Federal Deposit 

Insurance Corporation 

 

MEMO 

TO: The Board of Directors 

FROM: Diane Ellis 

Director, Division of Insurance and Research 

DATE: December 14, 2021 

RE: Restoration Plan Semiannual Update 

SUMMARY 

The Federal Deposit Insurance Act (the FDI Act) requires that the FDIC’s Board of Directors (Board) 

adopt a restoration plan when the Deposit Insurance Fund (the DIF or the fund) reserve ratio falls below 1.35 

percent or is expected to within 6 months.1

 As of June 30, 2020, the reserve ratio had fallen below the statutory 

minimum and stood at 1.30 percent. On September 15, 2020, the Board adopted a Restoration Plan (Plan) to 

restore the DIF to at least 1.35 percent by September 30, 2028.2

 The Plan requires the FDIC to update its analysis 

and projections for the DIF balance and reserve ratio at least semiannually. This memorandum is the second 

semiannual update for 2021 following the establishment of the Plan in September 2020. Similar to the last 

update, staff recommend no changes to the Plan and will continue to update the Board semiannually, or more 

frequently as conditions warrant, to determine if changes to the Plan are necessary. 

Under the Plan, detailed below, the FDIC is monitoring deposit balance trends, potential losses, and 

other factors that affect the reserve ratio. While subject to uncertainty, based on a range of reasonable estimates 

of future losses and normal depositor behavior in the long-term, staff continue to project that the reserve ratio 

would return to 1.35 percent before the end of the statutory 8-year period beginning upon the implementation 

of the Plan. 

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

reserve ratio to decline below the statutory minimum as of June 30, 2020. Since the Board adopted the Plan, 

insured deposit growth decelerated compared to the extraordinary growth experienced in the first half of 2020. 

Banks experienced significant growth in insured deposits during the first quarter of 2021 due to subsequent 

additional fiscal stimulus and continued elevated savings rates. Since the first semiannual update was provided 

to the Board in June, insured deposits have grown in line with recent historical averages for the second and 

third quarters, resulting in a reserve ratio of 1.27 percent as of September 30, 2021. 

1

 12 U.S.C. § 1817(b)(3)(E). 

2 See 85 FR 59306 (Sept. 21, 2020). Under the FDI Act, a restoration plan must restore the reserve ratio to at least

1.35 percent within 8 years of establishing the plan, absent extraordinary circumstances. 12 U.S.C. 

§ 1817(b)(3)(E)(ii).
 

 

 

 

As infections receded following a rise in Coronavirus 2019 (COVID-19) cases over the summer months, 

coupled with progress on vaccinations, continued strengthening in indicators of economic activity, and waning 

fiscal support, the growth in insured deposits associated with the pandemic appears to have slowed through the 

third quarter of 2021. Although some uncertainty persists, including the recent rise in COVID-19 cases and the 

emergence of the Omicron variant, the overall economic outlook has strengthened relative to when the Plan 

was first adopted in September 2020, and the banking system continues to appear better positioned to 

withstand losses when compared to prior periods of stress. 

As described below, while insured deposit balances may remain elevated to some extent in the nearterm, recent trends in insured deposit growth have been at or below historical averages prior to the pandemic, 

indicating that growth rates may have begun to normalize. Whether the normalization of insured deposit growth 

continues and those insured deposits resulting from extraordinary growth will recede is uncertain, but staff 

expect more clarity in the future and will continue to monitor deposit trends. 

BACKGROUND 

As of June 30, 2020, the reserve ratio had fallen below the statutory minimum and stood at 1.30 

percent.3

 The decline in the reserve ratio during the first half of 2020 was solely a result of extraordinary insured 

deposit growth resulting from actions taken by monetary and fiscal authorities, and by individuals, businesses, 

and financial market participants in response to the COVID-19 pandemic. On September 15, 2020, the Board 

adopted a Plan to restore the DIF to at least 1.35 percent by September 30, 2028, maintaining the assessment 

rate schedule in place at the time. As of the first semiannual update to the Board in 2021, insured deposits grew 

due to subsequent additional fiscal stimulus and continued elevated savings rates, resulting in the reserve ratio 

falling to a low of 1.25 percent as of March 31, 2021.4 

Since then, the DIF balance continued to grow while quarterly insured deposit growth began to 

normalize, resulting in growth in the reserve ratio to 1.27 percent as of September 30, 2021. Table 1 shows the 

components of the reserve ratio for each quarter of 2021. Over this period, the DIF balance continued to grow 

and did not experience material losses. Assessment revenue declined, driven by lower assessment rates 

reflecting improvement in certain financial measures and in supervisory ratings. As of September 30, 2021, the 

DIF balance totaled a record $121.9 billion, up $2.6 billion from the end of the first quarter of 2021. 

3

 The reserve ratio is calculated as the ratio of the net worth of the Deposit Insurance Fund (fund balance) to the 

value of the aggregate estimated insured deposits at the end of a given quarter. See 12 U.S.C. § 1813(y)(3). 

4

 Restoration Plan Semiannual Update, June 15, 2021, available at: https://www.fdic.gov/news/boardmatters/2021/2021-06-15-notice-dis-a-mem.pdf. 

MEMO 2 
 

Table 1–Fund Balance, 

Estimated Insured Deposits, and Reserve Ratio 

[dollar amounts in billions] 

1Q 2021 2Q 2021 3Q 2021 

Beginning Fund Balance $117.9 $119.4 $120.5

 Plus: Net Assessment Revenue $1.9 $1.6 $1.7

 Plus: Investment Incomea * * $0.1 

Less: Loss Provisions ($0.1) * ($0.1)

 Less: Operating Expenses $0.5 $0.5 $0.5 

Ending Fund Balanceb $119.4 $120.5 $121.9 

Estimated Insured Deposits $9,514.0 $9,490.2 $9,577.1 

Q-O-Q Growth in Est. Insured Deposits 4.28% (0.25%) 0.92% 

Ending Reserve Ratio 1.25% 1.27% 1.27% 

*Absolute value less than $50 million 

a

Includes unrealized gains/losses on available-for-sale securities. b

Components of fund balance changes may not sum to totals due to rounding. 

In the first quarter of 2021, additional fiscal stimulus and continued elevated personal savings boosted 

insured deposits by 4.3 percent, nearly double the average quarterly growth rate of 2.3 percent from 2015 

through 2019, illustrated in Chart 1. Insured deposit growth has since moderated, returning to pre-pandemic 

historical rates. In the second quarter of 2021, insured deposits declined by 0.2 percent, which is a larger decline 

than the average decline of 0.01 percent experienced in second quarters between 2015 and 2019. Insured 

deposits grew by 0.9 percent during the third quarter of 2021, slightly below the historical average. 

For the first three quarters of 2021, insured deposits grew by $454 billion, with the vast majority of the 

growth occurring in the first quarter of 2021 due to the fiscal stimulus provided in January and again in March. 

While insured deposit balances may remain elevated to some extent in the near-term, recent trends in insured 

deposit growth have been at or below historical averages, indicating that growth rates may have begun to 

normalize. 

MEMO 3 
 

 

 

 

 

 

 

THE RESTORATION PLAN 

Under the FDI Act, when the reserve ratio falls below 1.35 percent the FDIC must establish and 

implement a restoration plan to restore the reserve ratio to at least 1.35 percent within 8 years of establishing 

the plan, absent extraordinary circumstances.5

 On September 15, 2020, the Board adopted a Restoration Plan to 

restore the DIF to at least 1.35 percent by September 30, 2028.6 

The Plan requires the FDIC to update its analysis and projections for the fund balance and reserve ratio 

at least semiannually, which enables the FDIC to evaluate whether the increase of the reserve ratio is likely to 

reach 1.35 percent within the 8-year period. This memorandum is the second semiannual update for 2021 

following establishment of the Plan in September 2020.

 While subject to uncertainty, based on a range of reasonable estimates of future losses and normal 

depositor behavior in the long-term, the Plan described below would restore the reserve ratio to the required 

minimum level by September 30, 2028, within the timeframe required by law. The Plan provides that: 

1. The FDIC will continue to monitor deposit trends, potential losses, and other factors that affect the 

reserve ratio. 

2. The FDIC will maintain the current schedule of assessment rates for all insured depository institutions 

(IDIs). 

3. At least semiannually, staff will update the Board on its analysis and projections for the fund balance 

and reserve ratio and, if necessary, recommend any modifications to the Plan, such as increasing 

assessment rates. 

To determine whether the reserve ratio has reached the statutory minimum, the FDIC will rely on the 

reserve ratio as of September 30, 2028.7 

SEMIANNUAL UPDATE 

As stipulated by the Plan, below is an updated analysis with respect to each element of the Plan. 

Deposit trends 

The extraordinary growth in insured deposits during the first half of 2020 was largely a result of actions 

taken by monetary and fiscal authorities, and by individuals, businesses, and financial market participants in 

response to the COVID-19 pandemic. Since the Board adopted the Plan, insured deposits grew by 1.0 percent 

during the third quarter of 2020 and by 2.2 percent during the fourth quarter of 2020, a significant deceleration 

from the extraordinary growth experienced in the first half of 2020, but still above average. During the first 

quarter of 2021, insured deposits increased by 4.3 percent, driven by two additional rounds of fiscal stimulus. 

Since the first semiannual update, banks experienced typical insured deposit growth, as insured deposits 

5

 12 U.S.C. § 1817(b)(3)(E). 

6 See 85 FR 59306 (Sept. 21, 2020). Under the FDI Act, a restoration plan must restore the reserve ratio to at least 

1.35 percent within 8 years of establishing the plan, absent extraordinary circumstances. 12 U.S.C. 

§ 1817(b)(3)(E)(ii). 

7

 The reserve ratio is based on total estimated insured deposits at the end of a given quarter. The FDIC will rely 

on the reserve ratio as of September 30, 2028, the first quarter-end date for which the reserve ratio will be 

known after September 15, 2028, the end date of the 8-year period. 

MEMO 4 
 

 

 

 

 

declined by 0.2 percent in the second quarter of 2021 followed by an increase of 0.9 percent in the third quarter 

of 2021. This moderation in insured deposit growth was attributable in part to a decline in support from fiscal 

stimulus programs and increases in consumer spending. 

Since the first semiannual update, economic conditions continued to improve. Following a 3.5 percent 

decline in gross domestic product (GDP) in 2020, GDP surpassed its pre-recession peak in the second quarter of 

2021. The unemployment rate was 4.6 percent in October 2021, which is down considerably from the high at the 

end of the February to April 2020 recession, but remains above pre-pandemic levels. However, economic growth 

slowed to 2.1 percent in the third quarter due in part to a rise in coronavirus cases, waning fiscal support, and 

supply constraints to production. These factors contributed to slower consumer spending in the third quarter. 

The personal savings rate has declined slightly below its pre-pandemic average to 7.3 percent as of October 

2021 from a year-to-date high of 26.6 percent in March 2021. Lower personal savings contributed to the 

moderation in deposit growth, reflecting a decline in support from fiscal stimulus programs and increases in 

consumer spending driven by the continued economic recovery and higher inflation. 

The economic outlook continues to strengthen, but remains uncertain. The November 2021 Blue Chip 

consensus forecast for GDP growth is 4.9 percent for the fourth quarter of 2021, and 5.5 percent for full-year 

2021. The positive outlook for economic growth reflects expectations of increased consumer and business 

spending and continued improvement in the labor market, which reduces the incentive for precautionary 

savings. The outlook for savings and deposits remains uncertain and depends on the outlook for consumer 

spending and incomes. Any unexpected economic weakness or concerns about slower than expected economic 

recovery, and any resurgence of infections or reinstatement of restrictive measures to mitigate infections, may 

cause businesses and consumers to maintain caution in spending, and keep deposit levels elevated. Continued 

supply chain pressures and higher inflation may cause consumer spending to rise further as consumers pay 

more for a similar amount of goods, or may cause consumers to delay or forgo some purchases. Similarly, 

unexpected financial market stress could prompt another round of investor risk aversion that could lead to an 

increase in insured deposits. A significant increase in fiscal spending or further stimulus could also provide 

uncertainty to normalizing the level of insured deposits.

 Going forward, staff expect normal depositor behavior in the long-term as economic conditions 

improve, the precautionary behavior exhibited by depositors continues to subside, and individuals and 

businesses redirect some deposits toward consumption and higher-yielding investments. Early fourth quarter 

deposit data monitoring indicates that seven weeks into the fourth quarter of 2021, estimated domestic 

deposits (including both insured and uninsured deposits) for domestically chartered commercial banks 

increased by 1.9 percent since September 30, 2021.8 

The impact of continued uncertainty on deposit balances is difficult to predict. Under the Plan, the FDIC 

will continue to monitor deposit balance trends and their impact on the ability of the reserve ratio to return to 

1.35 percent by September 30, 2028. 

Potential losses 

Losses from past and future bank failures affect the reserve ratio by lowering the fund balance. In 

recent years, the DIF has experienced low losses from IDI failures. On average, four IDIs per year failed between 

8

 Percent change for estimated weekly aggregate domestic deposits, which includes insured and uninsured 

deposits, at domestically chartered commercial banks only. This statistic is based on data that are reported 

weekly by a sample of banks and does not include deposits at other IDIs, including savings institutions. Federal 

Reserve, H.8 Data Release, Assets and Liabilities of Commercial Banks in the United States, data as of November 

17, 2021, available at https://www.federalreserve.gov/releases/h8/current/default.htm. 

MEMO 5 
 

 

 

 

 

2016 and 2020, at an average annual cost to the fund of about $256 million.9 No banks have failed thus far in 

2021, marking 13 consecutive months without a bank failure and the seventh year in a row with few or no 

failures. 

The total number of institutions on the FDIC’s Problem Bank List was 46 at the end of the third quarter 

of 2021, down significantly from the peak of 888 institutions in March 2011.10 The number of troubled banks is 

currently expected to remain at low levels through 2022. At September 30, 2021, the contingent loss reserve for 

anticipated failures was $12 million, down from $62 million one year earlier. 

Future losses to the DIF remain uncertain as the length and severity of the pandemic and the resulting 

potential economic and banking effects are still unclear, although prospects appear significantly more favorable 

compared to when the Plan was adopted in September of 2020. The uncertainties include, among others, the 

variable trends in COVID-19 infections and vaccinations, the length of time necessary for a full economic 

recovery, and evolving consumer behavior, which could have longer-term effects on the condition and 

performance of the banking industry. 

The banking industry has remained a source of strength for the economy, in part, because the stronger 

capital position of banks has better positioned them to withstand losses compared to 2008. Banks continued to 

be strongly capitalized in the third quarter of 2021, holding a higher amount and quality of capital than just prior 

to the 2008-2013 banking crisis. 

While many banks built substantial levels of reserves for potential losses in 2020, banks significantly 

reduced the pace of additional loan loss provisioning for most loan categories, with the industry reporting 

aggregate negative provisions in the first, second, and third quarters of 2021 as the economic outlook 

strengthened and the expectation for future credit losses declined significantly relative to 2020. However, 

reserve releases tapered off in the third quarter of 2021 and loan allowances remain above pre-pandemic levels 

implying some continued measure of conservativism in the midst of pandemic uncertainty. For example, some 

heightened credit risk remains, particularly related to businesses most acutely affected by the pandemic such as 

hospitality, travel, and certain commercial real estate sectors. 

To anticipate declines in capital that could trigger losses from IDI failures, the FDIC also monitors other 

measures, such as earnings, asset quality, and supervisory ratings. As of June 30, 2021, quarterly loan balances 

grew for the first time since the second quarter of 2020 and continued to grow through September 30, 2021, 

reflecting a modest uptick in loan demand. The net interest margin for the industry improved for the first time 

since the beginning of the pandemic, as persistent low interest rates have been contributing to contraction in 

the average net interest margins to record lows. Asset quality and supervisory ratings generally remain strong. 

Asset quality indicators deteriorated modestly in 2020 but remain considerably better than those reported 

during prior recessions and have improved through 2021. As of September 30, 2021, 0.9 percent of loan and 

lease balances were noncurrent, down from a year ago, and well below the peak of 5.46 percent in the first 

quarter of 2010. 

The banking industry remains resilient moving into the fourth quarter of 2021 despite the extraordinary 

challenges of the pandemic. Strong liquidity and capital levels at the end of 2021 should help to mitigate 

potential credit stress across loan portfolios. Under the Plan, the FDIC will continue to monitor these and other 

9

 FDIC, Annual Report 2020, Assets and Deposits of Failed or Assisted Insured Institutions and Losses to the 

Deposit Insurance Fund, 1934 – 2020, page 145, available at https://www.fdic.gov/about/financialreports/reports/2020annualreport/2020ar-final.pdf. 

10 “Problem” institutions are institutions with a CAMELS composite rating of “4” or “5” due to financial, 

operational, or managerial weaknesses that threaten their continued financial viability. 

MEMO 6 
 

 

 

 

 

data to project potential losses to the DIF and to assess their impact on the ability of the reserve ratio to return 

to 1.35 percent within 8 years of establishing the Plan. 

Other factors that affect the reserve ratio 

The FDIC also monitors other factors that affect the reserve ratio, including changes in IDI risk profiles, 

which influence assessment rates; growth in the assessment base; DIF investment income and unrealized gains 

and losses on investments; and operating expenses. Growth in the assessment base has contributed to 

increasing assessment revenue and growth in the DIF balance, which stands at an all-time high. Operating 

expenses remained steady, while low investment returns on securities held by the DIF have limited growth in the 

fund balance. 

Assessment revenue is still the main contributor to growth in the DIF balance. However, improvement 

in banks’ risk-based pricing profiles resulted in a modest decline in the industry’s weighted average assessment 

rate over the last few quarters. The most recent weighted average assessment rate was slightly below the 

average assessment rate assumed in the analysis described below in Table 2. Should lower assessment rates 

persist, staff may update assumptions appropriately as circumstances warrant. Conversely, as interest rates 

stabilize or rise, staff may loosen its assumption of zero investment income to better reflect expected returns on 

the investment portfolio. 

In future quarters, the weighted average assessment rate may increase or decrease as a result of 

changes in the risk profiles of institutions. While a decline in elevated insured deposit balances resulting from 

extraordinary growth would help increase the reserve ratio, it could reduce growth in the assessment base and 

constrain growth in the DIF. Investment returns on securities held by the DIF may remain low as a prolonged 

period of low interest rates continues, or could increase if market interest rates increase. Depending on how 

these combined factors affect growth in the reserve ratio, staff may recommend changes to the Plan in future 

updates. 

Current schedule of assessment rates 

In developing the Plan, staff projected the DIF balance and associated reserve ratio at the end of the 8-

year period beginning upon implementation of the Plan, assuming different annual rates of insured deposit 

growth. Staff updated its analysis using data through September 30, 2021. While subject to uncertainty, staff 

continue to believe that the reserve ratio would reach the minimum level by the statutory deadline while 

maintaining the current assessment rate schedule. 

Table 2 depicts the amount of losses that the DIF could absorb and still reach 1.35 percent within the 8-

year period.11 For example, if insured deposits grow at an annual rate of 2.5 percent over the next 7 years, the 

DIF could absorb losses of up to $21.2 billion and still reach the minimum reserve ratio requirement by 

September 30, 2028. Alternatively, if insured deposits grow at an annual rate of 4.5 percent over the next 7 years, 

the DIF would need an additional $1.0 billion for the reserve ratio to reach the 1.35 percent minimum. 

11 For simplicity, the analysis shown in Table 2 assumes that: (1) the assessment base grows 4.5 percent, 

annually; (2) the average assessment rate is 4.0 basis points; (3) interest income on the deposit insurance fund 

balance is zero; and (4) operating expenses grow at 1 percent per year. 

MEMO 7 
 

 

Table 2–Projected Reserve Ratio at September 30, 2028 

Assuming Different Rates of Insured Deposit Growth 

Annual 

Insured 

Deposit 

Growth 

Rate 

[percent] 

Industry 

Insured 

Deposits 

[billions of 

dollars] 

DIF 

Reserve 

Ratio 

[percent] 

DIF Balance 

needed to reach 

1.35 percent 

reserve ratio 

[billions of dollars] 

Amount available to 

absorb losses and 

reach 1.35 percent 

reserve ratio 

[billions of dollars] 

2.5 11,384 1.53 153.1 21.2 

3.0 11,779 1.48 158.4 15.9 

3.5 12,185 1.43 163.9 10.5 

4.0 12,603 1.38 169.5 4.8 

4.5 13,033 1.34 175.3 (1.0) 

It is reasonable that annual insured deposit growth could average less than 4.5 percent over the next 7 

years for two main reasons. First, annualized growth has been less than 4.5 percent or negative during most (59 

percent) quarters since quarterly reporting was adopted in 1991. Most importantly, as previously discussed, 

deposit growth could experience declines in the near-term now that direct stimulus payments have largely 

ended, as economic conditions continue to improve, and as the consumption and investment patterns of 

individuals and households exhibit less precautionary behavior. Additionally, insured deposits that resulted 

from extraordinary growth during the pandemic may recede as the economy recovers and spending normalizes, 

and any flow of such insured deposits out of the banking system would offset insured deposit growth to some 

extent. 

For purposes of this analysis, staff estimated how much insured deposits would have grown between 

December 31, 2019, and September 30, 2021, assuming the pre-pandemic average annual rate of 4.5 percent. 

Insured deposit balances in excess of that growth rate are estimated to total $1.13 trillion, and represent the 

surge in insured deposits that occurred as a result of the pandemic. If this excess amount of insured deposits 

does not recede but also does not contribute to further growth, while the remaining balance of insured deposits 

continue to grow at the pre-pandemic average annual rate of 4.5 percent, staff estimate that total insured 

deposits would reach $12.63 trillion as of September 30, 2028. That balance would represent an implied average 

annual insured deposit growth rate of 4.03 percent between September 30, 2021, and September 30, 2028. 

Under this scenario losses would have to approach $4.8 billion to prevent the reserve ratio from reaching 1.35 

percent by the end of the 8-year period. 

Due to the uncertainties discussed earlier, losses from bank failures remain difficult to project. 

However, the banking industry remains well capitalized, the number of banks on the problem bank list remains 

low, and the banking industry has remained resilient through the economic uncertainties posed by the 

pandemic. As the effects of the pandemic on the banking industry and the economic outlook continue to 

become more apparent, staff will reassess its analysis of insured deposit growth, potential losses, and other 

factors that affect the reserve ratio. 

Future updates 

This memorandum is the second semiannual update following the adoption of the Plan. While subject 

to uncertainty, based on a range of reasonable estimates of future losses and normal depositor behavior in the 

long-term, staff continue to project that the reserve ratio would return to 1.35 percent before the end of the 8-

year period beginning upon the implementation of the Plan. As COVID-19 infections receded following a rise in 

cases over the summer months, and with progress on vaccinations and continued strengthening in indicators of 

economic activity, insured deposits resulting from extraordinary growth during the pandemic may recede as the 

MEMO 8 
 

 

 

 

 

precautionary behavior exhibited by depositors subsides and individuals and businesses redirect deposits 

toward consumption and higher-yielding investments. The economic outlook has strengthened and appears 

more favorable than in September 2020 when the Plan was first adopted, and the banking system continues to 

appear better positioned to withstand losses when compared to prior periods of stress. However, several 

factors, such as slower than expected economic growth, inflationary pressures, supply chain disruptions, market 

volatility, adjustments in the stance of monetary policy, or additional fiscal stimulus could result in increased 

insured deposit growth or losses to the fund. 

Losses could be higher or lower than anticipated if economic conditions worsen or financial stresses 

facing IDIs prove more or less severe. For example, DIF loss projections may increase if the quality of IDI assets 

quickly deteriorates or capital markets become severely constrained, and income could be affected by the 

factors described previously. Insured deposit growth could be higher or lower based on future economic 

conditions and the response of fiscal and monetary authorities and depositors. A reduction in the average 

assessment rate or a reduction in the aggregate assessment base, which could be driven by a future flow of 

insured deposits out of the banking system, could reduce assessment revenue and constrain growth in the DIF. 

Future updates to the Board may include changes in assumptions that result in different assessment 

revenue needs. Consequently, in order to fulfill the statutory requirement that the reserve ratio returns to 1.35 

percent before the end of the 8-year period, absent extraordinary circumstances, the FDIC may need to adopt 

higher assessment rates than those currently in effect. Under assessment regulations, any increase in 

assessment rates greater than two basis points would require notice and comment.12 

Under the Plan, staff will continue to update its projections for the fund balance and reserve ratio at 

least semiannually while the Plan is in effect and to recommend rate adjustments as necessary. Staff continue to 

believe that frequent updates are necessary because loss and reserve ratio projections made so far into the 

future are subject to considerable uncertainty. 

Staff contacts: 

DIR 

Michael Spencer 

Associate Director, Financial Risk Management 

(202) 898-7041 

12 See 12 C.F.R. § 327.10(f). 

MEMO 9