Federal Deposit Insurance Corporation

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

 February 21, 2020

MEMORANDUM TO: The Board of Directors

FROM: Bret Edwards

Deputy to the Chairman

and Chief Financial Officer

SUBJECT: Fourth Quarter 2019 CFO Report to the Board 

The attached report highlights the FDIC’s financial activities and results for the quarter ended 

December 31, 2019.

Executive Summary

• During the fourth quarter of 2019, the Deposit Insurance Fund (DIF) balance rose to $110.3 billion, up 

$1.4 billion from the September 30, 2019, balance of $108.9 billion. The quarterly increase was 

primarily due to $1.3 billion in assessment revenue and $531 million in interest on U.S. Treasury 

securities, partially offset by $460 million in operating expenses.

• The reserve ratio, which is the ratio of the DIF balance to estimated insured deposits, was 1.41 percent 

for the fourth quarter of 2019, unchanged from third quarter 2019. 

• During the fourth quarter of 2019, the FDIC was named receiver for three failed financial institutions. 

The combined assets at inception for these failed institutions were $179 million with estimated losses 

to the DIF as of December 31, 2019, of $9 million. The corporate cash outlay during the fourth quarter 

for these failures was approximately $156 million.

• Through December 31, 2019, overall FDIC Operating Budget expenditures were below the full-year 

budget by nine percent ($180 million). This variance was primarily the result of underspending in the 

Salaries and Compensation, Outside Services – Personnel, Travel, and Buildings and Leased Space 

expense categories in the Ongoing Operations budget component and the Outside Services –

Personnel expense category in the Receivership Funding budget component.
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I. Financial Results (See pages 6 – 7 for detailed data and charts.)

Deposit Insurance Fund 

• The DIF’s comprehensive income totaled $7.7 billion for 2019 compared to comprehensive income of 

$9.9 billion during 2018. The decline was primarily due to a $4.6 billion decrease in assessment 

revenue partially offset by a $723 million increase in negative provision for insurance losses and a $1.8 

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

• Assessment revenue was $4.9 billion for 2019, compared to $9.5 billion for 2018. The $4.6 billion 

year-over-year decrease was primarily due to the cessation of the surcharge assessment on large 

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

minimum of 1.35 percent as of September 30, 2018. In addition, assessment revenue was 

reduced in 2019 for actual and expected small bank assessment credit usage of $704 million.

• The provision for insurance losses was a negative $1.3 billion for 2019, compared to a negative $563

million for 2018. The negative provision for 2019 primarily resulted from a $575 million reduction of 

receiverships’ shared-loss liability estimates, $465 million in unanticipated recoveries from litigation 

settlements and professional liability claims by receiverships, and a $118 million reduction in future 

receivership expense estimates.

Assessments

• During December, the DIF recognized $1.2 billion of assessment revenue for the estimate of fourth 

quarter 2019 insurance coverage. Gross assessment revenue of $1.387 billion was reduced by $145 

million for expected small bank assessment credit usage. Additionally, the DIF recognized a $35 million 

adjustment for higher-than-estimated collections for the third quarter 2019 insurance coverage, which 

increased assessment revenue.

• On December 30, 2019, the FDIC collected $1.1 billion in DIF assessments for third quarter 2019 

insurance coverage.

II. Investment Results (See pages 8 – 9 for detailed data and charts.)

DIF Investment Portfolio

• On December 31, 2019, the total liquidity (also total market value) of the DIF investment portfolio stood 

at $107.0 billion, up $8.1 billion from its December 31, 2018, balance of $99.0 billion. During the year, 

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

resolution-related outlays and operating expenses.

• On December 31, 2019, the DIF investment portfolio’s yield was 1.98 percent, down 7 basis points 

from its 2.05 percent yield on December 31, 2018. The new Treasury securities purchased during the 

year had lower yields than the maturing securities’ yields.

• In accordance with the approved fourth quarter 2019 DIF portfolio investment strategy, staff purchased 

a total of 11 short-maturity conventional Treasury securities. The 11 securities had a total par value of 

$12.0 billion, a weighted average yield of 1.741 percent, and a weighted average maturity of 1.06 

years.
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III. Budget Results (See pages 10 – 11 for detailed data.)

Approved Budget Modifications

The 2019 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other officials the 

authority to make certain modifications to the 2019 FDIC Operating Budget. The following budget 

reallocations were approved during the fourth quarter in accordance with the authority delegated by the 

Board of Directors.

• In October, the CFO approved a budget realignment of $1.2 million in the Outside Services –

Personnel budget of the Ongoing Operations budget component from the Office of CIO Management 

Services (OCMS) to the Division of Information Technology (DIT). This change corrected a 

misalignment of funds that occurred earlier in the year in connection with the reorganization that 

separated OCMS from DIT. 

• In December, the CFO approved an increase of $2.4 million in the CIO Council budget that was 

reallocated from the Corporate Unassigned contingency reserve. This increase addressed projected 

budget shortfalls related to the Control Totals Module Modernization and ALPHA-Rex projects, the 

Backup Data Center project, and other CIO Council projects.

• In early January 2020, the CFO approved budget realignments among several organizations in the 

Salaries and Expense category of the Ongoing Operations budget component to address projected 

funding shortfalls in certain organizations due to employee details and other factors. Small budget 

increases were also approved in the Travel expense category for the Office of the Ombudsman 

($76,000) and the Office of Financial Institution Adjudication ($7,246) to cover unbudgeted fourth 

quarter travel expenses and in the Other expense category for the Office of Chief Information Security 

Officer ($15,616) to cover higher-than-budgeted expenses for employee Professional Learning 

Accounts. All of these increases were funded by reallocations from the Corporate Unassigned 

contingency reserve.

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

Following these fourth quarter budget modifications, the balances in the Corporate Unassigned 

contingency reserves as of year-end 2019 were $7,756,292 in the Ongoing Operations budget component 

and $19,313,320 in the Receivership Funding budget component. This unused budget authority expired at 

the end of the year.

Approved Staffing Modifications

The 2019 Budget Resolution delegated to the CFO the authority to modify approved 2019 staffing 

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

2019 FDIC Operating Budget. In October, the CFO approved an increase of four authorized permanent 

positions and the realignment of three authorized permanent positions within the Executive Offices. These 

realignments supported new Executive Office organizational structures approved by the Board of Directors 

in conjunction with amendments to the Bylaws of the Federal Deposit Insurance Corporation.

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

Significant spending variances for the year ending December 31, 2019, are defined as those that either (1) 

exceeded the YTD budget by any amount; or (2) were under the YTD budget for a major expense category 

or division/office by an amount that exceeded $5 million and represented more than five percent of the 

major expense category or total division/office budget. 
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Significant Spending Variances by Major Expense Category

Ongoing Operations

There were significant spending variances through the fourth quarter in two major expense categories of 

the Ongoing Operations budget component. Spending in the Outside Services - Personnel expense 

category was under the YTD budget by $15.7 million, or 6 percent, and spending in the Travel expense 

category was under the YTD budget by $7.5 million, or 9 percent. 

• The variance in the Outside Services – Personnel category was attributable to underspending by 

several offices and divisions: $4.2 million in Office of Chief Information Security Officer (OCISO) due to 

delays in on-boarding specialized IT security contract personnel and the acquisition of IT security tools 

that required the processing and approval of three interagency agreements; $1.5 million in Division of 

Complex Institution Supervision and Resolution (CISR) due to delays in or the re-evaluation of planned 

contract work to focus on the transition to the new CISR organizational structure; $1.6 million in the 

Division of Administration attributable to reduced work hours for contract career counselors, contracting 

vacancies that were not filled because of the difficulty of finding qualified candidates, reduced 

contractor support requirements for several projects, and reduced payroll support costs; and $1.4 

million in the Legal Division due to lower-than-projected outside counsel support for litigation. The 

remainder of the Outside Services – Personnel variance was attributable to smaller underspending 

variances in other divisions and offices.

• The variance in the Travel expense category was primarily attributable to $4.3 million in underspending 

by Division of Risk Management Supervision and $1.9 million in underspending by the Division of 

Depositor and Consumer Protection for travel to bank examinations. This was attributable to the 

decline in the number of insured financial institutions, a corresponding reduction in the number of bank 

exams conducted, and efforts by both divisions to reduce on-site examination work. CISR also 

underspent its travel budget by $1.1 million due to lower-than-anticipated relocation expenses for 

legacy Office of Complex Financial Institutions staff as well as less-than-anticipated international and 

regular duty travel.

Receivership Funding

The Receivership Funding component of the 2019 FDIC Operating Budget included funding for expenses 

that were 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 was a significant full-year spending variance in one major expense category of the Receivership 

Funding budget component in 2019. Outside Services – Personnel expenses were $90 million, or 57 

percent, less than budgeted. This variance primarily reflected underspending by Division of Resolutions 

and Receiverships (DRR) ($39 million, or 51 percent of its 2019 budget) and the Legal Division ($31 

million, or 55 percent of its 2019 budget). DRR underspending was attributable to the absence of insured 

institution failures for which funds had been budgeted. The variance for the Legal Division was attributable 

to lower-than-projected spending for outside counsel because cases were settled before going to trial or 

did not materialize. Almost all of the remaining variance ($19 million) was attributable to unused funding in 

the Corporate Unassigned contingency reserve.

Office of Inspector General

There were three significant spending variances in the 2019 Office of the Inspector General (OIG) budget 

component. The OIG’s Salaries and Compensation budget was underspent by $5 million, or 14 percent, 

primarily due to vacancies in authorized positions. OIG overspent its budgets for Outside Services –

Personnel (over by $786,000, or 49 percent) primarily due to contracted support to assist with IT activities,

and Travel (over by $462,000, or 38%) due to unanticipated relocation expenses.
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Significant Spending Variances by Division/Office1

Six organizations had significant spending variances through the end of the year.

• DRR spent $50.3 million, or 25 percent, less than budgeted, due to the small number of insured 

institution failures. The underspending was mostly in the Outside Services – Personnel expense 

category of the Receivership Funding budget component, but substantial underspending also occurred 

in the Travel, Buildings, and Other expense categories of the Receivership Funding budget 

component.

• The Legal Division spent $39.0 million, or 20 percent, less than budgeted, mostly in the Outside 

Services – Personnel expense category in both the Ongoing Operations and Receivership Funding 

budget components due to lower-than-budgeted outside counsel expenses.

• CISR spent $6.7 million, or 17 percent, less than budgeted due primarily to underspending in the 

Salaries and Compensation, Outside Services – Personnel, and Travel expense categories of its 

Ongoing Operations budget.

• Corporate University spent $6 million, or 13 percent, less than budgeted due to small variances in 

several expense categories in both the Ongoing Operations and Receivership Funding budget 

components.

• OCISO underspent its budget by $5.8 million, or 12 percent, due to variances in the Outside Services –

Personnel and Equipment expense categories of the Ongoing Operations budget component.

• OIG underspent its budget by $5.2 million, or 12 percent. This reflected the net effect of 

underspending of $6.5 million in the Salaries and Compensation and Equipment expense categories 

and combined overspending of $1.3 million in the Outside Services – Personnel and Travel expense 

categories.

 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) 

6

The mix of the DIF 2019 Comprehensive Income components is notably different from the prior 4 years presented in 2 of the 4 

categories. Assessment Revenue is just over half of the prior 4 year average, reflecting the cessation of surcharge assessments, 

lower assessment rates, and the application of small bank credits. Earnings on the DIF investment portfolio, however, continue 

to increase, with 2019 posting a high not seen since 2008. Operating expenses have remained relatively constant, and the DIF is

still benefiting from negative provisions due to reductions in estimated losses from past failures.

Balance Sheet

Quarterly Year-Over-Year

Dec-19 Sep-19 Change Dec-18 Change

Cash and cash equivalents $ 5,991 $ 4,268 $ 1,723 $ 5,774 $ 217

Investment in U.S. Treasury securities 100,072 100,873 (801) 92,708 7,364

Assessments receivable 1,242 1,115 127 1,376 (134)

Interest receivable on investments and other assets, net 1,021 582 439 550 471

Receivables from resolutions, net 2,669 2,801 (132) 3,058 (389)

Property and equipment, net 330 317 13 329 1

Total Assets $ 111,325 $ 109,956 $ 1,369 $ 103,795 $ 7,530

Accounts payable and other liabilities 215 212 3 198 17

Liabilities due to resolutions 346 427 (81) 605 (259)

Postretirement benefit liability 289 236 53 236 53

Contingent liability for anticipated failures 94 108 (14) 114 (20)

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

Total Liabilities $ 978 $ 1,016 $ (38) $ 1,186 $ (208)

FYI: Unrealized gain (loss) on U.S. Treasury securities, net 587 586 1 (615) 1,202

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

Fund Balance $ 110,347 $ 108,940 $ 1,407 $ 102,609 $ 7,738

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

 Receivership Selected Statistics December 2019 vs. December 2018

Since 2013, the coverage 

ratio has steadily risen as a 

result of significant 

increases in interest 

revenue on U.S. Treasury 

securities (an annual 

average increase of 79%), 

nominally offset by 

increases in operating 

expenses (an annual 

average increase of 2%).

Increases in interest 

revenue on U.S. Treasury 

securities are due largely to 

steady growth in the 

investment portfolio 

balance.

Income Statement (year-to-date)

Quarterly Year-Over-Year

Dec-19 Sep-19 Change Dec-18 Change

Assessments $ 4,939 $ 3,667 $ 1,272 $ 9,527 $ (4,588)

Interest on U.S. Treasury securities 2,117 1,586 531 1,633 484

Other revenue 39 17 22 11 28

Total Revenue $ 7,095 $ 5,270 $ 1,825 $ 11,171 $ (4,076)

Operating expenses 1,796 1,336 460 1,765 31

Provision for insurance losses (1,286) (1,198) (88) (563) (723)

Insurance and other expenses 3 2 1 3 0

Total Expenses and Losses $ 513 $ 140 $ 373 $ 1,205 $ (692)

Net Income 6,582 5,130 1,452 9,966 (3,384)

Unrealized gain (loss) on U.S. Treasury securities, net 1,203 1,201 2 (136) 1,339

Unrealized postretirement benefit gain (loss) (47) 0 (47) 32 (79)

Comprehensive Income $ 7,738 $ 6,331 $ 1,407 $ 9,862 $ (2,124)

Deposit Insurance Fund

 ($ in millions) Dec-19 Dec-18 Change Dec-19 Dec-18 Change Dec-19 Dec-18 Change

Total Receiverships 248 272 (24) 0 0 0 248 272 (24)

Assets in Liquidation $ 524 $ 1,176 $ (652) $ 0 $ 2 $ (2) $ 524 $ 1,178 $ (654)

YTD Collections $ 1,341 $ 1,449 $ (108) $ 2 $ 1 $ 1 $ 1,343 $ 1,450 $ (107)

YTD Dividend/Other Pmts - $ 1,675 $ 3,252 $ (1,577) $ 0 $ 0 $ 0 $ 1,675 $ 3,252 $ (1,577)

DIF FRF ALL FUNDS

Selected Financial Data

Quarterly Year-Over-Year

Dec-19 Sep-19 Change Dec-18 Change

Cash and cash equivalents $ 923 $ 918 $ 5 $ 902 $ 21

Accumulated deficit (124,566) (124,570) 4 (124,587) 21

Total resolution equity 923 919 4 902 21

Total revenue 20 17 3 17 3

Operating expenses 1 0 1 0 1

Recovery of tax benefits (1) 0 (1) 0 (1)

Losses related to thrift resolutions 0 0 0 0 0

Net Income (Loss) $ 21 $ 17 $ 4 $ 17 $ 4

FSLIC Resolution Fund
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12/31/19 12/31/18 Change

Par Value $104,429 $99,339 $5,090

Amortized Cost $105,464 $99,063 $6,401

Total Market Value (including accrued interest) $107,024 $98,954 $8,070

Primary Reserve 1 $107,024 $98,954 $8,070

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

Yield-to-Maturity 1.98% 2.05% -0.07%

Weighted Average Maturity (in years) 1.18 1.75 -0.57

Effective Duration (in years)

 Total Portfolio 1.15 1.69 -0.54

 Available-for-Sale Securities 1.22 1.79 -0.57

 Held-to-Maturity Securities 2 not applicable not applicable not applicable

12/31/19 12/31/18 Change

FRF-FSLIC

 Book Value 3 $878 $857 $21

 Yield-to-Maturity 1.51% 2.42% -0.91%

 Weighted Average Maturity overnight overnight no change

12/31/19 12/31/18 Change

Book Value 4 $2,128 $2,988 ($860)

Effective Annual Yield 1.76% 2.46% -0.70%

Weighted Average Maturity (in days) 32 51 (19)

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 

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

National Liquidation Fund (NLF) Investment Portfolio Summary

(Dollar Values in Millions)

2

 In early August 2008, management reclassified all of the DIF portfolio's HTM securities as AFS securities effective as of 

June 30, 2008, because the FDIC could no longer assert it had the positive intent and ability to hold its HTM securities until 

their maturity dates.
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DEPOSIT INSURANCE FUND

Invest up to $19 billion (par value) in AFS securities with maturities between March 31, 

2020 and December 31, 2024. 

Invest up to $23 billion (par value) in AFS securities with maturities between June 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 first quarter of 2020.

Strategy Changes for the 1st Quarter of 2020

Strategy for the 4th Quarter 2019

Strategy for the 4th Quarter 2019

Strategy Changes for the 1st Quarter 2020

Investment Strategies
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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 $1,229,561 $1,229,560 $1,186,516 96% ($43,044)

Outside Services - Personnel 262,264 262,265 246,573 94% (15,692)

Travel 85,409 85,409 77,870 91% (7,539)

Buildings 105,792 105,792 100,761 95% (5,031)

Equipment 112,850 112,850 111,719 99% (1,131)

Outside Services - Other 16,412 16,412 15,959 97% (453)

Other Expenses 13,176 13,176 11,303 86% (1,873)

Total Ongoing Operations $1,825,464 $1,825,464 $1,750,701 96% (74,763)

Receivership Funding

Salaries & Compensation $3,761 $3,761 $2,735 73% ($1,026)

Outside Services - Personnel 156,753 156,753 66,634 43% (90,119)

Travel 3,203 3,203 1,417 44% (1,786)

Buildings 5,488 5,488 2,253 41% (3,235)

Equipment 1,153 1,153 542 47% (611)

Outside Services - Other 1,023 1,023 584 57% (439)

Other Expenses 3,619 3,619 955 26% (2,664)

Total Receivership Funding $175,000 $175,000 $75,120 43% ($99,880)

Office of Inspector General

Salaries & Compensation $37,013 $37,013 $31,779 86% ($5,234)

Outside Services - Personnel 1,595 1,595 2,381 149% 786

Travel 1,218 1,218 1,680 138% 462

Buildings 0 0 0 0

Equipment 2,686 2,686 1,484 55% (1,202)

Outside Services - Other 0 0 1 1

Other Expenses 470 470 449 96% (21)

Total Office of Inspector General $42,982 $42,982 $37,774 88% ($5,208)

Total FDIC Operating Budget $2,043,446 $2,043,446 $1,863,595 91% ($179,851)

Executive Summary of 2019 Budget and Expenditures

by Budget Component and Major Expense Category

Through December 31, 2019

(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 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, and Chief Information 

Officer.

Annual YTD YTD % of YTD YTD

Division/Office Budget Budget Expenditures Budget Used Variance

 FDIC Operating Budget 

 Risk Management Supervision $551,291 $551,291 $538,262 98% ($13,029)

 Administration 267,323 267,323 261,301 98% (6,022)

 Information Technology 241,161 241,161 234,153 97% (7,008)

 Resolutions & Receiverships 198,959 198,959 148,619 75% (50,340)

 Legal 191,093 191,093 152,112 80% (38,981)

 Depositor & Consumer Protection 179,507 179,507 173,248 97% (6,259)

 Insurance & Research 55,527 55,527 54,017 97% (1,510)

 CIO Council 54,268 54,268 54,069 100% (199)

 Chief Information Security Officer 48,111 48,111 42,297 88% (5,814)

 Inspector General 42,982 42,982 37,774 88% (5,208)

 Finance 40,740 40,740 38,400 94% (2,340)

 Complex Institution Supervision & Resolution 40,581 40,581 33,883 83% (6,698)

 Executive Support 1 33,271 33,271 31,086 93% (2,185)

 Corporate University - Corporate 26,349 26,349 23,408 89% (2,941)

 Corporate University - CEP 20,939 20,939 17,838 85% (3,101)

 Executive Offices 2 13,548 13,548 12,834 95% (714)

 Complex Financial Institutions 10,726 10,726 10,294 96% (432)

 Corporate Unassigned 27,070 27,070 0 0% (27,070)

 Total FDIC Operating Budget $2,043,446 $2,043,446 $1,863,595 91% ($179,851)

Executive Summary of 2019 Budget and Expenditures

by Division/Office

Through December 31, 2019

(Dollars in Thousands)