Federal Deposit Insurance Corporation

550 17th Street, N.W., Washington, D.C. 20429-9990 Deputy to the Chairman and CFO

June 8, 2020

MEMORANDUM TO: The Board of Directors

FROM: Bret Edwards

Deputy to the Chairman

and Chief Financial Officer

SUBJECT: First Quarter 2020 CFO Report to the Board

The attached report highlights the FDIC’s financial activities and results for the quarter ended March 31, 2020.

Executive Summary

• During the first quarter of 2020, the Deposit Insurance Fund (DIF) balance rose to $113.2 billion, up $2.9

billion from year-end 2019. The quarterly increase was primarily due to a $1.5 billion unrealized gain on U.S. 

Treasury securities and $1.4 billion in assessment revenue.

• The reserve ratio, which is the ratio of the DIF balance to estimated insured deposits, was 1.39 percent as 

of March 31, 2020. The reserve ratio decreased by two basis points from December 31, 2019, as 

exceptionally strong growth in insured deposits more than offset the growth in the DIF.

• With a fund balance of more than $113 billion as of March 31, 2020, the DIF is currently well-positioned to 

cover possible short and mid-term risks. However, there remains uncertainty about the effects of the 

COVID-19 health crisis on the economy and the banking industry over the long-term. Effects from a 

weakened economic outlook, elevated unemployment levels, and diminished repayment capacity of 

borrowers may stress the balance sheets of several institutions across the United States. The FDIC 

continues to evaluate a range of possible outcomes for economic stress, the risks those outcomes pose to 

insured financial institutions, and the extent to which such risks may draw on the resources of the DIF.

• During the first quarter of 2020, the FDIC was named receiver for one failed financial institution. The assets 

at inception for this failed institution were $98 million with an estimated loss to the DIF as of March 31, 2020, 

of $14 million. The corporate cash outlay during the first quarter for this failure was approximately $70

million.

• Through March 31, 2020, overall FDIC Operating Budget expenditures were below the year-to-date budget 

by about $42.6 million, or eight percent. This variance was primarily the result of underspending in the 

Salaries and Compensation expense categories in the Ongoing Operations budget component due to 

unfilled vacancies in authorized positions. This variance may narrow in the second quarter. To ensure 

preparedness to address the possible emergence of problems within the banking industry, FDIC divisions 

and offices will give priority during the second quarter to filling authorized vacancies.
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I. Financial Results (See pages 4 – 5 for detailed data and charts.)

Deposit Insurance Fund 

• For the first quarter of 2020, the DIF’s comprehensive income totaled $2.9 billion, compared to 

comprehensive income of $2.3 billion for the same period last year. The increase of $598 million was 

primarily due to a $1.0 billion increase in unrealized gains on U.S. Treasury securities partially offset by a 

$408 million increase in the provision for insurance losses. 

• The $1.5 billion unrealized gain on U.S. Treasury securities for the first quarter 2020 was a result of yields 

declining considerably across most maturity sectors of the Treasury yield curve, resulting in increases in the 

securities’ market values relative to their book values.

Assessments

• During March, the DIF recognized assessment revenue of $1.4 billion for the estimate of first quarter 2020 

insurance coverage. Gross assessment revenue of $1.408 billion was reduced by $51 million for expected 

small bank assessment credit usage. Additionally, the DIF recognized a $15 million adjustment for higherthan-estimated collections for the fourth quarter 2019 insurance coverage, which increased assessment 

revenue.

• Of the total $765 million small bank assessment credits awarded, $707.4 million have been applied over the 

past three quarters to reduce assessments paid by small banks. After applying an estimated $51 million in 

credits against the June 2020 assessment collection, over $5 million will remain for remittance to those 

institutions with unused credits.

• On March 30, 2020, the FDIC collected $1.3 billion in DIF assessments for fourth quarter 2019 insurance 

coverage.

II. Investment Results (See pages 6 – 7 for detailed data and charts.)

DIF Investment Portfolio

• On March 31, 2020, the total liquidity (also total market value) of the DIF investment portfolio stood at 

$109.9 billion, up $2.9 billion from its December 31, 2019, balance of $107.0 billion. During the quarter, 

interest revenue, receivership dividends, and deposit insurance assessment collections far exceeded 

resolution-related outlays and operating expenses.

• On March 31, 2020, the DIF investment portfolio’s yield was 1.74 percent, down 24 basis points from its 

1.98 percent yield on December 31, 2019. The new Treasury securities purchased during the first quarter of 

the year had significantly lower yields than the maturing securities’ yields.

• In accordance with the approved first quarter 2020 DIF portfolio investment strategy, staff purchased a total 

of 12 conventional Treasury securities. The 12 securities had a total par value of $13.03 billion, a weighted 

average yield of 1.25 percent, and a weighted average maturity of 1.00 year.

III. Budget Results (See pages 8 – 9 for detailed data.)

Approved Budget Modifications

The 2020 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other officials the 

authority to make certain modifications to the 2020 FDIC Operating Budget. The following budget reallocations 

were approved during the first quarter in accordance with the authority delegated by the Board of Directors:

• In March, the CFO approved a budget realignment of $8.1 million in the Outside Services – Personnel and 

Equipment budgets of the Ongoing Operations budget component from the Office of the Chief Information 
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Security Officer (OCISO) to the Division of Information Technology (DIT). This reallocation supported a 

realignment of responsibility for day-to-day operational security management tasks, such as firewall 

support and file integrity monitoring, from OCISO to DIT. 

There were no changes to the Receivership Funding budgets for any organization.

The first quarter budget modification did not affect the Corporate Unassigned contingency reserve. The 

balances in the Corporate Unassigned contingency reserves as of March 31, 2020, were $30,000,000 in the 

Ongoing Operations budget component and $12,042,515 in the Receivership Funding budget component.

Approved Staffing Modifications

The 2020 Budget Resolution delegated to the CFO the authority to modify approved 2020 staffing authorizations 

for divisions and offices, as long as those modifications did not increase the total approved 2020 FDIC

Operating Budget. In March, the CFO approved the transfer of two authorized permanent positions (with their 

incumbents) from OCISO to DIT in conjunction with the realignment of operational security management 

responsibilities referenced above. DIT has sufficient funding in its Salaries and Compensation budget to cover 

the two salaries associated with this transfer.

Spending Variances

Significant spending variances by major expense category and division/office are discussed below. Significant 

spending variances for the quarter ending March 31, 2020, are defined as those that either (1) exceeded the 

YTD budget for a major expense category or division/office by more than $5 million and represented more than 

three percent of the major expense category or total division/office budget; or (2) were under the YTD budget for 

a major expense category or division/office by more than $15 million and represented more than 15 percent of 

the major expense category or total division/office budget. 

Significant Spending Variances by Major Expense Category

Ongoing Operations

There were no significant spending variances for the first quarter in the Ongoing Operations budget component. 

It is likely, however, that a significant variance will develop in the Travel expense category during the second 

quarter due to the virtual elimination of employee travel as part of the Corporation’s pandemic response. 

Receivership Funding

The Receivership Funding component of the 2020 FDIC Operating Budget includes funding for expenses that 

are incurred in conjunction with institution failures and the management and disposition of the assets and 

liabilities of the ensuing receiverships, except for salary and benefits expenses for permanent employees 

assigned to the receivership management function and other expenses required to ensure readiness without 

regard to whether failures occurred. 

There were no significant spending variances for the first quarter in the Receivership Funding budget 

component.

Office of Inspector General

There were no significant spending variances in the first quarter of the 2020 Office of Inspector General budget 

component. 

Significant Spending Variances by Division/Office1

No organizations had significant spending variances in the first quarter of 2020.

 1Information on division/office variances reflects variances in the FDIC Operating Budget and does not include 

variances related to approved multi-year investment projects. 
Fund Financial Results ($ in Millions) 

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Balance Sheet

Quarterly Year-Over-Year

Mar-20 Dec-19 Change Mar-19 Change

Cash and cash equivalents $ 9,490 $ 5,991 $ 3,499 $ 7,062 $ 2,428

Investment in U.S. Treasury securities 99,733 100,072 (339) 93,507 6,226

Assessments receivable 1,357 1,242 115 1,372 (15)

Interest receivable on investments and other assets, net 709 1,021 (312) 567 142

Receivables from resolutions, net 2,456 2,669 (213) 3,187 (731)

Property and equipment, net 326 330 (4) 324 2

Operating lease right-of-use assets 120 0 120 0 120

Total Assets $ 114,191 $ 111,325 $ 2,866 $ 106,019 $ 8,172

Accounts payable and other liabilities 215 215 0 211 4

Operating lease liabilities 127 0 127 0 127

Liabilities due to resolutions 213 346 (133) 554 (341)

Postretirement benefit liability 289 289 0 236 53

Contingent liability for anticipated failures 107 94 13 115 (8)

Contingent liability for guarantee payments and litigation losses 34 34 0 33 1

Total Liabilities $ 985 $ 978 $ 7 $ 1,149 $ (164)

FYI: Unrealized gain (loss) on U.S. Treasury securities, net 2,037 587 1,450 (194) 2,231

FYI: Unrealized postretirement benefit (loss) gain (61) (61) 0 (14) (47)

Fund Balance $ 113,206 $ 110,347 $ 2,859 $ 104,870 $ 8,336

Deposit Insurance Fund

As each US Treasury security nears its maturity, the market value will approach the par value, and the unrealized 

gain will reduce to zero. For those securities that mature by year end 2020, their unrealized gain as of March 31, 

2020 of $263 million, or 13 percent of total unrealized gains, will be reduced to zero.
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Fund Financial Results - continued ($ in Millions) 

Receivership Selected Statistics March 2020 vs. March 2019

Income Statement (year-to-date)

Year-Over-Year

Mar-20 Dec-19 Mar-19 Change

Assessments $ 1,372 $ 4,939 $ 1,369 $ 3

Interest on U.S. Treasury securities 507 2,117 507 0

Other revenue 3 39 2 1

Total Revenue $ 1,882 $ 7,095 $ 1,878 $ 4

Operating expenses 460 1,796 434 26

Provision for insurance losses 12 (1,286) (396) 408

Insurance and other expenses 1 3 0 1

Total Expenses and Losses $ 473 $ 513 $ 38 $ 435

Net Income $ 1,409 $ 6,582 $ 1,840 $ (431)

Unrealized gain (loss) on U.S. Treasury securities, net 1,450 1,203 421 1,029

Unrealized postretirement benefit gain (loss) 0 (47) 0 0

Comprehensive Income $ 2,859 $ 7,738 $ 2,261 $ 598

Deposit Insurance Fund

Selected Financial Data

Quarterly Year-Over-Year

Mar-20 Dec-19 Change Mar-19 Change

Cash and cash equivalents $ 926 $ 923 $ 3 $ 907 $ 19

Accumulated deficit (124,563) (124,566) 3 (124,582) 19

Total resolution equity 926 923 3 908 18

Total revenue 3 20 5 (2)

Operating expenses 0 1 0 0

Recovery of tax benefits 0 (1) 0 0

Losses related to thrift resolutions 0 0 0 0

Net Income (Loss) $ 3 $ 21 $ 5 $ (2)

FSLIC Resolution Fund

Mar-20 Mar-19 Change Mar-20 Mar-19 Change Mar-20 Mar-19 Change

245 271 (26) 0 0 0 245 271 (26)

$ 546 $ 1,035 $ (489) $ 1 $ 2 $ (1) $ 547 $ 1,037 $ (490)

$ 87 $ 400 $ (313) $ 0 $ 0 $ 0 $ 87 $ 400 $ (313)

$ 189 $ 255 $ (66) $ 0 $ 0 $ 0 $ 189 $ 255 $ (66)

DIF FRF ALL FUNDS
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3/31/20 12/31/19 Change

Par Value $106,056 $104,429 $1,627

Amortized Cost $107,176 $105,464 $1,713

Total Market Value (including accrued interest) $109,871 $107,024 $2,847

Primary Reserve 1 $109,871 $107,024 $2,847

Primary Reserve % of Total Portfolio 100.0% 100.0% 0.0%

Yield-to-Maturity 1.74% 1.98% -0.24%

Weighted Average Maturity (in years) 1.06 1.18 -0.12

Effective Duration (in years)

 Total Portfolio 1.04 1.15 -0.11

 Available-for-Sale Securities 2 1.14 1.22 -0.08

3/31/20 12/31/19 Change

FRF-FSLIC

 Book Value 3 $881 $878 $3

 Yield-to-Maturity 0.04% 1.51% -1.47%

 Weighted Average Maturity overnight overnight no change

3/31/20 12/31/19 Change

Book Value 4 $2,150 $2,128 $22

Effective Annual Yield 0.69% 1.76% -1.07%

Weighted Average Maturity (in days) 28 32 (4)

4

 Due to the short-term nature of the NLF portfolio, its Book and Market Values are identical for reporting purposes.

Summary of Other Corporate Investment Portfolios

(Dollar Values in Millions)

3

 Due to the current short-term nature of this portfolio, its respective Par, Book, and Market Values are identical for reporting 

purposes.

Deposit Insurance Fund Portfolio Summary

(Dollar Values in Millions)

1

 Primary Reserve is the total market value (including accrued interest) of overnight investments, all available-for-sale (AFS) 

securities, and held-to-maturity securities maturing within three months.

National Liquidation Fund (NLF) Investment Portfolio Summary

(Dollar Values in Millions)

2

 Excludes any overnight investments.
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DEPOSIT INSURANCE FUND

Invest up to $23 billion (par value) in AFS securities with maturities between June 30, 

2020 and December 31, 2024. 

Invest up to $18 billion (par value) in AFS securities with maturities between September 

30, 2020 and December 31, 2024. 

NATIONAL LIQUIDATION FUND

Maintain an overnight deposit target floor balance within a range of $100 million to $300 

million.

Strategically invest the remaining funds in the zero- to 12-month maturity sector.

No strategy changes for the second quarter of 2020.

Investment Strategies

Strategy Changes for the 2nd Quarter 2020

Strategy for the 1st Quarter 2020

Strategy for the 1st Quarter 2020

Strategy Changes for the 2nd Quarter 2020
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Annual YTD YTD % of YTD YTD

Major Expense Category Budget Budget Expenditures Budget Used Variance

FDIC Operating Budget 

Ongoing Operations

Salaries & Compensation $1,272,827 $334,397 $314,297 94% ($20,100)

Outside Services - Personnel 308,904 67,914 62,770 92% (5,144)

Travel 81,054 20,018 15,277 76% (4,741)

Buildings 98,701 24,837 23,251 94% (1,586)

Equipment 108,080 26,523 23,436 88% (3,087)

Outside Services - Other 16,004 3,536 3,479 98% (57)

Other Expenses 13,870 3,146 3,154 100% 8

Total Ongoing Operations $1,899,440 $480,371 $445,664 93% ($34,707)

Receivership Funding

Salaries & Compensation $325 $81 $424 523% $343

Outside Services - Personnel 69,675 14,351 7,191 50% (7,160)

Travel 1,095 272 354 130% 82

Buildings 2,227 556 499 90% (57)

Equipment 8 2 30 1500% 28

Outside Services - Other 571 142 (4) -3% (146)

Other Expenses 1,099 273 245 90% (28)

Total Receivership Funding $75,000 $15,677 $8,739 56% ($6,938)

Office of Inspector General

Salaries & Compensation $37,033 $9,258 $8,793 95% ($465)

Outside Services - Personnel 2,400 600 479 80% (121)

Travel 1,035 259 301 116% 42

Buildings 0 0 0 0

Equipment 1,888 472 138 29% (334)

Outside Services - Other 0 0 4 4

Other Expenses 626 157 68 43% (89)

Total Office of Inspector General $42,982 $10,746 $9,783 91% ($963)

Total FDIC Operating Budget $2,017,422 $506,794 $464,186 92% ($42,608)

Executive Summary of 2020 Budget and Expenditures

by Budget Component and Major Expense Category

Through March 31, 2020

(Dollars in Thousands)
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1) Expenses for DIT include YTD expenses for the Office of CIO Management Services. 

2) Executive Support includes the Offices of Minority and Women Inclusion, Communications, Ombudsman, Legislative Affairs, 

Financial Institution Adjudication, and FDiTech Lab. 

3) Executive Offices include the offices of the Chairman, Vice Chairman, Independent Director, Deputy to the Chairman and Chief 

Operating Officer, Deputy to the Chairman and Chief Financial Officer, Deputy to the Chairman for Policy, and Chief Information 

Officer.

Annual YTD YTD % of YTD YTD

Division/Office Budget Budget Expenditures Budget Used Variance

 FDIC Operating Budget 

 Risk Management Supervision $546,948 $143,234 $134,222 94% ($9,012)

 Information Technology 1 311,810 71,615 72,993 102% 1,378

 Administration 273,690 70,211 61,379 87% (8,832)

 Depositor & Consumer Protection 185,003 48,504 43,680 90% (4,824)

 Legal 169,606 44,260 34,775 79% (9,485)

 Resolutions & Receiverships 144,149 37,271 35,072 94% (2,199)

 Complex Institution Supervision & Resolution 85,383 21,768 20,326 93% (1,442)

 Insurance & Research 60,294 15,473 14,628 95% (845)

 Inspector General 42,982 10,746 9,783 91% (963)

 Finance 42,779 11,047 10,136 92% (911)

 Chief Information Security Officer 38,802 12,617 9,900 78% (2,717)

 Executive Support 2 29,433 7,446 5,341 72% (2,105)

 Corporate University - Corporate 21,546 5,254 5,683 108% 429

 Executive Offices 3 11,560 3,019 2,780 92% (239)

 Corporate University - CEP 11,394 4,329 3,488 81% (841)

 Corporate Unassigned 3 42,043 0 0 0

 Total FDIC Operating Budget $2,017,422 $506,794 $464,186 92% ($42,608)

Executive Summary of 2020 Budget and Expenditures

by Division/Office

Through March 31, 2020

(Dollars in Thousands)