744.4) (7,660.4) 418.5 497.5 0 14,098.9 

1992 6,479.3 5,758.6 0.0 720.7 0.1815% (596.8) (2,274.7) 614.83 1,063.1 35.4 7,111.5 

1991 5,886.5 5,254.0 0.0 632.5 0.1613% 16,925.3 15,496.2 326.1 1,103.0 42.4 (10,996.4) 

1990 3,855.3 2,872.3 0.0 983.0 0.0868% 13,059.3 12,133.1 275.6 650.6 56.1 (9,147.9) 

1989 3,494.8 1,885.0 0.0 1,609.8 0.0816% 4,352.2 3,811.3 219.9 321.0 5.6 (851.8) 

1988 3,347.7 1,773.0 0.0 1,574.7 0.0825% 7,588.4 6,298.3 223.9 1,066.2 0 (4,240.7) 

1987 3,319.4 1,696.0 0.0 1,623.4 0.0833% 3,270.9 2,996.9 204.9 69.1 0 48.5 

1986 3,260.1 1,516.9 0.0 1,743.2 0.0787% 2,963.7 2,827.7 180.3 (44.3) 0 296.4 

1985 3,385.5 1,433.5 0.0 1,952.0 0.0815% 1,957.9 1,569.0 179.2 209.7 0 1,427.6 

1984 3,099.5 1,321.5 0.0 1,778.0 0.0800% 1,999.2 1,633.4 151.2 214.6 0 1,100.3 

1983 2,628.1 1,214.9 164.0 1,577.2 0.0714% 969.9 675.1 135.7 159.1 0 1,658.2 

136 
2019

APPENDICES

-

INCOME AND EXPENSES, DEPOSIT INSURANCE FUND, 

FROM BEGINNING OF OPERATIONS, 

SEPTEMBER 11, 1933, THROUGH DECEMBER 31, 2019 (continued) 

Dollars in Millions 

Income Expenses and Losses 

Year Total 

Assessment 

Income 

Assessment 

Credits 

Investment 

and Other 

Effective 

Assessment 

Rate1 Total 

Provision 

for 

Ins. Losses 

Admin. 

and 

Operating 

Expenses2 

Interest 

& Other 

Ins. 

Expenses 

Funding 

Transfer 

from the 

FSLIC 

Resolu 

tion Fund 

Net Income/ 

(Loss) 

1982 2,524.6 1,108.9 96.2 1,511.9 0.0769% 999.8 126.4 129.9 743.5 0 1,524.8 

1981 2,074.7 1,039.0 117.1 1,152.8 0.0714% 848.1 320.4 127.2 400.5 0 1,226.6 

1980 1,310.4 951.9 521.1 879.6 0.0370% 83.6 (38.1) 118.2 3.5 0 1,226.8 

1979 1,090.4 881.0 524.6 734.0 0.0333% 93.7 (17.2) 106.8 4.1 0 996.7 

1978 952.1 810.1 443.1 585.1 0.0385% 148.9 36.5 103.3 9.1 0 803.2 

1977 837.8 731.3 411.9 518.4 0.0370% 113.6 20.8 89.3 3.5 0 724.2 

1976 764.9 676.1 379.6 468.4 0.0370% 212.3 28.0 180.44 3.9 0 552.6 

1975 689.3 641.3 362.4 410.4 0.0357% 97.5 27.6 67.7 2.2 0 591.8 

1974 668.1 587.4 285.4 366.1 0.0435% 159.2 97.9 59.2 2.1 0 508.9 

1973 561.0 529.4 283.4 315.0 0.0385% 108.2 52.5 54.4 1.3 0 452.8 

1972 467.0 468.8 280.3 278.5 0.0333% 65.7 10.1 49.6 6.0 5 0 401.3 

1971 415.3 417.2 241.4 239.5 0.0345% 60.3 13.4 46.9 0.0 0 355.0 

1970 382.7 369.3 210.0 223.4 0.0357% 46.0 3.8 42.2 0.0 0 336.7 

1969 335.8 364.2 220.2 191.8 0.0333% 34.5 1.0 33.5 0.0 0 301.3 

1968 295.0 334.5 202.1 162.6 0.0333% 29.1 0.1 29.0 0.0 0 265.9 

1967 263.0 303.1 182.4 142.3 0.0333% 27.3 2.9 24.4 0.0 0 235.7 

1966 241.0 284.3 172.6 129.3 0.0323% 19.9 0.1 19.8 0.0 0 221.1 

1965 214.6 260.5 158.3 112.4 0.0323% 22.9 5.2 17.7 0.0 0 191.7 

1964 197.1 238.2 145.2 104.1 0.0323% 18.4 2.9 15.5 0.0 0 178.7 

1963 181.9 220.6 136.4 97.7 0.0313% 15.1 0.7 14.4 0.0 0 166.8 

1962 161.1 203.4 126.9 84.6 0.0313% 13.8 0.1 13.7 0.0 0 147.3 

1961 147.3 188.9 115.5 73.9 0.0323% 14.8 1.6 13.2 0.0 0 132.5 

1960 144.6 180.4 100.8 65.0 0.0370% 12.5 0.1 12.4 0.0 0 132.1 

1959 136.5 178.2 99.6 57.9 0.0370% 12.1 0.2 11.9 0.0 0 124.4 

1958 126.8 166.8 93.0 53.0 0.0370% 11.6 0.0 11.6 0.0 0 115.2 

1957 117.3 159.3 90.2 48.2 0.0357% 9.7 0.1 9.6 0.0 0 107.6 

1956 111.9 155.5 87.3 43.7 0.0370% 9.4 0.3 9.1 0.0 0 102.5 

1955 105.8 151.5 85.4 39.7 0.0370% 9.0 0.3 8.7 0.0 0 96.8 

1954 99.7 144.2 81.8 37.3 0.0357% 7.8 0.1 7.7 0.0 0 91.9 

1953 94.2 138.7 78.5 34.0 0.0357% 7.3 0.1 7.2 0.0 0 86.9 

1952 88.6 131.0 73.7 31.3 0.0370% 7.8 0.8 7.0 0.0 0 80.8 

1951 83.5 124.3 70.0 29.2 0.0370% 6.6 0.0 6.6 0.0 0 76.9 

1950 84.8 122.9 68.7 30.6 0.0370% 7.8 1.4 6.4 0.0 0 77.0 

1949 151.1 122.7 0.0 28.4 0.0833% 6.4 0.3 6.1 0.0 0 144.7 

1948 145.6 119.3 0.0 26.3 0.0833% 7.0 0.7 6.36 0.0 0 138.6 

1947 157.5 114.4 0.0 43.1 0.0833% 9.9 0.1 9.8 0.0 0 147.6 

1946 130.7 107.0 0.0 23.7 0.0833% 10.0 0.1 9.9 0.0 0 120.7 

1945 121.0 93.7 0.0 27.3 0.0833% 9.4 0.1 9.3 0.0 0 111.6 

137 
ANNUAL 

REPORT

APPENDICES

-

INCOME AND EXPENSES, DEPOSIT INSURANCE FUND, 

FROM BEGINNING OF OPERATIONS, 

SEPTEMBER 11, 1933, THROUGH DECEMBER 31, 2019 (continued) 

Dollars in Millions 

Income Expenses and Losses 

Year Total 

Assessment 

Income 

Assessment 

Credits 

Investment 

and Other 

Effective 

Assessment 

Rate1 Total 

Provision 

for 

Ins. Losses 

Admin. 

and 

Operating 

Expenses2 

Interest 

& Other 

Ins. 

Expenses 

Funding 

Transfer 

from the 

FSLIC 

Resolu 

tion Fund 

Net Income/ 

(Loss) 

1944 99.3 80.9 0.0 18.4 0.0833% 9.3 0.1 9.2 0.0 0 90.0 

1943 86.6 70.0 0.0 16.6 0.0833% 9.8 0.2 9.6 0.0 0 76.8 

1942 69.1 56.5 0.0 12.6 0.0833% 10.1 0.5 9.6 0.0 0 59.0 

1941 62.0 51.4 0.0 10.6 0.0833% 10.1 0.6 9.5 0.0 0 51.9 

1940 55.9 46.2 0.0 9.7 0.0833% 12.9 3.5 9.4 0.0 0 43.0 

1939 51.2 40.7 0.0 10.5 0.0833% 16.4 7.2 9.2 0.0 0 34.8 

1938 47.7 38.3 0.0 9.4 0.0833% 11.3 2.5 8.8 0.0 0 36.4 

1937 48.2 38.8 0.0 9.4 0.0833% 12.2 3.7 8.5 0.0 0 36.0 

1936 43.8 35.6 0.0 8.2 0.0833% 10.9 2.6 8.3 0.0 0 32.9 

1935 20.8 11.5 0.0 9.3 0.0833% 11.3 2.8 8.5 0.0 0 9.5 

1933-34 7.0 0.0 0.0 7.0 N/A 10.0 0.2 9.8 0.0 0 (3.0) 

1 The effective assessment rate is calculated from annual assessment income (net of assessment credits), excluding transfers to the Financing 

Corporation (FICO), Resolution Funding Corporation (REFCORP) and FSLIC Resolution Fund, divided by the average assessment base. Figures 

represent only BIF-insured institutions prior to 1990, and BIF- and SAIF-insured institutions from 1990 through 2005. After 1995, all thrift closings 

became the responsibility of the FDIC and amounts are reflected in the SAIF. Beginning in 2006, figures are for the DIF.

The annualized assessment rate for 2019 is based on full year assessment income divided by a four quarter average of 2019 quarterly 

assessment base amounts. The assessment base for fourth quarter 2019 was estimated using the third quarter 2019 assessment base and an 

assumed quarterly growth rate of one percent. 

Historical Assessment Rates: 

1934 – 1949 The statutory assessment rate was 0.0833 percent. 

1950 – 1984 The effective assessment rates varied from the 

statutory rate of 0.0833 percent due to assessment 

credits provided in those years. 

1985 – 1989 The statutory assessment rate was 0.0833 percent (no 

credits were given). 

1990 The statutory rate increased to 0.12 percent. 

1991 – 1992 The statutory rate increased to a minimum of 0.15 

percent. The effective rates in 1991 and 1992 varied 

because the FDIC exercised new authority to increase 

assessments above the statutory minimum rate when 

needed. 

1993 – 2006 Beginning in 1993, the effective rate was based on a 

risk-related premium system under which institutions 

paid assessments in the range of 0.23 percent to 0.31 

percent. In May 1995, the BIF reached the mandatory 

recapitalization level of 1.25 percent. As a result, 

BIF assessment rates were reduced to a range of 

0.04 percent to 0.31 percent of assessable deposits, 

effective June 1995, and assessments totaling $1.5 

billion were refunded in September 1995. Assessment 

rates for the BIF were lowered again to a range of 0 to 

0.27 percent of assessable deposits, effective the start 

2007 – 2008 

2009 – 2011

of 1996. In 1996, the SAIF collected a one-time special 

assessment of $4.5 billion. Subsequently, assessment 

rates for the SAIF were lowered to the same range as 

the BIF, effective October 1996. This range of rates 

remained unchanged for both funds through 2006. 

As part of the implementation of the Federal Deposit 

Insurance Reform Act of 2005, assessment rates 

were increased to a range of 0.05 percent to 0.43 

percent of assessable deposits effective at the start 

of 2007, but many institutions received a one-time 

assessment credit ($4.7 billion in total) to offset the new 

assessments. 

For the first quarter of 2009, assessment rates were 

increased to a range of 0.12 percent to 0.50 percent 

of assessable deposits. On June 30, 2009, a special 

assessment was imposed on all insured banks and 

thrifts, which amounted in aggregate to approximately 

$5.4 billion. For 8,106 institutions, with $9.3 trillion in 

assets, the special assessment was 5 basis points of 

each insured institution’s assets minus tier one capital; 

89 other institutions, with assets of $4.0 trillion, had 

their special assessment capped at 10 basis points 

of their second quarter assessment base. From the 

second quarter of 2009 through the first quarter of 2011, 

initial assessment rates ranged between 0.12 percent 

and 0.45 percent of assessable deposits. Initial rates 

were subject to further adjustments. 

138 
2019

APPENDICES

2011 – 2016 Beginning in the second quarter of 2011, the 2018 The 4.5 basis point surcharge imposed on large banks 

assessment base changed to average total ended effective October 1, 2018. The annualized 

consolidated assets less average tangible equity (with assessment rates averaged approximately 7.2 cents 

certain adjustments for banker’s banks and custodial per $100 of the assessable base for the first three 

banks), as required by the Dodd-Frank Act. The FDIC quarters of 2018 and 3.5 cents per $100 of the 

implemented a new assessment rate schedule at the assessment base for the last quarter of 2018. The full 

same time to conform to the larger assessment base. year annualized assessment rate averaged 6.3 cents 

Initial assessment rates were lowered to a range of per $100 (which is shown in the table).

0.05 percent to 0.35 percent of the new base. The 

annualized assessment rates averaged approximately 

17.6 cents per $100 of assessable deposits for the first 

quarter of 2011 and 11.1 cents per $100 of the new 

2019 Assessment income for 2019 included the application 

of small bank credits in the second, third, and fourth 

quarters, for a total of $704 million.

base for the last three quarters of 2011 (which is shown 

in the table). 

2016 Beginning July 1, 2016, initial assessment rates were 

lowered from a range of 5 basis points to 35 basis 

points to a range of 3 basis points to 30 basis points, 

and an additional surcharge was imposed on large 

banks (generally institutions with $10 billion or more in 

assets) of 4.5 basis points of their assessment base 

(after making adjustments). 

2 These expenses, which are presented as operating expenses in the Statement of Income and Fund Balance, pertain to the FDIC in its corporate 

capacity only and do not include costs that are charged to the failed bank receiverships that are managed by the FDIC. The receivership 

expenses are presented as part of the “Receivables from Resolutions, net” line on the Balance Sheet. The narrative and graph presented on page 

87 of this report shows the aggregate (corporate and receivership) expenditures of the FDIC.

3 Includes $210 million for the cumulative effect of an accounting change for certain postretirement benefits (1992).

4 Includes a $106 million net loss on government securities (1976).

5 This amount represents interest and other insurance expenses from 1933 to 1972.

6 Includes the aggregate amount of $81 million of interest paid on capital stock between 1933 and 1948.

139 
ANNUAL 

REPORT

APPENDICES

 

 

 

 

 

 

 

 

 

FDIC INSURED INSTITUTIONS CLOSED DURING 2019 

Dollars in Thousands 

Codes for Bank Class: 

NM = State-chartered bank that is not a member of 

the Federal Reserve System 

N = National Bank 

SB = Savings bank 

SI = Stock and Mutual 

Savings Bank 

SM = State-chartered bank that is a member 

of the Federal Reserve System 

SA = Savings Association 

Name and Location 

Bank 

Class 

Number 

of 

Deposit 

Accounts 

Total 

Assets1 Total Deposits1 

Insured 

Deposit Funding 

and Other 

Disbursements 

Estimated Loss 

to 

the DIF2 

Date of 

Closing 

or Acquisition 

Receiver/Assuming 

Bank and Location 

Purchase and Assumption - All Deposits 

Louisa 

Community Bank 

Louisa, KY 

NM 1,584 $28,163 $25,174 $24,673 $4,547 10/25/19 Kentucky Farmers 

Bank Corporation 

Catlettsburg, KY 

Resolute Bank 

Maumee, OH 

SM 739 $23,292 $22,885 $21,227 $2,188 10/25/19 Buckeye State 

Bank 

Powell, OH 

City National Bank 

of New Jersey 

Newark, NJ 

N 10,312 $120,574 $111,234 $110,647 $2,491 11/01/19 Industrial Bank 

Washington, DC 

Insured Deposit Transfer 

Enloe State Bank 

Cooper, TX 

NM 1,363 $36,738 $31,254 $31,094 $21,577 05/31/19 Legend Bank, 

N.A. 

Bowie, TX 

1 Total Assets and Total Deposits data are based upon the last Call Report filed by the institution prior to failure.

2 Estimated losses are as of December 31, 2019. Estimated losses are routinely adjusted with updated information from new appraisals and 

asset sales, which ultimately affect the asset values and projected recoveries. Represents the estimated loss to the DIF from deposit insurance 

obligations. 

140 
2019

APPENDICES

RECOVERIES AND LOSSES BY THE DEPOSIT INSURANCE FUND 

ON DISBURSEMENTS FOR THE PROTECTION OF DEPOSITORS, 1934 - 2019 

Dollars in Thousands 

Bank and Thrift Failures1 

Year2 

Number 

of Banks/ 

Thrifts 

Total 

Assets3 

Total 

Deposits3 Funding4 

Final and 

Estimated 

Losses6 

2,627 $946,852,179 $713,129,053 $582,048,662 $104,976,605 

2019 4 208,767 $190,547 187,641 30,803 

2018 0 0 0 0 0 

2017 8 5,081,737 4,683,360 4,596,003 1,163,650 

2016 5 277,182 268,516 262,243 42,464 

2015 8 6,706,038 4,574,170 4,565,684 851,681 

2014 18 2,913,503 2,691,485 2,684,528 394,526 

2013 24 6,044,051 5,132,246 5,022,368 1,217,721 

2012 51 11,617,348 11,009,630 11,042,913 2,411,932 

2011 92 34,922,997 31,071,862 30,717,287 6,433,638 

20107 157 92,084,988 78,290,185 82,305,089 15,874,775 

20097 140 169,709,160 137,835,121 136,081,390 25,988,291 

20087 25 371,945,480 234,321,715 205,833,992 17,862,077 

2007 3 2,614,928 2,424,187 1,920,200 158,534 

2006 0 0 0 0 0 

2005 0 0 0 0 0 

2004 4 170,099 156,733 139,244 3,917 

2003 3 947,317 901,978 883,772 62,647 

2002 11 2,872,720 2,512,834 1,567,805 413,989 

2001 4 1,821,760 1,661,214 21,131 292,465 

2000 7 410,160 342,584 297,313 32,138 

1999 8 1,592,189 1,320,573 1,308,316 586,027 

1998 3 290,238 260,675 293,117 221,606 

1997 1 27,923 27,511 25,546 5,026 

1996 6 232,634 230,390 201,533 60,615 

1995 6 802,124 776,387 609,043 84,472 

1994 13 1,463,874 1,397,018 1,224,769 179,051 

1993 41 3,828,939 3,509,341 3,841,658 632,646 

1992 120 45,357,237 39,921,310 14,541,476 3,674,149 

1991 124 64,556,512 52,972,034 21,501,772 6,001,595 

1990 168 16,923,462 15,124,454 10,812,484 2,771,489 

1989 206 28,930,572 24,152,468 11,443,281 6,195,286 

1988 200 38,402,475 26,524,014 10,432,655 5,377,497 

1987 184 6,928,889 6,599,180 4,876,994 1,862,492 

1986 138 7,356,544 6,638,903 4,632,121 1,682,538 

1985 116 3,090,897 2,889,801 2,154,955 648,179 

1984 78 2,962,179 2,665,797 2,165,036 523,879 

1983 44 3,580,132 2,832,184 3,042,392 1,069,355 

1982 32 1,213,316 1,056,483 545,612 125,787 

1981 7 108,749 100,154 114,944 8,988 

1980 10 239,316 219,890 152,355 30,680 

1934 - 1979 558 8,615,743 5,842,119 5,133,173 380,878 

141 
ANNUAL 

REPORT

APPENDICES

RECOVERIES AND LOSSES BY THE DEPOSIT INSURANCE FUND ON 

DISBURSEMENTS FOR THE PROTECTION OF DEPOSITORS, 1934 - 2019 (continued) 

Dollars in Thousands 

Assistance Transactions1 

Year2 

Number 

of Banks/ 

Thrifts 

Total 

Assets3 

Total 

Deposits3 Funding4 Recoveries5 

Estimated 

Additional 

Recoveries 

Final and 

Estimated 

Losses6 

154 $3,317,099,253 $1,442,173,417 $11,630,356 $6,199,875 $0 $5,430,481 

2019 0 0 0 0 0 0 0 

2018 0 0 0 0 0 0 0 

2017 0 0 0 0 0 0 0 

2016 0 0 0 0 0 0 0 

2015 0 0 0 0 0 0 0 

2014 0 0 0 0 0 0 0 

2013 0 0 0 0 0 0 0 

2012 0 0 0 0 0 0 0 

2011 0 0 0 0 0 0 0 

2010 0 0 0 0 0 0 0 

20098 8 1,917,482,183 1,090,318,282 0 0 0 0 

20088 5 1,306,041,994 280,806,966 0 0 0 0 

2007 0 0 0 0 0 0 0 

2006 0 0 0 0 0 0 0 

2005 0 0 0 0 0 0 0 

2004 0 0 0 0 0 0 0 

2003 0 0 0 0 0 0 0 

2002 0 0 0 0 0 0 0 

2001 0 0 0 0 0 0 0 

2000 0 0 0 0 0 0 0 

1999 0 0 0 0 0 0 0 

1998 0 0 0 0 0 0 0 

1997 0 0 0 0 0 0 0 

1996 0 0 0 0 0 0 0 

1995 0 0 0 0 0 0 0 

1994 0 0 0 0 0 0 0 

1993 0 0 0 0 0 0 0 

1992 2 33,831 33,117 1,486 1,236 0 250 

1991 3 78,524 75,720 6,117 3,093 0 3,024 

1990 1 14,206 14,628 4,935 2,597 0 2,338 

1989 1 4,438 6,396 2,548 252 0 2,296 

1988 80 15,493,939 11,793,702 1,730,351 189,709 0 1,540,642 

1987 19 2,478,124 2,275,642 160,877 713 0 160,164 

142 
2019

APPENDICES

RECOVERIES AND LOSSES BY THE DEPOSIT INSURANCE FUND ON 

DISBURSEMENTS FOR THE PROTECTION OF DEPOSITORS, 1934 - 2019 (continued) 

Dollars in Thousands 

Assistance Transactions1 (continued) 

Year2 

Number 

of Banks/ 

Thrifts 

Total 

Assets3 

Total 

Deposits3 Funding4 Recoveries5 

Estimated 

Additional 

Recoveries 

Final and 

Estimated 

Losses6 

1986 7 712,558 585,248 158,848 65,669 0 93,179 

1985 4 5,886,381 5,580,359 765,732 406,676 0 359,056 

1984 2 40,470,332 29,088,247 5,531,179 4,414,904 0 1,116,275 

1983 4 3,611,549 3,011,406 764,690 427,007 0 337,683 

1982 10 10,509,286 9,118,382 1,729,538 686,754 0 1,042,784 

1981 3 4,838,612 3,914,268 774,055 1,265 0 772,790 

1980 1 7,953,042 5,001,755 0 0 0 0 

1934-1979 4 1,490,254 549,299 0 0 0 0 

1 Institutions for which the FDIC is appointed receiver, including deposit payoff, insured deposit transfer, and deposit assumption cases. 

2 For 1990 through 2005, amounts represent the sum of BIF and SAIF failures (excluding those handled by the RTC); prior to1990, figures are only 

for the BIF. After 1995, all thrift closings became the responsibility of the FDIC and amounts are reflected in the SAIF. For 2006 to 2019, figures 

are for the DIF. 

3 Assets and deposit data are based on the last Call Report or TFR filed before failure.

4 Funding represents the amounts provided by the DIF to receiverships for subrogated claims, advances for working capital, and administrative 

expenses paid on their behalf. Between 2008 and 2013, the DIF resolved failures using whole-bank purchase and assumption transactions, most 

with an accompanying shared-loss agreement (SLA). The DIF satisfies any resulting liabilities by offsetting receivables from resolutions when 

receiverships declare a dividend and/or sending cash directly to receiverships to fund an SLA and other expenses.

5 Recoveries represent cash received and dividends (cash and non-cash) declared by receiverships. 

6 Final losses represent actual losses for unreimbursed subrogated claims of inactivated receiverships. Estimated losses generally represent the 

difference between the amount paid by the DIF to cover obligations to insured depositors and the estimated recoveries from the liquidation of 

receivership assets. 

7 Includes amounts related to transaction account coverage under the Transaction Account Guarantee Program (TAG). The estimated losses as of 

December 31, 2019, for TAG accounts in 2010, 2009, and 2008 are $363 million, $1.1 billion, and $12 million, respectively.

8 Includes institutions where assistance was provided under a systemic risk determination. 

143 
ANNUAL 

REPORT

APPENDICES

NUMBER, ASSETS, DEPOSITS, LOSSES, AND LOSS TO FUNDS OF INSURED 

THRIFTS TAKEN OVER OR CLOSED BECAUSE OF FINANCIAL DIFFICULTIES, 

1989 THROUGH 19951 

Dollars in Thousands 

Year 

Number of 

Institutions Assets Deposits 

Final 

Receivership 

Loss2 

Loss to 

Fund3 

Total 748 $393,986,574 $318,328,770 $75,977,846 $81,579,496 

1995 2 423,819 414,692 28,192 27,750 

1994 2 136,815 127,508 11,472 14,599 

1993 10 6,147,962 5,708,253 267,595 65,212 

1992 59 44,196,946 34,773,224 3,286,908 3,832,145 

1991 144 78,898,904 65,173,122 9,235,967 9,734,263 

1990 213 129,662,498 98,963,962 16,062,685 19,257,578 

19894 318 134,519,630 113,168,009 47,085,027 48,647,949 

1

 Beginning in 1989 through July 1, 1995, all thrift closings were the responsibility of the Resolution Trust Corporation (RTC). Since the RTC was 

terminated on December 31, 1995, and all assets and liabilities transferred to the FSLIC Resolution Fund (FRF), all the results of the thrift closing 

activity from 1989 through 1995 are now reflected on the FRF’s books. Year is the year of failure, not the year of resolution.

2 The Final Receivership Loss represents the loss at the fund level from receiverships for unreimbursed subrogated claims of the FRF-RTC and 

unpaid advances to receiverships from the FRF-RTC. 

3 The Loss to Fund represents the total resolution cost of the failed thrifts in the FRF-RTC fund. In addition to the receivership losses, this 

includes corporate revenue and expense items such as interest expense on Federal Financing Bank debt, interest expense on escrowed funds, 

administrative expenses, and interest revenue on advances to receiverships.

4 Total for 1989 excludes nine failures of the former FSLIC.

144 
2019

APPENDICES

B. MORE ABOUT THE FDIC 

FDIC Board of Directors 

Seated: Jelena McWilliams 

Standing (left to right) Joseph M. Otting, Martin J. Gruenberg, and Kathleen L. Kraninger 

Jelena McWilliams 

Jelena McWilliams was sworn in as the 21st Chairman 

of the FDIC on June 5, 2018. She serves a six-year term 

on the FDIC Board of Directors, and is designated as 

Chairman for a term of fve years. 

Ms. McWilliams was Executive Vice President, Chief 

Legal Ofcer, and Corporate Secretary for Fifth Tird 

Bank in Cincinnati, Ohio. At Fifth Tird Bank she 

served as a member of the executive management team 

and numerous bank committees including: Management 

Compliance, Enterprise Risk, Risk and Compliance, 

Operational Risk, Enterprise Marketing, and 

Regulatory Change. 

Prior to joining Fifth Tird Bank, Ms. McWilliams 

worked in the U.S. Senate for six years, most recently as 

Chief Counsel and Deputy Staf Director with the Senate 

Committee on Banking, Housing and Urban Afairs, and 

previously as Assistant Chief Counsel with the Senate 

Small Business and Entrepreneurship Committee. 

145 
ANNUAL 

REPORT

APPENDICES

From 2007 to 2010, Ms. McWilliams served as an attorney 

at the Federal Reserve Board of Governors, where she 

drafted consumer protection regulations, reviewed and 

analyzed comment letters on regulatory proposals, and 

responded to consumer complaints. 

Before entering public service, she practiced corporate 

and securities law at Morrison & Foerster LLP in Palo 

Alto, California, and Hogan & Hartson LLP (now 

Hogan Lovells LLP) in Washington, D.C.  In legal 

practice, Ms. McWilliams advised management and 

boards of directors on corporate governance, compliance, 

and reporting requirements under the Securities Act of 

1933 and the Securities Exchange Act of 1934.  She also 

represented publicly- and privately-held companies in 

mergers and acquisitions, securities oferings, strategic 

business ventures, venture capital investments, and general 

corporate matters. 

Ms. McWilliams graduated with highest honors from the 

University of California at Berkeley with a B.S. in political 

science, and earned her law degree from U.C. Berkeley 

School of Law. 

Martin J. Gruenberg 

Martin J. Gruenberg is the 20th Chairman of the FDIC, 

receiving Senate confrmation on November 15, 2012, for 

a fve-year term. Mr. Gruenberg served as Vice Chairman 

and Member of the FDIC Board of Directors from 

August 22, 2005, until his confrmation as Chairman. 

He served as Acting Chairman from July 9, 2011, to 

November 15, 2012, and also from November 16, 2005, 

to June 26, 2006. 

Mr. Gruenberg joined the FDIC Board after broad 

congressional experience in the fnancial services and 

regulatory areas. He served as Senior Counsel to Senator 

Paul S. Sarbanes (D-MD) on the staf of the Senate 

Committee on Banking, Housing, and Urban Afairs from 

1993 to 2005. Mr. Gruenberg advised the Senator on 

issues of domestic and international fnancial regulation, 

monetary policy, and trade. He also served as Staf 

Director of the Banking Committee’s Subcommittee on 

International Finance and Monetary Policy from 1987 

to 1992. Major legislation in which Mr. Gruenberg 

played an active role during his service on the Committee 

includes the Financial Institutions Reform, Recovery, 

and Enforcement Act of 1989 (FIRREA); the Federal 

Deposit Insurance Corporation Improvement Act of 

1991 (FDICIA); the Gramm-Leach-Bliley Act; and the 

Sarbanes-Oxley Act of 2002. 

Mr. Gruenberg served as Chairman of the Executive 

Council and President of the International Association 

of Deposit Insurers (IADI) from November 2007 

to November 2012. In addition, Mr. Gruenberg 

has served as Chairman of the Board of Directors 

of the Neighborhood Reinvestment Corporation 

(NeighborWorks America) since June 2019, and a member 

of the Board since April 2018. 

Mr. Gruenberg holds a J.D. from Case Western Reserve 

Law School and an A.B. from Princeton University, 

Woodrow Wilson School of Public and International 

Afairs. 

Kathleen L. Kraninger 

Kathy Kraninger became Director of the Consumer 

Financial Protection Bureau (CFPB) in December, 2018. 

From her early days as a Peace Corps volunteer, to her 

role establishing the Department of Homeland Security 

(DHS), to her policy work at the Ofce of Management 

and Budget (OMB) to the CFPB, Director Kraninger has 

dedicated her career to public service. 

Director Kraninger came to the CFPB from OMB, where 

as a Policy Associate Director she oversaw the budgets 

for executive branch agencies including the Departments 

of Commerce, Justice, DHS, Housing and Urban 

Development, Department of Transportation (DOT), 

and the Department of Treasury, in addition to 30 other 

government agencies. 

Previously she worked in the U.S. Senate, where she was 

the Clerk for the Senate Appropriations Subcommittee 

on Homeland Security, which provides DHS with its 

$40 billion discretionary budget. On Capitol Hill, she 

also worked for the House Appropriations Subcommittee 

on Homeland Security as well as the Senate Homeland 

Security and Governmental Afairs Committee. 

Ms. Kraninger also served in executive branch posts with 

DOT. Tere, after the terrorist attacks on September 11, 

2001, she volunteered to join the leadership team that set 

up the newly created DHS. 

146 
2019

APPENDICES

Her work at DHS led to awards including the Secretary 

of Homeland Security’s Award of Exceptional Service, the 

International Police and Public Safety 9/11 Medal, and the 

Meritorious Public Service Award from the United States 

Coast Guard. 

Ms. Kraninger graduated magna cum laude from 

Marquette University and earned a law degree from 

Georgetown University Law Center. She served as a U.S. 

Peace Corps Volunteer in Ukraine. 

Joseph M. Otting 

Joseph M. Otting was sworn in as the 31st Comptroller of 

the Currency on November 27, 2017. 

Te Comptroller of the Currency is the administrator of 

the federal banking system and chief ofcer of the Ofce 

of the Comptroller of the Currency (OCC). Te OCC 

supervises nearly 1,400 national banks, federal savings 

associations, and federal branches and agencies of foreign 

banks operating in the United States. Te mission of the 

OCC is to ensure that national banks and federal savings 

associations operate in a safe and sound manner, provide 

fair access to fnancial services, treat customers fairly, and 

comply with applicable laws and regulations. 

Te Comptroller also serves as a director of the Federal 

Deposit Insurance Corporation and member of the 

Financial Stability Oversight Council and the Federal 

Financial Institutions Examination Council. 

Prior to becoming Comptroller of the Currency, Mr. 

Otting was an executive in the banking industry. He 

served as President of CIT Bank and Co-President of 

CIT Group. 

Mr. Otting previously was President, Chief Executive 

Ofcer, and a member of the Board of Directors of 

OneWest Bank, N.A. Prior to joining OneWest Bank, 

he served as Vice Chairman of U.S. Bancorp, where he 

managed the Commercial Banking Group and served on 

the Bancorp’s executive management committee. He also 

served as a member of U.S. Bank’s main subsidiary banks’ 

Board of Directors. 

From 1986 to 2001, Mr. Otting was with Union Bank 

of California, where he was Executive Vice President and 

Group Head of Commercial Banking. Before joining 

Union Bank, he was with Bank of America and held 

positions in branch management, preferred banking, and 

commercial lending. 

Mr. Otting has played signifcant roles in charitable 

and community development organizations. He has 

served as a board member for the California Chamber 

of Commerce, the Killebrew-Tompson Memorial 

foundation, the Associated Oregon Industries, the Oregon 

Business Council, the Portland Business Alliance, the 

Minnesota Chamber of Commerce, and Blue Cross 

Blue Shield of Oregon. He was also a member of the 

Financial Services Roundtable, the Los Angeles Chamber 

of Commerce, and the Board and Executive Committee of 

the Los Angeles Economic Development Corporation. 

Mr. Otting holds a bachelor of arts in management from 

the University of Northern Iowa and is a graduate of the 

School of Credit and Financial Management, which was 

held at Dartmouth College in Hanover, New Hampshire. 

147 
ANNUAL 

REPORT

APPENDICES

FDIC ORGANIZATION CHART/OFFICIALS 

Zachary Brown

CISO

OFFICE OF

CHIEF INFORMATION 

SECURITY OFFICER 

DEPUTY TO THE CHAIRMAN 

AND CHIEF OPERATING OFFICER

DIVISION OF ADMINISTRATION 

DEPUTY TO THE CHAIRMAN 

AND CHIEF FINANCIAL OFFICER

DIVISION OF FINANCE DIVISION OF INFORMATION TECHNOLOGY 

CHIEF INFORMATION OFFICER 

AND CHIEF PRIVACY OFFICER

Sylvia W. Burns Bret D. Edwards 

OFFICE OF INSPECTOR GENERAL

Jay N. Lerner

Inspector General

OFFICE OF FINANCIAL

INSTITUTION ADJUDICATION ** 

DIVISION OF RESOLUTIONS 

AND RECEIVERSHIPS

Maureen Sweeney

Director 

LEGAL DIVISION

Nicholas Podsiadly

General Counsel

* OMWI Director reports directly to the Chairman** ALJs are supported administratively within the Legal Division 

DIVISION OF INSURANCE 

AND RESEARCH

Diane Ellis

Director 

DEPUTY TO THE CHAIRMAN 

FOR CONSUMER PROTECTION

AND INNOVATION

Leonard Chanin

DIVISION OF

DEPOSITOR AND 

CONSUMER PROTECTION

Mark E. Pearce

Director

FDiTECH

Vacant

Chief Innvovation Officer 

COMPLEX INSTITUTION

SUPERVISION AND 

RESOULUTION

Ricardo (Rick) Delfin

Director 

Arleas Upton Kea 

DEPUTY TO THE CHAIRMAN 

FOR EXTERNAL AFFAIRS

Chad Davis 

DEPUTY TO THE CHAIRMAN 

FOR FINANCIAL STABILITY

Arthur Murton 

DEPUTY TO THE CHAIRMAN 

FOR POLICY

Travis Hill 

GENERAL COUNSEL

Nicholas Podsiadly 

CORPORATE

UNIVERSITY 

OFFICE OF

COMMUNICATIONS 

Suzannah L. Susser

Chief Learning Officer 

Amy Thompson

Director

OFFICE OF

LEGISLATIVE AFFAIRS

Andy Jiminez

Director

OFFICE OF

THE OMBUDSMAN

M. Anthony Lowe

Director 

OFFICE OF MINORITY AND 

WOMEN INCLUSION *

Saul Schwartz

Director 

(1) Christopher B. McNeil

(2) Jennifer Whang

Administrative Law Judges 

DEPUTY TO THE CHAIRMAN AND

CHIEF OF STAFF

Brandon Milhorn

BOARD OF DIRECTORS

Jelena McWilliams

FDIC

Chairman 

Martin J. Gruenberg

FDIC

Board Member 

Vacant

FDIC

Vice Chairman 

Joseph M. Otting

OCC

Board Member 

Kathleen L. Kraninger

CFPB

Board Member

DIVISION OF

RISK MANAGEMENT

SUPERVISION

Doreen R. Eberley

Director 

148 
2019

APPENDICES

0 

CORPORATE STAFFING 

STAFFING TRENDS 

9,000 

6,000 

3,000 

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 

8,150 7,973 7,476 7,254 6,631 6,385 6,096 5,880 5,693 5,593 

FDIC Year–End On-Board Staffing 

Notes: 2010-2019 staffing totals reflect year-end full time equivalent staff. 

149 
ANNUAL 

REPORT

APPENDICES

NUMBER OF EMPLOYEES BY DIVISION/OFFICE (YEAR-END)1 

Total Washington Regional/ 

Division or Office: 2019 2018 2019 2018 2019 2018 

Division of Risk Management Supervision 2,318 2,499 174 207 2,145 2,293 

Division of Depositor and Consumer Protection 794 816 123 122 671 694 

Legal Division 440 474 298 314 142 160 

Division of Administration 353 353 247 246 106 108 

Division of Resolutions and Receiverships 323 387 89 119 234 268 

Division of Complex Institution Supervision and Resolution2 243 62 113 49 130 13 

Division of Information Technology 237 280 173 216 64 64 

Corporate University 217 204 210 197 7 7 

Division of Insurance and Research 204 204 166 168 38 36 

Division of Finance 156 164 152 160 4 4 

Executive Support Ofces 3 110 67 103 60 7 7 

Ofce of the Chief Information Security Ofcer 41 37 41 37 0 0 

Executive Ofces4 30 20 30 20 0 0 

Ofce of Inspector General 128 126 78 80 50 46 

TOTAL 5,593 5,693 1,995 1,994 3,598 3,699 

1 The FDIC reports staffing totals using a full-time equivalent methodology, which is based on an employee’s scheduled work hours. Division/Office 

staffing has been rounded to the nearest whole FTE. Totals may not foot due to rounding.

2

 In 2019, the Office of Complex Financial Institution merged with parts of Risk Management Supervision and Division of Resolutions and 

Receivership to create this new Division. 

3

 Includes the Offices of the Legislative Affairs, Communications, Ombudsman, CIO Management Services, FDI Tech, Financial Adjudication and 

Minority and Women Inclusion. 

4

 Includes the Offices of the Chairman, Vice Chairman, Director (Appointive), Chief Operating Officer, Chief Financial Officer, Chief Information 

Officer, Consumer Protection and Innovation, External Affairs, Policy and Financial Stability.

150 
2019

APPENDICES

SOURCES OF INFORMATION 

FDIC Website 

www.fdic.gov 

A wide range of banking, consumer, and fnancial 

information is available on the FDIC's website. Tis 

includes the FDIC's Electronic Deposit Insurance 

Estimator (EDIE), which estimates an individual’s deposit 

insurance coverage; the Institution Directory, which 

contains fnancial profles of FDIC-insured institutions; 

Community Reinvestment Act evaluations and ratings for 

institutions supervised by the FDIC; Call Reports, which 

are bank reports of condition and income; and Money 

Smart, a training program to help individuals outside the 

fnancial mainstream enhance their money management 

skills and create positive banking relationships. Readers 

also can access a variety of consumer pamphlets, FDIC 

press releases, speeches, and other updates on the agency's 

activities, as well as corporate databases and customized 

reports of FDIC and banking industry information. 

FDIC Call Center 

Phone: 877-275-3342 (877-ASK-FDIC) 

703-562-2222 

Hearing Impaired: 800-925-4618 

703-562-2289 

Te FDIC Call Center in Washington, DC, is the primary 

telephone point of contact for general questions from the 

banking community, the public, and FDIC employees. 

Te Call Center directly, or with other FDIC subjectmatter experts, responds to questions about deposit 

insurance and other consumer issues and concerns, as well 

as questions about FDIC programs and activities. Te 

Call Center also refers callers to other federal and state 

agencies as needed. Hours of operation are 8:00 a.m. to 

8:00 p.m., Eastern Time, Monday – Friday, and 9:00 a.m. 

to 5:00 p.m., Saturday – Sunday. Recorded information 

about deposit insurance and other topics is available 24 

hours a day at the same telephone number. 

As a customer service, the FDIC Call Center has many 

bilingual Spanish agents on staf and has access to a 

translation service, which is able to assist with over 40 

diferent languages. 

Public Information Center 

3501 Fairfax Drive 

Room E-1021 

Arlington, VA 22226 

Phone: 877-275-3342 (877-ASK-FDIC), 

703-562-2200 

Fax: 703-562-2296 

FDIC Online Catalog: https://catalog.fdic.gov 

E-mail: publicinfo@fdic.gov 

Publications such as FDIC Quarterly and Consumer 

News and a variety of deposit insurance and consumer 

pamphlets are available at www.fdic.gov or may be ordered 

in hard copy through the FDIC online catalog. Other 

information, press releases, speeches and congressional 

testimony, directives to fnancial institutions, policy 

manuals, and FDIC documents are available on request 

through the Public Information Center. Hours of 

operation are 9:00 a.m. to 4:00 p.m., Eastern Time, 

Monday – Friday. 

Office of the Ombudsman

3501 Fairfax Drive 

Room E-2022 

Arlington, VA 22226 

Phone: 877-275-3342 (877-ASK-FDIC) 

Fax: 703-562-6057 

E-mail: ombudsman@fdic.gov 

Te Ofce of the Ombudsman (OO) is an independent, 

neutral, and confdential resource and liaison for the 

banking industry and the general public. Te OO 

responds to inquiries about the FDIC in a fair, impartial, 

and timely manner. It researches questions and felds 

complaints from bankers and bank customers. OO 

representatives are present at all bank closings to provide 

accurate information to bank customers, the media, 

bank employees, and the general public. Te OO 

also recommends ways to improve FDIC operations, 

regulations, and customer service. 

151 
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REGIONAL AND AREA OFFICES 

Atlanta Regional Office Chicago Regional Office

Michael J. Dean, Regional Director John P. Conneely, Regional Director 

10 Tenth Street, NE 300 South Riverside Plaza 

Suite 800 Suite 1700 

Atlanta, Georgia 30309 Chicago, Illinois 60606 

(678) 916-2200 (312) 382-6000 

States Represented: States Represented: 

Alabama Illinois 

Florida Indiana 

Georgia Kentucky 

North Carolina Michigan 

South Carolina Ohio 

Virginia Wisconsin 

West Virginia 

Dallas Regional Office Memphis Area Office

Kristie K. Elmquist, Regional Director Kristie K. Elmquist, Director 

1601 Bryan Street 6060 Primacy Parkway 

Dallas, Texas 75201 Suite 300 

(214) 754-0098 Memphis, Tennessee 38119 

(901) 685-1603 

States Represented: States Represented: 

Colorado Arkansas 

New Mexico Louisiana 

Oklahoma Mississippi 

Texas Tennessee 

152 
2019

APPENDICES

Kansas City Regional Office

James D. LaPierre, Regional Director 

1100 Walnut Street 

Suite 2100 

Kansas City, Missouri 64106 

(816) 234-8000 

States Represented: 

Iowa 

Kansas 

Minnesota 

Missouri 

Nebraska 

North Dakota 

South Dakota 

New York Regional Office

Frank R. Hughes, Regional Director 

350 Fifth Avenue 

Suite 1200 

New York, New York 10118 

(917) 320-2500 

States and Territories Represented: 

Delaware 

District of Columbia 

Maryland 

New Jersey 

New York 

Pennsylvania 

Puerto Rico 

Virgin Islands 

Boston Area Office San Francisco Regional Office

Frank R. Hughes, Director 

15 Braintree Hill Ofce Park 

Suite 200 

Braintree, Massachusetts 02184 

(781) 794-5500 

Kathy L. Moe, Regional Director 

25 Jessie Street at Ecker Square 

Suite 2300 

San Francisco, California 94105 

(415) 546-0160 

States Represented: 

Connecticut 

Maine 

Massachusetts 

New Hampshire 

Rhode Island 

Vermont 

States and Territories Represented: 

Alaska 

American Samoa 

Arizona 

California 

Federated States of Micronesia 

Guam 

Hawaii 

Idaho 

Montana 

Nevada 

Oregon 

Utah 

Washington 

Wyoming 

153 
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February 2020



C. OFFICE OF INSPECTOR GENERAL’S ASSESSMENT OF THE 

MANAGEMENT AND PERFORMANCE CHALLENGES FACING THE FDIC 

Top Management and Performance Challenges 

Facing the Federal Deposit Insurance Corporation 

February 2020 

Federal Deposit Insurance Corporation 

Office of Inspector General 

154 
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INTRODUCTION 

Each year, Federal Inspectors General are required to identify and report on the top challenges 

facing their respective agencies, pursuant to the Reports Consolidation Act of 2000. The Office 

of Inspector General (OIG) is therefore issuing this report, which identifies the Top Management 

and Performance Challenges (TMPC) facing the Federal Deposit Insurance Corporation (FDIC). 

This TMPC report is based upon the OIG’s experience and observations from our oversight 

work, reports by other oversight bodies, review of academic and other relevant literature, 

perspectives from Government agencies and officials, and information from private-sector 

entities. We considered this body of information in light of the current operating environment 

and circumstances and our independent judgment. 

The FDIC faces Challenges in the following critical areas, a number of which remain from 

previous years: 

 Keeping Pace with Emerging Financial Technologies; 

 Enhancing the FDIC’s Information Technology Security Program; 

 Ensuring the FDIC’s Readiness for Crises; 

 Sharing Threat Information with Banks and Examiners; 

 Strengthening the Governance of the FDIC; 

 Overseeing Human Resources; 

 Keeping FDIC Facilities, Information, and Personnel Safe and Secure; 

 Administering the Acquisition Process; and 

 Measuring Costs and Benefits of FDIC Regulations. 

We believe that the FDIC should focus its attention on these Challenges, and we hope that this 

document informs policy makers, including the FDIC and Congressional oversight bodies, and 

the American public about the programs and operations at the FDIC and the Challenges it 

faces. 
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1|KEEPING PACE WITH EMERGING FINANCIAL TECHNOLOGIES 

Technology is re-shaping consumers’ interactions with banks, changing the way banks do 

business, and disrupting the banking industry. Emerging technologies promise potential benefits 

but also introduce risk. Increased digital interconnections with multiple avenues to access 

banking systems elevate cybersecurity risk because an incident at one digital juncture has the 

potential to infect the entire banking system. The FDIC’s challenge is keeping pace with new 

technology and the associated risks to banks, third-party service providers, and the banking 

system. The key is for the FDIC to align supervisory guidance, examination procedures, and 

supervisory strategies with rapidly evolving risks. 

Use of financial technology is having a significant impact on banks and the banking industry. 

Global investment in financial technologies was $37.9 billion in the first half of 2019.1 More than 

half of all consumers are interacting with banks through digital means.2 Person-to-person 

cashless transactions totaled more than $570 billion in 2018.

3 Consumers also prefer 

connectivity among financial management applications and their bank accounts.4 

The FDIC Chairman has recognized that technology is “not simply transforming how customers 

access financial services; it is transforming the business of banking both in the way consumers 

interact with their financial institutions, and the way banks do business.”5 Banks are 

incorporating new technologies into bank processes and establishing partnerships with thirdparty financial technology companies.6 Community banks, in particular, are working closely with 

technology companies to develop solutions, such as reducing the time for loan underwriting and 

digital credit applications.7 

Financial technologies offer banks potential benefits but also introduce a range of risks. 

According to the Financial Stability Oversight Council (FSOC),

8 “[c]yber vulnerabilities in the 

financial system include vulnerabilities to malware attacks, ransomware attacks, denial of 

service attacks, data breaches, and other events. Such incidents have the potential to impact 

tens or even hundreds of millions of Americans and result in financial losses of billions of dollars 

due to disruption of operations, theft, and recovery costs.”

9 

The FDIC Chairman stated that “[c]ybersecurity is the biggest threat facing America’s banks.”10 

The Office of the Comptroller of the Currency (OCC) similarly observed that “[o]perational risk is 

elevated as banks adapt to a changing and increasingly complex operating environment,” and 

key drivers are “the need to adapt and evolve current technology systems for ongoing 

1 KPMG, The Pulse of Fintech 2019 – Biannual Global Analysis of Investment in Fintech, (July 31, 2019). 2 American Banker, 10 ways technology will change banking in 2019, (January 6, 2019). 3 Forbes, Venmo Versus Zelle: Who’s Winning the P2P Payments War?, (February 11, 2019). 4 American Banker, 10 ways technology will change banking in 2019, (January 6, 2019). 5 Jelena McWilliams, FDIC Chairman, Remarks at the CATO Summit on Financial Regulation, “If You Build It, They 

Will Come,” (June 12, 2019). 6 American Banker, 10 ways technology will change banking in 2019, (January 6, 2019). 7 Bankrate, Community Banks Step Up Tech to Compete with Big Banks, Benefitting Customers, (May 31, 2019). 8 The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 established FSOC, which has 

responsibility for identifying risks and responding to emerging threats to financial stability. FSOC brings together the 

expertise of Federal financial regulators (including the FDIC), an independent insurance expert, and state regulators. 9 FSOC, 2019 Annual Report. 10 CNN Business, Banks could get fined for cyber breaches, top regulator says, (August 1, 2019). 
2019

APPENDICES 157 

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cybersecurity threats.”11 According to reports from the Department of the Treasury’s Financial 

Crimes Enforcement Network (FinCEN), financial institutions reported 3,494 cyberattacks during 

the first half of 2019.12 Small banks (less than $1 billion in assets) were the victims of nearly 

half (47 percent) of bank-related cybercrimes between 2012 and 2017.13 

In the Fall of 2019, the OCC recognized elevated cybersecurity risks as “malicious actors target 

not only bank staff and processes but also bank customers and third parties.”14 According to 

Banking Technology Vision 2019 by the consulting firm Accenture, as interconnectivity among 

banks, consumers, and third parties grows, “the potential points of weakness and vulnerability 

also multiply.”15 Hackers need only a single weakness to exploit and penetrate systems.16 

Banks’ use of advanced technology may also increase the risks of harm to consumers. For 

example, the OCC noted that banks’ deployment of new technology may result in fair lending 

issues.17 When banks use artificial intelligence, they often use algorithm models and rules that 

rely upon historical data.

18 If model rules are outdated or the data used in the algorithm models 

are not representative of the current customer population, selection bias may occur.19 

Banks also face competitive risks from technology innovations of non-bank entities. The OCC 

further noted that “[b]anks face strategic risks from non-depository financial institutions, use of 

innovative and evolving technology, and progressive data analysis capabilities.”20 According to 

the Global Payments Pulse Survey 2019 conducted by Accenture, approximately $280 billion of 

banks’ global payment revenue is likely to be displaced by non-bank competitors in the next 

6 years.

21 

Further, according to the Basel Committee on Banking Supervision, “[t]he estimated market 

capitalization of crypto-assets reached a historical peak exceeding $800 billion in January 

2018.”22 Non-bank entities such as Facebook23 and Walmart24 have announced plans to 

introduce cryptocurrencies. These privately controlled cryptocurrencies fall outside traditional 

11 OCC, Semiannual Risk Perspective, (Fall 2019). 12 New York Times, Capital One Breach Shows a Bank Hacker Needs Just One Gap to Wreak Havoc, 

(July 30, 2019). 13 Forbes, 5 Cybersecurity Myths Banks Should Stop Believing, (April 8, 2019). 14 OCC, Semiannual Risk Perspective, (Fall 2019). 15 Accenture, The Dawn of Banking in the Post-Digital Era – Banking Technology Vision 2019, (May 7, 2019). 16 New York Times, Capital One Breach Shows How a Bank Hacker Needs Just One Gap to Wreak Havoc, 

(July 30, 2019). 17 OCC, Semiannual Risk Perspective, (Fall 2019). 18 American Banker, Don’t let AI trigger a fair-lending violation, (August 6, 2019). 19 American Banker, Don’t let AI trigger a fair-lending violation, (August 6, 2019). 20 OCC, Semiannual Risk Perspective, (Fall 2019). 21 Accenture, Global Payment Pulse Survey 2019. 22 Basel Committee on Banking Supervision, Discussion Paper: Designing a Prudential Treatment for Crypto-assets, 

(December 2019).

23 Washington Post, Why governments around the world are afraid of Libra, Facebook’s cryptocurrency, 

(July 12, 2019). 24 American Banker, Walmart crypto coin patent could be a back door to banking, (August 2, 2019). One bank, JP 

Morgan Chase, plans to issue its own cryptocurrency called JPM Coin that will be used for international payments for 

large institutional clients. See CNBC, JP Morgan is tolling out the first US bank-backed cryptocurrency to transform 

payments business, (February 14, 2019). 
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banking systems and may be beyond the reach of the current regulatory structures.

25 In 

addition, certain banks are also testing the use of blockchain and distributed ledger 

technologies, as well as digital currencies for cross-border transfers.26 

Modernizing FDIC Guidance and Understanding Risks of Financial Technology 

FDIC policy makers should understand technology and its impact on the safety and soundness 

of institutions in order to provide guidance to both bankers and examiners. Keeping policies 

and guidance in step with technology is a challenge. According to the Department of the 

Treasury, current financial statutes and regulations may not address new technology and 

evolving business models.27 Regulators should create an agile framework that encourages 

innovation and sound risk management practices.28 The FDIC Chairman has stated that: 

In many cases, the cost to innovation is prohibitively high for community banks, which 

often lack the expertise, information technology, and research and development budgets 

to independent[ly] develop and deploy their own technology . . . [I]f our regulatory 

framework does not evolve with technological advances in a manner that enables 

partnerships between banks and fintechs, such innovation may not occur at community 

banks.29 

Further, bank examiners need up-to-date examination procedures to effectively assess the risks 

associated with new financial technologies. 

The FDIC also faces challenges in issuing timely guidance that is consistent with other Federal 

banking regulators.30 The Board of Governors of the Federal Reserve System, the OCC, the 

Consumer Financial Protection Bureau, and the FDIC share responsibility for Federal banking 

regulation and supervision.31 These regulatory agencies work through the Federal Financial 

25 Washington Post, Facebook’s Zuckerberg takes broad lashing on Libra, 2020 election and civil rights at 

congressional hearing, (October 23, 2019). See Commodity Futures Trading Corporation, Backgrounder on 

Oversight of and Approach to Virtual Currency Futures Markets, (January 4, 2018), “US Law does not provide for 

direct, comprehensive Federal oversight of underlying Bitcoin or virtual currency spot markets.” US regulation 

includes (1) the Internal Revenue Service treating virtual currencies as property subject to capital gains tax, (2) the 

Department of the Treasury Financial Crimes Enforcement Network monitoring virtual currency exchanges as money 

transmitters for anti-money laundering purposes, and (3) the Securities and Exchange Commission treating virtual 

currency issuances as securities issuances. 

26 CNBC, JP Morgan Is Rolling Out the First US Bank-backed Cryptocurrency to Transform Payments Business, 

(February 14, 2019). Reuters, Wells Fargo Tests Cryptocurrency for Internal Transactions, (September 17, 2019). 27 Department of the Treasury, A Financial System That Creates Economic Opportunities: Nonbank Financials, 

Fintech, and Innovation, (July 2018). 28 Jelena McWilliams, FDIC Chairman, Remarks at the Institute of International Bankers’ Annual Washington 

Conference; Washington, D.C., (March 11, 2019). 29 Statement of Jelena McWilliams, FDIC Chairman, on Oversight of Financial Regulators before the United States 

Senate Committee on Banking, Housing, and Urban Affairs, (December 5, 2019). 30 American Banker, Regulators Must Issue AI Guidance or FDIC Will: McWilliams, (August 2, 2019); and American 

Banker, Blockchain crypto tech need clear rules of the road, (August 7, 2019). 31 Jelena McWilliams, FDIC Chairman, "Principles of Supervision and Your Value to our Nation's Banking System," 

delivered at the Banking Institute sponsored by the University of North Carolina School of Law; Charlotte, North 

Carolina, (March 21, 2019). 
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Institutions Examination Council (FFIEC)32 to promote uniformity in the supervision of financial 

institutions. FDIC Chairman McWilliams recently noted her concern about the time required for 

regulators to reach consensus on artificial intelligence guidance and indicated that the FDIC 

may choose to issue its own guidance if regulators cannot agree on joint guidance.33 

In October 2018, the FDIC announced the development of a new FDIC Tech Lab to centralize 

the FDIC’s knowledge of technology in order to focus on technologies in the financial services 

sector, help the FDIC understand how innovation can contribute to the expansion of banking 

services, and promote the adoption of technology. As of January 2020, the FDIC continued to 

implement the operational foundation for the Tech Lab, including developing governing policies 

and procedures and searching for a Chief Innovation Officer to lead this effort.34 In addition, the 

FDIC is seeking a range of other technologists—including data scientists, process engineers, 

software developers, and network security experts—to join the agency.

35 We are monitoring the 

FDIC’s progress in standing up the Tech Lab. 

Ensuring Examinations Identify and Mitigate Technology Risks 

According to the Interagency Guidelines Establishing Information Security Standards,

36 a 

financial institution is responsible for the cybersecurity of its own information technology (IT) 

systems. Similarly, responsibility for compliance with consumer protection laws and regulations 

lies with the financial institution, regardless of whether the institution or a third-party service 

provider controls the information.37 The FDIC assesses whether bank management has 

appropriate controls in place to mitigate cybersecurity risks and enhance consumer protections. 

According to the OCC, bank examiners note that “the most common specific control 

deficiencies” at banks relate to: Patch Management, Network Configuration, and Access 

Management.38 In addition, banks and service providers report that some of the common 

attacks against institutions include: Phishing incidents; Compromised credentials; and 

Automated Teller Machine exploits. 

Since 2016, the FDIC has used the Information Technology Risk Examination (InTREX) work 

program to conduct bank IT examinations and assess financial institutions’ management of 

third-party service providers. The FDIC developed InTREX to enhance IT supervision by 

providing examiners with risk-focused examination procedures.39 Examiners use work 

programs to observe and document processes, and test controls. The FDIC may undertake 

32 The FFIEC was established on March 10, 1979, pursuant to title X of the Financial Institutions Regulatory and 

Interest Rate Control Act of 1978, Public Law 95-630. The Council is an interagency body empowered to prescribe 

uniform principles, standards, and report forms for the federal examination of financial institutions by the Board of 

Governors of the Federal Reserve System, the FDIC, the National Credit Union Administration, the OCC, and the 

Bureau of Consumer Financial Protection and to make recommendations to promote uniformity in the supervision of 

financial institutions. 

33 Regulators Must Issue AI Guidance or FDIC Will: McWilliams, American Banker, (August 2, 2019). There is also a 

need for regulatory clarity for blockchain and cryptocurrency. See Blockchain crypto tech need clear rules of the 

road, American Banker, (August 7, 2019) 34 American Banker, FDIC Chairman, Regulators Need New Approach to Innovation, (October 4, 2019). 35 American Banker, FDIC Chairman, Regulators Need New Approach to Innovation, (October 4, 2019). 36 These Interagency Guidelines can be found in the FDIC Rules and Regulations, Part 364, Appendix B. 37 12 C.F.R. Part 364, Appendix B. The FDIC, OCC, and Board of Governors of the Federal Reserve issued the 

Interagency Guidelines Establishing Information Security Standards. Financial Institution Letter 44-2008, Guidance 

for Managing Third-Party Risk (June 6, 2008). 38 OCC, Semiannual Risk Perspective, (Fall 2019). 39 Financial Institution Letter 43-2016, Information Technology Risk Examination (InTREX) Program, (June 30, 2016). 
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enforcement actions when examiners identify IT risks and weak management practices at the 

institutions. 

From 2016 to 2018, the FDIC conducted more than 3,000 IT examinations. Examiners 

establish the scope of an IT examination consistent with a bank’s IT complexity and risk. For 

example, the IT examination scope could be larger if new technology has been introduced, a 

new material third-party technology service provider is added, or bank information security 

testing identified material deficiencies. 

Banks have expanded their use of advanced technologies such as person-to-person payments, 

cloud computing, and blockchain. These developments increased the overall IT risk profile of 

the banking industry and the complexity of FDIC IT examination work. As a result, the FDIC has 

devoted an increasing number of examination hours to IT supervision. For example, according 

to FDIC data for IT examinations completed by the FDIC between January 2017 and 

August 2018, the average number of hours per examination increased 11 percent. For that 

same period, the average IT examination hours for FDIC-identified banks with the highest IT risk 

increased 46 percent. 

The increase in IT examination hours has led to geographic examiner resource gaps requiring 

examiners from one region to supplement examiners in another region. For example, the New 

York Regional Office noted that it has shortages of examiners qualified to complete IT 

examinations and required the assistance from other Regional Offices. The FDIC has a 

nationwide IT On-The-Job training program to increase the pool of qualified examiners for 

intermediate and advanced examinations. We have ongoing work to evaluate the FDIC’s 

process for allocating examination staff, including examiner IT subject-matter experts, to safety 

and soundness examinations. Also, we plan to conduct a review of the FDIC’s InTREX 

examination program. 

Mitigating Risks Associated With Third-Party Service Providers 

According to the OCC, “[b]anks increasingly rely on third-party service providers for technology 

and other solutions to compete in a rapidly evolving financial marketplace.”40 In addition, 

“cyber crime and espionage increasingly target third-party service providers because of the 

potential to access multiple networks from a single point.”41 For example, in July 2019, an 

employee of a third-party provider of Capital One exploited a firewall and gained access to 

sensitive information for approximately 106 million U.S. and Canadian customers.42 

The OCC also noted that banks are relying on the same pool of third-party service providers for 

critical services such as payments, transaction processing, and maintenance of sensitive 

information. “[C]onsolidation in the bank technology service provider industry has resulted in 

fewer entities providing certain critical services.”43 Thus, if one third-party provider experiences 

a service disruption, operations at many banks may be affected. 

The FDIC—through its supervisory examination processes—evaluates banks’ monitoring of the 

security programs of their third-party providers. Bank management must exercise due diligence 

before entering into third party relationships. Due diligence includes, for example, 

40 OCC, Semiannual Risk Perspective, (Fall 2019). 41 OCC, Semiannual Risk Perspective, (Spring 2019). 42 CyberScoop, Capital One is a cautionary tale for companies rushing to embrace new tech, (July 31, 2019). 43 OCC, Semiannual Risk Perspective, (Fall 2019). 
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understanding the third-party’s risk and security controls, and ensuring clear lines of 

responsibility between the third-party and the bank on actions to be taken in the case of an 

incident. According to Banking Technology Vision 2019 by Accenture, 69 percent of 

784 banking and IT executives surveyed did not know about the security at their third-party 

service providers.44 We plan to conduct a review to assess whether FDIC examination 

processes evaluate institutions’ monitoring and management of risks associated with third-party 

relationships. 

The FDIC should understand risks associated with emerging technology to provide banks with 

implementation guidance that balances banking sector safeguards with innovation. The FDIC 

should also ensure that examinations effectively address technology risks. 

2| ENHANCING THE FDIC’S INFORMATION TECHNOLOGY SECURITY 

PROGRAM 

The FDIC continues to increase its reliance on IT systems to fulfill its mission. As of June 

2018, the FDIC had 338 IT systems that collect, store, or process Personally Identifiable 

Information (PII) and sensitive information. A total of 174 of the FDIC’s 338 IT systems 

contained what the Agency has determined to be “sensitive PII.” Further, the FDIC has legacy 

systems that are becoming difficult and expensive to maintain. The FDIC is in the process of 

modernizing its technology and must maintain the security of information within its systems as 

the IT environment evolves. 

According to the Office of Management and Budget (OMB), the Federal Government is a 

significant target of cyberattacks, and in Fiscal Year 2018, Federal agencies experienced 

31,107 cybersecurity incidents.45 A recent report issued by the data protection firm, Veritas, 

stated that “ransomware damage costs will reach $20 billion by 2021.”46 Nearly 30 percent of 

Federal agency respondents to the Veritas survey had been directly affected by ransomware 

attacks in the past 3 years, and 80 percent of Federal respondents believed that ransomware 

and malware will be as great a concern—if not a greater concern—within the next 12 months. 

The report further noted that ransomware attacks at Federal agencies present risks to national 

security, employee productivity loss, prolonged loss of services, and loss of institutional trust. 

The Director of the Cybersecurity and Infrastructure Security Agency (CISA)47 at the 

Department of Homeland Security (DHS) noted that ransomware attacks are “only getting 

worse.”

48 The actors are shifting their business models and going to more coordinated attacks. 

Also, in June 2019, a Senate Committee on Homeland Security and Governmental Affairs 

report49 found that Federal agencies failed to comply with basic cybersecurity standards, 

44 Accenture, Banking Technology Vision 2019, (May 7, 2019). 45 Federal Information Security Modernization Act of 2014 Annual Report to Congress, (August 2019). 46 Veritas, Ransomware Threats Is Your Agency Ready?, (December 2019). 47 On November 16, 2018, the President signed into law the Cybersecurity and Infrastructure Security Agency Act of 

2018 (Act). The Act established the Cybersecurity and Infrastructure Security Agency (CISA) within the DHS to, 

among other things, make the United States cyber and physical infrastructure more secure by sharing information at 

all levels of Government and the private and non-profit sectors. Cybersecurity and Infrastructure Security Act of 

2017, House Report 115-454, 115th Congress, (December 11, 2017). 48 FedScoop, Survey Indicates Federal Agencies Lack Adequate Planning to Recover from Ransomware Attacks, 

(December 6, 2019).

49 Federal Cybersecurity: America’s Data At Risk, United States Senate Committee on Homeland Security and 

Governmental Affairs Permanent Subcommittee on Investigations, (June 2019). The Subcommittee reviewed the 
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including deficiencies related to: 

 Protecting PII;50 

 Maintaining comprehensive and accurate lists of IT assets; 

 Installing required security patches; and 

 Ensuring systems had valid operating authorities. 

This Senate Report also noted that agencies were at increased risk when they rely on aging 

systems also called “legacy systems.”51 These legacy IT systems are difficult to secure and 

costly to maintain. 

FDIC IT systems reflect a combination of legacy systems and new technologies. According to 

the Government Accountability Office (GAO), use of legacy systems increases the cybersecurity 

risk of those systems.52 Further, the FDIC’s Chief Information Officer Organization recognized 

that the “burden of maintaining the legacy environment limits the ability of staff to develop and 

practice new skills and pursue innovation.”53 

The FDIC relies heavily on IT systems to carry out its responsibilities of insuring deposits, 

supervising banks, and performing its resolution and receivership activities. The FDIC 

maintains 338 IT systems that collect, store, or process PII and sensitive information. A total of 

174 of the FDIC’s 338 IT systems contain what the agency has determined to be “sensitive 

PII.”54 For example, in its capacity as receiver for failed banks, the FDIC collects and maintains 

a significant volume of PII such as names, home addresses, SSNs, dates and places of birth, 

bank account numbers, and credit card information. The FDIC also maintains business 

proprietary information that is sensitive, including banks’ information relating to internal 

operations regarding counterparties, vendors, suppliers, and contractors. 

In December 2019, the FDIC Chairman announced the departure of the Chief Information 

Officer (CIO) who led the FDIC’s IT strategic planning and modernization efforts. On January 

16, 2020 the Chairman named the Deputy CIO as the new CIO to continue leadership of the 

implementation of the FDIC’s IT Modernization Plan. The appointment of the new CIO marks 

the FDIC’s eighth CIO or Acting CIO in the last decade. These senior management changes 

impact the direction of an organization because turnover affects management strategy, 

planning, budgets, and staffing. As noted by the GAO, a high turnover rate in CIOs negatively 

Department of Homeland Security, the Department of State, the Department of Transportation, the Department of 

Housing and Urban Development, the Department of Agriculture, the Department of Health and Human Services, the 

Department of Education, and the Social Security Administration.

50 PII is any information about an individual maintained by an agency, including (1) any information that can be used 

to distinguish or trace an individual‘s identity, such as name, Social Security Number (SSN), date and place of birth, 

mother‘s maiden name, or biometric records; and (2) any other information that is linked or linkable to an individual, 

such as medical, educational, financial, and employment information. 51 U.S. Government Accountability Office, Information Technology: Agencies Need to Develop Modernization Plans 

for Critical Legacy Systems, GAO-19-471, (June 2019). 52 U.S. Government Accountability Office, Information Technology: Agencies Need to Develop Modernization Plans 

for Critical Legacy Systems, GAO-19-471, (June 2019). 53 FDIC Chief Information Officer Organization, FDIC IT Modernization Plan 2020-2024. 54 According to FDIC Circular 1360.9, Protecting Sensitive Information, (October 2015), sensitive PII is a subset of PII 

that presents the highest risk of being misused for identity theft or fraud. Sensitive PII may be comprised of a single 

item of information, such as an SSN, or a combination of two or more items, such as full name along with financial, 

medical, criminal, or employment information. 
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impacts their effectiveness because there is limited time to put their agenda in place or form 

close working relationships with agency leadership.55 

Maturing the FDIC’s IT Security Program and Practices 

In our annual audit report, The FDIC’s Information Security Program—2019 (October 2019) 

(FISMA Report) and other OIG reports, we identified weaknesses that limited the effectiveness 

of the FDIC’s information security program and practices and placed the confidentiality, integrity, 

and availability of the FDIC’s information systems and data at risk. In particular, we identified 

the following weaknesses and deficiencies that pose the highest risks to FDIC IT systems: 

 Network Firewalls. According to the National Institute of Standards and Technology 

(NIST) guidance, firewalls are essential devices or programs that help organizations 

protect their networks and information systems from hostile attacks, break-ins, and 

malicious software.56 The FDIC deploys firewalls at both the perimeter and interior of its 

network. These firewalls control the flow of inbound traffic from the internet through the 

use of “ingress” rules that inspect traffic and permit or deny requests for access to FDIC 

systems. The firewalls also control the type of traffic allowed to flow out of the network 

using “egress” rules. Therefore, the FDIC’s firewalls are only as effective as the rules 

that the FDIC defines for them. 

In our audit report, Preventing and Detecting Cyber Threats (May 2019), we identified 

weaknesses in the effectiveness of both FDIC firewalls and the Security Information and 

Event Management tool that works in concert with firewalls to analyze network activity 

and detect cyber threats. The FDIC had inadequate firewall policies and procedures that 

led to firewall rules lacking documented justification, unnecessary firewall rules, and an 

ineffective process to periodically review firewall rules. Unnecessary firewall rules pose 

a security risk. The FDIC undertook significant steps to address these network firewall 

weaknesses. However, the FDIC had not yet completed actions to document all existing 

network firewall rules with an approval and mission/business need, including the 

duration of that need, or implemented a firewall policy consistent with NIST guidance. 

 Privileged Account Management. The FDIC assigns certain network users 

“administrative accounts” that have privileged access to systems and network IT 

resources to perform maintenance and IT troubleshooting activities. The FDIC must 

carefully control and monitor administrative accounts because hackers and other 

adversaries often target them to perform malicious activity, such as exfiltrating sensitive 

information. 

In our audit report, Preventing and Detecting Cyber Threats, we found that the FDIC did 

not always require administrators to uniquely identify and authenticate when they 

accessed network firewalls. These vulnerabilities exposed the network firewalls to 

increased risk of unauthorized access or malicious activity. The FDIC corrected these 

vulnerabilities. 

 Security Control Assessments. Agencies are required to test and evaluate 

information security controls periodically in order to ensure that they are effective. The 

55 U.S. Government Accountability Office, Federal Chief Information Officers: Responsibilities, Reporting 

Relationships, Tenure, and Challenges, GAO-04-823, (July 2004). 56 NIST SP 800-41, Guidelines on Firewalls and Firewall Policy, (September 2009). 
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FDIC assessed its security controls following a risk-based schedule. However, in our 

audit, Security Configuration Management of the Windows Server Operating System 

(January 2019), we found instances in which security control assessors did not test the 

implementation of security controls, when warranted. Instead, assessors relied on 

narrative descriptions of controls in FDIC policies, procedures, and system security 

plans and/or interviews of FDIC or contractor personnel. Without testing, assessors did 

not have a basis for concluding on the effectiveness of security controls. We made eight 

recommendations, one of which remains unimplemented at the time of this report. 

 Security and Privacy Awareness Training. FDIC policy requires employees and 

contractor personnel with network access to complete security and privacy awareness 

training within one week of employment, and annually thereafter. FDIC policy states that 

users who fail to comply with this requirement must have their network access revoked. 

We identified 29 network users who did not satisfy the FDIC’s awareness training 

requirement but still had access to the network. We found that the FDIC was not aware 

of the 29 users, among approximately 7,000 network users, because the system used to 

monitor training compliance did not track all users required to take the annual security 

and privacy awareness training. 

The FDIC must continue to modernize its IT systems and mature security controls to minimize 

risks of cyber incidents. Information security should remain a critical element of the FDIC’s plan 

to modernize its IT systems. 

3| ENSURING THE FDIC’S READINESS FOR CRISES 

Banks face numerous significant risks that could affect the stability of the financial system, as well 

as the safety and soundness of institutions. Central to the FDIC’s mission is readiness to address 

crises impacting the banking system and mitigation of risk through supervision. The FDIC 

identified two important lessons learned following the recent financial crisis: (i) the importance of 

crisis readiness planning; and (ii) quickly addressing emerging supervisory risks. Crisis readiness 

best practices identify the principles and elements of effective preparedness that collectively 

provide a framework for crisis planning efforts. Adopting such a framework strengthens the FDIC’s 

ability to respond to a crisis in a timely and effective manner. 

The World Economic Forum identified five categories of risk to the world economy that also 

impact the banking sector: (1) Technological risks, such as widespread economic disruption, 

failure of the internet or satellites, or large-scale data fraud or theft; (2) Economic risks, such as 

unsustainable prices for housing or commodities that result in sudden price drops; (3) 

Environmental risks, such as extreme weather events, natural disasters, or man-made 

disasters; (4) Geopolitical events, such as terrorist attacks or weapons of mass destruction; and 

(5) Societal risks, such as infectious disease pandemics.57 

The FDIC plays an important role in supervising and regulating banks that may be affected by 

these risks. The FDIC helps to stabilize financial markets through its examination of banks, 

provision of deposit insurance, and resolution of failed banks. When the FDIC acts as the 

receiver of a failed institution, the FDIC assumes responsibility for recovering funds through the 

disposition of a bank’s assets.

58 The FDIC Chairman noted that during its 85-year history, the 

57 The World Economic Forum, The Global Risks Report 2018, 13th Edition. 58 FDIC 2018-2023 Strategic Plan, Receivership Management Program. 
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FDIC “has resolved more than 2,700 institutions with assets of more than $1 trillion and almost 

$800 billion in deposits.”59 

Planning for Crises and Resolution of Failed Banks 

When early mitigation fails or events overtake mitigation efforts, the FDIC should be prepared to 

address bank failures. In 2017, the FDIC published a study of the Agency’s response to the 

financial crisis in 2008-2013. The FDIC study, Crisis and Response: An FDIC History, 2008-

2013 (Crisis and Response Report), concluded that the financial crisis presented the FDIC with 

unprecedented challenges and demanded creative and innovative responses from the FDIC 

and other financial regulatory agencies. In addition, the crisis stretched the limits of the FDIC’s 

capacity to supervise problem institutions, manage the Deposit Insurance Fund, and implement 

orderly resolutions for failed financial institutions. The Crisis and Response Report concluded 

that “[i]n hindsight, it might have been more effective if the FDIC, as part of its readiness 

planning, had built a larger and more agile infrastructure—including staff, contracts, and 

[information technology] systems—during the lull between the end of the previous crisis and the 

start of this new one.” The 

Crisis and Response Report 

indicated that, as a result, one 

of the most important lessons 

learned from the prior financial 

crisis was that “readiness 

planning is essential.”

60 

Crisis readiness best 

practices61 identify seven 

elements of a readiness 

planning framework, as 

depicted in Figure 1. A crisis 

readiness framework identifies 

the principles and elements of 

effective preparedness and 

promotes a shared understanding and a common, integrated perspective of readiness across all 

mission areas.62 

Specifically, the seven elements of a readiness framework that agencies such as the FDIC 

should have include: 

 Policy and Procedures – Agencies should have a policy with defined readiness 

authorities, roles, and responsibilities, including a committee responsible for overseeing 

Source: FDIC OIG. 

Figure 1: OIG Compilation of Crisis Readiness Framework 

59 Jelena McWilliams, FDIC Chairman, Keynote Remarks delivered at the 2018 Annual Conference of The Clearing 

House and Bank Policy Institute, (November 28, 2018). 60 The Crisis and Response Report indicated that, as part of maintaining readiness in a stable environment, the FDIC 

could explore how other agencies with highly variable resource demands address their resource challenges. The 

report cited FEMA as an example, noting the agency has developed readiness capabilities despite the unpredictable 

need for disaster relief. 

61 OIG-identified best practices included the Department of Homeland Security, National Preparedness Guidelines 

(September 2007); Federal Emergency Management Agency (FEMA), FEMA Operational Planning Manual (FEMAP-1017) (June 2014); and the Organization for Economic Co-operation and Development, Strategic Crisis 

Management (December 2012). 62 FEMA, National Disaster Recovery Framework website summary page https://www.fema.gov/national-disasterrecovery-framework (October 2018). 
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readiness activities. This policy helps ensure that personnel understand and implement 

management directives for readiness. Agencies should also have procedures for a 

consistent crisis readiness planning process. 

 Plans – Agencies should have an agency-wide all-hazards readiness plan as well as 

plans for specific hazards as needed based on risk. These plans improve the efficiency 

of the readiness planning process and provide management and personnel with a 

comprehensive understanding of readiness planning activities across an organization. 

 Training – Agencies’ plans should incorporate training requirements to ensure that 

personnel understand the content of crisis readiness plans, including the task-related 

responsibilities for executing the plans. 

 Exercises – Agencies should regularly test readiness plans, document the results of all 

readiness plan exercises, and consistently incorporate such exercise requirements 

within its plans. 

 Lessons Learned – Agencies should have a process to monitor the implementation of 

lessons learned and related recommendations from readiness plan training, exercises 

and execution during a crisis. 

 Maintenance – Agencies should regularly review and update their readiness plans and 

incorporate such maintenance requirements within their plans. 

 Assessment and Reporting – Agencies should regularly assess and report on 

Agency-wide progress on crisis readiness plans and activities to key decision makers 

within an organization. 

We have work ongoing to assess the FDIC’s crisis readiness planning efforts in the context of 

this framework. 

Promptly Identifying and Mitigating Banking Risks 

An important step in avoiding crises is early risk identification and mitigation. In its review of the 

financial crisis, the Financial Crisis Inquiry Commission stated that “[i]n case after case after 

case, regulators continued to rate the institutions they oversaw as safe and sound even in the 

face of mounting troubles, often downgrading them just before their collapse.”63 

The FDIC adopted a Forward-Looking Supervision initiative to identify and mitigate risk before it 

impacts the financial condition of an institution. In our evaluation report, Forward-Looking 

Supervision64 (August 2018) we found that for 41 examination reports sampled, examiners 

identified overall safety and soundness risk; however, only 27 percent of reports sampled (11 of 

41) elevated concerns to the financial institution’s board of directors. Based on the financial 

institutions’ risk, we believe that a greater number of these concerns warranted board attention. 

Elevating concerns and recommendations provides greater visibility and awareness to the 

financial institution’s board of directors and senior management. 

63 Financial Crisis Inquiry Commission, Final Report of the National Commission on the Causes of the Financial and 

Economic Crisis in the United States (January 21, 2011). Congress established the Financial Crisis Inquiry 

Commission as part of the Fraud Enforcement and Recovery Act (Public Law 111-21) to examine the causes of the 

financial crisis. 

64 Forward-Looking Supervision, EVAL-18-004, (August 2018). 
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An institution’s financial condition may also change between examination intervals, making the 

most recent examination rating outdated or inaccurate. The FDIC’s Offsite Review Program 

(ORP) is designed for the early identification of emerging supervisory concerns and potential 

problems so that supervisory strategies can be adjusted quickly. The ORP includes models and 

other methodologies that review quarterly bank information65 and produce the Offsite Review 

List (ORL) of institutions with potential emerging supervisory concerns. FDIC Regional Offices 

may add institutions that are not initially identified on the ORL based on Region-specific 

concerns. The ORP also includes a Supplemental Review List for new or emerging risks to be 

included in the quarterly offsite process. 

In our evaluation report, Offsite Reviews of 1- and 2-Rated Institutions (December 2019), we 

found that the ORP identified emerging issues concerning financial institutions’ rapid growth, 

use of noncore funding, and deteriorating financial trends, but the FDIC should evaluate 

additional methods and new technologies to identify financial institutions with other types of 

emerging supervisory concerns. For example, the FDIC should assess whether innovative 

technologies would provide predictive information on other types of emerging supervisory 

concerns, such as those related to banks’ internal controls, credit administration, and 

management practices. We recommended that the FDIC evaluate the feasibility of using new 

technologies to identify institutions with emerging supervisory concerns. 

The health of banks and the banking system depends upon the FDIC’s and other regulators’ 

early identification and mitigation of safety and soundness risk and the FDIC’s ability to respond 

to banking crises. Establishing a robust readiness framework ensures the FDIC has the 

organizational processes, individuals, resources, and integration necessary to respond to a 

crisis. 

4|SHARING THREAT INFORMATION WITH BANKS AND EXAMINERS 

Federal Government agencies gather a substantial volume of information related to the safety 

and soundness of financial institutions in the United States, and thus, relevant to FDIC 

supervisory activities. For example, Government agencies collect information about cyber 

threats, money laundering, and illicit financing activity. Bankers need to receive actionable 

information in order to respond to threats in a timely manner. FDIC examiners responsible for 

supervised institutions should be aware of threats directed toward those institutions to 

understand their impact and make necessary supervisory adjustments. Further, examiners 

should understand the nature of threats to evaluate potential gaps and determine the depth and 

scope of an examination. FDIC policy makers should be aware of emerging threats to ensure 

that relevant threat information is disseminated to banks and examiners; in addition, policy 

makers can adjust examination policy and procedures and assess the need for supplementing or 

modifying the regulatory scheme. 

On April 30, 2019, the CISA identified consumer and commercial banking, and funding and 

liquidity services as National Critical Functions which are “so vital to the United States that their 

disruption, corruption, or dysfunction would have a debilitating effect on security, national 

economic security, national public health or safety, or any combination thereof.”66 The CISA 

65 Banks reviewed through the ORP include FDIC-supervised institutions and institutions supervised by the Federal 

Reserve Board or the Office of the Comptroller of the Currency.

66 DHS Cybersecurity and Infrastructure Security Agency, National Critical Functions – An Evolved Lens for Critical 

Infrastructure and Security Resilience, (April 30, 2019). 
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further stated that a key focus to support these National Critical Functions is collecting and 

sharing threat information about natural occurrences or man-made actions that represent “the 

potential to harm life, information, operations, the environment, and/or property.”67 

Similarly, the FSOC noted, in its 2019 Annual Report, the critical importance to the financial 

sector of sharing timely and actionable threat information with Federal Government agencies 

and the private sector. The FSOC stated that Federal agencies should “carefully consider how 

to appropriately share information and, where possible, continue efforts to declassify (or 

downgrade classification) to the extent practicable, consistent with national security 

imperatives.”68 

FinCEN also stressed the importance of providing the financial sector with information about 

illicit activity to help sector participants identify and report such activities to law enforcement.69 

This information is especially important to identify illicit actors who use virtual currency to 

facilitate criminal activity, such as human or drug trafficking, child exploitation, fraud, terrorist 

financing, or to support rogue regimes and facilitate sanctions evasion. 

As shown in Figure 2, the GAO identified multiple sources of threat information. 

Figure 2: Sources of Threat Information for Financial Institutions. 

67 Department of Homeland Security, DHS Risk Lexicon, (September 2008). 68 FSOC 2019 Annual Report. 69 Financial Crimes Enforcement Network, Advisory on Illicit Activity Involving Convertible Virtual Currency, 

(May 9, 2019). 
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Disseminating Threat Information to Banks 

The OCC noted that “[t]he potential for operational disruptions underscores the need for 

effective controls and operational resilience to help ensure the ongoing delivery of financial 

products and services in a safe and sound manner.”70 The FFIEC provides instructions to 

examiners on how to examine financial institutions’ business continuity plans. These 

instructions note that threats should be analyzed “based upon the impact to the institution, its 

customers, and the financial market it serves.”71 The FFIEC notes that financial institutions 

should have “a means to collect data on potential threats that can assist management in its 

identification of information security risks.” The FDIC is responsible for evaluating bank 

management’s processes to receive and assess threat information, and to act on such 

information in order to mitigate risks. 

The Cybersecurity Information Sharing Act (2015) required the Director of National Intelligence 

(DNI) and other agency heads to develop and issue procedures to facilitate and promote the 

sharing of cyber threat indicators and defensive measures. In February 2016, the DNI issued a 

report entitled Sharing of Cyber Threat Indicators and Defensive Measures by the Federal 

Government under the Cybersecurity Information Sharing Act of 2015 (Threat Sharing 

Procedures), which outlined the procedures for Federal agencies to share cybersecurity 

information with non-Federal entities such as financial institutions.72 The Threat Sharing 

Procedures promote sharing unclassified and classified information, and best practices related 

to cyber security. 

According to the Threat Sharing Procedures, Federal Government agencies are to make every 

reasonable effort to share unclassified reports of cyber threats on a timely basis. The sharing of 

classified threat information is dependent on the recipient’s security clearance level and must 

protect sources, methods, operations, and investigations. The Threat Sharing Procedures 

encourage Federal agencies to “downgrade, declassify, sanitize or make use of tearlines to 

ensure dissemination of threat information to the maximum extent possible.”73 

Federal agencies may use Information Sharing and Analysis Centers (ISAC) to provide threat 

information to other government agencies or non-Federal entities.74 The goal of ISACs is to 

provide members with accurate, actionable, and relevant information, and they are organized to 

share sector-specific threat and vulnerability information with members. 

The Financial Services Information Sharing and Analysis Center (FS-ISAC) was established to 

serve financial institutions. FS-ISAC has 7,000 members and its purpose is to share timely, 

relevant, and actionable security threat information. Federal financial-sector regulators 

encourage financial institutions to gain access to threat information through FS-ISAC 

membership.75 Regulators also suggest that banks use other available resources from the 

Federal Bureau of Investigation, Department of Homeland Security, and U.S. Secret Service in 

70 OCC, Semiannual Risk Perspective, (Fall 2019). 71 FFIEC, Business Continuity Planning Booklet, Risk Assessment, (Available on the FFIEC website). 72 The Office of the Director of National Intelligence, The Department of Homeland Security, The Department of 

Defense, and The Department of Justice, Sharing of Cyber Threat Indicators and Defensive Measures by the Federal 

Government under the Cybersecurity Information Sharing Act of 2015, (February 16, 2016). 73 The Office of the Director of National Intelligence, The Department of Homeland Security, The Department of 

Defense, and The Department of Justice, Sharing of Cyber Threat Indicators and Defensive Measures by the Federal 

Government under the Cybersecurity Information Sharing Act of 2015, (February 16, 2016). 74 Presidential Policy Directive 63, Critical Infrastructure Protection, (May 22, 1998). 75 FFIEC, Cybersecurity and Threat and Vulnerability Monitoring and Sharing Statement, (November 3, 2014). 
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order to identify and respond to cyber attacks. Bank “management is expected to monitor and 

maintain sufficient awareness of cybersecurity threats and vulnerability information so they may 

evaluate risk and respond accordingly.”76 

As part of the FDIC’s supervisory process, examiners evaluate banks’ processes for obtaining 

and assessing threat information. Examiners may face challenges in assessing the 

effectiveness of banks’ threat identification and mitigation processes when banks are not 

receiving threat information through FS-ISAC membership. 

Disseminating Threat Information to FDIC Policy Makers and Examiners 

FDIC policy makers should be aware of threats to ensure relevant threat information is provided 

to banks and examiners. Further, policy makers may need to adjust examination policy and 

procedures to address emerging threat issues and assess the need for additional regulation. 

FDIC examiners should be aware of threats directed toward those institutions to understand 

their impact and make necessary supervisory adjustments. Understanding the nature of threats 

to all banks provides context for examiners to evaluate potential gaps in an institution’s 

processes for threat information gathering and continuity planning. Further, threat information 

can assist examiners in prioritizing and focusing their work on emerging issues, and modifying 

the depth or scope of an examination. 

According to best practices,

77 recipients of threat information should have the following 

processes in place to assess the significance of the information and ensure that actionable 

information is disseminated to relevant parties: 

 Acquiring Threat information. Threat information may be obtained from a variety of 

sources and methods, including information from open sources, confidential sources, 

law enforcement, intelligence, public and private entities, as well as investigations, 

assessments, and intelligence collection. 

 Analyzing Threat Information. The significance of the threat must be assessed in the 

context of other threats and relevant information. 

 Disseminating and Using Actionable Threat Information. This step includes 

distribution with a focus on timely delivery of relevant actionable threat information to the 

appropriate people. Further, information must be “marked” to ensure proper 

safeguarding and access restrictions. 

 Providing Feedback on Threat information. Establishing processes for lessons 

learned improves the relevance, usefulness, and format of threat information. 

The FDIC has access to threat information held by various Government agencies, and should 

have formal processes to address the four steps, referenced above, for threat information 

assessment and sharing. Without formal processes, the FDIC leaves the collection of 

information, analysis, dissemination, and feedback to staff discretion, which may lead to 

inconsistencies, uncertainty, and a lack of uniformity in sharing threat information. 

76 FFIEC, Cybersecurity and Threat and Vulnerability Monitoring and Sharing Statement, (November 3, 2014). 77 OIG compilation based on a combination of DHS, Critical Infrastructure Threat Information Sharing Framework, A 

Reference Guide for the Critical Infrastructure Community, (October 2016); and SANS Institute, Cyber Threat 

intelligence Support to Incident Handling, (November 2017). 
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The FDIC is also challenged to set up the infrastructure needed to execute threat assessment 

and sharing processes. FDIC Headquarters staff has access to significant amounts of threat 

information held by the U.S. Government, and much of the information is confidential and highly 

sensitive. Given the volume of information, the FDIC faces challenges in having the appropriate 

number of personnel with the requisite security clearance levels to analyze, distill, and convey 

relevant and actionable threat information. The FDIC is also challenged to convey classified 

information to policy makers and examiners. In order to access, store, and handle classified 

information, FDIC policy makers and examiners must have relevant security clearances and 

secure facilities—or alternatively, the FDIC must have processes in place to declassify 

information in a timely manner. We have ongoing work to evaluate the effectiveness of the 

FDIC’s procedures for the collection and dissemination of threat information. 

Timely and actionable threat information allows bank management to thwart threats and the 

FDIC to quickly adjust supervisory strategies. Understanding the emerging threat landscape 

across all banks provides examiners with context to review a bank’s processes to defend 

against threats and provides perspective to adjust examination policies and procedures. Absent 

information sharing, bank management, policy makers, and examiners may be unaware of 

threats that could affect the safety and soundness of financial institutions. 

5| STRENGTHENING THE GOVERNANCE OF THE FDIC 

Effective governance is critical to ensure proper oversight of the FDIC. The Federal Deposit 

Insurance Act vests the management of the FDIC to its Board of Directors (FDIC Board). The 

FDIC Board has operated without a full membership since 2015. The FDIC Board delegates 

authority to FDIC senior leaders to fulfill the Agency’s mission, including implementation of its 

Enterprise Risk Management (ERM) program. The FDIC should ensure that it is identifying and 

managing risks, and making data-driven acquisition decisions. 

According to Principles of Corporate Governance issued by the Organization for Economic Cooperation and Development (OECD Governance Principles), “[t]he purpose of corporate 

governance is to help build an environment of trust, transparency and accountability necessary 

for fostering long-term investment, financial stability, and business integrity, thereby supporting 

stronger growth, and more inclusive societies.”78 As explained in the OECD Governance 

Principles, a governance framework should ensure strategic guidance, effective monitoring of 

management by the board, and the board’s accountability to stakeholders. 

One area of importance for boards is oversight of the organization’s ERM. Such oversight 

includes accountability and responsibilities for managing risks, specifying the types and degree 

of risk that an organization is willing to tolerate, and the management of risks through operations 

and relationships. ERM is a governance issue that falls within the oversight responsibility of 

boards of directors.79 

78 OECD, G20/OECD Principles of Corporate Governance, (2015). The Principles are presented in six different 

chapters. This document references two chapters: (1) Ensuring the basis for an effective corporate governance 

framework and (2) The responsibilities of the Board. 79 Harvard Law School Forum on Corporate Governance and Financial Regulation, Risk Management and the Board 

of Directors, (March 20, 2018). 
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The Federal Deposit Insurance Act80 vests management of the FDIC in the FDIC Board. The 

FDIC Board consists of five members, all of whom are appointed by the President and 

confirmed by the Senate: the Comptroller of the Currency; the Director of the Consumer 

Financial Protection Bureau; and three “Appointive Directors,” including a Chairman and Vice 

Chairman.

and one member “shall have State bank supervisory experience.”82

81 No more than three members of the Board may be from the same political party, 

Although the FDIC Board may delegate certain powers to officers of the FDIC, the FDIC Board 

members should exercise oversight, remain informed about FDIC activities, and review financial 

statements.83 

Maturing Enterprise Risk Management 

According to OMB Circular Number A-123, Management’s Responsibility for Enterprise Risk 

Management and Internal Control,

84 Federal agencies face internal and external risks to 

achieving their missions, including “economic, operational, and organizational change factors.”85 

The OMB requires that Federal agencies implement ERM to assist agencies in identifying, 

assessing, and mitigating internal and external risks. 

The OMB defines ERM as “an effective Agency-wide approach to addressing the full spectrum 

of the organization’s external and internal risks by understanding the combined impact of risks 

as an interrelated portfolio, rather than addressing risks only within silos.”86 The components of 

ERM include a risk governance structure; a methodology for developing an agency’s risk profile; 

and a process, guided by an organizations senior leadership, to consider risk appetite and risk 

tolerance levels that serve as a guide for the agency to establish strategy and select objectives. 

In June 2010, the FDIC hired a consulting firm to address five key issues regarding its ERM 

program. In response to the firm’s recommendations, the then-FDIC Chairman appointed a 

Risk Steering Committee to evaluate alternatives and recommend an organizational structure 

for risk management. The Risk Steering Committee recommended to the FDIC Board the 

establishment of an Office of Corporate Risk Management (OCRM), headed by a Chief Risk 

Officer (CRO), with total staffing of 16. The Board approved the recommended changes, which 

were intended to provide an office to review internal and external risks with a system-wide 

perspective; facilitate sharing of information regarding existing, emerging, and potential risks; 

and instill risk governance as part of the FDIC’s culture. 

From 2011 to 2016, the ERM program was headed by a CRO who reported directly to the thenChairman. In May 2016, the CRO retired, and only five ERM program staff remained at the 

80 12 U.S.C. § 1812(a)(1) (2019). 81 12 U.S.C. § 1812(a)(1) (2019); FDIC, Bylaws of the FDIC, (2018). Technically designated the Chairperson and 

Vice Chairperson in the statute and bylaws, it is longstanding FDIC practice to refer to the positions as Chairman and 

Vice Chairman. 

82 12 U.S.C. § 1812(a)(1) (2019). 83 Bylaws of the Federal Deposit Insurance Corporation, Adopted by the Board of Directors, (September 17, 2019); 

Wyoming Law Review, Director Oversight and Monitoring: The Standard of Care and the Standard of Liability PostEnron, (2006). 84 OMB Circular No. A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control, 

(July 15, 2016). 85 OMB Circular No. A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control, 

(July 15, 2016). 86 OMB Circular No. A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control, 

(July 15, 2016). 
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time. In June 2017, the FDIC reorganized the ERM program by placing the positon of CRO 

under the Division of Finance as a Deputy Director, eliminating OCRM and moving the ERM 

function to a newly constituted Risk Management and Internal Controls Branch. 

In October 2018, the FDIC revised its Enterprise Risk Management and Internal Control Policy 

(FDIC ERM Directive), which includes the ERM principles of OMB Circular Number A-123.87 

The FDIC ERM Directive vests the FDIC’s Operating Committee with oversight of the ERM 

program, including “establishment of the agency’s risk profile, regular assessment of risk, and 

development of appropriate risk response.” 88 The Operating Committee includes senior-level 

officials, but it is not a decision-making body. 

The FDIC ERM Directive instructs the CRO to work in partnership with FDIC Division and Office 

leaders to ensure enterprise-wide coordination, training, policy, and maintenance of ERM 

components (risk inventory, risk profile, and risk appetite statements). The FDIC ERM Directive 

states that implementation of ERM should facilitate efforts of the FDIC Board to identify, assess, 

and address risks. However, the FDIC ERM Directive does not envision an oversight role for 

the FDIC Board, nor does it describe regular reporting requirements or communications for the 

FDIC Board. 

In our recent audit, The FDIC’s Information Security Program–2019 (October 2019), we found 

that the ERM program developed a risk appetite statement establishing the amount of risk the 

FDIC is willing to accept in pursuit of its mission. However, as of the time of our report, the 

FDIC had not yet completed an inventory of risks facing the FDIC, or a risk profile to help 

manage and prioritize risk mitigation activities. 

Subsequent to our report, the FDIC completed a risk inventory and risk profile. FDIC 

management is in the process of integrating its ERM program into the FDIC’s budget, strategic 

planning, performance reporting, and internal control processes. We have ongoing work 

evaluating the FDIC’s ERM program to assess the extent to which the FDIC has implemented 

an effective ERM program consistent with guidance and best practices. 

Operating Without a Full FDIC Board 

The FDIC Board has been operating with four members since 2015. The Vice Chairman 

position on the FDIC Board of Directors has been vacant since April 30, 2018.89 In addition, the 

FDIC has not had an independent Board member with “State bank supervisory experience” 

since 2012.90 Nearly 80 percent of banks in the United States (approximately 4,400 institutions) 

are chartered by states, and the FDIC has authority to examine and supervise state-chartered 

banks that are not part of the Federal Reserve System. 

On January 30, 2019, a bipartisan group of fifteen Members of the House of Representatives 

submitted a letter to the White House expressing concern that no current sitting FDIC Board 

87 FDIC Directive 4010.3, Enterprise Risk Management and Internal Control Program (2018). The FDIC is not 

required to follow OMB Circular No. A-123. 88 FDIC Directive 4010.3, Enterprise Risk Management and Internal Control Program (2018). 89 American Banker, Pressure Grows on Administration to Fill Fed, FDIC Seats, (November 3, 2019). 90 Former Comptroller of the Currency Thomas Curry, who served on the FDIC Board until May 2017, was formerly 

the Massachusetts Banking Commissioner, but did not meet the statutory requirement for an independent Board 

member with supervisory experience. See American Banker, FDIC Needs a State Regulator on Its Board, 

(August 17, 2018). 
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member satisfies the state banking supervisory experience requirement.91 The Congressional 

Members noted in the letter that state bank supervisory experience is important because both 

state and FDIC regulators share concurrent responsibility for the safety and soundness of 

certain state-chartered banks. Most state banking agencies participate in an examination 

program under which certain examinations are performed on an alternating basis by the state 

agency and the FDIC. The Members of Congress stated they believe that “having an FDIC 

Board member with state bank experience is an important part of that coordination.” 

Overseeing Investment Decisions 

In order to properly oversee investment decisions at the FDIC, the FDIC Board and senior 

managers should have quality data and processes. The FDIC awarded 2,400 contracts valued 

at more than $1.5 billion over a 3-year period from 2016 to 2018. In our evaluation 

report, Contract Oversight Management (October 2019), we found that the FDIC was 

overseeing acquisitions on a contract-by-contract basis rather than on a portfolio basis and did 

not have an effective contracting management information system to readily gather, analyze, 

and report portfolio-wide contract information across the Agency. In addition, we found that the 

FDIC’s contracting system did not maintain certain key data in a manner necessary to conduct 

historical trend analyses, plan for future acquisition decisions, and assess risk in the FDIC’s 

awarded contract portfolio. As a result, FDIC Board members or other senior management 

officials were not provided with a portfolio-wide view or the ability to analyze historical 

contracting trends across the portfolio, identify anomalies, and perform ad hoc analyses to 

identify risk or plan for future acquisitions. 

In our audit report, The FDIC’s Governance of Information Technology Initiatives, (July 2018), 

we found that the FDIC faced a number of challenges and risks related to the governance of its 

IT initiatives. For example, the FDIC did not fully develop a strategy to move IT services and 

applications to the cloud or obtain the acceptance of key FDIC stakeholders before taking steps 

to initiate cloud migration projects. The FDIC also had not implemented an effective Enterprise 

Architecture to guide the three IT initiatives we reviewed or the FDIC’s broader transition of IT 

services to the cloud. The FDIC has taken action to address six of our eight recommendations 

and continues to work towards implementing the remaining two recommendations relating to: 

(1) revising IT Governance Processes into FDIC policies and procedures; and (2) identifying 

and documenting IT resources and expertise needed to execute the FDIC’s IT Strategic Plan. 

The FDIC Board’s oversight of FDIC senior management is a critical component to promptly 

identifying, assessing, and responding to risks to the FDIC, and overseeing contracting activities 

and IT investment decisions. 

91 The letter is available here. Congressman Barry Loudermilk, Congressman Denny Heck, Congressman Peter 

King, Congressman Jim Hines, Congressman Frank Lucas, Congressman Scott Tipton, Congressman Tom Emmer, 

Congressman Steve Stivers, Congressman Lee Zeldin, Congressman Alex Mooney, Congressman Ted Budd, 

Congressman David Kustoff, Congressman Trey Hollingsworth, Congressman John Rose, and Congressman Denver 

Lee Riggleman III. 
2019

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6|OVERSEEING HUMAN RESOURCES 

The FDIC relies on the talents and skills of its employees to accomplish its mission. Within the 

next few years, the FDIC will need to navigate a potential wave of retirements, reverse attrition 

trends among its core examination workforce, and hire staff with skills to match technology 

innovation. Effective management of these challenges limits the impact of leadership and skill 

gaps, and the loss of institutional experience and knowledge due to retirements. The FDIC 

should position itself to recruit, retain, and develop future talent. 

In March 2019, the GAO recognized strategic human capital management as a continuing 

Government-wide area of high risk.

92 The GAO noted that 31.6 percent of the permanent 

Federal workforce on board as of September 30, 2017 would be eligible to retire within the next 

5 years.93 The GAO identified the need for Federal agencies to measure and address existing 

mission-critical skill gaps, and to use workforce analytics to predict and mitigate future gaps. 94 

The GAO also identified five trends affecting the future Government workforce: 

(1) Technological advances that will change the way work is performed; 

(2) Increased reliance on contractors to achieve policy goals that will require new skills 

and competencies; 

(3) Fiscal constraints that will require agencies to review how they conduct business; 

(4) Evolving mission requirements that will require agencies to adapt their work and 

workforce; and 

(5) Changing demographics and shifting attitudes towards work.95 

Without careful attention to strategic and workforce planning and other approaches to managing 

and engaging personnel, reduced investments in human capital may have lasting effects on the 

capacity of an agency’s workforce to meet its mission.96 

Forty-two percent of current FDIC employees (on board as of July 31, 2019) are eligible to retire 

within the next 5 years. These retirement figures include retirement eligibility of 60 percent for 

FDIC Executives and 58 percent for its Managers. Although historical FDIC projections show 

that employees may not retire on their eligibility date, this wave of potential retirements could 

deplete the FDIC’s institutional experience and knowledge, especially during a crisis. Without 

proper succession planning strategies, these retirements can also result in leadership gaps. 

Further, the FDIC’s budget for 2019 marked the ninth consecutive year of lower annual staffing 

levels and operating budgets, reflecting the FDIC’s reduced bank failure workload. The FDIC’s 

authorized staffing level at the beginning of 2019 of 5,901 positions represented a net reduction 

of 182 positions from 2018 (approximately 3.1 percent) and the operating budget was reduced 

by 2.3 percent for the same period. 

92 GAO, High-Risk Series: Substantial Efforts Needed to Achieve Greater Progress on High-Risk Areas, GAO-19-

157SP, (March 2019). 93 GAO, Federal Workforce: Talent Management Strategies to Help Agencies Better Compete in a Tight Labor 

Market, GAO-19-723T, (September 2019). 94 GAO, High-Risk Series: Substantial Efforts Needed to Achieve Greater Progress on High-Risk Areas, GAO-19-

157SP, (March 2019). 95 GAO, Federal Workforce: Key Talent Management Strategies for Agencies to Better Meet Their Missions, GAO19-181, (March 2019). 96 GAO, Federal Workforce: Key Talent Management Strategies for Agencies to Better Meet Their Missions, GAO19-181, (March 2019). 
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Retirements and attrition can create opportunities for employees and allow organizations to 

restructure to meet program goals and fiscal realities. However, if turnover is not strategically 

monitored and managed, gaps can develop in an organization’s institutional knowledge and 

leadership.97 

Navigating the Upcoming Retirement Waves in the FDIC’s Primary Divisions 

Approximately 91 percent of all FDIC employees work in one of the FDIC’s nine primary and 

support Divisions. We analyzed the data regarding eligibility for retirement of the employees 

within these Divisions as illustrated in Table A. Based on our review, we found that 30 to 

67 percent of the FDIC staff in these Divisions is eligible to retire in the next 5 years. Notably, 

all but one of the primary FDIC Divisions have retirement eligibility rates that are higher than the 

Federal Government average of 31.6 percent. 

FDIC Executives and Managers in the nine Divisions have retirement eligibility rates ranging 

from 29 to 76 percent. For example, more than three-quarters of FDIC Executives and 

Managers within the Division of Finance (76 percent) are eligible to retire in the next 5 years. 

Similarly, 70 percent of Executives and Managers in the Division of Resolutions and 

Receiverships can retire in the same timeframe. 

The 5-year retirement rates of Executive Managers and Corporate Managers could result in 

knowledge and leadership gaps at the FDIC. As recognized by the GAO, retirement waves may 

result in leadership gaps.98 These mission-critical skills gaps could impede the capabilities of 

any agency to achieve its mission, unnecessarily delay decision-making, and reduce program 

management and oversight.99 

Table A: Retirement Eligibility Statistics for Key FDIC Divisions 

Division Staff Eligible to 

Retire in 2024 

Executives and 

Managers Eligible to 

Retire in 2024 

Division of Resolutions and Receiverships (DRR) 67 percent 70 percent 

Division of Finance (DOF) 61 percent 76 percent 

Legal Division 56 percent 44 percent 

Division of Administration (DOA) 53 percent 57 percent 

Division of Information Technology (DIT) 46 percent 52 percent 

Division of Risk Management Supervision (RMS) 39 percent 63 percent 

Division of Complex Institution Supervision & 

Resolutions (CISR) 

35 percent 29 percent 

Division of Depositor and Consumer Protection 

(DCP) 

33 percent 51 percent 

Division of Insurance and Research (DIR) 30 percent 39 percent 

Source: OIG analysis of FDIC-provided data as of July 31, 2019. 

97 GAO, Federal Workforce: Sustained Attention to Human Capital Leading Practices Can Help Improve Agency 

Performance, GAO-17-627T, (May 2017). 98 GAO, High-Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts Needed on Others, GAO17-317, (February 2017). 99 Southern California Law Review, Vacant Offices: Delays In Staffing Top Agency Positions, (2008). 
2019

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The FDIC faces significant risks regarding retirement eligibility in key Divisions involved in crises 

readiness efforts. For example, two-thirds of FDIC employees within DRR are eligible to retire 

by 2024. DRR staff is responsible for managing resolutions and receiverships when banks fail, 

including ensuring the prompt payment of deposit insurance funds to eligible bank customers. 

During the financial crisis, the FDIC had the benefit of experienced DRR employees. Absent 

seasoned employees with knowledge from past crises, the FDIC may not be sufficiently agile 

and could delay decisions and resolution determinations. 

DOF, the Legal Division, DOA, and DIT also play important roles to support DRR in a crisis 

situation when banks fail. These Divisions also face 5-year staff retirement eligibility rates 

ranging from 46 to 61 percent. DOF staff manages the liquidity of the Deposit Insurance Fund 

to ensure that money is available to DRR to pay depositors quickly in the event of a bank failure, 

and attorneys in the Legal Division assist DRR in structuring resolution agreements. DOA staff 

provides contracting support for DRR, including, for example, the rapid hiring of temporary 

personnel to address crisis staffing requirements, and DIT provides IT support for necessary 

computers and servers during bank failures and crises. 

A significant number of employees responsible for ensuring the safety and soundness of 

institutions and protecting consumers are also eligible to retire. Specifically, 39 percent of RMS 

staff is eligible to retire within 5 years, and more than 62 percent of its Executives and Managers 

may retire over the same period. CISR similarly addresses supervisory and resolution risks for 

banks with over $100 billion in assets. Staff in CISR has a 5-year retirement eligibility rate of 

35 percent. In addition, DCP conducts examinations to ensure that banks meet certain 

requirements for consumer protection, anti-discrimination, and community reinvestment. Thirtythree percent of its staff is eligible to retire within 5 years, and 51 percent of its Executives and 

Managers may retire during this same timeframe. All supervision-related Divisions are 

supported by the banking-sector research and analysis performed by DIR, which has a 

retirement eligibility rate of 30 percent within the next 5 years. 

The FDIC should continue to ensure that the institutional knowledge of retirement-eligible 

employees is captured and passed on to new employees. The FDIC has programs underway to 

review succession planning and we will monitor those efforts. 

Navigating the Upcoming Retirement Wave in FDIC Regional Offices 

The FDIC has six Regional Offices located throughout the country. Regional Offices include 

members from all FDIC Divisions, but the largest representation of employees is RMS 

examination staff. The FDIC faces risk due to staff retirement eligibility rates within each of its 

Regional Offices. 

Similar to the above analysis regarding each of the FDIC Divisions, we also assessed the data 

regarding the eligibility for retirement of employees in the Regional Offices. Based on our 

analysis, as shown in Table B, we found that FDIC employees in these Regional Offices are 

eligible to retire in the next 5 years at rates ranging from 33 to 53 percent, and retirement rates 

for Executives and Managers range from 44 to 77 percent. For example, in the Dallas Regional 

Office alone, more than half of its staff is eligible to retire in the next 5 years, and more than 

three-quarters of its Executives and Managers can do the same. 
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Table B: Retirement Eligibility Statistics for FDIC Regional Offices 

Region Staff Eligible to Retire in 2024 

Executives and Managers 

Eligible to Retire in 2024 

Dallas 53 percent 77 percent 

New York 40 percent 44 percent 

Atlanta 39 percent 47 percent 

San Francisco 37 percent 58 percent 

Chicago 36 percent 60 percent 

Kansas City 33 percent 74 percent 

Source: OIG analysis of FDIC-provided data as of July 31, 2019. 

Regional Office personnel are the critical interface between the FDIC and bank management. 

Regional Office examiners evaluate bank management’s controls to maintain safety and 

soundness, mitigate cybersecurity risks, and minimize harm to consumers. Regional Office 

personnel also play a significant role during financial crises. The FDIC’s Dallas Regional Office 

houses operational capabilities for large-scale bank failures, and it has among the highest rates 

of retirement eligibility at the FDIC. 

Addressing Attrition Among FDIC Examiners 

As of July 31, 2019, 47 percent of FDIC employees were classified as examiners. These 

examiners are deployed to four FDIC Divisions: RMS, DCP, DIR, and CISR, and to the FDIC’s 

Corporate University.100 As shown in Figure 3, at the end of 2019, 14 percent of examiners 

were eligible to retire. However, that number of retirement-eligible examiners jumps to 

25 percent within 3 years (2022) and increases further to 33 percent (one-third of the examiner 

workforce) in 5 years (2024). 

Figure 3: FDIC Examiner Retirement Eligibility 

December 2019 December 2024 

383 (14%) 884 (33%) 

December 2022 

660 (25%) 

Source: OIG analysis of FDIC retirement data. 

In addition, approximately 72 percent of all FDIC examiners are assigned to safety and 

soundness and IT examination positions within RMS. In 2018, 11 percent of RMS examiners 

resigned from their position, retired, or were promoted to non-examiners positions within the 

FDIC; this figure represents a 9-percent increase from the prior year. According to RMS 

surveys of managers of departing examiners, a significant portion of the attrition rate attributable 

to resigning examiners was dissatisfaction with the amount of travel required to conduct 

examinations. The FDIC has noted that safety and soundness examiners spent an average of 

89 nights per year away from home, more than 24 percent of the year.

101 

100 As of July 31, 2019, the FDIC’s Corporate University had 142 employees training for examiner commissions. 

Examiners are assigned to Corporate University during their first year of training. 

101 Statement of Jelena McWilliams, FDIC Chairman, on Oversight of Financial Regulators before the United States 

Senate Committee on Banking, Housing, and Urban Affairs, (December 5, 2019). 
2019

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Examiner attrition is costly. The FDIC invests an average of $620,000 per person to train new 

hires to become commissioned examiners over the period of 4 years (an average of 

approximately $155,000 annually per examiner).102 Historically, entry-level employees hired for 

examination positions must progress through the FDIC’s Corporate Employee Program (CEP) 

rotational year, be assigned to a Division, and then meet benchmarks, complete training, and 

meet technical requirements to become commissioned examiners.103 

During the 4-year examiner pre-commissioning, the FDIC loses between 7 and 8 percent of 

participants each year at an average cost of about $1.3 million per year. For example, 

according to RMS statistics, for the five CEP cohorts from 5 years ago (the class of 2014), 

35 percent of participants departed before completion of the 4-year commissioning process. 

In August 2019, the FDIC announced changes to its approach for recruiting, hiring, and training 

examiners. The planned changes are aimed at improving the process for hiring new examiners 

and reducing the time for an examiner to attain commission by 6 to 8 months. We have ongoing 

work to evaluate the FDIC’s allocation and retention of human capital for the examination 

function. 

The FDIC should also align its human capital strategy to meet the challenges of rapidly 

changing bank technology. Community banking is increasingly dependent on a model that 

relies on technology provided by third-party partners, such as credit bureaus and payment 

networks, but it also includes new customer-facing and back-office collaborators.104 The FDIC 

should have examination staff that understands new technology in order to examine risks. 

The FDIC should take a strategic approach to align its human capital management with current 

and future mission requirements, including technology changes. Addressing human capital 

holistically from planning through retirement allows the FDIC to maximize performance and 

manage the waves of retirements and attrition. 

7|KEEPING FDIC FACILITIES, INFORMATION, AND PERSONNEL SAFE AND SECURE 

The FDIC is responsible for protecting approximately 6,000 employees and 3,000 contract 

personnel who work at 94 FDIC-owned or leased facilities throughout the country. The FDIC is 

also custodian of 338 systems containing sensitive information about banks and PII of employees, 

contractors, bank management, and bank deposit holders. A total of 174 of the FDIC’s 338 IT 

systems contain what the agency deems to be “sensitive PII.” The FDIC is challenged to have 

appropriate processes in place to safeguard facilities, information, and personnel. 

According to the Worldwide Threat Assessment of the US Intelligence Community105 (2018) 

(Threat Assessment), foreign intelligence agencies, terrorist groups, and criminal organizations 

strive to gain access to proprietary information from the finance industry and attempt to recruit 

sources such as trusted insiders.106 According to Verizon’s 2018 Data Breach Investigations 

102 Average costs per examiner are based on RMS calculations for the five cohorts of new hires for 2014. 103 The FDIC is eliminating the CEP program in 2020. 104 Accenture, Banking Technology Vision 2019. Governor Michelle W. Bowman, Community Banking in the Age of 

Innovation, at the “Fed Family” Luncheon at the Federal Reserve Bank of San Francisco, San Francisco, California, 

(April 11, 2019). 105 Statement for the Record: Worldwide Threat Assessment of the US Intelligence Community (February 13, 2018). 106 Statement for the Record: Worldwide Threat Assessment of the US Intelligence Community (February 13, 2018). 
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Report, one-third of all cyber breaches of government information is the result of privilege 

misuse and errors by insiders.107 A Carnegie Mellon University paper entitled Analytic 

Approaches to Detect Insider Threats estimated the cost of an insider attack to be $445,000.108 

With an average of 3.8 insider attacks per organization per year across all industries, annual 

costs to an organization can reach $1.7 million.109 

According to the GAO, a background investigation program should ensure the identification and 

assessment of individuals with criminal histories and questionable behavior.110 Background 

investigations “minimize the risks of unauthorized disclosures of classified information and ... 

help ensure that information about individuals with criminal histories or other questionable 

behavior is identified and assessed.”111 

Also, Federal managers and supervisors are responsible for assessing facility risk, assigning 

facility security levels, and determining whether implemented countermeasures effectively 

mitigate risk.112 Further, Federal agencies must protect the PII and sensitive information they 

possess. PII includes any information about an individual maintained by an agency, including 

(1) any information that can be used to distinguish or trace an individual’s identity, such as 

name, Social Security Number (SSN), date and place of birth, mother‘s maiden name, or 

biometric records; and (2) any other information that is linked or linkable to an individual, such 

as medical, educational, financial, and employment information. PII protection includes 

information contained in IT systems as well as other forms. In March 2019, the GAO identified 

the protection of privacy and sensitive data as a major challenge for the Federal Government.113 

As of June 2018, the FDIC reported that it maintained 338 information systems containing PII, 

including 174 systems that contain what the agency deems to be “sensitive PII.” 

Implementing Risk-Based Physical Security Management 

The FDIC maintains 94 leased or owned facilities across the country that house approximately 

9,000 FDIC employees and contractors. In our evaluation report, The FDIC’s Physical Security 

Risk Management Process (April 2019), we assessed whether physical security risk 

management processes met Federal standards and guidelines. We concluded that the FDIC 

had not established an effective physical security risk management process to ensure that it met 

ISC standards and guidelines. 

We found that the FDIC frequently did not document its decisions regarding facility security risks 

and countermeasures, and such decisions were not guided by defined policies or procedures. 

Instead, FDIC officials relied on a few experienced employees to make important decisions 

regarding physical security risks and countermeasures at facilities. Without documentation of 

107 Verizon, 2018 Data Breach Investigations Report, (11th Edition). 108 Carnegie Mellon University Software Engineering Institute, Analytic Approaches to Detect Insider Threats, 

(December 9, 2015). 109 Carnegie Mellon University Software Engineering Institute, Analytic Approaches to Detect Insider Threats, 

(December 9, 2015). 110 GAO, High-Risk List: Substantial Efforts Need to Achieve Greater Progress on High-Risk Areas, GAO-19-157SP, 

(March 6, 2019). 111 GAO, GAO Adds Government-wide Personnel Security Clearance Process to “High Risk List,” GAO Press 

Release, (January 25, 2018). 112 In 1995, President Clinton, by Executive Order 12977 (October 19, 1995), created the Interagency Security 

Committee (ISC) in order to issue standards, policies, and best practices to enhance the quality and effectiveness of 

security in non-military Federal facilities in the United States. 113 GAO, High-Risk Series: Substantial Efforts Needed to Achieve Greater Progress on High-Risk Areas, GAO-19-

157SP, (March 6, 2019). 
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these decisions, FDIC executives and oversight bodies were unable to fully consider and review 

the decisions. 

We also found that the FDIC did not conduct key activities in a timely or thorough manner for 

determining facility risk level, assessing security protections in the form of countermeasures, 

mitigating and accepting risk, and measuring program effectiveness. For example, for one of its 

medium-risk facilities, the FDIC began, but did not complete, an assessment more than 

21⁄2 years after the FDIC occupied the leased space. Collectively, these weaknesses limited the 

FDIC’s assurance that it met Federal standards for physical security over its facilities. We made 

nine recommendations to address the weaknesses in the FDIC’s physical security risk 

management process, and five remained unimplemented at the time of this report. 

Securing Sensitive and Personally Identifiable Information 

During 2016, the FDIC reported a series of breaches to Congress as departing employees 

improperly downloaded sensitive PII, including SSNs, to removable media devices shortly 

before leaving the FDIC. Collectively, these breaches potentially affected over 121,000 

individuals. We reported on the FDIC’s handling of these breaches and its associated controls 

in four prior reports.114 In our audit report, The FDIC’s Processes for Responding to Breaches 

of Personally Identifiable Information (September 2017), we found that the FDIC had processes 

to evaluate the harm to individuals affected by a breach, but the FDIC did not adequately 

implement those processes. For example, it took the FDIC more than 9 months to notify 

individuals affected by a breach. Further, in our OIG Special Inquiry115 (April 2018) report we 

noted systemic weaknesses that hindered the FDIC’s ability to respond to multiple information 

security incidents and breaches efficiently and effectively. The FDIC addressed the 

20 recommendations we made in these two reports. 

In our audit report, The FDIC’s Privacy Program (December 2019), we assessed the 

effectiveness of the FDIC’s Privacy Program and practices by determining whether the FDIC 

complied with selected provisions in privacy-related statutes and OMB policy and guidance.116 

The FDIC’s Privacy Program was effective in certain areas. Specifically, the FDIC had 

implemented a privacy awareness and training program; identified its privacy staffing and 

budgetary needs; established privacy competency requirements for key staff; and took steps to 

ensure contractor compliance with privacy programs. However, we found that the FDIC’s 

controls and practices for its Privacy Program in four areas assessed were either partially 

effective or not effective, because they did not comply with all relevant privacy laws and/or OMB 

policy and guidance. Specifically, the FDIC did not: 

114 See OIG Reports, The FDIC’s Process for Identifying and Reporting Major Information Security Incidents (FDIC 

OIG AUD-16-004) (July 2016, revised February 2017); The FDIC’s Processes for Responding to Breaches of 

Personally Identifiable Information (FDIC OIG AUD-17-006) (September 2017); Controls over Separating Personnel’s 

Access to Sensitive Information (FDIC OIG EVAL-17-007) (September 2017); and The FDIC’s Response, Reporting, 

and Interactions with Congress Concerning Information Security Incidents and Breaches (FDIC OIG-18-001) 

(April 2018). 115 OIG Special Inquiry Report, The FDIC’s Response, Reporting, and Interactions with Congress Concerning 

Information Security Incidents and Breaches (April 2018). 116 Privacy Act of 1974, 5 U.S.C. § 552a; Section 208 of the E-Government Act of 2002, Pub. L. No. 107-347, 116 

Stat. 2899 (codified at 44 U.S.C. § 3501 note); Section 522 of the Consolidated Appropriations Act of 2005, Pub. L. 

No. 108-447, 118 Stat. 2809, amended by Consolidated Appropriations Act of 2008, Pub. L. No. 110-161, 121 Stat. 

1844 (codified as amended at 42 U.S.C. § 2000ee-2); Designation of Senior Agency Officials for Privacy (OMB 

Memorandum M-05-08) (February 11, 2005); OMB Circular A-130, Managing Information as a Strategic Resource 

(July 28, 2016). 
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 Fully integrate privacy considerations into its risk management framework designed to 

categorize information systems, establish system privacy plans, and select and 

continuously monitor system privacy controls; 

 Adequately define the responsibilities of the Deputy Chief Privacy Officer or implement 

Records and Information Management Unit responsibilities for supporting the Privacy 

Program; 

 Effectively manage or secure PII stored in network shared drives and in hard copy, or 

dispose of PII within established timeframes; and 

 Ensure that Privacy Impact Assessments117 were always completed, monitored, 

published, and retired in a timely manner. 

Weaknesses in the FDIC’s Privacy Program increased the risk of PII loss, theft, and 

unauthorized access or disclosure, which could lead to identity theft or other forms of consumer 

fraud against individuals. In addition, weaknesses related to the management of Privacy Impact 

Assessments reduced transparency regarding the FDIC’s practices for handling and protecting 

PII. Our report contained 14 recommendations intended to strengthen the effectiveness of the 

FDIC’s Privacy Program and practices. 

In addition, in our audit report, The FDIC’s Information Security Program – 2019 (October 2019), 

we noted that the FDIC did not adequately control access to sensitive information and PII stored 

on its internal network and in hard copy. For example, we identified instances in which sensitive 

information stored on internal network shared drives was not restricted to authorized users. We 

also conducted unannounced walkthroughs of selected FDIC facilities and identified significant 

quantities of sensitive hard copy information stored in unlocked filing cabinets and boxes in 

building hallways. 

The majority of unsecured sensitive information we found was stored in unlocked filing cabinets 

and boxes in building hallways. Examples included: 

 Confidential bank examination information, such as Reports of Examination; 

 Suspicious Activity Reports; 

 Sensitive PII, such as reports containing names, SSNs, and dates of birth; 

 Legal documents, analyses, and correspondence pertaining to investigations, litigation, 

claims, and settlements; 

 Portable storage media, including a computer hard drive and CDs/DVDs (one of which 

was marked confidential); and 

 Contracting and procurement sensitive information. 

We recommended that employees and contractor personnel properly safeguard sensitive 

electronic and hardcopy information. The FDIC took immediate action to secure information 

identified by the OIG. 

117 The E-Government Act of 2002 requires, among other things, that Federal agencies conduct Privacy Impact 

Assessments that analyze how personal information is collected, stored, shared, and managed in a Federal system. 

See Government Accountability Office, Privacy: Federal Law Should Be Updated to Address Changing Technology 

Landscape, GAO-12-961T, (July 31, 2012). 
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Securing the FDIC’s Supply Chain Figure 4: Supply Chain Risk View 

According to the GAO, the supply chain is 

“the set of organizations, people, activities, 

and resources that create and move a 

product from suppliers to end users.”118 As 

shown in Figure 4, an organization may 

have reduced visibility, understanding, and 

control of relationships with vendors who 

rely on second- and third-tier suppliers and 

service providers. Risks are realized when 

the supply chain exploits existing 

vulnerabilities though it may take years for 

such exploitation to occur or for an agency 

to discover the exploitation.119 

The GAO noted that key supply chain 

threats include: 

 Installation of hardware or software 

containing malicious logic causing significant damage by allowing attackers to take 

control of entire systems and read, modify, or delete sensitive information, disrupt 

operations, launch attacks against other organizations’ systems, or destroy systems. 

 Installation of counterfeit hardware or software threatening the integrity, trustworthiness, 

and reliability of information systems because they fail more often and more quickly, and 

provide an opportunity to insert a back door to give an intruder remote access. 

 Failure or disruption in the production or distribution of critical products, including 

manmade and natural disruptions of the supply of IT products critical to federal agencies. 

 Reliance on a malicious or unqualified service provider who can use its access to 

systems and data to gain access to information, commit fraud, disrupt operations, or launch 

attacks against other computers or networks. 

 Installation of hardware or software that contains unintentional vulnerabilities such 

that defects in code or misconfigurations can be exploited to gain access to information 

systems and data and disrupt service.120 

An example of supply chain risk is the Federal Government’s limitation on the purchase of 

telecommunications equipment from Huawei because of concern that the Chinese government 

can access phone calls and information.121 

The FDIC does not have a comprehensive, FDIC-wide supply chain risk policy. The FDIC’s 

Chief Information Officer Organization (CIOO) established a Policy on Supply Chain Risk 

Management in July 2019 that applies to CIOO employees who “participate, support, and are 

involved with the procurement and acquisition process of IT products.” Other FDIC Divisions 

and Offices are not bound by and may not be aware of the CIOO Policy. The FDIC established 

a Supply Chain Risk Management Steering Committee in 2019 to address this area of risk. We 

have work planned to assess the FDIC’s supply chain risk mitigation. 

118 GAO, Information Security: Supply Chain Risks Affecting Federal Agencies, GAO-18-667T, (July 12, 2018). 119 National Institute of Standards and Technology (NIST) Publication 800-161, Supply Chain Risk Management 

Practices for Federal Information Systems and Organizations. 120 GAO, Information Security: Supply Chain Risks Affecting Federal Agencies, GAO-18-667T, (July 12, 2018). 121 The New York Times, U.S. Moves to Ban Huawei From Government Contracts, (August 7, 2019). 

Source: NIST Publication 800-161, Supply Chain Risk 

Management Practices for Federal Information Systems and 

Organizations. 
ANNUAL 

REPORT

184 APPENDICES

OFFICE OF INSPECTOR GENERAL’S 

ASSESSMENT (continued)

 

 

 

 

 

 

 

 

 

 

 

 

Sustaining a Work Environment Free from Discrimination, Harassment, and Retaliation 

Federal facilities should also have working environments that are free from intimidating, hostile, 

or offensive behaviors. Employee behaviors such as sexual harassment can undermine an 

agency’s mission by creating a hostile work environment that lowers productivity and morale, 

affects the agency’s authority and credibility, and exposes the agency to litigation risk and costs. 

The FDIC reported receiving a total of just 9 allegations of sexual harassment over a 31⁄2-year 

period (January 2015 to June 2018). However, when the Merit Systems Protection Board 

(MSPB) conducted a survey in 2016 (based on data from 2014 to 2016), the MSPB found that 

approximately 9 percent of the 427 FDIC employees who responded to the survey 

(40 employees) indicated they had experienced sexual harassment. We have ongoing work to 

review the FDIC’s program for addressing sexual harassment allegations. 

Conducting Background Investigations 

During late 2015 and early 2016, the FDIC experienced eight incidents as departing employees 

improperly took sensitive information shortly before leaving the FDIC. Seven incidents involved 

PII, including Social Security Numbers, and thus constituted data breaches. In the eighth 

incident, the departing employee took highly sensitive components of resolution plans submitted 

by certain large systemically important financial institutions without authorization. 

FDIC employees and contractors are subject to background investigations commensurate with 

the sensitivity of their positions, scope of responsibility, and access to classified National 

Security Information.122 The FDIC’s Personnel Security and Suitability Program (PSSP) aims to 

ensure that FDIC employees and contractors have suitable character, reputation, honesty, 

integrity, and trustworthiness. A strong PSSP reduces the risk of employee or contractor 

information breaches and identifies potential issues for the FDIC’s Insider Threat Program.123 

The FDIC does not have a policy to ensure proper coordination and collaboration among its 

PSSP and its Insider Threat Program. As a result, program interconnections are made at the 

discretion of program personnel. Absent standard criteria for the referral of potential insider 

threat issues from the PSSP to the Insider Threat Program Manager, threat information may not 

be shared. We have an evaluation underway to assess the current state of the FDIC’s 

Personnel Security and Suitability Program. 

The protection of employees, contractors, facilities, and information is paramount for the 

execution of the FDIC’s mission and the protection of the privacy of FDIC personnel and 

contractors as well as financial institution customers and employees. The FDIC should ensure 

that it implements appropriate controls to assess the suitability of its employees and contractors 

and provide them with safe facilities in which to conduct their work. FDIC employees and 

contractors must also be responsible in protecting sensitive information and individual privacy. 

122 FDIC Circular 1610.2, Personnel Security Policy and Procedures for FDIC Contractors; Circular 1600.3, National 

Security Program; and Circular 2120.1, Personnel Suitability Program. 123 Security Executive Agent Directive 3, Reporting Requirements for Personnel with Access to Classified Information 

or Who Hold a Sensitive Position, (June 12, 2017). 
2019

APPENDICES 185 

OFFICE OF INSPECTOR GENERAL’S 

ASSESSMENT (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

8|ADMINISTERING THE ACQUISITION PROCESS 

The FDIC relies on contractors for day-to-day support of its mission. In 2018, the FDIC spent 

nearly $500 million on contracts, with the largest expenditures for IT and administrative support 

services. The FDIC currently oversees acquisitions on a contract-by-contract basis—rather than 

on a portfolio-wide basis—and it does not have an effective contracting management information 

system to readily gather, analyze, and report portfolio-wide contract information across the 

Agency and does not maintain certain key data elements. Therefore, FDIC officials cannot readily 

analyze historical contracting trends across the portfolio and identify anomalies. In addition, 

contracting demands are expected to increase as the FDIC modernizes its IT program and 

systems and moves to cloud computing. Further, FDIC contracting staff may experience 

significant spikes in contracting work during periods of crises. FDIC contract oversight should 

also include consideration of supply chain risks for acquired products and services. 

According to the GAO, about 40 percent of the Government’s discretionary spending is for 

goods and services contracts.124 In Fiscal Year 2018, the Federal Government spent more than 

$550 billion on these contracts, an increase of more than $100 billion from 2015. The 

Administration found that major government acquisitions often failed to achieve their goals 

because of project management skill shortcomings among Federal procurement staff.125 

Similarly, the GAO found that Federal agencies continue to award management support service 

contracts but raised questions about agencies’ capacity to manage those contracts.126 

Specifically, the GAO identified three challenges aligned with the contracting life cycle: 

(1) requirements definition, (2) competition and pricing, and (3) contractor oversight. The GAO 

noted that heavy workloads of contract officials at one agency made it difficult for them to 

oversee contracts and ensure contractors’ adherence to contract terms.

127 

The FDIC procures goods and services to augment its internal resources and help the Agency 

achieve its mission. FDIC contracting requirements increase significantly during times of crises 

to address the FDIC’s receivership responsibilities. The FDIC DOA Acquisition Services Branch 

(ASB) works with Oversight Managers (OMs) from FDIC Divisions and Offices to provide 

oversight of FDIC procurements. As shown in Figure 5, ASB awarded more than 

2,400 contracts valued at over $1.5 billion over a 3-year period from 2016 to 2018. The average 

annual awarded amount per contract for these 3 years was more than $675,000. 

124 GAO WatchBlog, Federal Government Contracting for Fiscal Year 2018 (infographic) posted May 28, 2019. GAO 

launched its WatchBlog in January 2014, as part of its continuing effort to reach its audiences—Congress and the 

American people—where they are currently looking for information. 125 President’s Management Agenda, (March 20, 2018). 126 GAO, Federal Acquisitions: Congress and the Executive Branch Have Taken Steps to Address Key Issues, but 

Challenges Endure, GAO-18-627, (September 2018). 127 GAO, Federal Acquisitions: Congress and the Executive Branch Have Taken Steps to Address Key Issues, but 

Challenges Endure, GAO-18-627, (September 2018) (Heavy workloads were noted for the Department of Veterans 

Affairs.) 
ANNUAL 

REPORT

186 APPENDICES

OFFICE OF INSPECTOR GENERAL’S 

ASSESSMENT (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 5: FDIC Total Dollar Value of Contract Awards 2016-2018 

 485,000,000

 490,000,000

 495,000,000

 500,000,000

 505,000,000

 510,000,000

 515,000,000

 520,000,000

 525,000,000

 530,000,000 

Total Awarded Amount 

2016 

2017 

2018 

Source: FDIC Analysis of FDIC Contract Awards. 

In 2018, the FDIC’s DIT, DOA, and DRR accounted for over 96 percent of contracts and 

contracting dollar awards. The Chief Information Officer Organization identified specific 

acquisition strategies to sustain legacy systems, modernize information technology, and adapt 

to change. DIT expects to increase contracting activity as it implements the FDIC’s IT 

Modernization Plan. 

Strengthening FDIC Contract Oversight 

Our evaluation report, Contract Oversight Management (October 2019), concluded that the 

FDIC must strengthen its contract oversight management. We found that the FDIC needed to 

improve its contracting management information system, contract documentation, the training 

and certification of certain OMs, and workload capacity of OMs for one Division. 

Specifically, we found that the FDIC was overseeing acquisitions on a contract-by-contract basis 

rather than on a portfolio basis and did not have an effective contracting management 

information system to readily gather, analyze, and report portfolio-wide contract information 

across the Agency. For example, the FDIC's contracting system did not maintain certain key 

data in a manner necessary to conduct historical trend analyses, plan for future acquisition 

decisions, and assess risk in the FDIC's awarded contract portfolio. As a result, FDIC Board 

Members and other senior management officials were not provided with a portfolio-wide view or 

the ability to analyze historical contracting trends across the portfolio, identify anomalies, and 

perform ad hoc analyses to identify risk or plan for future acquisitions. 

Additionally, 20 percent of the contracts executed between 2013 and 2017 (1,518 of 7,786) did 

not have contract pricing arrangement information entered into the FDIC’s Automated 

Procurement System. Without complete data, the FDIC cannot readily analyze the contract 

pricing arrangements across the FDIC’s contract portfolio. 

We also found that contract files maintained by OMs were often incomplete, and that OMs were 

unable to produce the missing contract documentation, such as critical records relating to 

inspection and acceptance. Without this documentation, the FDIC could incur additional costs 

to recover or replace lost documentation and could have difficulty enforcing the contract in the 

event of contractor noncompliance. 

Further, OMs improperly uploaded contractor deliverable documentation containing PII to the 

FDIC’s contacting system known as CEFile for one of our four sampled contracts covering 
2019

APPENDICES 187 

OFFICE OF INSPECTOR GENERAL’S 

ASSESSMENT (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

property management services for failed bank properties. Because CEFile was not identified as 

a system to retain PII, the FDIC was not monitoring CEFile for PII. Therefore, there was a risk 

that the PII in CEFile could be improperly accessed, printed, and removed. The FDIC 

subsequently took action to remove the PII from CEFile. 

We also found that the workload for OMs in DIT was 67-percent higher than another FDIC 

Division with a similar-sized contract portfolio. DIT acknowledged that insufficient OM capacity 

put it at risk for ineffective oversight. We made 12 recommendations in the Contract Oversight 

Management report. 

In two previous OIG evaluation reports, we identified similar issues involving DIT oversight. 

 In Payments to Pragmatics, Inc. (December 2018), we determined that about 10 percent 

of the labor charges we reviewed were not adequately supported or allowable under the 

contract and related task orders. The unsupported labor charges were for hours billed 

by two subcontractor employees who did not access the FDIC’s network or facilities on 

the days they charged the hours. In addition, we identified unallowable labor charges for 

work performed offsite, away from FDIC facilities. 

 In the FDIC’s Failed Bank Data Services Project (March 2017), we reviewed transition 

costs ($24.4 million) of a 10-year project to replace the FDIC’s information systems for 

processing bank data for failed financial institutions. We found that the FDIC faced 

challenges related to defining contract requirements, coordinating contracting and 

program office personnel, and establishing implementation milestones. We reported that 

FDIC personnel did not fully understand the requirements for transitioning failed financial 

institution data and services to a new contractor, or communicate these requirements to 

bidders in a comprehensive transition plan as part of the solicitation. Further, the FDIC 

did not establish clear expectations in the contract documents and did not implement a 

project management framework and plans. 

Reviewing for Supply Chain Risk 

When an agency contracts for goods and services that will be introduced into its environment, 

the agency might encounter risks related to product and service supply chains. Management of 

supply chain risk requires “ensuring the integrity, security, quality, and resilience of the supply 

chain and its products and services.”128 

Supply chain risk is not limited to equipment. Contractor personnel also pose security risks to 

organizations, especially contractors involved in systems development. Contractors with 

malicious intent may be able to insert harmful hardware or malicious code into FDIC systems. 

NIST advises organizations to take a holistic, enterprise-wide approach to managing supply 

chain risks.129 Organizational best practices include executive-level involvement in supply chain 

risk management decision-making and cross-functional leadership structures to break down 

silos. In addition, as required by statute, OMB has initiated a Federal Acquisition Security 

128 NIST, Cyber Supply Chain Risk Management, (May 24, 2016). 129 NIST Special Publication 800-161, Supply Chain Risk Management for Federal Information Systems and 

Organizations, (April 2015). 
ANNUAL 

REPORT

188 APPENDICES

OFFICE OF INSPECTOR GENERAL’S 

ASSESSMENT (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

Council to assist Federal agencies in determining supply chain risk, sharing supply chain risk 

information, and deciding on actions to mitigate risk.130 

As mentioned previously, the FDIC does not have a comprehensive, FDIC-wide supply chain 

risk policy. The FDIC’s CIOO has a supply chain risk policy applicable to CIOO IT 

procurements. Thus, FDIC personnel outside the CIOO are not currently required to consider or 

mitigate supply chain risks as part of procurement activities. 

Further, the responsibility of managing FDIC supply chain risk is not within the FDIC’s 

contracting staff but is a collateral duty for the FDIC’s Insider Threat Program Manager. As a 

result, supply chain risk management is not the focus of those involved in the contracting 

process. The FDIC established a Supply Chain Risk Management Steering Committee in 2019 

to address this area of risk. We will be monitoring and assessing the FDIC’s efforts in this 

regard. 

Contracting is an important function at the FDIC because of the Agency’s reliance on 

outsourced services, especially during times of crises. In order to establish an effective 

contracting oversight program, the FDIC should maintain a contracting system that can readily 

provide an adequate portfolio-wide view of the Agency’s acquisitions. In addition, the FDIC 

should establish an effective program to manage and mitigate supply chain risks. 

9|MEASURING COSTS AND BENEFITS OF FDIC REGULATIONS 

Financial regulations significantly affect banks and their customers. The FDIC does not 

currently have a consistent process in place to determine when and how to conduct cost benefit 

analysis in order to ensure that the benefits of a regulation justify its costs. Further, the FDIC 

does not have criteria in place to distinguish among rules which are sufficiently “significant” to 

require cost benefit analysis. Absent clear processes and criteria, demonstrating that FDIC 

regulations justify their costs remains a fundamental challenge. We also note that the FDIC 

does not conduct retrospective cost benefit analyses on existing rules. Performing such 

analyses would help the FDIC ensure that its rules are effective and achieve their intended 

objectives/outcomes. 

According to a study by the Federal Reserve Bank of St. Louis, regulatory compliance costs as 

a percentage of overall non-interest expense for small banks are nearly twice those of larger 

banks.131 As shown in Figure 6, for the years of 2015 through 2017, small banks (less than 

$100 million in assets) incurred total compliance costs at 9.8 percent of their noninterest 

expenses. By comparison, banks with $1 to $10 billion in assets had compliance costs at 

5.3 percent of their noninterest expenses for the same period. 

130 Director of National Intelligence, Supply Chain Risk Management, National Supply Chain Integrity Month, 

(April 24, 2019). See also The Strengthening and Enhancing Cyber-capabilities by Utilizing Risk Exposure 

Technology Act of 2018, Public Law No. 115-390 (December 21, 2018) (“SECURE Technology Act”). Title II of the 

Act established the Federal Acquisition Security Council (FASC). 131 Federal Reserve Bank of St. Louis, Compliance Costs, Economies of Scale and Compliance Performance, 

Evidence from a Survey of Community Banks, (April 2018). 
2019

APPENDICES 189 

OFFICE OF INSPECTOR GENERAL’S 

ASSESSMENT (continued)

 

 

 

 

 

 

 

 

 

 

 

Source: Federal Reserve Bank of St. Louis, April 2018.

Figure 6: Total Compliance Expenses as a Percentage 

of Noninterest Expenses 

In August 2018, the FDIC Chairman 

stated that a top priority for the Agency 

was to review the regulatory burden on 

small banks.132 She further emphasized 

the need to balance regulatory safety 

and soundness requirements without 

impeding banks’ ability to compete. The 

challenge, she indicated, is to ensure 

that FDIC regulations are appropriate to 

the size and complexity of the banks 

that the FDIC supervises.133 

Quantifying Costs and Benefits 

According to the FDIC’s Statement of 

Policy on the Development and Review 

of Regulations and Policies, the FDIC 

uses available information to evaluate 

the costs and benefits of reasonable 

and potential regulations or statements 

of policy. Quantifying both the costs and 

benefits of significant financial regulations is challenging, and it often may be imprecise and 

unreliable.

134 Performing such analysis can be difficult, because it involves theory, modeling, 

statistical analysis, and other tools to predict future outcomes based on certain assumptions.135 

For example, it may be difficult to estimate the cost of a financial crisis and the benefits of 

regulations aimed to eliminate the crisis.

136 Congress acknowledged the difficulty in measuring 

costs and benefits when introducing the Independent Agency Regulatory Analysis Act 

(March 25, 2019). This Act requires agencies to “assess the costs and benefits of the intended 

rule and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a 

rule only upon a reasoned determination that the benefits of the rule justify the costs.”137 

In our evaluation report, Cost Benefit Analysis Process for Rulemaking (February 2020), we 

evaluated whether the FDIC’s cost benefit analysis process for rules was consistent with best 

practices. We found that the FDIC’s cost benefit analysis was not consistent with best 

practices, because the FDIC did not: 

 Establish and document a process to determine when and how to perform a cost benefit

analysis;

 Leverage the expertise of its economists when rules were initially developed;

 Require the FDIC Chief Economist to concur on the cost benefit analyses performed;

 Disclose its cost benefit analyses to the public; and

 Perform cost benefit analyses after final rule issuance.

132 Wall Street Journal, New FDIC Leader Joins Push to Re-Evaluate Banking Rulebook, (August 6, 2018). 133 Jelena McWilliams, FDIC Chairman, “Principles of Supervision,” delivered at the American Bar Association 

Banking Law Committee Annual Meeting (January 11, 2019). 134 Yale Law Review, Cost-Benefit Analysis of Financial Regulation: A Reply, (January 22, 2015). 135 Congressional Research Service, Cost-Benefit Analysis and Financial Regulator Rulemaking, (April 12, 2017). 136 The University of Chicago Journal of Legal Studies, Challenges for Cost-Benefit Analysis of Financial Regulation, 

(June 2014). 137 Independent Agency Regulatory Analysis Act, S. 869, United States Senate, (March 26, 2019). 
ANNUAL 

REPORT

190 APPENDICES

OFFICE OF INSPECTOR GENERAL’S 

ASSESSMENT (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 7: Cost Benefit Analysis Performance 

Source: OIG analysis of FDIC rules published in the

Federal register.

The FDIC’s rulemaking process resulted in inconsistent practices for conducting cost benefit 

analyses. As shown in Figure 7, based on our review of rules promulgated by the FDIC from 

January 2016 to December 2018, we found that the FDIC performed cost benefit analyses on 

37 percent of the final rules published in the 

Federal Register. The FDIC did not explain in the 

accompanying Federal Register notices why 

15 rules needed a cost benefit analysis and the 

other 25 rules did not. These rules lacking a cost 

benefit analysis included both substantive rules 

and technical modifications. 

The FDIC also did not have an established 

process for determining how to perform cost 

benefit analyses. Based on our review, we found 

that the FDIC performed an in-depth cost benefit 

analysis138 on only 10 percent of the final rules 

published in the Federal Register. 

In addition, the depth of analysis that the FDIC 

performed did not always align with the rule’s 

degree of significance.139 We found substantive rules without corresponding cost benefit 

analyses, and less substantive rules with cost benefit analyses. The process used by the FDIC 

did not ensure that the Agency identified and defined a proposed rule’s degree of significance, 

and that the Agency appropriately and consistently analyzed costs and benefits. 

We also noted that the FDIC did not conduct retrospective cost benefit analyses on existing 

rules.140 Without performing cost benefit analyses of existing rules, the FDIC may not identify 

duplicative, outdated, or overly burdensome rules in a timely manner. In addition, the FDIC may 

not ensure that its rules are effective and achieve their intended objectives/outcomes. We 

made five recommendations to the FDIC to improve the cost benefit analysis in its rulemaking 

process. 

138 The OIG defines an “in-depth” cost benefit analysis as a cost benefit analysis that contains supporting quantitative 

and qualitative data and analysis of the proposed action and main alternatives identified. 139 Executive Order 12866 advises Federal agencies, not including the FDIC, to conduct in-depth cost benefit 

analyses for certain significant regulatory actions. The order defines significant regulatory action as any regulatory 

action that is likely to result in a rule that may: (1) have an annual effect on the economy of $100 million or more, or 

adversely affect in a material way the economy, or a sector of the economy, productivity, competition, jobs, the 

environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious 

inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the 

budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients 

thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the 

principles set forth in this order. 140 Under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA) (12 U.S.C. § 3311 

(1996)), the FFIEC and certain member agencies (Federal bank regulators – FDIC, OCC, and FRB), and the NCUA 

(as a participating member), are directed to conduct a joint review of their regulations every 10 years and to consider 

whether any of those regulations are outdated, unnecessary, or unduly burdensome. Since Congress enacted 

EGRPRA in 1996, the FDIC (jointly with other agencies under the FFIEC) has completed two reviews and submitted 

two reports to Congress – the first report was submitted in 2007 and the second report was submitted in 2017. The 

FDIC performed these reviews over a period of several years, and commenced the second EGRPRA review in 2014. 

The FDIC’s EGRPRA review process was a reactive review process that relied solely on public comments to identify 

and initiate Agency action on rules that may be outdated, unnecessary, or unduly burdensome. 
2019

APPENDICES 191 

OFFICE OF INSPECTOR GENERAL’S 

ASSESSMENT (continued)

 

 

 

On December 3, 2019, the FDIC issued a Request for Information seeking comment on 

approaches to analyzing the effects of its regulatory actions and alternatives. In addition, on 

November 4, 2019, the FDIC announced a reorganization that moved the regulatory analysis 

function from the Office of the Chief Economist to the Research and Regulatory Analysis 

Branch, which also houses the FDIC’s Center for Financial Research. We will continue to 

monitor this realignment. 

The FDIC should accurately measure costs and benefits to ensure that regulations strike the 

proper balance between the safety and soundness at institutions and regulatory burden. Also, 

the FDIC should have transparent processes in place to obtain and assess reliable information 

to measure the impact of regulatory action. Absent such processes, FDIC rules may impose 

burdensome costs on banks and consumers. 
192 APPENDICES 

D. ACRONYMS AND INITIALISMS

ACLs Allowances for Credit Losses

AEI Alliance for Economic Inclusion

AFS Available-For-Sale

AHDP Affordable Housing Disposition 

Program

ALLL Allowance for Loan and Lease Losses

AML Anti-Money Laundering

ANPR Advanced Notice of Proposed 

Rulemaking

ASBA Association of Supervisors of Banks 

of the Americas

ASC Accounting Standards Codification

BCBS Basel Committee on Banking 

Supervision

BDC Backup Data Center

BoA Bank of America

BSA Bank Secrecy Act

BSA/AML Bank Secrecy Act/ Anti-Money 

Laundering

Call Report Consolidated Reports of Condition and 

Income

CAMELS adequacy of Capital, quality of Assets, 

capability of Management, quality and 

level of Earnings, adequacy of Liquidity, 

and Sensitivity to market risk

CBAC Advisory Committee on Community 

Banking

CBLR Community Bank Leverage Ratio

CCP Central Counterparties

CDFI Community Development Financial 

Institution

CECL Current Expected Credit Losses

CEO Chief Executive Officer

CEP Corporate Employee Program

CFI Complex Financial Institution

CFO Act Chief Financial Officers’ Act

CFPB Consumer Financial Protection Bureau

CFR Center for Financial Research

CFTC Commodity Futures Trading 

Commission

CIO Chief Information Officer

CIOO Chief Information Officer Organization

CISR Division of Complex Institution 

Supervision and Resolution

CMG Crisis Management Group

CMP Civil Money Penalty

ComE-IN Advisory Committee on Economic 

Inclusion

CRA Community Reinvestment Act

CSBS Conference of State Bank Supervisors

CSRS Civil Service Retirement System

D&I Diversity and Inclusion

DCP Division of Depositor and Consumer 

Protection

DFA Dodd-Frank Act

DHS Department of Homeland Security

DIF Deposit Insurance Fund

DIR Division of Insurance and Research

DIT Division of Information Technology

DOA Division of Administration

DOJ Department of Justice

DRR Designated Reserve Ratio

DRR (FDIC) Divisionof Resolutions and 

Receiverships

EAC Executive Advisory Council

EDIE Electronic Deposit Insurance Estimator

EGRPRA Economic Growth and Regulatory 

Paperwork Reduction Act of 1996

EGRRCPA Economic Growth, Regulatory Relief, 

and Consumer Protection Act

EU European Union

ERM Enterprise Risk Management

FAQ Frequently Asked Questions

FASB Financial Accounting Standards Board

FBIIC Financial and Banking Information 

Infrastructure Committee

FBO Foreign Bank Organization

FCA Farm Credit Administration

ANNUAL 

REPORT
2019

APPENDICES 193

FDI Act Federal Deposit Insurance Act

FDIC Federal Deposit Insurance Corporation

FDiTech FDIC Tech Lab

FEHB Federal Employees Health Benefits

FEMA Federal Emergency Management 

Agency

FERS Federal Employees Retirement System

FFB Federal Financing Bank

FFIEC Federal Financial Institutions 

Examination Council

FFMIA Federal Financial Management 

Improvement Act

FHFA Federal Housing Finance Agency

FICO Financing Corporation

FIL Financial Institution Letter

FinCEN Financial Crimes Enforcement Network

FINRA Financial Industry Regulatory 

Authority

FinTech Financial Technology

FIRREA Financial Institutions Reform, Recovery 

and Enforcement Act

FIS Financial Institution Specialists

FISMA Federal Information Security 

Modernization Act of 2014

FMFIA Federal Managers’ Financial Integrity 

Act

FRB Board of Governors of theFederal 

Reserve System

FRF FSLIC Resolution Fund

FSB Financial Stability Board

FS-ISAC Financial Services Information Sharing 

and Analysis Center

FSLIC Federal Savings and Loan Insurance 

Corporation

FSOC Financial Stability Oversight Council

FTE Full-Time Equivalent

GAAP Generally Accepted Accounting 

Principles

GAO U.S. Government Accountability Office

GPRA GovernmentPerformanceandResults 

Act

G-SIBs Global Systemically Important Banks

HVCRE High Volatility Commercial Real 

Estate

HMDA Home Mortgage Disclosure Act

IADI International Association of Deposit 

Insurers

IDI Insured Depository Institution

IHCs Intermediate Holding Companies

IMF International Monetary Fund

IMM Internal Models Method

InTREx Information Technology Risk 

Examination Program

ISM Information Security Manager

IT Information Technology

LBSB Large Bank Supervision Branch

LCFIs Large and Complex Financial 

Institutions

LIBOR London Inter-bank Offered Rate

LIDI Large Insured Depository Institution

LURA Land Use Restriction Agreement

MDI Minority Depository Institutions

MOL Maximum Obligation Limitation

MOU Memoranda of Understanding

MRBA Matters Requiring Board Attention

MWOB Minority- and Women-Owned Business

MWOLF Minority-and Women-Owned Law 

Firms

NCUA National Credit Union Administration

NIST National Institute of Standards and 

Technology

NPR Notice of Proposed Rulemaking

NSFR Net Stable Funding Ratio

OCC Office of the Comptroller of the 

Currency

OCFI Office of ComplexFinancial 

Institutions

OIG Office of the Inspector General

OJT On-the-Job Training

OLF Orderly Liquidation Fund

OMB U.S. Office of Management and Budget
194 APPENDICES 

OMWI Office of Minority and Women 

Inclusion

OO Office of the Ombudsman

OPM U.S. Office of Personnel Management

OTACs One-Time Assessment Credits

OTS Office of Thrift Supervision

P&A Purchase and Assumption

PCM Privacy Continuous Monitoring

PII Personally Identifiable Information

PTFA Protecting Tenants at Foreclosure Act

Q&A Questions and Answers

QBP Quarterly Banking Profile

REFCORP Resolution Funding Corporation

REMA Reasonably Expected Market Area

ReSG FSB’s Resolution Steering Group

RESPA Real Estate Settlement Procedures Act

RMIC Risk Management and Internal 

Controls

RMS Division of Risk Management 

Supervision

RTC Resolution Trust Corporation

SA-CCR Standardized Approach for 

Counterparty Credit Risk 

SBA Small Business Administration

SEC Securities and Exchange Commission

SIFI Systemically Important Financial 

Institution

SLA Shared-Loss Agreement

SMS Systemic Monitoring System

SNC Shared National Credit Program

SOC Security Operations Center

SORNs System of Record Notices

SRAC Systemic Resolution Advisory 

Committee

SRR SIFI Risk Report

SSGN Structured Sale of Guaranteed Note

TILA Truth in Lending Act

TRID TILA RESPA Integrated Disclosure 

Rule

TSP Federal Thrift Savings Plan

TSP (IT-related) Technology Service Providers

URSIT Uniform Rating System for 

Information Technology

VIEs Variable Interest Entities

WARM Weighted Average Remaining Maturity

YSP Youth Savings Program

ANNUAL 

REPORT
NOTES
NOTES
2019

Federal Deposit 

Insurance Corporation

This Annual Report was produced by talented and dedicated staff. 

To these individuals, we would like to offer our sincere thanks 

and appreciation. Special recognition is given to the following 

for their contributions:

❏ Jannie F. Eaddy 

❏ Barbara A. Glasby

❏ Financial Reporting Section Staff

❏ Division and Office Points-of-Contact

FEDERAL DEPOSIT INSURANCE CORPORATION
FEDERAL DEPOSIT INSURANCE CORPORATION

H H H

H H H

550 17th Street, N.W.

Washington, DC 20429-9990

www.fdic.gov

FDIC-003-2020