FEDERAL

DEPOSIT

INSURANCE

CORPORATION

ANNUAL REPORT 2013
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FEDERAL

DEPOSIT

INSURANCE

CORPORATION

ANNUAL REPORT 2013
ANNUAL REPORT 2013

2 FEDERAL DEPOSIT INSURANCE CORPORATION

FEDERAL DEPOSIT INSURANCE CORPORATION

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

March 14, 2014

Dear Sir,

In accordance with:

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

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

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

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

♦ the Reports Consolidation Act of 2000,

the Federal Deposit Insurance Corporation (FDIC) is pleased to submit its 2013 Annual Report (also referred to as the 

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

(DIF) and the Federal Savings and Loan Insurance Corporation (FSLIC) Resolution Fund (FRF). 

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

contained in this report. No material inadequacies were found, and the data are considered to be complete and reliable.

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

the FDIC can provide reasonable assurance that the objectives of Section 2 (internal controls) and Section 4 (financial 

management systems) of the Federal Managers’ Financial Integrity Act of 1982 have been achieved, and that the FDIC has no 

material weaknesses. Additionally, the U.S. Government Accountability Office did not identify any significant deficiencies in 

the FDIC’s internal controls for 2013. We are committed to maintaining effective internal controls corporate-wide in 2014.

Sincerely,

Martin J. Gruenberg

Chairman

The President of the United States

The President of the United States Senate

The Speaker of the United States House of Representatives
ANNUAL REPORT 2013 3

Table of Contents

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

Message from the Chief Financial Officer..................................................................................11

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

The Year in Review ............................................................................................................................................13

Overview.................................................................................................................................................................................... 13

Insurance ................................................................................................................................................................................... 13

Activities Related to Systemically Important Financial Institutions.................................................................................. 15

Supervision and Consumer Protection .................................................................................................................................. 19

Resolutions and Receiverships ............................................................................................................................................... 37

Effective Management of Strategic Resources ..................................................................................................................... 43

II. Financial Highlights...............................................................................................................47

Deposit Insurance Fund Performance ....................................................................................................................................... 47

Corporate Operating Budget......................................................................................................................................................... 49

Investment Spending ..................................................................................................................................................................... 50

III. Performance Results Summary......................................................................................................51

Summary of 2013 Performance Results by Program................................................................................................................. 51

2013 Budget and Expenditures by Program .............................................................................................................................. 53

Performance Results by Program and Strategic Goal............................................................................................................... 54

Prior Years’ Performance Results ................................................................................................................................................ 59

IV. Financial Section...................................................................................................................67

Deposit Insurance Fund (DIF) ..................................................................................................................................................... 68

FSLIC Resolution Fund (FRF)...................................................................................................................................................... 89

Government Accountability Office Auditor’s Report................................................................................................................. 99

Management’s Response ............................................................................................................................................................. 106

V. Corporate Management Control ........................................................................................109

Management Report on Final Actions ....................................................................................................................................... 109

VI. Appendices.........................................................................................................................113

A. Key Statistics............................................................................................................................................................................ 113

B. Overview of the Industry........................................................................................................................................................ 129

C. More About the FDIC.............................................................................................................................................................. 131

D. Office of Inspector General’s Assessment of the Management and Performance Challenges Facing the FDIC ....... 140
INSURING DEPOSITS • EXAMINING INSTITUTIONS • 

MANAGING RECEIVERSHIPS • EDUCATING CONSUMERS

In its unique role as deposit insurer of banks and savings associations, and 

in cooperation with the other state and federal regulatory agencies, the 

FDIC promotes the safety and soundness of the U.S. financial system and 

insured depository institutions by identifying, monitoring, and addressing 

risks to the Deposit Insurance Fund (DIF).

The FDIC promotes public understanding and the development of sound 

public policy by providing timely and accurate financial and economic 

information and analyses. It minimizes disruptive effects from the failure 

of financial institutions and promotes fairness in the sale of financial 

products and the provision of financial services.

The FDIC’s long and continuing tradition of excellence in public service 

is supported and sustained by a highly skilled and diverse workforce that 

continuously monitors and responds rapidly and successfully to changes in 

the financial environment. 

At the FDIC, we are working together to be the best.
ANNUAL REPORT 2012 5

I am pleased to 

present the Federal 

Deposit Insurance 

Corporation’s (FDIC) 

2013 Annual Report. 

SUMMARY

During 2013, the 

banking industry 

continued to 

experience a 

process of gradual 

recovery that has 

been evident for 

the past four years 

since the financial crisis. Fewer institutions reported 

quarterly losses, lending grew at a modest pace, credit 

quality continued to improve, the number of problem banks 

declined, and fewer banks failed.

In addition, we have seen sustained improvement in all 

the key bank performance indicators: three years of net 

income growth; improved credit quality; and growth in loan 

balances. Lower loan-loss provisions, reflecting improved 

credit quality, drove much of the improvement in earnings 

over the last few years. Revenue growth has remained 

flat. Going forward, industry earnings will depend more on 

increased lending, consistent with sound underwriting.

Internal indicators for the FDIC also continued to move in a 

positive direction. The numbers of both failed and problem 

institutions continued to decline in 2013, although they still 

remain elevated. Meanwhile, the Deposit Insurance Fund 

(DIF), which had been nearly $21 billion in the red during 

the financial crisis, stood at over $47 billion at year-end.

While some uncertainties remain, we now seem to be 

moving from an environment where the key focus had 

been repairing the damage from the financial crisis and the 

economic recession, into one where institutions are likely 

to explore opportunities to expand lending as conditions 

improve. One key issue lies with rising interest rates, which 

will provide banks an opportunity to increase margins, but 

also the challenge of managing interest rate risk. From a 

supervisory standpoint, interest rate risk will be a key focus 

of our examiners.

The FDIC is well prepared to carry out our mission of 

maintaining stability and public confidence in the nation’s 

financial system by insuring deposits, examining and 

supervising financial institutions for safety and soundness 

and consumer protection, and managing receiverships. At 

the end of 2013, the FDIC insured $6.0 trillion of deposits in 

over 600 million accounts at 6,800 institutions. 

In addition to carrying out our basic core mission 

responsibilities, our policy agenda includes the following:

♦ Carrying forward our major new responsibilities for 

reviewing and evaluating the resolution plans submitted 

by the largest bank holding companies and certain other 

systemically important financial institutions (SIFIs) 

under Title I of the Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank Act), continuing 

to develop a strategy for resolving SIFIs under the 

new authorities provided the FDIC under Title II of the 

Dodd-Frank Act, and promoting cross-border cooperation 

and coordination with respect to an orderly resolution of 

a globally active SIFI;

♦ Implementing new capital, liquidity, trading and 

derivatives rules to reduce systemic risk and improve the 

resilience of the financial system; 

♦ Continuing the FDIC’s Community Banking Initiatives, 

including further research on the future of community 

banks and providing technical assistance to community 

banks such as our recently-released series of training 

videos on key risk management and consumer 

compliance issues; and

♦ Continuing our focus on expanding access to the 

mainstream banking system for everyone who lives in the 

United States, including the national household survey of 

the unbanked and underbanked that the FDIC conducts 

jointly with the U.S. Census Bureau.

The FDIC also recognizes that information technology 

and cybersecurity developments pose increasing risk to 

MESSAGE FROM THE CHAIRMAN 5

Message from the Chairman
ANNUAL REPORT 2013

6 MESSAGE FROM THE CHAIRMAN

the financial services sector. We are actively engaged 

in efforts to promote the security and resilience of the 

financial services sector through the newly formed FFIEC 

Cybersecurity and Critical Infrastructure Working Group 

and the Financial and Banking Information Infrastructure 

Committee. The FDIC has also taken steps to ensure its 

operational readiness and response capabilities through 

internal exercises and the execution of several cyber-related 

performance goals.

A great strength of the FDIC continues to be a highly 

dedicated and motivated workforce. The FDIC’s employees 

understand the agency’s mission and how it relates to what 

they do. For the third year in a row, the FDIC took a top 

spot in the Best Places to Work in the Federal Government

based on a survey conducted by the Office of Personnel 

Management. 

STRENGTHENING THE 

DEPOSIT INSURANCE FUND 

AND RESOLVING FAILED BANKS

The FDIC has made significant progress in rebuilding 

the DIF. In 2010 and 2011, the FDIC Board of Directors 

approved a comprehensive, long-term plan for fund 

management based on Dodd-Frank Act requirements and on 

an FDIC historical analysis of DIF losses. We experienced 

a steady increase in the year-end fund balance from 2011 

through this year. The DIF balance rose to $47.2 billion 

at the end of 2013. Assessment revenue, a decrease in the 

estimate of losses from banks that have failed, and fewer 

bank failures were the main drivers of fund growth in 2013. 

The fund is on track to build up the reserve ratio, the ratio 

of the DIF to all insured deposits, to the statutorily required 

level of 1.35 percent by September 2020. 

Bank failures in 2013 totaled 24, down dramatically from 

a peak of 157 in 2010, while the number of banks on the 

problem bank list (banks rated 4 or 5 on the CAMELS 

rating scale) fell to 467 from a high of 888 in March 2011. 

These trends are still significantly higher than historical 

averages. As a result, although these trends are positive 

and may be accelerating to some degree, the FDIC must still 

devote considerable resources to managing receiverships, 

examining problem institutions, and implementing 

provisions of the Dodd-Frank Act.

Nonetheless, as the banking industry continues to recover, 

the FDIC will require fewer resources. The FDIC’s 

authorized workforce for 2013 was 8,026 full-time equivalent 

positions compared with 8,713 the year before. The 2013 

Corporate Operating Budget was $2.7 billion, a decrease of 

$600 million (18 percent) from 2012. 

For 2014, the Board reduced the budget by 11 percent 

to $2.4 billion and reduced authorized staffing by 

approximately 10 percent to 7,199 positions, in anticipation 

of a further drop in bank failure activity in the years ahead. 

Two temporary satellite offices that were set up to handle 

the crisis-related workload have now closed. The last of 

them, in Jacksonville, Florida, will close in 2014. However, 

contingent resources are included in the budget to ensure 

readiness should economic conditions unexpectedly 

deteriorate.

During 2013, the FDIC successfully continued to use 

resolution strategies instituted in 2008 to protect insured 

depositors of failed institutions at the least cost to the 

DIF. The FDIC actively marketed failing institutions and 

sold a large majority to other financial institutions. These 

strategies protected insured depositors and preserved 

banking relationships in many communities, providing 

depositors and customers with uninterrupted access to 

essential banking services. [All told, these strategies 

saved the FDIC over $40 billion since the beginning of the 

financial crisis.]

IMPLEMENTING THE FDIC’S 

NEW AUTHORITIES UNDER THE 

DODD-FRANK ACT AND OTHER 

FINANCIAL REFORMS

The Dodd-Frank Act included far-reaching changes to make 

financial regulation more effective in addressing systemic 

risks and provided significant new authorities to the FDIC 

and other U.S. regulators to plan for and manage the orderly 

failure of a SIFI. In particular, Title I of the Act requires 

all bank holding companies with assets over $50 billion, as 

well as nonbank financial companies designated as systemic 

by the Financial Stability Oversight Council, to prepare 

resolution plans (or “living wills”) to demonstrate how they 

would be resolved in a rapid and orderly manner under the 

Bankruptcy Code in the event of material financial 
MESSAGE FROM THE CHAIRMAN 7

distress or failure. Title II of the Act provides the FDIC 

with back-up authority to place a failing SIFI, including a 

consolidated bank holding company or a nonbank financial 

company deemed to pose a risk to the financial system, into 

an FDIC receivership, should an orderly resolution under 

the Bankruptcy Code not be possible. In 2013, the FDIC 

made considerable progress in implementing both of these 

new authorities. Significant progress has also been made 

on the implementation of key improvements to supervisory 

standards included in the Act, as well as those that are the 

product of international efforts. 

With respect to the living will process, it is widely 

recognized that U.S. SIFIs present a challenge to resolution 

in bankruptcy or under an FDIC receivership, because they 

are organized under a holding company structure with 

potentially thousands of interconnected subsidiaries that 

span legal and regulatory jurisdictions across international 

borders and share funding and critical support services. 

Title I provided new authority intended to make these 

companies more resolvable under the Bankruptcy Code, 

in a process jointly overseen by the FDIC and the Board of 

Governors of the Federal Reserve System. 

By the end of 2013, all covered bank holding companies 

had submitted their initial plans, and the 11 largest, most 

systemically significant companies had submitted their 

second round resolution plans by October 1st. The FDIC 

and Federal Reserve Board developed guidance with 

specific benchmarks for those companies to address in 

the second-round submissions. The benchmarks included 

global cooperation with foreign regulators, multiple 

insolvencies of subsidiaries, counterparty derivative 

actions, maintenance of critical operations, funding, and 

liquidity. The companies were required to provide analysis 

to support the strategies and assumptions contained in 

their resolution plans. The FDIC and Federal Reserve 

Board have been evaluating the plans under the standards 

provided in the statute.

When bankruptcy is not a viable option and a resolution 

under the bankruptcy process would pose a systemic 

risk to the U.S. financial system and economy, the Title II 

Orderly Liquidation Authority (OLA) of the Dodd-Frank 

Act provides broad new back-up authorities to place any 

systemically important financial institution into an FDIC 

receivership. The FDIC has worked for several years to 

develop the strategic and operational capability to carry out 

this new authority. 

During 2013, the FDIC released for public comment a 

Federal Register Notice on the Single Point of Entry (SPOE) 

strategy, developed by the FDIC to manage an orderly 

resolution of a SIFI. Under the strategy, the FDIC would 

take control of the top-tier holding company, allowing the 

firm’s operating subsidiaries, both domestic and foreign, 

to remain open and operating. The strategy is designed 

to diminish contagion effects while removing culpable 

management and imposing losses on shareholders and 

unsecured creditors without imposing costs on taxpayers. 

The Federal Register Notice provides a detailed overview 

of what would be a complex resolution process, describing 

how it would address key issues of liquidity, capital, 

restructuring, and governance consistent with purposes and 

authorities contained in Title II. 

The FDIC’s Systemic Risk Advisory Committee continued 

to provide advice and guidance on a wide range of issues 

regarding the resolution of large SIFIs. The Committee 

members have a wide range of knowledge and experience, 

including leading federal regulatory agencies; managing 

complex firms; administering bankruptcies; and working in 

the legal system, the accounting field, and academia. 

Also during the year, the FDIC continued to engage our 

major foreign counterparts with whom we would have 

to collaborate on a cross-border basis in resolving failing 

global SIFIs. We worked directly with regulators in the 

United Kingdom, Switzerland, Germany, Japan, and the 

European Union. As part of our efforts in this area, the 

FDIC, in conjunction with the prudential regulators in 

our jurisdictions and internationally, has been working 

to develop contingency plans for the failure of Global 

SIFIs (G-SIFIs). Of the 28 G-SIFIs designated by the 

Financial Stability Board of the G-20 countries, eight are 

headquartered in the United States. 

The FDIC made progress with efforts to develop 

international capital standards as a member of the Basel 

Committee on Banking Supervision and implement 

Dodd-Frank Act reforms to strengthen the safety and 

soundness of the financial system. 
ANNUAL REPORT 2013

8 MESSAGE FROM THE CHAIRMAN

In July 2013, the FDIC approved an interim final rule that 

implemented the international Basel III capital agreement. 

The interim final rule adopted, with revisions, the June 

2012 proposals related to the Basel III, Standardized, 

and Advanced Approaches rules. The interim final rule 

on Basel III strengthens both the quality and quantity of 

risk-based capital for all banks. The FDIC and the other 

federal banking agencies carefully considered more 

than 2,500 comments, the majority of which were from 

community banking institutions. Most of the key concerns 

of community banks were addressed through a few 

significant modifications to the proposed rule. The new 

capital requirements become effective for most banking 

organizations on January 1, 2015.

Also in July 2013, the FDIC approved a joint Notice 

of Proposed Rulemaking that would increase the 

supplementary leverage capital requirements for the largest, 

most systemically important banking organizations. The 

NPR addresses one of the main causes of the financial 

crisis, the excessive leverage that had built up in the system. 

In October 2013, the FDIC and the other federal banking 

agencies issued a Notice of Proposed Rulemaking to 

implement the Basel III liquidity coverage ratio (LCR) 

standard. The LCR requires covered companies to 

maintain a sufficient amount of high quality liquid assets 

to cover a short-term stress event and applies to large, 

internationally active banking organizations and certain of 

their subsidiaries. 

Finally, in December 2013, the FDIC with four other 

agencies jointly issued final rules to implement Section 619 

of the Dodd-Frank Act (often referred to as the “Volcker 

Rule”). The purpose of the Volcker Rule is to limit the type 

and amount of speculative risk that can be undertaken by 

entities that are supported by the public safety net. In order 

to achieve that goal, the provision places prohibitions and 

restrictions on the ability of depository institution holding 

companies, insured depository institutions, and their 

subsidiaries and affiliates to engage in proprietary trading or 

investing in, or having relationships with, hedge funds and 

private equity funds. 

COMMUNITY BANKING INITIATIVE

The financial crisis and its aftermath had significant 

consequences for community banks, which play a crucial 

role in the U.S. financial system. Community banks account 

for about 14 percent of the banking assets in the United 

States, but provide nearly 46 percent of the small loans that 

FDIC-insured depository institutions make to businesses 

and farms.

The FDIC is the lead federal supervisor for the majority 

of community banks, and the insurer of all. The FDIC has 

a particular responsibility for the safety and soundness 

of community banks, and for understanding and 

communicating the role they play in the banking system. 

We launched a number of community banking initiatives 

in 2012, including the first comprehensive study on the 

role and future of community banks in the United States. 

Our research efforts continued through 2013. During the 

year, we published an update of trends in community bank 

structure and performance through year-end 2012. This 

updated study showed that, by a number of measures, 

community banks in 2012 enjoyed their best year since 

before the financial crisis began. Our research efforts will 

continue into the coming year as we address topics such 

as banking industry consolidation, rural depopulation, and 

Minority Depository Institutions. 

As part of our outreach to community bankers, I 

participated in roundtable discussions with community 

bankers in each of the FDIC’s six supervisory regions during 

the year. Our supervisory and compliance examiners 

undertook an Examination and Rulemaking Review with the 

goal of identifying ways to make the supervisory process 

more efficient, consistent, and transparent. In response to 

concerns about pre- and post-examination processes, our 

supervisory staff developed a web-based tool that generates 

a pre-examination document and information request 

tailored to a specific institution’s operations and business 

lines. We are also improving how information is shared 

electronically between bankers and examiners.

During 2013, the FDIC launched a technical assistance video 

program designed to provide useful information to bank 
MESSAGE FROM THE CHAIRMAN 9

directors, officers, and employees on areas of supervisory 

focus and proposed regulatory changes. Throughout the 

year, we released technical videos that address the roles 

and responsibilities of bank board directors, the FDIC’s 

Risk Management and Compliance Examination processes, 

a virtual version of the FDIC’s Directors’ College Program 

that regional offices deliver throughout the year, and a 

variety of supervisory topics, including interest rate risk, 

troubled debt restructurings, appraisals and evaluations, 

the allowance for loan and lease losses, evaluations of 

municipal securities, and flood insurance. The feedback on 

the videos has been very positive.

Throughout 2013, FDIC supervisory staff also continued 

to offer additional on-site technical training opportunities 

on subjects of interest to community bankers. As part of 

this ongoing effort, our supervisory staff hosted Director 

and Banker Colleges in each region. These Colleges are 

typically conducted jointly with state trade associations 

and address topics of interest to community bankers. We 

conducted extensive outreach to community bankers 

on complex rulemakings, including the Basel III capital 

rulemaking process.

Finally, we continue to rely on our Advisory Committee on 

Community Banking as an ongoing forum for discussing 

critical issues and receiving valuable feedback and input 

from the industry. The advisory committee met three 

times during 2013. The Committee, which is composed 

of 15 community bank CEOs from around the country, is 

a valuable resource for input on a wide variety 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.

PROTECTING CONSUMERS 

AND EXPANDING ACCESS 

TO BANKING SERVICES

Expanding access to the banking system for all those living 

in the United States is part of the FDIC’s core mission. 

The FDIC biennial National Survey of Unbanked and 

Underbanked Households, conducted jointly with the 

Census Bureau, has documented that a large portion of the 

population in our country has either no access or limited 

access to insured institutions. We have undertaken a major 

effort through a number of initiatives to protect consumers 

and expand access to mainstream banking services. This 

continues to be an important priority for the agency.

The FDIC’s Advisory Committee on Economic Inclusion 

— composed of bankers, community and consumer 

organizations, and academics — has continued to explore 

strategies to bring the unbanked into the financial 

mainstream. In 2013, the committee focused on promoting 

household savings, reaching the underserved through 

mobile technology, examining financial education strategies 

for school-aged youth, and providing access to safe and 

affordable savings and transaction products.

At the local level, the FDIC’s Alliance for Economic 

Inclusion organizes coalitions of financial institutions, 

community organizations, local government officials, and 

other partners in communities across the country to bring 

unbanked and underbanked households into the financial 

mainstream. The effort includes better access to basic retail 

financial services, such as checking and savings accounts, 

affordable remittance products, small-dollar loans, 

targeted financial education programs, and asset-building 

programs. These partnerships are currently operating in 16 

communities nationwide.

Our efforts in this area are also focused on supervisory 

guidance designed to promote safe and sound practices and 

to promote consumer protection. During 2013, the FDIC 

issued final guidance regarding deposit advance products 

that are offered or may be offered by FDIC-supervised 

institutions. The guidance is intended to ensure that banks 

are aware of the potential credit, reputation, operational 

and compliance risks associated with deposit advance 

products. The guidance also recognizes consumers’ need 

for responsible small-dollar credit products and encourages 

institutions to develop new or innovative programs to 

effectively meet the need for small-dollar credit that do not 

exhibit the risks associated with deposit advance products 

and payday loans.
ANNUAL REPORT 2013

10 FEDERAL DEPOSIT INSURANCE CORPORATION

CONCLUSION

The recovery of the banking industry continued to advance 

during 2013 with stronger earnings and improved asset 

quality. The industry is experiencing fewer bank failures 

and problem institutions, and the FDIC’s Deposit Insurance 

Fund is steadily growing. Despite these improvements, we 

remain mindful of uncertainties and potential challenges, 

and are pursuing a number of important policy initiatives. 

The workforce of the FDIC remains committed to carrying 

out our core mission responsibility of maintaining stability 

and public confidence in the nation’s financial system. 

I am very grateful to the dedicated professionals of the 

FDIC for their commitment to public service and their 

continued dedication to the mission of the FDIC. 

Sincerely,

Martin J. Gruenberg

10 MESSAGE FROM THE CHAIRMAN
ANNUAL REPORT 2013 11

I am pleased to present 

the Federal Deposit 

Insurance Corporation’s 

(FDIC) 2013 Annual 

Report (also referred to 

as the Performance and 

Accountability Report). 

The report covers 

financial and program 

performance information 

and summarizes our 

successes for the year. 

The FDIC takes pride in providing timely, reliable, and 

meaningful information to its many stakeholders. 

For 22 consecutive years, the U.S. Government 

Accountability Office (GAO) has issued unmodified 

(unqualified) 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 responsibility 

and demonstrate discipline and accountability as stewards 

of these funds. We remain proactive in executing sound 

financial management and in providing reliable financial 

data. 

During 2013, the FDIC continued to make significant 

progress in rebuilding the DIF. Since year-end 2009, the 

DIF balance increased by $68.1 billion to $47.2 billion as 

of year-end 2013. This increase in the DIF balance was 

primarily due to cumulative assessment revenue of $49.2 

billion and a decrease in the estimated losses for both 

actual and anticipated bank failures of $15.1 billion. 

FINANCIAL RESULTS FOR 2013

For 2013, the DIF’s comprehensive income totaled $14.2 

billion compared to comprehensive income of $21.1 billion 

during 2012. This $6.9 billion year-over-year decrease was 

primarily due to a $6.0 billion decrease in other revenue 

(which is attributable to the 2012 transfer of fees from 

TLGP) and a $2.7 billion decrease in assessments; partially 

offset by a $1.5 billion decrease in the provision for 

insurance losses and a $156 million net increase from the 

sale of Citigroup trust preferred securities (TruPS). 

Assessment revenue was $9.7 billion for 2013. The decrease 

of $2.7 billion, from $12.4 billion in 2012, was primarily 

due to lower risk-based assessment rates resulting from 

continued improvements in banks’ CAMELS ratings and 

financial condition. In addition, in 2013, the DIF refunded 

$5.9 billion in prepaid assessments to the 5,625 insured 

depository institutions that had remaining balances. This 

final payment marked the end of the prepaid assessment 

program, which began with the collection of $45.7 billion in 

prepaid assessments on December 30, 2009. 

The provision for insurance losses was negative $5.7 

billion for 2013, compared to negative $4.2 billion for 2012. 

The negative provision for 2013 primarily resulted from 

a reduction of $1.0 billion in the contingent liability for 

anticipated failures due to the improvement in the financial 

condition of troubled institutions and a decrease of 

$4.8 billion in the estimated losses for institutions that 

failed in prior years.

Only 24 banks failed in 2013, the fewest since the beginning 

of the crisis in 2008 when 25 banks failed. Failures during 

the crisis peaked at 157 in 2010. Even though the banking 

crisis has subsided, the FDIC will still emphasize effectively 

managing risks to the DIF, as we rebuild the Fund in the 

post-banking crisis environment. Financial operations 

will continue to be based on sound financial management 

techniques, which will include a strong enterprise-wide risk 

management and internal control program.

Sincerely,

Steven O. App

MESSAGE FROM THE CHIEF FINANCIAL OFFICER 11

Message from the Chief Financial Officer
ANNUAL REPORT 2013

Seated (left to right): Mark Pearce, Arthur Murton, Richard Osterman, Jr., Doreen Eberley, Barbara Ryan, 

Chairman Martin Gruenberg, Director Jeremiah Norton, Arleas Upton Kea, and Andrew Gray. 

Standing (left to right): Cottrell Webster, Steven App, Russell Pittman, the late D. Michael Collins, Bret Edwards, 

Eric Spitler, Fred Gibson, Stephen Quick, and Craig Jarvill.

Not pictured: Vice Chairman Thomas Hoenig, Kymberly Copa, E. Melodee Brooks, Diane Ellis, Christopher 

Farrow, Robert Harris, Martin Henning, and Suzannah Susser.

FDIC Senior Leaders

12 FEDERAL DEPOSIT INSURANCE CORPORATION
The Year in Review

OVERVIEW

Although the number of bank failures declined in 2013 

compared to the previous year, the FDIC remained fully 

engaged in its mission-critical responsibilities. In 2013, 

the FDIC continued to make progress in fulfilling its 

responsibilities under the Dodd-Frank Wall Street Reform 

and Consumer Protection Act (Dodd-Frank Act) and related 

rulemakings. Also during 2013, the FDIC made progress 

with community banking initiatives including releasing 

numerous technical assistance videos on topics relating to 

risk management and consumer protection. The sections 

below highlight some of our accomplishments during 

the year.

INSURANCE

The FDIC insures bank and savings association deposits. As 

insurer, the FDIC must continually evaluate and effectively 

manage how changes in the economy, the financial markets, 

and the banking system affect 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 management plan designed to reduce the effects 

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. That plan is combined with the Restoration Plan, 

originally adopted in 2008 and subsequently revised, which 

is designed to ensure that the reserve ratio will reach 1.35 

percent of estimated insured deposits by September 30, 

2020, as required by the Dodd-Frank Act.1

 These plans 

include a reduction in rates that the FDIC Board adopted 

to become effective once the reserve ratio reaches 

1.15 percent. 

To increase the probability that the fund reserve ratio will 

reach a level sufficient to withstand a future crisis, the 

FDIC Board has—pursuant to the long-term management 

plan—set the Designated Reserve Ratio (DRR) for the DIF 

at 2.0 percent. Using historical fund loss and simulated 

income data from 1950 to 2010, FDIC analysis showed 

the reserve ratio would have had to exceed 2.0 percent 

before the onset of the two crises that occurred since the 

late 1980s to have maintained both a positive fund balance 

and stable assessment rates throughout both crises. The 

analysis assumed a moderate, long-term average industry 

assessment rate, consistent with the rates set forth in the 

plan. The 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. Under provisions of 

the Federal Deposit Insurance Act (FDI Act) that require the 

FDIC Board to set the DRR for the DIF annually, the FDIC 

Board voted in October 2013 to maintain the 2.0 percent 

DRR for 2014.

MANAGEMENT’S DISCUSSION AND ANALYSIS 13

1 The Act also requires that the FDIC offset the effect on institutions with less than $10 billion in assets of increasing the reserve 

ratio from 1.15 percent to 1.35 percent. The FDIC will promulgate a rulemaking that implements this requirement at a later date 

to better take into account prevailing industry conditions at the time of the offset.

Management’s 

Discussion and 

Analysis

I.
ANNUAL REPORT 2013

14 MANAGEMENT’S DISCUSSION AND ANALYSIS

As part of the long-term management plan, the FDIC also 

suspended dividends indefinitely when the fund reserve 

ratio exceeds 1.5 percent. Instead, the plan prescribes 

progressively lower assessment rates that will become 

effective when the reserve ratio exceeds 2.0 percent and 

2.5 percent. These lower assessment rates serve almost the 

same function as dividends, but provide more stable and 

predictable effective assessment rates over time.

State of the Deposit Insurance Fund 

Estimated losses to the DIF were $1.2 billion from failures 

occurring in 2013, and were lower than losses from failures 

in each of the previous five years. The fund balance 

continued to grow throughout 2013, with 16 consecutive 

quarters of positive growth. Assessment revenue, a 

decrease in the estimate of losses from banks that have 

failed, and a decline in loss provisions for anticipated bank 

failures drove the increase in the fund balance during 2013. 

The fund reserve ratio rose to 0.79 percent of estimated 

insured deposits at December 31, 2013, from 0.44 percent at 

the end of 2012. 

To ensure that the DIF had sufficient liquidity to handle a 

high volume of failures during the recent crisis, the Board 

issued a rule in 2009 that required insured depository 

institutions to prepay 13 quarters of estimated risk-based 

assessments.2 The $45.7 billion in assessments prepaid on 

December 30, 2009, resolved the FDIC’s immediate liquidity 

needs. As required by the rule, the FDIC refunded in 

aggregate $5.9 billion in remaining prepaid assessments at 

the end of June 2013 to 5,625 insured institutions.

Assessment System for Large and Highly 

Complex Institutions

On October 9, 2012, the FDIC Board approved a final rule to 

amend the assessment system for large and highly complex 

institutions. The rule amends definitions adopted in the 

February 2011 large bank pricing rule used to identify 

concentrations in higher-risk assets. This rule, which 

became effective on April 1, 2013, amends the definitions 

of leveraged loans and subprime loans, which are areas 

of significant potential risk. The revised definition of 

leveraged loans, renamed higher-risk C&I (commercial and 

industrial) loans and securities, focuses on large loans to 

the riskiest borrowers—those that are highly leveraged as 

the result of loans to finance a buyout, acquisition, or capital 

distribution. The revised definition of subprime consumer 

loans, renamed higher-risk consumer loans, focuses on the 

most important characteristic—the probability of default. 

The final rule resulted from concerns raised by the industry 

about the cost and burden of reporting under the definitions 

in the February 2011 rule. Nonetheless, the new definitions 

better reflect the risk that institutions pose to the DIF. 

Definition of Deposit at Foreign Branches 

of U.S. Banks

On September 10, 2013, the FDIC Board of Directors 

approved a final rule clarifying that funds on deposit in 

foreign branches of U.S. banks are not FDIC-insured, 

even though they can be deposits for purposes of the 

national depositor preference statute. Under the FDI Act, 

funds deposited in a foreign branch of a U.S. bank are not 

considered deposits, unless the deposits are also payable 

at an office of the bank in the United States (a dually 

payable deposit). A 2012 Consultation Paper by the United 

Kingdom’s Prudential Regulation Authority (PRA) proposed 

that banks from non-European Economic Area countries 

that have depositor preference laws be prohibited from 

accepting deposits at their United Kingdom (U.K.) branches, 

unless the banks take steps to ensure that U.K. depositors 

are no worse off than depositors in the bank’s home country 

if the bank fails. The PRA paper mentioned that such 

efforts could include changing deposit account agreements 

to make U.K. branch deposits dually payable in the United 

States, which would put the U.K. branch deposits on the 

same footing as U.S. deposits under the U.S. depositor 

preference statute. As a result, the FDIC anticipates that 

some large U.S. banks will change their deposit agreements 

to make their U.K. branch deposits payable in both the 

United Kingdom and the United States to provide depositor 

preference to U.K. branch deposits. The final rule clarifies 

that these U.K. branch deposits are not FDIC-insured.

2 The cash collected from the prepayment did not initially affect the DIF balance (i.e., the DIF’s net worth). Rather, each quarter, the 

DIF recognized as revenue prepaid amounts used to cover each institution’s quarterly risk-based assessment. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 15

ACTIVITIES RELATED TO SYSTEMICALLY 

IMPORTANT FINANCIAL INSTITUTIONS

Risk Monitoring Activities for Systemically Important 

Financial Institutions

The Dodd-Frank Act expanded the FDIC’s responsibilities 

for overseeing and monitoring the largest, most complex 

bank holding companies and large, nonbank systemically 

important financial institutions (SIFIs) designated by 

the Financial Stability Oversight Council (FSOC) for 

supervision by the Board of Governors of the Federal 

Reserve System (FRB). In 2013, the FDIC’s complex 

financial institution program activities included ongoing 

reviews of all banking organizations with more than 

$100 billion in assets as well as certain nonbank financial 

companies. Given the scope of the FDIC’s responsibilities 

under the Dodd-Frank Act, the FDIC developed additional 

risk assessment tools, processes, and procedures to better 

identify major risks at SIFIs, to ensure corrective actions 

when warranted, and to efficiently allocate resources. 

Additionally, the complex financial institution program 

prepares the FDIC to resolve insured depository institutions 

(IDIs) in the event of failure, including the review of 

IDI-prepared resolution plans.

In the FDIC’s back-up supervisory role, as outlined in 

Sections 8 and 10 of the FDI Act and Sections 23A and 

23B of the Federal Reserve Act, the FDIC has expanded 

resources and developed and implemented policies and 

procedures to guide back-up supervisory activities. These 

activities include participating in supervisory activities with 

other regulatory agencies, performing analyses of industry 

conditions and trends, and exercising examination and 

enforcement authorities, when necessary.

In addition, the FDIC continues to work closely with other 

federal regulators to gain a better understanding of the 

risk measurement and management practices of SIFIs, and 

assess the potential risks they pose to financial stability.

Title I Resolution Plans

Title I of the Dodd-Frank Act requires that each bank 

holding company with total consolidated assets of $50 

billion or more, and each nonbank financial company that 

the FSOC determined should be subject to supervision 

by the FRB, prepare a resolution plan, or “living will,” 

and periodically provide the plan to the FRB and the 

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

company’s resolution plan to provide for its rapid and 

orderly resolution under the bankruptcy code in the event 

of the company’s material financial distress or failure. The 

FDIC and the FRB issued a joint rule to implement the 

requirements for resolution plans to be filed pursuant to 

Section 165(d) [the 165(d) Rule]. 

In addition to the 165(d) Rule, the FDIC issued a separate 

rule that requires all IDIs with greater than $50 billion 

in assets to submit resolution plans to the FDIC (IDI 

Rule). The IDI’s resolution plan should enable the FDIC, 

as receiver, to resolve the IDI using the FDIC’s traditional 

resolution powers under the Federal Deposit Insurance 

Act (FDI Act), in a manner that ensures that depositors 

receive access to their insured deposits generally within 

one business day of the IDI’s failure, maximizes the net 

present value return from the disposition of its assets, and 

minimizes the amount of any loss realized by creditors.

The 165(d) Rule was effective as of November 30, 2011, 

and provides for staggered initial submission dates for the 

Paul Volcker, former Federal Reserve Chairman, 

offers his perspective on Title I resolution planning at 

a Systemic Resolution Advisory Committee meeting. 
ANNUAL REPORT 2013

16 MANAGEMENT’S DISCUSSION AND ANALYSIS

resolution plans of covered companies. Thereafter, unless 

otherwise agreed to by the FDIC and the FRB, each covered 

company must submit a plan annually, on or before the 

anniversary of its initial submission date. Initial submission 

dates for IDI resolution plans under the IDI Rule, which 

was effective April 1, 2012, conform to those for covered 

companies under the 165(d) Rule. Under the 165(d) Rule, 

the initial submission date is based upon nonbank assets (or 

for a foreign-based covered company, U.S. nonbank assets) 

as of November 30, 2011, and is set by the rule as follows:

♦ July 1, 2012: “First Wave Companies” are covered 

companies with $250 billion or more in nonbank assets 

(or U.S. nonbank assets for foreign-based covered 

companies). 

♦ July 1, 2013: “Second Wave Companies” are covered 

companies with $100 billion or more in nonbank assets 

(or U.S. nonbank assets for foreign-based covered 

companies). 

♦ December 31, 2013: “Third Wave Companies” are all other 

covered companies which are covered companies with 

less than $100 billion in nonbank assets (or U.S. nonbank 

assets for foreign-based covered companies).

Any company that becomes subject to the 165(d) Rule after 

its effective date (including nonbank financial companies 

designated by the FSOC), and any IDI that becomes subject 

to the IDI Rule after its effective date, must submit its initial 

resolution plan by the next July 1 that is at least 270 days 

after the date it became subject to the respective rule (or 

following its designation by FSOC). 

Eleven First Wave Companies submitted initial 165(d) plans 

in July 2012. Based upon review of the initial resolution 

plans, the FDIC and the FRB developed guidance for 

the First Wave Companies to permit alternate resolution 

strategies and to clarify information that should be included 

in their 2013 resolution plan submissions. This guidance 

is posted on the FDIC’s public Website3

. In the guidance, 

the FDIC and the FRB identified an initial set of significant 

obstacles to achieving a rapid and orderly resolution that 

each of the First Wave companies should address in its plan, 

including the actions or steps the company has taken or 

proposes to take to remediate or otherwise mitigate each 

obstacle (with a timeline for any proposed actions). The 

agencies extended the second submission filing date to 

October 1, 2013, giving the First Wave Companies additional 

time to develop resolution plans complying with the 

guidance. Each of the First Wave Companies submitted its 

second submission plan by the October 1 deadline, and the 

agencies are currently reviewing the plans.

Four Second Wave Companies submitted initial resolution 

plans by the July 1, 2013, submission date. The FDIC and 

the FRB reviewed those plans. One hundred and sixteen 

Third Wave Companies and twenty-two Third Wave IDIs 

submitted initial resolution plans by December 31, 2013. 

The FDIC and the FRB are currently reviewing those plans. 

Three nonbank SIFIs designated by the FSOC for FRB 

supervision are expected to submit initial resolution plans 

in 2014.

Title II Resolution Strategy Development

The preferred approach for the resolution of a large, 

complex financial company is for the firm to file for 

reorganization or liquidation under the U.S. Bankruptcy 

Code, just as any failed nonfinancial company would. In 

certain circumstances, however, resolution under the 

bankruptcy code may result in serious adverse effects 

on financial stability in the United States. In such cases, 

the Orderly Liquidation Authority (OLA) set out in Title 

II of the Dodd-Frank Act serves as a potential alternative 

that could be invoked pursuant to a statutorily prescribed 

recommendation and determination process, coupled with 

an expedited judicial review process.

Prior to the recent crisis, the FDIC’s receivership authority 

focused on IDIs. No regulator had the authority to place 

the bank holding company (BHC) or affiliates of an IDI 

or any other nonbank financial company into an FDIC 

receivership to avoid systemic consequences. The OLA 

addresses those limitations and gives the FDIC the back-up 

powers necessary to potentially resolve a failing BHC or 

other SIFI in an orderly manner that imposes accountability 

on shareholders, creditors, and management of the failed 

company while mitigating systemic risk and imposing no 

cost on taxpayers.

3 http://www.fdic.gov/regulations/reform/domesticguidance.pdf
MANAGEMENT’S DISCUSSION AND ANALYSIS 17

The FDIC has largely completed the core rulemakings 

necessary to carry out its responsibilities under Title 

II of the Dodd-Frank Act. Additionally, the FDIC has 

been developing a strategic approach, referred to as the 

“Single Point of Entry (SPOE)”, to carry out those orderly 

liquidation authorities. During 2013, the FDIC reviewed 

the characteristics of each domestic company and studied 

previous financial downturns to determine the systemic 

effects and channels of contagion, and consulted with 

external practitioners and experts on key resolution 

components and options. The FDIC discussed the SPOE 

concept at outreach events with other domestic government 

agencies, the Systemic Resolution Advisory Committee, 

industry groups, the academic community, and international 

financial regulators. In December 2013, the FDIC approved 

publication of a notice in the Federal Register that provides 

greater detail on the SPOE strategy and discusses the 

key issues that will be faced in the resolution of a SIFI.4

 

Comments are expected in early 2014, and the FDIC will 

consider those comments as resolution strategies continue 

to be developed. 

Cross-border Efforts

Advance planning and cross-border coordination for 

the resolution of globally active SIFIs will be essential 

to minimizing disruptions to global financial markets. 

Recognizing that global SIFIs create complex international 

legal and operational concerns, the FDIC continues to 

reach out to foreign regulators to establish frameworks for 

effective cross-border cooperation. 

As part of the bilateral efforts, the FDIC and the Bank of 

England, in conjunction with the prudential regulators 

in our respective jurisdictions, have been developing 

contingency plans for the failure of a global SIFI that 

has operations in the U.S. and the U.K. Of the 28 G-SIFIs 

designated by the Financial Stability Board (FSB) of the 

G-20 countries, four are headquartered in the U.K., and 

another eight are headquartered in the U.S. Moreover, 

approximately 70 percent of the reported foreign activities 

of the eight U.S. G-SIFIs emanates from the U.K. The 

FDIC and U.K. authorities released a joint paper on 

resolution strategies in December 2012, reflecting the 

close working relationship between the two authorities. 

This joint paper focuses on the application of “top-down” 

resolution strategies for a U.S. or a U.K. financial group 

in a cross-border context and addresses several common 

considerations to these resolution strategies. In December 

2013, the FDIC and the Bank of England, including the 

Prudential Regulation Authority, in conjunction with the 

Federal Reserve Board and the Federal Reserve Bank of 

New York, held a staff-level tabletop exercise exploring 

cross-border issues and potential mitigating actions that 

could be taken by regulators in the event of a resolution. 

The FDIC also is coordinating with representatives from 

European authorities to discuss issues of mutual interest, 

including the resolution of European global SIFIs and 

ways in which we can harmonize receivership actions. 

The FDIC and the European Commission (E.C.) have 

established a joint Working Group composed of senior 

executives from the FDIC and the E.C. to focus on both 

resolution and deposit insurance issues. The agreement 

establishing the Working Group provides for meetings twice 

a year with other interim interchanges and the exchange of 

detailees. In 2013, the Working Group convened formally 

twice, and there has been ongoing collaboration at the 

staff level, including discussions of the FDIC’s experience 

with resolutions, the SPOE strategy, the E.C.’s proposed 

European Union (E.U.)-wide Credit Institution and 

Investment Firm Recovery and Resolution Directive, the 

E.C.’s proposed amendment to harmonize further deposit 

guarantee schemes E.U.-wide, and the E.C.’s proposal for a 

Single Resolution Mechanism that would apply to Euro-area 

Member States, as well as any others that would opt-in. The 

FDIC and the E.C. also have exchanged staff members for 

short periods to enhance staff experience with respective 

resolution authorities. In 2014, at the request of the E.C., 

the FDIC is planning to conduct a training seminar on 

resolutions for E.C. staff.

The FDIC continues to foster its relationships with 

other jurisdictions that regulate global SIFIs, including 

4 Notice entitled, “Resolution of Systemically Important Financial Institutions: The Single Point of Entry Strategy,” 78 Federal

Register 76614 (December 18, 2013).
ANNUAL REPORT 2013

18 MANAGEMENT’S DISCUSSION AND ANALYSIS

Switzerland, Germany, and Japan. In 2013, the FDIC had 

significant principal and staff-level engagements with these 

countries to discuss cross-border issues and potential 

impediments that would affect the resolution of a global 

SIFI. This work will continue in 2014 with plans to host 

tabletop exercises with staff from these authorities. The 

development of joint resolution strategy papers, similar 

to the one with the U.K., as well as possible exchanges of 

detailees, has also been discussed. 

In a significant demonstration of cross-border cooperation 

on resolution issues, the FDIC signed a November 2013 

joint letter with the Bank of England, the Swiss Financial 

Market Supervisory Authority, and the German Federal 

Financial Supervisory Authority, to the International Swaps 

and Derivatives Association, Inc. (ISDA). This letter 

encouraged ISDA to develop provisions in derivatives 

contracts that would provide for the short-term suspension 

of early termination rights and other remedies in the event 

of a G-SIFI resolution. The adoption of such changes would 

allow derivatives contracts to remain in effect throughout 

the resolution process following the implementation of a 

number of potential resolution strategies. International 

coordination and outreach and efforts to address 

impediments to an orderly resolution of a global SIFI are 

expected to continue. 

Systemic Resolution Advisory Committee

In 2011, the FDIC Board approved the creation of the 

Systemic Resolution Advisory Committee. The Committee 

provides important advice to the FDIC regarding systemic 

resolutions. The Committee advises the FDIC on a variety 

of issues including:

♦ The effects on financial stability and economic conditions 

resulting from the failure of a SIFI.

♦ The ways in which specific resolution strategies would 

affect stakeholders and their customers. 

♦ The tools available to the FDIC to wind down the 

operations of a failed organization.

♦ The tools needed to assist in cross-border relations with 

foreign regulators and governments when a systemic 

company has international operations. 

Members of the Committee have a wide range of experience 

including managing complex firms; administering 

bankruptcies; and working in the legal system, accounting 

field, and academia. A meeting of the Systemic Resolution 

Advisory Committee was held on December 11, 2013. The 

Committee discussed, among other topics, the bankruptcy 

process for large financial companies, the FDIC’s SPOE 

strategy, and international coordination in financial 

company resolutions.

Honored guest Paul Tucker from the Bank of England, seated to the right of Chairman Gruenberg, with several 

members of the Systemic Resolution Advisory Committee and FDIC Board: (seated, from left) William Donaldson, 

Vice Chairman Hoenig, Paul Volcker, Chairman Gruenberg, Paul Tucker, and Director Norton; (standing, from 

left) Simon Johnson, Michael Bradfield, Richard Herring, Anat Admati, John Koskinen, Donald Kohn, Douglas 

Peterson, and David Wright.
MANAGEMENT’S DISCUSSION AND ANALYSIS 19

Coordinating Interagency Resolution Planning

In 2013, the FDIC continued to promote interagency 

information-sharing and cooperative resolution planning by 

holding quarterly meetings with the other federal regulatory 

agencies. The FDIC also conducted eight interagency 

outreach meetings with the financial market utilities 

(FMUs) that were designated by the FSOC.

Financial Stability Oversight Council 

The FSOC was created by the Dodd-Frank Act in July 2010 

to promote the financial stability of the United States. It is 

composed of ten voting members, including the Chairperson 

of the FDIC, and five non-voting members. 

The FSOC’s responsibilities include the following:

♦ Identifying risks to financial stability, responding to 

emerging threats in the system, and promoting market 

discipline.

♦ Designating a nonbank financial company for supervision 

by the FRB subject to heightened prudential standards.

♦ Designating FMUs and payment, clearing, or settlement 

activities that are, or are likely to become, systemically 

important.

♦ Facilitating regulatory coordination and informationsharing regarding policy development, rulemaking, 

supervisory information, and reporting requirements.

♦ Monitoring domestic and international financial 

regulatory proposals and advising Congress and making 

recommendations to enhance the integrity, efficiency, 

competiveness, and stability of U.S. financial markets. 

♦ Producing annual reports describing, among other things, 

the Council’s activities and potential emerging threats to 

financial stability.

During 2013, the FSOC designated three nonbank financial 

companies for FRB supervision, including enhanced 

prudential standards. Also during 2013, the FSOC issued its 

third annual report. Generally, at each of its meetings, the 

FSOC discusses various risk issues and, in 2013, the FSOC 

meetings addressed U.S. fiscal issues, an asset management 

study prepared by the Office of Financial Research, cyber 

security, market volatility, market and trading disruptions, 

money market mutual fund reforms, and fixed income 

valuations, among other topics.

SUPERVISION AND 

CONSUMER PROTECTION

Supervision and consumer protection are cornerstones 

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

confidence in, the nation’s financial system. The FDIC’s 

supervision program promotes the safety and soundness 

of FDIC-supervised IDIs, protects consumers’ rights, and 

promotes community investment initiatives. 

Examination Program 

The FDIC’s strong bank examination program is the core 

of its supervisory program. As of December 31, 2013, the 

FDIC was the primary federal regulator for 4,316 FDICinsured, state-chartered institutions that were not members 

of the Federal Reserve System (generally referred to as 

“state nonmember” institutions). Through risk management 

(safety and soundness), consumer compliance and the 

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. The FDIC 

also educates bankers and consumers on matters of interest 

and addresses consumer questions and concerns.

As of December 31, 2013, the FDIC conducted 2,284 

statutorily required risk management examinations, 

including a review of Bank Secrecy Act (BSA) compliance, 

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

frames. The FDIC also conducted 1,986 statutorily required 

CRA/compliance examinations (1,585 joint CRA/compliance 

examinations, 396 compliance-only examinations, and 5 

CRA-only examinations) and 5,057 specialty examinations. 

As of December 31, 2013, all CRA/compliance examinations 

were conducted within the time frame established by policy. 

The following table compares the number of examinations, 

by type, conducted from 2011 through 2013. 
ANNUAL REPORT 2013

20 MANAGEMENT’S DISCUSSION AND ANALYSIS

Risk Management

As of December 31, 2013, there were 467 insured 

institutions with total assets of $152.7 billion designated 

as problem institutions for safety and soundness purposes 

(defined as those institutions having a composite CAMELS5

rating of “4” or “5”), compared to the 651 problem 

institutions with total assets of $232.7 billion on December 

31, 2012. This constituted a 28 percent decline in the 

number of problem institutions and a 34 percent decrease 

in problem institution assets. In 2013, 238 institutions with 

aggregate assets of $78.7 billion were removed from the 

list of problem financial institutions, while 54 institutions 

with aggregate assets of $13.9 billion were added to the list. 

First National Bank, located in Edinburg, Texas, was the 

largest failure in 2013, with $3.1 billion in assets. The FDIC 

is the primary federal regulator for 306 of the 467 problem 

institutions, with total assets of $93.2 billion. 

During 2013, the FDIC issued the following formal and 

informal corrective actions to address safety and soundness 

concerns: 51 Consent Orders and 207 Memoranda of 

Understanding (MOUs). Of these actions, 22 Consent 

Orders and 27 MOUs were issued, based in whole or in part, 

on apparent violations of the BSA.

Compliance

As of December 31, 2013, 66 insured state nonmember 

institutions, about 2 percent of all supervised institutions, 

with total assets of $64 billion, were problem institutions for 

compliance, CRA, or both. All existing problem institutions 

for compliance were rated “4” for compliance purposes. 

For CRA purposes, the majority are rated “Needs to 

Improve,” and four are rated “Substantial Noncompliance.” 

As of December 31, 2013, all follow-up examinations for 

problem institutions were performed on schedule.

5 The CAMELS composite rating represents the adequacy of Capital, the quality of Assets, the capability of Management, the 

quality and level of Earnings, the adequacy of Liquidity, and the Sensitivity to market risk, and ranges from “1” (strongest) to “5” 

(weakest).

FDIC EXAMINATIONS 2011 – 2013

2013 2012 2011

Risk Management (Safety and Soundness): 

State Nonmember Banks 2,077 2,310 2,477

Savings Banks 203 249 227

Savings Associations 0 1 3

National Banks 0 1 1

State Member Banks 4 2 4

Subtotal–Risk Management Examinations 2,284 2,563 2,712

CRA/Compliance Examinations:

Compliance/Community Reinvestment Act 1,585 1,044 825

Compliance-only 396 611 921

CRA-only 5 10 11

Subtotal–CRA/Compliance Examinations 1,986 1,665 1,757

Specialty Examinations:

Trust Departments 406 446 466

Information Technology and Operations 2,323 2,642 2,802

Bank Secrecy Act 2,328 2,585 2,734

Subtotal–Specialty Examinations 5,057 5,673 6,002

Total 9,327 9,901 10,471
MANAGEMENT’S DISCUSSION AND ANALYSIS 21

Overall, banks demonstrated strong consumer compliance 

programs. The most significant consumer protection issue 

that emerged from the 2013 compliance examinations 

involved banks’ failure to adequately monitor third-party 

vendors. For example, we found violations involving unfair 

or deceptive acts or practices relating to issues such as 

failure to disclose material information about new products 

being offered, deceptive marketing and sales practices, and 

misrepresentations about the costs of products. As a result, 

the FDIC issued consumer restitution and civil money 

penalty actions.

During 2013, the FDIC issued the following formal and 

informal corrective actions to address compliance 

concerns: 19 Consent Orders and 55 MOUs. In certain 

cases, the Consent Orders issued by the FDIC contain 

requirements for institutions to pay restitution in the form 

of refunds to consumers for different violations of laws. 

During 2013, over $45 million was refunded to consumers 

by institutions subject to Consent Orders. These refunds 

primarily related to unfair or deceptive practices by 

institutions, as discussed above. Additionally, in 2013, the 

FDIC issued 54 Civil Money Penalties (CMPs) relating to 

consumer compliance.

Bank Secrecy Act/Anti-Money Laundering 

The FDIC pursued a number of BSA, Anti-Money 

Laundering (AML), and Counter-Terrorist Financing (CTF) 

initiatives in 2013. 

The FDIC held a symposium for approximately one-third 

of the agency’s 300 BSA/AML subject matter experts. 

Training topics covered electronic payments, suspicious 

activity monitoring, third-party payment processor 

relationships, foreign correspondent banking, money 

service businesses, and other higher-risk topics. In 

addition, a teleconference was held to discuss activity 

observed by the Office of Foreign Assets Control related to 

foreign correspondent transactions.

The FDIC conducted an International AML and CTF training 

session in November 2013, in the Dominican Republic, 

for members of the Association of Supervisors of Banks 

of the Americas (ASBA). The training focused on AML/

CTF controls, the AML examination process, customer due 

diligence, and suspicious activity monitoring, as well as 

AML compliance issues related to higher risk institutions, 

products, services, customers, and geographical locations.

Information Technology, Cyber Fraud, 

and Financial Crimes 

To address the specialized nature of technology-related 

supervision, cyber risks, and controls in the banking 

industry, the FDIC routinely conducts information 

technology (IT) examinations at FDIC-supervised 

institutions. The FDIC and other banking agencies also 

conduct IT examinations of major technology service 

providers (TSPs) that support financial institutions. 

The result of an IT examination is a rating under the 

Federal Financial Institutions Examination Council 

(FFIEC) Uniform Rating System for Information 

Technology (URSIT).

In 2013, the FDIC conducted 2,323 IT and operations risk 

examinations at financial institutions and TSPs. Further, as 

part of its ongoing supervision process, the FDIC monitors 

significant events, such as data breaches and natural 

disasters that may affect financial institution operations 

or customers.

In addition to the FDIC’s operations and technology 

examination program, the FDIC monitors cybersecurity 

issues in the banking industry on a regular basis through 

on-site examinations, regulatory reports, and intelligence 

reports. The FDIC works with groups such as the Financial 

and Banking Information Infrastructure Committee (FBIIC), 

the Financial Services Sector Coordinating Council for 

Critical Infrastructure Protection and Homeland Security 

(FSSCC), the Financial Services Information Sharing and 

Analysis Center (FS-ISAC), other regulatory agencies, law 

enforcement and others to share information regarding 

emerging issues and coordinate responses.

Throughout 2013, FDIC staff participated in workshops, 

sponsored by the National Institute of Standards and 

Technology (NIST), to develop the Cybersecurity 

Framework required by Executive Order 13636. The goal of 

the workshops was to create the initial body of standards, 

guidelines, best practices, tools, and procedures that will 

be used to populate the first draft of the Cybersecurity 
ANNUAL REPORT 2013

22 MANAGEMENT’S DISCUSSION AND ANALYSIS

Framework. Also, the FDIC has actively engaged through 

the FBIIC to participate in interagency discussions 

associated with various elements of the Executive Order.

Other major accomplishments during 2013 to promote IT 

security and combat cyber fraud and other financial crimes 

included the following:

♦ Held a Financial Crimes Conference for staff that 

focused on all types of financial fraud, and how the law 

enforcement community and regulators can effectively 

respond. The conference was co-sponsored by the U.S. 

Department of Justice and held in June 2013.

♦ Coordinated a nationwide video conference about 

distributed denial of service (DDoS) attacks with the FBI, 

financial regulatory agencies, large financial institutions, 

U.S. Treasury Department, and representatives from the 

largest technology service providers. There were over 

300 participants in 35 field offices.

♦ Published a Consumer News article about using 

technology to manage personal finances in the Spring 

2013 edition.

♦ Published a Supervisory Insights article on “The 

Evolution of Bank Information Technology Examinations” 

in the Summer 2013 edition.

♦ Hosted the FFIEC IT Examiners Conference that 

addressed technology and operational issues facing the 

federal financial regulatory agencies.

♦ Assisted financial institutions in identifying and shutting 

down “phishing” Websites that attempt to fraudulently 

obtain and use an individual’s confidential personal or 

financial information. 

♦ Issued a Consumer Alert pertaining to emails fraudulently 

claiming to be from the FDIC.

Minority Depository Institution Activities

The preservation of minority depository institutions (MDIs) 

remains a high priority for the FDIC. In June 2013, the 

FDIC hosted the 2013 Interagency Minority Depository 

Institution and Community Development Financial 

Institution Bank Conference. Every two years, the FDIC, 

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

the FRB host this important interagency conference for 

FDIC-insured MDIs to help preserve and promote their 

mission. The 2013 conference explored “Strategies for 

Success through Collaboration,” and encouraged interactive 

discussion among those who believe MDIs and Community 

Development Financial Institutions (CDFI) are uniquely 

positioned to create positive change in their communities. 

Nearly 120 MDI and CDFI bankers, representing 77 banks, 

attended.

In December 2012, the FDIC initiated a research-based 

study on MDIs. The study, conducted in earnest in 2013, 

sought to better understand the role MDIs play in our 

financial system and in our communities. It also addressed 

the types of challenges MDIs face in the post-crisis 

environment. The study followed a methodology similar 

to that used in the FDIC’s 2012 Community Banking Study, 

dividing institutions into groups of “community banks” 

and “non-community banks.” The study focused on 

structural changes in MDIs; their geography; the financial 

performance of MDIs over time; capital formation; and the 

broader community impact of these institutions. The FDIC 

anticipates that the study will be published in early 2014.

The FDIC continued to seek ways to improve 

communication and interaction with MDIs and to respond 

to the concerns of minority bankers. Many MDIs took 

advantage of FDIC technical assistance on nearly 60 bank 

supervision, compliance, and resolution and receivership 

topics, including, but not limited to, the following:

♦ Corporate Governance.

♦ New Capital Rules.

♦ Capital Stress Testing.

♦ New Mortgage Rules.

♦ Loan Underwriting and Administration.

♦ Troubled Debt Restructuring.

♦ Investment Policy and Investment Securities Monitoring.

♦ Funds Management.

♦ Interest Rate Risk Modeling/Stress Testing.

♦ Third-Party Risk.

♦ Internal Audit Programs.

♦ Information Technology Risk Assessment, Strategic 

Planning and Business Continuity Planning.
MANAGEMENT’S DISCUSSION AND ANALYSIS 23

♦ Home Mortgage Disclosure Act.

♦ Community Reinvestment Act.

♦ Bank Secrecy Act and Anti-Money Laundering.

♦ Branch Opening and Closing Requirements.

♦ Mergers/Acquisition.

♦ Prompt Corrective Action.

♦ FDIC Loss Share Agreements.

The FDIC continued to offer the benefit of having an 

examiner or a member of regional office management 

return to FDIC-supervised MDIs from 90 to 120 days 

after an examination, to provide technical assistance to 

management regarding examination recommendations, 

or to discuss other issues of interest. Several MDIs took 

advantage of this initiative in 2013. Also, the FDIC regional 

offices held outreach training efforts and educational 

programs for MDIs through conference calls and banker 

roundtables. Topics of discussion for these sessions 

included both compliance and risk management matters. 

Additional discussions included the economy, overall 

banking conditions, Basel III capital rules, new mortgage 

rules, and other bank examination issues.

Capital Rulemaking and Guidance

In July 2013, the FDIC acted on two important regulatory 

capital rulemakings. First, the FDIC joined the FRB 

and OCC in issuing rulemakings that significantly revise 

and strengthen risk-based capital regulations through 

implementation of the Basel III international accord 

(Basel III rulemaking). Second, these agencies also issued 

an NPR that would strengthen leverage capital requirements 

for the eight largest U.S. bank holding companies and their 

insured banks.

Basel III Rulemaking

The Basel III rulemaking adopts with revisions the notices 

of proposed rulemaking (NPRs) that the banking agencies 

proposed in June 2012 regarding the Basel Committee on 

Banking Supervision capital framework, the standardized 

approach for risk-weighted assets, and the advanced 

approaches for risk-based capital. The rule strengthens 

the definition of regulatory capital, increases risk-based 

capital requirements, and makes selected changes to 

the calculation of risk-weighted assets. It introduces a 

capital conservation buffer that, if breached, would trigger 

limitations on a bank’s capital distributions and certain 

other discretionary payments. The rule also incorporates 

standards of creditworthiness other than external credit 

ratings, consistent with the Dodd-Frank Act, and establishes 

due diligence requirements for securitization exposures. 

Banking organizations subject to the advanced 

approaches risk-based capital rule also must meet a 

3 percent supplementary leverage ratio requirement and 

a countercyclical capital buffer. Additionally, several 

enhancements to the advanced approaches risk-based 

capital rule are included in the rule to incorporate aspects 

of Basel III, as well as requirements introduced by the Basel 

Committee on Banking Supervision in the “Enhancements 

to the Basel II Framework” (2009 Enhancements).

The rule significantly changes aspects of the NPRs 

to address a number of community bank comments. 

Specifically, unlike the NPR, the rule retains the current 

risk-weighting approach for residential mortgages. It allows 

for an opt-out from the regulatory capital recognition of 

accumulated other comprehensive income (AOCI), except 

for large banking organizations that are subject to the 

advanced approaches capital requirements. Finally, the 

FRB has adopted the grandfathering provisions of Section 

171 of the Dodd-Frank Act for trust preferred securities 

issued by smaller bank holding companies.

The rule becomes effective January 1, 2015, for banking 

organizations not subject to the advanced approaches 

risk-based capital rule. For banking organizations that are 

subject to the advanced approaches capital requirements, 

the effective date is January 1, 2014. For all banking 

organizations, the interim final rule includes a phase-in 

period for certain aspects of the rule including the new 

capital ratios and adjustments to and deductions from 

regulatory capital.

Enhanced Supplementary Leverage Ratio Standards 

for Certain Bank Holding Companies and their 

Subsidiary Insured Depository Institutions

In July 2013, the federal banking agencies issued an NPR 

that would raise the supplementary leverage requirements 

for the largest, most systemically important banking 

organizations and their subsidiary insured depository 
ANNUAL REPORT 2013

24 MANAGEMENT’S DISCUSSION AND ANALYSIS

institutions (IDIs). The new requirements would apply to 

the largest, most interconnected banking organizations 

with at least $700 billion in total consolidated assets at the 

top-tier bank holding company or at least $10 trillion in 

assets under custody [covered Bank Holding Companies 

(BHCs)] and any IDI subsidiary of these bank holding 

companies (covered IDIs). For covered IDIs, the proposed 

rule would establish a supplementary leverage ratio of 

6 percent as a “well-capitalized” threshold for prompt 

corrective action. For covered BHCs, the proposed rule 

establishes a capital conservation buffer composed of 

tier 1 capital of 2 percent of total leverage exposure; 

therefore, these BHCs would need to maintain a 

supplementary leverage ratio of 5 percent to avoid 

restrictions on capital distributions.

The Enhanced Supplementary Leverage Ratio NPR was 

published in the Federal Register on August 20, 2013, and 

the comment period ended October 21, 2013. The FDIC is 

reviewing public comments and is working with the other 

federal banking agencies to develop a final rule.

Regulatory Reporting Under the Interim 

Final Capital Rule

In August 2013, the FDIC and the other federal banking 

agencies issued for comment the first stage of proposed 

revisions to the Consolidated Reports of Condition and 

Income (Call Report), which would align the regulatory 

capital components and ratios portion of the regulatory 

capital schedule with the Basel III revised regulatory 

capital definitions. The agencies also proposed to make 

similar changes to the Federal Financial Institutions 

Examination Council - FFIEC 101 regulatory capital report 

for advanced approaches institutions and to revise nine 

risk-weighted assets schedules in this report consistent 

with the revised advanced approaches regulatory capital 

rules. These proposed regulatory capital reporting changes 

would take effect as of the March 31, 2014, report date 

for advanced approaches banking organizations. The 

Call Report revisions would be applicable to all other 

institutions as of March 31, 2015. The second stage of Call 

Report revisions would update the risk-weighted assets 

portion of the regulatory capital schedule to reflect the 

standardized approach to risk weighting in the Basel III final 

rules effective as of the March 31, 2015, report date. The 

risk-weighted assets reporting proposal is expected to be 

published for comment in 2014. 

Stress Testing Guidance 

In July 2013, the FDIC, along with the other federal banking 

agencies, issued guidance that outlines high-level principles 

for implementation of Section 165(i) (2) of the Dodd-Frank 

Act stress tests for companies with $10 billion to $50 billion 

in consolidated assets.

The guidance discusses supervisory expectations for the 

Dodd-Frank Act stress test practices and offers additional 

details about methodologies that should be employed by 

these companies. It also underscores the importance of 

stress testing as an ongoing risk management practice that 

supports a company’s forward-looking assessment of its 

risks and better equips the company to address a range of 

macroeconomic and financial outcomes.

The comment period on this joint proposed guidance ended 

on September 25, 2013, and the final guidance is being 

developed.

Other Rulemaking and Guidance under the 

Dodd-Frank Act

The Dodd-Frank Act required various agencies to establish 

goals for the completion of rules and/or policy guidance 

on several topics. Although these goals were not included 

in the FDIC’s 2013 Annual Performance Plan, rules 

and guidance on these various topics were finalized or 

progressed in 2013. These topics include:

♦ Proprietary trading and other investment restrictions 

(often referred to as the “Volcker Rule”).

♦ Credit risk retention requirements for securitizations.

♦ Appraisal requirements for higher-priced mortgages.

♦ Examination standards for the classification and appraisal 

of securities.

♦ Capital, margin, and other requirements for over-thecounter (OTC) derivatives.

♦ Mortgage rules.
MANAGEMENT’S DISCUSSION AND ANALYSIS 25

Volcker Rule

On December 10, 2013, the FDIC, along with the other 

federal banking agencies, the Commodities Futures Trading 

Commission (CFTC), and the Securities and Exchange 

Commission (SEC), approved a joint final rule to implement 

the provisions of Section 619 of the Dodd-Frank Act, also 

known as the “Volcker Rule.” The Volcker Rule, which 

added new Section 13 to the BHC Act, generally prohibits 

any banking entity from engaging in proprietary trading or 

acquiring or retaining an interest in, sponsoring, or having 

certain relationships with, a hedge fund or private equity 

fund, subject to certain exemptions.

Based on comments received after issuance of the final rule, 

the agencies issued a joint interim final rule with request for 

comment on January 14, 2014, to permit banking entities to 

retain interests in and sponsorship of certain collateralized 

debt obligations backed primarily by trust preferred 

securities issued by community banks. Under the final 

rule, these investments would have met the definition of 

“covered funds” and would have been subject to investment 

prohibitions. The agencies also released a non-exclusive list 

of qualified collateralized debt obligations backed primarily 

by trust preferred securities to help banks determine 

compliance with the new interim final rule.

The final rule becomes effective April 1, 2014; the interim 

final rule would take effect on the same date. The FRB 

extended the conformance period until July 21, 2015. In 

the final rule, the agencies tailored the compliance program 

for banking entities engaged in covered activities based on 

asset size and amounts in trading assets and liabilities, and 

provided a phase-in of reporting of quantitative measures 

for covered trading activities. Beginning June 30, 2014, 

banking entities with $50 billion or more in consolidated 

trading assets and liabilities will be required to report 

quantitative measurements. Banking entities with at 

least $25 billion, but less than $50 billion, in consolidated 

trading assets and liabilities will become subject to this 

requirement on April 30, 2016. Those banking entities with 

at least $10 billion, but less than $25 billion, in consolidated 

trading assets and liabilities will become subject to the 

requirement on December 31, 2016. The agencies will 

review the data collected prior to September 30, 2015, and 

revise the collection requirement as appropriate. For ease 

of reference, the FDIC maintains a page on its Website 

dedicated to information on the Volcker Rule.

Credit Risk Retention for Securitizations

In August 2013, the FDIC, jointly with the OCC, the FRB, 

the Department of Housing and Urban Development (HUD), 

the SEC, and the Federal Housing Finance Agency (FHFA), 

approved an NPR to implement the securitization credit risk 

retention provisions of Section 941 of the Dodd-Frank Act 

(Section 941), which added Section 15G to the Securities 

and Exchange Act of 1934. This was the second NPR to 

implement that provision. Section 15G generally requires 

securitizers of asset-backed securities (ABS) to retain not 

less than 5 percent of the credit risk of assets collateralizing 

ABS issuances and generally prohibits a securitizer from 

directly or indirectly hedging or otherwise transferring the 

credit risk the securitizer is required to retain. Similar to 

the prior NPR, the current NPR provides the sponsors of 

ABSs with various options for meeting the risk retention 

requirements. As required by the Dodd-Frank Act, the 

proposed rule defines a “qualified residential mortgage” 

(QRM), that is, a mortgage which is statutorily exempt 

from risk retention requirements. The NPR would align 

the definition of QRM with the definition of “qualified 

mortgage” (QM) as prescribed by the Consumer Financial 

Protection Bureau (CFPB) in 2013 and asked for comment 

on an alternative definition. In addition, the proposed rule 

would: provide an exemption for securitizations solely 

collateralized by commercial mortgages, commercial real 

estate loans, or automobile loans, if such loans meet certain 

underwriting standards; and provide various securitization 

structure-specific risk retention options. The public 

comment period ended on October 30, 2013, and comments 

are under review. 

Appraisal Requirements for Higher-Priced Mortgages

In January 2013, the FDIC, jointly with the OCC, FRB, 

National Credit Union Administration (NCUA), FHFA, and 

CFPB, issued the final rule that establishes new appraisal 

requirements for higher-priced mortgage loans. Under the 

Dodd-Frank Act, mortgage loans are higher-priced if they 

are secured by a consumer’s home and have interest rates 

above certain thresholds. The final rule became effective on 

January 18, 2014.
ANNUAL REPORT 2013

26 MANAGEMENT’S DISCUSSION AND ANALYSIS

In July 2013, the FDIC, along with the OCC, FRB, NCUA, 

FHFA, and CFPB, issued a proposed rule that would create 

exemptions from certain appraisal requirements for a 

subset of higher-priced mortgage loans. The comment 

period ended on September 9, 2013. The rule was finalized 

in December 2013 and is effective January 18, 2014. 

The final rule provides that the following three types of 

higher-priced mortgage loans would be exempt from the 

Dodd-Frank Act appraisal requirements: loans of $25,000 

or less; certain “streamlined” refinancings; and certain loans 

secured by manufactured housing.

Uniform Agreement on the Classification 

and Appraisal of Securities Held by 

Financial Institutions

In October 2013, the FDIC issued interagency guidance 

with the OCC and the FRB that revised examination 

standards for the adverse classification of securities held 

in bank investment portfolios. The guidance reiterates 

the importance of a robust investment analysis process 

and the agencies’ longstanding asset classification 

definitions. It also addresses Section 939A of the 

Dodd-Frank Act, which directed the agencies to remove 

any reference to, or requirement of reliance on, credit 

ratings in regulations and replace them with appropriate 

standards of creditworthiness. State nonmember 

institutions are expected to perform an investment 

security creditworthiness assessment that does not rely 

solely on external credit ratings. FDIC examiners will use 

the statement to determine whether an asset should be 

adversely classified during supervisory reviews.

Over-The-Counter Derivatives

The U.S. regulators, including the FDIC, in their capacity as 

members of the Basel Committee on Banking Supervision, 

negotiated with international regulators to develop 

international standards that will be used to implement the 

margin requirements for uncleared OTC derivatives. The 

international convergence document was published in 

early September 2013, and U.S. rulemaking activities 

are continuing.

Mortgage Rules

In January 2013, the CFPB issued, after required 

consultation with the FDIC and the other financial 

regulatory agencies, a number of final rules to implement 

various provisions of the Mortgage Reform and AntiPredatory Lending Act, i.e., Title XIV of the Dodd-Frank 

Act. Key areas of the new rules include: (1) determining 

a consumer’s ability to repay and the qualified mortgage 

safe harbor; (2) loan originator compensation; (3) mortgage 

loan servicing; (4) new escrow requirements; (5) new 

requirements and expanded coverage under the Home 

Ownership and Equity Protection Act (HOEPA); (6) new 

requirements under the Equal Credit Opportunity Act 

(ECOA); and (7) implementing Regulation B. In addition, 

the CFPB issued or proposed several supplemental rules 

during 2013 to clarify certain aspects of many of the rules. 

To ensure examiner preparedness and to assist FDICsupervised institutions in their compliance planning for this 

significant overhaul of mortgage regulation, throughout 

2013, the FDIC worked extensively to develop and issue 

training materials for its examiners in advance of January 

2014, when the rules generally were effective. The FDIC 

also hosted a series of banker outreach calls, providing 

overviews of the new rules and answering questions, in 

collaboration with the CFPB.

On December 13, 2013, the FDIC, along with the OCC, 

FRB, and NCUA, issued a statement to clarify safetyand-soundness expectations and CRA considerations for 

regulated institutions engaged in residential mortgage 

lending in light of the CFPB’s Ability-to-Repay and Qualified 

Mortgage (QM) Standards Rule, which was issued January 

10, 2013, and was effective on January 10, 2014. The 

agencies recognize that many institutions may originate 

both QM and non-QM residential mortgage loans, based on 

the institution’s business strategy and risk appetite. The 

agencies will not subject a residential mortgage loan to 

regulatory criticism based solely on the loan’s status as a 

QM or a non-QM.

Liquidity and Funds Management 

Rulemaking and Guidance

Liquidity Coverage Ratio

In October 2013, the FDIC, together with the OCC and the 

FRB, issued an interagency proposed rule to implement 

the Liquidity Coverage Ratio (LCR). The proposed rule 

would implement a quantitative liquidity requirement 

consistent with the LCR established by the Basel Committee 
MANAGEMENT’S DISCUSSION AND ANALYSIS 27

on Banking Supervision. The requirement would apply to 

large, internationally active banking organizations and their 

consolidated subsidiary depository institutions with $10 

billion or more in total consolidated assets. The proposal 

requires banks to hold a minimum level of liquid assets to 

support contingent liquidity events and provides a standard 

way of expressing a bank’s on-balance sheet liquidity 

position to stakeholders and supervisors. The proposal 

establishes a transition schedule that is more accelerated 

than the Basel standard as it would require covered 

companies to fully meet the minimum LCR by January 1, 

2017, two years earlier than Basel requires.

The LCR proposal was published in the Federal Register

on November 29, 2013, and comments were due by 

January 31, 2014.

Depositor and Consumer Protection 

Rulemaking and Guidance

Guidance on Social Media

In December 2013, the FFIEC, on behalf of its members 

(the FDIC, CFPB, FRB, NCUA, OCC, and State Liaison 

Committee), issued final supervisory guidance on the 

applicability of consumer protection and compliance laws, 

regulations, and policies to activities conducted via social 

media by banks, savings associations, and credit unions, 

as well as nonbank entities supervised by the CFPB and 

state regulators. The final guidance is intended to help 

financial institutions understand and manage the potential 

consumer compliance, legal, reputation, and operational 

risks associated with the use of social media. It provides 

considerations that financial institutions may find useful in 

conducting risk assessments and crafting and evaluating 

policies and procedures regarding social media. 

Revisions to Interagency Questions and Answers 

Regarding Community Reinvestment

In November 2013, the FDIC, FRB, and OCC published 

revisions to “Interagency Questions and Answers Regarding 

Community Reinvestment.” The Questions and Answers 

document provides additional guidance to financial 

institutions and the public on the agencies’ CRA regulations. 

The revisions focus primarily on community development.

Guidance on Reporting Financial Abuse 

of Older Adults

In September 2013, the FDIC, CFPB, CFTC, Federal Trade 

Commission (FTC), NCUA, OCC, and SEC issued guidance 

to clarify that the privacy provisions of the Gramm-LeachBliley Act generally permit financial institutions to report 

suspected elder financial abuse to appropriate authorities. 

The Act generally requires that a financial institution 

notify consumers and give them an opportunity to opt out 

before providing nonpublic personal information to a third 

party. The guidance clarifies that it is generally acceptable 

under the law for financial institutions to report suspected 

elder financial abuse to appropriate local, state, or federal 

agencies.

Other Rulemaking and Guidance Issued

During 2013, the FDIC issued and participated in the 

issuance of other rulemaking and guidance in several areas 

as described below.

Guidance on Deposit Advance Products

In November 2013, the FDIC published supervisory 

guidance to FDIC-supervised financial institutions that offer 

or may consider offering deposit advance products. The 

guidance is intended to ensure that banks are aware of a 

variety of safety and soundness, compliance, and consumer 

protection risks posed by deposit advance loans. It 

supplements the FDIC’s existing guidance on payday loans 

and subprime lending, and encourages banks to respond to 

customers’ small-dollar credit needs.

FDIC Supervisory Approach to Payment Processing 

Relationships with Merchant Customers That Engage 

in Higher-Risk Activities

In September 2013, the FDIC issued guidance clarifying 

its policy and supervisory approach related to facilitating 

payment processing services directly, or indirectly 

through a third party, for merchant customers engaged 

in higher-risk activities. Facilitating payment processing 

for these types of merchant customers can pose risks to 

financial institutions; however, those that properly manage 

these relationships and risks are neither prohibited nor 

discouraged from providing payment processing services to 

customers operating in compliance with applicable law. 
ANNUAL REPORT 2013

28 MANAGEMENT’S DISCUSSION AND ANALYSIS

Modifications to the Statement of Policy for 

Section 19 of the Federal Deposit Insurance Act

On February 8, 2013, the FDIC modified the Statement 

of Policy for Section 19 of the Federal Deposit Insurance 

Act. Section 19 of the Act prohibits, without prior written 

consent of the FDIC, a person convicted of a criminal 

offense involving dishonesty, breach of trust, money 

laundering, or who has entered into a pretrial diversion 

program, from participating in the affairs of an FDICinsured institution. The updated Statement of Policy 

included modifications to the de minimis exceptions 

regarding the potential fine and the number of days of 

imprisonment. These modifications to the de minimis 

criteria are expected to reduce the number of Section 19 

applications and regulatory burden, consistent with safety 

and soundness.

Recordkeeping and Confirmation Requirements for 

Securities Transactions

On September 4, 2013, the FDIC published an NPR 

regarding the removal of Part 390, Subpart K (formerly OTS 

Part 551), which governs recordkeeping and confirmation 

requirements for securities transactions effected for 

customers by state savings associations. The FDIC carefully 

reviewed Part 390, Subpart K, and compared it with Part 

344, a substantially identical FDIC regulation governing 

recordkeeping and confirmation requirements for securities 

transactions effected for customers by state nonmember 

banks. Although the two rules are substantively the same, 

one difference between Part 390, Subpart K and Part 344 

concerned the number of securities transactions that 

could be effected by an IDI without triggering certain 

reporting and confirmation requirements (Small Transaction 

Exception). The threshold for Part 390, Subpart K’s Small 

Transaction Exception is an average of 500 or fewer 

transactions over the prior three calendar year period. The 

NPR proposed amending Part 344 to increase the threshold 

for the Small Transaction Exception applicable to all FDICsupervised institutions effecting securities transactions 

for customers from an average of 200 transactions to 500 

transactions per calendar year over the prior three calendar 

year period. The FDIC supports the idea that increasing 

the number of securities transactions to which the Small 

Transaction Exception would apply will ensure parity for 

all FDIC-supervised institutions. Increasing the threshold 

for the Small Transaction Exception also recognizes that 

the securities activities of FDIC-supervised depository 

institutions have increased over the three decades since 

the FDIC established the original scope of the Small 

Transaction Exception. The comment period for the NPR 

ended on November 4, 2013, with no comments having been 

received. Consequently, on December 10, 2013, the FDIC 

issued a final rule as proposed in the NPR without change; 

the Final Rule was effective January 21, 2014.

Guidance on Interest Rate Risk Management

In October 2013, the FDIC issued a Financial Institution 

Letter (FIL) reiterating expectations for institutions 

to prudently manage their interest rate risk exposure, 

particularly in a challenging interest rate environment. 

The guidance reminds institutions that interest rate risk 

management should be viewed as an ongoing process 

that requires effective measurement and monitoring, 

clear communication of modeling results, conformance 

with policy limits, and appropriate steps to mitigate risk. 

The guidance states that a number of institutions report 

a significantly liability-sensitive balance sheet position, 

which means that in a rising interest rate environment, the 

potential exists for adverse effects to net income and, in 

turn, earnings performance. Additionally, for a number 

of FDIC-supervised institutions, the potential exists for 

material securities depreciation relative to capital in a rising 

interest rate environment.

Advisory on Mandatory Clearing Requirements for 

Over-the-Counter Interest Rate and Credit Default 

Swap Contracts

On June 7, 2013, the FDIC completed a supervisory 

advisory on mandatory clearing requirements for over-thecounter interest rate and credit default swap contracts. 

This guidance was issued as an advisory because the 

requirements are Commodity Futures Trading Commission 

regulations that could impact FDIC-supervised institutions.

Qualified and Non-Qualified Mortgage Loans

On December 13, 2013, the FDIC, along with the OCC, 

FRB, and NCUA, issued a statement to clarify safetyand-soundness expectations and CRA considerations for 

regulated institutions engaged in residential mortgage 

lending in light of the CFPB’s Ability-to-Repay and Qualified 
MANAGEMENT’S DISCUSSION AND ANALYSIS 29

Mortgage (QM) Standards Rule, which was issued January 

10, 2013, and was effective on January 10, 2014. The 

agencies recognize that many institutions may originate 

both QM and non-QM residential mortgage loans, based on 

the institution’s business strategy and risk appetite. The 

agencies will not subject a residential mortgage loan to 

regulatory criticism based solely on the loan’s status as a 

QM or a non-QM.

Interagency Guidance on Leveraged Lending

On March 26, 2012, the FDIC and the other federal banking 

agencies proposed revisions to the 2001 interagency 

guidance on leveraged financing. The proposal’s purpose 

was to update the existing guidance and clarify regulatory 

expectations in light of significant growth in the leveraged 

lending market, and incorporate lessons learned from the 

recent financial crisis. The proposal describes expectations 

for the sound risk management of leveraged lending 

activities, including well-defined underwriting standards, 

effective management information systems, a prudent credit 

limit and concentration framework, and strong pipeline 

management policies. In March 2013, the OCC, the FRB, 

and the FDIC issued final guidance on leveraged lending. 

This guidance outlined for agency-supervised institutions 

high-level principles related to safe-and-sound leveraged 

lending activities, including expectations for the content of 

credit policies, the need for well-defined underwriting and 

valuation standards, and the importance of credit analytics 

and pipeline management. This guidance was effective on 

March 22, 2013.

Director and Officer Liability Insurance Policies

On October 12, 2013, the FDIC issued an Advisory 

Statement on Director and Officer Liability Insurance 

Policies, Exclusions, and Indemnification for Civil 

Money Penalties. The advisory discusses the importance 

of thoroughly reviewing and understanding the risks 

associated with coverage exclusions contained in director 

and officer liability insurance policies and serves as 

a reminder that an insured depository institution or 

depository institution holding company may not purchase 

an insurance policy that would indemnify institutionaffiliated parties (IAPs) for CMPs assessed against 

them. Even if the IAP agrees to reimburse the depository 

institution for the cost of such coverage, the purchase of the 

insurance policy by the depository institution is prohibited.

Interagency Supervisory Guidance on 

Troubled Debt Restructurings

On October 24, 2013, the FDIC and the other federal 

financial institution regulatory agencies jointly issued 

supervisory guidance clarifying certain issues related to 

the accounting treatment and regulatory classification 

of commercial and residential real estate loans that have 

undergone troubled debt restructurings (TDRs). The 

agencies’ guidance reiterates key aspects of previously 

issued guidance and discusses the definition of a collateraldependent loan and the classification and charge-off 

treatment for impaired loans, including TDRs. It also 

encourages institutions to work constructively with 

borrowers and reaffirms that the agencies view prudent 

loan modifications as positive actions when they mitigate 

credit risk. The guidance explains that when modified 

loans are determined to be TDRs for accounting purposes, 

the TDR label does not mean that the loan is automatically 

required to be in nonaccrual status, or to be adversely 

classified, for its remaining life.

Income Tax Allocation in a Holding 

Company Structure

In December 2013, the FDIC and the other federal banking 

agencies issued for comment a proposed Addendum to 

the 1998 Interagency Policy Statement on Income Tax 

Allocation in a Holding Company Structure. Since the 

beginning of the financial crisis, many disputes have 

occurred between holding companies in bankruptcy and 

failed IDIs regarding the ownership of tax refunds generated 

by the IDIs. Certain court decisions have found that holding 

companies in bankruptcy own tax refunds created by failed 

IDIs based on language in their tax-sharing agreements 

that the courts interpreted as creating a debtor-creditor 

relationship as opposed to acknowledging an agency 

relationship. The proposed Addendum seeks to remedy this 

problem by requiring IDIs to clarify that their tax sharing 

agreements acknowledge that an agency relationship exists 

between the holding company and its subsidiary IDI with 

respect to tax refunds, and provides a sample paragraph to 

accomplish this goal. The proposed Addendum would also 
ANNUAL REPORT 2013

30 MANAGEMENT’S DISCUSSION AND ANALYSIS

clarify how certain requirements of Sections 23A and 23B of 

the Federal Reserve Act apply to tax allocation agreements 

between IDIs and their affiliates. The comment period 

closed on January 21, 2014.

Regulatory Relief

During 2013, the FDIC issued six FILs that provide guidance 

to help financial institutions and facilitate recovery in areas 

damaged by wildfires and other natural disasters. In these 

FILs, the FDIC encouraged banks to work constructively 

with borrowers experiencing financial difficulties as a result 

of natural disasters, and clarified that prudent extensions 

or modifications of loan terms in such circumstances can 

contribute to the health of communities and serve the 

long-term interests of lending institutions. 

On February 19, 2013, FDIC-supervised institutions were 

informed that they could begin submitting interagency 

bank merger applications, notices of change in control, and 

notices of change of director or senior executive officer 

through FDICconnect, a secure transaction-based Website 

for FDIC-insured institutions.

On July 25, 2013, the FDIC issued, jointly with the other 

federal banking agencies, a Statement to Encourage 

Financial Institutions to Work with Student Loan 

Borrowers Experiencing Financial Difficulties. In 

addition, on October 9, 2013, the FDIC along with 

other federal regulatory agencies issued a Statement to 

Encourage Institutions to Work with Borrowers Affected 

by Government Shutdown.

Banker Teleconferences

In 2013, the FDIC hosted a series of banker teleconferences 

to maintain open lines of communication and update 

supervised institutions about related rulemakings, guidance, 

and emerging issues in risk management supervision, and 

compliance and consumer protection. Participants of the 

teleconferences included bank directors, officers, staff, and 

other banking industry professionals.

For the risk management supervision series, four 

teleconferences were held in 2013. The topics discussed 

included: (1) the Financial Accounting Standards Board’s 

proposal to change the accounting for credit losses, (2) 

leveraged lending guidance, (3) the interim final capital rule, 

and (4) emerging technology issues for banks and servicers.

For the compliance and consumer protection series, five 

teleconferences were held in 2013. The topics discussed 

included: (1) the CFPB’s final rules on the ability to repay, 

qualified mortgage standards, escrow requirements, and 

the loan originator compensation requirements involving 

the prohibition on mandatory arbitration clauses and 

single premium credit insurance, (2) the CFPB’s final 

rules on mortgage servicing, (3) the CFPB’s final rules on 

loan originator compensation and changes to the HOEPA, 

( 4) consumer complaints and their role in institutions’ 

compliance management systems; and 5) the FFIEC social 

media guidance.

Promoting Economic Inclusion

The FDIC is strongly committed to promoting consumer 

access to a broad array of banking products to meet 

consumer financial needs. To promote financial access 

to responsible and sustainable products offered by IDIs, 

the FDIC:

♦ Conducts research on the unbanked and underbanked.

♦ Engages in research and development on models of 

products meeting the needs of lower-income consumers.

♦ Supports partnerships to promote consumer access and 

use of banking services.

♦ Advances financial education and literacy.

♦ Facilitates partnerships to support community and small 

business development.

Advisory Committee on Economic Inclusion 

The Advisory Committee on Economic Inclusion (ComE-IN) 

provides the FDIC with advice and recommendations 

on important initiatives focused on expanding access to 

banking services to underserved populations. This may 

include reviewing basic retail financial services such as 

check cashing, money orders, remittances, stored value 

cards, small-dollar loans, savings accounts, and other 

services that promote individual asset accumulation and 

financial stability. During 2013, the Committee met in May 

and October to discuss savings initiatives; Safe Accounts, 

including bank prepaid cards, and mobile financial 

services. During the October meeting, staff presented to 

the Committee a plan for producing a white paper on IDIs’ 

use of mobile financial services (MFS) to better serve the 
MANAGEMENT’S DISCUSSION AND ANALYSIS 31

unbanked and underbanked. The presentation outlined 

three goals for the use of this technology: access to the 

banking system for the unbanked, sustainability for the 

underbanked or new entrants to the system, and growth 

of consumers’ ability to deepen banking relationships and 

fulfill financial goals.

FDIC National Survey of Unbanked and 

Underbanked Households and Survey of Banks’ 

Efforts to Serve the Unbanked and Underbanked

As part of its ongoing commitment to expanding economic 

inclusion in the United States, the FDIC works to fill the 

research and data gap regarding household participation 

in mainstream banking and the use of nonbank financial 

services. In addition, Section 7 of the Federal Deposit 

Insurance Reform Conforming Amendments Act of 2005 

(Reform Act) mandates that the FDIC regularly report 

on banks’ efforts to bring individuals and families into 

the conventional finance system. In response, the FDIC 

regularly conducts and reports on surveys of households 

and banks to inform the efforts of financial institutions, 

policymakers, regulators, researchers, academics, 

and others.

During 2013, the FDIC revised the household survey 

instrument and conducted the third nationwide survey 

in partnership with the U.S. Census Bureau. The survey 

focuses on basic checking and savings account ownership, 

but it also explores households’ use of alternative financial 

services to better understand the extent to which families 

are meeting their financial needs outside of mainstream 

financial institutions. Results of the survey will be 

published in 2014.

The FDIC’s planned initiation of work on a new survey 

of banks about their efforts to serve unbanked and 

underbanked customers was delayed until 2014. During 

2013, the FDIC explored alternative methods for gathering 

this information from banks, including the possible 

incorporation of this data collection into a larger survey of 

banks on the challenges and opportunities they are facing 

(an outgrowth of the FDIC’s Community Banking Initiative).

Partnership to Promote Consumer Access: 

Alliance for Economic Inclusion 

The goal of the FDIC’s Alliance for Economic Inclusion 

(AEI) initiative is to collaborate with financial institutions; 

community organizations; local, state, and federal agencies; 

and other partners in select markets, to launch broad-based 

coalitions to bring unbanked and underbanked consumers 

and owners of small businesses into the financial 

mainstream.

During 2013, the FDIC supported 16 AEI programs across 

the nation. Many AEIs formed committees and work groups 

to address specific challenges and financial services needs 

of their communities. These included retail financial series 

for underserved populations, savings initiatives, affordable 

remittance products, small-dollar loan programs, targeted 

financial education programs, and other asset-building 

programs.

In 2012, the FDIC launched AEI initiatives in two additional 

markets: the Appalachian region of West Virginia and 

Northeastern Oklahoma. In 2013, these new efforts 

expanded focus in two particular areas of need: small 

business and tribal organizations. The West Virginia AEI, 

working in collaboration with the Appalachian Regional 

Commission, collaborates with state-wide and local service 

providers to support financial access for small business and 

Chairman Gruenberg emphasizes a point during the 

May 2013 ComE-IN meeting.
ANNUAL REPORT 2013

32 MANAGEMENT’S DISCUSSION AND ANALYSIS

microenterprise in the state. The AEI partners hosted three 

Small Business Resource Summits in Wheeling, Huntington, 

and Fairmont to provide resources and educational 

opportunities to the small business community. The 

Northeast Oklahoma AEI (NEOK AEI) serves a significant 

Native American community as well as the City of Tulsa, 

Oklahoma. Oklahoma has a larger Native American 

population than any state other than California, and about 

60 percent of the state’s Native Americans lives in the 

northeastern quadrant. In 2013, the NEOK AEI initiated 

work to support consumers interested in improving their 

credit profile and worked with America Saves in supporting 

the first Oklahoma Saves campaign.

The FDIC also provided program guidance and technical 

assistance in the expansion of 52 Bank On programs. 

Bank On initiatives are designed to reduce barriers to 

banking and increase access to the financial mainstream. 

Advancing Financial Education 

The FDIC expanded its financial education efforts during 

2013 through a strategy that included providing access to 

timely and high-quality financial education products, 

sharing best practices, and working through partnerships 

to reach consumers.

The existing suite of Money Smart products for consumers 

was enhanced with the release of Money Smart for Older 

Adults in partnership with the CFPB. This stand-alone 

training module developed by both agencies provides 

information to raise awareness among older adults (age 62 

and older) and their caregivers on how to prevent, identify, 

and respond to elder financial exploitation, plan for a secure 

financial future, and make informed financial decisions. 

The instructor-led module offers practical information that 

can be implemented immediately. Money Smart for Older 

Adults is designed to be delivered by representatives of 

A group of dedicated individuals within both the FDIC and the CFPB joined forces to deliver a new product 

designed to help older Americans make informed financial decisions and avoid exploitation. Members of the 

FDIC team, shown here from left, are Cassandra Duhaney, Debra Stabile, Irma Matias, Lekeshia Frasure, Luke 

Reynolds, Ron Jauregui, James Williams, Evelyn Manley, and Glenn Gimble. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 33

financial institutions, adult protective service agencies, 

senior advocacy organizations, law enforcement, and 

others that serve this population. Between its release on 

June 12, 2013, and December 31, 2013, more than 15,000 

copies were released.

Through training and technical assistance, the FDIC 

emphasizes the importance of pairing education with access 

to appropriate banking products and services. The FDIC 

conducted more than 173 outreach events to promote 

the Money Smart program, including 68 train-the-trainer 

workshops with approximately 1,200 participants. More 

than 35,000 Money Smart instructor-led curriculum copies 

were distributed, and more than 50,000 people used the 

computer-based curriculum, exemplifying effective results 

from the outreach sessions. The FDIC also entered into 

23 new collaborative agreements with financial institutions 

and nonprofit organizations, to facilitate the use of the 

Money Smart program. 

A series of webinars for bankers on community 

development and economic inclusion topics were piloted 

during 2013. Five webinars were conducted during 2013 

and each averaged more than 400 participants.

Leading Community Development

In 2013, the FDIC provided professional guidance and 

technical assistance to banks and community organizations 

in outreach activities and events designed to foster 

an understanding and connection between financial 

institutions and other community stakeholders. As 

such, the FDIC conducted 49 community development 

forums linking bank and community partners to facilitate 

opportunities for banks and community stakeholders 

to address community credit and development needs, 

including interagency resource forums with the OCC and 

the Federal Reserve Banks and other stakeholders in the 

recovery efforts of communities in the Northeast impacted 

by Superstorm Sandy. The FDIC also conducted 50 CRA 

roundtables that provided market-specific training for 

bankers and 32 workshops for nonprofit stakeholders on 

CRA, effectively engaging with financial institutions to 

promote community development.

Community Banking Initiatives

The FDIC is the lead federal regulator for the majority 

of community banks, and the insurer of all. As such, the 

FDIC has an ongoing responsibility to better understand 

the challenges facing community banks, and to share 

that knowledge with bankers and the general public. 

Community banks play a crucial role in the American 

financial system. These institutions account for about 14 

percent of the banking assets in our nation, but they provide 

nearly 46 percent of all the small loans that FDIC-insured 

depository institutions make to businesses and farms. 

They also hold the majority of industry deposits in banking 

offices located in rural counties and micropolitan counties 

with populations up to 50,000.

In 2012, the FDIC issued a comprehensive study of the 

evolution of community banking in the United States 

over the past 25 years, and commenced a review of 

its examination, rulemaking, and guidance processes 

with a goal of identifying ways to make the supervisory 

process more efficient, consistent, and transparent. Our 

2012 activities under this initiative included a national 

conference on the Future of Community Banking and a 

series of roundtables with community bankers in each of 

the FDIC’s six regions.

These efforts under the Community Banking Initiative 

continued on a number of fronts in 2013. First, the results 

of the 2012 FDIC Community Banking Study were 

presented to a range of industry and academic audiences, 

furthering our dialogue with key stakeholder groups as to 

the trends that are shaping this key sector of our financial 

system. Using our research definition of the community 

bank, we published updated community bank reference 

data on fdic.gov to reflect year-end 2012 data. Employing 

these data, our researchers found that community banks 

experienced a significant decline in problem loans, loan loss 

provisions, and failures during 2012, while they expanded 

their loan portfolios and were more profitable than in any 

year since 2007.

FDIC researchers applied the analytical framework 

developed for our Community Banking Study to the case of 

MDIs. While MDIs represent a fairly small share of banking 

industry charters and assets, they were found to be highly 
ANNUAL REPORT 2013

34 MANAGEMENT’S DISCUSSION AND ANALYSIS

effective in reaching the minority and low- and moderateincome communities that they have been chartered to serve. 

Preliminary research results were presented in June at the 

2013 Interagency Minority Depository Institution and CDFI 

Bank Conference, and a written report is forthcoming.

Ongoing research topics include the effects of rural 

depopulation on community banks and the contribution of 

community banks to small business lending. In October 

2013, FDIC researchers presented a paper entitled “Do 

Community Banks Increase New Firms’ Access to Credit?” 

at the “Community Banking in the 21st Century,” conference 

co-sponsored by the FRB and the Conference of State Bank 

Supervisors (CSBS). These and other research initiatives 

will continue in 2014.

The FDIC also has continued and enhanced its examination 

and rulemaking review. Based on feedback received 

at community banker roundtables and our ongoing 

review of the FDIC’s bank examination process, the 

FDIC implemented enhancements to our supervisory 

and rulemaking processes in 2013. The FDIC developed 

a Web-based tool to tailor information requests for risk 

management examinations to the characteristics of the 

institution being examined. As a result, information 

requests have generally been shorter than previous 

examination request lists. In addition, more business 

transactions have been made available through 

FDICconnect, a secure, transactions-based Website, which 

ensures better access for bankers and supervisory staff.

The FDIC also has enhanced its efforts to actively 

communicate with the institutions it supervises. The 

FDIC developed an information package to be sent to the 

institution prior to the start of the pre-examination phase of 

compliance examinations to improve communication with 

the field manager and to offer resources that are available 

to the institution at any time throughout the examination 

process. The FDIC has also developed a brochure for 

community bankers entitled “Technical Assistance for 

Managing Consumer Compliance Responsibilities,” 

highlighting ways in which examiners can provide 

assistance to community banks.

The Directors’ Resource Center, a special section of the 

FDIC’s Website, is dedicated to providing useful information 

to bank directors, officers, and employees on areas of 

supervisory focus and regulatory changes. One key element 

of this resource center is a Technical Assistance Video 

Program. Three series of videos were released during 2013. 

The first series is the new director education videos; these 

videos cover director responsibilities and fiduciary duties 

as well as the FDIC examination process. The second 

series is a virtual version of the FDIC’s Directors’ College 

Program; these videos address interest rate risk, third-party 

risk, the CRA, the BSA, corporate governance, and 

information technology. The third series of videos provides 

more in-depth technical training on a variety of issues, 

including interest rate risk, appraisals and evaluations, 

flood insurance, the evaluation of municipal securities, 

fair lending, the allowance for loan and lease losses, and 

troubled debt restructurings.

FDIC staff look at video monitors of the set during 

filming of the bank director videos. From left: 

Lou Bervid, Rob Moss, Vince Moore, and 

Arnie Kunkler.
MANAGEMENT’S DISCUSSION AND ANALYSIS 35

The FDIC’s Website also has a section dedicated to the 

Regulatory Capital Interim Final Rule. This section 

contains links to the rule, pertinent FILs, instructions 

for regulatory reporting, and other items. The FDIC 

conducted comprehensive outreach to community banks 

to inform them about the new requirements. Several 

resources targeted to community institutions include an 

educational video, an interagency community bank guide, 

and an expanded guide for FDIC- supervised institutions. 

The FDIC also responds to questions submitted to 

regulatorycapital@fdic.gov, a dedicated mailbox for 

questions on the new rule. Additionally, to supplement 

the online informational resources, staff hosted outreach 

sessions in each regional office to discuss the new 

requirements and address bankers’ questions and concerns. 

On August 15, 2013, staff held a national conference call 

that had wide participation from bankers as well as FDIC 

supervisory and examination team members, with nearly 

1,700 lines used for the call. In November 2013, the FDIC, 

with the other federal banking agencies, released an 

estimation tool to help community bankers evaluate the 

potential effects on their capital ratios from the revised 

capital approaches.

In addition, the FDIC’s Advisory Committee on Community 

Banking continued to provide timely information and input 

to the FDIC on a variety of community bank policy and 

operational issues throughout 2013. The Committee held 

three meetings in 2013 and provided input on a number of 

key issues and initiatives, including the FDIC’s community 

bank study and report, community bank outreach and 

technical assistance, proposed improvements to the FDIC’s 

regulatory and supervisory processes, mobile banking 

issues, payment system developments and implications, 

information technology examination issues, vendor 

management issues, troubled debt restructuring guidance, 

the Uniform Agreement on Classification and Appraisal of 

Securities, bank cybersecurity issues, the Money Smart

for Small Businesses Program, flood insurance issues, the 

interagency social media guidance, as well as the potential 

effects of various regulatory and legislative developments 

on community banks.

Looking forward, the FDIC will continue to make 

community bank issues a high priority by following up 

on the Community Banking Study; pursuing additional 

research relating to the continued viability of community 

banks; and continuing our review of examination and 

rulemaking processes with the goal of identifying additional 

ways to make the supervisory process more efficient, 

consistent, and transparent, consistent with safe and sound 

banking practices. The FDIC will also be commencing a 

comprehensive review of all of its regulations, as required 

by the Economic Growth and Regulatory Paperwork 

Reduction Act, to identify any regulations that are outdated, 

unnecessary or unduly burdensome, with a focus on 

community banking issues.

Consumer Complaints and Inquiries

The FDIC assists consumers by receiving, investigating, and 

responding to consumer complaints about FDIC-supervised 

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. 

The 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 to identify trends or problems 

affecting consumer rights, understand the public perception 

of consumer protection issues, formulate policy that aids 

consumers, and foster confidence in the banking system 

by educating consumers about the protection they receive 

under certain consumer protection laws and regulations.

Consumer Complaints by Product and Issue

The FDIC receives complaints and inquiries by telephone, 

fax, mail, email, and online through the FDIC’s Website. 

Between January 1, 2013, and December 31, 2013, the FDIC 

handled 16,887 written and telephone complaints and 

inquiries. Of this total, 8,271 related to FDIC-supervised 

institutions. The FDIC responded to over 97 percent 

of these 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 and inquiry handling process, the 

FDIC works collaboratively with the other federal financial 

regulatory agencies to ensure that complaints and inquiries 

are forwarded to the appropriate agencies for response.
ANNUAL REPORT 2013

36 MANAGEMENT’S DISCUSSION AND ANALYSIS

The FDIC carefully analyzes the products and issues 

involved in complaints about FDIC-supervised institutions. 

The number of complaints received about a specific bank 

product and issue can serve as a red flag to prompt further 

review of practices that may raise consumer protection or 

supervisory concerns. 

Between January 1, 2013, and December 31, 2013, the five 

most frequently identified consumer product complaints 

about FDIC-supervised institutions concerned checking 

accounts (18 percent), unsecured credit cards (15 percent), 

residential real estate loans (14 percent), bank operations 

(9 percent), and business and commercial loans (7 

percent). The issues most commonly cited in checking 

account complaints related to banks’ overdraft fees and 

service charges. Unsecured credit card complaints most 

frequently described billing disputes and error resolution. 

The largest share of complaints about residential real estate 

loans related to loan modifications, while business and 

commercial loan complaints usually involved repossession 

and foreclosure. Many complaints regarding bank 

operations raised issues about bank management and staff.

The FDIC investigated 80 complaints alleging discrimination 

between January 1, 2013, and December 31, 2013. The 

number of discrimination complaints investigated has 

fluctuated over the past several years but averaged 

approximately 104 complaints per year between 2007 and 

2013. Over this period, 37 percent of these complaints 

investigated alleged discrimination based on the race, color, 

national origin, or ethnicity of the applicant or borrower. 

Twenty-five percent related to discrimination allegations 

based on age, 8 percent involved the sex of the borrower or 

applicant, and 3 percent concerned a handicap or disability.

Consumer refunds generally involve the financial institution 

offering a voluntary credit to the consumer’s account 

that is often a direct result of complaint investigations 

and identification of a banking error or violation of 

law. Between January 1, 2013, and December 31, 2013, 

consumers received a total of nearly $5.6 million in 

refunds from financial institutions as a result of the FDIC’s 

consumer response program.

Public Awareness of Deposit Insurance Coverage

The FDIC provides a significant amount of education for 

consumers and the banking industry on the rules for 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. The FDIC 

has an extensive deposit insurance education program 

consisting of seminars for bankers, electronic tools for 

estimating deposit insurance coverage, and written and 

electronic information targeted to both bankers and 

consumers. 

The FDIC continued its efforts to educate bankers and 

consumers about the rules and requirements for FDIC 

insurance coverage. As of December 31, 2013, the FDIC 

conducted 15 telephone seminars for bankers on deposit 

insurance coverage, reaching an estimated 28,000 bankers 

participating at approximately 8,000 bank locations 

throughout the country. The FDIC also updated its deposit 

insurance coverage publications and educational tools for 

consumers and bankers, including brochures, resource 

guides, videos, and the Electronic Deposit Insurance 

Estimator (EDIE).

As of December 31, 2013, the FDIC received and answered 

approximately 94,677 telephone deposit insurance-related 

inquiries from consumers and bankers. The FDIC Call 

Center addressed 44,541 of these inquiries, and deposit 

insurance coverage subject-matter experts handled the 

other 50,136. In addition to telephone inquiries about 

deposit insurance coverage, the FDIC received 2,499 written 

inquiries from consumers and bankers. Of these inquiries, 

99 percent received responses within two weeks, as 

required by corporate policy.

Center for Financial Research

The Center for Financial Research (CFR) was founded 

by the FDIC in 2004 to encourage and support innovative 

research on topics that are important to the FDIC’s role as 

deposit insurer and bank supervisor. During 2013, the CFR 

co-sponsored two major research conferences.

The CFR organized and sponsored the 23rd Annual 

Derivatives Securities and Risk Management Conference 

jointly with Cornell University’s Johnson Graduate School 
MANAGEMENT’S DISCUSSION AND ANALYSIS 37

of Management and the University of Houston’s Bauer 

College of Business. The conference was held in March 

2013 at the FDIC’s Seidman Center and attracted over 

100 researchers from around the world. Conference 

presentations included credit default swap markets, term 

structure and credit risk, credit and contagion risk, and 

commodity markets.

The CFR also organized and sponsored the 13th Annual 

Bank Research Conference jointly with the Journal for 

Financial Services Research (JFSR), in October 2013. The 

conference was attended by more than 120 participants and 

included over 20 presentations on topics related to global 

banking, financial stability, and the financial crisis.

RESOLUTIONS AND RECEIVERSHIPS

The 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. 

Upon closure of an institution, typically by its chartering 

authority—the state for state-chartered institutions and 

the Office of the Comptroller of the Currency (OCC) for 

national banks and federal savings associations—the FDIC 

is appointed receiver and is responsible for resolving the 

failed institution.

The FDIC uses a variety of business practices to resolve a 

failed institution. These practices are typically associated 

with either the resolution process or the receivership 

process. Depending on the characteristics of the institution, 

the FDIC may recommend 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.

The resolution process involves evaluating and marketing a 

failing institution, soliciting and accepting bids for the sale 

of the institution, determining which bid 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 

smoothly as possible. There are three basic resolution 

methods used by the FDIC: purchase and assumption 

transactions, deposit payoffs, and Deposit Insurance 

National Bank (DINB) assumptions.

The purchase and assumption (P&A) transaction is the most 

commonly used resolution method. In a P&A transaction, 

a healthy institution purchases certain assets and assumes 

certain liabilities of the failed institution. A variety of 

P&A transactions can be used. Since each failing bank 

situation is different, P&A transactions provide flexibility 

to structure deals that result in the highest value for the 

failed institution. For each possible P&A transaction, the 

acquirer may either acquire all or only the insured portion 

of the deposits. Loss sharing may be offered by the receiver 

in connection with a P&A transaction. In a loss-share 

transaction, the FDIC as receiver agrees to share losses on 

certain assets with the acquirer. The FDIC usually agrees 

to absorb a significant portion (for example, 80 percent) of 

future losses on assets that have been designated as “shared 

loss assets” for a specific period of time (for example, five 

to ten years). The economic rationale for these transactions 

is that keeping shared loss assets in the banking sector can 

produce a better net recovery than the FDIC’s immediate 

liquidation of these assets.

Deposit payoffs are only executed if a bid for a P&A 

transaction is more costly to the DIF than liquidation 

or if no bids are received, in which case the FDIC, in its 

corporate capacity, makes sure that the customers of 

the failed institution receive the full amount of their 

insured deposits.

The Federal Deposit Insurance Act authorizes the FDIC to 

establish a DINB to assume the insured deposits of a failed 

bank. A DINB is a new national bank with limited life and 

powers that allows failed-bank customers a brief period 

of time to move their deposit account(s) to other insured 

institutions. Though infrequently used, a DINB allows 

for a failed bank to be liquidated in an orderly fashion, 

minimizing disruption to local communities and 

financial markets.

The receivership process involves performing the closing 

functions at the failed institution, liquidating any remaining 

failed institution assets, and distributing any proceeds 

of the liquidation to the FDIC and other creditors of the 

receivership. In its role as receiver, the FDIC has used 

a wide variety of strategies and tools to manage and sell 
ANNUAL REPORT 2013

38 MANAGEMENT’S DISCUSSION AND ANALYSIS

retained assets. These include, but are not limited to, 

asset sale and/or management agreements, structured 

transactions, and securitizations.

Financial Institution Failures

During 2013, there were 24 institution failures, compared to 

51 failures in 2012. For the institutions that failed, the FDIC 

successfully contacted all known qualified and interested 

bidders to market these institutions. The FDIC also made 

insured funds available to all depositors within one business 

day of the failure if it occurred on a Friday, and within two 

business days if the failure occurred on any other day of the 

week. There were no losses on insured deposits, and no 

appropriated funds were required to pay insured deposits.

The following chart provides a comparison of failure 

activity over the last three years. 

FAILURE ACTIVITY 2011–2013

Dollars in Billions

2013 2012 2011

Total Institutions 24 51 92

Total Assets of Failed Institutions1 $6.0 $11.6 $34.9

Total Deposits of Failed Institutions1 $5.1 $11.0 $31.1

Estimated Loss to the DIF2 $1.2 $2.8 $7.6

1 Total assets and total deposits data are based on the last Call Report 

or Thrift Financial Report (TFR) filed by the institution prior to failure.

2 Estimated DIF losses from 2011 and 2012 failures are updated as of 

December 31, 2013.

Asset Management and Sales

As part of its resolution process, the FDIC makes every 

effort to sell as many assets as possible to an assuming 

institution. Assets that are retained by the receivership 

are evaluated. For 95 percent of the failed institutions, at 

least 90 percent of the book value of marketable assets is 

marketed for sale within 90 days of an institution’s failure 

for cash sales and within 120 days for structured sales.

Structured sales for 2013 totaled $199 million in unpaid 

principal balances from commercial real estate and 

acquisition, development, and construction assets acquired 

from various receiverships. Cash sales of assets for the year 

totaled $260 million in book value. In addition to structured 

and cash sales, the FDIC also uses securitizations to dispose 

of bank assets. In 2013, securitization sales totaled 

$954 million.

As a result of our marketing and collection efforts, the book 

value of assets in inventory decreased by $5.7 billion (34 

percent) in 2013. The following chart shows the beginning 

and ending balances of these assets by asset type.

ASSETS IN INVENTORY BY ASSET TYPE

Dollars in Millions

Asset Type 12/31/13 12/31/12

Securities $893 $1,179

Consumer Loans 69 99

Commercial Loans 274 604

Real Estate Mortgages 954 1,265

Other Assets/Judgments 1,145 1,134

Owned Assets 365 417

Net Investments in Subsidiaries 117 179

Structured and Securitized Assets 7,487 12,120

Total $11,304 $16,997

Receivership Management Activities

The FDIC, as receiver, manages failed banks and their 

subsidiaries with the goal of expeditiously winding up 

their affairs. The oversight and prompt termination of 

receiverships help to preserve value for the uninsured 

depositors and other creditors by reducing overhead and 

other holding costs. Once the assets of a failed institution 

have been sold and the final distribution of any proceeds is 

made, the FDIC terminates the receivership. In 2013, the 

number of receiverships under management increased by 

3 percent, as a result of new failures. The following chart 

shows overall receivership activity for the FDIC in 2013.

RECEIVERSHIP ACTIVITY

Active Receiverships as of 12/31/121 466

New Receiverships 24

Receiverships Terminated 10

Active Receiverships as of 12/31/131 480

1 Includes one FSLIC Resolution Fund receivership at year-end 2013.
MANAGEMENT’S DISCUSSION AND ANALYSIS 39

Minority and Women Outreach

The FDIC relies on contractors to help meet its mission. 

During 2013, the FDIC has awarded 995 contracts. Of these, 

282 contracts (28 percent) were awarded to minority- and 

women-owned businesses (MWOBs). The total value of 

contracts awarded in 2013 was $573 million, of which $199 

million (35 percent) was awarded to MWOBs, compared 

to 30 percent for all of 2012. In 2013, the FDIC paid $141 

million of its total contract payments (25 percent) to 

MWOBs. Engagements of minority and women-owned law 

firms (MWOLFs) were 18 percent of all legal engagements 

for 2013, with total payments of $13 million going to 

MWOLFs (13 percent) of all payments to outside counsel, 

compared to 13 percent for all of 2012.

In 2013, the FDIC participated in a combined total of 

25 business expos, one-on-one matchmaking sessions, 

and panel presentations. Dissemination of information 

and responses to inquiries regarding FDIC business 

opportunities for minorities and women took place at these 

sessions. In addition to targeting MWOBs, these efforts 

also targeted veteran-owned and small disadvantaged 

businesses. Vendors were provided with the FDIC’s 

general contracting procedures, prime contractors’ 

contact information, and possible upcoming solicitations. 

Vendors were also encouraged to register with the FDIC’s 

Contractors Resource List (a principal database for vendors 

interested in doing business with the FDIC).

The FDIC participated in trade events where information 

was provided to MWOLFs about opportunities for 

legal representation and how to enter into co-counsel 

arrangements with majority law firms. In addition to 

attending nine bar association conferences during 2013, 

the FDIC presented a training workshop for MWOLFs 

entitled “Anatomy of a Bank Closing” to provide firms 

with ideas for marketing their services to FDIC in-house 

attorneys following the resolution of a financial institution. 

This workshop was presented at events sponsored by the 

National Association of Minority and Women Owned Law 

Firms (NAMWOLF) affinity group. These events were 

well-attended and received with great enthusiasm. The 

FDIC continues to explore new opportunities to partner 

with NAMWOLF.

The FDIC also conducted a series of outreach events 

to raise awareness, and provide information on how to 

purchase Owned Real Estate (ORE) through the FDIC’s 

Owned Assets Marketplace and Auctions program. 

These events also facilitated interaction between smaller 

investors and asset managers, which includes minority 

and women-owned (MWO) firms. These included three 

informational sessions with 95 participants, and several 

workshops/webinars targeting small investors and MWO 

investors in the southeast.

In 2013, the FDIC’s Office of Minority and Women Inclusion 

(OMWI) participated with other Dodd-Frank Act agency 

OMWIs in drafting an interagency policy statement for 

assessing the diversity policies and practices of entities 

regulated by their agencies. The proposed statement 

was posted for comments in the Federal Register on 

October 25, 2013. The comment period was extended 

45 days and ended on February 7, 2014. The FDIC will 

continue efforts in 2014 to fully implement Section 342 

of the Dodd-Frank Act.

In 2014, the FDIC will continue to encourage and foster 

diversity and inclusion of minorities and women in its 

business, procurement activities and outside counsel 

engagements, and MWO investors, as well as promote 

strong commitment to diversity inclusion within its 

workforce and with all financial institutions and law firms 

that do business with the FDIC.

Protecting Insured Depositors 

The FDIC’s ability to attract healthy institutions to assume 

deposits and purchase assets of failed banks and savings 

associations at the time of failure minimizes the disruption 

to customers and allows assets to be returned to the private 

sector immediately. Assets remaining after resolution 

are liquidated by the FDIC in an orderly manner, and the 

proceeds are used to pay creditors, including depositors 

whose accounts exceeded the insurance limit. During 2013, 

the FDIC paid dividends of $7 million to depositors whose 

accounts exceeded the insurance limit.

Professional Liability and Financial Crimes Recoveries

FDIC staff works to identify potential claims against 

directors, officers, fidelity bond insurance carriers, 

appraisers, attorneys, accountants, mortgage loan brokers, 
ANNUAL REPORT 2013

40 MANAGEMENT’S DISCUSSION AND ANALYSIS

title insurance companies, securities underwriters, 

securities issuers, and other professionals who may 

have contributed to the failure of an IDI. Once a claim is 

determined to be meritorious and cost-effective to pursue, 

the FDIC initiates legal action against the appropriate 

parties. During 2013, the FDIC recovered more than $674 

million from professional liability claims and settlements. 

The FDIC also authorized lawsuits related to 42 failed 

institutions against 316 individuals for director and officer 

liability and authorized 10 other lawsuits for fidelity 

bond, liability insurance, attorney malpractice, appraiser 

malpractice, and securities law violations for residential 

mortgage-backed securities. Eighty-three residential 

mortgage malpractice and fraud lawsuits were pending as of 

year-end 2013. Also, by year-end 2013, the FDIC’s caseload 

included 119 professional liability lawsuits (up from 95 at 

year-end 2012) and 796 open investigations (down from 

1,343 at year-end 2012).

In addition, as part of the sentencing process for those 

convicted of criminal wrongdoing against institutions that 

later failed, a court may order a defendant to pay restitution 

or to forfeit funds or property to the receivership. The 

FDIC, working with the U.S. Department of Justice, 

collected $8.4 million from criminal restitution and 

forfeiture orders through year-end 2013. As of year-end 

2013, there were 4,073 active restitution and forfeiture 

orders (down from 4,860 at year-end 2012). This includes 

126 orders held by the FSLIC Resolution Fund orders, 

(i.e., orders arising out of failed financial institutions that 

were in receivership or conservatorship by the Federal 

Savings and Loan Insurance Corporation or the Resolution 

Trust Corporation).

International Outreach 

Throughout 2013, the FDIC played a leading role among 

international standard-setting, regulatory, supervisory, 

and multi-lateral organizations by supporting the global 

development of effective deposit insurance and bank 

supervision systems, maintaining public confidence and 

financial stability, and promoting effective resolution 

regimes as integral components of the financial safety net. 

Among the key institutions the FDIC collaborated with were 

the Association of Supervisors of Banks of the Americas 

(ASBA), the Basel Committee on Banking Supervision 

(BCBS), the European Forum of Deposit Insurers, the 

Financial Stability Board (FSB), the Financial Stability 

Institute (FSI), the International Association of Deposit 

Insurers (IADI), the International Monetary Fund (IMF), 

and the World Bank.

Key to the international collaboration was the ongoing 

dialogue among FDIC Chairman Martin J. Gruenberg, other 

senior FDIC leaders, and a number of policymakers and 

senior financial regulators from the United Kingdom (U.K.) 

about the implementation of the Dodd-Frank Act, Basel III, 

and how changes in U.S., U.K., and European Union (EU) 

financial regulations affect global information sharing, 

crisis management, and recovery and resolution activities. 

In light of the large number of cross-border operations of 

large, complex financial institutions, the primary areas of 

discussion and collaboration were the FDIC’s OLA under 

Title II of the Dodd-Frank Act, and the importance of crossborder coordination in the event a SIFI begins to experience 

financial distress. In addition, FDIC leadership was engaged 

in numerous consultations with EU policymakers on 

creating a Banking Union in Europe to encompass bank 

supervision, resolution, and deposit insurance.

During 2013, the FDIC participated in both Governors 

and Heads of Supervision and BCBS meetings. The 

FDIC supported work streams, task forces, and policy 

development group meetings to participate in BCBS 

work on a variety of topics. The FDIC assisted in several 

quantitative analyses conducted by the BCBS, including 

those with respect to the leverage ratio and liquidity 

standards. Additionally, the FDIC participated in BCBS 

initiatives related to topics including comparability 

and simplicity within the Basel Accord, standards 

implementation, accounting, external audits, review of 

the trading book, capital planning, liquidity standards, and 

credit ratings 

and securitizations. 

International Association of Deposit Insurers (IADI) 

Since its founding in 2002, IADI has grown from 26 founding 

members to 71 deposit insurers from 69 jurisdictions. IADI 

contributes to the security of individual depositors and 

global financial stability and is recognized as the standardsetting body for deposit insurance by all the major public 

international financial institutions, including the FSB, the 
MANAGEMENT’S DISCUSSION AND ANALYSIS 41

Group of 20 (G-20), the BCBS, the IMF, and the World Bank. 

Chairman Gruenberg served as the President of IADI and 

the Chair of its Executive Council from November 2007 

to October 2012. FDIC Vice Chairman Thomas Hoenig 

currently serves on IADI’s Executive Council.

Under the FDIC’s leadership, IADI has made significant 

progress in advancing the 2009 IADI and BCBS Core 

Principles for Effective Deposit Insurance Systems 

(Core Principles). In February 2011, the FSB approved 

the Core Principles and the Core Principles Assessment

Methodology for inclusion in its Compendium of Key 

Standards for Sound Financial Systems. During 2013, an 

IADI Steering Committee led by the FDIC and the Canada 

Deposit Insurance Corporation was established to review 

and update the Core Principles. The Steering Committee 

plans to submit a revised document to the FSB in July 2014. 

To-date, IADI has trained over 250 staff members from 

over 70 jurisdictions in conducting self-assessments for 

compliance with the Core Principles.

The Core Principles are officially recognized by both the 

IMF and World Bank and are now accepted for use in 

their Financial Sector Assessment Program (FSAP). This 

represents an important milestone in the acceptance 

of the role of effective systems of deposit insurance in 

maintaining financial stability. The FDIC has also worked 

with senior officials at the World Bank and IMF, and 

formalized IADI collaboration and support of the deposit 

insurance review portion of the FSAP reviews. This support 

includes the provision of FDIC member-experts for IMF/

World Bank FSAP Review Teams and the on-going training 

of additional IADI experts for subsequent FSAP missions. 

Core Principles regional workshops, training sessions, 

self-assessment reviews and Steering Committee meetings 

were held in Istanbul, Turkey; Manila, Philippines; Basel, 

Switzerland; Warsaw, Poland; Buenos Aires, Argentina; and 

Mumbai, India during 2013. In addition, the FDIC hosted 

the IADI executive training seminar, “Claims Management: 

Reimbursement to Insured Depositors” July 16-18, 2013, 

at the Seidman Center in Arlington, Virginia. Fifty-three 

people from 31 jurisdictions participated in the seminar.

The FDIC continued its global role in supporting the 

development of effective deposit insurance and banking 

supervision systems through the provision of training, 

consultations, and briefings to foreign bank supervisors, 

deposit insurance authorities, international financial 

institutions, partner U.S. agencies, and other governmental 

officials. Many of these consultations were multi-day study 

tours that enabled delegations to receive in-depth advice 

on a wide range of deposit insurance issues. Officials from 

the European Commission, the Ukraine Deposit Guarantee 

Fund, the Malaysian Deposit Insurance Corporation, the 

Philippine Deposit Insurance Corporation, the Bank of 

Thailand, and the Central Bank of Kenya benefited from 

these extended consultations.

Association of Supervisors of Banks of 

the Americas (ASBA) 

The FDIC has been a member of ASBA since its founding 

in 1999 and supports ASBA’s mission of promoting 

sound banking supervision and regulation throughout 

the Western Hemisphere. In recognition of the FDIC’s 

enduring leadership in ASBA, the General Assembly elected 

FDIC Director of Risk Management Supervision Sandra 

Thompson to serve a two-year term as Vice Chairman 

of ASBA in November 2011, a position she held until her 

departure from the FDIC in early 2013. In this capacity, 

Director Thompson presided over meetings of the Training 

and Technical Cooperation Committee, the General 

Assembly, and the ASBA board.

To assist ASBA in promoting capacity- and leadershipbuilding in the Americas, the FDIC currently chairs 

the Association’s Training and Technical Cooperation 

Committee, and led two ASBA technical assistance training 

missions in 2013, including Financial Institution Analysis in 

Panama City, Panama, and Anti-Money Laundering in Santo 

Domingo, Dominican Republic. The FDIC continued to 

provide subject-matter experts as instructors and speakers 

to support ASBA-sponsored training programs, seminars, 

and conferences.

In support of building institutional leadership, the 

FDIC hosted its second Secondment Program in the 

spring of 2013, designed to demonstrate how the FDIC 

has successfully implemented best international bank 

supervisory practices into its Risk Management and 

Supervision programs. Three ASBA members, representing 

bank supervisory agencies from the National Commission 

of Banks and Insurances of Honduras; the Bank of Jamaica; 

and the Superintendent of Banking, Insurance, and Private 
ANNUAL REPORT 2013

42 MANAGEMENT’S DISCUSSION AND ANALYSIS

Pension Funds Administrators of Peru, participated in 

this intensive eight-week study tour at the various policy 

and operational levels within the FDIC at headquarters, a 

regional office, and a field office.

In addition, to promote and influence sound bank 

supervision policy, and the adoption of international best 

practices, the FDIC actively participates in Research 

and Guidance Working Groups sponsored by ASBA, 

including those on Corporate Governance, Enterprise Risk 

Management, and Anti-Money Laundering and Combating 

the Financing of Terrorism.

Foreign Visitors Program 

The FDIC’s international efforts supporting the development 

of effective deposit insurance systems, bank supervisory 

practices, and bank resolution regimes continued to grow in 

2013. FDIC management and staff met with 533 individuals, 

representing over 39 jurisdictions during the year. 

Discussions with European authorities were an important 

focus of the FDIC’s international efforts this year. Senior 

management and subject-matter experts provided advice 

and consultation on a number of major European initiatives, 

including the Single Supervisory mechanism, the proposed 

bank recovery and resolution directive, and the directive on 

deposit guarantee schemes. 

Questions about the FDIC’s expanded authorities under the 

Dodd-Frank Act continued to be a common area of intense 

interest, with particular focus on how the FDIC would 

resolve a SIFI with cross-border operations. Other major 

topics discussed include the FDIC’s management of the DIF, 

offsite monitoring methodologies, and corporate training 

programs.

During 2013, the FDIC provided subject-matter experts to 

participate in seven FSI seminars around the world. The 

topics included resolution planning, liquidity risk, stress 

testing, bank resolution, SIFI resolution, and supervising 

SIFIs. Additionally, 204 individuals representing over 16 

jurisdictions attended training programs offered through the 

FDIC’s Corporate University.

The FDIC made major strides in strengthening its 

relationships with Chinese authorities in 2013. The 5th 

U.S.-China Strategic and Economic Dialogue was held 

in Washington, D.C. in July. U.S. Treasury Secretary 

Jacob Lew and Chinese Vice Premier Wang Qishan led 

the Economic Track discussions. FDIC Chairman Martin 

Gruenberg participated in the meetings alongside a 

high-level delegation of Cabinet members, ministers, agency 

heads, and senior officials from both countries. Chairman 

Gruenberg discussed the importance of a well-developed 

deposit insurance framework and bank resolution regime 

for financial stability. In October 2013, Chairman Gruenberg 

visited China to meet with Chinese officials to discuss 

effective deposit insurance and bank resolution systems, 

and how the FDIC expects to resolve U.S. SIFIs under 

the OLA of the Dodd-Frank Act. While there, Chairman 

Gruenberg signed an MOU with the People’s Bank of China 

(PBOC) designed to extend their effective international 

working relationship in the areas of deposit insurance and 

resolution. The purpose of the MOU is to develop and 

expand the interaction between the FDIC and the PBOC 

and to demonstrate a shared commitment to cooperation 

among banking agencies. The MOU also seeks to enhance 

cooperation in analyzing cross-border financial institution 

recovery and resolution issues, and planning for potential 

recovery and resolution scenarios, including appropriate 

simulations, contingency planning, and other work designed 

to improve preparations to manage troubled institutions 

with operations in the United States and the People’s 

Republic of China. In November 2013, a senior government 

delegation which included representatives from the Chinese 

State Council, visited the FDIC for a series of discussions 

with FDIC management, subject-matter experts, and 

academics about the operations of the FDIC, the benefits of 

an effective deposit insurance system and bank resolution 

regime, and advice on China’s plans to implement a deposit 

insurance system.

Financial Services Volunteer Corps (FSVC) 

The FDIC placed two staff members on long-term 

assignments with the FSVC during 2013 as part of 

a continuing written agreement between the two 

organizations. FDIC personnel provided a variety 

of consulting and training services focused on risk 

management supervision in Angola, Egypt, and Tanzania. 

SME credit analysis, credit risk ratings, corporate 

governance best practices, risk management organization 

and policy, and financial education teaching aids were 

among the projects completed for the benefit of central 
MANAGEMENT’S DISCUSSION AND ANALYSIS 43

banks, training institutes, financial business associations, 

and commercial banking organizations. Over the past 

several years, the FDIC has assisted the FSVC with a wide 

variety of programs and projects funded in large part by 

the U.S. Agency for International Development to help 

strengthen regulatory frameworks and banking systems in 

developing countries. 

EFFECTIVE MANAGEMENT OF 

STRATEGIC RESOURCES

The FDIC recognizes that it must effectively manage 

its human, financial, and technological resources to 

successfully carry out its mission and meet the performance 

goals and targets set forth in its annual performance 

plan. The FDIC must align these strategic resources 

with its mission and goals and deploy them where they 

are most needed to enhance its operational effectiveness 

and minimize potential financial risks to the DIF. Major 

accomplishments in improving the FDIC’s operational 

efficiency and effectiveness during 2013 follow. 

Human Capital Management

The FDIC’s human capital management programs 

are designed to recruit, develop, reward, and retain 

a highly skilled, cross-trained, diverse, and resultsoriented workforce. In 2013, FDIC workforce planning 

initiatives shifted emphasis to restructuring the portion 

of the workforce that will address the requirements of 

Dodd-Frank, especially as it relates to the oversight of SIFIs. 

Workforce planning also more acutely addressed the need 

to start winding down bank closure activities, based on the 

decrease in the number of financial institution failures and 

institutions in at-risk categories.

Strategic Workforce Planning and Readiness

In August 2010, the FDIC established its Office of 

Complex Financial Institutions (OCFI) in response to the 

requirements of the Dodd-Frank Act to supervise and be 

prepared to resolve SIFIs. In 2011 and 2012, the FDIC 

recruited complex financial institution specialists who had 

developed their skills in other public and private sector 

organizations to staff the risk management supervision 

section of the OCFI and redeployed current FDIC 

employees with the requisite skills from other parts of the 

agency. In 2013, the FDIC reorganized these staff from 

the supervision section of OCFI into the Division of Risk 

Management Supervision (RMS), where the vast majority of 

bank supervisory expertise resides. This allows the FDIC 

to integrate all financial institution risk supervision into 

one organization that can deploy and train staff as needed 

for both SIFIs and smaller banks. It also allows OCFI to 

concentrate on policy and rule development as we continue 

to implement Dodd-Frank.

In 2013, the FDIC also addressed workforce planning at 

several levels within the agency. Given the number of 

senior executives in key leadership positions who are, or 

in the next few years will become, eligible to retire from 

the federal government, in 2013 the FDIC embarked on 

a succession planning effort focused on the Division and 

Office Director level. The FDIC is defining the attributes, 

skills, and experience needed in each of these positions, 

drafting a plan for developing these attributes and skills in 

executive managers at the next lower levels, and identifying 

potential candidates at those levels.

In addition, as the number of financial institution failures 

continued to decline in 2013, the FDIC’s workforce planning 

efforts turned to determining the staffing needs of the 

agency during “normal” times and beginning to release 

some of the temporary staff as their term appointments 

expire. Although post-closure activity often continues for 

five to seven years after a bank fails, that activity should 

slow considerably over the next few years. The FDIC is in 

the process of extending term appointments only for the 

most critical staff still needed to monitor and process those 

actions. The FDIC is also filling vacancies for permanent 

staff, principally from among the ranks of these experienced 

term employees.

Finally, in 2013, the FDIC also refined its processes for 

implementing its “Pathways Programs” as a source of 

entry-level employees to maintain a fully-trained staff. 

By utilizing the intern program and the recent graduates 

program, as well as the normal hiring process, the FDIC 

has been able to recruit a well-educated and highly skilled 

workforce that can successfully complete the rigorous 

three- to four-year training program that leads to a 

commission as a bank examiner or resolutions specialist. 

By maintaining a steady pipeline of new examiner trainees, 

the FDIC intends to keep its future workforce in a steady 

state of readiness. 
ANNUAL REPORT 2013

44 MANAGEMENT’S DISCUSSION AND ANALYSIS

The FDIC utilizes the Corporate Employee Program (CEP) 

to sponsor the development of newly hired Financial 

Institution Specialists (FISs) for entry-level positions. 

The Program encompasses major FDIC divisions where 

newly hired FISs are trained to become a highly effective 

workforce. During their first year rotation within the 

Program, FISs gain experience and knowledge in the 

Division of Depositor and Consumer Protection (DCP), 

the Division of Risk Management Supervision (RMS), the 

Division of Resolutions and Receiverships (DRR), and 

the Division of Insurance and Research (DIR). At the 

conclusion of this rotation period, FISs are placed within 

RMS, DCP, or DRR, where they continue their career path 

to become commissioned examiners or resolutions and 

receiverships specialists. 

The Corporate Employee Program is an essential part of 

the FDIC’s ability to provide continual cross-divisional staff 

mobility. As a result, the FDIC is capable of responding 

rapidly to shifting priorities and changes in workload while 

achieving its corporate mission. Since the CEP’s inception 

in 2005, 1,254 individuals have joined the FDIC through 

this multi-discipline program and approximately 540 

have become commissioned examiners after successfully 

completing the program’s requirements.

The FDIC also continues to sponsor the Financial 

Management Scholars Program (FMSP) that was launched 

in May 2011 as an additional hiring source for CEP. 

Participants in the FMSP are summer interns who have 

completed their junior year of college. The level of FMSP 

participants increased significantly in 2012 and 2013. 

This program allows the FDIC to recruit and hire highly 

talented and well-qualified students into the CEP earlier 

than the agency has been able to in the past, and serves as 

an additional venue to recruit talent. For 2014, the FDIC 

will continue to augment its workforce by fully utilizing the 

capacity of the CEP, including the FMSP.

Employee Learning and Development

The FDIC provides its employees with a broad array of 

learning and development opportunities throughout their 

career to grow both in technical proficiency and leadership 

capacity, supporting career progression and succession 

management. In 2013, the FDIC focused on developing and 

implementing comprehensive curricula for its business lines 

to incorporate lessons learned from the financial crisis and 

prepare employees to meet new challenges. Such training, 

which includes both classroom and online instruction 

for maximum flexibility, is a critical part of workforce 

and succession planning as more experienced employees 

become eligible for retirement.

The FDIC also offers a holistic leadership development 

program that combines core courses, electives, and other 

enrichment opportunities to develop employees at all 

levels. From new employees to new managers, the FDIC 

provides employees with targeted leadership development 

opportunities that are aligned with key leadership 

competencies. The FDIC is also expanding the use of 

strategic simulations within its leadership development 

program to support corporate readiness and preparedness.

In addition to extensive internally developed and 

administered courses, the FDIC also offers its employees 

with funds and/or time to participate in external offerings 

in support of their career development. The FDIC offers 

learning and development opportunities in support of the 

FDIC mission for employees at all levels and stages of their 

career. In 2013, FDIC employees completed approximately 

39,000 sessions in the classroom and online, through 

internal and external courses.

Continuity of Operations

In accordance with guidance in Executive Order 12656, 

Assignment of Emergency Preparedness Responsibilities; 

National Security Presidential Directive-51/Homeland 

Security Presidential Directive-20, National Continuity 

Policy; and other pertinent Federal Executive Branch 

continuity guidance, in 2013, the FDIC implemented a new 

Continuity of Operations Plan that addresses two central 

priorities:

♦ Reduce the potential for loss of life and safeguard the 

FDIC workforce.

♦ Minimize and mitigate disruptions to FDIC operations 

to enable continuous performance of essential FDIC 

functions.

The FDIC’s Continuity of Operations Plan meets these 

central priorities by:
MANAGEMENT’S DISCUSSION AND ANALYSIS 45

♦ Ensuring continuity facilities are prepared to carry out 

essential actions.

♦ Facilitating succession to key positions by enunciating 

clear policies and procedures.

♦ Identifying, safeguarding, and ensuring the availability 

of all essential records that support FDIC essential 

functions.

♦ Protecting facilities, equipment, essential records, and 

other assets.

♦ Facilitating a timely and orderly transition from 

emergency operations to ordinary operations and 

resumption of full service to the public.

♦ Ensuring and validating readiness through an effective 

continuity test, training, and exercise program.

As a result of these efforts, the FDIC has the enhanced 

ability to maintain a comprehensive and effective continuity 

capability to support the preservation of our form of 

government under the Constitution and the continuing 

performance of Nation Essential Functions under all 

conditions.

Corporate Risk Management

During 2013, the Office of Corporate Risk Management 

(OCRM) worked with Divisions and Offices to develop 

common agency-wide processes for identifying, managing, 

and mitigating risks to the FDIC. The Office supported 

both the Enterprise Risk Committee and the Executive 

Management Committee in reviewing material risks across 

the FDIC, including:

♦ Risks to the financial system posed by the current 

very low level of interest rates, and from the potential 

disruptions which could arise from sudden and sharp 

increases in rates.

♦ Risks to the deposit insurance system arising from new 

products and services with characteristics very different 

from traditional time and demand deposits.

♦ Risks posed by the analytical models used by both the 

financial services industry and the FDIC in identifying and 

managing risk.

♦ Internal operational risks associated with both large-scale 

IT system development efforts and smaller-scale IT 

applications developed by individual Divisions and 

Offices.

♦ Coordination risks arising from new organizational units 

created to manage the range of new functions assigned to 

the FDIC by the Dodd-Frank Act.

♦ Risks posed to the FDIC and to the financial services 

industry by concerted attempts to penetrate, compromise, 

and disrupt the information systems that are essential to 

effective operation. 

Employee Engagement

The 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. The 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 identified 

in the survey. In December 2013, the FDIC received an 

award from the Partnership for Public Service for being 

Chairman Martin J. Gruenberg and Arleas Upton Kea, 

Director of the Division of Administration, accepts 

the award from Max Stier, President and CEO of the 

Partnership for Public Service.
ANNUAL REPORT 2013

ranked number one among mid-sized federal agencies on 

the Best Places to Work in the Federal Government® list. 

Effective leadership is the primary factor driving employee 

satisfaction and commitment in the federal workplace, 

according to a report by the Partnership for Public Service.

The FDIC’s Workplace Excellence (WE) Program played 

an important role in helping the FDIC achieve this 

ranking. The WE Program is composed of a nationallevel WE Steering Committee and Division/Office WE 

Councils that are focused on maintaining, enhancing, 

and institutionalizing a positive workplace environment 

throughout the FDIC. In addition to the WE Program, 

the FDIC-NTEU Labor-Management Forum serves as 

a mechanism for the union and employees to have 

pre-decisional input on workplace matters. The WE 

Program and Labor Management Forum enhances 

communication, provides additional opportunities for 

employee input and engagement, and improves employee 

empowerment.

Information Technology Management

The FDIC continues to heavily leverage Information 

Technology (IT) to achieve its mission and has improved 

both the structure of IT leadership and the protection of 

sensitive digital information from cyber threats in 2013. 

IT Leadership Structural Changes

Because the importance of digital information to FDIC 

operations continues to grow, an assessment of IT 

leadership structure was completed, and corresponding 

improvements were implemented. First, the assessment 

concluded that the requirements of the Chief Information 

Officer (CIO) role have grown to require a full-time 

incumbent in addition to a full time incumbent in the role 

of IT division director. The new CIO role, which reports 

directly to the Chairman, was separated from the IT division 

director role and is responsible for strategic alignment of 

IT resources to securely produce objectively measurable 

business value. The IT division director, in turn, reports 

to the CIO and manages IT operations and development. 

Second, the assessment concluded that the information 

security and privacy functions continue to grow in 

importance and warranted separation under the CIO from 

the IT division. Both of these changes will help to elevate 

and integrate IT and information security management 

commensurate with their increasing importance in 

achieving the FDIC’s mission.

Sensitive Digital Information Protection

The FDIC continued to enhance its security posture under 

a new cross-divisional leadership team to combat the 

increased number and sophistication of security threats. 

Several specific projects were completed during the 

year including an independent assessment of the FDIC’s 

IT security, employee training improvements, and the 

introduction of simulation exercises to routinely identify 

potential enhancements to the FDIC security profile.

An independent assessment of the FDIC’s IT security 

was completed and improvements were initiated in 

response to the assessment’s findings. The assessment 

confirmed the overall high quality of the FDIC’s security 

mechanisms but also identified refinements that could be 

efficiently implemented, ranging from improvements to 

access controls to enhancements of incident monitoring 

tools. Several of the recommendations have already been 

implemented and the remainder will be completed in 2014.

The new cross-divisional leadership team has also overseen 

improvements to employee security training during the year. 

Specifically, better monitoring of employee completion of 

general security training was implemented and exercises to 

help employees identify fraudulent emails were increased. 

Also, educational presentations to the leadership team 

were completed throughout the year to raise awareness 

and understanding of types of threats and preventative 

measures, both at the FDIC and at financial institutions.

Simulation exercises contributed significantly to identifying 

areas to improve in current policy and procedure relative 

to varying threat scenarios. For example, in November 

simulations of a successful fraud perpetration on the FDIC 

data center were completed that helped identify needed 

changes to incident response procedures. These changes 

are now being implemented. Additional simulations are 

planned for 2014 and on an ongoing basis to continually 

evaluate the efficacy of FDIC security and privacy 

procedures.

46 MANAGEMENT’S DISCUSSION AND ANALYSIS
In its role as deposit insurer of financial institutions, 

the FDIC promotes the safety and soundness of insured 

depository institutions (IDIs). The following financial 

highlights address the performance of the deposit insurance 

funds, and discuss the corporate operating budget and 

investment spending.

DEPOSIT INSURANCE FUND 

PERFORMANCE 

The FDIC administers the Deposit Insurance Fund (DIF) 

and the FSLIC Resolution Fund (FRF), which fulfills 

the obligations of the former Federal Savings and Loan 

Insurance Corporation (FSLIC) and the former Resolution 

Trust Corporation (RTC). The following summarizes the 

condition of the DIF. (See the accompanying graphs on 

FDIC-Insured Deposits and Insurance Fund Reserve Ratios 

on the following page.)

For 2013, the DIF’s comprehensive income totaled $14.2 

billion compared to comprehensive income of $21.1 billion 

during 2012. This $6.9 billion year-over-year decrease was 

primarily due to a $6.0 billion decrease in other revenue 

(which is attributable to the 2012 transfer of fees from 

TLGP) and a $2.7 billion decrease in assessments; partially 

offset by a $1.5 billion decrease in provision for insurance 

losses and $156 million net increase from the sale of 

Citigroup trust preferred securities (TruPS). 

Assessment revenue was $9.7 billion for 2013. The decrease 

of $2.7 billion, from $12.4 billion in 2012, was primarily 

due to lower assessment rates, resulting from continued 

improvements in banks’ CAMELS ratings and financial 

condition. In addition, in 2013, the DIF refunded $5.9 billion 

in prepaid assessments to the 5,625 insured depository 

institutions that had remaining balances. This final payment 

marked the end of the prepaid assessment program, 

which began with the collection of $45.7 billion in prepaid 

assessments on December 30, 2009. 

The provision for insurance losses was negative $5.7 

billion for 2013, compared to negative $4.2 billion for 2012. 

The negative provision for 2013 primarily resulted from 

a reduction of $1.0 billion in the contingent liability for 

anticipated failures due to the improvement in the financial 

condition of troubled institutions and a decrease of $4.8 

billion in the estimated losses for institutions that failed in 

prior years.

During 2013, to facilitate a sale of the TruPS, the FDIC 

exchanged the Citigroup TruPS for $2.420 billion (principal 

amount) of Citigroup subordinated notes. The exchange 

resulted in an increase of $156 million to the DIF’s 2013 

comprehensive income. Subsequently, the subordinated 

notes were sold to the institutional fixed income market for 

the principal amount of $2.420 billion.

Financial II. Highlights

FINANCIAL HIGHLIGHTS 47
ANNUAL REPORT 2013

48 FINANCIAL HIGHLIGHTS

ESTIMATED DIF INSURED DEPOSITS

DEPOSIT INSURANCE FUND RESERVE RATIOS

SOURCE: Commercial Bank Call and Thrift Financial Reports

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

noninterest-bearing transaction accounts.

3-09

Dollars in Billions

6-09 9-09 12-09 3-10 6-10 9-10 12-10 3-11 6-11 9-11 12-11 3-12 6-12 9-12 12-12 3-13 6-13 9-13 12-13 9-13

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

3-09

Fund Balances as a Percent of Insured Deposits

6-09 9-09 12-09 3-10 6-10 9-10 12-10 3-11 6-11 9-11 12-11 3-12 6-12 9-12 12-12 3-13 6-13 9-13 12-13

0.4

0.6

0.8

0.2

0.0

-0.2

-0.4
FINANCIAL HIGHLIGHTS 49

DEPOSIT INSURANCE FUND SELECTED STATISTICS 

 Dollars in Millions

For the years ended December 31

2013  2012 2011

Financial Results

Revenue $10,459 $18,522 $16,342

Operating Expenses 1,609 1,778 1,625

Insurance and Other Expenses (includes provision for loss) (5,655) (4,377) (4,541)

Net Income 14,505 21,121 19,257

Comprehensive Income 14,233 21,131 19,179

Insurance Fund Balance $47,191 $32,958 $11,827

Fund as a Percentage of Insured Deposits (reserve ratio) 0.79 % 0.44 % 0.17 %

Selected Statistics

Total DIF-Member Institutions1 6,812 7,183 7,357

Problem Institutions 467 651 813

Total Assets of Problem Institutions $152,687 $232,701 $319,432

Institution Failures 24 51 92

Total Assets of Failed Institutions in Year2 $6,044 $11,617 $34,923

Number of Active Failed Institution Receiverships 479 463 426

CORPORATE OPERATING BUDGET

The FDIC segregates its corporate operating budget and 

expenses into two discrete components: ongoing operations 

and receivership funding. The receivership funding 

component represents expenses resulting from financial 

institution failures and is, therefore, largely driven by 

external forces, while the ongoing operations component 

accounts for all other operating expenses and tends to be 

more controllable and estimable. Corporate operating 

expenses totaled $2.3 billion in 2013, including $1.6 billion 

in ongoing operations and $0.7 billion in receivership 

funding. This represented approximately 91 percent of the 

approved budget for ongoing operations and 75 percent of 

the approved budget for receivership funding for the year.6

The Board of Directors approved a 2014 Corporate 

Operating Budget of approximately $2.4 billion, consisting 

of $1.8 billion for ongoing operations and $0.6 billion 

for receivership funding. The level of approved ongoing 

operations budget for 2014 is approximately $9 million (0.5 

percent) higher than the 2013 ongoing operations budget, 

while the approved receivership funding budget is roughly 

$300 million (33 percent) lower than the 2013 receivership 

funding budget.

As in prior years, the 2014 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 major program 

support functions. The most significant factor contributing 

to the decrease in the Corporate 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 2014 receivership funding budget 

allows for resources for contractor support as well as 

6 The numbers in this paragraph will not agree with the DIF and FRF financial statements due to differences in how items are 

classified.

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

2 Total Assets data are based upon the last Call Report or TFR filed by the institution prior to failure.
ANNUAL REPORT 2013

non-permanent staffing for DRR, the Legal Division, and 

other organizations, should workload in these areas require 

an immediate response.

INVESTMENT SPENDING

The FDIC instituted a separate Investment Budget in 

2003. 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. The 

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 quarterly.

The FDIC undertook significant capital investments 

during the 2004-2013 period, the largest of which was the 

expansion of its Virginia Square office facility. Most other 

projects involved the development and implementation 

of major IT systems. Investment spending totaled $280 

million during this period, peaking at $108 million in 

2004. Spending for investment projects in 2013 totaled 

approximately $19 million. For 2014, investment spending 

is estimated at $23 million.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

$120

$100

$80

$60

$40

$20

$0

50 FINANCIAL HIGHLIGHTS

INVESTMENT SPENDING 2004–2013

Dollars in Millions
PERFORMANCE RESULTS SUMMARY 51

SUMMARY OF 2013 PERFORMANCE 

RESULTS BY PROGRAM

The FDIC successfully achieved 30 of the 31 annual 

performance targets established in its 2013 Annual 

Performance Plan. One target regarding the survey of the 

unbanked and underbanked was deferred. There were no 

instances in which 2013 performance had a material adverse 

effect on the successful achievement of the FDIC’s mission 

or its strategic goals and objectives regarding its major 

program responsibilities.

Additional key accomplishments are noted below.

Program Area Performance Results

Insurance ♦ Updated the FDIC Board of Directors on loss, income, and reserve ratio projections 

for the Deposit Insurance Fund at the April and October meetings. 

♦ Briefed the FDIC Board of Directors in April and October on progress in meeting 

the goals of the Restoration Plan. Based upon current fund projections, no changes 

to assessment rate schedules were necessary. 

♦ Completed reviews of the recent accuracy of the contingent loss reserves. 

♦ Researched and analyzed emerging risks and trends in the banking sector, financial 

markets, and the overall economy to identify issues affecting the banking industry 

and the Deposit Insurance Fund. 

♦ Provided policy research and analysis to FDIC leadership in support of the 

implementation of financial industry regulation, as well as support for testimony 

and speeches. 

♦ Published economic and banking information and analyses through the FDIC 

Quarterly, FDIC Quarterly Banking Profile (QBP), FDIC State Profiles, and the 

Center for Financial Research Working Papers.

♦ Operated the Electronic Deposit Insurance Estimator (EDIE), which had 458,635 

user sessions in 2013. 

III. Performance

Results

Summary
ANNUAL REPORT 2013

52 PERFORMANCE RESULTS SUMMARY

Program Area Performance Results

Supervision and 

Consumer Protection

♦ Participated in the examinations of selected financial institutions, for which the 

FDIC is not the primary federal regulator, to assess risk to the DIF and carry out 

back-up authorities.

♦ Developed processes for reviewing Section 165(d) and IDI plan submissions for 

Third Wave Companies.

♦ Released a template for annual stress test reporting and documentation for large 

institutions. 

♦ Worked with other federal banking regulators and the Basel Committee on Banking 

Supervision to develop proposals to strengthen capital and liquidity requirements.

♦ Held an Advisory Committee on Community Banking Meeting focused on IT and 

cybersecurity issues affecting community banks, including IT examinations and the 

evolving payment system.

♦ Developed a community bank cybersecurity exercise.

Receivership 

Management

♦ Terminated at least 75 percent of new receiverships that are not subject to lossshare agreements, structured sales, or other legal impediments within three years 

of the date of failure.

♦ Made final decisions for 87 percent of all investigated claim areas that were within 

18 months of the institution’s failure date.
PERFORMANCE RESULTS SUMMARY 53

2013 BUDGET AND EXPENDITURES 

(including Allocated Support) Dollars in Millions

2013 BUDGET AND EXPENDITURES 

BY PROGRAM 

(Excluding Investments)

The FDIC budget for 2013 totaled $2.7 billion. Budget 

amounts were allocated as follows: $240 million, or 

9 percent, to Corporate General and Administrative 

expenditures; $286 million, or 11 percent, to the Insurance 

program; $1.0 billion, or 38 percent, to the Supervision and 

Consumer Protection program; and $1.1 billion, or 

42 percent, to the Receivership Management program. 

Actual expenditures for the year totaled $2.3 billion. 

Actual expenditures amounts were allocated as follows: 

$182 million, or 8 percent, to Corporate General and 

Administrative expenditures; $276 million, or 12 percent, to 

the Insurance program; $919 million, or 40 percent, to the 

Supervision and Consumer Protection program; and $910 

million, or 40 percent, to the Receivership Management 

program. 

Insurance

Program

Supervision and

Consumer Protection

Program

Receivership

Management

Program

General and

Administrative

$1,200

Budget Expenditures

$900

$600

$300

$0
ANNUAL REPORT 2013

54 PERFORMANCE RESULTS SUMMARY

PERFORMANCE RESULTS BY PROGRAM AND STRATEGIC GOAL

2013 INSURANCE PROGRAM RESULTS

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

#

Annual 

Performance Goal Indicator Target Results

1 Respond promptly to 

all financial institution 

closings and related 

emerging issues.

Number of business days 

after an institution failure 

that depositors have 

access to insured funds.

Insured depositor losses 

resulting from a financial 

institution failure.

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.

Achieved.

See pg. 38.

Achieved.

See pg. 38.

Achieved.

See pg. 38.

Achieved.

See pg. 38.

2 Disseminate data and 

analyses on issues and 

risks affecting the financial 

services industry to 

bankers, supervisors, 

the public, and other 

stakeholders on an 

ongoing basis.

Scope and timeliness of 

information dissemination 

on identified or potential 

issues and risks.

Disseminate results of research and 

analyses in a timely manner through regular 

publications, ad hoc reports, and other 

means.

Undertake industry outreach activities to 

inform bankers and other stakeholders 

about current trends, concerns, and other 

available FDIC resources.

Achieved. 

See pg. 51.

Achieved.

See pg. 51.

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.

Updated fund balance 

projections and 

recommended changes 

to assessment rates.

Demonstrated progress in 

achieving the goals of the 

Restoration Plan.

Provide updated fund balance projections 

to the FDIC Board of Directors by June 30, 

2013, and December 31, 2013.

Recommend changes to deposit insurance 

assessment rates to the FDIC Board of 

Directors as necessary.

Provide progress reports to the FDIC 

Board of Directors by June 30, 2013, and 

December 31, 2013.

Achieved.

See pg. 51.

Achieved.

See pg. 51.

Achieved.

See pg. 51.
PERFORMANCE RESULTS SUMMARY 55

2013 INSURANCE PROGRAM RESULTS (continued)

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

#

Annual 

Performance Goal Indicator Target Results

4 Expand and strengthen 

the FDIC’s participation 

and leadership role 

in supporting robust 

international deposit 

insurance and banking 

systems.

Initiatives to advance the 

FDIC’s global leadership 

and participation.

Provision of technical 

assistance to foreign 

counterparts.

Maintain open dialogue with counterparts 

in strategically important countries as well 

as international financial institutions and 

partner U.S. agencies.

Conduct workshops and assessments of 

deposit insurance systems based on the 

methodology for assessment of compliance 

with the Basel Committee on Bank 

Supervision (BCBS) and the International 

Association of Depositor Insurers (IADI) Core 

Principles for Effective Deposit Insurance 

Systems.

Support visits, study tours, and longer-term 

technical assistance and training programs 

for foreign jurisdictions to strengthen their 

deposit insurance organizations, central 

banks, and bank supervisors.

Achieved.

See pgs. 40-42.

Achieved.

See pgs. 40-41.

Achieved.

See pg. 42.

5 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.

Timeliness of responses 

to deposit insurance 

coverage inquiries.

Initiatives to increase 

public awareness of 

deposit insurance 

coverage changes.

Respond within two weeks to 95 percent 

of written inquiries from consumers and 

bankers about FDIC deposit insurance 

coverage.

Conduct at least 15 telephone or in-person 

seminars for bankers on deposit insurance 

coverage.

Achieved.

 See pg. 36.

Achieved.

See pg. 36.
ANNUAL REPORT 2013

56 PERFORMANCE RESULTS SUMMARY

2013 SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS

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

#

Annual 

Performance Goal Indicator Target Results

1 Conduct on-site risk 

management examinations 

to assess the overall 

financial condition, 

management practices and 

policies, and compliance 

with applicable laws and 

regulations of FDICsupervised depository 

institutions. When 

problems are identified, 

promptly implement 

appropriate corrective 

programs, and follow up 

to ensure that identified 

problems are corrected.

Percentage of required 

examinations conducted 

in accordance with 

statutory requirements 

and FDIC policy.

Implement appropriate 

corrective program where 

violations are identified.

Conduct all required risk management 

examinations within the time frames 

prescribed by statute and FDIC policy.

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.

Achieved

See pg. 19.

Achieved

See pg. 20.

2 Assist in protecting the 

infrastructure of the U.S. 

banking system against 

terrorist financing, money 

laundering, and other 

financial crimes.

Percentage of required 

examinations conducted 

in accordance with 

statutory requirements 

and FDIC policy. 

Conduct all Bank Secrecy Act examinations 

within the time frames prescribed by statute 

and FDIC policy.

Achieved.

See pg. 19.

3 More closely align 

regulatory capital 

standards with risk and 

ensure that capital is 

maintained at prudential 

levels.

Completion of review of 

comments and impact 

analyses of changes to 

regulatory capital rules.

Issuance by the federal 

banking agencies of 

final regulatory capital 

rules to implement 

internationally agreed 

upon enhancements 

to regulatory capital 

standards and remove 

references to credit 

ratings consistent with 

DFA.

Complete by June 30, 2013, the review of 

comments and impact analysis of June 2012 

proposed interagency changes to regulatory 

capital rules.

Issue by December 31, 2013, final regulatory 

capital rules.

Achieved.

See pgs. 23-24.

Achieved.

See pgs. 23-24.

4 Identify and address risks 

in financial institutions 

designated as systemically 

important.

Timely completion of 

statutory and regulatory 

requirements under Title I 

of DFA.

Input from Systemic 

Resolution Advisory 

Committee.

Complete, in collaboration with the Federal 

Reserve Board and in accordance with 

statutory and regulatory time frames, all 

required actions associated with the review 

of Section 165(d) resolution plans submitted 

under Title I of DFA.

Hold at least one meeting of the Systemic 

Resolution Advisory Committee to obtain 

feedback on resolving systemically important 

financial companies.

Achieved.

See pgs. 15-16.

Achieved.

See pg. 18.
PERFORMANCE RESULTS SUMMARY 57

2013 SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (continued)

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

#

Annual 

Performance Goal Indicator Target Results

5 Conduct on-site CRA and 

compliance examinations 

to assess compliance 

with applicable laws and 

regulations by FDICsupervised depository 

institutions. When 

violations are identified, 

promptly implement 

appropriate corrective 

programs and follow up 

to ensure that identified 

problems are corrected.

Percentage of 

examinations conducted 

in accordance with the 

time frames prescribed by 

FDIC policy.

Implementation of 

corrective programs.

Conduct 100 percent of required 

examinations within the time frames 

established by FDIC policy.

Conduct visits and/or follow-up examinations 

in accordance with established FDIC policies 

and ensure that the requirements of any 

required corrective program have been 

implemented and are effectively addressing 

identified violations.

Achieved.

See pg. 19. 

Achieved.

See pgs. 20-21. 

6 Effectively investigate 

and respond to written 

consumer complaints 

and inquiries about 

FDIC-supervised financial 

institutions.

Timely responses to 

written consumer 

complaints and inquiries.

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 

acknowledgement within two weeks.

Achieved.

See pg. 35.

7 Promote economic 

inclusion and access to 

responsible financial 

services through 

supervisory, research, 

policy, and consumer/

community affairs 

initiatives.

Completion of planned 

initiatives.

Conduct the third biennial FDIC National 

Survey of Unbanked and Underbanked 

Households (conducted jointly with the U.S. 

Census Bureau).

Initiate work on the Survey of Banks’ Efforts 

to Serve the Unbanked and Underbanked.

Implement the strategy outlined in the work 

plan approved by the Advisory Committee 

on Economic Inclusion to support the 

responsible use of technology to expand 

banking services to the unbanked.

Achieved.

See pg. 31.

Deferred.

See pg. 31.

Achieved.

See pgs. 30-31.
ANNUAL REPORT 2013

58 PERFORMANCE RESULTS SUMMARY

2013 RECEIVERSHIP MANAGEMENT PROGRAM RESULTS

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

#

Annual 

Performance Goal Indicator Target Results

1 Market failing institutions 

to all known qualified 

and interested potential 

bidders.

Scope of qualified and 

interested bidders 

solicited.

Contact all known qualified and interested 

bidders.

Achieved.

See pg. 38.

2 Value, manage, and 

market assets of failed 

institutions and their 

subsidiaries in a timely 

manner to maximize net 

return.

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) or 120 days of the failure date 

(for structured sales).

Achieved.

See pg. 38.

3 Manage the receivership 

estate and its subsidiaries 

toward an orderly 

termination.

Timely termination of new 

receiverships.

Terminate at least 75 percent of new 

receiverships that are not subject to lossshare agreements, structured sales, or other 

legal impediments, within three years of the 

date of failure.

Achieved.

See pg. 52.

4 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.

Percentage of investigated 

claim areas for which a 

decision has been made 

to close or pursue the 

claim.

For 80 percent of all claim areas, make a 

decision to close or pursue professional 

liability claims within 18 months of the failure 

of an insured depository institution.

Achieved.

See pg. 52.
PERFORMANCE RESULTS SUMMARY 59

PRIOR YEARS’ PERFORMANCE RESULTS

Refer to the respective full Annual Report of prior years for more information on performance results for those years. Minor 

wording changes may have been made to reflect current goals and targets. (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 2012 2011 2010

1. Respond promptly to all financial institution closings and related emerging issues.

♦ Depositors have access to insured funds within one business day if the failure 

occurs on a Friday. Achieved. Achieved. Achieved.

♦ Depositors have access to insured funds within two business days if the failure 

occurs on any other day of the week. Achieved. Achieved. Achieved.

♦ Depositors do not incur any losses on insured deposits. Achieved. Achieved. Achieved.

♦ No appropriated funds are required to pay insured depositors. Achieved. Achieved. Achieved.

2. Deepen the FDIC’s understanding of the future of community banking.

♦ Conduct a nationwide conference on the future of community banking during 

the first quarter of 2012. Achieved.

♦ Publish by December 31, 2012, a research study on the future of community 

banks, focusing on their evolution, characteristics, performance, challenges, 

and role in supporting local communities.

Achieved.

3. Disseminate data and analyses on issues and risks affecting the financial 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.

♦ Industry outreach activities are undertaken to inform bankers and other 

stakeholders about current trends, concerns, and other available FDIC 

resources.

Achieved. Achieved. Achieved.

4. 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 projections to the FDIC Board of Directors by June 30, 

2012, and December 31, 2012. Achieved.

♦ Provide updated fund projections to the FDIC Board of Directors by June 30, 

2011, and December 31, 2011. Achieved.

♦ Provide progress reports to the FDIC Board of Directors by June 30, 2012, and 

December 31, 2012. Achieved.

♦ Provide to the Chairman by September 1, 2012, an analysis, with 

recommendations where appropriate, of refinements to the deposit insurance 

pricing methodology for banks with assets under $10 billion.

Achieved.

♦ Recommend changes to deposit insurance assessment rates for the DIF to the 

FDIC Board as necessary. Achieved. Achieved.

♦ Provide updates to the FDIC Board by June 30, 2011, and December 31, 2011. Achieved.
ANNUAL REPORT 2013

60 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 2012 2011 2010

5. Set assessment rates to restore the insurance fund reserve ratio to the statutory 

minimum of at least 1.15 percent of estimated insured deposits by year-end 

2016, in accordance with the Amended Restoration Plan.

♦ Provide updated fund projections to the FDIC Board of Directors by June 30, 

2010, and December 31, 2010. Achieved.

♦ Recommend deposit insurance assessment rates for the DIF to the FDIC Board 

as necessary.

Achieved.

♦ Provide updates to the FDIC Board by June 30, 2010, and December 31, 2010. 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.

♦ Conduct at least 12 telephone or in-person seminars for bankers on deposit 

insurance coverage. Achieved. Achieved.

7. Expand and strengthen the FDIC’s participation and leadership role in providing 

technical guidance, training, consulting services, and information to international 

governmental banking and deposit insurance organizations; and in supporting 

robust international deposit insurance and banking systems.

♦ Maintain open dialogue with counterparts in strategically important countries 

as well as international financial institutions and partner U.S. agencies. Achieved.

♦ Target capacity building based on the assessment methodology of the BCBS 

and IADI Core Principles for an Effective Deposit Insurance System. Achieved.

♦ Lead and support the Association of Supervisors of Banks of the America’s 

efforts to promote sound banking principles throughout the Western 

Hemisphere.

Achieved.

♦ Undertake outreach activities to inform and train foreign bank regulators and 

deposit insurers. Achieved. Achieved.

♦ Foster strong relationships with international banking regulators and 

associations that promote sound banking supervision and regulation, failure 

resolutions, and deposit insurance practices. 

Achieved. Achieved. Achieved.

♦ Develop methodology and lead the International Association of Deposit 

Insurers training on the methodology for assessing compliance with 

implementation of the Core Principles for Effective Deposit Insurance Systems.

Achieved. Achieved.
PERFORMANCE RESULTS SUMMARY 61

SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS

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

Annual Performance Goals and Targets 2012 2011 2010

1. Conduct on-site risk management examinations to assess the overall financial 

condition, management practices and policies, and compliance with applicable 

laws and regulations of FDIC-supervised depository institutions.

♦ One hundred percent of required risk management examinations are 

conducted on schedule. Achieved.

♦ Conduct all required risk management examinations within the time frames 

prescribed by statute and FDIC policy. Achieved. Achieved.

2. For all institutions that are assigned a composite Uniform Financial Institutions 

Rating of 3, 4, or 5, conduct on-site visits within six months after implementation 

of a corrective program. Ensure during these visits and subsequent examinations 

that the institution is fulfilling the requirements of the corrective program that 

has been implemented and that the actions taken are effectively addressing the 

underlying concerns identified during the examination.

♦ Conduct 100 percent of required on-site visits within six months after 

implementation of a corrective program. Achieved. Achieved.

3. Complete the transfer of personnel and supervisory responsibility for statechartered thrifts from the Office of Thrift Supervision to the FDIC in accordance 

with approved plans and statutory requirements.

♦ Complete the transfer of supervisory responsibility for state-chartered thrifts by 

July 21, 2011. Achieved.

♦ Identify the OTS employees to be transferred and complete the transfer of 

those employees to the FDIC no later than 90 days after July 21, 2011. Achieved.

4. Take prompt and effective supervisory action to address unresolved problems 

identified during the FDIC examination of FDIC-supervised institutions that 

receive a composite Uniform Financial Institutions Rating of 3, 4, or 5 (problem 

institution). Monitor FDIC-supervised insured depository institutions’ compliance 

with formal and informal enforcement actions.

♦ One hundred percent of required on-site visits are conducted within six months 

of completion of the prior examination to confirm that the institution is fulfilling 

the requirements of the corrective program.

Achieved.

♦ One hundred percent of follow-up examinations are conducted within 12 

months of completion of the prior examination to confirm that identified 

problems have been corrected.

Achieved.

5. Assist in protecting the infrastructure of the U.S. banking system against terrorist 

financing, money laundering, and other financial crimes.

♦ Conduct all Bank Secrecy Act examinations within the time frames prescribed 

by statute and FDIC policy. Achieved. Achieved. Achieved

6. More closely align regulatory capital standards with risks and ensure that capital 

is maintained at prudential levels. 

♦ Complete by December 31, 2012, final rules addressing alternative standards 

of creditworthiness for credit ratings in the risk-based capital rules.

Not 

Achieved.

♦ Complete by December 31, 2012, a final rule for the Basel III capital standards. Not 

Achieved.
ANNUAL REPORT 2013

62 PERFORMANCE RESULTS SUMMARY

SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (Continued)

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

Annual Performance Goals and Targets 2012 2011 2010

♦ Complete by July 31, 2012, a final rule on the Market Risk Amendment, 

including finalizing alternatives to the use of credit ratings in accordance with 

DFA requirements.

Achieved.

♦ Complete by June 30, 2011, the final rule addressing capital floors for banking 

organizations. Achieved.

♦ Complete by September 30, 2011, the Basel III Notice of Proposed Rulemaking 

(NPR) for the new definition of capital, the July 2009 enhancements to 

resecuritizations risk weights, and securitization disclosures.

Deferred.

♦ Complete by September 30, 2011, the Basel NPR for the new leverage ratio. Deferred.

♦ Complete by September 30, 2011, the Basel NPR for the new liquidity 

requirements. Deferred.

♦ Complete by December 31, 2011, the final rule on the Market Risk 

Amendment (includes finalizing alternatives to the use of credit ratings in 

accordance with DFA requirements).

Deferred.

♦ Complete by September 30, 2011, the NPR for the Standardized Framework. Deferred.

7. More closely align regulatory capital with risk and ensure that capital is 

maintained at prudential levels.

♦ Complete by December 31, 2010, the rulemaking for implementing the 

Standardized Approach for an appropriate subset of U.S. banks. Deferred.

♦ Complete by December 31, 2010, the rulemaking for amending the floors for 

banks that calculate their risk-based capital requirements under the Advanced 

Approaches Capital rule to ensure capital requirements meet safety-andsoundness objectives.

Not 

Achieved.

♦ Complete by December 31, 2010, the rulemaking for implementing revisions 

to the Market Risk Amendment of 1996. Deferred.

♦ Complete by December 31, 2010, the rulemaking for implementing revisions 

to regulatory capital charges for resecuritizations and asset-backed commercial 

paper liquidity facilities.

Deferred.

8. Identify and address risks in financial institutions designated as systemically 

important.

♦ Take all steps necessary to facilitate timely issuance of implementing 

regulations and related policy guidance on proprietary trading and other 

investment restrictions (also known as the Volcker Rule).

Achieved.

♦ Take all steps necessary to facilitate timely issuance of implementing 

regulations and related policy guidance on restrictions on federal assistance to 

swap entities.

Achieved.

♦ Take all steps necessary to facilitate timely issuance of implementing 

regulations and related policy guidance on capital and margin and other 

requirements for OTC derivatives.

Achieved.

♦ Take all steps necessary to facilitate timely issuance of implementing 

regulations and related policy guidance on credit risk retention requirements 

for securitizations.

Achieved.
PERFORMANCE RESULTS SUMMARY 63

SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (Continued)

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

Annual Performance Goals and Targets 2012 2011 2010

♦ Take all steps necessary to facilitate timely issuance of implementing 

regulations and related policy guidance on enhanced compensation structure 

and incentive compensation requirements.

Achieved.

♦ Monitor risk within and across large, complex firms to assess the potential 

need for, and obtain the information that would be required to carry out, if 

necessary, an FDIC resolution of the institution.

Achieved.

♦ Establish by June 30, 2012, with the FRB, policies and procedures for 

collecting, processing, and reviewing for completeness and sufficiency holding 

company and insure depository institution (IDI) resolution plans submitted 

under Section 165(d) of DFA. 

Achieved.

♦ Complete, with the FRB and in accordance with prescribed time frames, the 

review of holding company and IDI resolution plans submitted under Section 

165(d) of DFA.

Achieved.

♦ Establish an ongoing FDIC monitoring program for all covered financial 

institutions. Achieved.

♦ Complete rulemaking to establish (with the Board of Governors of the Federal 

Reserve System) criteria for resolution plans to be submitted by systemically 

important institutions.

Achieved.

9. Facilitate more effective regulatory compliance so as to reduce regulatory burden 

on the banking industry, where appropriate, while maintaining the independence 

and integrity of the FDIC’s risk management and consumer compliance 

supervisory programs.

♦ Issue by March 31, 2011, a revised corporate directive on the issuance of 

Financial Institution Letters (FILs) that includes a requirement that all FILs 

contain an informative section as to their applicability to smaller institutions 

(total assets under $1 billion).

Achieved.

♦ Complete by June 30, 2011, a review of all recurring questionnaires and 

information requests to the industry and submit a report to FDIC management 

with recommendations on improving efficiency and ease of use, including 

a scheduled plan for implementing these revisions. Carry out approved 

recommendations in accordance with the plan.

Achieved.
ANNUAL REPORT 2013

64 PERFORMANCE RESULTS SUMMARY

SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (Continued)

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

Annual Performance Goals and Targets 2012 2011 2010

1. Conduct on-site CRA and compliance examinations to assess compliance with 

applicable laws and regulations by FDIC-supervised depository institution.

♦ Conduct 100 percent of required examinations within the time frames 

established by FDIC policy. Achieved.

♦ One hundred percent of required examinations are conducted on schedule. Achieved.

2. Take prompt and effective supervisory action to monitor and address problems 

identified during compliance examinations of FDIC-supervised institutions that 

received an overall 3, 4, or 5 rating for compliance with consumer protection and 

fair lending laws. Ensure that each institution is fulfilling the requirements of any 

corrective program that has been implemented and that the actions taken are 

effectively addressing the underlying concerns identified during the examination.

♦ Conduct follow-up examinations or on-site visits for any unfavorably rated (3, 4, 

or 5) institution within 12 months of completion of the prior examination. Achieved.

♦ One hundred percent of follow-up examinations or visitations are conducted 

within 12 months from the date of a formal enforcement action to confirm 

compliance with the prescribed enforcement action.

Achieved.

♦ For all institutions that are assigned a compliance rating of 3, 4, or 5, conduct 

follow-up examinations or on-site visits within 12 months to ensure that each 

institution is fulfilling the requirements of any corrective programs that have 

been implemented and that the actions taken are effectively addressing the 

underlying concerns identified during the examination.

Achieved.

3. Complete the transfer of personnel and supervisory responsibility for compliance 

examinations of FDIC supervised institutions with more than $10 billion in assets 

and their affiliates from the FDIC to the new Consumer Financial Protection 

Bureau (CFPB) in accordance with statutory requirements.

♦ Complete by July 21, 2011, the transfer of supervisory responsibility from the 

FDIC to the CFPB. Achieved.

♦ Identify the FDIC employees to be transferred to the CFPB and transfer them 

in accordance with established time frames. Achieved.

4. Establish an effective working relationship with the new Consumer Financial 

Protection Bureau (CFPB).

♦ Complete the transfer of consumer compliant processing responsibilities within 

the purview of the CFPB within approved time frames. Achieved.

5. Effectively investigate and respond to written consumer complaints and inquiries 

about FDIC-supervised financial 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.

6. Establish, in consultation with the FDIC’s Advisory Committee on Economic 

Inclusion and other regulatory agencies, national objectives and methods for 

reducing the number of unbanked and underbanked individuals.

♦ Launch the FDIC Model Safe Accounts Pilot, begin data collection on the 

accounts from banks, and start reporting on results of the pilot. Achieved.
PERFORMANCE RESULTS SUMMARY 65

SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (Continued)

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

Annual Performance Goals and Targets 2012 2011 2010

♦ Continue to promote the results of the FDIC Small-Dollar Loan Pilot and 

research opportunities for bringing small-dollar lending programs to scale, 

including exploring a test of employer-based lending using the federal 

workforce.

Achieved.

♦ Engage in efforts to support safe mortgage lending in low- and moderateincome communities. Achieved.

♦ Facilitate completion of final recommendation on the initiatives identified in 

the Advisory Committee’s strategic plan. Achieved.

♦ Implement, or establish plans to implement, Advisory Committee 

recommendations approved by the FDIC for further action, including new 

research, demonstration and pilot projects, and new and revised supervisory 

and public policies.

Achieved.

7. Promote economic inclusion and access to responsible financial services through 

supervisory, reach, policy, and consumer/community affairs initiatives.

♦ Complete and publish results of the second biennial National Survey of 

Unbanked and Underbanked Households and Banks’ Efforts to Serve the 

Unbanked and Underbanked.

Achieved.

♦ Plan and hold meetings of the Advisory Committee on Economic Inclusion to 

gain feedback and advice on FDIC efforts to promote inclusion. Achieved.

♦ Coordinate 25 CRA community forums nationwide to facilitate community 

development opportunities for financial institutions. Achieved.
ANNUAL REPORT 2013

RECEIVERSHIP MANAGEMENT PROGRAM RESULTS

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

Annual Performance Goals and Targets 2012 2011 2010

1. Market failing institutions to all known qualified and interested potential bidders.

♦ Contact all known qualified and interested bidders. Achieved. Achieved. Achieved.

2. 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 failure date (for structured sales).

Achieved. Achieved. Achieved.

♦ Implement enhanced reporting capabilities from the Automated Procurement 

System. Achieved.

♦ Ensure that all newly designated oversight managers and technical 

monitors receive training in advance of performing contract administration 

responsibilities.

Achieved.

♦ Optimize the effectiveness of oversight managers and technical monitors by 

restructuring work assignments, providing enhanced technical support, and 

improving supervision.

Achieved.

3. Manage the receivership estate and its subsidiaries toward an orderly 

termination.

♦ Terminate within three years of the date of failure, at least 75 percent of new 

receiverships that are not subject to loss-share agreements, structured sales, or 

other legal impediments.

Achieved. Achieved. Achieved.

4. 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, a decision is made to close or pursue 

professional liability claims within 18 months of the failure date of an insured 

depository institution.

Achieved. Achieved. Achieved.

5. Complete reviews of all loss-share and Limited Liability Corporation (LLC) 

agreements to ensure full compliance with the terms and conditions of the 

agreements.

♦ Complete reviews of 100 percent of the loss-share and LLC agreements active 

as of December 31, 2011, and December 31, 2010, to ensure full compliance 

with the terms and conditions of the agreements.

Achieved. Achieved.

♦ Review the final report and implement an action plan to address the report’s 

finding and recommendations for 80 percent of the loss-share reviews and 70 

percent of the LLC reviews.

Achieved.

♦ Review the final report and implement an action plan to address the report’s 

finding and recommendations for 75 percent of the loss-share reviews and 50 

percent of the LLC reviews, including all reviews of agreements totaling more 

than $1.0 billion (gross book value).

Achieved.

66 PERFORMANCE RESULTS SUMMARY
Financial I Section V.

FINANCIAL SECTION 67
ANNUAL REPORT 2013

68 FINANCIAL SECTION 

DEPOSIT INSURANCE FUND (DIF)

FEDERAL DEPOSIT INSURANCE CORPORATION

DEPOSIT INSURANCE FUND BALANCE SHEET AT DECEMBER 31

Dollars in Thousands

2013 2012

Assets

Cash and cash equivalents $3,543,270 $3,100,361 

Investment in U.S. Treasury obligations (Note 3) 38,510,500 34,868,688 

Trust preferred securities (Note 10) 0 2,263,983 

Assessments receivable, net (Note 8) 2,227,735 1,006,852 

Interest receivable on investments and other assets, net 511,428 433,592 

Receivables from resolutions, net (Note 4) 16,344,991 23,119,554 

Property and equipment, net (Note 5) 377,223 392,880 

Total Assets $61,515,147 $65,185,910 

Liabilities 

Accounts payable and other liabilities $300,575 $349,620 

Unearned revenue - prepaid assessments (Note 8) 0 1,576,417 

Refunds of prepaid assessments (Note 8) 0 5,675,199 

Liabilities due to resolutions (Note 6) 12,625,982 21,173,785 

Postretirement benefit liability (Note 13) 193,591 224,225 

Contingent liabilities for: 

Anticipated failure of insured institutions (Note 7) 1,198,960 3,220,697 

Litigation losses (Note 7) 5,200 8,200 

Total Liabilities 14,324,308 32,228,143 

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

Fund Balance

Accumulated Net Income 47,186,974 32,682,237 

Accumulated Other Comprehensive Income

Unrealized gain on U.S. Treasury investments, net (Note 3) 20,215 33,819 

Unrealized postretirement benefit loss (Note 13) (16,350) (60,448)

Unrealized gain on trust preferred securities (Note 10) 0 302,159 

Total Accumulated Other Comprehensive Income 3,865 275,530 

Total Fund Balance 47,190,839 32,957,767 

Total Liabilities and Fund Balance $61,515,147 $65,185,910 

The accompanying notes are an integral part of these financial statements.
FINANCIAL SECTION 69

DEPOSIT INSURANCE FUND (DIF)

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

FEDERAL DEPOSIT INSURANCE CORPORATION

DEPOSIT INSURANCE FUND STATEMENT OF INCOME AND FUND BALANCE 

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2013 2012

Revenue

Assessments (Note 8) $9,734,173 $12,397,022 

Interest on U.S. Treasury obligations 103,363 159,214 

Systemic risk revenue 0 (161,135)

Other revenue (Note 9) 163,154 6,127,211 

Gain on sale of trust preferred securities (Note 10) 458,176 0 

Total Revenue 10,458,866 18,522,312 

Expenses and Losses

Operating expenses (Note 11) 1,608,717 1,777,513 

Systemic risk expenses 0 (161,135)

Provision for insurance losses (Note 12) (5,659,388) (4,222,595)

Insurance and other expenses 4,799 7,282 

Total Expenses and Losses (4,045,872) (2,598,935)

Net Income 14,504,738 21,121,247 

Other Comprehensive Income

Unrealized loss on U.S. Treasury investments, net (13,604) (13,878)

Unrealized postretirement benefit gain (loss) (Note 13) 44,097 (26,886)

Unrealized (loss) gain on trust preferred securities (Note 10) (302,159) 50,752 

Total Other Comprehensive (Loss) Income (271,666) 9,988 

Comprehensive Income 14,233,072 21,131,235 

Fund Balance - Beginning 32,957,767 11,826,532 

Fund Balance - Ending $47,190,839 $32,957,767
ANNUAL REPORT 2013

70 FINANCIAL SECTION 

DEPOSIT INSURANCE FUND (DIF)

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

FEDERAL DEPOSIT INSURANCE CORPORATION

DEPOSIT INSURANCE FUND STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2013 2012

Operating Activities

Provided by:

Assessments $7,111,902 $1,525,414 

Interest on U.S. Treasury obligations 1,080,157 1,088,697 

Dividends and interest on trust preferred securities 154,393 360,754 

Recoveries from financial institution resolutions 5,696,453 4,937,738 

Miscellaneous receipts 79,773 69,285 

Used by:

Operating expenses (1,558,229) (1,703,278)

Disbursements for financial institution resolutions (3,857,214) (8,998,978)

Refunds of prepaid assessments (Note 8) (5,850,135) 0 

Temporary Liquidity Guarantee Program debt obligations 0 (117,708)

Dividends and interest on trust preferred securities transferred to U.S. Treasury 0 (182,754)

Miscellaneous disbursements (17,228) (15,030)

Net Cash Provided (Used) by Operating Activities 2,839,872 (3,035,860)

Investing Activities

Provided by:

Maturity of U.S. Treasury obligations 27,704,523 32,132,623 

Sale of U.S. Treasury obligations (Note 3) 0 2,554,781 

Sale of trust preferred securities (Note 10) 2,420,000 0 

Used by:

Purchase of property and equipment (57,390) (67,344)

Purchase of U.S. Treasury obligations (32,464,096) (33,388,751)

Net Cash (Used) Provided by Investing Activities (2,396,963) 1,231,309 

Net Increase (Decrease) in Cash and Cash Equivalents 442,909 (1,804,551)

Cash and Cash Equivalents - Beginning 3,100,361 4,904,912 

Cash and Cash Equivalents - Ending $3,543,270 $3,100,361
FINANCIAL SECTION 71

1. OPERATIONS OF THE DEPOSIT 

INSURANCE FUND

OVERVIEW

The Federal Deposit Insurance Corporation (FDIC) is the 

independent deposit insurance agency created by Congress 

in 1933 to maintain stability and public confidence in 

the nation’s banking system. Provisions that govern the 

operations of the FDIC are generally found in the Federal 

Deposit Insurance (FDI) Act, as amended (12 U.S.C. 1811, 

et seq). In carrying out the purposes of the FDI Act, 

the FDIC, as administrator of the Deposit Insurance 

Fund (DIF), insures the deposits of banks and savings 

associations (insured depository institutions) from loss due 

to institution failures. In cooperation with other federal and 

state agencies, the FDIC promotes the safety and soundness 

of insured depository institutions by identifying, monitoring 

and addressing risks to the DIF. Commercial banks, savings 

banks and savings associations (known as “thrifts”) are 

supervised by either the FDIC, the Office of the Comptroller 

of the Currency, or the Federal Reserve Board. 

The FDIC is also the administrator of the FSLIC Resolution 

Fund (FRF). The FRF is a resolution fund responsible for 

the sale of remaining assets and satisfaction of liabilities 

associated with the former Federal Savings and Loan 

Insurance Corporation (FSLIC) and the former Resolution 

Trust Corporation. The DIF and the FRF are maintained 

separately by the FDIC to support their respective 

functions. 

Pursuant to the Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010 (Dodd-Frank Act), the 

FDIC is the manager of the Orderly Liquidation Fund 

(OLF). Established as a separate fund in the U.S. Treasury 

(Treasury), the OLF is inactive and unfunded until the FDIC 

is appointed as receiver for a covered financial company (a 

failing financial company, such as a bank holding company 

or nonbank financial company for which a systemic risk 

determination has been made as set forth in section 203 of 

the Dodd-Frank Act). 

The Dodd-Frank Act (Public Law 111-203) granted the 

FDIC authority to establish a widely available program 

to guarantee obligations of solvent insured depository 

institutions (IDIs) or solvent depository institution 

holding companies (including affiliates) upon the systemic 

determination of a liquidity event during times of severe 

economic distress. The program would not be funded 

by the DIF but rather by fees and assessments paid by 

all participants in the program. If fees are insufficient to 

cover losses or expenses, the FDIC must impose a special 

assessment on participants as necessary to cover the 

shortfall. Any excess funds at the end of the liquidity event 

program would be deposited in the General Fund of the 

Treasury. 

The Dodd-Frank Act limits the FDIC’s systemic risk 

determination authority under section 13 of the FDI Act to 

IDIs for which the FDIC has been appointed receiver. Prior 

to this change, the authority permitted open bank assistance 

and the creation of the Temporary Liquidity Guarantee 

Program (TLGP) that expired on December 31, 2012 

(see Note 9).

The Dodd-Frank Act also created the Financial Stability 

Oversight Council (FSOC) of which the Chairman of the 

FDIC is a member and expanded the FDIC’s responsibilities 

to include supervisory review of resolution plans (known 

as living wills) and backup examination authority for 

systemically important bank holding companies and 

nonbank financial companies. The living wills provide 

for an entity’s rapid and orderly resolution in the event of 

material financial distress or failure.

OPERATIONS OF THE DIF

The primary purposes of the DIF are to 1) insure the 

deposits and protect the depositors of IDIs and 2) resolve 

failed IDIs upon appointment of the FDIC as receiver in a 

Notes to the Financial Statements

DEPOSIT INSURANCE FUND 

December 31, 2013 and 2012
ANNUAL REPORT 2013

72 FINANCIAL SECTION 

manner that will result in the least possible cost to the DIF 

(unless a systemic risk determination is made). 

The DIF is primarily funded from deposit insurance 

assessments. Other available funding sources, if necessary, 

are borrowings from the Treasury, the Federal Financing 

Bank (FFB), Federal Home Loan Banks, and IDIs. The 

FDIC has borrowing authority of $100 billion from the 

Treasury and a Note Purchase Agreement with the FFB, not 

to exceed $100 billion, to enhance the DIF’s ability to fund 

deposit insurance. 

A statutory formula, known as the Maximum Obligation 

Limitation (MOL), limits the amount of obligations the 

DIF can incur to the sum of its cash, 90 percent of the fair 

market value of other assets, and the amount authorized to 

be borrowed from the Treasury. The MOL for the DIF was 

$146.0 billion and $132.9 billion as of December 31, 2013 and 

2012, respectively. 

OPERATIONS OF RESOLUTION ENTITIES

The FDIC is responsible for managing and disposing of 

the assets of failed institutions in an orderly and efficient 

manner. The assets held by receiverships, pass-through 

conservatorships, and bridge institutions (collectively, 

resolution entities), and the claims against them, are 

accounted for separately from the DIF assets and liabilities 

to ensure that proceeds from these entities are distributed 

in accordance with applicable laws and regulations. 

Accordingly, income and expenses attributable to resolution 

entities are accounted for as transactions of those entities. 

Resolution entities are billed by the FDIC for services 

provided on their behalf.

2. SUMMARY OF SIGNIFICANT 

ACCOUNTING POLICIES

GENERAL

These financial statements pertain to the financial position, 

results of operations, and cash flows of the DIF and are 

presented in accordance with U.S. generally accepted 

accounting principles (GAAP). As permitted by the Federal 

Accounting Standards Advisory Board’s Statement of 

Federal Financial Accounting Standards 34, The Hierarchy 

of Generally Accepted Accounting Principles, Including 

the Application of Standards Issued by the Financial 

Accounting Standards Board, the FDIC prepares financial 

statements in accordance with standards promulgated 

by the Financial Accounting Standards Board (FASB). 

These statements do not include reporting for assets and 

liabilities of resolution entities because these entities are 

legally separate and distinct, and the DIF does not have any 

ownership or beneficial interests in them. Periodic and final 

accounting reports of resolution entities are furnished to 

courts, supervisory authorities, and others upon request.

USE OF ESTIMATES

Management makes estimates and assumptions that affect 

the amounts reported in the financial statements and 

accompanying notes. Actual results could differ from these 

estimates. Where it is reasonably possible that changes 

in estimates will cause a material change in the financial 

statements in the near term, the nature and extent of 

such potential changes in estimates have been disclosed. 

The more significant estimates include the assessments 

receivable and associated revenue; the allowance for loss 

on receivables from resolutions (including shared-loss 

agreements); guarantee obligations for structured 

transactions; the postretirement benefit obligation; and 

the estimated losses for anticipated failures, litigation, and 

representations and indemnifications. 

CASH EQUIVALENTS

Cash equivalents are short-term, highly liquid investments 

consisting primarily of U.S. Treasury Overnight Certificates.

INVESTMENT IN U.S. TREASURY OBLIGATIONS

The DIF funds are required to be invested in obligations 

of the United States or in obligations guaranteed as to 

principal and interest by the United States. The Secretary 

of the Treasury must approve all such investments in excess 

of $100,000 and has granted the FDIC approval to invest 

the DIF funds only in U.S. Treasury obligations that are 

purchased or sold exclusively through the Bureau of the 

Fiscal Service’s Government Account Series program.

The DIF’s investments in U.S. Treasury obligations are 

classified as available-for-sale. Securities designated as 

available-for-sale are shown at fair value. Unrealized gains 

and losses are reported as other comprehensive income. 

Realized gains and losses are included in the Statement of 
FINANCIAL SECTION 73

Income and Fund Balance as components of net income. 

Income on securities is calculated and recorded on a daily 

basis using the effective interest or straight-line method 

depending on the maturity of the security. 

REVENUE RECOGNITION FOR ASSESSMENTS

Assessment revenue is recognized for the quarterly period 

of insurance coverage based on an estimate. The estimate 

is derived from an institution’s risk-based assessment rate 

and assessment base for the prior quarter adjusted for 

the current quarter’s available assessment credits, certain 

changes in supervisory examination ratings for larger 

institutions, as well as modest assessment base growth 

and average assessment rate adjustment factors. At the 

subsequent quarter-end, the estimated revenue amounts are 

adjusted when actual assessments for the covered period 

are determined for each institution (see Note 8). 

CAPITAL ASSETS AND DEPRECIATION

The FDIC buildings are depreciated on a straight-line basis 

over a 35- to 50-year estimated life. Building improvements 

are capitalized and depreciated over the estimated useful 

life of the improvements. Leasehold improvements 

are capitalized and depreciated over the lesser of the 

remaining life of the lease or the estimated useful life of 

the improvements, if determined to be material. Capital 

assets depreciated on a straight-line basis over a five-year 

estimated useful life include mainframe equipment; 

furniture, fixtures, and general equipment; and internal-use 

software. Personal computer equipment is depreciated on a 

straight-line basis over a three-year estimated useful life.

REPORTING ON VARIABLE INTEREST ENTITIES

FDIC receiverships engaged in structured transactions, 

some of which resulted in the issuance of note obligations 

that were guaranteed by the FDIC in its corporate capacity 

(see Note 7, Contingent Liabilities for: FDIC Guaranteed 

Debt of Structured Transactions). As the guarantor of note 

obligations for several structured transactions, the FDIC 

in its corporate capacity is the holder of a variable interest 

in a number of variable interest entities (VIEs). The FDIC 

conducts a qualitative assessment of its relationship with 

each VIE as required by Accounting Standards Codification 

(ASC) Topic 810, Consolidation. These assessments 

are conducted to determine if the FDIC in its corporate 

capacity has 1) power to direct the activities that most 

significantly impact the economic performance of the VIE 

and 2) an obligation to absorb losses of the VIE or the right 

to receive benefits from the VIE that could potentially be 

significant to the VIE. When a variable interest holder 

has met both of these characteristics, the enterprise is 

considered the primary beneficiary and must consolidate 

the VIE. In accordance with the provisions of ASC 810, an 

assessment of the terms of the legal agreement for each 

VIE was conducted to determine whether any of the terms 

had been activated or modified in a manner which would 

cause the FDIC in its corporate capacity to be characterized 

as a primary beneficiary. In making that determination, 

consideration was given to which, if any, activities were 

significant to each VIE. Often, the right to service collateral, 

to liquidate collateral, or to unilaterally dissolve the limited 

liability company (LLC) or trust was determined to be the 

most significant activity. In other cases, it was determined 

that the structured transactions did not include such 

significant activities and that the design of the entity was the 

best indicator of which party was the primary beneficiary. 

The results of each analysis identified a party other than the 

FDIC in its corporate capacity as the primary beneficiary. 

The conclusion of these analyses was that the FDIC in 

its corporate capacity has not engaged in any activity 

that would cause the FDIC in its corporate capacity to 

be characterized as a primary beneficiary to any VIE 

with which it was involved as of December 31, 2013 and 

2012. Therefore, consolidation is not required for the 

2013 and 2012 DIF financial statements. In the future, the 

FDIC in its corporate capacity may become the primary 

beneficiary upon the activation of provisional contract 

rights that extend to the Corporation if payments are made 

on guarantee claims. Ongoing analyses will be required in 

order to monitor consolidation implications under ASC 810.

The FDIC’s involvement with VIEs, in its corporate capacity, 

is fully described in Note 7.

RELATED PARTIES

The nature of related parties and a description of related 

party transactions are discussed in Note 1 and disclosed 

throughout the financial statements and footnotes. 
ANNUAL REPORT 2013

74 FINANCIAL SECTION 

PRESENTATION OF STATEMENT OF CASH FLOWS

To enhance cash flow information for operating activities of 

the DIF, in 2013, the FDIC changed the method of presenting 

the DIF’s Statement of Cash Flows from the indirect method 

to the direct method, which is preferable and is encouraged 

by the Financial Accounting Standards Board. Accordingly, 

the DIF’s 2012 Statement of Cash Flows has been 

conformed to this method of presentation for comparative 

purposes. For 2013 and 2012, the reconciliation of net 

income to net cash from operating activities is presented in 

Note 16.

DISCLOSURE ABOUT RECENT RELEVANT 

ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements have been deemed 

not applicable or material to the financial statements as 

presented.

3. INVESTMENT IN U.S. TREASURY 

OBLIGATIONS

As of December 31, 2013 and 2012, investments in U.S. 

Treasury obligations, were $38.5 billion and $34.9 billion, 

respectively. As of December 31, 2013 and 2012, the DIF 

held $4.6 billion and $5.3 billion, respectively, of Treasury 

Inflation-Protected Securities (TIPS), which are indexed to 

increases or decreases in the Consumer Price Index for All 

Urban Consumers (CPI-U).

In 2012, the FDIC sold securities designated as availablefor-sale for total proceeds of $2.6 billion. The gross realized 

gains and losses on these sales were $878 thousand and 

$241 thousand, respectively, which resulted in a total net 

gain of $637 thousand. The cost of these securities sold 

was determined based on specific identification. Since 

these securities were purchased on behalf of the TLGP, the 

realized gain was recognized in the “Systemic risk revenue” 

line item on the Statement of Income and Fund Balance 

(see Note 9).
FINANCIAL SECTION 75

TOTAL INVESTMENT IN U.S. TREASURY OBLIGATIONS AT DECEMBER 31, 2013

Dollars in Thousands

Maturity

Yield at 

Purchase1

Face 

Value

Net 

Carrying 

Amount

Unrealized 

Holding 

Gains

Unrealized 

Holding 

Losses

Fair 

Value

U.S. Treasury notes and bonds

Within 1 year 0.23% $14,300,000 $14,552,418 $4,167 $(31) $14,556,554 

After 1 year 

through 5 years 

0.70% 18,351,209 19,382,202 24,408 (14,013) 19,392,597 

U.S. Treasury Inflation-Protected Securities

Within 1 year -0.86% 2,150,000 2,464,330 1,050 (1,130) 2,464,250 

After 1 year 

through 5 years 

-0.99% 1,800,000 2,091,335 5,788 (24) 2,097,099 

Total $36,601,209 $38,490,285 $35,413 $(15,198)2 $38,510,500 

1 For TIPS, the yields in the above table are stated at their real yields at purchase, not their effective yields. Effective yields on TIPS include a longterm annual inflation assumption as measured by the CPI-U. The long-term CPI-U consensus forecast is 2.0 percent, based on figures issued by the 

Congressional Budget Office and Blue Chip Economic Indicators in early 2013.

2 The unrealized losses occurred as a result of temporary changes in market interest rates. These unrealized losses occurred over a period of less 

than a year. The FDIC does not intend to sell the securities and is not likely to be required to sell them before their maturity date, thus, the FDIC 

does not consider these securities to be other than temporarily impaired at December 31, 2013.

TOTAL INVESTMENT IN U.S. TREASURY OBLIGATIONS AT DECEMBER 31, 2012

Dollars in Thousands

Maturity

Yield at

Purchase1

Face

Value

Net

Carrying

Amount

Unrealized

Holding

Gains

Unrealized

Holding

Losses

Fair

Value

U.S. Treasury notes and bonds

Within 1 year 0.34% $24,800,000 $25,228,393 $19,871 $0 $25,248,264 

After 1 year 

through 5 years 

0.32% 4,050,000 4,341,814 4,569 0 4,346,383 

U.S. Treasury Inflation-Protected Securities

Within 1 year -0.86% 1,650,000 1,813,291 0 (9,788)2 1,803,503 

After 1 year 

through 5 years 

-0.87% 2,900,000 3,451,371 19,167 0 3,470,538 

Total $33,400,000 $34,834,869 $43,607 $(9,788) $34,868,688 

1

 For TIPS, the yields in the above table are stated at their real yields at purchase, not their effective yields. Effective yields on TIPS include a longterm annual inflation assumption as measured by the CPI-U. The long-term CPI-U consensus forecast is 2.0 percent, based on figures issued by the 

Congressional Budget Office and Blue Chip Economic Indicators in early 2012. 

2

 The unrealized losses occurred as a result of temporary changes in market interest rates. These unrealized losses occurred over a period of less 

than a year. The FDIC does not intend to sell the TIPS and is not likely to be required to sell them before their maturity in 2013, thus, the FDIC 

does not consider these securities to be other than temporarily impaired at December 31, 2012.
ANNUAL REPORT 2013

76 FINANCIAL SECTION 

4. RECEIVABLES FROM 

RESOLUTIONS, NET

RECEIVABLES FROM RESOLUTIONS,

NET AT DECEMBER 31

Dollars in Thousands

2013 2012

Receivables from 

closed banks

$106,291,226 $116,940,999 

Allowance for losses (89,946,235) (93,821,445)

Total $16,344,991 $23,119,554

The receivables from resolutions result from payments 

made by the DIF to cover obligations to insured depositors 

(subrogated claims), advances to resolution entities for 

working capital, and administrative expenses paid on 

behalf of resolution entities. Any related allowance for 

loss represents the difference between the funds advanced 

and/or obligations incurred and the expected repayment. 

Estimated future payments on losses incurred on assets 

sold to an acquiring institution under a shared-loss 

agreement (SLA) are factored into the computation of the 

expected repayment. Assets held by DIF resolution entities 

(including structured transaction-related assets; see Note 7) 

are the main source of repayment of the DIF’s receivables 

from resolutions. 

As of December 31, 2013, there were 479 active 

receiverships, including 24 established in 2013. As of 

December 31, 2013 and 2012, DIF resolution entities held 

assets with a book value of $38.4 billion and $53.5 billion, 

respectively (including $27.1 billion and $36.5 billion, 

respectively, of cash, investments, receivables due from 

the DIF, and other receivables). Ninety-nine percent of 

the current asset book value of $38.4 billion is held by 

resolution entities established since the beginning of 2008.

Estimated cash recoveries from the management and 

disposition of assets that are used to determine the 

allowance for losses are based on asset recovery rates from 

several sources including actual or pending institutionspecific asset disposition data, failed institution-specific 

asset valuation data, aggregate asset valuation data on 

several recently failed or troubled institutions, sampled 

asset valuation data, and empirical asset recovery data 

based on failures as far back as 1990. Methodologies for 

determining the asset recovery rates incorporate estimating 

future cash recoveries, net of applicable liquidation cost 

estimates, and discounting based on market-based risk 

factors applicable to a given asset’s type and quality. The 

resulting estimated cash recoveries are then used to derive 

the allowance for loss on the receivables from these 

resolutions.

For failed institutions resolved using a whole bank purchase 

and assumption transaction with an accompanying SLA, the 

projected future shared-loss payments and recoveries on 

the covered assets sold to the acquiring institution under 

the agreement are considered in determining the allowance 

for loss on the receivables from these resolutions. The 

shared-loss cost projections are based on the covered 

assets’ intrinsic value which is determined using financial 

models that consider the quality, condition and type of 

covered assets, current and future market conditions, risk 

factors and estimated asset holding periods. For year-end 

2013 financial reporting, the shared-loss cost estimates 

were updated for the majority (98% or 285) of the 290 

active SLAs; the remaining 5 were based on recent loss 

estimates. The updated shared-loss cost projections for the 

larger agreements were primarily based on new third-party 

valuations estimating the cumulative loss of covered 

assets. The remaining agreements were stratified by either 

receivership age or geographic location. A random sample 

of institutions within each stratum was selected for new 

third-party loss estimations, and valuation results from the 

sample institutions were aggregated and extrapolated to 

institutions within the like stratum based on asset type and 

performance status.

Note that estimated asset recoveries are regularly evaluated 

during the year, but remain subject to uncertainties because 

of potential changes in economic and market conditions. 

Continuing economic uncertainties could cause the 

DIF’s actual recoveries to vary significantly from current 

estimates. 

WHOLE BANK PURCHASE AND ASSUMPTION 

TRANSACTIONS WITH SHARED-LOSS AGREEMENTS 

Since the beginning of 2008, the FDIC resolved 304 failures 

using whole bank purchase and assumption resolution 

transactions with accompanying SLAs on total assets 

of $216.6 billion purchased by the financial institution 

acquirers. The acquirer typically assumes all of the 
FINANCIAL SECTION 77

deposits and purchases essentially all of the assets of a 

failed institution. The majority of the commercial and 

residential loan assets are purchased under an SLA, where 

the FDIC agrees to share in future losses and recoveries 

experienced by the acquirer on those assets covered under 

the agreement. SLAs are used by the FDIC to keep assets 

in the private sector and to minimize disruptions to loan 

customers.

Losses on the covered assets are shared between the 

acquirer and the FDIC in its receivership capacity of the 

failed institution when losses occur through the sale, 

foreclosure, loan modification, or write-down of loans in 

accordance with the terms of the SLA. The majority of 

the agreements cover a five- to 10-year period with the 

receiver covering 80 percent of the losses incurred by 

the acquirer and the acquiring bank covering 20 percent. 

Prior to March 26, 2010, most SLAs included a threshold 

amount, above which the receiver covered 95 percent of 

the losses incurred by the acquirer. As mentioned above, 

the estimated shared-loss liability is accounted for by the 

receiver and is included in the calculation of the DIF’s 

allowance for loss against the corporate receivable from the 

resolution. As shared-loss claims are asserted and proven, 

DIF receiverships satisfy these shared-loss payments using 

available liquidation funds and/or by drawing on amounts 

due from the DIF for funding the deposits assumed by the 

acquirer (see Note 6). 

As of December 31, 2013, 300 receiverships have made 

shared-loss payments totaling $26.4 billion. At December 

31, 2013 and 2012, estimates of additional payments by 

DIF receiverships over the duration of the SLAs were 

$12.3 billion and $18.1 billion, respectively, on total 

remaining covered assets of $78.2 billion and $103.7 billion, 

respectively.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the DIF 

to concentrations of credit risk are receivables from 

resolutions. The repayment of the DIF’s receivables from 

resolutions is primarily influenced by recoveries on assets 

held by DIF receiverships and payments on the covered 

assets under SLAs. The majority of the remaining assets 

in liquidation ($11.2 billion) and current shared-loss 

covered assets ($78.2 billion) which total $89.4 billion 

are concentrated in commercial loans ($40.1 billion), 

residential loans ($37.4 billion), securities ($2.8 billion), and 

structured transaction-related assets as described in Note 

7 ($7.5 billion). Most of the assets originated from failed 

institutions located in California ($27.1 billion), Florida 

($10.2 billion), Puerto Rico ($8.7 billion), Alabama ($6.8 

billion), Illinois ($6.6 billion) and Georgia ($6.3 billion).

5. PROPERTY AND EQUIPMENT, NET

PROPERTY AND EQUIPMENT, 

NET AT DECEMBER 31

Dollars in Thousands

2013 2012

Land $37,352 $37,352 

Buildings (including building and 

leasehold improvements)

314,775 313,221 

Application software (includes 

work-in-process)

149,115 135,059 

Furniture, fixtures, and equipment 142,621 152,280 

Accumulated depreciation (266,640) (245,032)

Total $377,223 $392,880 

The depreciation expense was $73 million and $76 million 

for 2013 and 2012, respectively.

6. LIABILITIES DUE TO RESOLUTIONS 

As of December 31, 2013 and 2012, the DIF recorded 

liabilities totaling $12.6 billion and $21.1 billion, 

respectively, to resolution entities representing the 

agreed-upon value of assets transferred from the 

receiverships, at the time of failure, to the acquirers/bridge 

institutions for use in funding the deposits assumed by the 

acquirers/bridge institutions. Ninety-one percent of these 

liabilities are due to failures resolved under whole-bank 

purchase and assumption transactions, most with an 

accompanying SLA. The DIF satisfies these liabilities 

either by directly sending cash to the receivership to fund 

shared-loss and other expenses or by offsetting receivables 

from resolutions when the receivership declares a dividend. 

In addition, the DIF recorded liabilities of $29 million and 

$56 million in unpaid deposit claims related to multiple 

receiverships, which are offset by receivables included 

in the “Receivables from resolutions, net” line item of 

the Balance Sheet as of December 31, 2013 and 2012, 

respectively. The DIF pays these liabilities when the claims 

are approved. 
ANNUAL REPORT 2013

78 FINANCIAL SECTION 

7. CONTINGENT LIABILITIES FOR: 

ANTICIPATED FAILURE OF INSURED INSTITUTIONS

The DIF records a contingent liability and a loss provision 

for DIF-insured institutions that are likely to fail, absent 

some favorable event such as obtaining additional capital 

or merging, when the liability is probable and reasonably 

estimable. The contingent liability is derived by applying 

expected failure rates and loss rates to the institutions 

based on supervisory ratings, balance sheet characteristics, 

and projected capital levels.

The banking industry continued to improve in 2013 at a 

gradual, steady pace. According to the quarterly financial 

data submitted by DIF-insured institutions, the industry 

reported total net income of $154.7 billion for full-year 2013, 

an increase of 9.6 percent over 2012. The downward trend 

in loan loss provisions that has coincided with the ongoing 

improvement in asset quality was responsible for most of 

the improvement in earnings. 

Losses to the DIF from failures that occurred in 2013 were 

lower than the contingent liability at the end of 2012, as 

the aggregate number and size of institution failures in 

2013 were less than anticipated. The removal from the 

contingent liability of institutions that did fail in 2013, as 

well as projected favorable trends in bank supervisory 

downgrade and failure rates, all contributed to a decline 

by $2.0 billion to $1.2 billion in the contingent liability for 

anticipated failures of insured institutions at December 31, 

2013.

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 $3.0 billion as of year-end 

2013 as compared to $6.3 billion as of year-end 2012. The 

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

and market conditions and could differ materially from 

this estimate.

During 2013, 24 institutions failed with combined assets 

of $5.8 billion at the date of failure. Recent trends in 

supervisory ratings and market data suggest that the 

financial performance and condition of the banking industry 

should continue to improve over the coming year. However, 

exposure to interest rate risk, reliance on short-term 

sources of funding, and limited opportunities for earnings 

growth will continue to stress the industry. Additionally, 

key risks continue to weigh on the economic outlook as 

well, including the impact of rising interest rates as they 

return to more normal levels; fiscal challenges at federal, 

state, and local levels; and global economic risks. The FDIC 

continues to evaluate ongoing risks to affected institutions 

in light of existing economic and financial conditions, 

and the extent to which such risks may put stress on the 

resources of the insurance fund.

LITIGATION LOSSES

The DIF records an estimated loss for unresolved legal 

cases to the extent that those losses are considered 

probable and reasonably estimable. The FDIC recorded 

probable litigation losses of $5 million and $8 million for the 

DIF as of December 31, 2013 and 2012, respectively, and has 

determined that losses from unresolved cases totaling $125 

thousand are reasonably possible for year-end 2013.

OTHER CONTINGENCIES

IndyMac Federal Bank Representation and 

Indemnification Contingent Liability

On March 19, 2009, the FDIC as receiver of IndyMac 

Federal Bank (IMFB) and certain subsidiaries (collectively, 

sellers) sold substantially all of the assets, which included 

mortgage loans and servicing rights, of IMFB and its 

respective subsidiaries to OneWest Bank and its affiliates. 

The sellers made certain representations customarily made 

by commercial parties regarding the assets and agreed 

to indemnify the acquirers for losses incurred as a result 

of breaches of such representations, losses incurred as 

a result of the failure to obtain contractual counterparty 

consents to the sale, and third party claims arising from 

pre-sale acts and omissions of the sellers or the failed 

bank. The FDIC, in its corporate capacity, guaranteed the 

receivership’s indemnification obligations under the sale 

agreements. Until the periods for asserting claims under 

these arrangements have expired and all indemnification 

claims are quantified and paid, losses could continue to be 

incurred by the receivership and, in turn, the DIF.
FINANCIAL SECTION 79

The acquirers’ rights to assert claims to recover 

losses incurred as a result of breaches of loan seller 

representations extend out to March 19, 2014 for the Fannie 

Mae, Freddie Mac, and Ginnie Mae mortgage servicing 

portfolios (unpaid principal balance of $367 million at 

December 31, 2013 compared to $34.3 billion at December 

31, 2012) and to March 19, 2019 for the Fannie Mae and 

Ginnie Mae reverse mortgage servicing portfolios (unpaid 

principal balance of $15.2 billion at December 31, 2013 

compared to $16.2 billion at December 31, 2012).

On March 19, 2011, the acquirers’ rights to assert claims 

to recover losses incurred as a result of other third party 

claims and breaches of servicer representations expired. As 

of the expiration date of this claim period, notices relating 

to potential defects were received, but they require review 

to determine whether a valid defect exists and, if so, the 

identification and resolution of possible cure actions. It is 

highly unlikely that all of these potential defects will result 

in losses. Therefore, while additional potential losses 

relating to servicing representations may be incurred, those 

losses cannot currently be quantified.

The IndyMac receivership has paid cumulative claims 

totaling $15 million through December 31, 2013 and $14 

million through December 31, 2012. Additional claims 

asserted, but under review, were accrued in the amount 

of $7 million and $1 million as of December 31, 2013 and 

December 31, 2012, respectively. Review and evaluation 

is in process for approximately $32 million in reasonably 

possible liabilities with respect to alleged breaches of 

representations and warranties as of December 31, 2013 

and 2012. Potential losses relating to origination and 

servicing representations, which also cannot currently be 

quantified, may also be incurred under other agreements 

with investors.

As a result of existing origination and servicing 

representation provisions, the IndyMac receivership and 

the wholly-owned subsidiary Financial Freedom Senior 

Funding Corporation have repurchased loans with an 

aggregate principal balance of $308 million and $100 million 

respectively. Estimated losses of up to $48 million could 

be incurred on these portfolios. Because these loans have 

been repurchased and are now considered receivership 

or receivership subsidiary assets, the resulting estimated 

losses are reflected in the “Receivables from resolutions, 

net” line item on the Balance Sheet. 

The FDIC believes it is likely that additional losses 

will be incurred; however, quantifying the contingent 

liability associated with the representations and the 

indemnification obligations is subject to a number of 

uncertainties, including 1) borrower prepayment speeds, 

2) the occurrence of borrower defaults and resulting 

foreclosures and losses, 3) the assertion by third party 

investors of claims with respect to loans serviced for them, 

4) the existence and timing of discovery of breaches and 

the assertion of claims for indemnification for losses by the 

acquirer, 5) the compliance by the acquirer with certain loss 

mitigation and other conditions to indemnification, 6) third 

party sources of loss recovery (such as title companies and 

insurers), 7) the ability of the acquirer to refute claims from 

investors without incurring reimbursable losses, and 8) the 

cost to cure breaches and respond to third party claims. 

Because of these and other uncertainties that surround 

the liability associated with indemnifications and the 

quantification of possible losses, the FDIC has determined 

that, while additional losses are probable, the amount is 

not estimable. 

Purchase and Assumption Indemnification

In connection with purchase and assumption agreements 

for resolutions, the FDIC in its receivership capacity 

generally indemnifies the purchaser of a failed institution’s 

assets and liabilities in the event a third party asserts a 

claim against the purchaser unrelated to the explicit assets 

purchased or liabilities assumed at the time of failure. The 

FDIC in its corporate capacity is a secondary guarantor 

if a receivership is unable to pay. These indemnifications 

generally extend for a term of six years after the date of 

institution failure. The FDIC is unable to estimate the 

maximum potential liability for these types of guarantees 

as the agreements do not specify a maximum amount and 

any payments are dependent upon the outcome of future 

contingent events, the nature and likelihood of which 

cannot be determined at this time. During 2013 and 2012, 

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.
ANNUAL REPORT 2013

80 FINANCIAL SECTION 

FDIC Guaranteed Debt of Structured Transactions

The FDIC as receiver uses three types of structured 

transactions to dispose of certain performing and 

non-performing residential mortgage loans, commercial 

loans, construction loans, and mortgage-backed securities 

held by the receiverships. The three types of structured 

transactions are 1) limited liability companies (LLCs), 2) 

securitizations, and 3) structured sale of guaranteed notes 

(SSGNs). 

LLCs

Under the LLC structure, the FDIC in its receivership 

capacity contributes a pool of assets to a newly-formed 

LLC and offers for sale, through a competitive bid process, 

some of the equity in the LLC. The day-to-day management 

of the LLC transfers to the highest bidder along with the 

purchased equity interest. In many instances, the FDIC in 

its corporate capacity guarantees notes issued by the LLCs. 

In exchange for a guarantee, the DIF receives a guarantee 

fee in either 1) a lump-sum, up-front payment based on the 

estimated duration of the note or 2) a monthly payment 

based on a fixed percentage multiplied by the outstanding 

note balance. The terms of these guarantee agreements 

generally stipulate that all cash flows received from the 

entity’s collateral be used to pay, in the following order, 1) 

operational expenses of the entity, 2) the FDIC’s contractual 

guarantee fee, 3) the guaranteed notes (or, if applicable, 

fund the related defeasance account for payoff of the notes 

at maturity), and 4) the equity investors. If the FDIC is 

required to perform under these guarantees, it acquires an 

interest in the cash flows of the LLC equal to the amount of 

guarantee payments made plus accrued interest thereon. 

Once all expenses have been paid, the guaranteed notes 

have been satisfied, and the FDIC has been reimbursed for 

any guarantee payments, the equity holders receive any 

remaining cash flows. 

Since 2009, private investors have purchased a 40- to 

50-percent ownership interest in the LLC structures for 

$1.6 billion in cash and the LLCs issued notes of $4.4 

billion to the receiverships to partially fund the purchase 

of the assets. The receiverships hold the remaining 50- to 

60-percent equity interest in the LLCs and, in most cases, 

the guaranteed notes. The FDIC in its corporate capacity 

guarantees the timely payment of principal and interest due 

on the notes. The terms of the note guarantees extend until 

the earlier of 1) payment in full of the notes or 2) two years 

following the maturity date of the notes. The note with the 

longest term matures in 2020. In the event of note payment 

default, the FDIC as guarantor is entitled to exercise or 

cause the exercise of certain rights and remedies including: 

1) accelerating the payment of the unpaid principal amount 

of the notes; 2) selling the assets held as collateral; or 3) 

foreclosing on the equity interests of the debtor. 

Securitizations and SSGNs

Securitizations and SSGNs (collectively, “trusts”) are 

transactions in which certain assets or securities from 

failed institutions are pooled and transferred into a trust 

structure. The trusts issue 1) senior and/or subordinated 

debt instruments and 2) owner trust or residual certificates 

collateralized by the underlying mortgage-backed securities 

or loans. 

Since 2010, private investors purchased the senior 

notes issued by the trusts for $6.2 billion in cash. The 

receiverships hold 100 percent of the subordinated debt 

instruments and owner trust or residual certificates. The 

FDIC in its corporate capacity guarantees the timely 

payment of principal and interest due on the senior notes, 

the latest maturity of which is 2050. In exchange for the 

guarantee, the DIF receives a monthly payment based 

on a fixed percentage multiplied by the outstanding note 

balance. These guarantee agreements generally stipulate 

that all cash flows received from the entity’s collateral be 

used to pay, in the following order, 1) operational expenses 

of the entity, 2) the FDIC’s contractual guarantee fee, 

3) interest on the guaranteed notes, 4) principal of the 

guaranteed notes, and 5) the holders of the subordinated 

notes and owner trust or residual certificates. If the FDIC 

is required to perform under its guarantees, it acquires an 

interest in the cash flows of the trust equal to the amount 

of guarantee payments made plus accrued interest thereon. 

Once all expenses have been paid, the guaranteed notes 

have been satisfied, and the FDIC has been reimbursed for 

any guarantee payments, the subordinated note holders 

and owner trust or residual certificates holders receive the 

remaining cash flows. 
FINANCIAL SECTION 81

All Structured Transactions with FDIC 

Guaranteed Debt

Through December 31, 2013, the receiverships have 

transferred a portfolio of loans with an unpaid principal 

balance of $16.4 billion and mortgage-backed securities with 

a book value of $8.8 billion to 14 LLCs and 11 trusts. The 

LLCs and trusts subsequently issued notes guaranteed by 

the FDIC in an original principal amount of $10.6 billion. As 

of December 31, 2013 and 2012, the DIF collected guarantee 

fees totaling $231 million and $218 million, respectively, 

and recorded a receivable for additional guarantee fees 

of $66 million and $95 million, respectively, included in 

the “Interest receivable on investments and other assets, 

net” line item on the Balance Sheet. All guarantee fees are 

recorded as deferred revenue, included in the “Accounts 

payable and other liabilities” line item, and recognized as 

revenue primarily on a straight-line basis over the term 

of the notes. At December 31, 2013 and 2012, the amount 

of deferred revenue recorded was $66 million and $101 

million, respectively. The DIF records no other structuredtransaction-related assets or liabilities on its balance sheet.

The estimated loss to the DIF from the guarantees is 

derived from an analysis of the net present value (using 

a discount rate of 3.7 percent) of the expected guarantee 

payments by the FDIC, reimbursements to the FDIC for 

guarantee payments, and guarantee fee collections. It is 

reasonably possible that the DIF could be required to make 

a guarantee payment of approximately $27 million for an 

SSGN transaction at note maturity in 2020. Any guarantee 

payment made would be fully reimbursed from the proceeds 

of the liquidation of the SSGN’s underlying collateral. For 

all of the remaining transactions, the cash flows from the 

LLC or trust assets provide sufficient coverage to fully pay 

the debts. To date, the FDIC in its corporate capacity has 

not provided, and does not intend to provide, any form of 

financial or other type of support to a trust or LLC that it 

was not previously contractually required to provide.

As of December 31, 2013 and 2012, the maximum loss 

exposure was $99 million and $2.2 billion for LLCs and $2.8 

billion and $3.2 billion for trusts, respectively, representing 

the sum of all outstanding debt guaranteed by the FDIC in 

its corporate capacity. Some transactions have established 

defeasance accounts to pay off the notes at maturity. As of 

December 31, 2013 and 2012, a total of $78 million and $1.6 

billion, respectively, has been deposited into these accounts.

8. ASSESSMENTS 

The framework for the FDIC deposit insurance assessment 

system is mandated by section 7 of the FDI Act and the 

provisions for implementation are contained in part 327 of 

title 12 of the Code of Federal Regulations. The FDI Act 

requires a risk-based assessment system and payment of 

assessments by all IDIs.

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

several changes to the assessment system and developed 

a comprehensive, long-term fund management plan. The 

plan is designed to restore and maintain a positive fund 

balance for the DIF even during a banking crisis and 

achieve moderate, steady assessment rates throughout any 

economic cycle. Summarized below are actions taken to 

implement assessment system changes and provisions of 

the comprehensive plan.

♦ The FDIC adopted a Restoration Plan to ensure that 

the ratio of the DIF fund balance to estimated insured 

deposits (reserve ratio) reaches 1.35 percent by 

September 30, 2020. The FDIC will update, at least 

semiannually, its loss and income projections for the fund 

and, if needed, increase or decrease assessment rates, 

following notice-and-comment rulemaking, if required.

♦ The FDIC adopted a final rule which suspends dividends 

indefinitely, and, in lieu of dividends, adopts lower 

assessment rate schedules when the reserve ratio reaches 

1.15 percent, 2 percent, and 2.5 percent.

♦ The FDIC adopted a final rule which amends and clarifies 

some definitions of higher-risk assets as used in deposit 

insurance pricing for large and highly complex IDIs by 

1) revising the definitions of certain higher-risk assets, 

specifically leveraged loans and subprime consumer 

loans, 2) clarifying when an asset must be identified as 

higher risk, and 3) clarifying the way securitizations are 

identified as higher risk. The final rule became effective 

on April 1, 2013. 

♦ The Federal Deposit Insurance Act (FDI Act) requires that 

the FDIC Board of Directors designate a reserve ratio for 

the DIF and publish the designated reserve ratio (DRR) 
ANNUAL REPORT 2013

82 FINANCIAL SECTION 

before the beginning of each calendar year. Accordingly, 

in October 2013, the FDIC adopted a final rule maintaining 

the DRR at 2 percent for 2014. The DRR is an integral 

part of the FDIC’s comprehensive, long-term management 

plan for the DIF and is viewed as a long-range, minimum 

target for the reserve ratio.

ASSESSMENT REVENUE

Annual assessment rates averaged approximately 7.8 cents 

per $100 and 10.1 cents per $100 of the assessment base 

for 2013 and 2012, respectively. The assessment base is 

generally defined as the average consolidated total assets 

minus the average tangible equity (measured as Tier 1 

capital) of the IDI during the assessment period.

In December 2009, a majority of IDIs prepaid $45.7 billion 

of estimated quarterly risk-based assessments to address 

the DIF’s liquidity need to pay for projected failures and to 

ensure that the deposit insurance system remained industryfunded. For each interim quarter, an institution’s risk-based 

deposit insurance assessment was offset by the available 

amount of prepaid assessments. The final offset of prepaid 

assessments occurred for the period ending March 31, 

2013, and in June 2013, as required by regulation, the DIF 

refunded $5.9 billion of unused prepaid assessments to IDIs. 

The “Assessments receivable, net” line item on the Balance 

Sheet of $2.2 billion and $1.0 billion as of December 31, 2013 

and 2012, respectively, represents the estimated premiums 

due from IDIs for the fourth quarter of 2013 and 2012, 

respectively. The actual deposit insurance assessments for 

the fourth quarter of 2013 will be billed and collected at the 

end of the first quarter of 2014. During 2013 and 2012, $9.7 

billion and $12.4 billion, respectively, were recognized as 

assessment revenue from institutions.

RESERVE RATIO

As of December 31, 2013 and 2012, the DIF reserve ratio 

was 0.79 percent and 0.44 percent, respectively, of estimated 

insured deposits.

ASSESSMENTS RELATED TO FICO

Assessments continue to be levied on institutions for 

payments of the interest on obligations issued by the 

Financing Corporation (FICO). The FICO was established 

as a mixed-ownership government corporation to function 

solely as a financing vehicle for the former FSLIC. The 

annual FICO interest obligation of approximately $790 

million is paid on a pro rata basis using the same rate for 

banks and thrifts. The FICO assessment has no financial 

impact on the DIF and is separate from deposit insurance 

assessments. The FDIC, as administrator of the DIF, acts 

solely as a collection agent for the FICO. During 2013 

and 2012, approximately $792 million and $797 million, 

respectively, was collected and remitted to the FICO.

9. OTHER REVENUE 

OTHER REVENUE 

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2013 2012

Temporary Liquidity Guarantee 

Program revenue

$0 $5,885,330 

Dividends and interest on 

Citigroup trust preferred 

securities (Note 10)

124,726 177,831 

Guarantee fees for structured 

transactions (Note 7)

33,051 57,206 

Other 5,377 6,844 

Total $163,154 $6,127,211

TEMPORARY LIQUIDITY GUARANTEE PROGRAM 

(TLGP) REVENUE

Pursuant to a systemic risk determination in October 2008, 

the FDIC established the TLGP. In exchange for guarantees 

issued under the TLGP, the DIF received fees that were set 

aside, as deferred revenue, for potential TLGP losses. As 

losses occurred, the DIF recognized the losses as systemic 

risk expenses and offset the losses by recognizing an 

equivalent portion of the deferred revenue as systemic risk 

revenue.

In accordance with FDIC policy, the DIF recognized 

revenue when guarantee fees held were determined to be in 

excess of amounts needed to cover potential losses, and, for 

all remaining TLGP assets held as deferred revenue, upon 

expiration of the TLGP on December 31, 2012. The DIF 

recognized revenue of $5.9 billion in 2012.
FINANCIAL SECTION 83

10. GAIN ON SALE OF TRUST 

PREFERRED SECURITIES 

Pursuant to a systemic risk determination, the Treasury, 

the FDIC, and the Federal Reserve Bank of New York 

executed terms of a guarantee agreement on January 15, 

2009 with Citigroup to provide loss protection on a pool of 

approximately $301.0 billion of assets that remained on the 

balance sheet of Citigroup. In consideration for its portion 

of the shared-loss guarantee at inception, the FDIC received 

$3.025 billion of Citigroup’s preferred stock. All shares 

of the preferred stock were subsequently converted to 

Citigroup Capital XXXIII trust preferred securities (TruPS) 

with a liquidation amount of $1,000 per security and a 

distribution rate of 8 percent per annum payable quarterly.

On December 23, 2009, Citigroup terminated the guarantee 

agreement, citing improvements in its financial condition. 

The FDIC incurred no losses as a result of the guarantee 

and retained $2.225 billion (liquidation amount) of the 

$3.025 billion in TruPS as consideration for the period of 

guarantee coverage. The DIF recorded the TruPS at their 

fair value and recognized revenue of $1.962 billion upon 

termination of the agreement. In lieu of the FDIC returning 

the remaining $800 million (liquidation amount) of TruPS 

to Citigroup, the Treasury agreed to return $800 million in 

TruPS on behalf of the FDIC from its portion of Citigroup 

TruPS holdings received as a result of the shared-loss 

agreement. The FDIC held $800 million of TruPS as security 

for guaranteed debt instruments issued by Citigroup and 

its affiliates under the TLGP. Pursuant to the agreement 

between the Treasury and the FDIC, the FDIC transferred 

the $800 million in TruPS (plus related dividends and 

interest of $183 million) to the Treasury on December 28, 

2012, upon maturity of Citigroup’s last outstanding debt 

instruments.

To facilitate a sale of the retained TruPS, the FDIC 

exchanged the TruPS on September 9, 2013 for $2.420 

billion (principal amount) of Citigroup marketable 

subordinated notes. The exchange resulted in a realized 

gain to the DIF of $458 million reported in the “Gain on sale 

of trust preferred securities” line item on the Statement 

of Income and Fund Balance. FDIC reclassified the $458 

million out of accumulated other comprehensive income to 

“Gain on sale of trust preferred securities”, representing the 

sum of unrealized gains recorded as of December 31, 2012 

($302 million) and holding gains arising during the current 

period ($156 million). The resulting net effect on the DIF 

Statement of Income and Fund Balance was a $156 million 

increase to the 2013 comprehensive income.

On September 10, 2013, the subordinated notes were sold 

to the institutional fixed income market for the principal 

amount of $2.420 billion. The FDIC received $1.6 million 

for one day of accrued interest on the subordinated notes, 

which is included in the “Other revenue” line item on the 

Statement of Income and Fund Balance (see Note 9). Also 

included in the “Other revenue” line item is $123.1 million 

for dividends and interest earned on the TruPS in 2013 prior 

to their disposition (see Note 9).

11. OPERATING EXPENSES 

Operating expenses were $1.6 billion and $1.8 billion for 

December 31, 2013 and 2012, respectively. The chart below 

lists the major components of operating expenses.

OPERATING EXPENSES 

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2013 2012

Salaries and benefits $1,292,551 $1,300,697 

Outside services 326,040 337,379 

Travel 96,056 106,897 

Buildings and leased space 91,469 91,631 

Software/Hardware 

maintenance

56,297 63,108 

Depreciation of property and 

equipment

72,828 76,365 

Other 29,505 21,137 

Subtotal 1,964,746 1,997,214 

Less: Services billed to 

resolution entities

(356,029) (219,701)

Total $1,608,717 $1,777,513 

12. PROVISION FOR INSURANCE 

LOSSES 

The provision for insurance losses was negative $5.7 

billion for 2013, compared to negative $4.2 billion for 2012. 

The negative provision for 2013 primarily resulted from 

a reduction of $1.0 billion in the contingent liability for 
ANNUAL REPORT 2013

84 FINANCIAL SECTION 

anticipated failures due to the improvement in the financial 

condition of troubled institutions and a decrease of $4.8 

billion in the estimated losses for institutions that failed in 

prior years.

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 are used to derive the 

loss allowance on the receivables from resolutions. 

Consequently, the $4.8 billion reduction in the estimated 

losses from failures was primarily attributable to three 

components. The first component of this change was a $2.8 

billion decrease in the receiverships’ shared-loss liability 

that resulted from lower loss estimates in the underlying 

commercial and residential loans due to improvements in 

regional economies. The second factor was unanticipated 

recoveries of $1.3 billion in professional liability claims, 

litigation settlements and tax refunds by the receiverships, 

which are not recognized until the cash is received since 

there are significant uncertainties surrounding their 

recovery. Lastly, the remainder is primarily due to asset 

recoveries that exceeded projections and higher valuations 

on receivership assets.

13. EMPLOYEE BENEFITS 

PENSION BENEFITS AND SAVINGS PLANS

Eligible FDIC employees (permanent and term employees 

with appointments exceeding one year) are covered by the 

federal government retirement plans, either the Civil Service 

Retirement System (CSRS) or the Federal Employees 

Retirement System (FERS). Although the DIF contributes 

a portion of pension benefits for eligible employees, it does 

not account for the assets of either retirement system. The 

DIF also does not have actuarial data for accumulated 

plan benefits or the unfunded liability relative to eligible 

employees. These amounts are reported on and accounted 

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

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

contributions up to 5 percent. Under the Federal Thrift 

Savings Plan (TSP), the FDIC provides FERS employees 

with an automatic contribution of 1 percent of pay and an 

additional matching contribution up to 4 percent of pay. 

CSRS employees also can contribute to the TSP, but they do 

not receive agency matching contributions.

PENSION BENEFITS AND 

SAVINGS PLANS EXPENSES

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2013 2012

Civil Service Retirement 

System

$5,430 $5,960 

Federal Employees Retirement 

System (Basic Benefit)

99,553 97,517 

FDIC Savings Plan 37,816 37,700 

Federal Thrift Savings Plan 35,686 34,555 

Total $178,485 $175,732 

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The DIF has no postretirement health insurance liability 

since all eligible retirees are covered by the Federal 

Employees Health Benefits (FEHB) program. The FEHB is 

administered and accounted for by the OPM. In addition, 

OPM pays the employer share of the retiree’s health 

insurance premiums.

The FDIC provides certain life and dental insurance 

coverage for its eligible retirees, the retirees’ beneficiaries, 

and covered dependents. Retirees eligible for life and 

dental insurance coverage are those who have qualified 

due to 1) immediate enrollment upon appointment or five 

years of participation in the plan and 2) eligibility for an 

immediate annuity. The life insurance program provides 

basic coverage at no cost to retirees and allows converting 

optional coverage to direct-pay plans. For the dental 

coverage, retirees are responsible for a portion of the dental 

premium.

The FDIC has elected not to fund the postretirement life 

and dental benefit liabilities. As a result, the DIF recognized 

the underfunded status (the difference between the 

accumulated postretirement benefit obligation and the plan 

assets at fair value) as a liability. Since there are no plan 

assets, the plan’s benefit liability is equal to the accumulated 
FINANCIAL SECTION 85

postretirement benefit obligation. At December 31, 2013 

and 2012, the liability was $194 million and $224 million, 

respectively, which is recognized in the “Postretirement 

benefit liability” line item on the Balance Sheet. The 

cumulative actuarial losses (changes in assumptions and 

plan experience) and prior service costs (changes to plan 

provisions that increase benefits) were $16 million and $60 

million at December 31, 2013 and 2012, respectively. These 

amounts are reported as accumulated other comprehensive 

income in the “Unrealized postretirement benefit loss” line 

item on the Balance Sheet. 

The DIF’s expenses for postretirement benefits for 2013 

and 2012 were $18 million and $14 million, respectively, 

which are included in the current and prior year’s operating 

expenses on the Statement of Income and Fund Balance. 

The changes in the actuarial losses and prior service costs 

for 2013 and 2012 of $44 million and negative $27 million, 

respectively, are reported as other comprehensive income 

in the “Unrealized postretirement benefit gain (loss)” line 

item on the Statement of Income and Fund Balance. Key 

actuarial assumptions used in the accounting for the 

plan include the discount rate of 4.75 percent, the rate 

of compensation increase of 4.0 percent, and the dental 

coverage trend rate of 4.5 percent. The discount rate of 4.75 

percent is based upon rates of return on high-quality fixed 

income investments whose cash flows match the timing and 

amount of expected benefit payments. 

14. COMMITMENTS AND OFFBALANCE-SHEET EXPOSURE

COMMITMENTS:

Leased Space

The FDIC’s lease commitments total $193 million for future 

years. The lease agreements contain escalation clauses 

resulting in adjustments, usually on an annual basis. The 

DIF recognized leased space expense of $52 million and 

$54 million for 2013 and 2012, respectively.

LEASED SPACE COMMITMENTS

Dollars in Thousands

2014 2015 2016 2017 2018

2019/

Thereafter

$48,013 $39,879 $36,208 $31,586 $20,123 $17,687 

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 December 31, 2013 and 2012, estimated 

insured deposits for the DIF were $6.0 trillion and $7.4 

trillion, respectively.
ANNUAL REPORT 2013

86 FINANCIAL SECTION 

15. DISCLOSURES ABOUT THE FAIR 

VALUE OF FINANCIAL INSTRUMENTS

Financial assets recognized and measured at fair value 

on a recurring basis at each reporting date include cash 

equivalents (see Note 2) and the investment in U.S. Treasury 

obligations (see Note 3). The following tables present 

the DIF’s financial assets measured at fair value as of 

December 31, 2013 and 2012.

ASSETS MEASURED AT FAIR VALUE AT DECEMBER 31, 2013

Dollars in Thousands

Fair Value Measurements Using

Quoted Prices 

in Active 

Markets for

Identical Assets

(Level 1)

Significant Other

Observable 

Inputs

(Level 2)

Significant

Unobservable 

Inputs

(Level 3)

Total Assets

at Fair Value

Assets

Cash equivalents1 $3,534,305 $3,534,305 

Available-for-Sale Debt Securities

Investment in U.S. Treasury Obligations2 38,510,500 38,510,500 

Total Assets $42,044,805 $0 $0 $42,044,805 

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

Fiscal Service.

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

ASSETS MEASURED AT FAIR VALUE AT DECEMBER 31, 2012

Dollars in Thousands

Fair Value Measurements Using

Quoted Prices

in Active 

Markets for

Identical Assets

(Level 1)

Significant Other

Observable 

Inputs

(Level 2)

Significant

Unobservable 

Inputs

(Level 3)

Total Assets

at Fair Value

Assets

Cash equivalents1 $3,091,778 $3,091,778 

Available-for-Sale Debt Securities

Investment in U.S. Treasury Obligations2 34,868,688 34,868,688 

Trust preferred securities $2,263,983 2,263,983 

Total Assets $37,960,466 $2,263,983 $0 $40,224,449 

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

Fiscal Service.

2 The investment in U.S. Treasury obligations is measured based on prevailing market yields for federal government entities.
FINANCIAL SECTION 87

Some of the DIF’s financial assets and liabilities are not 

recognized at fair value but are recorded at amounts that 

approximate fair value due to their short maturities and/

or comparability with current interest rates. Such items 

include interest receivable on investments, assessments 

receivable, other short-term receivables, refunds of prepaid 

assessments, accounts payable, and other liabilities. 

The net receivables from resolutions primarily include the 

DIF’s subrogated claim arising from obligations to insured 

depositors. The resolution entity assets that will ultimately 

be used to pay the corporate subrogated claim are valued 

using discount rates that include consideration of market 

risk. These discounts ultimately affect the DIF’s allowance 

for loss against the receivables from resolutions. Therefore, 

the corporate subrogated claim indirectly includes the 

effect of discounting and should not be viewed as being 

stated in terms of nominal cash flows.

Although the value of the corporate subrogated claim is 

influenced by valuation of resolution entity assets (see 

Note 4), such valuation is not equivalent to the valuation of 

the corporate claim. Since the corporate claim is unique, 

not intended for sale to the private sector, and has no 

established market, it is not practicable to estimate a 

fair value.

The FDIC believes that a sale to the private sector of 

the corporate claim would require indeterminate, but 

substantial, discounts for an interested party to profit from 

these assets because of credit and other risks. In addition, 

the timing of resolution entity payments to the DIF on the 

subrogated claim does not necessarily correspond with the 

timing of collections on resolution entity assets. Therefore, 

the effect of discounting used by resolution entities should 

not necessarily be viewed as producing an estimate of fair 

value for the net receivables from resolutions.

At December 31, 2012, the fair value of the TruPS in 

the amount of $2.264 billion was classified as a Level 2 

measurement based on an FDIC-developed model using 

observable market data for traded Citigroup securities to 

determine the expected present value of future cash flows. 

Key inputs included market yields on U.S. dollar interest 

rate swaps and discount rates for default, call, and liquidity 

risks that were derived from traded Citigroup securities and 

modeled pricing relationships. 
ANNUAL REPORT 2013

88 FINANCIAL SECTION 

16. INFORMATION RELATING TO THE 

STATEMENT OF CASH FLOWS

17. SUBSEQUENT EVENTS 

Subsequent events have been evaluated through March 6, 

2014, the date the financial statements are available to 

be issued.

2014 FAILURES THROUGH MARCH 6, 2014

Through March 6, 2014, five insured institutions failed in 

2014 with total losses to the DIF estimated to be $92 million.

RECONCILIATION OF NET INCOME TO NET CASH FROM OPERATING ACTIVITIES 

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2013 2012

Operating Activities

Net Income: $14,504,738 $21,121,247 

Adjustments to reconcile net income to net cash provided (used) 

by operating activities:

Amortization of U.S. Treasury obligations 1,139,456 854,195 

Treasury Inflation-Protected Securities inflation adjustment (35,300) (98,050)

Gain on sale of trust preferred securities (458,176) 0 

Depreciation on property and equipment 72,829 76,365 

Loss on retirement of property and equipment 220 14 

Provision for insurance losses (5,659,388) (4,222,595)

Unrealized gain (loss) on postretirement benefits 44,097 (26,886)

Change in Assets and Liabilities:

(Increase) in assessments receivable, net (1,220,883) (724,605)

(Increase) Decrease in interest receivable and other assets (75,014) 51,181 

Decrease in receivables from resolutions 10,406,392 6,371,418 

Decrease in receivables - systemic risk 0 1,948,151 

(Decrease) in accounts payable and other liabilities (49,045) (24,543)

(Decrease) Increase in postretirement benefit liability (30,635) 36,258 

(Decrease) in contingent liabilities - systemic risk 0 (2,216)

(Decrease) in liabilities due to resolutions (8,547,803) (11,616,727)

(Decrease) in Debt Guarantee Program liabilities - systemic risk 0 (117,027)

(Decrease) in unearned revenue - prepaid assessments (1,576,417) (15,823,411)

(Decrease) in deferred revenue - systemic risk 0 (6,513,828)

(Decrease) Increase in refunds of prepaid assessments (5,675,199) 5,675,199 

Net Cash Provided (Used) by Operating Activities $2,839,872 $(3,035,860)
FINANCIAL SECTION 89

FSLIC RESOLUTION FUND (FRF)

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

FEDERAL DEPOSIT INSURANCE CORPORATION

FSLIC RESOLUTION FUND BALANCE SHEET AT DECEMBER 31

Dollars in Thousands

2013 2012

Assets

Cash and cash equivalents (Note 1) $871,612 $3,594,007 

Receivables from thrift resolutions and other assets, net (Note 3) 1,183 5,456 

Receivables from U.S. Treasury for goodwill litigation (Note 4) 356,455 356,455 

Total Assets $1,229,250 $3,955,918 

Liabilities 

Accounts payable and other liabilities $790 $2,442 

Contingent liabilities for goodwill litigation (Note 4) 356,455 356,455 

Total Liabilities 357,245 358,897 

Resolution Equity (Note 5)

Contributed capital 125,332,156 128,056,656 

Accumulated deficit (124,460,151) (124,459,635)

Total Resolution Equity 872,005 3,597,021 

Total Liabilities and Resolution Equity $1,229,250 $3,955,918 
ANNUAL REPORT 2013

90 FINANCIAL SECTION 

FSLIC RESOLUTION FUND (FRF)

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

FEDERAL DEPOSIT INSURANCE CORPORATION

FSLIC RESOLUTION FUND STATEMENT OF INCOME AND ACCUMULATED DEFICIT 

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2013 2012

Revenue

Interest on U.S. Treasury obligations $1,196 $2,458 

Other revenue 1,953 2,549 

Total Revenue 3,149 5,007 

Expenses and Losses

Operating expenses 2,350 4,165 

Provision for losses (1,255) (1,408)

Goodwill litigation expenses (Note 4) 500 181,000 

Other expenses 2,070 258 

Total Expenses and Losses 3,665 184,015 

Net Loss (516) (179,008)

Accumulated Deficit - Beginning (124,459,635) (124,280,627)

Accumulated Deficit - Ending $(124,460,151) $(124,459,635)
FINANCIAL SECTION 91

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

FEDERAL DEPOSIT INSURANCE CORPORATION

FSLIC RESOLUTION FUND STATEMENT OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2013 2012

Operating Activities

Provided by:

Interest on U.S. Treasury obligations $1,196 $2,458 

Recoveries from financial institution resolutions 5,148 19,074 

Recovery of tax benefits 130 44,445 

Miscellaneous receipts 52 365 

Used by:

Operating expenses (3,921) (5,718)

Payments for goodwill litigation (Note 4) (500) (181,000)

Miscellaneous disbursements 0 (27)

Net Cash Provided (Used) by Operating Activities 2,105 (120,403)

Financing Activities

Provided by:

U.S. Treasury payments for goodwill litigation (Note 4) 500 181,000 

Used by:

Return of U.S. Treasury funds (Note 5) (2,600,000) 0 

Payment to Resolution Funding Corporation (Note 5) (125,000) 0 

Net Cash (Used) Provided by Financing Activities (2,724,500) 181,000 

Net (Decrease) Increase in Cash and Cash Equivalents (2,722,395) 60,597 

Cash and Cash Equivalents - Beginning 3,594,007 3,533,410 

Cash and Cash Equivalents - Ending $871,612 $3,594,007 

FSLIC RESOLUTION FUND (FRF)
ANNUAL REPORT 2013

92 FINANCIAL SECTION 

1. OPERATIONS/DISSOLUTION OF

THE FSLIC RESOLUTION FUND

OVERVIEW

The Federal Deposit Insurance Corporation (FDIC) is the 

independent deposit insurance agency created by Congress 

in 1933 to maintain stability and public confidence in 

the nation’s banking system. Provisions that govern the 

operations of the FDIC are generally found in the Federal 

Deposit Insurance (FDI) Act, as amended (12 U.S.C. 1811, 

et seq). In carrying out the purposes of the FDI Act, 

the FDIC, as administrator of the Deposit Insurance 

Fund (DIF), insures the deposits of banks and savings 

associations (insured depository institutions). In 

cooperation with other federal and state agencies, the FDIC 

promotes the safety and soundness of insured depository 

institutions by identifying, monitoring and addressing risks 

to the DIF. Commercial banks, savings banks and savings 

associations (known as “thrifts”) are supervised by either 

the FDIC, the Office of the Comptroller of the Currency, or 

the Federal Reserve Board. In addition, the FDIC, through 

administration of the FSLIC Resolution Fund (FRF), is 

responsible for the sale of remaining assets and satisfaction 

of liabilities associated with the former Federal Savings 

and Loan Insurance Corporation (FSLIC) and the former 

Resolution Trust Corporation (RTC). The DIF and the FRF 

are maintained separately by the FDIC to support their 

respective functions.

The U.S. Congress created the FSLIC through the enactment 

of the National Housing Act of 1934. The Financial 

Institutions Reform, Recovery, and Enforcement Act of 

1989 (FIRREA) abolished the insolvent FSLIC, created the 

FRF, and transferred the assets and liabilities of the FSLIC 

to the FRF—except those assets and liabilities transferred 

to the newly created RTC—effective on August 9, 1989. 

Further, the FIRREA established the Resolution Funding 

Corporation (REFCORP) to provide part of the initial funds 

used by the RTC for thrift resolutions.

The RTC Completion Act of 1993 terminated the RTC as of 

December 31, 1995. All remaining assets and liabilities of 

the RTC were transferred to the FRF on January 1, 1996. 

Today, the FRF consists of two distinct pools of assets and 

liabilities: one composed of the assets and liabilities of the 

FSLIC transferred to the FRF upon the dissolution of the 

FSLIC (FRF-FSLIC), and the other composed of the RTC 

assets and liabilities (FRF-RTC). The assets of one pool are 

not available to satisfy obligations of the other.

OPERATIONS/DISSOLUTION OF THE FRF

The FRF will continue operations until all of its assets 

are sold or otherwise liquidated and all of its liabilities 

are satisfied. Any funds remaining in the FRF-FSLIC 

will be paid to the U.S. Treasury. Any remaining funds 

of the FRF-RTC will be distributed to the REFCORP to 

pay the interest on the REFCORP bonds. In addition, the 

FRF-FSLIC has available until expended $602 million in 

appropriations to facilitate, if required, efforts to wind up 

the resolution activity of the FRF-FSLIC. 

The FDIC has conducted an extensive review and 

cataloging of FRF’s remaining assets and liabilities. Some 

of the issues and items that remain open in FRF are 1) 

criminal restitution orders (generally have from 1 to 17 

years remaining to enforce); 2) collections of settlements 

and judgments obtained against officers and directors and 

other professionals responsible for causing or contributing 

to thrift losses (generally have up to 7 years remaining to 

enforce, unless the judgments are renewed or are covered 

by the Federal Debt Collections Procedures Act, which will 

result in significantly longer periods for collection for some 

judgments); 3) a few assistance agreements entered into by 

the former FSLIC (FRF could continue to receive or refund 

overpayments of tax benefits sharing in future years); 4) 

goodwill litigation (no final date for resolution has been 

established; see Note 4); and 5) affordable housing program 

monitoring (requirements can exceed 25 years). The 

FRF could potentially realize recoveries from tax benefits 

Notes to the Financial Statements

FSLIC RESOLUTION FUND 

December 31, 2013 and 2012
FINANCIAL SECTION 93

sharing, criminal restitution orders, and professional 

liability claims; however, any associated recoveries are not 

reflected in FRF’s financial statements given the significant 

uncertainties surrounding the ultimate outcome. 

After evaluating FRF’s remaining assets and liabilities in 

2013, the FDIC returned $2.6 billion to the U.S. Treasury on 

behalf of FRF-FSLIC and paid $125 million to REFCORP 

on behalf of FRF-RTC (see Note 5). More transfers are 

expected to continue as remaining assets wind down and 

liabilities are satisfied.

RECEIVERSHIP OPERATIONS

The FDIC is responsible for managing and disposing of 

the assets of failed institutions in an orderly and efficient 

manner. The assets held by receivership entities, and the 

claims against them, are accounted for separately from FRF 

assets and liabilities to ensure that receivership proceeds 

are distributed in accordance with applicable laws and 

regulations. Also, the income and expenses attributable 

to receiverships are accounted for as transactions of those 

receiverships. Receiverships are billed by the FDIC for 

services provided on their behalf.

2. SUMMARY OF SIGNIFICANT 

ACCOUNTING POLICIES

GENERAL

These financial statements pertain to the financial position, 

results of operations, and cash flows of the FRF and are 

presented in accordance with U.S. generally accepted 

accounting principles (GAAP). As permitted by the Federal 

Accounting Standards Advisory Board’s Statement of 

Federal Financial Accounting Standards 34, The Hierarchy 

of Generally Accepted Accounting Principles, Including 

the Application of Standards Issued by the Financial 

Accounting Standards Board, the FDIC prepares financial 

statements in accordance with standards promulgated by 

the Financial Accounting Standards Board (FASB). These 

statements do not include reporting for assets and liabilities 

of receivership entities because these entities are legally 

separate and distinct, and the FRF does not have any 

ownership or beneficial interests in them. Periodic and final 

accounting reports of receivership entities are furnished to 

courts, supervisory authorities, and others upon request.

USE OF ESTIMATES

Management makes estimates and assumptions that affect 

the amounts reported in the financial statements and 

accompanying notes. Actual results could differ from these 

estimates. Where it is reasonably possible that changes 

in estimates will cause a material change in the financial 

statements in the near term, the nature and extent of such 

changes in estimates have been disclosed. The more 

significant estimates include the valuation of other assets 

and the estimated losses for litigation.

CASH EQUIVALENTS

Cash equivalents are short-term, highly liquid investments 

consisting primarily of U.S. Treasury Overnight Certificates.

PROVISION FOR LOSSES

The provision for losses represents the change in the 

estimation of the allowance for losses related to the 

receivables from thrift resolutions and other assets.

RELATED PARTIES

The nature of related parties and a description of related 

party transactions are discussed in Note 1 and disclosed 

throughout the financial statements and footnotes.

PRESENTATION OF STATEMENT OF CASH FLOWS

To enhance cash flow information for operating activities 

of the FRF, in 2013, the FDIC changed the method of 

presenting the FRF’s Statement of Cash Flows from the 

indirect method to the direct method, which is preferable 

and is encouraged by the Financial Accounting Standards 

Board. Accordingly, the FRF’s 2012 Statement of Cash 

Flows has been conformed to this method of presentation 

for comparative purposes. For 2013 and 2012, the 

reconciliation of net income to net cash from operating 

activities is presented in Note 7.

DISCLOSURE ABOUT RECENT RELEVANT 

ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update No. 2013-07, Presentation of 

Financial Statements - Liquidation Basis of Accounting, 

modifies Accounting Standards Codification Topic 205, 

Presentation of Financial Statements, to require an entity 

to prepare its financial statements using the liquidation 
ANNUAL REPORT 2013

94 FINANCIAL SECTION 

basis of accounting when liquidation is imminent. The 

amendments are effective during annual reporting periods 

beginning after December 15, 2013. As the remaining issues 

of the FRF continue to wind down (see Note 1), the FDIC 

will evaluate the applicability of this standard to the FRF. 

At this time, the FDIC has no approved liquidation plan for 

the final dissolution of the FRF. 

Other recent accounting pronouncements have been 

deemed not applicable or material to the financial 

statements as presented. 

3. RECEIVABLES FROM THRIFT 

RESOLUTIONS AND OTHER 

ASSETS, NET

RECEIVABLES FROM THRIFT RESOLUTIONS

The receivables from thrift resolutions include payments 

made by the FRF to cover obligations to insured depositors, 

advances to receiverships for working capital, and 

administrative expenses paid on behalf of receiverships. 

Any related allowance for loss represents the difference 

between the funds advanced and/or obligations incurred 

and the expected repayment. Assets held by the FDIC in its 

receivership capacity for the former RTC are a significant 

source of repayment of the FRF’s receivables from thrift 

resolutions. As of December 31, 2013, only one of the 

850 FRF receiverships remains active and is expected to 

terminate in 2014. 

The FRF receiverships held assets with a book value of 

$2 million and $13 million as of December 31, 2013 and 

2012, respectively (which primarily consist of cash held for 

non-FRF, third party creditors). 

OTHER ASSETS

Other assets primarily consist of assets that were acquired 

from terminated receiverships. 

RECEIVABLES FROM THRIFT RESOLUTIONS 

AND OTHER ASSETS, NET AT DECEMBER 31

Dollars in Thousands

2013 2012

Receivables from closed thrifts $35 $869,917 

Allowance for losses 0 (867,208)

Receivables from 

Thrift Resolutions, Net

35 2,709 

Other assets, net 1,148 2,747 

Total $1,183 $5,456 

4. CONTINGENT LIABILITIES FOR:

GOODWILL LITIGATION

In United States v. Winstar Corp., 518 U.S. 839 (1996), 

the Supreme Court held that when it became impossible 

following the enactment of FIRREA in 1989 for the federal 

government to perform certain agreements to count 

goodwill toward regulatory capital, the plaintiffs were 

entitled to recover damages from the United States. 

On July 22, 1998, the Department of Justice’s (DOJ’s) 

Office of Legal Counsel (OLC) concluded that the FRF is 

legally available to satisfy all judgments and settlements 

in the goodwill litigation involving supervisory action 

or assistance agreements. OLC determined that 

nonperformance of these agreements was a contingent 

liability that was transferred to the FRF on August 9, 1989, 

upon the dissolution of the FSLIC. On July 23, 1998, the U.S. 

Treasury determined, based on OLC’s opinion, that the FRF 

is the appropriate source of funds for payments of any such 

judgments and settlements. The FDIC General Counsel 

concluded that, as liabilities transferred on August 9, 1989, 

these contingent liabilities for future nonperformance of 

prior agreements with respect to supervisory goodwill were 

transferred to the FRF-FSLIC, which is that portion of the 

FRF encompassing the obligations of the former FSLIC. 

The FRF 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 
FINANCIAL SECTION 95

goodwill litigation. This appropriation is to remain available 

until expended. Because an appropriation is available 

to pay such judgments and settlements, any estimated 

liability for goodwill litigation should have a corresponding 

receivable from the U.S. Treasury and therefore have no net 

impact on the financial condition of the FRF. 

The FRF paid $500 thousand and $181 million 

to the plaintiffs in one goodwill case in 2013 and 

2012, respectively. The $500 thousand represents a 

reimbursement for a tax liability of the plaintiffs as a result 

of the $181 million settlement received in 2012. The FRF 

received appropriations from the U.S. Treasury to fund 

these payments.

As of December 31, 2013, one case is active and pending 

against the United States based on alleged breaches of 

the agreements stated above. For this case, a contingent 

liability and an offsetting receivable of $356 million was 

recorded as of December 31, 2013 and 2012. This case is 

currently before the lower court pending remand following 

appeal. It is reasonably possible that for this case the FRF 

could incur additional estimated losses of $63 million, 

representing additional damages contended by the plaintiff. 

For a case that was fully adjudicated, an estimated loss of 

$8 million, which represents estimated tax liabilities, is also 

reasonably possible. 

For the second of the two cases active at year-end 2012, 

the United States’ Motion for Costs was denied by the trial 

court and the United States did not seek further review of 

this denial. This case is now concluded.

In addition, the FRF-FSLIC pays the goodwill litigation 

expenses incurred by the DOJ, the entity that defends these 

lawsuits against the United States, based on a Memorandum 

of Understanding (MOU) dated October 2, 1998, between 

the FDIC and the DOJ. FRF-FSLIC pays in advance the 

estimated goodwill litigation expenses. Any unused funds 

are carried over and applied toward the next fiscal year 

(FY) charges. In 2013, FRF-FSLIC did not provide any 

additional funding to the DOJ because the unused funds 

from prior fiscal years were sufficient to cover estimated FY 

2014 expenses. 

GUARINI LITIGATION

Paralleling the goodwill cases were similar cases alleging 

that the government breached agreements regarding tax 

benefits associated with certain FSLIC-assisted acquisitions. 

These agreements allegedly contained the promise of 

tax deductions for losses incurred on the sale of certain 

thrift assets purchased by plaintiffs from the FSLIC, even 

though the FSLIC provided the plaintiffs with tax-exempt 

reimbursement. A provision in the Omnibus Budget 

Reconciliation Act of 1993 (popularly referred to as the 

“Guarini legislation”) eliminated the tax deductions for 

these losses.

All eight of the original Guarini cases have been settled. 

However, a case settled in 2006 further obligates the 

FRF-FSLIC as a guarantor for all tax liabilities in the event 

the settlement amount is determined by tax authorities to 

be taxable. The maximum potential exposure under this 

guarantee is approximately $81 million. However, the FDIC 

believes that it is very unlikely the settlement will be subject 

to taxation. The Internal Revenue Service concluded an 

examination of the affected entity’s 2006 return without an 

assertion of taxation for an issue covered by the guarantee. 

The 2006 return was subsequently amended, and the 

amended return is under further administrative review. 

As of December 31, 2013, no liability has been recorded. 

The FRF does not expect to fund any payment under this 

guarantee. 

GUARANTEES

On May 21, 2012, the FDIC, in its capacity as manager of 

the FRF, entered into an agreement with Fannie Mae for 

the release of $13 million of credit enhancement reserves 

to the FRF in exchange for indemnifying Fannie Mae for 

all future losses incurred on 76 multi-family mortgage 

loans. The former RTC supplied Fannie Mae with the 

credit enhancement reserves in the form of cash collateral 

to cover future losses on these mortgage loans through 

2020. The maximum exposure on this indemnification is the 

current unpaid principal balance of the remaining 60 multifamily loans totaling $7 million. Based on a contingent 

liability assessment of this portfolio, the majority of the 

loans are at least 65% amortized, and all are scheduled to 
ANNUAL REPORT 2013

96 FINANCIAL SECTION 

mature within two to seven years. Since all of the loans are 

currently in performing status and no losses have occurred 

since 2001, future payments on this indemnification are 

not expected. As a result, the FRF has not recorded a 

contingent liability for this indemnification as of December 

31, 2013.

5. RESOLUTION EQUITY

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

comprised of two distinct pools: the FRF-FSLIC and the 

FRF-RTC. The FRF-FSLIC consists of the assets and 

liabilities of the former FSLIC. The FRF-RTC consists of the 

assets and liabilities of the former RTC. Pursuant to legal 

restrictions, the two pools are maintained separately and 

the assets of one pool are not available to satisfy obligations 

of the other.

The following table shows the contributed capital, 

accumulated deficit, and resulting resolution equity for 

each pool.

RESOLUTION EQUITY AT DECEMBER 31, 2013

Dollars in Thousands

FRF-FSLIC FRF-RTC

FRF 

Consolidated

Contributed capital - beginning $46,307,319 $81,749,337 $128,056,656 

Less: Payment to REFCORP 0 (125,000) (125,000)

Less: Return of U.S. Treasury funds (2,600,000) 0 (2,600,000)

Add: U.S. Treasury payment for goodwill litigation 500 0 500 

Contributed capital - ending 43,707,819 81,624,337 125,332,156 

Accumulated deficit (42,879,951) (81,580,200) (124,460,151)

Total $827,868 $44,137 $872,005 

RESOLUTION EQUITY AT DECEMBER 31, 2012

Dollars in Thousands

FRF-FSLIC FRF-RTC

FRF 

Consolidated

Contributed capital - beginning $46,126,319 $81,749,337 $127,875,656 

Add: U.S. Treasury payment for goodwill litigation 181,000 0 181,000 

Contributed capital - ending 46,307,319 81,749,337 128,056,656 

Accumulated deficit (42,882,341) (81,577,294) (124,459,635)

Total $3,424,978 $172,043 $3,597,021 
FINANCIAL SECTION 97

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 mixedownership government corporation established to function 

solely as a financing vehicle for the FSLIC) and the RTC 

issued $31.3 billion of these instruments to the REFCORP. 

FIRREA prohibited the payment of dividends on any of 

these capital certificates.

FRF-FSLIC received $500 thousand and $181 million in U.S. 

Treasury payments for goodwill litigation in 2013 and 2012, 

respectively. Furthermore, $356 million was accrued for as 

receivables as of December 31, 2013 and 2012, respectively. 

Through December 31, 2013, the FRF has received or 

established a receivable for a total of $2.2 billion of 

goodwill appropriations, the effect of which increases 

contributed capital.

Through December 31, 2013, the FRF-RTC has returned 

$4.6 billion to the U.S. Treasury and made payments of $5.1 

billion to the REFCORP. The most recent payment to the 

REFCORP was in July of 2013 for $125 million. In addition, 

the FDIC returned $2.6 billion to the U.S. Treasury on behalf 

of the FRF-FSLIC in 2013. These actions serve to reduce 

contributed capital.

ACCUMULATED DEFICIT

The accumulated deficit represents the cumulative excess 

of expenses and losses over revenue for activity related 

to the FRF-FSLIC and the FRF-RTC. Approximately

 $29.8 billion and $87.9 billion were brought forward 

from the former FSLIC and the former RTC on August 9, 

1989, and January 1, 1996, respectively. The FRF-FSLIC 

accumulated deficit has increased by $13.1 billion, whereas 

the FRF-RTC accumulated deficit has decreased by $6.3 

billion, since their dissolution dates.

6. DISCLOSURES ABOUT THE FAIR 

VALUE OF FINANCIAL INSTRUMENTS 

At December 31, 2013 and 2012, the FRF’s financial assets 

measured at fair value on a recurring basis are cash 

equivalents of $826 million and $3.4 billion, respectively. 

Cash equivalents are Special U.S. Treasury Certificates 

with overnight maturities valued at prevailing interest 

rates established by the Bureau of the Fiscal Service. 

The valuation is considered a Level 1 measurement in the 

fair value hierarchy, representing quoted prices in active 

markets for identical assets. 

Some of the FRF’s financial assets and liabilities are not 

recognized at fair value but are recorded at amounts that 

approximate fair value due to their short maturities and/

or comparability with current interest rates. Such items 

include other short-term receivables and accounts payable 

and other liabilities.
ANNUAL REPORT 2013

98 FINANCIAL SECTION 

7. INFORMATION RELATING TO THE 

STATEMENT OF CASH FLOWS 

RECONCILIATION OF NET LOSS TO NET CASH FROM OPERATING ACTIVITIES 

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2013 2012

Operating Activities

Net Loss: $(516) $(179,008)

Adjustments to reconcile net loss to net cash provided (used) 

by operating activities:

Provision for insurance losses (1,255) (1,408)

Change in Assets and Liabilities:

Decrease in receivables from resolutions and other assets 5,528 61,115 

(Decrease) in accounts payable and other liabilities (1,652) (1,102)

Net Cash Provided (Used) by Operating Activities $2,105 $(120,403)

8. SUBSEQUENT EVENTS

Subsequent events have been evaluated through March 6, 

2014, the date the financial statements are available to be 

issued, and management determined that there are no items 

to disclose.
FINANCIAL SECTION 99

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT
ANNUAL REPORT 2013

100 FINANCIAL SECTION 

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT (continued)
FINANCIAL SECTION 101

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT (continued)
ANNUAL REPORT 2013

102 FINANCIAL SECTION 

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT (continued)
FINANCIAL SECTION 103

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT (continued)
ANNUAL REPORT 2013

104 FINANCIAL SECTION 

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT (continued)
FINANCIAL SECTION 105

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT (continued)
ANNUAL REPORT 2013

106 FINANCIAL SECTION 

MANAGEMENT’S RESPONSE

Appendix I
FINANCIAL SECTION 107

MANAGEMENT’S RESPONSE (continued)
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The FDIC uses several means to maintain comprehensive 

internal controls, ensure the overall effectiveness and 

efficiency of operations, and otherwise comply as necessary 

with the following federal standards, among others:

♦ Chief Financial Officers’ Act (CFO Act)

♦ Federal Managers’ Financial Integrity Act (FMFIA)

♦ Federal Financial Management Improvement Act 

(FFMIA)

♦ Government Performance and Results Act (GPRA)

♦ Federal Information Security Management Act (FISMA)

♦ OMB Circular A-123

♦ GAO’s Standards for Internal Control in the Federal 

Government

As a foundation for these efforts, the DOF Corporate 

Management Control Branch oversees a corporate-wide 

program of relevant activities by establishing policies and 

working with management in each division and office in 

the FDIC. The FDIC has made a concerted effort to ensure 

that financial, reputational, and operational risks have been 

identified and that corresponding control needs are being 

incorporated into day-to-day operations. The program also 

requires that comprehensive procedures be documented, 

employees be thoroughly trained, and supervisors be held 

accountable for performance and results. Compliance 

monitoring is carried out through periodic management 

reviews and by the distribution of various activity reports 

to all levels of management. Conscientious attention is 

also paid to the implementation of audit recommendations 

made by the FDIC Office of the Inspector General, the GAO, 

the Treasury Department’s Special Inspector General for 

the TARP program, and other providers of external/audit 

scrutiny. The FDIC has received unmodified/unqualified 

opinions on its financial statement audits for 22 consecutive 

years, and these and other positive results reflect the 

effectiveness of the overall management control program.

The year 2013 was a continuation of our efforts over 

the past few years. Considerable energy was devoted 

to ensuring that the FDIC’s processes and systems of 

control have kept pace with the workload, and that the 

FDIC’s foundation of controls throughout the FDIC 

remained strong. Enhanced metrics, process mapping, 

and monitoring activities were put in action, particularly 

regarding the continuing effort to reduce hiring timeframes. 

In 2014, among other things, program evaluation activities 

will focus on human resources, process mapping, the 

continuation of activities associated with the Dodd-Frank 

Act, and closing of the Jacksonville temporary satellite 

office. Continued emphasis and management scrutiny also 

will be applied to the accuracy and integrity of transactions, 

the expansion of performance metrics, and oversight of 

systems development efforts in general. 

MANAGEMENT REPORT ON 

FINAL ACTIONS

As required under amended Section 5 of the Inspector 

General Act of 1978, the FDIC must report information on 

final action taken by management on certain audit reports. 

The tables on the following pages provide information 

on final action taken by management on audit reports for 

the federal fiscal year period October 1, 2012, through 

September 30, 2013.

CORPORATE MANAGEMENT CONTROL 109

Corporate 

Management 

Control

V.
ANNUAL REPORT 2013

110 CORPORATE MANAGEMENT CONTROL

TABLE 1: 

MANAGEMENT REPORT ON FINAL ACTION ON AUDITS WITH DISALLOWED COSTS

FOR FISCAL YEAR 2013

Dollars in Thousands

Audit Reports Number of 

Reports

Disallowed 

Costs 

A. Management decisions – final action not taken at beginning of period 2 $3,794

B. Management decisions made during the period 1 $741

C. Total reports pending final action during the period (A and B) 3 $4,535

D. Final action taken during the period:

1. Recoveries: 

(a) Collections & offsets 1 $741

(b) Other 0 $0

2. Write-offs 1 $34

3. Total of 1 & 2 2 $774

E. Audit reports needing final action at the end of the period* 1 $3,760

*

Total may not foot due to rounding.

TABLE 2: 

MANAGEMENT REPORT ON FINAL ACTION ON AUDITS WITH RECOMMENDATIONS TO PUT 

FUNDS TO BETTER USE FOR FISCAL YEAR 2013

Dollars in Thousands

Audit Reports Number of 

Reports

Funds Put To 

Better Use

A. Management decisions – final action not taken at beginning of period 0 $0 

B. Management decisions made during the period 0 $0 

C. Total reports pending final action during the period (A and B) 0 $0 

D. Final action taken during the period:

1. Value of recommendations implemented (completed) 0 $0

2. Value of recommendations that management concluded should not or 

could not be implemented or completed

0 $0

3. Total of 1 and 2 0 $0

E. Audit reports needing final action at the end of the period 0 $0
CORPORATE MANAGEMENT CONTROL 111

TABLE 3: 

AUDIT REPORTS WITHOUT FINAL ACTIONS BUT WITH MANAGEMENT DECISIONS 

OVER ONE YEAR OLD FOR FISCAL YEAR 2013

MANAGEMENT ACTION IN PROCESS

Report No.

and Issue Date OIG Audit Finding Management Action Disallowed Costs

AUD-12-009

04/05/2012

The OIG recommended that the FDIC should 

review the manner in which management 

fees are calculated under structured asset 

sale agreements and determine whether it is 

in the FDIC’s best interest for management 

fees to be paid on nonaccrual and 

capitalized interest. Based on the results of 

this review, revisit prior management fees 

billed by ST Residential, LLC, to ensure 

they were allowable and clarify the terms 

of future structured asset sale agreements 

to more clearly define the manner in which 

management fees are calculated.

The FDIC should disallow $6,258,151 in 

servicing expenses that were deducted 

from the collections of funds received 

from the liquidation of assets during the 

period covered by the audit. (Questioned 

Costs of $3,754,891, which is 60 percent of 

$6,258,151.)

The FDIC should request that ST Residential 

discontinue the practice of deducting 

expenses from the collection of funds 

received from the liquidation of assets 

pertaining to the Managing Member’s 

Servicing Obligation and Overhead expenses.

The FDIC should request that FDIC’s CMC(s) 

assess whether unallowable expenses 

pertaining to services provided by real 

estate development firms and travel, meals, 

and entertainment were deducted from 

the collection of funds received from 

the liquidation of assets subsequent to 

September 30, 2010. If such expenses had 

been deducted, they should be disallowed.

The FDIC should disallow $8,929 in 

management fees paid to the Managing 

Member. (Questioned Costs of $5,357, which 

is 60 percent of $8,929.)

The FDIC will review Corus Construction 

Venture’s (CCV) monthly reports in 

determining principal balances and the 

calculation of management fees. If the FDIC’s 

review determines improper management 

fee amounts, the FDIC will disallow the 

amounts and request reimbursement; 

send CCV notification that clarifies how 

management fees are to be calculated going 

forward; and ensure that future asset sale 

agreements include a clear description of how 

management fees are calculated. 

Completed: 11/04/2013

The FDIC engaged a Compliance 

Monitoring Contractor (CMC) to conduct a 

comprehensive review of servicing expenses 

(as part of its quarterly compliance review) 

to determine the amount to be disallowed. 

Upon completion of the CMC review, the 

FDIC will request a reimbursement of the 

disallowed amounts. 

Completed: 11/04/2013

The FDIC will issue written notification to 

ST Residential to discontinue the practice of 

deducting expenses from the collection of 

funds for servicing obligation and overhead 

expenses and to comply with the transaction 

documents.

Completed: 11/04/2013

The FDIC engaged a CMC to conduct a 

comprehensive review of servicing expenses 

to determine the amount to be disallowed. 

Upon completion of the CMC review, the 

FDIC will request a reimbursement for all 

disallowed amounts.

Completed: 11/04/2013

The specific request is that ST Residential 

reimburse CCV the disallowed amount of 

$8,929. The FDIC will receive 60 percent of 

the amount reimbursed to CCV. 

Completed: 11/04/2013

$0 

$3,754,891

$5,357
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A. KEY STATISTICS

The FDIC’s Strategic Plan and Annual Performance Plan 

provide the basis for annual planning and budgeting 

for needed resources. The 2013 aggregate budget (for 

corporate, receivership, and investment spending) was $2.7 

billion, while actual expenditures for the year were $2.3 

billion, about $0.2 billion less than 2012 expenditures.

Over the past decade the FDIC’s expenditures have varied in 

response to workload. Earlier in the decade, expenditures 

rose, largely due to increasing resolution and receivership 

activity. To a lesser extent increased expenses resulted 

from supervision-related costs associated with the oversight 

of more troubled institutions. More recently, these 

increases have been subsiding.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$0

FDIC EXPENDITURES 2004–2013

Dollars in Millions

Appendices V I.

APPENDICES 113
ANNUAL REPORT 2013

114 APPENDICES

FDIC ACTIONS ON FINANCIAL INSTITUTIONS APPLICATIONS 2011–2013

2013 2012 2011

Deposit Insurance 10 6 10

Approved1 10 6 10

Denied 0 0 0

New Branches 499 570 442

Approved 499 570 442

Denied 0 0 0

Mergers 256 238 206

Approved 256 238 206

Denied 0 0 0

Requests for Consent to Serve2 474 674 876

Approved 474 671 875

Section 19 4 10 24

Section 32 470 661 851

Denied 0 3 1

Section 19 0 1 0

Section 32 0 2 1

Notices of Change in Control 22 26 21

Letters of Intent Not to Disapprove 22 26 21

Disapproved 0 0 0

Brokered Deposit Waivers 81 97 84

Approved 81 95 83

Denied 0 2 1

Savings Association Activities3 8 21 30

Approved 8 21 30

Denied 0 0 0

State Bank Activities/Investments4 10 7 9

Approved 10 7 9

Denied 0 0 0

Conversion of Mutual Institutions 7 8 6

Non-Objection 7 8 6

Objection 0 0 0

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 Amendments to Part 303 of the FDIC Rules and Regulations changed FDIC oversight responsibility in October 1998. In 1998, Part 303 changed 

the Delegations of Authority to act upon applications. 

4 Section 24 of the FDI Act, in general, precludes a federally insured state bank from engaging in an activity not permissible for a national bank and 

requires notices to be filed with the FDIC.
APPENDICES 115

COMPLIANCE, ENFORCEMENT, AND OTHER RELATED LEGAL ACTIONS 2011–2013

2013 2012 2011

Total Number of Actions Initiated by the FDIC 414 557 557

Termination of Insurance

Involuntary Termination

Sec. 8a For Violations, Unsafe/Unsound Practices or Conditions 0 0 0

Voluntary Termination

Sec. 8a By Order Upon Request 0 0 0

Sec. 8p No Deposits 7 3 7

Sec. 8q Deposits Assumed 4 4 2

Sec. 8b Cease-and-Desist Actions

Notices of Charges Issued 2 0 7

Orders to Pay Restitution 11 9 N/A

Consent Orders 70 120 183

Sec. 8e Removal/Prohibition of Director or Officer

Notices of Intention to Remove/Prohibit 14 8 11

Consent Orders 99 108 100

Sec. 8g Suspension/Removal When Charged With Crime 0 0 1

Civil Money Penalties Issued

Sec. 7a Call Report Penalties 0 1 0

Sec. 8i Civil Money Penalties 81 164 193

Sec. 8i Civil Money Penalty Notices of Assessment 13 5 5

Sec. 10c Orders of Investigation 16 16 29

Sec. 19 Waiver Orders

Approved Section 19 Waiver Orders 86 119 10

Denied Section 19 Waiver Orders 2 0 1

Sec. 32 Notices Disapproving Officer/Director’s Request for Review 0 0 0

Truth-in-Lending Act Reimbursement Actions

Denials of Requests for Relief 0 0 0

Grants of Relief 0 0 0

 Banks Making Reimbursement1 98 126 84

Suspicious Activity Reports (open and closed institutions)1 123,134 139,102 125,460

Other Actions Not Listed 9 0 8

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.
ANNUAL REPORT 2013

116 APPENDICES

ESTIMATED INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND, 

DECEMBER 31, 1934, THROUGH DECEMBER 31, 20131 

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 Insured 

Deposits

Deposit 

Insurance

Fund

Total

Domestic 

Deposits

Est. Insured

Deposits

2013 $250,000 $9,825,300 $6,011,310 61.2 $47,190.8 0.48 0.79 

2012 250,000 9,474,582 7,406,522 78.2 32,957.8 0.35 0.44 

2011 250,000 8,782,134 6,974,690 79.4 11,826.5 0.13 0.17 

2010 250,000 7,887,733 6,302,329 79.9 (7,352.2) (0.09) (0.12)

2009 250,000 7,705,353 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 6,229,823 3,891,000 62.5 48,596.6 0.78 1.25 

2004 100,000 5,724,775 3,622,213 63.3 47,506.8 0.83 1.31 

2003 100,000 5,224,030 3,452,606 66.1 46,022.3 0.88 1.33 

2002 100,000 4,916,200 3,383,720 68.8 43,797.0 0.89 1.29 

2001 100,000 4,565,068 3,216,585 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 

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 
APPENDICES 117

ESTIMATED INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND, 

DECEMBER 31, 1934, THROUGH DECEMBER 31, 20131 (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 Insured 

Deposits

Deposit 

Insurance

Fund

Total

Domestic 

Deposits

Est. Insured

Deposits

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 

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 
ANNUAL REPORT 2013

118 APPENDICES

ESTIMATED INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND, 

DECEMBER 31, 1934, THROUGH DECEMBER 31, 20131 (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 Insured 

Deposits

Deposit 

Insurance

Fund

Total

Domestic 

Deposits

Est. Insured

Deposits

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

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 

sum of the BIF and Savings Association Insurance Fund (SAIF) amounts; for 2006 to 2013, figures are for DIF. Amounts for 1989-2013 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 Act (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 DoddFrank 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.
APPENDICES 119

INCOME AND EXPENSES, DEPOSIT INSURANCE FUND, FROM BEGINNING OF OPERATIONS, 

SEPTEMBER 11, 1933, THROUGH DECEMBER 31, 2013 

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 

Resolution 

Fund

Net 

Income/

(Loss)

Total $201,686.7 $137,510.7 $11,392.9 $75,568.9 $154,785.2 $120,599.0 $24,743.1 $9,443.1 $139.5 $47,041.0 

2013 10,458.9 9,734.2 0.0 724.7 0.0776% (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 

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 
ANNUAL REPORT 2013

120 APPENDICES

INCOME AND EXPENSES, DEPOSIT INSURANCE FUND, FROM BEGINNING OF OPERATIONS, 

SEPTEMBER 11, 1933, THROUGH DECEMBER 31, 2013 (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 

Resolution 

Fund

Net 

Income/

(Loss)

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 6.05 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 
APPENDICES 121

INCOME AND EXPENSES, DEPOSIT INSURANCE FUND, FROM BEGINNING OF OPERATIONS, 

SEPTEMBER 11, 1933, THROUGH DECEMBER 31, 2013 (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 

Resolution 

Fund

Net 

Income/

(Loss)

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 

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 Figures represent only BIF-insured institutions prior to 1990, BIF- and SAIF-insured institutions from 1990 through 2005, and DIF-insured institutions 

beginning in 2006. After 1995, all thrift closings became the responsibility of the FDIC and amounts are reflected in the SAIF. 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 four quarter average assessment base. The effective 

rates from 1950 through 1984 varied from the statutory rate of 0.0833 percent due to assessment credits provided in those years. The statutory 

rate increased to 0.12 percent in 1990 and to a minimum of 0.15 percent in 1991. The effective rates in 1991 and 1992 varied because the FDIC 

exercised new authority to increase assessments above the statutory minimum rate when needed. 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 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 to 0.50 percent of assessable deposits. From the second quarter of 2009 through 

the first quarter of 2011, initial assessment rates ranged between 0.12 and 0.45 percent of assessable deposits. Initial rates are subject to further 

adjustments. Beginning in the second quarter of 2011, the assessment base changed to average total consolidated assets less average tangible 

equity (with certain adjustments for banker’s banks and custodial banks), as required by the Dodd-Frank Act. The FDIC implemented a new 

assessment rate schedule at the same time to conform to the larger assessment base. Initial assessment rates were lowered to a range of 0.05 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 base for the last three quarters of 2011 (which is the figure shown in the table). The effective 

assessment rate for 2012 and 2013 is based on full year accrued assessment income divided by a four-quarter average of the new assessment base. 

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 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.

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 113 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.

4 Includes a $106 million net loss on government securities.

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.
ANNUAL REPORT 2013

122 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 

Thrifts Assets Deposits

Estimated 

Receivership 

Loss2

Loss to 

Funds3

Total 748 $393,986,574 $317,501,978 $75,977,713 $81,580,200 

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 4,881,461 267,595 65,212 

1992 59 44,196,946 34,773,224 3,286,907 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 16,062,552 19,257,446 

19894 318 134,519,630 113,168,009 47,085,028 48,648,785 

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 FRF’s books. Year is the year of failure, not the year of resolution.

2

The estimated losses represent the projected loss at the fund level from receiverships for unreimbursed subrogated claims of the FRF and unpaid 

advances to receiverships from the FRF.

3

The Loss to Funds represents the total resolution cost of the failed thrifts in the FRF-RTC fund, which includes corporate revenue and expense items 

such as interest expense on Federal Financing Bank debt, interest expense on escrowed funds, and interest revenue on advances to receiverships, 

in addition to the estimated losses for receiverships.

4

Total for 1989 excludes nine failures of the former FSLIC.
APPENDICES 123

FDIC- INSURED INSTITUTIONS CLOSED DURING 2013

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

Sunrise Bank

Valdosta, GA

NM 2,469 $60,793 $57,775 $60,695 $16,119 05/10/13 Synovus Bank

Columbus, GA

Community 

South Bank

Parsons, TN

NM 18,041 $386,908 $377,672 $367,166 $72,494 08/23/13 CB&S Bank, Inc.

Russellville, AL

Whole Bank Purchase and Assumption - All Deposits

Westside 

Community Bank

University Place, WA

NM 3,258 $91,935 $91,879 $94,131 $26,534 01/11/13 Sunwest Bank

Irvine, CA

1st Regents Bank

Andover, MN

NM 1,376 $49,626 $49,147 $48,853 $16,466 01/18/13 First Minnesota 

Bank

Minnetoka, MN

Covenant Bank

Chicago, IL

NM 3,673 $58,422 $54,202 $55,140 $21,756 02/15/13 Liberty Bank and 

Trust Company

New Orleans, LA

Frontier Bank

LaGrange, GA

NM 13,271 $258,840 $224,108 $215,689 $58,265 03/08/13 HeritageBank 

of the South

Albany, GA

Gold Canyon Bank

Gold Canyon, AZ

SM 1,370 $42,125 $41,728 $43,172 $11,080 04/05/13 First Scottsdale 

Bank, National 

Association

Scottsdale, AZ

Chipola Community 

Bank

Marianna, FL

NM 1,567 $37,471 $37,067 $37,490 $10,348 04/19/13 First Federal 

Bank of Florida

Lake City, FL

First Federal Bank

Lexington, KY

SA 5,017 $92,982 $87,196 $89,003 $10,477 04/19/13 Your Community 

Bank

New Albany, IN

Heritage Bank 

of North Florida

Orange Park, FL

NM 2,692 $103,960 $106,348 $105,923 $26,495 04/19/13 FirstAtlantic Bank

Jacksonville, FL

Douglas County 

Bank

Douglasville, GA

NM 15,310 $317,288 $315,326 $308,912 $91,392 04/26/13 Hamilton State Bank

Hoschton, GA
ANNUAL REPORT 2013

124 APPENDICES

FDIC- INSURED INSTITUTIONS CLOSED DURING 2013 (continued)

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

Parkway Bank

Lenoir, NC

NM 6,035 $109,642 $104,709 $108,519 $18,623 04/26/13 CertusBank, 

National 

Association

Easley, SC

Pisgah Community 

Bank

Asheville, NC

NM 587 $21,880 $21,246 $22,975 $9,708 05/10/13 Capital Bank, 

National 

Association

Rockville, MD

Central Arizona Bank

Scottsdale, AZ

NM 1,006 $31,550 $30,822 $28,922 $8,645 05/14/13 Western 

State Bank

Devils Lake, ND

Banks of Wisconsin 

d/b/a 

Bank of Kenosha

Kenosha, WI

NM 7,008 $134,024 $127,590 $127,946 $19,763 05/31/13 North Shore 

Bank, FSB

Brookfield, WI

1st Commerce Bank

North Las Vegas, NV

NM 242 $20,152 $19,579 $21,891 $9,880 06/06/13 Plaza Bank

Irvine, CA

Mountain 

National Bank

Sevierville, TN

N 16,725 $437,282 $373,366 $376,858 $27,106 06/07/13 First Tennessee 

Bank, National 

Association

Memphis, TN

First Community 

Bank of 

Southwest Florida

Fort Myers, FL

NM 9,715 $247,315 $243,618 $239,309 $27,077 08/02/13 C1 Bank

Saint Petersburg, FL

Bank of Wausau

Wausau, WI

NM 1,465 $43,564 $40,663 $44,292 $13,500 08/09/13 Nicolet 

National Bank

Green Bay, WI

Sunrise Bank 

of Arizona

Phoenix, AZ

NM 5,430 $202,179 $196,924 $188,521 $17,049 08/23/13 First Fidelity 

Bank, National 

Association

Oklahoma City, OK

First National Bank

Edinburg, TX

N 89,508 $3,085,764 $2,338,335 $2,225,494 $637,523 09/13/13 PlainsCapital Bank

Dallas, TX

Bank of Jackson 

County

Graceville, FL

NM 2,491 $24,724 $24,591 $25,405 $5,074 10/30/13 First Federal 

Bank of Florida

Lake City, FL
APPENDICES 125

FDIC- INSURED INSTITUTIONS CLOSED DURING 2013 (continued)

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

Texas Community 

Bank, National 

Association

The Woodlands, TX

N 2,160 $159,257 $142,640 $118,657 $10,765 12/13/13 Spirit of Texas 

Bank, SSB

College Station, TX

Insured Deposit Payoff

The Community’s 

Bank

Bridgeport, CT

NM 1,049 $26,368 $25,715 $38,002 $7,800 9/13/13 Federal Deposit 

Insurance 

Corporation

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 12/31/13. 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. 
ANNUAL REPORT 2013

126 APPENDICES

RECOVERIES AND LOSSES BY THE DEPOSIT INSURANCE FUND ON DISBURSEMENTS 

FOR THE PROTECTION OF DEPOSITORS, 1934 - 2013

Dollars in Thousands

Bank and Thrift Failures1

Year2

Number 

of Banks/

Thrifts

Total 

Assets3

Total 

Deposits3

Insured Deposit 

Funding 

and Other 

Disbursements Recoveries

Estimated 

Additional 

Recoveries

Estimated 

Losses

2,584 $931,664,951 $700,668,975 $577,938,885 $399,685,827 $59,761,118 $118,491,940

2013 24 6,044,051 5,132,246 4,992,965 0 3,819,026 1,173,939 

2012 51 11,617,348 11,009,630 11,074,800 1,201,587 7,069,516 2,803,697 

2011 92 34,922,997 31,071,862 31,782,065 2,617,454 21,479,949 7,571,752 

20104 157 92,084,987 78,290,185 82,240,983 51,181,613 10,097,143 20,962,227 

20094 140 169,709,160 137,783,121 136,331,221 88,529,446 14,462,095 33,339,680 

20084 25 371,945,480 234,321,715 205,495,557 183,834,032 2,229,312 19,432,213 

2007 3 2,614,928 2,424,187 1,918,810 1,369,413 380,982 168,415 

2006 0 0 0 0 0 0 0 

2005 0 0 0 0 0 0 0 

2004 4 170,099 156,733 138,971 134,978 76 3,917 

2003 3 947,317 901,978 883,772 812,933 8,192 62,647 

2002 11 2,872,720 2,512,834 2,127,249 1,704,030 7,655 415,564 

2001 4 1,821,760 1,661,214 1,605,612 1,128,577 184,384 292,651 

2000 7 410,160 342,584 297,313 265,175 0 32,138 

1999 8 1,592,189 1,320,573 1,307,442 711,758 5,674 590,010 

1998 3 290,238 260,675 292,691 58,248 11,752 222,691 

1997 1 27,923 27,511 25,546 20,520 0 5,026 

1996 6 232,634 230,390 201,533 140,918 0 60,615 

1995 6 802,124 776,387 609,043 524,571 0 84,472 

1994 13 1,463,874 1,397,018 1,224,769 1,045,718 0 179,051 

1993 41 3,828,939 3,509,341 3,841,658 3,209,012 0 632,646 

1992 120 45,357,237 39,921,310 14,541,316 10,866,760 543 3,674,013 

1991 124 64,556,512 52,972,034 21,499,567 15,500,130 4,819 5,994,618 

1990 168 16,923,462 15,124,454 10,812,484 8,040,995 0 2,771,489 

1989 206 28,930,572 24,152,468 11,443,281 5,247,995 0 6,195,286 

1988 200 38,402,475 26,524,014 10,432,655 5,055,158 0 5,377,497 

1987 184 6,928,889 6,599,180 4,876,994 3,014,502 0 1,862,492 

1986 138 7,356,544 6,638,903 4,632,121 2,949,583 0 1,682,538 

1985 116 3,090,897 2,889,801 2,154,955 1,506,776 0 648,179 

1984 78 2,962,179 2,665,797 2,165,036 1,641,157 0 523,879 

1983 44 3,580,132 2,832,184 3,042,392 1,973,037 0 1,069,355 

1982 32 1,213,316 1,056,483 545,612 419,825 0 125,787 

1981 7 108,749 100,154 114,944 105,956 0 8,988 

1980 10 239,316 219,890 152,355 121,675 0 30,680 

1934 - 1979 558 8,615,743 5,842,119 5,133,173 4,752,295 0 380,878 
APPENDICES 127

RECOVERIES AND LOSSES BY THE DEPOSIT INSURANCE FUND ON DISBURSEMENTS 

FOR THE PROTECTION OF DEPOSITORS, 1934 - 2013 (continued)

Dollars in Thousands

Assistance Transactions

Year2

Number 

of Banks/

Thrifts

Total 

Assets3

Total 

Deposits3

Insured Deposit 

Funding 

and Other 

Disbursements Recoveries

Estimated 

Additional 

Recoveries

Estimated 

Losses

154 $3,317,099,253 $1,442,173,417 $11,630,356 $6,199,875 $0 $5,430,481 

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 

20095 8 1,917,482,183 1,090,318,282 0 0 0 0 

20085 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 

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 
ANNUAL REPORT 2013

128 APPENDICES

RECOVERIES AND LOSSES BY THE DEPOSIT INSURANCE FUND ON DISBURSEMENTS 

FOR THE PROTECTION OF DEPOSITORS, 1934 - 2013 (continued)

Dollars in Thousands

Assistance Transactions

Year2

Number 

of Banks/

Thrifts

Total 

Assets3

Total 

Deposits3

Insured Deposit 

Funding 

and Other 

Disbursements Recoveries

Estimated 

Additional 

Recoveries

Estimated 

Losses

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 to 1990, 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 2013, figures are 

for the DIF.

3 Assets and deposit data are based on the last Call Report or TFR filed before failure.

4 Includes amounts related to transaction account coverage under the Transaction Account Guarantee Program (TAG). The estimated losses as of 

12/31/13 for TAG accounts in 2010, 2009, and 2008 are $490 million, $1,408 million, and $15 million, respectively.

5 Includes institutions where assistance was provided under a systemic risk determination. Any costs that exceed the amounts estimated under the 

least cost resolution requirement would be recovered through a special assessment on all FDIC-insured institutions.
APPENDICES 129

B. OVERVIEW OF THE INDUSTRY

The 6,812 FDIC-insured commercial banks and savings 

institutions that filed financial results for full year 2013 

reported net income of $154.7 billion, an increase of 9.6 

percent compared to 2012. This is the fourth consecutive 

year that industry earnings have registered a year-overyear increase. The improvement in earnings was primarily 

attributable to lower expenses for loan-loss provisions, 

reduced noninterest expenses, and increased noninterest 

income. More than half of all institutions—54.2 percent—

reported year-over-year increases in net income, and the 

percentage of institutions with negative net income for the 

year fell to 7.8 percent, down from 11 percent a year earlier.

The average return on assets (ROA) was 1.07 percent, up 

from 1.00 percent in 2012. This is the highest annual ROA 

for the industry since 2006. However, fewer than half of 

insured institutions—45.3 percent—had higher ROAs in 

2013 than in 2012. Insured institutions set aside $32.1 

billion in provisions for loan and lease losses during 2013, 

a decline of $25.7 billion (44.4 percent) compared to 2012. 

This is the smallest annual loss provision since 2006. The 

industry’s total noninterest expenses fell by $4.5 billion 

(1.1 percent), as itemized litigation expenses declined by 

$4.5 billion. Noninterest income rose by $3.2 billion (1.3 

percent), as trading revenue was $4.3 billion (23.7 percent) 

higher, servicing fee income was up by $3.9 billion (27.5 

percent), and income from trust activities rose by $2.2 

billion (7.7 percent). Noninterest income from changes in 

the fair values of financial instruments accounted for under 

a fair value option was $6.5 billion lower than in 2012. 

Realized gains on securities were $5.2 billion (53.7 percent) 

lower, as higher interest rates in 2013 reduced the market 

values of banks’ securities portfolios.

 A challenging interest-rate environment contributed to a 

decline in the industry’s net interest income in 2013. Net 

interest income registered a third consecutive annual 

decline, falling by $3.7 billion (0.9 percent), as interest 

income declined more rapidly than interest expense. Total 

interest income was $16 billion (3.3 percent) lower than in 

2012, even though average interest-earning asset balances 

were $487.3 billion (4 percent) higher, as older, higher-yield 

assets matured and were replaced by lower-yielding current 

investments. The average net interest margin fell from 3.42 

percent in 2012 to 3.26 percent, the lowest annual average 

since 2008. 

Indicators of asset quality continued to improve in 

2013. In the twelve months ended December 31, total 

noncurrent loans and leases—those that were 90 days 

or more past due or in nonaccrual status—declined 

by $69.7 billion (25.2 percent). Loans secured by real 

estate properties accounted for the largest share of the 

reduction in noncurrent loans ($64.9 billion). Noncurrent 

1-4 family residential real estate loans fell by $44.5 billion 

(23.2 percent), noncurrent nonfarm nonresidential real 

estate loans declined by $9.5 billion (31.1 percent), and 

noncurrent real estate construction loans fell by $8.6 

billion (50.6 percent). Noncurrent balances in all other 

major loan categories declined, led by loans to commercial 

and industrial (C&I) borrowers (down $3.3 billion, or 24.8 

percent). 

Net charge-offs of loans and leases (NCOs) totaled $53.2 

billion in 2013, a decline of $29 billion (35.3 percent) 

compared to 2012. Real estate loans secured by 1-4 family 

residential properties registered the largest year-over-year 

decline, with NCOs falling by $15.9 billion (51.7 percent). 

Net charge-offs of credit card loans were $3.2 billion 

(12.5 percent) lower, while net charge-offs of nonfarm 

nonresidential real estate loans declined by $3 billion 

(51.4 percent), and NCOs of real estate construction and 

development loans were $2.8 billion (73 percent) lower than 

in 2012. NCOs in all other major loan categories also posted 

significant declines. At the end of 2013, there were 467 

institutions on the FDIC’s “Problem List,” down from 651 

“problem” institutions a year earlier.

Asset growth remained modest in 2013. During the 

12 months ended December 31, total assets of insured 

institutions increased by $272.1 billion (1.9 percent). Loans 

and leases accounted for more than half of the increase 

in total assets, rising by $197.3 billion (2.6 percent). C&I 

loans increased by $101.5 billion (6.8 percent), nonfarm 

nonresidential real estate loans rose by $36.1 billion 

(3.4 percent), and auto loans increased by $33.2 billion 
ANNUAL REPORT 2013

130 APPENDICES

(10.4 percent). In contrast, home equity lines of credit fell 

by $44 billion (7.9 percent), and other real estate loans 

secured by 1-4 family residential properties declined by 

$63.5 billion (3.4 percent). 

Growth in deposits outpaced the increase in total assets. In 

the 12 months ended December 31, total deposits of insured 

institutions increased by $374.7 billion (3.5 percent). 

Deposits in domestic offices rose by $343.9 billion, 

(3.6 percent), while foreign office deposits increased by 

$30.7 billion (2.2 percent). Much of the increase in 

domestic deposits occurred in balances in largedenomination accounts. Deposits in accounts with 

denominations greater than $250,000 increased by 

$269.4 billion, (5.9 percent). Nondeposit liabilities declined 

by $128.2 billion (6.4 percent), while equity capital rose by 

$29.8 billion (1.8 percent).
APPENDICES 131

C. MORE ABOUT THE FDIC

FDIC BOARD OF DIRECTORS

Martin J. Gruenberg

Martin J. Gruenberg is the 20th Chairman of the FDIC, 

receiving Senate confirmation on November 15, 2012, for 

a five-year term. Mr. Gruenberg has served on the FDIC 

Board of Directors since August 22, 2005, including 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 financial services and 

regulatory areas. He served as Senior Counsel to Senator 

Paul S. Sarbanes (D-MD) on the staff of the Senate 

Committee on Banking, Housing, and Urban Affairs from 

1993 to 2005. Mr. Gruenberg advised the Senator on issues 

of domestic and international financial regulation, monetary 

policy, and trade. He also served as Staff 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-LeachBliley 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.

Seated (left to right): Thomas M. Hoenig, Martin J. Gruenberg, Jeremiah O. Norton 

Standing (left to right): Thomas J. Curry, Richard Cordray
ANNUAL REPORT 2013

132 APPENDICES

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 Affairs. 

Thomas M. Hoenig

Thomas M. Hoenig was confirmed by the Senate as Vice 

Chairman of the FDIC on November 15, 2012. He joined 

the FDIC on April 16, 2012, as a member of the Board 

of Directors of the FDIC for a six-year term. He is also 

a member of the Executive Board of the International 

Association of Deposit Insurers.

Prior to serving on the FDIC Board, Mr. Hoenig was the 

President of the Federal Reserve Bank of Kansas City and 

a member of the Federal Reserve System’s Federal Open 

Market Committee from 1991 to 2011.

Mr. Hoenig was with the Federal Reserve for 38 years, 

beginning as an economist, and then as a senior officer in 

banking supervision during the U.S. banking crisis of the 

1980s. In 1986, he led the Kansas City Federal Reserve 

Bank’s Division of Bank Supervision and Structure, 

directing the oversight of more than 1,000 banks and bank 

holding companies with assets ranging from less than $100 

million to $20 billion. He became President of the Kansas 

City Federal Reserve Bank on October 1, 1991.

Mr. Hoenig is a native of Fort Madison, Iowa, and received a 

doctorate in economics from Iowa State University.

Jeremiah O. Norton

Jeremiah O. Norton was sworn in on April 16, 2012, as a 

member of the FDIC Board of Directors for the remainder 

of a term expiring July 15, 2013.

Prior to joining the FDIC’s Board, Mr. Norton was an 

Executive Director at J.P. Morgan Securities LLC, in New 

York, New York.

Mr. Norton was in government for a number of years 

before joining the FDIC Board, most recently as the Deputy 

Assistant Secretary for Financial Institutions Policy at 

the U.S. Treasury Department. Mr. Norton also was a 

Legislative Assistant and professional staff member for U.S. 

Representative Edward R. Royce.

Mr. Norton received a J.D. from the Georgetown University 

Law Center and an A.B. in economics from Duke University.

Thomas J. Curry

Thomas J. Curry was sworn in as the 30th Comptroller of 

the Currency on April 9, 2012.

The Comptroller of the Currency is the administrator of 

national banks and federal savings associations, and chief 

officer of the Office of the Comptroller of the Currency 

(OCC). The OCC supervises more than 2,000 national 

banks and federal savings associations and about 50 federal 

branches and agencies of foreign banks in the United States. 

These institutions comprise nearly two-thirds of the assets 

of the commercial banking system. The Comptroller also is 

a Director of NeighborWorks® America.

On April 1, 2013, Mr. Curry was named Chairman of the 

Federal Financial Institutions Examination Council (FFIEC) 

for a two-year term. Comptroller Curry is the 21st FFIEC 

Chairman.

Prior to becoming Comptroller of the Currency, Mr. Curry 

served as a Director of the FDIC Board since January 2004, 

and as the Chairman of the NeighborWorks® America 

Board of Directors.

Prior to joining the FDIC’s Board of Directors, Mr. 

Curry served five Massachusetts Governors as the 

Commonwealth’s Commissioner of Banks from 1990 to 1991 

and from 1995 to 2003. He served as Acting Commissioner 

from February 1994 to June 1995. He previously served 

as First Deputy Commissioner and Assistant General 

Counsel within the Massachusetts Division of Banks. He 

entered state government in 1982 as an attorney with the 

Massachusetts’ Secretary of State’s Office.

Mr. Curry served as the Chairman of the Conference of State 

Bank Supervisors from 2000 to 2001, and served two terms 

on the State Liaison Committee of the Federal Financial 

Institutions Examination Council, including a term as 

Committee Chairman.

He is a graduate of Manhattan College (summa cum laude), 

where he was elected to Phi Beta Kappa. He received his 

law degree from the New England School of Law. 
APPENDICES 133

Richard Cordray 

Richard Cordray serves as the first Director of the 

Consumer Financial Protection Bureau. He previously led 

the Bureau’s Enforcement Division.

Prior to joining the Bureau, Mr. Cordray served on the 

front lines of consumer protection as Ohio’s Attorney 

General. Mr. Cordray recovered more than $2 billion for 

Ohio’s retirees, investors, and business owners, and took 

major steps to help protect its consumers from fraudulent 

foreclosures and financial predators. In 2010, his office 

responded to a record number of consumer complaints, but 

Mr. Cordray went further and opened that process for the 

first time to small businesses and nonprofit organizations 

to ensure protections for even more Ohioans. To recognize 

his work on behalf of consumers as Attorney General, the 

Better Business Bureau presented Mr. Cordray with an 

award for promoting an ethical marketplace.

Mr. Cordray also served as Ohio Treasurer and Franklin 

County Treasurer, two elected positions in which he led 

state and county banking, investment, debt, and financing 

activities. As Ohio Treasurer, he resurrected a defunct 

economic development program that provides low-interest 

loan assistance to small businesses to create jobs, 

re-launched the original concept as GrowNOW, and pumped 

hundreds of millions of dollars into access for credit to 

small businesses. Mr. Cordray simultaneously created a 

Bankers Advisory Council to share ideas about the program 

with community bankers across Ohio.

Earlier in his career, Mr. Cordray was an adjunct professor 

at the Ohio State University College of Law, served as a 

State Representative for the 33rd Ohio House District, was 

the first Solicitor General in Ohio’s history, and was a sole 

practitioner and Counsel to Kirkland & Ellis. Mr. Cordray 

has argued seven cases before the United States Supreme 

Court, by special appointment of both the Clinton and 

Bush Justice Departments. He is a graduate of Michigan 

State University, Oxford University, and the University of 

Chicago Law School. Mr. Cordray was Editor-in-Chief of the 

University of Chicago Law Review and later clerked for U.S. 

Supreme Court Justices Byron White and Anthony Kennedy.

Mr. Cordray lives in Grove City, Ohio, with his wife 

Peggy—a Professor at Capital University Law School in 

Columbus—and twin children Danny and Holly.
ANNUAL REPORT 2013

134 APPENDICES FDIC ORGANIZATION CHART/OFFICIALS BOARD OF DIRECTORS FEDERAL DEPOSIT INSURANCE CORPORATION Martin J. Gruenberg FDIC

Chairman

Jeremiah O. Norton

FDIC

Board Member

Thomas M. Hoenig

FDIC

Vice Chairman, Board Member

Thomas J. Curry

OCC

Board Member

Richard Cordray

CFPB

Board Member

DEPUTY TO THE CHAIRMAN 

AND CHIEF OPERATING OFFICER,

CHIEF OF STAFF

Barbara A. Ryan

DEPUTY TO THE CHAIRMAN 

AND CHIEF FINANCIAL OFFICER

Steven O. App

SENIOR ADVISOR

INTERNATIONAL 

RESOLUTION POLICY

David S. Hoelscher

OFFICE OF 

COMMUNICATIONS

CHIEF RISK OFFICER

Stephen A. Quick

SPECIAL ADVISOR FOR

SUPERVISORY MATTERS

Jason C. Cave

OFFICE OF MINORITY AND 

WOMEN INCLUSION

E. Melodee Brooks

Acting Director

OFFICE OF 

LEGISLATIVE AFFAIRS

Eric J. Spitler

Director

OFFICE OF 

THE OMBUDSMAN

Cottrell L. Webster

Ombudsman

OFFICE OF INSPECTOR GENERAL

Fred W. Gibson

Acting Inspector General

DEPUTY TO THE CHAIRMAN

FOR COMMUNICATIONS

Andrew S. Gray

DEPUTY TO THE CHAIRMAN

Kymberly K. Copa

DIVISION OF INFORMATION 

TECHOLOGY

CHIEF INFORMATION OFFICER 

AND CHIEF PRIVACY OFFICER

Martin D. Henning

Acting Chief Information 

and Privacy Officer

DIVISION OF RESOLUTION 

AND RECEIVERSHIPS

Bret D. Edwards

Director

LEGAL DIVISION

Richard J. Osterman, Jr.

Acting General Counsel

DIVISION OF INSURANCE 

AND RESEARCH

Diane Ellis

Director

DIVISION OF DEPOSITOR 

AND CONSUMER PROTECTION

Mark E. Pearce

Director

OFFICE OF COMPLEX

FINANCIAL INSTITUTIONS

Arthur J. Murton

Director

DIVISION OF RISK 

MANAGEMENT SUPERVISION

Doreen R. Eberley

Director

DIVISION OF 

ADMINISTRATION

Arleas Upton Kea

Director

DIVISION OF FINANCE

Craig R. Jarvill

Director

Russell G. Pittman

Director

INFORMATION SECURITY

AND PRIVACY STAFF

Christopher J. Farrow

Chief Information 

Security Officer

CORPORATE UNIVERSITY

Suzannah L. Susser

Acting Director

INTERNAL OMBUDSMAN

Robert D. Harris

WRITER-EDITOR

Michele A. Heller
APPENDICES 135

5,078 4,514 4,476 4,532 4,988 6,557 8,150 7,973 7,476

FDIC Year–End Staffing

7,254

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

9,000

6,000

3,000

0

CORPORATE STAFFING 

STAFFING TRENDS 2004-2013

Note: 2008-2013 staffing totals reflect year-end full time equivalent staff. Prior to 2008, staffing totals reflect total employees on-board. 
ANNUAL REPORT 2013

136 APPENDICES

NUMBER OF EMPLOYEES BY DIVISION/OFFICE 2013 AND 2012 (YEAR-END)1

Total Washington Regional/Field

Division or Office: 2013 2012 2013 2012 2013 2012

Division of Risk Management Supervision2 2,814 2,763 207 169 2,608 2,593

Division of Depositor and Consumer Protection 858 848 126 119 732 729

Division of Resolutions and Receiverships 1,284 1,428 166 165 1,118 1,263

Legal Division 678 716 388 384 290 332

Division of Administration 396 403 247 248 149 156

Division of Information Technology3 340 358 264 280 76 78

Corporate University 195 194 184 176 11 18

Division of Insurance and Research3 187 195 143 145 44 51

Division of Finance 176 176 174 174 2 2

Office of Inspector General 117 126 75 81 42 46

Office of Complex Financial Institutions2 74 148 62 87 12 61

Executive Offices4 20 20 20 20 0 0

Executive Support Offices3,5 117 102 107 89 10 13

Total 7,254 7,476 2,161 2,135 5,093 5,341

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 March 2013, 99 positions were moved from the Office of Complex Financial Institutions to the Division of Risk Management 

Supervision.

3 In September 2013, the Office of the International Agency was merged into the Division of Insurance and Research and the Office of the 

Information Security Privacy Staff (ISPS) was split from the Division of Information Technology.

4 Includes the Offices of the Chairman, Vice Chairman, Director (Appointive), Chief Operating Officer, Chief Financial Officer, Chief 

Information Officer, and External Affairs. 

5 Includes the Offices of the Legislative Affairs, Communications, Ombudsman, Information Security and Privacy Staff, Minority and 

Women Inclusion, and Corporate Risk Management.
APPENDICES 137

SOURCES OF INFORMATION

FDIC Website

www.fdic.gov

A wide range of banking, consumer, and financial 

information is available on the FDIC’s Website. This 

includes the FDIC’s Electronic Deposit Insurance Estimator 

(EDIE), which estimates an individual’s deposit insurance 

coverage; the Institution Directory, which contains 

financial profiles of FDIC-insured institutions; Community 

Reinvestment Act evaluations and ratings for institutions 

supervised by the FDIC; Call Reports, which are banks’ 

reports of condition and income; and Money Smart, a 

training program to help individuals outside the financial 

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

The 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. 

The Call Center directly, or in concert with other FDIC 

subject-matter experts, responds to questions about deposit 

insurance and other consumer issues and concerns, as well 

as questions about FDIC programs and activities. The 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 staff and has access to a 

translation service able to assist with over 40 different 

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://vcart.velocitypayment.com/

fdic/

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 financial 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

The Office of the Ombudsman (OO) is an independent, 

neutral, and confidential resource and liaison for the 

banking industry and the general public. The OO responds 

to inquiries about the FDIC in a fair, impartial, and timely 

manner. It researches questions and fields 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. The OO also recommends ways to improve 

FDIC operations, regulations, and customer service.
ANNUAL REPORT 2013

138 APPENDICES

REGIONAL AND AREA OFFICES

Atlanta Regional Office Chicago Regional Office

10 Tenth Street, NE 300 South Riverside Plaza

Suite 800 Suite 1700

Atlanta, Georgia 30309 Chicago, Illinois 60606

(678) 916-2200 (312) 382-6000

Alabama Illinois

Florida Indiana

Georgia Kentucky

North Carolina Michigan

South Carolina Ohio

Virginia Wisconsin

West Virginia

Dallas Regional Office Memphis Area Office

1601 Bryan Street 6060 Primacy Parkway

Dallas, Texas 75201 Suite 300

(214) 754-0098 Memphis, Tennessee 38119

(901) 685-1603

Colorado Arkansas

New Mexico Louisiana

Oklahoma Mississippi

Texas Tennessee

Kansas City Regional Office New York Regional Office

1100 Walnut Street 350 Fifth Avenue

Suite 2100 Suite 1200

Kansas City, Missouri 64106 New York, New York 10118

(816) 234-8000 (917) 320-2500

Iowa Delaware

Kansas District of Columbia

Minnesota Maryland

Missouri New Jersey

Nebraska New York

North Dakota Pennsylvania

South Dakota Puerto Rico

Virgin Islands
APPENDICES 139

Boston Area Office San Francisco Regional Office

15 Braintree Hill Office Park 25 Jessie Street at Ecker Square

Suite 100 Suite 2300

Braintree, Massachusetts 02184 San Francisco, California 94105

(781) 794-5500 (415) 546-0160

Connecticut Alaska

Maine Arizona

Massachusetts California

New Hampshire Guam

Rhode Island Hawaii

Vermont Idaho

Montana

Nevada

Oregon

Utah

Washington

Wyoming
ANNUAL REPORT 2013

140 APPENDICES

D. OFFICE OF INSPECTOR GENERAL’S 

ASSESSMENT OF THE MANAGEMENT 

AND PERFORMANCE CHALLENGES 

FACING THE FDIC 

Under the Reports Consolidation Act of 2000, the Office 

of Inspector General (OIG) identifies the management and 

performance challenges facing the FDIC and provides its 

assessment to the FDIC for inclusion in the FDIC’s annual 

performance and accountability report. In doing so, we 

keep in mind the FDIC’s overall program and operational 

responsibilities; financial industry, economic, and 

technological conditions and trends; areas of congressional 

interest and concern; relevant laws and regulations; the 

Chairman’s priorities and corresponding corporate goals; 

and ongoing activities to address the issues involved. The 

OIG believes that the FDIC faces challenges in the areas 

listed below, as it continues to operate in a post-crisis 

environment. 

Carrying Out Systemic Resolution Responsibilities

The Dodd-Frank Wall Street Reform and Consumer 

Protection Act (the Dodd-Frank Act) created a 

comprehensive new regulatory and resolution framework 

designed to avoid the severe consequences of financial 

instability. Title I of the Dodd-Frank Act provides tools for 

regulators to impose enhanced supervision and prudential 

standards on systemically important financial institutions 

(SIFIs). Title II provides the FDIC with a new orderly 

liquidation authority for SIFIs, subject to a systemic risk 

determination by statutorily-designated regulators. 

The FDIC has made significant progress over the past 

three years toward implementing its systemic resolution 

authorities under the Dodd-Frank Act. Among other things, 

the FDIC has issued a joint regulation and met established 

time frames for completing reviews of resolution plans 

submitted by covered financial companies, entered into 

agreements with certain foreign regulatory authorities to 

promote cross-border cooperation, and developed a singlepoint-of-entry resolution strategy as a preferred approach 

for the orderly liquidation of covered financial companies 

under certain circumstances.

While these accomplishments are notable, challenges 

remain in establishing a robust corporate-wide capability 

for this critical responsibility. In the coming months, the 

FDIC will be working to enhance its strategic planning 

efforts, strengthen coordination among the various FDIC 

divisions involved in the resolution activities, and build out 

the Office of Complex Financial Institutions’ infrastructure 

to support systemic resolution activities. 

Strengthening IT Security and Governance

Key to achieving the FDIC’s mission of maintaining stability 

and public confidence in the nation’s financial system is 

safeguarding the sensitive information, including personally 

identifiable information that the FDIC collects and manages 

in its role as federal deposit insurer and regulator of 

state non-member financial institutions. Further, as an 

employer, an acquirer of services, and a receiver for failed 

institutions, the FDIC obtains considerable amounts of 

sensitive information from its employees, contractors, 

and failed institutions. Increasingly sophisticated security 

risks and global connectivity have resulted in both internal 

and external risks to that sensitive information. Internal 

risks include errors and fraudulent or malevolent acts by 

employees or contractors working within the organization. 

External threats include a growing number of cyber-based 

attacks that can come from a variety of sources, such as 

hackers, criminals, foreign nations, terrorists, and other 

adversarial groups. Such threats underscore the importance 

of a strong, enterprise-wide information security program.

During 2013, the FDIC Chairman announced significant 

changes to the FDIC’s information security governance 

structure. These changes were intended to address current 

and emerging risks in the IT and information security 

environments. Among these changes, in April, the FDIC 

established the IT/Cyber Security Oversight Group to 

provide a senior-level forum for assessing cybersecurity 

threats and developments impacting the FDIC and the 

banking industry. In July 2013, the Chairman separated the 

roles and responsibilities of the Chief Information Officer 

(CIO) and Director, Division of Information Technology. 

Both positions had previously been held by the same 

individual. The position of CIO now reports directly to the 

FDIC Chairman. The CIO has broad strategic responsibility 

of IT governance, investments, program management, and 

information security. The CIO also serves as the FDIC’s 

Chief Privacy Officer. Finally, the Chief Information 

Security Officer (CISO) and related staff, who had formerly 
APPENDICES 141

reported to the Director of the Division of Information 

Technology, now report to the CIO. The purpose of this 

realignment was to ensure that the CISO has the ability to 

provide an independent perspective on security matters 

to the CIO and that the CIO has the authority and primary 

responsibility to implement an agency-wide information 

security program. 

During 2014, a challenging priority for the FDIC will be 

to continue to adapt to these organizational changes 

as the new roles and responsibilities become ingrained 

in a changing environment and to ensure effective 

communication and collaboration among all parties 

involved in ensuring a robust and secure IT operating 

environment.

Maintaining Effective Supervision and 

Preserving Community Banking

The FDIC’s supervision program promotes the safety 

and soundness of FDIC-supervised IDIs. The FDIC is the 

primary federal regulator for 4,316 FDIC-insured, statechartered institutions that are not members of the Federal 

Reserve Board. As such, the FDIC is the lead federal 

regulator for the majority of community banks. As the 

FDIC continues to operate in a post-crisis environment, 

it must continue to apply lessons learned over the past 

years of turmoil. One key lesson is the need for earlier 

regulatory response when risks are building. For example, 

banks may be tempted to take additional risks or to loosen 

underwriting standards. Some banks are also introducing 

new products or lines of business or seeking new sources 

for non-interest income, all of which can lead to interest 

rate risk, credit risk, operational risk, and reputational risk. 

Additionally, with technological changes, increased use of 

technology service providers, new delivery channels, and 

cyber-threats, the FDIC’s IT examination program needs to 

be proactive and bankers need to ensure a strong control 

environment and sound governance practices in their 

institutions. If the FDIC determines that an institution’s 

condition is less than satisfactory, it may take a variety 

of supervisory actions, including informal and formal 

enforcement actions against the institution or its directors 

and officers and others associated with the institution, 

to address identified deficiencies and, in some cases, 

ultimately ban individuals from banking. 

The Chairman has made it clear that one of the FDIC’s 

most important priorities is the future of community 

banks and the critical role they play in the financial system 

and the U.S. economy as a whole. The FDIC undertook 

a comprehensive review of the U.S. community banking 

sector covering 27 years of data. Additionally, the FDIC 

has reviewed its examination, rulemaking, and guidance 

processes with a goal of identifying ways to make the 

supervisory process more efficient, consistent, and 

transparent—while maintaining safe and sound banking 

practices. Supplementing these activities were roundtable 

discussions with community bankers from around the 

country, and ongoing discussions with the FDIC’s Advisory 

Committee on Community Banking. In response to 

concerns raised, the FDIC implemented a number of 

enhancements to its supervisory and rulemaking processes. 

For example, it restructured the pre-exam process. It is 

taking steps to improve communication with banks under 

its supervision by using Web-based tools. Finally, it has 

instituted a number of outreach and technical assistance 

initiatives for community bankers, which it expects 

to continue. 

A strong examination program, vigilant supervisory 

activities, effective enforcement actions and lessons learned 

in light of the recent crisis will be critical to the future 

of community banks. These actions will also ensure 

stability and continued confidence in the financial system 

going forward. 

Carrying Out Ongoing Resolution 

and Receivership Workload

In the recent financial crisis, the FDIC made extensive use 

of loss-share agreements (LSA) to facilitate the prompt 

transfer of failed bank assets to private management. In 

a loss share transaction, the FDIC as receiver agrees to 

share losses on certain assets with the acquirer. Under a 

typical LSA structure, the FDIC would assume 80 percent 

of future losses on troubled assets, with the acquiring 

institution assuming the remaining 20 percent. This partial 

indemnification against loss would induce risk-averse 

acquirers to take on these troubled assets under private 

management, and thus keep them out of a governmentcontrolled receivership. It also provided an incentive for 

the acquirer to maximize net recoveries on those assets, 
ANNUAL REPORT 2013

142 APPENDICES

– consistent with the fiduciary responsibility of the FDIC. 

Almost 65 percent of the bank failures since the beginning 

of 2008 through 2012 were resolved through whole-bank 

purchase and assumption transactions with LSAs. 

As another resolution strategy, the FDIC employed 

structured transactions to minimize the FDIC’s holding and 

asset management expenses for the assets by transferring 

the management responsibility to private-sector asset 

management experts. As receiver, the FDIC had completed 

34 structured transactions through August 2013 involving 

42,900 assets with a total unpaid principal balance of $26 

billion. To ensure the FDIC receives the highest return on 

the assets and the managing members treat failed bank 

borrowers fairly, the FDIC must continue to monitor the 

managing member’s compliance with the transaction 

agreements by reviewing regular reports, measuring 

actual performance against performance projections in 

the consolidated business plans, conducting regular site 

visitations, and thoroughly investigating borrower or 

guarantor complaints with regard to the servicing and 

dispositions of their loans by the managing members.

As the crisis continues to diminish, some of these 

agreements will be winding down. We have recommended 

that the FDIC develop a strategy for mitigating the impact 

of impending portfolio sales and LSA terminations on 

the Deposit Insurance Fund (DIF) and that it ensure that 

procedures, processes, and resources are sufficient to 

address the volume of terminations and potential requests 

for asset sales. Given the dollar value and risks associated 

with the structured transactions, the FDIC needs to ensure 

continuous monitoring and effective oversight in the 

interest of receiving a high return on assets. 

Ensuring the Continued Strength of 

the Insurance Fund

Insuring deposits remains at the heart of the FDIC’s 

commitment to maintain stability and public confidence 

in the nation’s financial system. To maintain sufficient 

DIF balances, the FDIC collects risk-based insurance 

premiums from insured institutions and invests deposit 

insurance funds. 

In the aftermath of the financial crisis, FDIC-insured 

institutions continue to make gradual but steady progress. 

Continuing to replenish the DIF in a post-crisis environment 

is a critical activity for the FDIC. The DIF balance had 

dropped below negative $20 billion during the worst time of 

the crisis. At year-end 2013, the balance was $47.2 billion, 

reflecting 16 consecutive quarters of positive growth. 

Assessment revenue and a decline in loss provisions for 

anticipated bank failures have been the impetus for the 

increase in the fund balance.

While the fund is considerably stronger than it has been, 

the FDIC must continue to monitor the emerging risks that 

can threaten fund solvency in the interest of continuing to 

provide the insurance coverage that depositors have come 

to rely upon. Given the volatility of the global markets and 

financial systems, new risks can emerge without warning 

and threaten the safety and soundness of U.S. financial 

institutions and the viability of the DIF. The FDIC must be 

prepared for such a possibility. 

Promoting Consumer Protections 

and Economic Inclusion

The FDIC carries out its consumer protection role by 

providing consumers with access to information about 

their rights and disclosures that are required by federal 

laws and regulations. Importantly, it also examines the 

banks where the FDIC is the primary federal regulator 

to determine the institutions’ compliance with laws and 

regulations governing consumer protection, fair lending, 

and community investment. The FDIC also coordinates 

with the Consumer Financial Protection Board (CFPB), 

created under the Dodd-Frank Act, on consumer issues of 

mutual interest. 

The FDIC continues to work with the Congress and 

others to ensure that the banking system remains sound 

and that the broader financial system is positioned to 

meet the credit needs of consumers and the economy, 

especially the needs of creditworthy households that may 

experience distress. A challenging priority articulated by 

the Chairman is to continue to increase access to financial 

services for the unbanked and underbanked in the United 

States. Efforts in this regard include the FDIC’s biennial 

survey conducted jointly with the Census Bureau to assess 

the overall population’s access to insured institutions. 

Additionally, the FDIC’s Advisory Committee on Economic 

Inclusion, composed of bankers, community and consumer 

organizations, and academics, explores strategies to 
APPENDICES 143

bring the unbanked into the financial mainstream. The 

FDIC’s Alliance for Economic Inclusion initiative seeks 

to collaborate with financial institutions; community 

organizations; local, state, and federal agencies; and other 

partners to form broad-based coalitions to bring unbanked 

and underbanked consumers and small businesses into the 

financial mainstream. 

Successful activities in pursuit of this priority will continue 

to require effort on the part of the FDIC going forward. 

The FDIC will need to sustain ongoing efforts to carry 

out required compliance and community reinvestment 

examinations, coordinate with CFPB on regulatory matters 

involving financial products and services, and pursue 

economic inclusion initiatives to the benefit of the 

American public. 

Implementing Workforce Changes and 

Budget Reductions 

As the number of financial institution failures continues to 

decline, the FDIC is reshaping its workforce and adjusting 

its budget and human resources as it seeks a balanced 

approach to managing costs while achieving mission 

responsibilities. The FDIC closed two temporary offices 

charged with managing receivership activities and asset 

sales: the West Coast Office and the Midwest Office in 

January 2012, and September 2012, respectively. It plans to 

close the East Coast Office in April 2014.

The Board of Directors approved a $2.4 billion Corporate 

Operating Budget for 2014, 11 percent lower than the 2013 

budget. In conjunction with its approval of the 2014 budget, 

the Board also approved an authorized 2014 staffing level 

of 7,199 positions, down from 8,053 currently authorized, a 

net reduction of 854 positions. This is the third consecutive 

reduction in the FDIC’s annual operating budget, and the 

2014 budget is the lowest annual budget since 2008. 

As conditions improve throughout the industry and the 

economy, the FDIC and staff are adjusting to a new work 

environment and workplace. For all employees, in light of 

a post-crisis, transitioning workplace, the FDIC will seek to 

sustain its emphasis on fostering employee engagement and 

morale. Its diversity and inclusion initiatives, along with its 

new Workplace Excellence Program are positive steps in 

that direction and should continue to yield positive results. 

Ensuring Effective Enterprise Risk Management

A key component of corporate governance at the FDIC 

is the Board of Directors. The Board will likely face 

challenges in leading the organization, accomplishing the 

Chairman’s priority initiatives, and coordinating with the 

other regulatory agencies on issues of mutual concern and 

shared responsibility. Enterprise risk management is a 

related aspect of governance at the FDIC. Notwithstanding 

a stronger economy and financial services industry, the 

FDIC’s enterprise risk management framework and related 

activities need to be attuned to emerging risks, both internal 

and external to the FDIC that can threaten corporate 

success. Individuals at every working level throughout 

the FDIC need to understand current and emerging risks 

and be ready to take necessary steps to mitigate those 

risks as changes occur and challenging scenarios present 

themselves.
THIS PAGE INTENTIONALLY LEFT BLANK.
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 

♦ Brian D. Aaron

♦ Barbara A. Glasby

♦ Financial Reporting Section

♦ Division and Offices’ Points-of-Contact

2013

Federal Deposit 

Insurance Corporation
FEDERAL DEPOSIT INSURANCE CORPORATION

550 17th Street, N.W.

Washington, DC 20429-9990

WWW.FDIC.GOV

FDIC-003-2014