Proposed Agency Information Collection Activities; Comment Request, 49160-49175 [2018-21105]

Download as PDF 49160 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices resources include, but are not limited to personnel and subject matter experts (Pilots, Aircraft Dispatchers, etc.), aircraft equipped with FANS 1/A, Airline Operations Center/Flight Operations Center flight planning and dispatch applications, Electronic Flight Bags hardware and software applications, Aircraft Interface Devices, A/G broadband internet services, ground automation system applications, commercial data management services, and other capabilities that industry may see beneficial to support the future ATM environment. The Live Flight Demonstration will provide a platform to showcase the benefits of trajectory sharing and synchronization and begin to establish the policies and procedures for their routine usage with the National Airspace System. Registration Space at the FTB facility is limited and therefore, attendance will be on a first come first served basis. However, a webcast will be provided for those that cannot attend in person. To attend the Industry Day (in person or via webcast), participants must register via the following link: https:// www.eventbrite.com/e/4dt-live-flightdemonstration-industry-day-tickets48876809854. Issued in Washington, DC, on September 25, 2018. Paul Fontaine, Director, Portfolio Management & Technology Development Office (ANG–C). [FR Doc. 2018–21205 Filed 9–27–18; 8:45 am] BILLING CODE 4910–13–P DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency FEDERAL RESERVE SYSTEM FEDERAL DEPOSIT INSURANCE CORPORATION Proposed Agency Information Collection Activities; Comment Request Office of the Comptroller of the Currency (OCC), Treasury; Board of Governors of the Federal Reserve System (Board); and Federal Deposit Insurance Corporation (FDIC). ACTION: Joint notice and request for comment. amozie on DSK3GDR082PROD with NOTICES1 AGENCY: In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA), the OCC, the Board, and the FDIC (the agencies) SUMMARY: VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The Federal Financial Institutions Examination Council (FFIEC), of which the agencies are members, has approved the agencies’ publication for public comment of a proposal to revise and extend the Consolidated Reports of Condition and Income for a Bank with Domestic and Foreign Offices (FFIEC 031), the Consolidated Reports of Condition and Income for a Bank with Domestic Offices Only (FFIEC 041), and the Consolidated Reports of Condition and Income for a Bank with Domestic Offices Only and Total Assets Less Than $1 Billion (FFIEC 051), which are currently approved collections of information. The Consolidated Reports of Condition and Income are commonly referred to as Call Reports. The FFIEC has also approved the Board’s publication for public comment, on behalf of the agencies, of a proposal to revise and extend the Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 002) and the Report of Assets and Liabilities of a Non-U.S. Branch that is Managed or Controlled by a U.S. Branch or Agency of a Foreign (Non-U.S.) Bank (FFIEC 002S) as well as the agencies’ publication for public comment of proposals to revise and extend the Foreign Branch Report of Condition (FFIEC 030), the Abbreviated Foreign Branch Report of Condition (FFIEC 030S), and the Regulatory Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework (FFIEC 101), all of which are currently approved collections of information. The proposed revisions generally address the revised accounting for credit losses under the Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU) No. 2016–13, ‘‘Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments’’ (ASU 2016–13). This proposal also includes reporting changes for regulatory capital related to implementing the agencies’ recent notice of proposed rulemaking on the implementation and capital transition for the current expected credit losses methodology (CECL). In addition, this notice includes other revisions to the Call Reports and the FFIEC 101 resulting from two sections of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), effective upon enactment on May 24, 2018, that affect the information reported in these reports PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 and for which the agencies submitted emergency review requests to OMB that OMB has approved. The proposed revisions related to ASU 2016–13 would begin to take effect March 31, 2019, for reports with quarterly report dates and December 31, 2019, for reports with an annual report date, with later effective dates for certain respondents. At the end of the comment period for this notice, the comments received will be reviewed to determine whether the FFIEC and the agencies should modify the proposed revisions to one or more of the previously identified reports. As required by the PRA, the agencies will then publish a second Federal Register notice for a 30-day comment period and submit the final Call Reports, FFIEC 002, FFIEC 002S, FFIEC 030, FFIEC 030S, and FFIEC 101 to OMB for review and approval. DATES: Comments must be submitted on or before November 27, 2018. ADDRESSES: Interested parties are invited to submit written comments to any or all of the agencies. All comments, which should refer to the ‘‘CECL and EGRRCPA Reporting Revisions,’’ will be shared among the agencies. OCC: You may submit comments, which should refer to ‘‘CECL and EGRRCPA Reporting Revisions,’’ by any of the following methods: • Email: prainfo@occ.treas.gov. • Mail: Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E–218, Washington, DC 20219. All comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not include any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure. You may personally inspect and photocopy comments at the OCC, 400 7th Street SW, Washington, DC 20219. For security reasons, the OCC requires that visitors make an appointment to inspect comments. You may do so by calling (202) 649–6700 or, for persons who are deaf or hearing impaired, TTY, (202) 649–5597. Upon arrival, visitors will be required to present valid government-issued photo identification and submit to security screening in order to inspect and photocopy comments. Board: You may submit comments, which should refer to ‘‘CECL and EGRRCPA Reporting Revisions,’’ by any of the following methods: • Agency Website: http:// www.federalreserve.gov. Follow the E:\FR\FM\28SEN1.SGM 28SEN1 amozie on DSK3GDR082PROD with NOTICES1 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices instructions for submitting comments at: http://www.federalreserve.gov/ generalinfo/foia/ProposedRegs.cfm. • Email: regs.comments@ federalreserve.gov. Include ‘‘CECL Reporting Revisions’’ in the subject line of the message. • Fax: (202) 452–3819 or (202) 452– 3102. • Mail: Ann E. Misback, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW, Washington, DC 20551. All public comments are available from the Board’s website at www.federalreserve.gov/generalinfo/ foia/ProposedRegs.cfm as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper form in Room 3515, 1801 K Street NW (between 18th and 19th Streets NW), Washington, DC 20006 between 9:00 a.m. and 5:00 p.m. on weekdays. FDIC: You may submit comments, which should refer to ‘‘CECL and EGRRCPA Reporting Revisions,’’ by any of the following methods: • Agency Website: https:// www.fdic.gov/regulations/laws/federal/. Follow the instructions for submitting comments on the FDIC’s website. • Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments. • Email: comments@FDIC.gov. Include ‘‘CECL Reporting Revisions’’ in the subject line of the message. • Mail: Manuel E. Cabeza, Counsel, Attn: Comments, Room MB–3007, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. • Hand Delivery: Comments may be hand delivered to the guard station at the rear of the 550 17th Street Building (located on F Street) on business days between 7:00 a.m. and 5:00 p.m. Public Inspection: All comments received will be posted without change to https://www.fdic.gov/regulations/ laws/federal/ including any personal information provided. Paper copies of public comments may be requested from the FDIC Public Information Center by telephone at (877) 275–3342 or (703) 562–2200. Additionally, commenters may send a copy of their comments to the OMB desk officer for the agencies by mail to the Office of Information and Regulatory Affairs, U.S. Office of Management and Budget, New Executive Office Building, Room 10235, 725 17th Street NW, Washington, DC 20503; by fax to (202) VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 395–6974; or by email to oira_ submission@omb.eop.gov. For further information about the proposed revisions to the information collections discussed in this notice, please contact any of the agency staff whose names appear below. In addition, copies of the reporting forms for the reports within the scope of this notice can be obtained at the FFIEC’s website (https:// www.ffiec.gov/ffiec_report_forms.htm). OCC: Kevin Korzeniewski, Counsel, (202) 649–5490, or for persons who are hearing impaired, TTY, (202) 649–5597, Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219. Board: Nuha Elmaghrabi, Federal Reserve Board Clearance Officer, (202) 452–3884, Office of the Chief Data Officer, Board of Governors of the Federal Reserve System, 20th and C Streets NW, Washington, DC 20551. Telecommunications Device for the Deaf (TDD) users may call (202) 263–4869. FDIC: Manuel E. Cabeza, Counsel, (202) 898–3767, Legal Division, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. SUPPLEMENTARY INFORMATION: FOR FURTHER INFORMATION CONTACT: I. Background A. ASU 2016–13, ‘‘Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments’’ In June 2016, the FASB issued ASU 2016–13, which introduced CECL for estimating allowances for credit losses and added Topic 326, Credit Losses, to the Accounting Standards Codification (ASC). The new credit losses standard changes several aspects of existing U.S. generally accepted accounting principles (U.S. GAAP) as follows: • Introduction of a new credit loss methodology. The new accounting standard developed by the FASB has been designed to replace the existing incurred loss methodology in U.S. GAAP. Under CECL, the allowance for credit losses is an estimate of the expected credit losses on financial assets measured at amortized cost, which is measured using relevant information about past events, including historical credit loss experience on financial assets with similar risk characteristics, current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the financial assets. In concept, an allowance will be created upon the origination or acquisition of a PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 49161 financial asset measured at amortized cost. At subsequent reporting dates, the allowance will be reassessed for a level that is appropriate as determined in accordance with CECL. The allowance for credit losses under CECL is a valuation account, measured as the difference between the financial assets’ amortized cost basis and the amount expected to be collected on the financial assets, i.e., lifetime expected credit losses. • Reduction in the number of credit impairment models. Impairment measurement under existing U.S. GAAP has often been considered complex because it encompasses five credit impairment models for different financial assets.1 In contrast, CECL introduces a single measurement objective to be applied to all financial assets measured at amortized cost, including loans heldfor-investment (HFI) and held-tomaturity (HTM) debt securities. CECL does not, however, specify a single method for measuring expected credit losses; rather, it allows any reasonable approach, as long as the estimate of expected credit losses achieves the objective of the FASB’s new accounting standard. Under the existing incurred loss methodology, institutions use various methods, including historical loss rate methods, roll-rate methods, and discounted cash flow methods, to estimate credit losses. CECL allows the continued use of these methods; however, certain changes to these methods will need to be made in order to estimate lifetime expected credit losses. • Purchased credit-deteriorated (PCD) financial assets. CECL introduces the concept of PCD financial assets, which replaces purchased credit-impaired (PCI) assets under existing U.S. GAAP. The differences in the PCD criteria compared to the existing PCI criteria will result in more purchased loans HFI, HTM debt securities, and available-for-sale (AFS) debt securities being accounted for as PCD financial assets. In contrast to the existing accounting for PCI assets, the new standard requires the estimate of expected credit losses embedded in the purchase price of PCD assets to be estimated and separately recognized as an allowance as of the date of 1 Current U.S. GAAP includes five different credit impairment models for instruments within the scope of CECL: ASC Subtopic 310–10, ReceivablesOverall; ASC Subtopic 450–20, Contingencies-Loss Contingencies; ASC Subtopic 310–30, ReceivablesLoans and Debt Securities Acquired with Deteriorated Credit Quality; ASC Subtopic 320–10, Investments-Debt and Equity Securities—Overall; and ASC Subtopic 325–40, Investments-OtherBeneficial Interests in Securitized Financial Assets. E:\FR\FM\28SEN1.SGM 28SEN1 49162 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices acquisition. This is accomplished by grossing up the purchase price by the amount of expected credit losses at acquisition, rather than being reported as a credit loss expense. As a result, as of the acquisition date, the amortized cost basis of a PCD financial asset is equal to the principal balance of the asset less the non-credit discount, rather than equal to the purchase price as is currently recorded for PCI loans. • AFS debt securities. The new accounting standard also modifies the existing accounting practices for impairment on AFS debt securities. Under this new standard, institutions will recognize a credit loss on an AFS debt security through an allowance for credit losses, rather than a direct write-down as is required by current U.S. GAAP. The recognized credit loss is limited to the amount by which the amortized cost of the security exceeds fair value. A write-down of an AFS debt security’s amortized cost basis to fair value, with any incremental impairment reported in earnings, would be required only if the fair value of an AFS debt security is less than its amortized cost basis and either (1) the institution intends to sell the debt security, or (2) it is more likely than not that the institution will be required to sell the security before recovery of its amortized cost basis. Although the measurement of credit loss allowances is changing under CECL, the FASB’s new accounting standard does not address when a financial asset should be placed in nonaccrual status. Therefore, institutions should continue to apply the agencies’ nonaccrual policies that are currently in place. In addition, the FASB retained the existing write-off guidance in U.S. GAAP, which requires an institution to write off a financial asset in the period the asset is deemed uncollectible. Institutions 2 must apply ASU 2016– 13 in their Call Report, FFIEC 002,3 FFIEC 002S, FFIEC 030, FFIEC 030S, and FFIEC 101 submissions in accordance with the effective dates set forth in the ASU, if an institution is required to file such form. For institutions that are public business entities (PBE) and also are Securities and Exchange Commission (SEC) filers, as both terms are defined in U.S. GAAP, the new credit losses standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Thus, for an SEC filer that has a calendar year fiscal year, the standard is effective January 1, 2020, and the institution must first apply the new credit losses standard in its Call Report, FFIEC 002,4 FFIEC 002S, FFIEC 030, and FFIEC 101 for the quarter ended March 31, 2020 (and in its FFIEC 030S for December 31, 2020), if the institution is required to file these forms. For a PBE that is not an SEC filer, the credit losses standard is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Thus, for a PBE that is not an SEC filer and has a calendar year fiscal year, the standard is effective January 1, 2021, and the institution must first apply the new credit losses standard in its Call Report, FFIEC 002,5 FFIEC 002S, FFIEC 030, and FFIEC 101 for the quarter ended March 31, 2021 (and in its FFIEC 030S for December 31, 2021), if the institution is required to file these forms. For an institution that is not a PBE, the credit losses standard is effective for fiscal years beginning after December 15, 2020, and for interim period financial statements for fiscal years beginning after December 15, 2021.6 Thus, an institution with a calendar year fiscal year that is not a PBE must first apply the new credit losses standard in its Call Report, FFIEC 002,7 FFIEC 002S, FFIEC 030, FFIEC 030S, and FFIEC 101 for December 31, 2021, if the institution is required to file these forms.8 However, such an institution would include the ASU 2016–13 credit loss provisions for the entire year ended December 31, 2021, in the income statement in its Call Report for year-end 2021. The institution would also recognize in its year-end 2021 Call Report a cumulative-effect adjustment to the beginning balance of retained earnings as of January 1, 2021, resulting from the adoption of the new standard as of the beginning of the 2021 fiscal year. For regulatory reporting purposes, early application of the new credit losses standard will be permitted for all institutions for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The following table provides a summary of the effective dates for ASU 2016–13. EFFECTIVE DATES FOR ASU 2016–13 Regulatory report effective date * U.S. GAAP effective date PBEs That Are SEC Filers .............. Other PBEs (Non-SEC Filers) ........ Non-PBEs ........................................ Early Application ............................. Fiscal years beginning after 12/15/2019, including interim periods within those fiscal years. Fiscal years beginning after 12/15/2020, including interim periods within those fiscal years. Fiscal years beginning after 12/15/2020, and interim periods for fiscal years beginning after 12/15/2021 9. Early application permitted for fiscal years beginning after 12/15/ 2018, including interim periods within those fiscal years. 3/31/2020. 3/31/2021. 12/31/2021.10 First calendar quarter-end after effective date of early application of the ASU. amozie on DSK3GDR082PROD with NOTICES1 * For institutions with calendar fiscal year-ends and reports with quarterly report dates. 2 Institutions include banks, savings associations, holding companies, U.S. branches and agencies of foreign banks, and foreign branches of U.S. banks and U.S. savings associations. 3 As stated in the instructions for the FFIEC 002, U.S. branches and agencies of foreign banks may choose to, but are not required to, maintain credit loss allowances on an office level. 4 See footnote 3. VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 5 See footnote 3. August 20, 2018, the FASB issued a proposed ASU that would amend the transition and effective date provisions in ASU 2016–13 for entities that are not PBEs (non-PBEs) so that the credit losses standard would be effective for nonPBEs for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. 7 See footnote 3. 6 On PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 8 If the FASB issues a final Accounting Standards Update amending the transition and effective date provisions in ASU 2016–13 as described in footnote 6, a non-PBE with a calendar year fiscal year would first apply the new credit losses standard in its reports for March 31, 2022, if an institution is required to file these report forms. 9 See footnote 6. 10 See footnote 8. E:\FR\FM\28SEN1.SGM 28SEN1 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices For additional information on key elements of the new accounting standard and initial supervisory views with respect to measurement methods, use of vendors, portfolio segmentation, data needs, qualitative adjustments, and allowance processes, refer to the agencies’ Joint Statement on the New Accounting Standard on Financial Instruments—Credit Losses issued on June 17, 2016, and Frequently Asked Questions on the New Accounting Standard on Financial Instruments— Credit Losses (CECL FAQs), which were last updated on September 6, 2017.11 B. EGRRCPA On May 24, 2018, EGRRCPA amended various statutes administered by the agencies and affected regulations issued by the agencies.12 Two of the amendments made by EGRRCPA, as described below, took effect on the day of EGRRCPA’s enactment and impact institutions’ regulatory reports. In response to emergency review requests, the agencies received approval from OMB to revise the reporting of information in the Call Reports on certain high volatility commercial real estate (HVCRE) exposures and reciprocal deposits and in the FFIEC 101 report on certain HVCRE exposures for the June 30, 2018, report date. As a result of OMB’s emergency approval of revisions to the information collections affected by the above statutory changes, the expiration date of these collections has been revised to February 28, 2019. The agencies are now undertaking the regular PRA process for revising and extending these information collections for three years as described in this notice. amozie on DSK3GDR082PROD with NOTICES1 • HVCRE Exposures Section 214 of EGRRCPA adds a new Section 51 to the Federal Deposit Insurance Act (FDI Act) governing the risk-based capital requirements for certain acquisition, development, or construction (ADC) loans. EGRRCPA provides that, effective upon enactment, the agencies may only require a depository institution to assign a heightened risk weight to an HVCRE exposure if such exposure is an ‘‘HVCRE ADC Loan,’’ as defined in Section 214 of EGRRCPA. Accordingly, a depository institution is permitted to use the definition of HVCRE ADC Loan 11 The CECL FAQs and a related link to the joint statement can be found on the following agency websites: Board: https://www.federalreserve.gov/ supervisionreg/srletters/sr1708a1.pdf; FDIC: https:// www.fdic.gov/news/news/financial/2017/fil170 41a.pdf; OCC: https://www.occ.gov/topics/bankoperations/accounting/cecl/cecl-faqs.html. 12 Public Law 115–174, 132 Stat. 1296 (2018). VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 49163 in place of the existing definition of HVCRE loan when reporting HVCRE exposures held for sale, held for investment, and held for trading on Schedule RC–R, Regulatory Capital, Part II, Risk-Weighted Assets, in the Call Reports, as well as on Schedule B and Schedule G in the FFIEC 101 for institutions required to file that form. Board OMB Control No.: 7100–0036. Estimated Number of Respondents: 808 state member banks. Estimated Average Burden per Response: 49.87 burden hours per quarter to file. Estimated Total Annual Burden: 161,180 burden hours to file. • Reciprocal Deposits FDIC OMB Control No.: 3064–0052. Estimated Number of Respondents: 3,596 insured state nonmember banks and state savings associations. Estimated Average Burden per Response: 43.85 burden hours per quarter to file. Estimated Total Annual Burden: 630,738 burden hours to file. The estimated average burden hours collectively reflect the estimates for the FFIEC 031, the FFIEC 041, and the FFIEC 051 reports. When the estimates are calculated by type of report across the agencies, the estimated average burden hours per quarter are 121.74 (FFIEC 031), 55.57 (FFIEC 041), and 38.59 (FFIEC 051). The estimated burden per response for the quarterly filings of the Call Report is an average that varies by agency because of differences in the composition of the banks and savings associations under each agency’s supervision (e.g., size distribution of such institutions, types of activities in which they are engaged, and existence of foreign offices). Type of Review: Extension and revision of currently approved collections. Section 29 of the FDI Act (12 U.S.C. 1831f), as amended by Section 202 of EGRRCPA, excepts a capped amount of reciprocal deposits from treatment as brokered deposits for qualifying institutions, effective upon enactment. The current Call Report instructions, consistent with the law prior to the enactment of EGRRCPA, treat all reciprocal deposits as brokered deposits. When reporting in the Call Report, institutions should apply the newly defined terms and other provisions of Section 202 to determine whether they and their reciprocal deposits are eligible for the statutory exclusion and report as brokered deposits in Schedule RC–E, and reciprocal brokered deposits in Schedule RC–O, only those reciprocal deposits that are considered brokered deposits under the new law. II. Affected Reports and Specific Revisions A. Call Reports The agencies propose to extend for three years, with revision, the FFIEC 031, FFIEC 041, and FFIEC 051 Call Reports. Report Title: Consolidated Reports of Condition and Income (Call Report). Form Numbers: FFIEC 031 (for banks and savings associations with domestic and foreign offices), FFIEC 041 (for banks and savings associations with domestic offices only),13 and FFIEC 051 (for banks and savings associations with domestic offices only and total assets less than $1 billion). Frequency of Response: Quarterly. Affected Public: Business or other forprofit. OCC OMB Control No.: 1557–0081. Estimated Number of Respondents: 1,252 national banks and federal savings associations. Estimated Average Burden per Response: 45.98 burden hours per quarter to file. Estimated Total Annual Burden: 230,268 burden hours to file. 13 Banks and savings associations with domestic offices only and total consolidated assets of $100 billion or more file the FFIEC 031 report rather than the FFIEC 041 report. PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 General Description of Reports The Call Report information collections are mandatory: 12 U.S.C. 161 (for national banks), 12 U.S.C. 324 (for state member banks), 12 U.S.C. 1817 (for insured state nonmember commercial and savings banks), and 12 U.S.C. 1464 (for federal and state savings associations). At present, except for selected data items and text, these information collections are not given confidential treatment. Abstract Banks and savings associations submit Call Report data to the agencies each quarter for the agencies’ use in monitoring the condition, performance, and risk profile of individual institutions and the industry as a whole. Call Report data serve a regulatory or public policy purpose by assisting the agencies in fulfilling their shared missions of ensuring the safety and soundness of financial institutions and the financial system and protecting consumer financial rights, as well as E:\FR\FM\28SEN1.SGM 28SEN1 49164 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices amozie on DSK3GDR082PROD with NOTICES1 agency-specific missions affecting national and state-chartered institutions, such as conducting monetary policy, ensuring financial stability, and administering federal deposit insurance. Call Reports are the source of the most current statistical data available for identifying areas of focus for on-site and off-site examinations. Among other purposes, the agencies use Call Report data in evaluating institutions’ corporate applications, including, in particular, interstate merger and acquisition applications for which the agencies are required by law to determine whether the resulting institution would control more than 10 percent of the total amount of deposits of insured depository institutions in the United States. Call Report data also are used to calculate institutions’ deposit insurance and Financing Corporation assessments and national banks’ and federal savings associations’ semiannual assessment fees. B. FFIEC 002 and 002S The Board proposes to extend for three years, with revision, on behalf of the agencies the FFIEC 002 and FFIEC 002S reports. Report Titles: Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks; Report of Assets and Liabilities of a Non-U.S. Branch that is Managed or Controlled by a U.S. Branch or Agency of a Foreign (Non-U.S.) Bank. Form Numbers: FFIEC 002; FFIEC 002S. OMB control number: 7100–0032. Frequency of Response: Quarterly. Affected Public: Business or other forprofit. Respondents: All state-chartered or federally-licensed U.S. branches and agencies of foreign banking organizations, and all non-U.S. branches managed or controlled by a U.S. branch or agency of a foreign banking organization. Estimated Number of Respondents: FFIEC 002—209; FFIEC 002S—38. Estimated Average Burden per Response: FFIEC 002—23.87 hours; FFIEC 002S—6.0 hours. Estimated Total Annual Burden: FFEIC 002—19,955 hours; FFIEC 002S— 912 hours. Type of Review: Extension and revision of currently approved collections. General Description of Reports These information collections are mandatory (12 U.S.C. 3105(c)(2), 1817(a)(1) and (3), and 3102(b)). Except for select sensitive items, the FFIEC 002 is not given confidential treatment; the VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 FFIEC 002S is given confidential treatment (5 U.S.C. 552(b)(4) and (8)). Abstract On a quarterly basis, all U.S. branches and agencies of foreign banks are required to file the FFIEC 002, which is a detailed report of condition with a variety of supporting schedules. This information is used to fulfill the supervisory and regulatory requirements of the International Banking Act of 1978. The data are also used to augment the bank credit, loan, and deposit information needed for monetary policy and other public policy purposes. The FFIEC 002S is a supplement to the FFIEC 002 that collects information on assets and liabilities of any non-U.S. branch that is managed or controlled by a U.S. branch or agency of the foreign bank. A non-U.S. branch is managed or controlled by a U.S. branch or agency if a majority of the responsibility for business decisions, including but not limited to decisions with regard to lending or asset management or funding or liability management, or the responsibility for recordkeeping with respect to assets or liabilities for that foreign branch, resides at the U.S. branch or agency. A separate FFIEC 002S must be completed for each managed or controlled non-U.S. branch. The FFIEC 002S must be filed quarterly along with the U.S. branch or agency’s FFIEC 002. The data from both reports are used for (1) monitoring deposit and credit transactions of U.S. residents; (2) monitoring the impact of policy changes; (3) analyzing structural issues concerning foreign bank activity in U.S. markets; (4) understanding flows of banking funds and indebtedness of developing countries in connection with data collected by the International Monetary Fund and the Bank for International Settlements that are used in economic analysis; and (5) assisting in the supervision of U.S. offices of foreign banks. The Federal Reserve System collects and processes these reports on behalf of all three agencies. C. FFIEC 030 and 030S The agencies propose to extend for three years, with revision, the FFIEC 030 and FFIEC 030S reports. Report Title: Foreign Branch Report of Condition. Form Numbers: FFIEC 030 and FFIEC 030S. Frequency of Response: Annually, and quarterly for significant branches. Affected Public: Business or other for profit. OCC OMB Number: 1557–0099. PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 Estimated Number of Respondents: 199 annual branch respondents (FFIEC 030); 57 quarterly branch respondents (FFIEC 030); 30 annual branch respondents (FFIEC 030S). Estimated Average Time per Response: 3.4 burden hours (FFIEC 030); 0.5 burden hours (FFIEC 030S). Estimated Total Annual Burden: 1,467 burden hours. Board OMB Number: 7100–0071. Estimated Number of Respondents: 14 annual branch respondents (FFIEC 030); 24 quarterly branch respondents (FFIEC 030); 11 annual branch respondents (FFIEC 030S). Estimated Average Time per Response: 3.4 burden hours (FFIEC 030); 0.5 burden hours (FFIEC 030S). Estimated Total Annual Burden: 380 burden hours. FDIC OMB Number: 3064–0011. Estimated Number of Respondents: 8 annual branch respondents (FFIEC 030); 1 quarterly branch respondent (FFIEC 030); 8 annual branch respondents (FFIEC 030S). Estimated Average Time per Response: 3.4 burden hours (FFIEC 030); 0.5 burden hours (FFIEC 030S). Estimated Total Annual Burden: 45 burden hours. Type of Review: Extension and revision of currently approved collections. General Description of Reports This information collection is mandatory: 12 U.S.C. 602 (Board); 12 U.S.C. 161 and 602 (OCC); and 12 U.S.C. 1828 (FDIC). This information collection is given confidential treatment under 5 U.S.C. 552(b)(4) and (8). Abstract The FFIEC 030 collects asset and liability information for foreign branches of insured U.S. banks and insured U.S. savings associations (U.S. depository institutions) and is required for regulatory and supervisory purposes. The information is used to analyze the foreign operations of U.S. institutions. All foreign branches of U.S. institutions regardless of charter type file this report as provided in the instructions to the FFIEC 030 and FFIEC 030S. A U.S. depository institution generally must file a separate report for each foreign branch, but in some cases may consolidate filing for multiple foreign branches in the same country, as described below. A branch with either total assets of at least $2 billion or commitments to purchase foreign E:\FR\FM\28SEN1.SGM 28SEN1 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices currencies and U.S. dollar exchange of at least $5 billion as of the end of a calendar quarter is considered a ‘‘significant branch’’ and an FFIEC 030 report is required to be filed quarterly. A U.S. depository institution with a foreign branch having total assets in excess of $250 million that does not meet either of the criteria to file quarterly must file the entire FFIEC 030 report for this foreign branch on an annual basis as of December 31. A U.S. depository institution with a foreign branch having total assets of $50 million, but less than or equal to $250 million that does not meet the criteria to file the FFIEC 030 report must file the FFIEC 030S report for this foreign branch on an annual basis as of December 31. A U.S. depository institution with a foreign branch having total assets of less than $50 million is exempt from filing the FFIEC 030 and 030S reports. D. FFIEC 101 The agencies propose to extend for three years, with revision, the FFIEC 101 report. Report Title: Risk-Based Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework. Form Number: FFIEC 101. Frequency of Response: Quarterly. Affected Public: Business or other forprofit. amozie on DSK3GDR082PROD with NOTICES1 OCC OMB Control No.: 1557–0239. Estimated Number of Respondents: 20 national banks and federal savings associations. Estimated Time per Response: 674 burden hours per quarter to file. Estimated Total Annual Burden: 53,920 burden hours to file. Board OMB Control No.: 7100–0319. Estimated Number of Respondents: 6 state member banks; 16 bank holding companies and savings and loan holding companies; and 6 intermediate holding companies. Estimated Time per Response: 674 burden hours per quarter for state member banks to file, 677 burden hours per quarter for bank holding companies and savings and loan holding companies to file; and 3 burden hours per quarter for intermediate holding companies to file. Estimated Total Annual Burden: 16,176 burden hours for state member banks to file; 43,328 burden hours for bank holding companies and savings and loan holding companies to file; and 72 burden hours for intermediate holding companies to file. VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 FDIC OMB Control No.: 3064–0159. Estimated Number of Respondents: 2 insured state nonmember banks and state savings associations. Estimated Time per Response: 674 burden hours per quarter to file. Estimated Total Annual Burden: 5,392 burden hours to file. Type of Review: Extension and revision of currently approved collections. General Description of Reports Each advanced approaches institution 14 is required to report quarterly regulatory capital data on the FFIEC 101. The FFIEC 101 information collection is mandatory for advanced approaches institutions: 12 U.S.C. 161 (national banks), 12 U.S.C. 324 (state member banks), 12 U.S.C. 1844(c) (bank holding companies), 12 U.S.C. 1467a(b) (savings and loan holding companies), 12 U.S.C. 1817 (insured state nonmember commercial and savings banks), 12 U.S.C. 1464 (savings associations), and 12 U.S.C. 1844(c), 3106, and 3108 (intermediate holding companies). Certain data items in this information collection are given confidential treatment under 5 U.S.C. 552(b)(4) and (8). Abstract The agencies use data reported in the FFIEC 101 to assess and monitor the levels and components of each reporting entity’s capital requirements and the adequacy of the entity’s capital under the Advanced Capital Adequacy Framework; 15 to evaluate the impact of the Advanced Capital Adequacy Framework on individual reporting entities and on an industry-wide basis and its competitive implications; and to supplement on-site examination processes. The reporting schedules also assist advanced approaches institutions in understanding expectations relating to the system development necessary for implementation and validation of the Advanced Capital Adequacy Framework. Submitted data that are released publicly will also provide other interested parties with information about advanced approaches institutions’ regulatory capital. Current Actions I. Introduction In response to the new credit losses standard, key elements of which were 14 See 12 CFR 3.100(b) (OCC); 12 CFR 217.100(b) (Board); 12 CFR 324.100(b) (FDIC). 15 12 CFR part 3, subpart E (OCC); 12 CFR part 217, subpart E (Board); 12 CFR part 324, subpart E (FDIC). PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 49165 outlined above in Section A of ‘‘Supplementary Information, I. Background,’’ the agencies reviewed the existing FFIEC reports to determine which reports may be affected by ASU 2016–13. As a result, revisions are proposed to the following FFIEC reports: (1) Call Reports (FFIEC 031, FFIEC 041, and FFIEC 051), (2) FFIEC 002 and FFIEC 002S, (3) FFIEC 030 and FFIEC 030S, and (4) the FFIEC 101. The agencies also reviewed the existing FFIEC reports to determine which reports may be affected by EGRRCPA. As a result, additional revisions are proposed for the Call Reports (FFIEC 031, FFIEC 041, and FFIEC 051) and the FFIEC 101. A detailed description of the proposed revisions resulting from both ASU 2016–13 and EGRRCPA follows. II. Call Report Revisions A. General Discussion of Proposed Call Report Revisions 1. ASU 2016–13 Proposed Call Report Revisions In response to the changes in accounting for credit losses under ASU 2016–13, the agencies are proposing revisions to the manner in which data on credit losses is reported in the Call Report. These changes are necessary to align the information reported in the Call Report with the new accounting standard as it relates to the credit losses for loans and leases, including offbalance sheet credit exposures.16 The revisions also address the broader scope of financial assets for which an allowance for credit losses must be established and maintained, and the elimination of the existing model for PCI assets, as described in more detail later in this section. In developing these proposed Call Report revisions, the agencies followed the guiding principles for evaluating potential additions and deletions of Call Report data items and other revisions to the Call Report. In general, data items collected in the Call Report must meet three guiding principles: (1) The data items serve a long-term regulatory or public policy purpose by assisting the FFIEC member entities in fulfilling their shared missions of ensuring the safety and soundness of financial institutions and the financial system and the protection of consumer financial rights, as well as agency-specific missions affecting national and state-chartered institutions; (2) the data items to be collected maximize practical utility and minimize, to the extent practicable and appropriate, burden on financial 16 See E:\FR\FM\28SEN1.SGM 12 U.S.C. 1831n(a). 28SEN1 amozie on DSK3GDR082PROD with NOTICES1 49166 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices institutions; and (3) equivalent data items are not readily available through other means. The agencies also applied these principles in developing the proposed revisions to the other FFIEC reports within the scope of this notice. In following these principles, the agencies sought to limit the number of data items being added to the Call Report and the other reports within the scope of this notice to address the changes in accounting for credit losses. The majority of the proposed changes address the broader scope of assets subject to an allowance for credit losses assessment under ASU 2016–13. Throughout the Call Report, the agencies generally propose to request credit loss information on loans and leases, HTM debt securities, and AFS debt securities given the materiality of these asset types to institutions’ overall balance sheets as well as the potential materiality of the allowances for credit losses on these assets. The existing Call Report schedules impacted by ASU 2016–13 and included in the development of this proposal are: D Schedule RI—Income Statement D Schedule RI–B—Charge-offs and Recoveries on Loans and Leases and Changes in Allowance for Loan and Lease Losses D Schedule RI–C—Disaggregated Data on the Allowance for Loan and Lease Losses [FFIEC 031 and FFIEC 041 only] D Schedule RI–D—Income from Foreign Offices [FFIEC 031 only] D Schedule RI–E—Explanations D Schedule RC—Balance Sheet D Schedule RC–B—Securities D Schedule RC–C—Loans and Lease Financing Receivables D Schedule RC–F—Other Assets D Schedule RC–G—Other Liabilities D Schedule RC–H—Selected Balance Sheet Items for Domestic Offices [FFIEC 031 only] D Schedule RC–K—Quarterly Averages D Schedule RC–N—Past Due and Nonaccrual Loans, Leases, and Other Assets D Schedule RC–R—Regulatory Capital D Schedule RC–V—Variable Interest Entities [FFIEC 031 and FFIEC 041 only] D Schedule SU—Supplemental Information [FFIEC 051 only] As noted previously, ASU 2016–13 broadens the scope of financial assets for which allowances for credit losses must be estimated. CECL is applicable to all financial instruments measured at amortized cost (including loans held for investment and HTM debt securities, as well as trade and reinsurance receivables and receivables that relate to repurchase agreements and securities VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 lending agreements), net investments in leases, and off-balance-sheet credit exposures not accounted for as insurance, including loan commitments, standby letters of credit, and financial guarantees. In addition, under ASU 2016–13, institutions will record credit losses on AFS debt securities through an allowance for credit losses rather than as a write-down through earnings for other-than-temporary impairment (OTTI). The broader scope of financial assets for which allowances must be estimated under ASU 2016–13 results in the proposed reporting of additional allowances, and related charge-off and recovery data, in the Call Report and proposed changes to the terminology used to describe allowances for credit losses within the Call Report. To address the broader scope of assets that will have allowances under ASU 2016– 13, the agencies propose to change the allowance nomenclature to consistently use ‘‘allowance for credit losses’’ followed by the specific asset type as relevant, e.g., ‘‘allowance for credit losses on loans and leases’’ and ‘‘allowance for credit losses on HTM debt securities.’’ By broadening the scope of financial assets for which the need for allowances for credit losses must be assessed to include HTM and AFS debt securities, the new standard eliminates the existing OTTI model for such securities. Subsequent to an institution’s adoption of ASU 2016–13, the concept of OTTI will no longer be relevant and information on OTTI will no longer be captured in the Call Report. The new standard also eliminates the separate impairment model for PCI loans and debt securities. Under CECL, credit losses on PCD financial assets measured at amortized cost are subject to the same credit loss measurement standard as all other financial assets measured at amortized cost. Subsequent to an institution’s adoption of ASU 2016–13, information on PCI loans will no longer be captured in the Call Report. While the standard generally does not change the scope of off-balance sheet credit exposures subject to an allowance for credit loss assessment, the standard does change the period over which an institution should estimate expected credit losses. For off-balance-sheet credit exposures, an institution will estimate expected credit losses over the contractual period in which it is exposed to credit risk via a present contractual obligation to extend credit. For the period of exposure, the estimate of expected credit losses should consider both the likelihood that funding will occur and the amount expected to be funded over the PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 estimated remaining life of the commitment or other off-balance-sheet exposure. In contrast to existing practices, the FASB decided that no credit losses should be recognized on off-balance-sheet credit exposures that are unconditionally cancellable by the issuer. The exclusion of unconditionally cancellable off-balance sheet exposures from the allowance for credit losses assessment requires clarification in the Call Report instructions. The agencies also note that, because of the different effective dates for ASU 2016–13 for PBEs that are SEC filers, other PBEs (non-SEC filers), and all other entities, as well as the option for early adoption and the varying fiscal years across the population of institutions that file Call Reports, the period over which institutions may be implementing this ASU ranges from the first quarter of 2019 through the fourth quarter of 2022. December 31, 2022, will be the first quarter-end Call Report date as of which all institutions would be required to prepare their Call Reports in accordance with ASU 2016–13.17 As a result, the agencies are proposing revisions to the reporting of information on credit losses in response to the ASU that would be introduced in the Call Report effective March 31, 2019, but would not be fully phased in until the Call Report for December 31, 2022.18 As of the new accounting standard’s effective date for an individual institution, the institution will apply the standard based on the characteristics of financial assets as follows: • Financial assets measured at amortized cost (that are not PCD assets) and net investments in leases: A cumulative-effect adjustment for the changes in the allowances for credit losses on these assets will be recognized in retained earnings, net of applicable taxes, as of the beginning of the fiscal year in which the new standard is adopted. The cumulative-effect adjustment to retained earnings should be reported in Call Report Schedule RI– A, item 2, ‘‘Cumulative effect of changes in accounting principles and corrections of material accounting errors,’’ and explained in Schedule RI–E, item 4.a, for which a preprinted caption, ‘‘Adoption of Current Expected Credit 17 If the FASB issues a final Accounting Standards Update amending the transition and effective date provisions in ASU 2016–13 as described in footnote 6, December 31, 2022, would continue to be the first quarter-end Call Report date as of which all institutions would be required to prepare their Call Reports in accordance with ASU 2016–13. 18 See CECL FAQs, question 36, for examples of how and when institutions with non-calendar fiscal years must incorporate the new credit losses standard into their regulatory reports. E:\FR\FM\28SEN1.SGM 28SEN1 amozie on DSK3GDR082PROD with NOTICES1 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices Losses Methodology—ASC Topic 326,’’ will be provided in the text field for this item. • Purchased credit-deteriorated financial assets: Financial assets classified as PCI assets prior to the effective date of the new standard will be classified as PCD assets as of the effective date. For all financial assets designated as PCD assets as of the effective date, an institution will be required to gross up the balance sheet amount of the financial asset by the amount of its allowance for expected credit losses as of the effective date, resulting in an adjustment to the amortized cost basis of the asset to reflect the addition of the allowance for credit losses as of that date. For loans held for investment and held-tomaturity debt securities, this allowance gross-up as of the effective date of ASU 2016–13 should be reported in the appropriate columns of Schedule RI–B, Part II, item 6, ‘‘Adjustments,’’ and should be included in the amount reported in Schedule RI–E, item 6.b, for which a preprinted caption, ‘‘Effect of adoption of current expected credit losses methodology on allowances for credit losses on loans and leases held for investment and held-to-maturity debt securities,’’ will be provided in the text field for this item. Subsequent changes in the allowances for credit losses on PCD financial assets will be recognized by charges or credits to earnings through provisions for credit losses. The institution will accrete the noncredit discount or premium to interest income based on the effective interest rate on the PCD financial assets determined after the gross-up for the CECL allowance as of the effective date, except for PCD financial assets in nonaccrual status. • AFS and HTM debt securities: A debt security on which OTTI had been recognized prior to the effective date of the new standard will transition to the new guidance prospectively (i.e., with no change in the amortized cost basis of the security). The effective interest rate on such a debt security before the adoption date will be retained and locked in. Amounts previously recognized in accumulated other comprehensive income related to cash flow improvements will continue to be accreted to interest income over the remaining life of the debt security on a level-yield basis. Recoveries of amounts previously written off relating to improvements in cash flows after the date of adoption will be recognized in income in the period received. VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 2. EGRRCPA Proposed Call Report Revisions This proposal addresses the changes to the reporting of reciprocal deposits and HVCRE exposures in the Call Report resulting from EGRRCPA. The guiding principles, noted above, were applied in determining these proposed changes to the Call Report. The existing Call Report schedules impacted by EGRRCPA and for which revisions are included in this proposal are: D Schedule RC–E—Deposit Liabilities D Schedule RC–O—Other Data for Deposit Insurance and FICO Assessments D Schedule RC–R—Regulatory Capital: Part II. Risk-Weighted Assets B. Detail of Specific Proposed Call Report Revisions The proposed Call Report revisions are consistent across the FFIEC 031, FFIEC 041, and FFIEC 051 reporting forms to the extent that the same schedule and data items within these schedules currently exist within each reporting form. Throughout this detailed discussion of specific proposed Call Report revisions, for each schedule discussed, the agencies have included the affected form numbers next to the schedule name. Unless otherwise stated, all changes relating to a particular schedule apply to all forms listed. 1. ASU 2016–13 Revisions Proposed Call Report Due to the staggered effective dates, ASU 2016–13 will not be implemented by all institutions until December 2022. It is expected that the majority of institutions will implement the standard in the first or fourth quarter of 2021. As such, the proposed revisions to schedule titles or specific data item captions resulting from the change in nomenclature upon the adoption of CECL generally would not be reflected in the reporting forms until March 31, 2021, as outlined in the following schedule-by-schedule descriptions of the proposed changes to the affected Call Report schedules. Effective for the March 31, 2021, report date, unless otherwise indicated, the schedule titles or specific data item captions referencing the ‘‘provision for loan and lease losses’’ and the ‘‘allowance for loan and lease losses’’ would be changed to the ‘‘provision for credit losses’’ and the ‘‘allowance for credit losses on loans and leases,’’ respectively. From March 31, 2019, through December 31, 2020, the reporting form and instructions for each schedule title PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 49167 or data item impacted by the change in nomenclature would include guidance stating how institutions that have adopted ASU 2016–13 would report the data items related to the ‘‘provision for credit losses’’ and ‘‘allowance for credit losses,’’ as applicable. For the transition period from March 31, 2021, through December 31, 2022, the reporting form and instructions for each impacted schedule title or data item would be updated to include guidance stating how institutions that have not adopted ASU 2016–13 would report the ‘‘provision for loan and lease losses’’ or the ‘‘allowance for loan and lease losses,’’ as applicable. Schedule RI (FFIEC 031, FFIEC 041, and FFIEC 051) To address the broader scope of financial assets for which provisions will be calculated under ASU 2016–13, the agencies propose to revise Schedule RI, item 4, from ‘‘Provision for loan and lease losses’’ to ‘‘Provisions for credit losses on financial assets,’’ effective March 31, 2021. To address the elimination of the concept of OTTI by ASU 2016–13, effective December 31, 2022, the agencies propose to remove Schedule RI, Memorandum item 14, ‘‘Other-than-temporary impairment losses on held-to-maturity and available-for-sale debt securities recognized in earnings.’’ Under the new standard, institutions will recognize credit losses on HTM and AFS debt securities through an allowance for credit losses, and the agencies propose to collect information on the allowance for credit losses on these two categories of debt securities in Schedule RI–B as described below. From March 31, 2019, through September 30, 2022, the reporting form and instructions for Memorandum item 14 will include guidance stating that Memorandum item 14 is to be completed only by institutions that have not adopted ASU 2016–13. Schedule RI–B (FFIEC 031, FFIEC 041, and FFIEC 051) To address the broader scope of financial assets for which allowances will be calculated under ASU 2016–13 and for which charge-offs and recoveries will be applicable, the agencies propose to change the title of Schedule RI–B effective March 31, 2019, from ‘‘Chargeoffs and Recoveries on Loans and Leases and Changes in Allowance for Loan and Lease Losses’’ to ‘‘Charge-offs and Recoveries on Loans and Leases and Changes in Allowances for Credit Losses.’’ In addition, for the FFIEC 031 and FFIEC 041 only, effective March 31, E:\FR\FM\28SEN1.SGM 28SEN1 amozie on DSK3GDR082PROD with NOTICES1 49168 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices 2021, to address the change in allowance nomenclature arising from the broader scope of allowances under ASU 2016–13, the agencies propose to revise Schedule RI–B, Part I, Memorandum item 4, from ‘‘Uncollectible retail credit card fees and finance charges reversed against income (i.e., not included in charge-offs against the allowance for loan and lease losses)’’ to ‘‘Uncollectible retail credit card fees and finance charges reversed against income (i.e., not included in charge-offs against the allowance for credit losses on loans and leases).’’ To further address the broader scope of financial assets for which allowances will be calculated under ASU 2016–13, the agencies propose to revise Schedule RI–B, Part II, to also include changes in the allowances for credit losses on HTM and AFS debt securities. Effective March 31, 2019, the agencies propose to change the title of Schedule RI–B, Part II, from ‘‘Changes in Allowance for Loan and Lease Losses’’ to ‘‘Changes in Allowances for Credit Losses.’’ In addition, effective March 31, 2019, Schedule RI–B, Part II, would be expanded from one column to a table with three columns titled: —Column A: Loans and leases held for investment —Column B: Held-to-maturity debt securities —Column C: Available-for-sale debt securities From March 31, 2019, through September 30, 2022, the reporting form and instructions for Schedule RI–B, Part II, would include guidance stating that Columns B and C are to be completed only by institutions that have adopted ASU 2016–13. In addition, effective March 31, 2019, Schedule RI–B, Part II, item 4, will be revised from ‘‘Less: Write-downs arising from transfers of loans to a held-for-sale account’’ to ‘‘Less: Write-downs arising from transfers of financial assets’’ to capture changes in allowances from transfers of loans from held-toinvestment to held-for-sale and from transfers of securities between categories, e.g., from the AFS to the HTM category. Further, effective March 31, 2019, Schedule RI–B, Part II, item 5, will be revised from ‘‘Provision for loan and lease losses’’ to ‘‘Provisions for credit losses’’ to capture the broader scope of financial assets included in the schedule. Effective March 31, 2019, or the first quarter in which an institution reports its adoption of ASU 2016–13, whichever is later, Schedule RI–B, Part II, item 6, ‘‘Adjustments,’’ would be used to capture the initial impact of applying VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 ASU 2016–13 as of the effective date in the period of adoption, including the initial allowance gross-up for PCD assets as of the effective date. Item 6 also would be used to report the allowance gross-up upon the acquisition of PCD assets on or after the effective date. These adjustments would be explained in items for which preprinted captions would be provided in place of the existing text fields in Schedule RI–E, items 6.a and 6.b, respectively, as proposed below. In the memorandum section of Schedule RI–B, Part II, on the FFIEC 031 and the FFIEC 041, to address the change in allowance nomenclature arising from the broader scope of allowances under ASU 2016–13, the agencies propose to revise the caption for Memorandum item 3, effective March 31, 2021, from ‘‘Amount of allowance for loan and lease losses attributable to retail credit card fees and finance charges’’ to ‘‘Amount of allowance for credit losses on loans and leases attributable to retail credit card fees and finance charges.’’ Also in the memorandum section of Schedule RI–B, Part II, on the FFIEC 031 and the FFIEC 041, effective December 31, 2022, the agencies propose to remove existing Memorandum item 4, ‘‘Amount of allowance for post-acquisition credit losses on purchased credit impaired loans accounted for in accordance with FASB ASC 310–30,’’ as ASU 2016–13 eliminates the concept of PCI loans and the separate credit impairment model for such loans. From March 31, 2019, through September 30, 2022, the reporting form and instructions for Schedule RI–B, Part II, Memorandum item 4, would specify that this item should be completed only by institutions that have not yet adopted ASU 2016–13. Given that the scope of ASU 2016–13 is broader than the three financial asset types proposed to be included in the table in Schedule RI–B, Part II, effective March 31, 2019, the agencies propose to also add new Memorandum item 5, ‘‘Provisions for credit losses on other financial assets measured at amortized cost,’’ and Memorandum item 6, ‘‘Allowance for credit losses on other financial assets measured at amortized cost,’’ to Schedule RI–B, Part II, at the same time. For purposes of Memorandum items 5 and 6, other financial assets would include all financial assets measured at amortized cost other than loans and leases held for investment and held-to-maturity debt securities. From March 31, 2019, through September 30, 2022, the reporting form and instructions for Schedule RI–B, Part II, would include PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 guidance stating that Memorandum items 5 and 6 are to be completed only by institutions that have adopted ASU 2016–13. Schedule RI–C (FFIEC 031 and FFIEC 041) Schedule RI–C currently requests allowance information for specified categories of loans held for investment that is disaggregated on the basis of three separate credit impairment models, and the amounts of the related recorded investment, from institutions with $1 billion or more in total assets. ASU 2016–13 eliminates these separate credit impairment models and replaces them with CECL for all financial assets measured at amortized cost. As a result of this change, effective March 31, 2021, the agencies propose to change the title of Schedule RI–C from ‘‘Disaggregated Data on the Allowance for Loan and Lease Losses’’ to ‘‘Disaggregated Data on Allowances for Credit Losses.’’ To capture disaggregated data on allowances for credit losses from institutions that have adopted ASU 2016–13, the agencies propose to create Schedule RI–C, Part II, ‘‘Disaggregated Data on Allowances for Credit Losses,’’ effective March 31, 2019. The existing table in Schedule RI–C, which includes items 1 through 6 and columns A through F, would be renamed ‘‘Part I. Disaggregated Data on the Allowance for Loan and Lease Losses.’’ From March 31, 2019, through September 30, 2022, the reporting form and instructions for Schedule RI–C, Part I, would include guidance stating that only those institutions that have not adopted ASU 2016–13 should complete Schedule RI– C, Part I. The proposed Part II of this schedule would contain the same six loan portfolio categories and the unallocated category for which data are currently collected in existing Schedule RI–C along with the following portfolio categories for which allowance information would begin to be reported for HTM debt securities: 1. Securities issued by states and political subdivisions in the U.S. 2. Mortgage-backed securities (MBS) (including CMOs, REMICs, and stripped MBS) a. Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies b. Other mortgage-backed securities 3. Asset-backed securities and structured financial products 4. Other debt securities 5. Total For each category of loans in Part II of Schedule RI–C, institutions would E:\FR\FM\28SEN1.SGM 28SEN1 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices report the amortized cost and the related allowance balance in Columns A and B, respectively. The amortized cost amounts to be reported would exclude any accrued interest receivable that is reported in ‘‘Other assets’’ on the balance sheet. For each category of HTM debt securities in Part II of Schedule RI– C, institutions would report only the related allowance balance. The amortized cost and allowance information on loans and the allowance information on HTM debt securities would be reported quarterly only by institutions with $1 billion or more in total assets, as is currently done with existing Part I of Schedule RI–C. The agencies will use the securitiesrelated information gathered in proposed Part II of the schedule to monitor the allowance levels and changes in these levels for the categories of HTM debt securities specified above, which would serve as a starting point for assessing the appropriateness of these levels. Further, with the proposed removal of the Call Report item for OTTI losses recognized in earnings (Schedule RI, Memorandum item 14), proposed Schedule RI–C, Part II, will become another source of information regarding credit losses on HTM debt securities, in addition to data proposed to be reported in Schedule RI–B, Part II. From March 31, 2019, through September 30, 2022, the reporting form and instructions for Schedule RI–C, Part II, would include guidance stating that only those institutions with $1 billion or more in total assets that have adopted ASU 2016–13 should complete Schedule RI– C, Part II. In addition, effective December 31, 2022, the agencies propose to remove the existing Schedule RI–C, Part I. Schedule RI–C, Part II, would then be the only table remaining within this schedule and the ‘‘Part II’’ designation would be removed. amozie on DSK3GDR082PROD with NOTICES1 Schedule RI–D (FFIEC 031) To address the broader scope of financial assets for which provisions will be calculated under ASU 2016–13, effective March 31, 2021, the agencies propose to revise Schedule RI–D, item 3, from ‘‘Provision for loan and lease losses in foreign offices’’ to ‘‘Provisions for credit losses in foreign offices.’’ Schedule RI–E (FFIEC 031, FFIEC 041, and FFIEC 051) Institutions use item 4 of Schedule RI–E to itemize and describe amounts included in Schedule RI–A, item 2, ‘‘Cumulative effect of changes in accounting principles and corrections of material accounting errors.’’ Effective March 31, 2019, the agencies propose to VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 replace the existing text field for Schedule RI–E, item 4.a, with a preprinted caption that would be titled ‘‘Adoption of Current Expected Credit Losses Methodology—ASC Topic 326.’’ Institutions will use this item to report the cumulative-effect adjustment (net of applicable income taxes) recognized in retained earnings for the changes in the allowances for credit losses on financial assets and off-balance sheet credit exposures as of the beginning of the fiscal year in which the institution adopts ASU 2016–13. Providing a preprinted caption for this data item, rather than allowing each institution to enter its own description for this cumulative-effect adjustment in the text field for item 4.a, will enhance the agencies’ ability to compare the impact of the adoption of ASU 2016–13 across institutions. From March 31, 2019, through December 31, 2022, the reporting form and instructions for Schedule RI–E, item 4.a, would specify that this item is to be completed only in the quarter-end Call Reports for the remainder of the calendar year in which an institution adopts ASU 2016–13. The agencies anticipate that the preprinted caption for Schedule RI–E, item 4.a, would be removed after all institutions have adopted ASU 2016–13. For Schedule RI–E, item 6, to address the broader scope of financial assets for which allowances will be maintained under ASU 2016–13, effective March 31, 2019, the agencies propose to revise this item from ‘‘Adjustments to allowance for loan and lease losses’’ to ‘‘Adjustments to allowances for credit losses.’’ In addition, effective March 31, 2019, the agencies propose to replace the existing text field for Schedule RI–E, item 6.a, with a preprinted caption that would be titled ‘‘Initial allowances for credit losses recognized upon the acquisition of purchased credit-deteriorated assets on or after the effective date of ASU 2016–13.’’ Also, effective March 31, 2019, the agencies propose to replace the existing text field for Schedule RI–E, item 6.b, with a preprinted caption that would be titled ‘‘Effect of adoption of current expected credit losses methodology on allowances for credit losses on loans and leases held for investment and heldto-maturity debt securities.’’ Item 6.b would be used to capture the change in the amount of allowances from initially applying ASU 2016–13 to these two categories of assets as of the effective date of the accounting standard in the period of adoption, including the initial allowance gross-up for any PCD assets held as of the effective date. From March 31, 2019, through September 30, PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 49169 2022, the reporting form and instructions for Schedule RI–E, items 6.a and 6.b, would specify that these items are to be completed only by institutions that have adopted ASU 2016–13. The instructions for item 6.b would further state that this item is to be completed only in the quarter-end Call Reports for the remainder of the calendar year in which an institution adopts ASU 2016–13. The agencies anticipate that the preprinted caption for Schedule RI–E, item 6.b, would be removed after all institutions have adopted ASU 2016–13. Schedule RC (FFIEC 031, FFIEC 041, and FFIEC 051) To address the broader scope of financial assets for which allowances will be estimated under ASU 2016–13, the agencies propose revisions to the reporting form and instructions to specify which asset categories should be reported net of an allowance for credit losses on the Call Report balance sheet and which asset categories should be reported gross of such an allowance. The agencies determined that the only financial asset category for which separate (i.e., gross) reporting of the amortized cost 19 and the allowance is needed on Schedule RC continues to be item 4.b, ‘‘Loans and leases held for investment,’’ because of the large size and overall importance of this asset category and its related allowances in comparison to the total assets reported on the balance sheet by most institutions. For other financial assets within the scope of CECL, the agencies propose that institutions report these assets at amortized cost 20 net of the related allowance for credit losses on Schedule RC. Effective March 31, 2021, the agencies propose to revise Schedule RC, item 2.a, from ‘‘Held-to-maturity securities’’ to ‘‘Held-to-maturity securities, net of allowance for credit losses.’’ From March 31, 2019, through December 31, 2020, the agencies propose to add a footnote to Schedule RC, item 2.a, specifying that institutions should ‘‘report this amount net of any applicable allowance for credit losses.’’ Additionally, for Schedule RC, item 3.b, ‘‘Securities purchased under agreements to resell,’’ and Schedule RC, item 11, ‘‘Other assets,’’ effective March 31, 2019, the agencies propose to add a footnote to these items specifying that institutions should ‘‘report this amount net of any applicable allowance for 19 Amortized cost amounts to be reported by asset category would exclude any accrued interest receivable on assets in that category that is reported in ‘‘Other assets’’ on the Call Report balance sheet. 20 See footnote 19. E:\FR\FM\28SEN1.SGM 28SEN1 49170 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices credit losses.’’ From March 31, 2019, through September 30, 2022, the reporting form and instructions for Schedule RC, items 2.a, 3.b, and 11, would specify that reporting such items net of any related allowances for credit losses is applicable only to those institutions that have adopted ASU 2016–13. Given that AFS debt securities are reported on Schedule RC at fair value, the agencies are not proposing any changes to Schedule RC, item 2.b, ‘‘Available-for-sale securities,’’ and instead propose reporting allowances for credit losses on AFS debt securities only in Schedule RI–B, Part II. In addition, to address the change in allowance nomenclature under ASU 2016–13, the agencies propose to revise Schedule RC, item 4.c, from ‘‘LESS: Allowance for loan and lease losses’’ to ‘‘LESS: Allowance for credit losses on loans and leases’’ effective March 31, 2021. amozie on DSK3GDR082PROD with NOTICES1 Schedule RC–B (FFIEC 031, FFIEC 041, and FFIEC 051) Effective March 31, 2019, the agencies propose to revise the instructions to Schedule RC–B to clarify that for institutions that have adopted ASU 2016–13, allowances for credit losses should not be deducted from the amortized cost amounts reported in columns A and C of this schedule.21 In other words, institutions should continue reporting the amortized cost of HTM and AFS debt securities in these two columns of Schedule RC–B gross of their related allowances for credit losses. Schedule RC–C (FFIEC 031, FFIEC 041, and FFIEC 051) Effective March 31, 2021, to address the change in allowance nomenclature, the agencies propose to revise the reporting form and instructions for Schedule RC–C by replacing references to the allowance for loan and lease losses in statements indicating that the allowance should not be deducted from the loans and leases reported in this schedule with references to the allowance for credit losses. Thus, loans and leases will continue to be reported gross of any related allowances or allocated transfer risk reserve in Schedule RC–C, Part I. In addition, to address the elimination of PCI assets by ASU 2016–13, the agencies propose to remove Schedule RC–C, Part I, Memorandum items 7.a and 7.b, in which institutions report the 21 Amortized cost amounts to be reported by securities category in Schedule RC–B would exclude any accrued interest receivable on the securities in that category that is reported in ‘‘Other assets’’ on the Call Report balance sheet. VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 outstanding balance and balance sheet amount, respectively, of PCI loans held for investment effective December 31, 2022. The agencies determined that these items were not needed after the transition to PCD loans under ASU 2016–13 because the ASU eliminates the separate credit impairment model for PCI loans and applies CECL to all loans held for investment measured at amortized cost. From March 31, 2019, through September 30, 2022, the reporting form and instructions for Schedule RC–C, Part I, Memorandum items 7.a and 7.b, would specify that these items should be completed only by institutions that have not yet adopted ASU 2016–13. Additionally, since ASU 2016–13 supersedes ASC 310–30, the agencies propose to revise Schedule RC–C, Part I, Memorandum item 12, ‘‘Loans (not subject to the requirements of FASB ASC 310–30 (former AICPA Statement of Position 03–3)) and leases held for investment that were acquired in business combinations with acquisition dates in the current calendar year,’’ effective December 31, 2022. As revised, the loans held for investment to be reported in Memorandum item 12 would be those not considered purchased credit deteriorated per ASC 326. From March 31, 2019, through September 30, 2022, the agencies propose to revise the reporting form and instructions for Schedule RC–C, Part I, by adding a statement explaining that, subsequent to adoption of ASU 2016– 13, an institution should report only loans held for investment not considered purchased credit deteriorated per ASC 326 in Schedule RC–C, Part I, Memorandum item 12. Schedule RC–F (FFIEC 031, FFIEC 041, and FFIEC 051) To address the broader scope of financial assets for which allowances will be applicable under ASU 2016–13, the agencies propose to specify that assets within the scope of the ASU that are included in Schedule RC–F should be reported net of any applicable allowances for credit losses. Effective March 31, 2019, the agencies propose to revise the reporting form and the instructions for Schedule RC–F by adding a statement explaining that, subsequent to adoption of ASU 2016– 13, an institution should report asset amounts in Schedule RC–F net of any applicable allowances for credit losses. In addition, effective March 31, 2019, the agencies propose to add a footnote to item 1, ‘‘Accrued interest receivable,’’ on the reporting form and a statement to the instructions for item 1 that specify that institutions should exclude from PO 00000 Frm 00123 Fmt 4703 Sfmt 4703 this item any accrued interest receivable that is reported elsewhere on the balance sheet as part of the related financial asset’s amortized cost. Schedule RC–G (FFIEC 031, FFIEC 041, and FFIEC 051) To address ASU 2016–13’s exclusion of off-balance sheet credit exposures that are unconditionally cancellable from the scope of off-balance sheet credit exposures for which allowances for credit losses should be measured, the agencies propose to revise the reporting form and instructions for Schedule RC–G, item 3, ‘‘Allowance for credit losses on off-balance-sheet credit exposures,’’ effective March 31, 2019. As revised, the reporting form and instructions would state that institutions that have adopted ASU 2016–13 should report in item 3 the allowance for credit losses on those offbalance-sheet credit exposures that are not unconditionally cancellable. Schedule RC–H (FFIEC 031) Effective March 31, 2019, the agencies propose to revise the instructions to Schedule RC–H to clarify that institutions that have adopted ASU 2016–13 should report Schedule RC–H, item 3, ‘‘Securities purchased under agreements to resell,’’ at amortized cost net of any related allowance for credit losses, which would be consistent with the proposed reporting of this asset category in Schedule RC—Balance Sheet. Also effective March 31, 2019, the agencies propose to revise the instructions to items 10 through 17 of Schedule RC–H to clarify that, for institutions that have adopted ASU 2016–13, allowances for credit losses should not be deducted from the amortized cost amounts reported for HTM debt securities in column A.22 This proposed reporting treatment for HTM debt securities is consistent with proposed reporting of the cost amounts of such securities in Schedule RC–B, column A. Schedule RC–K (FFIEC 031, FFIEC 041, FFIEC 051) Effective March 31, 2019, the agencies propose to revise the instructions to Schedule RC–K to clarify that, for institutions that have adopted ASU 2016–13, allowances for credit losses should not be deducted from the related amortized cost amounts when calculating the quarterly averages for all debt securities. 22 Amortized cost amounts to be reported by securities category in Schedule RC–H would exclude any accrued interest receivable on the securities in that category that is reported in ‘‘Other assets’’ on the Call Report balance sheet. E:\FR\FM\28SEN1.SGM 28SEN1 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices Schedule RC–N (FFIEC 031, FFIEC 041, and FFIEC 051) To address the elimination of PCI assets by ASU 2016–13, the agencies propose to remove Schedule RC–N, Memorandum items 9.a and 9.b, in which institutions report the outstanding balance and balance sheet amount, respectively, of past due and nonaccrual PCI loans effective December 31, 2022. The agencies determined that these items were not needed for PCD loans under ASU 2016– 13 given that the ASU eliminates the separate credit impairment model for PCI loans and applies CECL to PCD loans and all other loans held for investment measured at amortized cost. From March 31, 2019, through September 30, 2022, the reporting form and the instructions for Schedule RC–N, Memorandum items 9.a and 9.b, would specify that these items should be completed only by institutions that have not yet adopted ASU 2016–13. amozie on DSK3GDR082PROD with NOTICES1 Schedule RC–R (FFIEC 031, FFIEC 041, and FFIEC 051) In connection with the agencies’ recently issued proposed rule on the implementation of CECL and the related transition for regulatory capital (CECL NPR),23 the agencies are proposing a number of revisions to Schedule RC–R to incorporate new terminology and the proposed optional regulatory capital transition. The proposed reporting changes to Schedule RC–R are tied to the revisions proposed in the CECL NPR. To the extent the agencies revise proposed elements of the CECL NPR when issuing a final rule, the agencies would make any necessary corresponding adjustments to the proposed Schedule RC–R reporting revisions discussed in this notice and describe these adjustments in their required second Federal Register notice for this proposal to revise the Call Report and other FFIEC reports prior to submitting the revised reports for OMB review. Unless otherwise indicated, the proposed revisions to Schedule RC–R discussed below would take effect March 31, 2019 (or the first quarter-end report date thereafter following the effective date on any final rule) and would apply to those institutions that have adopted CECL. The CECL NPR would introduce a newly defined regulatory capital term, allowance for credit losses (ACL), which would replace the term ALLL, as defined under the existing capital rules, for institutions that have adopted CECL. The CECL NPR also proposes that credit 23 83 FR 22312 (May 14, 2018). VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 loss allowances for PCD assets held by these institutions would be netted when determining the carrying value, as defined in the CECL NPR, and, therefore, only the resulting net amount would be subject to risk-weighting. In addition, under the CECL NPR, the agencies are proposing to provide each institution the option to phase in over the three-year period beginning with the institution’s CECL effective date the day-one regulatory capital effects that may result from the adoption of ASU 2016–13.24 Allowances for Credit Losses Definition and Treatment of Purchased Credit Deteriorated Assets In general, under the CECL NPR, institutions that have adopted CECL would report ACL amounts in Schedule RC–R items instead of ALLL amounts that are currently reported. Effective December 31, 2022, the agencies are proposing to remove references to ALLL and replace them with references to ACL on the reporting form for Schedule RC–R. From March 31, 2019, through September 30, 2022, the agencies are proposing to revise the instructions to Schedule RC–R to direct institutions that have adopted CECL to use ACL amounts instead of ALLL amounts in calculating regulatory capital. The instructional revisions would affect Schedule RC–R, Part I. Regulatory Capital Components and Ratios, item 30 (FFIEC 051) and item 30.a (FFIEC 031 and 041), ‘‘Allowance for loan and lease losses includable in tier 2 capital’’; and Schedule RC–R, Part II. Risk-Weighted Assets, item 6, ‘‘LESS: Allowance for loan and lease losses’’; item 26, ‘‘Riskweighted assets base for purposes of calculating the allowance for loan and lease losses 1.25 percent threshold’’; item 28, Risk-weighted assets before deductions for excess allowance for loan and lease losses and allocated transfer risk reserve’’; and item 29, ‘‘LESS: Excess allowance for loan and lease losses’’. In addition, under the CECL NPR, assets and off-balance sheet credit exposures for which any related credit loss allowances are eligible for inclusion 24 A non-PBE with a calendar year fiscal year that does not early adopt CECL would first report under CECL as of December 31, 2021, even though the non-PBE’s CECL effective date is January 1, 2021. Thus, under the CECL NPR, such a non-PBE would use the phase-in percentage applicable to the first year of the three-year transition period only for the December 31, 2021, report date (i.e., one quarter), not the four quarters that begin with the first report under CECL. The non-PBE may use the applicable phase-in percentages for all four quarters of the second and third years after the CECL effective date (i.e., 2022 and 2023). The same principle would apply to the optional phase-in by a non-PBE with a non-calendar fiscal year. PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 49171 in regulatory capital would be calculated and reported in Schedule RC–R, Part II. Risk-Weighted Assets, on a gross basis. Therefore, the agencies are proposing to revise the instructions for Schedule RC–R, Part II, Risk-Weighted Assets, item 2.a, ‘‘Held-to-maturity securities’’; item 3.b, ‘‘Securities purchased under agreements to resell’’; item 5.a, ‘‘Residential mortgage exposures’’ held for investment; item 5.b, ‘‘High volatility commercial real estate exposures’’ held for investment; item 5.c, Held-for-investment ‘‘Exposures past due 90 days or more or on nonaccrual’’; item 5.d, ‘‘All other exposures’’ held for investment; item 8, ‘‘All other assets,’’ and item 9.a, ‘‘Onbalance sheet securitization exposures: Held-to-maturity securities’’; to explain that institutions that have adopted CECL should report and risk weight their loans and leases held for investment, HTM securities, and other financial assets measured at amortized cost gross of their credit loss allowances, but net of any associated allowances on PCD assets.25 In addition, effective March 31, 2019, the agencies propose to add a new Memorandum item 4 to Schedule RC–R, Part II, that would collect data by asset category on the ‘‘Amount of allowances for credit losses on purchased creditdeteriorated assets.’’ The amount of such allowances for credit losses would be reported separately for ‘‘Loans and leases held for investment’’ in Memorandum item 4.a, ‘‘Held-tomaturity debt securities’’ in Memorandum item 4.b, and, ‘‘Other financial assets measured at amortized cost’’ in Memorandum item 4.c. The instructions for Schedule RC–R, Part II, Memorandum item 4, would specify that these items should be completed only by institutions that have adopted ASU 2016–13. The agencies also would include footnotes for the affected Schedule RC– R items on the reporting forms to highlight the revised treatment of those items for institutions that have adopted CECL. CECL Transition Provision Under the CECL NPR, an institution that experiences a reduction in retained earnings as of the effective date of CECL for the institution as a result of the institution’s adoption of CECL may elect to phase in the regulatory capital impact of adopting CECL (electing institution). As described in the CECL NPR, an 25 Amortized cost amounts to be reported by asset category in Schedule RC–R, Part II, would exclude any accrued interest receivable on assets in that category that is reported in ‘‘Other assets’’ on the Call Report balance sheet. E:\FR\FM\28SEN1.SGM 28SEN1 amozie on DSK3GDR082PROD with NOTICES1 49172 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices electing institution would indicate in its Call Report whether it has elected to use the CECL transition provision beginning in the quarter that it first reports its credit loss allowances as measured under CECL. To identify which institutions are electing institutions, the agencies are proposing to revise Schedule RC–R, Part I. Regulatory Capital Components and Ratios, by adding a new item 2.a in which an institution that has adopted CECL would report whether it has or does not have a CECL transition election in effect as of the quarter-end report date. Each institution would complete item 2.a beginning in the Call Report for its first reporting period under CECL and in each subsequent Call Report thereafter until item 2.a is removed from the report. Until an institution has adopted CECL, it would leave item 2.a blank. Effective March 31, 2025, the agencies propose to remove item 2.a from Schedule RC–R, Part I, because the optional three-year phase-in period will have ended for all electing institutions by the end of the prior calendar year. If an individual electing institution’s three-year phase-in period ends before item 2.a is removed (e.g., its phase-in period ends December 31, 2022), the institution would change its response to item 2.a and report that it does not have a CECL transition election in effect as of the quarter-end report date. During the CECL transition period, an electing institution would need to make adjustments to its retained earnings, temporary difference deferred tax assets (DTAs), ACL, and average total consolidated assets for regulatory capital purposes. An advanced approaches electing institution also would need to make an adjustment to its total leverage exposure. These adjustments are described in detail in the CECL NPR. The agencies are proposing to revise the instructions to Schedule RC–R, Part I. Regulatory Capital Components and Ratios, item 2, ‘‘Retained earnings’’; items 30 (FFIEC 051) and 30.a (FFIEC 031 and 041), ‘‘Allowance for loan and lease losses includable in tier 2 capital’’; item 36, ‘‘Average total consolidated assets’’; and item 45.a (FFIEC 031 and 041), ‘‘Total leverage exposure’’; and Schedule RC–R, Part II. Risk-Weighted Assets, item 8, ‘‘All other assets,’’ consistent with the adjustments to these items for the applicable transitional amounts as described in the CECL NPR for the reporting by electing institutions of the adjusted amounts. The agencies also propose to include footnotes on the reporting forms to highlight the changes to these items for electing institutions. VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 Schedule RC–V (FFIEC 031 and FFIEC 041) The agencies propose to clarify in the instructions effective March 31, 2019, that all assets of consolidated variable interest entities should be reported net of applicable allowances for credit losses by institutions that have adopted ASU 2016–13. Net reporting on Schedule RC–V by such institutions is consistent with the proposed changes to Schedules RC and RC–F. Similarly, effective March 31, 2019, the reporting form for Schedule RC–V will also specify that institutions that have adopted ASU 2016–13 should report assets net of applicable allowances. Schedule SU (FFIEC 051) To address the change in allowance nomenclature arising from the broader scope of allowances under ASU 2016– 13, the agencies propose to revise Schedule SU, item 8.c, effective March 31, 2021, from ‘‘Amount of allowance for loan and lease losses attributable to retail credit card fees and finance charges’’ to ‘‘Amount of allowance for credit losses on loans and leases attributable to retail credit card fees and finance charges.’’ 2. EGRRCPA Proposed Call Report Revisions As mentioned above in Section B of ‘‘Supplementary Information, I. Background,’’ Sections 202 and 214 of EGRRCPA on reciprocal deposits and HVCRE ADC loans, respectively, were effective upon enactment on May 24, 2018, and affect the reporting of information in the Call Reports effective beginning with the June 30, 2018, report date. To assist institutions in preparing their Call Reports for that report date, the Call Report Supplemental Instructions for June 2018 included information regarding the reporting of HVCRE exposures and reciprocal deposits. In amending Section 29 of the FDI Act to except a capped amount of reciprocal deposits from treatment as brokered deposits for qualifying institutions, Section 202 defines ‘‘reciprocal deposits’’ to mean ‘‘deposits received by an agent institution through a deposit placement network with the same maturity (if any) and in the same aggregate amount as covered deposits placed by the agent institution in other network member banks.’’ The terms ‘‘agent institution,’’ ‘‘deposit placement network,’’ ‘‘covered deposit,’’ and ‘‘network member bank,’’ all of which are used in the definition of ‘‘reciprocal deposit,’’ also are defined in Section 202. PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 In particular, an ‘‘agent institution’’ is an FDIC-insured depository institution that meets at least one of the following criteria: • The institution is well-capitalized and has a composite condition of ‘‘outstanding’’ or ‘‘good’’ when most recently examined under section 10(d) of the FDI Act (12 U.S.C. 1820(d)); • The institution has obtained a waiver from the FDIC to accept, renew, or roll over brokered deposits pursuant to section 29(c) of the FDI Act (12 U.S.C. 1831f(c)); or • The institution does not receive reciprocal deposits in an amount that is greater than a ‘‘special cap’’ (discussed below). Under the ‘‘general cap’’ set forth in Section 202, an agent institution may classify reciprocal deposits up to the lesser of the following amounts as nonbrokered reciprocal deposits: • $5 billion, or • An amount equal to 20 percent of the agent institution’s total liabilities. Any amount of reciprocal deposits in excess of the ‘‘general cap’’ would be treated as, and should be reported in the Call Report as, brokered deposits. A ‘‘special cap’’ applies if an agent institution is either not ‘‘well-rated’’ or not well capitalized. In this situation, the institution may classify reciprocal deposits as non-brokered in an amount up to the lesser of the ‘‘general cap’’ or the average amount of reciprocal deposits held by the agent institution on the last day of each of the four calendar quarters preceding the calendar quarter in which the agent institution was found to not have a composite condition of ‘‘outstanding’’ or ‘‘good’’ or was determined to be not well capitalized. Section 51 of the FDI Act, as added by Section 214 of EGRRCPA, governs the risk-based capital requirements for HVCRE ADC Loans and defines this term. Under Section 214, the assignment of a heightened risk weight to HVCRE exposures may be required only if the exposure meets the statutory definition of an HVCRE ADC Loan. The revisions discussed in this section have already been submitted to OMB under the emergency review process, and OMB has approved these changes. However, the agencies are requesting comment on whether there should be any further changes for these items or revisions to the items or instructions developed by the agencies. Schedule RC–E (FFIEC 031, FFIEC 041, and FFIEC 051) To address the change in the treatment of certain reciprocal deposits under Section 202 of EGRRCPA in the Call Report, the agencies, through the E:\FR\FM\28SEN1.SGM 28SEN1 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices amozie on DSK3GDR082PROD with NOTICES1 issuance of Call Report Supplemental Instructions for June 2018, explained how institutions could report certain data on brokered deposits in accordance with EGRRCPA or based on the reporting instructions in effect prior to passage of EGRRCPA. The agencies explained that institutions that chose to report based on the new law should include in Memorandum items 1.b through 1.d only those reciprocal deposits that are still considered brokered deposits under Section 202. The agencies plan to reissue these Supplemental Instructions for September 2018. Revised instructions for Memorandum item 1.b will be incorporated into the Call Report instruction books at a future date. In addition, the agencies plan to add a new Memorandum item 1.g to Schedule RC–E in which institutions would report their ‘‘Total reciprocal deposits’’ (as of the report date) in accordance with the definition of this term in Section 202, starting with the September 30, 2018, Call Report. The new Memorandum item 1.g of Schedule RC–E would be used in determining an institution’s ‘‘special cap’’ if the institution were found to not have a composite condition of ‘‘outstanding’’ or ‘‘good’’ or was determined not to be well capitalized. The measurement of an institution’s ‘‘special cap’’ would be the average of reciprocal deposits held on the last day of each of the four calendar quarters preceding the calendar quarter in which the institution was found to not have a composite condition of ‘‘outstanding’’ or ‘‘good’’ or was determined not to be well capitalized. From a supervisory perspective, a funding concentration could arise if a significant amount of an institution’s deposits comes from reciprocal deposits obtained through a single deposit placement network, regardless of whether the reciprocal deposits are treated as brokered under Section 202. Examiners review funding concentrations on an institution-byinstitution basis. The Memorandum item for ‘‘Total reciprocal deposits’’ would enable the agencies to identify significant changes in the reported amounts of such deposits at institutions for appropriate supervisory follow-up. Schedule RC–O (FFIEC 031, FFIEC 041, and FFIEC 051) To address the change in the treatment of certain reciprocal deposits under Section 202 of EGRRCPA, the agencies, through the Supplemental Instructions for June 2018, explained that institutions that chose to report based on the new law should include in items 9, ‘‘Reciprocal brokered deposits,’’ VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 and 9.a, ‘‘Fully consolidated reciprocal brokered deposits,’’ only those reciprocal deposits that are still considered brokered deposits after application of Section 202 of the new law. The agencies plan to reissue these Supplemental Instructions for September 2018. Revised instructions for items 9 and 9.a will be incorporated into the Call Report instruction books at a future date. Schedule RC–R (FFIEC 031, FFIEC 041, and FFIEC 051) To address the EGRRCPA change that applies to the reporting of HVCRE exposures for risk-based capital purposes, the agencies revised the instructions to Schedule RC–R, Part II, through the Call Report Supplemental Instructions for June 2018. The revised instructions explain that, pending further action by the agencies, when reporting HVCRE exposures in Schedule RC–R, Part II, institutions may use available information to reasonably estimate and report only ‘‘HVCRE ADC Loans’’ held for sale, held for investment, and held for trading in Schedule RC–R, Part II, items 4.b, 5.b and 7, respectively. The portion of any ‘‘HVCRE ADC Loan’’ that is secured by collateral or has a guarantee that qualifies for a risk weight lower than 150 percent may continue to be assigned a lower risk weight when completing Schedule RC–R, Part II. Pending further agency action, institutions may refine their estimates of ‘‘HVCRE ADC Loans’’ in good faith as they obtain additional information, but they will not be required to amend Call Reports previously filed for report dates on or after June 30, 2018, as these estimates are adjusted. Alternatively, institutions may continue to report and risk weight HVCRE exposures in a manner consistent with the current Call Report instructions for Schedule RC–R, Part II, until the agencies take further action. The agencies will incorporate the instructions for these items, currently in the Supplemental Instructions for June 2018, into the Call Report instruction books at a future date. III. FFIEC 002/002S Revisions FFIEC 002 Schedule M—Due From/ Due to Related Institutions in the U.S. and in Foreign Countries At present, a reporting U.S. branch or agency of a foreign bank is not required to, but may choose to, establish a general allowance for loan losses, which it would report in its FFIEC 002 report in Schedule M, Part IV, item 1, ‘‘Amount of allowance for loan losses, if any, carried on the books of the PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 49173 reporting branch or agency including its IBF.’’ In addition, any general allowance for loan losses is reported in Schedule M, Part I, item 2(a), column B, as part of the ‘‘Gross due to’’ the ‘‘Head office of parent bank,’’ as well as in either Schedule RAL, item 2(a), ‘‘Net due from related depository institutions,’’ or item 5(a), Net due to related depository institutions,’’ as applicable. The institution would report the total amount of the allowance carried on the books of the reporting institution, even if part of that allowance is applicable to other branches. To address the change in allowance nomenclature arising from the broader scope of allowances under ASU 2016– 13, the agencies propose to revise Schedule M, Part IV, item 1, from ‘‘Amount of allowance for loan losses’’ to ‘‘Allowance for credit losses on loans and leases,’’ effective March 31, 2021. For the period from March 31, 2019, through December 31, 2020, the reporting form and instructions for this data item would include guidance stating that institutions that have adopted ASU 2016–13 would report the ‘‘allowance for credit losses on loans and leases,’’ as applicable. For the transition period from March 31, 2021, through December 31, 2022, the reporting form and instructions for this data item would be updated to include guidance stating that institutions that have not adopted ASU 2016–13 would report the amount of the ‘‘allowance for loan losses,’’ as applicable. In addition, for these same time periods, the agencies propose to revise the instructions for Schedule M, Part I, item 2(a), column B, as well as Schedule RAL, items 2(a) and 5(a), to incorporate language clarifying that institutions should include any allowance for loan losses or any allowances for credit losses in these items, as applicable. If an institution chooses to establish them, the allowances for credit losses reportable in item 2(a) or 5(a), as applicable, could apply to loans, leases, other financial assets measured at amortized cost, and off-balance sheet credit exposures (but not available-forsale securities, which are reported at fair value on Schedule RAL). Finally, effective March 31, 2019, the agencies propose to add a statement to the instructions for Schedule RAL, item 1(h), ‘‘Other assets (including other claims on nonrelated parties,’’ that specifies that institutions that have adopted ASU 2016–13 should exclude from this item any accrued interest receivable that is reported elsewhere on the balance sheet as part of the related financial asset’s amortized cost. E:\FR\FM\28SEN1.SGM 28SEN1 49174 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices FFIEC 002S The General Instructions for the FFIEC 002S state that due from/due to relationships with related institutions (both depository and nondepository) are to be reported on a gross basis and that such relationships include all claims between the foreign branch and any related institutions (whether depository or nondepository) arising in connection with any accounting or regulatory allocations entered on the books of the reporting foreign branch that ultimately affect unremitted profits. As an example of such allocations, the General Instructions cite the ‘‘allowance for possible loan losses.’’ In addition, the instructions for item 2(c), ‘‘Loans,’’ states that loans (and leases) should be reported before deduction of any allowance for loan losses. To address the change in allowance nomenclature arising from the broader scope of allowances under ASU 2016–13, the agencies propose to revise the FFIEC 002S General Instructions and item 2(c) instructions to change the ‘‘allowance for loan losses’’ terminology to ‘‘allowances for credit losses’’ and ‘‘allowances for credit losses on loans and leases,’’ respectively, effective March 31, 2021. Allowances for credit losses could apply to loans, leases, other financial assets measured at amortized cost, and off-balance sheet credit exposures (but not available-for-sale securities). For the period from March 31, 2019, through December 31, 2020, the General Instructions for reporting due from/due to relationships would include guidance stating that institutions that have adopted ASU 2016–13 should interpret the ‘‘allowance for loan losses’’ as ‘‘allowances for credit losses,’’ as applicable. For the transition period from March 31, 2021, through December 31, 2022, these General Instructions would include guidance stating that institutions that have not adopted ASU 2016–13 should interpret ‘‘allowances for credit losses’’ as the ‘‘allowance for loan losses,’’ as applicable. Comparable changes would be made to the instructions for item 2(c) for these periods. amozie on DSK3GDR082PROD with NOTICES1 V. FFIEC 030/030S Revisions FFIEC 030 Assets All asset categories on the FFIEC 030 report are reported gross of any related allowances. Allowances for credit losses, including loan and lease losses, are reported in line item 16, ‘‘Gross due to head office, U.S. branches, and other foreign branches of this bank.’’ Currently, however, the instructions for line item 8, ‘‘Gross due from head office, VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 U.S. branches, and other foreign branches of this bank,’’ also state that institutions should report any allowance for loan and lease losses and other valuation allowances in this line item. Effective March 31, 2019, the agencies propose to remove this language from the line item 8 instructions since the allowance for loan and lease losses and other valuation allowances are reported in line item 16. Additionally, the agencies propose to add a statement to the instructions for balance sheet item 10, ‘‘Other assets,’’ that specifies that institutions that have adopted ASU 2016–13 should exclude from this item any accrued interest receivable that is reported elsewhere on the balance sheet as part of the related financial asset’s amortized cost. FFIEC 030 Liabilities The gross due to amounts reported in Liabilities item 16, ‘‘Gross due to head office, U.S. branches, and other foreign branches of this bank,’’ include any allowance for loan and lease losses on the books of the reporting branch. To address the change in allowance nomenclature arising from the broader scope of allowances under ASU 2016– 13, effective March 31, 2019, the agencies propose to revise the reporting instructions for Liabilities item 16, to change ‘‘any allowance for loan and lease losses’’ to ‘‘any allowances for credit losses.’’ From March 31, 2019, through September 30, 2022, the instructions for item 16 would specify that institutions that have not adopted ASU 2016–13 should continue to include the allowance for loan and lease losses in this item. FFIEC 030S Financial Data Branches that file the FFIEC 030S report their ‘‘Gross due to related institutions’’ in item 3. The instructions for item 3 state that this item corresponds to FFIEC 030 Liabilities items 16 and 17.26 Thus, the effect of the proposed revisions to the instructions for FFIEC 030 Liabilities item 16, described above, will carry over to FFIEC 030S item 3. VI. FFIEC 101 Revisions The proposed changes in the CECL NPR would revise the capital rules applicable to an advanced approaches institution 27 that has completed the 26 Liabilities item 17 is used to report a branch’s ‘‘Gross due to consolidated subsidiaries of this bank.’’ 27 An institution is an advanced approaches institution if it has consolidated assets of at least $250 billion or if it has consolidated on-balance sheet foreign exposures of at least $10 billion, or if it is a subsidiary of a depository institution, bank PO 00000 Frm 00127 Fmt 4703 Sfmt 4703 parallel run process 28 by aligning the definition of eligible credit reserves (ECR) with the definition of ACL. In addition, as described in the CECL NPR, an advanced approaches institution may elect to phase in the impact of CECL by adjusting ECR, which could affect the reporting of certain items in the FFIEC 101. To reflect the proposed changes in the CECL NPR and in the optional CECL transition provision, the agencies are proposing to revise the instructions to FFIEC 101, Schedule A—Advanced Approaches Regulatory Capital, item 50, ‘‘Eligible credit reserves includable in tier 2 capital’’; item 76, ‘‘Total allowance for loan and lease losses (ALLL) under the standardized approach’’; and item 77, ‘‘Amount of ALLL includable in tier 2 capital under the standardized approach,’’ effective March 31, 2019, for advanced approaches institutions that have adopted CECL. The proposed revisions to these instructions would incorporate the new definitions in the CECL NPR, as well as the mechanics of the CECL transition provision for electing advanced approaches institutions that have adopted CECL. The agencies also would include footnotes on the forms to highlight these items for these advanced approaches institutions. In addition, the definition of HVCRE ADC Loan in Section 214 of EGRRCPA that applies to the reporting of such exposures held for sale, held for investment, and held for trading in Schedule RC–R, Part II, of the Call Report also impacts the reporting of information in the FFIEC 101 on HVCRE exposures in Schedule B, item 5, and Schedule G—High Volatility Commercial Real Estate.29 The agencies have received OMB approval to revise the instructions to these schedules to allow institutions to report commercial holding company, savings and loan holding company, or intermediate holding company that is an advanced approaches institution. An institution that elects to use the advanced approaches to calculate its total risk-weighted assets also is an advanced approaches institution. See 12 CFR 3.100 (OCC); 12 CFR 217.100 (Board); 12 CFR 324.100 (FDIC). 28 An advanced approaches institution is considered to have completed the parallel run process once it has completed the advanced approaches qualification process and received notification from its primary federal regulator pursuant to section 121(d) of subpart E of the capital rules. See 12 CFR 3.121(d) (OCC); 12 CFR 217.121(d) (Board); 12 CFR 324.121(d) (FDIC). 29 To assist advanced approaches institutions in preparing their FFIEC 101 reports for the June 30, 2018, report date, the FFIEC sent a letter to these institutions providing instructions regarding the reporting of HVCRE exposures in the FFIEC 101 as of that date. Guidance from this letter will be incorporated into the FFIEC 101 Instructions at a future date. E:\FR\FM\28SEN1.SGM 28SEN1 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices real estate exposures that meet the statutory definition of ‘‘HVCRE ADC Loan’’ in Section 214 of this new law. Therefore, to address the EGRRCPA change that applies to the reporting of HVCRE exposures in the FFIEC 101, the agencies revised the instructions for the FFIEC 101 to allow an advanced approaches institution to estimate and report HVCRE exposures on Schedules B and G of the FFIEC 101 using the definition under Section 214 of the new law. Pending further agency action, institutions may refine their estimates in good faith as they obtain additional information, but they will not be required to amend FFIEC 101 reports previously filed for report dates on or after June 30, 2018, as these estimates are adjusted. Alternatively, institutions may report HVCRE exposures in a manner consistent with the current definition contained in the agencies’ regulatory capital rules until the agencies take further action. amozie on DSK3GDR082PROD with NOTICES1 VII. Request for Comment Public comment is requested on all aspects of this joint notice. Comment is specifically invited on: (a) In Call Report Schedule RI, Income Statement, whether institutions should continue reporting the provision for credit losses on off-balance sheet credit exposures in item 7.d, ‘‘Other noninterest expense,’’ or whether institutions should report this expense as part of proposed item 4, ‘‘Provisions for credit losses on financial assets’’; (b) In Call Report Schedule RI–C, Part II, Disaggregated Data on Allowances for Credit Losses, whether the agencies should retain item 5 for reporting unallocated allowances for loans and leases, as proposed, or whether ASU 2016–13 is viewed as eliminating the potential for unallocated allowances considering the accounting standard VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 requires allowances to be estimated at a pool level when similar risk characteristics exist and at an individual asset level when similar risk characteristics do not exist; (c) For proposed Schedule RI–C, Part II, whether the general categories of debt securities for which data are proposed to be collected are at the appropriate level of granularity or whether alternative categories should be used and, if so, what these categories should be; (d) Also for proposed Schedule RI–C, Part II, whether the proposed annual reporting frequency for the disaggregation of data on the allowances for credit losses on HTM debt securities and AFS debt securities is appropriate or whether more frequent reporting of these data would be more appropriate and, if so, what the reporting frequency should be; (e) Whether, after an institution adopts ASU 2016–13, all accrued interest receivable currently reported in ‘‘Other assets’’ should be reported as part of the balance sheet amount of the related financial asset, consistent with the definition of amortized cost in the ASU; (f) Whether the agencies should consider according confidential treatment to Schedule RC–O, items 9 and 9.a, on reciprocal brokered deposits, and Schedule RC–E, Memorandum items 1.b through 1.d, on brokered deposits, because amounts an institution reports in these items in relation to the amount reported in proposed Schedule RC–E, Memorandum item 1.g, ‘‘Total reciprocal deposits,’’ and changes in these reported amounts over time, may enable users of Call Report data to make inferences about the institution’s composite rating under the Uniform Financial Institutions PO 00000 Frm 00128 Fmt 4703 Sfmt 9990 49175 Rating System, which is confidential supervisory information; (g) Whether the proposed revisions to the collections of information that are the subject of this notice are necessary for the proper performance of the agencies’ functions, including whether the information has practical utility; (h) The accuracy of the agencies’ estimates of the burden of the information collections as they are proposed to be revised, including the validity of the methodology and assumptions used; (i) Ways to enhance the quality, utility, and clarity of the information to be collected; (j) Ways to minimize the burden of information collections on respondents, including through the use of automated collection techniques or other forms of information technology; and (k) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. Comments submitted in response to this joint notice will be shared among the agencies. All comments will become a matter of public record. Dated: September 20, 2018. Theodore J. Dowd, Deputy Chief Counsel, Office of the Comptroller of the Currency. Board of Governors of the Federal Reserve System, September 21, 2018. Ann Misback, Secretary of the Board. Dated at Washington, DC, on September 20, 2018. Federal Deposit Insurance Corporation. Valerie Best, Assistant Executive Secretary. [FR Doc. 2018–21105 Filed 9–27–18; 8:45 am] BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P E:\FR\FM\28SEN1.SGM 28SEN1

Agencies

[Federal Register Volume 83, Number 189 (Friday, September 28, 2018)]
[Notices]
[Pages 49160-49175]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21105]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

FEDERAL RESERVE SYSTEM

FEDERAL DEPOSIT INSURANCE CORPORATION


Proposed Agency Information Collection Activities; Comment 
Request

AGENCY: Office of the Comptroller of the Currency (OCC), Treasury; 
Board of Governors of the Federal Reserve System (Board); and Federal 
Deposit Insurance Corporation (FDIC).

ACTION: Joint notice and request for comment.

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SUMMARY: In accordance with the requirements of the Paperwork Reduction 
Act of 1995 (PRA), the OCC, the Board, and the FDIC (the agencies) may 
not conduct or sponsor, and a respondent is not required to respond to, 
an information collection unless it displays a currently valid Office 
of Management and Budget (OMB) control number. The Federal Financial 
Institutions Examination Council (FFIEC), of which the agencies are 
members, has approved the agencies' publication for public comment of a 
proposal to revise and extend the Consolidated Reports of Condition and 
Income for a Bank with Domestic and Foreign Offices (FFIEC 031), the 
Consolidated Reports of Condition and Income for a Bank with Domestic 
Offices Only (FFIEC 041), and the Consolidated Reports of Condition and 
Income for a Bank with Domestic Offices Only and Total Assets Less Than 
$1 Billion (FFIEC 051), which are currently approved collections of 
information. The Consolidated Reports of Condition and Income are 
commonly referred to as Call Reports. The FFIEC has also approved the 
Board's publication for public comment, on behalf of the agencies, of a 
proposal to revise and extend the Report of Assets and Liabilities of 
U.S. Branches and Agencies of Foreign Banks (FFIEC 002) and the Report 
of Assets and Liabilities of a Non-U.S. Branch that is Managed or 
Controlled by a U.S. Branch or Agency of a Foreign (Non-U.S.) Bank 
(FFIEC 002S) as well as the agencies' publication for public comment of 
proposals to revise and extend the Foreign Branch Report of Condition 
(FFIEC 030), the Abbreviated Foreign Branch Report of Condition (FFIEC 
030S), and the Regulatory Capital Reporting for Institutions Subject to 
the Advanced Capital Adequacy Framework (FFIEC 101), all of which are 
currently approved collections of information.
    The proposed revisions generally address the revised accounting for 
credit losses under the Financial Accounting Standards Board's (FASB) 
Accounting Standards Update (ASU) No. 2016-13, ``Financial 
Instruments--Credit Losses (Topic 326): Measurement of Credit Losses on 
Financial Instruments'' (ASU 2016-13). This proposal also includes 
reporting changes for regulatory capital related to implementing the 
agencies' recent notice of proposed rulemaking on the implementation 
and capital transition for the current expected credit losses 
methodology (CECL).
    In addition, this notice includes other revisions to the Call 
Reports and the FFIEC 101 resulting from two sections of the Economic 
Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), 
effective upon enactment on May 24, 2018, that affect the information 
reported in these reports and for which the agencies submitted 
emergency review requests to OMB that OMB has approved.
    The proposed revisions related to ASU 2016-13 would begin to take 
effect March 31, 2019, for reports with quarterly report dates and 
December 31, 2019, for reports with an annual report date, with later 
effective dates for certain respondents. At the end of the comment 
period for this notice, the comments received will be reviewed to 
determine whether the FFIEC and the agencies should modify the proposed 
revisions to one or more of the previously identified reports. As 
required by the PRA, the agencies will then publish a second Federal 
Register notice for a 30-day comment period and submit the final Call 
Reports, FFIEC 002, FFIEC 002S, FFIEC 030, FFIEC 030S, and FFIEC 101 to 
OMB for review and approval.

DATES: Comments must be submitted on or before November 27, 2018.

ADDRESSES: Interested parties are invited to submit written comments to 
any or all of the agencies. All comments, which should refer to the 
``CECL and EGRRCPA Reporting Revisions,'' will be shared among the 
agencies.
    OCC: You may submit comments, which should refer to ``CECL and 
EGRRCPA Reporting Revisions,'' by any of the following methods:
     Email: [email protected].
     Mail: Legislative and Regulatory Activities Division, 
Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E-
218, Washington, DC 20219.
    All comments received, including attachments and other supporting 
materials, are part of the public record and subject to public 
disclosure. Do not include any information in your comment or 
supporting materials that you consider confidential or inappropriate 
for public disclosure.
    You may personally inspect and photocopy comments at the OCC, 400 
7th Street SW, Washington, DC 20219. For security reasons, the OCC 
requires that visitors make an appointment to inspect comments. You may 
do so by calling (202) 649-6700 or, for persons who are deaf or hearing 
impaired, TTY, (202) 649-5597. Upon arrival, visitors will be required 
to present valid government-issued photo identification and submit to 
security screening in order to inspect and photocopy comments.
    Board: You may submit comments, which should refer to ``CECL and 
EGRRCPA Reporting Revisions,'' by any of the following methods:
     Agency Website: http://www.federalreserve.gov. Follow the

[[Page 49161]]

instructions for submitting comments at: http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Email: [email protected]. Include ``CECL 
Reporting Revisions'' in the subject line of the message.
     Fax: (202) 452-3819 or (202) 452-3102.
     Mail: Ann E. Misback, Secretary, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue NW, 
Washington, DC 20551.
    All public comments are available from the Board's website at 
www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, 
unless modified for technical reasons. Accordingly, your comments will 
not be edited to remove any identifying or contact information. Public 
comments may also be viewed electronically or in paper form in Room 
3515, 1801 K Street NW (between 18th and 19th Streets NW), Washington, 
DC 20006 between 9:00 a.m. and 5:00 p.m. on weekdays.
    FDIC: You may submit comments, which should refer to ``CECL and 
EGRRCPA Reporting Revisions,'' by any of the following methods:
     Agency Website: https://www.fdic.gov/regulations/laws/federal/. Follow the instructions for submitting comments on the FDIC's 
website.
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: [email protected]. Include ``CECL Reporting 
Revisions'' in the subject line of the message.
     Mail: Manuel E. Cabeza, Counsel, Attn: Comments, Room MB-
3007, Federal Deposit Insurance Corporation, 550 17th Street NW, 
Washington, DC 20429.
     Hand Delivery: Comments may be hand delivered to the guard 
station at the rear of the 550 17th Street Building (located on F 
Street) on business days between 7:00 a.m. and 5:00 p.m.
    Public Inspection: All comments received will be posted without 
change to https://www.fdic.gov/regulations/laws/federal/ including any 
personal information provided. Paper copies of public comments may be 
requested from the FDIC Public Information Center by telephone at (877) 
275-3342 or (703) 562-2200.
    Additionally, commenters may send a copy of their comments to the 
OMB desk officer for the agencies by mail to the Office of Information 
and Regulatory Affairs, U.S. Office of Management and Budget, New 
Executive Office Building, Room 10235, 725 17th Street NW, Washington, 
DC 20503; by fax to (202) 395-6974; or by email to 
[email protected].

FOR FURTHER INFORMATION CONTACT: For further information about the 
proposed revisions to the information collections discussed in this 
notice, please contact any of the agency staff whose names appear 
below. In addition, copies of the reporting forms for the reports 
within the scope of this notice can be obtained at the FFIEC's website 
(https://www.ffiec.gov/ffiec_report_forms.htm).
    OCC: Kevin Korzeniewski, Counsel, (202) 649-5490, or for persons 
who are hearing impaired, TTY, (202) 649-5597, Legislative and 
Regulatory Activities Division, Office of the Comptroller of the 
Currency, 400 7th Street SW, Washington, DC 20219.
    Board: Nuha Elmaghrabi, Federal Reserve Board Clearance Officer, 
(202) 452-3884, Office of the Chief Data Officer, Board of Governors of 
the Federal Reserve System, 20th and C Streets NW, Washington, DC 
20551. Telecommunications Device for the Deaf (TDD) users may call 
(202) 263-4869.
    FDIC: Manuel E. Cabeza, Counsel, (202) 898-3767, Legal Division, 
Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, 
DC 20429.

SUPPLEMENTARY INFORMATION: 

I. Background

A. ASU 2016-13, ``Financial Instruments--Credit Losses (Topic 326): 
Measurement of Credit Losses on Financial Instruments''

    In June 2016, the FASB issued ASU 2016-13, which introduced CECL 
for estimating allowances for credit losses and added Topic 326, Credit 
Losses, to the Accounting Standards Codification (ASC). The new credit 
losses standard changes several aspects of existing U.S. generally 
accepted accounting principles (U.S. GAAP) as follows:
     Introduction of a new credit loss methodology.
    The new accounting standard developed by the FASB has been designed 
to replace the existing incurred loss methodology in U.S. GAAP. Under 
CECL, the allowance for credit losses is an estimate of the expected 
credit losses on financial assets measured at amortized cost, which is 
measured using relevant information about past events, including 
historical credit loss experience on financial assets with similar risk 
characteristics, current conditions, and reasonable and supportable 
forecasts that affect the collectability of the remaining cash flows 
over the contractual term of the financial assets. In concept, an 
allowance will be created upon the origination or acquisition of a 
financial asset measured at amortized cost. At subsequent reporting 
dates, the allowance will be reassessed for a level that is appropriate 
as determined in accordance with CECL. The allowance for credit losses 
under CECL is a valuation account, measured as the difference between 
the financial assets' amortized cost basis and the amount expected to 
be collected on the financial assets, i.e., lifetime expected credit 
losses.
     Reduction in the number of credit impairment models.
    Impairment measurement under existing U.S. GAAP has often been 
considered complex because it encompasses five credit impairment models 
for different financial assets.\1\ In contrast, CECL introduces a 
single measurement objective to be applied to all financial assets 
measured at amortized cost, including loans held-for-investment (HFI) 
and held-to-maturity (HTM) debt securities. CECL does not, however, 
specify a single method for measuring expected credit losses; rather, 
it allows any reasonable approach, as long as the estimate of expected 
credit losses achieves the objective of the FASB's new accounting 
standard. Under the existing incurred loss methodology, institutions 
use various methods, including historical loss rate methods, roll-rate 
methods, and discounted cash flow methods, to estimate credit losses. 
CECL allows the continued use of these methods; however, certain 
changes to these methods will need to be made in order to estimate 
lifetime expected credit losses.
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    \1\ Current U.S. GAAP includes five different credit impairment 
models for instruments within the scope of CECL: ASC Subtopic 310-
10, Receivables-Overall; ASC Subtopic 450-20, Contingencies-Loss 
Contingencies; ASC Subtopic 310-30, Receivables-Loans and Debt 
Securities Acquired with Deteriorated Credit Quality; ASC Subtopic 
320-10, Investments-Debt and Equity Securities--Overall; and ASC 
Subtopic 325-40, Investments-Other-Beneficial Interests in 
Securitized Financial Assets.
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     Purchased credit-deteriorated (PCD) financial assets.
    CECL introduces the concept of PCD financial assets, which replaces 
purchased credit-impaired (PCI) assets under existing U.S. GAAP. The 
differences in the PCD criteria compared to the existing PCI criteria 
will result in more purchased loans HFI, HTM debt securities, and 
available-for-sale (AFS) debt securities being accounted for as PCD 
financial assets. In contrast to the existing accounting for PCI 
assets, the new standard requires the estimate of expected credit 
losses embedded in the purchase price of PCD assets to be estimated and 
separately recognized as an allowance as of the date of

[[Page 49162]]

acquisition. This is accomplished by grossing up the purchase price by 
the amount of expected credit losses at acquisition, rather than being 
reported as a credit loss expense. As a result, as of the acquisition 
date, the amortized cost basis of a PCD financial asset is equal to the 
principal balance of the asset less the non-credit discount, rather 
than equal to the purchase price as is currently recorded for PCI 
loans.
     AFS debt securities.
    The new accounting standard also modifies the existing accounting 
practices for impairment on AFS debt securities. Under this new 
standard, institutions will recognize a credit loss on an AFS debt 
security through an allowance for credit losses, rather than a direct 
write-down as is required by current U.S. GAAP. The recognized credit 
loss is limited to the amount by which the amortized cost of the 
security exceeds fair value. A write-down of an AFS debt security's 
amortized cost basis to fair value, with any incremental impairment 
reported in earnings, would be required only if the fair value of an 
AFS debt security is less than its amortized cost basis and either (1) 
the institution intends to sell the debt security, or (2) it is more 
likely than not that the institution will be required to sell the 
security before recovery of its amortized cost basis.
    Although the measurement of credit loss allowances is changing 
under CECL, the FASB's new accounting standard does not address when a 
financial asset should be placed in nonaccrual status. Therefore, 
institutions should continue to apply the agencies' nonaccrual policies 
that are currently in place. In addition, the FASB retained the 
existing write-off guidance in U.S. GAAP, which requires an institution 
to write off a financial asset in the period the asset is deemed 
uncollectible.
    Institutions \2\ must apply ASU 2016-13 in their Call Report, FFIEC 
002,\3\ FFIEC 002S, FFIEC 030, FFIEC 030S, and FFIEC 101 submissions in 
accordance with the effective dates set forth in the ASU, if an 
institution is required to file such form. For institutions that are 
public business entities (PBE) and also are Securities and Exchange 
Commission (SEC) filers, as both terms are defined in U.S. GAAP, the 
new credit losses standard is effective for fiscal years beginning 
after December 15, 2019, including interim periods within those fiscal 
years. Thus, for an SEC filer that has a calendar year fiscal year, the 
standard is effective January 1, 2020, and the institution must first 
apply the new credit losses standard in its Call Report, FFIEC 002,\4\ 
FFIEC 002S, FFIEC 030, and FFIEC 101 for the quarter ended March 31, 
2020 (and in its FFIEC 030S for December 31, 2020), if the institution 
is required to file these forms.
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    \2\ Institutions include banks, savings associations, holding 
companies, U.S. branches and agencies of foreign banks, and foreign 
branches of U.S. banks and U.S. savings associations.
    \3\ As stated in the instructions for the FFIEC 002, U.S. 
branches and agencies of foreign banks may choose to, but are not 
required to, maintain credit loss allowances on an office level.
    \4\ See footnote 3.
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    For a PBE that is not an SEC filer, the credit losses standard is 
effective for fiscal years beginning after December 15, 2020, including 
interim periods within those fiscal years. Thus, for a PBE that is not 
an SEC filer and has a calendar year fiscal year, the standard is 
effective January 1, 2021, and the institution must first apply the new 
credit losses standard in its Call Report, FFIEC 002,\5\ FFIEC 002S, 
FFIEC 030, and FFIEC 101 for the quarter ended March 31, 2021 (and in 
its FFIEC 030S for December 31, 2021), if the institution is required 
to file these forms.
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    \5\ See footnote 3.
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    For an institution that is not a PBE, the credit losses standard is 
effective for fiscal years beginning after December 15, 2020, and for 
interim period financial statements for fiscal years beginning after 
December 15, 2021.\6\ Thus, an institution with a calendar year fiscal 
year that is not a PBE must first apply the new credit losses standard 
in its Call Report, FFIEC 002,\7\ FFIEC 002S, FFIEC 030, FFIEC 030S, 
and FFIEC 101 for December 31, 2021, if the institution is required to 
file these forms.\8\ However, such an institution would include the ASU 
2016-13 credit loss provisions for the entire year ended December 31, 
2021, in the income statement in its Call Report for year-end 2021. The 
institution would also recognize in its year-end 2021 Call Report a 
cumulative-effect adjustment to the beginning balance of retained 
earnings as of January 1, 2021, resulting from the adoption of the new 
standard as of the beginning of the 2021 fiscal year.
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    \6\ On August 20, 2018, the FASB issued a proposed ASU that 
would amend the transition and effective date provisions in ASU 
2016-13 for entities that are not PBEs (non-PBEs) so that the credit 
losses standard would be effective for non-PBEs for fiscal years 
beginning after December 15, 2021, including interim periods within 
those fiscal years.
    \7\ See footnote 3.
    \8\ If the FASB issues a final Accounting Standards Update 
amending the transition and effective date provisions in ASU 2016-13 
as described in footnote 6, a non-PBE with a calendar year fiscal 
year would first apply the new credit losses standard in its reports 
for March 31, 2022, if an institution is required to file these 
report forms.
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    For regulatory reporting purposes, early application of the new 
credit losses standard will be permitted for all institutions for 
fiscal years beginning after December 15, 2018, including interim 
periods within those fiscal years.
    The following table provides a summary of the effective dates for 
ASU 2016-13.
---------------------------------------------------------------------------

    \9\ See footnote 6.
    \10\ See footnote 8.

                     Effective Dates for ASU 2016-13
------------------------------------------------------------------------
                                                           Regulatory
                                  U.S. GAAP effective   report effective
                                         date                date *
------------------------------------------------------------------------
PBEs That Are SEC Filers......  Fiscal years beginning  3/31/2020.
                                 after 12/15/2019,
                                 including interim
                                 periods within those
                                 fiscal years.
Other PBEs (Non-SEC Filers)...  Fiscal years beginning  3/31/2021.
                                 after 12/15/2020,
                                 including interim
                                 periods within those
                                 fiscal years.
Non-PBEs......................  Fiscal years beginning  12/31/2021.\10\
                                 after 12/15/2020, and
                                 interim periods for
                                 fiscal years
                                 beginning after 12/15/
                                 2021 \9\.
Early Application.............  Early application       First calendar
                                 permitted for fiscal    quarter-end
                                 years beginning after   after effective
                                 12/15/2018, including   date of early
                                 interim periods         application of
                                 within those fiscal     the ASU.
                                 years.
------------------------------------------------------------------------
* For institutions with calendar fiscal year-ends and reports with
  quarterly report dates.


[[Page 49163]]

    For additional information on key elements of the new accounting 
standard and initial supervisory views with respect to measurement 
methods, use of vendors, portfolio segmentation, data needs, 
qualitative adjustments, and allowance processes, refer to the 
agencies' Joint Statement on the New Accounting Standard on Financial 
Instruments--Credit Losses issued on June 17, 2016, and Frequently 
Asked Questions on the New Accounting Standard on Financial 
Instruments--Credit Losses (CECL FAQs), which were last updated on 
September 6, 2017.\11\
---------------------------------------------------------------------------

    \11\ The CECL FAQs and a related link to the joint statement can 
be found on the following agency websites: Board: https://www.federalreserve.gov/supervisionreg/srletters/sr1708a1.pdf; FDIC: 
https://www.fdic.gov/news/news/financial/2017/fil17041a.pdf; OCC: 
https://www.occ.gov/topics/bank-operations/accounting/cecl/cecl-faqs.html.
---------------------------------------------------------------------------

B. EGRRCPA

    On May 24, 2018, EGRRCPA amended various statutes administered by 
the agencies and affected regulations issued by the agencies.\12\ Two 
of the amendments made by EGRRCPA, as described below, took effect on 
the day of EGRRCPA's enactment and impact institutions' regulatory 
reports. In response to emergency review requests, the agencies 
received approval from OMB to revise the reporting of information in 
the Call Reports on certain high volatility commercial real estate 
(HVCRE) exposures and reciprocal deposits and in the FFIEC 101 report 
on certain HVCRE exposures for the June 30, 2018, report date. As a 
result of OMB's emergency approval of revisions to the information 
collections affected by the above statutory changes, the expiration 
date of these collections has been revised to February 28, 2019. The 
agencies are now undertaking the regular PRA process for revising and 
extending these information collections for three years as described in 
this notice.
---------------------------------------------------------------------------

    \12\ Public Law 115-174, 132 Stat. 1296 (2018).
---------------------------------------------------------------------------

 HVCRE Exposures
    Section 214 of EGRRCPA adds a new Section 51 to the Federal Deposit 
Insurance Act (FDI Act) governing the risk-based capital requirements 
for certain acquisition, development, or construction (ADC) loans. 
EGRRCPA provides that, effective upon enactment, the agencies may only 
require a depository institution to assign a heightened risk weight to 
an HVCRE exposure if such exposure is an ``HVCRE ADC Loan,'' as defined 
in Section 214 of EGRRCPA. Accordingly, a depository institution is 
permitted to use the definition of HVCRE ADC Loan in place of the 
existing definition of HVCRE loan when reporting HVCRE exposures held 
for sale, held for investment, and held for trading on Schedule RC-R, 
Regulatory Capital, Part II, Risk-Weighted Assets, in the Call Reports, 
as well as on Schedule B and Schedule G in the FFIEC 101 for 
institutions required to file that form.
 Reciprocal Deposits
    Section 29 of the FDI Act (12 U.S.C. 1831f), as amended by Section 
202 of EGRRCPA, excepts a capped amount of reciprocal deposits from 
treatment as brokered deposits for qualifying institutions, effective 
upon enactment. The current Call Report instructions, consistent with 
the law prior to the enactment of EGRRCPA, treat all reciprocal 
deposits as brokered deposits. When reporting in the Call Report, 
institutions should apply the newly defined terms and other provisions 
of Section 202 to determine whether they and their reciprocal deposits 
are eligible for the statutory exclusion and report as brokered 
deposits in Schedule RC-E, and reciprocal brokered deposits in Schedule 
RC-O, only those reciprocal deposits that are considered brokered 
deposits under the new law.

II. Affected Reports and Specific Revisions

A. Call Reports

    The agencies propose to extend for three years, with revision, the 
FFIEC 031, FFIEC 041, and FFIEC 051 Call Reports.
    Report Title: Consolidated Reports of Condition and Income (Call 
Report).
    Form Numbers: FFIEC 031 (for banks and savings associations with 
domestic and foreign offices), FFIEC 041 (for banks and savings 
associations with domestic offices only),\13\ and FFIEC 051 (for banks 
and savings associations with domestic offices only and total assets 
less than $1 billion).
---------------------------------------------------------------------------

    \13\ Banks and savings associations with domestic offices only 
and total consolidated assets of $100 billion or more file the FFIEC 
031 report rather than the FFIEC 041 report.
---------------------------------------------------------------------------

    Frequency of Response: Quarterly.
    Affected Public: Business or other for-profit.
OCC
    OMB Control No.: 1557-0081.
    Estimated Number of Respondents: 1,252 national banks and federal 
savings associations.
    Estimated Average Burden per Response: 45.98 burden hours per 
quarter to file.
    Estimated Total Annual Burden: 230,268 burden hours to file.
Board
    OMB Control No.: 7100-0036.
    Estimated Number of Respondents: 808 state member banks.
    Estimated Average Burden per Response: 49.87 burden hours per 
quarter to file.
    Estimated Total Annual Burden: 161,180 burden hours to file.
FDIC
    OMB Control No.: 3064-0052.
    Estimated Number of Respondents: 3,596 insured state nonmember 
banks and state savings associations.
    Estimated Average Burden per Response: 43.85 burden hours per 
quarter to file.
    Estimated Total Annual Burden: 630,738 burden hours to file.
    The estimated average burden hours collectively reflect the 
estimates for the FFIEC 031, the FFIEC 041, and the FFIEC 051 reports. 
When the estimates are calculated by type of report across the 
agencies, the estimated average burden hours per quarter are 121.74 
(FFIEC 031), 55.57 (FFIEC 041), and 38.59 (FFIEC 051). The estimated 
burden per response for the quarterly filings of the Call Report is an 
average that varies by agency because of differences in the composition 
of the banks and savings associations under each agency's supervision 
(e.g., size distribution of such institutions, types of activities in 
which they are engaged, and existence of foreign offices).
    Type of Review: Extension and revision of currently approved 
collections.
General Description of Reports
    The Call Report information collections are mandatory: 12 U.S.C. 
161 (for national banks), 12 U.S.C. 324 (for state member banks), 12 
U.S.C. 1817 (for insured state nonmember commercial and savings banks), 
and 12 U.S.C. 1464 (for federal and state savings associations). At 
present, except for selected data items and text, these information 
collections are not given confidential treatment.
Abstract
    Banks and savings associations submit Call Report data to the 
agencies each quarter for the agencies' use in monitoring the 
condition, performance, and risk profile of individual institutions and 
the industry as a whole. Call Report data serve a regulatory or public 
policy purpose by assisting the agencies in fulfilling their shared 
missions of ensuring the safety and soundness of financial institutions 
and the financial system and protecting consumer financial rights, as 
well as

[[Page 49164]]

agency-specific missions affecting national and state-chartered 
institutions, such as conducting monetary policy, ensuring financial 
stability, and administering federal deposit insurance. Call Reports 
are the source of the most current statistical data available for 
identifying areas of focus for on-site and off-site examinations. Among 
other purposes, the agencies use Call Report data in evaluating 
institutions' corporate applications, including, in particular, 
interstate merger and acquisition applications for which the agencies 
are required by law to determine whether the resulting institution 
would control more than 10 percent of the total amount of deposits of 
insured depository institutions in the United States. Call Report data 
also are used to calculate institutions' deposit insurance and 
Financing Corporation assessments and national banks' and federal 
savings associations' semiannual assessment fees.

B. FFIEC 002 and 002S

    The Board proposes to extend for three years, with revision, on 
behalf of the agencies the FFIEC 002 and FFIEC 002S reports.
    Report Titles: Report of Assets and Liabilities of U.S. Branches 
and Agencies of Foreign Banks; Report of Assets and Liabilities of a 
Non-U.S. Branch that is Managed or Controlled by a U.S. Branch or 
Agency of a Foreign (Non-U.S.) Bank.
    Form Numbers: FFIEC 002; FFIEC 002S.
    OMB control number: 7100-0032.
    Frequency of Response: Quarterly.
    Affected Public: Business or other for-profit.
    Respondents: All state-chartered or federally-licensed U.S. 
branches and agencies of foreign banking organizations, and all non-
U.S. branches managed or controlled by a U.S. branch or agency of a 
foreign banking organization.
    Estimated Number of Respondents: FFIEC 002--209; FFIEC 002S--38.
    Estimated Average Burden per Response: FFIEC 002--23.87 hours; 
FFIEC 002S--6.0 hours.
    Estimated Total Annual Burden: FFEIC 002--19,955 hours; FFIEC 
002S--912 hours.
    Type of Review: Extension and revision of currently approved 
collections.
General Description of Reports
    These information collections are mandatory (12 U.S.C. 3105(c)(2), 
1817(a)(1) and (3), and 3102(b)). Except for select sensitive items, 
the FFIEC 002 is not given confidential treatment; the FFIEC 002S is 
given confidential treatment (5 U.S.C. 552(b)(4) and (8)).
Abstract
    On a quarterly basis, all U.S. branches and agencies of foreign 
banks are required to file the FFIEC 002, which is a detailed report of 
condition with a variety of supporting schedules. This information is 
used to fulfill the supervisory and regulatory requirements of the 
International Banking Act of 1978. The data are also used to augment 
the bank credit, loan, and deposit information needed for monetary 
policy and other public policy purposes. The FFIEC 002S is a supplement 
to the FFIEC 002 that collects information on assets and liabilities of 
any non-U.S. branch that is managed or controlled by a U.S. branch or 
agency of the foreign bank. A non-U.S. branch is managed or controlled 
by a U.S. branch or agency if a majority of the responsibility for 
business decisions, including but not limited to decisions with regard 
to lending or asset management or funding or liability management, or 
the responsibility for recordkeeping with respect to assets or 
liabilities for that foreign branch, resides at the U.S. branch or 
agency. A separate FFIEC 002S must be completed for each managed or 
controlled non-U.S. branch. The FFIEC 002S must be filed quarterly 
along with the U.S. branch or agency's FFIEC 002. The data from both 
reports are used for (1) monitoring deposit and credit transactions of 
U.S. residents; (2) monitoring the impact of policy changes; (3) 
analyzing structural issues concerning foreign bank activity in U.S. 
markets; (4) understanding flows of banking funds and indebtedness of 
developing countries in connection with data collected by the 
International Monetary Fund and the Bank for International Settlements 
that are used in economic analysis; and (5) assisting in the 
supervision of U.S. offices of foreign banks. The Federal Reserve 
System collects and processes these reports on behalf of all three 
agencies.

C. FFIEC 030 and 030S

    The agencies propose to extend for three years, with revision, the 
FFIEC 030 and FFIEC 030S reports.
    Report Title: Foreign Branch Report of Condition.
    Form Numbers: FFIEC 030 and FFIEC 030S.
    Frequency of Response: Annually, and quarterly for significant 
branches.
    Affected Public: Business or other for profit.
OCC
    OMB Number: 1557-0099.
    Estimated Number of Respondents: 199 annual branch respondents 
(FFIEC 030); 57 quarterly branch respondents (FFIEC 030); 30 annual 
branch respondents (FFIEC 030S).
    Estimated Average Time per Response: 3.4 burden hours (FFIEC 030); 
0.5 burden hours (FFIEC 030S).
    Estimated Total Annual Burden: 1,467 burden hours.
Board
    OMB Number: 7100-0071.
    Estimated Number of Respondents: 14 annual branch respondents 
(FFIEC 030); 24 quarterly branch respondents (FFIEC 030); 11 annual 
branch respondents (FFIEC 030S).
    Estimated Average Time per Response: 3.4 burden hours (FFIEC 030); 
0.5 burden hours (FFIEC 030S).
    Estimated Total Annual Burden: 380 burden hours.
FDIC
    OMB Number: 3064-0011.
    Estimated Number of Respondents: 8 annual branch respondents (FFIEC 
030); 1 quarterly branch respondent (FFIEC 030); 8 annual branch 
respondents (FFIEC 030S).
    Estimated Average Time per Response: 3.4 burden hours (FFIEC 030); 
0.5 burden hours (FFIEC 030S).
    Estimated Total Annual Burden: 45 burden hours.
    Type of Review: Extension and revision of currently approved 
collections.
General Description of Reports
    This information collection is mandatory: 12 U.S.C. 602 (Board); 12 
U.S.C. 161 and 602 (OCC); and 12 U.S.C. 1828 (FDIC). This information 
collection is given confidential treatment under 5 U.S.C. 552(b)(4) and 
(8).
Abstract
    The FFIEC 030 collects asset and liability information for foreign 
branches of insured U.S. banks and insured U.S. savings associations 
(U.S. depository institutions) and is required for regulatory and 
supervisory purposes. The information is used to analyze the foreign 
operations of U.S. institutions. All foreign branches of U.S. 
institutions regardless of charter type file this report as provided in 
the instructions to the FFIEC 030 and FFIEC 030S.
    A U.S. depository institution generally must file a separate report 
for each foreign branch, but in some cases may consolidate filing for 
multiple foreign branches in the same country, as described below. A 
branch with either total assets of at least $2 billion or commitments 
to purchase foreign

[[Page 49165]]

currencies and U.S. dollar exchange of at least $5 billion as of the 
end of a calendar quarter is considered a ``significant branch'' and an 
FFIEC 030 report is required to be filed quarterly. A U.S. depository 
institution with a foreign branch having total assets in excess of $250 
million that does not meet either of the criteria to file quarterly 
must file the entire FFIEC 030 report for this foreign branch on an 
annual basis as of December 31.
    A U.S. depository institution with a foreign branch having total 
assets of $50 million, but less than or equal to $250 million that does 
not meet the criteria to file the FFIEC 030 report must file the FFIEC 
030S report for this foreign branch on an annual basis as of December 
31. A U.S. depository institution with a foreign branch having total 
assets of less than $50 million is exempt from filing the FFIEC 030 and 
030S reports.

D. FFIEC 101

    The agencies propose to extend for three years, with revision, the 
FFIEC 101 report.
    Report Title: Risk-Based Capital Reporting for Institutions Subject 
to the Advanced Capital Adequacy Framework.
    Form Number: FFIEC 101.
    Frequency of Response: Quarterly.
    Affected Public: Business or other for-profit.
OCC
    OMB Control No.: 1557-0239.
    Estimated Number of Respondents: 20 national banks and federal 
savings associations.
    Estimated Time per Response: 674 burden hours per quarter to file.
    Estimated Total Annual Burden: 53,920 burden hours to file.
Board
    OMB Control No.: 7100-0319.
    Estimated Number of Respondents: 6 state member banks; 16 bank 
holding companies and savings and loan holding companies; and 6 
intermediate holding companies.
    Estimated Time per Response: 674 burden hours per quarter for state 
member banks to file, 677 burden hours per quarter for bank holding 
companies and savings and loan holding companies to file; and 3 burden 
hours per quarter for intermediate holding companies to file.
    Estimated Total Annual Burden: 16,176 burden hours for state member 
banks to file; 43,328 burden hours for bank holding companies and 
savings and loan holding companies to file; and 72 burden hours for 
intermediate holding companies to file.
FDIC
    OMB Control No.: 3064-0159.
    Estimated Number of Respondents: 2 insured state nonmember banks 
and state savings associations.
    Estimated Time per Response: 674 burden hours per quarter to file.
    Estimated Total Annual Burden: 5,392 burden hours to file.
    Type of Review: Extension and revision of currently approved 
collections.
General Description of Reports
    Each advanced approaches institution \14\ is required to report 
quarterly regulatory capital data on the FFIEC 101. The FFIEC 101 
information collection is mandatory for advanced approaches 
institutions: 12 U.S.C. 161 (national banks), 12 U.S.C. 324 (state 
member banks), 12 U.S.C. 1844(c) (bank holding companies), 12 U.S.C. 
1467a(b) (savings and loan holding companies), 12 U.S.C. 1817 (insured 
state nonmember commercial and savings banks), 12 U.S.C. 1464 (savings 
associations), and 12 U.S.C. 1844(c), 3106, and 3108 (intermediate 
holding companies). Certain data items in this information collection 
are given confidential treatment under 5 U.S.C. 552(b)(4) and (8).
---------------------------------------------------------------------------

    \14\ See 12 CFR 3.100(b) (OCC); 12 CFR 217.100(b) (Board); 12 
CFR 324.100(b) (FDIC).
---------------------------------------------------------------------------

Abstract
    The agencies use data reported in the FFIEC 101 to assess and 
monitor the levels and components of each reporting entity's capital 
requirements and the adequacy of the entity's capital under the 
Advanced Capital Adequacy Framework; \15\ to evaluate the impact of the 
Advanced Capital Adequacy Framework on individual reporting entities 
and on an industry-wide basis and its competitive implications; and to 
supplement on-site examination processes. The reporting schedules also 
assist advanced approaches institutions in understanding expectations 
relating to the system development necessary for implementation and 
validation of the Advanced Capital Adequacy Framework. Submitted data 
that are released publicly will also provide other interested parties 
with information about advanced approaches institutions' regulatory 
capital.
---------------------------------------------------------------------------

    \15\ 12 CFR part 3, subpart E (OCC); 12 CFR part 217, subpart E 
(Board); 12 CFR part 324, subpart E (FDIC).
---------------------------------------------------------------------------

Current Actions

I. Introduction

    In response to the new credit losses standard, key elements of 
which were outlined above in Section A of ``Supplementary Information, 
I. Background,'' the agencies reviewed the existing FFIEC reports to 
determine which reports may be affected by ASU 2016-13. As a result, 
revisions are proposed to the following FFIEC reports: (1) Call Reports 
(FFIEC 031, FFIEC 041, and FFIEC 051), (2) FFIEC 002 and FFIEC 002S, 
(3) FFIEC 030 and FFIEC 030S, and (4) the FFIEC 101.
    The agencies also reviewed the existing FFIEC reports to determine 
which reports may be affected by EGRRCPA. As a result, additional 
revisions are proposed for the Call Reports (FFIEC 031, FFIEC 041, and 
FFIEC 051) and the FFIEC 101.
    A detailed description of the proposed revisions resulting from 
both ASU 2016-13 and EGRRCPA follows.

II. Call Report Revisions

A. General Discussion of Proposed Call Report Revisions

1. ASU 2016-13 Proposed Call Report Revisions
    In response to the changes in accounting for credit losses under 
ASU 2016-13, the agencies are proposing revisions to the manner in 
which data on credit losses is reported in the Call Report. These 
changes are necessary to align the information reported in the Call 
Report with the new accounting standard as it relates to the credit 
losses for loans and leases, including off-balance sheet credit 
exposures.\16\ The revisions also address the broader scope of 
financial assets for which an allowance for credit losses must be 
established and maintained, and the elimination of the existing model 
for PCI assets, as described in more detail later in this section.
---------------------------------------------------------------------------

    \16\ See 12 U.S.C. 1831n(a).
---------------------------------------------------------------------------

    In developing these proposed Call Report revisions, the agencies 
followed the guiding principles for evaluating potential additions and 
deletions of Call Report data items and other revisions to the Call 
Report. In general, data items collected in the Call Report must meet 
three guiding principles: (1) The data items serve a long-term 
regulatory or public policy purpose by assisting the FFIEC member 
entities in fulfilling their shared missions of ensuring the safety and 
soundness of financial institutions and the financial system and the 
protection of consumer financial rights, as well as agency-specific 
missions affecting national and state-chartered institutions; (2) the 
data items to be collected maximize practical utility and minimize, to 
the extent practicable and appropriate, burden on financial

[[Page 49166]]

institutions; and (3) equivalent data items are not readily available 
through other means. The agencies also applied these principles in 
developing the proposed revisions to the other FFIEC reports within the 
scope of this notice. In following these principles, the agencies 
sought to limit the number of data items being added to the Call Report 
and the other reports within the scope of this notice to address the 
changes in accounting for credit losses. The majority of the proposed 
changes address the broader scope of assets subject to an allowance for 
credit losses assessment under ASU 2016-13. Throughout the Call Report, 
the agencies generally propose to request credit loss information on 
loans and leases, HTM debt securities, and AFS debt securities given 
the materiality of these asset types to institutions' overall balance 
sheets as well as the potential materiality of the allowances for 
credit losses on these assets.
    The existing Call Report schedules impacted by ASU 2016-13 and 
included in the development of this proposal are:

    [ssquf] Schedule RI--Income Statement
    [ssquf] Schedule RI-B--Charge-offs and Recoveries on Loans and 
Leases and Changes in Allowance for Loan and Lease Losses
    [ssquf] Schedule RI-C--Disaggregated Data on the Allowance for Loan 
and Lease Losses [FFIEC 031 and FFIEC 041 only]
    [ssquf] Schedule RI-D--Income from Foreign Offices [FFIEC 031 only]
    [ssquf] Schedule RI-E--Explanations
    [ssquf] Schedule RC--Balance Sheet
    [ssquf] Schedule RC-B--Securities
    [ssquf] Schedule RC-C--Loans and Lease Financing Receivables
    [ssquf] Schedule RC-F--Other Assets
    [ssquf] Schedule RC-G--Other Liabilities
    [ssquf] Schedule RC-H--Selected Balance Sheet Items for Domestic 
Offices [FFIEC 031 only]
    [ssquf] Schedule RC-K--Quarterly Averages
    [ssquf] Schedule RC-N--Past Due and Nonaccrual Loans, Leases, and 
Other Assets
    [ssquf] Schedule RC-R--Regulatory Capital
    [ssquf] Schedule RC-V--Variable Interest Entities [FFIEC 031 and 
FFIEC 041 only]
    [ssquf] Schedule SU--Supplemental Information [FFIEC 051 only]

    As noted previously, ASU 2016-13 broadens the scope of financial 
assets for which allowances for credit losses must be estimated. CECL 
is applicable to all financial instruments measured at amortized cost 
(including loans held for investment and HTM debt securities, as well 
as trade and reinsurance receivables and receivables that relate to 
repurchase agreements and securities lending agreements), net 
investments in leases, and off-balance-sheet credit exposures not 
accounted for as insurance, including loan commitments, standby letters 
of credit, and financial guarantees. In addition, under ASU 2016-13, 
institutions will record credit losses on AFS debt securities through 
an allowance for credit losses rather than as a write-down through 
earnings for other-than-temporary impairment (OTTI). The broader scope 
of financial assets for which allowances must be estimated under ASU 
2016-13 results in the proposed reporting of additional allowances, and 
related charge-off and recovery data, in the Call Report and proposed 
changes to the terminology used to describe allowances for credit 
losses within the Call Report. To address the broader scope of assets 
that will have allowances under ASU 2016-13, the agencies propose to 
change the allowance nomenclature to consistently use ``allowance for 
credit losses'' followed by the specific asset type as relevant, e.g., 
``allowance for credit losses on loans and leases'' and ``allowance for 
credit losses on HTM debt securities.''
    By broadening the scope of financial assets for which the need for 
allowances for credit losses must be assessed to include HTM and AFS 
debt securities, the new standard eliminates the existing OTTI model 
for such securities. Subsequent to an institution's adoption of ASU 
2016-13, the concept of OTTI will no longer be relevant and information 
on OTTI will no longer be captured in the Call Report.
    The new standard also eliminates the separate impairment model for 
PCI loans and debt securities. Under CECL, credit losses on PCD 
financial assets measured at amortized cost are subject to the same 
credit loss measurement standard as all other financial assets measured 
at amortized cost. Subsequent to an institution's adoption of ASU 2016-
13, information on PCI loans will no longer be captured in the Call 
Report.
    While the standard generally does not change the scope of off-
balance sheet credit exposures subject to an allowance for credit loss 
assessment, the standard does change the period over which an 
institution should estimate expected credit losses. For off-balance-
sheet credit exposures, an institution will estimate expected credit 
losses over the contractual period in which it is exposed to credit 
risk via a present contractual obligation to extend credit. For the 
period of exposure, the estimate of expected credit losses should 
consider both the likelihood that funding will occur and the amount 
expected to be funded over the estimated remaining life of the 
commitment or other off-balance-sheet exposure. In contrast to existing 
practices, the FASB decided that no credit losses should be recognized 
on off-balance-sheet credit exposures that are unconditionally 
cancellable by the issuer. The exclusion of unconditionally cancellable 
off-balance sheet exposures from the allowance for credit losses 
assessment requires clarification in the Call Report instructions.
    The agencies also note that, because of the different effective 
dates for ASU 2016-13 for PBEs that are SEC filers, other PBEs (non-SEC 
filers), and all other entities, as well as the option for early 
adoption and the varying fiscal years across the population of 
institutions that file Call Reports, the period over which institutions 
may be implementing this ASU ranges from the first quarter of 2019 
through the fourth quarter of 2022. December 31, 2022, will be the 
first quarter-end Call Report date as of which all institutions would 
be required to prepare their Call Reports in accordance with ASU 2016-
13.\17\ As a result, the agencies are proposing revisions to the 
reporting of information on credit losses in response to the ASU that 
would be introduced in the Call Report effective March 31, 2019, but 
would not be fully phased in until the Call Report for December 31, 
2022.\18\
---------------------------------------------------------------------------

    \17\ If the FASB issues a final Accounting Standards Update 
amending the transition and effective date provisions in ASU 2016-13 
as described in footnote 6, December 31, 2022, would continue to be 
the first quarter-end Call Report date as of which all institutions 
would be required to prepare their Call Reports in accordance with 
ASU 2016-13.
    \18\ See CECL FAQs, question 36, for examples of how and when 
institutions with non-calendar fiscal years must incorporate the new 
credit losses standard into their regulatory reports.
---------------------------------------------------------------------------

    As of the new accounting standard's effective date for an 
individual institution, the institution will apply the standard based 
on the characteristics of financial assets as follows:
     Financial assets measured at amortized cost (that are not 
PCD assets) and net investments in leases: A cumulative-effect 
adjustment for the changes in the allowances for credit losses on these 
assets will be recognized in retained earnings, net of applicable 
taxes, as of the beginning of the fiscal year in which the new standard 
is adopted. The cumulative-effect adjustment to retained earnings 
should be reported in Call Report Schedule RI-A, item 2, ``Cumulative 
effect of changes in accounting principles and corrections of material 
accounting errors,'' and explained in Schedule RI-E, item 4.a, for 
which a preprinted caption, ``Adoption of Current Expected Credit

[[Page 49167]]

Losses Methodology--ASC Topic 326,'' will be provided in the text field 
for this item.
     Purchased credit-deteriorated financial assets: Financial 
assets classified as PCI assets prior to the effective date of the new 
standard will be classified as PCD assets as of the effective date. For 
all financial assets designated as PCD assets as of the effective date, 
an institution will be required to gross up the balance sheet amount of 
the financial asset by the amount of its allowance for expected credit 
losses as of the effective date, resulting in an adjustment to the 
amortized cost basis of the asset to reflect the addition of the 
allowance for credit losses as of that date. For loans held for 
investment and held-to-maturity debt securities, this allowance gross-
up as of the effective date of ASU 2016-13 should be reported in the 
appropriate columns of Schedule RI-B, Part II, item 6, ``Adjustments,'' 
and should be included in the amount reported in Schedule RI-E, item 
6.b, for which a preprinted caption, ``Effect of adoption of current 
expected credit losses methodology on allowances for credit losses on 
loans and leases held for investment and held-to-maturity debt 
securities,'' will be provided in the text field for this item. 
Subsequent changes in the allowances for credit losses on PCD financial 
assets will be recognized by charges or credits to earnings through 
provisions for credit losses. The institution will accrete the 
noncredit discount or premium to interest income based on the effective 
interest rate on the PCD financial assets determined after the gross-up 
for the CECL allowance as of the effective date, except for PCD 
financial assets in nonaccrual status.
     AFS and HTM debt securities: A debt security on which OTTI 
had been recognized prior to the effective date of the new standard 
will transition to the new guidance prospectively (i.e., with no change 
in the amortized cost basis of the security). The effective interest 
rate on such a debt security before the adoption date will be retained 
and locked in. Amounts previously recognized in accumulated other 
comprehensive income related to cash flow improvements will continue to 
be accreted to interest income over the remaining life of the debt 
security on a level-yield basis. Recoveries of amounts previously 
written off relating to improvements in cash flows after the date of 
adoption will be recognized in income in the period received.

2. EGRRCPA Proposed Call Report Revisions

    This proposal addresses the changes to the reporting of reciprocal 
deposits and HVCRE exposures in the Call Report resulting from EGRRCPA. 
The guiding principles, noted above, were applied in determining these 
proposed changes to the Call Report.
    The existing Call Report schedules impacted by EGRRCPA and for 
which revisions are included in this proposal are:

    [ssquf] Schedule RC-E--Deposit Liabilities
    [ssquf] Schedule RC-O--Other Data for Deposit Insurance and FICO 
Assessments
    [ssquf] Schedule RC-R--Regulatory Capital: Part II. Risk-Weighted 
Assets

B. Detail of Specific Proposed Call Report Revisions

    The proposed Call Report revisions are consistent across the FFIEC 
031, FFIEC 041, and FFIEC 051 reporting forms to the extent that the 
same schedule and data items within these schedules currently exist 
within each reporting form. Throughout this detailed discussion of 
specific proposed Call Report revisions, for each schedule discussed, 
the agencies have included the affected form numbers next to the 
schedule name. Unless otherwise stated, all changes relating to a 
particular schedule apply to all forms listed.
1. ASU 2016-13 Proposed Call Report Revisions
    Due to the staggered effective dates, ASU 2016-13 will not be 
implemented by all institutions until December 2022. It is expected 
that the majority of institutions will implement the standard in the 
first or fourth quarter of 2021. As such, the proposed revisions to 
schedule titles or specific data item captions resulting from the 
change in nomenclature upon the adoption of CECL generally would not be 
reflected in the reporting forms until March 31, 2021, as outlined in 
the following schedule-by-schedule descriptions of the proposed changes 
to the affected Call Report schedules. Effective for the March 31, 
2021, report date, unless otherwise indicated, the schedule titles or 
specific data item captions referencing the ``provision for loan and 
lease losses'' and the ``allowance for loan and lease losses'' would be 
changed to the ``provision for credit losses'' and the ``allowance for 
credit losses on loans and leases,'' respectively.
    From March 31, 2019, through December 31, 2020, the reporting form 
and instructions for each schedule title or data item impacted by the 
change in nomenclature would include guidance stating how institutions 
that have adopted ASU 2016-13 would report the data items related to 
the ``provision for credit losses'' and ``allowance for credit 
losses,'' as applicable. For the transition period from March 31, 2021, 
through December 31, 2022, the reporting form and instructions for each 
impacted schedule title or data item would be updated to include 
guidance stating how institutions that have not adopted ASU 2016-13 
would report the ``provision for loan and lease losses'' or the 
``allowance for loan and lease losses,'' as applicable.
Schedule RI (FFIEC 031, FFIEC 041, and FFIEC 051)
    To address the broader scope of financial assets for which 
provisions will be calculated under ASU 2016-13, the agencies propose 
to revise Schedule RI, item 4, from ``Provision for loan and lease 
losses'' to ``Provisions for credit losses on financial assets,'' 
effective March 31, 2021. To address the elimination of the concept of 
OTTI by ASU 2016-13, effective December 31, 2022, the agencies propose 
to remove Schedule RI, Memorandum item 14, ``Other-than-temporary 
impairment losses on held-to-maturity and available-for-sale debt 
securities recognized in earnings.'' Under the new standard, 
institutions will recognize credit losses on HTM and AFS debt 
securities through an allowance for credit losses, and the agencies 
propose to collect information on the allowance for credit losses on 
these two categories of debt securities in Schedule RI-B as described 
below. From March 31, 2019, through September 30, 2022, the reporting 
form and instructions for Memorandum item 14 will include guidance 
stating that Memorandum item 14 is to be completed only by institutions 
that have not adopted ASU 2016-13.
Schedule RI-B (FFIEC 031, FFIEC 041, and FFIEC 051)
    To address the broader scope of financial assets for which 
allowances will be calculated under ASU 2016-13 and for which charge-
offs and recoveries will be applicable, the agencies propose to change 
the title of Schedule RI-B effective March 31, 2019, from ``Charge-offs 
and Recoveries on Loans and Leases and Changes in Allowance for Loan 
and Lease Losses'' to ``Charge-offs and Recoveries on Loans and Leases 
and Changes in Allowances for Credit Losses.''
    In addition, for the FFIEC 031 and FFIEC 041 only, effective March 
31,

[[Page 49168]]

2021, to address the change in allowance nomenclature arising from the 
broader scope of allowances under ASU 2016-13, the agencies propose to 
revise Schedule RI-B, Part I, Memorandum item 4, from ``Uncollectible 
retail credit card fees and finance charges reversed against income 
(i.e., not included in charge-offs against the allowance for loan and 
lease losses)'' to ``Uncollectible retail credit card fees and finance 
charges reversed against income (i.e., not included in charge-offs 
against the allowance for credit losses on loans and leases).''
    To further address the broader scope of financial assets for which 
allowances will be calculated under ASU 2016-13, the agencies propose 
to revise Schedule RI-B, Part II, to also include changes in the 
allowances for credit losses on HTM and AFS debt securities. Effective 
March 31, 2019, the agencies propose to change the title of Schedule 
RI-B, Part II, from ``Changes in Allowance for Loan and Lease Losses'' 
to ``Changes in Allowances for Credit Losses.''
    In addition, effective March 31, 2019, Schedule RI-B, Part II, 
would be expanded from one column to a table with three columns titled:

--Column A: Loans and leases held for investment
--Column B: Held-to-maturity debt securities
--Column C: Available-for-sale debt securities

From March 31, 2019, through September 30, 2022, the reporting form and 
instructions for Schedule RI-B, Part II, would include guidance stating 
that Columns B and C are to be completed only by institutions that have 
adopted ASU 2016-13.
    In addition, effective March 31, 2019, Schedule RI-B, Part II, item 
4, will be revised from ``Less: Write-downs arising from transfers of 
loans to a held-for-sale account'' to ``Less: Write-downs arising from 
transfers of financial assets'' to capture changes in allowances from 
transfers of loans from held-to-investment to held-for-sale and from 
transfers of securities between categories, e.g., from the AFS to the 
HTM category. Further, effective March 31, 2019, Schedule RI-B, Part 
II, item 5, will be revised from ``Provision for loan and lease 
losses'' to ``Provisions for credit losses'' to capture the broader 
scope of financial assets included in the schedule.
    Effective March 31, 2019, or the first quarter in which an 
institution reports its adoption of ASU 2016-13, whichever is later, 
Schedule RI-B, Part II, item 6, ``Adjustments,'' would be used to 
capture the initial impact of applying ASU 2016-13 as of the effective 
date in the period of adoption, including the initial allowance gross-
up for PCD assets as of the effective date. Item 6 also would be used 
to report the allowance gross-up upon the acquisition of PCD assets on 
or after the effective date. These adjustments would be explained in 
items for which preprinted captions would be provided in place of the 
existing text fields in Schedule RI-E, items 6.a and 6.b, respectively, 
as proposed below.
    In the memorandum section of Schedule RI-B, Part II, on the FFIEC 
031 and the FFIEC 041, to address the change in allowance nomenclature 
arising from the broader scope of allowances under ASU 2016-13, the 
agencies propose to revise the caption for Memorandum item 3, effective 
March 31, 2021, from ``Amount of allowance for loan and lease losses 
attributable to retail credit card fees and finance charges'' to 
``Amount of allowance for credit losses on loans and leases 
attributable to retail credit card fees and finance charges.'' Also in 
the memorandum section of Schedule RI-B, Part II, on the FFIEC 031 and 
the FFIEC 041, effective December 31, 2022, the agencies propose to 
remove existing Memorandum item 4, ``Amount of allowance for post-
acquisition credit losses on purchased credit impaired loans accounted 
for in accordance with FASB ASC 310-30,'' as ASU 2016-13 eliminates the 
concept of PCI loans and the separate credit impairment model for such 
loans. From March 31, 2019, through September 30, 2022, the reporting 
form and instructions for Schedule RI-B, Part II, Memorandum item 4, 
would specify that this item should be completed only by institutions 
that have not yet adopted ASU 2016-13.
    Given that the scope of ASU 2016-13 is broader than the three 
financial asset types proposed to be included in the table in Schedule 
RI-B, Part II, effective March 31, 2019, the agencies propose to also 
add new Memorandum item 5, ``Provisions for credit losses on other 
financial assets measured at amortized cost,'' and Memorandum item 6, 
``Allowance for credit losses on other financial assets measured at 
amortized cost,'' to Schedule RI-B, Part II, at the same time. For 
purposes of Memorandum items 5 and 6, other financial assets would 
include all financial assets measured at amortized cost other than 
loans and leases held for investment and held-to-maturity debt 
securities. From March 31, 2019, through September 30, 2022, the 
reporting form and instructions for Schedule RI-B, Part II, would 
include guidance stating that Memorandum items 5 and 6 are to be 
completed only by institutions that have adopted ASU 2016-13.
Schedule RI-C (FFIEC 031 and FFIEC 041)
    Schedule RI-C currently requests allowance information for 
specified categories of loans held for investment that is disaggregated 
on the basis of three separate credit impairment models, and the 
amounts of the related recorded investment, from institutions with $1 
billion or more in total assets. ASU 2016-13 eliminates these separate 
credit impairment models and replaces them with CECL for all financial 
assets measured at amortized cost. As a result of this change, 
effective March 31, 2021, the agencies propose to change the title of 
Schedule RI-C from ``Disaggregated Data on the Allowance for Loan and 
Lease Losses'' to ``Disaggregated Data on Allowances for Credit 
Losses.''
    To capture disaggregated data on allowances for credit losses from 
institutions that have adopted ASU 2016-13, the agencies propose to 
create Schedule RI-C, Part II, ``Disaggregated Data on Allowances for 
Credit Losses,'' effective March 31, 2019. The existing table in 
Schedule RI-C, which includes items 1 through 6 and columns A through 
F, would be renamed ``Part I. Disaggregated Data on the Allowance for 
Loan and Lease Losses.'' From March 31, 2019, through September 30, 
2022, the reporting form and instructions for Schedule RI-C, Part I, 
would include guidance stating that only those institutions that have 
not adopted ASU 2016-13 should complete Schedule RI-C, Part I.
    The proposed Part II of this schedule would contain the same six 
loan portfolio categories and the unallocated category for which data 
are currently collected in existing Schedule RI-C along with the 
following portfolio categories for which allowance information would 
begin to be reported for HTM debt securities:

1. Securities issued by states and political subdivisions in the U.S.
2. Mortgage-backed securities (MBS) (including CMOs, REMICs, and 
stripped MBS)
    a. Mortgage-backed securities issued or guaranteed by U.S. 
Government agencies or sponsored agencies
    b. Other mortgage-backed securities
3. Asset-backed securities and structured financial products
4. Other debt securities
5. Total

    For each category of loans in Part II of Schedule RI-C, 
institutions would

[[Page 49169]]

report the amortized cost and the related allowance balance in Columns 
A and B, respectively. The amortized cost amounts to be reported would 
exclude any accrued interest receivable that is reported in ``Other 
assets'' on the balance sheet. For each category of HTM debt securities 
in Part II of Schedule RI-C, institutions would report only the related 
allowance balance. The amortized cost and allowance information on 
loans and the allowance information on HTM debt securities would be 
reported quarterly only by institutions with $1 billion or more in 
total assets, as is currently done with existing Part I of Schedule RI-
C.
    The agencies will use the securities-related information gathered 
in proposed Part II of the schedule to monitor the allowance levels and 
changes in these levels for the categories of HTM debt securities 
specified above, which would serve as a starting point for assessing 
the appropriateness of these levels. Further, with the proposed removal 
of the Call Report item for OTTI losses recognized in earnings 
(Schedule RI, Memorandum item 14), proposed Schedule RI-C, Part II, 
will become another source of information regarding credit losses on 
HTM debt securities, in addition to data proposed to be reported in 
Schedule RI-B, Part II. From March 31, 2019, through September 30, 
2022, the reporting form and instructions for Schedule RI-C, Part II, 
would include guidance stating that only those institutions with $1 
billion or more in total assets that have adopted ASU 2016-13 should 
complete Schedule RI-C, Part II.
    In addition, effective December 31, 2022, the agencies propose to 
remove the existing Schedule RI-C, Part I. Schedule RI-C, Part II, 
would then be the only table remaining within this schedule and the 
``Part II'' designation would be removed.
Schedule RI-D (FFIEC 031)
    To address the broader scope of financial assets for which 
provisions will be calculated under ASU 2016-13, effective March 31, 
2021, the agencies propose to revise Schedule RI-D, item 3, from 
``Provision for loan and lease losses in foreign offices'' to 
``Provisions for credit losses in foreign offices.''
Schedule RI-E (FFIEC 031, FFIEC 041, and FFIEC 051)
    Institutions use item 4 of Schedule RI-E to itemize and describe 
amounts included in Schedule RI-A, item 2, ``Cumulative effect of 
changes in accounting principles and corrections of material accounting 
errors.'' Effective March 31, 2019, the agencies propose to replace the 
existing text field for Schedule RI-E, item 4.a, with a preprinted 
caption that would be titled ``Adoption of Current Expected Credit 
Losses Methodology--ASC Topic 326.'' Institutions will use this item to 
report the cumulative-effect adjustment (net of applicable income 
taxes) recognized in retained earnings for the changes in the 
allowances for credit losses on financial assets and off-balance sheet 
credit exposures as of the beginning of the fiscal year in which the 
institution adopts ASU 2016-13. Providing a preprinted caption for this 
data item, rather than allowing each institution to enter its own 
description for this cumulative-effect adjustment in the text field for 
item 4.a, will enhance the agencies' ability to compare the impact of 
the adoption of ASU 2016-13 across institutions. From March 31, 2019, 
through December 31, 2022, the reporting form and instructions for 
Schedule RI-E, item 4.a, would specify that this item is to be 
completed only in the quarter-end Call Reports for the remainder of the 
calendar year in which an institution adopts ASU 2016-13. The agencies 
anticipate that the preprinted caption for Schedule RI-E, item 4.a, 
would be removed after all institutions have adopted ASU 2016-13.
    For Schedule RI-E, item 6, to address the broader scope of 
financial assets for which allowances will be maintained under ASU 
2016-13, effective March 31, 2019, the agencies propose to revise this 
item from ``Adjustments to allowance for loan and lease losses'' to 
``Adjustments to allowances for credit losses.'' In addition, effective 
March 31, 2019, the agencies propose to replace the existing text field 
for Schedule RI-E, item 6.a, with a preprinted caption that would be 
titled ``Initial allowances for credit losses recognized upon the 
acquisition of purchased credit-deteriorated assets on or after the 
effective date of ASU 2016-13.'' Also, effective March 31, 2019, the 
agencies propose to replace the existing text field for Schedule RI-E, 
item 6.b, with a preprinted caption that would be titled ``Effect of 
adoption of current expected credit losses methodology on allowances 
for credit losses on loans and leases held for investment and held-to-
maturity debt securities.'' Item 6.b would be used to capture the 
change in the amount of allowances from initially applying ASU 2016-13 
to these two categories of assets as of the effective date of the 
accounting standard in the period of adoption, including the initial 
allowance gross-up for any PCD assets held as of the effective date. 
From March 31, 2019, through September 30, 2022, the reporting form and 
instructions for Schedule RI-E, items 6.a and 6.b, would specify that 
these items are to be completed only by institutions that have adopted 
ASU 2016-13. The instructions for item 6.b would further state that 
this item is to be completed only in the quarter-end Call Reports for 
the remainder of the calendar year in which an institution adopts ASU 
2016-13. The agencies anticipate that the preprinted caption for 
Schedule RI-E, item 6.b, would be removed after all institutions have 
adopted ASU 2016-13.
Schedule RC (FFIEC 031, FFIEC 041, and FFIEC 051)
    To address the broader scope of financial assets for which 
allowances will be estimated under ASU 2016-13, the agencies propose 
revisions to the reporting form and instructions to specify which asset 
categories should be reported net of an allowance for credit losses on 
the Call Report balance sheet and which asset categories should be 
reported gross of such an allowance. The agencies determined that the 
only financial asset category for which separate (i.e., gross) 
reporting of the amortized cost \19\ and the allowance is needed on 
Schedule RC continues to be item 4.b, ``Loans and leases held for 
investment,'' because of the large size and overall importance of this 
asset category and its related allowances in comparison to the total 
assets reported on the balance sheet by most institutions. For other 
financial assets within the scope of CECL, the agencies propose that 
institutions report these assets at amortized cost \20\ net of the 
related allowance for credit losses on Schedule RC.
---------------------------------------------------------------------------

    \19\ Amortized cost amounts to be reported by asset category 
would exclude any accrued interest receivable on assets in that 
category that is reported in ``Other assets'' on the Call Report 
balance sheet.
    \20\ See footnote 19.
---------------------------------------------------------------------------

    Effective March 31, 2021, the agencies propose to revise Schedule 
RC, item 2.a, from ``Held-to-maturity securities'' to ``Held-to-
maturity securities, net of allowance for credit losses.'' From March 
31, 2019, through December 31, 2020, the agencies propose to add a 
footnote to Schedule RC, item 2.a, specifying that institutions should 
``report this amount net of any applicable allowance for credit 
losses.'' Additionally, for Schedule RC, item 3.b, ``Securities 
purchased under agreements to resell,'' and Schedule RC, item 11, 
``Other assets,'' effective March 31, 2019, the agencies propose to add 
a footnote to these items specifying that institutions should ``report 
this amount net of any applicable allowance for

[[Page 49170]]

credit losses.'' From March 31, 2019, through September 30, 2022, the 
reporting form and instructions for Schedule RC, items 2.a, 3.b, and 
11, would specify that reporting such items net of any related 
allowances for credit losses is applicable only to those institutions 
that have adopted ASU 2016-13. Given that AFS debt securities are 
reported on Schedule RC at fair value, the agencies are not proposing 
any changes to Schedule RC, item 2.b, ``Available-for-sale 
securities,'' and instead propose reporting allowances for credit 
losses on AFS debt securities only in Schedule RI-B, Part II.
    In addition, to address the change in allowance nomenclature under 
ASU 2016-13, the agencies propose to revise Schedule RC, item 4.c, from 
``LESS: Allowance for loan and lease losses'' to ``LESS: Allowance for 
credit losses on loans and leases'' effective March 31, 2021.
Schedule RC-B (FFIEC 031, FFIEC 041, and FFIEC 051)
    Effective March 31, 2019, the agencies propose to revise the 
instructions to Schedule RC-B to clarify that for institutions that 
have adopted ASU 2016-13, allowances for credit losses should not be 
deducted from the amortized cost amounts reported in columns A and C of 
this schedule.\21\ In other words, institutions should continue 
reporting the amortized cost of HTM and AFS debt securities in these 
two columns of Schedule RC-B gross of their related allowances for 
credit losses.
---------------------------------------------------------------------------

    \21\ Amortized cost amounts to be reported by securities 
category in Schedule RC-B would exclude any accrued interest 
receivable on the securities in that category that is reported in 
``Other assets'' on the Call Report balance sheet.
---------------------------------------------------------------------------

Schedule RC-C (FFIEC 031, FFIEC 041, and FFIEC 051)
    Effective March 31, 2021, to address the change in allowance 
nomenclature, the agencies propose to revise the reporting form and 
instructions for Schedule RC-C by replacing references to the allowance 
for loan and lease losses in statements indicating that the allowance 
should not be deducted from the loans and leases reported in this 
schedule with references to the allowance for credit losses. Thus, 
loans and leases will continue to be reported gross of any related 
allowances or allocated transfer risk reserve in Schedule RC-C, Part I.
    In addition, to address the elimination of PCI assets by ASU 2016-
13, the agencies propose to remove Schedule RC-C, Part I, Memorandum 
items 7.a and 7.b, in which institutions report the outstanding balance 
and balance sheet amount, respectively, of PCI loans held for 
investment effective December 31, 2022. The agencies determined that 
these items were not needed after the transition to PCD loans under ASU 
2016-13 because the ASU eliminates the separate credit impairment model 
for PCI loans and applies CECL to all loans held for investment 
measured at amortized cost. From March 31, 2019, through September 30, 
2022, the reporting form and instructions for Schedule RC-C, Part I, 
Memorandum items 7.a and 7.b, would specify that these items should be 
completed only by institutions that have not yet adopted ASU 2016-13.
    Additionally, since ASU 2016-13 supersedes ASC 310-30, the agencies 
propose to revise Schedule RC-C, Part I, Memorandum item 12, ``Loans 
(not subject to the requirements of FASB ASC 310-30 (former AICPA 
Statement of Position 03-3)) and leases held for investment that were 
acquired in business combinations with acquisition dates in the current 
calendar year,'' effective December 31, 2022. As revised, the loans 
held for investment to be reported in Memorandum item 12 would be those 
not considered purchased credit deteriorated per ASC 326. From March 
31, 2019, through September 30, 2022, the agencies propose to revise 
the reporting form and instructions for Schedule RC-C, Part I, by 
adding a statement explaining that, subsequent to adoption of ASU 2016-
13, an institution should report only loans held for investment not 
considered purchased credit deteriorated per ASC 326 in Schedule RC-C, 
Part I, Memorandum item 12.
Schedule RC-F (FFIEC 031, FFIEC 041, and FFIEC 051)
    To address the broader scope of financial assets for which 
allowances will be applicable under ASU 2016-13, the agencies propose 
to specify that assets within the scope of the ASU that are included in 
Schedule RC-F should be reported net of any applicable allowances for 
credit losses. Effective March 31, 2019, the agencies propose to revise 
the reporting form and the instructions for Schedule RC-F by adding a 
statement explaining that, subsequent to adoption of ASU 2016-13, an 
institution should report asset amounts in Schedule RC-F net of any 
applicable allowances for credit losses.
    In addition, effective March 31, 2019, the agencies propose to add 
a footnote to item 1, ``Accrued interest receivable,'' on the reporting 
form and a statement to the instructions for item 1 that specify that 
institutions should exclude from this item any accrued interest 
receivable that is reported elsewhere on the balance sheet as part of 
the related financial asset's amortized cost.
Schedule RC-G (FFIEC 031, FFIEC 041, and FFIEC 051)
    To address ASU 2016-13's exclusion of off-balance sheet credit 
exposures that are unconditionally cancellable from the scope of off-
balance sheet credit exposures for which allowances for credit losses 
should be measured, the agencies propose to revise the reporting form 
and instructions for Schedule RC-G, item 3, ``Allowance for credit 
losses on off-balance-sheet credit exposures,'' effective March 31, 
2019. As revised, the reporting form and instructions would state that 
institutions that have adopted ASU 2016-13 should report in item 3 the 
allowance for credit losses on those off-balance-sheet credit exposures 
that are not unconditionally cancellable.
Schedule RC-H (FFIEC 031)
    Effective March 31, 2019, the agencies propose to revise the 
instructions to Schedule RC-H to clarify that institutions that have 
adopted ASU 2016-13 should report Schedule RC-H, item 3, ``Securities 
purchased under agreements to resell,'' at amortized cost net of any 
related allowance for credit losses, which would be consistent with the 
proposed reporting of this asset category in Schedule RC--Balance 
Sheet. Also effective March 31, 2019, the agencies propose to revise 
the instructions to items 10 through 17 of Schedule RC-H to clarify 
that, for institutions that have adopted ASU 2016-13, allowances for 
credit losses should not be deducted from the amortized cost amounts 
reported for HTM debt securities in column A.\22\ This proposed 
reporting treatment for HTM debt securities is consistent with proposed 
reporting of the cost amounts of such securities in Schedule RC-B, 
column A.
---------------------------------------------------------------------------

    \22\ Amortized cost amounts to be reported by securities 
category in Schedule RC-H would exclude any accrued interest 
receivable on the securities in that category that is reported in 
``Other assets'' on the Call Report balance sheet.
---------------------------------------------------------------------------

Schedule RC-K (FFIEC 031, FFIEC 041, FFIEC 051)
    Effective March 31, 2019, the agencies propose to revise the 
instructions to Schedule RC-K to clarify that, for institutions that 
have adopted ASU 2016-13, allowances for credit losses should not be 
deducted from the related amortized cost amounts when calculating the 
quarterly averages for all debt securities.

[[Page 49171]]

Schedule RC-N (FFIEC 031, FFIEC 041, and FFIEC 051)
    To address the elimination of PCI assets by ASU 2016-13, the 
agencies propose to remove Schedule RC-N, Memorandum items 9.a and 9.b, 
in which institutions report the outstanding balance and balance sheet 
amount, respectively, of past due and nonaccrual PCI loans effective 
December 31, 2022. The agencies determined that these items were not 
needed for PCD loans under ASU 2016-13 given that the ASU eliminates 
the separate credit impairment model for PCI loans and applies CECL to 
PCD loans and all other loans held for investment measured at amortized 
cost. From March 31, 2019, through September 30, 2022, the reporting 
form and the instructions for Schedule RC-N, Memorandum items 9.a and 
9.b, would specify that these items should be completed only by 
institutions that have not yet adopted ASU 2016-13.
Schedule RC-R (FFIEC 031, FFIEC 041, and FFIEC 051)
    In connection with the agencies' recently issued proposed rule on 
the implementation of CECL and the related transition for regulatory 
capital (CECL NPR),\23\ the agencies are proposing a number of 
revisions to Schedule RC-R to incorporate new terminology and the 
proposed optional regulatory capital transition. The proposed reporting 
changes to Schedule RC-R are tied to the revisions proposed in the CECL 
NPR. To the extent the agencies revise proposed elements of the CECL 
NPR when issuing a final rule, the agencies would make any necessary 
corresponding adjustments to the proposed Schedule RC-R reporting 
revisions discussed in this notice and describe these adjustments in 
their required second Federal Register notice for this proposal to 
revise the Call Report and other FFIEC reports prior to submitting the 
revised reports for OMB review. Unless otherwise indicated, the 
proposed revisions to Schedule RC-R discussed below would take effect 
March 31, 2019 (or the first quarter-end report date thereafter 
following the effective date on any final rule) and would apply to 
those institutions that have adopted CECL.
---------------------------------------------------------------------------

    \23\ 83 FR 22312 (May 14, 2018).
---------------------------------------------------------------------------

    The CECL NPR would introduce a newly defined regulatory capital 
term, allowance for credit losses (ACL), which would replace the term 
ALLL, as defined under the existing capital rules, for institutions 
that have adopted CECL. The CECL NPR also proposes that credit loss 
allowances for PCD assets held by these institutions would be netted 
when determining the carrying value, as defined in the CECL NPR, and, 
therefore, only the resulting net amount would be subject to risk-
weighting. In addition, under the CECL NPR, the agencies are proposing 
to provide each institution the option to phase in over the three-year 
period beginning with the institution's CECL effective date the day-one 
regulatory capital effects that may result from the adoption of ASU 
2016-13.\24\
---------------------------------------------------------------------------

    \24\ A non-PBE with a calendar year fiscal year that does not 
early adopt CECL would first report under CECL as of December 31, 
2021, even though the non-PBE's CECL effective date is January 1, 
2021. Thus, under the CECL NPR, such a non-PBE would use the phase-
in percentage applicable to the first year of the three-year 
transition period only for the December 31, 2021, report date (i.e., 
one quarter), not the four quarters that begin with the first report 
under CECL. The non-PBE may use the applicable phase-in percentages 
for all four quarters of the second and third years after the CECL 
effective date (i.e., 2022 and 2023). The same principle would apply 
to the optional phase-in by a non-PBE with a non-calendar fiscal 
year.
---------------------------------------------------------------------------

Allowances for Credit Losses Definition and Treatment of Purchased 
Credit Deteriorated Assets
    In general, under the CECL NPR, institutions that have adopted CECL 
would report ACL amounts in Schedule RC-R items instead of ALLL amounts 
that are currently reported. Effective December 31, 2022, the agencies 
are proposing to remove references to ALLL and replace them with 
references to ACL on the reporting form for Schedule RC-R. From March 
31, 2019, through September 30, 2022, the agencies are proposing to 
revise the instructions to Schedule RC-R to direct institutions that 
have adopted CECL to use ACL amounts instead of ALLL amounts in 
calculating regulatory capital. The instructional revisions would 
affect Schedule RC-R, Part I. Regulatory Capital Components and Ratios, 
item 30 (FFIEC 051) and item 30.a (FFIEC 031 and 041), ``Allowance for 
loan and lease losses includable in tier 2 capital''; and Schedule RC-
R, Part II. Risk-Weighted Assets, item 6, ``LESS: Allowance for loan 
and lease losses''; item 26, ``Risk-weighted assets base for purposes 
of calculating the allowance for loan and lease losses 1.25 percent 
threshold''; item 28, Risk-weighted assets before deductions for excess 
allowance for loan and lease losses and allocated transfer risk 
reserve''; and item 29, ``LESS: Excess allowance for loan and lease 
losses''.
    In addition, under the CECL NPR, assets and off-balance sheet 
credit exposures for which any related credit loss allowances are 
eligible for inclusion in regulatory capital would be calculated and 
reported in Schedule RC-R, Part II. Risk-Weighted Assets, on a gross 
basis. Therefore, the agencies are proposing to revise the instructions 
for Schedule RC-R, Part II, Risk-Weighted Assets, item 2.a, ``Held-to-
maturity securities''; item 3.b, ``Securities purchased under 
agreements to resell''; item 5.a, ``Residential mortgage exposures'' 
held for investment; item 5.b, ``High volatility commercial real estate 
exposures'' held for investment; item 5.c, Held-for-investment 
``Exposures past due 90 days or more or on nonaccrual''; item 5.d, 
``All other exposures'' held for investment; item 8, ``All other 
assets,'' and item 9.a, ``On-balance sheet securitization exposures: 
Held-to-maturity securities''; to explain that institutions that have 
adopted CECL should report and risk weight their loans and leases held 
for investment, HTM securities, and other financial assets measured at 
amortized cost gross of their credit loss allowances, but net of any 
associated allowances on PCD assets.\25\
---------------------------------------------------------------------------

    \25\ Amortized cost amounts to be reported by asset category in 
Schedule RC-R, Part II, would exclude any accrued interest 
receivable on assets in that category that is reported in ``Other 
assets'' on the Call Report balance sheet.
---------------------------------------------------------------------------

    In addition, effective March 31, 2019, the agencies propose to add 
a new Memorandum item 4 to Schedule RC-R, Part II, that would collect 
data by asset category on the ``Amount of allowances for credit losses 
on purchased credit-deteriorated assets.'' The amount of such 
allowances for credit losses would be reported separately for ``Loans 
and leases held for investment'' in Memorandum item 4.a, ``Held-to-
maturity debt securities'' in Memorandum item 4.b, and, ``Other 
financial assets measured at amortized cost'' in Memorandum item 4.c. 
The instructions for Schedule RC-R, Part II, Memorandum item 4, would 
specify that these items should be completed only by institutions that 
have adopted ASU 2016-13.
    The agencies also would include footnotes for the affected Schedule 
RC-R items on the reporting forms to highlight the revised treatment of 
those items for institutions that have adopted CECL.
CECL Transition Provision
    Under the CECL NPR, an institution that experiences a reduction in 
retained earnings as of the effective date of CECL for the institution 
as a result of the institution's adoption of CECL may elect to phase in 
the regulatory capital impact of adopting CECL (electing institution). 
As described in the CECL NPR, an

[[Page 49172]]

electing institution would indicate in its Call Report whether it has 
elected to use the CECL transition provision beginning in the quarter 
that it first reports its credit loss allowances as measured under 
CECL. To identify which institutions are electing institutions, the 
agencies are proposing to revise Schedule RC-R, Part I. Regulatory 
Capital Components and Ratios, by adding a new item 2.a in which an 
institution that has adopted CECL would report whether it has or does 
not have a CECL transition election in effect as of the quarter-end 
report date. Each institution would complete item 2.a beginning in the 
Call Report for its first reporting period under CECL and in each 
subsequent Call Report thereafter until item 2.a is removed from the 
report. Until an institution has adopted CECL, it would leave item 2.a 
blank. Effective March 31, 2025, the agencies propose to remove item 
2.a from Schedule RC-R, Part I, because the optional three-year phase-
in period will have ended for all electing institutions by the end of 
the prior calendar year. If an individual electing institution's three-
year phase-in period ends before item 2.a is removed (e.g., its phase-
in period ends December 31, 2022), the institution would change its 
response to item 2.a and report that it does not have a CECL transition 
election in effect as of the quarter-end report date.
    During the CECL transition period, an electing institution would 
need to make adjustments to its retained earnings, temporary difference 
deferred tax assets (DTAs), ACL, and average total consolidated assets 
for regulatory capital purposes. An advanced approaches electing 
institution also would need to make an adjustment to its total leverage 
exposure. These adjustments are described in detail in the CECL NPR.
    The agencies are proposing to revise the instructions to Schedule 
RC-R, Part I. Regulatory Capital Components and Ratios, item 2, 
``Retained earnings''; items 30 (FFIEC 051) and 30.a (FFIEC 031 and 
041), ``Allowance for loan and lease losses includable in tier 2 
capital''; item 36, ``Average total consolidated assets''; and item 
45.a (FFIEC 031 and 041), ``Total leverage exposure''; and Schedule RC-
R, Part II. Risk-Weighted Assets, item 8, ``All other assets,'' 
consistent with the adjustments to these items for the applicable 
transitional amounts as described in the CECL NPR for the reporting by 
electing institutions of the adjusted amounts. The agencies also 
propose to include footnotes on the reporting forms to highlight the 
changes to these items for electing institutions.
Schedule RC-V (FFIEC 031 and FFIEC 041)
    The agencies propose to clarify in the instructions effective March 
31, 2019, that all assets of consolidated variable interest entities 
should be reported net of applicable allowances for credit losses by 
institutions that have adopted ASU 2016-13. Net reporting on Schedule 
RC-V by such institutions is consistent with the proposed changes to 
Schedules RC and RC-F. Similarly, effective March 31, 2019, the 
reporting form for Schedule RC-V will also specify that institutions 
that have adopted ASU 2016-13 should report assets net of applicable 
allowances.
Schedule SU (FFIEC 051)
    To address the change in allowance nomenclature arising from the 
broader scope of allowances under ASU 2016-13, the agencies propose to 
revise Schedule SU, item 8.c, effective March 31, 2021, from ``Amount 
of allowance for loan and lease losses attributable to retail credit 
card fees and finance charges'' to ``Amount of allowance for credit 
losses on loans and leases attributable to retail credit card fees and 
finance charges.''
2. EGRRCPA Proposed Call Report Revisions
    As mentioned above in Section B of ``Supplementary Information, I. 
Background,'' Sections 202 and 214 of EGRRCPA on reciprocal deposits 
and HVCRE ADC loans, respectively, were effective upon enactment on May 
24, 2018, and affect the reporting of information in the Call Reports 
effective beginning with the June 30, 2018, report date. To assist 
institutions in preparing their Call Reports for that report date, the 
Call Report Supplemental Instructions for June 2018 included 
information regarding the reporting of HVCRE exposures and reciprocal 
deposits.
    In amending Section 29 of the FDI Act to except a capped amount of 
reciprocal deposits from treatment as brokered deposits for qualifying 
institutions, Section 202 defines ``reciprocal deposits'' to mean 
``deposits received by an agent institution through a deposit placement 
network with the same maturity (if any) and in the same aggregate 
amount as covered deposits placed by the agent institution in other 
network member banks.'' The terms ``agent institution,'' ``deposit 
placement network,'' ``covered deposit,'' and ``network member bank,'' 
all of which are used in the definition of ``reciprocal deposit,'' also 
are defined in Section 202.
    In particular, an ``agent institution'' is an FDIC-insured 
depository institution that meets at least one of the following 
criteria:
     The institution is well-capitalized and has a composite 
condition of ``outstanding'' or ``good'' when most recently examined 
under section 10(d) of the FDI Act (12 U.S.C. 1820(d));
     The institution has obtained a waiver from the FDIC to 
accept, renew, or roll over brokered deposits pursuant to section 29(c) 
of the FDI Act (12 U.S.C. 1831f(c)); or
     The institution does not receive reciprocal deposits in an 
amount that is greater than a ``special cap'' (discussed below).
    Under the ``general cap'' set forth in Section 202, an agent 
institution may classify reciprocal deposits up to the lesser of the 
following amounts as non-brokered reciprocal deposits:
     $5 billion, or
     An amount equal to 20 percent of the agent institution's 
total liabilities.
    Any amount of reciprocal deposits in excess of the ``general cap'' 
would be treated as, and should be reported in the Call Report as, 
brokered deposits.
    A ``special cap'' applies if an agent institution is either not 
``well-rated'' or not well capitalized. In this situation, the 
institution may classify reciprocal deposits as non-brokered in an 
amount up to the lesser of the ``general cap'' or the average amount of 
reciprocal deposits held by the agent institution on the last day of 
each of the four calendar quarters preceding the calendar quarter in 
which the agent institution was found to not have a composite condition 
of ``outstanding'' or ``good'' or was determined to be not well 
capitalized.
    Section 51 of the FDI Act, as added by Section 214 of EGRRCPA, 
governs the risk-based capital requirements for HVCRE ADC Loans and 
defines this term. Under Section 214, the assignment of a heightened 
risk weight to HVCRE exposures may be required only if the exposure 
meets the statutory definition of an HVCRE ADC Loan.
    The revisions discussed in this section have already been submitted 
to OMB under the emergency review process, and OMB has approved these 
changes. However, the agencies are requesting comment on whether there 
should be any further changes for these items or revisions to the items 
or instructions developed by the agencies.
Schedule RC-E (FFIEC 031, FFIEC 041, and FFIEC 051)
    To address the change in the treatment of certain reciprocal 
deposits under Section 202 of EGRRCPA in the Call Report, the agencies, 
through the

[[Page 49173]]

issuance of Call Report Supplemental Instructions for June 2018, 
explained how institutions could report certain data on brokered 
deposits in accordance with EGRRCPA or based on the reporting 
instructions in effect prior to passage of EGRRCPA. The agencies 
explained that institutions that chose to report based on the new law 
should include in Memorandum items 1.b through 1.d only those 
reciprocal deposits that are still considered brokered deposits under 
Section 202. The agencies plan to reissue these Supplemental 
Instructions for September 2018. Revised instructions for Memorandum 
item 1.b will be incorporated into the Call Report instruction books at 
a future date.
    In addition, the agencies plan to add a new Memorandum item 1.g to 
Schedule RC-E in which institutions would report their ``Total 
reciprocal deposits'' (as of the report date) in accordance with the 
definition of this term in Section 202, starting with the September 30, 
2018, Call Report. The new Memorandum item 1.g of Schedule RC-E would 
be used in determining an institution's ``special cap'' if the 
institution were found to not have a composite condition of 
``outstanding'' or ``good'' or was determined not to be well 
capitalized. The measurement of an institution's ``special cap'' would 
be the average of reciprocal deposits held on the last day of each of 
the four calendar quarters preceding the calendar quarter in which the 
institution was found to not have a composite condition of 
``outstanding'' or ``good'' or was determined not to be well 
capitalized.
    From a supervisory perspective, a funding concentration could arise 
if a significant amount of an institution's deposits comes from 
reciprocal deposits obtained through a single deposit placement 
network, regardless of whether the reciprocal deposits are treated as 
brokered under Section 202. Examiners review funding concentrations on 
an institution-by-institution basis. The Memorandum item for ``Total 
reciprocal deposits'' would enable the agencies to identify significant 
changes in the reported amounts of such deposits at institutions for 
appropriate supervisory follow-up.
Schedule RC-O (FFIEC 031, FFIEC 041, and FFIEC 051)
    To address the change in the treatment of certain reciprocal 
deposits under Section 202 of EGRRCPA, the agencies, through the 
Supplemental Instructions for June 2018, explained that institutions 
that chose to report based on the new law should include in items 9, 
``Reciprocal brokered deposits,'' and 9.a, ``Fully consolidated 
reciprocal brokered deposits,'' only those reciprocal deposits that are 
still considered brokered deposits after application of Section 202 of 
the new law. The agencies plan to reissue these Supplemental 
Instructions for September 2018. Revised instructions for items 9 and 
9.a will be incorporated into the Call Report instruction books at a 
future date.
Schedule RC-R (FFIEC 031, FFIEC 041, and FFIEC 051)
    To address the EGRRCPA change that applies to the reporting of 
HVCRE exposures for risk-based capital purposes, the agencies revised 
the instructions to Schedule RC-R, Part II, through the Call Report 
Supplemental Instructions for June 2018. The revised instructions 
explain that, pending further action by the agencies, when reporting 
HVCRE exposures in Schedule RC-R, Part II, institutions may use 
available information to reasonably estimate and report only ``HVCRE 
ADC Loans'' held for sale, held for investment, and held for trading in 
Schedule RC-R, Part II, items 4.b, 5.b and 7, respectively. The portion 
of any ``HVCRE ADC Loan'' that is secured by collateral or has a 
guarantee that qualifies for a risk weight lower than 150 percent may 
continue to be assigned a lower risk weight when completing Schedule 
RC-R, Part II. Pending further agency action, institutions may refine 
their estimates of ``HVCRE ADC Loans'' in good faith as they obtain 
additional information, but they will not be required to amend Call 
Reports previously filed for report dates on or after June 30, 2018, as 
these estimates are adjusted. Alternatively, institutions may continue 
to report and risk weight HVCRE exposures in a manner consistent with 
the current Call Report instructions for Schedule RC-R, Part II, until 
the agencies take further action. The agencies will incorporate the 
instructions for these items, currently in the Supplemental 
Instructions for June 2018, into the Call Report instruction books at a 
future date.

III. FFIEC 002/002S Revisions

FFIEC 002 Schedule M--Due From/Due to Related Institutions in the U.S. 
and in Foreign Countries

    At present, a reporting U.S. branch or agency of a foreign bank is 
not required to, but may choose to, establish a general allowance for 
loan losses, which it would report in its FFIEC 002 report in Schedule 
M, Part IV, item 1, ``Amount of allowance for loan losses, if any, 
carried on the books of the reporting branch or agency including its 
IBF.'' In addition, any general allowance for loan losses is reported 
in Schedule M, Part I, item 2(a), column B, as part of the ``Gross due 
to'' the ``Head office of parent bank,'' as well as in either Schedule 
RAL, item 2(a), ``Net due from related depository institutions,'' or 
item 5(a), Net due to related depository institutions,'' as applicable. 
The institution would report the total amount of the allowance carried 
on the books of the reporting institution, even if part of that 
allowance is applicable to other branches.
    To address the change in allowance nomenclature arising from the 
broader scope of allowances under ASU 2016-13, the agencies propose to 
revise Schedule M, Part IV, item 1, from ``Amount of allowance for loan 
losses'' to ``Allowance for credit losses on loans and leases,'' 
effective March 31, 2021. For the period from March 31, 2019, through 
December 31, 2020, the reporting form and instructions for this data 
item would include guidance stating that institutions that have adopted 
ASU 2016-13 would report the ``allowance for credit losses on loans and 
leases,'' as applicable. For the transition period from March 31, 2021, 
through December 31, 2022, the reporting form and instructions for this 
data item would be updated to include guidance stating that 
institutions that have not adopted ASU 2016-13 would report the amount 
of the ``allowance for loan losses,'' as applicable. In addition, for 
these same time periods, the agencies propose to revise the 
instructions for Schedule M, Part I, item 2(a), column B, as well as 
Schedule RAL, items 2(a) and 5(a), to incorporate language clarifying 
that institutions should include any allowance for loan losses or any 
allowances for credit losses in these items, as applicable. If an 
institution chooses to establish them, the allowances for credit losses 
reportable in item 2(a) or 5(a), as applicable, could apply to loans, 
leases, other financial assets measured at amortized cost, and off-
balance sheet credit exposures (but not available-for-sale securities, 
which are reported at fair value on Schedule RAL).
    Finally, effective March 31, 2019, the agencies propose to add a 
statement to the instructions for Schedule RAL, item 1(h), ``Other 
assets (including other claims on nonrelated parties,'' that specifies 
that institutions that have adopted ASU 2016-13 should exclude from 
this item any accrued interest receivable that is reported elsewhere on 
the balance sheet as part of the related financial asset's amortized 
cost.

[[Page 49174]]

FFIEC 002S

    The General Instructions for the FFIEC 002S state that due from/due 
to relationships with related institutions (both depository and 
nondepository) are to be reported on a gross basis and that such 
relationships include all claims between the foreign branch and any 
related institutions (whether depository or nondepository) arising in 
connection with any accounting or regulatory allocations entered on the 
books of the reporting foreign branch that ultimately affect unremitted 
profits. As an example of such allocations, the General Instructions 
cite the ``allowance for possible loan losses.'' In addition, the 
instructions for item 2(c), ``Loans,'' states that loans (and leases) 
should be reported before deduction of any allowance for loan losses. 
To address the change in allowance nomenclature arising from the 
broader scope of allowances under ASU 2016-13, the agencies propose to 
revise the FFIEC 002S General Instructions and item 2(c) instructions 
to change the ``allowance for loan losses'' terminology to ``allowances 
for credit losses'' and ``allowances for credit losses on loans and 
leases,'' respectively, effective March 31, 2021. Allowances for credit 
losses could apply to loans, leases, other financial assets measured at 
amortized cost, and off-balance sheet credit exposures (but not 
available-for-sale securities). For the period from March 31, 2019, 
through December 31, 2020, the General Instructions for reporting due 
from/due to relationships would include guidance stating that 
institutions that have adopted ASU 2016-13 should interpret the 
``allowance for loan losses'' as ``allowances for credit losses,'' as 
applicable. For the transition period from March 31, 2021, through 
December 31, 2022, these General Instructions would include guidance 
stating that institutions that have not adopted ASU 2016-13 should 
interpret ``allowances for credit losses'' as the ``allowance for loan 
losses,'' as applicable. Comparable changes would be made to the 
instructions for item 2(c) for these periods.

V. FFIEC 030/030S Revisions

FFIEC 030 Assets

    All asset categories on the FFIEC 030 report are reported gross of 
any related allowances. Allowances for credit losses, including loan 
and lease losses, are reported in line item 16, ``Gross due to head 
office, U.S. branches, and other foreign branches of this bank.'' 
Currently, however, the instructions for line item 8, ``Gross due from 
head office, U.S. branches, and other foreign branches of this bank,'' 
also state that institutions should report any allowance for loan and 
lease losses and other valuation allowances in this line item. 
Effective March 31, 2019, the agencies propose to remove this language 
from the line item 8 instructions since the allowance for loan and 
lease losses and other valuation allowances are reported in line item 
16. Additionally, the agencies propose to add a statement to the 
instructions for balance sheet item 10, ``Other assets,'' that 
specifies that institutions that have adopted ASU 2016-13 should 
exclude from this item any accrued interest receivable that is reported 
elsewhere on the balance sheet as part of the related financial asset's 
amortized cost.

FFIEC 030 Liabilities

    The gross due to amounts reported in Liabilities item 16, ``Gross 
due to head office, U.S. branches, and other foreign branches of this 
bank,'' include any allowance for loan and lease losses on the books of 
the reporting branch. To address the change in allowance nomenclature 
arising from the broader scope of allowances under ASU 2016-13, 
effective March 31, 2019, the agencies propose to revise the reporting 
instructions for Liabilities item 16, to change ``any allowance for 
loan and lease losses'' to ``any allowances for credit losses.'' From 
March 31, 2019, through September 30, 2022, the instructions for item 
16 would specify that institutions that have not adopted ASU 2016-13 
should continue to include the allowance for loan and lease losses in 
this item.

FFIEC 030S Financial Data

    Branches that file the FFIEC 030S report their ``Gross due to 
related institutions'' in item 3. The instructions for item 3 state 
that this item corresponds to FFIEC 030 Liabilities items 16 and 
17.\26\ Thus, the effect of the proposed revisions to the instructions 
for FFIEC 030 Liabilities item 16, described above, will carry over to 
FFIEC 030S item 3.
---------------------------------------------------------------------------

    \26\ Liabilities item 17 is used to report a branch's ``Gross 
due to consolidated subsidiaries of this bank.''
---------------------------------------------------------------------------

VI. FFIEC 101 Revisions

    The proposed changes in the CECL NPR would revise the capital rules 
applicable to an advanced approaches institution \27\ that has 
completed the parallel run process \28\ by aligning the definition of 
eligible credit reserves (ECR) with the definition of ACL. In addition, 
as described in the CECL NPR, an advanced approaches institution may 
elect to phase in the impact of CECL by adjusting ECR, which could 
affect the reporting of certain items in the FFIEC 101.
---------------------------------------------------------------------------

    \27\ An institution is an advanced approaches institution if it 
has consolidated assets of at least $250 billion or if it has 
consolidated on-balance sheet foreign exposures of at least $10 
billion, or if it is a subsidiary of a depository institution, bank 
holding company, savings and loan holding company, or intermediate 
holding company that is an advanced approaches institution. An 
institution that elects to use the advanced approaches to calculate 
its total risk-weighted assets also is an advanced approaches 
institution. See 12 CFR 3.100 (OCC); 12 CFR 217.100 (Board); 12 CFR 
324.100 (FDIC).
    \28\ An advanced approaches institution is considered to have 
completed the parallel run process once it has completed the 
advanced approaches qualification process and received notification 
from its primary federal regulator pursuant to section 121(d) of 
subpart E of the capital rules. See 12 CFR 3.121(d) (OCC); 12 CFR 
217.121(d) (Board); 12 CFR 324.121(d) (FDIC).
---------------------------------------------------------------------------

    To reflect the proposed changes in the CECL NPR and in the optional 
CECL transition provision, the agencies are proposing to revise the 
instructions to FFIEC 101, Schedule A--Advanced Approaches Regulatory 
Capital, item 50, ``Eligible credit reserves includable in tier 2 
capital''; item 76, ``Total allowance for loan and lease losses (ALLL) 
under the standardized approach''; and item 77, ``Amount of ALLL 
includable in tier 2 capital under the standardized approach,'' 
effective March 31, 2019, for advanced approaches institutions that 
have adopted CECL. The proposed revisions to these instructions would 
incorporate the new definitions in the CECL NPR, as well as the 
mechanics of the CECL transition provision for electing advanced 
approaches institutions that have adopted CECL. The agencies also would 
include footnotes on the forms to highlight these items for these 
advanced approaches institutions.
    In addition, the definition of HVCRE ADC Loan in Section 214 of 
EGRRCPA that applies to the reporting of such exposures held for sale, 
held for investment, and held for trading in Schedule RC-R, Part II, of 
the Call Report also impacts the reporting of information in the FFIEC 
101 on HVCRE exposures in Schedule B, item 5, and Schedule G--High 
Volatility Commercial Real Estate.\29\ The agencies have received OMB 
approval to revise the instructions to these schedules to allow 
institutions to report commercial

[[Page 49175]]

real estate exposures that meet the statutory definition of ``HVCRE ADC 
Loan'' in Section 214 of this new law. Therefore, to address the 
EGRRCPA change that applies to the reporting of HVCRE exposures in the 
FFIEC 101, the agencies revised the instructions for the FFIEC 101 to 
allow an advanced approaches institution to estimate and report HVCRE 
exposures on Schedules B and G of the FFIEC 101 using the definition 
under Section 214 of the new law. Pending further agency action, 
institutions may refine their estimates in good faith as they obtain 
additional information, but they will not be required to amend FFIEC 
101 reports previously filed for report dates on or after June 30, 
2018, as these estimates are adjusted. Alternatively, institutions may 
report HVCRE exposures in a manner consistent with the current 
definition contained in the agencies' regulatory capital rules until 
the agencies take further action.
---------------------------------------------------------------------------

    \29\ To assist advanced approaches institutions in preparing 
their FFIEC 101 reports for the June 30, 2018, report date, the 
FFIEC sent a letter to these institutions providing instructions 
regarding the reporting of HVCRE exposures in the FFIEC 101 as of 
that date. Guidance from this letter will be incorporated into the 
FFIEC 101 Instructions at a future date.
---------------------------------------------------------------------------

VII. Request for Comment

    Public comment is requested on all aspects of this joint notice. 
Comment is specifically invited on:
    (a) In Call Report Schedule RI, Income Statement, whether 
institutions should continue reporting the provision for credit losses 
on off-balance sheet credit exposures in item 7.d, ``Other noninterest 
expense,'' or whether institutions should report this expense as part 
of proposed item 4, ``Provisions for credit losses on financial 
assets'';
    (b) In Call Report Schedule RI-C, Part II, Disaggregated Data on 
Allowances for Credit Losses, whether the agencies should retain item 5 
for reporting unallocated allowances for loans and leases, as proposed, 
or whether ASU 2016-13 is viewed as eliminating the potential for 
unallocated allowances considering the accounting standard requires 
allowances to be estimated at a pool level when similar risk 
characteristics exist and at an individual asset level when similar 
risk characteristics do not exist;
    (c) For proposed Schedule RI-C, Part II, whether the general 
categories of debt securities for which data are proposed to be 
collected are at the appropriate level of granularity or whether 
alternative categories should be used and, if so, what these categories 
should be;
    (d) Also for proposed Schedule RI-C, Part II, whether the proposed 
annual reporting frequency for the disaggregation of data on the 
allowances for credit losses on HTM debt securities and AFS debt 
securities is appropriate or whether more frequent reporting of these 
data would be more appropriate and, if so, what the reporting frequency 
should be;
    (e) Whether, after an institution adopts ASU 2016-13, all accrued 
interest receivable currently reported in ``Other assets'' should be 
reported as part of the balance sheet amount of the related financial 
asset, consistent with the definition of amortized cost in the ASU;
    (f) Whether the agencies should consider according confidential 
treatment to Schedule RC-O, items 9 and 9.a, on reciprocal brokered 
deposits, and Schedule RC-E, Memorandum items 1.b through 1.d, on 
brokered deposits, because amounts an institution reports in these 
items in relation to the amount reported in proposed Schedule RC-E, 
Memorandum item 1.g, ``Total reciprocal deposits,'' and changes in 
these reported amounts over time, may enable users of Call Report data 
to make inferences about the institution's composite rating under the 
Uniform Financial Institutions Rating System, which is confidential 
supervisory information;
    (g) Whether the proposed revisions to the collections of 
information that are the subject of this notice are necessary for the 
proper performance of the agencies' functions, including whether the 
information has practical utility;
    (h) The accuracy of the agencies' estimates of the burden of the 
information collections as they are proposed to be revised, including 
the validity of the methodology and assumptions used;
    (i) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (j) Ways to minimize the burden of information collections on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    (k) Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.
    Comments submitted in response to this joint notice will be shared 
among the agencies. All comments will become a matter of public record.

    Dated: September 20, 2018.
Theodore J. Dowd,
Deputy Chief Counsel, Office of the Comptroller of the Currency.

    Board of Governors of the Federal Reserve System, September 21, 
2018.
Ann Misback,
Secretary of the Board.
    Dated at Washington, DC, on September 20, 2018.

    Federal Deposit Insurance Corporation.
Valerie Best,
Assistant Executive Secretary.
[FR Doc. 2018-21105 Filed 9-27-18; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P