I 

MANAGEMENT’S 

DISCUSSION AND 

ANALYSIS 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

Overview 

During 2021, the FDIC continued to fulfill its mission-critical responsibilities, while addressing 

challenges related to the COVID-19 pandemic. In addition, the agency worked to further 

strengthen the banking system, modernize its approach to supervision, and increase 

transparency surrounding its programs. The FDIC also continued to engage in several 

community banking and community development initiatives. 

Cybersecurity remained a high priority for the FDIC in 2021; the agency worked to strengthen 

its infrastructure resiliency, manage information security risks, enhance data governance, 

and modernize information technology. This Annual Report highlights these and other 

accomplishments achieved during the year. 

Deposit Insurance 

As insurer of bank and savings association deposits, the FDIC must continually evaluate and 

effectively manage how changes in the economy, financial markets, and banking system affect 

the adequacy and the viability of the Deposit Insurance Fund (DIF). 

Long-Term Comprehensive Fund Management Plan 

In 2010, the FDIC developed a comprehensive, long-term DIF management plan 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. 

Under this plan, to increase the probability that the fund reserve ratio (the ratio of the fund 

balance to estimated insured deposits) would reach a level sufficient to withstand a future 

crisis, the FDIC Board set the Designated Reserve Ratio of the DIF at 2.0 percent. The FDIC 

views the 2.0 percent Designated Reserve Ratio as a long-term goal and the minimum level 

needed to withstand future crises of the magnitude of past crises. In December 2021, the 

Board voted to maintain the 2.0 percent ratio for 2022. 

Additionally, as part of the long-term DIF management plan, the FDIC suspended dividends 

indefinitely when the fund reserve ratio exceeds 1.5 percent. In lieu of dividends, the plan 

prescribes progressively lower assessment rates that will become effective when the reserve 

ratio exceeds 2.0 percent and 2.5 percent. 

State of the Deposit Insurance Fund 

The DIF balance continued to grow through 2021, as it has every quarter since the end of 2009, 

driven primarily by assessment revenue. Growth in the fund balance was offset by strong 

growth in insured deposits due to additional fiscal stimulus. The fund reserve ratio was 1.27 

percent at September 30, 2021, three basis points lower than the previous year. 

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Restoration Plan 

Extraordinary growth in insured deposits during the first and second quarters of 2020 

caused the DIF reserve ratio to decline below the statutory minimum of 1.35 percent as of 

June 30, 2020. In September 2020, the FDIC Board of Directors adopted a Restoration Plan 

to restore the reserve ratio to at least 1.35 percent within eight years, absent extraordinary 

circumstances, as required by the Federal Deposit Insurance (FDI) Act. The Restoration Plan 

requires the FDIC to update its analysis and projections for the DIF balance and reserve ratio at 

least semiannually. 

In 2021, insured deposit growth decelerated compared to the extraordinary growth 

experienced in the first half of 2020, but remained above average in the first quarter of 2021 

due to subsequent additional fiscal stimulus and continued elevated savings rates. During 

the second and third quarters of 2021, insured deposits grew in line with recent historical 

averages. In its June and December 2021 semiannual updates, the FDIC continued to project 

that the reserve ratio, while subject to uncertainty, would return to the statutory minimum 

level of 1.35 percent by September 30, 2028. 

Supervision 

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 financial institutions, 

protects consumers’ rights, and promotes community investment initiatives. 

EXAMINATION PROGRAM 

The FDIC’s bank examination efforts are at the core of its supervisory program. As of 

December 31, 2021, the FDIC was the primary federal regulator for 3,135 FDIC-insured, statechartered 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, 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 table on the following page illustrates the number of examinations by type, conducted 

from 2019 through 2021. 

During the course of 2021, the FDIC conducted 1,268 statutorily required risk management 

examinations, and conducted all required follow-up examinations for FDIC-supervised 

problem institutions, within prescribed time frames. The FDIC also conducted 1,100 

statutorily required CRA/consumer compliance examinations (740 joint CRA/consumer 

compliance examinations, 358 consumer compliance-only examinations, and two CRA-only 

examinations). In addition, the FDIC performed 2,831 specialty examinations, including 

statutorily required reviews of compliance with Bank Secrecy Act (BSA) and Anti-Money 

Laundering (AML) requirements, within prescribed time frames. 

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FDIC Examinations 

2021 2020 2019 

Risk Management (Safety and Soundness): 

State Nonmember Banks 1,139 1,219 1,310 

Savings Banks 129 125 148 

State Member Banks 0 0 0 

Savings Associations 0 0 0 

National Banks 0 1 0 

Subtotal Risk Management Examinations 1,268 1,345 1,458 

CRA/Consumer Compliance Examinations: 

Consumer Compliance/Community 

Reinvestment Act 740 805 933 

Consumer Compliance-only 358 221 210 

CRA-only 2 3 4 

Subtotal—CRA/Compliance Examinations 1,100 1,029 1,147 

Specialty Examinations: 

Trust Departments 275 308 313 

Information Technology and Operations 1,271 1,345 1,466 

Bank Secrecy Act 1,285 1,372 1,491 

Subtotal—Specialty Examinations 2,831 3,025 3,270 

TOTAL 5,199 5,399 5,875 

Risk Management 

All risk management examinations have been conducted in accordance with statutorily 

established time frames. As of September 30, 2021, 46 insured institutions with total assets 

of $50.6 billion were designated as problem institutions (i.e., institutions with a composite 

CAMELS1

 rating of 4 or 5) for safety and soundness purposes. By comparison, on September 

30, 2020, there were 56 problem institutions with total assets of $53.9 billion. This represents 

an 18 percent decrease in the number of problem institutions and a 6 percent decline in 

problem institution assets. 

For the 12 months ended September 30, 2021, 19 institutions with aggregate assets of $2.6 

billion were removed from the list of problem financial institutions, while 9 institutions 

with aggregate assets of $1.7 billion were added to the list. The FDIC is the primary federal 

regulator for 27 of the 46 problem institutions, with total assets of $3.5 billion. 

1

 The CAMELS composite rating represents an institution’s adequacy of Capital, quality of Assets, capability of 

Management, quality and level of Earnings, adequacy of Liquidity, and Sensitivity to market risk, and ranges from 

“1” (strongest) to “5” (weakest). 

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MANAGEMENT’S DISCUSSION AND ANALYSIS 

In 2021, the FDIC’s Division of Risk Management Supervision (RMS) initiated 78 formal 

enforcement actions and 60 informal enforcement actions.® Enforcement actions against 

institutions included, but were not limited®to, seven actions under Section 8(b) of the FDI 

Act, one of which was a notice of charges, and 60 memoranda of understanding (MOUs). No 

civil money penalties or Section 39 Compliance Plans were issued. Of these enforcement 

actions against institutions, 13 MOUs were based, in whole or in part, on apparent violations 

of BSA/AML laws and regulations. In addition, enforcement actions were also initiated against 

individuals. These actions included, but were not limited to, 25 removal and prohibition 

actions under Section 8(e) of the FDI Act (21 consent orders and four notices of intention to 

remove/prohibit), one action under Section 8(b) of the FDI Act, and 12 civil money penalties 

(CMPs) (eight orders to pay and four notices of assessment). 

The FDIC continues its risk-focused, forward-looking supervision program by assessing risk 

management practices during the examination process to address risks before they lead to 

financial deterioration. Examiners make supervisory recommendations, including Matters 

Requiring Board Attention (MRBA), in Reports of Examination to address these risks. RMS met 

its goal of following up on at least 90 percent of MRBAs within six months of transmittal of the 

Report of Examination. In addition, RMS implemented a new tracking system to gather more 

information about the subject of MRBAs, which will aid supervisory planning going forward. 

During the COVID-19 pandemic, the FDIC adapted existing processes for virtual operations 

and created new processes and capabilities to address emerging needs. The agency is 

currently identifying and further promoting efficient and cost-effective business processes 

by documenting lessons learned and best practices from virtual examinations, as well as 

internal processes adapted to complete and process work, train and manage personnel, and 

communicate effectively across all levels remotely. These review activities include both an 

internal project to gather feedback from FDIC personnel and a Request for Information (RFI) 

that obtained information and comments from financial institutions for which the FDIC is the 

primary federal regulator. 

EXAMINATION PROGRAMS 

Well-managed banks engaged in traditional, non-complex activities receive periodic, point-intime safety and soundness and consumer protection examinations that are carried out over 

a few weeks, while the very largest FDIC-supervised institutions (generally, those with total 

assets of $10 billion or greater) are subject to continuous safety-and-soundness supervision 

and ongoing examination carried out through targeted reviews during the course of an 

examination cycle. 

Point-in-Time Examinations 

Approximately 98 percent of all FDIC-supervised institutions are examined under the pointin-time examination program. Risk management point-in-time examinations are conducted 

every 12 to 18 months, generally on an alternating basis with the appropriate State banking 

department. Prior to the pandemic, point-in-time examinations began with the examinerin-charge conducting an examination planning process on an off-site basis, followed by an 

on-site component with the examination team traveling to the institution and engaging 

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with bank management. Examiners then completed their work off-site and submitted their 

findings to their Regional Office case manager for review, finalization, and presentation to 

institution management. Since March 16, 2020, nearly all examination activity has occurred 

off-site. The FDIC is planning for a resumption of regular on-site examination activity as health 

conditions allow. It sought feedback during the year from financial institution management 

and examiners about lessons learned from off-site work that could be leveraged going forward 

to allow examiners to conduct a greater amount of examination activity off-site than the prepandemic period. 

Continuous Examination Programs 

Risk management continuous examinations are conducted throughout an annual examination 

cycle by a dedicated team of examiners working jointly with the appropriate State banking 

department. The examination team produces examination findings throughout the cycle 

after the completion of various targeted reviews of specific risk areas and a roll-up report of 

examination at the end of the annual examination cycle. Prior to the pandemic, dedicated 

examination teams typically worked on-site at the financial institution while conducting 

targeted reviews and off-site while reviewing materials or conducting ongoing supervision. As 

with the point-in-time examination program, dedicated examination teams have completed 

nearly all continuous examinations off-site since March 16, 2020. The FDIC is planning for a 

resumption of on-site examination activity as health conditions allow. 

The number of institutions subject to continuous examinations has grown over the past few 

years as a result of both organic growth and merger-related activity. Given changes in industry 

structure and the number of large institutions supervised, RMS conducted a holistic review of 

its continuous examination program during 2021, focusing on thresholds, staffing, knowledge 

transfer, and supervisory planning. RMS will implement changes to the program over the 

course of 2022 based on this review. 

Off-Site Monitoring 

The FDIC utilizes off-site monitoring programs to supplement and guide the examination 

process. Off-site monitoring programs can provide an early indication that an institution’s 

risk profile may be changing. The FDIC has developed a number of off-site monitoring tools 

using key data from institutions’ quarterly Reports of Condition and Income, or Call Reports, 

to identify institutions that are experiencing rapid loan growth or reporting unusual levels 

or trends in problem loans, investment activities, funding strategies, earnings structure, or 

capital levels that merit further review. 

Off-site monitoring for banks with total assets greater than $10 billion includes the quarterly 

Large Insured Depository Institution (LIDI) program, which remains the primary instrument 

for off-site monitoring of the largest institutions supervised by the FDIC. The LIDI Program 

provides a comprehensive process to standardize data capture and reporting for large and 

complex institutions nationwide, allowing for quantitative and qualitative risk analysis. 

The LIDI Program focuses on institutions’ potential vulnerabilities to asset, funding, and 

operational stresses, and supports effective large bank supervision by using individual 

institution information to focus resources on higher-risk areas, determine the need for 

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supervisory action, and support insurance assessments and resolution planning. In 2021, the 

LIDI Program covered 113 institutions with total assets of $4.2 trillion. 

Shared National Credit Program In 2021, the 

The Shared National Credit (SNC) Program is an 

interagency initiative administered jointly by the FDIC, LIDI Program

OCC, and FRB to promote consistency in the regulatory covered 113 review of large, syndicated credits, as well as to identify 

risk in this market, which comprises a large volume of institutions 

domestic commercial lending. In 2021, outstanding with total credit commitments in the SNC Program totaled more 

than $5 trillion. The FDIC, OCC, and FRB report the results assets of 

of their review in an annual joint public statement. $4.2 trillion. 

Business Process Modernization 

RMS is also engaged in a business process modernization initiative to move its technology 

systems from an applications-based environment to a human-centered, business-process 

environment. This effort will reduce the amount of manual data entry surrounding 

supervisory activities and will also allow RMS to expand its use of machine learning 

(ML) technology to identify emerging trends from examination activities, among other

improvements. 

Consumer Compliance 

As of December 31, 2021, 26 insured state nonmember institutions (collectively, with 

total assets of $25 billion), about one percent of all supervised institutions, were problem 

institutions for consumer compliance, CRA, or both. All of the problem institutions for 

consumer compliance were rated “4” for consumer compliance purposes, with none rated 

“5”. For CRA purposes, the majority were rated “Needs to Improve”; only one was rated 

“Substantial Noncompliance”. As of December 31, 2021, all follow-up examinations for 

problem institutions were performed on schedule. 

As of December 31, 2021, the FDIC’s Division of Depositor and Consumer Protection 

(DCP) conducted and substantially achieved all required consumer compliance and 

CRA examinations and, when violations were identified, completed follow-up visits and 

implemented appropriate enforcement actions in accordance with FDIC policy. In completing 

these activities, DCP achieved its internally established time standards for the issuance of final 

examination reports and enforcement actions. 

As of December 31, 2021, DCP initiated 21 formal enforcement actions and 24 informal 

enforcement actions, such as Board Resolutions and Memoranda of Understanding, to 

address consumer compliance examination findings. This included two consent orders to 

strengthen consumer compliance management systems, and 18 CMPs. The CMPs were issued 

against institutions to address violations of the Flood Disaster Protection Act and Section 5 

of the Federal Trade Commission Act for Unfair or Deceptive Acts or Practices. CMPs totaled 

approximately $2.7 million. In addition to the consumer refunds resulting from the assistance 

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provided by the FDIC’s Consumer Response Unit (see discussion under the Consumer 

Complaints and Inquiries section), consumer compliance examination findings resulted 

in banks making voluntary restitution of approximately $3.2 million to 28,936 consumers 

and Truth in Lending Act reimbursements of approximately $575,000 to more than 

5,510 consumers. 

In terms of its examination function, DCP leveraged technology as FDIC deftly ventured 

into fully offsite examinations to ensure it conducted all planned examinations in a timely 

and effective manner.® In addition, DCP developed and implemented a targeted CARES 

Act assessment for FDIC-supervised institutions that have the most significant mortgage 

servicing portfolios.® These were diagnostic in approach and took into account a bank’s good 

faith efforts designed to support consumers and comply with consumer protection laws 

and regulations. The overall purpose of this targeted assessment was to provide financial 

institutions the opportunity to share their challenges, issues, and concerns related to the 

COVID-19 pandemic and the CARES Act; and to determine the extent to which financial 

institutions effectively implemented relevant CARES Act provisions. No significant issues 

were identified through these assessments. 

Pilot Complex Bank Supervision Program 

In 2021, the FDIC developed a pilot Complex Bank Supervision Program to ensure that 

enhanced supervision is provided to institutions with higher compliance risk. The program 

consists of a three-tiered, progressive supervisory approach based on an institution’s risk 

profile and includes elements such as ongoing monitoring, risk assessments, supervisory 

plans, targeted reviews, and dedicated staff. For each tier, examiners create a supervisory 

strategy tailored to the institution that recognizes the unique characteristics of the 

business model and product offerings. In addition, the program provides institutions with 

access to a designated point of contact or examiner in charge who responds to regulatory 

questions, provides feedback, and clarifies guidance, and works collaboratively with bank 

management to identify potential risks earlier than point-in-time examinations and provides 

recommendations for appropriate action. 

Specialty Examinations 

Trust/Registered Transfer Agent/Municipal Securities Dealer/Government Securities Dealer 

The FDIC examines trust, registered transfer agent (RTA), municipal securities dealer (MSD), 

and government securities dealer (GSD) risk management practices at institutions that engage 

in these activities. As of December 31, 2021, the FDIC performed 266 trust, seven RTA, one 

MSD, and one GSD examinations. Of the 266 trust examinations, 26 were related to entities in 

the continuous examination program. 

Examiners assign a trust rating using the FFIEC Uniform Trust Interagency Rating System. 

The five trust component ratings, or MOECA, are comprised of the following components: 

management (M); operations, internal controls, and audit (O); earnings (E); compliance (C); and 

asset management (A). An overall trust composite rating is also assigned based on a careful 

evaluation of the institution’s fiduciary activities. While earnings performance is evaluated at 

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each institution, the specific earnings component rating is only assigned for institutions that 

have total trust assets of more than $100 million at the time of the examination or at a nondeposit trust company. The trust rating is considered in the assignment of the management 

component of the CAMELS rating, in accordance with the FFIEC Uniform Financial Institutions 

Rating System. 

In an effort to provide ongoing information about trust evaluations, FDIC staff periodically 

participate in fiduciary-related industry conferences. These meetings allow industry and 

regulatory participants to share information regarding current fiduciary hot topics and 

proposals and serve as a forum for discussion of trust-related topics and participant-posed 

questions. In 2021, however, many of these events were canceled due to ongoing pandemic 

restrictions. 

Where applicable, FDIC examiners also conduct RTA, MSD, and GSD examinations using 

established work programs. The results of these examination activities are incorporated into 

the report of examination and considered in assigning the management component of the 

CAMELS rating, in accordance with the FFIEC Uniform Financial Institutions Rating System. 

Information Technology and Cybersecurity 

The FDIC examines information technology (IT) risk management practices, including 

cybersecurity, at each bank it supervises as part of the risk management examination. 

Examiners assign an IT rating using the FFIEC Uniform Rating System for Information 

Technology. The IT rating is incorporated into the management component of the CAMELS 

rating, in accordance with the FFIEC Uniform Financial Institutions Rating System. 

During 2021, the FDIC conducted 1,271 IT examinations at state nonmember institutions and 

issued one enforcement action. 

The FDIC also examines the IT services provided to institutions by bank service providers. In 

addition to routine examination procedures, in 2021, the FDIC, FRB, and OCC horizontally 

reviewed a sample of service providers’ controls to defend against advanced cyber threats. 

Cybersecurity is included in the scope of every service provider examination. The FDIC, FRB, 

and OCC use the Cybersecurity Examination Procedures, developed by the agencies, to ensure 

consistent evaluation of this risk. 

The FDIC actively engages with both the public and private sectors to assess emerging 

cybersecurity threats and other operational risk issues. The information obtained from these 

engagements is shared with financial institutions and examiners, when appropriate. FDIC 

staff meet regularly with the Financial and Banking Information Infrastructure Committee, 

the Financial Services Sector Coordinating Council for Critical Infrastructure Protection, the 

Department of Homeland Security, the Financial Services Information Sharing and Analysis 

Center, other regulatory agencies, and law enforcement to share information regarding 

emerging issues and to coordinate responses. For example, in 2021, the FDIC sent financial 

institutions alerts relating to the Solarwinds, Microsoft Exchange, Apache Log4J, and other 

vulnerabilities. 

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On October 20, 2021, the FFIEC presented an examiner webinar on the FFIEC IT Handbook 

Architecture, Infrastructure, and Operations (AIO) booklet that provided an overview of the 

changes and content of the new booklet. The booklet provides expanded guidance to 

help financial institution examiners assess the risk profile and adequacy of an entity’s IT 

architecture, infrastructure, and operations, and provides examiners with fundamental 

examination expectations regarding architecture and infrastructure planning, governance 

and risk management, and operations of regulated entities. On November 3, 2021, the FFIEC 

followed up with an industry outreach webinar on the FFIEC IT Handbook AIO booklet. FDIC 

staff presented at the event. The webinars are recorded and available on the FFIEC website. 

In August, the FFIEC published new FFIEC Guidance on Authentication and Access to Financial 

Institution Services and Systems, which sets forth examples of risk management principles 

and practices for effective authentication of financial institutions’ customers, employees, 

and other users. On August 3, 2021, as part of the FFIEC IT Conference, the FFIEC delivered 

a presentation to examiners regarding the background and key provisions of the new 

Authentication Guidance. On November 3, 2021, the FFIEC presented an industry outreach 

webinar that reviewed the new Authentication Guidance. FDIC staff presented at both events. 

The IT Conference presentation and the industry outreach webinar are recorded and are also 

available on the FFIEC website. 

Bank Secrecy Act/Anti-Money Laundering 

The FDIC examines institutions’ compliance with BSA/AML requirements as part of each 

risk management examination. The FDIC also examines for BSA/AML compliance during 

examinations conducted by state banking authorities if the state lacks the authority or 

resources to conduct the examination. In total, during 2021, the FDIC conducted 1,285 BSA/ 

AML examinations. 

Throughout 2021, the FDIC, FRB, OCC, National Credit Union Administration (NCUA), and 

Treasury, including the Financial Crimes Enforcement Network (FinCEN) (collectively, the AML 

Agencies), continued to focus on improving the efficiency and effectiveness of the BSA/AML 

regime. The Anti-Money Laundering (AML) Act of 2020, which Congress passed on January 1, 

2021, also contained many requirements with similar goals, and these requirements are also 

being addressed by the AML Agencies. 

The goals of the AML Act are to: 

 Improve coordination and information sharing among the agencies tasked with 

administering and examining AML and countering the financing of terrorism (CFT) 

requirements, federal law enforcement agencies, national security agencies, the 

intelligence community, and financial institutions; 

 Modernize AML/CFT laws to adapt the government and private sector response to 

new and emerging threats; 

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 Encourage technological innovation and the adoption of new technology by 

financial institutions to counter money laundering and the financing of terrorism 

more effectively; 

 Reinforce that the AML/CFT policies, procedures, and controls of financial 

institutions must be risk-based; 

 Establish uniform beneficial ownership information reporting requirements; and 

 Establish a secure, nonpublic database at FinCEN for beneficial ownership 

information. 

Time-sensitive sections of the Act require the establishment of National AML/CFT priorities, 

the promulgation of regulations to carry out those priorities, and the promulgation of 

beneficial ownership information reporting requirements. 

In June 2021, FinCEN formally established AML/CFT Priorities in an effort to help all covered 

institutions meet their obligations under laws and regulations designed to combat money 

laundering and counter terrorist financing. Specifically, FinCEN established the following 

AML/CFT Priorities: 

 Corruption; 

 Cybercrime, including relevant cybersecurity and virtual currency considerations; 

 Foreign and domestic terrorist financing; 

 Fraud; 

 Transnational criminal organization activity; 

 Drug trafficking organization activity; 

 Human trafficking and human smuggling; and 

 Proliferation financing (the risk of raising, moving, or making available funds, 

other assets or economic resources, or financing, in whole or in part, to persons or 

entities for purposes of weapons of mass destruction proliferation, including the 

proliferation of their means of delivery or related material (including both dualuse technologies and dual-use goods for non-legitimate purposes)). 

Once FinCEN promulgates a revised program rule, the FDIC and the other federal banking 

agencies plan to amend their BSA/AML compliance program rules to conform with changes to 

FinCEN’s bank program rule. 

In June 2021, the FDIC, the other federal banking agencies, and the state bank and credit 

union regulators issued a statement to confirm that examiners will not examine banks for the 

incorporation of the AML/CFT Priorities into their risk-based BSA/AML compliance programs 

until the effective date of final revised regulations. 

Separately, the FFIEC continued to update the BSA/AML Examination Manual in 2021. In 

February, updates were published to sections regarding BSA/AML regulatory requirements, 

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the Customer Identification Program requirements, currency transaction reporting, and 

transactions of exempt persons.

2

 In June, updates were published to sections related to 

the purchase and sale of monetary instruments recordkeeping, special measures, reports 

of foreign financial accounts, and international transportation of currency or monetary 

instruments reporting. In November, updates to four additional sections were released, 

including an introduction to customer risk, independent automated teller machine owners 

and operators, politically exposed persons, and charities and non-profit organizations. 

The FFIEC expects to release additional updates in 2022. Revised sections of the manual 

reinforce instructions to examiners regarding depository institutions’ reasonably designed 

policies, procedures, and processes to meet BSA/AML requirements and safeguard institutions 

from money laundering, terrorist financing, and other illicit financial activity. The manual 

emphasizes that examiners should tailor the BSA/AML examination scope and planned 

procedures consistent with the depository institution’s money laundering and terrorist 

financing risk profile. 

Cyber Fraud and Financial Crimes 

The FDIC has undertaken a number of initiatives in 2021 to protect the banking industry from 

criminal financial activities.® These include hosting, with the Department of Justice, a virtual 

financial crimes-focused conference in May for examiners, lawyers, and others from federal 

banking agencies and law enforcement; helping financial institutions identify and shut down 

“phishing” websites that attempt to fraudulently obtain an individual’s confidential personal 

or financial information; and publishing a Consumer News article that offers tips consumers 

can use to protect themselves from ransomware and imposter scams. 

EXAMINER TRAINING AND DEVELOPMENT 

In 2021, the FDIC continued to emphasize the importance of delivering timely and effective 

examiner training programs. While on-the-job training remained the most significant portion 

of developmental activities, the historical mix of classroom, virtual instructor-led, and 

asynchronous (such as computer-based) training was modified in 2020 in response to the 

pandemic. Throughout 2021, the FDIC continued to use this modified mix, and RMS and DCP, 

in partnership with the FDIC’s Corporate University, virtually delivered all pre-commissioned 

examiner core training. 

All training and development activities are overseen by senior and mid-level management 

to ensure that FDIC staff and state regulatory partners receive training that is effective, 

appropriate, and current. The FDIC works in collaboration with partners across the 

organization and at the FFIEC to ensure emerging risks and topics are incorporated and 

2

 A bank must electronically file a Currency Transaction Report (CTR) for each transaction in currency (deposit, 

withdrawal, exchange of currency, or other payment or transfer) of more than $10,000 by, through, or to the bank. 

However, banks may exempt certain types of customers from currency transaction reporting. Pursuant to the 

Money Laundering Suppression Act of 1994, FinCEN established a process for banks to designate certain customers 

(referred to as Phase I and Phase II exempt persons) as exempt from the requirement to report currency transactions 

and exempt certain types of customers from currency transaction reporting. 

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conveyed. Training and development activities are targeted for all levels of examination staff. 

FDIC courses are mostly developed internally and delivered by a tenured and knowledgeable 

examiner instructor pool, in recognition of the essential role that peer-to-peer knowledge 

transfer plays in skills enhancement and the preservation of institutional knowledge. 

IMPROVEMENTS TO REGULATORY FRAMEWORK 

The FDIC finalized a number of key rulemakings in 2021, and initiated others, to improve the 

regulatory framework applicable to insured banks. 

Final Rulemaking on Guidance 

On March 2, 2021, the FDIC, FRB, OCC, Consumer Financial Protection Bureau (CFPB), and 

NCUA issued a final rule describing the agencies’ use of supervisory guidance and codifying 

a 2018 statement, as amended, that, among other things, clarified the differences between 

regulations and guidance. The codified statement includes provisions stating that supervisory 

guidance does not create binding, enforceable legal obligations; stating that the agencies do 

not issue supervisory criticisms (which includes, in the FDIC’s case, matters requiring board 

attention) for “violations” of or “non-compliance” with supervisory guidance; and describing 

the appropriate use of supervisory guidance. The FDIC finalized the proposal on January 19, 

2021, codified as 12 CFR Part 302, and published in the Federal Register on March 2, 2021. 

Final Guidelines on Appeals of Material Supervisory Determinations 

On January 25, 2021, the FDIC finalized a proposal to establish a new Office of Supervisory 

Appeals to independently consider and decide appeals of material supervisory determinations 

made by examiners. The new appeals process is intended to help promote consistency among 

examiners across the country, ensure accountability at the agency, and ultimately, help 

maintain stability and public confidence in the nation’s financial system.® 

On December 6, 2021, the FDIC’s new Office of Supervisory Appeals became fully operational. 

The Office is fully independent of the Divisions that have authority to issue supervisory 

determinations and is staffed with individuals who have bank supervisory or examination 

experience (e.g., retired bank examiners).® These individuals are FDIC employees whose sole 

function is hearing appeals, ensuring they have the time and capacity for the proper attention 

and diligence. 

The FDIC continues to encourage institutions to make good-faith efforts to resolve 

disagreements with examiners and/or the appropriate Regional Office. If these efforts are not 

successful, the institution can submit a request for review to the appropriate Division Director. 

Upon receiving a request for review, the Division Director will have the option of issuing a 

written decision or sending the appeal directly to the Office of Supervisory Appeals. If the 

Division Director issues a decision, institutions that disagree with the decision can appeal to 

the Office. 

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MANAGEMENT’S DISCUSSION AND ANALYSIS 

Proposed Rulemaking on Offering Circulars of State Nonmember Banks 

and Savings Associations 

On February 4, 2021, the FDIC proposed a rulemaking to rescind and remove Securities 

Offerings rules, which were transferred to the FDIC from the Office of Thrift Supervision (OTS) 

in July 2011, in connection with the implementation of Title III of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act. The FDIC also proposed to rescind its Statement of 

Policy Regarding the Use of Offering Circulars in Connection with the Public Distribution of Bank 

Securities, which provides a guide for State nonmember banks and other institutions in the 

preparation of offering circulars. 

At the same time, the FDIC proposed a new regulation regarding securities disclosures 

to be made by State nonmember banks and State savings associations (FDIC-supervised 

institutions). In so doing, the FDIC would create a unified framework for securities disclosure 

requirements applicable to FDIC-supervised institutions. The proposal also included technical 

amendments to update related regulations to remove rules pertaining to securities offerings 

for state savings associations and to rescind definitions for regulations affecting state savings 

associations that have been removed. 

Upon finalization of these rulemakings, state savings associations would be subject to the 

same set of federal regulations as state nonmember banks. The regulation will replace the 

1996 policy statement on the use of offering circulars and certain OTS regulations that are 

part of the FDIC regulations. No comment letters were received in response to this proposed 

rulemaking, and a final rule is planned for issuance in 2022. 

Proposed Rule on Tax Allocation Agreements 

On May 10, 2021, the FDIC, OCC, and FRB issued a notice of proposed rulemaking that 

would set forth standards for tax allocation agreements (Tax Allocation NPR) applicable to 

institutions in a consolidated tax filing group. The Tax Allocation NPR is consistent with the 

agencies’ existing interagency policy statement guidance, including the 1998 Interagency 

Policy Statement on Income Tax Allocation and the 2014 Addendum to the Interagency Policy 

Statement on Income Tax Allocation in a Holding Company Structure. It also includes additional 

elements that would further enhance the preservation of an IDI’s ownership rights in, and 

timely receipt of, tax refunds and equitable allocation of tax liabilities within a holding 

company structure. 

The agencies proposed that these guidelines be included in, and would be rendered 

enforceable as, an appendix to the agencies’ standards for safety and soundness that 

implements Section 39 of the Federal Deposit Insurance Act or Appendix A to FDIC’s Part 364— 

Interagency Guidelines Establishing Standards for Safety and Soundness. If adopted as final 

by the agencies, these guidelines would replace the prior guidelines from 1998 and 2014. The 

agencies are reviewing comment letters received in response to the proposed rulemaking with 

a final rule planned for issuance in 2022. 

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Proposed Rulemaking to Permit Additional Exemptions to Suspicious 

Activity Report Requirements 

On January 22, 2021, the FDIC published in the Federal Register a proposed rulemaking that 

would amend its Suspicious Activity Report (SAR) regulation to permit the FDIC to issue 

additional, case-by-case exemptions from SAR filing requirements to FDIC-supervised 

institutions. While the FDIC’s current SAR regulation allows exemptions from SAR filing 

requirements for physical crimes (robberies and burglaries) and lost, missing, counterfeit, or 

stolen securities, the proposed rule would allow the FDIC, in conjunction with the Financial 

Crimes Enforcement Network, to grant exemptions to FDIC-supervised institutions that 

develop innovative solutions to otherwise meet anti-money laundering requirements more 

efficiently and effectively. The FDIC proposed this rule as a proactive measure to address the 

likelihood that FDIC-supervised institutions will leverage existing or future technologies to 

report, share, or disclose suspicious activity in a different manner. 

The FRB, NCUA, and OCC issued similar but independent proposed rulemakings to amend 

their respective SAR regulations to permit those agencies to issue additional, case-by-case 

exemptions from SAR filing requirements to their supervised financial institutions. The FDIC 

is working with the other federal banking agencies to harmonize the language of the final 

rules for consistency and, if possible, the publication timing. A final rule is planned for 

issuance in 2022. 

Final Rule Amending Real Estate Lending Standards 

In October 2021, after considering public comments, the FDIC approved a final rule to amend 

the Interagency Guidelines for Real Estate Lending Policies. The final rule incorporated 

consideration of the capital framework established in the community bank leverage ratio 

(CBLR) rule into the method for calculating the ratio of loans in excess of the supervisory loanto-value limits (LTV Limits). The CBLR rule does not require electing institutions to calculate 

tier 2 capital or total capital. Therefore, this amendment provides a consistent approach for 

calculating the ratio of loans in excess of the supervisory LTV Limits at all FDIC-supervised 

institutions without requiring the computation of total capital. The final rule calls for 

calculating the ratio of loans in excess of the supervisory LTV Limits using tier 1 capital plus the 

appropriate allowance for credit losses in the denominator. 

Interagency Statement on Issuance of National AML/CFT Priorities 

As previously discussed, in June 2021, the FDIC, the other federal banking agencies, and 

State bank and credit union regulators issued an Interagency Statement on the Issuance of 

the AML/CFT National Priorities. This statement provides clarity for banks on the AML/CFT 

Priorities. The publication of the AML/CFT Priorities did not create an immediate change 

to BSA/AML requirements or supervisory expectations for banks. The AML Act requires the 

establishment of the AML/CFT Priorities and the promulgation of regulations regarding the 

AML/CFT Priorities. The FDIC and other federal banking agencies plan to revise the BSA/AML 

compliance program rule with conforming changes once FinCEN issues its bank program rule. 

The statement noted that banks are not required to incorporate the AML/CFT Priorities into 

their risk-based BSA/AML compliance programs until the effective date of the final revised 

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FINCEN regulations. Nevertheless, banks could consider how they plan to incorporate the 

AML/CFT Priorities into their risk-based BSA/AML compliance programs by assessing the 

potential related risks associated with the products and services offered, the customers 

served, and the geographic areas in which banks operate. 

The AML Act requires that banks incorporate the AML/CFT Priorities, as appropriate, into 

their risk-based BSA/AML compliance programs and that the banking agencies include 

those priorities as a measure by which a bank is supervised and examined. The interagency 

statement clarifies that the FDIC, other federal banking agencies, and State bank and credit 

union regulators will not examine banks for the incorporation of the AML/CFT Priorities 

into depository institutions’ risk-based BSA/AML compliance programs until the effective 

date of final revised regulations. In addition, the FDIC and other agencies are committed 

to working with FinCEN to develop any corresponding guidance and examination procedures 

for examiners. 

Computer-Security Incident Notification Rule 

In November 2021, the federal banking agencies issued a joint final rule to improve the sharing 

of information about cyber incidents that may affect the U.S. banking system. The final 

rule requires a banking organization to notify its primary federal regulator of any significant 

computer-security incident as soon as possible and no later than 36 hours after the banking 

organization determines that a cyber incident has occurred. Notification is required for 

incidents that have materially affected—or are reasonably likely to materially affect—the 

viability of a banking organization’s operations, its ability to deliver banking products and 

services, or the stability of the financial sector. 

In addition, the final rule requires a bank service provider to notify affected banking 

organization customers as soon as possible when the provider determines that it has 

experienced a computer-security incident that has materially affected or is reasonably likely to 

materially affect banking organization customers for four or more hours. 

Compliance with the final rule is required by May 1, 2022. 

Final Basel III Standards 

The FDIC continues to work with the other federal banking agencies to develop a proposed 

rulemaking that would seek comment on the implementation of the revised Basel III standards 

in the U.S. and expects to issue the proposed rulemaking in 2022. 

The final Basel III standards to be implemented in the U.S. for the largest and most complex 

institutions would address concerns regarding excessive variability in the measurement of 

risk-weighted assets across large internationally active banking institutions. 

The revisions are designed to reduce risk-weighted asset variability by enhancing the 

robustness and risk sensitivity of the standardized approach for credit risk and operational 

risk and constraining the use of internal models. In addition, the Basel III revisions will 

enhance the market risk framework by introducing a clearer boundary between the trading 

book and the banking book, an internal models approach that relies upon the use of expected 

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shortfall models, separate capital requirements for risk factors that cannot be modeled, and a 

risk-sensitive standardized approach that is designed and calibrated to be a credible fallback 

to the internal models approach. 

Office of Thrift Supervision Regulations 

Throughout 2021, the FDIC continued to streamline FDIC regulations and eliminate 

unnecessary and duplicative regulations applicable to state savings associations in order 

to improve the public’s understanding of the rules, to improve the ease of reference, and to 

promote parity between state savings associations and state nonmember banks. 

The FDIC removed rules transferred from the OTS relating to application processing 

procedures, non-discrimination requirements, requirements for subordinate organizations, 

and directives to take prompt corrective action, and made conforming amendments to its 

existing regulations to reference state savings associations as appropriate. 

The FDIC proposed to remove and rescind two remaining rules that were transferred from the 

OTS entitled Definitions for Regulations Affecting All-State Savings Associations and Securities 

Offerings. At the same time, as described more fully above, the FDIC proposed new rules 

regarding securities disclosures to be made by all covered FDIC-supervised institutions, while 

rescinding the Statement of Policy Regarding the Use of Offering Circulars in Connection with 

the Public Distribution of Bank Securities, which provides guidance to State nonmember banks. 

Upon removal of these transferred regulations, all FDIC-supervised institutions would be 

subject to the same set of regulations. 

Brokered Deposits 

At its December 2020 meeting, the FDIC Board of Directors approved a final rule that makes 

significant revisions to the brokered deposit rules applicable to financial institutions that 

are less than well-capitalized. The final rule represents the first meaningful update to the 

brokered deposit regulations since the rules were first put in place approximately 30 years 

ago. The new framework reflects the dramatic changes in technology, law, business models, 

and financial products over that time period. 

The final rule creates a more transparent and consistent regulatory approach by establishing 

bright line tests for the “facilitation” component of the deposit broker definition and a formal 

process for the application of the primary purpose exception. The final rule is intended to 

encourage innovation in how banks offer services and products to customers by reducing 

obstacles to certain types of relationships.® It continues to protect the Deposit Insurance Fund 

by ensuring that certain types of funding, including the specific types of deposits Section 29 of 

the FDIC Act was intended to address, continue to be treated as brokered deposits. The final 

rule became effective April 1, 2021. 

The FDIC has implemented a number of steps to explain the revised rules. In March 2021, the 

FDIC held a webinar to discuss the changes and the new notice and application procedures 

for certain primary purpose exceptions and launched a new Brokered Deposit webpage as 

part of the FDIC’s online Banker Resource Center. The webpage includes links to Section 29 

(Brokered Deposits) of the Federal Deposit Insurance Act, Sections 337.6 and 337.7 of the FDIC 

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Rules and Regulations containing the brokered deposit and interest rate restrictions, and the 

Final Rule as published in the Federal Register (including the Preamble to the Final Rule, that 

provides detailed explanations of the rule changes), complete instructions for filing notices 

and applications, a secure email process for submitting filings, a list of entities that have filed 

primary purpose exception notices, and a Questions & Answers page. 

SUPERVISION POLICY 

The goal of the FDIC’s supervision policy is to provide clear, consistent, meaningful, and timely 

information to financial institutions and examiners. 

Risk Management Manual of Examination Policies 

In February 2021, the FDIC updated the Risk Management Manual of Examination Policies to 

provide instructions for tracking and following up on State-issued Matters Requiring Board 

Attention. In addition, various updates were made to enhance certain controls to mitigate the 

risk of regulatory capture, expand the discussions on dominant official and key person risks, 

and provide other updates related to strategic planning and selecting and retaining competent 

management. 

Heightened Monitoring Programs 

Economic recovery from the pandemic-driven recession was uneven across industry sectors 

in 2021. The FDIC continued to operate programs developed as the pandemic unfolded to 

provide a greater line of sight into financial institutions with exposure to impacted industries 

including, but not limited to, restaurants, retail, entertainment, travel and tourism, and 

commercial real estate. 

Heightened monitoring programs have allowed examination staff to engage with management 

at exposed institutions to learn how the unprecedented nature of the pandemic has affected 

operations, assess the overall direction and level of risk in these institutions, and determine 

appropriate follow-up plans and strategies for each institution. In addition, the plans have 

helped the FDIC identify and monitor emerging pandemic-related risks across the industry 

that may require changes in supervisory approaches or policies. 

CAPITAL MARKETS AND ACCOUNTING POLICY 

London Inter-Bank Offered Rate (LIBOR) Transition 

Throughout 2021, the FDIC, in coordination with fellow regulators, participated in industry 

outreach and monitored community and regional bank readiness for the transition from 

LIBOR to alternative reference rates. FDIC monitoring includes interdisciplinary supervision 

coordination by risk management, capital markets, policy, technology, and consumer 

compliance to conduct banker outreach and communication to stay abreast of the latest 

LIBOR transition developments. The FDIC gathers information on LIBOR transition readiness 

during examinations and other contacts with supervised institutions. The data are evaluated 

across institutions to identify trends and inform the supervisory process for areas that may 

require increased oversight and supervisory attention. 

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To assist supervised institutions in the LIBOR transition, the FDIC established the LIBOR 

Transition Site on the Banker Resource Center. FDIC staff post key announcements related to 

the LIBOR transition as a resource to supervised banking institutions. 

At the June 11, 2021 meeting of the Financial Stability Oversight Council (FSOC), FDIC 

Chairman McWilliams noted that “most FDIC-supervised institutions do not have material 

LIBOR exposures. Those that do tend to be banks with total assets exceeding $10 billion and 

larger community banks that engage in commercial lending or derivative activities. These 

institutions have generally developed appropriate plans to move away from LIBOR and 

have stopped, or are on track to stop, issuing new contracts using LIBOR by year-end.” 

The Chairman reiterated that “the FDIC does not endorse any particular alternative 

reference rate.” 

To provide clarity on capital implications of the LIBOR transition, on July 29, 2021, the FDIC 

(in coordination with the FRB and OCC) issued Answers to Frequently Asked Questions (FAQs) 

about the Impact of LIBOR Transitions on Regulatory Capital Instruments. Among other things, 

the FAQs address the issue of changing a reference rate from LIBOR to an alternative rate 

and clarify that such a transition would not change the capital treatment of the instrument, 

provided the alternative rate is economically equivalent with the LIBOR-based rate. 

On October 20, 2021, the FDIC, FRB, OCC, NCUA, and CFPB, in conjunction with the state bank 

and state credit union regulators, jointly issued a statement to emphasize the expectation that 

supervised institutions with LIBOR exposure continue to progress toward an orderly transition 

away from LIBOR. The statement also included clarification regarding new LIBOR contracts, 

considerations when assessing the appropriateness of alternative reference rates, and 

expectations for fallback language.3

 The agencies reiterated that failure to prepare adequately 

for LIBOR’s discontinuance could undermine financial stability and institutions’ safety and 

soundness and create litigation, operational, and consumer protection risks. 

Current Expected Credit Losses (CECL) 

In June 2016, the Financial Accounting Standards Board (FASB) introduced the CECL 

methodology for estimating allowances for credit losses, replacing the current incurred-loss 

methodology. 

Since then, the FDIC has worked collaboratively with the FRB, OCC, FASB, Securities and 

Exchange Commission (SEC), and CSBS to answer questions regarding the implementation 

of CECL. 

 CECL became effective for primarily larger institutions or SEC filers, excluding

entities eligible to be smaller reporting companies (SRCs) starting January 1, 2020,

excluding those institutions that delayed adoption in accordance with Section

4014 of the Coronavirus Aid, Relief, and Economic Security Act, as amended by the

Consolidated Appropriations Act of 2021.

3

 Fallback language is contractual provisions that specify the trigger events for a transition to a replacement rate, the 

replacement rate, and the spread adjustment to align the replacement rate with the benchmark being replaced. 

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 For institutions that have not yet adopted CECL, the effective date for adoption

remains fiscal years beginning after December 15, 2022, including interim periods,

and thus, 2023 for most smaller reporting companies as defined by the SEC and

nonpublic companies unless early adoption is elected.

MANAGEMENT OF CREDIT RISK, LIQUIDITY RISK, 

AND INTEREST-RATE RISK 

Financial institutions showed adaptability in 2021 as economic uncertainty related to the 

COVID-19 pandemic and its variants continued. Loan deferrals, which institutions granted 

to assist borrowers as the pandemic initially unfolded, have decreased, and asset quality 

has improved. 

Limited observed credit risk concerns are centered on loans to service industries well-known 

to be impacted by the pandemic, namely hospitality and retail. While the economic outlook 

is positive, managing credit risk remains challenging as government stimulus winds down, 

forbearance periods expire, and changes in consumer and business behaviors accelerated by 

the pandemic persist. 

Deposit inflows moderated as pandemic relief programs expired, but deposit levels remain 

high compared to the pre-pandemic period. Ample liquidity, coupled with low loan demand 

outside of the Small Business Administration’s guaranteed Paycheck Protection Program, 

has contributed to a greater mix of low-yielding assets on financial institution balance sheets. 

Net interest margins have contracted to record low levels. Profitably deploying liquidity and 

limiting the adverse impacts from a “low for long” interest rate environment are among the 

industry’s top priorities. 

Through examinations and interim contacts with state nonmember institutions, FDIC staff 

regularly engage in dialogue with institution management about the need to ensure that 

their practices to manage credit risk, liquidity risk, and interest-rate risk are effective. Where 

appropriate, FDIC staff work with institutions that have significant exposure to these risks 

and encourage them to take appropriate risk-mitigating steps. The FDIC employs off-site 

monitoring to help identify institutions that may have heightened exposure to these risks 

and follows up with them to better understand their risk profiles. Throughout 2021, the FDIC 

conducted outreach and offered technical assistance regarding these risk issues. 

SUPERVISORY GUIDANCE 

Regulatory Relief - Areas Affected by Severe Storms 

During 2021, the FDIC issued 18 advisories through Financial Institution Letters to provide 

guidance to financial institutions in areas affected by hurricanes, tornadoes, flooding, 

wildfires, and other severe storms, and to facilitate recovery. In these advisories, the FDIC 

encouraged financial institutions 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. 

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Frequently Asked Questions on Suspicious Activity Reporting and Other Anti-Money 

Laundering Considerations 

In January 2021, FinCEN, the FDIC, and the other federal banking agencies issued Answers to 

Frequently Asked Questions (FAQs) Regarding Suspicious Activity Reports (SARs) and other AML 

considerations for financial institutions covered by SAR rules. 

The FAQs clarify the regulatory requirements related to SARs to assist financial institutions 

with their compliance obligations, while enabling those institutions to focus resources on 

activities that produce the greatest value to law enforcement agencies and other government 

users of BSA reporting. The FAQ answers were developed in response to Bank Secrecy Act 

Advisory Group recommendations; they neither alter existing BSA/AML legal or regulatory 

requirements, nor establish new supervisory expectations. 

Request for Information on Artificial Intelligence 

In March 2021, the FDIC, along with the FRB, OCC, CFPB, and NCUA released a RFI regarding 

financial institutions’ use of artificial intelligence (AI). The goal of the RFI is to better 

understand the use of AI by financial institutions; appropriate governance, risk management, 

and controls over AI; challenges in developing, adopting, and managing AI; and whether any 

regulatory clarifications would be helpful. 

The FDIC supports responsible innovation by financial institutions and recognizes that the use 

of new technology, such as AI, has the potential to augment decision-making and enhance 

services available to consumers and businesses. 

The initial comment period on the RFI was extended to July 1, 2021. The FDIC has reviewed 

the comment letters submitted to the FDIC and is assessing potential next steps in 

consultation with the other agencies. 

Interagency Statement on Model Risk Management for Bank Systems Supporting Bank 

Secrecy Act/Anti-Money Laundering Compliance 

In April 2021, the FDIC and other federal banking agencies, in consultation with FinCEN and 

the NCUA, issued a statement regarding industry questions on model risk management. 

The statement addressed how the risk management principles described in the Supervisory 

Guidance on Model Risk Management relate to systems or models used by banks to assist in 

complying with the BSA/AML requirements. 

Request for Information and Comment: Model Risk Management Support Compliance by 

Banks with BSA/AML and Office of Foreign Assets Control Requirements 

In conjunction with issuing the Interagency Statement on Model Risk Management for Bank 

Systems Supporting BSA/AML Compliance, the agencies published an RFI seeking comment 

on the extent to which the principles discussed in the Supervisory Guidance on Model Risk 

Management support compliance by banks with BSA/AML and Office of Foreign Assets 

Control (OFAC) requirements. Specifically, the RFI sought to enhance the understanding of 

bank practices in this area and identify issues where additional explanations may increase 

transparency and effectiveness. 

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A total of 12 comment letters were received with responses to 12 questions regarding banks’ 

use of automated AML transaction and OFAC monitoring models, as well as suggested 

enhancements to the April statement. This feedback may be considered in the context of 

AML Act, Section 6209 - Testing Methods rulemaking, which requires FinCEN, in consultation 

with federal banking agencies, to issue a rule specifying standards by which financial 

institutions must test the technology and related internal processes designed to facilitate 

BSA/AML compliance. 

Request for Information on Digital Assets 

In May 2021, the FDIC issued an RFI seeking information and comments regarding insured 

depository institutions’ current and potential digital assets activities. Specifically, the FDIC 

sought feedback regarding current and potential digital asset use cases involving insured 

institutions and their affiliates. The RFI recognized that banks are increasingly exploring 

several roles in the emerging digital asset ecosystem, and consumers are beginning to seek 

access to digital asset products and services. The FDIC understands that there are novel and 

unique considerations related to digital assets, and the RFI was intended to help inform the 

FDIC’s understanding and any potential policymaking in this area. The questions posed in the 

RFI sought information regarding digital asset use cases, risk and compliance management 

functions, and considerations for supervision, deposit insurance, and resolution. The 

comment period ended July 16, 2021. The FDIC has reviewed the 43 comment letters received 

and has used the information to inform its engagement on the crypto-asset policy sprint and 

other supervisory work.® 

Joint Statement on Crypto-Asset Policy Sprint Initiative and Next Steps 

The FDIC, along with the FRB and OCC issued a Joint Statement on Crypto-Asset Policy Sprint 

Initiative and Next Steps. First, the statement summarized the series of interagency “policy 

sprints” focused on crypto-assets, conducted by the agencies in 2021. The statement then 

provided a roadmap of future planned work. 

As described in the statement, throughout 2022, the agencies plan to provide (1) greater clarity 

on whether certain activities related to crypto-assets conducted by banking organizations are 

legally permissible, and (2) expectations for safety and soundness, consumer protection, and 

compliance with existing laws and regulations related to: 

 Crypto-asset safekeeping and traditional custody services,

 Ancillary custody services,

 Facilitation of customer purchases and sales of crypto-assets, 

 Loans collateralized by crypto-assets,

 Issuance and distribution of stablecoins, and

 Activities involving the holding of crypto-assets on balance sheet. 

The agencies also are also working to evaluate the application of bank capital and liquidity 

standards to crypto-assets. 

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President’s Working Group on Stablecoins 

On November 1, 2021, the FDIC joined the President’s Working Group on Financial Markets 

and the OCC to release a report on stablecoins to address the prudential risks of payment 

stablecoins. Among the recommendations in the report was a recommendation that Congress 

enact legislation to ensure that payment stablecoin arrangements are subject to a federal 

framework on a consistent and comprehensive basis. 

Proposed Interagency Guidance on Third-Party Relationships 

In July 2021, the FDIC, OCC, and FRB proposed interagency guidance for third-party risk 

management. The proposed guidance, if finalized, is intended as a resource to help banks 

manage their third-party relationships in a safe and sound manner and in compliance with 

applicable laws and regulations, including those related to consumer protection and security 

of customer information. The proposed guidance applies third-party risk management 

principles to the lifecycle of a bank’s relationship with a third party (other than customer 

relationships), providing detailed descriptions and examples of considerations applicable 

to all third-party relationships, including relationships with fintech companies, while 

emphasizing that a bank’s third-party risk management program should be commensurate 

with its size, complexity, risk profile, level of risk, and number of third-party relationships. 

Although the proposed guidance, if adopted, would replace the general third-party risk 

management guidance issued individually by each of the agencies (including the FDIC’s 

Guidance for Managing Third-Party Risk issued in 2008), it would not affect other specific 

third-party risk management guidance issued by the agencies, including those relating to 

information technology risks. 

The proposal was published in the Federal Register on July 19, 2021, and the agencies 

accepted comments until October 18, 2021. The FDIC received 74 comments; the three 

agencies received a total of 82 comments. The agencies are now considering those comments. 

Answers to Frequently Asked Questions about the Impact of LIBOR Transitions on 

Regulatory Capital Instruments 

As previously discussed, in July 2021, the FDIC issued answers to frequently asked questions 

about the impact of LIBOR transitions on regulatory capital instruments under 12 CFR 324. 

Among other things, the FAQs addressed the issue of changing a reference rate from LIBOR to 

an alternative rate and clarified that such a transition would not change the capital treatment 

of the instrument, provided the alternative rate is economically equivalent to the LIBOR-based 

rate. The OCC and the FRB issued similar FAQs. 

Authentication and Access to Financial Institution Services and Systems 

On August 11, 2021, the FFIEC issued new guidance entitled Authentication and Access to 

Financial Institution Services and Systems. The guidance provides financial institutions with 

examples of effective authentication and access risk management principles and practices. 

These principles and practices are for digital banking services and information systems. 

The new guidance addresses a financial institution’s risk assessment, which is critical for 

determining appropriate access and authentication practices; authentication practices for 

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a wide range of users including customers, employees, third parties, and service accounts 

accessing financial institution systems and services; and how multi-factor authentication, 

or controls of equivalent strength, can be used to effectively mitigate risks of unauthorized 

access. 

The guidance replaces the FFIEC-issued Authentication in an Internet Banking Environment 

(2005) and the Supplement to Authentication in an Internet Banking Environment (2011). 

Request for Information on the FDIC’s Supervisory Approach to Examinations 

During the Pandemic 

On August 13, 2021, the FDIC issued an RFI seeking feedback and comments from FDICsupervised financial institutions regarding the FDIC’s supervisory approach to examinations 

during the pandemic, including the impact of off-site activities on institution operations, 

the effectiveness of technology used to carry out off-site activities, and the effectiveness of 

communication methods used to support off-site activities. 

For a number of years prior to the pandemic, the FDIC had been leveraging technology 

advancements to allow examiners to conduct certain examination functions off-site that were 

previously performed on-site. Throughout the COVID-19 pandemic, examiners have continued 

the FDIC examination program despite pandemic conditions, in part by leveraging prior efforts 

and existing technology systems. 

The RFI comment period closed on October 12, 2021. The FDIC is reviewing the 20 comments 

received to identify what worked well in the off-site examination context in order to 

inform plans for future examinations, consistent with applicable law and the purpose of 

examinations. 

Research 

CENTER FOR FINANCIAL RESEARCH 

The FDIC’s Center for Financial Research (CFR) encourages, supports, and conducts innovative 

research on topics that inform the FDIC’s key functions of deposit insurance, supervision, and 

the resolution of failed banks. CFR researchers have published papers in leading banking, 

finance, and economics journals, including the American Economic Review; Journal of Money, 

Credit, and Banking; Journal of Consumer Affairs; and Journal of Financial Services Research. In 

addition, CFR researchers present their research at major conferences, regulatory institutions, 

and universities. 

The CFR also develops and maintains many financial models used throughout the FDIC, 

including off-site models that inform the examination process. CFR economists also provide 

ongoing support to RMS during on-site examinations. 

In April, the CFR hosted the FDIC’s first Academic Challenge. The FDIC Academic Challenge 

is a team competition for undergraduate students, designed to bring real-world policy 

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“The Effects of Community Banks 

on Local Economic Development.” Finalists 

 

 

 California State 

University, Fullerton; 

 State University of New 

York College at Geneseo; 

 University of Chicago; 

 University of Delaware; 

 University of North 

Carolina at Chapel Hill.

questions into the classroom and address questions concerning the banking industry. The 

topic for the 2020-2021 FDIC Academic Challenge was “The Effects of Community Banks on 

Local Economic Development.” After a first-round review of written submissions, five teams 

were selected as finalists: California State University, Fullerton; State University of New York 

College at Geneseo; the University of Chicago; the University of Delaware; and the University 

of North Carolina at Chapel Hill. The finalists participated in an all-day virtual event where 

they presented their project to a panel of five judges that included community bank CEOs, a 

university professor, and members of the organizing committee. When the teams were not 

presenting their work, they met with FDIC staff to discuss careers at the FDIC and what to 

expect in graduate school programs, including MBA, JD, and PhD programs. 

Following the presentations, the teams met with FDIC staff in a plenary session to discuss 

deposit insurance, bank resolutions, and current issues in banking regulation. At the end of 

the day, FDIC Chairman McWilliams announced the winner of the Challenge—State University 

of New York College at Geneseo—and met with the winning team. The 2021-2022 FDIC 

Academic Challenge launched in September with first-round written submissions due in 

November. 

In December, the CFR hosted the 20th Annual Bank Research Conference with the Journal 

of Financial Services Research. FDIC Chairman McWilliams provided opening remarks for 

the conference. To celebrate the 20th anniversary of the conference, there were two panel 

discussions—one to discuss the lessons learned in the past 20 years and one to look forward 

to the next 20 years. A retrospective article that discusses the impact of the first 20 years of 

the conference on policy and research communities, financial regulation, and the banking and 

finance literature is forthcoming in the Journal of Financial Services Research. 

This year’s conference paper sessions focused on safety nets, transparency, and bank 

behavior; understanding the industry and organizational impacts of fintech; COVID-19 

and financial contagion channels; the effects of banking competition on borrowers; bank 

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risk and regulation; systemic risk and bank regulation; bank funding; and climate change. 

The conference also included a virtual poster session in which authors recorded short 

presentations of their papers and a fast-track session during which authors presented six 

papers in a condensed timeframe. 

In 2021, CFR hosted four PhD students as part of the Summer Research Fellow Program. 

The program targets PhD. students who have completed their qualifying examinations and 

have well-developed research towards finishing their PhDs. Summer Research Fellows are 

encouraged to continue their dissertation work and build research relationships with FDIC 

colleagues. They participate in seminars and informal lunchtime presentations of research, 

engage with FDIC staff, and present their own research at the end of the summer. 

The Summer Research Fellows benefit from institutional knowledge of FDIC staff, CFR 

expertise on modeling, and presentation opportunities. The FDIC benefits from developing 

relationships with emerging scholars, expanding the reach of the CFR research network, and 

promoting career opportunities at the FDIC. 

In partnership with the American Economic Association Summer Program and Howard 

University, CFR hosted two undergraduate students in the summer of 2021. The summer 

experiential learning program offered the students an opportunity to apply their research 

skills to FDIC-relevant questions under the guidance of CFR economists and to develop careerlong mentoring relationships. The program aims to increase diversity in the field of economics 

and to attract a diverse workforce to related positions. 

How America Banks: Household Use of Banking and Financial Services 

Section 7 of the Federal Deposit Insurance Reform Conforming Amendments Act of 2005 

mandates that the FDIC regularly report on unbanked populations and bank efforts to bring 

individuals and families into the mainstream banking system. In response, since 2009, the 

FDIC has conducted biennial surveys to measure the banked and unbanked populations in the 

U.S. and study household use of banking and financial products and services. This effort is 

the most comprehensive analysis of its kind. The information it generates informs the FDIC, 

as well as the public, financial institutions, policymakers, regulators, researchers, academics, 

and others. 

In 2021, the FDIC finalized and administered the 2021 Survey of Household Use of Financial 

Services. The 2021 survey collected new information on how households use a wide range 

of bank and nonbank financial services and products to meet their core banking needs. In 

addition, the 2021 survey also collected information on economic events that households 

experienced since March 2020 and asked whether those events contributed to households 

becoming banked or unbanked. 

The FDIC continued to maintain a dedicated website that features survey results and data, 

and provides users with the ability to generate custom tabulations for each state and for more 

than one hundred Metropolitan Statistical Areas. The website also provides a wide range of 

preformatted information, including five-year estimates that provide additional granularity for 

state and local results. 

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National and Regional Risk Analysis 

The FDIC’s National and Regional Risk Analysis (NRRA) Branch identifies, analyzes, monitors, 

and communicates developments and key risks in the economy, financial markets, and 

banking industry that may impact FDIC-insured institutions and the DIF. As part of this work, 

NRRA publishes the Quarterly Banking Profile — a comprehensive summary of financial results 

for all FDIC-insured institutions. This report card on industry status and performance includes 

written analyses, graphs, and statistical tables. NRRA also published the 2021 Risk Review, 

summarizing key credit and market risks. 

In addition, NRRA publishes topical articles in the FDIC Quarterly. In 2021, this included 

seven articles: 

 “Farm Banks: Resilience Through Changing Conditions,” which analyzes trends in 

the agricultural sector and challenges faced by agricultural lenders; 

 “2020 Summary of Deposits Highlights,” which explains trends in bank deposit 

and branch growth; 

 “The Historic Relationship Between Bank Net Interest Margins and Short-Term 

Interest Rates,” which explores the connection between interest rates and bank 

net interest margins; 

 “Residential Lending During the Pandemic,” which follows key trends in the 

housing market and residential lending activity of banks; 

 “The Importance of Technology Investments for Community Bank Lending and 

Deposit Taking During the Pandemic,” which describes the relationship between 

community bank technology investment and lending and deposit activity during 

the pandemic; 

 “Commercial Real Estate: Resilience, Recovery, and Risks Ahead,” which assesses 

conditions in the commercial real estate sector and implications for banks; and 

 “Implications of Record Deposit Inflows for Banks During the Pandemic,” which 

provides insight on the opportunities and challenges presented to banks by the 

increased liquidity from deposit inflows during the pandemic. 

Innovation/Financial Technology 

The FDIC continuously monitors developments in technology to further advance the mission 

of the FDIC and better understand how it may affect the financial industry. 

FDITECH and FDIC Emerging Technology Steering Committee 

In 2021, the FDIC’s Office of Innovation — or FDITECH — continued its work to encourage 

innovation and partnerships at community banks. FDITECH was announced and established 

by Chairman McWilliams in 2019, with the following mission: 

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 Engage bankers, fintechs, technologists, and other regulators on innovations that 

will lay the foundation for banking’s future; 

 Conduct “tech sprints” and pilot projects to test emerging technologies in 

cooperation with states and affected federal regulators; 

 Support and promote the adoption of new technologies by financial institutions, 

particularly at community banks; and 

 Expand banking services to the unbanked, underbanked, and individuals in 

underserved communities through new technologies. 

In 2021, FDITECH took the following steps toward fulfilling that mission: 

 In February 2021, the FDIC named its first Chief Innovation Officer, charged with 

leading the FDIC’s efforts to promote the adoption of innovative technologies 

across the financial services sector. In May 2021, the FDIC also named its first 

Deputy Director of the Office of Innovation. 

 In February 2021, the Chief Innovation Officer began a bank-focused “Listening 

Tour” with discussions focused on innovation, inclusion, data, and efficiency 

opportunities. The Listening Tour expanded to include Congress, technology 

companies, fintechs, trade associations, and interest groups. 

 From February to year-end 2021, FDITECH participated in a variety of policy 

discussions focused on emerging technologies (e.g., AI, Quantum Computing, 

Digital Assets), as well as cybersecurity, internally to the FDIC, across the federal 

banking agencies, and across other federal agencies. Discussions centered on 

multi-factor authentication/authorization, better third-party technology risk 

management, and advancing cryptographic systems to support coming changes 

due to Quantum Computing (i.e., Post-Quantum Encryption). 

 In the second and third quarters of 2021, FDITECH hosted a series of virtual “Office 

Hours” to hear directly from a range of bank-focused stakeholders regarding 

current and evolving technological innovations in the business of banking. 

During the same period, the Chief Innovation Officer hosted more than two 

dozen roundtables focused on digitization, data access and ownership, artificial 

intelligence and machine learning, and personalization of the banking experience. 

 In June 2020, the FDIC announced a rapid prototyping competition, a type 

of procurement process tech sprint, to accelerate the adoption of modern 

technological tools to help financial institutions, particularly community banks, 

provide more timely and granular data to the FDIC in a more effective and efficient 

manner. In addition, these new tools will help the FDIC gain greater insight into 

the financial health of these institutions and allow for more efficient supervision. 

Phase one began in August 2020 with more than 30 technology firms from across 

the country invited to participate in the competition. With some formed into 

teams, the competitors developed proposed solutions that were presented 

to the FDIC for consideration. Competitors represent leaders in the financial 

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MANAGEMENT’S DISCUSSION AND ANALYSIS 

services, data management, data analytics, and AI/ML fields. In October 2020, 15 

competitors advanced to the second phase of the competition, presenting their 

initial prototypes. The FDIC selected 11 companies in January 2021 to compete 

in the third and final phase of the rapid prototyping competition. In March 2021, 

vendors presented their final prototypes and, by August 2021, four companies 

were selected to submit proposals moving into the pilot phase, which will be led 

by FDITECH. 

 Starting in April 2021, the Chief Innovation Officer held five podcast talks − 

Banking on Innovation, Engineering Innovation in the Banking System, Building 

a More Resilient Banking System, Protecting the Banking System, and The Age 

of Quantum Banking − under the Banking on Innovation program, which can be 

found on the FDIC’s public website. 

 In May 2021, FDITECH partnered with Duke University’s Pratt School of Engineering 

to explore new technology and financial inclusion. FDITECH and Duke University 

started a 10-week project with participants from the Master of Engineering in 

Financial Technology program to explore smart contracts risk analysis, digital 

assets, and financial inclusion, culminating in three team presentations in 

August 2021. 

 In July 2021, FDITECH held its first Innovation Town Hall, discussing tech-related 

activities and upcoming innovations. FDITECH also debuted internal open 

channels of communication for FDIC staff to ask questions and discuss new 

technologies. 

 FDITECH held two tech sprints during 2021, bringing together a diverse set of 

stakeholders in a collaborative setting. During August and September, the 

“Breaking Down Barriers: Reaching the Last Mile of the Unbanked” tech sprint was 

hosted by FDITECH with eight participant teams presenting solutions. The tech 

sprint had more than 20,000 combined views on LinkedIn, Twitter, and the FDIC 

website and more than 500 attendees at Demo Day. While some teams expanded 

on existing solutions, three of the teams created new solutions that are planned 

for release to the market within the next six months. The second tech sprint, 

“From Hurricanes to Ransomware: Measuring Resilience in the Banking World,” 

was held from September to October with six participating teams. 

 In the third and fourth quarters of 2021, FDITECH prototyped a fully functional 

cloud data analytical and analysis environment that supports AI/ML. The 

environment supports dynamically and automatically pulling in data from 

various data sources, loading, processing, and enriching the data. FDITECH built 

a pilot first-iteration bank-failure model using neural networks and tensor flow 

constructed with public Call Report data and script-configured AI/ML. FDITECH 

dynamically generates push notification alerts from model results, and employed 

a commercial off-the-shelf data masking and synthetic data generation solution to 

successfully generate synthetic datasets using public Call Report data. 

 In the third and fourth quarters of 2021, FDITECH collaborated with the FDIC’s 

Chief Information Officer Organization to build consensus on an innovative data 

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strategy for the FDIC, including Azure Adoption Program, Cloud Data Management 

and Analytics program, and the mainframe exit. 

 In the fourth quarter 2021, FDITECH formed a divisional outreach and governance 

program. Through this program, FDITECH worked with the Chief Financial Officer 

Organization to help them reach their goals using innovative technologies and 

strategies. 

 In October 2021, FDITECH launched the FDIX program. FDIX is an internal ideation 

program to build on existing technological infrastructure to improve processes 

within the FDIC. 

 In December 2021, FDITECH hosted a public live stream event with over 1,600 

viewers titled Banking and Fintech: “The Future is Now” to discuss the future of 

financial innovation and the potential impacts to financial markets, technology, 

and diversity, equity, and inclusion. The event was broken down into three distinct 

panels made up of industry innovators, leaders, and key market stakeholders. 

In addition to FDITECH, significant resources have been dedicated to identify and understand 

emerging technology and ensure the FDIC is prepared to address the changing landscape in 

financial services. Since 2016, these efforts have been led by the FDIC’s Emerging Technology 

Steering Committee, which is supported by two staff-level working groups. The committee 

is comprised of the Directors of RMS, DCP, the Division of Insurance and Research (DIR), the 

Division of Resolutions and Receiverships (DRR), and the Division of Complex Institution 

Supervision and Resolution (CISR), as well as the General Counsel, Chief Financial Officer, 

Chief Innovation Officer, Chief Risk Officer, Chief Information Officer, and the Deputy to the 

Chairman for Consumer Protection and Innovation. 

In 2021, the Emerging Technology Steering Committee continued work on its established 

objectives: 

 Comprehend, assess, and monitor the current emerging technology activities, 

risks, and trends; 

 Evaluate the projected impact of emerging technology on the banking system, the 

deposit insurance system, effective regulatory oversight, economic inclusion, and 

consumer protection; 

 Oversee internal working groups monitoring particular aspects of emerging 

technology; 

 Recommend follow-up actions, as appropriate, and monitor implementation; and 

 Help formulate strategies to respond to opportunities and challenges presented 

by emerging technology, and to ensure developments align with regulatory goals. 

In 2020, the Legal Division formed the Financial Technology and Innovation Group within the 

Office of the General Counsel.® That group houses the Fintech Innovation Team of attorneys, 

which focuses on legal issues facing both the FDIC and its supervised and insured banks and 

savings associations arising from emerging forms of technology, innovative banking products 

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT   
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and services, new approaches to the business of banking, and adapting relationships with 

third parties.® The team’s mission focuses on not only providing direct legal services and 

support to the other Divisions and FDITECH, but also advising on legal policy in an area of 

law that is dynamic and still developing. Through 2021, this team has continued to support 

FDITECH’s Tech Sprints and other programs, as well as provide direct legal support to several 

interagency bank activity, crypto-asset, and stablecoin policy initiatives. The team has 

contributed to, and at times led, various innovation efforts, such as the FDIC’s supervisory 

approach toward bank engagement with digital assets and related technologies; the 

development of an interagency guide as a resource for community banks when considering 

entering into business relationships with fintech companies (Conducting Due Diligence on 

Financial Technology Companies: A Guide for Community Banks); and the potential use of 

consensus standards in banks’ due diligence of fintech firms, products, and services. 

Partnerships 

The FDIC also participates on several working groups related to financial technology: 

 The Basel Committee on Banking Supervision’s Financial Technology Group, 

which focuses on the impact of financial technology on banks’ business models, 

risk management, and implications for bank supervision; 

 The Financial Stability Oversight Council Digital Assets Working Group, which 

is examining potential policy areas as they relate to digital assets and the 

application of distributed ledger technology; 

 The Interagency Group on Digital Assets, where agencies exchange information 

about digital asset and related developments; 

 An interagency fintech discussion forum, which focuses on issues related to 

consumer compliance; 

 The Global Financial Innovation Network; 

 The US-UK Financial Innovation Partnership, which focuses on the exchange of 

information and policy discussions between U.S. and UK regulators; and 

 The Financial Stability Board Financial Innovation Network, which monitors 

various innovative developments in financial markets, including innovation in 

financial technology. 

FDIC Staff Education 

In 2021, as part of an initiative to provide staff training and knowledge transfer, the FDIC held 

a series of webinars for FDIC staff on a range of emerging technology topics that the FDIC 

has been monitoring through the Emerging Technology Steering Committee for a number of 

years. Specifically, those topics included Payments Disintermediation, Consumer-Authorized 

Data Access, Digital Assets, Digital Only/Neo–Banks, and Digital Payments. The webinars 

are recorded and made available “On Demand” to FDIC staff, along with recordings of prior 

webinars on AI/ML and Application Programming Interfaces and Background Notes on various 

emerging technology topics. 

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Community Banking 

Community banks provide traditional, relationship-based banking services in their local 

communities. As the primary federal supervisor for the majority of community banks, the 

FDIC has a particular responsibility for the safety and soundness of this segment of the 

banking system. 

Community banks (as defined for FDIC research purposes) made up 91 percent of all FDICinsured institutions on September 30, 2021. While these banks hold just 12 percent of 

banking industry assets, community banks are of critical importance to the U.S. economy 

and local communities across the nation. Community banks hold 39 percent of the industry’s 

small loans to farmers and businesses, making them the lifeline to entrepreneurs and small 

enterprises of all types. They hold the majority of bank deposits in U.S. rural counties and 

micropolitan counties with populations up to 50,000. In fact, as of June 2021, community 

banks held more than 75 percent of deposits in 1,144 U.S. counties. In more than 600 of 

these counties, the only banking offices available to consumers were those operated by 

community banks. 

Community Banking Research 

The FDIC pursues an ambitious, ongoing agenda of research and outreach focused on 

community banking issues. In conjunction with the 2012 and 2020 community banking 

studies, FDIC researchers have published more than a dozen additional studies on topics 

ranging from community bank technology investment to small business financing. 

The FDIC Quarterly Banking Profile includes a section explicitly focused on community bank 

performance, providing a detailed statistical picture of the community banking sector that can 

be accessed by analysts, other regulators, and bankers themselves. The most recent report 

shows that net income at community banks increased 38.5 percent on a merger-adjusted 

basis in the first nine months of 2021 compared with the first nine months of 2020, reflecting 

improvement in the economy. The increase in net income during the first nine months of 2021 

was due to large decreases in credit loss provisions due to the real and anticipated economic 

and financial improvement as the U.S. emerges from the COVID-19 pandemic. 

The long-term trend of consolidation has done little to diminish the role of community banks 

in the banking industry. For example, while loans at community banks declined in the first 

nine months of 2021, on a merger-adjusted basis, loan growth at community banks exceeded 

the growth at noncommunity banks every year between 2012 and 2020. The decline in loans 

at community banks reflects the pay-downs and forgiveness of Paycheck Protection Program 

(PPP) loans originated in 2020 and early 2021. If PPP loans were excluded, in the first nine 

months of 2021, community banks would have reported annual loan growth of 5.1 percent and 

noncommunity banks would have reported loan growth of 2.7 percent. More than 86 percent 

of the community banks that merged between September 2020 and September 2021 were 

acquired by other community banks. 

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT   
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

-10

-5

0

5

10

15

2021* 

MANAGEMENT’S DISCUSSION AND ANALYSIS 

COMMUNITY BANK LOAN GROWTH HAS EXCEEDED GROWTH 

AT NONCOMMUNITY BANKS FOR NINE CONSECUTIVE YEARS 

Merger Adjusted Annual Growth in Total Loans and Leases 

15% 

12.3% 

10% 

5% 

0% 

-5% 

-10% 

-15% 

-0.9% 

2.0% 

3.4% 2.9% 

5.0% 

2.1% 

8.6% 

4.7% 

8.6% 

6.0% 

3.9% 

7.7% 

4.1% 

6.5% 

3.3% 

2.3% 

5.5% 5.1% 

0.3% 

2.7% 

-1.2% 

8.3% 

4.8% 

-8.9% 

7.0% 

9.5% 

11.2% 

9.3% 

-2.1% 

-0.3% 

-2.3% 

2.1% 

9.0% 

Source: FDIC. 

Note: Data as of third quarter for 2021 and as of year-end for all other years. 2021* hashed bars represent growth 

excluding paycheck Protection Program Loans. 

Community Bank Advisory Committee 

The FDIC’s Advisory Committee on Community Banking is an ongoing forum for discussing 

current issues faced by community banks and receiving valuable feedback from the industry. 

The Committee, which met virtually three times during 2021, is composed of as many as 18 

community bank executives from around the country. It is a valuable resource for information 

on a wide range of topics, including examination policies and procedures, capital and other 

supervisory issues, credit and lending practices, deposit insurance assessments and coverage, 

and regulatory compliance issues. 

 At each of the 2021 Advisory Committee meetings, there was a discussion of local 

banking conditions and supervisory issues, such as cybersecurity resilience, multi-factor 

authentication, and the future approach to examinations, as well as updates from the Minority 

Depository Institutions Subcommittee and the FDIC’s Office of Innovation (FDITECH). Further, 

at the July 2021 meeting, there was a financial inclusion update, a cybersecurity discussion, 

and a presentation from the FDIC Ombudsman on activities from 2019 to 2020. At the April 

and November 2021 meetings, FDIC staff also discussed community banking research. 

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Noncommunity Banks 
ANNUAL REPORT  9


MANAGEMENT’S DISCUSSION AND ANALYSIS 

Advisory Committee of State Regulators 

The FDIC’s Advisory Committee of State Regulators is another mechanism for state regulators 

and the FDIC to discuss current and emerging issues that have potential implications for the 

regulation and supervision of state-chartered financial institutions. The Advisory Committee 

members include regulators of state-chartered financial institutions from across the United 

States as well as other individuals with expertise in the regulation of state-chartered financial 

institutions. The Advisory Committee met virtually twice in 2021. During both meetings, the 

Committee discussed state banking conditions and state-federal coordination. In addition, 

FDIC staff provided information on FDIC research relating to community banking, as well as 

FDITECH. At the October 2021 meeting, FDIC staff also provided an update on minority and 

community development banking, and cybersecurity supervision initiatives. 

De Novo Banks 

In 2021, the FDIC continued processing deposit insurance applications, meeting with 

applicants to discuss the application process and specific proposals, and making application 

data available on the public website. The FDIC has provided several resources to aid 

organizers in developing deposit insurance proposals, including draft proposals. Interested 

parties may access application-related information and data on applications through the 

FDIC’s public website. 

During 2021, the FDIC approved deposit insurance for 12 new community banks. The FDIC 

maintains an internal goal of acting on 75 percent of community bank deposit insurance 

applications within 120 days after receiving a substantially complete application. The FDIC 

acted within 120 days for 6 applications, or 50 percent of the total; another 2 were completed 

within 135 days. The FDIC did not meet this goal in 2021 due to complexities in certain 

proposals requiring more analysis and changes proposed by applicants. 

Technical Assistance Program 

The FDIC continued to provide a robust technical assistance program for bank directors, 

officers, and employees. The technical assistance program includes an online Banker 

Resource Center, Directors’ College events held across the country, industry teleconferences 

and webinars, and a video program. 

The FDIC continuously updates the Banker Resource Center on its website. This one-stop 

resource for bankers contains detailed information on supervisory topics and general 

information in a number of other areas for bankers and is located at https://www.fdic.gov/ 

resources/bankers. 

In 2021, the FDIC hosted a variety of outreach sessions in all six FDIC regions. These sessions 

were conducted both independently and jointly with state trade associations or other financial 

regulators. During the sessions, FDIC employees engaged with bank directors and officers 

on various topics, including risk assessment, regulatory capital, capital markets, interestrate risk, brokered deposits, BSA, cybersecurity, emerging technologies, and consumer 

protection, among other topics. Additionally, five regions conducted banker roundtable 

events that provided a forum for bankers to receive information and raise questions about 

laws, regulations, or emerging risks. 

FEDERAL DEPOSIT INSURANCE CORPORATION 
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The FDIC also offered several banker events, in order to maintain open lines of communication 

and to keep community bank management and staff informed about important banking 

regulatory and emerging issues. In 2021, the FDIC offered three webinars: 

 Basics of New Paycheck Protection Program (PPP) Loan Programs, 

 Final Rule Revising Brokered Deposits and Interest Rate Restrictions, and 

 Overview and Updates on Consumer Complaints Management. 

The FDIC also issued two publications in 2021 intended to help community banks. Consumer 

Compliance Supervisory Highlights aims to enhance transparency regarding the FDIC’s 

consumer compliance supervisory activities and provides a high-level overview of consumer 

compliance issues identified in 2020 through the FDIC’s supervision of state non-member 

banks and thrifts. In addition, the FDIC, in collaboration with the FRB and the OCC, issued 

Conducting Due Diligence on Financial Technology Companies: A Guide for Community Banks, 

which is intended to help community banks conduct due diligence when considering 

relationships with financial technology companies. 

Through the Technical Assistance Video Program, the FDIC provides a series of educational 

videos designed to provide useful information to bank directors, officers and employees on 

various risk management and consumer protection-related matters. The videos help FDICsupervised institutions understand various risk management and consumer protectionrelated matters. In 2021, the FDIC released three new segments of the fair lending series and 

five new segments of the mortgage servicer rule series. 

Activities Related to Large and 

Complex Financial Institutions, 

including Systemically Important 

Financial Institutions 

The FDIC is committed to addressing the unique challenges associated with supervising, 

insuring the deposits of, and resolving large and complex financial institutions (LCFIs). The 

agency’s ability to analyze and respond to risks posed by these institutions is critical, as they 

comprise a significant share of banking industry assets and deposits. 

The Division of Complex Institution Supervision and Resolution (CISR) was established in 2019 

to centralize and integrate the FDIC’s operations related to the supervision and resolution of 

LCFIs, including systemically important financial institutions (SIFIs), financial market utilities 

(e.g., central counterparties), and FDIC-IDIs with assets greater than $100 billion, for which the 

FDIC is not the primary federal regulatory authority. 

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CISR performs ongoing risk monitoring of LCFIs in its portfolio that are domestic global 

systemically important banks (G-SIBs), large foreign banking organizations (FBOs), large 

domestic banking groups, and FSOC-designated nonbank financial companies; provides 

backup supervision of the firms’ related IDIs; and evaluates the firms’ required resolution 

plans. CISR also performs certain analyses that support the FDIC’s role as an FSOC member. 

SUPERVISION AND RISK ASSESSMENT 

Monitoring and Measuring Systemic Risks 

The FDIC monitors risks related to G-SIBs as well as other large domestic banks and FBOs 

at the firm level and industry wide to inform supervisory planning and response, policy and 

guidance considerations, and resolution planning efforts. As part of this monitoring, the FDIC 

analyzes each company’s risk profile, governance and risk management strategies structure 

and interdependencies, business operation and activities, management information system 

capabilities, and recovery and resolution capabilities. Capital and liquidity adequacy and 

resiliency under stressed conditions are also key parts of monitoring. Further, in response to 

the COVID-19 pandemic, there has been heightened risk monitoring. 

The FDIC continues to work closely with the other federal banking agencies as well as foreign 

regulators to analyze institution-specific and industry-wide conditions and trends, emerging 

risks and outliers, risk management, and the potential risk posed to financial stability by 

G-SIBs, other large domestic banks and FBOs, and nonbank financial companies. To support 

risk monitoring that informs supervisory and resolution planning efforts, the FDIC has 

developed systems and reports that make extensive use of structured and unstructured data. 

Monitoring reports are prepared on a routine and ad-hoc basis and cover a variety of aspects 

that include risk components, business lines and activity, market trends, and product analysis. 

In addition, the FDIC has implemented and continues to expand upon various monitoring 

systems, including the Systemic Monitoring System (SMS), the SIFI Risk Report (SRR), and the 

CAMELS Verification document. The SMS provides an individual risk profile and assessment 

for LCFIs by evaluating the level and change in metrics that serve as important indicators 

of overall risk. The SMS supports the identification of emerging and outsized risks within 

individual firms and the prioritization of supervisory and monitoring activities. Information 

from SMS and other FDIC-prepared reports are used to prioritize activities relating to LCFIs 

and to coordinate supervisory and resolution-related activities with the other banking 

agencies. The SRR identifies key vulnerabilities of systemically important firms, and the 

CAMELS Verification document includes an independent assessment of the appropriateness of 

supervisory CAMELS ratings for the IDIs held by these firms. 

Backup Supervision Activities for IDIs of Systemically Important Financial Institutions 

Risk monitoring is enhanced by the FDIC’s backup supervision activities. In this role, as 

outlined in Sections 8 and 10 of the FDI Act, the FDIC has expanded resources and has 

developed and implemented policies and procedures to guide backup supervisory activities. 

These activities include performing analyses of industry conditions and trends, supporting 

insurance pricing, participating in supervisory activities with other regulatory agencies, and 

exercising examination and enforcement authorities when necessary. 

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT   
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At institutions where the FDIC is not the primary federal regulator, FDIC staff work closely with 

other regulatory authorities to identify emerging risks and assess the overall risk profile of 

large and complex institutions. The FDIC has assigned dedicated staff to IDIs that are LCFIs, 

to enhance risk-identification capabilities and facilitate the communication of supervisory 

information. These individuals work with the staff of the FRB and OCC in monitoring risk at 

their assigned institutions. 

During 2021, FDIC staff completed 76 targeted examinations and 10 horizontal review 

activities with the FRB or OCC involving G-SIBs, large FBOs, and large regional banks. The 

targeted examination activities included, but were not limited to, the evaluation of corporate 

governance, BSA/AML compliance, IT risk, credit risk, model risk management, operational 

risk, liquidity risk, counterparty risk, market risk, interest-rate risk, and third-party risk 

management. FDIC staff also participated in various horizontal review activities, including the 

FRB’s 2020 Capital Plan Resubmission and 2021 Comprehensive Capital Analysis and Reviews, 

Liquidity Risk Management Reviews, Targeted Loan Reviews, Derivatives Resiliency Reviews, 

and Independent Risk Function Reviews, in addition to interagency Coordinated Cybersecurity 

Reviews and SNC Reviews. 

RESOLUTION PLANNING 

Title I Resolution Plans 

Certain large banking organizations and nonbank financial companies designated by FSOC for 

supervision by the FRB are periodically required to submit resolution plans to the FDIC and 

FRB. Each resolution plan, commonly known as a “living will,” must describe the company’s 

strategy for a rapid and orderly resolution under the U.S. Bankruptcy Code in the event of 

material financial distress or failure of the company. 

In July 2020, the agencies provided information to the eight largest and most complex 

domestic banking organizations to guide their 2021 resolution plans. These eight firms 

submitted resolution plans on or before July 1, 2021, and each firm’s resolution plan includes 

core elements—such as capital, liquidity, and recapitalization strategies—as well as how 

each firm has integrated changes to, and lessons learned from, its response to the COVID-19 

pandemic. The agencies are completing the review of these plans and will assess whether the 

shortcomings identified for six of these firms have been addressed adequately. 

In addition, on July 1, 2020, the FDIC and FRB announced that they had completed a review 

of “critical operations,” which are operations at certain firms whose failure or discontinuance 

would threaten U.S. financial stability, and informed the firms of the agencies’ findings. The 

agencies also announced their plan to complete another such review by July 2022, which will 

include a further, broader evaluation of the framework used to identify critical operations. 

On December 9, 2020, the agencies finalized guidance for certain FBOs that are Category 

II firms according to their combined U.S. operations under the FRB’s tailoring rule and are 

required to have a U.S. intermediate holding company. The final guidance included tailored 

expectations around resolution capital and liquidity; derivatives and trading activity; and 

payment, clearing, and settlement activities. 

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In addition, the agencies provided information for Category II and Category III foreign and 

domestic banking organizations that will inform the content of their next resolution plans, 

which were due December 17, 2021. These targeted plans are required to discuss capital, 

liquidity, and recapitalization strategies, among other topics. 

Title II Orderly Liquidation Authority 

Under the Dodd-Frank Act, failed or failing financial companies are expected to file for 

reorganization or liquidation under the U.S. Bankruptcy Code, similar to any failed or failing 

nonfinancial company. If resolution under the Bankruptcy Code would result in serious 

adverse effects to U.S. financial stability, Title II of the Dodd-Frank Act provides a backup 

authority for resolving a company for which the bankruptcy process is not viable. There are 

strict parameters on the use of the Title II Orderly Liquidation Authority, however, and it can 

only be invoked under a statutorily prescribed recommendation and determination process, 

coupled with an expedited judicial review process. 

The FDIC has undertaken institution-specific strategic planning to carry out its orderly 

liquidation authorities with respect to the largest G-SIBs operating in the United States. The 

strategic plans and optionality being developed for these firms are informed by the Title I plan 

submissions. Further, the FDIC updates its systemic resolution framework to incorporate 

enhanced firm capabilities established through the Title I planning process and other 

domestic and foreign resolution planning and policy developments and continues to build out 

process documents to facilitate the implementation of the framework in a Title II resolution. 

In addition, work continues in the development of resolution strategies for financial market 

utilities, particularly central counterparties (CCPs). 

Insured Depository Institution Resolution Planning 

The FDIC also undertakes institution-specific resolution planning under the FDI Act for IDIs 

that are LCFIs, drawing on both IDI plans submitted by firms and follow-on engagement with 

the firms. The development of a large regional bank resolution framework and process builds 

on lessons learned from historical bank resolutions and practices developed in connection 

with Title II resolution readiness planning for LCFIs. 

Section 360.10 of the FDIC Rules and Regulations requires an IDI with total assets of $50 billion 

or more to periodically submit to the FDIC a plan for its resolution in the event of its failure (the 

“IDI rule”). The IDI rule requires covered IDIs to submit a resolution plan that would allow the 

FDIC, as receiver, to resolve the institution under Sections 11 and 13 of the FDI Act in an orderly 

manner that enables prompt access to insured deposits, maximizes the return from the sale or 

disposition of the failed IDI’s assets, and minimizes losses realized by creditors. 

In June 2021, the FDIC outlined a modified approach to implementing the IDI rule. The 

modified approach applies to IDIs with $100 billion or more in total assets, extends the 

submission frequency to a three-year cycle, streamlines content requirements, and places 

enhanced emphasis on engagement with firms. 

The modified approach preserves key content requirements that have helped FDIC staff 

develop resolution strategies for IDIs, but exempts filers from other content requirements that 

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have been less useful or are obtainable through other supervisory channels. On a case-bycase basis, the FDIC also plans to exempt filers from certain content requirements based on its 

evaluation of how useful or material the information would be in planning to resolve each IDI. 

The modified approach also places greater focus on engagement and capabilities testing by 

FDIC staff. This structured, periodic engagement will be used to seek further understanding of 

content submitted in the plan and to assess a filer’s ability to produce relevant information. 

For IDIs with less than $100 billion in total assets, the moratorium on submission of IDI 

plans approved by the Board in April 2019 remains in effect, as indicated in the FDIC’s 

announcement on January 19, 2021. 

There were no resolution plans due to the FDIC in 2021 under Section 360.10. 

Recordkeeping Requirements 

The FDIC has implemented several recordkeeping regulations to support the resolvability 

of certain large IDIs and nonbank financial companies by requiring institutions subject to 

those regulations to maintain recordkeeping and reporting capabilities to enable the timely 

determination of deposit insurance coverage and the evaluation of Qualified Financial 

Contracts (QFCs). The FDIC maintains programs to test compliance with those regulations by 

the institutions that are subject to them. 

Timely Deposit Insurance Determination 

The FDIC’s Recordkeeping for Timely Deposit Insurance Determination regulation (12 CFR Part 

370) became effective on April 1, 2017, with an initial compliance date of April 1, 2020, that 

could be extended to April 1, 2021, if certain conditions were satisfied. Under this rule, an IDI 

that has two million or more deposit accounts for two consecutive quarters must implement 

the information technology system and recordkeeping capabilities needed to calculate the 

amount of deposit insurance coverage available for each deposit account in the event of its 

failure. Doing so will improve the FDIC’s ability to fulfill its statutory mandates to pay deposit 

insurance as soon as possible after an institution’s failure and to resolve an institution at the 

least cost to the Deposit Insurance Fund. 

Qualified Financial Contracts 

There are two regulations that require QFC recordkeeping. The first is the regulation 

promulgated by the U.S. Treasury for Qualified Financial Contracts Recordkeeping related 

to the FDIC Orderly Liquidation Authority (31 CFR Part 148), which requires certain nonbank 

financial companies to provide detailed QFC reporting to the FDIC on an ongoing basis. The 

second is the FDIC’s Recordkeeping Requirements for Qualified Financial Contracts regulation 

(12 CFR Part 371), which requires IDIs meeting the definition for “troubled condition” to 

provide detailed QFC reporting to the FDIC. Both rules require institutions within their scope 

to prepare in advance to provide the information about their QFC portfolios, which may be of 

a significant size and complexity, to facilitate well-informed decisions about how to manage 

them if the FDIC ever were appointed receiver for any of those institutions, whether under the 

FDI Act or under the Orderly Liquidation Authority, as applicable. 

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Cross-Border Cooperation 

Cross-border cooperation and advance planning are critical components of resolution 

planning for G-SIBs due to the international nature of their services and their extensive 

operations overseas. In 2021, the FDIC continued its robust bilateral and multilateral 

engagement with foreign authorities to deepen mutual understanding of the complex legal 

and operational issues related to cross-border resolution. This work is underpinned by 

an understanding that transparency and confidence in resolution planning will serve as a 

stabilizing force during times of stress. 

In its effort to continue ongoing work with international authorities to enhance coordination 

on cross-border bank resolution, in 2021 the FDIC led significant principal and staff-level 

engagements with foreign jurisdictions to discuss cross-border issues and potential 

impediments that could affect the resolution of a G-SIB. For example, the FDIC engaged in 

ongoing trilateral work with UK and European financial regulatory authorities. Contributors to 

this work include senior staff and senior officials of financial regulatory agencies from the U.S. 

and key foreign jurisdictions. 

The FDIC maintains a close working relationship on cross-border resolution planning topics 

with EU authorities, including through joint Working Group meetings with the European 

Commission (EC). Throughout the year, FDIC, FRB, and EC staffs held technical experts calls to 

discuss cross-border resolution planning topics. 

Financial Stability Board Resolution Steering Group 

The FDIC continued to enhance cooperation on cross-border resolution through its 

participation in the Financial Stability Board (FSB) Resolution Steering Group and its 

subgroups on banks, insurance, and financial market infrastructures. This year, the FDIC 

continued its active engagement in FSB work, in particular through the FDIC’s membership in 

the Resolution Steering Group and its various committees, including co-chairing the CrossBorder Crisis Management Committee for Financial Market Infrastructures, by contributing to 

work on standards and implementation, and by contributing to work on the FSB’s Evaluation 

of the Effects of Too Big to Fail Reforms and its final report published in April 2021. 

Cross-Border Crisis Management Groups 

With regard to the FDIC’s institution-specific engagement, the FDIC co-chaired Cross-Border 

Crisis Management Groups (CMGs) of supervisors and resolution authorities for U.S. G-SIBs and 

CCPs participated as a host authority in the work of CMGs for foreign G-SIBs and CCPs. Work 

through these CMGs allows the FDIC to improve resolution preparedness by strengthening our 

working relationships with key authorities, providing a forum to address institution-specific 

resolution planning considerations, and supporting information-sharing arrangements. 

The FDIC, in collaboration with the FRB, held meetings for all eight U.S. G-SIB CMGs in 2021. 

The FDIC also held three U.S. CCP CMG meetings in 2021. Due to pandemic-related travel 

restrictions, these meetings were held using a virtual format. 

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Joint U.S.-EU Financial Regulatory Forum 

FDIC staff also participated in two Joint U.S.-EU Financial Regulatory Forum meetings held in 

2021, as a member of the U.S. delegation led by Department of the Treasury staff, along with 

FRB, Commodity Futures Trading Commission (CFTC), SEC, and OCC staff. Staff from the EC, 

European Banking Authority, European Securities and Markets Authority, European Insurance 

and Occupational Pensions Authority, European Central Bank, Single Supervisory Mechanism, 

and Single Resolution Board represented the EU. The Forum meetings underscored EU and 

U.S. cooperation and focused on a number of themes, such as market developments, current 

assessments of financial stability risks, multilateral and bilateral engagement in banking, 

regulatory and supervisory cooperation in capital markets, financial innovation, and AML/CFT 

among other topics. 

U.S.-UK Financial Regulatory Working Group 

The FDIC also maintains a close working relationship on cross-border resolution planning 

topics with UK authorities, including through dialogue as a participating agency in the U.S.-

UK Financial Regulatory Working Group (FRWG), which the U.S. Department of the Treasury 

and UK Treasury established in 2018 to serve as a forum for bilateral regulatory cooperation 

between the U.S. and the UK. The FDIC participates along with the FRB, OCC, SEC, and CFTC; 

participating UK regulators include the Bank of England and the Financial Conduct Authority. 

In 2021, FRWG meetings focused on a number of themes, such as international and bilateral 

cooperation, updates on domestic initiatives and priorities, benchmark transition, crossborder regimes, operational resilience, and banking, among other topics. 

Principals Meeting of UK and U.S. Authorities Regarding CCP Resolution 

In June 2021, senior officials from the FDIC, CFTC, SEC, FRB, and the Bank of England 

convened a virtual meeting to discuss certain issues relating to the concept of the resolution 

of a CCP. This meeting was one of a regular series of senior-level meetings held since 2017 to 

share views on CCP resolution and review the progress of an ongoing program of joint work 

among the agencies. 

This work to date has included a review of UK and U.S. legal frameworks for resolution and 

analysis of the rulebooks of major UK and U.S. CCPs, thus facilitating the development of 

prototype resolution strategies for these CCPs. The work also has included consideration of 

the potential systemic impacts and operational challenges that might result from the use of 

resolution powers. 

Over the next year, the group will continue to share analyses and discuss policy formulation in 

relation to CCP resolution, with the objective of facilitating progression from the development 

of resolution strategies to detailed operational planning. 

Systemic Resolution Advisory Committee 

The FDIC created the Systemic Resolution Advisory Committee (SRAC) in 2011 to provide 

advice and recommendations on a broad range of issues relevant to the failure and resolution 

of systemically important financial companies pursuant to the Dodd-Frank Act. 

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Members of the SRAC have a wide range of experience, including managing complex firms, 

serving as bankruptcy judges, and working in the legal system, accounting field, and 

academia. The SRAC Charter was renewed in 2021, and FDIC staff has initiated planning for 

the next SRAC meeting. 

Depositor and 

Consumer Protection 

A major component of the FDIC’s mission is to ensure that financial institutions treat 

consumers and depositors fairly, and operate in compliance with federal consumer protection, 

anti-discrimination, and community reinvestment laws. The FDIC also promotes economic 

inclusion to build and strengthen positive connections between insured financial institutions 

and consumers, depositors, small businesses, and communities. 

Promoting Economic Inclusion 

The FDIC is committed to expanding economic inclusion in the financial mainstream by 

ensuring that all Americans have access to affordable and sustainable products and services 

from insured depository institutions. FDIC economic inclusion initiatives are integral to our 

mission of maintaining stability and public confidence in the nation’s financial system. 

The FDIC promotes economic inclusion and community development through collaborations 

with financial institutions and other stakeholders committed to strategic initiatives that 

impact low- and moderate-income (LMI) communities. 

The FDIC’s Economic Inclusion Strategic Plan addresses five areas of opportunity: Financial 

Education, Insured Deposits, Consumer Credit, Mortgage Credit, and Small Business. 

Advisory Committee on Economic Inclusion 

The Advisory Committee on Economic Inclusion (ComE-IN) provides the FDIC with advice and 

recommendations on important initiatives to support expanding consumer and community 

access and sustainable engagement with the nation’s banking system. This includes reviewing 

basic retail financial services (e.g., low-cost, safe transaction accounts; affordable small-dollar 

loans; and savings accounts), as well as demand-side factors such as consumers’ perceptions 

of financial institutions. In 2021, the ComE-IN met and discussed the following topics: 

 Expanding inclusion through technology and innovation; 

 Expanding account access using the #GetBanked awareness campaign; 

 The FDIC Tech Sprint designed to solicit new approaches to bringing in unbanked 

individuals into the mainstream banking system; 

 Expanding account access by taking advantage of increased attention by 

consumers at tax time; and 

 An update on the housing market and available housing assistance. 

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Members also reported out on key challenges and opportunities for inclusion in their 

communities and/or for the organizations they represent. 

#GetBanked Public Awareness Campaign 

As part of its ongoing efforts to expand financial inclusion, in April, the FDIC launched a public 

awareness campaign about the benefits of opening a bank account. The first phase of the 

#GetBanked campaign focuses on the Houston and Atlanta areas, where research indicates 

that Black and Hispanic households are disproportionately unbanked. The goal of this 

targeted, pilot campaign is to support financial empowerment by encouraging consumers 

to consider opening a checking account that can result in access to safer and lower-cost 

financial products. 

The theme - “There’s a better way” – breaks down misconceptions about banks and helps 

people see how banks can help them meet their financial needs, potentially at a lower cost, 

and offer other benefits. The first phase of the campaign leveraged primarily®radio and 

streaming audio advertising, as well as digital display banners, streaming TV, and mobile video 

advertising. Ads are in English and Spanish, and encourage people to visit®the #GetBanked 

webpage and open a bank account. Coordinated internal activities, including collaborative 

events with Bank On Coalitions in pilot cities for consumers and banks, multiple account 

access events nationwide for consumers and banks, and a podcast with the Cities for Financial 

Empowerment Fund, support the campaign. 

The COVID-19 pandemic underscored the urgency of helping people with LMI gain access to 

the banking system. For consumers eligible to receive economic impact payments, Child 

Tax Credits, or a tax refund from the Internal Revenue Service (IRS), the FDIC leveraged the 

#GetBanked campaign to share information about how to open a bank account and provide 

that bank account information to the IRS. The FDIC also conducted outreach to banks and 

community-based organizations to enhance consumer access to financial services that would 

allow receipt of government payments directly and safely. 

During the pandemic, many banks offered ways to open accounts remotely – online or through 

a mobile app – without going to a bank branch. The FDIC’s #GetBanked webpage provided 

consumers with all the information needed to find a bank and open an account online. The 

webpage includes a video that discusses the importance of establishing and maintaining a 

banking relationship, a printable flyer describing the top reasons to open a bank account, and 

a checklist to help people identify the account that best meets their needs. 

The webpage and all related resources were translated into Spanish to assist Spanishspeaking consumers interested in opening a bank account. To increase the number of 

consumers with access to direct deposit, the IRS included a link to the FDIC’s #GetBanked 

webpage in its consumer education materials. By year-end, the FDIC’s resource pages on bank 

account access had received over 599,000 page views. 

The FDIC continues to support coalitions nationwide that share its commitment to expanded 

access to safe and affordable bank accounts. The number of financial institutions offering 

affordable and sustainable transaction accounts without overdraft fees has increased in 2021. 

Banks have found these accounts work for many customers, including those without a current 

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MANAGEMENT’S DISCUSSION AND ANALYSIS 

banking relationship. As of December 2021, 174 banks and credit unions offer affordable and 

sustainable transaction accounts that meet the Cities for Financial Empowerment Fund’s Bank 

On National Account Standards, including eight of the ten largest banks. 

Public Awareness of Deposit Insurance Coverage 

Throughout 2021, the FDIC continued its efforts to educate bankers and consumers about 

the rules and requirements for FDIC insurance coverage. As of December 31, 2021, the 

FDIC conducted four banker webinars for financial institution employees on deposit 

insurance coverage. The FDIC also provides resources, such as the Electronic Deposit 

Insurance Estimator (EDIE), a web-based calculator for estimating deposit insurance 

coverage. Furthermore, the FDIC offers a number of educational material and training 

videos targeted to both bankers and consumers through the FDIC’s public website. 

RULEMAKING AND GUIDANCE 

NPR on Deposit Insurance Simplification 

In July 2021, the FDIC issued a proposed rule to amend its regulations governing deposit 

insurance coverage. The proposal would provide depositors and bankers with a rule for trust 

account coverage that is easy to understand and would help to facilitate the prompt payment 

of deposit insurance in the event of a failure of an IDI with a large number of trust accounts. 

Specifically, the proposed rule would merge the revocable and irrevocable trust categories 

into one trust account category. A deposit owner’s trust deposits would be insured for up to 

$250,000 for each of the trust beneficiaries, not to exceed five, regardless of whether a trust 

is revocable or irrevocable. This would provide for a maximum amount of deposit insurance 

coverage of $1,250,000 per owner, per insured depository institution for trust deposits. 

The proposed rule also would provide consistent treatment for all mortgage servicing account 

balances held to satisfy principal and interest obligations to a lender. Accounts maintained 

by a covered mortgage servicer that consist of payments of principal and interest would be 

insured for the cumulative balance paid into the account in order to satisfy principal and 

interest obligations to the lender, regardless of whether paid directly by the borrower or by 

another party, up to $250,000 per mortgagor. 

The FDIC approved the final rule in January 2022. 

CRA Modernization 

In early 2021, the FDIC, FRB and OCC announced plans to work toward a joint rule to 

modernize the agencies’ regulations that implement the CRA.® On July 20th, the agencies 

issued a press release stating in part that they are “committed to working together to jointly 

strengthen and modernize regulations implementing the Community Reinvestment Act (CRA)” 

and “Joint agency action will best achieve a consistent, modernized framework across all 

banks to help meet the credit needs of the communities in which they do business, including 

low– and moderate-income neighborhoods.”® The Agencies are meeting regularly to discuss 

issues raised by commenters in response to the FRB’s CRA ANPR. ®The agencies plan to issue a 

notice of proposed rulemaking by March 2022. 

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Home Mortgage Disclosure Act (HMDA) 

In March 2021, the FDIC and other FFIEC 

members issued a revised version of 

A Guide to HMDA Reporting: Getting It 

Right. The 2021 version of the guide 

applies to HMDA data reported in 2022 

and incorporates amendments made 

to HMDA by the Dodd-Frank Act and 

the Economic Growth, Regulatory 

Relief, and Consumer Protection Act 

(EGRRCPA). The guide was designed 

to help financial institutions better 

understand the HMDA requirements, 

including data collection and reporting provisions. 

Interagency Questions and Answers Regarding Flood Insurance 

In February 2019, the FDIC, FRB, OCC, NCUA, and the Farm Credit Administration issued a 

final rule that implemented the private flood insurance provisions of the Biggert-Waters 

Flood Insurance Reform Act of 2012. In March 2021, the agencies issued a notice with a 

request for comment on proposed new interagency Q&As Regarding Private Flood Insurance. 

The proposal seeks to address mandatory acceptance of private flood insurance policies, 

discretionary acceptance of private flood insurance policies, and general compliance issues 

arising from the private flood insurance requirements. 

Proposed Rule Regarding False Advertising, Misrepresentations about Insured Status, 

and Misuse of the FDIC’s Name or Logo 

In April 2021, the FDIC issued a notice of proposed rulemaking implementing its statutory 

authority under 12 U.S.C. 1828(a)(4) to prohibit any person or organization from making 

misrepresentations about FDIC deposit insurance or misusing the FDIC’s name or logo. The 

proposed rule would implement section 18(a)(4) of the FDI Act (Section 18(a)(4)), which 

prohibits any person or organization from: (1) making false or misleading representations 

about deposit insurance; (2) using the FDIC’s name or logo in a manner that would imply 

that an uninsured financial product is insured or guaranteed by the FDIC; or (3) knowingly 

misrepresenting the extent and manner of deposit insurance. The proposed rule is intended 

to provide transparency on the FDIC’s processes for investigating and resolving potential 

violations of these prohibitions. 

Updated Examination Procedures 

The FDIC approved changes to the Truth-in-Lending Act examination procedures on October 

22, 2021. The changes reflect recent amendments to the Qualified Mortgage rule that 

amended the sunset date of the temporary qualified mortgage definition for certain loans 

eligible for purchase or guarantee by the government-sponsored enterprises; amended the 

general qualified mortgage definition, primarily by replacing its 43 percent debt-to-income 

ratio limit with a limit based on the loan’s pricing; and created a new category of qualified 

mortgages, known as “seasoned qualified mortgages.” 

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MANAGEMENT’S DISCUSSION AND ANALYSIS 

Request for Information (RFI) on How to Modernize Sign and Advertising 

Requirements for Banks 

In February 2020, the FDIC published a RFI in the Federal Register seeking input regarding 

potential modernization of its official sign and advertising rules. The effort was suspended 

due to COVID-19. In April 2021, the FDIC published another RFI in the Federal Register to revisit 

the matter, with a new comment deadline of May 24, 2021. The FDIC has reviewed and is 

considering the feedback received from public commenters. 

Consumer Compliance Supervisory Highlights 

The latest issue of the FDIC Consumer Compliance Supervisory Highlights was released in 

March 2021. The purpose of this publication is to enhance transparency regarding the FDIC’s 

consumer compliance supervisory activities. The publication includes a high-level overview of 

consumer compliance issues identified by the FDIC during the prior year through the agency’s 

supervision of State nonmember banks and thrifts.® 

COMMUNITY AND SMALL BUSINESS DEVELOPMENT 

AND AFFORDABLE MORTGAGE LENDING 

The FDIC is committed to promoting community development, small business, and affordable 

mortgage lending in underserved communities. As of December 31, 2021, the FDIC’s 

Community Affairs staff had engaged with banks and community organizations through 

more than 240 outreach events. These events increased shared knowledge and supported 

collaboration among financial institutions and other community, housing, and small business 

development organizations. This collaborative outreach facilitated banks’ efforts to offer 

responsive, reasonably priced mortgages and small business loans to borrowers who 

otherwise might not have qualified for bank-sponsored loan products. 

Throughout 2021, the FDIC continued to promote community development partnerships and 

access to capital in historically underserved markets. Community development outreach 

events were held across all regions of the FDIC and spanned a wide variety of topics, including 

community and neighborhood stabilization, workforce development, and financial capability. 

The FDIC’s Community Affairs Program supports the FDIC’s mission to promote stability and 

public confidence in the nation’s financial system by encouraging economic inclusion and 

community development initiatives that broaden access to safe and affordable credit and 

deposit services from IDIs, particularly for LMI consumers and small businesses. The FDIC’s 

Affordable Mortgage Lending Center’s webpage houses various resources, including the 

Affordable Mortgage Lending Guide, a three-part manual designed to help community banks 

identify and access affordable mortgage products. The Affordable Mortgage Lending Center 

had more than 39,019 subscribers as of December 31, 2021. The webpage is located at https:// 

www.fdic.gov/consumers/community/mortgagelending/index.html. 

The CRA encourages banks to offer community development loans, investments, and services 

to help address the needs of LMI communities with respect to housing, community services, 

revitalization and stabilization of neighborhoods, and economic development. The FDIC, in 

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partnership with the FRB and OCC, hosted basic and advanced training sessions for bankers 

to enhance their understanding of the CRA and encourage them to pursue community 

development opportunities in their markets. In response to COVID-19, training sessions also 

focused on partnerships and activities that banks could engage in to support consumers and 

communities adversely impacted by the pandemic. 

The agencies also offered basic CRA training for community-based organizations, as well as 

seminars on establishing effective bank and community collaborations. Finally, the FDIC 

hosted examiner listening sessions with local community-based organizations designed to 

help examiners better understand®local community credit needs and opportunities for bank 

CRA and community development partnerships. 

FINANCIAL LITERACY AND EDUCATION 

Advancing Financial Education 

Financial education is central to the FDIC’s efforts to expand economic inclusion and promote 

confidence in the banking system. Effective financial education helps people gain the skills 

and confidence necessary to sustain a banking relationship, achieve financial goals, and 

improve financial well-being. 

Through the Money Smart suite of curricula, the FDIC offers banks and community-based 

organizations non-copyrighted, high-quality, free financial education training resources 

designed to meet the financial education needs of consumers of all ages and small business 

owners. Money Smart materials are available in multiple languages, Braille, and large print. 

Self-paced products complement instructor-led tools delivered via video conferencing and 

in person. To incorporate user feedback, regulatory changes, and evolving instructional best 

practices, the FDIC updates Money Smart materials regularly. 

Money Smart Improvements 

In September 2021, the FDIC launched an exciting new tool to help people learn more about 

money. How Money Smart Are You? is a next-generation, self-paced Money Smart product that 

allows consumers to engage 

with financial education from 

anywhere and empowers 

them to learn how to better 

control their finances and 

better protect and manage 

their money. 

How Money Smart Are You? 

features 14 new games. The 

games allow users to win virtual 

coins for correct answers and 

potentially earn a Certificate New Interactive Tool “How Money Smart Are You” of Completion for each game. 

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Users can complete banking crosswords, minimize the debt monster, balance assets and 

liabilities, escape the room, discover the combination lock, choose sense or nonsense, 

and more. 

Besides the 14 games, users can access interactive tools and links to learn more about each 

topic. These tools include: 

 Get Ready to Borrow Money, 

 Calculate My Net Worth, 

 Decide if I’m Ready to Buy a Home, and 

 Stay Focused on My Goals. 

This latest addition to the Money Smart product family provides practical knowledge and 

helps build financial skills to manage your finances with confidence. 

The FDIC also released an updated version of Money Smart for Older Adults in collaboration 

with the CFPB. The enhanced version includes a new section to help people avoid romance 

scams and an updated resource guide. Romance scams commonly occur when a scammer 

creates a fake profile on a dating site or app, strikes up a relationship with a target, and asks 

for money. The enhancements to Money Smart for Older Adults are based on stakeholder 

feedback and recent research conducted by the FDIC and CFPB for this collaborative effort. 

The enhancements included the release of a new informational brochure on COVID-19-related 

scams. 

A peer-reviewed article, “The Money Smart for Older Adults Program: A Qualitative Study of 

the Participants’ Financial Well-Being,” appeared in the Journal of Gerontological Social Work 

(Volume 64, 2021 - Issue 2) in 2021. Participants in the study reported the curriculum helped 

them increase awareness of their financial well-being and supported their financial decisionmaking. The authors encourage gerontological social workers to promote the program, while 

concluding that the Money Smart curriculum “is potentially the only option for those who are 

un- or under-banked and have limited access to private financial services.” 

Outreach Highlights 

Youth employment programs offer a unique opportunity to reach out to young people 

with information about how banks can help them achieve their financial goals. The FDIC 

has continued its efforts with federal agencies and other organizations to foster more 

collaboration between banks and youth workforce providers that result in young people 

receiving financial education and an opportunity to easily open a bank account. For example, 

FDIC worked with banks and the City of Philadelphia to help facilitate the delivery of six 

financial empowerment sessions to more than 2,000 young people. The banks also offered 

accounts to the participants. Similarly, FDIC fostered a collaboration between a bank and 

an Orange County, CA, workforce program to conduct a financial education training series. 

The bank discussed the importance of opening a bank account and how to do so. The FDIC 

will continue this work into 2022. 

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Other outreach highlights included collaborating with the CFPB in January 2021 to conduct 

a joint webinar that highlighted how the FDIC’s®Money Smart®financial education products 

and the CFPB’s®Your Money, Your Goals empowerment toolkit can be used together. A guest 

speaker from a nonprofit organization described their experience using both products, 

particularly during tax time. Other webinars, including several conducted in conjunction with 

racial equity initiatives, helped financial institutions learn how to use Money Smart for Adults. 

FDIC also collaborated with NCUA on national webinars on April 27 and November 16, 2021, 

that aimed to increase collaboration between financial institutions and workforce providers 

to help young people obtain financial education and open bank accounts. As a result of the 

first webinar, the FDIC was able to connect two youth employment programs with financial 

institutions, which resulted in the launch of new programs. 

The FDIC continued its support of savings initiatives, including through the America Saves 

program. The FDIC played a leadership role in the America Saves initiative, including by 

leading the Los Angeles Saves initiative and serving on the America Saves Week advisory group. 

More than 285,000 people set up or increased automated savings plans (based on responses 

from 6 percent of the participating organizations) in 2021. From their survey of participating 

financial institutions, America Saves reported that more than $158 million was deposited into 

new or existing savings accounts during the week.® 

Starting in July 2021, the FDIC began to publish Money Smart News monthly, rather than 

quarterly. Editions of the newsletter highlight Money Smart success stories, including how 

Money Smart can be delivered virtually. For example, the July edition highlighted a bank’s tips 

for other financial educators based on its experience with Money Smart for Small Business. 

The bank reported that delivering Money Smart to local start-ups and businesses less than 

three years old resulted in an increase in small business loans. The August edition highlighted 

Money Smart’s pivotal role with a program designed to help people stay in their homes. Money 

Smart News is circulated to more than 92,000 subscribers every month. 

This year, the FDIC hosted a banker roundtable to introduce the Wisconsin Task Force 

of Homeownership to banks. As a result, two banks now®serve®on®the Foreclosure 

Prevention®Loan®Fund®Committee®sponsored®by the Wisconsin County Treasurer’s 

Association and Wisconsin Rural Housing (WRH). The WRH was awarded a $700,000 grant 

to®start a foreclosure prevention loan fund,®which benefitted five counties serving LMI rural 

communities, including Native American homeowners in Wisconsin. 

Technical assistance provided to the Bank On Connecticut Coalition helped three financial 

institutions complete the Cities for Financial Empowerment’s National Account Standards 

certification process. This will further enhance the Bank On Connecticut Coalition’s suite of 

product offerings aimed to connect more residents with a wide variety of safe and affordable 

bank accounts readily available across Connecticut. These three banks have also become 

regular and active members of the Bank On Connecticut Coalition working on account 

access initiatives. 

Through the Spanish-Speaking Communities Initiative in 2020 and 2021, more than $4 

million in affordable small-dollar loans was provided to more than 200 Spanish-speaking 

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entrepreneurs and households. Financial literacy resources were provided to approximately 

500 households, and hundreds of new banking relationships were established with previously 

unbanked Latinos in California, Nevada, and Utah. 

The Los Angeles Alliance for Economic Inclusion Volunteer Income Tax Assistance volunteers 

(VITA) Program delivered 2,615 hours of qualified community development services during 

the pandemic, facilitating critical financial support for LMI households, which resulted in an 

estimated 2,600 households receiving assistance in filing their 2020 tax returns. This effort 

helped Los Angeles VITA tax-filers secure their tax refunds, Economic Impact Payments, and 

prepared qualified filers for the receipt of Child Tax Credits payments. 

FDIC Consumer News 

The FDIC Consumer News is a monthly publication that provides practical guidance on how to 

become a smarter, safer user of financial services. The FDIC published 13 issues in 2021, which 

included a Special Edition on the difficulty with paying mortgages for consumers impacted by 

the pandemic. Selected articles define financial terms, offer helpful hints, resources, quick 

tips, and common-sense strategies to protect and stretch consumers’ hard-earned dollars. 

The FDIC promotes Consumer News on four social media platforms, provides English and 

Spanish printable versions, and has more than 138,000 subscribers nationwide. 

Partnerships for Access to Mainstream Banking 

Across the country, the FDIC supported community development and economic inclusion 

partnerships at the local level by providing technical assistance and information resources, 

with a focus on unbanked households and LMI communities. Community Affairs staff 

advanced economic inclusion through FDIC-led Alliances for Economic Inclusion (AEI), as 

well as other local, state, and regional coalitions that promote collaboration among financial 

institutions, federal agency partners, and local nonprofits, including Bank On, United Way, 

industry trade groups, and foundations. Further, the FDIC worked with other financial 

regulatory agencies to provide information and technical assistance to banks and community 

leaders across the country. 

Due to the public health impact of COVID-19, Community Affairs’ outreach activities were 

conducted via online platforms during 2021. As of December 31, 2021, the FDIC hosted over 

240 events, providing opportunities for banks to collaborate with partners on increasing 

consumer access to bank accounts and credit services; develop collaborative CRA strategies; 

expand partnerships to address the community impacts of COVID-19 and social justice 

issues; identify opportunities for consumers to build savings and improve credit histories; 

and participate in initiatives that strengthen the capability of community service providers 

that directly serve LMI consumers and small businesses. Through these events and other 

activities, the FDIC also raised awareness of pandemic-driven scams, as well as state and local 

assistance and recovery programs. 

In 2021, the FDIC held 25 webinars in support of AEI coalitions in Austin, Boston, Houston, 

Los Angeles, Milwaukee, Mississippi, Southeast Michigan, and Southeast Louisiana. The FDIC 

currently manages 12 AEI coalitions, which support working groups of bankers and community 

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT   
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leaders responding to the financial 

capability and services needs in their 

communities in various parts of the 

country. Twelve webinars featured 

the FDIC’s #GetBanked resources 

and discussed strategies to connect 

consumers to safe and affordable bank 

accounts. In June, the Austin AEI held 

a webinar focused on empowering 

women and families through innovative 

financial services and discussed 

opportunities to support access to 

education, childcare, healthcare, and 

housing. The Los Angeles AEI held 

a webinar in June that focused on 

available resources to help mitigate the impact of the COVID-19 pandemic, specifically for 

rental assistance and homeownership. In October, the Milwaukee AEI partnered with the Bank 

of Greater Milwaukee on a webinar during which experts shared best practices on improving 

the financial resilience of immigrant and refugee communities through financial education 

and access to safe, affordable bank accounts. 

CONSUMER COMPLAINTS AND INQUIRIES 

In May 2021, the FDIC’s Deposit Insurance Section merged with the Consumer Response 

Center, creating the National Center for Consumer and Depositor Assistance (NCDA). The 

NCDA is comprised of staff on the East and West coasts, with a centrally located hub in the 

Kansas City Regional Office. The NCDA fulfills two mission-critical functions for the FDIC: (1) 

investigating and responding to consumer complaints and inquiries involving FDIC-supervised 

institutions; and (2) promoting public awareness and understanding of FDIC deposit insurance 

coverage and ensuring depositors and bankers have ready access to information regarding 

deposit insurance rules and requirements. 

The FDIC’s NCDA helps consumers by receiving, investigating, and responding to consumer 

complaints about FDIC-supervised institutions and answering inquiries about federal 

consumer banking laws and regulations, FDIC operations, and other related topics. Assessing 

and resolving these matters helps the agency 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. 

The FDIC publishes an annual report on its Transparency & Accountability webpage regarding 

the nature of the FDIC’s interactions with consumers and depositors and also regularly 

updates its performance metrics on its handling of requests from the public for FDIC 

assistance. The webpage can be found at www.fdic.gov/transparency/consumers.html. 

FDIC held 25 webinars in support of Alliance for 

Economic Inclusion (AEI) Coalitions. 

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17,714 

Consumer Complaints 

by Topic and Issue 

In 2021, the FDIC’s Consumer 

Response Center (CRC) handled 17,714 

written and telephonic complaints 

and inquiries. Of the 14,236 involving 

written correspondence, 5,710 were 

referred to other agencies. The FDIC 

handled the remaining 8,526. 

24% 

checking accounts 

$ 

16% 

consumer lines of 

credit/installment 

loans 

23% 

consumer/business 

credit cards 

8% 

residential 

real estate loans 

$1,292,200 

in refunds and voluntary compensation 

as a result of FDIC’s assistance. 

Consumer Complaints by Topic and Issue 

As noted above, in 2021, the FDIC processed 17,714 written and telephonic complaints and 

inquiries. Of the 14,236 involving written correspondence, 5,710 were referred to other federal 

banking agencies. The FDIC handled the remaining 8,526. The FDIC responded to 99 percent of 

written complaints within time frames established by corporate policy and acknowledged 100 

percent of all consumer complaints and inquiries within 14 days. 

The most commonly identified topics in consumer complaints and inquiries about 

FDIC-supervised institutions, as a percent of total volume, included checking accounts 

(24 percent), credit cards (23 percent), consumer lines of credit/installment loans (16 percent), 

and residential real estate loans (8 percent). The FDIC helped consumers receive more than 

$1,292,200 in refunds and voluntary compensation from financial institutions as a result of the 

assistance provided by the FDIC. 

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT   
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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. Through December 2021, the FDIC Contact Center handled 60,724 telephone cases 

of which 14,593 were identified as deposit insurance-related inquiries. In addition to the 

telephone inquiries, the FDIC received 723 written deposit insurance inquiries from consumers 

and bankers. Of these inquiries, 100 percent received responses within two weeks, as required 

by corporate policy. The NCDA’S Deposit Insurance Unit helps depositors identify potentially 

fraudulent websites posing as legitimate FDIC-insured institutions. Through December 2021, 

the FDIC identified and took appropriate action on more than 100 websites, some of which 

included the Member FDIC logo, but were not operated by FDIC-member banks. 

In March 2020, the FDIC began tracking incoming complaints and inquiries regarding 

the COVID-19 pandemic by adding specific keywords to case files. Keywords included 

“Coronavirus 2020” to track general concerns regarding the pandemic; “IRS Stimulus CSR” to 

track concerns related to the Economic Impact Payments; “SBA-CARES Act” to track business 

owners’ concerns and issues involving the SBA’s PPP, and “CARES Act Provisions” to track the 

cases involving specific provisions of the CARES Act that are not SBA or PPP related. Through 

December 31, 2021, the FDIC closed 1,305 written complaints and inquiries tagged with one 

or more of these key words. The following keywords, by count, were identified among the 

1,305 case files: Coronavirus 2020 (1,254), IRS Stimulus CSR (329), SBA-CARES Act (272), and 

CARES Act Provisions (351). Additionally, 123 of the cases noted loan modification inquires or 

concerns and 35 noted inquiries related to the foreclosure process. 

Failure Resolution and 

Receivership Management 

The Division of Resolutions and Receiverships is responsible for resolving the failure of IDIs 

with assets under $100 billion. When an IDI fails, the chartering authority typically appoints 

the FDIC as receiver. The FDIC employs a variety of strategies to ensure the prompt payment 

of deposit insurance to insured depositors and to provide for the least costly resolution 

transaction to the DIF. No depositor has ever experienced a loss on their insured funds as a 

result of a bank failure. 

FINANCIAL INSTITUTION FAILURES 

During 2021, there were no insured institution failures. This is the first calendar year since 

2018 during which no federally insured institutions failed. 

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MANAGEMENT’S DISCUSSION AND ANALYSIS 

The following chart provides a comparison of failure activity over the past three years. 

Failure Activity 

Dollars in Billions 

2021 2020 2019 

Total Institutions 0 4 4 

Total Assets of Failed Institutions* $0 $0.5 $0.2 

Total Deposits of Failed Institutions* $0 $0.4 $0.2 

Estimated Loss to the DIF $0 $0.1 $0.03 

*Total assets and total deposits data are based on the last quarterly report filed by the institution prior to 

failure. 

RECEIVERSHIP MANAGEMENT ACTIVITIES 

As part of the receivership process, the FDIC as receiver manages failed IDIs and their 

subsidiaries with the goal of expeditiously winding up their affairs. Assets not sold to an 

assuming institution through the resolution process are retained by the receivership and 

promptly valued and liquidated through different sales channels – cash sales, securitizations, 

and joint venture transactions – to maximize the return to the receivership estate. 

Because of the FDIC’s asset marketing and collection efforts, the book value of assets in 

inventory decreased by $190.5 million (67.4 percent) in 2021. Total assets in liquidation 

continued a downward trend, resulting in a total book value of $92.1 million at the end of 2021. 

The following chart shows the year-end balances of assets in liquidation by asset type. 

Assets in Liquidation Inventory by Asset Type 

Dollars in Millions 

Asset Type 12/31/21 12/31/20 12/31/19 

Securities $7 $10 $10 

Consumer Loans 0 0 0 

Commercial Loans 2 6 1 

Real Estate Mortgages 2 3 19 

Other Assets/Judgments 18 24 44 

Owned Assets 0 1 3 

Net Investments in Subsidiaries 20 20 31 

Structured and Securitized Assets 43 219 416 

TOTAL $92 $283 $524 

Proceeds generated from asset sales and collections are used to pay receivership claimants, 

including depositors whose accounts exceeded the insurance limit. During 2021, receiverships 

paid dividends of $536,000 to depositors whose accounts exceeded the insurance limit. 

In 2021, DRR successfully terminated the ten remaining Shared Loss Agreements. These 

terminations mark the end of a program that was used extensively during the last crisis and 

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was highly effective in mitigating losses on $216 billion in loans and other assets covered 

under these agreements. 

During 2021, DRR continued to make significant progress removing impediments to 

receivership terminations, including clearing 355 of 966 impediments and terminating 

43 of 234 active receiverships. Despite this progress, DRR was unable to meet the annual 

performance target to terminate 75 percent of new receiverships that are not subject to 

Shared Loss Agreements, structured transactions, or other legal impediments within three 

years of the date of failure. Given the reduction in failure activity and considering the longterm nature of the legal impediments on recent failures, only four receiverships met the 

criteria for the annual performance target. DRR terminated one of the four receiverships 

in 2021 and started the termination process for a second that is projected to terminate in 

February 2022. The remaining two receiverships, from banks that failed in 2019, contained 

impediments that prevented them from being terminated during 2021. 

The following chart shows overall receivership activity for the FDIC in 2021. 

Receivership Activity 

Active Receiverships as of 12/31/20 234 

New Receiverships 0 

Receiverships Terminated 43 

Active Receiverships as of 12/31/21 191 

Professional Liability and Financial Crimes Recoveries 

The FDIC investigates bank failures to identify potential claims against directors, officers, 

securities underwriters and issuers, fidelity bond insurance carriers, appraisers, attorneys, 

accountants, mortgage loan brokers, title insurance companies, and other professionals who 

may have caused losses to insured depository institutions that failed. The FDIC will pursue 

meritorious claims that are expected to be cost effective. 

During 2021, the FDIC recovered $35.1 million 

from professional liability claims and settlements. During 2021, the

The FDIC authorized one professional liability FDIC recovered 

lawsuit during 2021. As of December 31, 2021, 

the FDIC’s caseload included nine professional $35.1 million 

liability lawsuits (down from 10 at year-end 2020), from professional four residential mortgage malpractice and fraud 

lawsuits (down from eight at year-end 2020), and liability claims open investigations in six claim areas out of four 

institutions. The FDIC completed investigations and settlements. 

and made decisions on 96 percent of the 

investigations related to the five failures that reached the 18-month point in 2021 after the 

institutions’ failure dates, exceeding the annual performance target. 

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As part of the sentencing process, for those convicted of criminal wrongdoing against an 

insured institution that later failed, a court may order a defendant to pay restitution or to 

forfeit funds or property to the receivership. The FDIC, working with the U.S. Department of 

Justice in connection with criminal restitution and forfeiture orders issued by federal courts 

and independently in connection with restitution orders issued by the state courts, collected 

$6.8 million in 2021. As of December 31, 2021, there were 1,753 active restitution and forfeiture 

orders (down from 1,909 at year-end 2020). This includes 19 orders held by the Federal 

Savings and Loan Insurance Corporation (FSLIC) Resolution Fund (i.e., orders arising out of 

failed financial institutions in receivership or conservatorship by the FSLIC or the Resolution 

Trust Corporation). 

Information Technology 

Information Technology (IT) is an essential component in virtually all FDIC business processes. 

This integration of IT with the business provides opportunities for efficiencies and requires 

an awareness of potential risks. In 2021, the Chief Information Officer Organization (CIOO) 

focused its efforts on modernizing FDIC applications and systems to support business process 

implementations and key stakeholders, strengthening infrastructure resiliency, and managing 

information security risk. 

Modernizing IT and Enhancing Data Governance 

The FDIC continues to provide a robust, resilient, and secure IT infrastructure that promotes 

efficient operations, applies modern approaches for the use and protection of data, and 

improves the effectiveness of the FDIC’s engagement with regulated institutions. As part of 

this commitment, in 2021, the FDIC continued implementing the multi-year, comprehensive IT 

modernization effort focusing on application and data modernization initiatives identified in 

the IT Modernization Roadmap. In support of this commitment, the CIOO: 

 Deployed iterative parts of the Structure Information Management System 

Redesign Release 3; 

 Completed an analysis to identify the best path forward for RMS Business Process 

Modernization; 

 Retired and decommissioned legacy Sun Solaris Unix servers; 

 Implemented Release 3 of the Resolution and Receivership Management Portal; 

and 

 Completed release 1 of the Framework for Oversight of Compliance and CRA 

Activities User Suite. 

The FDIC also continues to mature its data governance program. For example, the CIOO 

developed a new test data management solution in 2021, whereby synthetic or obfuscated 

data were used to test selected FDIC systems in a non-production environment. The CIOO 

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT   
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plans to mature and expand its capabilities in the area of data testing and data governance 

though various initiatives, such as promoting data literacy and migrating data to the cloud. 

Strengthening Infrastructure Resiliency 

The FDIC continues to concentrate on implementing effective strategies and solutions to 

enhance infrastructure security and resiliency. In support of the continued effort to improve 

resiliency and ensure the FDIC can continue to meet its mission in the face of emergencies or 

disasters, the CIOO took actions in three key areas: 

Support COVID-19 Requirements 

 Implemented facilities access requests to track and manage physical access to 

FDIC buildings and offices during the pandemic; and 

 Released a ServiceNow-based COVID-19 vaccine attestation solution that captures 

documentation and supports reasonable accommodation requests in response to 

the COVID-19 Vaccine Executive Order. 

Ongoing Infrastructure Resiliency Enhancements 

 Developed a Surge Playbook to address IT requirements related to financial crisis 

preparedness. 

Mission Sustainment 

 Implemented a self-service password reset solution; and 

 Released a new remote access Virtual Private Network software, GlobalProtect, 

which provides faster connectivity and enhanced security protection. 

Managing Information Security Risk 

The FDIC continues to place great emphasis on its risk management obligations, including 

identifying, assessing, and developing strategies to mitigate information security threats. 

Among a range of actions, in 2021, the FDIC: 

 Actively managed information security, privacy, and other priority risks. The 

Information Technology Risk Advisory Council met regularly to discuss progress 

made with risk mitigation strategies, update risks in the CIOO risk inventory, and 

review Key Risk Indicators. 

 Completed corrective actions to address internal control recommendations, 

strengthened internal controls, and addressed 13 audit recommendations 

subsequently closed by the FDIC’s Office of the Inspector General (OIG). This 

included eight audit recommendations from the 2020 OIG Federal Information 

Security Modernization Act (FISMA) audit report and the OIG 2019 Privacy Audit 

report. 

 Integrated information security and privacy into procurements, including 

updating a Checklist for Information Security and Privacy Contract Provisions 

and Clauses. 

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT   
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 Updated the Privacy Program with the Privacy Continuous Monitoring Strategy 

and Privacy Control Assessments. 

Hybrid Work Environment 

 Continued foundational implementation of a hybrid work environment by 

updating conference room equipment in FDIC headquarters and publishing a 

webpage on facilitating hybrid work. 

The continued corporate-wide focus on managing information security risks through a host of 

projects and initiatives had a positive impact. In its 2021 audit required by the FISMA, the OIG 

determined that the FDIC’s information security program was operating at a Maturity Level 

4 (out of 5). Within the context of the maturity model, a Level 4, “Managed and Measurable,” 

information security program is operating at an “Effective” level of security.4 

International Outreach 

The FDIC continues to play a leading role in supporting the global development of deposit 

insurance, bank supervision, and bank resolution systems. In 2021, this included working 

closely with regulatory and supervisory authorities from around the world, as well as 

international standard-setting bodies and multilateral organizations, such as the International 

Association of Deposit Insurers (IADI), the Association of Supervisors of Banks of the Americas 

(ASBA), the Basel Committee on Banking Supervision (BCBS), the Financial Stability Board 

(FSB), the International Monetary Fund (IMF), and the World Bank. The FDIC engaged with 

foreign regulatory counterparts by virtually hosting foreign officials, conducting training 

seminars, delivering technical assistance, and fulfilling the commitments of FDIC membership 

in international organizations. The FDIC also advanced policy objectives with key jurisdictions 

by participating in high-level interagency dialogues. 

International Association of Deposit Insurers 

FDIC officials and subject matter experts provided continuing support for IADI programs in 

2021, including the development of the 2022-2026 Strategic Plan. The FDIC chairs the Training 

and Technical Assistance Council Committee and the Fintech Technical Committee of IADI. 

The Fintech Technical Committee launched its Fintech Brief series in September 2021, with 

the FDIC contributing two briefs to the series. In addition, the FDIC chairs IADI’s Capacity 

Building Technical Committee, which, among other activities, provides support for developing 

and facilitating virtual workshops for the Africa, Asia-Pacific, Caribbean, European, Latin 

American, Middle East and North Africa, and North American regions of IADI. With leadership 

and support from FDIC executives and senior staff, IADI technical assistance and training 

activities reached 1,181 participants. The FDIC also contributed to IADI papers on contingency 

planning and coverage. 

4

 NIST Special Publication (SP) 800-53, Rev. 4, Security and Privacy Controls for Federal Information Systems and 

Organizations, defines security control e3ectiveness as the extent to which the controls are implemented correctly, 

operating as intended, and producing the desired outcome with respect to meeting the security requirements for 

the information system in its operational environment or enforcing/mediating established security policies. 

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT   
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Association of Supervisors of Banks of the Americas 

Senior FDIC staff chaired the ASBA Training Committee in 2021, which designs and implements 

ASBA’s training strategy to promote the adoption of sound banking supervision policies and 

practices among its members. The FDIC also participated in development of the 2022-2025 

Strategic Plan. Due to COVID-19, the on-site training programs were canceled for the year; 

however, many courses were able to be converted to virtual events. The training program 

reached 115 member participants in 2021. 

Basel Committee on Banking Supervision 

The FDIC supports and contributes to the development of international standards, guidelines, 

and sound practices for prudential regulation and supervision of banks through its 

longstanding membership in the BCBS. The FDIC’s contributions include actively participating 

in many of the committee groups, working groups, and task forces established by the BCBS 

to carry out its work, which focuses on policy development, supervision and implementation, 

accounting, and consultation. Particular areas of focus are capital policy, accounting, 

operational risk, stress testing, and anti-money laundering. 

International Capacity Building 

Due to COVID-19-related restrictions, the FDIC’s in-person direct assistance programs were 

canceled or postponed in 2021. However, the FDIC was able to provide technical expertise 

to many foreign organizations through the use of virtual technology. These engagements 

included supplying staff experts to provide training for the Deposit Insurance Fund of Kosovo 

on insurance fund thresholds, the Indonesia Deposit Insurance Fund on bank resolution 

matters, and the Philippines Deposit Insurance Corporation on deposit insurance target 

ratios. In addition, the FDIC conducted numerous virtual routine visits, most notably with 

the Canada Insurance Deposit Corporation five times during the year on topics related to 

deposit Insurance and resolution matters. Likewise, the FDIC conducted visits with the 

European Central Bank on communication best practices, the Government of Brazil on 

equity partnerships, the Azerbaijan Deposit Insurance Fund on resolution matters, and the 

Taiwan Financial Supervisory 

Commission on the Industrial 

Loan Company (ILC) rule. 

Finally, the FDIC conducted 

its first Virtual 101, a 4-day 

virtual classroom event that 

provides an overview of bank 

supervision, deposit insurance, 

and resolutions, and was 

attended by 112 attendees from 

35 countries and 42 separate 

organizations, including deposit 

insurers from around the globe. Virtual 101 

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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. Following are the FDIC’s major 

accomplishments in improving operational efficiency and effectiveness during 2021. 

Human Capital Management 

The FDIC’s human capital management programs are designed to attract, train, develop, 

reward, and retain a highly skilled, diverse, and results-oriented workforce. In 2021, the FDIC 

workforce-planning initiatives emphasized the need to plan for employees to fulfill current 

and future capability and leadership needs. This focus ensures that the FDIC has a workforce 

positioned to meet today’s core responsibilities and prepared to fulfill its mission in the 

years ahead. 

Strategic Workforce Planning and Readiness 

The FDIC understands that succession planning is critical to ensure that gaps in employee 

aspiration, engagement, and readiness for senior leadership and technical positions are 

addressed. The FDIC dedicates resources to strengthen and expand its internal pipeline of 

employees who aspire to higher-level positions, have the necessary leadership and technical 

skills, and are prepared to assume future leadership roles. 

The FDIC conducted targeted workforce and succession-planning initiatives in mission-critical 

functions to ensure it has the workforce and leadership capabilities needed in a dynamic 

environment. The agency engaged in defining the capabilities required of subject matter 

experts in mission-critical roles to plan future recruitment, professional development, and 

retention strategies and inform human capital investments. In 2021, individual divisions and 

offices continued to plan and implement succession-planning activities tailored to address 

their unique workforce and leadership capacity needs in evolving conditions. The FDIC 

also launched a Retention Management Working Group to enhance the availability of 

data and analyses to ensure that the FDIC remains focused and effective in managing and 

retaining talent. 

During the past few years, the FDIC has witnessed an uptick in retirements among its 

management and leadership ranks, requiring a greater emphasis on knowledge transfer 

and long-term succession planning. Additionally, RMS had a higher level of attrition in its 

examiner ranks during 2021 than in 2020. To ensure that critical skills are sustained, the FDIC 

is developing new career paths that encompass emerging skills, while offering leadership 

training and career development opportunities designed to increase the internal candidate 

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT   
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pool of potential leaders at all levels. The FDIC is also undertaking innovative approaches 

to attract and retain a new generation of entry-level examiners with specialty and 

emerging skillsets. 

Through these efforts, the FDIC workforce will be even better positioned to respond to 

dynamic financial and technological challenges, now and in the future.® 

Employee Learning and Development 

The FDIC has a robust program to train and develop its employees throughout their careers 

to enhance technical proficiency and leadership capacity, supporting career progression and 

succession management. The FDIC is in the midst of a multi-year effort to modernize learning 

and development, including expanding virtual and online offerings, integrating modern 

learning technology, and modernizing the FDIC’s Training Center. 

The FDIC develops and implements comprehensive curricula for its business lines to prepare 

employees to meet new challenges. Employees working to become commissioned examiners 

or resolutions and receiverships specialists attend a prescribed set of specialized, internally 

developed and instructed courses. Post-commission, employees continue to further their 

knowledge in specialty areas with more advanced courses. The FDIC is revising examiner 

classroom training to better support on-the-job application and has developed a 

wide-ranging resolution and receivership training curriculum 

to support readiness. 

The FDIC also offers a comprehensive 

leadership development program 

that combines core courses, electives, 

and other enrichment opportunities 

to develop employees at all levels, 

and support succession planning 

and diversity, equity, inclusion, 

and accessibility goals. From new 

employees to new executives, the 

FDIC provides employees with 

targeted opportunities that align 

with key leadership competencies. In 

addition to a broad array of internally 

developed and administered courses, 

the FDIC provides its employees with 

funds to participate in external training to support their career development. 

In 2021, the FDIC’s Corporate University continued to convert courses to virtual delivery and 

support employee learning and development during mandatory telework. More than 360 

virtual course offerings were delivered to more than 9,100 participants. 

Virtual Courses. 

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT   
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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 feedback from employees and takes an agency-wide approach to address 

key issues identified in the survey. The FDIC consistently scores highly in all categories of the 

Partnership for Public Service Best Places to Work in the Federal Government® list for mid-size 

federal agencies. 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 engages employees through formal mechanisms such as the TEAM (Transparency, 

Empowerment, Accountability, Mission) FDIC initiative that empowers employees to identify 

and implement short-term projects that positively impact the FDIC workplace and support 

the FDIC’s mission; Chairman’s Diversity Advisory Councils; Employee Resource Groups; and 

informally through working groups, team discussions, listening sessions, and daily employeesupervisor interactions. Employee engagement plays an important role in empowering 

employees and helps maintain, enhance, and institutionalize a positive workplace 

environment. 

FEDERAL DEPOSIT INSURANCE CORPORATION ANNUAL REPORT