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Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

Home > About FDIC > Financial Reports > 2002 Annual Report

2002 Annual Report

I. Management’s Discussion and Analysis

Operations of the Corporation – The Year in Review


Operating More Efficiently

The Corporation took a number of steps in 2002 to improve its overall efficiency and effectiveness, from internal restructuring and downsizing to enhancing technology-related tools.

Corporate Reorganization
The FDIC substantially revamped its internal organizational structure to improve operational efficiency and unify corporate efforts in each of the three major business lines: insurance, supervision, and receivership management. As part of this major restructuring, the FDIC also streamlined the Corporation’s management and support structures.

The major organizational changes made in 2002 include:

  • The Division of Insurance and the Division of Research and Statistics were merged into a new Division of Insurance and Research to facilitate a more integrated and effective research and policy leadership capability.

  • The Division of Supervision and the Division of Compliance and Consumer Affairs were merged into a new Division of Supervision and Consumer Protection. The regional and field structure of the new division was also streamlined, with a reduction in the number of regional offices from eight to six. Additionally, 89 field offices were consolidated into 52 territories for safety and soundness functions, and 73 field offices were consolidated into 30 territories for compliance functions.

  • The receivership accounting operations of the Division of Finance were transferred to the Division of Resolutions and Receiverships to better align business processes in the Corporation's receivership management program.

  • Personnel and training functions were merged to create a new Human Resources Branch within the Division of Administration.

The Corporation also took steps to complete the downsizing that it has been addressing for much of the past decade. Employment dropped from 6,167 at the beginning of 2002 to 5,430 at year-end 2002 as a result of declining workloads and organizational streamlining. Much of the needed reduction in staffing was accomplished voluntarily through targeted buyout programs that resulted in the retirement or resignation of approximately 700 employees and the reassignment of surplus employees to vacant positions elsewhere within the Corporation. In addition, approximately 30 surplus attorney positions were eliminated through a reduction-in-force in May. The decade of downsizing is substantially completed.

The savings resulting from corporate restructuring, downsizing and other initiatives directed toward cost containment and improved operating efficiency will, when fully realized, reduce future corporate operating costs by an estimated $80 million annually. The initial impact can be seen in the 2003 budget adopted by the Board of Directors in December 2002. Estimated 2003 spending will decline by seven percent from 2002 spending.

Corporate University
In another move to improve its long-term operational efficiency and effectiveness, the Corporation began developing a new Corporate University that will be modeled on the best practices of high-performing organizations in both the public and private sectors. The new Corporate University will provide an integrated framework for addressing future leadership development and skill requirements. It will include core training programs for the FDIC’s three major business lines – insurance, supervision, and receivership management – and give employees the opportunity for cross-training and job rotation. This will facilitate the establishment, over time, of a flexible, permanent workforce capable of responding expeditiously to changing workload needs and priorities. Leadership development programs will assist in providing a strong foundation for current and future FDIC leaders. The Corporate University will use technology, seminars, hands-on experience and traditional instruction to make learning easier, more convenient and continual.

Information Technology Initiatives
In 2002, the Corporation also continued to pursue a number of major technology-related investments that will, when implemented, reduce future operating costs. The largest of these projects, the New Financial Environment (NFE), will greatly improve operating efficiencies and provide substantial cost savings to the FDIC after it is implemented in mid-2004. The NFE will replace the Corporation’s current accounting and related systems and will facilitate the implementation of streamlined work processes. It will also provide better information and support to FDIC management for decision-making.

In addition, the FDIC continued to develop FDICconnect, a secure electronic Web-enabled environment allowing the Corporation to electronically exchange information with insured financial institutions. With the automation of data exchanges, the FDIC will be able to streamline and improve business processes, and reduce costs. In particular, the faster receipt of information will enable the FDIC to provide more timely information to the public.

Phase II Construction of the Seidman Center
In March 2002, the FDIC Board of Directors unanimously approved the expenditure of $110.9 million for Phase II construction at the FDIC’s existing Seidman Center facility in Northern Virginia. The Corporation’s decision was based on an extensive analysis of various lease, purchase and build scenarios. Phase II construction was determined to be the most economical option over the long term. The project will save the FDIC an estimated $78 million over 20 years on a net present value basis compared to the projected costs of continued leasing in downtown Washington, DC. Phase II construction is targeted for completion by 2006.

Last Updated 03/31/2003

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