Federal Deposit 

Insurance Corporation

 

Deputy to the Chairman and Chief Financial Officer

 August 27, 2021

MEMORANDUM TO: The Board of Directors

FROM: Bret D. Edwards

Deputy to the Chairman

and Chief Financial Officer

SUBJECT: Second Quarter 2021 CFO Report to the Board 

The attached report highlights the FDIC’s financial activities and results for the quarter ended June 30, 2021.

Executive Summary

• During the second quarter of 2021, the Deposit Insurance Fund (DIF) balance rose to a record $120.5 billion as 

of June 30, 2021, up $1.2 billion from the March 31, 2021 balance of $119.4 billion. The quarterly increase was 

primarily due to a $1.6 billion increase in assessment revenue, partially offset by a $466 million increase in 

operating expenses.

• The reserve ratio, which is the ratio of the DIF balance to estimated insured deposits, was 1.27 percent at 

June 30, 2021. Estimated insured deposits declined which caused the reserve ratio to increase by two basis 

points from March 31, 2021. 

• There were no FDIC-insured financial institution failures during the second quarter of 2021; the last failure 

occurred on October 23, 2020.

• Through June 30, 2021, overall FDIC Operating Budget expenditures were below the year-to-date budget by 

about $109.2 million, or 10 percent. This variance was primarily the result of underspending of $102.3 million 

in the Ongoing Operations budget component. The largest variances were in three expense categories:

o Salaries and Compensation ($30.3 million, or 5 percent) due to unfilled vacancies in authorized positions

o Travel ($24.4 million, or 86 percent) due to the continuation of travel restrictions during the COVID-19 

pandemic and,

o Outside Services – Personnel ($24.3 million, or 15 percent) due to reduced or delayed utilization of 

contract services in various organizations. 
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I. Financial Results (See pages 7 – 8 for detailed data and charts.)

Deposit Insurance Fund 

• For the six months ending June 30, 2021, the DIF’s comprehensive income totaled $2.6 billion compared to 

comprehensive income of $4.3 billion for the same period last year, a decrease of $1.7 billion. While 

assessment revenue increased year-over-year by $289 million, this increase was offset by a decrease in 

interest on U.S. Treasury (UST) securities of $426 million and a decline in fair value adjustments on UST 

securities of $1.6 billion.

• During the first half of 2021, the DIF incurred a $518 million unrealized loss on its portfolio of UST securities 

due to yields rising across all investable maturity sectors of the Treasury yield curve. 

Assessments

• During June, the DIF recognized assessment revenue of $1.8 billion for the estimate of second quarter 2021 

insurance coverage. Additionally, the DIF recognized a $166 million adjustment for lower-than-estimated 

collections for the first quarter 2021 insurance coverage, which decreased assessment revenue.

• On June 30, 2021, the FDIC collected $1.8 billion in DIF assessments for first quarter 2021 insurance coverage.

II. Investment Results (See pages 9 – 10 for detailed data and charts.)

DIF Investment Portfolio

• On June 30, 2021, the total liquidity (also total market value) of the DIF investment portfolio stood at $118.16 

billion, up $3.25 billion from its December 31, 2020, balance of $114.91 billion. During the quarter, interest 

revenue, receivership dividends, and deposit insurance assessment collections exceeded resolution-related 

outlays and operating expenses.

• On June 30, 2021, the DIF investment portfolio’s yield was 0.816 percent, down 29.7 basis points from its 

1.113 percent yield on December 31, 2020. The new Treasury securities purchased during the second quarter 

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

• In accordance with the approved second quarter 2021 DIF portfolio investment strategy, staff purchased a 

total of seven conventional Treasury securities. The seven securities had a total par value of $10.50 billion, a 

weighted average yield of 0.230 percent, and a weighted average maturity of 1.99 years.
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III. Budget Results (See pages 11 – 12 for detailed data.)

The 2021 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other officials the 

authority to make certain modifications to the 2021 FDIC Operating Budget. The CFO approved the following 

budget reallocations during the second quarter, in accordance with the authority delegated by the Board of 

Directors:

• In April, the CFO approved an increase of $9.2 million, from $5.3 million to $14.5 million, in the Ongoing 

Operations budget of the FDIC Tech Lab (FDITECH), primarily in the Salaries and Compensation and Outside 

Services-Personnel major expense categories. This increase supports the new Chief Innovation Officer’s 

agenda and funds salaries and benefits for seven newly established permanent positions and a substantial 

expansion of contract services for planned 2021 FDITECH activities.

• In June, the CFO approved the following mid-year adjustments to 2021 Ongoing Operations budgets, which 

resulted in a net increase of $7.1 million to the Ongoing Operations budgets of the affected divisions and 

offices: 

o A net increase of $1.8 million in the budget for the Division of Information Technology (DIT) to address 

updated cost estimates for several projects and provide funding for a small number of high priority new 

projects. 

o A net increase of $4.2 million in the budget for the Division of Administration (DOA) to provide funding 

for the electronic conversion of Official Personnel Folders, an expansion of consulting services for 

performance management and compensation programs, consulting support for the new Crisis 

Readiness and Response Program, the acquisition of additional digital library subscriptions, and the 

purchase of software to support remote onboarding of new employees.

o A net increase of $765,500 in the budget for the Legal Division. This included increases of $753,000 in 

the Outside Services–Personnel expense category, primarily to provide funding to support 

establishment of the Mission Driven Fund (2020 funding for this purpose was not spent) and a Standard 

Developing Organization, and $12,500 in the Outside Services–Other category to provide funding for FDI 

Act website enhancement and Honors Attorneys recruiting events.

o An increase of $150,000 in the budget for the Office of Communications in the Outside Services–

Personnel expense category to fund contract services for the new Virtual Outreach Center. 

o An increase of $200,000 in the budget for the Office of Risk Management and Internal Controls in the 

Outside Services–Personnel expense category to fund an increase in the number of independent 

validations of corporate models this year.

• In June, the CFO also approved realignments in the Salaries and Compensation budgets of several 

organizations to address projected surpluses and shortfalls. These adjustments resulted in no net change to 

the corporate-wide Salaries and Compensation budget.

Following these second quarter budget modifications, the balances in the Corporate Unassigned contingency 

reserve for the Ongoing Operations budget component declined from $22.9 million to $7.2 million (excluding the 

$40 million portion of the reserve set aside to address a potential increase in bank failure activity this year). The 

balance in the Corporate Unassigned contingency reserve for the Receivership Funding budget component 
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remained unchanged at $22.5 million (excluding the $100 million portion of the reserve set aside to address a 

potential increase in bank failure activity later this year).

Approved Staffing Modifications

The 2021 Budget Resolution delegated to the CFO the authority to modify approved 2021 staffing authorizations 

for divisions and offices, as long as those modifications do not increase the total approved 2021 FDIC Operating 

Budget. The CFO approved the following modifications to staffing authorizations during the second quarter, in 

accordance with the authority delegated by the Board of Directors:

• In April, the CFO approved an increase of seven permanent positions, from two to nine, in FDITECH to support 

the planned innovation program of the new Chief Innovation Officer.

• In June, the CFO approved the following adjustments to the 2021 staffing authorizations of four 

organizations:

o An increase of one permanent position in DIT’s staffing authorization to provide dedicated acquisitions 

support to FDITECH. This increased total authorized staffing in DIT from 325 to 326 permanent 

positions.

o An increase of 14 permanent positions and two non-permanent positions in DOA to augment staffing 

and classification capabilities in the human resources organization, facilitate technological innovation, 

strengthen oversight management of contracts, and strengthen the corporate crisis readiness program. 

This increased total authorized staffing for DOA to 414 positions, including 411 permanent and three 

non-permanent positions. 

o An increase of one supervisory position for Corporate University (CU) to mitigate the supervisory burden 

in Examiner Learning Programs. This increased total authorized staffing in CU to 67 permanent 

positions.

o A decrease of one position in the Office of Legislative Affairs (OLA) in recognition of the transfer of an 

administrative specialist position to DOA. This decreased total authorized staffing for OLA to 11 

permanent positions.

Subsequent to these second quarter adjustments, authorized 2021 staffing for the Corporation totaled 5,834 

positions (5,791 permanent and 43 non-permanent), a net increase of 24 positions.

Significant Spending Variances by Major Expense Category

Ongoing Operations

Overall spending for the Ongoing Operations budget component was $102.3 million, or 10 percent, below budget 

through the second quarter in 2021. There were significant spending variances in four major expense categories: 

• Spending in the Travel expense category was under budget by $24.4 million, or 86 percent, primarily due to 

underspending in the Division of Risk Management Supervision (RMS) and the Division of Depositor and 
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Consumer Protection. The variance in the Travel expense category reflects the continuation of pandemicrelated FDIC travel restrictions during the first half of the year.

• Spending in the Outside Services – Personnel expense category was under budget by $24.3 million, or 15 

percent. The variance was largely attributable to underspending in the following divisions and offices:

o The DIT underspent its budget by $8.4 million, with $4.7 million attributable to delays on IT 

Modernization initiatives and $3.7 million attributable to lower-than-projected spending on cloud 

platform operations and maintenance. 

o The FDIC Tech Lab (FDITECH) underspent its budget by $3.9 million as a result of delays in starting several

budgeted projects due to extended discussions with participating divisions and offices on project scope 

and approach and consultations with the Legal Division and the Acquisition Services Branch in the DOA 

about the appropriate procurement approaches. 

o The Division of Complex Institution Supervision and Resolution underspent its budget by $2.6 million 

because of delays in initiating procurement actions to acquire strategic communications and human 

resources advisory services and other planned contractual services.

o The Office of the Chief Information Security Officer underspent its budget by $2.5 million, principally due 

to delays in onboarding new security contract personnel.

o RMS underspent its budget by $1.7 million, primarily due to lower-than-anticipated usage of scanning 

and imaging services and FBI finger printing services during mandatory telework.

o The Legal Division underspent its budget by $1.4 million due to a slower-than-anticipated pace of cases 

in litigation. It projects that the pace of litigation will speed up and expenses will normalize by year-end. 

• Spending in the Equipment expense category was under budget by $10.6 million, or 16 percent. This was 

mostly attributable to delays in hardware refresh purchases by DIT and digital library subscription and 

furniture purchases by the DOA during mandatory telework.

• Spending in the Buildings and Leased Space expense category was under budget by $10.4 million, or 20 

percent. The underspending was attributable primarily to the reduced use of facilities and related service 

contracts during mandatory telework ($5.3 million), a delay in the Bair Auditorium Upgrade project ($1.3 

million), the decision to discontinue leasing space at 1750 New York Avenue ($1 million), and delays in 

modifying an architectural and engineering support contract ($1 million).

Receivership Funding

The Receivership Funding component of the 2021 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 occur. 

There were no significant spending variances through the second quarter in the Receivership Funding budget 

component. 
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Office of Inspector General

There were no significant spending variances through the second quarter in the Office of Inspector General 

budget component. 

Significant Spending Variances by Division/Office1

There were two organizations with significant spending variances through the end of the second quarter: 

• RMS spent $38.1 million, or 13 percent, less than its YTD budget. This variance was primarily attributable to 

underspending of $18 million in the Travel expense category due to pandemic related travel restrictions, $17 

million in the Salaries and Compensation expense category due to vacancies in budgeted positions, and $1.7 

million in the Outside Services-Personnel category due to lower-than-projected usage of contract services, as 

noted above.

• DOA underspent its budget by $16.0 million, or 11 percent, through the end of the second quarter. This 

included underspending of $10.3 million in the Outside Services – Personnel expense category and $1.4 

million in the Equipment expense category for the reasons identified above and $2.8 million in the Salaries 

and Compensation expense category due to vacancies in budgeted positions, primarily in DOA’s regional 

offices and its Corporate Services and Acquisition Services Branches.

 1

Information 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) 

7

• Nearly 30% of the DIF 

investment portfolio is 

expected to mature 

before year-end.

• The dollar volume of 

maturities is 

approximately equally 

divided between the 

third and fourth 

quarters.

• These securities are 

yielding 1.007%, on a 

weighted average 

basis.

Balance Sheet

Quarterly Year-Over-Year

Jun-21 Mar-21 Change Jun-20 Change

Cash and cash equivalents $ 5,361 $ 4,895 $ 466 $ 5,144 $ 217

Investment in U.S. Treasury securities 111,991 110,680 1,311 105,024 6,967

Assessments receivable 1,755 1,941 (186) 1,632 123

Interest receivable on investments and other assets, net 832 969 (137) 1,369 (537)

Receivables from resolutions, net 908 1,220 (312) 1,860 (952)

Property and equipment, net 320 321 (1) 320 0

Operating lease right-of-use assets 100 110 (10) 118 (18)

Total Assets $ 121,267 $ 120,136 $ 1,131 $ 115,467 $ 5,800

Accounts payable and other liabilities 235 255 (20) 221 14

Operating lease liabilities 107 117 (10) 127 (20)

Liabilities due to resolutions 7 1 6 73 (66)

Postretirement benefit liability 336 336 0 289 47

Contingent liability for anticipated failures 35 65 (30) 74 (39)

Contingent liability for guarantee payments and litigation losses 0 0 0 32 (32)

Total Liabilities $ 720 $ 774 $ (54) $ 816 $ (96)

FYI: Unrealized gain (loss) on U.S. Treasury securities, net 552 785 (233) 1,654 (1,102)

FYI: Unrealized postretirement benefit (loss) gain (98) (98) 0 (61) (37)

Fund Balance $ 120,547 $ 119,362 $ 1,185 $ 114,651 $ 5,896

Deposit Insurance Fund
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Fund Financial Results - continued ($ in Millions) 

Receivership Selected Statistics June 2021 vs. June 2020

 ($ in millions) Jun-21 Jun-20 Change Jun-21 Jun-20 Change Jun-21 Jun-20 Change

Total Receiverships 220 244 (24) 0 0 0 220 244 (24)

Assets in Liquidation $ 206 $ 380 $ (174) $ 0 $ 1 $ (1) $ 206 $ 381 $ (175)

YTD Collections $ 176 $ 285 $ (109) $ 1 $ 1 $ 0 $ 177 $ 286 $ (109)

YTD Dividend/Other Pmts - Cash $ 525 $ 797 $ (272) $ 0 $ 0 $ 0 $ 525 $ 797 $ (272)

DIF FRF ALL FUNDS

Income Statement (year-to-date)

Quarterly Year-Over-Year

Jun-21 Mar-21 Change Jun-20 Change

Assessments $ 3,451 $ 1,862 $ 1,589 $ 3,162 $ 289

Interest on U.S. Treasury securities 535 284 251 961 (426)

Other revenue 7 2 5 6 1

Total Revenue $ 3,993 $ 2,148 $ 1,845 $ 4,129 $ (136)

Operating expenses 920 454 466 925 (5)

Provision for insurance losses (99) (57) (42) (35) (64)

Insurance and other expenses 4 1 3 2 2

Total Expenses and Losses $ 825 $ 398 $ 427 $ 892 $ (67)

Net Income $ 3,168 $ 1,750 $ 1,418 $ 3,237 $ (69)

Unrealized gain (loss) on U.S. Treasury securities, net (518) (285) (233) 1,067 (1,585)

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

Comprehensive Income $ 2,650 $ 1,465 $ 1,185 $ 4,304 $ (1,654)

Deposit Insurance Fund

Selected Financial Data

Quarterly Year-Over-Year

Jun-21 Mar-21 Change Jun-20 Change

Cash and cash equivalents $ 907 $ 907 $ 0 $ 926 $ (19)

Accumulated deficit (124,562) (124,562) 0 (124,563) 1

Total resolution equity 907 907 0 907 0

Total revenue 0 0 0 3 (3)

Operating expenses 0 0 0 0 0

Recovery of tax benefits 0 0 0 0 0

Losses related to thrift resolutions 0 0 0 0 0

Net Income (Loss) $ 0 $ 0 $ 0 $ 3 $ (3)

FSLIC Resolution Fund

• Treasury securities’ yields

remain at historic low

levels, as the Federal 

Reserve’s accommodative

stance continues.

• The yield on maturing

securities are above 100

basis points (on a

weighted average basis),

while the yield on

securities available for

reinvestment hover

between 10 to 85 basis

points, depending on the

duration.

• The overall DIF portfolio’s

yield will likely continue to

decline until interest rates

begin to climb.
9

6/30/21 12/31/20 Change

Par Value $114,403 $110,403 $4,000

Amortized Cost $116,793 $112,698 $4,096

Total Market Value (including accrued interest) $118,155 $114,910 $3,245

Primary Reserve 1 $118,155 $114,910 $3,245

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

Yield-to-Maturity 0.816% 1.113% -0.297%

Weighted Average Maturity (in years) 1.22 1.19 0.03

Effective Duration (in years)

 Total Portfolio 1.19 1.16 0.03

 Available-for-Sale Securities 2 1.25 1.20 0.05

 

6/30/21 12/31/20 Change

FRF-FSLIC

 Book Value 3 $882 $882 $0

 Yield-to-Maturity 0.04% 0.06% -0.02%

 Weighted Average Maturity overnight overnight no change

6/30/21 12/31/20 Change

Book Value 5 $1,345 $1,761 ($416)

Effective Annual Yield 0.06% 0.14% -0.07%

Weighted Average Maturity (in days) 1 1 0

5

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

4

 The NLF is comprised of the collective cash holdings of all active failed bank receivesrhips managed by the FDIC.

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 

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

National Liquidation Fund (NLF) Investment Portfolio Summary 4

(Dollar Values in Millions)

2

 Excludes any overnight investments.
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DEPOSIT INSURANCE FUND

Invest up to $16 billion (par value) in AFS securities with maturities between September 

30, 2021 and April 1, 2026. 

Invest up to $24 billion (par value) in AFS securities with maturities between December 

31, 2021 and July 1, 2026. 

NATIONAL LIQUIDATION FUND

Maintain an overnight deposit target floor balance within a range of $50 million to $200 

million.

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

Maintain an overnight deposit target floor balance within a range of $10 million to $100 

million.

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

Investment Strategies

Strategy Changes for the 3rd Quarter 2021

Strategy for the 2nd Quarter 2021

Strategy for the 2nd Quarter 2021

Strategy Changes for the 3rd Quarter 2021
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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 $1,355,812 $671,451 $641,195 95% ($30,256)

Outside Services - Personnel 376,751 164,425 140,080 85% (24,345)

Travel 61,552 28,564 4,131 14% (24,433)

Buildings 111,716 52,291 41,851 80% (10,440)

Equipment 120,511 67,782 57,182 84% (10,600)

Outside Services - Other 17,688 7,994 8,597 108% 603

Other Expenses 14,607 7,945 5,158 65% (2,787)

 Total Ongoing Operations $2,058,637 $1,000,452 $898,194 90% (102,258)

Receivership Funding

Salaries & Compensation $1,008 $504 ($11) -2% ($515)

Outside Services - Personnel 168,589 19,937 16,503 83% (3,434)

Travel 793 389 10 3% (379)

Buildings 2,129 1,064 1,058 99% (6)

Equipment 1,273 637 739 116% 102

Outside Services - Other 179 89 52 58% (37)

Other Expenses 1,028 595 770 129% 175

 Total Receivership Funding $174,999 1 $23,215 $19,121 82% ($4,094)

Office of Inspector General

Salaries & Compensation $36,603 $18,251 $18,097 99% ($154)

Outside Services - Personnel 3,857 1,929 684 35% (1,245)

Travel 1,235 618 265 43% (353)

Buildings 0 0 0 0

Equipment 2,370 1,185 349 29% (836)

Outside Services - Other 1 1 0 0% (1)

Other Expenses 846 423 208 49% (215)

 Total Office of Inspector General $44,912 $22,407 $19,603 87% ($2,804)

Total FDIC Operating Budget $2,278,548 $1,046,074 $936,918 90% ($109,156)

Executive Summary of 2021 Budget and Expenditures

by Budget Component and Major Expense Category

Through June 30, 2021

(Dollars in Thousands)
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1) Executive Support includes the Offices of Minority and Women Inclusion, Communications, Ombudsman, Legislative Affairs, 

Financial Institution Adjudication, and Risk Management and Internal Controls as well as FDiTech Lab . 

2) 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, Deputy to the Chairman for 

External Affairs, Deputy to the Chairman for Financial Stability, Deputy to the Chairman for Consumer Protection and Innovation, and 

Chief Information Officer/Chief Privacy Officer.

3) The Corporate Unassigned contingency reserve includes $140 million ( $40 million in Ongoing Operations and $100 million in

Receivership Funding portions of the budget) in funds budgeted to ensure that FDIC is prepared to respond quickly to potential 

pandemic-related problems within the banking industry. Those funds are not available for use for any other purpose.

Annual YTD YTD % of YTD YTD

Division/Office Budget Budget Expenditures Budget Used Variance

 FDIC Operating Budget 

 Risk Management Supervision $ 581,168 $ 296,468 $ 258,404 87% $ (38,064)

 Information Technology 364,420 188,117 176,558 94% (11,559)

 Administration 302,464 145,985 130,014 89% (15,971)

 Depositor & Consumer Protection 185,250 92,256 84,117 91% (8,139)

 Legal 163,986 77,124 70,492 91% (6,632)

 Resolutions & Receiverships 133,065 65,130 60,045 92% (5,085)

 Complex Institution Supervision & Resolution 101,686 46,697 41,460 89% (5,237)

 Insurance & Research 63,791 31,468 28,268 90% (3,200)

 Inspector General 44,913 22,406 19,603 87% (2,803)

 Chief Information Security Officer 41,077 21,431 17,592 82% (3,839)

 Executive Support 1 51,543 23,770 17,079 72% (6,691)

 Finance 37,961 18,079 17,435 96% (644)

 Corporate University - Corporate 23,094 10,797 10,215 95% (582)

 Executive Offices 2 14,447 6,346 5,636 89% (710)

 Corporate Unassigned 3 169,683 0 0 0

 Total FDIC Operating Budget $2,278,548 $1,046,074 $936,918 90% ($109,156)

Executive Summary of 2021 Budget and Expenditures

by Division/Office

Through June 30, 2021

(Dollars in Thousands)