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

301 Moved Permanently

301 Moved Permanently


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III. Budget Results - Third Quarter 2015

Approved Budget Modifications

The 2015 Budget Resolution delegated to the CFO the authority to modify approved 2015 staffing authorizations for divisions and offices, as long as those modifications did not increase the total approved 2015 Corporate Operating Budget.  The following changes were approved by the CFO in accordance with the authority delegated to him by the Board of Directors:

  • In August, the CFO approved an increase of seven non-permanent authorized positions in Division of Risk Management and Supervision (RMS).  Six positions were added to hire one CM-1 Supervisory Examiner (IT) in each region.  This increase provided for appropriate Supervisory Examiner (IT) spans of control in all regions following the addition of 30 new, non-permanent IT Examination Analyst positions at the beginning of 2015.  In addition, the CFO approved the addition of a non-permanent Section Chief position in the Accounting and Securities Disclosure Section to handle the Chief Accountant’s day-to-day supervision and management responsibilities for the next three years while the Chief Accountant is engaged in significant accounting policy issues related to the Basel Accords and implementation of expected new standards from the Financial Accounting Standards Board.
  • In August, the CFO approved an increase of one non-permanent position for a Senior Consumer Affairs Specialist in the Deposit and Consumer Protection (DCP) regional office in Kansas City.  This position was needed for temporarily elevated call center workload.

No reallocations of funds were made as there were sufficient funds to cover these positions in the Ongoing Operations budgets of both divisions.

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, 2015, are defined as those that either (1) exceed the YTD budget by $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 by an amount that exceeds $2 million and represents more than four percent of the major expense category or total division/office budget.

Significant Spending Variances by Major Expense Category

Ongoing Operations

There were significant spending variances in four of the seven major expense categories in the Ongoing Operations component of the 2015 Corporate Operating Budget through the third quarter.

  • Salaries and Compensation ($44 million, or 5 percent, less than budgeted).  The most significant variances in this expense category were in RMS ($17 million), the Legal Division ($5 million), the Division of Information Technology (DIT) ($3 million), the Division of Administration (DOA) ($3 million), the Division of Resolutions and Receivership (DRR) ($3 million), and DCP ($3 million).  Under spending in this expense category was largely attributable to vacancies in budgeted positions.
  • Outside Services – Personnel ($16 million, or 9 percent, less than budgeted).  DOA spent $3 million less than budgeted, largely due to delays in the salary structure review project and the nationwide rollout of the new badging system; and to lower-than-anticipated costs for contracted administrative support services due to high turnover among contractor employees and delays in bringing replacement contractor personnel on board.  DIT spent $2 million less than budgeted, primarily due to less than anticipated spending on the Infrastructure Services Contract. The Information Security & Privacy Staff spent $2 million less than budgeted, largely due to delays in completing new contract awards and background investigations of new contractors.  DRR spent $2 million less than budgeted primarily due to delays in initiating projects in its Complex Financial Institutions and Planning and Resource Management branches. Corporate University spent $1 million less than budgeted primarily due to lower than projected expenditures for projects in the Dallas Learning Center and the Schools of Corporate Operations, Leadership Development, and Supervision.  In addition, the combined Executive Support Offices spent $1 million less than budgeted for contractual services on a number of smaller projects.
  • Equipment expenditures ($28 million, or 39 percent, less than budgeted).  DIT spent $23 million less than budgeted, primarily because of delays in planned purchases of hardware and software from its technical refresh allowance.  Those purchases are now expected to occur in the fourth quarter.  In addition, DOA spent $4 million less than budgeted due to lower than projected equipment costs associated with its new badging initiative, significant savings realized from reusing instead of purchasing new furniture, and fluctuation in on-line information services usage.
  • Other Expenses ($2 million, or 19 percent, less than budgeted).  This variance was mostly due to underutilization of Professional Learning Accounts by employees and lower-than-projected office supply purchases across the Corporation.

Receivership Funding

The Receivership Funding component of the 2015 Corporate 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 and related expenses for permanent employees assigned to the receivership management function.

There were significant spending variances in this budget component in three of the seven major expense categories through the third quarter.

  • Salaries and Compensation ($5 million, or 7 percent, less than budgeted).  This variance was largely attributable to early departures from term positions not being renewed.
  • Outside Services-Personnel ($43 million, or 17 percent, less than budgeted).  DRR spent $37 million less than budgeted as resolutions, asset management and marketing costs declined at a faster rate than projected.  This resulted in lower than budgeted expenses for contracts supporting Owned Real Estate, Loan Servicing, Loss Share Agreement Monitoring, and Capital Markets.
  • Other Expenses ($5 million, or 31 percent, less than budgeted).  This variance was attributable to the transfer of banking operations and the disposition of failed bank assets more quickly than expected.

Significant Spending Variances by Division/Office

Nine organizations had significant spending variances through the end of the third quarter:

  • DRR ($52 million, or 16 percent, less than budgeted).  Approximately $47 million of this under-spending was in the Receivership Funding Budget component due to lower than anticipated resolutions and receivership expenses and workload.
  • DIT ($31 million, or 17 percent, less than budgeted).   This variance was largely attributable to vacancies in budgeted positions, delays in hardware and software purchases, and lower-than-budgeted support costs for failed financial institutions.
  • RMS ($20 million, or 5 percent, less than budgeted).  This variance was largely attributable to vacancies in budgeted positions and lower than budgeted examination travel expenses associated with those vacancies.
  • DOA ($17 million, or 8 percent, less than budgeted).  This variance was largely attributable to lower than budgeted spending in its Ongoing Operations budget component for salaries and compensation ($3 million) due to vacancies in budgeted positions; equipment ($4 million) due to less-than-budgeted expenses for the new badging initiative, furniture, and online information services; buildings ($3 million) due to delays in the Student Residence Center plumbing project and the data center air handler replacement project; and contractual support ($3 million) due to delays in starting the salary structure review project and the nationwide rollout of the new badging initiative.  In addition, DOA spent approximately $2 million less than budgeted in the Receivership Funding budget component to support bank closings.
  • Legal Division ($12 million, or 6 percent, less than budgeted).  This variance was due to under-spending of approximately $7 million for salaries and compensation category ($5 million in the Ongoing Operations budget component and $2 million in the Receivership Funding budget component) due to vacancies in budgeted non-permanent positions and slower than projected hiring to fill those vacancies, and $5 million for outside counsel to support receivership-related litigation.
  • Office of Complex Financial Institutions ($3 million, or 22 percent, less than budgeted).  This variance was largely attributable to vacancies in budgeted positions and lower than budgeted travel expenses associated with those vacancies.
  • Information Security and Privacy Staff ($3 million or 13 percent less than budgeted).  This variance was primarily attributable to delays in completing new contract awards and background investigations of new contractors.
  • Office of Inspector General ($3 million, or 11 percent, less than budgeted).  This variance was attributable to vacancies in budgeted positions and slower than expected hiring to fill those vacancies.
  • The Executive Support Offices ($2 million, or 11 percent, less than budgeted).  This variance was mostly attributable to slower-than-projected hiring to fill vacant positions and lower-than-budgeted spending for contract services.



Last Updated 12/02/2015 dofbusinesscenter@fdic.gov

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