FEDERAL

DEPOSIT

INSURANCE

CORPORATION

2 0 1 4 

ANNUAL 

REPORT 
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FEDERAL

DEPOSIT

INSURANCE

CORPORATION

2 0 1 4 

ANNUAL 

REPORT 
ANNUAL REPORT 2014

2 FEDERAL DEPOSIT INSURANCE CORPORATION

FEDERAL DEPOSIT INSURANCE CORPORATION

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

March 4, 2015

Dear Sir,

In accordance with:

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

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

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

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

♦ the Reports Consolidation Act of 2000,

the Federal Deposit Insurance Corporation (FDIC) is pleased to submit its 2014 Annual Report (also referred to as the 

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

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

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

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

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

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

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

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

the FDIC’s internal controls for 2014. We are committed to maintaining effective internal controls corporate-wide in 2015. 

Sincerely,

Martin J. Gruenberg

Chairman

The President of the United States

The President of the United States Senate

The Speaker of the United States House of Representatives
ANNUAL REPORT 2014 3

Table of Contents

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

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

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

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

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

Implementation of Key Regulations................................................................................................................................. 13

Insurance ............................................................................................................................................................................. 18

Activities Related to Systemically Important Financial Institutions ........................................................................... 19

Supervision.......................................................................................................................................................................... 24

Receivership Management ................................................................................................................................................ 38

International Outreach....................................................................................................................................................... 41

Minority and Women Inclusion......................................................................................................................................... 43

Effective Management of Strategic Resources ............................................................................................................... 44

II. Performance Results Summary...........................................................................................49

Summary of 2014 Performance Results by Program ............................................................................................................ 49

Performance Results by Program and Strategic Goal .......................................................................................................... 51

Prior Years’ Performance Results............................................................................................................................................ 57

III. Financial Highlights............................................................................................................65

Deposit Insurance Fund Performance ................................................................................................................................... 65

IV. FDIC Budget and Spending ...............................................................................................69

Corporate Operating Budget.................................................................................................................................................... 69

2014 Budget and Expenditures by Program........................................................................................................................... 70

Investment Spending................................................................................................................................................................. 71

V. Financial Section ................................................................................................................73

Deposit Insurance Fund (DIF)................................................................................................................................................. 74

FSLIC Resolution Fund (FRF)................................................................................................................................................. 93

Government Accountability Office Auditor’s Report.......................................................................................................... 102

Management’s Report on Internal Control Over Financial Reporting .............................................................................. 109

Management’s Response to the Auditor’s Report................................................................................................................ 110

VI. Corporate Management Control......................................................................................111

Management Report on Final Actions .................................................................................................................................. 112

VII. Appendices ......................................................................................................................113

A. Key Statistics ....................................................................................................................................................................... 114

B. More About the FDIC ......................................................................................................................................................... 128

C. Office of Inspector General’s Assessment of the Management and Performance Challenges 

Facing the FDIC ............................................................................................................................................................... 137

D. Acronyms............................................................................................................................................................................. 143
INSURING DEPOSITS • EXAMINING AND 

SUPERVISING INSTITUTIONS • MANAGING RECEIVERSHIPS • 

EDUCATING CONSUMERS

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

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

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

insured depository institutions by identifying, monitoring, and addressing 

risks to the Deposit Insurance Fund (DIF).

The FDIC promotes public understanding and the development of sound 

public policy by providing timely and accurate financial and economic 

information and analyses. It minimizes disruptive effects from the failure 

of financial institutions and assures fairness in the sale of financial products 

and the provision of financial services.

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

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

continuously monitors and responds rapidly and successfully to changes in 

the financial environment. 

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

For more than 80 years, the FDIC has carried out its mission 

of maintaining public confidence and stability in the nation’s 

financial system. 

The FDIC does this 

by insuring deposits; 

supervising and 

examining financial 

institutions for 

safety, soundness, 

and consumer 

protection; 

and managing 

receiverships when 

banks fail.

At the end of 2014, 

the FDIC insured 

deposits of $6.2 

trillion in more than half a billion accounts at over 6,500 

institutions. Further, the FDIC supervised 4,138 institutions, 

conducted 8,160 examinations, and managed nearly 500 

active receiverships having total assets of $29.7 billion at 

year-end 2014.

The U.S. economy and the banking industry saw continued 

improvement in 2014. After experiencing the most severe 

financial crisis and economic downturn in the United States 

since the 1930s, the United States is now well into the 

recovery. The economy is expanding, although the pace of 

economic growth has been weaker than the long-term trend 

and bank profitability remains lower than pre-crisis levels. 

Still, the industry has been strengthening balance sheets, 

building capital, and enhancing liquidity. 

Stronger balance sheets indicate ample capacity for FDICinsured institutions to support the economic recovery. 

Last year, loan balances at banks increased by $416 billion, 

the largest dollar gain since 2007. Moreover, that growth 

was broad-based, with nearly all loan categories posting 

increases, and almost three-quarters of all institutions 

reporting larger loan balances. Loan growth was 

strongest at community banks, which posted an 8.6 percent 

gain in 2014 versus 5.3 percent for the industry overall. The 

numbers of both failed and problem institutions declined 

again in 2014, and the Deposit Insurance Fund (DIF) 

balance, which was almost $21 billion in the red during the 

financial crisis, was once again positive at nearly $63 billion 

at year-end.

Rising loan demand and a recent pickup in the pace 

of economic activity are creating favorable conditions 

for FDIC-insured institutions. The FDIC is working to 

wind down the receiverships of failed institutions and to 

address the emerging supervisory challenges of interest 

rate risk, credit risk, and cybersecurity threats. This 

shift is indicative of the move from a post-crisis recovery 

environment to one of expanding economic growth and 

financial activity. Following is an overview of the key 

strategic challenges facing the FDIC. 

REBUILDING THE DIF, RESOLVING 

FAILED BANKS, AND FDIC RESOURCES

Under a long-term plan based on the Dodd-Frank Act 

requirements to rebuild the DIF, the FDIC has had a steady 

increase in the year-end fund balance from 2011 through 

2014. Recently, lower than estimated losses for past bank 

failures, together with assessment income, have contributed 

to the increase in the fund balance to $62.8 billion as of 

December 31, 2014. The fund is on track to reach a reserve 

ratio — the ratio of the DIF fund balance to estimated 

insured deposits — of 1.35 percent by September 2020, as 

mandated by statute. The reserve ratio was 1.01 percent as 

of year-end 2014.

Bank failures in 2014 totaled 18, down dramatically from 

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

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

rating scale) fell to 291 at the end of 2014 from a high of 

888 in March 2011. Although these trends are positive, 

we still have a way to go before these numbers return to 

more normal levels. The FDIC will continue to manage 

receiverships, examine problem institutions, and implement 

provisions of the Dodd-Frank Act.

As the banking industry continues to recover, the FDIC 

will require fewer resources. The agency’s authorized 

workforce for 2014 was 7,200 full-time equivalent positions 

Message from the Chairman

MESSAGE FROM THE CHAIRMAN 5
ANNUAL REPORT 2014

6 MESSAGE FROM THE CHAIRMAN

compared with 8,026 the year before. The 2014 Corporate 

Operating Budget was $2.4 billion, a decrease of $300 

million (11 percent) from 2013.

The FDIC reduced its budget for 2015 from the prior year 

by 3 percent to $2.32 billion and reduced authorized 

staffing by approximately 5 percent to 6,875 positions, in 

anticipation of a further drop in bank failure activity in 

the years ahead. The three temporary satellite offices that 

were set up to handle the crisis-related workload have now 

closed. However, contingent resources are included in the 

budget to ensure readiness should economic conditions 

unexpectedly deteriorate.

During 2014, the FDIC continued to successfully use various 

resolution strategies to protect insured depositors of failed 

institutions at the least cost to the DIF. The FDIC actively 

marketed failing institutions and sold a large majority to 

other financial institutions. These strategies protected 

insured depositors and preserved banking relationships in 

many communities, providing depositors and customers 

with uninterrupted access to essential banking services. 

IMPLEMENTING THE FDIC’S 

AUTHORITIES UNDER THE 

DODD-FRANK ACT AND 

OTHER FINANCIAL REFORMS

The FDIC continues to implement its authorities under 

the Dodd-Frank Act, as well as important new capital and 

liquidity requirements. 

Capital and Liquidity Rules Strengthened

In 2014, the FDIC Board of Directors (FDIC Board), 

in concert with the other regulators, adopted several 

important rules that strengthen the capital and liquidity 

standards for banking organizations. In April 2014, 

the FDIC Board finalized the Basel III capital rule that 

strengthens the quality of regulatory capital and increases 

the level of risk-based capital required under the prompt 

corrective action (PCA) standards. The FDIC’s Basel III 

rule is substantively identical to rules adopted by the Board 

of Governors of the Federal Reserve System (FRB) and the 

Office of the Comptroller of the Currency (OCC). In April, 

the FDIC Board also approved an interagency, enhanced 

supplementary leverage ratio requirement for the largest 

systemically important financial institutions (SIFIs). The 

new leverage ratio goes beyond international standards 

agreed to by the Basel Committee on Banking Supervision.

The enhanced supplementary leverage ratio currently 

applies to eight large organizations designated as Global 

Systemically Important Banks, or G-SIBs. Insured banks 

within these G-SIB organizations would need to satisfy a 6 

percent supplementary leverage ratio to be considered well 

capitalized for PCA purposes. The new rule also establishes 

an enhanced 5 percent supplementary leverage ratio at the 

holding company level. This should reduce the likelihood 

of failure, while increasing the ability of these firms to 

continue lending during periods of economic adversity. 

The introduction of the enhanced supplementary leverage 

ratio is one of the most significant step taken thus far to 

reduce the systemic risk posed by large, complex banking 

organizations.

In September 2014, the FDIC, the FRB, and the OCC 

adopted the first-ever quantitative liquidity standard for 

large banking organizations in the United States, the 

liquidity coverage ratio (LCR). During the recent financial 

crisis, many of the largest banks did not have a sufficient 

amount of high-quality liquid assets, such as cash and U.S. 

Treasury securities, and could not borrow enough funds 

from the marketplace to meet their liquidity needs. This 

new ratio will strengthen the liquidity positions of our 

largest financial institutions, thereby promoting safety and 

soundness, and the stability of the financial system.

The LCR applies to bank holding companies (BHCs) and 

depository institutions with $250 billion or more in total 

assets or with $10 billion or more in foreign exposures, and 

to depository institutions with $10 billion or more in assets 

that are consolidated subsidiaries of these covered banking 

organizations. Separately, the FRB issued similar rules for 

BHCs with at least $50 billion in assets. The new rule will 

not apply to community banks.

RESOLUTION PLANNING FOR 

SYSTEMICALLY IMPORTANT 

FINANCIAL INSTITUTIONS AND 

INTERNATIONAL COORDINATION

Under the framework of the Dodd-Frank Act, bankruptcy 

is the preferred path in the event of the failure of a SIFI. 
MESSAGE FROM THE CHAIRMAN 7

To make this objective achievable, Section 165(d) of the 

Dodd-Frank Act and the implementing joint rules require 

that all BHCs with total consolidated assets of $50 billion or 

more, and nonbank financial companies that the Financial 

Stability Oversight Council (FSOC) designates for FRB 

supervision, prepare resolution plans, or “living wills,” to 

demonstrate how the company could be resolved in a rapid 

and orderly manner under the Bankruptcy Code in the event 

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

living will process is an important new tool to enhance 

the resolvability of large financial institutions through the 

bankruptcy process.

Since 2010, the FRB and FDIC have been working to 

implement this new authority and have taken a number of 

important steps to do so, including the issuance of a joint 

rule in 2011 and joint guidance in 2013. In August 2014, 

the FDIC and FRB issued joint letters to the 11 largest, 

most complex banking organizations, directing them 

to make specific substantive changes to facilitate their 

orderly resolution in bankruptcy. The actions the firms 

are being directed to take include changes to simplify 

their legal structures, actions to ensure the continuation 

of critical services throughout the resolution process, and 

information system changes to ensure the timely delivery 

of information in resolution. The agencies in the letters 

directed a set of changes for the firms to implement that 

will make a meaningful difference in the ability to resolve 

these firms in an orderly manner in bankruptcy, as well as 

reduce the risk they pose to the financial system. Since 

that time, the agencies have been providing guidance to the 

banking organizations on the improvements needed to each 

plan, as those plans must demonstrate that the firms are 

making significant progress to address all the shortcomings 

identified in the letters. 

In cases in which resolution under the Bankruptcy Code 

may result in serious adverse effects on financial stability 

in the United States, the Orderly Liquidation Authority set 

out in Title II of the Dodd-Frank Act serves as an important 

backstop. Upon recommendations by a two-thirds vote 

of the Federal Reserve Board and the FDIC Board and a 

determination by the Treasury Secretary in consultation 

with the President, a financial company whose failure is 

deemed to pose a risk to the financial system may be placed 

into an FDIC receivership. Under the Act, key findings 

and recommendations must be made before the Orderly 

Liquidation Authority can be considered as an option. 

These include a determination that the financial company 

is in default or danger of default; that failure of the financial 

company and its resolution under applicable federal or 

state law, including bankruptcy, would have serious adverse 

effects on U.S. financial stability; and that no viable private 

sector alternative is available to prevent the default of the 

financial company. 

At the end of 2013, the FDIC Board approved publication 

of a Federal Register notice, which provides greater detail 

on a Single Point of Entry (SPOE) strategy for resolution 

and discusses the key issues that likely will be faced in the 

resolution of a SIFI. The notice sought public comment 

and views as to how the policy objectives set forth in the 

Dodd-Frank Act could better be achieved and a number 

of comments were received that will be considered as the 

FDIC continues its contingency planning. 

Advance planning and cross-border coordination for the 

resolution of globally active SIFIs will be essential to 

minimize disruptions to global financial markets. Following 

up on progress made on international coordination in prior 

years, the FDIC continues to foster its relationships with 

foreign regulators to establish frameworks for effective 

cross-border cooperation. 

In October, the FDIC hosted the heads of the Treasuries, 

central banks, and leading financial regulatory bodies in the 

United States and United Kingdom in an exercise designed 

to further understanding, communication, and cooperation 

between U.S. and U.K. authorities in the event of the failure 

and resolution of a G-SIB. In addition, the FDIC worked 

with its major foreign counterparts in significant efforts 

to develop cross-border cooperation for resolving failing 

global financial firms.

COMMUNITY BANKING INITIATIVE

Community banks are critically important to our economy 

and banking system. Community banks account for 13.3 

percent of the banking assets in the United States, but also 

account for 45.1 percent of the small loans to businesses 

and farms made by all banks, making them key partners in 

supporting local economic development and job creation. 

Since the FDIC is the primary Federal supervisor of 
ANNUAL REPORT 2014

8 MESSAGE FROM THE CHAIRMAN

the majority of community banks in the United States, 

community banking will continue to be an important focus 

of FDIC supervision, technical assistance, and research.

In late 2012, the FDIC published a comprehensive study 

on community banking. The study confirmed that the 

traditional community bank business model – knowing your 

customer, funding from stable core deposits, and locally 

focused lending – performed comparatively well during 

the recent banking crisis. Of the more than 500 banks that 

failed since 2007, the highest failure rates were among 

non-community banks and community banks that departed 

from this traditional model by investing in risky assets 

funded by non-core deposits.

In 2014, FDIC analysts published new papers dealing with 

community bank consolidation, the effects of long-term 

rural depopulation, and the efforts of Minority Depository 

Institutions (MDIs) to provide essential banking services 

to customers. The FDIC also added a new community 

bank section to the FDIC’s Quarterly Banking Profile 

(QBP). It includes new data on the structure, activity, and 

performance of community banks that will be useful in 

tracking the industry’s performance more closely.

Apart from research, the community bank initiative includes 

a robust technical assistance program for bank directors, 

officers, and employees. The FDIC’s latest innovation is 

a series of videos that are helping community bankers 

to understand better their management responsibilities. 

The video program grew out of requests by community 

bankers for help in a number of areas – from director 

responsibilities, to hot button issues in risk management 

and compliance supervision. Since 2013, the FDIC has 

produced and released more than 20 videos, available on 

the FDIC’s website. 

Finally, the FDIC’s Advisory Committee on Community 

Banking is an ongoing forum for discussing current issues 

and receiving valuable feedback from the industry. The 

committee, which met three times during 2014, is composed 

of 15 community bank CEOs from around the country. It 

is a valuable resource for input on a wide variety of topics, 

including examination policies and procedures, capital 

and other supervisory issues, credit and lending practices, 

deposit insurance assessments and coverage, and regulatory 

compliance issues.

CYBERSECURITY

The rapidly evolving nature of cybersecurity risks 

reinforces the need for regulators, financial institutions, and 

critical technology service providers to have appropriate 

procedures to effectively respond to cybersecurity risk. 

The FDIC works with other bank regulators to analyze and 

respond to emerging cyber threats, bank security breaches, 

and other harmful or disruptive technology-related 

incidents. The federal banking agencies are currently 

reviewing security readiness at banks and technology 

service providers. We are also evaluating our supervisory 

policies for potential improvements.

The FDIC has taken a number of actions to raise awareness 

of cyber risks and to encourage practices to protect against 

threats at the banks we supervise, particularly community 

banks. For example, in 2014 the FDIC distributed Cyber 

Challenge: A Community Bank Cyber Exercise to all FDICsupervised banks. Cyber Challenge provides operational 

risk-related scenarios and challenge questions designed to 

facilitate discussion and allow community bankers to assess 

their preparedness for and response to cyber-related events. 

The FDIC monitors cybersecurity issues on a regular basis 

through on-site bank examinations, regulatory reports, 

and intelligence reports. The FDIC also works with 

other federal agencies, law enforcement and a number of 

government groups and industry coordinating councils, 

such as the Finance and Banking Information Infrastructure 

Committee, and the Financial Services Sector Coordinating 

Council for Critical Infrastructure Protection and Homeland 

Security, to facilitate collaboration and information sharing 

across the financial services sector.

PROTECTING CONSUMERS 

AND EXPANDING ACCESS 

TO BANKING SERVICES

Expanding access to mainstream banking services is part 

of the FDIC’s core mission. The FDIC’s National Survey of 

Unbanked and Underbanked Households, conducted every 

two years with the U.S. Census Bureau, has documented 

that a large portion of the population in our country 

does not have a relationship with an insured depository 

institution or relies on alternative financial service providers 
MESSAGE FROM THE CHAIRMAN 9

to meet some of their financial services needs. The survey, 

which was last released in October 2014, is widely used by 

the industry, analysts, government and non-governmental 

organizations, the media, and many others to better 

understand who lacks access to mainstream banking 

services and to gain insights into opportunities to expand 

participation.

During 2014, the FDIC continued its efforts to protect 

consumers and expand access to mainstream banking 

services. For example, the FDIC’s Advisory Committee on 

Economic Inclusion — composed of bankers, community 

and consumer organizations, and academics — continues 

to focus on new ways to expand banking services to all 

consumers. During 2014, several banks offered low-cost 

transaction accounts that were consistent with the 

FDIC’s model SAFE transaction account template that 

was developed under guidance from the committee. The 

committee also worked on developing ways to tap the 

economic inclusion potential of mobile financial services, 

expanding financial education programs for young people, 

and identifying prudent, feasible approaches to providing 

access to small-dollar credit within mainstream, insured 

financial institutions.

CONCLUSION

During 2014, the U.S. banking industry continued its 

recovery from the recent financial crisis. The industry 

benefited from stronger balance sheets, fewer problem 

banks and bank closings, increased lending activity, and 

a larger balance in the DIF. At the same time, it remains 

important for bankers and supervisors to heed the lessons 

of the recent crisis by maintaining a steady focus on 

risk management. 

In 2015, the FDIC will continue to work to fulfill its mission 

of maintaining public confidence and stability in the nation’s 

financial system. 

The workforce of the FDIC remains committed to the 

FDIC’s core mission. I am very grateful to the dedicated 

professionals of the FDIC for their commitment to public 

service and for the high level at which they carry out their 

important responsibilities. 

Sincerely,

Martin J. Gruenberg
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ANNUAL REPORT 2012 11

I am pleased to present 

the Federal Deposit 

Insurance Corporation’s 

(FDIC) 2014 Annual 

Report (also referred 

to as the Performance 

and Accountability 

Report). The report 

covers financial and 

program performance 

information, and 

summarizes our 

successes for the year. The FDIC takes pride in providing 

timely, reliable, and meaningful information to its 

many stakeholders. 

For 23 consecutive years, the U.S. Government 

Accountability Office (GAO) has issued unmodified 

(unqualified) audit opinions for the two funds administered 

by the FDIC: the Deposit Insurance Fund (DIF) and the 

Federal Savings and Loan Insurance Corporation (FSLIC) 

Resolution Fund (FRF). We take pride in our responsibility 

and demonstrate discipline and accountability as stewards 

of these funds. We remain proactive in execution of 

sound financial management and in providing reliable 

financial data.

During 2014, the FDIC continued to rebuild the DIF 

following the most recent banking crisis. Since the end 

of 2009, when the DIF was negative $20.9 billion, the DIF 

increased by $83.7 billion to a record $62.8 billion at the 

end of 2014. This increase is primarily due to $57.9 billion 

in cumulative assessment revenue and a $23.4 billion 

cumulative decrease in the provision for insurance losses.

FINANCIAL RESULTS FOR 2014

For 2014, DIF comprehensive income totaled $15.6 billion, 

an increase of $1.4 billion over the 2013 comprehensive 

income of $14.2 billion. This increase is primarily due to 

a negative $8.3 billion in provision for insurance losses 

in 2014 compared to a negative $5.7 billion in 2013. 

Assessment revenue was $8.7 billion in 2014 as compared 

to $9.7 billion in 2013, a decrease of $1.0 billion. Interest on 

U.S. Treasury obligations totaled $282 million as compared 

to $103 million in 2013; at the end of 2014, the yield to 

maturity on the DIF portfolio was 0.70%.

In April 2014, we closed the last of our three temporary 

offices which were originally opened in 2009 and 2010 to 

deal with the banking crisis. At the height of the banking 

crisis, the FDIC full-time equivalent employees peaked 

at 8,241. At the end of 2014, we had 6,631 employees, a 

20% reduction in overall staffing. While we have reduced 

staffing and project further reductions in 2015, we will 

maintain a workforce ready to carry out the mission of the 

FDIC and to handle any future bank failures.

In 2014, there were 18 bank failures, down markedly from 

the peak of 157 in 2010, and the lowest number since 25 

failures occurred at the beginning of the crisis in 2008. As 

bank failures decline further, we will continue to manage 

risks, especially as they pertain to our goal of rebuilding 

the DIF. We will remain focused on sound financial 

management techniques, and maintain our enterprise-wide 

risk management and internal control program.

Sincerely,

Steven O. App

Message from the Chief Financial Officer

MESSAGE FROM THE CHIEF FINANCIAL OFFICER 11
ANNUAL REPORT 2014

FDIC Senior Leaders

12 FEDERAL DEPOSIT INSURANCE CORPORATION

Seated (left to right): Vice Chairman Thomas M. Hoenig, Chairman Martin J. Gruenberg, and 

Director Jeremiah O. Norton. Standing 1st Row (left to right): Suzannah L. Susser, Barbara A. Ryan, Arleas Upton 

Kea, Craig R. Jarvill, Doreen R. Eberley, and Arthur J. Murton. 2nd Row (left to right): Martin D. Henning, Cottrell 

L. Webster, Richard J. Osterman, Jr., Stephen A. Quick, and Andrew S. Gray. 3rd Row (left to right): Diane Ellis, 

Mark E. Pearce, Bret D. Edwards, Russell G. Pittman, Eric J. Spitler, and Steven O. App. 

Not pictured: Barbara Hagenbaugh, Kymberly K. Copa, Segundo Pereira, Robert D. Harris, Fred W. Gibson, 

Barry C. West, Christopher J. Farrow, and C. Richard Miserendino.
Management’s 

Discussion and 

Analysis

I.

The Year in Review

OVERVIEW

During 2014, the FDIC continued to fulfill its mission-critical 

responsibilities. The FDIC adopted and issued final rules on 

key regulations under the Dodd-Frank Wall Street Reform 

and Consumer Protection Act (Dodd-Frank Act). The FDIC 

also engaged in several community banking and community 

development initiatives over the past year. In addition, 

cybersecurity remained a high priority for the FDIC as it 

worked to strengthen cybersecurity oversight, help financial 

institutions mitigate this increasing risk, and respond to 

cyber threats. The sections below highlight some of our 

accomplishments during the year.

IMPLEMENTATION OF 

KEY REGULATIONS

Capital Rulemaking and Guidance

In April 2014, the FDIC adopted as final its 2013 interim 

final capital rule implementing the Basel III capital 

standards. The Basel III standards strengthen the quality 

and required level of regulatory capital and, for advanced 

approaches banks, introduce a new supplementary leverage 

requirement. The final rule is largely identical to the final 

capital rule adopted by the Office of the Comptroller of 

the Currency (OCC) and the Board of Governors of the 

Federal Reserve System (FRB) in September 2013. Also in 

April 2014, the FDIC and the other federal banking agencies 

issued a final rule that strengthens the supplementary 

leverage capital requirements for the eight largest U.S. 

bank holding companies (BHCs) and their insured banks. 

The enhanced leverage requirements in this rule, which 

are significantly higher than the 3 percent level agreed to 

by the Basel Committee, should contribute to the stability 

and resilience of these large institutions and the financial 

system. 

Basel III Final Capital Rule

At its April 2014 meeting, the FDIC Board of Directors 

(FDIC Board) approved the Basel III interim final rule as a 

final rule with no substantive changes. The FDIC had issued 

the July 2013 Basel III rule as an interim final rule in order 

to consider comments on the enhanced supplementary 

leverage standards. The Basel III rule became effective 

January 1, 2015, for banking organizations not subject to 

the advanced approaches risk-based capital rule. Banking 

organizations that are subject to the advanced approaches 

capital requirements have been operating under the 

new capital rule since January 1, 2014. For all banking 

organizations, the final rule provides a phase-in period for 

certain aspects of the rule including the new capital ratios, 

the capital conservation buffer, and adjustments to and 

deductions from regulatory capital.

The capital conservation buffer framework provides for 

gradually increasing limits on capital distributions as 

a bank’s risk-based capital ratios approach regulatory 

minimums. S-corporation banks have expressed concern 

that this framework could increase the frequency with 

which their shareholders face a tax liability without having 

MANAGEMENT’S DISCUSSION AND ANALYSIS 13
ANNUAL REPORT 2014

14 MANAGEMENT’S DISCUSSION AND ANALYSIS

received dividends. Under the final rule, banks may make 

a dividend exception request to their primary federal 

regulator (PFR), and the regulator can approve the request 

if warranted based on safety and soundness considerations. 

In July 2014, the FDIC released a Financial Institution Letter 

(FIL) describing the factors that will be considered for 

such requests from S-corporation banks. Absent significant 

safety and soundness concerns about the requesting bank, 

the FDIC generally would expect to approve exception 

requests by well-rated S-corporation banks that are limited 

to the payment of dividends to cover shareholders’ taxes on 

their portion of an S-corporation’s earnings.

Regulatory Capital–Proposed Revisions Applicable 

to Banking Organizations Subject to the Advanced 

Approaches Risk-Based Capital Rule

In November 2014, the federal banking agencies issued a 

notice of proposed rulemaking (NPR) regarding certain 

technical amendments to the advanced approaches 

risk-based capital rule, to enhance consistency of the U.S. 

capital rules with international standards for the use of the 

advanced approaches framework.

Enhanced Supplementary Leverage Ratio Standards 

for Certain Bank Holding Companies and their 

Subsidiary Insured Depository Institutions 

In April 2014, the federal banking agencies issued a final 

rule that increases the supplementary leverage requirements 

for the largest, most systemically important banking 

organizations and their subsidiary insured depository 

institutions (IDIs). The new requirements apply to banking 

organizations with at least $700 billion in total consolidated 

assets at the top-tier BHC or at least $10 trillion in assets 

under custody (covered BHCs) and any IDI subsidiary of 

these bank holding companies (covered IDIs). For covered 

IDIs, the rule establishes a supplementary leverage ratio 

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

corrective action (PCA). For covered BHCs, the rule 

establishes a capital conservation buffer composed of tier 

1 capital of 2 percent of total leverage exposure; therefore, 

these BHCs need to maintain a supplementary leverage ratio 

of 5 percent to avoid restrictions on capital distributions. 

These levels are in excess of the Basel III requirement of a 

3 percent supplementary leverage ratio, which applies to all 

advanced approaches banking organizations.

Supplementary Leverage Ratio Final Rule

In September 2014, the FDIC approved an interagency 

final rule that implements changes to the supplementary 

leverage ratio calculation that were proposed in April 

2014. The supplementary leverage ratio applies to all 

banking organizations subject to the advanced approaches 

risk-based capital rules, including the eight entities subject 

to the enhanced supplementary leverage requirements. 

The rule aligns the agencies’ rules on the calculation of 

the denominator of the supplementary leverage ratio with 

international leverage ratio standards. Among other things, 

the new rule:

♦ Incorporates in the denominator of the ratio the effective 

notional amount of credit derivatives and other similar 

instruments under which credit protection is provided.

♦ Modifies the calculation of total leverage exposure for 

derivatives and repo-style transactions. 

♦ Revises the credit conversion factors applied to certain 

off-balance sheet exposures. 

The rule also establishes public disclosure requirements 

that are effective in March 2015. Supplementary leverage 

ratio capital requirements incorporating the revised 

denominator are effective January 1, 2018.

Regulatory Reporting Under the Final Capital Rule

In March 2014, the FDIC and the other federal banking 

agencies implemented the first stage of revisions to the 

Consolidated Reports of Condition and Income (Call 

Report) to align the regulatory capital components and 

ratios portion of the regulatory capital schedule with 

the Basel III revised regulatory capital definitions. The 

agencies also revised the Federal Financial Institutions 

Examination Council (FFIEC) 101 regulatory capital report 

for advanced approaches institutions to implement changes 

to the advanced approaches regulatory capital rules. These 

regulatory capital reporting changes took effect as of the 

March 31, 2014, report date for advanced approaches 

institutions. The Call Report revisions will be applicable to 

all other institutions as of the March 31, 2015, report date. 

In June 2014, the FDIC and the other federal banking 

agencies issued for comment the second stage of revisions 

to the Call Report regulatory capital schedule. These 
MANAGEMENT’S DISCUSSION AND ANALYSIS 15

revisions would update the risk-weighted assets portion 

of the schedule to reflect the standardized approach to 

risk weighting in the Basel III final rules and would take 

effect as of the March 31, 2015, report date. Following 

the publication of the proposal, the agencies conducted a 

banker teleconference to describe the proposed reporting 

changes and respond to questions. The agencies have 

modified the report form and instructions in response to 

comments and technical questions received on the proposal. 

Final drafts of the revised risk-weighted assets report form 

and instructions were made available to institutions in 

January 2015. Subsequently, the agencies also issued the 

final risk-weighted asset reporting changes for comment 

and submitted them to the U.S. Office of Management and 

Budget (OMB) for approval.

In September 2014, the FDIC and the other federal banking 

agencies issued for comment the proposed FFIEC 102 

market risk regulatory report. This new quarterly report 

would collect key information from the limited number 

of institutions subject to the Basel III market risk capital 

rules on how they measure and calculate market risk 

under these rules. The report would take effect as of the 

March 31, 2015, report date. After considering technical 

questions received on the proposal, the agencies finalized 

the market risk reporting requirements in January 2015, 

and subsequently issued a final request for comments and 

submitted the new report to OMB for approval.

Stress Testing Guidance

In March 2014, the FDIC, along with the other federal 

banking agencies, issued final guidance that outlines 

high-level principles for implementing Section 165(i)(2) 

of the Dodd-Frank Act, which requires stress tests 

for companies with $10 billion to $50 billion in 

consolidated assets.

The guidance discusses supervisory expectations for the 

Dodd-Frank Act stress test practices and offers additional 

details about methodologies that should be employed by 

these companies. It also underscores the importance of 

stress testing as an ongoing risk management practice that 

supports a company’s forward-looking assessment of its 

risks and better equips the company to address a range of 

macroeconomic and financial outcomes.

Since the publication of the Annual Stress Test rule in 

October 2012, the FDIC and other federal banking agencies 

have received feedback from the industry regarding 

the resource constraints that covered banks face at the 

beginning and end of the calendar year arising from 

competing regulatory and reporting deadlines. The FDIC 

and other banking agencies are aware that conducting 

stress testing during the last quarter of a calendar year may 

also make it difficult for covered banks to timely modify 

strategic and operational plans for the following year that 

address any issues identified in the company-run stress 

test results.

For these reasons, in November 2014, the FDIC, in 

coordination with the FRB and the OCC, issued a final 

rule that modifies the dates of the stress test cycle and the 

corresponding reporting and publication deadlines. The 

shift in testing, reporting, and disclosure dates will take 

place for the 2016 company-run stress test cycle and each 

annual cycle thereafter.

Other Rulemaking and Guidance 

under the Dodd-Frank Act 

The Dodd-Frank Act requires various agencies to 

publicize regulations in a number of areas. The 

following is a summary of significant activity relating to 

the Dodd-Frank Act.

Margin and Capital Requirements 

for Covered Swap Entities

In September 2014, the FDIC Board approved the 

interagency notice of proposed rulemaking (NPR) for 

Margin and Capital Requirements for Covered Swap 

Entities. This proposed rule would implement certain 

requirements contained in Sections 731 and 764 of the 

Dodd-Frank Act, which provide that the largest and most 

active participants in the over-the-counter derivatives 

market must collect initial margin and variation margin. 

The NPR is consistent with the international framework 

on margin requirements published by the Basel Committee 

on Banking Supervision (BCBS) and the International 

Organization of Securities Commissions in September 2013. 

The proposed rule applies to these large entities supervised 

by the agencies and designated by the U.S. Commodity 

Futures Trading Commission (CFTC) or the U.S. Securities 
ANNUAL REPORT 2014

16 MANAGEMENT’S DISCUSSION AND ANALYSIS

and Exchange Commission (SEC) as swap dealers, major 

swap participants, security-based swap dealers, or securitybased major swap participants. The NPR calls these 

registered firms “covered swap entities” (CSEs). As of 

December 15, 2014, 15 insured depository institutions had 

registered with the CFTC as swap dealers, and as of that 

date, no IDI had registered with the CFTC as a major swap 

participant. The SEC has not yet imposed a registration 

requirement for dealers or major participants in swaps that 

it regulates.

A CSE would be required to exchange initial margin for 

non-cleared swaps that it enters into with other swap 

entities and with financial entities that engage in swap 

activity above a certain threshold. A CSE would be required 

to exchange variation margin for uncleared swaps it enters 

into with another swap entity or with any financial entity. 

Most community bank swap activities are in amounts 

too small to be affected by the proposed rule. Also, the 

proposed rule does not require CSEs to collect margin from 

commercial end users.

The proposal was published in the Federal Register on 

September 24, 2014, and the comment period ended 

November 24, 2014. The agencies are reviewing the 

comments and plan to issue a final rule in early 2015.

Credit Risk Retention for Securitizations

In October 2014, the FDIC, jointly with the OCC, the FRB, 

the Department of Housing and Urban Development, the 

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

approved a final rule to implement the securitization credit 

risk retention provisions of Section 941 of the Dodd-Frank 

Act, which added Section 15G to the Securities Exchange 

Act of 1934. Section 15G generally requires securitizers 

of asset-backed securities (ABS) to retain not less than 

5 percent of the credit risk of assets collateralizing ABS 

issuances, and generally prohibits a securitizer from 

directly or indirectly hedging or otherwise transferring the 

credit risk the securitizer is required to retain. The final 

rule provides various exemptions from the risk retention 

requirements, some of which are required by statute. For 

example, as required by the Dodd-Frank Act, the final rule 

exempts ABS collateralized solely by “qualified residential 

mortgages” (QRM) from risk retention requirements. 

The final rule aligns the definition of QRM with the 

definition of “qualified mortgage” (QM) as prescribed by 

the Consumer Financial Protection Bureau (CFPB). This 

alignment is consistent with the statutory requirement that 

the QRM definition be no broader than the QM definition 

and take into consideration underwriting and product 

features that historical loan performance data indicate 

result in lower risk of default. In addition, the final rule 

reduces, in some situations to zero, the risk retention 

requirements for ABS collateralized by commercial 

mortgages, commercial real estate (CRE) loans, or 

automobile loans that meet certain underwriting standards. 

The final rule also provides various transaction-specific 

risk retention options for revolving pool securitizations, 

commercial mortgage-backed securities, open market 

collateralized loan obligations, government-sponsored 

enterprises, municipal bond repackagings (known as 

tender option bonds), and asset-backed commercial paper 

conduits. The final rule prohibits hedging, transferring, 

or pledging required risk retention until these restrictions 

lapse, which varies by asset type. 

The final rule was published in the Federal Register on 

December 24, 2014. Compliance with respect to residential 

mortgage-backed securities is required beginning one year 

after the date of publication in the Federal Register. For 

all other classes of ABS, compliance with the final rule is 

required beginning two years after the date of publication in 

the Federal Register. 

The Volcker Rule

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

federal banking agencies, and the SEC, approved a joint 

final rule to implement the provisions of Section 619 of the 

Dodd-Frank Act, also known as the “Volcker Rule.” (On 

that same date, for procedural reasons, the CFTC adopted 

an identical final rule.) The Volcker Rule, which added 

Section 13 to the BHC Act, generally prohibits any banking 

entity from engaging in proprietary trading or acquiring 

or retaining an interest in, sponsoring, or having certain 

relationships with, a hedge fund or private equity fund, 

subject to certain exemptions. The final rule became 

effective April 1, 2014.
MANAGEMENT’S DISCUSSION AND ANALYSIS 17

In January 2014, the FDIC, together with the other federal 

banking agencies, the SEC, and the CFTC, adopted a joint 

interim final rule that permits banking entities subject to the 

Volcker Rule to retain investments in certain collateralized 

debt obligations backed primarily by trust preferred 

securities. 

To help ensure consistent implementation of the Volcker 

Rule, the agencies have established an interagency Volcker 

Rule working group that meets regularly to discuss issues 

and the application and enforcement of the rule. 

During 2014, the agencies posted various joint Frequently 

Asked Questions (FAQs) on their websites to address 

certain implementation issues presented by banking entities 

subject to the Volcker Rule. These FAQs have addressed 

such matters as:

♦ Annual CEO Attestation

♦ Conformance Period

♦ Foreign Public Fund Seeding Vehicles

♦ Loan Securitization Servicing Assets

♦ Metrics Reporting and Confidentiality

♦ Metrics Reporting Date

♦ Metrics Reporting During the Conformance Period

♦ Mortgage-Backed Securities of Government-Sponsored 

Enterprises

♦ Name-sharing Prohibition

♦ Trading Desks 

Minimum Requirements for Appraisal 

Management Companies

In April 2014, the FDIC, jointly with the OCC, the FRB, 

the National Credit Union Administration (NCUA), the 

CFPB, and the FHFA, approved an NPR to implement the 

minimum requirements for registration and supervision 

of appraisal management companies (AMCs) in the 

Dodd-Frank Act. The proposed rule would establish the 

minimum requirements in Section 1473 of the Dodd-Frank 

Act (Section 1473) for registration and supervision of 

AMCs; establish the minimum requirements for AMCs that 

register with the State under Section 1473; require federally 

regulated AMCs to meet the minimum requirements of 

Section 1473 (other than registering with the State); and 

require the reporting of certain AMC information to the 

Appraisal Subcommittee of the FFIEC. The comment 

period closed in June 2014, and the agencies are reviewing 

and considering the comments received. The agencies 

expect to issue a final rule in 2015. 

Joint Standards for Assessing 

Diversity Policies and Practices 

The FDIC continued to implement the provisions of Section 

342 of the Dodd-Frank Act during 2014. Section 342(b)(2)

(C) of the Act requires the Office of Minority and Women 

Inclusion (OMWI) Director of each covered agency to 

develop standards for assessing the diversity policies 

and practices of entities regulated by such agency. To 

implement that requirement and develop those standards, 

the FDIC’s OMWI continued to work closely in 2014 with 

the OMWI Directors of the OCC, the NCUA, the FRB, the 

CFPB, and the SEC. In addition, the FDIC developed 

standards for increasing the participation of minorityand women-owned businesses (MWOBs) in the agency’s 

programs and contracts and standards to evaluate agency 

contractors’ good faith efforts to include minorities and 

women in their workforce.

In late 2013, proposed standards were published in 

the Federal Register as a Proposed Interagency Policy 

Statement Establishing Joint Standards for Assessing the 

Diversity Policies and Practices of Entities Regulated by 

the Agencies. The proposed standards describe leading 

diversity practices for the financial services industry in four 

key areas: (1) organizational commitment to diversity and 

inclusion; (2) workforce profile and employment practices; 

(3) procurement and business practices – supplier diversity; 

and (4) practices to promote transparency of organizational 

diversity and inclusion. 

The comment period was initially scheduled to end on 

December 24, 2013, but was extended to February 7, 2014, 

to facilitate public comment on the policy statement and 

questions posed by the agencies. The FDIC in coordination 

with the other agencies have reviewed the comments 

received and are in the final stages of preparing final joint 

standards, which will likely be issued in 2015.
ANNUAL REPORT 2014

18 MANAGEMENT’S DISCUSSION AND ANALYSIS

Liquidity and Funds Management Rulemaking 

Liquidity Coverage Ratio

In September 2014, the FDIC, together with the OCC and 

the FRB, issued a joint final rule to implement the Liquidity 

Coverage Ratio (LCR). The final rule requires certain 

banks to hold a minimum level of liquid assets to support 

contingent liquidity events that could arise within a 30-day 

liquidity stress horizon. It also provides a standard way of 

expressing a bank’s on-balance sheet liquidity position to 

stakeholders and supervisors. 

The requirement applies to large, internationally active 

banking organizations and their consolidated subsidiary 

depository institutions with $10 billion or more in total 

consolidated assets. Covered companies are required to 

notify their PFR when the LCR drops below 100 percent 

and develop a remediation plan if the shortfall persists. The 

rule establishes a shorter phase-in period than the Basel 

III standard, as it would require covered companies to 

fully meet the minimum LCR by January 1, 2017, two years 

earlier than the Basel III requirements. The FRB is also 

applying a less stringent LCR requirement to certain smaller 

depository institution holding companies with $50 billion to 

$250 billion in total assets. 

Net Stable Funding Ratio 

In October 2014, the BCBS published a final standard to 

implement the Net Stable Funding Ratio (NSFR). While the 

LCR focuses on having sufficient high-quality liquid asset 

buffers to weather a short-term severe stress, the NSFR 

considers funding over a longer horizon. The NSFR requires 

banks to maintain a stable funding profile in relation to their 

on- and off-balance sheet activities, comparing the amount 

of an entity’s required stable funding to meet asset and 

off-balance sheet obligations against the available stable 

funding sources. The FDIC expects that the federal banking 

agencies will complete an NSFR proposal by year-end 2015. 

INSURANCE

The FDIC insures bank and savings association deposits. As 

insurer, the FDIC must continually evaluate and effectively 

manage how changes in the economy, the financial markets, 

and the banking system affect the adequacy and the viability 

of the Deposit Insurance Fund (DIF).

Long-Term Comprehensive 

Fund Management Plan 

In 2010 and 2011, the FDIC developed a comprehensive, 

long-term DIF management plan designed to reduce 

the effects of cyclicality and achieve moderate, steady 

assessment rates throughout economic and credit cycles, 

while also maintaining a positive fund balance, even 

during a banking crisis. That plan is combined with 

the Restoration Plan, originally adopted in 2008 and 

subsequently revised, which is designed to ensure that the 

reserve ratio (the ratio of the fund balance to estimated 

insured deposits) will reach 1.35 percent by September 

30, 2020, as required by the Dodd-Frank Act.1 These plans 

include a reduction in assessment rates that the FDIC Board 

adopted to become effective once the reserve ratio reaches 

1.15 percent. 

To increase the probability that the fund reserve ratio will 

reach a level sufficient to withstand a future crisis, the 

FDIC Board has—under the long-term DIF management 

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

at 2.0 percent. The FDIC views the 2.0 percent DRR as a 

long-term goal and the minimum level needed to withstand 

future crises of the magnitude of past crises. Under 

provisions of the Federal Deposit Insurance Act (FDI Act) 

that require the FDIC Board to set the DRR for the DIF 

annually, the FDIC Board voted in October 2014 to maintain 

the 2.0 percent DRR for 2015—the DRR that has been in 

effect every year since 2011.

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

also suspended dividends indefinitely when the fund reserve 

ratio exceeds 1.5 percent. Instead, the plan prescribes 

progressively lower assessment rates that will become 

effective when the reserve ratio exceeds 2.0 percent and 

2.5 percent. These lower assessment rates serve much the 

same function as dividends, but provide more stable and 

predictable effective assessment rates over time.

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

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

to better take into account prevailing industry conditions at the time of the offset.
MANAGEMENT’S DISCUSSION AND ANALYSIS 19

State of the Deposit Insurance Fund 

Estimated losses to the DIF were $0.4 billion from failures 

occurring in 2014; these losses were lower than losses from 

failures in each of the previous six years. The fund balance 

continued to grow through 2014, as it has every quarter 

starting first quarter 2010, for a total of 20 consecutive 

quarters. Lower than estimated losses for past bank 

failures together with assessment revenue contributed to 

the increase in the fund balance in 2014. The fund reserve 

ratio rose to 1.01 percent at December 31, 2014, from 0.79 

percent at the previous year-end. 

Deposit Insurance Assessment System

In November 2014, the FDIC finalized a rule that revises 

the deposit insurance system to be consistent with changes 

in the regulatory capital rules that go into effect January 

1, 2015, and January 1, 2018. The rule conforms the 

capital ratios and ratio thresholds in the deposit insurance 

assessment system to the Basel III rule prompt corrective 

action capital ratios and thresholds. The rule also conforms 

the assessment base calculation for custodial banks 

to the new asset risk weights under the Basel III rule’s 

standardized approach. In addition, for highly complex 

institutions, the rule requires counterparty exposure for 

assessment purposes to be measured using the Basel III 

rule’s standardized approach, with a modification for certain 

cash collateral securing derivative exposures.

ACTIVITIES RELATED TO SYSTEMICALLY 

IMPORTANT FINANCIAL INSTITUTIONS

Complex Financial Institutions

The FDIC is committed to addressing the unique challenges 

associated with the supervision, insurance, and potential 

resolution of large and complex insured institutions. The 

FDIC’s ability to analyze and respond to risks in these 

institutions is particularly important, as they comprise a 

significant share of banking industry assets. The FDIC’s 

programs related to complex financial institutions provide 

for a consistent approach to large bank supervision 

nationwide, allows for the analysis of financial institution 

risks on an individual and comparative basis, and enables 

a quick response to risks identified at large institutions. 

Given the concentration of risk in these institutions, the 

FDIC has expanded its activities at the nation’s largest and 

most complex institutions through additional and enhanced 

on-site and off-site monitoring and supervision.

Risk Monitoring Activities for Systemically 

Important Financial Institutions

The Dodd-Frank Act expanded the FDIC’s responsibilities 

for overseeing and monitoring the largest, most complex 

BHCs and large, nonbank systemically important financial 

institutions (SIFIs) designated by the Financial Stability 

Oversight Council (FSOC) for supervision by the FRB. 

In 2014, the FDIC’s CFI activities included ongoing 

risk monitoring of the largest, most complex banking 

organizations and backup supervision of their IDIs, as well 

as ongoing risk monitoring of certain nonbank financial 

companies. The FDIC continues to work closely with 

other federal regulators to better understand the risk 

measurement and management practices of SIFIs and 

assess the potential risks they pose to financial stability.

The FDIC undertakes risk monitoring activities at the 

company level to understand each company’s: structure, 

business activities, and resolution/recovery capabilities 

to inform the FDIC’s resolution planning staff; business 

activities and risk profile to gauge both proximity to a 

resolution event and the speed at which a company’s 

condition could potentially deteriorate to a resolution event; 

recovery plans; early warning signals and triggers; and the 

range of remedial actions to be taken should a triggering 

event occur. 

In 2014, the FDIC’s off-site monitoring systems for SIFIs 

were expanded to enhance efforts to analyze structured and 

unstructured data. The FDIC developed and implemented 

the Systemic Monitoring System (SMS), which is an off-site 

monitoring tool for SIFIs that will be used to enhance risk 

scoping of various activities. This tool will be integrated 

into the FDIC’s SIFI on-site monitoring and resolution 

planning processes. The SMS synthesizes large amounts 

of quantitative data from numerous sources (i.e., data 

that pertain to both proximity-to-default and speed-todefault), evaluates the level and change in metrics that 

serve as important barometers of overall risk, produces 

a preliminary risk assessment and comprehensive risk 

profile report for individual SIFIs, and identifies areas 
ANNUAL REPORT 2014

20 MANAGEMENT’S DISCUSSION AND ANALYSIS

requiring further follow-up to determine the need for 

additional supervisory activities or accelerated resolution 

planning efforts. SMS risk assessments will help the FDIC 

to identify emerging risks in individual firms, prioritize 

supervisory activities, and inform the development of 

appropriate supervisory responses and resolution strategies 

in deteriorating situations. However, the SMS is not a 

predictive or a statistically based model; rather it is a 

dynamic tool that assists the FDIC in identifying risk in the 

largest firms.

Risk monitoring is enhanced by the FDIC’s backup 

supervision activities. In the FDIC’s back-up supervisory 

role, as outlined in Sections 8 and 10 of the FDI Act 

and Sections 23A and 23B of the Federal Reserve Act, 

the FDIC has expanded resources and developed and 

implemented policies and procedures to guide back-up 

supervisory activities. These activities include participating 

in supervisory activities with other regulatory agencies, 

performing analyses of industry conditions and trends, 

exercising examination authorities, and exercising 

enforcement authorities when necessary. At institutions 

where the FDIC is not the PFR, staff works closely with 

other financial institution regulatory authorities to identify 

emerging risk and assess the overall risk profile of large 

and complex institutions. The FDIC, the FRB, and the 

OCC operate under a Memorandum of Understanding 

(MOU) that establishes guidelines for coordination and 

cooperation to carry out their respective responsibilities, 

including the FDIC’s role as insurer and supervisor. Under 

this agreement, the FDIC has assigned dedicated staff to 

systemically important and large, complex regional banking 

organizations to enhance risk identification capabilities and 

facilitate the communication of supervisory information. 

These individuals work closely with PFR staff in the 

ongoing monitoring of risk at their assigned institutions.

Additionally, the FDIC allocates examination and analytical 

resources annually to the FRB’s Comprehensive Capital 

Analysis and Review and Comprehensive Liquidity Analysis 

and Review programs. Also, in 2014, the FDIC expanded 

participation with the FRB’s Supervisory Assessment of 

Recovery and Resolution Preparedness program in an effort 

to assess firms’ capabilities related to resolvability planning 

and preparedness. 

Title I Resolution Plans

Title I of the Dodd-Frank Act requires that each BHC with 

total consolidated assets of $50 billion or more and each 

nonbank financial company that the FSOC determines 

should be subject to supervision by the FRB, prepare a 

resolution plan, or “living will,” and periodically provide 

the plan to the FRB and the FDIC. Section 165(d) of the 

Dodd-Frank Act requires the company’s resolution plan to 

provide for its rapid and orderly resolution under the U.S. 

Bankruptcy Code in the event of the company’s material 

financial distress or failure. The FDIC and the FRB issued 

a joint rule, effective November 30, 2011, to implement the 

requirements for resolution plans filed under Section 165(d) 

[the 165(d) Rule]. 

The 165(d) Rule provides for staggered initial submission 

dates for the resolution plans of covered companies. 

Thereafter, unless otherwise agreed to by the FDIC and the 

FRB, each covered company must submit a plan annually, 

on or before the anniversary of its initial submission date. 

Under the 165(d) Rule, the initial submission date is based 

upon nonbank assets (or for a foreign-based covered 

company, U.S. nonbank assets) as of November 30, 2011, 

and is set by the rule as follows:

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

companies with $250 billion or more in nonbank

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

covered companies). 

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

companies with $100 billion or more in nonbank 

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

covered companies). 

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

other covered companies as of the effective date of the 

165(d) Rule.

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

after November 30, 2011, (including nonbank financial 

companies designated by the FSOC), must submit its 

initial resolution plan by the next July 1 that is at least 

270 days after the date it became subject to the rule (or 

following its designation by FSOC). 

In July 2012, 11 First Wave Companies submitted initial 

165(d) plans. Based upon review of the initial resolution 
MANAGEMENT’S DISCUSSION AND ANALYSIS 21

plans, the FDIC and the FRB developed guidance for 

the First Wave Companies to permit alternate resolution 

strategies and to clarify information that should be included 

in their 2013 resolution plan submissions.2 The agencies 

also extended the second submission filing date to October 

1, 2013, giving the First Wave Companies additional time to 

develop resolution plans complying with the guidance.

In August 2014, the agencies announced the completion of 

reviews of the October 2013 resolution plans submitted by 

the First Wave Companies. Based on the review of the 2013 

plans, the FDIC Board determined that the plans were not 

credible and did not facilitate an orderly resolution under 

the U.S. Bankruptcy Code as required by Section 165(d) of 

the Dodd-Frank Act. Although this determination was not 

made jointly by the FDIC and the FRB, the agencies jointly 

identified and communicated to the firms, certain firmspecific shortcomings with the 2013 resolution plans and 

agreed that the First Wave Companies must take immediate 

action to improve their resolvability and reflect those 

improvements in their 2015 plans. The agencies further 

agreed that in the event that the First Wave Companies have 

not, on or before July 1, 2015, submitted plans responsive 

to the identified shortcomings, the agencies expect to use 

their authority under Section 165(d) to determine that 

a resolution plan does not meet the requirements of the 

Dodd-Frank Act.

In August 2014, the agencies issued joint feedback letters to 

each of the First Wave Companies. The letters noted some 

improvements from the original plans submitted by the 

companies, but detailed specific shortcomings of each firm’s 

plan and the agencies expectations for the 2015 submission.

While the shortcomings of the plans varied across the First 

Wave Companies, the agencies identified several common 

features of the plans’ shortcomings. These common 

features included: (1) assumptions that the agencies 

regard as unrealistic or inadequately supported, such 

as assumptions about the likely behavior of customers, 

counterparties, investors, central clearing facilities, and 

regulators; and (2) the failure to make, or even to identify, 

the kinds of changes in firm structure and practices that 

would be necessary to enhance the prospects for orderly 

resolution. 

The agencies will require that the annual plans submitted 

by these firms in 2015 demonstrate that the firms are 

making significant progress to address all the shortcomings 

identified in the letters and are taking actions to improve 

their resolvability under the U.S. Bankruptcy Code. 

In July 2014, the First Wave Companies and two of the 

Second Wave Companies submitted revised resolution 

plans, and the three nonbank financial companies 

designated by the FSOC (referred to as Fourth Wave 

Companies) submitted their initial resolution plans. The 

FRB and the FDIC granted requests for extensions to two 

Second Wave Companies, which submitted their plans to 

the agencies by October 1, 2014. The FDIC and the FRB are 

reviewing the plans submitted by the various companies 

in July and October 2014, with the exception of one plan 

for which the review has been completed. In November 

2014, the FDIC and the FRB announced the completion of 

their review of this firm’s 2014 resolution plan and issued a 

joint letter to the firm. The agencies noted improvements 

from the original plan submitted in 2013. The guidance 

given to the firm for preparation of its 2015 plan submission 

stated that its 2014 plan provided a basis for a resolution 

strategy that could facilitate an orderly liquidation under 

bankruptcy. If fully developed in the future, the firm’s plan 

could reduce the risk that the company’s failure would 

pose to the stability of the U.S. financial system. The 

agencies also jointly identified specific shortcomings of the 

2014 resolution plan that need to be addressed in the 2015 

plan. The letter detailed the specific shortcomings and the 

expectations of the agencies for the 2015 submission. 

By December 31, 2013, 116 Third Wave Companies had 

submitted initial resolution plans. In August 2014, after 

reviewing the plans, the agencies provided each of the Third 

Wave Companies the following guidance for their second 

round submissions based on the relative size and scope of 

each firm’s U.S. operations:

♦ The more complex firms are required to file a full 

resolution plan that takes into account and discusses 

potential obstacles to resolvability identified by the 

agencies. The obstacles include global issues, financial 

market utility interconnections, and funding and liquidity. 

2 http://www.fdic.gov/regulations/reform/domesticguidance.pdf
ANNUAL REPORT 2014

22 MANAGEMENT’S DISCUSSION AND ANALYSIS

♦ Firms with less complex U.S. operations are permitted to 

file tailored plans and can use a model template issued by 

the agencies or follow the guidelines previously released 

by the agencies.

♦ Firms with limited U.S. operations may focus their plans 

on material changes to their initial plans as well as actions 

taken to strengthen the effectiveness of their initial plans.

♦ In August 2014, the agencies also released a tailored 

resolution plan template for the Third Wave Companies’ 

2014 plans. The optional template, which is intended 

to facilitate the preparation of tailored resolution plans, 

focuses on the nonbanking operations of the company 

and on the interconnections and interdependencies 

between its nonbanking and banking operations. 

♦ By December 31, 2014, 120 Third Wave Companies 

submitted plans to the agencies. The FDIC and the FRB 

are reviewing those plans.

Insured Depository Institution Resolution Plans

The FDIC has a separate rule that requires all IDIs with 

assets greater than $50 billion to submit resolution plans to 

the FDIC (IDI Rule). The IDI Rule requires each covered 

institution to provide a resolution plan that should allow 

the FDIC as receiver to resolve the institution in an orderly 

manner that enables prompt access of insured deposits, 

maximizes the return from the failed institution’s assets, and 

minimizes losses realized by creditors and the DIF. These 

plans complement those required under the 165(d) Rule. 

Based upon its review of IDI plans submitted prior to 

and during 2014, the FDIC issued guidance in December 

2014 for resolution plans required by the IDI Rule. Under 

the guidance, a covered institution must provide a fully 

developed discussion and analysis of a range of realistic 

resolution strategies. To assist institutions in writing 

their plans, the guidance includes direction regarding the 

elements that should be discussed in a fully developed 

resolution strategy and the cost analysis, clarification 

regarding assumptions made in the plan, and a list 

of significant obstacles to an orderly and least costly 

resolution that institutions should address. The guidance 

applies to the resolution plans of 36 institutions covered 

by the IDI Rule, as well as any new institution meeting 

the threshold, commencing with the 2015 resolution plan 

submissions.

Title II Resolution Strategy Development

Under the Dodd-Frank Act, failed or failing financial 

companies are expected to file for reorganization or 

liquidation under the U.S. Bankruptcy Code, just as any 

failed or failing nonfinancial company would. If resolution 

under the Bankruptcy Code would result in serious adverse 

effects to the U.S. financial stability, the Orderly Liquidation 

Authority (OLA) set out in Title II of the Dodd-Frank Act 

provides a back-up authority to the bankruptcy process. 

There are strict parameters on its use, however, and 

it can only be invoked under a statutorily prescribed 

recommendation and determination process, coupled with 

an expedited judicial review process.

Prior to the 2008 financial crisis, the FDIC’s receivership 

role was limited to IDIs. No regulator had the authority 

to resolve a failing financial company, (e.g., a BHC) or any 

of the company’s non-IDI affiliates or any other nonbank 

financial company through the FDIC’s receivership process, 

in order to avoid the systemic consequences that could arise 

from bankruptcy or other insolvency regime filing. The OLA 

addresses those limitations and gives the FDIC the back-up 

powers necessary to potentially resolve a failing BHC or 

other SIFI in an orderly manner that imposes accountability 

on shareholders, creditors, and management of the failed 

company while mitigating systemic risk and without cost to 

taxpayers.

The FDIC has largely completed the core rulemakings 

necessary to carry out its responsibilities under Title II 

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

developing strategies including one approach, referred to 

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

liquidation authorities. In December 2013, the FDIC 

published a notice in the Federal Register that provides 

greater detail on the SPOE strategy and discusses the key 

issues that the FDIC could encounter in the resolution of a 

SIFI.3

 The notice requested public comment and views as to 

whether the SPOE approach can be effective in supporting 

3 Notice entitled, “Resolution of Systemically Important Financial Institutions: The Single Point of Entry Strategy,” 78 Fed. Reg. 

76614 (Dec. 18, 2013).
MANAGEMENT’S DISCUSSION AND ANALYSIS 23

the policy objectives of minimizing moral hazard and 

promoting market discipline while maintaining the stability 

of the U.S. financial system as set forth in Title II of the 

Dodd-Frank Act. In 2014, the FDIC reviewed all submitted 

comments. Firm-specific resolution strategies continue to 

be developed and refined. 

As part of the FDIC’s efforts to develop and refine strategies 

that could be implemented in a Title II resolution, the FDIC 

and the Bank of England, in conjunction with the financial 

institution regulators in the respective jurisdictions, have 

been developing contingency plans for the failure of a 

U.S.- or U.K.-based SIFI that has significant operations in 

the United Kingdom or the United States, respectively. Of 

the 28 global SIFIs (G-SIFIs) identified by the Financial 

Stability Board (FSB) of the Group of 20 (G-20) countries, 

four are headquartered in the United Kingdom and eight are 

headquartered in the United States. Moreover, more than 

80 percent of the reported foreign activities of the eight U.S. 

G-SIFIs emanates from the United Kingdom. In October 

2014, the FDIC was host to the Secretary of the Treasury, 

the Chair of the Federal Reserve Board of Governors, the 

Chancellor of the Exchequer, and the Governor of the Bank 

of England, as well as leading financial regulatory bodies 

in the United States and United Kingdom for an exercise 

designed to further promote a working relationship between 

U.S. and U.K. authorities in the event of the failure and 

resolution of a G-SIFI. The exercise’s high-level discussion 

furthered understanding among U.S. and U.K. principals 

regarding resolution strategies for G-SIFIs under the two 

countries’ resolution regimes. 

Cross-Border Efforts

Advance planning and cross-border coordination for 

the resolution of G-SIFIs will be essential to minimizing 

disruptions to global financial markets. Recognizing that 

G-SIFIs create complex international legal and operational 

concerns, the FDIC continues to reach out to foreign 

regulators to establish frameworks for effective crossborder cooperation. 

During 2014, the FDIC continued to coordinate with 

representatives from European authorities to discuss issues 

of mutual interest, including the resolution of European 

G-SIFIs and harmonization of receivership actions. The 

FDIC and the European Commission (E.C.) established a 

joint Working Group composed of FDIC and E.C. senior 

executives to focus on both resolution and deposit 

insurance issues. The Working Group meets twice a year 

with other interim interchanges, including the exchanging 

of staff members. Discussions were held concerning 

the FDIC’s experience with bank resolutions, systemic 

resolution strategies, the European Union (E.U.)-wide 

Credit Institution and Investment Firm Recovery and 

Resolution Directive, the E.C.’s amendment to harmonize 

deposit guarantee schemes across the E.U., and the E.C.’s 

Single Resolution Mechanism. In June 2014, the FDIC 

conducted a training seminar on resolutions for resolution 

authorities and E.C. staff.

The FDIC continues to foster its relationships with other 

jurisdictions that regulate G-SIFIs, including Switzerland, 

Germany, France, and Japan. In 2014, the FDIC had 

significant principal and staff-level engagements with these 

countries to discuss cross-border issues and potential 

impediments that would affect the resolution of a G-SIFI. 

This work will continue in 2015 with plans to host tabletop 

exercises with regulatory staff from these jurisdictions. 

Systemic Resolution Advisory Committee

In 2011, the FDIC Board approved the creation of the 

Systemic Resolution Advisory Committee (SRAC). The 

SRAC provides important advice to the FDIC regarding 

systemic resolutions, and advises the FDIC on a variety of 

issues including the following:

♦ The effects on financial stability and economic conditions 

resulting from the failure of a SIFI.

♦ The ways in which specific resolution strategies would 

affect stakeholders and their customers. 

♦ The tools available to the FDIC to wind down the 

operations of a failed organization.

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

foreign regulators and governments when a systemic 

company has international operations. 

Members of the SRAC have a wide range of experience 

including managing complex firms; administering 

bankruptcies; and working in the legal system, accounting 
ANNUAL REPORT 2014

24 MANAGEMENT’S DISCUSSION AND ANALYSIS

field, and academia. A meeting of the SRAC was held in 

December 2014. The SRAC discussed, among other topics, 

living wills and bankruptcy, resolution plan transparency, 

international developments, ISDA protocol, and orderly 

liquidation updates.

Financial Stability Oversight Council 

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

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

composed of ten voting members, including the Chairperson 

of the FDIC, and five non-voting members. 

The FSOC’s responsibilities include the following:

♦ Identifying risks to financial stability, responding to 

emerging threats in the system, and promoting market 

discipline.

♦ Identifying and assessing threats that institutions may 

pose to financial stability and, if appropriate, designating 

a nonbank financial company for supervision by the FRB 

subject to heightened prudential standards.

♦ Designating financial market utilities and payment, 

clearing, or settlement activities that are, or are likely to 

become, systemically important.

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

supervisory information, and reporting requirements.

♦ Monitoring domestic and international financial 

regulatory proposals and advising Congress and making 

recommendations to enhance the integrity, efficiency, 

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

♦ Producing annual reports describing, among other things, 

the Council’s activities and potential emerging threats to 

financial stability.

In 2014, the FSOC issued its fourth annual report. 

Generally, at each of its meetings, the FSOC discusses 

various risk issues. In 2014, the FSOC meetings addressed, 

among other topics, U.S. fiscal issues, market environment 

and developments in the Ukraine, an asset management 

industry conference hosted by the FSOC, short-term 

wholesale funding markets, money market mutual fund 

reforms, and nonbank financial company designations.

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 IDIs, protects consumers’ rights, and 

promotes community investment initiatives. 

Examination Program 

The FDIC’s strong bank examination program is the core 

of its supervisory program. As of December 31, 2014, the 

FDIC was the PFR for 4,138 FDIC-insured, state-chartered 

institutions that were not members of the Federal Reserve 

System [generally referred to as “state nonmember” (SNM) 

institutions]. Through risk management (safety and 

soundness), consumer compliance and the Community 

Reinvestment Act (CRA), and other specialty examinations, 

the FDIC assesses an institution’s operating condition, 

management practices and policies, and compliance with 

applicable laws and regulations. The FDIC also educates 

bankers and consumers on matters of interest and 

addresses consumer questions and concerns.

As of December 31, 2014, the FDIC conducted 2,087 

statutorily required risk management examinations, 

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

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

frames. The FDIC also conducted 1,406 statutorily required 

SRAC member and former Chairman of the 

Federal Reserve Board of Governors Paul Volcker 

(left) and FDIC Chairman Gruenberg discussing 

resolution strategy.
MANAGEMENT’S DISCUSSION AND ANALYSIS 25

CRA/compliance examinations (1,019 joint CRA/compliance 

examinations, 376 compliance-only examinations, and 11 

CRA-only examinations), and 4,667 specialty examinations.

The table above compares the number of examinations, by 

type, conducted from 2012 through 2014.

Risk Management

As of December 31, 2014, 291 insured institutions with 

total assets of $86.7 billion were designated as problem 

institutions for safety and soundness purposes (defined as 

those institutions having a composite CAMELS4 rating of 

“4” or “5”), compared to the 467 problem institutions with 

total assets of $152.7 billion on December 31, 2013. This 

constituted a 38 percent decline in the number of problem 

institutions and a 43 percent decrease in problem institution 

assets. In 2014, 202 institutions with aggregate assets 

of $64.4 billion were removed from the list of problem 

financial institutions, while 26 institutions with aggregate 

assets of $6.3 billion were added to the list. The National 

Republic Bank of Chicago, located in Chicago, Illinois, was 

the largest failure in 2014, with $843 million in assets. The 

FDIC is the PFR for 202 of the 291 problem institutions, 

with total assets of $58.7 billion.

During 2014, the FDIC issued the following formal and 

informal corrective actions to address safety and soundness 

concerns: 41 Consent Orders and 180 MOUs. Of these 

actions, 20 Consent Orders and 23 MOUs were issued, based 

in whole or in part, on apparent violations of the BSA.

All risk management exams were conducted in accordance 

with statutorily-established time frames, and related 

enforcement actions for newly-identified 4- and 5- rated 

institutions were issued in accordance with the time frames 

established by FDIC policy. The FDIC was slightly 

below its performance standard for timeliness in the 

issuance of enforcement actions for newly-identified 

3-rated institutions.

FDIC EXAMINATIONS 2012 – 2014

2014 2013 2012

Risk Management (Safety and Soundness): 

State Nonmember Banks 1,881 2,077 2,310

Savings Banks 206 203 249

Savings Associations 0 0 1

National Banks 0 0 1

State Member Banks 0 4 2

Subtotal–Risk Management Examinations 2,087 2,284 2,563

CRA/Compliance Examinations:

Compliance/Community Reinvestment Act 1,019 1,201 1,044

Compliance-only 376 371 611

CRA-only 11 4 10

Subtotal–CRA/Compliance Examinations 1,406 1,576 1,665

Specialty Examinations:

Trust Departments 428 406 446

Information Technology and Operations 2,113 2,323 2,642

Bank Secrecy Act 2,126 2,328 2,585

Subtotal–Specialty Examinations 4,667 5,057 5,673

Total 8,160 8,917 9,901

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

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

“5” (weakest).
ANNUAL REPORT 2014

26 MANAGEMENT’S DISCUSSION AND ANALYSIS

Compliance

As of December 31, 2014, 56 insured SNM institutions, about 

1 percent of all supervised institutions, with total assets 

of $61 billion, were problem institutions for compliance, 

CRA, or both. Most of the existing problem institutions 

for compliance were rated “4” for compliance purposes, 

with only one rated “5.” For CRA purposes, the majority 

are rated “Needs to Improve,” and only three are rated 

“Substantial Noncompliance.” As of December 31, 2014, 

all follow-up examinations for problem institutions were 

performed on schedule.

During 2014, the FDIC conducted all required compliance 

and CRA examinations and, when violations were identified, 

completed follow-up visits and implemented appropriate 

enforcement actions in full accordance with FDIC policy.

In completing these activities, the FDIC substantially met 

its internally-established time standards for the issuance of 

final examination reports and enforcement actions.

Overall, banks demonstrated strong consumer compliance 

programs. The most significant consumer protection issue 

that emerged from the 2014 compliance examinations 

involved banks’ failure to adequately monitor third-party 

vendors. For example, the FDIC found violations involving 

unfair or deceptive acts or practices relating to issues 

such as failure to disclose material information about new 

product features being offered, deceptive marketing and 

sales practices, and misrepresentations about the costs 

of products. As a result, the FDIC issued orders requiring 

consumer restitution and civil money penalty (CMP) 

actions.

During 2014, the FDIC issued the following formal and 

informal corrective actions to address compliance 

concerns: 14 Consent Orders and 42 MOUs. In certain 

cases, the Consent Orders contain requirements for 

institutions to pay restitution in the form of consumer 

refunds for different violations of laws. During 2014, 

institutions subject to Consent Orders refunded over $105 

million to consumers. These refunds primarily related to 

unfair or deceptive practices by institutions, as discussed 

above. Additionally, in 2014, the FDIC issued 24 CMPs 

relating to consumer compliance, totaling just over $9.5 

million in CMPs.

Large and Complex Financial Institutions

The FDIC established the Complex Financial Institutions 

and Large Bank Supervision Groups (Groups) within its 

Division of Risk Management Supervision in response to 

the growing complexity of large banking organizations. 

These Groups are responsible for supervisory oversight 

and ongoing monitoring, and support the insurance and 

resolutions business lines. For SNM banks over $10 billion, 

the FDIC generally applies a continuous examination 

program whereby dedicated staff conduct ongoing onsite 

supervisory examinations and institution monitoring, as 

previously discussed. At institutions where the FDIC is not 

the PFR, staff works closely with other financial institution 

regulatory authorities to identify emerging risk and assess 

the overall risk profile of large and complex institutions. 

The Large Insured Depository Institution (LIDI) Program 

remains the primary instrument for off-site monitoring 

of IDIs with $10 billion or more in total assets. The LIDI 

Program provides a comprehensive process to standardize 

data capture and reporting through nationwide quantitative 

and qualitative risk analysis of large and complex 

institutions. In 2014, the LIDI Program encompassed 

106 institutions with total assets of $12.4 trillion. The 

comprehensive LIDI Program is essential to effective large 

bank supervision because it captures information on the 

risks and utilizes that information to best deploy resources 

to high-risk areas, determine the need for supervisory 

action, and support insurance assessments and resolution 

planning. 

The Shared National Credit (SNC) Program is an 

interagency initiative administered jointly by the FDIC, the 

FRB, and the OCC to ensure consistency in the regulatory 

review of large, syndicated credits, as well as identify 

risk in this market, which comprises a large volume of 

domestic commercial lending. In 2014, outstanding credit 

commitments identified in the SNC Program totaled $3.4 

trillion. The FDIC, the FRB, and the OCC issued a joint 

release detailing the results of the review in November 2014.

In 2014, the FDIC implemented various initiatives to expand 

knowledge and expertise related to large bank supervisory 

matters. For example, a long-term program was established 

to expand on-the-job training and provide mentoring of 
MANAGEMENT’S DISCUSSION AND ANALYSIS 27

select staff regarding examination processes and risk 

analysis at large banks. The FDIC is also focused on hiring 

and developing additional staff with quantitative skill sets 

to facilitate the evaluation of complex modeling used by the 

largest banks. Additionally, several training initiatives were 

developed and implemented in 2014 that focused on large 

bank supervisory risks, structures, vulnerabilities, 

and processes.

Bank Secrecy Act/Anti-Money Laundering 

The FDIC pursued a number of BSA, Anti-Money 

Laundering (AML), and Counter Financing of Terrorism 

(CFT) initiatives in 2014. 

In January and June 2014, the FDIC conducted International 

AML/CFT training sessions for 61 government officials from 

Afghanistan, Algeria, Azerbaijan, Kazakhstan, Mali, Nigeria, 

Pakistan, and Yemen. Additionally, in March 2014, the FDIC 

conducted an International AML and CFT training session in 

Kuala Lumpur, Malaysia, the first such training session held 

outside of the United States. The training was coordinated 

with Bank Negara Malaysia and included 59 participants 

representing financial regulatory agencies from Cambodia, 

Indonesia, Laos, Malaysia, Myanmar, the Philippines, 

Thailand, and Vietnam. These training sessions assisted 

participating jurisdictions in implementing AML/CFT 

standards and providing law enforcement with financial 

investigative and other skills necessary to combat money 

laundering, terrorist financing, and fraud. Specifically, each 

of the training sessions focused on AML/CFT controls, the 

AML examination process, customer due diligence, and 

suspicious activity monitoring. Additionally, in August 

2014, the FDIC hosted the Office of Foreign Assets Control 

(OFAC) for an interagency teleconference to discuss recent 

changes to existing U.S. economic sanctions programs, as 

well as OFAC compliance expectations and enforcement 

case studies.

In December 2014, the FFIEC released the 2014 

Bank Secrecy Act/Anti-Money Laundering (BSA/

AML) Examination Manual (BSA/AML Manual). The 

revised BSA/AML Manual provides current guidance on 

risk-based policies, procedures, and processes for banking 

organizations to comply with the BSA and safeguard 

operations from money laundering and terrorist financing. 

It also reflects regulatory changes and clarifies supervisory 

expectations that have occurred since the BSA/AML Manual 

was last updated. The 2014 revisions incorporate feedback 

from the banking industry and examination staff.

Information Technology, Cyber Fraud, 

and Financial Crimes 

To address the specialized nature of technology- and 

operations-related supervision, cyber risks, and controls 

in the banking industry, the FDIC routinely conducts 

information technology (IT) and operations examinations at 

FDIC-supervised institutions. The FDIC and other banking 

agencies also conduct IT and operations examinations 

of technology service providers (TSPs), which support 

financial institutions. The result of an IT and operations 

examination is a rating under the FFIEC Uniform Rating 

System for Information Technology, which is incorporated 

into the Management component of the Safety and 

Soundness rating and the Safety and Soundness Report of 

Examination.

In 2014, the FDIC conducted 2,113 IT and operations 

examinations at financial institutions and TSPs. Further, 

as part of its ongoing supervision process, the FDIC 

monitors significant events, such as data breaches and 

natural disasters that may affect financial institution 

operations or customers.

In addition to the FDIC’s operations and technology 

examination program, the FDIC regularly monitors 

cybersecurity issues in the banking industry through 

on-site examinations, regulatory reports, and intelligence 

reports. The FDIC works with groups, such as the Financial 

and Banking Information Infrastructure Committee, the 

Financial Services Sector Coordinating Council for Critical 

Infrastructure Protection and Homeland Security, the 

Financial Services Information Sharing and Analysis Center 

(FS-ISAC), other regulatory agencies, law enforcement, 

and others to share information regarding emerging issues 

and coordinate responses. Further, the FDIC actively 

participates in the FFIEC’s Cybersecurity and Critical 

Infrastructure Working Group (CCIWG). The CCIWG was 

formed in 2013 and serves as a forum to address policy 

related to cybersecurity and critical infrastructure. It 

enables members to communicate and collaborate on 
ANNUAL REPORT 2014

28 MANAGEMENT’S DISCUSSION AND ANALYSIS

activities to support and strengthen the resilience of the 

financial services sector and provides input to FFIEC 

principal members regarding cybersecurity matters.

In 2014, the FDIC continued a multi-year effort begun in 

2010 to strengthen IT and cyber-related educational and 

professional development programs for the examination 

workforce. As part of this effort, newly commissioned 

examiners must complete four IT-related courses – an 

IT examination course as well as courses on payment 

systems; risk assessment, IT audit and business continuity 

planning; and information security. Once this course work 

is completed, these examiners are able to conduct IT 

examinations at the FDIC’s least technologically complex 

supervised financial institutions and better understand the 

risks associated with the FDIC’s more complex financial 

institution IT examinations conducted by specialized IT 

examiners. The FDIC now has nearly 300 commissioned 

examiners who have completed all four post-commission 

IT schools and more than 500 who have completed at least 

one of these schools. An additional facet of this multi-year 

effort is an on-the-job training program to develop 

additional examiners with more advanced IT examination 

skills. In 2014, 18 examiners received advanced 

certifications in IT, bringing the total of examiners with 

advanced IT certifications to 116.

The FDIC’s major accomplishments during 2014 to 

promote IT security, assess risk management practices, 

and combat cyber fraud and other financial crimes included 

the following:

♦ Developed and distributed to all FDIC-supervised banks 

the FDIC’s Cyber Challenge simulation exercise to 

encourage community banks to discuss operational risk 

issues and the potential impact of information technology 

disruptions. The exercise contained four videos that 

depict various operational disruptions and materials to 

facilitate discussion about how the bank would respond 

to the disruptions. Lists of reference materials where 

banks could obtain additional information were also 

included.

♦ Published two FDIC Consumer News articles: “More 

About How to Protect Yourself From Data Breaches” and 

“When People Face Tough Time, Crooks Try to Profit.”

♦ Re-issued, as a FIL, three documents that contain 

practical ideas for community banks to consider when 

they engage in technology outsourcing.

♦ Hosted the FFIEC IT Examiners Conference that 

addressed technology and operational issues facing the 

federal financial regulatory agencies.

♦ Commenced planning a Financial Crimes Conference for 

staff that will focus on all types of financial fraud, and 

how the law enforcement community and regulators can 

effectively respond. The conference is co-sponsored by 

the U.S. Department of Justice (DOJ) and will be held in 

June 2015.

♦ Assisted financial institutions in identifying and shutting 

down “phishing” websites that attempt to fraudulently 

obtain and use an individual’s confidential personal or 

financial information.

Major interagency accomplishments as a member of the 

FFIEC included the following:

♦ Collaborated on the development of an FFIEC 

cybersecurity assessment pilot program conducted at 

more than 500 community banks and TSPs. The pilot 

program was designed to assess how well community 

financial institutions manage cybersecurity and their 

preparedness to mitigate cyber risks. The results of the 

assessment are instructive and will help FFIEC members 

make informed decisions about how they prioritize 

actions to enhance the effectiveness of cybersecurityrelated supervisory programs, guidance, and examiner 

training.

♦ Published FFIEC statements on Cyber Attacks on ATM 

and Card Authorization Systems, as well as Distributed 

Denial of Service (DDoS) Attacks. 

♦ Published an FFIEC Technology Alert on IT 

vulnerabilities.

♦ Co-sponsored and conducted an interagency webinar for 

community banks addressing senior management’s role in 

cybersecurity. Over 5,000 chief executive officers (CEOs) 

and senior managers participated in the webinar.

♦ Issued a press release and FFIEC statement providing 

financial institutions with information on available 

resources to mitigate potential cyber threats and 
MANAGEMENT’S DISCUSSION AND ANALYSIS 29

recommending that institutions of all sizes participate 

in cyber-related information sharing forums, such as the 

FS-ISAC.

Minority Depository Institution Activities

The preservation of minority depository institutions (MDIs) 

remains a high priority for the FDIC. In July 2014, the FDIC 

released a study specifically on MDIs entitled, Minority 

Depository Institutions: Structure, Performance, and 

Social Impact. The study explores the role of MDIs in the 

U.S. financial system: how the industry has changed over 

time, how MDIs have performed financially, and how they 

have served their communities. The report notes that MDIs 

underperform non-MDIs in terms of standard industry 

measures of financial performance, but it concludes that 

MDIs often promote the economic viability of minority and 

underserved communities. Compared with community 

banks, the markets served by MDI offices include a higher 

share of the population living in low- or moderate-income 

(LMI) census tracts, as well as a higher share of minority 

populations. In addition, among institutions that reported 

data under the Home Mortgage Disclosure Act, MDIs 

originated a larger share of their mortgages to borrowers 

who live in LMI census tracts and to minority borrowers 

than did non-MDI community banks. These findings 

demonstrate the essential role MDIs play in their local 

communities and their high level of commitment to the 

populations they serve.

In 2014, the FDIC continued to advocate for MDI and 

Community Development Financial Institution (CDFI) 

industry-led strategies for success, building on the results 

of the 2013 Interagency Minority Depository Institution 

and CDFI Bank Conference. These strategies include 

industry-led solutions; MDI and CDFI bankers working 

together to tell their story; collaborative approaches to 

partnerships to share costs, raise capital, or pool loans; 

technical assistance; and innovative use of federal 

programs. The FDIC has begun working with the OCC and 

the FRB to plan for the 2015 Interagency Conference for 

MDI and CDFI Banks and to build upon these strategies.

The FDIC continually pursued ways to improve 

communication and interaction with MDIs and to respond 

to the concerns of minority bankers. In addition to active 

outreach with MDI trade groups, the FDIC annually offers 

to arrange meetings between regional management and 

each MDI’s board of directors to discuss issues of interest. 

In addition, the FDIC routinely contacts FDIC-supervised 

MDIs to offer return visits and technical assistance 

following the conclusion of each safety and soundness, 

compliance, CRA, and specialty examination to assist 

bank management in understanding and implementing 

examination recommendations. These return visits, 

normally conducted 90 to 120 days after the examination, 

are to provide recommendations or feedback for improving 

operations, not to identify new problems or issues. MDIs 

also may initiate contact with the FDIC to request technical 

assistance at any time. In 2014, the FDIC provided 119 

individual technical assistance sessions on approximately 

80 risk management and compliance topics, including, but 

not limited to, the following:

♦ Bank Secrecy Act and Anti-Money Laundering.

♦ Basel III Capital Rules.

♦ Branch Opening and Closing Requirements.

♦ CRE Concentrations.

♦ Community Reinvestment Act.

♦ Information Technology.

♦ Interest Rate Risk.

♦ Loan Underwriting and Administration.

♦ New Mortgage Rules/Ability to Repay.

♦ Sensitivity to Market Risk.

♦ Third-Party Risk Management.

♦ Troubled Debt Restructurings.

The FDIC regional offices also held outreach, training, and 

educational programs for MDIs through conference calls 

and banker roundtables. In 2014, topics of discussion for 

these sessions included many of those listed above, as well 

as the FDIC’s Technical Assistance Video Program, Capital 

Raising, and PCA.

Other Rulemaking and Guidance Issued

During 2014, the FDIC issued and participated in the 

issuance of other rulemaking and guidance in several areas 

as described below.
ANNUAL REPORT 2014

30 MANAGEMENT’S DISCUSSION AND ANALYSIS

Registration of Municipal Advisors 

In January 2014, the FDIC issued a FIL to advise FDICsupervised financial institutions on the registration 

requirements for those institutions that meet the definition 

of “municipal advisor.” Section 975 of the Dodd-Frank Act 

amended Section 15B(a) of the Securities Exchange Act 

of 1934 to make it unlawful for “municipal advisors,” as 

defined in the Dodd-Frank Act, to provide certain advice 

to or solicit municipal entities or certain other persons 

without registering with the SEC. In September 2013, the 

SEC issued a final rule establishing a permanent registration 

system for municipal advisors.

Paying Agent Notification Requirements

In February 2014, the FDIC issued a FIL to alert bankers to 

the SEC’s amendment to the Exchange Act Rule 17Ad-17 

to implement the requirements of Section 929W of the 

Dodd-Frank Act. The amendments add a requirement 

that “paying agents” send a one-time notification to 

“unresponsive payees” stating that the agent has sent a 

security holder a check that has not yet been negotiated.

Income Tax Allocation in a Holding 

Company Structure

In June 2014, the FDIC and the other federal banking 

agencies issued an addendum to the 1998 Interagency 

Policy Statement on Income Tax Allocation in a Holding 

Company Structure. Since the beginning of the 2008 

financial crisis, many disputes have occurred between 

holding companies in bankruptcy and failed IDIs regarding 

the ownership of tax refunds generated by the IDIs. Certain 

court decisions have found that holding companies in 

bankruptcy own tax refunds created by failed IDIs based 

on language in their tax-sharing agreements that the courts 

interpreted as creating a debtor-creditor relationship as 

opposed to acknowledging an agency relationship. The 

addendum seeks to remedy this problem by requiring IDIs 

to clarify that their tax-sharing agreements acknowledge 

that an agency relationship exists between the holding 

company and its subsidiary IDI with respect to tax refunds 

attributable to income earned, taxes paid, and losses 

incurred by the IDI, and provides a sample paragraph to 

accomplish this goal. The addendum also clarifies how 

certain requirements of Sections 23A and 23B of the Federal 

Reserve Act apply to tax allocation agreements between 

IDIs and their affiliates. Those IDIs and their holding 

companies subject to the 1998 Interagency Policy Statement 

were expected to implement the addendum no later than 

October 31, 2014. The FDIC will review compliance with 

the guidance in upcoming examinations of affected IDIs.

Economic Growth and Regulatory 

Paperwork Reduction Act

The FDIC, along with the other banking regulatory agencies, 

launched a cooperative, three-year effort to review all 

of their regulations. The purpose of the review, which 

is mandated by the Economic Growth and Regulatory 

Paperwork Reduction Act of 1996 (EGRPRA), is to identify 

and eliminate any regulatory requirements that are outdated 

or otherwise unnecessary.

For the purpose of this review, the agencies categorized 

their regulations into 12 separate groups. Over the next two 

years, groups of regulations will be published for comment, 

providing industry participants, consumer and community 

groups, and other interested parties an opportunity to 

identify regulatory requirements they believe are no longer 

needed or should be modified. The agencies will then 

analyze the comments and propose amendments to their 

regulations where appropriate.

In June 2014, the agencies issued the first three groups 

of regulations for comment: Applications and Reporting, 

Powers and Activities, and International Operations. 

During the 90-day comment period, which ended September 

2, 2014, 40 letters were received. Staff is reviewing and 

analyzing the comments.

One such comment letter resulted in the FDIC’s issuance 

of a FIL in November 2014, which eliminates application 

requirements for state-chartered banks engaging in 

activities or investments permissible for a national bank if 

the bank maintains certain documentation, including that 

the activity is permissible under relevant state law. The 

FIL clarifies that this change applies to unincorporated 

subsidiaries of state-chartered banks operating as a 

limited liability company (LLC), a limited partnership, or 

a similar entity wishing to engage in activities permissible 

for a national bank. In addition, in November 2014, the 

FDIC issued guidance through a FIL to aid applicants in 

developing proposals for deposit insurance and to provide 

transparency to the application process. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 31

As a part of the regulatory burden reduction effort, the 

agencies hosted a banker outreach meeting in December 

2014, in Los Angeles, California, to facilitate awareness of 

the EGRPRA project and to listen to stakeholder comments 

and suggestions. FDIC Chairman Martin J. Gruenberg, 

FRB Governor Lael Brainard, and Comptroller Thomas J. 

Curry were featured speakers at the meeting. Staff from 

each of the federal banking agencies, as well as regional 

representatives of the major industry trade groups and 

community advocates, attended the meeting. The agencies 

plan to hold additional roundtable discussions with bankers 

and interested parties and will publish details about these 

sessions at http://www.fdic.gov/EGRPRA/index.html and 

http://egrpra.ffiec.gov as they are finalized.

FDIC Clarifying Supervisory Approach to 

Institutions Establishing Account Relationships 

with Third-Party Payment Processors

In July 2014, the FDIC issued guidance clarifying its 

supervisory approach to institutions establishing account 

relationships with third-party payment processors (TPPPs). 

The focus of the FDIC’s supervisory approach to institutions 

establishing account relationships with TPPPs is to ensure 

that institutions have adequate procedures for conducting 

due diligence, underwriting, and ongoing monitoring of 

these relationships. The guidance stressed that insured 

institutions that properly manage customer relationships 

are neither prohibited nor discouraged from providing 

services to any customer operating in compliance with 

applicable law. 

Interagency Guidance on Home Equity Lines of 

Credit Nearing Their End-of-Draw Period

In July 2014, the FDIC, jointly with the OCC, the FRB, the 

NCUA, and the Conference of State Bank Supervisors, 

issued home equity lines of credit (HELOC) guidance, 

which recognizes that some institutions and borrowers 

may face challenges as HELOCs near their end-of-draw 

period. Many borrowers will have the financial capacity to 

meet their contractual obligations as HELOCs transition 

from the draw period to an amortizing or balloon payment. 

However, some borrowers may have difficulty meeting 

higher payments resulting from principal amortization or 

an interest rate reset, while others may encounter problems 

refinancing an existing loan due to changes in financial 

circumstances, or declines in property values since the 

HELOC’s origination date. The HELOC guidance provides a 

framework for managing HELOCs nearing their end-of draw 

period and communicating and prudently working with 

HELOC borrowers experiencing financial difficulties. 

Prudent Management of Agricultural 

Credits through Economic Cycles

In July 2014, the FDIC issued a FIL reminding institutions 

engaged in agricultural lending to maintain sound 

underwriting standards, strong credit administration 

practices, and effective risk management strategies. The 

FIL encourages financial institutions to work constructively 

with borrowers to strengthen the credit and mitigate 

loss when agricultural borrowers experience financial 

difficulties.

Regulatory Relief

During 2014, the FDIC issued six FILs that provide guidance 

to help financial institutions and to facilitate recovery in 

areas affected by tornadoes, flooding, and other severe 

storms. In these FILs, the FDIC encouraged banks to 

work constructively with borrowers experiencing financial 

difficulties as a result of natural disasters, and clarified that 

prudent extensions or modifications of loan terms in such 

circumstances can contribute to the health of communities 

and serve the long-term interests of lending institutions.

Frequently Asked Questions for Implementing the 

Interagency Guidance on Leveraged Lending 

In November 2014, the FDIC, jointly with the FRB and the 

OCC, issued Frequently Asked Questions (FAQs) through 

a FIL to provide clarification on the implementation and 

interpretation of the leveraged lending guidance issued in 

March 2013. The guidance is intended to help institutions 

strengthen risk management frameworks to ensure that 

leveraged lending activities do not heighten risk in the 

banking system through the origination and distribution of 

poorly underwritten and low-quality loans. The responses 

contained in the FAQs foster industry and examiner 

understanding and promote consistent application and 

implementation of the guidance.
ANNUAL REPORT 2014

32 MANAGEMENT’S DISCUSSION AND ANALYSIS

Depositor and Consumer Protection 

Rulemaking and Guidance

Guidance on Increased Maximum Flood Insurance 

Coverage for “Other Residential Buildings”

The FDIC, the OCC, the FRB, the NCUA, and the Farm 

Credit Administration (collectively, the agencies) issued 

an interagency statement in May 2014 regarding the new 

National Flood Insurance Program (NFIP) maximum 

limit of flood insurance coverage for non-condominium 

residential buildings designed for use for five or more 

families (classified by the NFIP as “Other Residential 

Buildings”). The guidance discusses agency’ expectations 

and financial institution responsibilities when, as a result 

of the increase in the maximum limit of building coverage 

for such properties, a financial institution determines that 

a building securing a designated loan is covered by flood 

insurance in an amount less than the amount required under 

federal flood insurance law.

Guidance on Unfair or Deceptive Credit Practices

In August 2014, the FDIC, the FRB, the CFPB, the NCUA, 

and the OCC issued guidance regarding certain consumer 

credit practices. This guidance was prompted by the 

Dodd-Frank Act’s repeal of the authority to issue credit 

practices rules for banks, savings associations, and federal 

credit unions. The guidance cautioned institutions not 

to construe the repeal of rulemaking authority under the 

Federal Trade Commission Act (FTC Act) to indicate 

that the unfair or deceptive practices described in these 

former regulations are permissible. The guidance made 

clear that the credit practices described in these former 

regulations remain subject to Section 5 of the FTC Act. As 

such, depending on the facts and circumstances, if banks 

engage in the unfair or deceptive practices described in 

the former credit practices rules, such conduct may violate 

the prohibition against unfair or deceptive practices in 

Section 5 of the FTC Act, and Sections 1031 and 1036 of the 

Dodd-Frank Act.

Proposed Revisions to Interagency Question and 

Answers on Community Reinvestment

In September 2014, the FRB, the FDIC, and the OCC 

requested public comments on proposed revisions to 

the “Interagency Questions and Answers Regarding 

Community Reinvestment.” The Questions and Answers 

provide additional guidance to financial institutions and 

the public on agency regulations that implement the 

CRA. The proposed new and revised guidance address 

questions raised by bankers, community organizations, 

and others regarding agency CRA regulations, including 

access to banking service, innovative or flexible lending 

practices, qualitative assessment factors, and community 

development. The new round of CRA Questions and 

Answers is a follow-up to final revisions to earlier 

Questions and Answers published in the Federal Register

in November 2013.

Proposed Rulemaking on Flood Insurance Rule

In October 2014, the FDIC, the FRB, the NCUA, the OCC, 

and the Farm Credit Administration issued a proposed 

rule to amend regulations pertaining to loans secured 

by property located in special flood hazard areas. The 

proposed rule would implement provisions of the 

Homeowner Flood Insurance Affordability Act of 2014 

(HFIAA) relating to escrowing flood insurance payments 

and the exemption of certain detached structures from the 

mandatory flood insurance purchase requirement. HFIAA 

amends the escrow provisions of the Biggert-Waters Flood 

Insurance Reform Act of 2012 (the Biggert-Waters Act).

Promoting Economic Inclusion

The FDIC is strongly committed to promoting consumer 

access to a broad array of banking products to meet 

consumer financial needs. To promote financial access to 

responsible and sustainable products offered by IDIs,

the FDIC:

♦ Conducts research on the unbanked and underbanked.

♦ Engages in research and development on models of 

products meeting the needs of lower-income consumers.

♦ Supports partnerships to promote consumer access and 

use of banking services.

♦ Advances financial education and literacy.

♦ Facilitates partnerships to support community and small 

business development.
MANAGEMENT’S DISCUSSION AND ANALYSIS 33

Advisory Committee on Economic Inclusion 

The Advisory Committee on Economic Inclusion (ComE-IN) 

provides the FDIC with advice and recommendations 

on important initiatives focused on expanding access to 

banking services to underserved populations. This may 

include reviewing basic retail financial services such as 

check cashing, money orders, remittances, stored value 

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

services that promote individual asset accumulation and 

financial stability. During 2014, the ComE-IN met in April 

and October to discuss safe banking products, mobile 

financial services, financial education opportunities for 

young people, consumer demand for small dollar credit, 

Bank On programs, and the results from the FDIC National 

Survey of Unbanked and Underbanked Households.

FDIC National Survey of Unbanked and 

Underbanked Households and Survey of Banks’ 

Efforts to Serve the Unbanked and Underbanked

As part of its ongoing commitment to expanding economic 

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

research and data gap regarding household participation 

in mainstream banking and the use of nonbank financial 

services. In addition, Section 7 of the Federal Deposit 

Insurance Reform Conforming Amendments Act of 2005 

(Reform Act) mandates that the FDIC regularly report 

on bank efforts to bring individuals and families into 

the conventional finance system. In response, the FDIC 

regularly conducts and reports on surveys of households 

and banks to inform the efforts of financial institutions, 

policymakers, regulators, researchers, academics, and 

others.

During 2014, the FDIC published a report on the 2013 

FDIC National Survey of Unbanked and Underbanked 

Households, based on data collected in partnership with the 

U.S. Census Bureau. The survey focuses on basic checking 

and savings account ownership, but it also explores 

households’ use of alternative financial services to better 

understand the extent to which families are meeting their 

financial needs outside of mainstream financial institutions. 

In addition, the report identified opportunities to better 

include or retain consumers as bank customers, including 

opportunities associated with economic transitions such 

as gaining or losing a job. The report was presented to 

the ComE-IN members in October. Also, to enhance 

transparency and utility of the data, the FDIC developed a 

web-based resource to allow bankers and other members of 

the public to specify and generate reports that reflect their 

particular interests.

The FDIC continued planning for new research to learn 

about bank efforts to serve unbanked and underbanked 

customers. During 2014, the FDIC advanced work to 

develop new survey questions and established relationships 

with external vendors that may be called upon to assist with 

qualitative research efforts, such as in-depth interviews with 

a limited number of bankers.

Partnerships to Promote Consumer Access 

The FDIC, through work with Alliances for Economic 

Inclusion, Bank On initiatives, and in collaboration 

with many local and national organizations, supports 

consumer financial education and access. The goal of the 

FDIC’s Alliance for Economic Inclusion (AEI) initiative 

is to collaborate with financial institutions; community 

organizations; local, state, and federal agencies; and other 

partners in select markets, to launch broad-based coalitions 

to bring unbanked and underbanked consumers and owners 

of small businesses into the financial mainstream.

During 2014, the FDIC supported 16 AEI programs across 

the nation. Many AEIs formed committees and working 

groups to address specific challenges and financial services 

needs in their communities. These included retail financial 

services for underserved populations, savings initiatives, 

affordable remittance products, small-dollar loan programs, 

targeted financial education programs, and other credit and 

asset-building programs.

The FDIC continued to work with a wide range of banks 

and nonprofit organizations in all of the AEI markets. For 

example, in March 2014, the FDIC, with the Small Business 

Administration’s support, conducted a Small Business 

Resource Summit and Entrepreneurial Cafe in Fairmont, 

West Virginia. This event brought together an array of 

banks, training providers, nonprofit organizations, and 

state and federal agencies to connect small businesses 

with the resources they need. In January and June 2014, 

the Northeast Oklahoma AEI (NEOK AEI) membership 

conducted credit building events in Tahlequah and Tulsa. 

At these events, consumers reviewed their credit reports 
ANNUAL REPORT 2014

34 MANAGEMENT’S DISCUSSION AND ANALYSIS

in one-on-one sessions with credit counselors, lenders, and 

underwriters who assisted them in interpreting, correcting 

and improving their credit histories. Other events in 2014 

that were co-sponsored by the FDIC in four AEI markets 

included training sessions on the importance of credit 

scores and the potential for enhancing credit profiles. 

AEI members collaborated with the Credit Builders 

Alliance, a nonprofit organization that works to facilitate 

credit reporting for community development lenders, 

to train more than 200 representatives of social service 

organizations, local governments and banks, in greater Los 

Angeles, California; Milwaukee, Wisconsin; and Wilmington, 

Delaware, on the role of credit building for low- and 

moderate-income consumers.

The FDIC also provided information and technical 

assistance in the development of safe and affordable 

transaction and savings accounts and other products and 

services designed to meet the needs of low- and moderateincome consumers. In over 50 markets, the FDIC provided 

technical assistance to local Bank On initiatives and to 

asset building coalition activities designed to reduce 

barriers to banking and increase access to the financial 

mainstream. The FDIC also supported efforts to link 

consumers to financial education and savings through 

engagement in activities organized around designated 

“Money Smart” or “Financial Fitness” weeks or months that 

involved hundreds of consumer outreach events. Moreover, 

working with the national, local, state, and targeted (youth, 

military, and minority consumer-focused) America Saves

campaigns, FDIC community affairs teams continued to link 

banking companies to active efforts for engaging consumers 

with setting savings goals at tax time and year round. 

Banker Teleconferences

In 2014, the FDIC hosted a series of banker teleconferences 

to maintain open lines of communication and update 

supervised institutions about related rulemakings, 

guidance, and emerging issues in compliance and 

consumer protection. Teleconference participants 

included bank directors, officers, staff, and other banking 

industry professionals.

Three teleconferences were held in 2014. The topics 

discussed included (1) revisions to the “Interagency 

Questions and Answers Regarding Community 

Reinvestment, (2) Common Questions and Answers 

Pertaining to Implementation of the CFPB’s Ability-to-Repay 

and Loan Originator Compensation Final Rules, and (3) an 

update on flood insurance matters.

Advancing Financial Education 

The FDIC expanded its financial education efforts during 

2014 through a strategy that included providing access 

to timely and high-quality financial education products, 

sharing best practices, and working through partnerships 

to reach consumers. In particular, the FDIC took steps to 

more closely align its financial education activities with the 

Starting Early for Financial Success focus of the Financial 

Literacy and Education Commission. 

The FDIC signed a multi-year MOU with the CFPB in 

April 2014, which leverages each agency’s strengths to 

improve financial education and decision-making skills 

among American youth from pre-kindergarten through age 

20. Early results of the new partnership include tailored 

financial education resources for teachers, youth, and 

parents/caregivers. 

As part of the new partnership, the FDIC began to develop 

a new instructor-led Money Smart curriculum series 

for young people, to be used as a resource for teachers. 

Bankers can also use these tools as they work with schools, 

non-profit organizations, and other youth-based audiences. 

The age-appropriate series, targeted for release in early 

2015, will consist of four free standard-aligned curriculums 

that empower teachers with engaging activities to integrate 

financial education instruction into subjects such as math, 

English, and social studies. Each curriculum includes a 

new parent resource guide with information about the 

topics being covered in class, as well as at-home activities. 

The curriculum will be made available through the new 

Teacher Online Resource Center (TORC) website. (https://

www.fdic.gov/consumers/education/teachers.html) that 

was launched in September 2014. The TORC is a central 

location for teachers to access resources from across 

the FDIC and CFPB that can support financial literacy 

instruction.

Also, as part of the new partnership, in August 2014, the 

FDIC and CFPB launched a campaign to encourage parents 

and caregivers to help their children build knowledge 
MANAGEMENT’S DISCUSSION AND ANALYSIS 35

on financial matters. More than 13,000 visitors accessed 

the website which provides resources that parents and 

caregivers can use to talk about money with young people. 

In August 2014, the FDIC launched a Youth Savings 

Pilot Program (Pilot) to identify and highlight promising 

approaches to offering financial education tied to the 

opening of safe, low-cost savings accounts for K-12 

school-aged children. The FDIC selected nine institutions 

from a pool of bank applicants. The Pilot’s first phase 

covers existing partnerships between institutions and 

schools that are in place during the 2014–15 school year. In 

2015, the FDIC plans to solicit banks that intend to carry 

out new programs and partnerships during the 2015–16 

school year to participate in the second phase of the Pilot. 

The Pilot will culminate in a report later in 2015 that will 

communicate lessons learned about ways banks may work 

with schools or other organizations to effectively combine 

financial education with access to a savings account. 

The existing suite of Money Smart products for consumers 

was also enhanced with the release of a Spanish language 

translation of Money Smart for Older Adults, in partnership 

with the CFPB. This stand-alone training module developed 

by both agencies was initially released in English in 2013 to 

raise awareness among older adults (age 62 and older) and 

their caregivers on how to prevent, identify, and respond 

to elder financial exploitation, plan for a secure financial 

future, and make informed financial decisions. 

Through training and technical assistance, the FDIC 

emphasizes the importance of pairing education with access 

to appropriate banking products and services. The FDIC 

conducted more than 150 outreach events to promote the 

Money Smart program. More than 38,000 copies of the 

Money Smart instructor-led curriculum were distributed 

or downloaded, and more than 49,000 people used the 

computer-based or podcast curriculum, exemplifying 

effective results from the outreach sessions. 

An example of FDIC outreach with leading organizations to 

achieve shared objectives is the FDIC’s participation in the 

2014 America Saves Week, which took place from February 

24 to March 1. The FDIC hosted six webinars that reached 

more than 300 financial institutions to discuss opportunities 

to participate in America Saves Week. In addition, the 

FDIC supported local America Saves coalitions in many 

communities around the country by conducting financial 

education workshops and providing resources. 

Community Development

In 2014, the FDIC provided professional guidance and 

technical assistance to banks and community organizations 

through outreach activities and events designed to foster 

understanding and practical relationships between financial 

institutions and other community development and 

economic inclusion stakeholders. As part of this effort, the 

FDIC conducted over 135 community development events 

linking bank and community partners with opportunities 

to address community credit and development needs. A 

particular emphasis was on low- and moderate-income 

consumers and small businesses.

The FDIC provided support to strategic partnering 

between community banks and Community Development 

Financial Institutions (CDFIs). In May 2014, the FDIC 

released a guide entitled “Strategies for Community Banks 

to Develop Partnerships with Community Development 

Financial Institutions” in an effort to strengthen outreach 

to encourage partnerships with CDFIs to meet community 

credit needs. 

The FDIC also co-sponsored the 2014 National Interagency 

Community Reinvestment Conference in Chicago, Illinois.

FDIC Chairman Gruenberg, as a plenary speaker, addressed 

the importance of economic inclusion and community 

development in his remarks. FDIC staff moderated a 

number of the sessions covering small business lending, 

CRA 101 for Community Based Organizations, financial 

capability, affordable housing, and economic inclusion. 

More than 900 bankers and community development 

practitioners attended the biennial conference.

Community Banking Initiatives

Community banks are those institutions that provide 

traditional, relationship-based banking services in their 

local communities. They account for about 13.3 percent 

of the banking assets in the United States but provide 

nearly 45.1 percent of the small loans that FDIC- IDIs make 

to businesses and farms. The FDIC is the lead federal 

supervisor for the majority of community banks, and the 
ANNUAL REPORT 2014

36 MANAGEMENT’S DISCUSSION AND ANALYSIS

insurer of all. The FDIC has a particular responsibility for 

the safety and soundness of community banks, and for 

understanding and communicating the role they play in the 

banking system. 

Efforts under the Community Banking Initiative continued 

on a number of fronts in 2014. The FDIC continued to

conduct targeted research on key community banking 

issues, and published or presented findings related to the 

resilience of community banks amid banking industry 

consolidation, de novo institutions and their performance 

over time, the effects of long-term rural depopulation on 

community banks, the performance and social impact of 

Minority Depository Institutions (MDIs), and long-term 

trends in the physical banking offices operated by FDICinsured institutions

Another important development during the year was 

the introduction of a new section in the FDIC Quarterly 

Banking Profile (QBP) that focuses specifically on 

community banks. This new section of the FDIC’s flagship 

statistical report highlights the structure, activities, and 

performance of community banks as distinct from the 

results for larger institutions, and should provide a useful 

barometer by which smaller institutions can compare their 

own results. Combined with the FDIC’s special reports on 

community banking topics, this enhancement to the QBP 

represents an ongoing commitment to an active program of 

research and analysis on community banking.

In response to concerns about pre- and post-examination 

processes, the FDIC developed a web-based tool in 2013 

that generates a pre-examination document and information 

request tailored to a specific institution’s operations and 

business lines. In 2014, the regional and Washington offices 

continued to monitor banker feedback on the enhanced 

pre-examination process and adjusted the tool based on 

banker and examiner feedback. 

The Directors’ Resource Center, a special section of the 

FDIC’s website, is dedicated to providing useful information 

to bank directors, officers, and employees on areas of 

supervisory focus and regulatory changes. One key 

element of this resource center is a Technical Assistance 

Video Program that provides in-depth, technical training 

for bankers to view at their convenience. A new video 

released during 2014 focused on the new mortgage rules 

that became effective in 2013. The video is targeted to bank 

compliance officers to facilitate bank implementation of 

and compliance with the CFPB’s ability-to-repay/qualified 

mortgage regulations. In addition, the FDIC’s Cyber 

Challenge: A Community Bank Cyber Exercise was added 

to the Technical Assistance Video Program in 2014.

Throughout 2014, the FDIC continued to offer additional 

technical training opportunities on subjects of interest 

to community bankers. As part of this ongoing effort, 

the FDIC hosted Director Colleges in each region. These 

Colleges are typically conducted jointly with state trade 

associations and address topics of interest to community 

bankers. The FDIC hosted a banker call-in on new 

mortgage rules and participated in an FFIEC call-in 

regarding Call Report changes. The FDIC also offered a 

series of Deposit Insurance Coverage seminars for bank 

officers and employees. These free seminars, which 

were offered nationwide, particularly benefited smaller 

institutions that have limited training resources. Further, the 

FDIC conducted a series of roundtables with community 

bankers in each of its six regions. Community bank 

outreach and training initiatives will continue in 2015.

Additionally, in June 2014, the FDIC mailed an information 

packet to the chief executive officers (CEOs) of all FDICsupervised banks. In addition to an introductory letter to 

the CEOs, the packet contained brochures highlighting the 

content of key resources and programs; a copy of the Cyber 

Challenge, a technical assistance product designed to assist 

with the assessment of operational readiness capabilities; 

and other information of interest to community bankers. 

The FDIC’s Advisory Committee on Community Banking 

is an ongoing forum for discussing critical issues and 

receiving valuable feedback and input from the industry. 

The advisory committee met three times during 2014. The 

Committee, which is composed of 15 senior leaders of 

community banks from around the country, is a valuable 

resource for input on a wide variety of topics, including 

examination policies and procedures, capital and other 

supervisory issues, credit and lending practices, deposit 

insurance assessments and coverage, and regulatory 

compliance issues.
MANAGEMENT’S DISCUSSION AND ANALYSIS 37

Finally, the FDIC and the OCC co-hosted a Joint Agency 

Mutual Forum (Forum) on July 24, 2014, which was the first 

conference conducted for all mutual banking institutions, 

regardless of charter type. Mutually-related institutions 

represent about 9 percent of all FDIC-insured institutions 

and are among the oldest form of depository institution. 

Attended by approximately 125 mutual bankers, the Forum 

provided an opportunity for the participants to learn about 

current trends and engage in a dialogue on the opportunities 

and challenges facing mutual institutions. In June 2014, 

the FDIC created a new website dedicated to mutual 

institutions, with helpful resources, guidance, and the first 

ever published comprehensive listing of mutual banks and 

institutions owned by mutual holding companies.

Consumer Complaints and Inquiries

The FDIC helps consumers by receiving, investigating, and 

responding to consumer complaints about FDIC-supervised 

institutions and answering inquiries about banking laws 

and regulations, FDIC operations, and other related topics. 

In addition, the FDIC provides analytical reports and 

information on complaint data for internal and external use, 

and conducts outreach activities to educate consumers. 

The FDIC recognizes that consumer complaints and 

inquiries play an important role in the development of 

strong public and supervisory policy. Assessing and 

resolving these matters helps to identify trends or problems 

affecting consumer rights, understand the public perception 

of consumer protection issues, formulate policy that aids 

consumers, and foster confidence in the banking system 

by educating consumers about the protection they receive 

under certain consumer protection laws and regulations.

Consumer Complaints by Product and Issue

The FDIC receives complaints and inquiries by telephone, 

fax, U.S. Mail, email, and online through the FDIC’s website. 

In 2014, the FDIC handled 17,559 written and telephone 

complaints and inquiries. Of this total, 9,358 related to 

FDIC-supervised institutions. The FDIC responded to 

nearly 98 percent of these complaints within time frames 

established by corporate policy, and acknowledged 100 

percent of all consumer complaints and inquiries within 

14 days. As part of the complaint and inquiry handling 

process, the FDIC works with the other federal financial 

regulatory agencies to ensure that complaints and inquiries 

are forwarded to the appropriate agencies for response.

The FDIC carefully analyzes the products and issues 

involved in complaints about FDIC-supervised institutions. 

The number of complaints received about a specific bank 

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

review of practices that may raise consumer protection or 

supervisory concerns. 

In 2014, the five most frequently identified consumer 

product complaints and inquiries about FDIC-supervised 

institutions concerned credit cards (18 percent), checking 

accounts (14 percent), residential real estate loans (12 

percent), consumer loans (13 percent), and prepaid cards 

(8 percent). Credit card complaints and inquiries most 

frequently described issues with collection practices, 

while the issues most commonly cited in correspondence 

about checking accounts related to bank overdraft fees 

and service charges. The largest share of complaints and 

inquiries about residential real estate loans related to loan 

modifications and foreclosures. Consumers most often 

identified concerns with collection practices regarding 

consumer loans, and a large number of complaints also 

involved issues related to prepaid cards.

The FDIC also investigated 76 complaints alleging 

discrimination during 2014. The number of discrimination 

complaints investigated has fluctuated over the past several 

years but averaged approximately 121 complaints per year 

between 2008 and 2014. Over this period, 36 percent of the 

complaints investigated alleged discrimination based on the 

race, color, national origin, or ethnicity of the applicant or 

borrower; 23 percent related to discrimination allegations 

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

applicant; and 3 percent concerned a handicap or disability.

Consumer refunds generally involve the financial institution 

offering a voluntary credit to the consumer’s account that 

is often a direct result of complaint investigations and 

identification of a banking error or violation of law. In 2014, 

consumers received more than $801,000 in refunds from 

financial institutions as a result of the assistance provided 

by the FDIC’s Consumer Affairs Program.
ANNUAL REPORT 2014

38 MANAGEMENT’S DISCUSSION AND ANALYSIS

Public Awareness of Deposit 

Insurance Coverage

An important part of the FDIC’s deposit insurance mission 

is to ensure that bankers and consumers have access to 

accurate information about the FDIC’s rules for deposit 

insurance coverage. The FDIC has an extensive deposit 

insurance education program consisting of seminars for 

bankers, electronic tools for estimating deposit insurance 

coverage, and written and electronic information targeted 

to both bankers and consumers. 

The FDIC continued its efforts to educate bankers and 

consumers about the rules and requirements for FDIC 

insurance coverage during 2014. For example, the FDIC 

conducted 12 telephone seminars for bankers on deposit 

insurance coverage, reaching an estimated 20,108 bankers 

participating at approximately 5,745 bank locations 

throughout the country. In 2014, the FDIC also completed 

a comprehensive update of its deposit insurance coverage 

publications and educational tools for consumers and 

bankers. This included a complete revision of the FDIC’s 

website including brochures, resource guides, and videos. 

In addition, new outreach materials were developed to 

assist depositors, including infographic diagrams for 

revocable and irrevocable trust deposits.

As of December 31, 2014, the FDIC received and answered 

approximately 88,315 telephone deposit insurance-related 

inquiries from consumers and bankers. The FDIC Call 

Center addressed 40,522 of these inquiries, and deposit 

insurance coverage subject-matter experts handled the 

other 47,793. In addition to telephone inquiries about 

deposit insurance coverage, the FDIC received 1,879 written 

inquiries from consumers and bankers. Of these inquiries, 

99 percent received responses within two weeks, as 

required by corporate policy.

Center for Financial Research

The FDIC’s Center for Financial Research (CFR) 

encourages and supports innovative research on topics 

that are important to the FDIC’s role as deposit insurer 

and bank supervisor. During 2014, the FDIC’s CFR 

co-sponsored two major conferences. Approximately 60 

regulatory staff attended an Interagency Risk Quantification 

Forum, co-sponsored by the FDIC, the OCC, and the 

Federal Reserve Bank of Philadelphia, which addressed 

topics including securitization and creditor recovery, loss 

given default, and the identification of systemic risk in the 

banking industry. 

The CFR also organized and sponsored the 14th Annual 

Bank Research Conference jointly with the Journal for 

Financial Services Research (JFSR), in October 2014. More 

than 120 participants attended the conference that included 

more than 20 presentations on topics related to global 

banking, financial stability, and the financial crisis.

RECEIVERSHIP MANAGEMENT

The FDIC has the unique mission of protecting depositors 

of insured banks and savings associations. No depositor 

has ever experienced a loss on the insured amount of his or 

her deposits in an FDIC-insured institution due to a failure. 

Upon closure of an institution, typically by its chartering 

authority—the state for state-chartered institutions and the 

OCC for national banks and federal savings associations—

the FDIC is appointed receiver and is responsible for 

resolving the failed institution.

The FDIC uses a variety of business practices to resolve a 

failed institution. These practices are typically associated 

with either the resolution process or the receivership 

process. Depending on the characteristics of the institution, 

the FDIC may recommend several of these methods 

to ensure the prompt and smooth payment of deposit 

insurance to insured depositors, to minimize the impact 

on the DIF, and to speed dividend payments to uninsured 

depositors and other creditors of the failed institution.

The resolution process involves evaluating and marketing a 

failing institution, soliciting and accepting bids for the sale 

of the institution, determining which bid is least costly to 

the DIF, and working with the acquiring institution through 

the closing process.

To minimize disruption to the local community, the 

resolution process must be performed as quickly and 

smoothly as possible. The FDIC uses two basic resolution 

methods: purchase and assumption transactions and 

deposit payoffs.

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

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

a healthy institution purchases certain assets and assumes 

certain liabilities of the failed institution. A variety of 
MANAGEMENT’S DISCUSSION AND ANALYSIS 39

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

situation is different, P&A transactions provide flexibility 

to structure deals that result in the highest value for the 

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

acquirer may either acquire all or only the insured portion 

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

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

transaction, the FDIC as receiver agrees to share losses 

on certain assets with the acquirer, absorbing a significant 

portion (for example, 80 percent) of future losses on assets 

that have been designated as “shared-loss assets” for a 

specific period of time (for example, five to ten years). 

The economic rationale for these transactions is that 

keeping assets in the banking sector can produce a better 

net recovery than the FDIC’s immediate liquidation of

these assets.

The FDIC monitors compliance with shared-loss 

agreements by validating the appropriateness of loss-share 

claims; reviewing efforts to maximize recoveries; ensuring 

consistent application of policies and procedures across 

both shared-loss and legacy portfolios; and confirming 

that the acquirer has sufficient internal controls, including 

adequate staff, reporting, and recordkeeping systems. At 

year-end 2014, there were 281 shared-loss agreements with 

$54.6 billion in total covered assets.

Deposit payoffs are only executed if all bids received for a 

P&A transaction are more costly to the DIF than liquidation 

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

its corporate capacity, makes sure that the customers 

of the failed institution receive the full amount of their 

insured deposits. A variation of the deposit payoff is the 

establishment of a New Depository Institution (NDI), as 

authorized by the FDI Act. An NDI is a new national bank 

or federal savings association with limited life and powers 

that assumes the insured deposits of a failed bank or 

savings association, allowing customers of the failed bank 

or savings association a brief period of time to move their 

deposit account(s) to other insured institutions. Though 

infrequently used, an NDI allows for a failed bank or 

savings association to be liquidated in an orderly fashion, 

minimizing disruption to local communities and financial 

markets.

The receivership process involves performing the closing 

functions at the failed institution; liquidating any remaining 

failed institution assets; and distributing any proceeds 

of the liquidation to the FDIC, uninsured depositors, and 

other creditors of the receivership. In its role as receiver, 

the FDIC has used a wide variety of strategies and tools to 

manage and sell retained assets. These include, but are not 

limited to, asset sale and/or management agreements, and 

structured transactions.

Financial Institution Failures

During 2014, there were 18 institution failures, compared to 

24 failures in 2013. For the institutions that failed, the FDIC 

successfully contacted all known qualified and interested 

bidders to market these institutions. The FDIC also 

made insured funds available to all depositors within one 

business day of the failure. There were no losses on insured 

deposits, and no appropriated funds were required to pay 

insured deposits.

The following chart provides a comparison of failure 

activity over the last three years. 

FAILURE ACTIVITY 2012–2014

Dollars in Billions

2014 2013 2012

Total Institutions 18 24 51

Total Assets of Failed Institutions1 $2.9 $6.0 $11.6

Total Deposits of Failed Institutions1 $2.7 $5.1 $11.0

Estimated Loss to the DIF $0.4 $1.3 $2.7

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

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

Asset Management and Sales

As part of its resolution process, the FDIC tries to sell as 

many assets as possible to an assuming institution. Assets 

that are retained by the receivership are evaluated. For 95 

percent of the failed institutions, at least 90 percent of the 

book value of marketable assets is marketed for sale within 

90 days of an institution’s failure for cash sales and within 

120 days for structured sales.

Cash sales of assets for the year totaled $772 million in book 

value. In addition to structured and cash sales, the FDIC 

also uses securitizations to dispose of bank assets. 
ANNUAL REPORT 2014

40 MANAGEMENT’S DISCUSSION AND ANALYSIS

As a result of the FDIC’s marketing and collection efforts, 

the book value of assets in inventory decreased by $3.6 

billion (32 percent) in 2014. The following chart shows the 

beginning and ending balances of these assets by asset type.

ASSETS IN INVENTORY BY ASSET TYPE

Dollars in Millions

Asset Type 12/31/14 12/31/13

Securities $470 $893

Consumer Loans 36 69

Commercial Loans 123 274

Real Estate Mortgages 697 954

Other Assets/Judgments 957 1,145

Owned Assets 120 365

Net Investments in Subsidiaries 123 117

Structured and Securitized Assets 5,150 7,487

Total $7,676 $11,304

Receivership Management Activities

The FDIC, as receiver, manages failed banks and their 

subsidiaries with the goal of expeditiously winding up 

their affairs. The oversight and prompt termination of 

receiverships help to preserve value for the uninsured 

depositors and other creditors by reducing overhead and 

other holding costs. Once the assets of a failed institution 

have been sold and the final distribution of any proceeds is 

made, the FDIC terminates the receivership. In 2014, the 

number of receiverships under management increased by 

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

shows overall receivership activity for the FDIC in 2014.

RECEIVERSHIP ACTIVITY

Active Receiverships as of 12/31/131 480

New Receiverships 18

Receiverships Terminated 17

Active Receiverships as of 12/31/14 481

1 Includes one FSLIC Resolution Fund receivership at year-end 2013.

Protecting Insured Depositors 

The FDIC’s ability to attract healthy institutions to assume 

deposits and purchase assets of failed banks and savings 

associations at the time of failure minimizes the disruption 

to customers and allows assets to be returned to the private 

sector immediately. Assets remaining after resolution 

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

proceeds are used to pay creditors, including depositors 

whose accounts exceeded the insurance limit. During 2014, 

the FDIC paid dividends of $6 million to depositors whose 

accounts exceeded the insurance limit.

Professional Liability and 

Financial Crimes Recoveries

The FDIC staff works to identify potential claims against 

directors, officers, fidelity bond insurance carriers, 

appraisers, attorneys, accountants, mortgage loan brokers, 

title insurance companies, securities underwriters, 

securities issuers, and other professionals who may 

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

determined to be meritorious and is expected to be costeffective to pursue, the FDIC initiates legal action against 

the appropriate parties. During 2014, the FDIC recovered 

more than $1.1 billion from professional liability claims and 

settlements. The FDIC also authorized lawsuits related to 

17 failed institutions against 123 individuals for director 

and officer liability, and authorized five other lawsuits for 

fidelity bond, liability insurance, attorney malpractice, 

appraiser malpractice, and securities law violations for 

residential mortgage-backed securities. As of the end 

of 2014, 75 residential mortgage malpractice and fraud 

lawsuits were pending. Also, the FDIC’s caseload included 

102 professional liability lawsuits (down from 119 at 

year-end 2013) and 511 open investigations (down from 796 

at year-end 2013).

As part of the sentencing process for those convicted of 

criminal wrongdoing against institutions that later failed, 

a court may order a defendant to pay restitution or to 

forfeit funds or property to the receivership. The FDIC, 

working with the DOJ, collected $6.4 million from criminal 

restitution and forfeiture orders through the end of 2014. At 

that time, there were 3,954 active restitution and forfeiture 

orders (down from 4,073 at year-end 2013). This includes 

130 orders held by the Federal Savings and Loan Insurance 

Corporation (FSLIC) Resolution Fund, (i.e., orders arising 

out of failed financial institutions that were in receivership 

or conservatorship by the FSLIC or the Resolution Trust 

Corporation).
MANAGEMENT’S DISCUSSION AND ANALYSIS 41

INTERNATIONAL OUTREACH 

In 2014, the FDIC continued to play a leading role in 

supporting and promoting the global development of 

effective deposit insurance, bank supervision, and effective 

resolution regimes as integral components of the financial 

safety net. The FDIC worked with several standard-setting, 

regulatory, supervisory, and multi-lateral organizations such 

as the Association of Supervisors of Banks of the Americas 

(ASBA), the Basel Committee on Banking Supervision 

(BCBS), the Financial Services Volunteer Corps (FSVC), the 

International Association of Deposit Insurers (IADI), the 

International Monetary Fund (IMF), and the World Bank. 

FDIC staff also facilitated the training of several hundred 

bank supervisors and regulators, technical assistance 

missions around the world, and secondment programs to 

further the international community’s understanding 

and implementation of best practices in bank supervision 

and regulation.

International Association of Deposit Insurers 

The International Association of Deposit Insurers (IADI) 

contributes to global financial stability by promoting 

international cooperation in the field of deposit insurance 

and providing guidance for establishing new, and enhancing 

existing, deposit insurance systems, and by encouraging 

wide international contact among deposit insurers and 

other interested parties. It is recognized as the standardsetting body for deposit insurance by major international 

financial institutions, including the FSB, the G-20, the BCBS, 

the E.C., the IMF, and the World Bank. Since its founding 

in 2002, IADI has grown from 26 founding members to 79 

deposit insurers from 76 jurisdictions. FDIC Chairman 

Gruenberg served as the President of IADI and Chair of its 

Executive Council from November 2007 to October 2012. 

FDIC Vice Chairman Thomas Hoenig currently serves on 

IADI’s Executive Council. 

In 2009, IADI and the BCBS jointly issued the Core 

Principles for Effective Deposit Insurance Systems and 

completed the accompanying Compliance Assessment 

Methodology for the Core Principles in 2010 (together, the 

Core Principles). The FSB included the Core Principles

in its Compendium of Key Standards for Sound Financial 

Systems. The IMF and World Bank use the Core Principles

in the context of the Financial Sector Assessment Program 

(FSAP) reviews, to assess the effectiveness of jurisdictions’ 

deposit insurance systems and practices. This represents 

an important milestone in the growing global acceptance 

of the role of effective deposit insurance systems in 

maintaining financial stability. To-date, IADI has trained 

more than 280 staff members from over 70 jurisdictions 

in conducting self-assessments for compliance with the 

Core Principles. 

In 2014, a Joint Working Group, comprising key 

representatives from the FDIC, the Canada Deposit 

Insurance Corporation, the BCBS, the European Forum of 

Deposit Insurers, the IMF, the World Bank, the E.C., and the 

FSB, revised the Core Principles and presented the revision 

to the IADI Executive Council, which approved it in October 

2014. Subsequently, IADI submitted the updated Core 

Principles to the FSB for inclusion in its Periodic Report 

to the Plenary, and acceptance by the IMF and World Bank 

is expected in the near term. Complementing FDIC efforts 

with IADI and the Core Principles, the FDIC in partnership 

with the Financial Stability Institute (FSI), developed an 

online tutorial to assist jurisdictions in completing selfassessments of compliance with the Core Principles in 

preparation for the IMF/World Bank FSAP review.

FDIC executives and subject-matter experts partnered with 

IADI to make significant contributions to the development 

and delivery of several key international programs in 2014. 

Vice Chairman Hoenig and division executives joined 

global bank resolution and deposit insurance leaders 

in exploring key issues related to the use of bail-in as a 

resolution tool in Warsaw, Poland. The FDIC partnered 

with FSI to develop a seminar on bank resolution and 

crisis management hosted by the Bank for International 

Settlements in Basel, Switzerland. In collaboration with 

the Kenya School of Monetary Studies, the FDIC led a 

workshop in Nairobi, Kenya, in May 2014 for jurisdictions 

interested in establishing new deposit insurance systems. 

The FDIC helped modernize IADI’s information technology 

infrastructure and its research capabilities and supported 

IADI in many leadership capacities. In addition to the 

Vice Chairman’s role on the Executive Council, an FDIC 

executive chairs the IADI Training and Conference 

Committee (TCC), which is responsible for setting IADI’s 

training strategy, advancing the Core Principles capacity 

building programs, and forging effective partnerships with 
ANNUAL REPORT 2014

42 MANAGEMENT’S DISCUSSION AND ANALYSIS

multilateral agencies that contribute to IADI’s training 

capabilities. One of the TCC’s marquee programs is its 

Executive Training Seminars. In July 2014, the FDIC led a 

seminar on Deposit Insurance Funding for 70 participants 

from 35 jurisdictions. 

Association of Supervisors of Banks of the Americas 

The FDIC has been a member of ASBA since its founding 

in 1999 and supports ASBA’s mission of promoting sound 

bank supervision and regulation throughout the Western 

Hemisphere. ASBA represents bank supervisors from 36 

jurisdictions. The FDIC strives to lead the development 

of strong supervisory policies in this hemisphere through 

active engagement with the Association’s Board, chairing 

the ASBA’s Training and Technical Committee, and by 

providing leadership in many of the Association’s research 

and guidance working groups. 

Senior FDIC staff chair the ASBA Training and Technical 

Committee, which is responsible for designing and 

implementing ASBA’s training strategy that advances the 

adoption of sound bank supervision policies and practices 

among members. In support of ASBA’s Continental Training 

Program, the FDIC led two technical assistance training 

missions in 2014, including Supervision of Operational 

Risk in San Salvador, El Salvador, and Financial Institution 

Analysis in Tegucigalpa, Honduras. The FDIC continued to 

provide subject-matter experts as instructors and speakers 

to support ASBA-sponsored training programs, seminars, 

and conferences.

Basel Committee on Banking Supervision

The FDIC supported the development of sound regulatory 

policy through effective participation in the BCBS and its 

relevant subgroups. FDIC senior managers represented 

the FDIC in quarterly meetings of the BCBS and its Policy 

Development Group. Throughout the year, the FDIC was 

active in a number of BCBS subgroups that developed 

proposals for international minimum standards for capital 

adequacy, resolution regimes, liquidity and funding, 

and trading and derivatives activities for internationally 

active banks. These groups include the Task Force on 

Simplicity and Comparability, the Leverage Ratio Group, 

the Accounting Experts Group, the Working Group on 

Liquidity, the Working Group on Margining Requirements, 

the Cross-Border Bank Resolution Group, and the 

Standards Implementation Group, among others. FDIC staff 

contributed to active work streams and quantitative impact 

studies for BCBS subgroups, providing substantial support 

and in some instances leading the work.

International Capacity Building

The FDIC’s international efforts supporting the 

development of effective deposit insurance systems, 

bank supervisory practices, and bank resolution regimes 

continued to grow in 2014. FDIC staff contributed 

to international capacity building by providing study 

tours, secondments, and technical assistance to foreign 

counterparts. These engagements resulted in an enhanced 

dialogue between the FDIC and foreign bank supervisors, 

deposit insurers, and lawmakers on significant areas such 

as bank supervision and regulatory development post crisis, 

depositor preference and resolution functions of the deposit 

insurance system, and optimal funding strategies for deposit 

insurers. 

FDIC management and staff hosted study tours for 288 

individuals, representing 26 jurisdictions during the year. 

Additionally, the FDIC’s Corporate University provided 

training in bank supervision and information technology to 

294 foreign delegates from 20 jurisdictions. In support of 

the FDIC’s long-term partnership with the U.S. Department 

of State, the FDIC hosted training sessions for 111 

individuals from 15 jurisdictions on Anti-Money Laundering/

Combating the Financing of Terrorism (AML/CFT) in 2014. 

These training sessions assisted participating jurisdictions 

in implementing AML/CFT standards, and in providing law 

enforcement with financial investigative skills, as well as 

a suite of skills necessary to combat money laundering, 

terrorist financing, and fraud. 

The FDIC contributes to global and domestic initiatives 

by providing staff to support long-term projects and 

technical assistance missions led by the IMF, U.S. Treasury 

Department, the FSVC, and the World Bank. In 2014, 

senior FDIC staff served on long-term assignments at 

the U.S. Treasury Department’s Office of International 

Bank and Securities Markets. The FDIC led six technical 

assistance missions sponsored by the U.S. Treasury and 

the FSVC. In collaboration with the U.S. Treasury Office of 

Technical Assistance, the FDIC advised the Banque de la 

République du Burundi on the development of a risk-based 
MANAGEMENT’S DISCUSSION AND ANALYSIS 43

supervision program. In partnership with the FSVC, the 

FDIC participated in several technical assistance missions 

including assisting the Albania Deposit Insurance Agency 

in developing an automated system to verify deposit 

insurance premiums and payouts, providing expertise on 

the topic of savings mobilization in the financial sector to 

the East African Community Financial Services Providers’ 

Council in Tanzania, and providing senior Bank of Uganda 

examiners with an opportunity to strengthen its supervision 

framework by observing an FDIC risk-management 

examination. The FDIC partnered with the World Bank 

to provide technical assistance to the Nigerian Deposit 

Insurance Corporation on developing a targeted fund ratio 

for their deposit insurance fund. The FDIC also provided 

technical assistance and consultation to the Central Bank 

of Curaçao on the disposition of larger troubled banks and 

strengthening its bank supervision framework.

The FDIC expands and strengthens international 

engagement by providing secondment opportunities to 

foreign officials to engage in long-term consultation with 

FDIC subject-matter experts in areas related to bank 

supervision, deposit insurance, and resolutions. In 2014, 

two officials from the Deposit Insurance Corporation 

of Japan and the Korea Deposit Insurance Corporation 

concluded their secondments to the FDIC, and two new 

secondees from these agencies joined the FDIC, each for 

one-year assignments.

Key International Engagements

In 2014, the FDIC took important steps to strengthen 

its relationships with key jurisdictions worldwide. In 

February, FDIC executives attended the U.S.-India Financial 

Regulatory Dialogue, hosted by the Securities and Exchange 

Bureau of India (SEBI) in Mumbai. U.S. representatives 

from the Treasury Department, FRB, SEC, Commodity 

Futures Exchange Commission, and the Federal Insurance 

Office met with the Indian Ministry of Finance, Reserve 

Bank of India, the Forward Markets Commission, and the 

Insurance Regulatory and Development Authority to discuss 

banking sector developments, commodity market and 

capital market issues, insurance and pension regulation, 

and financial regulatory reform in each country. The 

FDIC discussed the U.S. bank resolution regime and new 

resolution powers for nonbank resolutions. The Reserve 

Bank of India, in turn, explained its proposed banking 

reform legislation that would dissolve the current Deposit 

Insurance and Credit Guarantee Corporation and create a 

new resolution corporation responsible for the resolution of 

bank and nonbank financial institutions in India. 

In July 2014, Secretary of the Treasury Jacob Lew and 

Secretary of State John Kerry led a delegation of senior U.S. 

officials to Beijing, China, to participate in the 6th U.S.-China 

Strategic and Economic Dialogue. Secretary Lew and Vice 

Premier Wang Yang led the Economic Track discussion. 

The FDIC was represented at the meetings, alongside a 

high-level delegation of Cabinet members, ministers, agency 

heads, and senior officials from both countries. Among key 

outcomes, such as commitments by China to liberalize its 

exchange rate regime, reduce barriers to trade, and further 

open its markets, China also committed to accelerate the 

establishment of a deposit insurance system and improve 

the resolution mechanism for financial institutions through 

issuing regulations on bank resolution.

MINORITY AND WOMEN INCLUSION

The FDIC relies on contractors to help meet its mission. 

In 2014, the FDIC awarded 288 (26.9 percent) contracts 

to minority- and women-owned businesses (MWOBs) out 

of a total of 1,072 issued. The FDIC awarded contracts 

with a combined value of $686.8 million in 2014, of which, 

$239.9 million, or 34.9 percent, were awarded to MWOBs, 

compared to 34.7 percent for all of 2013. The FDIC paid 

$128.2 million of its total contract payments (26.1 percent) 

to MWOBs, under 1,934 active contracts. Referrals 

to minority- and women-owned law firms (MWOLFs) 

accounted for 16 percent of all legal referrals in 2014, 

with total payments of $15.3 million going to MWOLFs, 

(13 percent of all payments to outside counsel) compared 

to 13 percent for all of 2013.

In 2014, the FDIC participated in a combined total of 21 

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

panel presentations. At these events, FDIC staff provided 

information and responded to inquiries regarding FDIC 

business opportunities for minorities and women. In 

addition to targeting MWOBs, these efforts also targeted 

veteran-owned and small disadvantaged businesses. 

Vendors were provided with the FDIC’s general contracting 
ANNUAL REPORT 2014

44 MANAGEMENT’S DISCUSSION AND ANALYSIS

procedures, prime contractors’ contact information, and 

forecasts of possible upcoming solicitations. Also, vendors 

were encouraged to register through the FDIC’s Contractor 

Resource List (a principal database for vendors interested 

in doing business with the FDIC). In 2014, a total of 332 

MWOBs were added to the FDIC Contractor Resource List. 

On December 2, 2014, the FDIC hosted a Technical 

Assistance Day. This event provided a venue for various 

business owners, including MWOBs and MWOLFs, to 

become better acquainted with the FDIC’s contracting 

process, receive technical assistance on effective proposal 

writing, and learn about the types of technical assistance 

offered by the Procurement Technical Assistance Center 

and Minority Business Development Agency. The event 

also included a panel composed of Office of Minority and 

Women Inclusion (OMWI) Directors from the U.S. Treasury 

Department, the OCC, the SEC, the FHFA, the CFPB, and 

the FDIC, who addressed their respective programs and 

opportunities. Eighty-six business representatives attended.

In addition, the FDIC conducted a series of outreach events 

to raise awareness and provide information on how to 

purchase other real estate (ORE) through the FDIC’s Owned 

Assets Marketplace and Auctions Program. The events also 

facilitated interaction between smaller investors and asset 

managers, which includes minority- and women-owned 

(MWO) firms. 

Additionally, the FDIC conducted outreach targeting 

prospective asset purchasers and investors, including MWO 

investors, in Chicago and New York City in advance of an 

auction that occurred later in 2014. Information regarding 

the Owned Assets Marketplace and Auctions Program can 

be found on the FDIC’s website at www.fdic.gov/mwop. 

EFFECTIVE MANAGEMENT OF 

STRATEGIC RESOURCES

The FDIC recognizes that it must effectively manage 

its human, financial, and technological resources to 

successfully carry out its mission and meet the performance 

goals and targets set forth in its annual performance 

plan. The FDIC must align these strategic resources 

with its mission and goals and deploy them where they 

are most needed to enhance its operational effectiveness 

and minimize potential financial risks to the DIF. Major 

accomplishments in improving the FDIC’s operational 

efficiency and effectiveness during 2014 follow. 

Human Capital Management

The FDIC’s human capital management programs are 

designed to attract, train and develop, reward, and retain 

a highly skilled, diverse, and results-oriented workforce. 

In 2014, FDIC workforce planning initiatives emphasized 

the need to plan for employees to fulfill current and future 

requirements and leadership needs. This focus ensures that 

the FDIC has a workforce positioned to meet today’s core 

responsibilities while preparing to fulfill its mission in the 

years ahead. 

Strategic Workforce Planning and Readiness

During 2014, the FDIC continued to develop and began 

implementation of the Workforce Development initiative. 

This effort began with an assessment of the current 

talent pipeline for senior leadership positions. Based 

on the findings, the FDIC elected to broaden the scope 

of the initiative beyond succession planning to include 

the development of strategies designed to address 

comprehensive workforce development challenges and 

opportunities. The initiative is focused on four broad 

objectives: attract and develop talented employees 

across the agency, enhance the capabilities of employees 

through training and diverse work experiences, encourage 

employees to engage in active career development planning 

and seek leadership roles in the FDIC, and build on 

and strengthen the FDIC’s operations to best support 

these efforts. 

In 2014, the FDIC embarked on planning and developing 

the infrastructure, governance, programs, and processes 

to help meet its long-term workforce needs. The FDIC is 

committed to building and maintaining its talent pipeline 

to ensure succession challenges are fully addressed. It 

will take several cycles of identifying future workforce and 

leadership needs; assessing current workforce capabilities; 

supporting aspiration to leadership and management 

roles; and developing and sourcing the talent to meet 

emerging workforce needs. As such, the FDIC’s Workforce 

Development initiative is a dynamic process rather than a 

one-time, static event. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 45

Simultaneously, the FDIC continued to focus on ensuring 

the availability of a workforce prepared to address today’s 

responsibilities, especially related to the oversight of SIFIs 

required under the Dodd-Frank Act. As an outgrowth of 

strategic workforce planning, the FDIC established a new 

employee development program to expand the number 

of FDIC employees who have broad, cross-divisional 

experience with the largest and most complex FDIC-insured 

banks and BHCs. The program provides experience in 

supervision, risk analysis and monitoring, risk-based pricing 

and deposit insurance fund management, and resolution 

planning and resolvability. Twelve employees were selected 

for this rotational program in 2014. 

Workforce planning efforts also addressed the need to 

continue winding down bank closure activities, based on 

the decrease in the number of financial institution failures 

and institutions in at-risk categories. In 2014, the FDIC 

continued to evaluate its staffing needs in a post-crisis 

environment and released some of the temporary staff as 

their term appointments expired. The FDIC has extended 

appointments only for the most critical temporary positions, 

where workload continues to exist, to address post-closure 

activity, which typically extends for five to seven years after 

a bank fails. The bank resolution workload is expected to 

slow considerably over the next few years. 

The quality and commitment of FDIC employees have 

allowed the agency to respond effectively in times of 

crisis, while continuing to deliver on its core mission 

responsibilities. Through further development of its 

human capital strategies, the FDIC will work to ensure that 

the future FDIC workforce is as prepared, capable, and 

dedicated as the one it has today.

Corporate Employee Program

The FDIC’s Corporate Employee Program (CEP) sponsors 

the development of newly hired financial institution 

specialists (FISs) in entry-level positions. The CEP 

encompasses major FDIC divisions where FISs are trained 

to become part of a highly effective workforce. During the 

first-year rotation within the program, FISs gain experience 

and knowledge in the core business of the FDIC, including 

the Division of Depositor and Consumer Protection (DCP), 

Division of Risk Management Supervision (RMS), the 

Division of Resolutions and Receiverships (DRR), and 

the Division of Insurance (DIR). At the conclusion of the 

rotation period, FISs are placed within RMS, DCP, 

or DRR, where they continue their career path to 

become commissioned examiners or resolutions and 

receiverships specialists.

The CEP is an essential part of the FDIC’s ability to provide 

continual cross-divisional staff mobility. As a result, 

the FDIC is capable of responding rapidly to shifting 

priorities and changes in workload while achieving its 

corporate mission. Since the CEP’s inception in 2005, 

1,391 individuals have joined the FDIC through this multidiscipline program and approximately 628 have become 

commissioned examiners after successfully completing the 

program’s requirements.

The FDIC continues to sponsor the Financial Management 

Scholars Program (FMSP), an additional hiring source for 

the CEP. Participants in the FMSP complete an internship 

with the FDIC the summer following the conclusion of their 

junior year. As a result, the FDIC is able to recruit and hire 

highly talented and well-qualified students into the CEP 

ahead of other prospective employers. The program serves 

as an additional venue to recruit talent. For 2015, the FDIC 

will continue to augment its workforce by fully utilizing the 

capacity of the CEP, including the FMSP.

Employee Learning and Development

The FDIC is committed to the learning and development 

of its employees throughout their career to enrich 

technical proficiency and leadership capacity, supporting 

career progression and succession management. In 

2014, the FDIC focused on developing and implementing 

comprehensive curricula for its business lines to 

incorporate lessons learned from the financial crises and 

prepare employees to meet new challenges. Such training, 

which includes both classroom and online instruction 

for maximum flexibility, is a critical part of workforce 

and succession planning as more experienced employees 

become eligible for retirement.

The FDIC also offers a comprehensive leadership 

development program that combines core courses, 

electives, and other enrichment opportunities to develop 

employees at all levels. From new employees to new 
ANNUAL REPORT 2014

46 MANAGEMENT’S DISCUSSION AND ANALYSIS

managers, the FDIC provides employees with targeted 

leadership development opportunities that align with key 

leadership competencies. The FDIC is expanding the use 

of strategic simulations to support corporate readiness and 

preparedness. In addition to a broad array of internally 

developed and administered courses, the FDIC also 

provides its employees with funds and/or time to participate 

in external training to support their career development. 

Corporate Risk Management

During 2014, the Office of Corporate Risk Management 

(OCRM) worked with divisions and offices to advance 

common agency-wide processes for identifying, managing, 

and mitigating risks to the FDIC. OCRM assisted the 

Enterprise Risk Committee, Executive Management 

Committee, External Risk Forum, and Management Risk 

Roundtable in reviewing risks across the agency. OCRM 

monitors material risks and mitigation activities, including 

the following:

♦ Risks to the agency’s ability to conduct its mission 

essential functions under all threats and conditions, 

as described in its Continuity of Operations Plan and 

Business Continuity Plan.

♦ Risks to the financial system posed by the extended 

current low level of interest rates.

♦ Risks to the deposit insurance system arising from new 

products and services with characteristics very different 

from traditional loan and deposit products.

♦ Risks posed by the analytical models used by the FDIC in 

identifying and managing risk.

♦ Risks associated with governance and development of 

large-scale IT projects.

♦ Risks posed to the agency and to the financial services 

industry by concerted attempts to penetrate, compromise, 

and disrupt the information systems that are essential to 

their effective operation. 

Employee Engagement

The FDIC continually evaluates its human capital programs 

and strategies to ensure that it remains an employer of 

choice and that all of its employees are fully engaged 

and aligned with the mission. The FDIC uses the Federal 

Employee Viewpoint Survey mandated by Congress 

to solicit information from employees and takes an 

agency-wide approach to address key issues identified 

in the survey. In December 2014, the FDIC received an 

award from the Partnership for Public Service for being 

ranked number one among mid-sized federal agencies on 

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

Effective leadership is the primary factor driving employee 

satisfaction and commitment in the federal workplace, 

according to a report by the Partnership for Public Service.

The FDIC’s Workplace Excellence (WE) program plays an 

important role in helping the FDIC engage employees. The 

WE program is composed of a national-level WE Steering 

Committee and Division/Office WE Councils that are 

focused on maintaining, enhancing, and institutionalizing 

a positive workplace environment throughout the agency. 

In addition to the WE program, the FDIC-National 

Treasury Employees Union Labor Management Forum 

serves as a mechanism for the union and employees to 

have pre-decisional input on workplace matters. The 

WE program and Labor Management Forum enhances 

communication, provides additional opportunities for 

employee input and engagement, and improves employee 

empowerment.

Director of the Division of Administration Arleas 

Upton Kea and Deputy to the Chairman and Chief 

Operating Officer Barbara A. Ryan accept the award 

from Max Stier, President and CEO of Partnership for 

Public Service. 

Photo credit: Sam Kittner/Kittner.com
MANAGEMENT’S DISCUSSION AND ANALYSIS 47

INFORMATION TECHNOLOGY 

MANAGEMENT

The FDIC recognizes secure information technology (IT) 

solutions are a critical and transformative resource for 

the successful accomplishment of the agency’s business 

objectives. The FDIC relies on the efficient, innovative, and 

secure business capabilities that IT provides to ensure and 

enhance mission achievement. 

Cybersecurity (internal)

Information resources are subject to serious threats that 

can have wide-ranging adverse impacts on the FDIC’s 

operations, reputation, and ultimately the ability to 

accomplish its mission. The continually changing landscape 

of threats poses significant security challenges for the FDIC, 

the public, and the nation. Several serious widespread 

vulnerabilities, including the Heartbleed, Shellshock, and 

POODLE vulnerabilities, were of specific concern for the 

FDIC in 2014. The FDIC recognizes that protections 

against today’s numerous and sophisticated array of cyber 

threats requires constant vigilance and rapidly evolving 

security solutions. 

As threats continued to intensify from cyber criminals, 

hacktivists, and foreign governments, multiple defenses 

were necessary to address each of the different motivations, 

intents, and capabilities of attacks. The increasing threat 

of cyber-attacks required the FDIC to implement improved 

strategies for ensuring the security of the FDIC’s data 

(including private, personal data) and IT infrastructure. 

In addition, the FDIC developed new cybersecurity 

capabilities for detecting incidents earlier and incorporated 

the capabilities together in a comprehensive framework 

to minimize the impact on operations and critical 

infrastructure, resulting in reduced risk.

The Information Security and Privacy Staff protects the FDIC’s networks and systems from threats and attacks.
THIS PAGE INTENTIONALLY LEFT BLANK.
PERFORMANCE RESULTS SUMMARY 49

SUMMARY OF 2014 PERFORMANCE 

RESULTS BY PROGRAM

The FDIC successfully achieved 36 of the 38 annual 

performance targets established in its 2014 Annual 

Performance Plan. There were no instances in which 2014 

performance had a material adverse effect on the successful 

achievement of the FDIC’s mission or its strategic goals and 

objectives regarding its major program responsibilities.

Additional key accomplishments are noted below.

Program Area Performance Results

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

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

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

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

to assessment rate schedules were necessary.

♦ Presented a notice of proposed rulemaking to the FDIC Board of Directors in 

July and a final rule in November that: conforms capital ratios and thresholds for 

deposit insurance assessment purposes to the PCA capital ratios and thresholds in 

the Basel III rule; conforms the assessment base deduction for custodial banks to 

the asset risk weights in the Basel III rule’s standardized approach; and requires that 

highly complex institutions measure their counterparty exposure for assessment 

purposes consistent with the standardized approach in the Basel III rule.

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

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

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

and the Deposit Insurance Fund. 

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

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

and speeches. 

♦ Published economic and banking information and analyses through the FDIC

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

for Financial Research Working Papers.

♦ Operated the Electronic Deposit Insurance Estimator (EDIE), which had 360,376 

user sessions in 2014. 

II. Performance

Results

Summary
ANNUAL REPORT 2014

50 PERFORMANCE RESULTS SUMMARY

Program Area Performance Results

Supervision and 

Consumer Protection

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

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

back-up authorities.

♦ Implemented the strategy outlined in the work plan approved by the Advisory 

Committee on Economic Inclusion to support the expanded availability of 

Safe accounts and the responsible use of technology to expand banking services to 

the underbanked.

Receivership 

Management

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

of the date of failure.

♦ Made final decisions for 86 percent of all investigated claim areas that were within 

18 months of the institution’s failure date.
PERFORMANCE RESULTS SUMMARY 51

PERFORMANCE RESULTS BY PROGRAM AND STRATEGIC GOAL

2014 INSURANCE PROGRAM RESULTS

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

#

Annual 

Performance Goal Indicator Target Results

1 Respond promptly to all 

insured financial institution 

closings and related 

emerging issues.

Number of business days 

after an institution failure 

that depositors have 

access to insured funds.

Insured depositor losses 

resulting from a financial 

institution failure.

Depositors have access to insured funds 

within one business day if the failure occurs 

on a Friday.

Depositors have access to insured funds 

within two business days if the failure occurs 

on any other day of the week.

Depositors do not incur any losses on 

insured deposits.

No appropriated funds are required to pay 

insured depositors.

Achieved.

See pg. 39. 

Achieved.

See pg. 39.

Achieved.

See pg. 39.

Achieved.

See pg. 39.

2 Disseminate data and 

analyses on issues and 

risks affecting the financial 

services industry to 

bankers, supervisors, 

the public, and other 

stakeholders on an 

ongoing basis.

Scope and timeliness of 

information dissemination 

on identified or potential 

issues and risks.

Disseminate results of research and 

analyses in a timely manner through 

regular publications, ad hoc reports, 

and other means.

Undertake industry outreach activities to 

inform bankers and other stakeholders 

about current trends, concerns, and other 

available FDIC resources.

Achieved. 

See pg. 49.

Achieved.

See pg. 34.

3 Adjust assessment rates, 

as necessary, to achieve a 

DIF reserve ratio of at least 

1.35 percent of estimated 

insured deposits by 

September 30, 2020.

Updated fund balance 

projections and 

recommended changes 

to assessment rates.

Demonstrated progress in 

achieving the goals of the 

Restoration Plan.

Provide updated fund balance projections 

to the FDIC Board of Directors by June 30, 

2014, and December 31, 2014.

Recommend changes to deposit insurance 

assessment rates to the FDIC Board of 

Directors as necessary.

Provide progress reports to the FDIC 

Board of Directors by June 30, 2014, and 

December 31, 2014.

Achieved.

See pg. 49.

Achieved.

See pg. 49.

Achieved.

See pp. 49.
ANNUAL REPORT 2014

52 PERFORMANCE RESULTS SUMMARY

2014 INSURANCE PROGRAM RESULTS (continued)

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

#

Annual 

Performance Goal Indicator Target Results

4 Expand and strengthen 

the FDIC’s participation 

and leadership role in 

supporting robust and 

effective deposit insurance 

programs, resolution 

strategies, and banking 

systems worldwide. 

Initiatives to advance the 

FDIC’s global leadership 

and participation.

Provision of technical 

assistance to foreign 

counterparts.

Maintain open dialogue with counterparts 

in strategically important countries as well 

as international financial institutions and 

partner U.S. agencies.

Maintain a leadership position in the 

International Association of Deposit 

Insurers (IADI) by conducting workshops 

and performing assessments of deposit 

insurance systems based on the 

methodology for assessment of compliance 

with the IADI Core Principles for Effective 

Deposit Insurance Systems (Core Principles), 

developing and conducting training on 

priority topics identified by IADI members, 

and actively participating in IADI’s Executive 

Council and Standing Committees.

Engage with authorities responsible for 

resolutions and resolutions planning in 

priority foreign jurisdictions.

Contribute to the resolution-related agenda 

of the Financial Stability Board (FSB) through 

active participation in the FSB’s Resolution 

Steering Group and its working groups. 

Actively participate in bilateral interagency 

regulatory dialogues. 

Support visits, study tours, and longer-term 

technical assistance and training programs 

for foreign jurisdictions to strengthen their 

deposit insurance organizations, central 

banks, bank supervisors, and resolution 

authorities. 

Achieved.

See pg. 41.

Achieved.

See pgs. 41-42.

Achieved.

See pg. 41.

Achieved.

See pg. 41.

Achieved.

See pg. 43.

Achieved.

See pg. 42.

5 Provide educational 

information to insured 

depository institutions 

and their customers to 

help them understand 

the rules for determining 

the amount of insurance 

coverage on deposit 

accounts.

Timeliness of responses 

to deposit insurance 

coverage inquiries.

Initiatives to increase 

public awareness of 

deposit insurance 

coverage changes.

Respond within two weeks to 95 percent 

of written inquiries from consumers and 

bankers about FDIC deposit insurance 

coverage.

Conduct at least 12 telephone or in-person 

seminars for bankers on deposit insurance 

coverage.

Achieved.

See pg. 38.

Achieved.

See pg. 38.
PERFORMANCE RESULTS SUMMARY 53

2014 SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS

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

#

Annual 

Performance Goal Indicator Target Results

1 Conduct on-site risk 

management examinations 

to assess the overall 

financial condition, 

management practices and 

policies, and compliance 

with applicable laws and 

regulations of FDICsupervised depository 

institutions. When 

problems are identified, 

promptly implement 

appropriate corrective 

programs, and follow up 

to ensure that identified 

problems are corrected.

Percentage of required 

examinations conducted 

in accordance with 

statutory requirements 

and FDIC policy.

Implement appropriate 

corrective program where 

violations are identified.

Conduct all required risk management 

examinations within the time frames 

prescribed by statute and FDIC policy.

Implement formal or informal enforcement 

actions within 60 days for at least 90 percent 

of all institutions that are newly downgraded 

to a composite Uniform Financial Institutions 

Rating of 3, 4, or 5.

Achieved.

See pg. 24.

Substantially 

Achieved.

See pg. 25.

2 Assist in protecting the 

infrastructure of the U.S. 

banking system against 

terrorist financing, money 

laundering, and other 

financial crimes.

Percentage of required 

examinations conducted 

in accordance with 

statutory requirements 

and FDIC policy. 

Conduct all Bank Secrecy Act examinations 

within the time frames prescribed by statute 

and FDIC policy.

Achieved.

See pg. 24.

3 More closely align 

regulatory capital 

standards with risk and 

ensure that capital is 

maintained at prudential 

levels.

Issuance of final Basel III 

reporting instructions.

Issuance of a final Basel 

Liquidity Coverage Ratio 

rule.

Issuance of a final rule 

implementing the Basel III 

capital accord.

Issuance of an enhanced 

U.S. supplementary 

leverage ratio standard.

Finalize Basel III reporting instructions in 

time to ensure that institutions that are using 

the advanced approaches can implement 

Basel III in the first quarter of 2014 and that 

all IDIs can implement the standardized 

approach in the first quarter of 2015.

Publish a final Basel Liquidity Coverage Rule, 

in collaboration with other regulators by 

December 31, 2014.

Publish a final rule implementing the Basel 

III capital accord in collaboration with other 

regulators, by December 31, 2014.

Finalize, in collaboration with other 

regulators, an enhanced U.S. supplementary 

leverage ratio standard by December 31, 

2014.

Achieved.

See pgs. 14-15.

Achieved.

See pg. 18.

Achieved.

See pgs. 13-14.

Achieved.

See pg. 14.
ANNUAL REPORT 2014

54 PERFORMANCE RESULTS SUMMARY

2014 SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (continued)

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

#

Annual 

Performance Goal Indicator Target Results

4 Identify and address risks 

in financial institutions 

designated as systemically 

important.

Risk monitoring of 

systemically important 

banks, bank holding 

companies, and 

designated non-banking 

firms. 

Completion of statutory 

and regulatory 

requirements under Title I 

of the Dodd-Frank Act.

Meetings of the Systemic 

Resolution Advisory 

Committee.

Conduct ongoing risk analysis and 

monitoring of SIFIs to understand their 

structure, business activities and risk 

profiles, and their resolution and recovery 

capabilities.

Complete, in collaboration with the Federal 

Reserve Board and in accordance with 

statutory and regulatory time frames, all 

required actions associated with the review 

of resolution plans submitted by financial 

companies subject to the requirements of 

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

Hold at least one meeting of the Systemic 

Resolution Advisory Committee to obtain 

feedback on resolving SIFIs. 

Achieved.

See pgs. 19-20.

Achieved.

See pgs. 20-21.

Achieved.

See pg. 24.

5 Implement strategies 

to promote enhanced 

cybersecurity within the 

banking industry.

Implementation of an 

enhanced information 

technology (IT) 

supervision program.

In coordination with the FFIEC, implement 

recommendations to enhance the FDIC’s 

supervision of the IT risks at insured 

depository institutions and their technology 

service providers. 

Achieved.

See pgs. 27-28.
PERFORMANCE RESULTS SUMMARY 55

2014 SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (continued)

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

#

Annual 

Performance Goal Indicator Target Results

1 Conduct on-site CRA and 

compliance examinations 

to assess compliance 

with applicable laws and 

regulations by FDICsupervised depository 

institutions. When 

violations are identified, 

promptly implement 

appropriate corrective 

programs and follow up 

to ensure that identified 

problems are corrected.

Percentage of 

examinations conducted 

in accordance with the 

time frames prescribed by 

FDIC policy.

Implementation of 

corrective programs.

Conduct 100 percent of required 

examinations within the time frames 

established by FDIC policy.

Conduct visits and/or follow-up examinations 

in accordance with established FDIC policies 

to ensure that the requirements of any 

required corrective program have been 

implemented and are effectively addressing 

identified violations.

Substantially

Achieved.

See pg. 26. 

Achieved.

See pg. 26.

2 Effectively investigate 

and respond to written 

consumer complaints 

and inquiries about 

FDIC-supervised financial 

institutions.

Timely responses to 

written consumer 

complaints and inquiries.

Respond to 95 percent of written consumer 

complaints and inquiries within time frames 

established by policy, with all complaints 

and inquiries receiving at least an initial 

acknowledgement within two weeks.

Achieved.

See pg. 37.

3 Promote economic 

inclusion and access to 

responsible financial 

services through 

supervisory, research, 

policy, and consumer/

community affairs 

initiatives.

Completion of planned 

initiatives.

Publish the results of the 2013 FDIC National 

Survey of Unbanked and Underbanked 

Households (conducted jointly with the U.S. 

Census Bureau).

Implement the strategy outlined in the work 

plan approved by the Advisory Committee 

on Economic Inclusion to support the 

expanded availability of SAFE accounts and 

the responsible use of technology, to expand 

banking services to the underbanked. 

Facilitate opportunities for banks and 

community stakeholders to address issues 

concerning access to financial services, 

community development, and financial 

education.

Achieved.

See pg. 33.

Achieved.

See pg. 33.

Achieved.

See pgs. 35-36.
ANNUAL REPORT 2014

56 PERFORMANCE RESULTS SUMMARY

2014 RECEIVERSHIP MANAGEMENT PROGRAM RESULTS

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

#

Annual 

Performance Goal Indicator Target Results

1 Market failing institutions 

to all known qualified 

and interested potential 

bidders.

Scope of qualified and 

interested bidders 

solicited.

Contact all known qualified and interested 

bidders. 

Achieved. 

See pg. 39.

2 Value, manage, and 

market assets of failed 

institutions and their 

subsidiaries in a timely 

manner to maximize net 

return.

Percentage of the assets 

marketed for each failed 

institution.

For at least 95 percent of insured institution 

failures, market at least 90 percent of the 

book value of the institution’s marketable 

assets within 90 days of the failure date (for 

cash sales) or 120 days of the failure date 

(for structured sales).

Achieved.

See pg. 39.

3 Manage the receivership 

estate and its subsidiaries 

toward an orderly 

termination.

Timely termination of new 

receiverships.

Terminate at least 75 percent of new 

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

legal impediments, within three years of the 

date of failure.

Achieved.

See pg. 50.

4 Conduct investigations into 

all potential professional 

liability claim areas for all 

failed insured depository 

institutions, and decide 

as promptly as possible, 

to close or pursue each 

claim, considering the 

size and complexity of the 

institution.

Percentage of investigated 

claim areas for which a 

decision has been made 

to close or pursue the 

claim.

For 80 percent of all claim areas, make a 

decision to close or pursue professional 

liability claims within 18 months of the failure 

of an insured depository institution.

Achieved.

See pg. 50.
PERFORMANCE RESULTS SUMMARY 57

PRIOR YEARS’ PERFORMANCE RESULTS

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

wording changes may have been made to reflect current goals and targets. (Shaded areas indicate no such target existed for 

that respective year.)

INSURANCE PROGRAM RESULTS

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

Annual Performance Goals and Targets 2013 2012 2011

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

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

occurs on a Friday. Achieved. Achieved. Achieved.

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

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

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

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

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

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

the first quarter of 2012. Achieved.

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

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

and role in supporting local communities.

Achieved.

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

industry to bankers, supervisors, the public, and other stakeholders on an 

ongoing basis.

♦ Disseminate results of research and analyses in a timely manner through 

regular publications, ad hoc reports, and other means. Achieved. Achieved. Achieved.

♦ Industry outreach activities are undertaken to inform bankers and other 

stakeholders about current trends, concerns, and other available FDIC 

resources.

Achieved. Achieved. Achieved.

4. Adjust assessment rates, as necessary, to achieve a DIF reserve ratio of at least 

1.35 percent of estimated insured deposits by September 30, 2020.

♦ Provide updated fund balance projections to the FDIC Board of Directors by 

June 30, 2013, 2012, and 2011, and December 31, 2013, 2012, and 2011. Achieved. Achieved. Achieved.

♦ Provide progress reports to the FDIC Board of Directors by June 30, 2013, 

2012 and 2011, and December 31, 2013, 2012 and 2011. Achieved. Achieved. Achieved.

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

recommendations where appropriate, of refinements to the deposit insurance 

pricing methodology for banks with assets under $10 billion.

Achieved.

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

FDIC Board as necessary. Achieved. Achieved. Achieved.
ANNUAL REPORT 2014

58 PERFORMANCE RESULTS SUMMARY

INSURANCE PROGRAM RESULTS

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

Annual Performance Goals and Targets 2013 2012 2011

5. Provide educational information to insured depository institutions and their 

customers to help them understand the rules for determining the amount of 

insurance coverage on deposit accounts.

♦ Respond within two weeks to 95 percent of written inquiries from consumers 

and bankers about FDIC deposit insurance coverage. Achieved. Achieved. Achieved.

♦ Conduct at least 15 telephone or in-person seminars for bankers on deposit 

insurance coverage during 2013 and at least 12 seminars each year during 

2012 and 2011.

Achieved. Achieved. Achieved.

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

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

governmental banking and deposit insurance organizations; and in supporting 

robust international deposit insurance and banking systems.

♦ Maintain open dialogue with counterparts in strategically important countries 

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

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

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

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

efforts to promote sound banking principles throughout the Western 

Hemisphere.

Achieved.

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

deposit insurers. Achieved.

♦ Foster strong relationships with international banking regulators and 

associations that promote sound banking supervision and regulation, failure 

resolutions, and deposit insurance practices. 

Achieved. Achieved.

♦ Develop methodology and lead the International Association of Deposit 

Insurers training on the methodology for assessing compliance with 

implementation of the Core Principles for Effective Deposit Insurance Systems.

Achieved.

♦ Conduct workshops and assessments of deposit insurance systems based on 

the methodology for assessment of compliance with Basel Committee on Bank 

Supervision (BCBS) and the International Association of Depositor Insurers 

(IADI) Core Principles for Effective Deposit Insurance Systems. 

Achieved.

♦ Support visits, study tours, and longer-term technical assistance and training 

programs for foreign jurisdictions to strengthen their deposit insurance 

organizations, central banks, and bank supervisors. 

Achieved. 
PERFORMANCE RESULTS SUMMARY 59

SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS

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

Annual Performance Goals and Targets 2013 2012 2011

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

condition, management practices and policies, and compliance with applicable 

laws and regulations of FDIC-supervised depository institutions. Beginning in 

2013, when problems are identified, promptly implement appropriate corrective 

programs, and follow up to ensure that identified problems are corrected. 

♦ Conduct all required risk management examinations within the time frames 

prescribed by statute and FDIC policy. Achieved. Achieved. Achieved.

♦ Implement formal or informal enforcement actions within 60 days for at least 

90 percent of all institutions that are newly downgraded to a composite 

Uniform Financial Institutions Rating of 3, 4, or 5.

Substantially

Achieved.*

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

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

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

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

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

underlying concerns identified during the examination.

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

implementation of a corrective program. Achieved. Achieved.

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

with approved plans and statutory requirements.

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

July 21, 2011. Achieved.

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

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

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

financing, money laundering, and other financial crimes.

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

by statute and FDIC policy. Achieved. Achieved. Achieved.

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

is maintained at prudential levels. 

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

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

Not 

Achieved.

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

Achieved.

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

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

DFA requirements.

Achieved.

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

organizations. Achieved.

* Erroneously reported as “Achieved” in the 2013 Annual Report.
ANNUAL REPORT 2014

60 PERFORMANCE RESULTS SUMMARY

SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (continued)

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

Annual Performance Goals and Targets 2013 2012 2011

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

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

enhancements to resecuritizations risk weights, and securitization disclosures.

Deferred.

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

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

requirements. Deferred.

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

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

accordance with DFA requirements).

Deferred.

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

♦ Complete by June 30, 2013, the review of comments and impact analysis of 

June 2012 proposed interagency changes to regulatory capital rules. Achieved.

♦ Issue by December 31, 2013, final regulatory capital rules. Achieved.

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

important.

♦ Take all steps necessary to facilitate timely issuance of implementing 

regulations and related policy guidance on proprietary trading and other 

investment restrictions (also known as the Volcker Rule).

Achieved.

♦ Take all steps necessary to facilitate timely issuance of implementing 

regulations and related policy guidance on restrictions on federal assistance to 

swap entities.

Achieved.

♦ Take all steps necessary to facilitate timely issuance of implementing 

regulations and related policy guidance on capital and margin and other 

requirements for OTC derivatives.

Achieved.

♦ Take all steps necessary to facilitate timely issuance of implementing 

regulations and related policy guidance on credit risk retention requirements 

for securitizations.

Achieved.

♦ Take all steps necessary to facilitate timely issuance of implementing 

regulations and related policy guidance on enhanced compensation structure 

and incentive compensation requirements.

Achieved.

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

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

necessary, an FDIC resolution of the institution.

Achieved.

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

collecting, processing, and reviewing for completeness and sufficiency holding 

company and insure depository institution (IDI) resolution plans submitted 

under Section 165(d) of DFA. 

Achieved.

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

review of holding company and IDI resolution plans submitted under Section 

165(d) of DFA.

Achieved.

♦ Establish an ongoing FDIC monitoring program for all covered financial 

institutions. Achieved.
PERFORMANCE RESULTS SUMMARY 61

SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (continued)

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

Annual Performance Goals and Targets 2013 2012 2011

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

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

important institutions.

Achieved.

♦ Complete, in collaboration with the Federal Reserve board and in accordance 

with statutory and regulatory time frames, all required actions associated with 

the review of Section 165(d) resolution plans submitted under Title 1 of DFA.

Achieved.

♦ Hold at least one meeting of the Systemic Resolution Advisory Committee to 

obtain feedback on resolving systemically important financial companies. 

Achieved.

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

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

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

supervisory programs.

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

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

contain an informative section as to their applicability to smaller institutions 

(total assets under $1 billion).

Achieved.

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

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

with recommendations on improving efficiency and ease of use, including 

a scheduled plan for implementing these revisions. Carry out approved 

recommendations in accordance with the plan.

Achieved.
ANNUAL REPORT 2014

62 PERFORMANCE RESULTS SUMMARY

SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (continued)

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

Annual Performance Goals and Targets 2013 2012 2011

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

applicable laws and regulations by FDIC-supervised depository institutions. 

Beginning in 2013, when problems are identified, promptly implement 

appropriate corrective programs, and follow up to ensure that identified 

problems are corrected. 

♦ Conduct 100 percent of required examinations within the time frames 

established by FDIC policy. Achieved. Achieved.

♦ Conduct visits and/or follow-up examinations in accordance with established 

FDIC policies and ensure that the requirements of any required corrective 

program have been implemented and are effectively addressing identified 

violations. 

Achieved.

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

identified during compliance examinations of FDIC-supervised institutions that 

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

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

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

effectively addressing the underlying concerns identified during the examination.

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

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

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

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

institution is fulfilling the requirements of any corrective programs that have 

been implemented and that the actions taken are effectively addressing the 

underlying concerns identified during the examination.

Achieved.

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

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

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

Bureau (CFPB) in accordance with statutory requirements.

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

FDIC to the CFPB. Achieved.

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

accordance with established time frames. Achieved.

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

Protection Bureau (CFPB).

♦ Complete the transfer of consumer compliant processing responsibilities within 

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

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

about FDIC-supervised financial institutions.

♦ Respond to 95 percent of written consumer complaints and inquiries within 

time frames established by policy, with all complaints and inquiries receiving at 

least an initial acknowledgment within two weeks.

Achieved. Achieved. Achieved.

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

Inclusion and other regulatory agencies, national objectives and methods for 

reducing the number of unbanked and underbanked individuals.

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

accounts from banks, and start reporting on results of the pilot. Achieved.
PERFORMANCE RESULTS SUMMARY 63

SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (continued)

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

Annual Performance Goals and Targets 2013 2012 2011

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

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

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

workforce.

Achieved.

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

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

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

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

Unbanked and Underbanked Households and Banks’ Efforts to Serve the 

Unbanked and Underbanked.

Achieved.

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

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

♦ Coordinate 25 CRA community forums nationwide to facilitate community 

development opportunities for financial institutions. Achieved.

♦ Conduct the third biennial FDIC National Survey of Unbanked and 

Underbanked Households (conducted jointly with the U.S. Census Bureau). Achieved.

♦ Initiate work on the Survey of Banks’ Efforts to Serve the Unbanked and 

Underbanked. Deferred.

♦ Implement the strategy outlined in the work plan approved by the Advisory 

Committee on Economic Inclusion to support the responsible use of 

technology to expand banking services to the unbanked.

Achieved.
ANNUAL REPORT 2014

RECEIVERSHIP MANAGEMENT PROGRAM RESULTS

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

Annual Performance Goals and Targets 2013 2012 2011

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

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

2. Value, manage, and market assets of failed institutions and their subsidiaries in a 

timely manner to maximize net return.

♦ For at least 95 percent of insured institution failures, market at least 90 percent 

of the book value of the institution’s marketable assets within 90 days of the 

failure date (for cash sales) or 120 days of the failure date (for structured sales).

Achieved. Achieved. Achieved.

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

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

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

other legal impediments.

Achieved. Achieved. Achieved.

4. Conduct investigations into all potential professional liability claim areas for all 

failed insured depository institutions, and decide as promptly as possible to close 

or pursue each claim, considering the size and complexity of the institution.

♦ For 80 percent of all claim areas, a decision is made to close or pursue 

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

depository institution.

Achieved. Achieved. Achieved.

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

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

agreements.

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

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

with the terms and conditions of the agreements.

Achieved. Achieved.

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

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

percent of the LLC reviews.

Achieved.

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

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

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

than $1.0 billion (gross book value).

Achieved.

64 PERFORMANCE RESULTS SUMMARY
In its role as deposit insurer of financial institutions, 

the FDIC promotes the safety and soundness of insured 

depository institutions (IDIs). The following financial 

highlights address the performance of the deposit 

insurance funds.

DEPOSIT INSURANCE 

FUND PERFORMANCE 

The FDIC administers the Deposit Insurance Fund (DIF) 

and the FSLIC Resolution Fund (FRF), which fulfills 

the obligations of the former Federal Savings and Loan 

Insurance Corporation (FSLIC) and the former Resolution 

Trust Corporation (RTC). The following summarizes the 

condition of the DIF. (See the accompanying graphs on 

FDIC-Insured Deposits and Insurance Fund Reserve Ratios 

on the following page.)

For 2014, the DIF’s comprehensive income totaled $15.6 

billion compared to comprehensive income of $14.2 billion 

during 2013. This $1.4 billion year-over-year increase was 

primarily due to a $2.6 billion decrease in provision for 

insurance losses, partially offset by a $1.0 billion decrease 

in assessment revenue.

Assessment revenue was $8.7 billion for 2014. The decrease 

of $1.0 billion, from $9.7 billion in 2013, was primarily due to 

lower risk-based assessment rates resulting from continued 

improvements in banks’ CAMELS ratings and financial 

condition. 

The provision for insurance losses was negative $8.3 

billion for 2014, compared to negative $5.7 billion for 

2013. The negative provision for 2014 primarily resulted 

from a decrease of $9.1 billion in the estimated losses for 

institutions that failed in current and prior years, partially 

offset by an increase of $850 million in the contingent 

liability for anticipated failures due to the deterioration in 

the financial condition of certain troubled institutions. 

The $9.1 billion reduction in the estimated losses from 

failures was primarily attributable to (1) unanticipated 

recoveries of $1.8 billion in litigation settlements, 

professional liability claims, and tax refunds by the 

receiverships and (2) a $6.7 billion decrease in the 

receiverships’ shared-loss liability that resulted from 

decreases in covered asset balances, lower future loss rate 

estimates, and unanticipated recoveries on shared-loss 

agreement losses. Covered asset balances decreased 

by $23.6 billion during 2014 with lower than anticipated 

losses. These lower than anticipated losses were due to 

loan amortizations and pay-downs, resulting from the 

improvement in the condition of real estate markets where 

shared-loss assets are concentrated, and the expiration of 

83 commercial asset shared-loss coverage agreements in 

2014, thereby ending the loss claim period. The reduction 

in future loss rate estimates resulted from the general 

improvement in the real estate markets and the composition 

of the remaining covered asset portfolios, which primarily 

consist of performing single family assets. These assets 

have historically experienced significantly lower losses than 

commercial assets. Finally, unanticipated recoveries of 

approximately $958 million on previous shared-loss claims, 

which are not estimated due to their uncertainty, were 

received by the receiverships during 2014.

The DIF’s interest revenue on U.S. Treasury investments for 

2014 was $282 million compared to interest revenue of $103 

million in 2013. This $179 million year-over-year increase 

reflects not only a larger investment portfolio balance, 

but also new, higher-yielding investments. The DIF’s cash 

and U.S. Treasury investment portfolio balance was $51.7 

billion at year-end 2014, an increase of $9.7 billion from the 

year-end 2013 balance of $42.0 billion that was primarily 

due to assessment collections of $8.9 billion and recoveries 

from resolutions of $4.1 billion, less disbursements for 

resolutions of $1.9 billion and cash operating expenses of 

$1.6 billion.

III. Financial 

Highlights

FINANCIAL HIGHLIGHTS 65
ANNUAL REPORT 2014

66 FINANCIAL HIGHLIGHTS

SOURCE: Commercial Bank Call and Thrift Financial Reports

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

of noninterest-bearing transaction accounts.

ESTIMATED DIF INSURED DEPOSITS

DEPOSIT INSURANCE FUND RESERVE RATIOS

12-09

Fund Balances as a Percent of Insured Deposits

3-10 6-10 9-10 12-10 3-11 6-11 9-11 12-11 3-12 6-12 9-12 12-12 6-133-13 9-13 6-143-1412-13 9-14 12-14

0.4

0.6

0.8

1.2

1.0

0.2

0.0

-0.2

-0.4

12-09

Dollars in Billions

3-10 6-10 9-10 12-10 3-11 6-11 9-11 12-11 3-12 6-12 9-12 12-12 3-13 6-13 9-13 12-13 3-14 6-14 9-14 12-14

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0
FINANCIAL HIGHLIGHTS 67

DEPOSIT INSURANCE FUND SELECTED STATISTICS 

 Dollars in Millions

For the years ended December 31

2014  2013 2012

Financial Results

Revenue $8,965 $10,459 $18,522 

Operating Expenses 1,664  1,609 1,778 

Insurance and Other Expenses (includes provision for loss) (8,299)  (5,655)  (4,377) 

Net Income 15,600 14,505 21,121 

Comprehensive Income 15,589  14,233  21,131 

Insurance Fund Balance $62,780  $47,191  $32,958 

Fund as a Percentage of Insured Deposits (reserve ratio) 1.01% 0.79% 0.45%

Selected Statistics

Total DIF-Member Institutions1 6,509 6,812 7,083 

Problem Institutions 291 467 651 

Total Assets of Problem Institutions $86,712 $152,687 $232,701

Institution Failures 18 24 51 

Total Assets of Failed Institutions in Year2 $2,914 $6,044  $11,617 

Number of Active Failed Institution Receiverships 481 479  463 

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

2 Total Assets data are based upon the last Call Report filed by the institution prior to failure.
THIS PAGE INTENTIONALLY LEFT BLANK.
CORPORATE OPERATING BUDGET

The FDIC segregates its corporate operating budget and 

expenses into two discrete components: ongoing operations 

and receivership funding. The receivership funding 

component represents expenses resulting from financial 

institution failures and is, therefore, largely driven by 

external forces, while the ongoing operations component 

accounts for all other operating expenses and tends to be 

more controllable and estimable. Over the past decade, the 

FDIC’s expenditures have varied in response to workload. 

From 2008-2010, expenditures rose substantially, largely 

due to increasing resolution and receivership activity and 

the oversight of more problem institutions. Since 2010 

these activities and their associated expenditures have been 

gradually declining.

Corporate operating expenses totaled $2.1 billion in 2014, 

including $1.6 billion in ongoing operations and $0.5 billion 

in receivership funding. This represented approximately 91 

percent of the approved budget for ongoing operations and 

86 percent of the approved budget for receivership funding 

for the year. 5

In December 2014, the Board of Directors approved a 2015 

Corporate Operating Budget of approximately $2.3 billion, 

consisting of $1.8 billion for ongoing operations and $0.5 

billion for receivership funding. The ongoing operations 

budget for 2015 is approximately $2 million (0.1 percent) 

higher than it was for 2014, while the receivership funding 

budget is $75 million (13 percent) lower than it was 

for 2014.

As in prior years, the 2015 budget was formulated primarily 

on the basis of an analysis of projected workload for each 

of the Corporation’s three major business lines and its major 

program support functions. The most significant factor 

contributing to the decrease in the Corporate Operating 

Budget is the improving health of the industry and the 

resulting reduction in failure-related workload. Although 

savings in this area are being realized, the 2015 receivership 

funding budget allows for resources for contractor support 

as well as non-permanent staffing for DRR, the Legal 

Division, and other organizations, should workload in these 

areas require an immediate response.

IV. FDIC Budget 

and Spending

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

classified.

BUDGET SECTION 69
ANNUAL REPORT 2014

70 BUDGET SECTION

FDIC EXPENDITURES 2005–2014

Dollars in Millions

2014 BUDGET AND EXPENDITURES BY PROGRAM

(including Allocated Support) Dollars in Millions

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$0

2014 BUDGET AND 

EXPENDITURES BY PROGRAM 

(Excluding Investments)

The FDIC operating budget for 2014 totaled $2.4 billion. 

Budget amounts were allocated as follows: $264 million, 

or 11 percent, to the Insurance program; $1.1 billion, or 

44 percent, to the Supervision program; $864 million, or 

36 percent, to the Receivership Management program; 

and $216 million, or 9 percent, to Corporate General and 

Administrative expenditures.

Actual expenditures for the year totaled $2.1 billion. 

Actual expenditures amounts were allocated as follows: 

$273 million, or 13 percent, to the Insurance program;

 $924 million, or 44 percent, to the Supervision program; 

and $714 million, or 34 percent, to the Receivership 

Management program; and $189 million, or 9 percent, to 

Corporate General and Administrative expenditures.

Insurance

Program

Supervision 

Program

Receivership

Management

Program

General and

Administrative

$1,200

Budget

$900

$600

$300

$0

Expenditures
BUDGET SECTION 71

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$60

$40

$20

$10

$30

$50

$70

$0

INVESTMENT SPENDING 2005 - 2014

Dollars in Millions

INVESTMENT SPENDING

The FDIC instituted a separate Investment Budget in 

2003 to provide enhanced governance of major multi-year 

development efforts. There is a disciplined process for 

reviewing proposed new investment projects and managing 

the construction and implementation of approved projects. 

Proposed IT projects are carefully reviewed to ensure 

that they are consistent with the Corporation’s enterprise 

architecture. The project approval and monitoring 

processes also enable the FDIC to be aware of risks to the 

major capital investment projects and facilitate appropriate, 

timely intervention to address these risks throughout the 

development process. An investment portfolio performance 

review is provided to the FDIC’s Board of Directors on 

a quarterly basis. From 2005-2014, investment spending 

totaled $191 million and is estimated at $30 million 

for 2015. 
THIS PAGE INTENTIONALLY LEFT BLANK.
V. Financial 

Section

FINANCIAL SECTION 73
ANNUAL REPORT 2014

74 FINANCIAL SECTION 

DEPOSIT INSURANCE FUND (DIF)

FEDERAL DEPOSIT INSURANCE CORPORATION

DEPOSIT INSURANCE FUND BALANCE SHEET AT DECEMBER 31

Dollars in Thousands

2014 2013

Assets

Cash and cash equivalents $1,914,520 $3,543,270 

Investment in U.S. Treasury obligations (Note 3) 49,805,846 38,510,500 

Assessments receivable, net (Note 8) 2,003,424 2,227,735 

Interest receivable on investments and other assets, net 651,894 511,428 

Receivables from resolutions, net (Note 4) 18,181,498 16,344,991 

Property and equipment, net (Note 5) 372,419 377,223 

Total Assets $72,929,601 $61,515,147 

Liabilities 

Accounts payable and other liabilities $291,006 $300,575 

Liabilities due to resolutions (Note 6) 7,799,279 12,625,982 

Postretirement benefit liability (Note 13) 243,419 193,591 

Contingent liabilities for: 

Anticipated failure of insured institutions (Note 7) 1,814,770 1,198,960 

Litigation losses (Note 7) 950 5,200 

Total Liabilities 10,149,424 14,324,308 

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

Fund Balance

Accumulated Net Income 62,786,786 47,186,974 

Accumulated Other Comprehensive Income

Unrealized gain on U.S. Treasury investments, net (Note 3) 51,142 20,215 

Unrealized postretirement benefit loss (Note 13) (57,751) (16,350)

Total Accumulated Other Comprehensive (Loss) Income (6,609) 3,865 

Total Fund Balance 62,780,177 47,190,839 

Total Liabilities and Fund Balance $72,929,601 $61,515,147

The accompanying notes are an integral part of these financial statements.
FINANCIAL SECTION 75

DEPOSIT INSURANCE FUND (DIF)

The accompanying notes are an integral part of these financial statements.

FEDERAL DEPOSIT INSURANCE CORPORATION

DEPOSIT INSURANCE FUND STATEMENT OF INCOME AND FUND BALANCE 

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2014 2013

Revenue

Assessments (Note 8) $8,656,082 $9,734,173 

Interest on U.S. Treasury obligations 281,924 103,363 

Other revenue (Note 9) 27,059 163,154 

Gain on sale of trust preferred securities (Note 10) 0 458,176 

Total Revenue 8,965,065 10,458,866 

Expenses and Losses

Operating expenses (Note 11) 1,664,344 1,608,717 

Provision for insurance losses (Note 12) (8,305,577) (5,659,388)

Insurance and other expenses 6,486 4,799 

Total Expenses and Losses (6,634,747) (4,045,872)

Net Income 15,599,812 14,504,738 

Other Comprehensive Income

Unrealized gain (loss) on U.S. Treasury investments, net 30,927 (13,604)

Unrealized postretirement benefit (loss) gain (Note 13) (41,401) 44,097 

Unrealized loss on trust preferred securities (Note 10) 0 (302,159)

Total Other Comprehensive Loss (10,474) (271,666)

Comprehensive Income 15,589,338 14,233,072 

Fund Balance - Beginning 47,190,839 32,957,767 

Fund Balance - Ending $62,780,177 $47,190,839
ANNUAL REPORT 2014

76 FINANCIAL SECTION 

DEPOSIT INSURANCE FUND (DIF)

The accompanying notes are an integral part of these financial statements.

FEDERAL DEPOSIT INSURANCE CORPORATION

DEPOSIT INSURANCE FUND STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2014 2013

Operating Activities

Provided by:

Assessments $8,873,123 $7,111,902 

Interest on U.S. Treasury obligations 1,450,939 1,080,157 

Dividends and interest on trust preferred securities 0 154,393 

Recoveries from financial institution resolutions 4,099,804 5,696,453 

Miscellaneous receipts 78,558 79,773 

Used by:

Operating expenses (1,586,858) (1,558,229)

Disbursements for financial institution resolutions (1,860,014) (3,857,214)

Refunds of prepaid assessments (Note 8) 0 (5,850,135)

Miscellaneous disbursements (15,385) (17,228)

Net Cash Provided by Operating Activities 11,040,167 2,839,872 

Investing Activities

Provided by:

Maturity of U.S. Treasury obligations 17,158,275 27,704,523 

Sale of trust preferred securities (Note 10) 0 2,420,000 

Used by:

Purchase of property and equipment (55,295) (57,390)

Purchase of U.S. Treasury obligations (29,771,897) (32,464,096)

Net Cash (Used) by Investing Activities (12,668,917) (2,396,963)

Net (Decrease) Increase in Cash and Cash Equivalents (1,628,750) 442,909 

Cash and Cash Equivalents - Beginning 3,543,270 3,100,361 

Cash and Cash Equivalents - Ending $1,914,520 $3,543,270
FINANCIAL SECTION 77

Notes to the Financial Statements

DEPOSIT INSURANCE FUND 

December 31, 2014 and 2013

1. OPERATIONS OF THE DEPOSIT 

INSURANCE FUND

OVERVIEW

The Federal Deposit Insurance Corporation (FDIC) is the 

independent deposit insurance agency created by Congress 

in 1933 to maintain stability and public confidence in the 

nation’s banking system. Provisions that govern the FDIC’s 

operations are generally found in the Federal Deposit 

Insurance (FDI) Act, as amended (12 U.S.C. 1811, et seq). 

In accordance with the FDI Act, the FDIC, as administrator 

of the Deposit Insurance Fund (DIF), insures the deposits 

of banks and savings associations (insured depository 

institutions). In cooperation with other federal and state 

agencies, the FDIC promotes the safety and soundness 

of insured depository institutions (IDIs) by identifying, 

monitoring, and addressing risks to the DIF. Commercial 

banks, savings banks and savings associations (known as 

“thrifts”) are supervised by either the FDIC, the Office of the 

Comptroller of the Currency, or the Federal Reserve Board. 

In addition to being the administrator of the DIF, the FDIC 

is the administrator of the FSLIC Resolution Fund (FRF). 

The FRF is a resolution fund responsible for the sale of 

the remaining assets and the satisfaction of the liabilities 

associated with the former Federal Savings and Loan 

Insurance Corporation (FSLIC) and the former Resolution 

Trust Corporation. The FDIC maintains the DIF and the 

FRF separately to support their respective functions. 

Pursuant to the Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010 (Dodd-Frank Act), 

the FDIC also manages the Orderly Liquidation Fund 

(OLF). Established as a separate fund in the U.S. Treasury 

(Treasury), the OLF is inactive and unfunded until the FDIC 

is appointed as receiver for a covered financial company. 

A covered financial company is a failing financial company 

(for example, a bank holding company or nonbank financial 

company) for which a systemic risk determination has been 

made as set forth in section 203 of the Dodd-Frank Act. 

The Dodd-Frank Act (Public Law 111-203) granted the 

FDIC authority to establish a widely available program to 

guarantee obligations of solvent IDIs or solvent depository 

institution holding companies (including affiliates) upon the 

systemic risk determination of a liquidity event during times 

of severe economic distress. The program would not be 

funded by the DIF but rather by fees and assessments paid 

by all participants in the program. If fees are insufficient to 

cover losses or expenses, the FDIC must impose a special 

assessment on participants as necessary to cover the 

shortfall. Any excess funds at the end of the liquidity 

event program would be deposited in the General Fund of 

the Treasury. 

The Dodd-Frank Act also created the Financial Stability 

Oversight Council (FSOC) of which the Chairman of the 

FDIC is a member and expanded the FDIC’s responsibilities 

to include supervisory review of resolution plans (known 

as living wills) and backup examination authority for 

systemically important bank holding companies and 

nonbank financial companies. The living wills provide 

for an entity’s rapid and orderly resolution in the event of 

material financial distress or failure.

OPERATIONS OF THE DIF

The primary purposes of the DIF are to (1) insure the 

deposits and protect the depositors of IDIs and (2) resolve 

failed IDIs upon appointment of the FDIC as receiver in a 

manner that will result in the least possible cost to the DIF.

The DIF is primarily funded from deposit insurance 

assessments. Other available funding sources, if necessary, 

are borrowings from the Treasury, the Federal Financing 

Bank (FFB), Federal Home Loan Banks, and IDIs. The 

FDIC has borrowing authority of $100 billion from the 

Treasury and a Note Purchase Agreement with the FFB, not 

to exceed $100 billion, to enhance the DIF’s ability to fund 

deposit insurance. 

A statutory formula, known as the Maximum Obligation 

Limitation (MOL), limits the amount of obligations the 
ANNUAL REPORT 2014

78 FINANCIAL SECTION 

DIF can incur to the sum of its cash, 90 percent of the fair 

market value of other assets, and the amount authorized to 

be borrowed from the Treasury. The MOL for the DIF was 

$162.0 billion and $146.0 billion as of December 31, 2014 and 

2013, respectively. 

OPERATIONS OF RESOLUTION ENTITIES

The FDIC is responsible for managing and disposing of 

the assets of failed institutions in an orderly and efficient 

manner. The assets held by receiverships, pass-through 

conservatorships, and bridge institutions (collectively, 

resolution entities), and the claims against them, are 

accounted for separately from the DIF assets and liabilities 

to ensure that proceeds from these entities are distributed 

according to applicable laws and regulations. Therefore, 

income and expenses attributable to resolution entities are 

accounted for as transactions of those entities. The FDIC 

bills resolution entities for services provided on their behalf.

2. SUMMARY OF SIGNIFICANT 

ACCOUNTING POLICIES

GENERAL

These financial statements include the financial position, 

results of operations, and cash flows of the DIF and are 

presented in accordance with U.S. generally accepted 

accounting principles (GAAP). These statements do not 

include reporting for assets and liabilities of resolution 

entities because these entities are legally separate and 

distinct, and the DIF does not have any ownership or 

beneficial interests in them. Periodic and final accounting 

reports of resolution entities are furnished to courts, 

supervisory authorities, and others upon request.

USE OF ESTIMATES

Management makes estimates and assumptions that affect 

the amounts reported in the financial statements and 

accompanying notes. Actual results could differ from these 

estimates. Where it is reasonably possible that changes 

in estimates will cause a material change in the financial 

statements in the near term, the nature and extent of 

such potential changes in estimates have been disclosed. 

The more significant estimates include the assessments 

receivable and associated revenue; the allowance for loss 

on receivables from resolutions (including shared-loss 

agreements); guarantee obligations for structured 

transactions; the postretirement benefit obligation; and 

the estimated losses for anticipated failures, litigation, and 

representations and indemnifications. 

CASH EQUIVALENTS

Cash equivalents are short-term, highly liquid investments 

consisting primarily of U.S. Treasury Overnight Certificates.

INVESTMENT IN U.S. TREASURY OBLIGATIONS

The FDI Act requires that the DIF funds be invested in 

obligations of the United States or in obligations guaranteed 

as to principal and interest by the United States. The 

Secretary of the Treasury must approve all such investments 

in excess of $100,000 and has granted the FDIC approval to 

invest the DIF funds only in U.S. Treasury obligations that 

are purchased or sold exclusively through the Bureau of the 

Fiscal Service’s Government Account Series program.

The DIF’s investments in U.S. Treasury obligations are 

classified as available-for-sale. Securities designated as 

available-for-sale are shown at fair value. Unrealized gains 

and losses are reported as other comprehensive income. 

Realized gains and losses are included in the Statement of 

Income and Fund Balance as components of net income. 

Income on securities is calculated and recorded daily using 

the effective interest or straight-line method depending on 

the maturity of the security. 

REVENUE RECOGNITION FOR ASSESSMENTS

Assessment revenue is recognized for the quarterly period 

of insurance coverage based on an estimate. The estimate 

is derived from an institution’s risk-based assessment rate 

and assessment base for the prior quarter adjusted for 

the current quarter’s available assessment credits, certain 

changes in supervisory examination ratings for larger 

institutions, as well as modest assessment base growth 

and average assessment rate adjustment factors. At the 

subsequent quarter-end, the estimated revenue amounts are 

adjusted when actual assessments for the covered period 

are determined for each institution (see Note 8). 

CAPITAL ASSETS AND DEPRECIATION

The FDIC buildings are depreciated on a straight-line basis 

over a 35- to 50-year estimated life. Building improvements 

are capitalized and depreciated over the estimated useful 
FINANCIAL SECTION 79

life of the improvements. Leasehold improvements 

are capitalized and depreciated over the lesser of the 

remaining life of the lease or the estimated useful life of 

the improvements, if determined to be material. Capital 

assets depreciated on a straight-line basis over a five-year 

estimated useful life include mainframe equipment; 

furniture, fixtures, and general equipment; and internal-use 

software. Computer equipment is depreciated on a straightline basis over a three-year estimated useful life.

REPORTING ON VARIABLE INTEREST ENTITIES

The FDIC receiverships engaged in structured transactions, 

some of which resulted in the issuance of note obligations 

that were guaranteed by the FDIC, in its corporate capacity. 

As the guarantor of note obligations for several structured 

transactions, the FDIC, in its corporate capacity, holds an 

interest in many variable interest entities (VIEs). The FDIC 

conducts a qualitative assessment of its relationship with 

each VIE as required by Accounting Standards Codification 

(ASC) Topic 810, Consolidation. These assessments 

are conducted to determine if the FDIC, in its corporate 

capacity, has (1) power to direct the activities that most 

significantly affect the economic performance of the VIE 

and (2) an obligation to absorb losses of the VIE or the 

right to receive benefits from the VIE that could potentially 

be significant to the VIE. When a variable interest holder 

has met both of these characteristics, the enterprise is 

considered the primary beneficiary and must consolidate 

the VIE. In accordance with the provisions of ASC 810, an 

assessment of the terms of the legal agreement for each VIE 

was conducted to determine whether any of the terms had 

been activated or modified in a manner that would cause 

the FDIC, in its corporate capacity, to be characterized 

as a primary beneficiary. In making that determination, 

consideration was given to which, if any, activities were 

significant to each VIE. Often, the right to service collateral, 

to liquidate collateral, or to unilaterally dissolve the limited 

liability company (LLC) or trust was determined to be the 

most significant activity. In other cases, it was determined 

that the structured transactions did not include such 

significant activities and that the design of the entity was the 

best indicator of which party was the primary beneficiary. 

The conclusion of these analyses was that the FDIC, in its 

corporate capacity, has not engaged in any activity that 

would cause the FDIC to be characterized as a primary 

beneficiary to any VIE with which it was involved as of 

December 31, 2014 and 2013. Therefore, consolidation is 

not required for the 2014 and 2013 DIF financial statements. 

In the future, the FDIC, in its corporate capacity, may 

become the primary beneficiary upon the activation of 

provisional contract rights that extend to the FDIC if 

payments are made on guarantee claims. Ongoing analyses 

will be required to monitor consolidation implications under 

ASC 810.

The FDIC’s involvement with VIEs is fully described in 

Note 7.

RELATED PARTIES

The nature of related parties and a description of related 

party transactions are discussed in Note 1 and disclosed 

throughout the financial statements and footnotes. 

DISCLOSURE ABOUT RECENT RELEVANT 

ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board 

issued Accounting Standards Update (ASU) 2014-09, 

Revenue from Contracts with Customers (Topic 606). 

The ASU will require an entity to recognize revenue based 

on the amount it expects to be entitled for the transfer of 

promised goods or services. For the DIF, the new standard 

is effective for annual periods beginning after December 

15, 2017. The FDIC does not expect this new ASU to have a 

material impact on the DIF.

Other recent accounting pronouncements have been 

deemed not applicable or material to the financial 

statements as presented.

3. INVESTMENT IN U.S. TREASURY 

OBLIGATIONS

Investments in U.S. Treasury obligations, totaled $49.8 

billion as of December 31, 2014, and $38.5 billion as of 

December 31, 2013. As of December 31, 2014 and 2013, 

the DIF held $2.5 billion and $4.6 billion, respectively, of 

Treasury Inflation-Protected Securities (TIPS), which are 

indexed to increases or decreases in the Consumer Price 

Index for All Urban Consumers (CPI-U).
ANNUAL REPORT 2014

80 FINANCIAL SECTION 

INVESTMENT IN U.S. TREASURY OBLIGATIONS AT DECEMBER 31, 2014

Dollars in Thousands

Maturity

Yield at 

Purchase1

Face 

Value

Net 

Carrying 

Amount

Unrealized 

Holding 

Gains

Unrealized 

Holding 

Losses

Fair

Value

U.S. Treasury notes and bonds

Within 1 year 0.28% $12,450,000 $12,861,127 $2,291 $(4,516) $12,858,902 

After 1 year 

through 5 years 

0.91% 33,901,209 34,393,283 86,212 (5,759) 34,473,736 

U.S. Treasury Inflation-Protected Securities

Within 1 year -1.03% 1,500,000 1,759,237 0 (17,120) 1,742,117 

After 1 year 

through 5 years 

-0.43% 700,000 741,057 0 (9,966) 731,091 

Total $48,551,209 $49,754,704 $88,503 $(37,361)2 $49,805,846 

1

 For TIPS, the yields in the above table are stated at their real yields at purchase, not their effective yields. Effective yields on TIPS include a longterm annual inflation assumption as measured by the CPI-U. The long-term CPI-U consensus forecast is 2.0 percent, issued by the Congressional 

Budget Office and Blue Chip Economic Indicators in early 2014.

2

 The unrealized losses occurred as a result of temporary changes in market interest rates. These unrealized losses occurred over a period of less 

than a year. The FDIC does not intend to sell the securities and is not likely to be required to sell them before their maturity date, thus, the FDIC 

does not consider these securities to be other than temporarily impaired at December 31, 2014. The aggregate related fair value of securities with 

unrealized losses was $19.0 billion as of December 31, 2014.

1

 For TIPS, the yields in the above table are stated at their real yields at purchase, not their effective yields. Effective yields on TIPS include a longterm annual inflation assumption as measured by the CPI-U. The long-term CPI-U consensus forecast is 2.0 percent, issued by the Congressional 

Budget Office and Blue Chip Economic Indicators in early 2013. 

2

 The unrealized losses occurred as a result of temporary changes in market interest rates. These unrealized losses occurred over a period of less 

than a year. The FDIC does not intend to sell the securities and is not likely to be required to sell them before their maturity date, thus, the FDIC 

does not consider these securities to be other than temporarily impaired at December 31, 2013. The aggregate related fair value of securities with 

unrealized losses was $9.0 billion as of December 31, 2013.

INVESTMENT IN U.S. TREASURY OBLIGATIONS AT DECEMBER 31, 2013

Dollars in Thousands

Maturity

Yield at 

Purchase1

Face 

Value

Net 

Carrying 

Amount

Unrealized 

Holding 

Gains

Unrealized 

Holding 

Losses

Fair

Value

U.S. Treasury notes and bonds

Within 1 year 0.23% $14,300,000 $14,552,418 $4,167 $(31) $14,556,554 

After 1 year 

through 5 years 

0.70% 18,351,209 19,382,202 24,408 (14,013) 19,392,597 

U.S. Treasury Inflation-Protected Securities

Within 1 year -0.86% 2,150,000 2,464,330 1,050 (1,130) 2,464,250 

After 1 year 

through 5 years 

-0.99% 1,800,000 2,091,335 5,788 (24) 2,097,099 

Total $36,601,209 $38,490,285 $35,413 $(15,198)2 $38,510,500
FINANCIAL SECTION 81

4. RECEIVABLES FROM

RESOLUTIONS, NET

RECEIVABLES FROM RESOLUTIONS,

NET AT DECEMBER 31

Dollars in Thousands

2014 2013

Receivables from 

closed banks

$98,360,904 $106,291,226 

Allowance for losses (80,179,406) (89,946,235)

Total $18,181,498 $16,344,991

The receivables from resolutions result from DIF payments 

to cover obligations to insured depositors (subrogated 

claims), advances to resolution entities for working capital, 

and administrative expenses paid on behalf of resolution 

entities. Any related allowance for loss represents the 

difference between the funds advanced and/or obligations 

incurred and the expected repayment. Estimated future 

payments on losses incurred on assets sold to an acquiring 

institution under a shared-loss agreement (SLA) are 

factored into the computation of the expected repayment. 

Assets held by DIF resolution entities (including structured 

transaction-related assets; see Note 7) are the main source 

of repayment of the DIF’s receivables from resolutions. 

As of December 31, 2014, the FDIC had 481 active 

receiverships, including 18 established in 2014. The DIF 

resolution entities held assets with a book value of $29.7 

billion as of December 31, 2014, and $38.4 billion as of 

December 31, 2013 (including $22.0 billion and $27.1 

billion, respectively, of cash, investments, receivables due 

from the DIF, and other receivables). Ninety-nine percent 

of the current asset book value of $29.7 billion is held by 

resolution entities established since the beginning of 2008.

Estimated cash recoveries from the management and 

disposition of assets that are used to determine the 

allowance for losses are based on asset recovery rates from 

several sources, including actual or pending institutionspecific asset disposition data, failed institution-specific 

asset valuation data, aggregate asset valuation data on 

several recently failed or troubled institutions, sampled 

asset valuation data, and empirical asset recovery 

data based on failures since 1990. Methodologies for 

determining the asset recovery rates incorporate estimating 

future cash recoveries, net of applicable liquidation cost 

estimates, and discounting based on market-based risk 

factors applicable to a given asset’s type and quality. 

The resulting estimated cash recoveries are then used 

to derive the allowance for loss on the receivables from 

these resolutions.

For failed institutions resolved using a whole bank purchase 

and assumption transaction with an accompanying SLA, 

the projected future shared-loss payments on the covered 

assets sold to the acquiring institution under the agreement 

are considered in determining the allowance for loss on 

the receivables from these resolutions. The shared-loss 

cost projections are based on the covered assets’ intrinsic 

value, which is determined using financial models that 

consider the quality, condition and type of covered assets, 

current and future market conditions, risk factors, and 

estimated asset holding periods. For year-end 2014, the 

shared-loss cost estimates were updated for all 281 active 

SLAs. The updated shared-loss cost projections for the 

larger agreements were primarily based on new third-party 

valuations estimating the cumulative loss of covered assets. 

The updated shared-loss cost projections on the remaining 

agreements were based on a random sample of institutions 

selected for new third-party loss estimations, and valuation 

results from the sampled institutions were aggregated and 

extrapolated to the non-sampled institutions by asset type 

and performance status.

Also reflected in the allowance for loss calculation are 

end-of-agreement SLA “true-up” recoveries. True-up 

recoveries are projected to be received at expiration in 

accordance with the terms of the SLA, if actual losses at 

expiration are lower than originally estimated. 

Note that estimated asset recoveries are regularly evaluated 

during the year, but remain subject to uncertainties because 

of potential changes in economic and market conditions, 

which may cause the DIF’s actual recoveries to vary 

significantly from current estimates. 

WHOLE BANK PURCHASE AND 

ASSUMPTION TRANSACTIONS 

WITH SHARED-LOSS AGREEMENTS 

Since the beginning of 2008, the FDIC resolved 304 failures 

using whole bank purchase and assumption resolution 

transactions with accompanying SLAs on total assets 

of $216.5 billion purchased by the financial institution 
ANNUAL REPORT 2014

82 FINANCIAL SECTION 

acquirers. The acquirer typically assumes all of the 

deposits and purchases essentially all of the assets of a 

failed institution. The majority of the commercial and 

residential loan assets are purchased under an SLA, where 

the FDIC agrees to share in future losses and recoveries 

experienced by the acquirer on those assets covered 

under the agreement. The FDIC uses SLAs to keep assets 

in the private sector and to minimize disruptions to loan 

customers.

Losses on the covered assets of failed institutions 

are shared between the acquirer and the FDIC, in its 

receivership capacity, when losses occur through the sale, 

foreclosure, loan modification, or charge-off of loans under 

the terms of the SLA. The majority of the agreements cover 

commercial and single-family loans over a five- to ten-year 

shared-loss period, respectively, with the receiver covering 

80 percent of the losses incurred by the acquirer and the 

acquiring institution covering 20 percent. Prior to March 

26, 2010, most SLAs included a threshold amount, above 

which the receiver covered 95 percent of the losses incurred 

by the acquirer. Recoveries by the acquirer on covered 

commercial and single-family SLA losses are also shared 

over an eight- to ten-year period, respectively. Note that 

future recoveries on SLA losses are not factored into the 

DIF allowance for loss calculation because the amount and 

timing of such receipts are not determinable. 

The estimated shared-loss liability is accounted for by the 

receiver and is included in the calculation of the DIF’s 

allowance for loss against the corporate receivable from the 

resolution. As shared-loss claims are asserted and proven, 

DIF receiverships satisfy these shared-loss payments using 

available liquidation funds and/or by drawing on amounts 

due from the DIF for funding the deposits assumed by the 

acquirer (see Note 6). 

Receiverships with SLAs made cumulative shared-loss 

payments totaling $28.2 billion, (comprised of $31.8 billion 

in losses, net of $3.6 billion of recoveries) as of year-end 

2014 and $26.4 billion (comprised of $29.1 billion in losses, 

net of $2.7 billion of recoveries) as of year-end 2013. 

Estimates of additional payments, net of true-up recoveries, 

by DIF receiverships over the duration of the SLAs were 

$3.9 billion on total remaining covered assets of $54.6 billion 

at December 31, 2014, and $12.3 billion on total remaining 

covered assets of $78.2 billion as of December 31, 2013. 

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the DIF 

to concentrations of credit risk are receivables from 

resolutions. The repayment of these receivables is 

primarily influenced by recoveries on assets held by DIF 

receiverships and payments on the covered assets under 

SLAs. The majority of the remaining assets in liquidation 

($7.7 billion) and current shared-loss covered assets ($54.6 

billion), which together total $62.3 billion, are concentrated 

in commercial loans ($22.0 billion), residential loans 

($31.0 billion), and structured transaction-related assets 

as described in Note 7 ($5.2 billion). Most of the assets 

originated from failed institutions located in California 

($20.5 billion), Florida ($7.2 billion), Puerto Rico ($7.2 

billion), Alabama ($4.6 billion), Illinois ($3.8 billion), and 

Georgia ($3.6 billion).

5. PROPERTY AND EQUIPMENT, NET

PROPERTY AND EQUIPMENT, 

NET AT DECEMBER 31

Dollars in Thousands

2014 2013

Land $37,352 $37,352 

Buildings (including building and 

leasehold improvements)

326,067 314,775

Application software (includes 

work-in-process)

142,907 149,115 

Furniture, fixtures, and equipment 104,761 142,621 

Accumulated depreciation (238,668) (266,640)

Total $372,419 $377,223 

The depreciation expense was $60 million and $73 million 

for 2014 and 2013, respectively.

6. LIABILITIES DUE TO RESOLUTIONS

As of December 31, 2014 and 2013, the DIF recorded 

liabilities totaling $7.8 billion and $12.6 billion, respectively, 

to resolution entities representing the agreed-upon value 

of assets transferred from the receiverships, at the time of 

failure, to the acquirers/bridge institutions for use in funding 

the deposits assumed by the acquirers/bridge institutions. 

Ninety-one percent of these liabilities are due to failures 

resolved under whole-bank purchase and assumption 

transactions, most with an accompanying SLA. The DIF 
FINANCIAL SECTION 83

satisfies these liabilities either by sending cash directly to 

the receivership to fund shared-loss and other expenses 

or by offsetting receivables from resolutions when the 

receivership declares a dividend. 

In addition, as of December 31, 2014 and 2013, the 

DIF recorded liabilities of $12 million and $29 million, 

respectively, in unpaid deposit claims related to multiple 

receiverships, which are offset by receivables included in 

the “Receivables from resolutions, net” line item on the 

Balance Sheet. The DIF pays these liabilities when the 

claims are approved. 

7. CONTINGENT LIABILITIES FOR:

ANTICIPATED FAILURE OF 

INSURED INSTITUTIONS

The DIF records a contingent liability and a loss provision 

for DIF-insured institutions that are likely to fail, absent 

some favorable event such as obtaining additional capital 

or merging, when the liability is probable and reasonably 

estimable. The contingent liability is derived by applying 

expected failure rates and loss rates to the institutions 

based on supervisory ratings, balance sheet characteristics, 

and projected capital levels.

The banking industry’s financial condition and performance 

continued to improve in 2014. According to the quarterly 

financial data submitted by DIF-insured institutions, the 

industry reported total net income of $116.0 billion for the 

first nine months of 2014, an increase of 1.1 percent over 

the comparable period one year ago. The industry’s capital 

levels also continued to improve, and noncurrent loans 

declined, as the industry’s ratio of noncurrent loans-to-total 

loans fell to its lowest level since the second quarter of 

2008.

Losses to the DIF from failures that occurred in 2014 were 

lower than the contingent liability at the end of 2013, as the 

aggregate number and size of institution failures in 2014 

were less than anticipated. However, the contingent liability 

increased from $1.2 billion at December 31, 2013 to $1.8 

billion at December 31, 2014, as the effect of an increase 

in the failure rates for certain institutions contributing to 

the contingent liability more than offset the removal of the 

liability for institutions that failed in 2014.

In addition to the recorded contingent liabilities, the 

FDIC has identified risks in the financial services industry 

that could result in additional losses to the DIF, should 

potentially vulnerable insured institutions ultimately 

fail. As a result of these risks, the FDIC believes that it is 

reasonably possible that the DIF could incur additional 

estimated losses of approximately $1.7 billion as of 

December 31, 2014, as compared to $3.0 billion as of 

year-end 2013. The actual losses, if any, will largely depend 

on future economic and market conditions and could differ 

materially from this estimate.

During 2014, 18 institutions failed with combined assets 

of $2.9 billion at the date of failure. Recent trends in 

supervisory ratings and market data suggest that the 

financial performance and condition of the banking industry 

should continue to improve over the coming year. However, 

exposure to interest rate risk, reliance on short-term 

sources of funding, and limited opportunities for revenue 

growth will continue to stress the industry. Additionally, 

key risks continue to weigh on the economic outlook as 

well, including the impact of rising interest rates as they 

return to more normal levels; fiscal challenges at federal, 

state, and local levels; and global economic risks. The FDIC 

continues to evaluate ongoing risks to affected institutions 

in light of existing economic and financial conditions, 

and the extent to which such risks may put stress on the 

resources of the insurance fund.

LITIGATION LOSSES

The DIF records an estimated loss for unresolved legal 

cases to the extent that those losses are considered 

probable and reasonably estimable. The FDIC recorded 

probable litigation losses of $950 thousand and $5 million 

for the DIF as of December 31, 2014 and 2013, respectively. 

In addition, the FDIC has determined that there are no 

reasonably possible losses from unresolved cases at 

year-end 2014, compared to $125 thousand at year-end 2013.

OTHER CONTINGENCIES

IndyMac Federal Bank Representation and 

Indemnification Contingent Liability

On March 19, 2009, the FDIC as receiver for IndyMac 

Federal Bank (IMFB) and certain subsidiaries (collectively, 

Sellers) sold substantially all of the assets, which 
ANNUAL REPORT 2014

84 FINANCIAL SECTION 

included mortgage loans and servicing rights, of IMFB 

and its respective subsidiaries to OneWest Bank and its 

affiliates (the “Acquirers”). The Sellers made certain 

representations customarily made by commercial parties in 

similar transactions. The FDIC, in its corporate capacity, 

guaranteed the receivership’s indemnification obligations 

under the sale agreements. Until the periods for asserting 

claims under these arrangements have expired and all 

indemnification claims are quantified and paid, losses could 

continue to be incurred by the receivership and, in turn, 

the DIF. 

Under the sales agreements, the Acquirers have rights 

to assert claims to recover losses incurred as a result of 

third-party claims and breaches of representations. Assets 

sold subject to representation and warranty indemnification 

total $171.6 billion. The IndyMac receivership has paid 

cumulative claims totaling $21 million through December 

31, 2014, and $15 million through December 31, 2013. 

Additional quantified claims asserted and under review have 

been accrued in the amount of $6 million and $7 million as 

of December 31, 2014 and 2013, respectively. The FDIC is 

evaluating the likelihood of additional losses for alleged 

breaches as follows:

♦ Potential losses could be incurred for failures by the 

servicer to initiate foreclosure within a prescribed 

timeframe with respect to certain government guaranteed 

loans, resulting in the refusal of the guarantor to pay 

interest otherwise payable to the investors on such loans. 

Review and evaluation is in process for approximately $32 

million as of December 31, 2014 and 2013, in reasonably 

possible losses.

♦ The Acquirers’ rights to assert additional claims as a 

result of certain third-party claims and breaches of 

representations expired on March 19, 2011 and March 19, 

2014. As of the expiration date of these notice periods, 

199 thousand claims relating to potential breaches were 

received. As of December 31, 2014, 40 thousand claims 

remain and preserve the Acquirer’s right to claim losses 

over the life of the loan. These remaining claims require 

review to determine whether a breach exists and, if so, 

if a cure will result in a loss. As a result, potential losses 

cannot be estimated.

♦ The Acquirers’ rights to assert claims to recover 

losses incurred as a result of breaches of loan seller 

representations extend to March 19, 2019 for the Fannie 

Mae and Ginnie Mae reverse mortgage servicing portfolios 

(unpaid principal balance of $14.2 billion at December 31, 

2014, compared to $15.2 billion at December 31, 2013). 

The likelihood of loss is reasonably possible. However, 

while claims filed prior to this date reserve the right to 

recover losses over the life of the loan, this exposure is 

currently not estimable.

♦ Fannie Mae has demanded repurchase of 585 loans with 

current principal balances of $93 million. These claims 

are under review to determine their validity. In addition, 

during 2014, the IMFB receivership agreed to repurchase 

264 loans totaling $44 million in principal balance; 

however, a contingent liability has not been established 

as the amount and timing of any resulting losses is 

currently not determinable. An agreement among the 

sellers, the FDIC and Fannie Mae provides for the deferral 

of repurchases claimed by Fannie Mae, and that the 

parties will negotiate in good faith to attempt to resolve 

all outstanding and projected liabilities to Fannie Mae 

sometime before March 19, 2015.

In addition to the alleged breaches discussed above, 

the FDIC believes it is likely that additional losses 

will be incurred. However quantifying the contingent 

liability associated with the liabilities to investors 

and indemnification for breaches of sale agreement 

representations is subject to a number of uncertainties, 

including market conditions, the occurrence of borrower 

defaults and resulting foreclosures and losses. Because 

of these and other uncertainties that surround the liability 

associated with the quantification of possible losses, the 

FDIC has determined that, while additional losses are 

probable, the amount is not currently estimable.

Purchase and Assumption Indemnification

In connection with purchase and assumption agreements 

for resolutions, the FDIC in its receivership capacity 

generally indemnifies the purchaser of a failed institution’s 

assets and liabilities in the event a third party asserts a 

claim against the purchaser unrelated to the explicit assets 

purchased or liabilities assumed at the time of failure. The 
FINANCIAL SECTION 85

FDIC, in its corporate capacity, is a secondary guarantor 

if a receivership is unable to pay. These indemnifications 

generally extend for a term of six years after the date of 

institution failure. The FDIC is unable to estimate the 

maximum potential liability for these types of guarantees 

as the agreements do not specify a maximum amount and 

any payments are dependent upon the outcome of future 

contingent events, the nature and likelihood of which 

cannot be determined at this time. During 2014 and 2013, 

the FDIC, in its corporate capacity, made no indemnification 

payments under such agreements, and no amount has been 

accrued in the accompanying financial statements with 

respect to these indemnification guarantees.

FDIC Guaranteed Debt of Structured Transactions

The FDIC as receiver uses three types of structured 

transactions to dispose of certain performing and 

non-performing residential mortgage loans, commercial 

loans, construction loans, and mortgage-backed securities 

held by the receiverships. The three types of structured 

transactions are (1) limited liability companies (LLCs), 

(2) securitizations, and (3) structured sale of guaranteed 

notes (SSGNs). 

LLCs

Under the LLC structure, the FDIC, in its receivership 

capacity, contributes a pool of assets to a newly formed 

LLC and offers for sale, through a competitive bid process, 

some of the equity in the LLC. The day-to-day management 

of the LLC transfers to the highest bidder, along with the 

purchased equity interest. 

The LLCs issued notes to the receiverships to partially fund 

the purchased assets. In many instances, the FDIC, in its 

corporate capacity, guaranteed notes issued by the LLCs. 

This guarantee covers the timely payment of principal and 

interest due on the notes. In exchange for the guarantee, 

the DIF receives a guarantee fee from the LLCs. If the FDIC 

is required to perform under the guarantee, it acquires an 

interest in the cash flows of the LLC equal to the amount 

of guarantee payments made plus accrued interest. Equity 

holders receive cash flows from the LLCs once all expenses 

have been paid, the guaranteed notes have been satisfied, 

and the FDIC has been reimbursed for any guarantee 

payments. 

In the event of note payment default, the FDIC as guarantor 

is entitled to exercise or cause the exercise of certain rights 

and remedies including (1) accelerating the payment of the 

unpaid principal amount of the notes, (2) selling the assets 

held as collateral, or (3) foreclosing on the equity interests 

of the debtor. 

Since 2009, private investors purchased a 40- to 50- 

percent ownership interest in the LLC structures for $1.6 

billion in cash and the LLCs issued notes of $4.4 billion 

to the receiverships to partially fund the purchase of the 

assets. The receiverships held the remaining 50- to 60- 

percent equity interest in the LLCs and, in most cases, 

the guaranteed notes. At December 31, 2014, only one 

guaranteed note with an outstanding balance of $10 million 

remained, which matures in 2020. At December 31, 2013, 

there were two guaranteed notes with outstanding balances 

totaling $99 million.

Securitizations and SSGNs

Securitizations and SSGNs (collectively, trusts) are 

transactions in which certain assets or securities from 

failed institutions are pooled and transferred into a trust 

structure. The trusts issue senior and/or subordinated 

debt instruments and owner trust or residual certificates 

collateralized by the underlying mortgage-backed securities 

or loans. 

Since 2010, private investors purchased the senior 

notes issued by the trusts for $6.2 billion in cash and the 

receiverships hold the subordinated debt instruments and 

owner trust or residual certificates. In exchange for a fee, 

the FDIC, in its corporate capacity, guarantees the timely 

payment of principal and interest due on the senior notes, 

the latest maturity of which is 2050. If the FDIC is required 

to perform under its guarantees, it acquires an interest in 

the cash flows of the trust equal to the amount of guarantee 

payments made plus accrued interest. The subordinated 

note holders and owner trust or residual certificates holders 

receive cash flows from the entity only after all expenses 

have been paid, the guaranteed notes have been satisfied, 

and the FDIC has been reimbursed for any guarantee 

payments. 
ANNUAL REPORT 2014

86 FINANCIAL SECTION 

All Structured Transactions 

with FDIC Guaranteed Debt

Through December 31, 2014, the receiverships have 

transferred a portfolio of loans with an unpaid principal 

balance of $16.4 billion and mortgage-backed securities 

with a book value of $8.8 billion to 14 LLCs and 11 

trusts. The LLCs and trusts subsequently issued notes 

guaranteed by the FDIC in an original principal amount of 

$10.6 billion. Since March 2013, there have been no new 

guarantee transactions. As of December 31, 2014 and 2013, 

the DIF collected guarantee fees totaling $250 million and 

$231 million, respectively, and recorded a receivable for 

additional guarantee fees of $42 million and $66 million, 

respectively, included in the “Interest receivable on 

investments and other assets, net” line item on the Balance 

Sheet. All guarantee fees are recorded as deferred revenue, 

included in the “Accounts payable and other liabilities” line 

item, and recognized as revenue primarily on a straight-line 

basis over the term of the notes. As of December 31, 2014 

and 2013, the amount of deferred revenue recorded was $42 

million and $66 million, respectively. The DIF records no 

other structured-transaction-related assets or liabilities on 

its balance sheet.

The estimated loss to the DIF from the guarantees is 

derived from an analysis of the net present value (using 

a discount rate of 3.3 percent) of the expected guarantee 

payments by the FDIC, reimbursements to the FDIC for 

guarantee payments, and guarantee fee collections. It is 

reasonably possible that the DIF could be required to make 

a guarantee payment of approximately $29 million for an 

SSGN transaction at note maturity in 2020. Any guarantee 

payment made would be fully reimbursed from the proceeds 

of the liquidation of the SSGN’s underlying collateral. For 

all of the remaining transactions, the estimated cash flows 

from the LLC or trust assets provide sufficient coverage 

to fully pay the debts. To date, the FDIC, in its corporate 

capacity, has not provided, and does not intend to provide, 

any form of financial or other type of support to a trust or 

LLC that it was not previously contractually required to 

provide.

As of December 31, 2014 and 2013, the maximum loss 

exposure was $10 million and $99 million for LLCs and $2.1 

billion and $2.8 billion for trusts, respectively, representing 

the sum of all outstanding debt guaranteed by the FDIC. 

8. ASSESSMENTS 

The framework for the FDIC deposit insurance assessment 

system is mandated by section 7 of the FDI Act, and the 

provisions for implementation are contained in part 327 of 

title 12 of the Code of Federal Regulations. The FDI Act 

requires a risk-based assessment system and payment of 

assessments by all IDIs.

In response to the Dodd-Frank Act, the FDIC implemented 

several changes to the assessment system and developed 

a comprehensive, long-term fund management plan. The 

plan is designed to restore and maintain a positive fund 

balance for the DIF even during a banking crisis and 

achieve moderate, steady assessment rates throughout any 

economic cycle. Summarized below are actions taken to 

implement assessment system changes and provisions of 

the comprehensive plan.

♦ The FDIC adopted a Restoration Plan to ensure that 

the ratio of the DIF fund balance to estimated insured 

deposits (reserve ratio) reaches 1.35 percent by 

September 30, 2020. The FDIC will update, at least 

semiannually, its loss and income projections for the fund 

and, if needed, increase or decrease assessment rates, 

following notice-and-comment rulemaking, if required.

♦ The FDIC adopted a final rule that suspends dividends 

indefinitely, and, in lieu of dividends, adopts lower 

assessment rate schedules when the reserve ratio reaches 

1.15 percent, 2 percent, and 2.5 percent.

♦ The FDIC adopted a final rule that amends and clarifies 

some definitions of higher-risk assets as used in deposit 

insurance pricing for large and highly complex IDIs by 

(1) revising the definitions of certain higher-risk assets, 

specifically leveraged loans and subprime consumer 

loans; (2) clarifying when an asset must be identified as 

higher risk; and (3) clarifying the way securitizations are 

identified as higher risk. The final rule became effective 

on April 1, 2013. 

♦ The Federal Deposit Insurance Act (FDI Act) requires that 

the FDIC Board of Directors designate a reserve ratio for 

the DIF and publish the designated reserve ratio (DRR) 

before the beginning of each calendar year. Accordingly, 

in October 2014, the FDIC adopted a final rule maintaining 

the DRR at 2 percent for 2015. The DRR is an integral 
FINANCIAL SECTION 87

part of the FDIC’s comprehensive, long-term management 

plan for the DIF and is viewed as a long-range, minimum 

target for the reserve ratio.

ASSESSMENT REVENUE

Annual assessment rates averaged approximately 6.8 cents 

per $100 of the assessment base and 7.8 cents per $100 

of the assessment base for 2014 and 2013, respectively. 

The assessment base is generally defined as the average 

consolidated total assets minus the average tangible 

equity (measured as Tier 1 capital) of the IDI during the 

assessment period.

In December 2009, a majority of IDIs prepaid $45.7 billion 

of estimated quarterly risk-based assessments to address 

the DIF’s liquidity need to pay for projected failures and to 

ensure that the deposit insurance system remained industryfunded. For each interim quarter, an institution’s risk-based 

deposit insurance assessment was offset by the available 

amount of prepaid assessments. The final offset of prepaid 

assessments occurred for the period ending March 31, 

2013, and in June 2013, as required by regulation, the DIF 

refunded $5.9 billion of unused prepaid assessments to IDIs. 

The “Assessments receivable, net” line item on the Balance 

Sheet of $2.0 billion and $2.2 billion represents the 

estimated premiums due from IDIs for the fourth quarter of 

2014 and 2013, respectively. The actual deposit insurance 

assessments for the fourth quarter of 2014 will be billed and 

collected at the end of the first quarter of 2015. During 2014 

and 2013, $8.7 billion and $9.7 billion, respectively, were 

recognized as assessment revenue from institutions.

RESERVE RATIO

As of September 30, 2014 and December 31, 2013, the 

DIF reserve ratio was 0.89 percent and 0.79 percent, 

respectively, of estimated insured deposits.

ASSESSMENTS RELATED TO FICO

Assessments continue to be levied on institutions for 

payments of the interest on obligations issued by the 

Financing Corporation (FICO). The FICO was established 

as a mixed-ownership government corporation to function 

solely as a financing vehicle for the former FSLIC. The 

annual FICO interest obligation of approximately $790 

million is paid on a pro rata basis using the same rate for 

banks and thrifts. The FICO assessment has no financial 

impact on the DIF and is separate from deposit insurance 

assessments. The FDIC, as administrator of the DIF, acts 

solely as a collection agent for the FICO. As of December 

31, 2014 and 2013, approximately $793 million and 

$792 million, respectively, was collected and remitted to 

the FICO.

9. OTHER REVENUE

OTHER REVENUE 

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2014 2013

Dividends and interest on 

Citigroup trust preferred 

securities (Note 10)

$0 $124,726

Guarantee fees for structured 

transactions (Note 7)

19,662 33,051

Other 7,397 5,377

Total $27,059 $163,154

10. GAIN ON SALE OF TRUST

PREFERRED SECURITIES 

Pursuant to a systemic risk determination, the Treasury, 

the FDIC, and the Federal Reserve Bank of New York 

executed terms of a guarantee agreement on January 15, 

2009, with Citigroup to provide loss protection on a pool 

of approximately $301.0 billion of assets that remained 

on the balance sheet of Citigroup. On December 23, 2009, 

Citigroup terminated this guarantee agreement, citing 

improvements in its financial condition. The FDIC did not 

incur any losses as a result of the guarantee and retained 

$2.225 billion (liquidation amount) of the $3.025 billion in 

trust preferred securities (TruPS) received as consideration 

for the period of guarantee coverage. The DIF recorded the 

TruPS at their fair value and recognized revenue of $1.962 

billion upon termination of the agreement. 

To facilitate a sale of the retained TruPS, the FDIC 

exchanged the TruPS on September 9, 2013, for $2.420 

billion (principal amount) of Citigroup marketable 
ANNUAL REPORT 2014

88 FINANCIAL SECTION 

subordinated notes. The exchange resulted in a realized 

gain to the DIF of $458 million, reported in the “Gain on 

sale of trust preferred securities” line item on the Statement 

of Income and Fund Balance. FDIC reclassified the $458 

million out of accumulated other comprehensive income to 

“Gain on sale of trust preferred securities,” representing the 

sum of unrealized gains recorded as of December 31, 2012, 

($302 million) and holding gains arising during 2013 ($156 

million). The resulting net effect on the DIF Statement of 

Income and Fund Balance was a $156 million increase to 

the 2013 comprehensive income.

On September 10, 2013, the subordinated notes were sold 

to the institutional fixed income market for the principal 

amount of $2.420 billion, resulting in the recognition of $1.6 

million for one day of accrued interest on the subordinated 

notes, which is included in the 2013 “Other revenue” line 

item on the Statement of Income and Fund Balance (see 

Note 9). Also included in the 2013 “Other revenue” line item 

is $123.1 million for dividends and interest earned on the 

TruPS in 2013 prior to their disposition (see Note 9).

11. OPERATING EXPENSES 

Operating expenses were $1.7 billion and $1.6 billion for 

2014 and 2013, respectively. The chart below lists the major 

components of operating expenses.

OPERATING EXPENSES 

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2014 2013

Salaries and benefits $1,252,167 $1,292,551

Outside services 263,649 326,040 

Travel 93,720 96,056 

Buildings and leased space 96,596 91,469 

Software/Hardware 

maintenance

58,844 56,297 

Depreciation of property 

and equipment

59,634 72,828 

Other 28,999 29,505 

Subtotal 1,853,609 1,964,746 

Less: Services billed to 

resolution entities

(189,265) (356,029)

Total $1,664,344 $1,608,717 

12. PROVISION FOR

INSURANCE LOSSES 

The provision for insurance losses was a negative $8.3 

billion for 2014, compared to negative $5.7 billion for 

2013. The negative provision for 2014 primarily resulted 

from a decrease of $9.1 billion in the estimated losses for 

institutions that failed in current and prior years, partially 

offset by an increase of $850 million in the contingent 

liability for anticipated failures due to the deterioration in 

the financial condition of certain troubled institutions.

As described in Note 4, the estimated recoveries from assets 

held by receiverships and estimated payments related to 

assets sold by receiverships to acquiring institutions under 

shared-loss agreements (SLAs) are used to derive the loss 

allowance on the receivables from resolutions. The $9.1 

billion reduction in the estimated losses from failures 

was primarily attributable to two components. The first 

component was unanticipated recoveries of $1.8 billion in 

litigation settlements, professional liability claims, and tax 

refunds by the receiverships. These are not recognized until 

the cash is received since significant uncertainties surround 

their recovery.

The second component of the reduction in the estimated 

losses from failures was a $6.7 billion decrease in the 

receiverships’ shared-loss liability that resulted from 

decreases in covered asset balances, lower future loss rate 

estimates, and unanticipated recoveries on SLA losses. 

Covered asset balances decreased by $23.6 billion during 

2014 with lower than anticipated losses. These lower 

than anticipated losses were due to loan amortizations 

and pay-downs, resulting from the improvement in the 

condition of real estate markets where shared-loss assets 

are concentrated, and the expiration of 83 commercial asset 

shared-loss coverage agreements in 2014, thereby ending 

the loss claim period. The reduction in future loss rate 

estimates resulted from the improvement in the real estate 

markets and the composition of the remaining covered asset 

portfolios, which primarily consist of performing single 

family assets. These assets have historically experienced 

significantly lower losses than commercial assets. Finally, 

unanticipated recoveries of approximately $958 million on 

previous shared-loss claims, which are not estimated due to 

their uncertainty, were received by the receiverships during 

2014.
FINANCIAL SECTION 89

13. EMPLOYEE BENEFITS 

PENSION BENEFITS AND SAVINGS PLANS

Eligible FDIC employees (permanent and term employees 

with appointments exceeding one year) are covered by the 

federal government retirement plans, either the Civil Service 

Retirement System (CSRS) or the Federal Employees 

Retirement System (FERS). Although the DIF contributes 

a portion of pension benefits for eligible employees, it does 

not account for the assets of either retirement system. The 

DIF also does not have actuarial data for accumulated 

plan benefits or the unfunded liability relative to eligible 

employees. The U.S. Office of Personnel Management 

(OPM) reports on and accounts for these amounts.

Eligible FDIC employees also may participate in a FDICsponsored tax-deferred 401(k) savings plan with matching 

contributions up to 5 percent. Under the Federal Thrift 

Savings Plan (TSP), the FDIC provides FERS employees 

with an automatic contribution of 1 percent of pay and an 

additional matching contribution up to 4 percent of pay. 

CSRS employees also can contribute to the TSP, but they do 

not receive agency matching contributions.

PENSION BENEFITS AND 

SAVINGS PLANS EXPENSES

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2014 2013

Civil Service Retirement 

System

$4,698 $5,430 

Federal Employees Retirement 

System (Basic Benefit)

99,954 99,553 

FDIC Savings Plan 37,304 37,816 

Federal Thrift Savings Plan 35,144 35,686 

Total $177,100 $178,485 

POSTRETIREMENT BENEFITS OTHER 

THAN PENSIONS

The DIF has no postretirement health insurance liability 

since all eligible retirees are covered by the Federal 

Employees Health Benefits (FEHB) program. OPM 

administers and accounts for the FEHB. In addition, OPM 

pays the employer share of the retiree’s health insurance 

premiums.

The FDIC provides certain life and dental insurance 

coverage for its eligible retirees, the retirees’ beneficiaries, 

and covered dependents. Retirees eligible for life and 

dental insurance coverage are those who have qualified 

due to (1) immediate enrollment upon appointment or five 

years of participation in the plan and (2) eligibility for an 

immediate annuity. The life insurance program provides 

basic coverage at no cost to retirees and allows converting 

optional coverage to direct-pay plans. For the dental 

coverage, retirees are responsible for a portion of 

the premium.

The FDIC has elected not to fund the postretirement life 

and dental benefit liabilities. As a result, the DIF recognized 

the underfunded status (the difference between the 

accumulated postretirement benefit obligation and the plan 

assets at fair value) as a liability. Since there are no plan 

assets, the plan’s benefit liability is equal to the accumulated 

postretirement benefit obligation. At December 31, 2014 

and 2013, the liability was $243 million and $194 million, 

respectively, which is recognized in the “Postretirement 

benefit liability” line item on the Balance Sheet. The 

cumulative actuarial losses (changes in assumptions and 

plan experience) and prior service costs (changes to plan 

provisions that increase benefits) were $58 million and $16 

million at December 31, 2014 and 2013, respectively. These 

amounts are reported as accumulated other comprehensive 

income in the “Unrealized postretirement benefit loss” line 

item on the Balance Sheet. 

The DIF’s expenses for postretirement benefits for 2014 

and 2013 were $14 million and $18 million, respectively, 

which are included in the current and prior year’s operating 

expenses on the Statement of Income and Fund Balance. 

The changes in the actuarial losses/gains and prior service 

costs for 2014 and 2013 of negative $41 million and $44 

million, respectively, are reported as other comprehensive 

income in the “Unrealized postretirement benefit (loss) 

gain” line item on the Statement of Income and Fund 

Balance. Key actuarial assumptions used in the accounting 

for the plan include the discount rate of 4.0 percent, the 

rate of compensation increase of 3.8 percent, and the dental 

coverage trend rate of 4.9 percent. The discount rate of 4.0 

percent is based upon rates of return on high-quality fixed 

income investments whose cash flows match the timing and 

amount of expected benefit payments. 
ANNUAL REPORT 2014

90 FINANCIAL SECTION 

14. COMMITMENTS AND OFFBALANCE-SHEET EXPOSURE

COMMITMENTS:

Leased Space

The FDIC’s lease commitments total $203 million for future 

years. The lease agreements contain escalation clauses 

resulting in adjustments, usually on an annual basis. The 

DIF recognized leased space expense of $56 million and $52 

million for 2014 and 2013, respectively.

LEASED SPACE COMMITMENTS

Dollars in Thousands

2015 2016 2017 2018 2019

2020/

Thereafter

$46,502 $45,842 $41,387 $30,900 $26,433 $12,291

OFF-BALANCE-SHEET EXPOSURE:

Deposit Insurance

Estimates of insured deposits are derived primarily from 

quarterly financial data submitted by IDIs to the FDIC and 

represent the accounting loss that would be realized if 

all IDIs were to fail and the acquired assets provided no 

recoveries. As of September 30, 2014 and December 31, 

2013, estimated insured deposits for the DIF were $6.1 

trillion and $6.0 trillion, respectively.

15. DISCLOSURES ABOUT THE

FAIR VALUE OF FINANCIAL 

INSTRUMENTS

Financial assets recognized and measured at fair value 

on a recurring basis at each reporting date include cash 

equivalents (see Note 2) and the investment in U.S. Treasury 

obligations (see Note 3). The following tables present the 

DIF’s financial assets measured at fair value as of December 

31, 2014 and 2013.

ASSETS MEASURED AT FAIR VALUE AT DECEMBER 31, 2014

Dollars in Thousands

Fair Value Measurements Using

Quoted Prices 

in Active 

Markets for

Identical Assets

(Level 1)

Significant Other

Observable 

Inputs

(Level 2)

Significant

Unobservable 

Inputs

(Level 3)

Total Assets

at Fair Value

Assets

Cash equivalents1 $1,900,105 $1,900,105 

Available-for-Sale Debt Securities

Investment in U.S. Treasury Obligations2 49,805,846 49,805,846 

Total Assets $51,705,951 $0 $0 $51,705,951 

1 Cash equivalents are Special U.S. Treasury Certificates with overnight maturities valued at prevailing interest rates established by the Bureau of the 

Fiscal Service.

2 The investment in U.S. Treasury obligations is measured based on prevailing market yields for federal government entities.
FINANCIAL SECTION 91

ASSETS MEASURED AT FAIR VALUE AT DECEMBER 31, 2013

Dollars in Thousands

Fair Value Measurements Using

Quoted Prices 

in Active 

Markets for

Identical Assets

(Level 1)

Significant Other

Observable 

Inputs

(Level 2)

Significant

Unobservable 

Inputs

(Level 3)

Total Assets

at Fair Value

Assets

Cash equivalents1 $3,534,305 $3,534,305 

Available-for-Sale Debt Securities

Investment in U.S. Treasury Obligations2 38,510,500 38,510,500 

Total Assets $42,044,805 $0 $0 $42,044,805 

1 Cash equivalents are Special U.S. Treasury Certificates with overnight maturities valued at prevailing interest rates established by the Bureau of the 

Fiscal Service.

2 The investment in U.S. Treasury obligations is measured based on prevailing market yields for federal government entities.

Some of the DIF’s financial assets and liabilities are not 

recognized at fair value but are recorded at amounts that 

approximate fair value due to their short maturities and/

or comparability with current interest rates. Such items 

include interest receivable on investments, assessments 

receivable, other short-term receivables, and accounts 

payable and other liabilities. 

The net receivables from resolutions primarily include the 

DIF’s subrogated claim arising from obligations to insured 

depositors. The resolution entity assets that will ultimately 

be used to pay the corporate subrogated claim are valued 

using discount rates that include consideration of market 

risk. These discounts ultimately affect the DIF’s allowance 

for loss against the receivables from resolutions. Therefore, 

the corporate subrogated claim indirectly includes the 

effect of discounting and should not be viewed as being 

stated in terms of nominal cash flows.

Although the value of the corporate subrogated claim is 

influenced by valuation of resolution entity assets (see 

Note 4), such valuation is not equivalent to the valuation of 

the corporate claim. Since the corporate claim is unique, 

not intended for sale to the private sector, and has no 

established market, it is not practicable to estimate a 

fair value.

The FDIC believes that a sale to the private sector of 

the corporate claim would require indeterminate, but 

substantial, discounts for an interested party to profit from 

these assets because of credit and other risks. In addition, 

the timing of resolution entity payments to the DIF on the 

subrogated claim does not necessarily correspond with the 

timing of collections on resolution entity assets. Therefore, 

the effect of discounting used by resolution entities should 

not necessarily be viewed as producing an estimate of fair 

value for the net receivables from resolutions.
ANNUAL REPORT 2014

92 FINANCIAL SECTION 

16. INFORMATION RELATING TO THE 

STATEMENT OF CASH FLOWS

17. SUBSEQUENT EVENTS 

Subsequent events have been evaluated through February 

5, 2015, the date the financial statements are available to be 

issued.

2015 FAILURES THROUGH FEBRUARY 5, 2015

Through February 5, 2015, two insured institutions failed in 

2015 with total losses to the DIF estimated to be $10 million.

RECONCILIATION OF NET INCOME TO NET CASH FROM OPERATING ACTIVITIES 

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2014 2013

Operating Activities

Net Income: $15,599,812 $14,504,738 

Adjustments to reconcile net income to net cash provided 

by operating activities:

Amortization of U.S. Treasury obligations 1,387,067 1,139,456 

Treasury Inflation-Protected Securities inflation adjustment (37,865) (35,300)

Gain on sale of trust preferred securities 0 (458,176)

Depreciation on property and equipment 59,634 72,829 

Loss on retirement of property and equipment 465 220 

Provision for insurance losses (8,305,577) (5,659,388)

Unrealized (loss) gain on postretirement benefits (41,401) 44,097 

Change in Assets and Liabilities:

Decrease (Increase) in assessments receivable, net 224,311 (1,220,883)

(Increase) in interest receivable and other assets (137,462) (75,014)

Decrease in receivables from resolutions 7,077,627 10,406,392 

(Decrease) in accounts payable and other liabilities (9,569) (49,045)

Increase (Decrease) in postretirement benefit liability 49,828 (30,635)

(Decrease) in liabilities due to resolutions (4,826,703) (8,547,803)

(Decrease) in unearned revenue - prepaid assessments 0 (1,576,417)

(Decrease) in refunds of prepaid assessments 0 (5,675,199)

Net Cash Provided by Operating Activities $11,040,167 $2,839,872 
FINANCIAL SECTION 93

FSLIC RESOLUTION FUND (FRF)

FEDERAL DEPOSIT INSURANCE CORPORATION

FSLIC RESOLUTION FUND BALANCE SHEET AT DECEMBER 31

Dollars in Thousands

2014 2013

Assets

Cash and cash equivalents $870,943 $871,612 

Receivables from U.S. Treasury for goodwill litigation (Note 3) 356,455 356,455 

Other assets, net 904 1,183 

Total Assets $1,228,302 $1,229,250 

Liabilities 

Accounts payable and other liabilities $370 $790 

Contingent liabilities for goodwill litigation (Note 3) 356,455 356,455 

Total Liabilities 356,825 357,245 

Resolution Equity (Note 4)

Contributed capital 125,332,156 125,332,156 

Accumulated deficit (124,460,679) (124,460,151)

Total Resolution Equity 871,477 872,005 

Total Liabilities and Resolution Equity $1,228,302 $1,229,250 

The accompanying notes are an integral part of these financial statements.
ANNUAL REPORT 2014

94 FINANCIAL SECTION 

FEDERAL DEPOSIT INSURANCE CORPORATION

FSLIC RESOLUTION FUND STATEMENT OF INCOME AND ACCUMULATED DEFICIT 

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2014 2013

Revenue

Interest on U.S. Treasury obligations $229 $1,196 

Other revenue 948 1,953 

Total Revenue 1,177 3,149 

Expenses and Losses

Operating expenses 2,326 2,350 

Provision for losses (792) (1,255)

Goodwill litigation expenses (Note 3) 0 500 

Other expenses 171 2,070 

Total Expenses and Losses 1,705 3,665 

Net Loss (528) (516)

Accumulated Deficit - Beginning (124,460,151) (124,459,635)

Accumulated Deficit - Ending $(124,460,679) $(124,460,151)

FSLIC RESOLUTION FUND (FRF)

The accompanying notes are an integral part of these financial statements.
FINANCIAL SECTION 95

FSLIC RESOLUTION FUND (FRF)

The accompanying notes are an integral part of these financial statements.

FEDERAL DEPOSIT INSURANCE CORPORATION

FSLIC RESOLUTION FUND STATEMENT OF CASH FLOWS 

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2014 2013

Operating Activities

Provided by:

Interest on U.S. Treasury obligations $229 $1,196 

Recoveries from financial institution resolutions 1,886 5,148 

Recovery of tax benefits 0 130 

Miscellaneous receipts 197 52 

Used by:

Operating expenses (2,981) (3,921)

Payments for goodwill litigation (Note 3) 0 (500)

Net Cash (Used) Provided by Operating Activities (669) 2,105 

Financing Activities

Provided by:

U.S. Treasury payments for goodwill litigation (Note 3) 0 500 

Used by:

Return of U.S. Treasury funds (Note 4) 0 (2,600,000)

Payment to Resolution Funding Corporation (Note 4) 0 (125,000)

Net Cash (Used) by Financing Activities 0 (2,724,500)

Net (Decrease) in Cash and Cash Equivalents (669) (2,722,395)

Cash and Cash Equivalents - Beginning 871,612 3,594,007

Cash and Cash Equivalents - Ending $870,943 $871,612
ANNUAL REPORT 2014

96 FINANCIAL SECTION 

Notes to the Financial Statements

FSLIC RESOLUTION FUND 

December 31, 2014 and 2013 

1. OPERATIONS/DISSOLUTION OF 

THE FSLIC RESOLUTION FUND

OVERVIEW

The Federal Deposit Insurance Corporation (FDIC) is the 

independent deposit insurance agency created by Congress 

in 1933 to maintain stability and public confidence in the 

nation’s banking system. Provisions that govern the FDIC’s 

operations are generally found in the Federal Deposit 

Insurance (FDI) Act, as amended (12 U.S.C. 1811, et seq). 

In accordance with the FDI Act, the FDIC, as administrator 

of the Deposit Insurance Fund (DIF), insures the deposits 

of banks and savings associations (insured depository 

institutions). In cooperation with other federal and state 

agencies, the FDIC promotes the safety and soundness 

of insured depository institutions (IDIs) by identifying, 

monitoring, and addressing risks to the DIF.

In addition to being the administrator of the DIF, the FDIC 

is the administrator of the FSLIC Resolution Fund (FRF). 

As such, the FDIC is responsible for the sale of remaining 

assets and satisfaction of liabilities associated with the 

former Federal Savings and Loan Insurance Corporation 

(FSLIC) and the former Resolution Trust Corporation 

(RTC). The FDIC maintains the DIF and the FRF separately 

to support their respective functions.

The FSLIC was created through the enactment of the 

National Housing Act of 1934. The Financial Institutions 

Reform, Recovery, and Enforcement Act of 1989 (FIRREA) 

abolished the insolvent FSLIC and created the FRF. At that 

time, the assets and liabilities of the FSLIC were transferred 

to the FRF – except those assets and liabilities transferred 

to the newly created RTC – effective on August 9, 1989. 

Further, the FIRREA established the Resolution Funding 

Corporation (REFCORP) to provide part of the initial funds 

used by the RTC for thrift resolutions.

The RTC Completion Act of 1993 terminated the RTC as of 

December 31, 1995. All remaining assets and liabilities of 

the RTC were transferred to the FRF on January 1, 1996. 

Today, the FRF consists of two distinct pools of assets and 

liabilities: one composed of the assets and liabilities of the 

FSLIC transferred to the FRF upon the dissolution of the 

FSLIC (FRF-FSLIC), and the other composed of the RTC 

assets and liabilities (FRF-RTC). The assets of one pool are 

not available to satisfy obligations of the other.

OPERATIONS/DISSOLUTION OF THE FRF

The FRF will continue operations until all of its assets 

are sold or otherwise liquidated and all of its liabilities 

are satisfied. Any funds remaining in the FRF-FSLIC 

will be paid to the U.S. Treasury. Any remaining funds 

of the FRF-RTC will be distributed to the REFCORP to 

pay the interest on the REFCORP bonds. In addition, the 

FRF-FSLIC has available until expended $602 million in 

appropriations to facilitate, if required, efforts to wind up 

the resolution activity of the FRF-FSLIC. 

The FDIC has extensively reviewed and cataloged the 

FRF’s remaining assets and liabilities. Some of the issues 

and items that remain open in the FRF are (1) criminal 

restitution orders (generally have from 1 to 17 years 

remaining to enforce); (2) collections of settlements and 

judgments obtained against officers and directors and 

other professionals responsible for causing or contributing 

to thrift losses (generally have up to 7 years remaining to 

enforce, unless the judgments are renewed or are covered 

by the Federal Debt Collections Procedures Act, which 

will result in significantly longer periods for collection for 

some judgments); (3) liquidation/disposition of residual 

assets purchased by the FRF from terminated receiverships; 

(4) three remaining assistance agreements entered into 

by the former FSLIC (FRF could continue to receive or 

refund overpayments of tax benefits sharing in future 

years); (5) goodwill litigation (no final date for resolution 

has been established; see Note 3); and (6) affordable 

housing disposition program monitoring (last agreement 

expires no later than 2045; see Note 3). The FRF could 

potentially realize recoveries from tax benefits sharing, 

criminal restitution orders, and professional liability claims; 
FINANCIAL SECTION 97

however, any associated recoveries are not reflected 

in the FRF’s financial statements, given the significant 

uncertainties surrounding the ultimate outcome. 

On April 1, 2014, the FDIC concluded its role as receiver of 

FRF receiverships when the last active receivership was 

terminated. In total, 850 receiverships were liquidated 

by the FRF and the RTC. To facilitate receivership 

terminations, the FRF, in its corporate capacity, acquired 

any remaining receivership assets. These assets are 

included in the “Other Assets, net” line item on the Balance 

Sheet.

During the years of receivership activity, the assets held 

by receivership entities, and the claims against them, 

were accounted for separately from the FRF’s assets 

and liabilities to ensure that receivership proceeds were 

distributed in accordance with applicable laws and 

regulations. Also, the income and expenses attributable to 

receiverships were accounted for as transactions of those 

receiverships. The FDIC billed receiverships for services 

provided on their behalf.

2. SUMMARY OF SIGNIFICANT 

ACCOUNTING POLICIES

GENERAL

These financial statements include the financial position, 

results of operations, and cash flows of the FRF and are 

presented in accordance with U.S. generally accepted 

accounting principles (GAAP). During the years of 

receivership activity, these statements did not include 

reporting for assets and liabilities of receivership entities 

because these entities were legally separate and distinct, 

and the FRF did not have any ownership or benefical 

interest in them. 

USE OF ESTIMATES

Management makes estimates and assumptions that affect 

the amounts reported in the financial statements and 

accompanying notes. Actual results could differ from these 

estimates. Where it is reasonably possible that changes 

in estimates will cause a material change in the financial 

statements in the near term, the nature and extent of such 

changes in estimates have been disclosed. The more 

significant estimates include the valuation of other assets 

and the estimated losses for litigation.

CASH EQUIVALENTS

Cash equivalents are short-term, highly liquid investments 

consisting primarily of U.S. Treasury Overnight Certificates.

PROVISION FOR LOSSES

The provision for losses represents the change in the 

estimated losses related to other assets.

RELATED PARTIES

The nature of related parties and a description of related 

party transactions are discussed in Note 1 and disclosed 

throughout the financial statements and footnotes.

DISCLOSURE ABOUT RECENT RELEVANT 

ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update No. 2013-07, Presentation of 

Financial Statements - Liquidation Basis of Accounting, 

modifies Accounting Standards Codification Topic 205, 

Presentation of Financial Statements, to require an entity 

to prepare its financial statements using the liquidation 

basis of accounting when liquidation is imminent. The 

requirements became effective for annual reporting periods 

beginning after December 15, 2013. 

The FDIC has determined that the FRF does not meet the 

requirements for presenting financial statements using the 

liquidation basis of accounting. According to the standard, 

a limited-life entity should apply the liquidation basis of 

accounting only if a change in the entity’s governing plan 

has occurred since its inception. By statute, the FRF is a 

limited-life entity whose dissolution will occur upon the 

satisfaction of all liabilities and the disposition of all assets. 

No changes to this statutory plan have occurred since 

inception of the FRF.

Other recent accounting pronouncements have been 

deemed not applicable or material to the financial 

statements as presented.

3. CONTINGENT LIABILITIES FOR:

GOODWILL LITIGATION

In United States v. Winstar Corp., 518 U.S. 839 (1996), 

the Supreme Court held that when it became impossible 

following the enactment of FIRREA in 1989 for the federal 

government to perform certain agreements to count 
ANNUAL REPORT 2014

98 FINANCIAL SECTION 

goodwill toward regulatory capital, the plaintiffs were 

entitled to recover damages from the United States. The 

contingent liability associated with the nonperformance of 

these agreements was transferred to the FRF on August 9, 

1989, upon the dissolution of the FSLIC.

The FRF can draw from an appropriation provided by 

Section 110 of the Department of Justice Appropriations 

Act, 2000 (Public Law 106-113, Appendix A, Title I, 113 Stat. 

1501A-3, 1501A-20) such sums as may be necessary for the 

payment of judgments and compromise settlements in the 

goodwill litigation. This appropriation is to remain available 

until expended. Because an appropriation is available 

to pay such judgments and settlements, any estimated 

liability for goodwill litigation should have a corresponding 

receivable from the U.S. Treasury and therefore have no net 

impact on the financial condition of the FRF. 

The FRF paid $500 thousand to the plaintiffs in one 

goodwill case in 2013, representing a reimbursement for a 

tax liability of the plaintiffs as a result of the settlement they 

received in 2012. The FRF received appropriations from the 

U.S. Treasury to fund this payment.

As of December 31, 2014 and 2013, one case remains active 

and pending against the United States based on alleged 

breaches of the agreements stated above. For this case, 

a contingent liability and an offsetting receivable of $356 

million was recorded as of December 31, 2014 and 2013. 

This case is currently before the lower court pending 

remand following appeal. It is reasonably possible that for 

this case the FRF could incur additional estimated losses 

of $63 million, representing additional damages contended 

by the plaintiff. Additionally, for a case that was fully 

adjudicated in 2012, an estimated loss of $8 million, which 

represents estimated tax liabilities, is also reasonably 

possible. 

In addition, the FRF-FSLIC pays the goodwill litigation 

expenses incurred by the Department of Justice (DOJ), 

the entity that defends these lawsuits against the United 

States, based on a Memorandum of Understanding 

(MOU) dated October 2, 1998, between the FDIC and the 

DOJ. FRF-FSLIC pays in advance the estimated goodwill 

litigation expenses. Any unused funds are carried over and 

applied toward the next fiscal year (FY) charges. In 2014, 

FRF-FSLIC did not provide any additional funding to the 

DOJ because the unused funds from prior fiscal years were 

sufficient to cover estimated FY 2015 expenses. 

OTHER CONTINGENCIES

Paralleling the goodwill cases were similar cases alleging 

that the government breached agreements regarding tax 

benefits associated with certain FSLIC-assisted acquisitions. 

All eight of those cases have been settled. However, a 

case settled in 2006 further obligates the FRF-FSLIC as a 

guarantor for all tax liabilities in the event the settlement 

amount is determined by tax authorities to be taxable. 

The maximum potential exposure under this guarantee is 

approximately $81 million. However, the FDIC believes that 

it is very unlikely the settlement will be subject to taxation. 

The entity’s federal income tax return for the 2006 taxable 

year has been amended and remains subject to examination 

by the Internal Revenue Service (IRS). To date, there 

has been no assertion by the IRS of taxation for an issue 

covered by the guarantee. As of December 31, 2014, no 

liability has been recorded, and the FRF does not expect to 

fund any payment under this guarantee. 

FANNIE MAE GUARANTEE

On May 21, 2012, the FDIC, in its capacity as administrator 

of the FRF, entered into an agreement with Fannie Mae for 

the release of $13 million of credit enhancement reserves 

to the FRF in exchange for indemnifying Fannie Mae for 

all future losses incurred on 76 multi-family mortgage 

loans. The former RTC supplied Fannie Mae with the credit 

enhancement reserves in the form of cash collateral to 

cover future losses on these mortgage loans through 2020.

Based on the most current data available, as of September 

30, 2014, the maximum exposure on this indemnification 

is the current unpaid principal balance of the remaining 

58 multi-family loans totaling $5.8 million. Based on a 

contingent liability assessment of this portfolio as of 

September 30, 2014, the majority of the loans are at least 76 

percent amortized, and all are scheduled to mature within 

one to six years. Since all of the loans are performing and 

no losses have occurred since 2001, future payments on this 

indemnification are not expected. As a result, no contingent 

liability for this indemnification has been recorded as of 

December 31, 2014.
FINANCIAL SECTION 99

AFFORDABLE HOUSING 

DISPOSITION PROGRAM

Required by FIRREA under section 501, the Affordable 

Housing Disposition Program (AHDP) was established 

in 1989 to ensure the preservation of affordable housing 

for low-income households. The FDIC, in its capacity as 

administrator of the FRF-RTC, assumed responsibility 

for monitoring property owner compliance with land use 

restriction agreements (LURAs). To enforce the property 

owners’ LURA obligation, the RTC, prior to its dissolution, 

entered into Memoranda of Understanding with 28 

monitoring agencies to oversee these LURAs. The FDIC, 

through the FRF, has agreed to indemnify the monitoring 

agencies for all losses related to LURA legal enforcement 

proceedings. Since 2006, the FDIC has entered into two 

litigations against property owners and has paid $23 

thousand in legal expenses, of which $13 thousand has been 

reimbursed due to successful litigation. The maximum 

potential exposure to the FRF cannot be estimated as it 

is contingent upon future legal proceedings. However, 

loss mitigation factors include: (1) the indemnification 

may become void if the FDIC is not immediately informed 

upon receiving notice of any legal proceedings and (2) the 

FDIC is entitled to reimbursement of any legal expenses 

incurred for successful litigation against a property owner. 

AHDP guarantees will continue until the termination of 

the last of the LURAs, or 2045 (whichever occurs first). 

As of December 31, 2014, no contingent liability for this 

indemnification has been recorded. 

4. RESOLUTION EQUITY

As stated in the Overview section of Note 1, the FRF is 

composed of two distinct pools: the FRF-FSLIC and the 

FRF-RTC. The FRF-FSLIC consists of the assets and 

liabilities of the former FSLIC. The FRF-RTC consists of the 

assets and liabilities of the former RTC. Pursuant to legal 

restrictions, the two pools are maintained separately and 

the assets of one pool are not available to satisfy obligations 

of the other.

The following table shows the contributed capital, 

accumulated deficit, and resulting resolution equity for 

each pool.

RESOLUTION EQUITY AT DECEMBER 31, 2013

Dollars in Thousands

FRF-FSLIC FRF-RTC

FRF 

Consolidated

Contributed capital - beginning $46,307,319 $81,749,337 $128,056,656 

Less: Payment to REFCORP 0 (125,000) (125,000)

Less: Return of U.S. Treasury funds (2,600,000) 0 (2,600,000)

Add: U.S. Treasury payment for goodwill litigation 500 0 500 

Contributed capital - ending 43,707,819 81,624,337 125,332,156 

Accumulated deficit (42,879,951) (81,580,200) (124,460,151)

Total $827,868 $44,137 $872,005 

RESOLUTION EQUITY AT DECEMBER 31, 2014

Dollars in Thousands

FRF-FSLIC FRF-RTC

FRF 

Consolidated

Contributed capital - beginning $43,707,819 $81,624,337 $125,332,156

Contributed capital - ending 43,707,819 81,624,337 125,332,156

Accumulated deficit (42,879,590) (81,581,089) (124,460,679)

Total $828,229 $43,248 $871,477
ANNUAL REPORT 2014

100 FINANCIAL SECTION 

CONTRIBUTED CAPITAL

The FRF-FSLIC and the former RTC received $43.5 billion 

and $60.1 billion from the U.S. Treasury, respectively, 

to fund losses from thrift resolutions prior to July 1, 

1995. Additionally, the FRF-FSLIC issued $670 million in 

capital certificates to the Financing Corporation (a mixedownership government corporation established to function 

solely as a financing vehicle for the FSLIC) and the RTC 

issued $31.3 billion of these instruments to the REFCORP. 

FIRREA prohibited the payment of dividends on any of 

these capital certificates.

FRF-FSLIC received $500 thousand in U.S. Treasury 

payments for goodwill litigation in 2013. In addition, $356 

million was accrued for as receivables as of December 31, 

2014 and 2013. Through December 31, 2014, the FRF has 

received or established a receivable for a total of $2.2 billion 

of goodwill appropriations, the effect of which increases 

contributed capital.

Through December 31, 2014, the FRF-RTC had returned 

$4.6 billion to the U.S. Treasury and made payments of $5.1 

billion to the REFCORP. The most recent payment to the 

REFCORP was in July of 2013 for $125 million. In addition, 

the FDIC returned $2.6 billion to the U.S. Treasury on behalf 

of the FRF-FSLIC in 2013. These actions serve to reduce 

contributed capital.

ACCUMULATED DEFICIT

The accumulated deficit represents the cumulative excess 

of expenses and losses over revenue for activity related 

to the FRF-FSLIC and the FRF-RTC. Approximately $29.8 

billion and $87.9 billion were brought forward from the 

former FSLIC and the former RTC on August 9, 1989, and 

January 1, 1996, respectively. The FRF-FSLIC accumulated 

deficit has increased by $13.1 billion, whereas the FRF-RTC 

accumulated deficit has decreased by $6.3 billion, since 

their dissolution dates.

5. DISCLOSURES ABOUT THE FAIR 

VALUE OF FINANCIAL INSTRUMENTS 

At December 31, 2014 and 2013, the FRF’s financial assets 

measured at fair value on a recurring basis are cash 

equivalents of $827 million and $826 million, respectively. 

Cash equivalents are Special U.S. Treasury Certificates 

with overnight maturities valued at prevailing interest 

rates established by the Bureau of the Fiscal Service. The 

valuation is considered a Level 1 measurement in the 

fair value hierarchy, representing quoted prices in active 

markets for identical assets. 

Some of the FRF’s financial assets and liabilities are not 

recognized at fair value but are recorded at amounts that 

approximate fair value due to their short maturities and/

or comparability with current interest rates. Such items 

include receivables from U.S. Treasury for goodwill 

litigation and accounts payable and other liabilities.

Assets purchased by the FRF from terminated receiverships 

(see Note 1) and included in the “Other Assets, net” line 

item on the Balance Sheet are primarily valued using 

projected cash flow analyses; however, these valuations 

do not represent an estimate of fair value. These assets 

(ranging in age up to 25 years), could not be liquidated 

during the life of the receiverships due to restrictive clauses 

and other impediments. Because these impediments 

remain, there is no market for these assets. Consequently, it 

is not practicable to provide an estimate of fair value.
FINANCIAL SECTION 101

RECONCILIATION OF NET LOSS TO NET CASH FROM OPERATING ACTIVITIES 

FOR THE YEARS ENDED DECEMBER 31

Dollars in Thousands

2014 2013

Operating Activities

Net Loss: $(528) $(516)

Adjustments to reconcile net loss to net cash (used) provided 

by operating activities:

Provision for insurance losses (792) (1,255)

Change in Assets and Liabilities:

Decrease in other assets 1,071 5,528 

(Decrease) in accounts payable and other liabilities (420) (1,652)

Net Cash (Used) Provided by Operating Activities $(669) $2,105 

6. INFORMATION RELATING TO THE 

STATEMENT OF CASH FLOWS

7. SUBSEQUENT EVENTS

Subsequent events have been evaluated through 

February 5, 2015, the date the financial statements are 

available to be issued, and management determined that 

there are no items to disclose.
ANNUAL REPORT 2014

102 FINANCIAL SECTION 

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT
FINANCIAL SECTION 103

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT (continued)
ANNUAL REPORT 2014

104 FINANCIAL SECTION 

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT (continued)
FINANCIAL SECTION 105

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT (continued)
ANNUAL REPORT 2014

106 FINANCIAL SECTION 

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT (continued)
FINANCIAL SECTION 107

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT (continued)
ANNUAL REPORT 2014

108 FINANCIAL SECTION 

GOVERNMENT ACCOUNTABILITY OFFICE AUDITOR’S REPORT (continued)
FINANCIAL SECTION 109

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Appendix I
ANNUAL REPORT 2014

110 FINANCIAL SECTION 

MANAGEMENT’S RESPONSE TO THE AUDITOR’S REPORT

Appendix II
VI. Corporate 

Management 

Control

The FDIC uses several means to maintain comprehensive 

internal controls, ensure the overall effectiveness and 

efficiency of operations, and otherwise comply as necessary 

with the following federal standards, among others:

♦ Chief Financial Officers’ Act (CFO Act)

♦ Federal Managers’ Financial Integrity Act (FMFIA)

♦ Federal Financial Management Improvement Act 

(FFMIA)

♦ Government Performance and Results Act (GPRA)

♦ Federal Information Security Management Act (FISMA)

♦ OMB Circular A-123

♦ GAO’s Standards for Internal Control in the Federal 

Government

As a foundation for these efforts, the DOF Corporate 

Management Control Branch oversees a corporate-wide 

program of relevant activities by establishing policies and 

working with management in each division and office in 

the FDIC. The FDIC has made a concerted effort to ensure 

that financial, reputational, and operational risks have been 

identified and that corresponding control needs are being 

incorporated into day-to-day operations. The program also 

requires that comprehensive procedures be documented, 

employees be thoroughly trained, and supervisors be held 

accountable for performance and results. Compliance 

monitoring is carried out through periodic management 

reviews and by the distribution of various activity reports 

to all levels of management. Conscientious attention is 

also paid to the implementation of audit recommendations 

made by the FDIC Office of the Inspector General, the GAO, 

the Treasury Department’s Special Inspector General for 

the TARP program, and other providers of external/audit 

scrutiny. The FDIC has received unmodified/unqualified 

opinions on its financial statement audits for 23 consecutive 

years, and these and other positive results reflect the 

effectiveness of the overall management control program.

The year 2014 was a continuation of our efforts over 

the past few years. Considerable energy was devoted 

to ensuring that the FDIC’s processes and systems of 

control have kept pace with the workload, and that the 

FDIC’s foundation of controls throughout the FDIC 

remained strong. Enhanced metrics, process mapping, and 

monitoring activities were put in action. 

In 2015, among other things, program evaluation activities 

will focus on human resources, process mapping, the 

continuation of activities associated with the Dodd-Frank 

Act, and contract oversight. Continued emphasis and 

management scrutiny also will be applied to the accuracy 

and integrity of transactions, the expansion of performance 

metrics, and oversight of systems development efforts in 

general. 

CORPORATE MANAGEMENT CONTROL 111
ANNUAL REPORT 2014

MANAGEMENT REPORT ON 

FINAL ACTIONS

As required under amended Section 5 of the Inspector 

General Act of 1978, the FDIC must report information on 

final action taken by management on certain audit reports. 

For the federal fiscal year period October 1, 2013, through 

September 30, 2014, there were no audit reports in the 

following categories:

♦ Management Report on Final Action on Audits with 

Disallowed Costs; and

♦ Management Report on Final Action on Audits with 

Recommendations to Put Funds to Better Use.

The table below provides information on final action taken 

by management on audit reports for the same fiscal year.

AUDIT REPORTS WITHOUT FINAL ACTIONS BUT WITH MANAGEMENT DECISIONS 

OVER ONE YEAR OLD FOR FISCAL YEAR 2014

MANAGEMENT ACTION IN PROCESS

Report No.

and Issue Date OIG Audit Finding Management Action Disallowed Costs

EVAL-13-003

08/19/2013

AUD-13-007

09/11/2013

The Director of the Division of Administration 

should implement a formal sustainability 

program to encompass the FDIC’s goals, 

processes, policies and procedures, and 

overall energy management efforts. The 

program should be documented and include 

written provisions for ensuring compliance 

with the various legislative requirements 

pertaining to energy efficiency.

The Acting Chief Information Officer should 

coordinate with the Division of Resolutions 

and Receiverships (DRR) and the Division 

of Risk Management Supervision (RMS) to 

ensure that existing applications developed 

under the divisions’ direction comply with 

FDIC security policies pertaining to sensitivity 

assessments, privacy reviews, security plans, 

access control reviews, and separation 

of duties.

The FDIC’s sustainability program for the 

Virginia Square buildings was expanded to 

include all headquarters facilities and the San 

Francisco Regional Office. The program was 

documented and incorporates the various 

legislative requirements on energy efficiency 

identified in the report.

Completed: 12/31/2014

The Division of Information Technology will 

review DRR and RMS’ business-developed 

applications for noncompliance with FDIC 

security policies pertaining to sensitivity 

assessments, privacy reviews, security plans, 

access control reviews, and separation of 

duties. If an application is found to be 

noncompliant with FDIC security policies, 

noncompliant issues will be cataloged and 

communicated to the divisions. Necessary 

remedial actions will be identified during the 

review along with specific owners and due 

dates commensurate with the severity of the 

flaw(s). 

Due Date: 04/15/2015

$0

$0

112 CORPORATE MANAGEMENT CONTROL
VII. Appendices

APPENDICES 113
ANNUAL REPORT 2014

114 APPENDICES

FDIC ACTIONS ON FINANCIAL INSTITUTIONS APPLICATIONS 2012–2014

2014 2013 2012

Deposit Insurance 2 10 6

Approved1 2 10 6

Denied 0 0 0

New Branches 520 499 570

Approved 520 499 570

Denied 0 0 0

Mergers 251 256 238

Approved 251 256 238

Denied 0 0 0

Requests for Consent to Serve2 327 474 674

Approved 327 474 671

Section 19 7 4 10

Section 32 320 470 661

Denied 0 0 3

Section 19 0 0 1

Section 32 0 0 2

Notices of Change in Control 15 22 26

Letters of Intent Not to Disapprove 15 22 26

Disapproved 0 0 0

Brokered Deposit Waivers 46 81 97

Approved 46 81 95

Denied 0 0 2

Savings Association Activities3 4 8 21

Approved 4 8 21

Denied 0 0 0

State Bank Activities/Investments4 14 10 7

Approved 14 10 7

Denied 0 0 0

Conversion of Mutual Institutions 4 7 8

Non-Objection 4 7 8

Objection 0 0 0

1 Includes deposit insurance application filed on behalf of (1) newly organized institutions, (2) existing uninsured financial services companies seeking 

establishment as an insured institution, and (3) interim institutions established to facilitate merger or conversion transactions, and applications to 

facilitate the establishment of thrift holding companies.

2 Under Section 19 of the Federal Deposit Insurance (FDI) Act, an insured institution must receive FDIC approval before employing a person 

convicted of dishonesty or breach of trust. Under Section 32, the FDIC must approve any change of directors or senior executive officers at a state 

nonmember bank that is not in compliance with capital requirements or is otherwise in troubled condition. 

3 Amendments to Part 303 of the FDIC Rules and Regulations changed FDIC oversight responsibility in October 1998. In 1998, Part 303 changed 

the Delegations of Authority to act upon applications. 

4 Section 24 of the FDI Act, in general, precludes a federally insured state bank from engaging in an activity not permissible for a national bank and 

requires notices to be filed with the FDIC.

A. KEY STATISTICS
APPENDICES 115

COMBINED RISK AND CONSUMER ENFORCEMENT ACTIONS 2012–2014

2014 2013 2012

Total Number of Actions Initiated by the FDIC 320 414 557

Termination of Insurance

Involuntary Termination 0 0 0

Sec. 8a For Violations, Unsafe/Unsound Practices or Conditions 0 0 0

Voluntary Termination 3 11 7

Sec. 8a By Order Upon Request 0 0 0

Sec. 8p No Deposits 3 7 3

Sec. 8q Deposits Assumed 0 4 4

Sec. 8b Cease-and-Desist Actions 57 83 129

Notices of Charges Issued 1 2 0

Orders to Pay Restitution 7 11 9

Consent Orders 48 70 120

Personal Cease and Desist Orders 1 0 0

Sec. 8e Removal/Prohibition of Director or Officer 101 113 116

Notices of Intention to Remove/Prohibit 4 14 8

Consent Orders 97 99 108

Sec. 8g Suspension/Removal When Charged With Crime 2 0 0

Civil Money Penalties Issued 66 94 170

Sec. 7a Call Report Penalties 0 0 1

Sec. 8i Civil Money Penalties 62 81 164

Sec. 8i Civil Money Penalty Notices of Assessment 4 13 5

Sec. 10c Orders of Investigation 16 16 16

Sec. 19 Waiver Orders 69 88 119

Approved Section 19 Waiver Orders 68 86 119

Denied Section 19 Waiver Orders 1 2 0

Sec. 32 Notices Disapproving Officer/Director’s Request for Review 0 0 0

Truth-in-Lending Act Reimbursement Actions 69 98 126

Denials of Requests for Relief 0 0 0

Grants of Relief 0 0 0

 Banks Making Reimbursement1 69 98 126

Suspicious Activity Reports (open and closed institutions)1 164,777 123,134 139,102

Other Actions Not Listed 6 9 0

1 These actions do not constitute the initiation of a formal enforcement action and, therefore, are not included in the total number of actions 

initiated.
ANNUAL REPORT 2014

116 APPENDICES

ESTIMATED INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND, 

DECEMBER 31, 1934, THROUGH DECEMBER 31, 20141 

Dollars in Millions (except Insurance Coverage)

Deposits in Insured 

Institutions2

Insurance Fund as 

a Percentage of

Year

Insurance 

Coverage2

Total Domestic 

Deposits

Est. Insured

Deposits

Percentage 

of Domestic 

Deposits

Deposit 

Insurance

Fund

Total

Domestic 

Deposits

Est. Insured

Deposits

2014 $250,000 $10,408,068 $6,203,524 59.6 $62,780.2 0.60 1.01

2013 250,000 9,825,398 6,010,854 61.2 47,190.8 0.48 0.79

2012 250,000 9,474,585 7,405,043 78.2 32,957.8 0.35 0.45

2011 250,000 8,782,134 6,973,468 79.4 11,826.5 0.13 0.17

2010 250,000 7,887,733 6,301,528 79.9 (7,352.2) (0.09) (0.12)

2009 250,000 7,705,353 5,407,773 70.2 (20,861.8) (0.27) (0.39)

2008 100,000 7,505,408 4,750,783 63.3 17,276.3 0.23 0.36 

2007 100,000 6,921,678 4,292,211 62.0 52,413.0 0.76 1.22 

2006 100,000 6,640,097 4,153,808 62.6 50,165.3 0.76 1.21 

2005 100,000 6,229,823 3,891,000 62.5 48,596.6 0.78 1.25 

2004 100,000 5,724,775 3,622,213 63.3 47,506.8 0.83 1.31 

2003 100,000 5,224,030 3,452,606 66.1 46,022.3 0.88 1.33 

2002 100,000 4,916,200 3,383,720 68.8 43,797.0 0.89 1.29 

2001 100,000 4,565,068 3,216,585 70.5 41,373.8 0.91 1.29 

2000 100,000 4,211,895 3,055,108 72.5 41,733.8 0.99 1.37 

1999 100,000 3,885,826 2,869,208 73.8 39,694.9 1.02 1.38 

1998 100,000 3,817,150 2,850,452 74.7 39,452.1 1.03 1.38 

1997 100,000 3,602,189 2,746,477 76.2 37,660.8 1.05 1.37 

1996 100,000 3,454,556 2,690,439 77.9 35,742.8 1.03 1.33 

1995 100,000 3,318,595 2,663,873 80.3 28,811.5 0.87 1.08 

1994 100,000 3,184,410 2,588,619 81.3 23,784.5 0.75 0.92 

1993 100,000 3,220,302 2,602,781 80.8 14,277.3 0.44 0.55 

1992 100,000 3,275,530 2,677,709 81.7 178.4 0.01 0.01 

1991 100,000 3,331,312 2,733,387 82.1 (6,934.0) (0.21) (0.25)

1990 100,000 3,415,464 2,784,838 81.5 4,062.7 0.12 0.15 

1989 100,000 3,412,503 2,755,471 80.7 13,209.5 0.39 0.48 

1988 100,000 2,337,080 1,756,771 75.2 14,061.1 0.60 0.80 

1987 100,000 2,198,648 1,657,291 75.4 18,301.8 0.83 1.10 

1986 100,000 2,162,687 1,636,915 75.7 18,253.3 0.84 1.12 

1985 100,000 1,975,030 1,510,496 76.5 17,956.9 0.91 1.19 

1984 100,000 1,805,334 1,393,421 77.2 16,529.4 0.92 1.19 

1983 100,000 1,690,576 1,268,332 75.0 15,429.1 0.91 1.22 

1982 100,000 1,544,697 1,134,221 73.4 13,770.9 0.89 1.21 

1981 100,000 1,409,322 988,898 70.2 12,246.1 0.87 1.24 

1980 100,000 1,324,463 948,717 71.6 11,019.5 0.83 1.16 
APPENDICES 117

ESTIMATED INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND, 

DECEMBER 31, 1934, THROUGH DECEMBER 31, 20141 (continued)

Dollars in Millions (except Insurance Coverage)

Deposits in Insured 

Institutions2

Insurance Fund as 

a Percentage of

Year

Insurance 

Coverage2

Total Domestic 

Deposits

Est. Insured

Deposits

Percentage 

of Insured 

Deposits

Deposit 

Insurance

Fund

Total

Domestic 

Deposits

Est. Insured

Deposits

1979 40,000 1,226,943 808,555 65.9 9,792.7 0.80 1.21 

1978 40,000 1,145,835 760,706 66.4 8,796.0 0.77 1.16 

1977 40,000 1,050,435 692,533 65.9 7,992.8 0.76 1.15 

1976 40,000 941,923 628,263 66.7 7,268.8 0.77 1.16 

1975 40,000 875,985 569,101 65.0 6,716.0 0.77 1.18 

1974 40,000 833,277 520,309 62.4 6,124.2 0.73 1.18 

1973 20,000 766,509 465,600 60.7 5,615.3 0.73 1.21 

1972 20,000 697,480 419,756 60.2 5,158.7 0.74 1.23 

1971 20,000 610,685 374,568 61.3 4,739.9 0.78 1.27 

1970 20,000 545,198 349,581 64.1 4,379.6 0.80 1.25 

1969 20,000 495,858 313,085 63.1 4,051.1 0.82 1.29 

1968 15,000 491,513 296,701 60.4 3,749.2 0.76 1.26 

1967 15,000 448,709 261,149 58.2 3,485.5 0.78 1.33 

1966 15,000 401,096 234,150 58.4 3,252.0 0.81 1.39 

1965 10,000 377,400 209,690 55.6 3,036.3 0.80 1.45 

1964 10,000 348,981 191,787 55.0 2,844.7 0.82 1.48 

1963 10,000 313,304 177,381 56.6 2,667.9 0.85 1.50 

1962 10,000 297,548 170,210 57.2 2,502.0 0.84 1.47 

1961 10,000 281,304 160,309 57.0 2,353.8 0.84 1.47 

1960 10,000 260,495 149,684 57.5 2,222.2 0.85 1.48 

1959 10,000 247,589 142,131 57.4 2,089.8 0.84 1.47 

1958 10,000 242,445 137,698 56.8 1,965.4 0.81 1.43 

1957 10,000 225,507 127,055 56.3 1,850.5 0.82 1.46 

1956 10,000 219,393 121,008 55.2 1,742.1 0.79 1.44 

1955 10,000 212,226 116,380 54.8 1,639.6 0.77 1.41 

1954 10,000 203,195 110,973 54.6 1,542.7 0.76 1.39 

1953 10,000 193,466 105,610 54.6 1,450.7 0.75 1.37 

1952 10,000 188,142 101,841 54.1 1,363.5 0.72 1.34 

1951 10,000 178,540 96,713 54.2 1,282.2 0.72 1.33 

1950 10,000 167,818 91,359 54.4 1,243.9 0.74 1.36 

1949 5,000 156,786 76,589 48.8 1,203.9 0.77 1.57 

1948 5,000 153,454 75,320 49.1 1,065.9 0.69 1.42 

1947 5,000 154,096 76,254 49.5 1,006.1 0.65 1.32 

1946 5,000 148,458 73,759 49.7 1,058.5 0.71 1.44 

1945 5,000 157,174 67,021 42.6 929.2 0.59 1.39 
ANNUAL REPORT 2014

118 APPENDICES

ESTIMATED INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND, 

DECEMBER 31, 1934, THROUGH DECEMBER 31, 20141 (continued)

Dollars in Millions (except Insurance Coverage)

Deposits in Insured 

Institutions2

Insurance Fund as 

a Percentage of

Year

Insurance 

Coverage2

Total Domestic 

Deposits

Est. Insured

Deposits

Percentage 

of Insured 

Deposits

Deposit 

Insurance

Fund

Total

Domestic 

Deposits

Est. Insured

Deposits

1944 5,000 134,662 56,398 41.9 804.3 0.60 1.43 

1943 5,000 111,650 48,440 43.4 703.1 0.63 1.45 

1942 5,000 89,869 32,837 36.5 616.9 0.69 1.88 

1941 5,000 71,209 28,249 39.7 553.5 0.78 1.96 

1940 5,000 65,288 26,638 40.8 496.0 0.76 1.86 

1939 5,000 57,485 24,650 42.9 452.7 0.79 1.84 

1938 5,000 50,791 23,121 45.5 420.5 0.83 1.82 

1937 5,000 48,228 22,557 46.8 383.1 0.79 1.70 

1936 5,000 50,281 22,330 44.4 343.4 0.68 1.54 

1935 5,000 45,125 20,158 44.7 306.0 0.68 1.52 

1934 5,000 40,060 18,075 45.1 291.7 0.73 1.61 

1 Prior to 1989, figures are for the Bank Insurance Fund (BIF) only and exclude insured branches of foreign banks. For 1989 to 2005, figures represent 

the sum of the BIF and Savings Association Insurance Fund (SAIF) amounts; for 2006 to 2014, figures are for DIF. Amounts for 1989 - 2014 include 

insured branches of foreign banks. Prior to year-end 1991, insured deposits were estimated using percentages determined from June Call and 

Thrift Financial Reports.

2 The year-end 2008 coverage limit and estimated insured deposits do not reflect the temporary increase to $250,000 then in effect under the 

Emergency Economic Stabilization Act of 2008. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) made this 

coverage limit permanent. The year-end 2009 coverage limit and estimated insured deposits reflect the $250,000 coverage limit. The Dodd-Frank 

Act also temporarily provided unlimited coverage for non-interest bearing transaction accounts for two years beginning December 31, 2010. 

Coverage for certain retirement accounts increased to $250,000 in 2006. Initial coverage limit was $2,500 from January 1 to June 30, 1934.
APPENDICES 119

INCOME AND EXPENSES, DEPOSIT INSURANCE FUND, FROM BEGINNING OF OPERATIONS, 

SEPTEMBER 11, 1933, THROUGH DECEMBER 31, 2014 

Dollars in Millions

Income Expenses and Losses

Year Total

Assessment 

Income

Assessment 

Credits

Investment 

and Other

Effective

Assessment 

Rate1 Total

Provision 

for 

Ins. Losses

Admin.

and 

Operating 

Expenses2

Interest

& Other Ins. 

Expenses

Funding 

Transfer

from the 

FSLIC 

Resolution 

Fund

Net 

Income/

(Loss)

Total $210,651.8 $146,166.8 $11,392.9 $75,877.9 $148,150.5 $112,293.5 $26,407.4 $9,449.6 $139.5 $62,640.8 

2014 8,965.1 8,656.1 0.0 309.0 0.0664% (6,634.7) (8,305.5) 1,664.3 6.5 0 15,599.8

2013 10,458.9 9,734.2 0.0 724.7 0.0776 (4,045.9) (5,659.4) 1,608.7 4.8 0 14,504.8 

2012 18,522.3 12,397.2 0.2 6,125.3 0.1012 (2,599.0) (4,222.6) 1,777.5 (153.9) 0 21,121.3 

2011 16,342.0 13,499.5 0.9 2,843.4 0.1115 (2,915.4) (4,413.6) 1,625.4 (127.2) 0 19,257.4 

2010 13,379.9 13,611.2 0.8 (230.5) 0.1772 75.0 (847.8) 1,592.6 (669.8) 0 13,304.9 

2009 24,706.4 17,865.4 148.0 6,989.0 0.2330 60,709.0 57,711.8 1,271.1 1,726.1 0 (36,002.6)

2008 7,306.3 4,410.4 1,445.9 4,341.8 0.0418 44,339.5 41,838.8 1,033.5 1,467.2 0 (37,033.2)

2007 3,196.2 3,730.9 3,088.0 2,553.3 0.0093 1,090.9 95.0 992.6 3.3 0 2,105.3 

2006 2,643.5 31.9 0.0 2,611.6 0.0005 904.3 (52.1) 950.6 5.8 0 1,739.2 

2005 2,420.5 60.9 0.0 2,359.6 0.0010 809.3 (160.2) 965.7 3.8 0 1,611.2 

2004 2,240.3 104.2 0.0 2,136.1 0.0019 607.6 (353.4) 941.3 19.7 0 1,632.7 

2003 2,173.6 94.8 0.0 2,078.8 0.0019 (67.7) (1,010.5) 935.5 7.3 0 2,241.3 

2002 2,384.7 107.8 0.0 2,276.9 0.0023 719.6 (243.0) 945.1 17.5 0 1,665.1 

2001 2,730.1 83.2 0.0 2,646.9 0.0019 3,123.4 2,199.3 887.9 36.2 0 (393.3)

2000 2,570.1 64.3 0.0 2,505.8 0.0016 945.2 28.0 883.9 33.3 0 1,624.9 

1999 2,416.7 48.4 0.0 2,368.3 0.0013 2,047.0 1,199.7 823.4 23.9 0 369.7 

1998 2,584.6 37.0 0.0 2,547.6 0.0010 817.5 (5.7) 782.6 40.6 0 1,767.1 

1997 2,165.5 38.6 0.0 2,126.9 0.0011 247.3 (505.7) 677.2 75.8 0 1,918.2 

1996 7,156.8 5,294.2 0.0 1,862.6 0.1622 353.6 (417.2) 568.3 202.5 0 6,803.2 

1995 5,229.2 3,877.0 0.0 1,352.2 0.1238 202.2 (354.2) 510.6 45.8 0 5,027.0 

1994 7,682.1 6,722.7 0.0 959.4 0.2192 (1,825.1) (2,459.4) 443.2 191.1 0 9,507.2 

1993 7,354.5 6,682.0 0.0 672.5 0.2157 (6,744.4) (7,660.4) 418.5 497.5 0 14,098.9 

1992 6,479.3 5,758.6 0.0 720.7 0.1815 (596.8) (2,274.7) 614.83 1,063.1 35.4 7,111.5 

1991 5,886.5 5,254.0 0.0 632.5 0.1613 16,925.3 15,496.2 326.1 1,103.0 42.4 (10,996.4)

1990 3,855.3 2,872.3 0.0 983.0 0.0868 13,059.3 12,133.1 275.6 650.6 56.1 (9,147.9)

1989 3,494.8 1,885.0 0.0 1,609.8 0.0816 4,352.2 3,811.3 219.9 321.0 5.6 (851.8)

1988 3,347.7 1,773.0 0.0 1,574.7 0.0825 7,588.4 6,298.3 223.9 1,066.2 0 (4,240.7)

1987 3,319.4 1,696.0 0.0 1,623.4 0.0833 3,270.9 2,996.9 204.9 69.1 0 48.5 

1986 3,260.1 1,516.9 0.0 1,743.2 0.0787 2,963.7 2,827.7 180.3 (44.3) 0 296.4 

1985 3,385.5 1,433.5 0.0 1,952.0 0.0815 1,957.9 1,569.0 179.2 209.7 0 1,427.6 

1984 3,099.5 1,321.5 0.0 1,778.0 0.0800 1,999.2 1,633.4 151.2 214.6 0 1,100.3 

1983 2,628.1 1,214.9 164.0 1,577.2 0.0714 969.9 675.1 135.7 159.1 0 1,658.2 

1982 2,524.6 1,108.9 96.2 1,511.9 0.0769 999.8 126.4 129.9 743.5 0 1,524.8 

1981 2,074.7 1,039.0 117.1 1,152.8 0.0714 848.1 320.4 127.2 400.5 0 1,226.6 
ANNUAL REPORT 2014

120 APPENDICES

INCOME AND EXPENSES, DEPOSIT INSURANCE FUND, FROM BEGINNING OF OPERATIONS, 

SEPTEMBER 11, 1933, THROUGH DECEMBER 31, 2014 (continued)

Dollars in Millions

Income Expenses and Losses

Year Total

Assessment 

Income

Assessment 

Credits

Investment 

and Other

Effective

Assessment 

Rate1 Total

Provision 

for 

Ins. Losses

Admin.

and 

Operating 

Expenses2

Interest

& Other Ins. 

Expenses

Funding 

Transfer

from the 

FSLIC 

Resolution 

Fund

Net 

Income/

(Loss)

1980 1,310.4 951.9 521.1 879.6 0.0370 83.6 (38.1) 118.2 3.5 0 1,226.8 

1979 1,090.4 881.0 524.6 734.0 0.0333 93.7 (17.2) 106.8 4.1 0 996.7 

1978 952.1 810.1 443.1 585.1 0.0385 148.9 36.5 103.3 9.1 0 803.2 

1977 837.8 731.3 411.9 518.4 0.0370 113.6 20.8 89.3 3.5 0 724.2 

1976 764.9 676.1 379.6 468.4 0.0370 212.3 28.0 180.44 3.9 0 552.6 

1975 689.3 641.3 362.4 410.4 0.0357 97.5 27.6 67.7 2.2 0 591.8 

1974 668.1 587.4 285.4 366.1 0.0435 159.2 97.9 59.2 2.1 0 508.9 

1973 561.0 529.4 283.4 315.0 0.0385 108.2 52.5 54.4 1.3 0 452.8 

1972 467.0 468.8 280.3 278.5 0.0333 65.7 10.1 49.6 6.05 0 401.3 

1971 415.3 417.2 241.4 239.5 0.0345 60.3 13.4 46.9 0.0 0 355.0 

1970 382.7 369.3 210.0 223.4 0.0357 46.0 3.8 42.2 0.0 0 336.7 

1969 335.8 364.2 220.2 191.8 0.0333 34.5 1.0 33.5 0.0 0 301.3 

1968 295.0 334.5 202.1 162.6 0.0333 29.1 0.1 29.0 0.0 0 265.9 

1967 263.0 303.1 182.4 142.3 0.0333 27.3 2.9 24.4 0.0 0 235.7 

1966 241.0 284.3 172.6 129.3 0.0323 19.9 0.1 19.8 0.0 0 221.1 

1965 214.6 260.5 158.3 112.4 0.0323 22.9 5.2 17.7 0.0 0 191.7 

1964 197.1 238.2 145.2 104.1 0.0323 18.4 2.9 15.5 0.0 0 178.7 

1963 181.9 220.6 136.4 97.7 0.0313 15.1 0.7 14.4 0.0 0 166.8 

1962 161.1 203.4 126.9 84.6 0.0313 13.8 0.1 13.7 0.0 0 147.3 

1961 147.3 188.9 115.5 73.9 0.0323 14.8 1.6 13.2 0.0 0 132.5 

1960 144.6 180.4 100.8 65.0 0.0370 12.5 0.1 12.4 0.0 0 132.1 

1959 136.5 178.2 99.6 57.9 0.0370 12.1 0.2 11.9 0.0 0 124.4 

1958 126.8 166.8 93.0 53.0 0.0370 11.6 0.0 11.6 0.0 0 115.2 

1957 117.3 159.3 90.2 48.2 0.0357 9.7 0.1 9.6 0.0 0 107.6 

1956 111.9 155.5 87.3 43.7 0.0370 9.4 0.3 9.1 0.0 0 102.5 

1955 105.8 151.5 85.4 39.7 0.0370 9.0 0.3 8.7 0.0 0 96.8 

1954 99.7 144.2 81.8 37.3 0.0357 7.8 0.1 7.7 0.0 0 91.9 

1953 94.2 138.7 78.5 34.0 0.0357 7.3 0.1 7.2 0.0 0 86.9 

1952 88.6 131.0 73.7 31.3 0.0370 7.8 0.8 7.0 0.0 0 80.8 

1951 83.5 124.3 70.0 29.2 0.0370 6.6 0.0 6.6 0.0 0 76.9 

1950 84.8 122.9 68.7 30.6 0.0370 7.8 1.4 6.4 0.0 0 77.0 

1949 151.1 122.7 0.0 28.4 0.0833 6.4 0.3 6.1 0.0 0 144.7 

1948 145.6 119.3 0.0 26.3 0.0833 7.0 0.7 6.36 0.0 0 138.6 

1947 157.5 114.4 0.0 43.1 0.0833 9.9 0.1 9.8 0.0 0 147.6 

1946 130.7 107.0 0.0 23.7 0.0833 10.0 0.1 9.9 0.0 0 120.7 
APPENDICES 121

INCOME AND EXPENSES, DEPOSIT INSURANCE FUND, FROM BEGINNING OF OPERATIONS, 

SEPTEMBER 11, 1933, THROUGH DECEMBER 31, 2014 (continued)

Dollars in Millions

Income Expenses and Losses

Year Total

Assessment 

Income

Assessment 

Credits

Investment 

and Other

Effective

Assessment 

Rate1 Total

Provision 

for 

Ins. Losses

Admin.

and 

Operating 

Expenses2

Interest

& Other Ins. 

Expenses

Funding 

Transfer

from the 

FSLIC 

Resolution 

Fund

Net 

Income/

(Loss)

1945 121.0 93.7 0.0 27.3 0.0833 9.4 0.1 9.3 0.0 0 111.6 

1944 99.3 80.9 0.0 18.4 0.0833 9.3 0.1 9.2 0.0 0 90.0 

1943 86.6 70.0 0.0 16.6 0.0833 9.8 0.2 9.6 0.0 0 76.8 

1942 69.1 56.5 0.0 12.6 0.0833 10.1 0.5 9.6 0.0 0 59.0 

1941 62.0 51.4 0.0 10.6 0.0833 10.1 0.6 9.5 0.0 0 51.9 

1940 55.9 46.2 0.0 9.7 0.0833 12.9 3.5 9.4 0.0 0 43.0 

1939 51.2 40.7 0.0 10.5 0.0833 16.4 7.2 9.2 0.0 0 34.8 

1938 47.7 38.3 0.0 9.4 0.0833 11.3 2.5 8.8 0.0 0 36.4 

1937 48.2 38.8 0.0 9.4 0.0833 12.2 3.7 8.5 0.0 0 36.0 

1936 43.8 35.6 0.0 8.2 0.0833 10.9 2.6 8.3 0.0 0 32.9 

1935 20.8 11.5 0.0 9.3 0.0833 11.3 2.8 8.5 0.0 0 9.5 

1933-34 7.0 0.0 0.0 7.0 N/A 10.0 0.2 9.8 0.0 0 (3.0)

1

 Figures represent only BIF-insured institutions prior to 1990, BIF- and SAIF-insured institutions from 1990 through 2005, and DIF-insured institutions 

beginning in 2006. After 1995, all thrift closings became the responsibility of the FDIC and amounts are reflected in the SAIF. The effective 

assessment rate is calculated from annual assessment income (net of assessment credits), excluding transfers to the Financing Corporation (FICO), 

Resolution Funding Corporation (REFCORP) and FSLIC Resolution Fund, divided by the four quarter average assessment base. The effective 

rates from 1950 through 1984 varied from the statutory rate of 0.0833 percent due to assessment credits provided in those years. The statutory 

rate increased to 0.12 percent in 1990 and to a minimum of 0.15 percent in 1991. The effective rates in 1991 and 1992 varied because the FDIC 

exercised new authority to increase assessments above the statutory minimum rate when needed. Beginning in 1993, the effective rate was based 

on a risk-related premium system under which institutions paid assessments in the range of 0.23 percent to 0.31 percent. In May 1995, the BIF 

reached the mandatory recapitalization level of 1.25 percent. As a result, BIF assessment rates were reduced to a range of 0.04 percent to 0.31 

percent of assessable deposits, effective June 1995, and assessments totaling $1.5 billion were refunded in September 1995. Assessment rates for 

the BIF were lowered again to a range of 0 to 0.27 percent of assessable deposits, effective the start of 1996. In 1996, the SAIF collected a onetime special assessment of $4.5 billion. Subsequently, assessment rates for the SAIF were lowered to the same range as the BIF, effective October 

1996. This range of rates remained unchanged for both funds through 2006. As part of the implementation of the Federal Deposit Insurance 

Reform Act of 2005, assessment rates were increased to a range of 0.05 percent to 0.43 percent of assessable deposits effective at the start of 

2007, but many institutions received a one-time assessment credit ($4.7 billion in total) to offset the new assessments. For the first quarter of 2009, 

assessment rates were increased to a range of 0.12 to 0.50 percent of assessable deposits. On June 30, 2009, a special assessment was imposed 

on all insured banks and thrifts, which amounted in aggregate to approximately $5.4 billion. For 8,106 institutions, with $9.3 trillion in assets, the 

special assessment was 5 basis points of each institution’s assets minus tier one capital; 89 other institutions, with assets of $4.0 trillion, had their 

special assessment capped at 10 basis points of their second quarter assessment base. From the second quarter of 2009 through the first quarter 

of 2011, initial assessment rates ranged between 0.12 and 0.45 percent of assessable deposits. Initial rates are subject to further adjustments. 

Beginning in the second quarter of 2011, the assessment base changed to average total consolidated assets less average tangible equity (with 

certain adjustments for banker’s banks and custodial banks), as required by the Dodd-Frank Act. The FDIC implemented a new assessment rate 

schedule at the same time to conform to the larger assessment base. Initial assessment rates were lowered to a range of 0.05 to 0.35 percent of the 

new base. The annualized assessment rates averaged approximately 17.6 cents per $100 of assessable deposits for the first quarter of 2011 and 

11.1 cents per $100 of the new base for the last three quarters of 2011 (which is the figure shown in the table).

2

 These expenses, which are presented as operating expenses in the Statement of Income and Fund Balance, pertain to the FDIC in its corporate 

capacity only and do not include costs that are charged to the failed bank receiverships that are managed by the FDIC. The receivership expenses 

are presented as part of the “Receivables from Resolutions, net” line on the Balance Sheet. The narrative and graph presented on pages 69-70 of 

this report shows the aggregate (corporate and receivership) expenditures of the FDIC.

3

 Includes $210 million for the cumulative effect of an accounting change for certain postretirement benefits. (1992)

4

 Includes a $106 million net loss on government securities. (1976)

5

 This amount represents interest and other insurance expenses from 1933 to 1972.

6

 Includes the aggregate amount of $81 million of interest paid on capital stock between 1933 and 1948.
ANNUAL REPORT 2014

122 APPENDICES

FDIC INSURED INSTITUTIONS CLOSED DURING 2014

Dollars in Thousands

Codes for Bank Class:

NM = State-chartered bank that is not a member 

of the Federal Reserve System

N = National Bank

SB = Savings Bank

SI = Stock and Mutual 

Savings Bank

SM = State-chartered bank that is a 

member of the Federal Reserve 

System

SA = Savings Association

Name and Location

Bank 

Class

Number

of 

Deposit 

Accounts

Total 

Assets1

Total 

Deposits1

Insured 

Deposit Funding 

and Other 

Disbursements

Estimated 

Loss to 

the DIF2

Date of 

Closing 

or 

Acquisition

Receiver/Assuming 

Bank and Location

Purchase and Assumption - All Deposits

The Bank of Union

El Reno, OK

NM 7,262 $317,172 $315,843 $313,049 $103,089 01/24/14 BancFirst

Oklahoma City, OK

Slavie Federal 

Savings Bank

Bel Air, MD

SA 4,202 $140,063 $111,142 $113,264 $6,608 05/30/14 Bay Bank, FSB

Lutherville, MD

Valley Bank

Ft. Lauderdale, FL

NM 1,676 $81,843 $66,541 $65,857 $7,722 06/20/14 Landmark Bank, NA

Ft. Lauderdale, FL

Valley Bank

Moline, IL

NM 25,104 $456,442 $359,953 $371,088 $51,444 06/20/14 Great Southern 

Bank

Reeds Spring, MO

The Freedom State 

Bank

Freedom, OK

NM 1,262 $22,816 $20,855 $20,253 $5,781 06/27/14 Alva State Bank and 

Trust Company

Alva, OK

NBRS Financial

Rising Sun, MD

SM 11,930 $155,353 $151,559 $145,048 $24,289 10/17/14 Howard Bank

Ellicott City, MD

National Republic 

Bank of Chicago

Chicago, IL

N 5,666 $843,118 $809,638 $796,600 $111,641 10/24/14 State Bank of Texas

Dallas, TX

Whole Bank Purchase and Assumption - All Deposits

DuPage National 

Bank

West Chicago, IL

N 3,609 $53,524 $51,878 $54,223 $2,242 01/17/14 Republic Bank of 

Chicago

Oak Brook, IL

Syringa Bank

Boise, ID

NM 7,334 $153,361 $145,813 $142,461 $4,757 01/31/14 Sunwest Bank

Irvine, CA

Millennium Bank, 

National Association

Sterling, VA

N 3,038 $130,305 $121,704 $124,004 $10,107 02/28/14 WashingtonFirst 

Bank

Reston, VA

Vantage Point Bank

Horsham, PA

NM 1,722 $63,453 $62,472 $60,536 $11,099 02/28/14 First Choice Bank

Mercerville, NJ

Allendale County 

Bank

Fairfax, SC

NM 3,061 $49,498 $49,356 $49,992 $18,104 04/25/14 Palmetto State Bank

Hampton, SC

AztecAmerica Bank

Berwyn, IL

NM 1,008 $66,309 $65,031 $65,569 $17,999 05/16/14 Republic Bank of 

Chicago

Oak Brook, IL

Columbia Savings 

Bank

Cincinnati, OH

SB 1,782 $36,484 $29,538 $25,877 $5,255 05/23/14 United Fidelity 

Bank, FSB

Evansville, IN
APPENDICES 123

FDIC INSURED INSTITUTIONS CLOSED DURING 2014 (continued)

Dollars in Thousands

Codes for Bank Class:

NM = State-chartered bank that is not a member 

of the Federal Reserve System

N = National Bank

SB = Savings Bank

SI = Stock and Mutual 

Savings Bank

SM = State-chartered bank that is a 

member of the Federal Reserve 

System

SA = Savings Association

Name and Location

Bank 

Class

Number

of 

Deposit 

Accounts

Total 

Assets1

Total 

Deposits1

Insured 

Deposit Funding 

and Other 

Disbursements

Estimated 

Loss to 

the DIF2

Date of 

Closing 

or 

Acquisition

Receiver/Assuming 

Bank and Location

Eastside Commerical 

Bank

Conyers, GA

NM 3,599 $173,946 $166,875 $160,301 $33,911 07/18/14 Community and 

Southern Bank

Atlanta, GA

GreenChoice Bank, 

FSB

Chicago, IL

SA 2,988 $70,286 $68,722 $67,826 $14,222 07/25/14 Providence Bank, 

LLC

South Holland, IL

Frontier Bank, FSB

Palm Desert, CA

SA 3,518 $80,736 $76,344 $75,321 $4,709 11/07/14 Bank of Southern 

California, N.A.

San Diego, CA

Northern Star Bank

Mankato, MN

NM 1,157 $18,794 $18,221 $17,860 $5,947 12/19/14 BankVista

Sartell, MN

1

 Total Assets and Total Deposits data are based upon the last Call Report filed by the institution prior to failure.

2

 Estimated losses are as of December 31, 2014. Estimated losses are routinely adjusted with updated information from new appraisals and 

asset sales, which ultimately affect the asset values and projected recoveries. Represents the estimated loss to the DIF from deposit insurance 

obligations.
ANNUAL REPORT 2014

124 APPENDICES

RECOVERIES AND LOSSES BY THE DEPOSIT INSURANCE FUND ON DISBURSEMENTS 

FOR THE PROTECTION OF DEPOSITORS, 1934 - 2014

Dollars in Thousands

Bank and Thrift Failures1

Year2

Number 

of Banks/

Thrifts

Total 

Assets3

Total 

Deposits3

Insured Deposit 

Funding 

and Other 

Disbursements Recoveries

Estimated 

Additional 

Recoveries

Estimated 

Losses

Total 2,602 $934,578,455 $703,412,460 $576,987,772 $403,272,546 $64,093,522 $109,508,794 

2014 18 2,913,503 2,691,485 2,669,129 31,298 2,198,905 438,926 

2013 24 6,044,051 5,132,246 5,010,841 48,542 3,627,828 1,334,471 

2012 51 11,617,348 11,009,630 11,017,896 1,514,509 6,827,536 2,675,851 

2011 92 34,922,997 31,071,862 30,675,465 2,598,550 20,888,383 7,075,622 

20104 157 92,084,988 78,290,185 82,239,795 52,108,227 12,650,307 17,481,261 

20094 140 169,709,160 137,835,121 135,976,290 90,569,874 16,301,294 29,105,122 

20084 25 371,945,480 234,321,715 205,519,425 184,056,434 3,156,855 18,306,136 

2007 3 2,614,928 2,424,187 1,919,899 1,384,368 373,730 161,801 

2006 0 0 0 0 0 0 0 

2005 0 0 0 0 0 0 0 

2004 4 170,099 156,733 139,006 134,978 111 3,917 

2003 3 947,317 901,978 883,772 812,933 8,192 62,647 

2002 11 2,872,720 2,512,834 1,567,637 1,705,792 (552,072) 413,917 

2001 4 1,821,760 1,661,214 21,131 1,138,677 (1,410,011) 292,465 

2000 7 410,160 342,584 297,313 265,175 0 32,138 

1999 8 1,592,189 1,320,573 1,307,724 711,758 5,649 590,317 

1998 3 290,238 260,675 292,731 58,248 11,433 223,050 

1997 1 27,923 27,511 25,546 20,520 0 5,026 

1996 6 232,634 230,390 201,533 140,918 0 60,615 

1995 6 802,124 776,387 609,043 524,571 0 84,472 

1994 13 1,463,874 1,397,018 1,224,769 1,045,718 0 179,051 

1993 41 3,828,939 3,509,341 3,841,658 3,209,012 0 632,646 

1992 120 45,357,237 39,921,310 14,541,386 10,866,760 613 3,674,013 

1991 124 64,556,512 52,972,034 21,499,781 15,496,730 4,769 5,998,282 

1990 168 16,923,462 15,124,454 10,812,484 8,040,995 0 2,771,489

1989 206 28,930,572 24,152,468 11,443,281 5,247,995 0 6,195,286 

1988 200 38,402,475 26,524,014 10,432,655 5,055,158 0 5,377,497 

1987 184 6,928,889 6,599,180 4,876,994 3,014,502 0 1,862,492 

1986 138 7,356,544 6,638,903 4,632,121 2,949,583 0 1,682,538 

1985 116 3,090,897 2,889,801 2,154,955 1,506,776 0 648,179 

1984 78 2,962,179 2,665,797 2,165,036 1,641,157 0 523,879 

1983 44 3,580,132 2,832,184 3,042,392 1,973,037 0 1,069,355 

1982 32 1,213,316 1,056,483 545,612 419,825 0 125,787 

1981 7 108,749 100,154 114,944 105,956 0 8,988 

1980 10 239,316 219,890 152,355 121,675 0 30,680 

1934 - 1979 558 8,615,743 5,842,119 5,133,173 4,752,295 0 380,878 
APPENDICES 125

RECOVERIES AND LOSSES BY THE DEPOSIT INSURANCE FUND ON DISBURSEMENTS 

FOR THE PROTECTION OF DEPOSITORS, 1934 - 2014 (continued)

Dollars in Thousands

Assistance Transactions

Year2

Number 

of Banks/

Thrifts

Total 

Assets3

Total 

Deposits3

Insured Deposit 

Funding 

and Other 

Disbursements Recoveries

Estimated 

Additional 

Recoveries

Estimated 

Losses

Total 154 $3,317,099,253 $1,442,173,417 $11,630,356 $6,199,875 $0 $5,430,481 

2014 0 0 0 0 0 0 0

2013 0 0 0 0 0 0 0 

2012 0 0 0 0 0 0 0 

2011 0 0 0 0 0 0 0 

2010 0 0 0 0 0 0 0 

20095 8 1,917,482,183 1,090,318,282 0 0 0 0 

20085 5 1,306,041,994 280,806,966 0 0 0 0 

2007 0 0 0 0 0 0 0 

2006 0 0 0 0 0 0 0 

2005 0 0 0 0 0 0 0 

2004 0 0 0 0 0 0 0 

2003 0 0 0 0 0 0 0 

2002 0 0 0 0 0 0 0 

2001 0 0 0 0 0 0 0 

2000 0 0 0 0 0 0 0 

1999 0 0 0 0 0 0 0 

1998 0 0 0 0 0 0 0 

1997 0 0 0 0 0 0 0 

1996 0 0 0 0 0 0 0 

1995 0 0 0 0 0 0 0 

1994 0 0 0 0 0 0 0 

1993 0 0 0 0 0 0 0 

1992 2 33,831 33,117 1,486 1,236 0 250 

1991 3 78,524 75,720 6,117 3,093 0 3,024 

1990 1 14,206 14,628 4,935 2,597 0 2,338 

1989 1 4,438 6,396 2,548 252 0 2,296 

1988 80 15,493,939 11,793,702 1,730,351 189,709 0 1,540,642 

1987 19 2,478,124 2,275,642 160,877 713 0 160,164 

1986 7 712,558 585,248 158,848 65,669 0 93,179 

1985 4 5,886,381 5,580,359 765,732 406,676 0 359,056 

1984 2 40,470,332 29,088,247 5,531,179 4,414,904 0 1,116,275 

1983 4 3,611,549 3,011,406 764,690 427,007 0 337,683 
ANNUAL REPORT 2014

126 APPENDICES

RECOVERIES AND LOSSES BY THE DEPOSIT INSURANCE FUND ON DISBURSEMENTS 

FOR THE PROTECTION OF DEPOSITORS, 1934 - 2014 (continued)

Dollars in Thousands

Assistance Transactions

Year2

Number 

of Banks/

Thrifts

Total 

Assets3

Total 

Deposits3

Insured Deposit 

Funding 

and Other 

Disbursements Recoveries

Estimated 

Additional 

Recoveries

Estimated 

Losses

1982 10 10,509,286 9,118,382 1,729,538 686,754 0 1,042,784 

1981 3 4,838,612 3,914,268 774,055 1,265 0 772,790 

1980 1 7,953,042 5,001,755 0 0 0 0 

1934 - 1979 4 1,490,254 549,299 0 0 0 0

1

 Institutions for which the FDIC is appointed receiver, including deposit payoff, insured deposit transfer, and deposit assumption cases.

2

 For 1990 through 2005, amounts represent the sum of BIF and SAIF failures (excluding those handled by the RTC); prior to 1990, figures are only for 

the BIF. After 1995, all thrift closings became the responsibility of the FDIC and amounts are reflected in the SAIF. For 2006 to 2014, figures are for 

the DIF.

3

 Assets and deposit data are based on the last Call Report or TFR filed before failure.

4

 Includes amounts related to transaction account coverage under the Transaction Account Guarantee Program (TAG). The estimated losses as of 

December 31, 2014, for TAG accounts in 2010, 2009, and 2008 are $406 million, $1,197 million, and $13 million, respectively.

5

 Includes institutions where assistance was provided under a systemic risk determination. Any costs that exceed the amounts estimated under the 

least cost resolution requirement would be recovered through a special assessment on all FDIC-insured institutions.
APPENDICES 127

NUMBER, ASSETS, DEPOSITS, LOSSES, AND LOSS TO FUNDS OF INSURED THRIFTS 

TAKEN OVER OR CLOSED BECAUSE OF FINANCIAL DIFFICULTIES, 1989 THROUGH 19951

Dollars in Thousands

Year

Number 

of 

Thrifts Assets Deposits

Estimated 

Receivership 

Loss2

Loss to 

Funds3

Total 748 $393,986,574 $318,328,770 $75,977,846 $81,581,089 

1995 2 423,819 414,692 28,192 27,750 

1994 2 136,815 127,508 11,472 14,599 

1993 10 6,147,962 5,708,253 267,595 65,212 

1992 59 44,196,946 34,773,224 3,286,908 3,832,145

1991 144 78,898,904 65,173,122 9,235,967 9,734,263

1990 213 129,662,498 98,963,962 16,062,685 19,257,578

19894 318 134,519,630 113,168,009 47,085,027 48,649,542

1

 Beginning in 1989 through July 1, 1995, all thrift closings were the responsibility of the Resolution Trust Corporation (RTC). Since the RTC was 

terminated on December 31, 1995, and all assets and liabilities transferred to the FSLIC Resolution Fund (FRF), all the results of the thrift closing 

activity from 1989 through 1995 are now reflected on FRF’s books. Year is the year of failure, not the year of resolution.

2

 The estimated losses represent the projected loss at the fund level from receiverships for unreimbursed subrogated claims of the FRF and unpaid 

advances to receiverships from the FRF.

3

 The Loss to Funds represents the total resolution cost of the failed thrifts in the FRF-RTC fund, which includes corporate revenue and expense items 

such as interest expense on Federal Financing Bank debt, interest expense on escrowed funds, and interest revenue on advances to receiverships, 

in addition to the estimated losses for receiverships.

4

 Total for 1989 excludes nine failures of the former FSLIC.
ANNUAL REPORT 2014

128 APPENDICES

B. MORE ABOUT THE FDIC

FDIC BOARD OF DIRECTORS

Seated (left to right): Thomas M. Hoenig, Martin J. Gruenberg, Jeremiah O. Norton 

Standing (left to right): Thomas J. Curry, Richard Cordray

Martin J. Gruenberg 

Martin J. Gruenberg is the 20th Chairman of the FDIC, 

receiving Senate confirmation on November 15, 2012, for 

a five-year term. Mr. Gruenberg served as Vice Chairman 

and Member of the FDIC Board of Directors from August 

22, 2005, until his confirmation as Chairman. He served as 

Acting Chairman from July 9, 2011, to November 15, 2012, 

and also from November 16, 2005, to June 26, 2006.

Mr. Gruenberg joined the FDIC Board after broad 

congressional experience in the financial services and 

regulatory areas. He served as Senior Counsel to Senator 

Paul S. Sarbanes (D-MD) on the staff of the Senate 

Committee on Banking, Housing, and Urban Affairs from 

1993 to 2005. Mr. Gruenberg advised the Senator on issues 

of domestic and international financial regulation, monetary 

policy, and trade. He also served as Staff Director of the 

Banking Committee’s Subcommittee on International 

Finance and Monetary Policy from 1987 to 1992. Major 

legislation in which Mr. Gruenberg played an active role 

during his service on the Committee includes the Financial 

Institutions Reform, Recovery, and Enforcement Act of 

1989 (FIRREA); the Federal Deposit Insurance Corporation 

Improvement Act of 1991 (FDICIA); the Gramm-LeachBliley Act; and the Sarbanes-Oxley Act of 2002.

Mr. Gruenberg served as Chairman of the Executive Council 

and President of the International Association of Deposit 

Insurers (IADI) from November 2007 to November 2012.
APPENDICES 129

Mr. Gruenberg holds a J.D. from Case Western Reserve Law 

School and an A.B. from Princeton University, Woodrow 

Wilson School of Public and International Affairs. 

Thomas M. Hoenig

Thomas M. Hoenig was confirmed by the Senate as Vice 

Chairman of the FDIC on November 15, 2012. He joined 

the FDIC on April 16, 2012, as a member of the Board 

of Directors of the FDIC for a six-year term. He is also 

a member of the Executive Board of the International 

Association of Deposit Insurers.

Prior to serving on the FDIC Board, Mr. Hoenig was the 

President of the Federal Reserve Bank of Kansas City and 

a member of the Federal Reserve System’s Federal Open 

Market Committee from 1991 to 2011.

Mr. Hoenig was with the Federal Reserve for 38 years, 

beginning as an economist, and then as a senior officer in 

banking supervision during the U.S. banking crisis of the 

1980s. In 1986, he led the Kansas City Federal Reserve 

Bank’s Division of Bank Supervision and Structure, 

directing the oversight of more than 1,000 banks and bank 

holding companies with assets ranging from less than $100 

million to $20 billion. He became President of the Kansas 

City Federal Reserve Bank on October 1, 1991.

Mr. Hoenig is a native of Fort Madison, Iowa, and received a 

doctorate in economics from Iowa State University.

Jeremiah O. Norton

Jeremiah O. Norton was sworn in on April 16, 2012, as a 

member of the FDIC Board of Directors.

Prior to joining the FDIC’s Board, Mr. Norton was an 

Executive Director at J.P. Morgan Securities LLC, in New 

York, New York.

Mr. Norton was in government for a number of years 

before joining the FDIC Board, most recently as the Deputy 

Assistant Secretary for Financial Institutions Policy at 

the U.S. Treasury Department. Mr. Norton also was a 

Legislative Assistant and professional staff member for U.S. 

Representative Edward R. Royce.

Mr. Norton received a J.D. from the Georgetown University 

Law Center and an A.B. in economics from Duke University.

Thomas J. Curry

Thomas J. Curry was sworn in as the 30th Comptroller of 

the Currency on April 9, 2012.

The Comptroller of the Currency is the administrator of 

national banks and federal savings associations, and chief 

officer of the Office of the Comptroller of the Currency 

(OCC). The OCC supervises approximately 1,700 national 

banks and federal savings associations and about 50 federal 

branches and agencies of foreign banks in the United States. 

These institutions comprise nearly two-thirds of the assets 

of the commercial banking system. The Comptroller also is 

a Director of NeighborWorks® America.

On April 1, 2013, Mr. Curry was named Chairman of the 

Federal Financial Institutions Examination Council (FFIEC) 

for a two-year term. Comptroller Curry is the 21st FFIEC 

Chairman.

Prior to becoming Comptroller of the Currency, Mr. Curry 

served as a Director of the FDIC Board since January 2004, 

and as the Chairman of the NeighborWorks® America 

Board of Directors. 

Prior to joining the FDIC’s Board of Directors, Mr. 

Curry served five Massachusetts Governors as the 

Commonwealth’s Commissioner of Banks from 1990 to 1991 

and from 1995 to 2003. He served as Acting Commissioner 

from February 1994 to June 1995. He previously served 

as First Deputy Commissioner and Assistant General 

Counsel within the Massachusetts Division of Banks. He 

entered state government in 1982 as an attorney with the 

Massachusetts’ Secretary of State’s Office.

Mr. Curry served as the Chairman of the Conference of State 

Bank Supervisors from 2000 to 2001, and served two terms 

on the State Liaison Committee of the Federal Financial 

Institutions Examination Council, including a term as 

Committee Chairman.

He is a graduate of Manhattan College (summa cum laude), 

where he was elected to Phi Beta Kappa. He received his 

law degree from the New England School of Law. 
ANNUAL REPORT 2014

130 APPENDICES

Richard Cordray 

Richard Cordray serves as the first Director of the 

Consumer Financial Protection Bureau. He previously led 

the Bureau’s Enforcement Division.

Prior to joining the Bureau, Mr. Cordray served on the 

front lines of consumer protection as Ohio’s Attorney 

General. Mr. Cordray recovered more than $2 billion for 

Ohio’s retirees, investors, and business owners, and took 

major steps to help protect its consumers from fraudulent 

foreclosures and financial predators. In 2010, his office 

responded to a record number of consumer complaints, but 

Mr. Cordray went further and opened that process for the 

first time to small businesses and nonprofit organizations 

to ensure protections for even more Ohioans. To recognize 

his work on behalf of consumers as Attorney General, the 

Better Business Bureau presented Mr. Cordray with an 

award for promoting an ethical marketplace.

Mr. Cordray also served as Ohio Treasurer and Franklin 

County Treasurer, two elected positions in which he led 

state and county banking, investment, debt, and financing 

activities. As Ohio Treasurer, he resurrected a defunct 

economic development program that provides low-interest 

loan assistance to small businesses to create jobs, 

re-launched the original concept as GrowNOW, and pumped 

hundreds of millions of dollars into access for credit to 

small businesses. Mr. Cordray simultaneously created a 

Bankers Advisory Council to share ideas about the program 

with community bankers across Ohio.

Earlier in his career, Mr. Cordray was an adjunct professor 

at the Ohio State University College of Law, served as a 

State Representative for the 33rd Ohio House District, was 

the first Solicitor General in Ohio’s history, and was a sole 

practitioner and Counsel to Kirkland & Ellis. Mr. Cordray 

has argued seven cases before the United States Supreme 

Court, by special appointment of both the Clinton and 

Bush Justice Departments. He is a graduate of Michigan 

State University, Oxford University, and the University of 

Chicago Law School. Mr. Cordray was Editor-in-Chief of the 

University of Chicago Law Review and later clerked for U.S. 

Supreme Court Justices Byron White and Anthony Kennedy.

Mr. Cordray lives in Grove City, Ohio, with his wife 

Peggy—a Professor at Capital University Law School in 

Columbus—and twin children Danny and Holly.
APPENDICES 131

FDIC ORGANIZATION CHART/OFFICIALS

BOARD OF DIRECTORS

Martin J. Gruenberg

FDIC

Chairman

Jeremiah O. Norton

FDIC

Board Member

Thomas M. Hoenig

FDIC

Vice Chairman, Board Member

Thomas J. Curry

OCC

Board Member

Richard Cordray

CFPB

Board Member

DEPUTY TO THE CHAIRMAN 

AND CHIEF OPERATING OFFICER,

CHIEF OF STAFF

Barbara A. Ryan

DEPUTY TO THE CHAIRMAN 

AND CHIEF FINANCIAL OFFICER

Steven O. App

SENIOR ADVISOR

INTERNATIONAL 

RESOLUTION POLICY

David S. Hoelscher

OFFICE OF 

COMMUNICATIONS

CHIEF RISK OFFICER

Stephen A. Quick

SPECIAL ADVISOR FOR

SUPERVISORY MATTERS

Jason C. Cave

OFFICE OF MINORITY AND 

WOMEN INCLUSION

Segundo Pereira

 Director

OFFICE OF FINANCIAL 

INSTITUTION ADJUDICATION

C. Richard Miserendino

Administrative Law Judge

OFFICE OF 

LEGISLATIVE AFFAIRS

Eric J. Spitler

Director

OFFICE OF 

THE OMBUDSMAN

Cottrell L. Webster

Ombudsman

OFFICE OF INSPECTOR GENERAL

Fred W. Gibson

Acting Inspector General

DEPUTY TO THE CHAIRMAN

FOR COMMUNICATIONS

Barbara Hagenbaugh

DEPUTY TO THE CHAIRMAN

Kymberly K. Copa

DIVISION OF INFORMATION 

TECHOLOGY

CHIEF INFORMATION OFFICER 

AND CHIEF PRIVACY OFFICER

Barry C. West

DIVISION OF RESOLUTION 

AND RECEIVERSHIPS

Bret D. Edwards

Director

LEGAL DIVISION

Richard J. Osterman, Jr.

Acting General Counsel

DIVISION OF INSURANCE 

AND RESEARCH

Diane Ellis

Director

DIVISION OF DEPOSITOR 

AND CONSUMER PROTECTION

Mark E. Pearce

Director

OFFICE OF COMPLEX

FINANCIAL INSTITUTIONS

Arthur J. Murton

Director

DIVISION OF RISK 

MANAGEMENT SUPERVISION

Doreen R. Eberley

Director

DIVISION OF 

ADMINISTRATION

Arleas Upton Kea

Director

DIVISION OF FINANCE

Craig R. Jarvill

Director

Russell G. Pittman

Director

INFORMATION SECURITY

AND PRIVACY STAFF

Christopher J. Farrow

Chief Information 

Security Officer

CORPORATE UNIVERSITY

Suzannah L. Susser

Director

INTERNAL OMBUDSMAN

Robert D. Harris

WRITER-EDITOR

Michele A. Heller
ANNUAL REPORT 2014

132 APPENDICES

CORPORATE STAFFING 

STAFFING TRENDS 2005-2014

Note: 2008-2014 staffing totals reflect year-end full time equivalent staff. Prior to 2008, staffing totals reflect total employees on-board. 

4,514 4,476 4,532 4,988 6,557 8,150 7,973 7,476

FDIC Year–End Staffing

7,254 6,631

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

9,000

6,000

3,000

0
APPENDICES 133

NUMBER OF EMPLOYEES BY DIVISION/OFFICE 2013 – 20141

Total Washington Regional/Field

Division or Office: 2014 2013 2014 2013 2014 2013

Division of Risk Management Supervision 2,704 2,814 205 207 2,500 2,608

Division of Depositor and Consumer Protection 853 858 128 126 725 732

Division of Resolutions and Receiverships 884 1,284 159 166 725 1,118

Legal Division 601 678 375 388 226 290

Division of Administration 372 396 245 247 127 149

Division of Information Technology 324 340 254 264 70 76

Corporate University 205 195 196 184 9 11

Division of Insurance and Research2 196 187 154 143 42 44

Division of Finance 170 176 168 174 2 2

Office of Inspector General 115 117 73 75 42 42

Office of Complex Financial Institutions 68 74 59 62 9 12

Information Security and Privacy Staff 33 29 33 29 0 0

Executive Offices2 23 20 23 20 0 0

Executive Support Offices3 85 88 76 78 9 10

Total 6,631 7,254 2,147 2,161 4,485 5,093

1

 The FDIC reports staffing totals using a full-time equivalent (FTE) methodology, which is based on an employee’s scheduled work hours. Division/

Office staffing has been rounded to the nearest whole FTE. Totals may not foot due to rounding.

2

 Includes the Offices of the Chairman, Vice Chairman, Director (Appointive), Chief Operating Officer, Chief Financial Officer, and Chief Information 

Officer. 

3

 Includes the Offices of Legislative Affairs, Communications, Ombudsman, Minority and Women Inclusion, and Corporate Risk Management.
ANNUAL REPORT 2014

134 APPENDICES

SOURCES OF INFORMATION

FDIC Website

www.fdic.gov

A wide range of banking, consumer, and financial 

information is available on the FDICʼs Website. This 

includes the FDICʼs Electronic Deposit Insurance Estimator 

(EDIE), which estimates an individual’s deposit insurance 

coverage; the Institution Directory, which contains 

financial profiles of FDIC-insured institutions; Community 

Reinvestment Act evaluations and ratings for institutions 

supervised by the FDIC; Call Reports, which are banksʼ 

reports of condition and income; and Money Smart, a 

training program to help individuals outside the financial 

mainstream enhance their money management skills 

and create positive banking relationships. Readers also 

can access a variety of consumer pamphlets, FDIC press 

releases, speeches, and other updates on the agencyʼs 

activities, as well as corporate databases and customized 

reports of FDIC and banking industry information. 

FDIC Call Center

Phone: 877-275-3342 (877-ASK-FDIC) 

703-562-2222

Hearing Impaired: 800-925-4618 

 703-562-2289

The FDIC Call Center in Washington, DC, is the primary 

telephone point of contact for general questions from the 

banking community, the public, and FDIC employees. The 

Call Center directly, or with other FDIC subject-matter 

experts, responds to questions about deposit insurance and 

other consumer issues and concerns, as well as questions 

about FDIC programs and activities. The Call Center also 

refers callers to other federal and state agencies as needed. 

Hours of operation are 8:00 a.m. to 8:00 p.m., Eastern Time, 

Monday – Friday, and 9:00 a.m. to 5:00 p.m., Saturday – 

Sunday. Recorded information about deposit insurance 

and other topics is available 24 hours a day at the same 

telephone number.

As a customer service, the FDIC Call Center has many 

bilingual Spanish agents on staff and has access to a 

translation service, which is able to assist with over 40 

different languages.

Public Information Center 

3501 Fairfax Drive

Room E-1021

Arlington, VA 22226

Phone: 877-275-3342 (877-ASK-FDIC),

703-562-2200

Fax: 703-562-2296

FDIC Online Catalog: https://vcart.velocitypayment.com/

fdic/

E-mail: publicinfo@fdic.gov

Publications such as FDIC Quarterly and Consumer News, 

and a variety of deposit insurance and consumer pamphlets 

are available at www.fdic.gov or may be ordered in hard 

copy through the FDIC online catalog. Other information, 

press releases, speeches and congressional testimony, 

directives to financial institutions, policy manuals, and FDIC 

documents are available on request through the Public 

Information Center. Hours of operation are 9:00 a.m. to 4:00 

p.m., Eastern Time, Monday – Friday.

Office of the Ombudsman 

3501 Fairfax Drive

Room E-2022

Arlington, VA 22226

Phone: 877-275-3342 (877-ASK-FDIC)

Fax: 703-562-6057

E-mail: ombudsman@fdic.gov

The Office of the Ombudsman (OO) is an independent, 

neutral, and confidential resource and liaison for the 

banking industry and the general public. The OO responds 

to inquiries about the FDIC in a fair, impartial, and timely 

manner. It researches questions and fields complaints 

from bankers and bank customers. OO representatives are 

present at all bank closings to provide accurate information 

to bank customers, the media, bank employees, and the 

general public. The OO also recommends ways to improve 

FDIC operations, regulations, and customer service.
APPENDICES 135

REGIONAL AND AREA OFFICES

Atlanta Regional Office

Michael J. Dean, Regional Director

10 Tenth Street, NE

Suite 800

Atlanta, Georgia 30309

(678) 916-2200

Alabama

Florida

Georgia

North Carolina

South Carolina

Virginia

West Virginia

Dallas Regional Office

Kristie K. Elmquist, Regional Director

1601 Bryan Street

Dallas, Texas 75201

(214) 754-0098

Colorado

New Mexico

Oklahoma

Texas

Kansas City Regional Office

James D. LaPierre, Regional Director

1100 Walnut Street

Suite 2100

Kansas City, Missouri 64106

(816) 234-8000

Iowa

Kansas

Minnesota

Missouri

Nebraska

North Dakota

South Dakota

Chicago Regional Office

M. Anthony Lowe, Regional Director

300 South Riverside Plaza

Suite 1700

Chicago, Illinois 60606

(312) 382-6000

Illinois

Indiana

Kentucky

Michigan

Ohio

Wisconsin

Memphis Area Office

Kristie K. Elmquist, Director

6060 Primacy Parkway

Suite 300

Memphis, Tennessee 38119

(901) 685-1603

Arkansas

Louisiana

Mississippi

Tennessee

New York Regional Office

John F. Vogel, Regional Director

350 Fifth Avenue

Suite 1200

New York, New York 10118

(917) 320-2500

Delaware

District of Columbia

Maryland

New Jersey

New York

Pennsylvania

Puerto Rico

Virgin Islands
ANNUAL REPORT 2014

136 APPENDICES

Boston Area Office

John F. Vogel, Director

15 Braintree Hill Office Park

Suite 100

Braintree, Massachusetts 02184

(781) 794-5500

Connecticut

Maine

Massachusetts

New Hampshire

Rhode Island

Vermont

San Francisco Regional Office

Stan Ivie, Regional Director

25 Jessie Street at Ecker Square

Suite 2300

San Francisco, California 94105

(415) 546-0160

Alaska

American Samoa

Arizona

California

Federated States of Micronesia

Guam

Hawaii

Idaho

Montana

Nevada

Oregon

Utah

Washington

Wyoming
APPENDICES 137

C. OFFICE OF INSPECTOR GENERAL’S 

ASSESSMENT OF THE MANAGEMENT 

AND PERFORMANCE CHALLENGES 

FACING THE FDIC 

Under the Reports Consolidation Act of 2000, the Office 

of Inspector General (OIG) identifies the management 

and performance challenges facing the FDIC and provides 

its assessment to the Corporation for inclusion in the 

FDIC’s Annual Performance and Accountability Report. 

In doing so, the OIG keeps in mind the FDIC’s overall 

program and operational responsibilities; financial industry, 

economic, and technological conditions and trends; areas 

of congressional interest and concern; relevant laws and 

regulations; the Chairman’s priorities and corresponding 

corporate goals; and ongoing activities to address the issues 

involved. The OIG believes that the FDIC faces challenges 

in the critical areas listed below that will continue to 

occupy much of the Corporation’s attention and require its 

sustained focus for the foreseeable future. 

Carrying Out Dodd-Frank Act Responsibilities

The Dodd-Frank Wall Street Reform and Consumer 

Protection Act (the Dodd-Frank Act) created a 

comprehensive new regulatory and resolution framework 

designed to avoid the severe consequences of financial 

instability. Title I of the Dodd-Frank Act provides tools for 

regulators to impose enhanced supervision and prudential 

standards on systemically important financial institutions 

(SIFIs). Title II provides the FDIC with a new orderly 

liquidation authority for SIFIs, subject to a systemic risk 

determination by statutorily-designated regulators. The 

FDIC has made progress toward implementing its systemic 

resolution authorities under the Dodd-Frank Act, in 

large part due to the efforts of an active cross-divisional 

working group composed of senior FDIC officials, but 

challenges remain. These challenges involve the FDIC’s 

ability to fulfill its insurance, supervisory, receivership 

management, and resolution responsibilities as it meets the 

requirements of the Dodd-Frank Act. These responsibilities 

are cross-cutting and are carried out by staff throughout 

the Corporation’s headquarters and regional divisions 

and offices, including in the Office of Complex Financial 

Institutions, an office established in response to the 

Dodd-Frank Act. That office is taking steps to realign 

organizational responsibilities for Title I and Title II 

tasks in the interest of ensuring the most efficient and 

complementary efforts of staff involved in both. 

As discussed more fully below, in the coming year, those 

involved in Dodd-Frank Act activities will continue to 

evaluate the resolution plans submitted by the largest 

bank holding companies and other SIFIs under Title I; 

develop strategies for resolving SIFIs under Title II; work 

to promote cross-border cooperation for the orderly 

resolution of a global SIFI; and coordinate with the other 

regulators to develop policy to implement the provisions 

of the Dodd-Frank Act.

In the interest of operational readiness to resolve a SIFI, 

the Corporation will need to determine optimum staffing, 

needed expertise, and effective organizational structures to 

handle current and future responsibilities. In that regard, it 

will also need to leverage subject-matter expertise currently 

existing in the FDIC’s various divisions and ensure effective 

and efficient communication, coordination, and information 

sharing as those responsible carry out their respective roles. 

Maintaining Strong Information Technology 

Security and Governance Practices

Key to achieving the FDIC’s mission of maintaining stability 

and public confidence in the nation’s financial system is 

safeguarding the sensitive information, including personally 

identifiable information that the FDIC collects and manages 

in its role as federal deposit insurer and regulator of 

state nonmember financial institutions. Further, as an 

employer, an acquirer of services, and a receiver for failed 

institutions, the FDIC obtains considerable amounts of 

sensitive information from its employees, contractors, 

and failed institutions. Increasingly sophisticated security 

risks and global connectivity have resulted in both internal 

and external risks to that sensitive information. Internal 

risks include errors and fraudulent or malevolent acts by 

employees or contractors working within the organization. 

External threats include a growing number of cyber-based 

attacks that can come from a variety of sources, such as 

hackers, criminals, foreign nations, terrorists, and other 

adversarial groups. Such threats underscore the importance 

of a strong, enterprise-wide information security program.
ANNUAL REPORT 2014

138 APPENDICES

During 2013, the FDIC Chairman announced significant 

changes to the FDIC’s information security governance 

structure to address current and emerging risks in the 

information technology (IT) and information security 

environments. Among these changes, the FDIC established 

the IT/Cyber Security Oversight Group to provide a 

senior-level forum for assessing cyber security threats 

and developments affecting the FDIC and the banking 

industry. Subsequently, the FDIC Chairman separated 

the roles and responsibilities of the Chief Information 

Officer (CIO) and Director of the Division of Information 

Technology (DIT). Both positions had previously been held 

by the same individual. The CIO now reports directly to 

the FDIC Chairman and has broad strategic responsibility 

of IT governance, investments, program management, and 

information security. The CIO also serves as the FDIC’s 

Chief Privacy Officer. Finally, the Chief Information 

Security Officer (CISO) and related staff, who had formerly 

reported to the Director of DIT, now report to the CIO. 

The purpose of this realignment was to ensure that the 

CISO has the ability to provide an independent perspective 

on security matters to the CIO, and that the CIO has the 

authority and primary responsibility to implement an 

agency-wide information security program. 

Throughout 2014, the benefits of the new IT governance 

structure began to be realized. During 2015, a challenging 

priority for the FDIC will be to continue to adapt to 

these organizational changes and maintain effective 

communication and collaboration among all parties 

involved in ensuring a robust, secure IT operating 

environment that meets the day-to-day and longer-term 

needs of the FDIC employees who depend on it. The 

Corporation will also need to ensure that its business 

continuity and disaster recovery plans are effective in 

addressing the impacts of natural disasters or other 

events that disrupt its business processes and activities. 

A permanent CIO came on board in December 2014 and 

will continue to carry out needed information security 

initiatives. Among those are strategies to ensure the 

security of the FDIC’s systems and infrastructure and efforts 

to support communications with other federal agencies if a 

widespread emergency occurred.

Maintaining Effective Supervisory Activities 

and Preserving Community Banking

The FDIC’s supervision program promotes the safety 

and soundness of FDIC-supervised insured depository 

institutions. The FDIC is the primary federal regulator for 

4,138 FDIC-insured, state-chartered institutions that are not 

members of the Board of Governors of the Federal Reserve 

System (FRB). As such, the FDIC is the lead federal 

regulator for the majority of community banks. As the FDIC 

operates in a post-crisis environment, it must continue to 

apply lessons learned over the past years of turmoil. One 

key lesson is the need for earlier regulatory response when 

risks are building. For example, banks may be tempted to 

take additional risks, engage in imprudent concentrations, 

or loosen underwriting standards. Some banks are also 

introducing new products or lines of business or seeking 

new sources for non-interest income, all of which can 

lead to interest rate risk, credit risk, operational risk, 

and reputational risk. Such risks need to be managed 

and addressed early on during the “good times” before 

a period of downturn. FDIC examiners need to identify 

problems, bring them to the attention of bank management, 

follow up on problems, recommend enforcement actions 

as needed, and be alert to such risks as Bank Secrecy 

Act and anti-money laundering issues. With respect to 

important international concerns, the FDIC also needs to 

support development of sound global regulatory policy 

through participation on the Basel Committee on Banking 

Supervision and related sub-groups, and to address 

such matters as the Basel III capital accord and Basel 

liquidity standards. 

Importantly, with respect to the FDIC’s involvement with 

the Dodd-Frank Act, the Division of Risk Management 

Supervision’s (RMS) Complex Financial Institutions Group 

is responsible for the monitoring function for SIFIs. This 

group is primarily responsible for monitoring risk within 

and across large, complex financial companies for back-up 

supervisory and resolution readiness purposes. In that 

connection, RMS is also playing a key role in reviewing 

and providing feedback on resolution plans submitted by 

companies covered by Title I of the Dodd-Frank Act, as part 

of a shared responsibility with the FRB.
APPENDICES 139

Of critical importance with respect to the FDIC’s 

supervisory role, and in light of technological changes, 

increased use of technology service providers (TSP), 

new delivery channels, and cyber threats, the FDIC’s 

IT examination program needs to be proactive. Also, 

bankers and Boards of Directors need to ensure a strong 

control environment and sound risk management and 

governance practices in their institutions. Controls need 

to be designed not only to protect sensitive customer 

information, but also to guard against intrusions that can 

compromise the integrity and availability of operations, 

information and transaction processing systems, and data. 

Given the complexities of the range of cyber threats, the 

FDIC needs to ensure its examination workforce has the 

needed expertise to effectively carry out its IT examination 

responsibilities.

Of special note, in partnership with the Federal Financial 

Institutions Examination Council, the FDIC has developed 

a framework for conducting IT examinations that covers a 

broad spectrum of technology, operational, and information 

security risks to both institutions and TSPs. Importantly, 

one TSP can service hundreds or even thousands of 

financial institutions, so that the impact of security 

incidents in one TSP can have devastating ripple effects on 

those institutions. In the coming months, the Corporation 

needs to continue efforts, along with the other regulators, 

to address these risks and use all available supervisory 

and legal authorities to ensure the continued safety and 

soundness of financial institutions and affiliated third-party 

entities. It also needs to ensure effective informationsharing about security incidents with regulatory parties and 

other federal groups established to combat cyber threats in 

an increasingly interconnected world.

The Chairman has made it clear that one of the FDIC’s most 

important priorities is the future of community banks and 

the critical role they play in the financial system and the 

U.S. economy as a whole. Local communities and small 

businesses rely heavily on community banks for credit 

and other essential financial services. These banks foster 

economic growth and help to ensure that the financial 

resources of the local community are put to work on its 

behalf. Consolidations and other far-reaching changes 

in the U.S. financial sector in recent decades have made 

community banks a smaller part of the U.S. financial 

system. To ensure the continued strength of the community 

banks, the Corporation will need to sustain initiatives such 

as ongoing research, technical assistance to the banks 

by way of training videos on key risk management and 

consumer compliance matters, and continuous dialogue 

with community banking groups. 

Maintaining a strong examination program, conducting 

vigilant supervisory activities for both small and large 

banks, applying lessons learned, and being attuned to 

harmful cyber threats in financial institutions and TSPs will 

be critical to ensuring stability and continued confidence in 

the financial system going forward. 

Carrying Out Current and Future Resolution 

and Receivership Responsibilities

Through purchase and assumption agreements with 

acquiring institutions, the Corporation has entered into 

shared-loss agreements (SLAs). Since loss sharing began 

during the most recent crisis in November 2008, the FDIC 

resolved 304 failures with accompanying SLAs; the initial 

covered asset balance was $216.5 billion. As of December 

31, 2014, 281 receiverships still have active SLAs, with a 

current covered asset balance of $54.6 billion. 

Under these agreements, the FDIC agrees to absorb a 

portion of the loss—generally 80 to 95 percent—which may 

be experienced by the acquiring institution with regard 

to those assets, for a period of up to 10 years. As another 

resolution strategy, the FDIC entered into 35 structured 

sales transactions involving 43,315 assets with a total 

unpaid principal balance of $26.2 billion. Under these 

arrangements, the FDIC retains a participation interest 

in future net positive cash flows derived from third-party 

management of these assets. 

Other post-closing asset management activities continue 

to require FDIC attention. FDIC receiverships manage 

assets from failed institutions, mostly those that are not 

purchased by acquiring institutions through purchase and 

assumption agreements or involved in structured sales. 

As of December 31, 2014, the Division of Resolutions and 

Receiverships (DRR) was managing 481 active receiverships 

with assets in liquidation totaling about $7.7 billion. As 

receiver, the FDIC seeks to expeditiously wind up the 

affairs of the receiverships. Once the assets of a failed 
ANNUAL REPORT 2014

140 APPENDICES

institution have been sold and the final distribution of any 

proceeds is made, the FDIC terminates the receivership. 

As recovery from the crisis continues, some of these 

risk-sharing agreements will be winding down and certain 

currently active receiverships will be terminated. Given the 

substantial dollar value and risks associated with the risk 

sharing activities and other receivership operations, the 

FDIC needs to ensure continuous monitoring and effective 

oversight to protect the FDIC’s financial interests. 

The FDIC increased its permanent resolution and 

receivership staffing and significantly increased its reliance 

on contractor and term employees to fulfill the critical 

resolution and receivership responsibilities associated with 

the ongoing FDIC interest in the assets of failed financial 

institutions. Now, and as discussed later in this document, 

as the number of financial institution failures continues 

to decline, the Corporation is reshaping its workforce and 

adjusting its budget and resources accordingly. Between 

January 2012 and April 2014, the FDIC closed three of the 

temporary offices it had established to handle the high 

volume of bank failures. As a result, authorized staffing 

for DRR, in particular, fell from a peak of 2,460 in 2010 

to 1,463 proposed for 2013, which reflected a reduction 

of 393 positions from 2012 and 997 positions over three 

years. Proposed DRR authorized staff for 2014 was 916. 

Authorized staffing for 2015 is 756. Of note, DRR will 

continue to substantially reduce its nonpermanent staff 

each year, based on declining workload. 

In the face of these staff reductions and the corresponding 

loss of specialized experience and expertise, however, the 

Corporation must also continue to review the resolution 

plans of large bank holding companies and designated 

nonbank holding companies to ensure their resolvability 

under the Bankruptcy Code, if necessary, and in cases 

where their failure would threaten financial stability, 

administer their orderly liquidation. Carrying out such 

activities could pose significant challenges to those in 

DRR who have historically carried out receivership and 

resolution activities. For example, the Complex Financial 

Institutions branch of DRR works to identify and mitigate 

risks in large insured depository institutions, bank holding 

companies, and nonbank SIFIs. One of DRR’s challenges 

in these areas will be to enhance the FDIC’s capability 

to successfully administer deposit insurance claims 

determinations for large or complex resolutions. It will also 

need to ensure operational readiness for related accounting 

and investigations work streams.

Ensuring the Continued Strength 

of the Insurance Fund 

Insuring deposits remains at the heart of the FDIC’s 

commitment to maintain stability and public confidence 

in the nation’s financial system. To maintain sufficient 

Deposit Insurance Fund (DIF) balances, the FDIC collects 

risk-based insurance premiums from insured institutions 

and invests the deposit insurance funds. 

In the aftermath of the financial crisis, FDIC-insured 

institutions continue to make gradual but steady progress. 

Continuing to replenish the DIF in a post-crisis environment 

is a critical activity for the FDIC. The DIF balance had 

dropped below negative $20 billion during the worst time 

of the crisis. During the fourth quarter of 2014, the DIF 

balance increased by $8.5 billion, from $54.3 billion at 

September 30, 2014, to an all-time high of $62.8 billion. The 

most recent quarterly increase was primarily due to $2.0 

billion of assessment revenue and a negative $6.8 billion 

provision for insurance losses, partially offset by $408 

million of operating expenses. 

While the fund is considerably stronger than it has been, 

the FDIC must continue to monitor the emerging risks that 

can threaten fund solvency in the interest of providing the 

insurance coverage that depositors have come to rely upon. 

In that regard, the FDIC will need to continue to regularly 

disseminate data and analysis on issues and risks affecting 

the financial services industry to bankers, supervisors, the 

public, and other stakeholders.

Given the volatility of the global markets and financial 

systems, new risks can emerge without warning and 

threaten the safety and soundness of U.S. financial 

institutions and the viability of the DIF. The FDIC must 

be prepared for such a possibility. As part of its efforts, 

the FDIC needs to continue its collaboration with other 

agencies in helping to ensure financial stability and protect 

the DIF. One important means of doing so is through 

participation on the Financial Stability Oversight Council 

(FSOC), created under the Dodd-Frank Act. This Council 

was established to provide comprehensive monitoring 

of stability in the U.S. financial system by identifying and 
APPENDICES 141

responding to emerging risks to U.S. financial stability and 

by promoting market discipline. The FDIC Chairman is a 

member of FSOC, which has the authority to designate for 

enhanced prudential supervision by the Federal Reserve 

System any financial firm whose material financial distress 

could pose a threat to U.S. financial stability. The FDIC’s 

active involvement on FSOC will be important as the 

Council members join forces to confront the many potential 

threats to the nation’s financial system and to the FDIC in 

its role as insurer. 

Promoting Consumer Protections 

and Economic Inclusion

The FDIC carries out its consumer protection role by 

providing consumers with access to information about 

their rights and disclosures that are required by federal 

laws and regulations. Importantly, it also examines the 

banks where the FDIC is the primary federal regulator 

to determine the institutions’ compliance with laws and 

regulations governing consumer protection, fair lending, 

and community investment. These activities require 

collaboration with other regulatory agencies. The FDIC 

also coordinates with the Consumer Financial Protection 

Board, created under the Dodd-Frank Act, on consumer 

issues of mutual interest and monitors rulemakings related 

to mortgage lending and other types of consumer financial 

services and products. The FDIC will need to continue 

to assess the impact of such rulemakings on supervised 

institutions, communicate key changes to stakeholders, and 

train examination staff accordingly. 

The FDIC continues to work with the Congress and others 

to ensure that the banking system remains sound and that 

the broader financial system is positioned to meet the 

credit needs of consumers and the economy, especially 

the needs of creditworthy households that may experience 

distress. A challenging priority articulated by the Chairman 

is to continue to increase access to financial services for 

the unbanked and underbanked in the United States. The 

Corporation will be continuing its Money Smart program 

and planning for its biennial survey conducted jointly with 

the U.S. Census Bureau to assess the overall population’s 

access to insured institutions. Additionally, the FDIC’s 

Advisory Committee on Economic Inclusion, composed 

of bankers, community and consumer organizations, 

and academics, will continue to explore strategies to 

bring the unbanked into the financial mainstream. The 

FDIC’s Alliance for Economic Inclusion initiative seeks 

to collaborate with financial institutions; community 

organizations; local, state, and federal agencies; and other 

partners to form broad-based coalitions to bring unbanked 

and underbanked consumers and small businesses into the 

financial mainstream. 

Successful activities in pursuit of this priority will continue 

to require effort on the part of the FDIC going forward. 

The FDIC will need to sustain ongoing efforts to carry 

out required compliance and community reinvestment 

examinations, coordinate with the other financial regulators 

and CFPB on regulatory matters involving financial 

products and services, and pursue and measure the success 

of economic inclusion initiatives to the benefit of the 

American public. 

Implementing Workforce Changes and 

Budget Reductions 

As referenced earlier, as the number of financial institution 

failures continues to decline, the FDIC has been reshaping 

its workforce and adjusting its budget and human 

resources as it seeks a balanced approach to managing 

costs while achieving mission responsibilities. Over the 

past several years of recovery, the FDIC closed all three 

of the temporary offices charged with managing many 

receivership and asset sales activities on the East and West 

Coasts and in the Midwest. 

During the 2015 planning and budget process, the 

Corporation reassessed its current and projected workload 

along with trends within the banking industry and the 

broader economy. Based on that review, the FDIC expects 

a continuation of steady improvements in the global 

economy, a small number of insured institution failures, 

gradual reductions in post-failure receivership management 

workload, and significant further reductions in the number 

of 3-, 4-, and 5-rated institutions. While the FDIC will 

continue to need some temporary and term employees over 

the next several years to complete the residual workload 

from the financial crisis, industry trends confirm that the 

need for nonpermanent employees over the next several 

years will steadily decrease. 

Given those circumstances, the FDIC Board of Directors 

approved a $2.32 billion Corporate Operating Budget 
ANNUAL REPORT 2014

142 APPENDICES

for 2015, 3 percent lower than the 2014 budget. In 

conjunction with its approval of the 2015 budget, the Board 

also approved an authorized 2015 staffing level of 6,875 

positions, down from 7,200 currently authorized, a net 

reduction of 325 positions. This is the fifth consecutive 

reduction in the FDIC’s annual operating budget.

As conditions improve throughout the industry and the 

economy, the FDIC will continue its efforts to achieve the 

appropriate level of resources. At the same time, however, 

it needs to remain mindful of ever-present risks and other 

uncertainties in the economy that may prompt the need for 

additional resources and new skill sets and expertise that 

may be challenging to obtain.

In that regard, the FDIC is continuing to work toward 

integrated workforce development processes as it seeks to 

bring on the best people to meet the FDIC’s changing needs 

and priorities, and do so in a timely manner. The FDIC 

has long promoted diversity and inclusion initiatives in the 

workplace. Section 342 of the Dodd-Frank Act reiterates 

the importance of standards for assessing diversity policies 

and practices and developing procedures to ensure the 

fair inclusion and utilization of women and minorities in 

the FDIC’s contractor workforce. The Dodd-Frank Act 

also points to the Office of Minority and Women Inclusion 

as being instrumental in diversity and inclusion initiatives 

within the FDIC’s working environment. This office will 

be challenged as it works to ensure it has the proper staff, 

expertise, and organizational structure to successfully carry 

out its advisory responsibilities to ensure diversity and 

inclusion.

For all employees, in light of a post-crisis, transitioning 

workplace, the FDIC will seek to sustain its emphasis on 

fostering employee engagement and morale. Its diversity 

and inclusion goals and initiatives, Workplace Excellence 

Program, and workforce development efforts are positive 

steps in that direction and should continue to create a 

working environment that warrants the FDIC’s recognition 

as a Best Place to Work. 

Ensuring Effective Enterprise Risk 

Management Practices

Enterprise risk management is a critical aspect of 

governance at the FDIC. Notwithstanding a stronger 

economy and financial services industry, the FDIC’s 

enterprise risk management framework and related 

activities need to be attuned to emerging risks, both internal 

and external to the FDIC that can threaten corporate 

success. As evidenced in the challenges discussed above, 

certain difficult issues may fall within the purview of a 

single division or office, while others are cross-cutting 

within the FDIC or involve coordination with the other 

financial regulators and external parties. The Corporation 

needs to adopt controls, mechanisms, and risk models 

that can address a wide range of concerns—from specific, 

everyday risks such as those posed by personnel security 

practices and records management activities, for example, 

to the far broader concerns of the ramifications of an 

unwanted and harmful cyber-attack or the failure of a large 

bank or SIFI.

The Corporation’s stakeholders—including the Congress, 

American people, media, and others— expect effective 

governance, sound risk management practices, and vigilant 

regulatory oversight of the financial services industry 

to avoid future crises. Leaders and individuals at every 

working level throughout the FDIC need to understand 

current and emerging risks to the FDIC mission and be 

prepared to take necessary steps to mitigate those risks 

as changes occur and challenging scenarios that can 

undermine the FDIC’s short- and long-term success present 

themselves.
APPENDICES 143

D. ACRONYMS

ABS Asset-backed securities

AEI Alliance for Economic Inclusion

AHDP Affordable Housing Disposition Program

AMC Appraisal management company

AML Anti-Money Laundering

ASBA Association of Supervisors of Banks of 

 the Americas

ASC Accounting Standards Codification

ASU Accounting Standards Update

BCBS Basel Committee on Banking Supervision

BHC Bank holding company

BSA Bank Secrecy Act

CAMELS Capital adequacy; Asset quality; Management 

 quality; Earnings; Liquidity; Sensitivity to 

 market risks

CCIWG Cybersecurity and Critical 

 Infrastructure Working Group

CDFI Community Development Financial Institution

CEO Chief Executive Officer

CEP Corporate Employee Program

CFO Act Chief Financial Officers’ Act

CFPB Consumer Financial Protection Bureau

CFR Center for Financial Research

CFT Counter Financing of Terrorism

CFTC Commodity Futures Trading Commission

CIO Chief Information Officer

CISO Chief Information Security Officer

CMP Civil Money Penalty

ComE-IN Advisory Committee on Economic Inclusion

CPI-U Consumer Price Index for All Urban Consumers

CRA Community Reinvestment Act

CRE Commercial real estate

CSE Covered swap entity

CSRS Civil Service Retirement System

DDoS Distributed denial of service

DFA Dodd-Frank Act

DIF Deposit Insurance Fund

DRR Designated Reserve Ratio

EDIE Electronic Deposit Insurance Estimator

EGRPRA Economic Growth and Regulatory Paperwork 

 Reduction Act of 1996

FAQ Frequently Asked Questions

FDI Act Federal Deposit Insurance Act

FDIC Federal Deposit Insurance Corporation

FEHB Federal Employees Health Benefits

FERS Federal Employees Retirement System

FFB Federal Financing Bank

FFIEC Federal Financial Institutions 

 Examination Council

FFMIA Federal Financial Management 

 Improvement Act

FHFA Federal Housing Finance Agency

FICO Financial Corporation

FIL Financial Institution Letter

FIS Financial Institution Specialist

FISMA Federal Information Security Management Act

FMFIA Federal Managers’ Financial Integrity Act

FMSP Financial Management Scholars Program

FRB Board of Governors of the Federal 

 Reserve System

FRF FSLIC Resolution Fund

FSAP Financial Sector Assessment Program

FSB Financial Stability Board

FSI Financial Stability Institute

FS-ISAC Financial Services Information Sharing and 

 Analysis Center

FSLIC Federal Savings and Loan 

 Insurance Corporation

FSOC Financial Stability Oversight Council

FSVC Financial Services Volunteer Corps

FTC Federal Trade Commission

GAAP Generally accepted accounting principles

GAO U.S. Government Accountability Office

GPRA Government Performance and Results Act

G-SIBs Global Systemically Important Banks

G-SIFIs Global SIFIs

HELOC Home Equity Line of Credit

HFIAA Homeowner Flood Insurance Affordability 

 Act of 2014

IADI International Association of Deposit Insurers

IDI Insured depository institution

IMF International Monetary Fund

IMFB IndyMac Federal Bank

ISDA International Swaps and Derivatives 

 Association, Inc.

IT Information technology

JFSR Journal for Financial Services Research
ANNUAL REPORT 2014

144 APPENDICES

LCR Liquidity coverage ratio

LIDI Large Insured Depository Institution

LLC Limited Liability Company

LMI Low- or moderate-income

LURA Land use restriction agreements

MDI Minority depository institutions

MOL Maximum Obligation Limitation

MOU Memoranda of Understanding

MWOB Minority- and women-owned business

NCUA National Credit Union Administration

NFIP National Flood Insurance Program

NPR Notice of proposed rulemaking

NSFR Net Stable Funding Ratio

NTEU National Treasury Employees Union

OCC Office of the Comptroller of the Currency

OFAC Office of Foreign Assets Control

OLA Orderly Liquidation Authority

OLF Orderly Liquidation Fund

OMB U.S. Office of Management and Budget

OPM U.S. Office of Personnel Management

OTC Over-the-counter

PCA Prompt corrective action

PFR Primary federal regulator

QBP Quarterly Banking Profile

QM Qualified mortgage

QRM Qualified residential mortgage

RTC Resolution Trust Corporation

SEC Securities and Exchange Commission

SIFI Systemically important financial institution

SLA Shared-loss agreement

SMS Systemic Monitoring System

SNC Shared National Credit

SNM State Nonmember

SPOE Single Point of Entry

SRAC Systemic Resolution Advisory Committee

SSGN Structured sale of guaranteed note

TARP Troubled Asset Relief Program

TCC Training and Conference Committee

TIPS Treasury Inflation-Protected Securities

TORC Teacher Online Resource Center

TPPP Third-party payment processor

TruPS Trust preferred securities

TSP Federal Thrift Savings Plan

TSP (IT-related) Technology service providers

VIE Variable interest entity

WE Workplace Excellence
ANNUAL REPORT 2014 3

This Annual Report was produced by talented and dedicated 

staff. To these individuals, we would like to offer our sincere 

thanks and appreciation. Special recognition is given to the 

following for their contributions:

♦ Jannie F. Eaddy 

♦ Brian D. Aaron

♦ Barbara A. Glasby

♦ Latoja S. Anderson

♦ Financial Reporting Section

♦ Division and Offices’ Points-of-Contact

2014

Federal Deposit 

Insurance Corporation
FEDERAL DEPOSIT INSURANCE CORPORATION

550 17th Street, N.W.

Washington, DC 20429-9990

WWW.FDIC.GOV

FDIC-003-2015