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Presentation Slides

1) FEDERAL DEPOSIT INSURANCE CORPORATION 2015 Annual Performance Plan

2) Federal Deposit Insurance Corporation 2015 Annual Performance Plan TABLE OF CONTENTS CHAIRMAN’S MESSAGE 3 PROGRAM DESCRIPTIONS AND ANNUAL PERFORMANCE GOALS Insurance Program Supervision Program Receivership Management Program 4 5 19 41 EFFECTIVE MANAGEMENT OF STRATEGIC RESOURCES 51 APPENDICES Appendix A - Program Resource Requirements Appendix B - The FDIC’s Planning Process Appendix C - Program Evaluation Appendix D - Interagency Relationships Appendix E - External Factors 57 58 59 60 61 67 2

3) Federal Deposit Insurance Corporation 2015 Annual Performance Plan CHAIRMAN’S MESSAGE I am pleased to present the Federal Deposit Insurance Corporation’s 2015 Annual Performance Plan that outlines the FDIC’s goals and priorities for this year. The FDIC plays a key role in maintaining stability and public confidence in the U.S. financial system. For more than 80 years, it has fulfilled that mission through its deposit insurance, bank supervision, and failed bank resolution programs. At the end of 2014, the FDIC insured more than half a billion accounts with over $6.2 trillion in depositor funds at over 6,500 institutions throughout the nation. The 2014 Annual Report described the FDIC’s wide variety of accomplishments in fulfilling its core mission responsibilities last year. In 2015, the FDIC expects the U.S. economy and the banking industry to continue their gradual recovery from the recent financial crisis. Capital levels, liquidity, asset quality, and earnings for insured institutions have all improved, but the FDIC will remain vigilant and prepared to address any unexpected problems that may arise. During 2015, the FDIC will continue to focus on the fulfillment of its core mission responsibilities, with an emphasis on its expanded post-crisis responsibilities (in coordination with the Federal Reserve Board) related to resolution planning for systemically important financial institutions (SIFIs). The FDIC will also continue to pay increased attention to cybersecurity and other new, technology-related risks in insured depository institutions, as well as conduct research on and provide outreach and technical assistance to community banks. The FDIC has been a symbol of trust for depositors in FDIC-insured financial institutions since 1933 and will carry that tradition forward in 2015. Martin J. Gruenberg Chairman 3

4) Federal Deposit Insurance Corporation 2015 Annual Performance Plan PROGRAM DESCRIPTIONS AND ANNUAL PERFORMANCE GOALS INSURANCE SUPERVISION RECEIVERSHIP MANAGEMENT 4

5) Federal Deposit Insurance Corporation 2015 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 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 in 2013 and 2014 was significantly lower than during the height of the crisis, allowing the FDIC to rebuild the DIF. At the end of 2014, the fund balance had risen to $62.8 billion from its negative $20.9 billion low point at the end of 2009. The reserve ratio at the end of 2014 was 1.01 percent. An institution’s charter and its Federal Reserve System membership status determine which federal banking agency is the institution’s primary federal supervisor. 1 5

6) Federal Deposit Insurance Corporation 2015 Annual Performance Plan The Dodd-Frank Act (DFA), which was enacted in July 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 fund reserve ratio of 2 percent and a strategy for assessment rates and dividends. The plan is designed to reduce the pro-cyclicality in the existing system and achieve moderate, steady assessment rates throughout economic and credit cycles while maintaining a positive fund balance, even during a banking crisis. A new Restoration Plan was also adopted to make sure that the reserve ratio reaches 1.35 percent by September 30, 2020 as required by the DFA, and changes have been made in the assessment system to ensure that insurance assessments better reflect the risk that institutions pose to the DIF The table below depicts the strategic goal, strategic objectives, and annual performance goals for the Insurance Program. Strategic Goal Strategic Objectives Annual Performance Goals 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) Insured depositors are protected from loss without recourse to taxpayer funding. The DIF and the deposit insurance system remain strong and adequately financed. The FDIC resolves the failure of insured depository institutions in the manner least costly to the DIF. 6 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) Market failing institutions to all known qualified and interested potential bidders. (1.4-1)

7) Federal Deposit Insurance Corporation 2015 Annual Performance Plan The public and FDICinsured depository institutions have access to accurate and easily understood information about federal deposit insurance coverage. 7 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)

8) Federal Deposit Insurance Corporation 2015 Annual Performance Plan 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 ï‚· Depositors have access to insured funds within one business day if the failure occurs on a Friday. ï‚· Depositors have access to insured funds within two business days if the failure occurs on any other day of the week. 2. Insured depositor losses resulting from a financial institution failure ï‚· Depositors do not incur any losses on insured deposits. ï‚· 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 prepares a plan to handle the possible resolution of the institution. The FDIC begins the resolution process by assessing the institution’s assets and liabilities. The FDIC then develops an information package that is used as a marketing tool and is provided to all interested potential assuming institutions. 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. 8

9) Federal Deposit Insurance Corporation 2015 Annual Performance Plan If the failed institution is sold to another insured institution, the FDIC works with the assuming institution so that the insured deposit accounts are transferred to it as soon 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, the FDIC continues to review and enhance existing plans, processes, and systems in response to potential risks that might affect the resolution process. Human Resources (staffing and training): The FDIC has authorized 2015 staffing of 756 employees dedicated to handling the failure of insured financial institutions and the management of ensuing receiverships. This includes 405 permanent positions and 351 nonpermanent positions. The number of authorized nonpermanent positions is lower than in 2014, reflecting a continuing decline in the number of insured institution failures and assets under management. However, the completion of residual receivership management responsibilities for the large number of open receiverships established as a result of prior-year failures will continue to substantially affect the FDIC’s workload for several years. Information Technology: Technology is critical to the efficiency of deposit insurance determinations and payments. 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 before the failure to estimate the amount of uninsured deposits for the leastcost test. When an insured deposit transaction is the least-cost resolution, CAS is used to determine the amount of the depositors’ funds that are 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. 2014 Performance Results This annual performance goal and its associated performance indicators and targets are unchanged from 2014. Eighteen insured financial institutions failed during 2014. The FDIC successfully met the performance targets for each failure. 9

10) Federal Deposit Insurance Corporation 2015 Annual Performance Plan 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 ï‚· Disseminate results of research and analyses in a timely manner through regular publications, ad hoc reports, and other means. ï‚· 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 on issues and topics of importance to the banking industry. Much of this research is conducted 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 (FILs), and 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 Corporation’s risk analysis program, and risk-focused examination training has been incorporated into the FDIC’s examination schools. 10

11) Federal Deposit Insurance Corporation 2015 Annual Performance Plan In addition, the FDIC also 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 of information on FDIC research and analysis on potential areas of risk for 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 faster 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. 2014 Performance Results This annual performance goal and its associated performance indicator and targets are unchanged from 2014. The FDIC successfully met the performance targets for this annual performance goal in 2014. 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 ï‚· Provide updated fund balance projections to the FDIC Board of Directors by June 30, 2015, and December 31, 2015. ï‚· Recommend changes to deposit insurance assessment rates to the FDIC Board of Directors as necessary. 11

12) Federal Deposit Insurance Corporation 2015 Annual Performance Plan 2. Demonstrated progress in achieving the goals of the Restoration Plan ï‚· Provide progress reports to the FDIC Board of Directors by June 30, 2015, and December 31, 2015. Means and Strategies Operational Processes (initiatives and strategies): This goal reflects a requirement of the DFA. As of December 31, 2014, the fund balance had risen to $62.8 billion from its negative $20.9 billion low point at the end of 2009. The reserve ratio at December 31, 2014 was 1.01 percent. The fund is projected to reach 1.15 percent of estimated insured deposits in late 2016 or the first half of 2017 and achieve the required 1.35 percent of estimated insured deposits by 2020 under the Restoration Plan adopted by the FDIC Board of Directors. The FDIC’s Financial Risk Committee (FRC) develops quarterly failure projections and loss estimates to establish contingent loss reserves for the DIF. The FRC consults with the other federal banking agencies in its deliberations. Models that forecast failures and failure resolution costs are maintained and enhanced, as necessary. The FRC regularly reviews adverse events to identify lessons or implications for monitoring and addressing risks. Based on an analysis of projected failed bank assets and other pertinent information, the FRC recommends to the Chief Financial Officer (CFO) the level of the contingent loss reserve for the DIF. FDIC staff uses the FRC’s projections on insurance losses to help determine the level of assessment revenue necessary to maintain adequate funding in the DIF. Projected insurance losses, as well as projections of investment revenue, operating expenses, and insured deposit growth, are key elements in estimating assessment revenue needs. 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. 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 To ensure that the RRPS identifies higher-risk institutions and appropriately assesses higher insurance premiums, a Federal Information Security Management Act (FISMA) security review of RRPS is conducted annually. In addition, the Government Accountability Office (GAO) reviews annually the methodology used to determine the contingent loss reserve. In 2015, the FRC will again conduct semiannual reviews of the contingent loss reserve methodology by 12

13) Federal Deposit Insurance Corporation 2015 Annual Performance Plan analyzing the variance 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. 2014 Performance Results This annual performance goal and its associated performance indicators and targets are unchanged from 2014. The FDIC successfully met the performance targets for this annual performance goal in 2014. 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 ï‚· Maintain open dialogue with counterparts in strategically important jurisdictions, international financial organizations and institutions, and partner U.S. agencies; and actively participate in bilateral interagency regulatory dialogues. ï‚· Maintain a leadership position in the International Association of Deposit Insurers (IADI) by conducting workshops and performing assessments of deposit insurance systems based on the methodology for assessment of compliance with the IADI Core Principles for Effective Deposit Insurance Systems (Core Principles), developing and conducting training on priority topics identified by IADI members, and actively participating in IADI’s Executive Council and Standing Committees. ï‚· Maintain open dialogue with the Association of Supervisors of Banks of the Americas (ASBA) to develop and foster relationships with bank supervisors in the region by providing assistance when necessary. ï‚· Engage with authorities responsible for resolutions and resolutions planning in priority foreign jurisdictions and contribute to the resolution-related agenda of the Financial Stability Board (FSB) through active participation in the FSB’s Resolution Steering Group (ReSG). 2. Provision of technical assistance to foreign counterparts ï‚· Support visits, study tours, secondments, and longer-term technical assistance and training programs for representatives of foreign jurisdictions to strengthen their deposit insurance organizations, central banks, bank supervisors, and resolution authorities. 13

14) Federal Deposit Insurance Corporation 2015 Annual Performance Plan 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 IADI, the FSB and ASBA. In 2015, the FDIC will continue to support IADI in the advancement of the revised and updated IADI Core Principles and lead the IADI effort to promote adoption of these principles by developing training seminars for deposit insurers and safety-net participants. The FDIC will also continue to support ASBA governance, guidance, and training initiatives. In addition, the FDIC will engage bilaterally and multilaterally in 2015 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-EC working group, the FDIC-Single Resolution Board working group, tabletop exercises, principal- level events, and joint papers: hosting of foreign delegations; and support for missions to foreign authorities. The FDIC will continue to support the FSB in its resolution-related efforts, particularly as the ReSG begins to focus upon resolution matters specific to insurers, financial market infrastructures, and other financial institutions, including the development and presentation of proposals to be addressed by the G20 Leaders at the 2015 Antalya Summit. The FDIC will also 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 assessments of the implementation of the Key Attributes of Effective Resolution Regimes for Financial Institutions (Key Attributes). The Key Attributes, endorsed by the 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 study tours, long-term secondments, 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, ASBA-led research and guidance initiatives, and the ASBA secondment program. The FDIC will support the IMF and World Bank in their Financial Sector Assessment Program (FSAP) and Reports on the Observance of Standards and Codes by offering to provide subject matter experts for deposit insurance program reviews and resolution-related matters. The FDIC will continue work with the FSB in the development of an assessment methodology for the Key Attributes. 14

15) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Human Resources (staffing and training): Available resources include an international affairs team dedicated to promoting the adoption of sound bank supervision and deposit insurance principles and coordinating the FDIC’s global outreach and technical assistance programs, as well as a core staff focused on cross-border resolution matters, each supplemented by other subject matter experts within the FDIC to support technical assistance missions overseas and study tour visits in the United States. Coordination of the FDIC’s international priorities is assured by the interdivisional International Affairs Working Group (IAWG), which convenes periodically to review, discuss, and recommend initiatives that advance FDIC’s international agenda. IAWG brings together senior representatives of several divisions and offices to discuss the FDIC’s major international activities and outreach. Information Technology: Information about the FDIC’s international programs, including its technical assistance, foreign visitor, secondment, foreign examiner training, and international leadership development programs, and international outreach with strategic associations such as IADI, ASBA, and the European Forum of Deposit Insurers, is communicated through the FDIC’s external website. Verification and Validation Progress in meeting this annual goal is reported to the FDIC’s International Working Group through established 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. 2014 Performance Results This annual performance goal and its associated performance targets have been updated for 2015. The performance targets for this goal were successfully met in 2014. 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 ï‚· Contact all known qualified and interested bidders. 15

16) Federal Deposit Insurance Corporation 2015 Annual Performance Plan 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 stimulate as much competition as possible. The FDIC maintains an inventory of qualified financial institutions that may potentially be interested in bidding to purchase a failing institution. In preparing a list of potential bidders for each failing institution, the FDIC takes into account the failed 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. 2014 Performance Results This annual performance goal and its associated performance indicator and target are unchanged from 2014. The performance target was successfully met for the 18 insured institution failures that occurred in 2014. 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. 16

17) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Indicators and Targets 1. Timeliness of responses to deposit insurance coverage inquiries ï‚· Respond within two weeks to 95 percent of written inquiries from consumers and bankers about FDIC deposit insurance coverage. 2. Initiatives to increase public awareness of deposit insurance coverage changes ï‚· Conduct at least 4 telephone or in-person seminars for bankers on deposit insurance coverage. ï‚· Complete and post on the FDIC website videos for bankers and consumers on deposit insurance coverage. Means and Strategies Operational Processes (initiatives and strategies): The FDIC uses various means 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 the 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 for research and response to FDIC employees who specialize in deposit insurance issues. 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 staffed by contractors and 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. 17

18) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Information Technology: The FDIC tracks the receipt of and response to written banker and consumer inquiries about its deposit insurance program through the Specialized Tracking and Reporting System (STARS). In 2015, enhancements will be made to STARS to improve data capture and reporting capabilities. Consumers and bankers also can estimate deposit insurance coverage by using the FDIC’s Electronic Deposit Insurance Estimator (EDIE) available on the FDIC website. The FDIC continues to use the Internet and the latest multi-media technology delivery mechanisms to reach large audiences of financial institution employees and to deliver deposit insurance 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. 2014 Performance Results This annual performance goal and one performance target are unchanged from 2014. The performance target on the conduct of seminars for bankers was revised from 15 to 4 seminars and a new performance target added for the completion and posting on the FDIC website of 3 videos as the FDIC seeks to enhance its use of technology to inform bankers and consumers. The FDIC successfully met the performance targets for this annual performance goal in 2014. 18

19) Federal Deposit Insurance Corporation 2015 Annual Performance Plan SUPERVISION PROGRAM The FDIC’s Supervision Program promotes the safety and soundness of insured depository institutions, protects consumer rights, and promotes community investment initiatives by FDICsupervised institutions. The FDIC is the primary federal regulator for state-chartered banks and savings institutions that are not members of the Federal Reserve System, generally known as state nonmember banks and state-chartered thrifts. This includes state-licensed insured branches of foreign banks and statechartered savings institutions. As insurer, the FDIC also has special (back-up) examination authority for state member banks that are supervised by the Federal Reserve Board (FRB) and national banks and thrift institutions that are supervised by the Office of the Comptroller of the Currency (OCC). The FDIC’s roles as insurer and primary supervisor are complementary, and many activities undertaken by the FDIC support both the insurance and supervision programs. Through the review of examination reports, off-site monitoring tools, participation in examinations conducted by other federal regulators, and, where appropriate, special (back-up) examination activities, the FDIC regularly monitors the potential risks at all insured institutions, including those for which it is not the primary federal regulator. The DFA expanded the FDIC’s statutory responsibilities beyond insured depository institutions to bank holding companies with more than $50 billion in assets and nonbank financial companies that are designated as systemically important financial institutions (SIFIs) by the Financial Stability Oversight Council (FSOC). The DFA designates the FRB as the primary supervisor of these companies, but the FDIC has established on- and off-site monitoring programs and has certain statutory back-up examination authorities for these companies. The purpose of the FDIC monitoring and risk assessment activities for these institutions is, where possible, to mitigate identified risks; assess the adequacy of their efforts to prepare to reorganize or liquidate through bankruptcy in the event of financial distress; and be prepared, if necessary, to conduct an orderly liquidation of the company. As the primary federal regulator of all insured state nonmember banks and state-chartered thrifts, the FDIC performs periodic risk management examinations of these institutions to assess their overall financial condition, management policies and practices, and compliance with applicable laws and regulations. Through the examination process, the FDIC also assesses the adequacy of their management and internal control systems to identify and control risks and to detect the risks of fraud or insider abuse. In addition, the FDIC uses off-site monitoring programs to enhance its ability to promptly identify emerging safety-and-soundness issues. 19

20) Federal Deposit Insurance Corporation 2015 Annual Performance Plan The FDIC’s compliance examination activities promote compliance with federal consumer protection laws, fair lending statutes, the Community Reinvestment Act, and the regulations that implement these laws and statutes. Effective supervision focuses on the areas requiring increased supervisory attention, including risk of consumer harm, and promotes the efficient use of resources. The FDIC conducts separate examinations for all state nonmember banks to assess the effectiveness of the compliance management system and Community Reinvestment Act (CRA) performance. Banks that are subject to the primary jurisdiction of the Consumer Financial Protection Bureau (CFPB) are examined for compliance with the regulations that were not transferred to the CFPB. As part of the compliance examination process, the FDIC reviews substantive compliance issues as well as the accuracy and completeness of information and disclosures that institutions provide to consumers. If weaknesses are identified through the examination process, the FDIC promptly takes appropriate supervisory action. Formal and informal enforcement actions may be issued to correct identified violations or other problems for institutions that are operating in a deteriorated financial condition; failing to comply with consumer protection, fair lending and other statutes; or displaying other significant weaknesses. These enforcement actions remain in place until the identified weaknesses are remedied. The FDIC also investigates consumer complaints about FDIC-supervised insured depository institutions. Consumers write or electronically submit to the FDIC complaints and inquiries regarding consumer protection and fair lending issues. Through its investigation of and response to consumer complaints and inquiries, the FDIC attempts to help consumers better understand their rights under federal consumer protection and fair lending laws. The FDIC monitors the level of satisfaction with its responses to consumer complaints and inquiries. In addition, the FDIC acts on applications from FDIC-supervised insured depository institutions to undertake new or expanded business activities. The FDIC evaluates various factors, including capital adequacy, quality of management, financial condition, and compliance with applicable laws and regulations. It also considers an institution’s compliance with consumer protection, fair lending, and privacy laws and its performance under CRA. In addition, it also ensures compliance with the Statement of Policy on Qualifications for Failed Bank Acquisitions. Information about the FDIC’s supervisory program, including laws, regulations, and regulatory guidance, is available at www.fdic.gov. The FDIC’s semiannual Supervisory Insights journal provides information about bank supervision for bankers, bank examiners, and other practitioners. The FDIC is focused in 2015 on addressing emerging risks to financial institutions including potential changes in interest rates and cybersecurity risks. In addition, the FDIC will continue to implement its new authorities under the DFA, as well as its ongoing community banking initiative. The FDIC continues to monitor potential changes in interest rates. In October 2013, the FDIC issued a Financial Institution Letter reiterating expectations that institutions would manage their interest rate risk exposure, particularly in a challenging interest rate environment. 20

21) Federal Deposit Insurance Corporation 2015 Annual Performance Plan The guidance states that a number of institutions are reporting a significantly liability-sensitive balance sheet position, which means that in a rising interest rate environment, the potential exists for adverse effects on net income and, in turn, earnings performance. In 2015, the FDIC will continue to identify and address interest rate risk at FDIC-supervised institutions through off-site analysis and on-site examinations. Another growing concern for the banking industry is cybersecurity as the financial services sector increases its use of technology to promote operational efficiency and enhance customer service. The increasing use and reliance on technology can increase security risks if IT systems are vulnerable to cyber-attacks or failures to technology or electronic networks. In 2015, the FDIC will add additional staff and resources to ensure that financial institutions are addressing risks related to cybersecurity. This will be accomplished through routine information technology (IT) examinations at FDIC-supervised institutions as well as the major technology service providers (TSPs) that support financial institutions. In addition, the FDIC will continue its efforts to promote the security and resilience of the financial services sector by collaborating with its fellow banking regulators through the Federal Financial Institutions Examination Council’s (FFIEC) Cybersecurity and Critical Infrastructure Working Group, the Information Technology Subcommittee, and the Financial and Banking Information Infrastructure Committee. In 2015, the FDIC will also continue to develop its capabilities related to its responsibilities under the DFA. In addition, the FDIC will work closely with the federal banking agencies to implement the new capital standards, including the development of regulatory reports and instructions for all banking organizations so that they are prepared to comply with the interim final capital rule. In the risk management area, the FDIC will conduct ongoing reviews of all banking organizations with more than $100 billion in assets as well as certain nonbank SIFIs. In addition, reviews will be completed of the resolution plans submitted by insured depository institutions and bank holding companies with assets of $50 billion or more as well as nonbank financial companies designated by the FSOC. The FDIC has the responsibility to ensure that these resolution plans provide a viable approach for reorganizing or liquidating through bankruptcy without creating an adverse effect on U.S. financial stability. Community bank issues remain a high priority for 2015. The FDIC will continue to follow up on the recommendations in the Community Banking Study to make the supervisory process more efficient, consistent and transparent to community banks. For 2015, this will include more outreach and guidance to community banks, similar to efforts made in 2014, such as updating of the development of the Directors Resource Center on the FDIC website and releasing technical assistance videos to provide useful information to bankers. In addition, the FDIC will continue its comprehensive review of all of its regulations, as required by the Economic Growth and Regulatory Paperwork Reduction Act, to identify any regulations that are outdated, unnecessary or unduly burdensome, with a focus on the impact on community banks. 21

22) Federal Deposit Insurance Corporation 2015 Annual Performance Plan The following table depicts the strategic goal, strategic objective, and annual performance goals for the Risk Management component of the Supervision Program. Strategic Goal FDIC-insured institutions are safe and sound. Strategic Objective Annual Performance Goals Conduct on-site risk management examinations to assess the overall financial condition, management practices and policies, and compliance with applicable laws and regulations of FDIC-supervised depository institutions. When problems are identified, promptly implement appropriate corrective programs, and follow up to ensure that identified problems are corrected.(2.1-1) The FDIC exercises its statutory authority, in cooperation with primary federal regulators and state agencies, to ensure that all FDIC-insured institutions appropriately manage risk. Assist in protecting the infrastructure of the U.S. banking system against terrorist financing, money laundering, and other financial crimes. (2.1-2) More closely align regulatory capital standards with risk and ensure that capital is maintained at prudential levels. (2.1-3) Implement strategies to promote enhanced information security, cybersecurity, and business continuity within the banking industry. (2.1-4) 22

23) Federal Deposit Insurance Corporation 2015 Annual Performance Plan The following table depicts the strategic goal, strategic objectives, and annual performance goals for the Compliance and Consumer Affairs components of the Supervision Program. Strategic Goal Strategic Objectives Annual Performance Goals FDIC-supervised institutions comply with consumer protection, CRA, and fair lending laws and do not engage in unfair or deceptive practices. Consumers’ rights are protected, and FDICsupervised institutions invest in their communities. Consumers have access to accurate and easily understood information about their rights and the disclosures due them under consumer protection and fair lending laws. The public has fair access to banking services and is treated equitably by FDICsupervised institutions. 23 Conduct on-site CRA and consumer compliance examinations to assess compliance with applicable laws and regulations by FDICsupervised depository institutions. When violations are identified, promptly implement appropriate corrective programs, and follow up to ensure that identified problems are corrected. (3.1-1) Effectively investigate and respond to written consumer complaints and inquiries about FDICsupervised financial institutions. (3.2-1) Promote economic inclusion and access to responsible financial services through supervisory, research, policy, and consumer/community affairs initiatives. (3.3-1)

24) Federal Deposit Insurance Corporation 2015 Annual Performance Plan The following table depicts the strategic goal, strategic objectives, and annual performance goals for the Resolution Planning component of the Supervision Program. Strategic Goal Large and complex financial institutions are resolvable in an orderly manner under bankruptcy. Strategic Objective Annual Performance Goal Large and complex financial institutions are resolvable under the Bankruptcy Code. Identify and address risks in large and complex financial institutions designated as systemically important. (4.1-1) 24

25) Federal Deposit Insurance Corporation 2015 Annual Performance Plan STRATEGIC GOAL 2: FDIC-insured institutions are safe and sound. STRATEGIC OBJECTIVE 2.1 The FDIC exercises its statutory authority, in cooperation with primary federal regulators and state agencies, to ensure that all FDIC-insured institutions appropriately manage risk. Annual Performance Goal 2.1-1 Conduct on-site risk management examinations to assess the overall financial condition, management practices and policies, and compliance with applicable laws and regulations of FDIC-supervised depository institutions. When problems are identified, promptly implement appropriate corrective programs, and follow up to ensure that identified problems are corrected. Indicators and Targets 1. Percentage of required examinations conducted in accordance with statutory requirements and FDIC policy ï‚· Conduct all required risk management examinations within the timeframes prescribed by statute and FDIC policy. 2. Follow-up actions on identified problems ï‚· For at least 90 percent of institutions that are assigned a composite CAMELS rating of 2 and for which the examination report identifies “Matters Requiring Board attention” (MRBAs), review progress reports and follow up with the institution within six months of the issuance of the examination report to ensure that all MRBAs are being addressed. Means and Strategies Operational Processes (initiatives and strategies): Risk management examinations assess the overall financial condition, management practices and policies, and compliance with applicable laws and regulations of FDIC-supervised depository institutions. The FDIC performs safety and soundness, Bank Secrecy Act, and IT reviews at each risk management examination of an FDICsupervised insured depository institution. As applicable, the FDIC also conducts reviews of trust, registered transfer agent, municipal securities dealer, and government security dealer activities at these examinations. In 2015, the FDIC projects that it will conduct more than 2,100 risk management examinations required under statute, FDIC policy, or agreements with state supervisors. 25

26) Federal Deposit Insurance Corporation 2015 Annual Performance Plan The number of risk management examinations conducted during 2015 may fluctuate as the number of FDIC-supervised insured depository institutions changes due to mergers, closings, newly approved charters, and other actions. In addition, increases in asset size or changes to an institution’s condition or capital levels may accelerate examination cycles and increase the number of required examinations. The FDIC follows a risk-focused approach to examinations, which allows examiners to focus resources on those areas with the greatest potential risk. The FDIC has several analytical models to identify higher-risk financial institutions by considering factors such as rapid growth, fluctuating earnings, economic downturns, and concentrations in vulnerable industry sectors. Examiners use these off-site tools to help them focus on various risks during on-site examinations. These models are also used to identify the need for inquiries or on-site visits to FDIC-supervised institutions outside of the regular examination cycle. The FDIC also continues to focus on the risks posed by technology. On-site examinations review technology-related activities to determine how each FDIC-supervised depository institution manages its IT risks. The FDIC proactively monitors indicators of technology risk that may affect FDIC-supervised institutions and provides information to the industry about risks associated with technology outsourcing practices (e.g., contracting for computer services). The FDIC regularly talks with technology vendors, bank trade associations, and standards and rulesetting entities to identify and promote effective risk management practices for emerging technologies. The examination report identifies any corrective actions to be taken by the institution. If deemed necessary, a formal or informal enforcement action is sent to the financial institution with the report of examination. To ensure that supervisory actions are taken promptly, the FDIC monitors the time it takes to provide examination reports to FDIC-supervised institutions after the completion of an examination. In addition to an on-site visit and a subsequent examination, compliance with an enforcement action is assessed through progress reports from the institution, use of off-site monitoring tools, and direct communication with management of the financial institution. In 2015, the FDIC will implement new requirements for follow- up with FDIC-supervised institutions that are assigned a composite CAMELS rating of 2 and for which the examination report identifies MRBAs. This reflects a change in emphasis from prior years, when the focus was on institutions that had been newly downgraded to a composite CAMELS rating of 3, 4 or 5. The number of such downgrades has declined dramatically in the past few years. Only 41 institutions were downgraded to a 3, 4, or 5 rating nationwide in 2014. At this point in the economic cycle, it is more important to implement forward-looking supervision techniques that ensure that problems identified at well-rated institutions are promptly addressed before they result in more serious deficiencies requiring formal or informal corrective programs. That is an important lesson drawn from the FDIC’s experience during the recent financial crisis. Human Resources (staffing and training): The FDIC has 1,729 authorized positions (1,520 permanent and 209 nonpermanent) in its field examination workforce for risk management in 2015. 26

27) Federal Deposit Insurance Corporation 2015 Annual Performance Plan This includes 30 new IT Examination Analyst (ITEA) positions to augment the IT expertise within the examination workforce. Field examiners conduct on-site examinations and visits. Staffing and training needs are reviewed regularly to ensure that the staff resources supporting the risk management examination program are adequate to conduct a high quality examination program and that employees possess the skills and knowledge to effectively identify existing and emerging risks. The FDIC has cooperative agreements with most states to conduct joint or alternating risk management examinations. If a state supervisor handling an examination has scheduling, staffing, or other resource constraints, the statutory examination requirement may not be met. In such cases, the FDIC will work with the state supervisor to make sure that any delinquent examination is quickly scheduled and completed. When appropriate, the FDIC may conduct the examination instead of the state supervisor. Case managers and other regional office officials finalize and monitor compliance with enforcement programs. Staffing and training needs for this function are also reviewed regularly to ensure that the resources available are adequate and that employees possess the required skills and knowledge. Information Technology: The FDIC’s Virtual Supervisory Information on the Net (ViSION) system is used to schedule and track the completion of risk management examinations. ViSION is also used to monitor all enforcement activity and other significant events at troubled institutions and to schedule on-site visits and follow-up examinations of 3-, 4-, and 5-rated institutions. The FDIC has almost completed a multi-year project to develop a new Examination Tools Suite (ETS) that will replace four examination-related software applications and address the risk of technological obsolescence. In 2012, the FDIC implemented the first phase of ETS by replacing the electronic loan review software that had been in use since 1996. The final phase of ETS development is scheduled to be completed in early 2015, with training and field implementation continuing through 2016. Verification and Validation The number and timing of examinations are tracked through ViSION and reported through established management processes. Enforcement actions and the timing of required on-site visits are tracked through ViSION. The FDIC uses its Regional Office Internal Control Review program to make sure that regions effectively monitor the compliance of FDIC-supervised institutions with formal and informal enforcement actions. This review incorporates various components of the supervisory process, including assessment of the appropriateness of formal and informal corrective actions and monitoring of enforcement implementation and follow-up activities. Any material exceptions noted during the reviews are brought to management’s attention for appropriate action. 27

28) Federal Deposit Insurance Corporation 2015 Annual Performance Plan 2014 Performance Results This annual performance goal and the first of its associated performance indicators and targets are unchanged from 2014. The second performance indicator and target are new for the reasons outlined in the “Means and Strategies” section. In 2014, the FDIC met the performance target that has been retained and substantially met the performance target that has been dropped for 2015. Annual Performance Goal 2.1-2 Assist in protecting the infrastructure of the U.S. banking system against terrorist financing, money laundering, and other financial crimes. Indicator and Target 1. Percentage of required examinations conducted in accordance with statutory requirements and FDIC policy ï‚· Conduct all Bank Secrecy Act examinations within the timeframes prescribed by statute and FDIC policy. Means and Strategies Operational Processes (initiatives and strategies): The FDIC conducts Bank Secrecy Act/AntiMoney Laundering (BSA/AML) examinations and Office of Foreign Assets Control (OFAC) reviews to assess the BSA/AML and OFAC compliance programs of FDIC-supervised financial institutions. These examinations and reviews cover sound risk management, compliance with recordkeeping requirements, and the ability of the institution to identify and report suspicious activity. BSA/AML examinations and OFAC reviews are performed as a part of all risk management examinations of FDIC-supervised insured depository institutions. The FDIC also completes BSA exams for states that do not conduct these exams. The FDIC follows a riskbased approach to BSA/AML examinations and OFAC reviews, which allows examiners to focus resources on those areas with the greatest potential risk. Guidance is provided to risk management staff through written memoranda, participation in the FFIEC BSA/AML Examination Workshop, and attendance at the Advanced BSA/AML Specialists Conference. Human Resources (staffing and training): The FDIC has 317 examiners who are designated as BSA/AML subject matter experts. Staffing and training needs are reviewed regularly to ensure that the staff resources supporting the BSA/AML examination program are adequate and that employees possess the skills and knowledge to effectively and successfully assess compliance with BSA/AML requirements and detect any emerging risks. 28

29) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Information Technology: ViSION is used to track the number and timing of required BSA/AML examinations. ETS is also used to provide updated BSA violation codes to examiners automatically, thereby increasing the efficiency of those examinations. Verification and Validation The number and timing of BSA/AML examinations are tracked in ViSION and reported through established management processes. 2014 Performance Results This annual performance goal and its associated performance indicator and target are unchanged from 2014. The FDIC successfully met this performance target in 2014. Annual Performance Goal 2.1-3 More closely align regulatory capital standards with risk and ensure that capital is maintained at prudential levels. Indicator and Target 1. U.S. implementation of internationally agreed regulatory standards ï‚· Publish by December 31, 2015, an interagency Notice of Proposed Rulemaking on implementation of the Basel III Net Stable Funding Ratio. Means and Strategies Operational Processes (initiatives and strategies): In 2015, FDIC staff will continue to work closely with the other federal banking agencies to develop an initial domestic proposal to implement the Net Stable Funding Ratio for internationally active banking organizations. The agencies began weekly drafting meetings in February 2015 and will continue to meet weekly until the proposal is approved. As needed, FDIC staff will consult internally with individuals and groups that have specialized expertise in areas such as accounting, consumer compliance, and insurance and research. Further, FDIC staff will continue to lead and support the Basel Committee’s ongoing quantitative impact study (QIS) work on the Net Stable Funding Ratio. Human Resources (staffing and training): The breadth and depth of knowledge among FDIC staff on bank liquidity, funding, and capital markets matters has expanded in recent years, partly through continued staff participation and active involvement in numerous Basel policy development groups. In 2015, the FDIC will continue to increase the number of staff with capital market expertise by providing internal and external training on liquidity, funding, capital, trading activities, and other capital market areas. Information Technology: The FDIC will use existing technology to accomplish this annual performance goal. 29

30) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Verification and Validation Progress in meeting this annual performance goal will be tracked through periodic meetings and established reporting processes. 2014 Performance Results This annual performance goal is unchanged from 2014, but its associated performance indicator and target have been updated for 2015. The FDIC successfully met the performance targets for this annual performance goal in 2014. Annual Performance Goal 2.1-4 Implement strategies to promote enhanced information security, cybersecurity, and business continuity within the banking industry. Indicator and Target 1. Enhancements to IT supervision program. ï‚· Enhance the technical expertise of the IT supervisory workforce ï‚· Working with FFIEC counterparts, update and strengthen IT guidance to the industry on cybersecurity preparedness ï‚· Working with FFIEC counterparts, update and strengthen IT examination work programs for institutions and technology service providers (TSPs) to evaluate cybersecurity preparedness and cyber resiliency ï‚· Improve information sharing on identified technology risks among the IT examination workforces of FFIEC member agencies. Means and Strategies Operational Processes (initiatives and strategies): The FDIC assesses the ability of FDICsupervised financial institutions and, with other banking regulators, technology service providers (TSPs) to manage information technology risks through a comprehensive framework of IT risk management standards, risk ratings and on-site examinations. This framework, jointly established by the members of the FFIEC, is implemented and enhanced to the extent needed by each agency. The framework focuses on evaluating information security, business continuity, incident response, audit and assessment, board and management oversight, vendor relationships, and payment systems. When significant weaknesses are identified in supervised financial institutions or TSPs, the FDIC has the authority to issue enforcement actions to compel them to correct these weaknesses. 30

31) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Due to an increasing cyber threat landscape and the continuing increased complexity of IT and operations, the members of the FFIEC conducted a cybersecurity assessment in 2014 at more than 500 financial institutions. As a result, the FFIEC agencies are reviewing and updating current guidance to align with changing cybersecurity risk and have created a cybersecurity assessment tool that institutions may use to conduct a self-assessment of their cyber preparedness. The assessment tool is planned for release during 2015. Human Resources (staffing and training): The vast majority of the FDIC’s 1,100 commissioned risk management examiners have training and experience in basic IT examination skills. The FDIC now has nearly 300 commissioned examiners who have completed all four postcommission IT schools and more than 500 who have completed at least one of these schools. In addition, the FDIC has 60 dedicated IT examiners, and 116 risk management examiners designated as either intermediate or advanced IT subject matter experts based on their completion of an on-the-job training program. In addition, 65 specialized ITEAs support the IT examination process, including 30 new positions added in 2015 with advanced technical skills. The IT examination function is supported by IT policy and examination personnel in Washington, DC. The FDIC will also expand its Washington operations to address the growing risk exposure in the payment services area and to enhance its examination of TSPs and cybersecurity risks in the banking industry. Information Technology: ViSION is used to schedule and track the completion of risk management examinations and any related enforcement actions or significant events at institutions due to noncompliance with IT-related banking laws and regulations. Verification and Validation The number and timing of examinations are tracked through ViSION and reported through established management processes. Enforcement actions and the timing of required on-site visits are also tracked through ViSION The majority of Technology Service Provider (TSP) exams are conducted and scheduled on an interagency basis. Setting strategies and planning for examinations of the largest TSPs takes place annually with the OCC and the FRB; other smaller TSP examinations are managed at the FDIC regional office level in coordination with their local FRB and OCC counterparts. All examination activity conducted by FDIC staff (including TSPs) and detailed information on individual examiner participation is tracked through FDIC systems. The FDIC uses its Regional Office Internal Control Review program to make sure that regions effectively monitor the compliance of FDIC-supervised institutions with formal and informal enforcement actions. This review incorporates various components of the supervisory process, including assessment of the appropriateness of formal and informal corrective actions and monitoring of enforcement implementation and follow-up activities. Any material exceptions noted during the reviews are brought to management’s attention for appropriate action. 31

32) Federal Deposit Insurance Corporation 2015 Annual Performance Plan 2014 Performance Results This annual performance goal has been revised from 2014. The FDIC successfully met the performance target for this annual performance goal in 2014. 32

33) Federal Deposit Insurance Corporation 2015 Annual Performance Plan STRATEGIC GOAL 3: Consumers’ rights are protected, and FDIC-supervised institutions invest in their communities. STRATEGIC OBJECTIVE 3.1 FDIC-supervised institutions comply with consumer protection, CRA, and fair lending laws and do not engage in unfair or deceptive practices. Annual Performance Goal 3.1-1 Conduct on-site CRA and consumer compliance examinations to assess compliance with applicable laws and regulations by FDIC-supervised depository institutions. When violations are identified, promptly implement appropriate corrective programs and follow up to ensure that identified problems are corrected. Indicators and Targets 1. Percentage of examinations conducted in accordance with the timeframes prescribed by FDIC policy ï‚· Conduct all required examinations within the timeframes established by FDIC policy. 2. Implementation of corrective programs ï‚· Conduct visits and/or follow-up examinations in accordance with established FDIC policies to ensure that the requirements of any required corrective program have been implemented and are effectively addressing identified violations. Means and Strategies Operational Processes (initiatives and strategies): The FDIC conducts CRA and compliance examinations of FDIC-supervised depository institutions to determine compliance with consumer protection and fair lending laws and performance under CRA. The frequency of compliance examinations is specified by FDIC policy. For CRA examinations, the FDIC’s examination frequency policy conforms to applicable provisions of the Gramm-Leach-Bliley Act (GLBA), which establishes the CRA examination cycle for most small banks. In 2015, the FDIC estimates that it will conduct approximately 1,350 compliance and/or CRA examinations. The FDIC’s compliance examination approach emphasizes a risk-focused scoping process to look at an institution’s compliance risk management practices and the potential risk of consumer harm. This approach involves an expanded review of an institution’s systems and compliance policies so that transaction testing can be better targeted and focused on areas that pose the greatest risk for consumer harm. This approach creates a more efficient and effective use of examination resources, especially in financial institutions with high compliance risk profiles. 33

34) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Institutions with compliance deficiencies are identified primarily through the examination process. While discussions with bank management are usually sufficient to correct these deficiencies, the FDIC has broad enforcement powers to correct practices, conditions, or violations of law that threaten an institution’s compliance with consumer protection and fair lending laws or a consumer’s rights under those laws. Institutions that are subject to enforcement actions because of unfavorable ratings for compliance with consumer protection and fair lending laws and regulations are closely monitored by regional office officials. A follow-up examination or on-site visit is conducted to review compliance with supervisory actions for each institution that receives an unsatisfactory rating. Additional followup action is taken when the initial corrective program is determined to have been insufficient in addressing the identified problem. Progress in complying with an enforcement action is also assessed through quarterly progress reports from, and direct communication with, management of the financial institution. Human Resources (staffing and training): The FDIC has 511 authorized positions (470 permanent, 41 nonpermanent) in its field examination workforce for compliance and consumer protection in 2015. Staffing and training needs are reviewed regularly to ensure that staff resources supporting the compliance supervision program are adequate to conduct a high quality examination program and that employees possess the skills and knowledge to effectively implement this program. Information Technology: The System of Uniform Reporting of Compliance and CRA Examinations (SOURCE) is used to schedule and track compliance examinations, support preexamination planning, and provide management information. Verification and Validation The FDIC will analyze examination-related data collected in SOURCE to determine whether the performance target for this goal is achieved during the reporting period. Results will be reported through established management processes. 2014 Performance Results This annual performance goal and its associated performance indicators and targets are unchanged from 2014. The performance targets for the annual performance goal were substantially met in 2014. 34

35) Federal Deposit Insurance Corporation 2015 Annual Performance Plan STRATEGIC OBJECTIVE 3.2 Consumers have access to accurate and easily understood information about their rights and the disclosures due them under consumer protection and fair lending laws. Annual Performance Goal 3.2-1 Effectively investigate and respond to written consumer complaints and inquiries about FDICsupervised financial institutions. Indicator and Target 1. Timely responses to written consumer complaints and inquiries ï‚· Respond to 95 percent of written consumer complaints and inquiries within timeframes established by policy, with all complaints and inquiries receiving at least an initial acknowledgement within two weeks. Means and Strategies Operational Processes (initiatives and strategies): The FDIC has a comprehensive program to disseminate information to banks and the public on consumer rights under consumer protection and fair lending law and regulations. It also operates a centralized Consumer Response Center that coordinates the investigation of and response to consumer complaints and inquiries. For correspondence related to FDIC-supervised institutions, FDIC staff contacts the institution and reviews applicable federal consumer protection regulations before providing a response. Correspondence regarding institutions under the jurisdiction of other primary federal regulators is referred to those agencies. Target response times vary by the type of inquiry or complaint. Human Resources (staffing and training): The FDIC’s centralized Consumer Response Center is located in Kansas City and is staffed by FDIC employees. In addition, consumer affairs staff in Washington, D.C., supports the Consumer Response Center by providing guidance and assistance with consumer complaints and inquiries that involve new or unusual issues or sensitive matters. Information Technology: The FDIC utilizes an automated Customer Assistance Form on the FDIC’s website to facilitate submission of consumer correspondence. STARS is used to capture and report information regarding FDIC’s consumer assistance program, including response time. In 2015, enhancements will be made to STARS to improve data capture and reporting capabilities. Verification and Validation The FDIC closely monitors the timeliness of its acknowledgment letters and responses through STARS. Performance results will be monitored through established management processes. 35

36) Federal Deposit Insurance Corporation 2015 Annual Performance Plan In addition, surveys are sent to a sample of consumers who have filed written consumer protection and fair lending complaints to assess their satisfaction with the FDIC’s investigations and responses. Established survey research methods are used to ensure the validity and reliability of the survey instrument and results. 2014 Performance Results This annual performance goal and its associated performance indicator and target are unchanged from 2014. In 2014, the FDIC successfully met the performance target for this annual performance goal. STRATEGIC OBJECTIVE 3.3 The public has fair access to banking services and is treated equitably by FDIC-supervised institutions. Annual Performance Goal 3.3-1 Promote economic inclusion and access to responsible financial services through supervisory, research, policy, and consumer/community affairs initiatives. Indicator and Targets 1. Completion of planned initiatives ï‚· Revise, test, and administer the 2015 FDIC National Survey of Unbanked and Underbanked Households. ï‚· Support the Advisory Committee on Economic Inclusion in expanding the availability and awareness of low-cost transaction accounts, consistent with the FDIC’s SAFE account template. ï‚· In partnership with the Consumer Financial Protection Bureau, enhance financial capability among school-age children through (1) development and delivery of tailored financial education materials; (2) resources and outreach targeted to youth, parents, and teachers; and (3) implementation of a pilot youth savings program. Means and Strategies Operational Processes (initiatives and strategies): Approximately 28 percent of U.S. households are underserved by the banking industry, based on survey results previously published by the FDIC. This includes both “unbanked” households (those with no checking or savings accounts) and “underbanked” households (those with checking or savings accounts who have utilized nonbank alternative financial services and providers, such as money orders, check cashing services, payday loans, rent-to-own agreements, pawn shops, or refund anticipation loans, in the past 12 months). 36

37) Federal Deposit Insurance Corporation 2015 Annual Performance Plan The FDIC’s Advisory Committee on Economic Inclusion supports research, demonstrations, and pilot projects and promotes sound supervisory and public policies to improve the “appropriate engagement” of underserved households with mainstream financial institutions. Appropriate engagement means that households are using financial products and services that are affordable, easy to understand, and not subject to unfair or unforeseen fees. During 2015, the FDIC will administer its 2015 FDIC National Survey of Unbanked and Underbanked Households (Household Survey) conducted jointly with the U.S. Census Bureau, with final data expected to be received in the first quarter of 2016. In addition to the Household Survey, the FDIC also collects information to provide insights into banks’ efforts to serve the unbanked and underbanked. In 2015, the FDIC will initiate qualitative research into the strategies that banks are using to serve these populations. Ultimately, the FDIC will provide an important set of references that will help assess progress and remaining challenges for economic inclusion. In addition, the FDIC will be better positioned to identify strategies that promote economic inclusion by studying opportunities to expand access to mainstream financial services, identifying the role that community banks play in meeting community needs, and increasing awareness of communities that are currently underserved or at risk of becoming underserved. The Advisory Committee’s work will support the expanded availability of SAFE accounts and the responsible use of technology, including mobile banking, to expand banking services to the underbanked population. In 2015, the FDIC will conduct additional research with consumers and banks to further assess opportunities to take advantage of the economic inclusion potential presented by mobile financial services. The Advisory Committee may recommend to the FDIC specific measures of improvement, many of which may represent national objectives that require the participation and cooperation of multiple stakeholders, including other federal agencies; federal, state, and local policy makers; the financial services industry; nonprofit and philanthropic groups; and consumer groups. During 2015, FDIC working groups will continue to conduct research, develop policy proposals, facilitate partnerships, and conduct outreach related to expanding access to mainstream banking services for underserved consumers. The FDIC may present these proposals to the Advisory Committee for advice and recommendations. Human Resources (staffing and training): This annual performance goal will be carried out largely by existing staff in the FDIC’s consumer research, policy, and consumer and community affairs functions. The activities of the Advisory Committee are supported by staff in several FDIC divisions. Employees in those divisions provide staff support for the Advisory Committee, as needed, including support for its research and demonstration activities. Information Technology: Existing technology will be used to accomplish this goal. The FDIC broadcasts the Advisory Committee’s public meetings on its website. 37

38) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Verification and Validation Progress in completing the initiatives planned for this annual performance goal will be monitored through established management reporting processes. 2014 Performance Results This annual performance goal and its associated performance indicator are unchanged from 2014, but its performance targets have been updated for 2015. In 2014, the FDIC successfully met the performance targets for this annual performance goal. 38

39) Federal Deposit Insurance Corporation 2015 Annual Performance Plan STRATEGIC GOAL 4: Large and complex financial institutions are resolvable in an orderly manner under bankruptcy. STRATEGIC OBJECTIVE 4.1 Large and complex financial institutions are resolvable under the Bankruptcy Code. Annual Performance Goal 4.1-1 Identify and address risks in large, complex financial institutions Indicators and Targets 1. Risk monitoring of large, complex financial institutions, bank holding companies and designated nonbanking firms ï‚· Conduct ongoing risk analysis and monitoring of large, complex financial institutions to understand and assess their structure, business activities, risk profiles, and resolution and recovery plans. 2. Completion of statutory and regulatory requirements under Title I of DFA ï‚· Complete, in collaboration with the FRB and in accordance with statutory and regulatory timeframes, a review of resolution plans submitted by individual financial companies subject to the requirements of section 165 (d) of DFA and Part 360.10 of the FDIC Rules and Regulations. Means and Strategies Operational Processes (initiatives and strategies): Ongoing risk analysis and monitoring is conducted by resident FDIC teams at large, complex financial institutions and offsite analytical teams composed of quantitative experts and complex financial institution specialists with bank examination backgrounds. The offsite teams analyze industry and market conditions and trends to support individual institution monitoring and the consideration of broader policy issues. They attempt to identify early warning signals and triggers and the range of possible response actions by monitoring financial condition and performance, assessing institutional risk management capabilities, and reviewing recovery plans. FDIC also participates in collaborative risk management examinations and targeted reviews of SIFIs with other regulatory agencies. Under Title I of the Dodd-Frank Act Section 165(d), covered companies are required to submit annually plans for a nonsystemic resolution under the bankruptcy code in the event of financial distress. Among other things, the resolution plans are required to identify each firm’s critical operations, core business lines, and key obstacles to a rapid and orderly resolution. 39

40) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Possible impediments to resolution include areas such as a firm’s internal organizational structure, its interconnections with other large and complex financial institutions, and its management information system limitations. The Federal Reserve Board and the FDIC have shared authority for the review of the plans submitted by covered companies to assess informational completeness and the resolvability of individual banks and bank holding companies. The FDIC also works with the Federal Reserve to develop joint guidance to covered firms on their future submissions of plans. All covered companies are required to submit resolution plans during 2015. The Systemic Resolution Advisory Committee advises the FDIC on a variety of issues including the effects on financial stability and economic conditions resulting from the failure of a large and complex financial institution, the ways in which specific resolution strategies would affect stakeholders and their customers, the tools available to the FDIC to wind down the operations of a failed organization, and the tools needed to assist in cross-border relations with foreign regulators and governments when a systemically important company has international operations. Members of the Committee have a wide range of knowledge and experience on these issues, including expertise in managing complex firms, administering bankruptcies, working within different legal jurisdictions, and understanding the application of accounting rules and practices. The Committee is scheduled to meet again in early 2016 to advise the FDIC on the resolution of covered firms. Human Resources (staffing and training): Ongoing risk monitoring is conducted by resident teams at large, complex financial institutions and offsite analysts who have expertise with large, complex financial institution operations. The FDIC’s review of resolution plans submitted under Section n165 (d) of the DFA is carried out by a multidisciplinary team with expertise across all major operational and business line functions of the covered companies, both domestically and internationally. Training needs for each of these groups are reviewed regularly to ensure that these teams have knowledge and expertise necessary to appropriately perform their assigned responsibilities. Training specifically related to investment bank liquidity risk has been developed and will be administered to appropriate team members in 2015. Information Technology: The FDIC uses existing technology to track the submission and review of the resolution plans required under Section 165(d) of the DFA. Verification and Validation Progress in achieving this annual performance goal will be monitored through established management reporting processes. 2014 Performance Results This strategic goal, objective and annual performance goal are new for 2015 and reflect the newly approved FDIC Strategic Plan, 2015-2019. However, there was a related annual performance goal, and the FDIC successfully met the performance targets for that goal in 2014. 40

41) Federal Deposit Insurance Corporation 2015 Annual Performance Plan RECEIVERSHIP MANAGEMENT PROGRAM When an insured institution fails, the FDIC is appointed receiver. In its receivership capacity, the FDIC assumes responsibility for efficiently recovering the maximum amount possible from the disposition of the receivership’s assets and the pursuit of the receivership’s claims. Funds collected from the sale of assets and the dispositions of valid claims are distributed to the receivership’s creditors under the priorities set by law. The FDIC focuses its receivership management efforts on the following four objectives: ï‚· ï‚· ï‚· ï‚· Resolving institutions in the least costly manner, Managing and marketing failed institution assets to maximize return, Pursuing monies due to failed institutions, and Resolving the debts of failed institutions fairly. The FDIC assesses the assets and liabilities of a failing institution to determine their current market value. Using this information, the FDIC markets and sells various parts of the institution to acquiring institutions and investors. The FDIC markets failed institutions broadly, ensuring that all qualified parties are given an opportunity to present bids. When an institution fails, it is closed by the appropriate chartering agency, and the FDIC is appointed receiver. After paying the insured depositors their funds (if another institution has not assumed the deposits), the FDIC inventories and values any remaining assets and uses various strategies to sell the assets as quickly as practicable. Disposing of certain assets can take a considerable amount of time. In the interim, the FDIC performs required asset servicing (such as building maintenance and the processing of loan payments) to maintain the value of these assets until they are sold. Throughout the asset valuation and sales processes, the FDIC also seeks payment from the debtors of the failed institution. FDIC staff identifies and investigates claims owed to the receivership and pursues those claims on behalf of the receivership when it is cost effective to do so and/or when public policy dictates that the FDIC pursue legal action against a debtor (e.g., in certain negligence or fraud cases). The FDIC also makes sure that legitimate claims against the receivership are satisfied fairly. The FDIC notifies likely claimants of the failed institution and provides them instructions on how to file a claim. Once the FDIC receives and analyzes the information, valid claims are paid under the priorities set by law. Following the resolution of receivership claims, disposition of most assets, payment of eligible creditor claims, and allocation of any other funds on behalf of the receivership, the FDIC terminates the receivership. This involves preparation of final accounting statements and can require judicial confirmation that the obligations of the FDIC as receiver have been met. 41

42) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Under Title II of the DFA, the FDIC may be called upon to carry out the orderly liquidation of certain large, systemically important financial companies. In 2015, the FDIC will continue to pursue planning and operational readiness initiatives to make sure that it is prepared, if it becomes necessary, to exercise this new authority. The FDIC will also continue to enhance its risk monitoring and resolution planning capabilities for these systemically important companies. The following table depicts the strategic goal, strategic objectives, and annual performance goals for the Receivership Management Program. Strategic Goal Strategic Objective Annual Performance Goals Receiverships are managed to maximize net return and terminated in an orderly and timely manner. Value, manage, and market assets of failed institutions and their subsidiaries in a timely manner to maximize net return. (5.1-1) Manage the receivership estate and its subsidiaries toward an orderly termination. (5.1-2) Resolutions are orderly and receiverships are managed effectively. Potential recoveries, including claims against professionals, are investigated and resolved in a fair and cost-effective manner. Conduct investigations into all potential professional liability claim areas for all failed insured depository institutions, and decide as promptly as possible to close or pursue each claim, considering the size and complexity of the institution. (5.2-1) Resolution of the failure of a large, complex financial institution is carried out in an orderly manner in accordance with statutory mandates Ensure the FDIC’s operational readiness to resolve a SIFI using the orderly liquidation authority in Title II of the Dodd-Frank Act. (5.3-1) 42

43) Federal Deposit Insurance Corporation 2015 Annual Performance Plan STRATEGIC GOAL 5: Resolutions are orderly and receiverships are managed effectively. STRATEGIC OBJECTIVE 5.1 Receiverships are managed to maximize net return and terminated in an orderly and timely manner. Annual Performance Goal 5.1-1 Value, manage, and market assets of failed institutions and their subsidiaries in a timely manner to maximize net return. Indicator and Target 1. Percentage of the assets marketed for each failed institution ï‚· For at least 95 percent of insured institution failures, market at least 90 percent of the book value of the institution’s marketable assets within 90 days of the failure date (for cash sales) or 120 days of the failure date (for structured sales). Means and Strategies Operational Processes (initiatives and strategies): By quickly returning the assets of a failed institution to the private sector, the FDIC maximizes net recoveries and minimizes disruption to the local community. Given adequate time, the FDIC prepares an online information package and an asset valuation review for each failing insured depository institution to help solicit bidders, analyze bids received for the assumption of deposits, and sell as many of the institution’s assets as possible at resolution or shortly thereafter. The FDIC markets most of the remaining assets within 120 days after an insured institution fails. During the 2008 through 2012 period, whole bank loss-share transactions were used extensively to sell most of the assets of a failed bank to an acquiring bank. Because of continued improvement in the economy, the use of loss-share transactions decreased significantly in 2013, and there were no loss-share transactions in 2014. After the resolution of the failed institution, the FDIC collects and manages the remaining assets in a cost-effective manner to maximize recoveries and preserve value until the assets can be marketed. The failed institution’s assets are grouped into pools that will be most appealing to acquirers and are marketed through an Internet-based platform. Potential asset purchasers are given the opportunity to view all sales information electronically before electronic submitting bids online. 43

44) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Where appropriate, the FDIC manages and disposes of the remaining assets from the failed bank location. The FDIC uses the Standard Asset Valuation Estimation (SAVE) methodology, valuation contractors, and financial advisors to value most of the assets of the failed institution and to decide how to market and dispose of them. The SAVE methodology uses standard assumptions and market information to ensure consistency in the valuation of assets. The valuation process, methodology, and assumptions used to value assets are continually reviewed and, when necessary, updated. The FDIC will continue to update and refine its marketing strategies to market assets as quickly and efficiently as possible. Human Resources (staffing and training): The FDIC has a permanent staff that manages the Corporation’s resolutions and receiver management functions. When workload increases, as it did from 2007 through 2011, the FDIC may add nonpermanent staff and contractor resources to help with these responsibilities. The FDIC may also deploy cross-trained employees from elsewhere within the Corporation. Current and projected workload is continually assessed to make sure that adequate staff and contractor resources are available to fulfill the FDIC’s receivership management responsibilities. Contractors are used as necessary to manage and sell the assets of failed institutions. The FDIC has comprehensive policies and procedures that cover every phase of the contracting process. Individual FDIC divisions and offices must establish internal controls and processes to make sure that these policies and procedures are strictly followed. Contract expenditures and the number of new contract awards declined in 2014, continuing a trend that began in 2011. The FDIC will continue in 2015 to refine its contract support requirements and to shift work from contractors to FDIC employees, where appropriate. In addition, consistent with the requirements of DFA, the FDIC will continue to identify and address barriers to the participation of underrepresented groups, including minority-and women-owned businesses and law firms, in FDIC contracting and asset purchase opportunities. Information Technology: The FDIC uses technology extensively to make its asset management/servicing, sale strategies, and other business processes more efficient and to keep pace with changing market and business practices. The FDIC will continue to use the Internet to deliver asset marketing information to potential investors and to sell assets received from failed institutions. In addition, the Franchise Marketing System (FMS) is used to track franchise marketing activities for failed financial institutions. FMS provides a comprehensive source of information on the management, valuation, marketing, and sale of their assets. It extracts from ViSION up-to-date examination and supervisory information on each failed institution. The FDIC also establishes bid list criteria for each prospective transaction and identifies qualified bidders in FMS. Verification and Validation Progress in meeting this annual performance goal is tracked in FMS and reported through established management reporting processes. Each primary federal regulatory agency reviews bid lists before bids are solicited to make sure that they include only those institutions that meet the established criteria for the transaction 44

45) Federal Deposit Insurance Corporation 2015 Annual Performance Plan 2014 Performance Results This annual performance goal and its associated performance indicator and target are unchanged from 2014. The FDIC successfully met the performance target for this annual performance goal in 2014. Annual Performance Goal 5.1-2 Manage the receivership estate and its subsidiaries toward an orderly termination. Indicator and Target 1. Timely termination of new receiverships ï‚· Terminate at least 75 percent of new receiverships that are not subject to loss-share agreements, structured sales, or other legal impediments within three years of the date of failure. Means and Strategies Operational Processes (initiatives and strategies): The oversight and prompt termination of a receivership preserves value for the uninsured depositors and other receivership claimants by reducing overhead and other holding costs. An individual action plan is established for each receivership, and staff is assigned from the appropriate functional areas (e.g., asset, liability, finance, and legal) to execute that plan. Receivership oversight staff monitors the execution of each action plan, including goals and milestones. In addition, an oversight committee consisting of department managers meets monthly to review and evaluate the progress that has been made in carrying out each plan. To be eligible for termination, a receivership must be free of impediments that represent material financial or legal risks to the FDIC. These impediments may include outstanding contractual liabilities, outstanding offensive or defensive litigation, potential representation and warranty asset sale claims, open employee benefit plans, open subsidiary corporations where articles of dissolution have not yet been approved, and known or potential environmental contamination liabilities. Once the FDIC has disposed of all of the assets of the receivership, resolved all liabilities, and made sure that no material financial or legal risks remain, a final distribution is made to the creditors of the receivership and the receivership entity is terminated. The FDIC continues to work to remove impediments to the termination of its remaining open receiverships. During 2014, 18 new receiverships were added to the FDIC’s inventory of receiverships and 17 were terminated, leaving 481 active receiverships at year end. Human Resources (staffing and training): Current and projected workloads are continually assessed to ensure that adequate staff and contractor resources are available to fulfill the FDIC’s receivership management responsibilities. As noted earlier, the FDIC uses contractor resources and temporary hiring initiatives to supplement permanent resolutions and receivership management staff as workload increases. 45

46) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Information Technology: The Receivership Termination System (RTS) tracks FDIC receiverships through the termination process and assists in tracking active and inactive receiverships. RTS identifies impediments to termination as well as termination milestone dates. Verification and Validation The process of inactivating a receivership is tracked in FDIC systems. Monthly reports of deactivations are reviewed for accuracy. System users validate the data, and any discrepancies are reconciled. Results are reported through established management processes. 2014 Performance Results This annual performance goal and its associated performance indicator and target are unchanged from 2014. The FDIC successfully met the performance target for this annual performance goal in 2014. STRATEGIC OBJECTIVE 5.2 Potential recoveries, including claims against professionals, are investigated and resolved in a fair and cost-effective manner. Annual Performance Goal 5.2-1 Conduct investigations into all potential professional liability claim areas for all failed insured depository institutions and decide as promptly as possible to close or pursue each claim, considering the size and complexity of the institution. Indicator and Target 1. Percentage of investigated claim areas for which a decision has been made to close or pursue the claim ï‚· For 80 percent of all claim areas, make a decision to close or pursue professional liability claims within 18 months of the failure of an insured depository institution. Means and Strategies Operational Processes (initiatives and strategies): The FDIC investigates potential claims against professionals (e.g., directors, officers, attorneys, and others) whose actions may have contributed to losses at a failed institution and assesses the viability of insurance policies and the carriers that provide fidelity insurance to the failed institution. Once the investigation is complete, the FDIC determines whether it has viable, cost-effective claims and whether it should pursue them. Most professional liability investigations must be completed and viable claims filed within three years following an institution’s failure to meet statute of limitations requirements. 46

47) Federal Deposit Insurance Corporation 2015 Annual Performance Plan The FDIC’s attorneys and investigators make sure that valid claims arising from the failure of an insured institution are fully evaluated within the prescribed time. They investigate the events that contributed to losses at the institution and research and analyze potential claims. They also determine if a recovery will exceed the estimated cost of pursuing each claim. The team then recommends to senior FDIC management whether a claim should be pursued or the investigation closed. Human Resources (staffing and training): Workload requirements are regularly reassessed to make sure that staffing is sufficient to fulfill these responsibilities. The FDIC uses contractor resources (including outside legal counsel) and hires temporary staff, as needed. In 2014, the FDIC will identify training needs and provide training to investigators on topics such as insurance claims, interviews, and loan review analysis. Information Technology: Data necessary to track failure dates of insured institutions, potential statute of limitation expiration dates, and other pertinent dates are routinely collected and stored in FDIC systems. Status information and decision events are also tracked. Verification and Validation Periodic data scrubs and audits are conducted to ensure that the information in FDIC systems is current and accurate. Consistent maintenance of these systems ensures that accurate data are readily available to measure compliance with the annual performance goal. Progress in meeting this goal is reported through established management processes. 2014 Performance Results This annual performance goal and its associated performance indicator and target are unchanged from 2014. The FDIC successfully met the performance target for this annual performance goal in 2014. STRATEGIC OBJECTIVE 5.3 Resolution of the failure of a large, complex financial institution is carried out in an orderly manner in accordance with statutory mandates. Annual Performance Goal 5.3-1 Ensure the FDIC’s operational readiness to resolve a large, complex financial institution using the orderly liquidation authority in Title II of the DFA. 47

48) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Indicators and Targets 1. Establishment of resolution plans and strategies ï‚· Update and refine firm-specific resolution plans and strategies and develop operational procedures for the administration of a Title II receivership. 2. Meetings of the Systemic Resolution Advisory Committee (SRAC) ï‚· Prepare for an early 2016 meeting of the Systemic Resolution Advisory Committee to obtain feedback on resolving SIFIs. 3. Enhanced cross-border coordination and cooperation in resolution planning ï‚· Continue to deepen and strengthen bilateral working relationships with key foreign jurisdictions. Means and Strategies Operational Processes (initiatives and strategies): Large and complex financial institutions in the United States are generally organized under a holding company structure with a top-tier parent and operating subsidiaries that comprise hundreds, or even thousands, of interconnected entities that share funding and support services and span legal and regulatory jurisdictions across international borders. Functions and core business lines are often not aligned with individual legal entity structures. Critical operations can cross legal entities and jurisdictions, and funding is often dispersed among affiliates as needs arise. These integrated legal structures make it very difficult to conduct an orderly resolution of one part of the company without triggering a costly collapse of the entire company and potentially transmitting adverse effects throughout the financial system. In addition, the top-tier company often raises the equity capital of the institution but subsequently downstreams equity and some debt funding to its subsidiaries. Given the challenges presented in the resolution of a large, complex financial company— especially as these companies are currently organized and operated—the FDIC initially focused its efforts on developing a resolution strategy called the single point of entry. That strategy would place the top-tier parent company of the firm into receivership while establishing a temporary bridge financial company to hold and manage its critical operating subsidiaries for a limited period. Assets of the top-tier parent company would be transferred from the receivership to the bridge financial company, as bank assets are transferred to a bridge bank in certain bank failures. Liabilities of the top-tier parent company would be left in the receivership to cover the losses and expenses from the firm's failure and to capitalize the subsidiaries through the liquidation process. In this way, the firm's critical subsidiaries, which perform operations and provide services that affect the broader financial system, and ultimately the economy, would be stabilized to facilitate liquidation through the wind-down of the firm. This process would avoid the disruption that would otherwise accompany the firm's sudden collapse. 48

49) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Customers would have time to transition to new service providers, and the resolution process would end with the termination of the bridge financial company. To operate the bridge financial company, the FDIC would appoint a new board of directors and senior management who would be charged with managing the wind-down of the firm in a way that minimizes systemic disruption. In addition to being an essential tool to preserve financial stability, the bridge institution is also an important means for ensuring accountability for stakeholders of the failed firm. Shareholders would be wiped out, creditors would take losses, and culpable management would be replaced. Such accountability is essential to minimizing moral hazard and promoting market discipline. From the outset, the bridge financial company would have a strong balance sheet because the unsecured debt obligations of the failed firm would be left as claims in the receivership, while all the assets would be transferred to the bridge company. As a well-capitalized entity, the FDIC expects the bridge financial company and its subsidiaries to be in a position to borrow from customary sources in private markets to meet its liquidity needs. However, if such funding is not immediately available, the law provides the Orderly Liquidation Fund (OLF): a dedicated, backup source of liquidity—not capital—to be used, if necessary, in the initial stage of resolution until private funding can be accessed. The OLF would only be used when private-sector funding is unavailable, and there are a number of important limitations on its use. For example, the DFA limits the amount that can be borrowed and requires that any OLF borrowing must be repaid from recoveries on the assets of the failed firm. If that should prove insufficient, assessments would be levied on the largest financial companies. Under the law, taxpayers cannot bear losses. Instead, losses are borne by the failed company through its shareholders and its creditors, and, if necessary, by the financial industry through assessments. The FDIC also established and consults regularly with the SRAC, which advises the FDIC on the potential effects of a large complex financial institution failure on financial stability and economic conditions, the ways in which specific resolution strategies would affect stakeholders and their customers, the tools available to the FDIC to wind-down the operations of a failed organization, and the tools needed to assist in cross-border relations with foreign regulators and governments when a systemic company has international operations. Members of the Advisory Committee bring a wide range of knowledge and experience to these issues, including expertise in managing complex firms, administering bankruptcies, working within different legal jurisdictions, and applying accounting rules and practices. Human Resources (staffing and training): This annual performance goal will be carried out largely by existing FDIC staff. The training needs of staff are reviewed regularly to ensure that teams have knowledge and expertise necessary to appropriately perform their assigned responsibilities. Training specifically related to nonbank covered companies has been developed and will be provided to appropriate team members in 2015. 49

50) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Information Technology: Existing information technology systems from the failed institution will be used in the resolution of a large, complex firm. The FDIC will continue to identify other information technology needs relative to a failure of a large, complex financial institution during 2015. Verification and Validation Although the FDIC has extensive experience in resolving the failure of IDIs and has devoted considerable time and resources to planning for the rapid and orderly resolution of a financial institution under Title II of the DFA, it has had no actual experience in implementing these plans. The particular facts surrounding the failure of a large, complex financial institution may affect the FDIC’s ability to execute the resolution as planned, especially considering the complex and interconnected nature and global reach of these firms. 2014 Performance Results This strategic objective and annual performance goal are new for 2015 and reflect the newly approved FDIC Strategic Plan, 2015-2019. However, the FDIC’s 2014 Annual Performance Plan included a performance indicator and target that was similar to the first performance indicator and target above. The FDIC successfully met that performance target in 2014. 50

51) Federal Deposit Insurance Corporation 2015 Annual Performance Plan EFFECTIVE MANAGEMENT OF STRATEGIC RESOURCES Introduction The FDIC recognizes that it must effectively manage many critical strategic resources to successfully carry out the annual performance goals outlined in this plan. These resources must be aligned and deployed to the areas where they are most needed. An overview of planned 2015 initiatives to enhance the FDIC’s management of its key strategic resources is provided below. Financial Resources Management The FDIC does not use taxpayer funds. Its operational expenses are predominantly paid from the Deposit Insurance Fund (DIF), which is funded from assessments paid by insured financial institutions. The FDIC takes very seriously its fiduciary responsibilities to use these funds efficiently and cost-effectively to meet its mission responsibilities. To that end, the FDIC engages annually in a rigorous planning and budget formulation process to make sure that budgeted resources are properly aligned with workload projections and designated corporate priorities (see Appendix B). The FDIC’s disciplined approach to managing its financial resources has been apparent over the past several years. From 2008 through 2010, the FDIC’s annual operating budget almost quadrupled and its authorized staffing level almost doubled in response to a rapid increase in the number of problem institutions and insured institution failures. The FDIC relied primarily on nonpermanent staff and contractor resources to address the resulting uptick in its supervisory and resolutions workload in order to facilitate future budget and staffing reductions when workload returned to more normal levels. In subsequent years, both the annual operating budget and authorized staffing level declined substantially. For 2015, the FDIC’s annual operating budget and authorized staffing are approximately 42 percent and 26 percent, respectively, below the peak levels experienced in 2010 and 2011. The FDIC will continue to carefully monitor both its supervision and receivership management workload and will take steps to further reduce expenses for these programs as underlying workload declines. Human Capital Management The FDIC’s most important resource is the “intellectual capital” that its employees bring to bear on the accomplishment of its mission. For that reason, the FDIC strives to attract, develop, and retain a highly skilled, diverse, and results-oriented workforce and to be regarded as a preeminent place to work among federal agencies, especially those whose workforces consist primarily of financial professionals. More than one-quarter of the FDIC’s current permanent workforce is projected to retire over the next ten years. 51

52) Federal Deposit Insurance Corporation 2015 Annual Performance Plan This will provide the FDIC a unique opportunity to reshape its permanent workforce to provide effective regulatory oversight to meet the emerging challenges of an increasingly complex U.S. financial system in the 21st century. In 2015, the FDIC will continue to pursue several ongoing initiatives to shape its future permanent workforce while addressing immediate staffing needs. Workforce Development Initiative Like many other federal agencies, the FDIC faces potential succession management challenges as many of its long-term, experienced employees retire. Introduced in 2013, the FDIC’s Workforce Development initiative emphasizes the need to prepare employees to fulfill current and future capability and leadership needs. This focus ensures that the FDIC has a workforce positioned to meet today’s core responsibilities while preparing to fulfill its mission in the years ahead. During 2014, the FDIC continued to develop and began implementation of the Workforce Development initiative. Based on an initial assessment of the current talent pipeline for senior leadership positions, the FDIC elected to broaden the scope of the initiative beyond succession planning to address comprehensive workforce development challenges and opportunities. The initiative is focused on four broad objectives: attracting and developing talented employees across the agency, enhancing the capabilities of employees through training and diverse work experiences, encouraging employees to engage in active career development planning and seek leadership roles in the FDIC, and building on and strengthening the FDIC’s operations to support these efforts. In 2015, the FDIC will continue to develop and implement the infrastructure, governance, programs and processes to support the attainment of these objectives in meeting its long-term workforce needs. The FDIC is committed to building and maintaining its talent pipeline to ensure succession needs are fully addressed. It will take several cycles of identifying future workforce and leadership requirements; assessing current workforce capabilities, supporting employees who aspire to leadership and management roles, and developing and sourcing the talent to meet emerging workforce needs. One key component of the workforce planning strategy continues to be the Corporate Employee Program (CEP). The CEP is the primary vehicle used to fill new, entry-level positions in the FDIC’s core bank supervision and resolutions and receivership management functions. The CEP emphasizes the development of a more flexible workforce that is crosstrained in the FDIC’s core mission functions. The objective is to build and maintain a workforce that can be redeployed rapidly to address new workload priorities in response to unexpected external events or changing conditions in the banking industry and the broader economy. In 2015, the FDIC will also continue to focus on ensuring that it has in its current workforce the skills needed to fulfill its core mission responsibilities, especially those related to the oversight of systemically important financial institutions required under the DFA. 52

53) Federal Deposit Insurance Corporation 2015 Annual Performance Plan As an outgrowth of its strategic workforce planning, the FDIC established in 2014 a new employee development program to expand the number of FDIC employees who have broad, cross-divisional experience with the largest and most complex FDIC-insured banks and bank holding companies. The program provides experience in supervision, risk analysis and monitoring, deposit insurance pricing and fund management, and resolution planning. FDIC employees have a long tradition of responding effectively in times of crisis. Through further development of its human capital strategies, the FDIC will work to ensure that the future FDIC workforce is as prepared, capable and dedicated as the one it has today Workforce Diversity and Inclusion In 2015, the FDIC will continue to pursue a more comprehensive, integrated, and strategic focus on diversity and inclusion within the FDIC workforce. The FDIC Diversity and Inclusion Executive Advisory Council, composed of key senior executives, oversees the implementation of the FDIC Diversity and Inclusion Strategic Plan, which was initially issued in early 2013 and is updated annually. The plan lays out a course for achieving workforce diversity through targeted recruiting and employee development initiatives; and cultivating greater workplace inclusion through collaboration, flexibility, and fairness. The plan details specific steps to enhance diversity and inclusion at the FDIC in the areas of leadership engagement, analytics and reporting, training, communications, strategic planning, and program enhancement. A Culture of Workplace Excellence Over the past several years, the FDIC has participated in annual employee surveys conducted by the U.S. Office of Personnel Management. These surveys identified major areas of strength as well as opportunities for improvement in employee satisfaction and engagement within the FDIC workforce. Survey results have consistently demonstrated that FDIC employees have an excellent understanding of the FDIC’s mission and strategic direction and know how their work fits into the organization’s goals and priorities. They enjoy their work, believe it is important, and get a sense of personal accomplishment from it. Employees are also highly satisfied with their pay and benefits, as well as the FDIC’s family-friendly work-life balance programs, physical work environment, and training, technology, and other resources. The FDIC’s Workplace Excellence (WE) Program plays an important role in helping the FDIC maintain a culture of workplace excellence. The WE Program is composed of a National WE Steering Committee and individual Division/Office WE Councils focused on maintaining, enhancing, and institutionalizing positive workplace and cultural change at the national and division/office levels at the FDIC. The WE Program enhances communications, provides additional opportunities for employee input and engagement, and promotes employee empowerment. 53

54) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Employee Learning and Development The FDIC provides employees with skills-based training and leadership development opportunities to help achieve its mission. In 2015, the FDIC’s Corporate University will continue to offer innovative solutions to prepare both current and new employees for the challenges ahead. It will also continue to use its learning programs as opportunities to strengthen its organizational culture, build key competencies, and reinforce corporate values. The FDIC provides its workforce with the technical knowledge and skills necessary to examine and supervise financial institutions and manage receiverships. In 2015, the FDIC will continue to develop and implement the priority components of the approved Division of Depositor and Consumer Protection (DCP) learning and development framework. Based on a comprehensive needs assessment completed in 2012, the framework is designed as a multi-year initiative to enhance the dissemination of critical information, expand training programs at all levels, and facilitate the cross-organizational sharing of knowledge and expertise The FDIC will also continue a three-year effort to develop a comprehensive curriculum to provide foundational knowledge, specialized skills, and cross-training opportunities across functions for employees in the Division of Resolutions and Receiverships to promote a flexible workforce and ensure readiness for future resolutions and receiverships activity. In support of the FDIC’s responsibilities for the possible orderly liquidation of a systemically important financial company, facilitated discussions and tabletop exercises, will continue to be used to enhance strategic and operational readiness, build interagency relationships, and implement and test new policies and procedures. In addition to technical training, the FDIC is focused on developing employees as leaders at all levels of the organization. The FDIC has a comprehensive leadership development curriculum that consists of core courses, electives, and enrichment activities. Development of the core leadership curriculum was completed in 2011, and new electives and enrichment opportunities will be added in 2015 to promote leadership throughout the organization. Management of Information Technology Resources The use of information technology (IT) is essential to accomplishing the FDIC’s mission. Innovative, timely, reliable, and secure information helps the FDIC meet its annual performance goals and carry out daily operations. Protection of digital information is vital as technology becomes an increasingly integral component of business functions. In 2015, the FDIC will focus on managing its IT resources to improve information security, support its responsibilities under the DFA, and improve performance and efficiency across all program areas. 54

55) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Information Security The FDIC has a robust, risk-based, organization-wide information security program. Digital information and information systems are treated as corporate assets to be protected, with controls at a level commensurate with the sensitivity of information processed, stored, or transmitted. Since government agencies face increasing and ever-changing cyber-threats, the FDIC must continue to enhance its continuous threat monitoring capabilities. The FDIC maintains a risk management approach to cybersecurity that provides an accurate picture of the FDIC’s security risk posture at all times. The approach provides visibility into assets, leverages automated data feeds to quantify risk, ensures security control effectiveness, and supports prioritized remedy implementation. In 2015, the FDIC will continue implementing enhanced strategies for ensuring the security of the FDIC’s systems and IT infrastructure against external intrusion. Security and privacy are embedded into the FDIC’s culture. Each employee and contractor must review and complete annual information security and privacy awareness training to acknowledge their responsibilities under the information security and privacy programs. The privacy program is primarily focused on ensuring that appropriate steps are taken to protect personally identifiable information from unauthorized use, access, disclosure, or sharing and to protect associated information systems and websites from unauthorized access, modification, disruption, or destruction. Continuity of Operations In 2014, the FDIC placed into operation a Sensitive Compartmented Information Facility (SCIF) to meet Continuity of Operations requirements for a Level 2 agency. This project included hiring a full-time Special Security Officer and constructing the SCIF to standards of Intelligence Community Directive 705, Sensitive Compartmented Information Facilities. The SCIF received physical security accreditation in August 2014, and equipment was purchased to enable communications testing and assessments planned for 2015. In 2015, the FDIC will also continue to work on completing Business Impact Analysis/Business Process Analysis for all divisions and offices. Findings will be used to further refine the Corporate Continuity of Operations Plan, as well as Business Continuity Plans for all FDIC Regional Offices. These plans will help minimize disruptions to FDIC operations, thus enabling continuous performance of essential FDIC functions. In addition, the FDIC will continue to work toward meeting standards set forth in NCSD 3-10 for continuity communications and will participate in training and exercises directed by the White House and FEMA through the annual continuity exercise, Eagle Horizon 2015. 55

56) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Management Controls As an integral part of its stewardship of the DIF, the FDIC maintains a comprehensive risk management and internal controls program that is designed to improve the efficiency, effectiveness, control, and risk-focus of internal operations. Staff in the FDIC’s internal controls program advise and assist with issues such as risk management, internal controls, system security, privacy, operational effectiveness and efficiency, post-project reviews, and audit follow-up. As the FDIC transitions back to post-crisis operational status, the focus will return to ensuring that key financial operations and processes maintain sound internal controls. The goal will be to ensure that these operations are managed appropriately and that opportunities to improve the control environment are identified and implemented in an efficient and timely manner. During 2015, the focus will be on continuous improvements to the FDIC’s core business functions, with a continuing emphasis on activities associated with DFA Title II implementation, system security management, system development risk management, enhanced performance metrics, and the operational risks accompanying client-led development. In 2015, the FDIC will also continue to review a sample of transactions and invoices to confirm management attestations that financial reporting and internal control procedures have been correctly followed. Process maps are being developed for critical operations, and billing reviews will be performed on high-dollar contracts as part of monitoring exposure to improper payments. All of these efforts support processes to make sure that the foundation of controls remains strong throughout the Corporation. 56

57) Federal Deposit Insurance Corporation 2015 Annual Performance Plan APPENDICES Appendix A Program Resource Requirements Appendix B The FDIC’s Planning Process Appendix C Program Evaluation Appendix D Interagency Relationships Appendix E External Factors 57

58) Federal Deposit Insurance Corporation 2015 Annual Performance Plan APPENDIX A Program Resource Requirements The chart below breaks out the 2015 Corporate Operating Budget by the FDIC’s three major program areas: insurance, supervision, and receivership management. It shows the budgetary resources that the FDIC estimates it will spend on these programs during 2015 to pursue the strategic goals and objectives and the annual performance goals in this plan and to carry out other program-related activities. The estimates include each program’s share of common support services that are provided on a consolidated basis. Supervision Insurance Receivership Management Corporate Expenses TOTAL $1,022,545,338 $322,298,871 $748,939,103 $224,913,601 $2,318,696,913 58

59) Federal Deposit Insurance Corporation 2015 Annual Performance Plan APPENDIX B The FDIC’s Planning Process The FDIC has a long-range Strategic Plan that identifies goals and objectives for its three major programs: insurance, supervision, and receivership management. It also develops an Annual Performance Plan that identifies annual goals, indicators, and targets for each strategic objective. In early 2015, the FDIC Board of Directors approved a new FDIC Strategic Plan, 2015-2019, that reflected the addition of strategic goals and objectives related to the FDIC’s new responsibilities for resolution planning for large and complex banks and bank holding companies under the DFA. In developing its Strategic and Annual Performance Plans, the FDIC uses an integrated planning process in which guidance and direction are provided by senior management, and plans and budgets are developed with input from program personnel. Business requirements, industry information, human capital, technology, and financial data are considered in preparing annual performance plans and budgets. Factors influencing the FDIC’s plans include changes in the financial services industry, program evaluations and other management studies, and past performance. The FDIC communicates its strategic goals and objectives and its annual performance goals, indicators, and targets to employees through the internal website and internal communications, such as newsletters and staff meetings. Pay and recognition programs are structured to reward employee contributions to the achievement of the FDIC’s annual performance goals. Throughout the year, FDIC senior management reviews progress reports. At the end of the year, the FDIC submits its Annual Report to Congress. That report, which is posted on the FDIC’s website (www.fdic.gov), compares actual performance results to the performance targets for each annual performance goal. 59

60) Federal Deposit Insurance Corporation 2015 Annual Performance Plan APPENDIX C Program Evaluation The Corporate Management Control Branch in the Division of Finance (DOF) coordinates the evaluation of the FDIC’s programs and issues follow-up reports. Program evaluations are interdivisional, collaborative efforts, and they involve management and staff from all affected divisions and offices. Division and office directors use the results of the program evaluations to assure the Chairman that operations are effective and efficient, financial data and reporting are reliable, laws and regulations are followed, and internal controls are adequate. These results are also considered in strategic planning for the FDIC. Since the beginning of the financial crisis, the FDIC has expanded the range of issues receiving close management scrutiny to encompass crisis-related challenges. Management continues to pay particular attention to the areas of cybersecurity, failed bank data, the development of IT systems supporting FDIC operations, infrastructure development for new operational areas, as well as process mapping and development of performance metrics in several areas. In 2015, risk-based reviews will continue to be performed in each of the FDIC’s strategic program areas. Results of these reviews will assist management by confirming that these programs are strategically aligned or by identifying changes that need to be made. 60

61) Federal Deposit Insurance Corporation 2015 Annual Performance Plan APPENDIX D Interagency Relationships The FDIC has productive working relationships with agencies at the state, federal, and international levels. It leverages those relationships to achieve the goals outlined in this plan and to promote confidence in the U.S. banking system. Listed below are examples of the many important relationships that the FDIC has built with other agencies, seeking to promote strength, stability, and confidence in the financial services industry. Other Federal Financial Institution Regulatory Agencies The FDIC works closely with other federal financial institution regulators—principally the Board of Governors of the FRB and the OCC—to address issues and programs that transcend the jurisdiction of each agency. Regulations are, in many cases, interagency efforts. For example, rules were written on an interagency basis to address implementation of Basel III; revisions to risk-based and leverage capital requirements; the liquidity coverage ratio; and credit risk retention; and other supervisory guidance policies, including policies addressing capital adequacy, information technology and cybersecurity risks, leveraged lending, and liquidity risk management. In addition, the OCC is a member of the FDIC Board of Directors, which facilitates crosscutting policy development and consistent regulatory practices between the FDIC and the OCC. The FDIC also works closely with the Consumer Financial Protection Bureau (CFPB) to address consumer protection issues. The CFPB is responsible for issuing the majority of consumer protection rules and regulations. However, the CFPB is required to consult with the FDIC, the FRB, and the OCC on these matters. Enforcement jurisdiction for insured, state nonmember banks with less than $10 billion in assets remains with the FDIC, unless the institution is an affiliate of another insured institution with $10 billion or more in assets that is supervised by the CFPB. The CFPB Director is also a member of the FDIC Board of Directors. As with the OCC, participation on the FDIC Board facilitates crosscutting policy development and consistent regulatory practices among the FDIC, the CFPB, and the OCC. The FDIC, the FRB, and the OCC also work closely with the National Credit Union Administration (NCUA), which supervises and insures credit unions; the Conference of State Bank Supervisors (CSBS), which represents the state regulatory authorities; and individual state regulatory agencies. Finally, the FDIC collaborates with the Federal Housing Finance Agency (FHFA), which is the rule-writer and supervisor for the Housing Enterprises and the Federal Home Loan Banks. The Federal Financial Institutions Examination Council The FFIEC is a formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions and to make recommendations to promote uniformity in the supervision of financial institutions. The member agencies of the FFIEC are the FDIC, the FRB, the OCC, the NCUA, and the CFPB. 61

62) Federal Deposit Insurance Corporation 2015 Annual Performance Plan In addition, the Chair of the FFIEC State Liaison Committee serves as a member of the FFIEC (the State Liaison Committee is composed of five representatives of state supervisory agencies). To foster interagency cooperation, the FFIEC has established interagency task forces on consumer compliance, examiner education, information sharing, regulatory reports, surveillance systems, and supervision. The FFIEC has statutory responsibilities to facilitate public access to data that depository institutions must disclose under the Home Mortgage Disclosure Act of 1975 (HMDA) and the aggregation of annual HMDA data for each metropolitan statistical area. It also publishes handbooks, catalogs, and databases that provide uniform guidance and information to promote a consistent examination process among the agencies and make information available to the public. This includes maintenance of a central data repository for CRA ratings and public evaluations. The FFIEC also provides an online Consumer Help Center that connects consumers with the appropriate federal regulator for a particular financial institution. State Banking Departments The FDIC, the FRB, and the OCC work cooperatively with the CSBS and with individual state regulatory agencies to make the bank examination process more efficient and uniform. In most states, alternating examination programs reduce the number of examinations that are conducted at insured financial institutions, thereby reducing regulatory burden. Joint examinations of larger financial institutions also optimize the use of state and FDIC resources in the examination of large, complex, and problem state nonmember banks and state-chartered thrift institutions. Basel Committee on Banking Supervision The FDIC is a member of the Basel Committee on Banking Supervision (BCBS), a forum for international cooperation on matters relating to financial institution supervision, and on numerous subcommittees of the BCBS. The BCBS aims to improve the consistency of capital regulations internationally, make regulatory capital more risk-sensitive, and promote enhanced risk management practices among large, internationally active banking organizations. Other areas of significant focus include liquidity and funds management, market risk exposure and derivatives activities. In 2014, the FDIC and the other federal banking agencies worked closely with the BCBS to improve the Basel III Capital Accord to strengthen the resiliency of the banking sector and improve liquidity risk management. As a result, the BCBS published a final leverage ratio standard, a final framework for securitization exposures, a proposal for a revised standardized approach, and a final standard for the Basel III liquidity metric known as the Net Stable Funding Ratio. The FDIC also provides substantial support on various BCBS qualitative impact studies, which are used to monitor the impact of proposed and final standards on banking entities. International Colleges of Regulators The FDIC participates in several groups of international regulators to address international consistency in the implementation of over-the-counter (OTC) derivatives reforms. The OTC Derivatives Regulators’ Forum is a college of regulators that discuss initiatives on derivative reforms mandated by the Group of Twenty and Financial Stability Board (FSB). 62

63) Federal Deposit Insurance Corporation 2015 Annual Performance Plan The group is heavily involved in assuring international consistency on the development of trade repositories and central counterparty clearing. The group then makes recommendations to standing committees, including the Committee on Payment and Settlement Systems, International Organization of Securities Commissions, BCBS, and FSB, for rulemakings. The OTC Supervisors’ Group is primarily involved in making changes to the infrastructure of the largest dealer banks. The group is composed of supervisors of the GSIFIs. Current efforts are focused on data repositories, dispute resolution, and client clearing. The group obtains commitments from the dealer community to make recommended changes and monitors implementation. Interagency Country Exposure Review Committee The Interagency Country Exposure Review Committee (ICERC) was established by the FDIC, the FRB, and the OCC to ensure consistent treatment of the transfer risk associated with the exposure of banks to both public and private sector entities outside the United States. The ICERC assigns ratings based on its assessment of the degree of transfer risk inherent in U.S. banks’ foreign exposure. International Association of Deposit Insurers The FDIC plays a leadership role in the International Association of Deposit Insurers (IADI) and participates in associated activities. IADI contributes to the stability of the financial system by promoting international cooperation in the field of deposit insurance. Through IADI, the FDIC builds strong bilateral and multilateral relationships with foreign deposit insurers, resolution authorities, U.S. government entities, and international organizations. The FDIC also provides technical assistance and conducts outreach activities with foreign entities to help develop and maintain sound banking and deposit insurance systems. Association of Supervisors of Banks of the Americas The FDIC exercises a leadership role in the Association of Supervisors of Banks of the Americas (ASBA) and actively participates in the organization’s activities. ASBA develops, disseminates, and promotes sound bank supervisory practices and resilient financial systems throughout the Americas and the Caribbean in line with international standards. The FDIC supports the organization’s mission and activities by actively contributing to ASBA’s research and guidance initiatives and its capacity and leadership building programs. The FDIC chairs the Association’s Technical Training and Cooperation Committee and participates on the Working Groups on Corporate Governance, Risk Management, and Anti-Money Laundering. Shared National Credit Program The FDIC participates with the other federal financial institution regulatory agencies in the Shared National Credit Program, an interagency program that performs a uniform credit review annually of financial institution loans that exceed $20 million and are shared by three or more financial institutions. The results of these reviews are used to identify trends in industry sectors and the credit risk management practices of banks. 63

64) Federal Deposit Insurance Corporation 2015 Annual Performance Plan The reviews, which are typically published in September of each year, help the industry better understand economic and credit risk management trends. Joint Agency Task Force on Discrimination in Lending The FDIC participates on the Joint Agency Task Force on Discrimination in Lending with several other federal financial institution regulators (FDIC, FRB, OCC, and NCUA) along with the Department of Housing and Urban Development, the Federal Housing Finance Agency, the Department of Justice (DOJ), and the Federal Trade Commission. The agencies exchange information about fair lending issues, examination and investigation techniques, and interpretations of statutes, regulations, and case precedents. European Forum of Deposit Insurers The FDIC and the European Forum of Deposit Insurers share similar interests, and the FDIC supports the organization’s mission to contribute to the stability of financial systems by promoting European cooperation in the field of deposit insurance. The FDIC openly shares its expertise and experience in deposit insurance and failed bank resolution through discussions and exchanges on issues that are of mutual interest and concern (e.g., cross-border issues, bilateral and multilateral relations, and customer protection). Finance and Banking Information Infrastructure Committee The FDIC works with the Department of Homeland Security and the Office of Cyberspace Security through the Finance and Banking Information Infrastructure Committee (FBIIC) to improve the reliability and security of the financial industry’s infrastructure. Other members of FBIIC include the Commodity Futures Trading Commission (CFTC), the FRB, the NCUA, the OCC, the Securities and Exchange Commission (SEC), the Department of the Treasury, and the National Association of Insurance Commissioners (NAIC). Bank Secrecy Act (BSA), Anti-Money Laundering (AML), Counter-Financing of Terrorism (CFT), and Anti-Fraud Working Groups The FDIC participates in several interagency groups, described below, to help combat money laundering, terrorist financing, and fraud: ï‚· The Anti-Money Laundering Task Force, chaired by the Department of the Treasury (Treasury), includes high-level representatives from the FDIC, OCC, FRB, NCUA, SEC, CFTC, DOJ, the Financial Crimes Enforcement Network (FinCEN), and the Internal Revenue Service (IRS). The purpose of the Task Force is to consider the effectiveness of the AML statutory, regulatory, supervisory, enforcement, and communication framework. ï‚· The Bank Secrecy Act Advisory Group (BSAAG) is a public/private partnership of agencies and organizations that meets to discuss strategies and industry efforts to address money laundering, terrorist financing and other illicit financial activities. 64

65) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Areas of focus include information technology, prepaid access/cards, cross border activities, suspicious activity reporting, and other emerging risks. ï‚· The FFIEC BSA/AML Working Group is composed of representatives from the federal bank regulatory agencies, FinCEN, and the CSBS to coordinate BSA/AML policy matters, training, and improve communications among the agencies. The BSA/AML working group builds on existing activities and works to strengthen the ongoing initiatives of other formal and informal interagency groups that oversee various BSA/AML issues. This working group meets monthly and invites other agencies, such as the SEC, CFTC, Treasury, IRS, and Office of Foreign Assets Control (OFAC), on a quarterly basis to ensure broader coordination of BSA/AML and sanctions efforts. ï‚· The Basel Anti-Money Laundering/Counter Financing of Terrorism (“AML/CFT”) Expert Group (AMLEG) is responsible for monitoring AML/CFT issues that have a bearing on banking supervision, coordinating with the Financial Action Task Force, and serving as a forum for AML/CFT experts from banking supervisory agencies. ï‚· The National Bank Fraud Working Group is sponsored by the DOJ to share information on fraud detection. It has two subgroups in which the FDIC actively participates (1) the Payments Fraud Working Group, co-chaired by the FDIC and DOJ, and composed of the federal bank regulatory agencies, the FBI, FinCEN, the IRS, the Bureau of Public Debt (BPD), and the U.S. Postal Service; and (2) the Cyber Fraud Working Group, composed of the federal bank regulatory agencies, DOJ, the FBI, FinCEN, the IRS, and the BPD. Financial Literacy and Education Commission The FDIC is a member of the Financial Literacy and Education Commission (FLEC), which was established by the Fair and Accurate Credit Transactions Act of 2003. The FDIC actively supports the FLEC’s efforts to improve financial literacy in America by assigning experienced staff to provide leadership and support for FLEC initiatives, including leadership of the FLEC workgroup. Financial Education Partnerships The FDIC launched the Money Smart initiative in 2001 to help individuals outside the financial mainstream enhance their money skills and create positive banking relationships. The FDIC has partnered with several federal agencies on this initiative. For example, in 2008, the FDIC signed a partnership agreement with the U.S. Office of Personnel Management to collaborate in providing financial literacy and education resources and training to more than 300 federal government benefits officers and 1,500 benefits specialists nationwide. More recently, the FDIC and the CFPB collaborated to enhance financial education among school-age children by providing resources for teachers and parents/caregivers. 65

66) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Alliance for Economic Inclusion The FDIC established and leads the Alliance for Economic Inclusion (AEI), a national initiative to bring all unbanked and underserved populations into the financial mainstream. The AEI is composed of broad-based coalitions of financial institutions, community-based organizations, and other partners in 15 markets across the country. These coalitions work to increase banking services for underserved consumers in low- and moderate-income neighborhoods, minority and immigrant communities, and rural areas. These services include savings accounts, affordable remittance products, targeted financial education programs, consumer loans, alternative delivery channels, and other asset-building programs. The Financial Stability Board (FSB) The FDIC actively participates in the work of the Financial Stability Board (FSB), an international body established by the G-20 leaders in 2009. As a member of the FSB’s Resolution Steering Group and its Cross-Border Crisis Management Group, the FDIC has helped develop international standards and guidance on issues relating to the resolution of G-SIFIs. Much of this work has related to the operationalization of the FSB’s Key Attributes. Federal Trade Commission, National Association of Insurance Commissioners, and the Securities and Exchange Commission The Gramm-Leach-Bliley Act (GLBA), which was enacted in 1999, permits insured financial institutions to expand the products they offer to include insurance and securities. GLBA also includes increased security requirements and disclosures to protect consumer privacy. The FDIC and other FFIEC agencies coordinate with the FTC, the SEC, and the NAIC to develop industry research and guidelines relating to these products. GLBA also requires the SEC to consult and coordinate with the appropriate federal banking agency on certain loan-loss allowance matters involving public bank and thrift holding companies. The SEC and the agencies have an established consultation process designed to fully comply with this requirement while avoiding unnecessary delays in processing holding company filings with the SEC and providing these institutions access to the securities markets. In addition, the accounting policy staffs of the FDIC and the other FFIEC agencies and the SEC’s Office of the Chief Accountant (OCA) meet quarterly to discuss accounting matters of mutual interest and maintain ongoing communications on accounting issues relevant to financial institutions. Other meetings are held with the OCA, as necessary, either on an individual agency or interagency basis. 66

67) Federal Deposit Insurance Corporation 2015 Annual Performance Plan APPENDIX E External Factors: The Economy and its Impact on the Banking Industry and the FDIC Economic conditions at the national, regional, and local levels affect banking strategies and the industry’s overall performance. Business activity tends to be cyclical, and as business and household spending fluctuate over time, these trends influence loan growth and credit performance for the banking industry. Business conditions and macroeconomic policies combine to determine the rate of inflation, domestic interest rates, the exchange value of the dollar, and equity market valuations, which in turn influence the lending, funding, and offbalance sheet activities of FDIC-insured depository institutions. The U.S. economy gained momentum in 2014, but challenges remain. Real gross domestic product (GDP) has grown at a relatively tepid pace each year since 2010, but it gained momentum in 2014 and is now well above its pre-recession peak. The slow pace of recovery is consistent with the aftermath of previous financial crises around the world. The unemployment rate has declined from a peak of 10 percent in 2009 to below 6 percent at the end of 2014. Going forward, the Blue Chip consensus forecasts expect real GDP growth to continue at a near-trend pace in 2015, as the labor market improves and personal consumption strengthens. Monetary policy remains accommodative, as the Federal Reserve is expected to keep interest rates near zero through late 2015 and then increase rates gradually. The U.S. economy continues to face a number of risks. As the economy improves, the Federal Reserve faces challenges normalizing monetary policy in a manner that supports both economic growth and price stability. Financial markets may encounter periods of volatility as monetary policy normalizes, which may adversely affect bank profitability. Even modest increases in interest rates can affect asset valuations and earnings potential of depository institutions. In addition, fiscal challenges for federal, state and local governments have the potential to weigh on economic growth. Globally, the recovery in Europe remains tenuous and slowing growth in some of the major advanced and emerging market economies could adversely affect trade and financial markets. If U.S. growth and monetary policy continue to diverge from those of other major countries, then the resulting dollar appreciation could exacerbate existing trade imbalances and potentially create volatility in global capital flows and financial markets. Financial crises in Greece, Puerto Rico, and China have the potential to further unsettle markets. The steady expansion of the U.S. economy should continue to support the performance of FDICinsured depository institutions as well as other institutions and sectors hard hit by the financial crisis. However, the post-crisis environment continues to pose unique challenges and risks that merit continued attention by regulators. Insured institution performance showed mixed results in 2014. The 6,509 FDIC-insured commercial banks and savings institutions that filed financial results for the full year of 2014 reported net income of $152.7.0 billion, down $1.7 billion (1.1 percent) from 2013. This is the first year that earnings have posted a year-over-year decrease since 2009. 67

68) Federal Deposit Insurance Corporation 2015 Annual Performance Plan The decline was mainly attributable to litigation expenses at a few larger institutions and lower noninterest income. Despite the overall decline, more than 60 percent of institutions reported higher net income in 2014 than in 2013 and only 6.1 percent reported negative net income compared to 8.2 percent a year ago. The average return on assets (ROA) was 1.01 percent, down from 1.07 percent a year ago. However, a majority of banks–56 percent–reported higher ROAs. Net operating revenue (the sum of net interest income and total noninterest income) was $669 billion, relatively unchanged from a year ago, with over two-thirds of all banks (67.4 percent) reporting year-over-year net operating revenue growth. Noninterest income was $5.5 billion (2.2 percent) lower than in 2013, as a sharp increase in medium- and long-term interest rates in May 2013 has led to a continued drop-off in income from mortgage refinancing. Noninterest income from the sale, securitization, and servicing of 1-4 family residential mortgages was $9.1 billion (35.2 percent) lower in 2014 than in 2013. Higher interest rates meant lower market values for securities portfolios, and realized gains on securities were $1.3 billion (28 percent) lower. However, the increase in longer-term interest rates was a positive development for net interest margins of institutions that invested in longer-term assets and funded these investments with short-term liabilities. More than half of all banks–52.9 percent–reported higher net interest margins than a year earlier. Net interest income was $5.5 billion (1.3 percent) higher than in 2013, as almost 72.1 percent of all banks reported year-over-year increases. For a fifth consecutive year, loan-loss provisions were lower for the full year than the previous year. Insured institutions set aside $29.7 billion in provisions for loan and lease losses, a $2.7 billion (8.4 percent) decline compared to a year earlier and the smallest total since 2006. Noninterest expenses were $5.2 billion (1.2 percent) higher than in 2013, as “other” noninterest expenses were $6.5 billion (3.8 percent) higher. This increase is largely attributable to the fact that itemized litigation expenses at three of the largest banks were $7.3 billion (327 percent) higher than a year ago. Asset quality indicators continued to improve in 2014. In the 12 months ended December 31, noncurrent loan balances—those that were 90 days or more past due or in nonaccrual status— declined by $44.6 billion (21.5 percent). Noncurrent 1-4 family residential mortgage loans fell by $29.8 billion (22.3 percent), while noncurrent nonfarm nonresidential real estate loans declined by $5.9 billion (27.9 percent). Noncurrent real estate construction and land development loans were $3.5 billion (40.9 percent) lower, and noncurrent commercial and industrial (C&I) loans declined by $1.4 billion (13.8 percent). Net charge-offs (NCOs) of loans and leases totaled $39.6 billion in 2014, down $14.2 billion (26.4 percent) from a year earlier. This is the fifth year in a row that total NCOs have been less than a year earlier. NCOs of 1-4 family residential mortgages were $5.6 billion (60.1 percent) lower than in 2013, while NCOs of home equity lines of credit declined by $2.7 billion (48 percent). NCOs of real estate loans secured by nonfarm nonresidential real estate properties fell by $1.8 billion (60.6 percent), and credit card NCOs declined by $1.6 billion (7.1 percent). Asset growth was relatively strong in 2014. At the end of December, total assets of insured institutions were $822 billion (5.6 percent) higher than a year earlier. 68

69) Federal Deposit Insurance Corporation 2015 Annual Performance Plan Banks increased their investment securities portfolios by $217.3 billion (7.2 percent), as holdings of U.S. Treasury securities rose by $212.7 billion (110.4 percent). Insured institutions also increased their balances with Federal Reserve banks by $215 billion (18.4 percent). Total loan and lease balances increased by $416.4 billion (5.3 percent), led by growth in C&I loans (up $148.9 billion, 9.5 percent). Real estate loans secured by nonfarm nonresidential properties increased by $40.7 billion (3.7 percent), while real estate loans secured by multifamily residential properties rose by $34.5 billion (13.1 percent). Much of the growth in assets was funded by increases in deposit balances. Deposits in domestic offices increased by $576.9 billion (5.9 percent) in the 12 months ended December 31. Most of the growth occurred in large-denomination accounts, as estimated insured deposits increased by only $192.7 billion (3.2 percent). Nondeposit liabilities increased by $163.1 billion (8.7 percent), as advances from Federal Home Loan Banks rose by $58.1 billion (14.3 percent). Equity capital increased by $91.4 billion (5.6 percent). At the end of December, 291 insured institutions on the FDIC’s “Problem List,” with total assets of $87 billion were on the FDIC’s “Problem Bank List”. A year earlier, 467 problem institutions with combined assets of $153 billion were on the Problem Bank List. Problem banks are identified as institutions with financial, operational, or managerial weaknesses that threaten their viability, although historical analysis shows that most problem institutions do not fail. In 2014, 18 banks with combined assets of $2.9 billion failed. At the end of December, the Deposit Insurance Fund (DIF) balance stood at $62.8 billion, up from $47.2 billion a year earlier. The reserve ratio was 1.01 percent, compared to 0.79 percent on December, 31, 2013. 69