Exhibit 3-1

The exhibit provides an illustration of a sample well-functioning information technology architecture in Horizon 3, including the manner in which data inputs might feed into the models on an automated basis to produce reports and analyses.

The architecture is divided into three main portions: data sources, processing, and reporting. Individual components of the architecture are depicted by boxes. Components that will be implemented as part of horizon 3 are shaded in gray.

Data sources include call reports, general ledger for premium and other income, market data (horizon 3), CAMELS ratings, rating agencies (horizon 3), and information from other regulators.

All of the data sources flow (illustrated by arrows) into the beginning of the processing phase, which McKinsey refers to as the interface tier (horizon 3). The interface tier flows into a single FDIC risk database (horizon 3). The single risk database would include current positions, credit ratings, market data, operational loss data, historical archives, and a base correlation structure. The single risk database would exchange information, using "middleware" (illustrated by arrows pointing forward and backward), with what McKinsey calls an "analysis tier." In the analysis tier, PDF, hedges (horizon 3), LGD, insured deposits, correlation structure, investments, and premiums flow into a "simulation engine" (horizon 3). The simulation engine would generate a probability of default, including components of deposits, credit risk, and investment risk, and would generate information for asset and liability management.

The analysis tier of processing will exchange information (illustrated by arrows pointing forward and backward) with the reporting phase, or "access tier," which are all horizon 3 components. The access tier will include a reporting server, web based access, a distribution engine, and on-line analytical processing. Reports would be printed and/or delivered by e-mail, in HTML format, and in XML format.

The source for this exhibit was McKinsey team analysis.