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Chief Financial Officer's (CFO) Report to the Board

III. Budget Results - Third Quarter 2018

Approved Budget Modifications

The 2018 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other officials the authority to make certain modifications to the 2018 FDIC Operating Budget.  The following budget reallocations were approved during the third quarter in accordance with the authority delegated by the Board of Directors.

Following these budget modifications, the balances in the Corporate Unassigned contingency reserves as of September 30, 2018, were $20,634,877 in the Ongoing Operations budget component and $23,908,578 in the Receivership Funding budget component.

Approved Staffing Modificatons

The 2018 Budget Resolution delegated to the CFO the authority to modify approved 2018 staffing authorizations for divisions and offices, as long as those modifications did not increase the total approved 2018 FDIC Operating Budget. 

Spending Variances

Significant spending variances by major expense category and division/office are discussed below.  Significant spending variances for the nine months ending September 30, 2018, are defined as those that either (1) exceed the YTD budget by more than $1 million and represent more than two percent of a major expense category or total division/office budget; or (2) are under the YTD budget for a major expense category or division/office budget by an amount that exceeds $7 million and represents more than seven percent of the major expense category or total division/office budget.

Significant Spending Variances by Major Expense CategoryOngoing Operations

Ongoing Operations

There were significant spending variances in three major expense categories of the Ongoing Operations budget component at the end of the third quarter:

Outside Services – Personnel expenditures were $18.7 million, or 10 percent, below budget. This was the result of under-spending by several organizations:

Equipment expenditures were $15.4 million, or 17%, under budget, mostly due to delays in equipment purchases for the backup data center and technology refreshment in DIT and OCISO.

Buildings expenditures were $12.3 million, or 16%, under budget due to procurement delays for four Headquarters building projects.  Building improvement projects for the San Francisco Regional Office were also deferred, and reimbursements from the construction contractor for expenses related to a San Francisco Regional Office project were credited to the Buildings/Miscellaneous Operating account, which decreased total net expenses incurred for the year.

Receivership Funding

The Receivership Funding component of the 2018 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. 

There was a significant spending variance in one major expense category of the Receivership Funding budget component at the end of the third quarter.  Spending for Outside Services - Personnel was $21 million, or 17%, below budget. This variance was mainly attributable to underspending for pre-closing and closing activities by the Division of Resolutions and Receiverships (DRR) because there have been no bank failures in 2018.  Lower-than-anticipated expenses in the Legal Division for outside legal counsel services for receivership and resolution activities also contributed to this variance.

Office of Inspector General

There were no significant spending variances through the third quarter in any major expense category of the Office of Inspector General budget component.

Significant Spending Variances by Division/Office 1

Five organizations had a significant spending variance through the end of the third quarter.


1Information on division/office variances reflects variances in the FDIC Operating Budget.