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2013 Annual Performance Plan

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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 goals:

  • Resolving institutions in the least costly manner;
  • Managing and marketing failed institution assets to maximize return;
  • Pursuing monies due to the failed institution; and
  • Resolving the debts of the institution fairly.

The FDIC assesses the assets and liabilities of the 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 identify and investigate claims owed to the receivership and pursue 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 claim filing instructions. Once the FDIC receives and analyzes the information, valid claims are paid in accordance with the priorities provided 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.

To address the goals articulated in Section 342 of DFA, the FDIC in 2011 initiated as part of its receivership management program a pilot Small Investor Program (SIP) to increase the participation of small, minority-and women-owned investors in the FDIC’s structured loan sales program.  SIP offers smaller-sized asset pools and unique structural features to improve accessibility for these investors.  The FDIC also developed an Investor Match Program to provide these investors the opportunity to voluntarily share information with other firms to bring together sources of capital and expertise needed to participate in the structured loan sales program.  In 2012, the FDIC closed two SIP structured loan sales with assets of $267 million.  Although decreased resolution activity reduces the availability of suitable loan product for these programs, they will continue to be used as opportunities develop for these programs in 2013.

Under Title II of DFA, the FDIC may be called upon to carry out the orderly liquidation of certain large, systemically important financial companies.  In 2013, 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.  Annual Performance Goal 2.1-5 addresses the activities that will be undertaken to complete the establishment of the regulatory and organizational infrastructure that is required for this purpose.  DFA requires that bank holding companies with more than $50 billion in assets and nonbank financial companies deemed to be systemically important by the Financial Services Oversight Committee prepare and submit resolution plans to the Federal Reserve Board and the FDIC for review.  Implementing rules have been issued, and procedures for the FDIC’s review and processing of those plans are nearing completion.  The FDIC issued parallel rules, under its Federal Deposit Insurance Act authority, requiring insured depository institutions with $50 billion or more in total assets to prepare resolution plans as well.  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 Objectives

Annual Performance Goals

Resolutions are orderly and receiverships are managed effectively.

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. (4.1-1)

Manage the receivership estate and its subsidiaries toward an orderly termination. (4.1-2)

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. (4.2-1)




STRATEGIC GOAL 4:
Resolutions are orderly and receiverships are managed effectively.


STRATEGIC OBJECTIVE 4.1
Receiverships are managed to maximize net return and terminated in an orderly and timely manner.

Annual Performance Goal 4.1-1
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
    • 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.  During the past four years, whole bank loss-share transactions have been used extensively to sell most of the assets of a failed bank to an acquiring bank.  Given adequate time, the FDIC prepares an 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.

    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 the Internet.  Potential asset purchasers are given the opportunity to view all sales information electronically before electronic bid submission.  The FDIC also allows potential bidders to view all hard-copy sale information at the sales site.

    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 non-permanent 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 extensively to manage and sell the assets of failed institutions.  The FDIC has broad 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.

    The number of contracts awarded for receivership management support in 2013 is expected to continue a decline that began in 2011, following dramatic increases in 2009 and 2010 as bank closing activity drove the need for high levels of contractor support.  The number of new awards declined to 953 (with a total contract ceiling of $530.13 million) in 2012 from 1,468 new awards (with a total contract ceiling of $965.75 million) in 2011.  With the decline in bank failures likely to continue in 2013, the focus in contracting will shift from bank closing support through Receivership Assistance Contractors to owned real estate management and marketing activities, environmental advisory services, and failed bank data management support, as measured by the number of currently active contracts.  The number of contractor resources deployed at year-end 2012 declined 19 percent from year-end 2011 levels.

    The FDIC will continue in 2013 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 is committed to increasing the participation of underrepresented groups, including minority-and women-owned businesses and law firms, in FDIC contracting and asset purchase opportunities by identifying and addressing barriers to such participation and other strategies.

    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 auction/sell assets received from failed institutions.  In addition, FMS is used to track franchise marketing activities and provide a comprehensive source of information on the resolution of failed financial institutions and 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.

2012 Performance Results
This annual performance goal and its associated performance indicator and target are unchanged for 2013.  In 2012, the FDIC successfully met the performance target for this annual performance goal.


Annual Performance Goal 4.1-2
Manage the receivership estate and its subsidiaries toward an orderly termination.

Indicator and Target

  1. Timely termination of new receiverships
    • 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 senior FDIC managers meets quarterly to review and evaluate the progress that has been made in carrying out each receivership action 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 try to remove impediments to the termination of its remaining open receiverships.  During 2012, 51 new receiverships were added to the FDIC’s inventory of receiverships and 16 were terminated, leaving 466 active receiverships at the end of 2012.  To the extent that significant, unresolved impediments remain for a substantial number of receiverships, the FDIC may be unable to achieve this goal.

    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.

    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.

2012 Performance Results
This annual performance goal and its associated performance indicator and target are unchanged from 2012.  The FDIC successfully met the performance target for this annual performance goal in 2012.


STRATEGIC OBJECTIVE 4.2
Potential recoveries, including claims against professionals, are investigated and resolved in a fair and cost-effective manner.

Annual Performance Goal 4.2-1
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
    • 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.

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 2013, 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 goal.  Progress in meeting this goal is reported through established management processes.

2012 Performance Results
This annual performance goal and its associated performance indicator and target are unchanged from 2012.  The FDIC successfully met the performance target for this annual performance goal in 2012.



Last Updated 07/30/2013 Finance@fdic.gov