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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 - First Quarter 2014

Approved Budget Modifications

The 2014 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other officials the authority to make certain modifications to the 2014 Corporate Operating Budget.  The following budget reallocations were approved during the first quarter in accordance with the authority delegated by the Board of Directors.

In January 2014, the Division of Information Technology (DIT) and the Office of Minority and Women Inclusion (OMWI) realigned small portions of their approved Corporate Operating Budgets among various expense categories.  In the Ongoing Operations budget component, DIT increased its Outside Services – Other expense category by $467,898, offset by reductions in the Outside Services – Personnel, Equipment, and other expense categories.   DIT also reallocated $351,388 between three expense categories in the Receivership Funding component of its budget.  OMWI realigned $54,164 between several expense categories within its Ongoing Operations budget component.  All adjustments were administrative in nature to better align funding resources with planned expenditures.  None of the budget realignments increased or decreased the total original Board-approved budget for either DIT or OMWI, or the Ongoing Operations or Receivership Funding components of their budgets.

 Spending Variances

Significant spending variances by major expense category and division/office are discussed below.   Significant spending variances for the three months ending March 31, 2014, are defined as those that either (1) exceed the YTD budget by $3 million and represent more than five percent for 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 $5 million and represents more than ten percent of the major expense category or total division/office budget.

Significant Spending Variances by Major Expense Category

Ongoing Operations

There was a significant spending variance during the first quarter in only one major expense category of the Ongoing Operations component of the 2014 Corporate Operating Budget.

  • Equipment expenditures were $5 million, or 42 percent, less than budgeted.  The Division of Administration (DOA) spent $3 million less than budgeted due to lower spending for online information services and under-spending for furniture, fixture and equipment (FF&E).  DOA anticipates these variances will decrease as the year progresses.  In addition, DIT spent $2 million less than budgeted for hardware and software maintenance due delays in the timing of budgeted purchases.

Receivership Funding

The Receivership Funding component of the 2014 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 expenses for permanent employees assigned to the receivership management function.

There was a significant spending variance in two of the seven major expense categories during the first quarter in the Receivership Funding component of the 2014 Corporate Operating Budget:

  • Outside Services-Personnel expenditures were $19 million, or 19 percent, less than budgeted. This variance was attributable to lower-than-budgeted contract expenses during the first quarter due to fewer bank closings than budgeted, less costly resolutions, and lower-than-anticipated asset management and marketing costs booked through March.  This resulted in lower expenses for contracts supporting Owned Real Estate, Valuations, Securitizations, Due Diligence, Shared-Loss, Receivership Assistance Contracts, and Structured Sales.
  • Other Expenses expenditures were $3 million, or 58 percent, more than budgeted.  This variance was attributable to costs incurred for the transfer of banking operations and the disposition of failed bank assets.

 Significant Spending Variances by Division/Office1

Only three organizations had significant spending variances through the end of the first quarter:

  • The Division of Resolutions and Receiverships spent $17 million, or 13 percent, less than budgeted, mostly due to less-than-budgeted spending for resolution and receivership workload for the reasons described above.
  • The Legal Division spent $10 million, or 13 percent, less than budgeted.  Approximately $7 million of this variance was in the Receivership Funding budget component and was largely attributable to lower-than-budgeted spending for legal services contracting and slower-than-projected hiring to fill budgeted positions.  Additionally, a $2 million variance in the Ongoing Operations budget component was due to slower-than-projected hiring.
  • DOA spent $6 million, or 9 percent, less than budgeted when its Investment Budget spending is taken into account.  However, it spent $8 million, or 13 percent, less than budgeted under the Corporate Operating Budget.  That variance was largely attributable to lower-than-projected spending for online information services and FF&E purchases; delays in awarding a Human Resource contract; under-spending for the digitizing of all background investigation case holdings and instituting an electronic records management system now expected to begin during the second quarter; delays in bringing replacement contract personnel on board to perform background investigations; and delays in filling budgeted positions.  This variance was partially offset by earlier-than-anticipated spending of over $2 million from its budget for the 550 HVAC Retrofit investment project.

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1Information on division/office variances reflects variances in both the Corporate Operating and Investment Budgets.





Last Updated 06/03/2014 dofbusinesscenter@fdic.gov

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