I. MANAGEMENT ’S DISCUSSION 

AND ANALYSIS

13

I.

Management’s

Discussion 

and Analysis
MANAGEMENT'S DISCUSSION AND ANALYSIS 15

OVERVIEW

The FDIC continued to fulfill its mission-critical 

responsibilities during 2015. The agency adopted and 

issued final rules on key regulations under the DoddFrank Wall Street Reform and Consumer Protection 

Act (Dodd-Frank Act) and engaged in several 

community banking and community development 

initiatives. Cybersecurity remained a high priority for 

the FDIC in 2015; the agency worked to strengthen 

cybersecurity oversight, help financial institutions 

mitigate increasing risks, and respond to cyber threats. 

The sections below highlight these and some of our 

other accomplishments during the year.

IMPLEMENTATION OF 

KEY REGULATIONS 

Capital Rulemaking and Guidance 

The revised capital rules, which generally 

implemented Basel III international capital standards 

and addressed the removal of references to external 

credit ratings as standards of creditworthiness, 

became effective for community banks on January 1, 

2015. The FDIC and other federal banking agencies 

continued efforts to implement the revised capital 

rules, including finalizing regulatory reporting, 

making technical corrections to the rule, and issuing 

guidance throughout 2015. In February 2015, the 

FDIC adopted another aspect of Basel III regarding 

certain regulatory reporting under the final capital 

rule. In June 2015, the FDIC adopted as final its 

amendments to the advanced approaches risk-based 

capital rule. The rule addresses certain technical 

adjustments 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. The agencies 

also provided capital guidance to banks by issuing 

a calculation tool that helps certain institutions 

determine risk-weighted assets and by releasing 

frequently asked questions (FAQs) on the revised 

rules. Finally, the agencies issued joint supervisory 

guidance in November 2015 concerning the capital 

treatment for certain covered funds under the final 

rule implementing Section 13 of the Bank Holding 

Company Act (Volcker Rule).

Regulatory Reporting Under the Final Capital Rule 

In February 2015, the FDIC, the Federal Reserve 

Board (FRB), and the Office of the Comptroller 

of the Currency (OCC), under the auspices of the 

Federal Financial Institutions Examination Council 

(FFIEC), announced changes to regulatory capital 

reporting on the Consolidated Reports of Condition 

and Income (Call Report). The changes update 

the risk-weighted assets portion of the regulatory 

capital schedule to reflect the standardized approach 

to risk weighting in the revised capital rules. These 

regulatory capital reporting changes were effective as 

of the March 31, 2015 report date for all institutions. 

As of the same report date, the revisions to the 

regulatory capital components and ratios portion 

of the Call Report regulatory capital schedule that 

were effective as of March 31, 2014, for advanced 

THE YEAR IN REVIEW

Photo credit: Courtesy ABA Banking Journal 

An Interview with the FDIC’s Chairman Martin J. Gruenberg

American Bankers Association President and CEO Frank Keating 

asks for the FDIC Chairman’s views on the future of community 

banking, cybersecurity threats, regulatory burden, too-big-to-fail, 

and more.
16 FEDERAL DEPOSIT INSURANCE CORPORATION

approaches institutions became applicable to all 

other institutions. 

In February and December 2015, the FDIC and the 

other banking agencies, under the auspices of the 

FFIEC, held national teleconferences for depository 

institutions to help them better understand the 

revisions to the regulatory capital schedule. More 

than 2,600 people participated in the February call, 

and 1,200 took part in the December event. 

In March 2015, the FDIC and the other federal 

banking agencies also implemented the new FFIEC 

102 market risk regulatory report. This quarterly 

report collects 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 was 

approved by the Office of Management and Budget 

(OMB) and took effect as of the March 31, 2015, 

report date. 

Regulatory Capital — Revisions Applicable to 

Banking Organizations Subject to the Advanced 

Approaches Risk-Based Capital Rule 

In June 2015, the FDIC Board approved a joint final 

rule that made technical corrections to the advanced 

approaches risk-based capital rules and rectified 

certain missing internal ratings-based requirements 

that were identified as part of the Regulatory 

Consistency Assessment Program. The final rule was 

published in the Federal Register on July 15, 2015.

Regulatory Capital Guidance

The FDIC led the development of a calculation 

tool to help institutions that have securitization 

exposures calculate their risk-weighted assets under 

the Simplified Supervisory Formula Approach. The 

FDIC released the calculator in February 2015, 

through a Financial Institution Letter (FIL), and the 

tool is available on the FDIC’s website as well as the 

websites of the other federal banking agencies.

In addition, in April 2015, the federal banking 

agencies released an initial set of FAQs on the 

revised capital rules, many of which are focused on 

community bank issues. The capital FAQs are posted 

on the FDIC website and are expanded as additional 

questions are raised. 

Capital Deduction Guidance for Non-Legacy 

Covered Funds Under the Volcker Rule 

In November 2015, the FDIC, jointly with the 

FRB and OCC, issued guidance that clarifies the 

interaction between the regulatory capital rule and the 

Volcker Rule with respect to the appropriate capital 

treatment for investments in certain private equity 

funds and hedge funds (covered funds). The FDIC 

issued FIL 50-2015 titled Supervisory Guidance on the 

Capital Treatment of Certain Investments in Covered 

Transactions to notify FDIC-supervised institutions of 

the calculations. The Volcker Rule prohibits banking 

organizations from holding ownership interests in 

covered funds after the relevant conformance period, 

unless such ownership interests are covered under 

certain exceptions/exemptions in the final rule. 

An exception is permitted for ownership interests 

arising from sponsoring covered funds totaling 

less than 3 percent of Tier 1 capital and subject to 

certain seeding period provisions. Under the rule, 

investments in covered funds purchased or acquired 

after December 31, 2013, must be deducted from 

Tier 1 capital after an initial conformance period that 

ended on July 21, 2015. The conformance period 

for legacy covered funds will end in July 2017. The 

guidance and instructions regarding legacy covered 

funds will be available at a later time. The November 

supervisory guidance describes the mechanics for 

making capital deductions under the Volcker Rule 

and how these relate to deductions required under the 

regulatory capital rule for investments in the capital 

instruments of unconsolidated financial institutions. 

These mechanics are intended to ensure no “double 

deductions” from Tier 1 capital.

Other Rulemaking and Guidance 

Under the Dodd-Frank Act 

The Dodd-Frank Act requires various agencies 

to publish regulations in a number of areas. The 

following is a summary of significant rulemaking 
MANAGEMENT'S DISCUSSION AND ANALYSIS 17

activity relating to the Dodd-Frank Act and other 

accomplishments during the year.

Minimum Requirements for Appraisal 

Management Companies 

In April 2015, the FDIC, jointly with the OCC, 

FRB, National Credit Union Administration 

(NCUA), Consumer Financial Protection Bureau 

(CFPB), and the Federal Housing Finance 

Agency (FHFA), issued a final rule to implement 

the minimum requirements for registration and 

supervision of appraisal management companies 

(AMCs) under the Dodd-Frank Act. The final rule 

establishes the minimum requirements set forth in 

Section 1473 of the Act (Section 1473) for state 

registration and supervision of AMCs; outlines the 

minimum requirements for AMCs that register with a 

state under Section 1473; requires federally regulated 

AMCs to meet the minimum requirements of Section 

1473 (other than registering with a state); and requires 

the reporting of certain AMC information to the 

Appraisal Subcommittee of the FFIEC. The final rule 

was published in the Federal Register on June 9, 2015, 

and the effective date was August 10, 2015.

The Volcker Rule 

The Volcker Rule (Rule) contains restrictions and 

prohibitions on the ability of banks and their 

affiliates to engage in proprietary trading and have 

interests in, or relationships with, a hedge fund or 

a private equity fund. The Rule was adopted on 

December 10, 2013, and became effective on April 1, 

2014. The Volcker Rule was subject to an extended 

conformance period that expired on July 21, 2015. 

In April and December of 2014, the FRB issued 

Orders announcing that it planned to extend the 

conformance period for certain covered funds for two 

additional one-year periods, so that the conformance 

period for these “legacy” covered funds would end 

July 21, 2017. 

In January 2014, the Volcker Rule agencies 

[FDIC, OCC, FRB, Commodity Futures Trading 

Commission (CFTC), and Securities and Exchange 

Commission (SEC)] adopted a joint interim final 

rule that permits banking entities subject to the 

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 established an interagency 

working group that meets regularly to discuss issues 

and the application and enforcement of the Rule. 

During 2015, the interagency Volcker Rule working 

group posted 11 joint FAQs on their websites to 

address certain implementation issues presented by 

banking entities subject to the Rule. The questions 

addressed such matters as:

• Chief Executive Officer Certification for Prime 

Brokerage Transactions

• Compliance for Market Making and the 

Identification of Covered Funds

• Termination of Market-Making Activity: Treatment 

of Residual Positions

• Conformance Period

• Seeding Period Treatment of Registered Investment 

Companies and Foreign Public Funds

• Foreign Public Funds Sponsored by a Banking 

Entity

• Joint Venture Exclusion for Covered Funds

• Solely Outside the United States Covered Fund 

Exemption: Marketing Restriction

• Applicability of the Restrictions in Section 13(f) of 

the Bank Holding Company Act (Super 23A)

• 30-Day Metrics Reporting During the 

Conformance Period

• Treasury Separate Trading of Registered Interest and 

Principal Securities (STRIPS) 

Margin and Capital Requirements 

for Covered Swaps Entities

In October 2015, the FDIC approved a final rule to 

establish margin requirements for swaps that are not 

cleared through a clearinghouse. The final rule takes 

into account the risk posed by a swaps dealer’s 
18 FEDERAL DEPOSIT INSURANCE CORPORATION

counterparties in establishing the minimum amount 

of initial and variation margin that the covered swaps 

entity must exchange with such counterparties. 

The final rule was issued jointly with the OCC, the 

FRB, the Farm Credit Administration (FCA), and the 

FHFA. The rule will apply to entities supervised by 

these agencies that register with the CFTC or SEC as 

a dealer or major participant in swaps. The joint final 

rule was developed in consultation with the CFTC 

and the SEC, as required by the Dodd-Frank Act.

The final rule implements certain requirements 

contained in Sections 731 and 764 of the DoddFrank Act, which requires the prudential regulators 

to establish initial and variation margin requirements 

for the largest and most active participants in the 

over-the-counter (OTC) derivatives market. The 

Dodd-Frank Act required the agencies to impose 

margin requirements to help ensure the safety and 

soundness of swaps dealers in light of the risk to 

the financial system associated with non-cleared 

swaps activity. The rule is also consistent with the 

international framework on margin requirements 

published in September 2013 by the Basel Committee 

on Banking Supervision (BCBS) and the International 

Organization of Securities Commissions. 

The final rule requires insured depository institutions 

(IDIs) that are covered swaps entities— the large 

dealers subject to the rule—to collect and post initial 

margin on non-cleared swaps entered into with 

other dealers, and with financial end users that have 

at least $8 billion, notional, in non-cleared swaps. 

The final rule also requires covered swaps entities 

to post and collect daily variation margin for swaps 

with other swaps entities or with financial enduser counterparties, regardless of the level of swaps 

exposure if the required amount of variation margin 

and initial margin exceeds $500,000. For noncleared swaps with financial affiliates, an IDI swaps 

dealer would be required to post and collect daily 

variation margin, but only collect initial margin 

from the affiliate. The final margin rule will be 

phased in beginning September 2016 and applies 

only to new swaps entered into after the applicable 

compliance dates.

Also in October 2015, the agencies approved an 

interim final rule, as required by Title III of the 

Terrorism Risk Insurance Program Reauthorization 

Act of 2015, so that the margin requirements do 

not apply to non-cleared swaps that a covered swaps 

entity enters into with a commercial end user, a small 

financial institution with total assets of $10 billion 

or less, or certain cooperatives if the counterparty 

uses the swaps for hedging purposes. This exemption 

parallels an exemption from a mandate in the DoddFrank Act to clear standardized swaps. The interim 

final rule is effective April 1, 2016. 

Capital requirements under Sections 731 and 764 

have been previously incorporated in the agencies’ 

capital rules, with the exception of the FCA. 

Liquidity and Funds Management 

Rulemaking

Net Stable Funding Ratio 

The net stable funding ratio (NSFR) is designed 

to complement the liquidity coverage ratio (LCR), 

which took effect January 1, 2015. While the LCR 

focuses on having sufficient liquid asset holdings to 

weather a short-term severe stress, the goal of the 

NSFR is to stabilize funding over a longer horizon. 

Specifically, the NSFR would require the largest banks 

to maintain a stable funding profile in relation to 

their on- and off-balance sheet activities, comparing 

an entity’s available stable funding sources over a 

one-year horizon against asset and off-balance sheet 

obligations. In October 2014, the BCBS published a 

final standard to implement the NSFR. Throughout 

2015, the FDIC, the OCC, and the FRB devoted 

substantial resources to develop an interagency notice 

of proposed rulemaking (NPR) to implement the 

NSFR rule, with a target of issuing the NPR by 

year-end 2015. However, the agencies decided in 

late 2015 to delay issuance of the NPR until 2016 to 

allow additional analysis.
MANAGEMENT'S DISCUSSION AND ANALYSIS 19

Financial Sector Assessment Program

The FDIC participated in the International Monetary 

Fund’s (IMF) Financial Sector Assessment Program 

(FSAP). The goal of FSAP assessments is twofold: 

(1) to gauge the stability of the financial sector and 

(2) to assess its potential contribution to growth and 

development. To assess the stability of the financial 

sector, FSAP teams examine the soundness and 

resilience of the banking and other financial sectors; 

conduct stress tests and analyze linkages among 

financial institutions, including across borders; rate 

the quality of bank, insurance, and financial market 

supervision against accepted international standards; 

and evaluate the ability of supervisors. In addition, 

FSAPs examine the quality of the legal framework 

and of financial infrastructure, such as the payments 

and settlements system; identify obstacles to the 

competitiveness and efficiency of the sector; and 

examine its contribution to economic growth and 

development. FDIC staff provided expertise and 

comprehensive feedback to the IMF to support the 

FSAP as it related to the FDIC’s Banking, Insurance, 

and Resolution business lines. The FDIC worked 

collaboratively with other U.S. financial institution 

regulatory authorities throughout this review to 

provide data. The results of the FSAP review were 

detailed in a report published on July 7, 2015. The 

report states that the banking agencies have improved 

effectiveness since the 2010 FSAP assessment and 

have achieved a high degree of compliance with 

international banking standards, although some 

recommendations for improvement were noted. The 

FDIC worked with other federal banking regulators 

to provide a consolidated response to IMF findings.

DEPOSIT INSURANCE

As insurer of bank and savings association deposits, 

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 complements 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) reaches 1.35 percent by September 

30, 2020, as required by the Dodd-Frank Act. (As 

discussed in the Minimum Reserve Ratio section below, 

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.) These plans include a reduction in 

assessment rates that the FDIC Board of Directors 

(FDIC Board) adopted to become effective once the 

reserve ratio reaches 1.15 percent. 

Under the long-term DIF management plan, to 

increase the probability that the fund reserve ratio will 

reach a level sufficient to withstand a future crisis, the 

FDIC Board has 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 2015 to maintain 

the 2.0 percent DRR for 2016—the ratio that has 

been in effect every year since 2011.

Also as part of the long-term DIF management plan, 

the FDIC has 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.
20 FEDERAL DEPOSIT INSURANCE CORPORATION

State of the Deposit Insurance Fund 

Estimated losses to the DIF from bank failures that 

occurred in 2015 totaled $829 million.  The fund 

balance continued to grow through 2015, as it has 

every quarter after the end of 2009, for a total of 24 

consecutive quarters. Lower than estimated losses 

for bank failures together with assessment revenue 

contributed to the increase in the fund balance in 

2015. The fund reserve ratio rose to 1.09 percent at 

September 30, 2015, from 0.88 percent a year earlier. 

Minimum Reserve Ratio

In October 2015, the FDIC approved an NPR that 

would implement section 334 of the Dodd-Frank Act, 

which increases the minimum reserve ratio from 1.15 

percent to 1.35 percent, requires that the reserve ratio 

reach that level by September 30, 2020, and mandates 

that the FDIC “offset the effect of (the increase in 

the minimum reserve ratio from 1.15 percent to 1.35 

percent) on IDIs with total consolidated assets of less 

than $10 billion.” 

To implement these requirements, the proposed rule 

would impose surcharges on the quarterly assessments 

of IDIs with total consolidated assets of $10 billion 

or more. The surcharges would begin the calendar 

quarter after the reserve ratio of the DIF first reaches 

or exceeds 1.15 percent—the same time that lower 

regular quarterly deposit insurance assessment 

(regular assessment) rates take effect under current 

regulations—or the quarter in which a final rule takes 

effect, whichever occurs later, and would continue 

through the quarter that the reserve ratio first reaches 

or exceeds 1.35 percent. In general, the surcharge 

would equal an annual rate of 4.5 basis points applied 

to the institution’s regular quarterly deposit insurance 

assessment base, after making certain adjustments 

specifically for the surcharge. The FDIC expects that 

eight quarterly surcharges would be needed for the 

reserve ratio to reach 1.35 percent.

If, contrary to the FDIC’s expectations, the reserve 

ratio does not reach 1.35 percent by December 31, 

2018 (but has reached at least 1.15 percent), the NPR 

would impose a shortfall assessment on IDIs with 

total consolidated assets of $10 billion or more on 

March 31, 2019.

Because the Dodd-Frank Act requires that the FDIC 

offset the effect of the increase in the reserve ratio 

from 1.15 percent to 1.35 percent on IDIs with total 

consolidated assets of less than $10 billion, the NPR 

would provide assessment credits to these institutions 

for the portion of their regular assessments that 

contribute to growth in the reserve ratio between 

1.15 percent and 1.35 percent. 

Deposit Insurance Assessment System

In June 2015, the FDIC approved an NPR to 

refine the deposit insurance assessment system for 

established small banks (generally, those with less than 

$10 billion in total assets that have been federally 

insured for at least five years). In January 2016, the 

FDIC approved a second NPR that would revise 

parts of the proposal adopted by the FDIC in June 

2015. The primary purpose of these NPRs is to 

improve the risk-based deposit insurance assessment 

system applicable to established small banks to more 

accurately reflect risk. The NPRs would incorporate 

newer data from the recent financial crisis and base 

assessment rates for all established small banks on a 

statistical model that estimates a bank’s probability 

of failure within three years. The NPRs propose that 

the revisions would go into effect the quarter after the 

reserve ratio of the DIF reaches 1.15 percent (or the 

first quarter after a final rule is adopted and the rule 

can take effect, whichever is later). The NPRs would 

maintain the range of assessment rates that will apply 

once the DIF reserve ratio reaches 1.15 percent, 2 

percent, and 2.5 percent, and would be implemented 

in a manner such that aggregate assessment revenue 

collected from established small banks under the 

NPRs would be approximately the same as would 

be collected under the current small bank pricing 

method for calculating assessments after the reserve 

ratio reaches 1.15 percent.
MANAGEMENT'S DISCUSSION AND ANALYSIS 21

ACTIVITIES RELATED TO 

SYSTEMICALLY IMPORTANT 

FINANCIAL INSTITUTIONS

Complex Financial Institutions Program

The FDIC is committed to addressing the unique 

challenges associated with the supervision, insurance, 

and potential resolution of large and complex financial 

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 and deposits. The FDIC’s 

programs related to complex financial institutions 

provide for a consistent approach to large bank 

supervision nationwide, allow for the identification 

and analysis of industry-wide and institution-specific 

risks and emerging issues, and enable a quick response 

to these risks. 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 offsite monitoring and supervision as well as close 

coordination with other federal agencies.

The Dodd-Frank Act expanded the FDIC’s 

responsibilities pertaining to systemically important 

financial institutions (SIFIs) and non-bank financial 

companies designated by the Financial Stability 

Oversight Council (FSOC). With regard to the 

largest, most complex SIFIs, the FDIC’s Complex 

Financial Institutions (CFI) program activities include 

ongoing risk monitoring, backup supervision of their 

related IDIs, and evaluation of required resolution 

plans. CFI program activities related to FSOCdesignated non-bank companies also include ongoing 

risk monitoring and evaluation of required resolution 

plans. In addition, the CFI program performs other 

analyses that support the FDIC’s role as an FSOC 

member. 

Risk Monitoring Activities for Systemically 

Important Financial Institutions

The FDIC monitors risks related to SIFIs at both 

the individual company level and industry wide to 

inform supervisory attention and response, policy 

and guidance considerations, and resolution planning 

efforts. To do this, the FDIC analyzes each company’s 

risk profile, governance and risk management 

capabilities, structure and interdependencies, business 

operation and activities, management information 

system capabilities, and recovery and resolution 

capabilities. 

The FDIC continues to work closely with other 

federal regulators to analyze institution-specific and 

industry-wide conditions and trends, emerging risks 

and outliers, risk management and the potential 

risk posed to financial stability by SIFIs and nonbank financial companies. In 2015, FDIC staff 

participated in 70 examinations with the FRB and 

OCC, including, but not limited to, engagement 

in Comprehensive Capital Analysis and Reviews 

(CCAR)/Dodd-Frank Act Stress Testing (DFAST), 

Comprehensive Liquidity Analysis and Reviews 

(CLAR), and the Shared National Credit (SNC) 

Reviews. Additionally, the FDIC added resources 

with quantitative modeling expertise, which 

supported many of the aforementioned efforts and 

additional activities that included Basel qualification 

reviews, quantitative model reviews, model validation 

reviews, and internal training. Also, in 2015, 

the FDIC participated in the FRB’s Supervisory 

Assessment of Recovery and Resolution Preparedness 

program in an effort to assess firms’ management 

information system capabilities related to recovery 

and resolution. Lastly, the FDIC collaborated 

with the FRB on Dodd-Frank Act Title I resolution 

plan assessments. 

To support risk monitoring that informs supervisory 

and resolution planning efforts, the FDIC developed 

systems and reports that make extensive use of 
22 FEDERAL DEPOSIT INSURANCE CORPORATION

structured and unstructured data. SIFI monitoring 

reports are prepared on a routine and ad-hoc basis and 

cover a variety of aspects that include risk component, 

business line and activity, market trends, and product 

analysis. Additionally, the FDIC has implemented 

and continues to expand upon various systems, 

including the Systemic Monitoring System (SMS). 

The SMS provides an individual risk profile and 

assessment for each SIFI by evaluating the level and 

change in metrics that serve as important barometers 

of overall risk. The SMS supports the identification 

of emerging risks within individual firms and the 

prioritization of supervisory and monitoring activities. 

The SMS also serves as an early warning system of 

financial vulnerability by gauging a firm’s proximity 

and speed to resolution event. Information from 

FDIC-prepared reports and systems are used to 

prioritize activities relating to SIFIs and coordinate 

and communicate with the FRB and OCC. 

The FDIC also conducted semi-annual “Day of Risk” 

meetings to present, discuss, and prioritize the review 

of emerging risks. For each major risk, executive 

management discussed the nature of the risk, 

exposures of SIFIs, and planned supervisory efforts.

Backup Supervision Activities for IDIs of 

Systemically Important Financial Institutions

Risk monitoring is enhanced by the FDIC’s backup 

supervision activities. In the FDIC’s backup 

supervisory role, as outlined in Sections 8 and 10 of 

the FDI Act, the FDIC has expanded resources and 

developed and implemented policies and procedures 

to guide backup supervisory activities. These activities 

include performing analyses of industry conditions 

and trends, insurance pricing support, participating 

in supervisory activities with other regulatory 

agencies, and exercising examination and enforcement 

authorities when necessary. At institutions where 

the FDIC is not the primary federal regulator (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.

Title I Resolution Plans

The Dodd-Frank Act requires that certain large 

banking organizations and nonbank financial 

companies designated by the FSOC for supervision 

by the FRB periodically submit resolution plans to 

the FRB and the FDIC. Each Title I resolution plan, 

commonly known as a living will, must describe the 

company’s strategy for rapid and orderly resolution 

in the event of material financial distress or failure 

of the company. Twelve large and complex banking 

organizations must file resolution plans in July and 

the remaining firms file plans in December. 

July Filers 

The 12 firms filing in July are Bank of America 

Corporation, Bank of New York Mellon Corporation, 

Barclays PLC, Citigroup Inc., Credit Suisse Group 

AG, Deutsche Bank AG, Goldman Sachs Group, Inc., 

JPMorgan Chase & Co., Morgan Stanley, State Street 

Corporation, UBS AG, and Wells Fargo & Company. 

As a follow-up to the specific feedback the FRB 

and the FDIC provided to these firms in August 

2014, the agencies initiated measures to improve 

communication with the firms regarding expectations 

for the July 1, 2015, resolution plan submissions. 

In fourth quarter 2014, the agencies provided the 

12 firms with the opportunity to submit a preview 

of the key aspects of their planned July 2015 Title I 

resolution plan submissions. 

Almost all firms submitted preview documents to 

the agencies by year-end 2014, and the agencies 
MANAGEMENT'S DISCUSSION AND ANALYSIS 23

provided written feedback on the documents to the 

firms in February. In addition, the agencies held a 

joint meeting with the firms on February 25, 2015, 

to answer questions and communicate industrywide issues regarding resolution plans. The agencies’ 

staff also met with the firms individually, on several 

occasions, during the first and second quarters of 

2015 to discuss their upcoming submissions. The 

FDIC and the FRB are now reviewing the 2015 plan 

submissions from the 12 firms.

December Filers 

By December 31, 2014, the December filers had 

submitted their second resolution plans. In July 

2015, after reviewing those plans, the FDIC and 

the FRB provided the 119 firms with guidance, 

clarification, and direction for their 2015 submissions 

based on the relative size and scope of each firm’s 

U.S. operations. Plan requirements were tiered, with 

less complex firms filing more streamlined plans as 

follows:

• Twenty-nine of the more complex firms were 

required to file either full or tailored resolution 

plans that take into account guidance identified by 

the agencies.

• Ninety firms with limited U.S. operations were 

allowed to file plans that focus on material changes 

to their 2014 resolution plans; actions taken to 

strengthen the effectiveness of those plans; and, 

where applicable, actions to ensure any subsidiary 

insured depository institution is adequately 

protected from the risk arising from the activities of 

nonbank affiliates of the firm. 

In July 2015, the agencies also released an updated 

tailored resolution plan template for the December 

filers’ 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, 2015, 122 December filers had 

submitted plans to the agencies. The FDIC and the 

FRB are reviewing those plans.

Nonbank Firms

On July 28, 2015, the FRB and the FDIC provided 

feedback by joint letter to American International 

Group, Inc. (AIG), General Electric Capital 

Corporation, Inc. (GECC), and Prudential, Inc., 

regarding their initial resolution plans and guidance 

for their year-end 2015 filings. The agencies tailored 

their feedback to account for each company’s unique 

business, structure, and operations. In addition to the 

specific guidance given to each company, the letters 

included some common themes that the firms should 

address. Those areas included the need for more 

detailed information on, and analysis of, obstacles 

to resolvability, including global cooperation, 

interconnectedness, and adequate funding and 

liquidity. Further, the agencies instructed the firms 

to describe in their resolution plans the progress they 

are making, and the steps remaining, to be more 

resolvable. Finally, the agencies directed the firms 

to strengthen the public portions of the firms’ 2015 

resolution plans. 

The three nonbank firms submitted the second 

version of their annual resolution plans in December 

2015. The FRB and the FDIC are currently 

reviewing those plans.

On March 26, 2015, the agencies permanently 

adjusted the annual resolution plan filing deadline 

for nonbank financial companies—AIG, GECC, 

MetLife, Inc., and Prudential, Inc.—from July 1 

to December 31, beginning in 2016. The agencies 

had temporarily extended the 2015 resolution plan 

deadlines for the nonbank firms to December 31st. 

In addition, MetLife was designated as systemically 

important on December 18, 2014, and will submit its 

first resolution plan by December 31, 2016.

Insured Depository Institution 

Resolution Plans

Section 360.10 of the FDIC Rules and Regulations 

requires all IDIs with assets greater than $50 billion 

to submit resolution plans to the FDIC (IDI Rule). 

The IDI Rule requires each IDI meeting the criteria to 

provide a resolution plan that should allow the FDIC 
24 FEDERAL DEPOSIT INSURANCE CORPORATION

as receiver to resolve the IDI in an orderly manner 

that enables prompt access of insured deposits, 

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

minimizes losses realized by creditors and the DIF. 

Based upon a review of IDI plans submitted before 

and during 2014, the FDIC issued guidance in 

December 2014 for resolution plans required by the 

IDI Rule. Under the guidance, a covered IDI must 

provide a fully developed discussion and analysis of a 

range of realistic resolution strategies. To assist IDIs 

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 IDIs should 

address. The guidance applies to the resolution 

plans of 36 IDIs covered by the IDI Rule, as well as 

any new IDI meeting the threshold, commencing 

with the 2015 resolution plan submissions. The 

FDIC is reviewing the 10 IDI resolution plans that 

were submitted by September 1, 2015, and the 26 

remaining IDI resolution plans that were submitted 

by December 31, 2015. The FDIC is conducting a 

review focused on the insolvency scenario, strategy 

and funding, readiness, and corporate governance.

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 file. 

If resolution under the Bankruptcy Code would result 

in serious adverse effects to U.S. financial stability, the 

Orderly Liquidation Authority (OLA) set out in Title 

II of the Dodd-Frank Act provides a backup 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.

The FDIC has been developing strategies, including 

an approach referred to as “Single Point of Entry,” to 

carry out its orderly liquidation authorities. Firmspecific resolution strategies for each SIFI continue to 

be developed and refined. In addition, preliminary 

work has begun with respect to developing resolution 

strategies for the nonbank firms and systemically 

important financial market utilities, particularly 

central counterparties (CCP).

To evaluate the requirements for carrying out a 

Title II resolution, and to identify areas of further 

development, the FDIC conducted an operational 

exercise in 2015. This exercise included senior FDIC 

managers and staff representing areas within the 

organization that would be responsible for executing 

a resolution under Title II of the Dodd-Frank Act. 

Participants discussed the primary actions that would 

occur during the initial appointment of the FDIC 

as receiver of a SIFI and the stabilization phase 

immediately following appointment. The exercise 

validated the current Title II planning efforts and 

enhanced organizational cooperation and awareness, 

in addition to identifying areas for further work. 

Cross-Border Efforts

Advance planning and cross-border coordination 

for the resolution of global-SIFIs (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 work with foreign regulators 

to establish frameworks for effective cross-border 

cooperation. 

During 2015, 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 

(EC) continued their engagement through the 

joint Working Group, which is composed of 

FDIC and EC senior executives who meet to 

focus on both resolution and deposit insurance issues. 
MANAGEMENT'S DISCUSSION AND ANALYSIS 25

The Working Group meets twice a year with other 

interim interchanges, including the exchanging of staff 

members. Discussions were held in 2015 concerning 

cross-border bank resolution and CCP resolution, 

among other topics. The FDIC also continued its 

deep cooperation with the Single Resolution Board 

on technical aspects of resolution, including through 

staff level exchanges.

The FDIC continued its relationships with other 

jurisdictions that regulate G-SIFIs, including the 

United Kingdom (U.K.), Switzerland, Germany, 

France, and Japan. In 2015, 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 included hosting a delegation from 

Japan in February to discuss cross-border issues related 

to resolution in both respective jurisdictions. Similar 

staff-level engagements took place with the U.K. 

and Switzerland, such as the U.K.-U.S. Financial 

Market Infrastructure working group, which meets 

to discuss resolvability considerations and develop 

common approaches concerning financial market 

infrastructures in the United Kingdom and the 

United States. This work will continue in 2016 with 

plans to host tabletop exercises with regulatory staff 

from certain of 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 field, and academia. The last 

meeting of the SRAC was held in December 2014. 

The SRAC discussed, among other topics, resolution 

plans and bankruptcy, resolution plan transparency, 

international developments, International Swaps 

and Derivatives Association protocol, and orderly 

liquidation updates. In 2015, the charter of the 

SRAC was renewed. The next meeting is scheduled to 

be held in 2016.

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 nonvoting members. 

The FSOC’s responsibilities include the following:

• Identifying risks to financial stability, responding 

to emerging threats in the financial 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.

SRAC members (from left) Paul Volcker, Simon Johnson, and 

Anat Admati confer with Chairman Gruenberg during a break 

between panel discussions at the December 2014 meeting.
26 FEDERAL DEPOSIT INSURANCE CORPORATION

• Facilitating regulatory coordination and 

information-sharing 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, competitiveness, 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 2015, the FSOC issued its fifth annual report. 

Generally, at each of its meetings, the FSOC discusses 

various risk issues. In 2015, the FSOC meetings 

addressed, among other topics, U.S. fiscal issues, 

interest rate risk, credit risk, cybersecurity, 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, 

2015, the FDIC was the primary federal regulator 

(PFR) for 4,008 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. 

As of December 31, 2015, the FDIC conducted 

1,871 statutorily required risk management 

examinations, including a review of Bank Secrecy 

Act (BSA) compliance, and all required followup examinations for FDIC-supervised problem 

institutions, within prescribed time frames. The 

FDIC also conducted 1,347 statutorily required CRA/

compliance examinations (859 joint CRA/compliance 

examinations, 478 compliance-only examinations, and 

10 CRA-only examinations). In addition, the FDIC 

performed 4,157 specialty examinations. 

The table on page 27 compares the number of 

examinations, by type, conducted from 2013 

through 2015.

Risk Management

All risk management examinations have been 

conducted in accordance with statutorily established 

timeframes. As of September 30, 2015, 203 insured 

institutions with total assets of $51.1 billion were 

designated as problem institutions for safety and 

soundness purposes (defined as those institutions 

having a composite CAMELS1

 rating of 4 or 5), 

compared to the 329 problem institutions with total 

assets of $102.3 billion on September 30, 2014. This 

is a 38 percent decline in the number of problem 

institutions and a 50 percent decrease in problem 

institution assets. For the twelve months ending 

September 30, 2015, 142 institutions with aggregate 

assets of $51.8 billion were removed from the list of 

problem financial institutions, while 16 institutions 

with aggregate assets of $3.0 billion were added to the 

list. The FDIC is the PFR for 133 of the 203 problem 

institutions, with total assets of $24.5 billion. 

In 2015, the FDIC’s Division of Risk Management 

Supervision initiated 233 formal enforcement actions 

and 165 informal enforcement actions. Enforcement 

actions against institutions included, but were not 

limited to, 28 actions under Section 8(b) of the FDI 

1

 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).
MANAGEMENT'S DISCUSSION AND ANALYSIS 27

Act (27 consent orders and 1 notice of charges), 3 

civil money penalty (CMP) actions, and 165 MOUs. 

Of these enforcement actions against institutions, 17 

consent orders, 2 CMPs, and 22 MOUs were based, 

in whole or in part, on apparent violations of BSA and 

anti-money laundering (AML) laws and regulations. 

In addition, enforcement actions were also initiated 

against individuals. These actions included, but were 

not limited to, 88 removal and prohibition actions 

under Section 8(e) of the FDI Act (84 consent orders 

and 4 notices of intention to remove/prohibit), 

4 actions under Section 8(b) of the FDI Act (2 

restitution orders and 2 notices of charges), and 24 

CMPs (15 orders to pay and 9 notices of assessment).

The FDIC has heightened its focus on forward-looking 

supervision aimed at ensuring that risks are mitigated 

before they lead to financial deterioration. In 2015, 

the FDIC concluded a two-year effort to train risk 

management supervision staff on forward-looking 

approaches to supervising institutions. 

Compliance

As of December 31, 2015, 51 insured SNM 

institutions, about 1 percent of all supervised 

institutions, with total assets of $61 billion, were 

problem institutions for compliance, CRA, or 

both. All of the problem institutions for compliance 

were rated “4” for compliance purposes, with none 

rated “5.” For CRA purposes, the majority were 

rated “Needs to Improve,” and only five were rated 

“Substantial Noncompliance.” As of December 

31, 2015, all follow-up examinations for problem 

institutions were performed on schedule.

During 2015, the FDIC conducted all required 

compliance and CRA examinations and, when 

violations were identified, completed follow-up visits 

and implemented appropriate enforcement actions in 

accordance with FDIC policy. In completing these 

activities, the FDIC substantially met its internally 

established time standards for the issuance of final 

examination reports and enforcement actions.

FDIC EXAMINATIONS 2013-2015

2015 2014 2013

Risk Management (Safety and Soundness): 

State Nonmember Banks 1,665 1,881 2,077

Savings Banks 206 206 203

State Member Banks 0 0 4

Savings Association 0 0 0

National Banks 0 0 0

Subtotal–Risk Management Examinations 1,871 2,087 2,284

CRA/Compliance Examinations:

Compliance/Community Reinvestment Act 859 1,019 1,201

Compliance-only 478 376 371

CRA-only 10 11 4

Subtotal–CRA/Compliance Examinations 1,347 1,406 1,576

Specialty Examinations:

Trust Departments 365 428 406

Information Technology and Operations 1,886 2,113 2,323

Bank Secrecy Act 1,906 2,126 2,328

Subtotal–Specialty Examinations 4,157 4,667 5,057

Total 7,375 8,160 8,917
28 FEDERAL DEPOSIT INSURANCE CORPORATION

Overall, banks demonstrated strong consumer 

compliance programs. The most significant consumer 

protection issue that emerged from the 2015 

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 

product features and limitations, deceptive marketing 

and sales practices, and misrepresentations about the 

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

requiring consumer restitution and the payment of 

civil money penalties (CMPs).

During 2015, the FDIC initiated 35 formal 

enforcement actions and 28 informal enforcement 

actions to address compliance concerns (see chart 

on page 138). This included 10 consent orders 

(including one that also addressed safety and 

soundness concerns), 7 restitution orders, 18 CMPs, 

and 28 MOUs. Restitution orders are formal actions 

that require institutions to pay restitution in the form 

of consumer refunds for different violations of law. In 

2015, these restitution orders required institutions 

to refund approximately $99.6 million to consumers, 

primarily related to unfair and deceptive practices 

by the institutions. The CMPs totaled just over 

$12.8 million.

Large and Complex Financial Institutions

The FDIC established the Large Bank Supervision 

Branch within the Division of Risk Management 

Supervision in response to the growing complexity 

of large banking organizations. This branch is 

responsible for both supervisory oversight and 

ongoing monitoring, and it supports 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. At institutions where the 

FDIC is not the PFR, staff works closely with other 

financial institution regulatory authorities to identify 

emerging risks 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 2015, 

the LIDI Program covered 108 institutions with total 

assets of $12.8 trillion.  The comprehensive LIDI 

Program is essential to effective large bank supervision 

because it captures information on the risks and uses 

that information to best deploy resources to highrisk 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 

2015, outstanding credit commitments identified in 

the SNC Program totaled $3.9 trillion. The FDIC, 

the FRB, and the OCC issued a joint press release 

detailing the results of the review in November 2015. 

The interagency SNC review indicated credit risk 

in the portfolio remains high, despite a relatively 

favorable economic environment. The agencies noted 

a significant increase in leveraged lending volumes and 

continued loose underwriting, as evidenced by weak 

capital structures and provisions that limit the lender’s 

ability to manage risk. While some improvement in 

underwriting practices was evident in the second half 

of the year, weakness in leveraged lending transactions 

drove an increase in classified commitments. Also, 

in 2015 the agencies agreed to change the program 

timing from an annual review to a semi-annual 

review. A pilot was conducted in September 2015, 

and the 2016 reviews will be completed in February 

and August.

In 2015, the FDIC continued with various initiatives 

to expand knowledge and expertise related to large 

bank supervisory matters. For example, a long-term 

program established in 2014 to expand on-the-
MANAGEMENT'S DISCUSSION AND ANALYSIS 29

job training and provide mentoring of select staff 

regarding examination processes and risk analysis 

at large banks continues as a mechanism to develop 

expertise. 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. In addition, several training 

initiatives were developed and implemented in 

2015 that focused on large bank supervisory risks, 

structures, vulnerabilities, and processes.

Bank Secrecy Act/Anti-Money Laundering 

The FDIC, with support from the FRB, OCC, and 

NCUA, facilitated the Spanish translation of the 

FFIEC BSA/AML Examination Manual (BSA/AML 

Manual). The Spanish version of the BSA/AML 

Manual was made public on the FFIEC InfoBase 

in October 2015. The 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. 

In July 2015, the FDIC hosted an Office of Foreign 

Assets Control (OFAC) representative who provided 

training to 30 examiners on recent changes to existing 

U.S. economic sanctions programs, as well as OFAC 

compliance expectations and enforcement case 

studies. The FDIC also participated in the Financial 

Action Task Force’s mutual evaluation of the United 

States’ system for preventing money laundering abuse 

of the financial system.

Information Technology, Cyber Fraud, 

and Financial Crimes 

To highlight the importance and rapidly evolving 

nature of cybersecurity and information technologyrelated risks, a new Operational Risk Branch was 

created within the Division of Risk Management 

Supervision. The new branch has responsibility for 

information technology policy and examinations 

as well as cybersecurity and critical infrastructure 

protection initiatives.

To address the specialized nature of technologyand 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 2015, the FDIC conducted 1,886 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 the 

Financial and Banking Information Infrastructure 

Committee, the Financial Services Sector 

Coordinating Council for Critical Infrastructure 

Protection, Homeland Security, the Financial Services 

Information Sharing and Analysis Center (FSISAC), 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 serves as a forum to address policy 

related to cybersecurity and critical infrastructure, 

enables members to communicate and collaborate 

on activities to support and strengthen the resilience 

of the financial services sector, and provides input to 

FFIEC principal members regarding cybersecurity 

matters.
30 FEDERAL DEPOSIT INSURANCE CORPORATION

The FDIC’s major accomplishments during 2015 to 

promote IT security, assess risk management practices, 

and combat cyber fraud and other financial crimes 

included the following:

• Provided nationwide cybersecurity awareness 

training for financial institution management 

and all risk management examination staff at 

all six FDIC regional office locations and by 

teleconference. The training focused on the need 

for banks to establish a culture of managerial and 

directorate collaboration to address cybersecurity 

risks, particularly given the increasing volume and 

sophistication of cyber attacks.

• Produced a video on cybersecurity awareness as part 

of the FDIC’s Community Banking Initiative. The 

video provides useful information to bank directors, 

officers, and employees on cybersecurity. 

• Hosted a nationwide teleconference to discuss 

the FDIC’s regulatory expectations regarding 

cybersecurity preparedness. During the 

teleconference, industry participants submitted and 

asked questions. The call was held in October 2015 

in support of National Cybersecurity Awareness 

Month.

• Added three new scenarios to the FDIC’s 

Cyber Challenge simulation exercise.  The 

exercise encourages community banks to discuss 

operational risk issues and the potential impact of 

information technology disruptions.  The exercise 

now contains seven 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 can obtain additional information are also 

included.

• Published three FDIC Consumer News articles: 

“Computer Security Tips for Bank Customers: A 

Basic Checklist,” “Mobile Banking and Payments: 

New Uses for Phones...and Even Watches,” and 

“Beware of Thieves Who Target Loan and Credit 

Card Shoppers.”

• Conducted training for all FDIC IT Examiners that 

addressed technology and operational issues facing 

the federal financial regulatory agencies.

• 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.

• Hired 30 additional IT Examination Analysts 

to enhance the technical expertise of the IT 

supervisory workforce in areas of forensic analysis, 

network systems, payment systems, applications 

development, and business continuity planning/

disaster recovery.

Major interagency accomplishments as a member of 

the FFIEC included the following:

• Published a Cybersecurity Assessment Tool to help 

financial institutions identify risks and determine 

their cybersecurity preparedness. The Assessment 

Tool provides a repeatable and measurable 

process for financial institutions to measure their 

cybersecurity preparedness over time. 

• Collaborated with the FRB and OCC to develop 

a Cybersecurity Evaluation Tool to be used during 

TSP examinations.

• Published FFIEC statements on Cyber Attacks 

Compromising Credentials and Destructive 

Malware. 

• Issued an appendix to the Business Continuity 

Planning (BCP) booklet of the FFIEC Information 

Technology Examination Handbook entitled 

“Strengthening the Resilience of Outsourced 

Technology Services.” The booklet is part of the 

IT Examination Handbook series. The appendix 

highlights and strengthens the BCP Booklet in four 

specific areas: Third-Party Management, Third-Party 

Capacity, Testing with Technology Service Providers, 

and Cyber Resilience.

• Revised the Management booklet of the FFIEC IT 

Examination Handbook to incorporate cybersecurity 

and cyber resiliency concepts as part of information 

security.

• Improved information sharing on identified 

technology risks among the IT examination 

workforces of the FFIEC member agencies through 

discussions at the March 2015 annual Supervisory 

Strategy meeting.
MANAGEMENT'S DISCUSSION AND ANALYSIS 31

Minority Depository Institution Activities

The preservation of minority depository institutions 

(MDIs) remains a high priority for the FDIC. 

In 2015, the FDIC continued to advocate for 

MDI and Community Development Financial 

Institution (CDFI) industry-led strategies for 

success. The institutions were encouraged to build 

on the results of the 2013 Interagency MDI and 

CDFI Bank Conference and the FDIC’s 2014 study 

on MDIs entitled Minority Depository Institutions: 

Structure, Performance and Social Impact. 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. 

In June 2015, the FDIC sponsored a roundtable 

in Salt Lake City, Utah, with three trade groups 

representing nearly 100 MDIs and CDFIs and 

approximately 20 representatives of potential bank 

partners to discuss CRA partnerships. The FDIC 

provided an overview of five CRA community 

development activities related to minority and 

women-owned financial institutions. The trade 

groups outlined the community development needs 

of their members that might be opportunities for the 

banks to invest in or develop partnerships. The banks 

had the opportunity to engage in dialog with the 

MDI representatives. The trade groups and the banks 

will continue to build upon these initial discussions 

following the roundtable.

The FDIC co-sponsored with the OCC and the 

FRB the 2015 Interagency MDI and CDFI Bank 

Conference, held in July. Nearly 110 bankers from 

72 banks attended the Celebrate 150 Years of Minority 

Depository Institutions: Changes, Challenges and 

Opportunities conference. The conference featured 

an interactive panel with FDIC Chairman Martin 

J. Gruenberg, Federal Reserve Board Governor Lael 

Brainard, and Comptroller of the Currency Thomas 

J. Curry. The conference encouraged interactive 

discussion among those who believe MDIs and 

CDFIs are uniquely positioned to create positive 

change in their communities. In addition, senior 

officials from federal agencies provided updates on 

programs and policies that can help MDIs and CDFIs 

achieve goals.

The FDIC also continues to pursue 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 MDIs to offer return visits 

and technical assistance following the conclusion of 

FDIC safety and soundness, compliance, CRA, and 

specialty examinations 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 issues. 

MDIs also may initiate contact with the FDIC to 

request technical assistance at any time. In 2015, the 

FDIC provided 101 individual technical assistance 

sessions on approximately 50 risk management and 

compliance topics, including the following:

• Accounting

• Bank Secrecy Act and Anti-Money Laundering

• Basel III Capital Rules

• Brokered Deposits/Waivers

• Capital Planning

• Commercial Real Estate Concentrations

• Community Reinvestment Act

• Funding and Liquidity

• Global Cash Flow

• High Volatility Commercial Real Estate

• Information Technology Risk Management and 

Security

• Interest Rate Risk

• Loan Underwriting and Administration 
32 FEDERAL DEPOSIT INSURANCE CORPORATION

• Qualified Mortgage Rules

• Strategic Planning

• Third-Party Risk Management

The FDIC regional offices also held outreach, 

training, and educational programs for MDIs through 

conference calls and banker roundtables. In 2015, 

topics of discussion for these sessions included many 

of those listed above, as well as cybersecurity, vendor 

management, and the FDIC’s Community Banking 

Initiative, including the Technical Assistance Videos.

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. This review started in 

2014 and continued throughout 2015. 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.

To facilitate the review, the agencies categorized 

their regulations into 12 separate groups. Over the 

course of two years, the groups of regulations are 

being 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 are 

analyzing the comments received and considering 

amendments to their regulations where appropriate.

On May 14, 2015, the public comment period 

closed for the regulations in the categories of 

Banking Operations, Capital, and the Community 

Reinvestment Act; approximately 23 comment letters 

were received.

On September 3, 2015, the comment period closed 

for rules relating to Consumer Protection; Directors, 

Officers and Employees; and Anti-Money Laundering. 

Approximately 16 comment letters were received.

On December 23, 2015, the agencies published the 

fourth Federal Register notice requesting comment 

on regulations regarding Securities, Safety and 

Soundness, and Rules of Procedure as well as all 

regulations the agencies have recently finalized, 

including those rules that the agencies have yet to 

fully implement. The comment period closes on 

March 22, 2016.

As a part of the regulatory burden reduction effort, 

the agencies hosted five nationwide outreach meetings 

during 2015 to facilitate awareness of the EGRPRA 

project and to listen to stakeholder comments and 

suggestions. Each meeting featured three banker 

panels covering the 12 categories of regulations and 

a consumer/community group panel. The outreach 

meetings were held at the Federal Reserve Banks in 

Dallas, Texas; Boston, Massachusetts; Kansas City, 

Missouri; and Chicago, Illinois; and at the FDIC in 

Arlington, Virginia. More than 1,030 individuals 

participated in the meetings in-person, by telephone, 

or via webcast. The Kansas City meeting focused on 

rural bank issues. 

Several themes have emerged through the EGRPRA 

process that could affect community banks. One 

consistent item has been the discussion of whether 

laws and regulations based on long-standing 

thresholds should be changed.

In addition, due in part to feedback received as part 

of the EGRPRA review, the FDIC and the other 

FFIEC member entities are undertaking a community 

bank Call Report burden-reduction initiative. The 

objective of this initiative, which comprises actions 

in five areas, is to streamline and simplify regulatory 

reporting requirements for community banks. As 

an initial step, the banking agencies, under the 

auspices of the FFIEC, published proposed Call 

Report revisions, including a first set of proposed 

burden-reducing changes, on September 18, 2015. 

The agencies are evaluating the comments on the 

proposal and would begin to implement the revisions 

in the third quarter of 2016. As a second action, 

the banking agencies have accelerated the start of 

a statutorily mandated review of the existing Call 
MANAGEMENT'S DISCUSSION AND ANALYSIS 33

Report data items, which otherwise would have 

commenced in 2017. Third, the FFIEC member 

entities are considering the feasibility and merits of 

creating a less burdensome version of the Call Report 

for small institutions. A fourth action for the FFIEC 

member entities is to better understand, through 

industry, the aspects of community banks’ Call Report 

preparation processes that are significant sources 

of reporting burden. This outreach effort included 

on-site visits to nine community banks during third 

quarter 2015 to learn about their reporting processes. 

Finally, the FFIEC and the agencies will offer periodic 

banker training by teleconferences and webinars to 

explain upcoming reporting changes and provide 

guidance on Call Report requirements that bankers 

find challenging.

Under Section 316(b) of the Dodd-Frank Act, rules 

transferred from the Office of Thrift Supervision 

(OTS) to the FDIC and other successor agencies 

remain in effect ‘‘until modified, terminated, set 

aside, or superseded in accordance with applicable 

law’’ by the relevant successor agency, by a court 

of competent jurisdiction, or by operation of law. 

When the FDIC republished the transferred OTS 

regulations as new FDIC regulations applicable to 

state savings associations, the FDIC stated in the 

Federal Register notice that its staff would evaluate the 

transferred OTS rules and might later recommend 

incorporating the transferred OTS regulations into 

other FDIC rules, amending them, or rescinding 

them. This process began in 2013 and continues, 

involving publication in the Federal Register of a 

series of NPRs and rulemakings. In 2015, the FDIC 

removed ten transferred OTS rules while making 

technical amendments to related FDIC rules for 

applicability to state savings associations. In addition, 

the FDIC repealed two transferred OTS rules that 

did not have corresponding FDIC rules and were 

deemed unnecessary to retain. The rules repealed 

were Possession by Conservators and Receivers for 

Federal and State Savings Associations, and Electronic 

Operations.

Other Rulemaking and Guidance Issued

During 2015, the FDIC issued and participated in the 

issuance of other rulemaking and guidance in several 

areas as described below.

Brokered Deposit Guidance 

In January 2015, the FDIC issued FIL-2-2015 titled 

Guidance on Identifying, Accepting, and Reporting 

Brokered Deposits due to numerous questions regarding 

brokered deposit determinations. This FIL provided 

a series of FAQs regarding identifying, accepting, and 

reporting brokered deposits. The FAQs are based on 

Section 29 of the FDI Act and Section 337.6 of the 

FDIC Rules and Regulations, as well as on advisory 

opinions and the Study on Core Deposits and Brokered 

Deposits, which the FDIC issued in July 2011. The 

FDIC issued the FAQs in a plain language summary of 

previously issued guidance that is conveniently located 

in one place. In response to follow-up inquiries, the 

FDIC hosted an industry call on April 22, 2015, 

to further discuss the FIL and FAQs. Further, on 

November 13, 2015, the FDIC issued an update to 

the FAQs document in response to additional inquiries 

and requested public comments on those FAQs. The 

comment period on the updated document closed on 

December 28, 2015. 

Statement on Providing Banking Services 

In January 2015, the FDIC issued the Statement on 

Providing Banking Services (FIL-5-2015) to encourage 

institutions to take a risk-based approach in assessing 

individual customer relationships rather than declining 

to provide banking services to entire categories of 

customers, without regard to the risks presented by an 

individual customer or the financial institution’s ability 

to manage the risk. 

Guidance on Private Student Loans with Graduated 

Repayment Terms at Loan Origination

In February 2015, the FDIC, jointly with the FRB, 

CFPB, NCUA, and the OCC and in conjunction with 

the State Liaison Committee (SLC), issued student 
34 FEDERAL DEPOSIT INSURANCE CORPORATION

loan guidance, which provides principles that financial 

institutions should consider in their policies and 

procedures for originating private student loans with 

graduated repayment terms. The guidance recognizes 

that students leaving a higher education program 

may prefer more flexibility with their payments as 

they transition into the labor market. It also reminds 

financial institutions that originate private student 

loans with graduated repayment terms to prudently 

underwrite the loans and provide disclosures that 

clearly communicate the timing and the amount of 

payments to facilitate a borrower’s understanding of 

the loan’s terms and features.

Filing Requirements and Processing Procedures for 

Changes in Control 

In October 2015, the FDIC approved a final rule that 

amends Part 303 of the FDIC Rules and Regulations 

for filing requirements and processing procedures 

for notices filed under the Change in Bank Control 

Act (Notices). The final rule consolidated into one 

subpart the requirements and procedures for Notices 

filed with respect to state nonmember banks and state 

savings associations and eliminated Part 391, subpart 

E. The final rule also adopted certain practices of 

related regulations of the OCC and the FRB. The 

final rule clarifies the FDIC’s requirements and 

procedures based on its experience interpreting and 

implementing the existing regulation and is part of 

the FDIC’s continuing review of its regulations under 

EGRPRA. 

Rescission of the Temporary Liquidity 

Guarantee Program

In October 2015, the FDIC rescinded Part 370 of the 

FDIC Rules and Regulations, which implemented 

the Temporary Liquidity Guarantee Program 

(TLGP). The TLGP was composed of two distinct 

components, the Debt Guarantee Program (DGP) 

and the Transaction Account Guarantee Program 

(TAGP). The DGP provided a temporary FDIC 

guarantee for all newly issued senior unsecured debt 

issued by participating entities up to prescribed 

limits, and the TAGP provided for the extension of 

unlimited deposit insurance for noninterest-bearing 

transaction accounts. Both programs had previously 

expired.

Clarifying Approach to Banks Offering Products 

and Services, such as Deposit Accounts and 

Extensions of Credit, to Nonbank Payday Lenders

In November 2015, the FDIC issued FIL-52-2015 

clarifying its approach to banks offering products and 

services to nonbank payday lenders. The FIL reissued 

and updated FIL-14-2005, Payday Lending Programs: 

Revised Examination Guidance, and its attachment, 

Revised Guidelines for Payday Lending. The guidance 

was revised to make clear that it applies only to 

banks making payday loans. It does not apply to 

banks offering products and services, such as deposit 

accounts and extensions of credit, to nonbank payday 

lenders. 

In addition, the aforementioned FILs reiterate the 

FDIC’s longstanding policy that financial institutions 

that properly manage customer relationships and 

effectively mitigate risks are neither prohibited nor 

discouraged from providing services to any category of 

customer accounts or individual customer operating 

in compliance with applicable state and federal law.

Advisory on Effective Risk Management 

Practices for Purchased Loans and Purchased 

Loan Participations

In November 2015, the FDIC issued FIL-49-2015 to 

update and replace the FDIC Advisory on 

Effective Credit Risk Management Practices for 

Purchased Loan Participations (FIL-38-2012, issued 

in September 2012). The updated Advisory reminds 

FDIC-supervised institutions of the importance of 

underwriting and administering purchased loans and 

loan participations in the same diligent manner as if 

they were being directly originated by the purchasing 

institution. It also outlines areas that should be 

considered before purchasing a loan or participation 

or entering into a third-party arrangement to purchase 

or participate in loans. More specifically, FDIC-
MANAGEMENT'S DISCUSSION AND ANALYSIS 35

supervised institutions should: (1) ensure that loan 

policies address the purchases; (2) understand the 

terms and limitations of agreements; (3) perform 

appropriate due diligence; and (4) obtain necessary 

board or committee approvals. Finally, the Advisory 

reminds institutions that third-party arrangements 

to facilitate loan and loan participation purchases 

should be managed by an effective third-party risk 

management process. The Advisory is based on 

existing guidance, including Guidance for Managing 

Third-Party Risk and Interagency Guidelines 

Establishing Standards for Safety and Soundness 

(Appendix A to Part 364 of the FDIC Rules and 

Regulations).

Statement on Prudent Risk Management for 

Commercial Real Estate Lending

In December 2015, the FDIC, FRB, and OCC 

jointly issued a statement to remind financial 

institutions of existing regulatory guidance on 

prudent risk management practices for commercial 

real estate (CRE) lending activity through economic 

cycles. 

The guidance reminds financial institutions that they 

should maintain underwriting discipline and exercise 

prudent risk management practices that identify, 

manage, monitor, and control the risks arising from 

their CRE lending activity.

Regulatory Relief 

During 2015, the FDIC issued ten FILs that provide 

guidance to help financial institutions and to facilitate 

recovery in areas affected by tornadoes, flooding, wild 

fires, landslides, mudslides, and other severe events. 

In these FILs, the FDIC encouraged banks to work 

constructively with borrowers experiencing financial 

difficulties as a result of natural disasters. The FILs 

also 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. 

Depositor and Consumer Protection 

Rulemaking and Guidance

Joint Final Rule on Loans in Areas Having Special 

Flood Hazards

In June 2015, the FDIC issued a final rule, 

jointly with the OCC, FRB, NCUA, and FCA, 

amending the FDIC’s flood insurance regulation 

and implementing certain provisions in the BiggertWaters Flood Insurance Reform Act of 2012 and the 

Homeowner Flood Insurance Affordability Act of 

2014. Specifically, the final rule addressed detached 

structures, force placement of flood insurance, 

escrowing flood insurance premiums and fees, and 

notice of special flood hazards. 

Interagency Examination Procedures for 

the Truth in Lending Act (Regulation Z) and Real 

Estate Settlement Procedures 

Act (Regulation X) Mortgage Rules

In June 2015, the FDIC released revised interagency 

examination procedures for the new Truth in Lending 

Act (TILA) - Real Estate Settlement Procedures 

Act (RESPA) Integrated Disclosure Rule (TRID 

Rule), as well as amendments to other provisions of 

TILA Regulation Z and RESPA Regulation X. The 

procedures were developed in coordination with 

member agencies of the FFIEC. The examination 

procedures should help financial institutions better 

understand the areas on which the FDIC will focus as 

part of the examination process.

Financial Institution Letter Regarding Military 

Lending Act Final Rule

In September 2015, the FDIC issued FIL-37-2015 

to notify FDIC-supervised institutions that the 

Department of Defense (DOD) promulgated a 

final rule amending the implementing regulations 

of the Military Lending Act of 2006 (MLA). The 

final rule expands specific protections provided to 

service members and their families under the MLA 

and addresses a wider range of credit products than 

the DOD’s previous regulation. FDIC-supervised 
36 FEDERAL DEPOSIT INSURANCE CORPORATION

institutions and other creditors must comply with the 

rule for new covered transactions beginning October 

3, 2016. For credit extended in a new credit card 

account under an open-end consumer credit plan, 

compliance is required beginning October 3, 2017.

Guidance on Supervisory Expectations for 

Financial Institutions Implementing the Truth 

in Lending Act (Regulation Z) and Real Estate 

Settlement Procedures Act (Regulation X) 

Integrated Disclosure Rule

In October 2015, the FDIC issued FIL-43-2015 

providing guidance on initial supervisory expectations 

in connection with examinations of financial 

institutions for compliance with the TRID Rule, 

which became effective on October 3, 2015. During 

initial examinations for compliance with the TRID 

Rule, FDIC examiners will evaluate an institution’s 

compliance management system and overall efforts to 

come into compliance, recognizing the scope and scale 

of changes necessary for each supervised institution to 

achieve effective compliance. The FDIC’s supervisory 

approach regarding the TRID Rule is similar to the 

approach the FDIC took in initial examinations 

for compliance with the Ability-to-Repay/Qualified 

Mortgage rules that became effective in January 2014.

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.

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 mainstream banking services to 

underserved populations. This may include reviewing 

basic retail financial services such as low-cost, safe 

transaction accounts, affordable small-dollar loans, 

savings accounts, and other services that promote 

individual asset accumulation and financial stability. 

During 2015, the ComE-IN met in May and October 

to discuss approaches to expanding access to Safe 

accounts, the economic inclusion potential of mobile 

financial services, financial education opportunities 

for young people, qualitative research into economic 

inclusion strategies for individuals with disabilities, 

and Money Smart for Small Business. 

FDIC National Survey of Unbanked and 

Underbanked Households and Related Research

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 

underserved populations and bank efforts to bring 

Progress was noted on several fronts by the Economic Inclusion 

Committee. FDIC Chairman Martin J. Gruenberg presided over 

the meeting.
MANAGEMENT'S DISCUSSION AND ANALYSIS 37

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 2015, the FDIC revised, tested, and 

administered the 2015 FDIC National Survey 

of Unbanked and Underbanked Households, in 

partnership with the U.S. Census Bureau. The 

survey focuses on basic checking and savings account 

ownership, but it also explores household 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 survey incorporated questions designed 

to assess the typical monthly financial services 

consumption patterns and to better understand 

household use of bank and nonbank consumer credit 

instruments. A full report is expected in 2016. 

In 2015, the FDIC also launched two qualitative 

research projects to further develop insights in this 

area. In the first, the FDIC conducted consumer 

research to better understand the economic inclusion 

potential of mobile financial services. Initial findings 

confirmed and provided more detailed insights 

into the opportunity of mobile financial services to 

improve the sustainability of banking relationships. 

In the second, the FDIC initiated interviews with 

bankers and other stakeholders to better understand 

the programs, products, and strategies that banks are 

finding useful for attracting and retaining unbanked 

households as customers.

Partnerships for Access to Mainstream Banking 

The FDIC supports broadening consumer access to 

mainstream banking through work with the Alliances 

for Economic Inclusion (AEI), Bank On initiatives, 

local and state government, and in collaboration 

with federal partners and many local and national 

organizations. The FDIC also collaborates with other 

financial regulatory agencies to provide information 

and technical assistance on community development.  

Local collaborations are many and diverse. The FDIC 

sponsored or co-sponsored more than 98 events 

during 2015 that provided opportunities for partners 

to collaborate on increasing access to bank accounts 

and credit services, opportunities to build savings and 

improve credit histories, and initiatives to significantly 

strengthen financial capability of community service 

providers who directly serve low- and moderateincome consumers.

During 2015, the FDIC helped convene financial 

institutions, community organizations, local, state, 

and federal agencies, and other partners to support 

coalitions that bring unbanked and underbanked 

consumers and owners of small businesses into the 

financial mainstream through the FDIC’s 14 area 

AEIs. AEI committees and working groups addressed 

specific challenges and financial services needs in their 

communities including education on the specific 

needs of unbanked and underbanked consumers, 

credit building training and seminars for community 

service providers and asset building organizations, 

workshops for financial coaches and counselors, 

promotion of savings opportunities for low- and 

moderate-income people and communities, outreach 

to bring larger numbers of people to expanded tax 

preparation assistance sites, and education for business 

owners to help them become bankable. 

The FDIC also provided information and technical 

assistance in the development of safe and affordable 

transaction and savings accounts. In over 30 markets, 

the FDIC provided technical assistance to local Bank 

On initiatives and asset building coalition activities 

designed to reduce barriers to banking and increase 

access to the financial mainstream. For example, 

the FDIC collaborated with the Cities for Financial 

Empowerment Fund to support its national efforts 

to work with local government and other partners to 

increase the access of low- or moderate-income (LMI) 

consumers to safe and affordable financial products 

and services. In October 2015, FDIC Chairman 

Martin J. Gruenberg addressed the national launch of 

Bank On’s national account standards in San Francisco 

to advance strategies to expand access to products that 

are consistent with the FDIC’s Safe Account model. 
38 FEDERAL DEPOSIT INSURANCE CORPORATION

The FDIC also supported efforts to link consumers 

to financial education and savings through activities 

organized for designated Money Smart or “financial 

fitness” weeks or months, involving hundreds of 

consumer outreach events. Moreover, working 

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

military, and minority consumer-focused) America 

Saves campaigns, the FDIC continued to link banking 

companies to active efforts for engaging consumers 

with setting savings goals at tax time and year round. 

Advancing Financial Education 

Financial education helps consumers understand and 

use bank products effectively and sustain a banking 

relationship over time. The FDIC continued to be 

a leader in developing high-quality, free financial 

education resources and pursuing collaborations to 

use those tools to educate the public. The FDIC’s 

work during 2015 dealt primarily with young people, 

consistent with the Financial Literacy and Education 

Commission’s focus on Starting Early for Financial 

Success.

In April 2015, the FDIC and the CFPB launched new 

educational tools for parents, students, and teachers. 

The new Money Smart for Young People series consists 

of four new age-appropriate curricula that are aligned 

with key academic standards. Unlike previous Money 

Smart products, these new tools involve educators, 

parents/caregivers, and young people in the 

learning process. 

Strategic collaborations continue to be a critical 

component of the FDIC’s financial education 

efforts. The FDIC emphasizes the importance of 

pairing education with access to appropriate banking 

products and services through outreach. Working 

through coalitions, the FDIC participated as a 

speaker or exhibitor at 28 conferences and events that 

reached an estimated 10,000 people. As part of a 

small pilot project, the FDIC also provided training 

to 60 teachers in three jurisdictions on Money Smart

for Young People as part of an initiative to better 

understand how the curriculum can be used and 

supported. 

During 2015, the FDIC launched the second 

phase of the Youth Savings Pilot Program, aimed at 

identifying and highlighting promising approaches 

to offering financial education tied to the opening 

of safe, low-cost savings accounts for school-aged 

children. In the second phase, the FDIC selected 

12 banks to join with the 9 banks selected in 2014 

for the first phase. The FDIC facilitated discussions 

and knowledge sharing among the Pilot participants 

to talk about program design and structure, such as 

approaches to program evaluation, offering incentives, 

and opening accounts. The FDIC also responded to 

a range of inquiries from banks on technical issues 

to support their youth savings initiatives. The Pilot 

will culminate with a report in the fall of 2016 that 

will communicate lessons learned and offer promising 

practices for banks to work with schools or other 

organizations to combine financial education with 

access to savings accounts. 

To support these types of collaborations, the FDIC, 

the FRB, the NCUA, the OCC, and the U.S. 

Department of the Treasury’s Financial Crimes 

Enforcement Network (FinCEN) issued Interagency 

Guidance to Encourage Financial Institution Youth 

Savings Programs and Address Related Frequently Asked 

Questions in February 2015. The guidance is intended 

to encourage financial institutions to develop 

and implement programs to expand the financial 

capability of youth and build opportunities for 

financial inclusion for more families. It also addresses 

frequently asked questions that may arise as financial Chairman Gruenberg unveils the Money Smart for Young People 

education curriculum at a Jump$tart® Coalition meeting.
MANAGEMENT'S DISCUSSION AND ANALYSIS 39

institutions collaborate with schools, local and state 

governments, nonprofit organizations, or corporate 

entities to facilitate youth savings and financial 

education programs.

While youth materials were the strategic focus 

during 2015, the FDIC also enhanced Money Smart

program products for other audiences. For example, 

the instructor-led Money Smart materials for adults 

were updated to reflect the new mortgage disclosure 

rules. In addition, three new modules were added to 

the Money Smart for Small Business curriculum, using 

feedback from the small business technical assistance 

organizations that are also Money Smart Alliance 

members. The three new modules, developed jointly 

with the Small Business Administration (SBA), were 

added to help aspiring entrepreneurs learn about 

business ownership, gain a realistic perspective on 

costs of starting a business, and understand the 

purpose of cash flow management. In addition, the 

entire small business curriculum was made available in 

Spanish during 2015.

The FDIC continues to strengthen collaboration 

with the SBA and other small business resources 

beyond training. In 2015, each of the six FDIC 

regional Community Affairs teams sponsored 25 

regional events for banks and the SBA and its SBA 

Resource Partner Network (SCORE, Small Business 

Development Centers and Women’s Business Centers, 

and Veteran’s Business Outreach Centers) to convene 

and discuss collaborations or provide technical 

assistance to small business leaders. 

Community Development

In 2015, the FDIC provided technical assistance to 

banks and community organizations through 111 

outreach events designed to foster understanding and 

practical relationships between financial institutions 

and other community development resources and 

stakeholders and to improve knowledge about the 

CRA. 

The FDIC’s work particularly emphasized sharing 

information to support bank efforts to provide 

prudent access to responsible mortgage credit in 

underserved markets and improve the banking 

connections of small businesses. In addition, the 

FDIC sponsored sessions with interagency partners 

covering basic and advanced CRA training for banks. 

The agencies also offered CRA basics for communitybased organizations as well as seminars on establishing 

effective bank-community collaborations for 

community development. 

During 2015, the FDIC, other federal regulators, 

and federal and state housing agencies hosted two 

housing roundtable discussions and two housing 

workshops to offer technical assistance to help expand 

access to mortgage credit for LMI households. 

During these events, banks and program managers 

shared experiences with federal mortgage guarantee 

and secondary market programs and state and local 

down payment assistance and counseling programs. 

They offered details of their work so that audiences 

could gain a better understanding of how to address 

challenges and identify opportunities for expanding 

participation in these programs. 

Community Banking Initiatives

Community banks provide traditional, relationshipbased banking services in their local communities. 

These banks accounted for 13 percent of banking 

industry assets; however, this measure vastly 

understates the importance of these institutions to 

the U.S. economy and local communities across the 

nation. For example, community banks hold 44 

percent of the industry’s small loans to farms and 

businesses, making them the lifeline to entrepreneurs 

and small enterprises of all types. Community banks 

also hold the majority of bank deposits in U.S. rural 

counties and micropolitan counties with populations 

up to 50,000. In fact, as of June 2015, community 

banks held more than 75 percent of deposits in 

more than 1,200 U.S. counties. In over 600 of 

these counties, the only banking offices available to 

consumers were those operated by community banks. 

The FDIC is the lead federal supervisor for the 

majority of community banks and the insurer of all 

IDIs. The FDIC has a particular responsibility for 
40 FEDERAL DEPOSIT INSURANCE CORPORATION

the safety and soundness of community banks and 

for understanding and communicating the role they 

play in the banking system. Accordingly, the FDIC 

in 2012 launched a Community Banking Initiative 

focused on publishing new research on issues of 

importance to community banks and providing 

resources that will be useful to their efforts to manage 

risks, enhance the expertise of their staff, and better 

understand changes in the regulatory environment. 

The FDIC continues to pursue an ambitious research 

agenda on community banks. Since the 2012 

publication of the FDIC Community Banking Study, 

FDIC researchers have published ten additional 

studies on topics ranging from small business 

financing to the factors that have driven industry 

consolidation over the past 30 years. During 2015, 

the FDIC published studies on recent trends in 

branch banking; the challenges and opportunities 

facing small, closely held community banks; and an 

updated model of economies of scale at community 

banks. The Community Bank Performance section 

of the FDIC Quarterly Banking Profile (QBP), first 

introduced in 2014, continues to provide a detailed 

statistical picture of the community banking sector 

that can be accessed by analysts, other regulators, and 

bankers themselves. The most recent report shows 

that net income at community banks continued to 

grow at double-digit annual rates in 2015, while total 

loans and leases at these institutions grew at a rate that 

was substantially faster than the industry as a whole.

Community Banking Research 

Highlights from 2015 

In 2015, FDIC economists published important 

research analyzing branch banking and the 

management and closely held ownership among 

community banks. 

Branch Banking

During the historic period of charter consolidation in 

U.S. banking since 1985, the number of banks and 

thrifts has declined by almost two-thirds. Yet, FDICinsured institutions continue to operate about 93,000 

banking offices—only 6 percent fewer than the 

all-time high reached in 2009. Even after the waves 

of new banking technologies introduced in recent 

decades, the density of U.S. banking offices per capita 

stands higher today than at any time before 1977. 

This relative stability in brick-and-mortar offices 

suggests that they remain useful in providing banking 

services even in the era of mobile banking. This is 

especially the case for community banks, which were 

shown to open new banking offices more frequently 

and to close existing banking offices less frequently 

than larger noncommunity banks (see chart on 

page 41). Even as technology marches forward, 

branch offices appear to remain an integral channel 

through which banks serve their customers and earn 

their trust.

Closely Held Ownership

Small, closely held banks are often thought to 

experience certain disadvantages compared to their 

larger competitors. They seldom have ready access to 

the capital markets, and may find it hard to recruit 

management talent from outside the bank. Yet a new 

FDIC study shows that small, closely held community 

banks have consistently outperformed widely held 

institutions in recent years in terms of return on assets 

(see chart on page 42) and operational efficiency. 

What is the secret of their success? In a sample of 

nearly 1,400 community banks in three supervisory 

regions, nearly 75 percent were deemed by FDIC 

examiners to be “closely held” by an ownership 

group that was almost always based on family or 

community ties, or both. In almost 60 percent 

of these institutions, the key officer that managed 

the bank was either part of or affiliated with the 

ownership group. Moreover, this set of institutions—

where ownership and management overlap—has 

reported the highest financial performance since 

2009, suggesting that bank profitability may improve 

if ownership and management share the same goals. 

The real challenge for small, closely held banks may 

be to find equally qualified successors to manage the 

institution over the long run.
MANAGEMENT'S DISCUSSION AND ANALYSIS 41

Apart from research, the Community Bank Initiative 

includes a robust technical assistance program for 

bank directors, officers, and employees. The technical 

assistance program includes Directors’ College events 

held across the country, industry teleconferences, and 

a video program. 

In 2015, the FDIC hosted 47 Directors’ College 

events. These events were typically conducted jointly 

with state trade associations and addressed issues 

such as corporate governance, regulatory capital, 

community banking, concentrations management, 

consumer protection, the Bank Secrecy Act, and 

interest rate risk, among others. In addition, the 

FDIC hosted five industry teleconferences on a 

range of topics of interest to community bankers, 

including brokered deposits, cybersecurity awareness, 

the implementation of CFPB’s mortgage rules, the 

interagency rule on loans in areas with special flood 

hazards, and youth savings programs. The FDIC also 

participated in two FFIEC industry teleconferences 

regarding regulatory capital reporting changes. In 

addition, the FDIC offered four deposit insurance 

coverage seminars for bank officers and employees 

in 2015. These free seminars, which were offered 

nationwide, particularly benefitted smaller institutions 

that have limited training resources. The FDIC also 

released three deposit insurance seminar training 

videos on the FDIC’s website and YouTube channel. 

Among other FDIC technical assistance initiatives 

is the Directors’ Resource Center, a special section of 

the FDIC’s website that provides 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 offers in-depth, 

technical training for bankers to view at their 

-20 -15 -10 -5 0 5 10 15

Percent Change in Number of Offices, 2008-2014

Community Banks Noncommunity Banks

Net Change

-8.8%

-13.0%

-8.6%

-17.3%

+11.5%

+9.5%

+5.1%

+1.3%

+0.8%

Net Change

-1.9% Source of Change:

Gross Office Openings

Gross Office Closings

Net Transfer Between Groups

Net Offices Added to Survey

COMMUNITY BANKS HAVE TENDED TO OPEN MORE 

NEW OFFICES AND CLOSE FEWER EXISTING OFFICES 

THAN NONCOMMUNITY BANKS

Source: Breitenstein, Eric C. and John M. McGee, “Brick-and-Mortar Banking Remains Prevalent in an Increasingly 

Virtual World,” FDIC Quarterly, Vol. 9, No. 1, 2015. FDIC calculations based on Summary of Deposits (SOD) data.
42 FEDERAL DEPOSIT INSURANCE CORPORATION

convenience. During 2015, the FDIC released three 

technical assistance videos on cybersecurity awareness, 

the Loan Originator Compensation Rule, and the 

Servicing Rule. In addition, the FDIC expanded an 

existing resource—the FDIC’s Cyber Challenge: A 

Community Bank Cyber Exercise—to include three 

additional exercises. In 2015, the FDIC surveyed 

almost 800 financial institutions to obtain feedback 

on the Technical Assistance Video Program. The 

survey requested comments on the program as a 

whole and on individual videos within the program 

and asked for suggestions for the program, including 

topics for new videos. The FDIC is evaluating the 

feedback received.

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 2015, 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.

The FDIC continues to promote open 

communication with industry members during 

these meetings, including feedback on the preexamination planning process. The FDIC’s electronic 

pre-examination planning package, launched in 

2013, has enabled examiners to tailor examination 

information requests to the particular characteristics 

and risk profile of the institution, thereby reducing 

the amount of the information requested. The FDIC 

continues to monitor industry feedback on this 

process from outreach events and through the Post 

CLOSELY HELD COMMUNITY BANKS WHERE OWNERSHIP 

AND MANAGERIAL CONTROL OVERLAP HAVE CONSISTENTLY 

REPORTED HIGHER PROFITABILITY

Source: Anderlik, John, M., Richard A. Brown, and Kathryn L. Fritzdixon. “Financial Performance and Management Structure of 

Small, Closely Held Banks,” FDIC Quarterly, Vol. 10, No. 1, 2016. 

Closely held community banks are owned by an identifiable primary owner or ownership group. Closely held banks where there is 

overlap are run by a key officer that is part of or affiliated with that ownership group.

1.4%

1.2%

Widely Held

Pretax Return on Assets

Percentage

Closely Held

2009 2010 2011 2012 2013 2014

1.0%

0.8%

0.6%

0.4%

0.2%

0.0%

1.4%

1.2%

Widely Held

Closely Held - Overlap

2009 2010 2011 2012 2013 2014

1.0%

0.8%

0.6%

0.4%

0.2%

0.0%

Closely Held - No Overlap
MANAGEMENT'S DISCUSSION AND ANALYSIS 43

Examination Survey, and communicate best practices 

to examination staff regarding information requests 

and use of the information received.

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 the agency identify 

trends or problems affecting consumer rights, 

understand the public perception of consumer 

protection issues, formulate policy that aids 

consumers, and foster confidence in the banking 

system 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 2015, the FDIC handled 

18,118 written and telephone complaints and 

inquiries. Of this total, 9,042 related to FDICsupervised 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 2015, the five most frequently identified consumer 

product complaints and inquiries about FDICsupervised institutions concerned credit cards (22 

percent), consumer loans (15 percent), checking 

accounts (13 percent), residential real estate loans (11 

percent), and prepaid cards (6 percent). Credit card 

complaints and inquiries most frequently described 

issues with billing disputes and error resolution, while 

the issues most commonly cited in correspondence 

about consumer loans were concerns with the 

reporting of erroneous information. Complaints and 

inquiries on checking accounts related to discrepancies 

or transaction errors on the account. The largest share 

of correspondence about residential real estate loans 

cited loan modifications and foreclosures as the main 

concern. Lastly, consumers most often identified 

issues with the release of funds in relation to prepaid 

cards.

The FDIC also investigated 89 complaints alleging 

discrimination during 2015. The number of 

discrimination complaints investigated has fluctuated 

over the past several years but averaged approximately 

117 complaints per year between 2008 and 2015. 

Over this period, nearly 37 percent of the complaints 

investigated alleged discrimination based on the race, 

color, national origin, or ethnicity of the applicant 

or borrower; 22 percent related to discrimination 

allegations based on age; 8 percent involved the sex 

of the borrower or applicant; and roughly 5 percent 

concerned marital status.

Consumer refunds generally involve the financial 

institution offering a voluntary credit to the 

consumer’s account, often as a direct result of 

complaint investigations and identification of a 

banking error or violation of law. In 2015, consumers 

received more than $636,792 in refunds from 

financial institutions as a result of the assistance 

provided by the FDIC’s Consumer Affairs Program.
44 FEDERAL DEPOSIT INSURANCE CORPORATION

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 2015. For 

example, the FDIC conducted four telephone 

seminars for bankers on deposit insurance coverage, 

reaching an estimated 4,449 bankers participating 

at approximately 1,271 bank sites throughout the 

country. The FDIC also created deposit insurance 

training videos that are available on the FDIC’s 

website and YouTube channel.

During 2015, the FDIC received and answered 

approximately 90,429 telephone deposit insurancerelated inquiries from consumers and bankers. 

The FDIC Call Center addressed 38,662 of these 

inquiries, and deposit insurance coverage subjectmatter experts handled the other 51,767. In addition 

to telephone inquiries about deposit insurance 

coverage, the FDIC received 1,859 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 roles as deposit 

insurer and bank supervisor. Research from CFR 

staff was accepted during the year for publication in 

leading banking, finance, and economics journals, 

and was presented at banking and finance seminars at 

major conferences, regulatory institutions, and 

universities. CFR researchers also produced a number 

of new working papers in 2015. 

In addition, the CFR organized and sponsored the 

15th Annual Bank Research Conference jointly with 

the Journal for Financial Services Research. More 

than 120 participants attended the conference, which 

was held in September 2015 and included more than 

15 presentations on topics related to bank capital, 

liquidity, lending, dividend policy, systemic risk, and 

macroprudential regulation. 

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 FDICinsured 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.
MANAGEMENT'S DISCUSSION AND ANALYSIS 45

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 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. From 2008 through 2013, 

loss sharing was offered by the FDIC in connection 

with P&A transactions. In a loss-share transaction, 

the FDIC as receiver agrees to share losses on certain 

assets with the acquirer, absorbing a significant 

portion (typically 80 percent) of future losses on 

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

for a specific period of time (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. As the markets improve 

and function more normally with capital and liquidity 

returning, acquirers become more comfortable with 

bidding without the loss sharing protection. 

The FDIC continues to monitor 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 2015, there were 215 receiverships with 

active shared-loss agreements with $31.5 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. 

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 asset 

sale and/or management agreements and structured 

transactions.

Financial Institution Failures

During 2015, eight institutions failed, including 

one large institution (greater than $5 billion in total 

assets), compared to 18 failures in 2014. The large 

failure in 2015 was unique because the majority of the 

institution’s assets and liabilities were sold to multiple 

buyers through an alliance partnership arrangement. 

The FDIC executed one P&A agreement with a 

lead buyer who then simultaneously sold portions of 

what they acquired to their alliance members. Asset 

buyers were also given an opportunity to bid on the 

institution’s assets prior to the institution failing. 

In all FDIC transactions, the FDIC successfully 

contacted all known qualified and interested bidders 

to market these institutions and also made insured 

funds available to all depositors within one business 

day of the failure. No losses were incurred on insured 

deposits, and no appropriated funds were required to 

pay insured deposits.

The following chart provides a comparison of failure 

activity over the past three years. 

FAILURE ACTIVITY 2013–2015

Dollars in Billions

2015 2014 2013

Total Institutions 8 18 24

Total Assets of 

Failed Institutions*

$6.7 $2.9 $6.0

Total Deposits of 

Failed Institutions*

$4.9 $2.7 $5.1

Estimated Loss to 

the DIF

$0.8 $0.4 $1.3

*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.
46 FEDERAL DEPOSIT INSURANCE CORPORATION

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 $1.7 billion 

in book value. In addition to structured and cash 

sales, the FDIC also uses securitizations to dispose 

of bank assets. 

As a result of the FDIC’s marketing and collection 

efforts, the book value of assets in inventory decreased 

by $2.9 billion (37.4 percent) in 2015. 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 12/31/15 12/31/14

Securities $393 $470

Consumer Loans 22 36

Commercial Loans 62 123

Real Estate Mortgages 173 697

Other Assets/Judgments 398 957

Owned Assets 113 120

Net Investments in Subsidiaries 122 123

Structured and Securitized Assets 3,524 5,150

Total $4,807 $7,676

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 2015, the number of receiverships 

under management decreased by 7.3 percent, due to 

receiverships being terminated. The following chart 

shows overall receivership activity for the FDIC 

in 2015.

RECEIVERSHIP ACTIVITY

Active Receiverships as of 12/31/14 481

New Receiverships 8

Receiverships Terminated 43

Active Receiverships as of 12/31/15 446

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 2015, 

the FDIC paid dividends of $5.7 million to depositors 

whose accounts exceeded the insurance limit.

Professional Liability and 

Financial Crimes Recoveries

The FDIC works to identify potential claims against 

directors, officers, securities underwriters and 

issuers, fidelity bond insurance carriers, appraisers, 

attorneys, accountants, mortgage loan brokers, title 

insurance companies, and other professionals who 

may have caused losses to an IDI. Once a claim 

is determined to be meritorious and is expected 

to be cost-effective to pursue, the FDIC initiates 

legal action against the appropriate parties. During 

2015, the FDIC recovered $450.3 million from 

professional liability claims and settlements. The 

FDIC also authorized lawsuits related to two failed 

institutions against 26 individuals for director and 

officer liability, and authorized nine other lawsuits for 

fidelity bond, liability insurance, attorney malpractice, 
MANAGEMENT'S DISCUSSION AND ANALYSIS 47

appraiser malpractice, and securities law violations 

for residential mortgage-backed securities. As of 

December 31, 2015, the FDIC’s caseload included 

50 professional liability lawsuits (down from 102 at 

year-end 2014), 87 residential mortgage malpractice 

and fraud lawsuits (up from 75), and 264 open 

investigations (down from 511). The FDIC seeks 

to complete professional liability investigations and 

make decisions expeditiously on whether to pursue 

potential professional liability claims.  During 2015, 

it completed investigations and made decisions on 

over 80 percent of the investigations related to failures 

that reached the 18-month point after the institution’s 

failure date, exceeding its annual performance target.

As part of the sentencing process for those convicted 

of criminal wrongdoing against an institution that 

later failed, a court may order a defendant to pay 

restitution or to forfeit funds or property to the 

receivership. The FDIC, working with the U.S. 

Department of Justice, collected $7.8 million from 

criminal restitution and forfeiture orders through 

the end of December 31, 2015. Also as of that 

same date, there were 3,831 active restitution and 

forfeiture orders (down from 3,954 at year-end 

2014). This includes 126 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).

INTERNATIONAL OUTREACH 

In 2015, the FDIC continued to play a leading role 

in supporting and promoting the global development 

of effective deposit insurance, bank supervision, 

and 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 BCBS, the Financial Services Volunteer Corps 

(FSVC), the Financial Stability Board (FSB), the 

International Association of Deposit Insurers (IADI), 

the International Monetary Fund (IMF), and the 

World Bank. FDIC staff also: facilitated training 

for several hundred participants from counterpart 

agencies around the world; participated in technical 

assistance missions to several countries; and conducted 

secondment programs to further the international 

community’s understanding and implementation of 

best practices in deposit insurance, bank supervision, 

and failure resolutions.

International Association of Deposit Insurers 

The IADI contributes to global financial stability by 

promoting international cooperation in the field of 

deposit insurance; providing guidance for establishing 

new, and enhancing existing, deposit insurance 

systems; and encouraging wide international contact 

among deposit insurers and other interested parties. 

IADI is now recognized as the standard-setting body 

for deposit insurance by major international financial 

institutions, including the FSB, the BCBS, the IMF, 

the World Bank, and the European Community. 

Since its founding in 2002, IADI has grown from 26 

members to 80 deposit insurers from 77 jurisdictions. 

FDIC Chairman Martin J. Gruenberg served as the 

President of IADI and Chair of its Executive Council 

from November 2007 to October 2012. In October 

2015, FDIC Vice Chairman Thomas M. Hoenig was 

elected to a two-year term to serve as President of 

IADI and Chair of its Executive Council. 

IADI and the BCBS jointly issued the Core Principles 

for Effective Deposit Insurance Systems in 2009 and 

completed the accompanying Compliance Assessment 

Methodology for the Core Principles in 2010 (together, 

the Core Principles). The FSB later included the Core 

Principles as part of its Compendium of Key Standards 

for Sound Financial Systems. During the fall of 2014, 

IADI’s Executive Council and the FSB approved a 

revised set of Core Principles that replaced the original 

(2009) version. 

Subsequently, an IADI drafting team, led by FDIC 

staff, began revising the Handbook for the Assessment 

of Compliance with the Core Principles (Handbook). 

The Handbook is being designed as a “how-to” guide, 

which will provide additional guidance on assessing a 

jurisdiction’s compliance with the Core Principles and 
48 FEDERAL DEPOSIT INSURANCE CORPORATION

will include lessons learned from collaboration with 

IMF and World Bank Financial Sector Assessment 

Program (FSAP) review teams, IADI Core Principles 

Regional Workshops, and IADI Self-Assessment 

Technical Assistance Program (SATAP) reviews. 

The IMF and World Bank use the Core Principles

in the context of the 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. IADI, under FDIC leadership 

of the Training and Conference Committee, has 

trained more than 300 staff members from over 

74 jurisdictions in conducting self-assessments for 

compliance with the Core Principles. In collaboration 

with the Deposit Insurance Fund of Kosovo, the 

FDIC led a Regional Workshop in Pristina, Kosovo, 

during May 2015 on Assessment of Compliance with 

the Revised Core Principles. In June 2015, the FDIC 

led a team of experts on an IADI SATAP review 

of the Korea Deposit Insurance Corporation in 

Seoul, Korea. 

FDIC executives and subject-matter experts partnered 

with IADI in helping to develop and deliver several 

international programs in 2015. In September 

2015, for example, Vice Chairman Thomas M. 

Hoenig joined global bank resolution and deposit 

insurance leaders at a conference hosted jointly by 

IADI and the Financial Stability Institute Conference. 

The conference, which was held at the Bank for 

International Settlements in Basel, Switzerland, 

explored key issues related to resolution and crisis 

management. The FDIC also led the organizing 

committee for IADI’s Biennial Research Conference 

held in June 2015, in Basel, Switzerland. Vice 

Chairman Hoenig presented at the conference, along 

with several FDIC subject-matter experts. Finally, 

in addition to the Vice Chairman’s new role as IADI 

President and Chair of its Executive Council, FDIC 

staff provides strategic guidance and leadership to 

multiple IADI standing committees, subcommittees, 

and working groups. 

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 

actively engaging with the Board, chairing ASBA’s 

Training and Technical Committee, and providing 

leadership in many of the Association’s research and 

guidance working groups. 

In 2015, senior FDIC staff chaired 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. 

ASBA’s training program reaches more than 600 

members annually, with FDIC support, both as 

chair and training provider. In support of ASBA’s 

training program, the FDIC led a technical assistance 

training mission in Guatemala City, Guatemala, 

titled Banking Crisis and Resolutions in 2015. During 

the year, the FDIC also partnered with the U.S. 

Treasury Department and ASBA to promote stronger 

cooperation and information sharing between deposit 

insurers and bank supervisors in Latin America and 

the Caribbean. 

Basel Committee on Banking Supervision 

The FDIC supported the development of sound 

regulatory policy through effective participation in the 

BCBS and its relevant groups, subgroups, and task 

forces. Major work areas for the BCBS include those 

conducted by the:

• Policy Development Group (PDG) and its:

– Coherence and Calibration Task Force

– Working Group on Capital

– Trading Book Group

– Leverage Ratio Group
MANAGEMENT'S DISCUSSION AND ANALYSIS 49

– Working Group on Liquidity

– Risk Measurement Group

– Ratings and Securitization Work Stream

– Task Force on Standardized Approaches

– Task Force on Interest Rate Risk in the 

Banking Book

– Task Force on Scope of Regulatory Consolidation

– Research Task Force

– Quantitative Impact Study Working Group

• Supervision and Implementation Group and its:

– Working Group on Operational Risk

– Standards Implementation Group – 

Banking Book

– Standards Implementation Group – Trading Book

– Task Force on Supervisory Colleges

– Task Force on Pillar 2

• Macroprudential Supervision Group

• Accounting Experts Group and its:

– Audit Subgroup

• Anti-Money Laundering Expert Group

• Task Force on Simplicity and Comparability

• Task Force on Sovereign Exposures

• Working Group on Margining Requirements

• OTC Derivatives Regulators’ Forum

• OTC Derivatives Supervisor Group

• OTC Derivatives Assessment Team 

• Joint Central Counterparties Task Force

• Task Force on Securitization Markets

International Derivatives Work 

For many years, the FDIC has been actively engaged 

in cooperation with market, prudential, and financial 

stability authorities in policy development and 

regulatory activities in the derivatives markets. The 

FDIC also participates in the work of Derivatives 

Regulators’ Forum and the OTC Derivatives 

Supervisors Group.

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 2015. 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 counterparts in significant areas such as 

bank supervision and regulatory developments post 

crisis, the legal framework and operations for bank 

resolutions, and optimal funding strategies for 

deposit insurers.

FDIC management and staff hosted study tours 

for 214 people representing 31 jurisdictions during 

the year. In addition, the FDIC’s Corporate 

University provided training in bank supervision and 

information technology to 173 foreign delegates from 

20 jurisdictions. In 2015, the FDIC also launched a 

new training program for foreign regulatory officials, 

FDIC 101: An Introduction to Deposit Insurance, Bank 

Supervision, and Resolutions (FDIC 101), designed to 

provide a structured and comprehensive view of how 

the FDIC executes its key business functions. FDIC 

101 incorporates technical expertise from across the 

Corporation into a semi-annual, five-day intensive 

course. 

The FDIC contributes to global and domestic 

bank supervision, deposit insurance, and resolution 

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. The FDIC also continued longestablished programs for staffing multiple details 

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

International Banking and Securities Markets and 

with the FSVC to work on a variety of technical 

assistance programs. The FSVC’s long-term 

assignments included on-site project work on lending 

to small-to-medium-sized enterprises and anti-money 

laundering in Indonesia, Angola, Tanzania, Jordan, 

and Egypt. 
50 FEDERAL DEPOSIT INSURANCE CORPORATION

The FDIC also completed short-term technical 

assistance missions to Egypt to promote access 

to credit, and to Poland to assist with the deposit 

insurer’s organizational development. The FDIC 

partnered with the World Bank to provide technical 

assistance to the Nigeria Deposit Insurance 

Corporation and the Zimbabwe Deposit Protection 

Corporation on the development of quantitative 

models to estimate appropriate target fund ratios 

for their deposit insurance funds. The FDIC also 

partnered with the World Bank to provide technical 

assistance to Mexico’s bank supervisor, Comisión 

Nacional Bancaria y de Valores, on off-site risk-based 

supervision.

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 2015, 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

The FDIC continued to advance policy making 

priorities and strengthen its relationships with key 

jurisdictions worldwide through its participation in 

interagency dialogues in 2015. 

In January 2015, FDIC executives traveled to 

Beijing to participate in the 11th U.S.-China Joint 

Economic Committee Meeting to discuss with 

their Chinese counterparts issues related to deposit 

insurance and the U.S. bank resolution regime. 

FDIC representatives, alongside representatives 

from the other U.S. financial regulatory authorities, 

also participated in the annual U.S.-India Financial 

Regulatory Dialogue in January to discuss issues 

related to bank resolution and financial inclusion. In 

April 2015, representatives from the FDIC, FRB, and 

OCC met with delegates from the China Banking 

Regulatory Commission (CBRC) for the eighth 

annual CBRC-U.S. Supervisors’ Bilateral Conference 

to discuss supervisory issues of mutual interest. 

In May 2015, the FDIC joined other U.S., Canadian, 

and Mexican financial sector regulators in Ottawa for 

the 20th meeting of the North American Free Trade 

Agreement (NAFTA) Financial Services Committee 

(FSC). The participants discussed financial sector 

regulation, key policy issues, current cross-border 

financial sector issues, and recent developments 

in financial service regulations. The FDIC led the 

discussion on cross-border resolution, which included 

a discussion of resolution planning, resolution plans, 

and cross-border coordination efforts.

The 7th U.S.-China Strategic and Economic 

Dialogue was held in Washington D.C. in June 

2015. FDIC Chairman Martin J. Gruenberg 

participated, alongside other leaders from U.S. and 

Chinese government agencies, giving remarks during 

the session on financial sector reform. Chairman 

Gruenberg commended China on the adoption 

of a deposit insurance system and emphasized the 

importance of strong bilateral cooperation and robust 

resolution regimes for global financial stability.

MINORITY AND 

WOMEN INCLUSION

The FDIC relies on contractors to help meet its 

mission. In 2015, the FDIC awarded 346 (29.9 

percent) contracts to minority- and women-owned 

businesses (MWOBs) out of a total of 1,159 issued. 

The FDIC awarded contracts with a combined value 

of $858.4 million in 2015, of which, $211.6 million, 

or 24.7 percent, were awarded to MWOBs, compared 

to 34.9 percent for all of 2014. The FDIC paid 

$142.5 million of its total contract payments (28.1 

percent) to MWOBs, under 591 active contracts. 

Referrals to minority- and women-owned law firms 

(MWOLFs) accounted for 40 percent of all legal 

referrals in 2015, with total payments of $12 million 

going to MWOLFs, 12 percent of all payments to 

outside counsel, compared to 13 percent for all 

of 2014.
MANAGEMENT'S DISCUSSION AND ANALYSIS 51

In 2015, the FDIC participated in a combined total 

of 34 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 and MWOLFs, these efforts also targeted 

veteran-owned and small disadvantaged businesses. 

Vendors were provided with the FDIC’s general 

contracting 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 August 2015, the FDIC, along with seven other 

agencies, co-hosted “Collaborating for Success,” a 

technical assistance event, in conjunction with the 

Northern Virginia Procurement Technical Assistance 

Program (PTAP). The purpose of the event was to 

network with MWOBs that are interested in federal 

contracting activities, and to provide meaningful 

information to help them build and grow their federal 

contracting opportunities. This event supports one 

of the key provisions of Section 342 of the DoddFrank Act requiring the Office of Minority and 

Women Inclusion (OMWI) agencies to increase and 

ensure the fair participation of MWOBs, and ensure 

MWOBs receive technical assistance and guidance 

about the procurement process within those agencies. 

This was the first Interagency Procurement Technical 

Assistance Event, with joint participation of eight 

OMWI agencies. A total of 344 vendors attended. 

During 2015, OMWI and the Division of Resolutions 

and Receiverships (DRR) collaborated to present two 

FDIC-sponsored asset purchaser workshops that were 

marketed extensively to minority- and women-owned 

investors and companies interested in learning about 

DRR’s sales processes.  DRR speakers with strong 

backgrounds in their respective programs provided 

details on the various tools used by DRR to market 

assets and presented information to attendees on how 

to participate in the transactions and bid on assets 

offered for sale.

Following the Doral Bank failure in Puerto Rico 

in February 2015 and highlighting interdivisional 

collaboration, the Division of Depositor and 

Consumer Protection (DCP) joined with DRR and 

OMWI to sponsor workshops for both investors 

and homeowners. More than 160 people attended 

these events, which included presentations by: DRR, 

OMWI, and DCP staff; Puerto Rico’s Commissioner 

Blanco-Latorre from the Office of the Commissioner 

of Financial Institutions; and representatives from 

both the Department of Housing and Urban 

Development and the Commonwealth of Puerto Rico 

Housing Finance Authority.

Another asset purchaser workshop held in Atlanta, 

Georgia, was attended by 42 prospective investors. 

This event included a special focus on Owned Real 

Estate (ORE) investment opportunities to support 

a DRR auction of real estate properties scheduled 

two weeks after the outreach workshop. A segment 

regarding contracting services was also part of 

the event.

In August, through OMWI’s logistical support and 

funding, DRR participated in a Mortgage Housing 

Fair in Puerto Rico. The Housing Fair was organized 

by a small group of business professionals from the 

Representatives of the eight OMWI agencies gather at the first interagency OMWI technical assistance event.
52 FEDERAL DEPOSIT INSURANCE CORPORATION

banking and insurance community on the island, and 

drew an audience of over one thousand attendees. 

Representatives from DRR educated participants 

on the process of purchasing ORE properties from 

the FDIC, provided a general overview on deposit 

insurance, and publicized the scheduled ORE auction 

in October. The FDIC team also included members 

from RMS Examinations (Puerto Rico). Over the 

course of the event, the FDIC directly engaged over 

500 attendees, and indirectly informed many more 

through 30-minute presentations on the main stage 

each day. Presentations focused on deposit insurance 

and how to buy ORE from the FDIC. Information 

regarding the Minority and Women Outreach 

Program can be found on the FDIC’s website at 

www.fdic.gov/mwop.

In addition, the FDIC worked to further implement 

Section 342(b)(2)(C) of the Dodd-Frank Act in 

2015, which requires the 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 continued to work 

closely with the OMWI Directors of the OCC, the 

NCUA, the FRB, the CFPB, and the SEC. On June 

10, 2015, the Final Interagency Policy Statement 

Establishing Joint Standards for Assessing the 

Diversity Policies and Practices of Entities Regulated 

by the Agencies became effective. 

EFFECTIVE MANAGEMENT OF 

STRATEGIC RESOURCES

The FDIC recognizes that it must effectively manage 

its human, financial, and technological resources 

to successfully carry out its mission and meet the 

performance goals and targets set forth in its annual 

performance plan. The FDIC must align these 

strategic resources with its mission and goals and 

deploy them where they are most needed to enhance 

its operational effectiveness and minimize potential 

financial risks to the DIF. Following are the FDIC’s 

major accomplishments in improving operational 

efficiency and effectiveness during 2015. 

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 resultsoriented workforce. In 2015, the FDIC workforce 

planning initiatives emphasized the need to plan for 

employees to fulfill current and future capabilities 

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 2015, the FDIC continued to develop and 

implement the Workforce Development Initiative, 

an integrated strategy to address workforce challenges 

and opportunities. The effort is focused on four 

broad objectives: (1) attract and develop talented 

employees across the agency; (2) enhance the 

capabilities of employees through training and diverse 

work experiences; (3) encourage employees to engage 

in active career development planning and seek 

leadership roles in the FDIC; and (4) build on and 

strengthen the FDIC’s operations to support these 

efforts. 

In 2015, the FDIC continued to develop the 

infrastructure, governance, programs, and processes 

to help meet its long-term workforce and leadership 

needs. The FDIC is committed to building and 

expanding its talent pipeline to ensure succession 

challenges are met. To that end, the agency 

conducted a cross-divisional succession planning 

review and talent strategy development process. 

Senior FDIC leaders convened to discuss emerging 

talent needs and strategies to address them, including 

efforts to develop the pipeline of the FDIC’s 

aspiring leadership pool. Several programs were 

launched in 2015 focused on enhancing leadership 

capabilities, including the Leadership Mentoring and 

Onboarding Programs, expanded external educational 

opportunities through Harvard’s Kennedy School of 

Government, and enriched management training. 
MANAGEMENT'S DISCUSSION AND ANALYSIS 53

The FDIC continued to focus on ensuring the 

availability of a workforce equipped to meet today’s 

responsibilities, while simultaneously preparing for 

future capability needs. The FDIC established a 

Career Paths initiative, targeted at nonsupervisory 

employees at all levels, to promote the acquisition of 

cross-organizational skills and knowledge. Additional 

support is provided to employees seeking professional 

development opportunities through expanded career 

management services. Following up on a pilot 

program launched in 2014, the FDIC evaluated 

its first-year experience with an effort to increase 

FDIC employees’ exposure to large bank operations 

across the agency. Based on initial feedback, the 

pilot program will be expanded to add six detail 

opportunities to the ten offered in 2014 to support 

the growth of the FDIC’s capabilities related to the 

oversight of SIFIs required under the Dodd-Frank 

Act.

The FDIC’s strategic workforce planning initiatives 

require a long-term and sustained focus to identify 

future workforce and leadership needs, assess current 

capabilities, support aspiration to management and 

leadership roles, and develop and source the talent 

to meet emerging workforce needs. 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), the 

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, which celebrated its 10th anniversary in 

2015, is an essential part of the FDIC’s ability to 

provide continual cross-divisional staff mobility. 

Since the CEP’s inception in 2005, 1,516 individuals 

have joined the FDIC through this multi-discipline 

program and more than 700 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.

Employee Learning and Development

The FDIC is committed to the learning and 

development of its employees throughout their 

careers to enrich technical proficiency and leadership 

capacity, supporting career progression and succession 

management. In 2015, the FDIC focused on 

developing and implementing comprehensive 

curricula for its business lines to incorporate lessons 

learned from the financial crises and preparing 

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 managers, the FDIC provides employees 

with targeted leadership development opportunities 

that align with key leadership competencies. In 

addition to a broad array of internally developed 
54 FEDERAL DEPOSIT INSURANCE CORPORATION

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 2015, 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 posed by the analytical models used by the 

FDIC in identifying and managing risk. During 

2015, the FDIC enhanced policies and controls 

to govern internal decision support models. The 

comprehensive, corporate-wide model validation 

program will ensure that FDIC models are sound 

through routine testing and evaluation carried out 

according to tailored model validation programs.

• 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 2015, 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 enhance 

communication, provide additional opportunities 

for employee input and engagement, and improve 

employee empowerment.

Photo credit: Aaron Clamage/Clamagephoto.com 

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.
MANAGEMENT'S DISCUSSION AND ANALYSIS 55

Information Technology Management

The FDIC recognizes that 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. 

Information Technology – 

Innovative Mission Support

In 2015, the FDIC developed and implemented 

innovative software that enabled our examination 

stakeholders at the FDIC, FRB, and state banking 

agencies to better address current and future business 

challenges. The new Examination Tools Suite (ETS) 

provides the Corporation with cost and time savings 

in administration and deployment efforts; ETS 

also reduces maintenance expenses by centralizing 

functionality and reducing the overall number of 

systems supporting the program. ETS introduces 

wireless on-site networks that enhance the security 

and accuracy of shared examination data while 

reducing data redundancy. ETS addresses the risk 

of technological obsolescence by using technology 

consistent with the FDIC’s current Enterprise 

Architecture standards and industry best practices. 

The Claims Administration System (CAS) is a system 

that FDIC personnel use to identify depositors’ 

insured and uninsured funds in failing and failed 

financial institutions. For every failing institution, 

CAS is used before the failure to estimate the amount 

of uninsured deposits for the least-cost test. When 

an insured deposit transaction is the least-cost 

resolution, CAS is used to determine the amount of 

the depositors’ funds that are insured and that can 

be transferred to the acquiring institution or paid 

out directly to the depositor. For all failures, CAS 

is the system of record for the deposits of the failed 

institution. During 2015, the FDIC enhanced CAS 

capabilities in order to “future-proof” the FDIC’s 

ability to efficiently and effectively manage the 

increased data requirements for SIFIs that the agency 

may need to address during the resolution process as 

required by Dodd-Frank Act regulations.

During 2015, the FDIC strengthened access 

controls of one of its primary systems for exchanging 

information with financial institutions, examiners, 

and other regulators by implementing MultiFactor Authentication (MFA). MFA is a method 

to authenticate users by requiring the presentation 

of two or all of the three following authentication 

factors: (1) a knowledge factor (something the user 

knows, such as a password); (2) a possession factor 

(something the user has, such as a token); or (3) an 

inherence factor (something the user is, such as a 

fingerprint). To improve remote access security for 

these FDIC customers, approximately 18,000 external 

users were provided MFA technology during the year.

Keeping the FDIC Secure –

Cybersecurity (Internal) 

Like all citizens in our increasingly connected world, 

the FDIC continues to face serious, wide-ranging 

threats to our operations, data, and reputation. 

During 2015, the FDIC continued to improve and 

evolve a strong and proactive IT security program to 

effectively mitigate these risks in our cybersecurity 

landscape. 

Phishing and other email scams continue to rise at a 

steady rate. The FDIC will likely see continued and 

heightened levels of malicious attacks through email. 

To strengthen email-related cybersecurity, the FDIC 

implemented improved data loss prevention controls 

and products that protect not only the FDIC’s 

reputation and data assets but also provide protection 

to the public by helping to ensure only the legitimate 

use of FDIC credentials. 

Finally, the FDIC enhanced its capabilities for 

quantifying risks posed by IT-related cybersecurity 

events. To provide management with up-to-date 

metrics and reporting mechanisms for monitoring 

their risk and the remediation of that risk, the FDIC 
56 FEDERAL DEPOSIT INSURANCE CORPORATION

implemented changes to its monitoring system to 

display the numeric Common Vulnerability Scoring 

System2 (CVSS) scores for all open findings. These 

scores provide management with a clear numerical 

representation of their finding’s risk level so that they 

can better prioritize agency resources for remediating 

those risks.

2

 The CVSS provides an open framework for communicating the characteristics and impacts of IT vulnerabilities.