Federal Deposit 

Insurance Corporation

 

Deputy to the Chairman and Chief Financial Officer

 May 18, 2021

MEMORANDUM TO: The Board of Directors

FROM: Bret Edwards

Deputy to the Chairman

and Chief Financial Officer

SUBJECT: First Quarter 2021 CFO Report to the Board 

The attached report highlights the FDIC’s financial activities and results for the quarter ended March 31, 2021.

Executive Summary

• During the first quarter of 2021, the Deposit Insurance Fund (DIF) balance rose to a record $119.4 billion as of 

March 31, 2021, up $1.5 billion from the December 31, 2020 balance of $117.9 billion. The quarterly increase 

was primarily due to $1.9 billion in assessment revenue, partially offset by $454 million in operating expenses.

• The reserve ratio, which is the ratio of the DIF balance to estimated insured deposits, was 1.25 percent at 

March 31, 2020. Strong estimated insured deposit growth caused the reserve ratio to decrease by our basis 

points from December 31, 2020. 

• There were no financial institution failures during the first quarter of 2021; the last failure occurred on 

October 23, 2020.

• Through March 31, 2021, overall FDIC Operating Budget expenditures were below the year-to-date budget by 

about $58.6 million, or 11 percent. This variance was primarily the result of underspending of $54.1 million in 

the Ongoing Operations budget component. The largest variances were in the Salaries and Compensation 

expense category ($24.3 million, or 7 percent) due to unfilled vacancies in authorized positions and the Travel 

expense category ($11.8 million, or 85 percent) due to travel restrictions during the COVID-19 pandemic. To 

ensure preparedness to address the possible emergence of problems within the banking industry, FDIC 

divisions and offices will give priority during the second quarter to filling authorized vacancies. 
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I. Financial Results (See pages 6 – 7 for detailed data and charts.)

Deposit Insurance Fund 

• For the first quarter of 2021, the DIF’s comprehensive income totaled $1.5 billion compared to comprehensive

income of $2.9 billion for the same period last year. While assessment revenue increased year-over-year by 

$490 million, this was fully offset by a decrease in interest on U.S. Treasury (UST) securities of $223 million

and a decline in fair value adjustments on UST securities of $1.7 billon.

• DIF incurred a $285 million unrealized loss on UST securities during the first quarter 2021 as a result of the 

yield curve steepening sharply as yields beyond the 2-year tenor saw significant upward pressure, while the 

front end of the curve trended lower. The curve’s steepening added 18bps to the 3-year tenor and 58bps to 

the 5-year tenor, causing subsequent unrealized losses to the securities portfolio for maturities in the latter 

end of 2023 and beyond.

Assessments

• During March, the DIF recognized assessment revenue of $1.9 billion for the estimate of first quarter 2021 

insurance coverage. Additionally, the DIF recognized a $79 million adjustment for lower-than-estimated 

collections for the fourth quarter 2020 insurance coverage, which decreased assessment revenue.

• On March 30, 2021, the FDIC collected $1.9 billion in DIF assessments for fourth quarter 2020 insurance 

coverage.

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

DIF Investment Portfolio

• On March 31, 2021, the total liquidity (also total market value) of the DIF investment portfolio stood at $116.5

billion, up $1.6 billion from its December 31, 2020, balance of $114.9 billion. During the quarter, interest 

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

outlays and operating expenses.

• On March 31, 2021, the DIF investment portfolio’s yield was 0.91 percent, down 20 basis points from its 1.11 

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

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

• In accordance with the approved first quarter 2021 DIF portfolio investment strategy, staff purchased fifteen

conventional Treasury securities. The 15 securities had a total par value of $20.50 billion, a weighted average 

yield of 0.241 percent, and a weighted average maturity of 1.95 years.

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

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

authority to make certain modifications to the 2021 FDIC Operating Budget. The following budget reallocations 

were approved during the first quarter in accordance with the authority delegated by the Board of Directors:
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• In February, the CFO approved the realignment of $576,130 in the Salaries and Compensation major expense 

category of the Ongoing Operations budget component from the Deputy to the Chairman and Chief 

Operating Officer (COO) to the Deputy to the Chairman for External Affairs (EA) in conjunction with the 

realignment of authorized positions between the two organizations. 

• In March, the CFO approved offsetting adjustments to the Ongoing Operations budgets of three organizations 

in conjunction with transfers of responsibility for three projects among these organizations:

o A transfer of $1,146,151 from the Outside Services-Personnel budget of the Division of Information 

Technology (DIT) to the Equipment budget of Division of Administration (DOA) related to the transfer of 

responsibility for the Virtual Outreach Center project.

o A transfer of $100,000 from the Outside Services-Personnel budget of DOA to the Outside ServicesPersonnel budget of the Office of the Chief Information Security Officer (OCISO) to provide funding for the 

use of an OCISO contract resource to perform an independent security assessment for the FDIC’s Insider 

Threat Program.

o A transfer of $45,000 from the Outside Services-Personnel budget of OCISO to the Outside ServicesPersonnel budget of DIT related to the transfer of responsibility for the Data Loss Prevention (DLP) 

planning project.

As a result, the DOA operating budget increased from $293.1 million to $294.2 million, the OCISO operating 

budget increased from $40.2 million to $40.3 million, and the DIT operating budget decreased from $348.6 

million to $347.5 million.

• In March, the CFO also approved the realignment of funds among various projects and a combined net 

increase of $7.1 million to the 2021 Ongoing Operations budgets of DIT and OCISO to address identified 

funding shortfalls in their 2021 budgets for both continuing operations and one-time initiatives. As a result, 

the 2021 DIT Ongoing Operations budget increased by about $6.3 million, from $347.5 million to $353.8 

million, and the 2021 OCISO Ongoing Operations budget increased by about $800,000, from $40.3 million to 

$41.1 million.

Following these first quarter budget modifications, the balance in the Corporate Unassigned contingency reserve 

for the Ongoing Operation budget component declined from $30 million to $22.9 million (excluding the $40 

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

balance in the Corporate Unassigned contingency reserve for the Receivership Funding budget component 

remained unchanged at $22.5 million (excluding the $100 million portion of the reserve set aside to address a 

potential increase in bank failure activity later this year).

Approved Staffing Modifications

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

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

Budget.

• In January, the CFO approved an increase of 15 authorized DOA positions, including 14 permanent positions 

and one non-permanent position, to address increases in hiring and contracting workload.
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• In February, following completion of a detailed annual analysis of first-line supervisory spans of control at the 

territory level, the CFO approved a decrease of eight authorized non-permanent Supervisory Examiner (SE) 

positions in Division of Risk Management Supervision (RMS). As a result, RMS’s total 2021 staffing 

authorization decreased from 2,374 to 2,366. 

• In February, following completion of a detailed annual analysis of first-line supervisory spans of control at the 

territory level, the CFO approved a net increase of three authorized SE positions in the Division of Depositor 

and Consumer Protection (DCP). This consisted of an increase of five non-permanent positions and a 

decrease of two permanent positions. As a result, DCP’s total 2021 staffing authorization increased from 789 

to 792. 

• In February, the CFO approved the transfer of two permanent authorized positions from the COO to the EA. 

• In March, the CFO approved an increase of one permanent and six non-permanent examiner positions in 

RMS’s 2021 staffing authorization to address increased large bank supervisory workload. As a result, RMS’s 

total 2021 staffing authorization increased from 2,366 to 2,373. 

Subsequent to these first quarter adjustments, authorized 2021 staffing for the Corporation totaled 5,810 (5,769 

permanent and 41 non-permanent), a net increase of 17 positions.

Spending Variances

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

spending variances for the quarter ending March 31, 2021, are defined as those that either (1) exceeded the YTD 

budget for a major expense category or division/office by more than $5 million and represented more than three 

percent of the major expense category or total division/office budget; or (2) were under the YTD budget for a 

major expense category or division/office by more than $15 million and represented more than 15 percent of the 

major expense category or total division/office budget.

Significant Spending Variances by Major Expense Category

Ongoing Operations

There were no significant spending variances for the first quarter in the Ongoing Operations budget component. 

It is likely, however, that a significant variance will develop in the Travel expense category during the second 

quarter due to continued pandemic-related travel restrictions. 

Receivership Funding

The Receivership Funding component of the 2021 FDIC Operating Budget includes funding for expenses that are 

incurred in conjunction with institution failures and the management and disposition of the assets and liabilities 

of the ensuing receiverships, except for salary and benefits expenses for permanent employees assigned to the 

receivership management function and other expenses required to ensure readiness without regard to whether 

failures occurred. 

There were no significant spending variances for the first quarter in the Receivership Funding budget component.
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Office of Inspector General

There were no significant spending variances in the first quarter of the 2021 Office of Inspector General budget 

component. 

Significant Spending Variances by Division/Office1

One organization had a significant spending variance in its overall budget during the first quarter of 2021. RMS 

underspent its budget by $23.4 million, or 16 percent, primarily in the Salaries and Compensation and Travel 

expense categories in the Ongoing Operations budget component. Underspending of $12.8 million, or 9 percent, 

in the Salaries and Compensation expense category was the result of a substantial number of budgeted but 

unfilled vacancies. RMS is working to fill the vacancies as quickly as possible. Underspending of $9.1 million, or 89 

percent, in the Travel category was due to pandemic-related travel restrictions and the decision by RMS to budget 

its regular travel funding evenly throughout the year. 

 1

Information on division/office variances reflects variances in the FDIC Operating Budget and does not include 

variances related to approved multi-year investment projects. 
Fund Financial Results ($ in Millions) 

6

Beginning in 4Q 2019, a combination of increases in assessment rates and the assessment base contributed to higher

quarterly assessment revenue through 3Q 2020. For the subsequent two quarters, assessment revenue declined slightly due

to adjustments in estimated versus actual collections for the prior quarter.

Assessment revenue was offset by small bank credits of $320 million in 2Q 2019, $239 million in 3Q 2019, $149 million in 4Q

2019, $51 million in 1Q 2020, and $6 million in 2Q 2020.

Balance Sheet

Quarterly Year-Over-Year

Mar-21 Dec-20 Change Mar-20 Change

Cash and cash equivalents $ 4,895 $ 3,311 $ 1,584 $ 9,490 $ (4,595)

Investment in U.S. Treasury securities 110,680 110,464 216 99,733 10,947

Assessments receivable 1,941 1,949 (8) 1,357 584

Interest receivable on investments and other assets, net 969 1,159 (190) 709 260

Receivables from resolutions, net 1,220 1,367 (147) 2,456 (1,236)

Property and equipment, net 321 321 0 326 (5)

Operating lease right-of-use assets 110 112 (2) 120 (10)

Total Assets $ 120,136 $ 118,683 $ 1,453 $ 114,191 $ 5,945

Accounts payable and other liabilities 255 251 4 215 40

Operating lease liabilities 117 119 (2) 127 (10)

Liabilities due to resolutions 1 1 0 213 (212)

Postretirement benefit liability 336 336 0 289 47

Contingent liability for anticipated failures 65 79 (14) 107 (42)

Contingent liability for guarantee payments and litigation losses 0 0 0 34 (34)

Total Liabilities $ 774 $ 786 $ (12) $ 985 $ (211)

FYI: Unrealized gain (loss) on U.S. Treasury securities, net 785 1,070 (285) 2,037 (1,252)

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

Fund Balance $ 119,362 $ 117,897 $ 1,465 $ 113,206 $ 6,156

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

Receivership Selected Statistics March 2021 vs. March 2020

Of the receivershiprelated assets in 

liquidation of $273 

million as of March 

31, 2021, 66 percent 

are concentrated in 

two receiverships. 

For these two 

receiverships, the 

assets primarily 

consist of interests 

in receivershiporiginated 

structured 

transactions which 

are expected to 

liquidate by 2022. 

Income Statement (year-to-date)

Year-Over-Year

Mar-21 Dec-20 Mar-20 Change

Assessments $ 1,862 $ 7,093 $ 1,372 $ 490

Interest on U.S. Treasury securities 284 1,683 507 (223)

Other revenue 2 20 3 (1)

Total Revenue $ 2,148 $ 8,796 $ 1,882 $ 266

Operating expenses 454 1,846 460 (6)

Provision for insurance losses (57) (157) 12 (69)

Insurance and other expenses 1 3 1 0

Total Expenses and Losses $ 398 $ 1,692 $ 473 $ (75)

Net Income $ 1,750 $ 7,104 $ 1,409 $ 341

Unrealized gain (loss) on U.S. Treasury securities, net (285) 483 1,450 (1,735)

Unrealized postretirement benefit gain (loss) 0 (37) 0 0

Comprehensive Income $ 1,465 $ 7,550 $ 2,859 $ (1,394)

Deposit Insurance Fund

Selected Financial Data

Quarterly Year-Over-Year

Mar-21 Dec-20 Change Mar-20 Change

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

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

Total resolution equity 907 907 0 926 (19)

Total revenue 0 4 3 (3)

Operating expenses 0 0 0 0

Recovery of tax benefits 0 0 0 0

Losses related to thrift resolutions 0 0 0 0

Net Income (Loss) $ 0 $ 4 $ 3 $ (3)

FSLIC Resolution Fund

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

Total Receiverships 229 245 (16) 0 0 0 229 245 (16)

Assets in Liquidation $ 273 $ 546 $ (273) $ 0 $ 1 $ (1) $ 273 $ 547 $ (274)

YTD Collections $ 62 $ 87 $ (25) $ 1 $ 0 $ 1 $ 63 $ 87 $ (24)

YTD Dividend/Other Pmts - Cash $ 192 $ 189 $ 3 $ 0 $ 0 $ 0 $ 192 $ 189 $ 3

DIF FRF ALL FUNDS
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3/31/21 12/31/20 Change

Par Value $112,485 $110,403 $2,082

Amortized Cost $114,780 $112,698 $2,082

Total Market Value (including accrued interest) $116,511 $114,910 $1,601

Primary Reserve 1 $116,511 $114,910 $1,601

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

Yield-to-Maturity 0.91% 1.11% -0.20%

Weighted Average Maturity (in years) 1.29 1.19 0.10

Effective Duration (in years)

 Total Portfolio 1.26 1.16 0.10

 Available-for-Sale Securities 2 1.32 1.20 0.12

3/31/21 12/31/20 Change

FRF-FSLIC

 Book Value 3 $882 $882 $0

 Yield-to-Maturity 0.01% 0.06% -0.05%

 Weighted Average Maturity overnight overnight no change

3/31/21 12/31/20 Change

Book Value 4 $1,662 $1,761 ($99)

Effective Annual Yield 0.13% 0.14% -0.01%

Weighted Average Maturity (in days) 1 1 0

4

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

Summary of Other Corporate Investment Portfolios

(Dollar Values in Millions)

3

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

Deposit Insurance Fund Portfolio Summary

(Dollar Values in Millions)

1

 Primary Reserve is the total market value (including accrued interest) of overnight investments, all available-for-sale securities, and 

held-to-maturity securities maturing within three months.

National Liquidation Fund (NLF) Investment Portfolio Summary

(Dollar Values in Millions)

2

 Excludes any overnight investments.
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DEPOSIT INSURANCE FUND

Invest up to $26 billion (par value) in AFS securities with maturities between June 30, 

2021 and January 1, 2026. 

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

30, 2021 and April 1, 2026. 

NATIONAL LIQUIDATION FUND

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

million.

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

No strategy changes for the second quarter of 2021.

Investment Strategies

Strategy Changes for the 2nd Quarter 2021

Strategy for the 1st Quarter 2021

Strategy for the 1st Quarter 2021

Strategy Changes for the 2nd Quarter 2021
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Annual YTD YTD % of YTD YTD

Major Expense Category Budget Budget Expenditures Budget Used Variance

FDIC Operating Budget 

Ongoing Operations

Salaries & Compensation $1,354,676 $338,447 $314,142 93% ($24,305)

Outside Services - Personnel 378,129 77,506 70,743 91% (6,763)

Travel 61,541 13,860 2,100 15% (11,760)

Buildings 111,716 26,077 19,817 76% (6,260)

Equipment 120,098 32,764 29,423 90% (3,341)

Outside Services - Other 17,634 3,696 3,237 88% (459)

Other Expenses 14,841 4,558 3,333 73% (1,225)

 Total Ongoing Operations $2,058,635 $496,908 $442,795 89% (54,113)

Receivership Funding

Salaries & Compensation $1,008 $252 ($19) -8% ($271)

Outside Services - Personnel 168,364 9,748 7,178 74% (2,570)

Travel 793 194 2 1% (192)

Buildings 2,129 532 528 99% (4)

Equipment 1,274 318 373 117% 55

Outside Services - Other 179 45 25 56% (20)

Other Expenses 1,253 313 286 91% (27)

 Total Receivership Funding $175,000 $11,402 $8,373 73% ($3,029)

Office of Inspector General

Salaries & Compensation $36,603 $9,163 $9,195 100% $32

Outside Services - Personnel 3,857 964 276 29% (688)

Travel 1,235 309 105 34% (204)

Buildings 0 0 0 0

Equipment 2,371 593 150 25% (443)

Outside Services - Other 1 0 0 0

Other Expenses 846 212 55 26% (157)

 Total Office of Inspector General $44,913 $11,241 $9,781 87% ($1,460)

Total FDIC Operating Budget $2,278,548 $519,551 $460,949 89% ($58,602)

Executive Summary of 2021 Budget and Expenditures

by Budget Component and Major Expense Category

Through March 31, 2021

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

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

2) Executive Offices include the offices of the Chairman, Vice Chairman, Independent Director, Deputy to the Chairman and Chief 

Operating Officer, Deputy to the Chairman and Chief Financial Officer, Deputy to the Chairman for Policy, Deputy to the Chairman for 

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

Chief Information Officer/Chief Privacy Officer.

Annual YTD YTD % of YTD YTD

Division/Office Budget Budget Expenditures Budget Used Variance

 FDIC Operating Budget 

 Risk Management Supervision $ 590,074 $ 150,310 $ 126,956 84% $ (23,354)

 Information Technology 362,689 92,143 88,420 96% (3,723)

 Administration 298,292 73,480 62,190 85% (11,290)

 Depositor & Consumer Protection 184,506 46,681 41,215 88% (5,466)

 Legal 163,220 38,160 34,721 91% (3,439)

 Resolutions & Receiverships 130,773 32,735 29,248 89% (3,487)

 Complex Institution Supervision & Resolution 101,309 21,848 21,082 96% (766)

 Insurance & Research 63,791 15,762 13,584 86% (2,178)

 Inspector General 44,913 11,241 9,780 87% (1,461)

 Chief Information Security Officer 41,077 11,573 8,357 72% (3,216)

 Executive Support 1 39,105 8,303 8,684 105% 381

 Finance 37,172 8,814 9,147 104% 333

 Corporate University - Corporate 23,061 5,320 5,107 96% (213)

 Executive Offices 2 13,143 3,181 2,458 77% (723)

 Corporate Unassigned 185,423 0 0 0

 Total FDIC Operating Budget $2,278,548 $519,551 $460,949 89% ($58,602)

Executive Summary of 2021 Budget and Expenditures

by Division/Office

Through March 31, 2021

(Dollars in Thousands)