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Federal Deposit
Insurance Corporation

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

2017 Annual Performance Plan

Insurance Program

The FDIC maintains stability and public confidence in the U.S. financial system by providing deposit insurance.  Through its industry and consumer awareness programs, the FDIC seeks to increase public awareness and understanding of deposit insurance rules and coverage.  The FDIC and other federal regulatory agencies make sure that insured depository institutions accurately disclose uninsured products.  The FDIC also informs depositors and financial institution staff about how the insurance rules and limits apply to specific deposit accounts.

Before a prospective insured depository institution can open for business, it must apply to the FDIC for federal deposit insurance.  The FDIC then evaluates an applicant’s potential risk to the Deposit Insurance Fund (DIF) by assessing the adequacy of its capital, future earnings potential, and the general character of its management.  Before granting access to the federal deposit insurance system, the FDIC also considers the needs of the community that the applicant plans to serve and obtains input from other regulatory authorities.

Communication and coordination with the other bank regulatory agencies are top priorities for the FDIC.  As the insurer, the FDIC, by statute, has special (back-up) examination authority for all insured depository institutions.  If significant emerging risks or other serious concerns are identified for an insured depository institution for which the FDIC is not the primary federal supervisor, the FDIC and the institution’s primary supervisor work together to address those risks or concerns.1

When an insured depository institution fails, the FDIC makes sure that the institution’s customers have prompt access to their insured deposits and other services.  To keep pace with the evolving banking industry and maintain its readiness to protect insured depositors, the FDIC prepares and maintains contingency plans to respond promptly to a variety of failure scenarios for insured depository institutions.

The financial crisis of 2008–09 and ensuing recession resulted in a large number of depository institution failures and high losses to the DIF.  The number of problem banks peaked in 2010 and has been declining since 2011.  Similarly, the number of bank failures declined from a peak of 157 in 2010 to five in 2016. This trend has allowed the FDIC to rebuild the DIF.  As of December 31, 2016, the fund balance had risen to $83.2 billion from a low of -$20.9 billion at the end of 2009.  In addition, the reserve ratio (the fund balance as a percent of estimated insured deposits) had risen to 1.20 percent at the end of 2016 from 1.11 percent a year earlier.

The Dodd-Frank Act (DFA) of 2010 revised the statutory authorities governing the FDIC’s management of the DIF.  As a result of the changes mandated by the DFA, the FDIC developed a comprehensive, long-term management plan for the DIF that sets a target reserve ratio of 2 percent and a strategy for establishing assessment rates and dividends to meet that target.  The plan also aims to achieve moderate, steady assessment rates throughout economic and credit cycles to reduce pro-cyclicality while maintaining a positive fund balance even during a banking crisis.  The DFA requires that the reserve ratio reach 1.35 percent by September 30, 2020, and the FDIC has adopted a Restoration Plan to ensure that the reserve ratio reaches that threshold as required. 

As part of its DIF management plan, the FDIC has updated its risk-based assessment system to ensure that insurance assessments better reflect the risk that institutions pose to the DIF.



1 An institution’s charter and its Federal Reserve System membership status determine which federal banking agency is the institution’s primary federal supervisor.

The table below depicts the strategic goal, strategic objectives, and annual performance goals for the Insurance Program.

Strategic Goal

Strategic Objectives

Annual Performance Goals

Insured depositors are protected from loss without recourse to taxpayer funding.

Customers of failed insured depository institutions have timely access to insured funds and financial services.

Respond promptly to all insured financial institution closings and related emerging issues. (1.1-1)

The FDIC promptly identifies and responds to potential risks to the DIF.

Disseminate data and analyses on issues and risks affecting the financial services industry to bankers, supervisors, the public, and other stakeholders on an ongoing basis. (1.2-1)

The DIF and the deposit insurance system remain strong and adequately financed.

Adjust assessment rates, as necessary, to achieve a DIF reserve ratio of at least 1.35 percent of estimated insured deposits by September 30, 2020. (1.3-1)

Expand and strengthen the FDIC’s participation and leadership role in supporting robust and effective deposit insurance programs, resolution strategies, and banking systems worldwide. (1.3-2)

The FDIC resolves the failure of insured depository institutions in the manner least costly to the DIF.

Market failing institutions to all known qualified and interested potential bidders.
(1.4-1)

The public and FDIC-insured depository institutions have access to accurate and easily understood information about federal deposit insurance coverage.

Provide educational information to insured depository institutions and their customers to help them understand the rules for determining the amount of insurance coverage on deposit accounts. (1.5-1)

 


STRATEGIC GOAL 1:
Insured depositors are protected from loss without recourse to taxpayer funding.


STRATEGIC OBJECTIVE 1.1

Customers of failed insured depository institutions have timely access to insured funds and financial services.

Annual Performance Goal 1.1-1

Respond promptly to all insured financial institution closings and related emerging issues.

Indicators and Targets

  1. Number of business days after an institution failure that depositors have access to insured funds
    • Depositors have access to insured funds within one business day if the failure occurs on a Friday.
    • Depositors have access to insured funds within two business days if the failure occurs on any other day of the week.
  1. Insured depositor losses resulting from a financial institution failure
    • Depositors do not incur any losses on insured deposits.
    • No appropriated funds are required to pay insured depositors.

Means and Strategies

Operational Processes (initiatives and strategies):  When an insured institution is identified as a potential failure, the FDIC develops a plan to handle the possible resolution of the institution.  This begins with an assessment of the institution’s assets and liabilities.  The FDIC then develops an information package that is used as a marketing tool and is provided to institutions that are interested in assuming the failed institution.  The FDIC solicits proposals from approved bidders to find a buyer for the deposit franchise.

If the federal or state supervisor chooses to close the institution, the FDIC is named receiver, takes control of the failed institution, and determines which deposits are insured.  Once the FDIC is appointed receiver, it initiates the resolution process for the failed institution.

If the failed institution is sold to another insured institution, the FDIC works with the assuming institution to transfer the insured deposit accounts as quickly as possible.  If no assuming institution is found during the resolution process, the FDIC disburses insured deposit balances directly to customers of the failed institution.  In either case, the FDIC provides the insured depositors with access to their accounts within one or two business days.

As banking industry practices and technologies evolve, so do potential risks that might affect the resolution process.  The FDIC continues to review and enhance its existing plans, processes, and systems in response to those changes and potential risks.

Human Resources (staffing and training):  For 2017, the FDIC has authorized staffing of 534 employees dedicated to handling the failure of insured financial institutions and the management of ensuing receiverships.  This includes 385 permanent positions and 149 nonpermanent positions.  The number of both permanent and nonpermanent authorized positions is lower than in 2016, reflecting a continuing reassessment of the number staff needed to maintain FDIC’s ability to quickly respond to future financial industry downturns and decline in the number of insured institution failures and assets under management. There are still a large number of open receiverships resulting from prior-year failures. Completing the residual management responsibilities related to these open receiverships will continue to substantially affect the FDIC’s workload for several years.

Information Technology:  Technology is critical to making deposit insurance determinations and payments efficiently.  The FDIC uses the Claims Administration System (CAS) to identify depositors’ insured and uninsured funds in failing and failed banks.  For every failing bank, CAS is used prior to failure to estimate the amount of uninsured deposits for the least-cost test.  When an insured deposit transaction is the least-cost resolution, CAS is used to determine the amount of the depositors’ funds that is insured.  For all failures, CAS is the system of record for the deposits of the failed bank and subsequent claims processing and tracking.

Verification and Validation

If insured deposits are transferred to a successor institution, the number of business days before depositors have access to their insured funds is verified by comparing the date of failure to the date that the successor insured depository institution opens for business and makes insured funds available to the failed institution’s depositors.  For a depositor payout, the availability of funds is verified by comparing the date of failure with the date that deposit insurance checks are mailed to depositors or made available for pickup at the premises of the failed institution.

2016 Performance Results

The FDIC successfully met the performance target for this annual performance goal for each of the five insured institution failures that occurred in 2016.  This annual performance goal and its associated performance indicators and targets are unchanged for 2017.


STRATEGIC OBJECTIVE 1.2

The FDIC promptly identifies and responds to potential risks to the DIF.

Annual Performance Goal 1.2-1

Disseminate data and analyses on issues and risks affecting the financial services industry to bankers, supervisors, the public, and other stakeholders on an ongoing basis.

Indicator and Targets

  1. Scope and timeliness of information dissemination on identified or potential issues and risks
    • Disseminate results of research and analyses in a timely manner through regular publications, ad hoc reports, and other means.
    • Undertake industry outreach activities to inform bankers and other stakeholders about current trends, concerns, and other available FDIC resources.

Means and Strategies

Operational Processes (initiatives and strategies):  The FDIC maintains a vigorous research and publications program that focuses on issues and topics of importance to the banking industry. Much of this research is conducted in collaboration with the academic community through the Center for Financial Research (CFR).  Research findings are disseminated through CFR Working Papers, articles in professional journals, and presentations at conferences and other events.  The FDIC also disseminates information and analyses on industry risks through periodic reports and publications (e.g., the FDIC Quarterly Banking Profile and the FDIC Quarterly), Financial Institution Letters, participation in industry events, and other outreach activities.

The FDIC conducts outreach sessions several times each year throughout the country.  In addition, FDIC employees regularly attend conferences and meet with industry analysts and trade groups to exchange views and analyses.  They also present Directors’ College outreach sessions to local bank board members.  During these sessions, FDIC employees share information with bank directors on current risks, new regulations, and emerging issues.  In addition, local FDIC offices nationwide conduct banker roundtable events that provide a forum for bankers to receive information and raise questions about new regulatory guidance or emerging risks.

Human Resources (staffing and training): The FDIC employs economists, financial analysts, and other staff members who monitor risks within the banking industry and communicate those risks to FDIC management, other regulators, the industry, the public, and other stakeholders through a variety of media and forums.

Visiting scholars also participate in the FDIC’s risk analysis program, and risk-focused examination training has been incorporated into the FDIC’s examination schools. In addition, the FDIC uses examiners and other staff located throughout the country to conduct banker outreach sessions as a collateral duty.

Information Technology: The FDIC’s website (www.fdic.gov) is a centralized source for FDIC research and analysis on potential areas of risk that is available to the industry, the public, and other regulators.  Databases and reports provide comprehensive financial and structural information about every FDIC-insured institution.  The data are provided in multiple formats, including eXtensible Business Reporting Language (XBRL), to provide access to financial institution information for all users of the data, including financial institutions, bank regulators, and the public.

Verification and Validation

Timely analyses of banking industry risks are included in regular publications or issued as ad hoc reports.  Industry outreach activities aimed at the banking community and industry trade groups promote discussion of current trends and concerns and inform bankers about available FDIC resources.  Publications and outreach events are documented through established reporting processes.

2016 Performance Results

The FDIC successfully met the performance targets for this annual performance goal in 2016.  This annual performance goal and its associated performance indicator and targets are unchanged for 2017.


STRATEGIC OBJECTIVE 1.3    

The DIF and the deposit insurance system remain strong and adequately financed.

Annual Performance Goal 1.3-1

Adjust assessment rates, as necessary, to achieve a DIF reserve ratio of at least 1.35 percent of estimated insured deposits by September 30, 2020.

Indicators and Targets

  1. Updated fund balance projections and recommended changes to assessment rates
    • Provide updated fund balance projections to the FDIC Board of Directors by June 30, 2017, and December 31, 2017.
    • Recommend changes to deposit insurance assessment rates to the FDIC Board of Directors as necessary.
  1. Demonstrated progress in achieving the goals of the Restoration Plan
    • Provide progress reports to the FDIC Board of Directors by June 30, 2017, and December 31, 2017.

Means and Strategies

Operational Processes (initiatives and strategies): This rule reflects the requirements imposed by the Dodd-Frank Act to increase the reserve ratio of the DIF.  On June 30, 2016, a final rule went into effect that imposes surcharges on large banks. This rule, and the Restoration Plan adopted by the Board of Directors, will help the FDIC achieve the required 1.35 reserve ratio by September 30, 2020.  As of December 31, 2016, the fund balance had risen to $83.2 billion from its low of -$20.9 billion at the end of 2009.  The reserve ratio at December 31, 2016, was 1.20 percent.

The FDIC’s Financial Risk Committee (FRC) recommends to the Chief Financial Officer a DIF contingent loss reserve for anticipated failures.  The FRC regularly reviews adverse events to identify lessons or implications for monitoring and addressing risks, and consults with the other federal banking agencies in its deliberations. 

The FDIC also maintains and, as necessary, enhances models that forecast failures, failure resolution costs, assessment revenue, investment revenue, operating expenses, and insured deposit growth in order to update the outlook for the insurance fund balance and reserve ratio and ensure compliance with the Restoration Plan. 

In addition, the FDIC continues to enhance the techniques and methodologies used to analyze the nature of risk exposure, including scenario analysis and stress testing.

Human Resources (staffing and training):  FDIC staff performs the analytical work associated with deposit insurance pricing and analysis of fund adequacy.  The FDIC will continue to expand its ties to the academic community to broaden the information and analytical perspectives available to it as steward of the DIF.

Information Technology:  The Risk-Rated Premium System (RRPS) calculates the premiums that financial institutions are assessed for deposit insurance.  RRPS is updated and tested when the insurance assessment pricing structure changes.

Verification and Validation

Pursuant to the Federal Information Security Management Act, a security review of RRPS is conducted annually to ensure that the system identifies higher-risk institutions and appropriately assesses higher insurance premiums. In addition, the Government Accountability Office reviews annually the methodology used to determine the contingent loss reserve.

In 2017, the FRC will again conduct semiannual reviews of the contingent loss reserve methodology by analyzing the difference between projected and actual losses. In addition, FDIC staff will report semiannually to the FDIC Board of Directors on progress made in meeting the goals of the Restoration Plan.

2016 Performance Results

The FDIC successfully met the performance targets for this annual performance goal in 2016. This annual performance goal and its associated performance indicators and targets are substantively unchanged, although the dates have been updated for 2017.


Annual Performance Goal 1.3-2

Expand and strengthen the FDIC’s participation and leadership role in supporting robust and effective deposit insurance programs, resolution strategies, and banking systems worldwide.

Indicator and Targets

  1. Activities to expand and strengthen engagement with foreign jurisdictions and advance the FDIC’s global leadership and participation
    • Foster strong relationships with international banking regulators, deposit insurers, and other relevant authorities by engaging with strategically important jurisdictions and organizations on key international financial safety net issues.
    • Continue to play leadership roles within key international organizations and associations and promote sound deposit insurance, bank supervision, and resolution practices.
  1. Provision of technical assistance to foreign counterparts
    • Promote international standards and expertise in financial regulatory practices and stability through the provision of technical assistance and training to global financial system authorities.

Means and Strategies

Operational Processes (initiatives and strategies):  As a recognized global leader in promoting sound deposit insurance, bank supervision, and resolution practices, the FDIC provides technical guidance, training, consulting services, and information to governmental banking, deposit insurance, and resolutions organizations around the world. This is achieved, in part, through the FDIC’s relationships with international financial institutions and regulatory agencies, and its leadership roles and participation in the International Association of Deposit Insurers (IADI), the Financial Stability Board (FSB), and the Association of Supervisors of Banks of the Americas (ASBA).  The FDIC’s Vice Chairman is currently serving as President and Chairman of the Executive Committee of IADI.  In 2017, the FDIC will continue to support the governance, training, and other activities of the IADI, FSB, and ASBA.

In addition, the FDIC will engage bilaterally and multilaterally in 2017 with priority foreign authorities to further develop resolution strategies for global systemically important financial institutions (G-SIFIs) that are chartered or have a substantial presence in the U.S.  This includes, among other things, participation in the FDIC-European Commission working group; close work with the Bank of England’s Resolution Directorate and the Single Resolution Board; tabletop exercises, principal-level events, and joint papers; hosting of foreign delegations; and support for missions to foreign authorities.  The FDIC also will convene Crisis Management Groups (CMGs) for G-SIFIs based in the United States, attend CMGs for non-U.S. G-SIFIs with significant U.S. operations, and participate in activities intended to implement the Key Attributes of Effective Resolution Regimes for Financial Institutions (Key Attributes) from a U.S. perspective.  The Key Attributes, endorsed by the Group of Twenty (G-20) in 2011, set out the core elements necessary for an effective resolution regime, including the ability to manage the failure of a G-SIFI in a way that minimizes systemic disruption and avoids the exposure of taxpayers to the risk of loss.

The FDIC will support visits and technical assistance for foreign counterparts that strengthen bank supervision and regulation and promote the adoption of sound deposit insurance and resolution frameworks.  The FDIC will continue to promote the adoption of sound bank supervisory principles and practices in the Americas by providing subject matter experts as instructors for ASBA-sponsored training and ASBA-led research and guidance initiatives.

The FDIC will support the International Monetary Fund and World Bank in their Financial Sector Assessment Program (FSAP), Reports on the Observance of Standards and Codes, and Technical Assistance by offering to provide subject matter experts for deposit insurance program reviews and resolution-related matters.  The FDIC will continue its work with the FSB to develop an assessment methodology for the Key Attributes.

Human Resources (staffing and training): Available resources include an international affairs team dedicated to promoting the adoption of sound bank supervision, resolution, and deposit insurance principles and coordinating the FDIC’s global outreach and technical assistance programs supplemented by subject matter experts within the FDIC.  The International Affairs Branch regularly coordinates and collaborates with other divisions and offices on the FDIC’s major international activities and outreach in order to advance the FDIC’s international agenda.

Information Technology: Information about the FDIC’s international programs, such as technical assistance, foreign visitor, and international leadership development programs, as well as associations with international bodies including IADI, ASBA, and the European Forum of Deposit Insurers, is communicated through the FDIC’s public website (www.fdic.gov).  

Verification and Validation

Progress in meeting this annual goal is reported to FDIC’s Division of Insurance and Research through established goal and strategy tracking processes.  Quarterly reports document trends in the number of foreign visitors, foreign officials trained, technical assistance missions, and FDIC participation and leadership in key international organizations.

2016 Performance Results

The performance targets for this goal were successfully met in 2016.  This annual performance goal and its associated performance indicators are unchanged, but the performance targets have been updated for 2017.


STRATEGIC OBJECTIVE 1.4

The FDIC resolves the failure of insured depository institutions in the manner least costly to the DIF.

Annual Performance Goal 1.4-1

Market failing institutions to all known qualified and interested potential bidders.

Indicator and Target

  1. Scope of qualified and interested bidders solicited
    • Contact all known qualified and interested bidders.

Means and Strategies

Operational Processes (initiatives and strategies): The FDIC markets the deposits and assets of failing institutions to all known qualified and interested potential bidders to encourage as much competition as possible.  The FDIC maintains an inventory of qualified financial institutions that may be interested in bidding for a failing institution.  In preparing a list of potential bidders for each failing institution, the FDIC takes into account the institution’s geographic location, competitive environment, minority-owned status, financial condition, asset size, capital level, and regulatory ratings.  Potential bidders are then given the opportunity to perform due diligence on the failing institution’s assets and liabilities before determining whether to submit bids.

Human Resources (staffing and training): Franchise marketing is carried out primarily by specialized FDIC personnel with support, as needed, from staff in other disciplines.  The FDIC’s Resolutions and Receiverships Commissioning Program ensures the future availability of trained and qualified personnel to handle this and other aspects of the resolutions and receivership management functions.  Staffing requirements are continually assessed within the context of current and projected workload to ensure that the FDIC is appropriately staffed.

The FDIC also uses contractor support, nonpermanent employees, and employees temporarily assigned from divisions and offices throughout the organization to meet workload demands and mission responsibilities in this area.

Information Technology:  The FDIC documents franchise marketing activities through its automated Franchise Marketing System (FMS), which is supported by the 4C system.

Verification and Validation

Data from FMS are used to report on marketing and sales progress.

2016 Performance Results

The FDIC successfully met the performance target for this annual performance goal for each of the five insured institution failures that occurred in 2016.  This annual performance goal and its associated performance indicator and target are unchanged for 2017.


STRATEGIC OBJECTIVE 1.5    

The public and FDIC-insured depository institutions have access to accurate and easily understood information about federal deposit insurance coverage.

Annual Performance Goal 1.5-1

Provide educational information to insured depository institutions and their customers to help
them understand the rules for determining the amount of insurance coverage on deposit accounts.

Indicators and Targets

  1. Timeliness of responses to deposit insurance coverage inquiries
    • Respond within two weeks to 95 percent of written inquiries from consumers and bankers about FDIC deposit insurance coverage.
  1. Initiatives to increase public awareness of deposit insurance coverage changes
    • Conduct at least four telephone or in-person seminars for bankers on deposit insurance coverage.

Means and Strategies

Operational Processes (initiatives and strategies):  The FDIC uses various methods to educate insured financial institution employees and depositors about FDIC deposit insurance coverage.  In addition to conducting seminars for bank employees, the FDIC encourages the dissemination of educational information through the banking industry and the media.

The FDIC also (1) operates a toll-free call center (877-ASK-FDIC) to answer questions about FDIC deposit insurance coverage, (2) maintains educational and informational resources on its website, (3) publishes articles on deposit insurance coverage in FDIC Consumer News (a quarterly newsletter for consumers published by the FDIC), and (4) works to raise awareness of deposit insurance coverage through the national and regional news media. The call center is staffed by contractors who are trained to provide answers to many different questions about deposit insurance coverage. Complex or unique issues, or those requiring additional analysis and review, are referred by the call center to FDIC employees who specialize in deposit insurance issues and who can research the issue and respond.

In addition, the FDIC administers a public education program that includes developing and distributing a wide range of written materials, videos, electronic calculators, and other tools to help consumers and bank employees understand how FDIC deposit insurance works.  The FDIC also provides training to employees of insured financial institutions.

Human Resources (staffing and training): The FDIC has a dedicated staff of deposit insurance specialists and contractors who respond to thousands of telephone and written inquiries from consumers and bankers about deposit insurance coverage.  The call center is also supported by a dedicated staff of subject matter experts on deposit insurance issues.

The FDIC regularly reviews staffing and training needs to ensure that the resources supporting deposit insurance educational initiatives are adequate and that employees possess the skills and knowledge to implement this program effectively and successfully.

Information Technology: The FDIC tracks the receipt of and response to written inquiries through the Specialized Tracking and Reporting System (STARS).  The FDIC also provides the Electronic Deposit Insurance Estimator (EDIE), which consumers and bankers can use to estimate deposit insurance coverage, on its public website.  The FDIC continues to use the internet and the latest multi-media technology to deliver educational tools and materials to the banking community and the public.

Verification and Validation

Progress in meeting the performance targets for this goal will be tracked through STARS and established reporting processes.

2016 Performance Results

The FDIC successfully met the performance targets for this annual performance goal in 2016.  This annual performance goal and its associated indicators and targets are unchanged for 2017.

 

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