Proposed Agency Information Collection Activities; Comment Request, 44361-44376 [2020-15788]

Download as PDF 44361 Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices Respondent universe Total annual responses N/A ................................................................. 142 responses ... CFR section Total ......................... Average time per responses (minutes) N/A Total annual burden hours 142 Total cost equivalent 1 8,694 1 The hourly wage rate to calculate the dollar cost equivalent for customers and state employees amounts to $61.20 per hour, which includes an hourly wage rate of $42.84 plus an hourly benefit of $18.34. FRA obtained this information from the Department of Labor, Bureau of Labor Statistics (BLS), Occupational Employment Statistics (OES) 11–3011, classified within NAICS 999200, State Government—excluding schools and hospitals. See https://www.bls.gov/oes/current/naics4_999200.htm. Total Estimated Annual Responses: 142. Total Estimated Annual Burden: 142 hours. Total Estimated Annual Burden Hour Dollar Cost Equivalent: $8,694. Under 44 U.S.C. 3507(a) and 5 CFR 1320.5(b) and 1320.8(b)(3)(vi), FRA informs all interested parties that it may not conduct or sponsor, and a respondent is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Authority: 44 U.S.C. 3501–3520. Brett A. Jortland, Deputy Chief Counsel. [FR Doc. 2020–15839 Filed 7–21–20; 8:45 am] BILLING CODE 4910–06–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. AGENCY: 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 the 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 jbell on DSKJLSW7X2PROD with NOTICES SUMMARY: VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 extend the Consolidated Reports of Condition and Income (Call Reports) (FFIEC 031, FFIEC 041, and FFIEC 051) and Regulatory Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework (FFIEC 101), which are currently approved collections of information. 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), which also are currently approved collections of information. The agencies are requesting comment on revisions to the Call Reports, FFIEC 101, and FFIEC 002 related to interim final rules and a final rule issued in response to disruptions related to the Coronavirus Disease 2019 (COVID–19) that revise the agencies’ capital rule, the Board’s regulations on reserve requirements and insider loans, and the FDIC’s assessments regulations as well as certain sections of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) for which the agencies received emergency approvals from OMB. In addition, the agencies are proposing changes to the Call Report and the FFIEC 002 related to U.S. generally accepted accounting principles (GAAP). Further, the agencies are proposing revisions to the Call Report to reflect the expiration of the temporary exception for estimated disclosures on international remittance transfers and certain amendments to the Remittance Rule recently finalized by the Consumer Financial Protection Bureau (Bureau), which is a member of the FFIEC. DATES: Comments must be submitted on or before September 21, 2020. ADDRESSES: Interested parties are invited to submit written comments to any or all of the agencies. All comments, which should refer to the ‘‘Call Report, FFIEC 101, and FFIEC 002 Revisions,’’ will be shared among the agencies. OCC: You may submit comments, which should refer to ‘‘Call Report, PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 FFIEC 101, and FFIEC 002 Revisions,’’ by any of the following methods: • Email: prainfo@occ.treas.gov. • Mail: Chief Counsel’s Office, Office of the Comptroller of the Currency, Attention: 1557–0081 and 1557–0239, 400 7th Street, SW, suite 3E–218, Washington, DC 20219. • Hand Delivery/Courier: 400 7th Street, SW, suite 3E–218, Washington, DC 20219. Instructions: You must include ‘‘OCC’’ as the agency name and ‘‘1557– 0081 and 1557–0239’’ in your comment. In general, the OCC will publish comments on www.reginfo.gov without change, including any business or personal information provided, such as name and address information, email addresses, or phone numbers. 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 review comments and other related materials that pertain to this information collection beginning on the date of publication of the second notice for this collection by the following method: • Viewing Comments Electronically: Go to www.reginfo.gov. Click on the ‘‘Information Collection Review’’ tab. Underneath the ‘‘Currently under Review’’ section heading, from the dropdown menu select ‘‘Department of Treasury’’ and then click ‘‘submit.’’ This information collection can be located by searching by OMB control number ‘‘1557–0081’’ or ‘‘1557–0239.’’ Upon finding the appropriate information collection, click on the related ‘‘ICR Reference Number.’’ On the next screen, select ‘‘View Supporting Statement and Other Documents’’ and then click on the link to any comment listed at the bottom of the screen. • For assistance in navigating www.reginfo.gov, please contact the Regulatory Information Service Center at (202) 482–7340. Board: You may submit comments, which should refer to ‘‘Call Report, FFIEC 101, and FFIEC 002 Revisions,’’ by any of the following methods: E:\FR\FM\22JYN1.SGM 22JYN1 jbell on DSKJLSW7X2PROD with NOTICES 44362 Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices • Agency website: http:// www.federalreserve.gov. Follow the instructions for submitting comments at: http://www.federalreserve.gov/ generalinfo/foia/ProposedRegs.cfm. • Email: regs.comments@ federalreserve.gov. Include ‘‘Call Report, FFIEC 101, and FFIEC 002 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 on the Board’s website at https:// www.federalreserve.gov/apps/foia/ proposedregs.aspx as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. FDIC: You may submit comments, which should refer to ‘‘Call Report, FFIEC 101, and FFIEC 002 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 ‘‘Call Report, FFIEC 101, and FFIEC 002 Revisions’’ in the subject line of the message. • Mail: Manuel E. Cabeza, Counsel, Attn: Comments, Room MB–3128, 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 officers 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 oira_ submission@omb.eop.gov. VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 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 report forms for the Call Reports, FFIEC 101, FFIEC 002, and FFIEC 002S can be obtained at the FFIEC’s website (https:// www.ffiec.gov/ffiec_report_forms.htm). OCC: Kevin Korzeniewski, Counsel, Chief Counsel’s Office, (202) 649–5490, or for persons who are deaf or hearing impaired, TTY, (202) 649–5597. 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: Table of Contents I. Affected Reports II. Current Actions A. Regulation-Related Items 1. Definition of Eligible Retained Income 2. Money Market Mutual Fund Liquidity Facility 3. 5-Year 2020 CECL Transition Provision 4. Community Bank Leverage Ratio 5. Paycheck Protection Program (PPP) Loans and Liquidity Facility 6. Board Regulation D Amendments 7. Loans to Executive Officers, Directors, and Principal Shareholders 8. Temporary Exclusions from the Supplementary Leverage Ratio B. Revisions Related to Section 4013 of the CARES Act C. Revisions Related to U.S. GAAP 1. Provisions for Credit Losses on OffBalance-Sheet Credit Exposures 2. Expected Recoveries of Amounts Previously Charged Off Included within the Allowances for Credit Losses 3. Nonaccrual Treatment of Purchased Credit-Deteriorated Assets 4. Last-of-Layer Hedging D. Revisions Related to International Remittance Transfers III. Timing IV. Request for Comment I. Affected Reports The proposed changes discussed below affect the Call Reports, FFIEC 101, and FFIEC 002. A. Call Reports The agencies propose to extend for three years, with revision, the FFIEC 031, FFIEC 041, and FFIEC 051 Call Reports. PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 Report Title: Consolidated Reports of Condition and Income (Call Report). Form Number: FFIEC 031 (Consolidated Reports of Condition and Income for a Bank with Domestic and Foreign Offices), FFIEC 041 (Consolidated Reports of Condition and Income for a Bank with Domestic Offices Only), and FFIEC 051 (Consolidated Reports of Condition and Income for a Bank with Domestic Offices Only and Total Assets Less Than $5 Billion). Frequency of Response: Quarterly. Affected Public: Business or other forprofit. Type of Review: Revision and extension of currently approved collections. OCC: OMB Control No.: 1557–0081. Estimated Number of Respondents: 1,136 national banks and federal savings associations. Estimated Average Burden per Response: 42.56 burden hours per quarter to file. Estimated Total Annual Burden: 193,393 burden hours to file. Board: OMB Control No.: 7100–0036. Estimated Number of Respondents: 756 state member banks. Estimated Average Burden per Response: 45.43 burden hours per quarter to file. Estimated Total Annual Burden: 137,380 burden hours to file. FDIC: OMB Control No.: 3064–0052. Estimated Number of Respondents: 3,335 insured state nonmember banks and state savings associations. Estimated Average Burden per Response: 40.62 burden hours per quarter to file. Estimated Total Annual Burden: 541,871 burden hours to file. The estimated average burden hours collectively reflect the estimates for the FFIEC 051, the FFIEC 041, and the FFIEC 031 reports for each agency. In the agencies’ most recently published Federal Register notice for the submission of Call Report revisions for OMB review, the estimated burden hours per quarter for each agency for the Call Report information collection (based on the data reported by the institutions under each agency’s supervision as of September 30, 2019) were 41.24 hours for the OCC, 44.45 hours for the Board, and 39.43 hours for the FDIC.1 In connection with the agencies’ emergency clearance requests that were submitted to, and approved by, OMB in the second quarter of 2020 1 85 E:\FR\FM\22JYN1.SGM FR 4780 (January 27, 2020). 22JYN1 Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES for the COVID–19-related Call Report revisions outlined in Sections II.A and II.B, below, these estimates were adjusted based on Call Report data reported as of December 31, 2019, before estimating that these revisions would produce an increase of approximately 0.92 burden hours per quarter for each of the three versions of the Call Report. The estimated burden hours per quarter by agency for the Call Report as currently approved by OMB, i.e., in response to the agencies’ emergency clearance requests, are 42.20 hours for the OCC, 45.07 hours for the Board, and 40.26 hours for the FDIC. The Call Report revisions proposed in this notice related to U.S. GAAP and international remittance transfers would represent a further increase in estimated average burden hours per quarter by agency of 0.36 hours. When the estimates are calculated by type of report across the agencies, the estimated average burden hours per quarter are 37.98 (FFIEC 051), 51.39 (FFIEC 041), and 96.68 (FFIEC 031). The estimated burden hours for the currently approved reports are 37.62 (FFIEC 051), 51.02 (FFIEC 041), and 96.30 (FFIEC 031), so the revisions proposed in this notice related to U.S. GAAP and international remittance transfers would represent an increase in estimated average burden hours per quarter by type of report of 0.36 (FFIEC 051), 0.37 (FFIEC 041), and 0.38 (FFIEC 031). 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 institutions under each agency’s supervision (e.g., size distribution of institutions, types of activities in which they are engaged, and existence of foreign offices). Type of Review: Extension and revision of currently approved collections. Legal Basis and Need for Collections The Call Report information collections are mandatory: 12 U.S.C. 161 (national banks), 12 U.S.C. 324 (state member banks), 12 U.S.C. 1817 (insured state nonmember commercial and savings banks), and 12 U.S.C. 1464 (federal and state savings associations). At present, except for selected data items and text, these information collections are not given confidential treatment. 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 VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 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 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 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 assessments and national banks’ and federal savings associations’ semiannual assessment fees. B. 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. OCC: OMB Control No.: 1557–0239. Estimated Number of Respondents: 5 national banks and federal savings associations. Estimated Time per Response: 674 burden hours per quarter to file for banks and federal savings associations. Estimated Total Annual Burden: 13,480 burden hours to file. Board: OMB Control No.: 7100–0319. Estimated Number of Respondents: 4 state member banks; 5 bank holding companies and savings and loan holding companies that complete Supplementary Leverage Ratio (SLR) Tables 1 and 2 only; 9 other bank holding companies and savings and loan holding companies; and 6 intermediate holding companies. Estimated Time per Response: 674 burden hours per quarter to file for state member banks; 3 burden hours per quarter to file for bank holding companies and savings and loan holding companies that complete PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 44363 Supplementary Leverage Ratio (SLR) Tables 1 and 2 only; 677 burden hours per quarter to file for other bank holding companies and savings and loan holding companies; and 3 burden hours per quarter to file for intermediate holding companies. Estimated Total Annual Burden: 10,784 burden hours for state member banks to file; 60 burden hours for bank holding companies and savings and loan holding companies that complete Supplementary Leverage Ratio (SLR) Tables 1 and 2 only to file; 24,372 burden hours for other 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: 1 insured state nonmember bank and state savings association. Estimated Time per Response: 674 burden hours per quarter to file. Estimated Total Annual Burden: 2,696 burden hours to file. Type of Review: Extension and revision of currently approved collections. Legal Basis and Need for Collections Each advanced approaches institution 2 is required to report quarterly regulatory capital data on the FFIEC 101. Each top-tier advanced approaches institution and top-tier Category III institution 3 is required to report supplementary leverage ratio information on the FFIEC 101. The FFIEC 101 information collections are mandatory for advanced approaches and top-tier Category III 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 (federal and state 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). The agencies use data reported in the FFIEC 101 to assess and monitor the levels and components of each reporting entity’s applicable capital requirements and the adequacy of the entity’s capital under the Advanced Capital Adequacy 2 12 CFR 3.100(b) (OCC); 12 CFR 217.100(b) (Board); 12 CFR 324.100(b) (FDIC). 3 12 CFR 3.2 (OCC); 12 CFR 217.2 (Board); 12 CFR 324.2 (FDIC). E:\FR\FM\22JYN1.SGM 22JYN1 44364 Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices Framework 4 and the supplementary leverage ratio,5 as applicable; to evaluate the impact of the Advanced Capital Adequacy Framework and the supplementary leverage ratio, as applicable, 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 and top-tier Category III institutions in understanding expectations relating to the system development necessary for implementation and validation of the Advanced Capital Adequacy Framework and the supplementary leverage ratio, as applicable. Submitted data that are released publicly will also provide other interested parties with additional information about advanced approaches institutions’ and top-tier Category III institutions’ regulatory capital. jbell on DSKJLSW7X2PROD with NOTICES C. FFIEC 002 and 002S The Board proposes to extend for three years, with revision, 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—24.87 hours; FFIEC 002S—6.0 hours. Estimated Total Annual Burden: FFEIC 002—20,791 hours; FFIEC 002S— 912 hours. Type of Review: Revision of currently approved collections. Legal Basis and Need for Collection 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 4 12 CFR part 3, subpart E (OCC); 12 CFR part 217, subpart E (Board); 12 CFR part 324, subpart E (FDIC). 5 12 CFR 3.10(c)(4) (OCC); 12 CFR 217.10(c)(4) (Board); 12 CFR 324.10(c)(4) (FDIC). VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 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 in respect of 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. 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)). 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. II. Current Actions A. Regulation-Related Revisions From March through June 2020, in response to the impact on the financial markets and the strains on the U.S. economy as a result of COVID–19, the agencies published in the Federal Register numerous interim final rules to make certain changes to their regulatory capital and liquidity rules to support prudent lending by banking organizations and facilitate banking organizations’ use of the Board’s emergency facilities. These revisions primarily affect the instructions for the PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 calculation of certain amounts reported on Schedule RC–R, Regulatory Capital, and apply to the three versions of the Call Report (FFIEC 031, FFIEC 041, and FFIEC 051) and for the calculation of certain amounts reported on Schedule A, Advanced Approaches Regulatory Capital, on the FFIEC 101. Certain revisions also involve the addition of new data items to Call Report Schedule RC–M, Memoranda. In addition, the Board made revisions to its Regulation D (12 CFR 204) that affect the reporting of deposit liabilities on Call Report Schedule RC–E, Deposit Liabilities, and FFIEC 002, Schedule E, Deposit Liabilities and Credit Balances, and issued an interim final rule that provides a certain exception to the reporting of extensions of credit to insiders on Call Report Schedule RC–M, required by section 22(h) of the Federal Reserve Act and the corresponding provisions of the Board’s Regulation O (12 CFR 215). The FDIC proposed and subsequently adopted revisions to its deposit insurance assessment rules that require the collection of new data items on Call Report Schedule RC–M and FFIEC 002 Schedule O, Other Data for Deposit Insurance Assessments. The agencies requested and received emergency approvals on April 3, 2020, from OMB to implement revisions to the Call Report and FFIEC 101 that took effect beginning with the March 31, 2020, report date. Subsequently, the agencies requested and received emergency approvals on May 27, 2020, from OMB to implement revisions to the Call Report, FFIEC 101, and FFIEC 002 that take effect beginning with the June 30, 2020, report date. The Board requested and received emergency approvals on June 8, 2020, and July 8, 2020, from OMB to implement further revisions to the FFIEC 002 that take effect beginning with the June 30, 2020, and September 30, 2020, report dates, respectively. The agencies are requesting comment on whether there should be any further changes to the items or instructions developed by the agencies to implement the revisions for which emergency approvals were received from OMB, and in regard to the Board Regulation D amendments, on whether to adopt proposed revisions to the Call Report and the FFIEC 002 to remove a reporting option that was implemented by the emergency approvals and could result in the collection of ambiguous data. Further, the agencies have requested comment in connection with each of the interim final rules described below. If modifications are made to the associated final rules, the agencies would modify the information collection revisions in E:\FR\FM\22JYN1.SGM 22JYN1 Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices this proposal to incorporate such changes. 1. Definition of Eligible Retained Income Under the capital rule, a banking organization must maintain a minimum amount of regulatory capital. In addition, a banking organization must maintain a buffer of regulatory capital above its minimum capital requirements to avoid restrictions on capital distributions and discretionary bonus payments. The agencies intend for the buffer requirements to limit the ability of banking organizations to distribute capital in the form of dividends and discretionary bonus payments and therefore strengthen the ability of banking organizations to continue lending and conducting other financial intermediation activities during stress periods. The agencies are concerned, however, that the existing calculation method could lead to sudden and severe distribution limits if such banking organizations were to experience even a modest reduction in their capital ratios. Therefore, the agencies adopted an interim final rule 6 on March 20, 2020, that revises the definition of eligible retained income (ERI). By modifying the definition of ERI and thereby allowing banking organizations to more freely use their capital buffers, this interim final rule should help to promote lending activity and other financial intermediation activities by banking organizations and avoid compounding disruptions due to COVID–19. Call Report Revisions The instructions for Schedule RC–R, Part I, item 53, ‘‘Eligible retained income,’’ have been revised to incorporate the revisions reflected in the ERI interim final rule. Beginning with the March 31, 2020, report date, institutions that are required to report amounts in item 53 should report the greater of (1) an institution’s net income for the four preceding calendar quarters, net of any distributions and associated tax effects not already reflected in net income, and (2) the average of an institution’s net income over the four preceding calendar quarters. jbell on DSKJLSW7X2PROD with NOTICES 2. Money Market Mutual Fund Liquidity Facility To enhance the liquidity and functioning of money markets, the Federal Reserve Bank of Boston (FRBB) launched the Money Market Mutual Fund Liquidity Facility, or MMLF, on 6 85 FR 15909 (March 20, 2020). VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 March 18, 2020.7 On March 23, 2020, the agencies published an interim final rule, which permits banking organizations to exclude from regulatory capital requirements exposures related to the MMLF (MMLF interim final rule).8 The MMLF interim final rule modifies the agencies’ capital rule to allow banking organizations to neutralize the effects of purchasing assets from money market mutual funds under the MMLF on their risk-based and leverage capital ratios. This treatment extends to the community bank leverage ratio. Specifically, a banking organization may exclude from its total leverage exposure, average total consolidated assets, standardized total risk-weighted assets, and advanced approaches total riskweighted assets, as applicable, any exposure acquired from an eligible money market mutual fund pursuant to a non-recourse loan under the MMLF and pledged to the FRBB. The MMLF interim final rule applies only to activities under the MMLF. The facility is scheduled to terminate on September 30, 2020, unless the facility is extended by the Board. Consistent with U.S. GAAP, the agencies would expect banking organizations to report assets purchased from money market mutual funds under the MMLF on their balance sheets. To be eligible collateral for pledging to the FRBB, assets must be purchased from an eligible money market mutual fund at either the seller’s amortized cost or fair value. Thereafter, banking organizations would subsequently measure the assets at amortized cost or fair value depending on the asset category in which the assets are reported on their balance sheets. The non-recourse nature of the transaction through the MMLF would impact the valuation of the liability to the FRBB. After reflecting any appropriate discounts on the assets purchased and the associated liabilities, organizations are not expected to report any material net gains or losses (if any) at the time of purchase. Any discounts generally would be accreted over time into income and expense. On May 12, 2020, the FDIC approved a proposed rule modifying its deposit insurance assessment rules to mitigate the effects of participation in the MMLF on insured depository institutions (IDIs).9 The proposed changes would 7 See https://www.federalreserve.gov/newsevents/ pressreleases/monetary20200318a.htm. 8 85 FR 16232. 9 85 FR 30649 (May 20, 2020). As discussed in Section II.A.5 below, the FDIC’s proposed rule also would modify its deposit insurance assessment rules to mitigate the effects of participation in the PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 44365 remove the effect of participation in the MMLF program on certain adjustments to an IDI’s assessment rate, provide an offset to an IDI’s assessment for the increase to its assessment base attributable to participation in the MMLF, and remove the effect of participation in the MMLF program when classifying IDIs as small, large, or highly complex for assessment purposes. On June 26, 2020, the FDIC published a final rule that mitigates the deposit insurance assessment effects of participating in the MMLF program on IDIs as proposed.10 Call Report Revisions Starting with the March 31, 2020, report date, banking organizations that file Call Reports would include their holdings of assets purchased from money market mutual funds under the MMLF in the appropriate asset category on Schedule RC, Balance Sheet, and Schedule RC–R, Regulatory Capital. On Schedule RC, banking organizations would report negotiable certificates of deposit not held for trading in item 1.b, held-to-maturity securities in item 2.a, available-for-sale (AFS) securities in item 2.b, and negotiable certificates of deposit and securities held for trading in item 5, as appropriate.11 For regulatory capital reporting purposes, the balance sheet amounts of assets purchased through the MMLF would be reported in both Column A (Totals From Schedule RC) and Column C (0% riskweight category) of the corresponding balance sheet asset categories of Schedule RC–R, Part II (i.e., in items 1, 2.a, 2.b, and 7, respectively).12 If a consolidated broker-dealer subsidiary of an institution that files Call Reports has purchased assets from money market mutual funds under the MMLF that the institution reports as ‘‘Other assets’’ on its consolidated balance sheet for financial reporting purposes, the institution should also Paycheck Protection Program and the Paycheck Protection Program Liquidity Facility on IDIs. 10 85 FR 38282 (June 26, 2020). See also Section II.A.5 below. 11 In addition, held-to-maturity and available-forsale securities would be reported by securities category in Schedule RC–B, Securities, and as pledged securities in Memorandum item 1 of this schedule on all three versions of the Call Report. Negotiable certificates of deposit and securities held for trading would be reported by asset category in Schedule RC–D, Trading Assets and Liabilities, by institutions required to complete this schedule on the FFIEC 031 and the FFIEC 041. Securities held for trading also would be reported as pledged securities in Schedule RC–D, Memorandum item 4.a, on the FFIEC 031. 12 Reporting in Schedule RC–R, Part II, applies only to institutions that do not have a community bank leverage ratio framework election in effect as of the quarter-end report date, as reported in Schedule RC–R, Part I, item 31.a. E:\FR\FM\22JYN1.SGM 22JYN1 jbell on DSKJLSW7X2PROD with NOTICES 44366 Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices report these assets in Schedule RC, Balance Sheet, item 11, ‘‘Other assets.’’ Further, for risk-based capital reporting purposes, if applicable, the parent institution of the broker-dealer should report these assets in Column A (Totals From Schedule RC) and Column C (0% risk-weight category) of Schedule RC–R, Part II, item 8, ‘‘All other assets.’’ The quarterly average of an institution’s holdings of assets purchased from money market mutual funds under the MMLF, including those purchased by a consolidated brokerdealer subsidiary of the institution, would be included as a deduction in Schedule RC–R, Part I, item 29, ‘‘LESS: Other deductions from (additions to) assets for leverage ratio purposes,’’ and thus excluded from Schedule RC–R, Part I, item 30, ‘‘Total assets for the leverage ratio.’’ Borrowings from the FRBB would be included in Schedule RC, item 16, ‘‘Other borrowed money,’’ and included in Schedule RC–M, items 5.b.(1)(a), Other borrowings with a remaining maturity or next repricing date of ‘‘One year or less,’’ 5.b.(2), ‘‘Other borrowings with a remaining maturity of one year or less,’’ and 10.b, ‘‘Amount of ‘Other borrowings’ that are secured.’’ Starting with the June 30, 2020, report date, banking organizations that file Call Reports would report the outstanding balance of assets purchased under the MMLF program in new item 18.a on Schedule RC–M and the quarterly average amount outstanding of assets purchased under the MMLF that were excluded from Schedule RC–R, Part I, item 30, ‘‘Total assets for the leverage ratio,’’ in new item 18.b on Schedule RC–M. The amounts reported in these items would include assets purchased by a consolidated broker-dealer subsidiary. These new items would enable the agencies to monitor the impact of the MMLF interim final rule on a banking organization’s leverage ratio and, if applicable, its risk-weighted assets. In addition, the FDIC would use these new items to implement the modifications to its deposit insurance assessment rules to mitigate the effects of participation in the MMLF on IDIs. The collection of the two new Schedule RC–M data items related to the MMLF program is expected to be time-limited. The agencies plan to propose to discontinue the collection of each item once the aggregate industry activity has diminished to a point where individual institution information is of limited practical utility and is no longer needed for deposit insurance VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 assessment purposes, where applicable.13 Institutions subject to the supplementary leverage ratio requirement would report their adjusted ‘‘Total leverage exposure’’ and ‘‘Supplementary leverage ratio’’ in Schedule RC–R, Part I, items 55.a and 55.b, respectively. These institutions would adjust their existing calculations of ‘‘Total leverage exposure’’ by excluding assets purchased from money market funds under the MMLF. The instructions for item 55.a would be revised to state that institutions should measure their total leverage exposure in accordance with section 10(c)(4) of the regulatory capital rules and section 302 of these rules for exposures related to the MMLF. FFIEC 101 Revisions Starting with the March 31, 2020, report date, advanced approaches banking organizations should not include assets purchased from money market funds under the MMLF in the ‘‘Total risk-weighted assets’’ reported in the FFIEC 101, Schedule A, item 60, or, for advanced approaches banking organizations that file Call Reports, in Schedule RC–R, Part I, item 48.b. For banking organizations subject to the supplementary leverage ratio requirement that file the FFIEC 101, assets purchased from money market funds under the MMLF would receive similar treatment as under the ‘‘leverage ratio’’ and should be reported in the FFIEC 101, Schedule A, SLR Tables. The outstanding balance of these assets would continue to be reported in SLR Table 1, item 1.1, ‘‘Total consolidated assets as reported in published financial statements,’’ and Table 2, item 2.1, ‘‘The balance sheet carrying value of all onbalance sheet assets.’’ The average amount of these assets calculated as of each day of the reporting quarter also would be reported in SLR Table 1, item 1.7.c, ‘‘Adjustments for deductions of qualifying central bank deposits for custodial banking organizations,’’ and in SLR Table 2, item 2.2.b, ‘‘Deductions of qualifying central bank deposits from total on-balance sheet exposures for custodial banking organizations,’’ even if a banking organization is not a custodial banking organization. Banking organizations subject to the 13 These new items will be reviewed in connection with the statutorily mandated review of the Call Report that the agencies must complete by year-end 2022. Per Section 604 of the Financial Services Regulatory Relief Act of 2006, the agencies must conduct a review of the information and schedules collected on the Call Report every five years with the purpose of reducing or eliminating requirements that are no longer necessary or appropriate. PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 supplementary leverage ratio requirement that file Call Reports would report their adjusted ‘‘Total leverage exposure’’ and ‘‘Supplementary leverage ratio’’ in Schedule RC–R, Part I, items 55.a and 55.b. FFIEC 002 Revisions In connection with the FDIC’s deposit insurance assessments final rule, starting with the FFIEC 002 report as of June 30, 2020, FDIC-insured branches would be required to separately report in Schedule O, Memorandum item 7, the quarterly average amount outstanding of assets purchased from money market funds under the MMLF with the collection of this item expected to be time-limited. The agencies plan to propose to discontinue the collection of this item once individual institution information is no longer needed for deposit insurance assessment purposes.14 3. 5-Year 2020 CECL Transition Provision The instructions for certain items in Call Report Schedule RC–R, Parts I and II, and the FFIEC 101 have been revised effective as of the March 31, 2020, report date to incorporate revisions reflected in the interim final rule, Regulatory Capital Rule: Revised Transition for the Current Expected Credit Losses Methodology for Allowances, published in the Federal Register on March 27, 2020 (CECL interim final rule).15 This interim final rule provides institutions that were required to adopt the current expected credit losses methodology (CECL) for accounting purposes during the 2020 calendar year with the option to delay for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during the initial twoyear delay (i.e., a five-year transition, in total). The CECL interim final rule does not replace the current CECL transition option in the agencies’ capital rule, which was adopted in 2019 and allows banking organizations to phase in over a three-year period the day-one effects on regulatory capital that may result from the adoption of CECL (2019 CECL rule).16 This transition option remains available to institutions that adopt CECL. Thus, institutions required to adopt CECL in 2020, including those 14 Findings from the statutorily mandated review of the Call Report will also be used for evaluating the FFIEC 002 new items. See footnote 13. 15 85 FR 17723. The agencies published a correcting amendment in the Federal Register on May 19, 2020 (85 FR 29839). 16 84 FR 4222 (February 14, 2019). E:\FR\FM\22JYN1.SGM 22JYN1 jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices that began reporting in accordance with CECL in their first quarter 2020 regulatory reports, have the option to elect the three-year transition option contained in the 2019 CECL rule or the five-year CECL transition option contained in the CECL interim final rule, beginning with the Call Report and, if applicable, the FFIEC 101 for the March 31, 2020, report date or such later report date in 2020 as of which institutions first report in accordance with CECL. Call Report Revisions The agencies have revised the Call Report Schedule RC–R instructions for the following items in Part I of the schedule to enable institutions that elect the five-year CECL transition option to report their regulatory capital data in accordance with the CECL interim final rule: • Item 2, ‘‘Retained earnings,’’ • Item 15 on the FFIEC 041 and FFIEC 051 and items 15.a and 15.b on the FFIEC 031, for certain deferred tax assets arising from temporary differences that exceed an institution’s applicable common equity tier 1 capital deduction threshold, • Item 27, ‘‘Average total consolidated assets,’’ • Item 42 on the FFIEC 041 and FFIEC 051 and item 42.a on the FFIEC 031, for the amount of adjusted allowances for credit losses includable in tier 2 capital, • Item 42.b on the FFIEC 31, ‘‘Eligible credit reserves includable in tier 2 capital,’’ and • Item 55.a on the FFIEC 031 and FFIEC 041, ‘‘Total leverage exposure.’’ The instructions for Schedule RC–R, Part II, item 8, ‘‘All other assets,’’ also have been revised to account for the five-year CECL transition option. In addition, beginning with the June 30, 2020, Call Report, Schedule RC–R, Part I, item 2.a, ‘‘Does your institution have a CECL transition election in effect as of the quarter-end report date? (enter ‘‘1’’ for Yes; enter ‘‘0’’ for No.),’’ will be revised to allow institutions that have adopted CECL to choose from among three entries rather than the current two entries. An institution that has adopted CECL will choose from the following CECL transition election entries: ‘‘0’’ for adopted CECL with no transition election; ‘‘1’’ for a 3-year CECL transition election; and ‘‘2’’ for a 5-year 2020 CECL transition election. An institution that has not adopted CECL will continue to leave item 2.a blank. FFIEC 101 Revisions The agencies have revised the FFIEC 101 instructions for the following items in Schedule A to enable advanced approaches institutions and top-tier VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 Category III institutions that elect the five-year CECL transition option to report their regulatory capital data in accordance with the CECL interim final rule: • Item 2, ‘‘Retained earnings,’’ • Item 21, ‘‘DTAs arising from temporary differences that could not be realized through net operating loss carrybacks, net of related valuation allowances and net of DTLs, that exceed the 10 percent common equity tier 1 capital deduction threshold,’’ • Item 50, ‘‘Eligible credit reserves includable in Tier 2 capital,’’ and • SLR Table 1, Item 1.8, and Table 2, Item 2.21, ‘‘Total leverage exposure.’’ 4. Community Bank Leverage Ratio Section 4012 of the CARES Act required the agencies to reduce the community bank leverage ratio (CBLR) requirement to 8 percent and provide a qualifying community banking organization whose leverage ratio falls below this community bank leverage ratio requirement a reasonable grace period to satisfy this requirement. Section 4012 also required that these CBLR changes be effective for a temporary period ending on the earlier of the termination date of the national emergency concerning the COVID–19 outbreak declared by the President on March 13, 2020, under the National Emergencies Act (National Emergency) or December 31, 2020. The agencies implemented the requirements of Section 4012 through an interim final rule.17 To provide further clarity around the possible end date of the statutory relief, the agencies also issued an interim final rule extending relief for the 8 percent leverage ratio for the remainder of 2020, providing relief through an 8.5 percent leverage ratio in 2021, and resuming the previous 9 percent leverage ratio in 2022.18 Neither interim final rule changed the methodology for calculating the CBLR, merely the qualifying ratio for an institution to report as a CBLR bank. There are no substantive Call Report revisions associated with the revised CBLR ratio. However, it is possible that some additional institutions that are now eligible CBLR banks under the lower ratio may choose to use the less burdensome regulatory capital reporting for CBLR banks on Schedule RC–R. At this time, the agencies cannot reliably estimate the number of institutions that might use the CBLR framework for regulatory capital reporting in the second quarter of 2020 under the reduced ratio. However, the agencies PO 00000 17 85 18 85 FR 22924 (April 23, 2020). FR 22930 (April 23, 2020). Frm 00100 Fmt 4703 Sfmt 4703 44367 plan to revise the burden estimates after more data are available on institutions’ use of the CBLR framework. 5. Paycheck Protection Program (PPP) Loans and Liquidity Facility (PPPLF) Section 1102 of the CARES Act allows banking organizations to make loans under the PPP of the U.S. Small Business Administration (SBA) in connection with COVID–19 disruptions to small businesses. Although the PPP loans are funded by lenders, the loans receive a guarantee from the SBA. The statute specified that these PPP loans should receive a zero percent risk weight for regulatory capital purposes. The Board subsequently established a liquidity facility, the PPPLF, to extend non-recourse loans to eligible financial institutions to fund PPP loans pledged to the PPPLF and thereby provide additional liquidity to these institutions.19 On April 13, 2020, the agencies published an interim final rule with an immediate effective date, which permits banking organizations to exclude from regulatory capital requirements PPP loans pledged to the PPPLF.20 This interim final rule modifies the agencies’ capital rule to allow banking organizations to neutralize the effects on their risk-based capital and leverage ratios of making PPP loans that are pledged under the Board’s liquidity facility. Specifically, a banking organization may exclude from its total leverage exposure, average total consolidated assets, standardized total risk-weighted assets, and advanced approaches total risk-weighted assets, as applicable, any exposure from a PPP loan pledged to the Board’s liquidity facility. The interim final rule also codified the statutory zero percent risk weight for PPP loans. On May 12, 2020, the FDIC approved a proposed rule modifying its deposit insurance assessment rules to mitigate the effects of participation in the PPP and the PPPLF on IDIs.21 The proposed changes would remove the effect of participation in the PPP and PPPLF on various risk measures used to calculate an IDI’s assessment rate, remove the effect of participation in the PPPLF program on certain adjustments to an IDI’s assessment rate, provide an offset 19 See https://www.federalreserve.gov/ newsevents/pressreleases/monetary20200406a.htm and https://www.federalreserve.gov/newsevents/ pressreleases/monetary20200416a.htm. 20 80 FR 20387 (April 13, 2020). 21 85 FR 30649 (May 20, 2020). As discussed in Section II.A.2 above, the FDIC’s proposed rule also would modify its deposit insurance assessment rules to mitigate the effects of participation in the MMLF on IDIs. E:\FR\FM\22JYN1.SGM 22JYN1 44368 Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES to an IDI’s assessment for the increase to its assessment base attributable to participation in the PPPLF, and remove the effect of participation in the PPPLF program when classifying IDIs as small, large, or highly complex for assessment purposes. On June 26, 2020, the FDIC published a final rule modifying its deposit insurance assessments rule to mitigate the effects of participation in the PPP and the PPPLF on IDIs.22 After the FDIC considered the comments on the proposed rule, the final rule provides an offset to an IDI’s assessment amount for the increase to its assessment base attributable to participation in the PPP rather than to participation in the PPPLF as had been proposed. Call Report Revisions Starting with the June 30, 2020, report date, institutions would report the outstanding balances of their PPP loans held for investment or held for sale in the appropriate loan category in Schedule RC–C, Part I, and, as applicable, in other Call Report schedules in which loan data are reported. The outstanding balance of such PPP loans pledged to the Board’s liquidity facility would be included in Schedule RC–C, Part I, Memorandum item 14, ‘‘Pledged loans and leases.’’ Any PPP loans held for trading would be reported by all institutions on the Call Report balance sheet in Schedule RC, item 5, with the fair value and amortized cost of such loans reported by loan category in Schedule RC–D, Trading Assets and Liabilities, by institutions required to complete this schedule on the FFIEC 031 and the FFIEC 041. The outstanding balance of PPP loans held for trading that are pledged to the Board’s liquidity facility would be included in Schedule RC–D, Memorandum item 4.b, ‘‘Pledged loans,’’ on the FFIEC 031. For regulatory capital reporting purposes, the balance sheet amounts of PPP loans should be reported in both Column A (Totals From Schedule RC) and Column C (0% risk-weight category) of the corresponding balance sheet asset categories of Schedule RC–R, Part II, (i.e., in items 4, 5, and 7, as appropriate).23 The quarterly average amount of PPP loans pledged to the Board’s liquidity facility would be included as a deduction in Schedule RC–R, Part I, item 29, ‘‘LESS: Other deductions from (additions to) assets for 22 85 FR 38282 (June 26, 2020). in Schedule RC–R, Part II, applies only to institutions that do not have a community bank leverage ratio framework election in effect as of the quarter-end report date, as reported in Schedule RC–R, Part I, item 31.a. 23 Reporting VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 leverage ratio purposes,’’ and thus excluded from Schedule RC–R, Part I, item 30, ‘‘Total assets for the leverage ratio.’’ Borrowings from Federal Reserve Banks under the PPPLF would be included in Schedule RC, item 16, ‘‘Other borrowed money;’’ the appropriate subitems of Schedule RC– M, item 5.b, ‘‘Other borrowings,’’ based on their remaining maturity; and Schedule RC–M, item 10.b, ‘‘Amount of ‘Other borrowings’ that are secured.’’ In addition, to implement the modifications to its deposit insurance assessment rules, the FDIC would remove the quarter-end balance sheet amount of PPP loans from an IDI’s total assets and average total consolidated assets in certain risk measures and adjustments used to calculate the IDI’s assessment rate. Furthermore, the FDIC would remove PPP loans from an IDI’s loan portfolio in measures used to calculate its assessment rate. Since PPP loans, regardless of whether they are pledged to the liquidity facility, receive a zero percent risk weight, the reporting treatment described above for PPP loans effectively means that these loans are not included in the standardized total risk-weighted assets reported in Schedule RC–R. Similarly, advanced approaches banking organizations would not reflect PPP loans in ‘‘total risk-weighted assets’’ reported in Schedule RC–R, Part I, item 48.b. Institutions subject to the supplementary leverage ratio requirement would report their adjusted ‘‘Total leverage exposure’’ and ‘‘Supplementary leverage ratio’’ in Schedule RC–R, Part I, items 55.a and 55.b, respectively. These institutions would adjust their existing calculations of ‘‘Total leverage exposure’’ by excluding PPP loans pledged to the Board’s liquidity facility. The instructions for item 55.a would be revised to state that institutions should measure their total leverage exposure in accordance with section 10(c)(4) of the regulatory capital rules and section 305 of these rules for exposures related to the Board’s liquidity facility. In addition, in connection with their missions to supervise institutions, the agencies need to understand the number and total balance of PPP loans, as well as the amount and quarterly average of PPP loans pledged under the Board’s liquidity facility. Therefore, the agencies requested and received emergency approvals from OMB to add four new data items to the Call Report to collect this information. Accordingly, starting with the June 30, 2020, report date, institutions will PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 begin to report the total number of PPP loans outstanding; the total outstanding balance of PPP loans; the total outstanding balance of PPP loans pledged to the Board’s liquidity facility; and the quarterly average amount of PPP loans pledged to the Board’s liquidity facility and excluded from average total assets in the calculation of the leverage ratio in Schedule RC–R, Part I. These items have been added to Schedule RC– M as items 17.a, 17.b, 17.c, and 17.e. In addition, in connection with the FDIC’s final rule to mitigate the deposit insurance assessment effects of participation in the PPP and the PPPLF on IDIs, the FDIC needs to collect information on outstanding borrowings under the PPPLF. Starting with the June 30, 2020, reporting period, the outstanding balance of borrowings from Federal Reserve Banks under the PPPLF with a remaining maturity of one year or less and the outstanding balance of borrowings from the Federal Reserve Banks under the PPPLF with a remaining maturity of more than one year would be reported in new items 17.d.(1) and 17.d.(2) of Schedule RC–M, respectively. The collection of the six data items related to PPP loans and the PPPLF is expected to be time-limited. The agencies plan to propose to discontinue the collection of each item once the aggregate industry activity has diminished to a point where individual institution information is of limited practical utility and is no longer needed for assessment purposes, where applicable.24 FFIEC 101 Revisions Starting with the June 30, 2020, report date, advanced approaches banking organizations would not include PPP loans in ‘‘total risk-weight assets’’ under the advanced approaches reported in the FFIEC 101, Schedule A, item 60. Since these loans already receive a zero percent risk weight, PPP loans are effectively excluded from advanced approaches total risk-weighted assets under the current capital rule. For banking organizations subject to the supplementary leverage ratio requirement that file the FFIEC 101, PPP loans pledged to the Board’s liquidity facility would be deducted as part of the calculation of total leverage exposure for the supplementary leverage ratio. The outstanding balance of PPP loans would continue to be reported in SLR Table 1, item 1.1, ‘‘Total consolidated assets as reported in published financial 24 These new items will be reviewed in connection with the statutorily mandated review of the Call Report. See footnote 13. E:\FR\FM\22JYN1.SGM 22JYN1 Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices statements,’’ and Table 2, item 2.1, ‘‘The balance sheet carrying value of all onbalance sheet assets.’’ A banking organization calculating its supplementary leverage ratio also would include the average amount of PPP loans pledged to the PPPLF as of each day of the reporting quarter in SLR Table 1, item 1.7.c, ‘‘Adjustments for deductions of qualifying central bank deposits for custodial banking organizations,’’ and in SLR Table 2, item 2.2.b, ‘‘Deductions of qualifying central bank deposits from total on-balance sheet exposures for custodial banking organizations,’’ even if a banking organization is not a custodial banking organization. FFIEC 002 Revisions In connection with the FDIC’s deposit insurance assessments proposed rule, the Board requested and received emergency approval from OMB for FDIC-insured branches to separately report in Schedule O, Other Data for Deposit Insurance Assessments, Memorandum item 6, the quarterly average amount of PPP loans pledged to the PPPLF starting with the FFIEC 002 report as of the June 30, 2020, report date. In connection with the FDIC’s deposit insurance assessments final rule, the Board requested and received emergency approval from OMB to change the information separately reported by FDIC-insured branches in Schedule O, Other Data for Deposit Insurance Assessments, Memorandum item 6, from the quarterly average of PPP loans pledged to the PPPLF to the quarter-end amount of PPP loans starting with the FFIEC 002 report as of the September 30, 2020, report date. The collection of this item would be timelimited. The agencies would expect to propose to discontinue the collection of this item once individual institution information is no longer needed for deposit insurance assessment purposes.25 jbell on DSKJLSW7X2PROD with NOTICES 6. Board Regulation D Amendments The Board published in the Federal Register on April 28, 2020, an interim final rule that amends the Board’s Regulation D (Reserve Requirements of Depository Institutions).26 The interim final rule amends the ‘‘savings deposit’’ definition in Regulation D by deleting the six-transfer-limit provisions in this definition that require depository institutions either to prevent transfers 25 Findings from the statutorily mandated review of the Call Report will also be used for evaluating the FFIEC 002 new items. See footnote 13. 26 85 FR 23445. VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 and withdrawals in excess of the limit or to monitor savings deposits ex post for violations of the limit. The interim final rule also makes conforming changes to other definitions in Regulation D that refer to ‘‘savings deposit’’ as necessary. The interim final rule permits, but does not require, depository institutions to immediately suspend enforcement of the six-transfer limit and allow their customers to make an unlimited number of convenient transfers and withdrawals from their savings deposits. The interim final rule also does not require any changes to the deposit reporting practices of depository institutions. To implement the interim final rule, the agencies temporarily revised the instructions to the Call Reports and the FFIEC 002 via emergency approvals from OMB to reflect the revised definition of ‘‘savings deposits’’ in Regulation D, beginning with reports for the June 30, 2020, report date. Specifically, the agencies published supplemental instructions to the Call Reports 27 and the FFIEC 002,28 which include temporary revisions to the General Instructions for Call Report Schedule RC–E and FFIEC 002 Schedule E, as well as the Glossary entries for ‘‘Deposits’’ in the Call Report and the FFIEC 002 instructions, to remove references to the six-transfer limit. In addition, the supplemental instructions temporarily revised the General Instructions for Call Report Schedule RC–E and FFIEC 002 Schedule E to state that if a depository institution chooses to suspend enforcement of the sixtransfer limit on a ‘‘savings deposit,’’ the depository institution may continue to report that account as a ‘‘savings deposit’’ or may instead choose to report that account as a ‘‘transaction account’’ based on an assessment of certain characteristics of the account. Call Reports and FFIEC 002 Revisions The agencies are revising the instructions to the Call Reports and the FFIEC 002 to reflect the revised definition of ‘‘savings deposits’’ in accordance with the amendments to Regulation D in the interim final rule, starting with the June 30, 2020, report date. Specifically, the agencies are revising the General Instructions for Call Report Schedule RC–E and FFIEC 002 Schedule E, as well as the Glossary 27 2Q2020 COVID–19 Related Supplemental Instructions (Call Report), https://www.ffiec.gov/ pdf/FFIEC_forms/FFIEC031_FFIEC041_FFIEC051_ suppinst_COVID_202006.pdf. 28 2Q2020 COVID–19 Related Supplemental Instructions (FFIEC 002), https://www.ffiec.gov/pdf/ FFIEC_forms/FFIEC002_suppinst_COVID_ 202006.pdf. PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 44369 entries for ‘‘Deposits’’ in the Call Report and FFIEC 002 instructions, to remove references to the six-transfer limit from descriptions of ‘‘savings deposits.’’ In the interim final rule, the Board amended the ‘‘savings deposit’’ definition in Regulation D to allow customers to be able to access savings deposits more easily. However, the agencies recognize that the corresponding temporary revisions to the instructions for the Call Reports and the FFIEC 002 created a reporting option that could result in the collection of ambiguous data by allowing a depository institution to report a savings deposit as either a ‘‘savings deposit’’ or a ‘‘transaction account’’ if the institution suspends enforcement of the six-transfer limit. To resolve this potential issue, the agencies propose to remove the reporting option and require instead that a depository institution report each account as a ‘‘savings deposit’’ or a ‘‘transaction account’’ based on the institution’s assessment of account characteristics. Specifically, the agencies propose to revise the General Instructions for Call Report Schedule RC–E and FFIEC 002 Schedule E, effective for reporting beginning in the first quarter of 2021, to state that where the reporting institution has suspended the enforcement of the six-transfer limit rule on an account that otherwise meets the definition of a savings deposit, the institution must report such deposits as a ‘‘savings deposit’’ (and as a ‘‘nontransaction account’’) or a ‘‘transaction account’’ based on an assessment of the following characteristics: (i) If the reporting institution does not retain the reservation of right to require at least seven days’ written notice before an intended withdrawal, the account must be reported as a demand deposit (and as a ‘‘transaction account’’). (ii) If the reporting institution retains the reservation of right to require at least seven days’ written notice before an intended withdrawal and the depositor is eligible to hold a NOW account, the account must be reported as an ATS account, NOW account, or a telephone and preauthorized transfer account (and as a ‘‘transaction account’’). (iii) If the reporting institution retains the reservation of right to require at least seven days’ written notice before an intended withdrawal and the depositor is ineligible to hold a NOW account, the account must be reported as a savings deposit (and as a ‘‘nontransaction account’’). The agencies anticipate that there will be no measurable increase in burden associated with these proposed revisions. The agencies may consider E:\FR\FM\22JYN1.SGM 22JYN1 jbell on DSKJLSW7X2PROD with NOTICES 44370 Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices further modifying the treatment of ‘‘savings deposits’’ and ‘‘transaction accounts’’ in the instructions for the Call Report and the FFIEC 002 after a review of the reported data. Any such changes would be proposed by the agencies through a separate Federal Register notice pursuant to the PRA. change burden, as institutions would not need to revise the existing amounts reported in Schedule RC–M, items 1.a and 1.b, in response to this change to Regulation O. 7. Loans to Executive Officers, Directors, and Principal Shareholders On April 14, 2020, the Board published in the Federal Register an interim final rule to temporarily exclude U.S. Treasury Securities (Treasuries) and deposits in their accounts at Federal Reserve Banks (deposits at Federal Reserve Banks) from total leverage exposure for bank holding companies, savings and loan holding companies, and intermediate holding companies subject to the supplementary leverage ratio through March 31, 2021.32 On June 1, 2020, the agencies published in the Federal Register an interim final rule (Depository Institution SLR IFR) to provide depository institutions subject to the supplementary leverage ratio the ability to temporarily exclude Treasuries and deposits at Federal Reserve Banks from total leverage exposure.33 An electing depository institution must notify its primary Federal banking regulator of its election within 30 days after the interim final rule is effective. The interim final rule will terminate after March 31, 2021. Under section 22(h) of the Federal Reserve Act and the Board’s Regulation O (12 CFR 215), extensions of credit to insiders 29 are subject to quantitative limits, prior approval requirements by an institution’s board, and qualitative requirements concerning loan terms.30 On April 22, 2020, the Board issued an interim final rule that excepts certain loans that are guaranteed under the SBA’s PPP from the requirements of section 22(h) of the Federal Reserve Act and the corresponding provisions of the Board’s Regulation O.31 The interim final rule states that the Board has determined that PPP loans pose minimal risk because the SBA guarantees PPP loans at 100 percent of principal and interest and that PPP loans have fixed terms prescribed by the SBA. Accordingly, the interim final rule states that PPP loans will not be subject to section 22(h) or the corresponding provisions of Regulation O provided they are not prohibited by SBA lending restrictions. The agencies currently collect data on the number and outstanding balance of all ‘‘extensions of credit’’ to the reporting institution’s executive officers, directors, principal shareholders, and their related interests that meet the definition of this term in Regulation O. This information is collected in Call Report Schedule RC–M, items 1.a and 1.b. Call Report instructions refer to Regulation O for guidance in reporting extensions of credit to insiders in these items. In response to the changes to Regulation O, the agencies have revised the Call Report instructions effective as of the June 30, 2020, report date to note the PPP loan exception that has been added to Regulation O and clarify that PPP loans should not be reported in items 1.a and 1.b of Schedule RC–M. PPP loans did not exist in the first quarter of 2020, so the current reporting on Call Report Schedule RC–M does not include these loans. Therefore, the agencies do not believe that revising the instructions for this exception would 29 ‘‘Insider means an executive officer, director, or principal shareholder, and includes any related interest of such a person.’’ 12 CFR 215.2(h). 30 12 CFR 215.4. 31 85 FR 22345 (April 22, 2020). VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 8. Temporary Exclusions From the Supplementary Leverage Ratio Call Report Revisions Depository institutions subject to the supplementary leverage ratio report Treasuries not held for trading in Schedule RC–B, item 1, ‘‘U.S. Treasury securities,’’ and those held for trading in Schedule RC, item 5, ‘‘Trading assets’’ (and, if applicable, in Schedule RC–D, item 1, ‘‘U.S. Treasury securities’’). Such depository institutions report deposits at Federal Reserve Banks in Schedule RC–A, item 4, ‘‘Balances due from Federal Reserve Banks.’’ Starting as of the June 30, 2020, report date, advanced approaches and Category III depository institutions that elect to opt into these temporary exclusions would exclude Treasuries and deposits at Federal Reserve Banks reported in the items identified above from Schedule RC–R, Part I, item 55.a, ‘‘Total leverage exposure.’’ Custodial banking organizations will also be able to deduct from total leverage exposure deposits with qualifying foreign central banks reported as part of Schedule RC–A, item 3, ‘‘Balances due from banks in foreign countries and foreign central banks,’’ subject to the limits in the Section 402 PO 00000 32 85 33 85 FR 20578. FR 32980 (June 1, 2020). Frm 00103 Fmt 4703 Sfmt 4703 rule,34 in addition to the deductions under this interim final rule. For purposes of reporting the supplementary leverage ratio as of June 30, 2020, electing depository institutions may reflect the exclusion of Treasuries and deposits at Federal Reserve Banks from total leverage exposure as if this interim final rule had been in effect for the entire second quarter of 2020. The instructions for item 55.a would be revised to state that institutions should measure their total leverage exposure in accordance with section 10(c)(4) of the regulatory capital rules and, for electing advanced approaches and Category III depository institutions, the applicable section of these rules for Treasuries and deposits at Federal Reserve Banks (section 303 for institutions supervised by the Board; section 304 for institutions supervised by the OCC or the FDIC). The temporary exclusions from total leverage exposure are available through the March 31, 2021, report date. FFIEC 101 Revisions For top-tier advanced approaches and Category III bank holding companies, savings and loan holding companies, and intermediate holding companies (and top-tier advanced approaches and Category III depository institutions that elect to opt into these temporary exclusions), Treasuries and deposits at Federal Reserve Banks would continue to be reported in the FFIEC 101, Schedule A, SLR Table 1, item 1.1, ‘‘Total consolidated assets as reported in published financial statements,’’ and Table 2, item 2.1, ‘‘The balance sheet carrying value of all on-balance sheet assets.’’ Starting as of the June 30, 2020, report date, the average amount of Treasuries and deposits at Federal Reserve Banks calculated as of each day of the reporting quarter also would be reported in SLR Table 1, item 1.7.c, ‘‘Adjustments for deductions of qualifying central bank deposits for custodial banking organizations,’’ and in SLR Table 2, item 2.2.b, ‘‘Deductions of qualifying central bank deposits from total on-balance sheet exposures for custodial banking organizations,’’ even if a holding company or an electing depository institution is not a custodial banking organization.35 For purposes of 34 The agencies recently issued a final rule, effective April 1, 2020, which implements section 402 of the Economic Growth, Regulatory Relief, and Consumer Protection Act by amending the capital rule to allow a banking organization that qualifies as a custodial banking organization to exclude from total leverage exposure deposits at qualifying central banks, subject to limits (Section 402 rule). 85 FR 4569 (January 27, 2020). 35 A holding company or electing depository institution may not deduct on-balance Treasuries in E:\FR\FM\22JYN1.SGM 22JYN1 Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices reporting the supplementary leverage ratio as of June 30, 2020, holding companies and electing depository institutions would be permitted the exclusion of Treasuries and deposits at Federal Reserve Banks from total leverage exposure as if these interim final rules had been in effect for the entire second quarter of 2020. The temporary exclusions from total leverage exposure would be available through the March 31, 2021, report date. Custodial banking organizations would also be able to deduct from total leverage exposure deposits with qualifying foreign central banks, subject to the limits in the Section 402 rule, in addition to the deductions of Treasuries and deposits at Federal Reserve Banks under these interim final rules. jbell on DSKJLSW7X2PROD with NOTICES B. Revisions Related to Section 4013 of the CARES Act As provided for under the CARES Act, a financial institution may account for an eligible loan modification either under Section 4013 or in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 310–40, Receivables—Troubled Debt Restructurings by Creditors. If a loan modification is not eligible under Section 4013, or if the institution elects not to account for the loan modification under Section 4013, the financial institution should evaluate whether the modified loan is a troubled debt restructuring (TDR) under ASC Subtopic 310–40. To be an eligible loan under Section 4013 (Section 4013 loan), a loan modification must be (1) related to COVID–19; (2) executed on a loan that was not more than 30 days past due as of December 31, 2019; and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date of termination of the National Emergency or (B) December 31, 2020. Financial institutions accounting for eligible loans under Section 4013 are not required to apply ASC Subtopic 310–40 to the Section 4013 loans for the term of the loan modification. Financial institutions do not have to report Section 4013 loans as TDRs in regulatory reports. Call Report and FFIEC 002 Revisions Consistent with Section 4013, the agencies requested and received emergency approvals from OMB to add two new data items for Section 4013 loans to the Call Report and FFIEC 002, SLR Table 2, item 2.12, ‘‘Gross assets for repo-style transactions, with no recognition of netting,’’ if it already reports such on-balance sheet Treasuries in SLR Table 2, item 2.2.b. VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 which would be collected quarterly beginning with the June 30, 2020, report date, with the collection of these items expected to be time-limited. These new items, Memorandum item 17.a, ‘‘Number of Section 4013 loans outstanding,’’ and Memorandum item 17.b, ‘‘Outstanding balance of Section 4013 loans,’’ would be added to Call Report Schedule RC–C, Part I, Loans and Leases, and Memorandum item 5.a, ‘‘Number of Section 4013 loans outstanding,’’ and Memorandum item 5.b, ‘‘Outstanding balance of Section 4013 loans,’’ would be added to FFIEC 002 Schedule C, Part I, Loans and Leases. These items would enable the agencies to monitor individual institutions’ and the industry’s use of the temporary relief provided by Section 4013 as well as the volume of loans modified in accordance with Section 4013. The agencies plan to propose to discontinue the collection of these specific items once the aggregate industry activity has diminished to a point where individual institution information is of limited practical utility.36 The agencies will collect institutionlevel and branch-and-agency-level Section 4013 loan information in the Call Report and the FFIEC 002 on a confidential basis. While the agencies generally make institution-level Call Report and branch-and-agency-level FFIEC 002 data publicly available, the agencies are collecting Section 4013 loan information as part of condition reports for the impacted entities and the agencies believe disclosure of these items at the institution level would not be in the public interest.37 Such information is permitted to be collected on a confidential basis, consistent with 5 U.S.C. 552(b)(8).38 The public disclosure of supervisory information on Section 4013 loans could have a detrimental impact on financial institutions offering modifications under this provision to borrowers that need relief due to COVID–19. Financial institutions may be reluctant to offer modifications under Section 4013 if information on these modifications made by each institution 36 These new Call Report items will be reviewed in connection with the statutorily mandated review of the Call Report. Findings from the statutorily mandated Call Report review will also be used for evaluating the FFIEC 002 new items. See footnote 13. 37 12 U.S.C. 1464(v)(2). 38 Exemption 8 of the Freedom of Information Act (FOIA) specifically exempts from disclosure information ‘‘contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions.’’ PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 44371 is publicly available, as analysts, investors, and other users of public Call Report and FFIEC 002 information may penalize an institution for using the relief provided by the CARES Act. The agencies have encouraged financial institutions to work with their borrowers during the National Emergency related to COVID–19, including use of the relief under Section 4013.39 The agencies may disclose Section 4013 loan data on an aggregated basis, consistent with confidentiality. C. Revisions Related to U.S. GAAP 1. Provisions for Credit Losses on OffBalance-Sheet Credit Exposures On June 16, 2016, the FASB issued Accounting Standards Update No. 2016–13, Topic 326, Financial Instruments—Credit Losses (ASU 2016– 13). Within Topic 326, paragraph 326– 20–30–11 states, ‘‘An entity shall report in net income (as a credit loss expense) the amount necessary to adjust the liability for credit losses for management’s current estimate of expected credit losses on off-balancesheet credit exposures.’’ Off-balancesheet credit exposures include unfunded loan commitments, financial standby letters of credit, and financial guarantees not accounted for as insurance, and other similar instruments except for those within the scope of ASC Topic 815 on derivatives and hedging. Throughout Topic 326, the FASB refers to provisions for credit losses as ‘‘credit loss expense.’’ For example, paragraph 326–20–30–1 states, ‘‘An entity shall report in net income (as a credit loss expense) the amount necessary to adjust the allowance for credit losses for management’s current estimate of expected credit losses on financial assets(s).’’ Thus, Topic 326 does not prohibit recording the adjustment to the liability for expected credit losses on off-balance-sheet credit exposures within the provisions for credit losses reported in the income statement. The Call Report income statement instructions currently direct institutions that have adopted Topic 326 to report provisions for expected credit losses on off-balance-sheet credit exposures in Schedule RI, item 7.d, ‘‘Other noninterest expense,’’ and prohibit its inclusion in Schedule RI, item 4, 39 See ‘‘Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised)’’ (April 7, 2020), available at https://www.occ.gov/news-issuances/ news-releases/2020/nr-ia-2020-50a.pdf. E:\FR\FM\22JYN1.SGM 22JYN1 44372 Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES ‘‘Provision for loan and lease losses.’’ 40 Therefore, to align regulatory reporting to the guidance within Topic 326, the agencies propose to change the Call Report instructions to direct institutions that have adopted Topic 326 to report provisions for expected credit losses on off-balance-sheet credit exposures as part of the total amount of institutions’ provisions for credit losses in Schedule RI, item 4.41 This Schedule RI instructional change would carry over to Schedule RI–D, Income from Foreign Offices, on the FFIEC 031.42 These instructional changes would apply only to institutions that have adopted Topic 326. The inclusion of provisions for expected credit losses on off-balancesheet credit exposures in the provisions for credit losses presented in item 4 of the Call Report income statement will cause a loss of transparency within the overall reported amount of provisions for credit losses between provisions attributable to on- and off-balance-sheet credit exposures. To enhance transparency and differentiate these provisions, the agencies propose adding a new Memorandum item 7, ‘‘Provisions for credit losses on off-balance-sheet credit exposures,’’ to Schedule RI–B, Part II, Changes in Allowances for Credit Losses, which will identify the portion of the overall amount of the provisions for credit losses reported in Schedule RI, item 4, attributable to the provisions for expected credit losses on off-balance-sheet credit exposures. Adding the new memorandum item to Schedule RI–B, Part II, will enable the agencies to monitor the underlying components of the total amount of an institution’s provisions for credit losses (i.e., the separate provisions for expected credit losses attributable to loans and leases held for investment, held-to-maturity debt securities, AFS debt securities, other financial assets measured at amortized cost, and offbalance-sheet credit exposures) and how these components change over time in relation to the amounts of the various categories of financial assets and offbalance-sheet credit exposures within the scope of ASC Topic 326. In addition, footnote 5 on Schedule RI–B, Part II, item 5, ‘‘Provisions for credit losses,’’ will be updated to reflect 40 A footnote to Schedule RI, item 4, on the Call Report forms currently states, ‘‘Institutions that have adopted ASU 2016–13 should report in item 4 the provisions for credit losses on all financial assets that fall within the scope of the standard.’’ 41 The existing footnote to Schedule RI, item 4, also would be revised in the same manner. 42 The existing footnote to Schedule RI–D, item 3, would be revised in the same manner as the footnote to Schedule RI, item 4. VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 ‘‘For institutions that have adopted ASU 2016–13, the sum of item 5, Column A through Column C, plus Schedule RI–B, Part II, Memorandum items 5 and 7, below, must equal Schedule RI, item 4.’’ 2. Expected Recoveries of Amounts Previously Charged Off Included within the Allowances for Credit Losses As noted above, the FASB issued ASU 2016–13 on June 16, 2016, which has been amended by subsequent FASB ASUs. Within Topic 326, paragraph 326–20–30–1 states, ‘‘The allowance for credit losses is a valuation account that is deducted from, or added to, the amortized cost basis of the financial asset(s) to present the net amount expected to be collected on the financial asset. Expected recoveries of amounts previously written off and expected to be written off shall be included in the valuation account and shall not exceed the aggregate of amounts previously written off and expected to be written off by an entity.’’ The terms ‘‘written off’’ as used in Topic 326 and ‘‘charged off’’ as used in Call Report instructions are used interchangeably in this discussion. Under GAAP before an institution’s adoption of Topic 326, expected recoveries of amounts previously written off would not be included in the measurement of the allowance for loan and lease losses; recoveries would be recorded only when received. Under Topic 326, including expected recoveries of amounts previously written off within allowances for credit losses reduces the overall amount of these allowances. Amounts related to an individual asset are written off or charged off when deemed uncollectible. However, under ASC Topic 326, institutions could, in some circumstances, reduce the amount of the allowance for credit losses that would otherwise be calculated for a pool of assets with similar risk characteristics that includes charged-off assets on the same day the charge-offs were taken by the estimated amount of expected recoveries of amounts written off on these assets. Reducing the allowance for credit losses by amounts of expected recoveries prior to collection effectively ‘‘reverses’’ a charge-off. Therefore, to provide transparency for amounts with inherently higher risk that, before an institution’s adoption of ASC Topic 326, were not allowed to be recorded until they were received, the agencies propose to add new Memorandum item 8 to Schedule RI–B, Part II, Changes in Allowances for Credit Losses, to capture the ‘‘Estimated amount of expected recoveries of amounts previously written off included within the PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 allowance for credit losses on loans and leases held for investment (included in item 7, column A, ‘Balance end of current period,’ above).’’ This new item would be applicable to institutions only after they have adopted Topic 326. Not including the proposed memorandum item for expected recoveries of amounts previously written off within the allowance for credit losses on loans and leases will cause a loss of transparency within the reported amount of this allowance between the portions of the allowance attributable to (1) expected credit losses on the amortized cost basis of loans and leases held for investment net of expected recoveries of amounts expected to be charged off in the future and (2) expected recoveries of loan and lease amounts previously charged off. Proposed new Memorandum item 8 will enhance transparency and differentiate these amounts within the period-end balance of the allowance for credit losses on loans and leases by separately identifying the estimated amount within this allowance attributable to expected recoveries of amounts previously written off. This proposed new memorandum item will enable the agencies, including their examiners, and other Call Report users to better understand key components underlying institutions’ allowance for credit losses on loans and leases (i.e., amounts for expected credit losses on the amortized cost basis of loans and leases held for investment and amounts for expected recoveries of amounts previously written off on such loans and leases) and how these components change over time. This information will assist the agencies and other users in monitoring amounts with inherently higher credit risk, and changes therein, that contribute to reductions in the overall amount of the allowance for credit losses on loans and leases. This proposed new memorandum item will apply to loans and leases held for investment because this is the Call Report category of financial assets that is expected to have the greatest amount of estimated expected recoveries of amounts previously written off. 3. Nonaccrual Treatment of Purchased Credit-Deteriorated Assets ASU 2016–13 introduced the concept of purchased credit-deteriorated (PCD) assets. PCD assets are acquired financial assets that, at acquisition, have experienced more-than-insignificant deterioration in credit quality since origination. When recording the acquisition of PCD assets, the amount of expected credit losses as of the acquisition date is recorded as an E:\FR\FM\22JYN1.SGM 22JYN1 Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES allowance and added to the purchase price of the assets rather than recording these acquisition date expected credit losses through provisions for credit losses. The sum of the purchase price and the initial allowance for credit losses (ACL) establishes the amortized cost basis of the PCD assets at acquisition. Any difference between the unpaid principal balance of the PCD assets and the amortized cost basis of the assets as of the acquisition date is a noncredit discount or premium. The initial ACL and any noncredit discount or premium determined on a collective basis at the acquisition date are allocated to the individual PCD assets. After acquisition, any noncredit discount or premium is accreted or amortized into interest income, as appropriate, over the remaining lives of the PCD assets on a level-yield basis. However, if a PCD asset is placed in nonaccrual status, institutions must cease accreting the noncredit discount or amortizing the noncredit premium into interest income consistent with the guidance in ASC paragraph 310–20–35– 17. The current instructions for Call Report Schedule RC–N, Past Due and Nonaccrual Loans, Leases, and Other Assets, provide an exception to the general rule for placing financial assets in nonaccrual status set forth in the Call Report Glossary entry for ‘‘Nonaccrual status’’ for purchased credit-impaired (PCI) assets. The instructions for FFIEC 002 Schedule N, Past Due, Nonaccrual, and Restructured Loans, include a similar exception for PCI assets. Topic 326 replaces the concept of PCI assets in previous GAAP with the concept of PCD assets.43 Although there is some similarity between the concepts of PCI and PCD assets, these two concepts are not identical. Nevertheless, ASU 2016– 13 provides that, upon adoption of Topic 326, all PCI assets will be deemed to be, and accounted for prospectively as, PCD assets. However, the Schedule RC–N instructions indicate that the nonaccrual exception for PCI assets was not extended to PCD assets by stating that ‘‘For purchased credit-deteriorated loans, debt securities, and other financial assets that fall within the scope of ASU 2016–13, nonaccrual status should be determined and subsequent nonaccrual treatment, if appropriate, should be applied in the 43 According to ASC paragraph 310–30–15–2, PCI assets, in general, are loans and debt securities with evidence of deterioration of credit quality since origination acquired by completion of a transfer for which it is probable, at acquisition, that the investor will be unable to collect all contractually required payments receivable. VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 same manner as for other financial assets held by an institution.’’ As described in the Call Report Supplemental Instructions for March 2020, if an institution has adopted ASU 2016–13 and has a PCD asset, including a PCD asset that was previously a PCI asset or part of a pool of PCI assets, that would otherwise be required to be placed in nonaccrual status (see the Glossary entry for ‘‘Nonaccrual status’’), the institution may elect to continue accruing interest income and not report the PCD asset as being in nonaccrual status if the following criteria are met: (1) The institution reasonably estimates the timing and amounts of cash flows expected to be collected, and (2) the institution did not acquire the asset primarily for the rewards of ownership of the underlying collateral, such as use of collateral in operations of the institution or improving the collateral for resale. Additionally, these Call Report Supplemental Instructions state that when a PCD asset that meets the criteria above is not placed in nonaccrual status, the asset should be subject to other alternative methods of evaluation to ensure that the institution’s net income is not materially overstated. Further, an institution is not permitted to accrete the credit-related discount embedded in the purchase price of a PCD asset that is attributable to the acquirer’s assessment of expected credit losses as of the date of acquisition (i.e., the contractual cash flows the acquirer did not expect to collect at acquisition). Interest income should no longer be recognized on a PCD asset to the extent that the net investment in the asset would increase to an amount greater than the payoff amount. If an institution is required or has elected to carry a PCD asset in nonaccrual status, the asset must be reported as a nonaccrual asset at its amortized cost basis in Call Report Schedule RC–N, column C.44 For PCD assets for which the institution has made a policy election to maintain a previously existing pool of PCI assets as a unit of account for accounting purposes upon adoption of ASU 2016–13, the determination of nonaccrual or accrual status should be made at the pool level, not at the individual asset level. For a PCD asset that is not reported in nonaccrual status, the delinquency status of the PCD asset should be determined in accordance with its contractual repayment terms for purposes of reporting the amortized cost 44 Similarly, in the FFIEC 002, any PCD loans in nonaccrual status would be reported in Schedule N, column C. PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 44373 basis of the asset as past due in Schedule RC–N, column A or B, and in FFIEC 002 Schedule N, column A or B, as appropriate. If the PCD asset that is not reported in nonaccrual status consists of a pool of loans that were previously PCI assets that is being maintained as a unit of account after the adoption of ASU 2016–13, delinquency status should be determined individually for each loan in the pool in accordance with the individual loan’s contractual repayment terms. The agencies are proposing to update the Call Report and FFIEC 002 instructions to revise the nonaccrual treatment for PCD assets to provide institutions the option to not report PCD assets in nonaccrual status if they meet the criteria described above. The instructions also would incorporate the other reporting guidance for PCD assets in the Call Report Supplemental Instructions for March 2020 described above. 4. Last-of-Layer Hedging In ASU No. 2017–12, Derivatives and Hedging (Topic 815)–Targeted Improvements to Accounting for Hedging Activities, the FASB added the last-of-layer method to its hedge accounting standards to lessen the difficulties institutions encountered under existing accounting rules when seeking to enter into a fair value hedge of the interest rate risk of a closed portfolio of prepayable financial assets or one or more beneficial interests secured by a portfolio of prepayable financial instruments. Typically, prepayable financial assets would be loans and AFS debt securities.45 Under ASU 2017–12, there are no limitations on the types of qualifying assets that could be grouped together in a last-oflayer hedge other than meeting the following two criteria: (1) They must be prepayable financial assets that have a contractual maturity date beyond the period being hedged and (2) they must be eligible for fair value hedge accounting of interest rate risk (for example, fixed-rate instruments). For example, fixed-rate residential mortgages, auto loans, and collateralized mortgage obligations could all be grouped and hedged together in a single last-of-layer closed portfolio. For a lastof-layer hedge, ASC paragraph 815–10– 50–5B states that an institution may need to allocate the related fair value hedge basis adjustment (FVHBA) ‘‘to meet the objectives of disclosure requirements in other Topics.’’ This ASC paragraph then explains that the 45 Prepayable held-to-maturity debt securities do not qualify for last-of-layer hedging. E:\FR\FM\22JYN1.SGM 22JYN1 44374 Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices institution ‘‘may allocate the basis adjustment on an individual asset basis or on a portfolio basis using a systematic and rational method.’’ Due to the aggregation of assets in a last-of-layer closed portfolio, institutions may find it challenging to allocate the related FVHBA to the individual loan or AFS debt security level when necessary for financial reporting purposes. In March 2018, the FASB added a project to its agenda to expand last-oflayer hedging to multiple layers, thereby providing more flexibility to entities when applying hedge accounting to a closed portfolio of prepayable assets. In connection with this project, the FASB anticipated that there would be diversity in practice if entities were required to allocate portfolio-level, lastof-layer FVHBAs to more granular levels, which in turn could potentially hamper data quality and comparability. In addition, the allocation would increase operational burden on institutions with little, if any, added value to risk management or to users of the financial statements. As such, for financial reporting purposes, the FASB Board has tentatively decided that it would require these FVHBAs to be presented as a reconciling item, i.e., in the aggregate for loans and AFS debt securities, in disclosures required by other areas of GAAP.46 jbell on DSKJLSW7X2PROD with NOTICES Call Report Revisions For regulatory reporting purposes, the agencies are proposing similar treatment for last-of-layer FVHBAs on Call Report Schedule RC–C, Part I, Loans and Leases, and Schedule RC–B, Securities. As such, following the FASB’s adoption of a final last-of-layer hedge accounting standard, the instructions for Schedule RC–C, Part I, item 11, ‘‘LESS: Any unearned income on loans reflected in items 1–9 above,’’ would be revised to explicitly state that last-of-layer FVHBAs associated with the loans reported in Schedule RC–C, Part I, should be included in this item. In addition, the agencies are proposing on Schedule RC–B, Securities, to rename existing item 7, ‘‘Investments in mutual funds and other equity securities with readily determinable fair values,’’ as ‘‘Unallocated last-of-layer fair value hedge basis adjustments.’’ Institutions would report amounts for last-of-layer FVHBAs on AFS debt securities only in 46 The tentative decision was made at the FASB Board meeting on October 16, 2019. The Board meeting minutes are available at https:// www.fasb.org/jsp/FASB/Document_C/ DocumentPage&cid=1176173617941. Currently, no exposure draft or ASU associated with this project has been issued. VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 item 7, column C, ‘‘Available-for-sale: Amortized Cost.’’ To note, only a small number of institutions that have not have yet adopted ASU 2016–01, which includes provisions governing the accounting for investments in equity securities, continue to report amounts in item 7. Because all institutions are required to adopt ASU 2016–01 for Call Report purposes by the December 31, 2020, report date, the agencies had previously determined that existing item 7 in Schedule RC–B would no longer be applicable to institutions for reporting purposes and could be removed as of that report date.47 Thus, the need for a new item in Schedule RC–B for reporting unallocated FVHBAs applicable to AFS debt securities following the FASB’s adoption of a final last-of-layer hedge accounting standard can be readily accommodated through the redesignation of existing item 7, column C, for this purpose. FFIEC 002 Revisions The agencies are also proposing similar treatment for last-of-layer FVHBAs on FFIEC 002 Schedule C, Part I, Loans, and Schedule RAL, Assets and Liabilities, Memorandum item 3.b, ‘‘Amortized cost of available-for-sale securities,’’ following the FASB’s adoption of a final last-of-layer hedge accounting standard. The instructions for Schedule C, Part I, item 10, ‘‘LESS: Any unearned income on loans reflected in items 1–8 above,’’ would be revised to explicitly state that last-of-layer FVHBAs associated with the loans reported in Schedule C, Part I, should be included in this item. In addition, the agencies are proposing to revise the FFIEC 002 instructions to state that institutions should report amounts for last-of-layer FVHBAs applicable to available-for-sale debt securities in Schedule RAL, Memorandum item 3.b, ‘‘Amortized cost of available-for-sale securities.’’ D. Revisions Related to International Remittance Transfers Section 1073 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) 48 amended the Electronic Fund Transfer Act (EFTA) 49 to create comprehensive consumer protections for remittance transfers sent by consumers in the United States to individuals and businesses in foreign countries. The Bureau implemented these EFTA amendments through the Remittance Rule (12 CFR 1005.30 et seq.). EFTA and the Remittance Rule PO 00000 47 83 FR 945–946 (January 8, 2018). U.S.C. 5601. 49 15 U.S.C. 1693 et seq. 48 12 Frm 00107 Fmt 4703 Sfmt 4703 include a requirement that remittance transfer providers generally must disclose (both prior to and at the time the consumer pays for the transfer) the exact exchange rate that applies to a remittance transfer and the amount to be received by the designated recipient of the transfer. The Remittance Rule also requires remittance transfer providers to disclose certain fees and other information, among several other requirements. A person that provides remittance transfers in the normal course of its business is a remittance transfer provider subject to the Remittance Rule’s requirements. Generally, whether a person provides remittance transfers in the normal course of its business depends on the facts and circumstances, such as the number and frequency of the remittance transfers the person provides. However, the Remittance Rule as originally adopted contained a safe harbor whereby a person that provided 100 or fewer remittance transfers in each of the previous and current calendar years was deemed not to be providing remittance transfers in the normal course of its business, and therefore was outside of the Remittance Rule’s coverage. The EFTA and the Remittance Rule also contain exceptions that permit some remittance transfer providers to estimate certain information in the required disclosures in certain circumstances. Of relevance to the current Call Reports, as discussed in greater detail below, there is a ‘‘temporary exception’’ that permits certain insured institutions 50 to estimate certain fees and the exchange rate (and information that depends on the fees and exchange rate) in their disclosures if certain conditions are met. Importantly, EFTA section 919 expressly limits the length of the temporary exception to July 21, 2020. As a result, the temporary exception will expire on July 21, 2020. In 2014, item 16 was added to Schedule RC–M of the FFIEC 031 and FFIEC 041 Call Reports, citing Section 1073 of the Dodd-Frank Act and the Remittance Rule.51 In supporting the inclusion of this new item in the Call Reports, the agencies ‘‘stated that the new item regarding remittance transfers could facilitate monitoring of market entry and exit, which would improve 50 The term ‘‘insured institution’’ refers to ‘‘an insured depository institution, as defined in section 1813 of title 12, or an insured credit union, as defined in section 1752 of title 12.’’ 15 U.S.C. 1693o–1(a)(4)(A). 51 79 FR 2509 (Feb. 14, 2014). Item 16 was later incorporated into the FFIEC 051 Call Report when that report was created. E:\FR\FM\22JYN1.SGM 22JYN1 Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices understanding of the consumer payments landscape generally, and facilitate evaluation of the remittance transfer rule’s impact. . .[as well as] enable the FFIEC and the agencies to refine supervisory procedures and policies. . .[and] help inform any later policy decisions regarding remittance transfers and activities regarding remittance transfers that are mandated by section 1073 of the Dodd-Frank Act.’’ 52 In 2018, the Bureau published its report of its Dodd-Frank-mandated assessment of the Remittance Rule (‘‘Assessment Report’’).53 Based on information surfaced by the Bureau’s assessment as well as a subsequent Request for Information,54 the Bureau proposed amendments to the Remittance Rule in 2019 (‘‘Remittance Proposal’’ or ‘‘Proposal’’).55 The Remittance Proposal included a proposed effective date of July 21, 2020. On June 5, 2020, the Bureau published a Final Rule amending the Remittance Rule.56 Currently, Schedule RC–M, Memoranda, item 16, ‘‘International remittance transfers offered to consumers,’’ and its instructions are identical across the FFIEC 031, FFIEC 041, and FFIEC 051 Call Report forms. The item consists of four questions, two of which are further subdivided into four and three questions, for a total of nine different data points requested of respondents that meet certain criteria outlined in the current Call Report instructions. Through the Remittance Proposal process, the Bureau identified certain proposed changes to the information collected in Schedule RC–M, item 16. These changes would better align item 16 with the Remittance Rule as amended, as well as streamline reporting for respondents and reduce burden where appropriate. The agencies propose that revised item 16 would consist of two questions, one of which would be further subdivided into three questions, for a total of four different data points. Item 16.a would be renamed ‘‘Estimated number of international remittance transfers provided by your institution during the calendar year ending on the report date.’’ This data item would be proposed to be collected annually in the jbell on DSKJLSW7X2PROD with NOTICES 52 Ibid. 53 Bureau, Remittance Rule Assessment Report (Oct. 2018, rev. Apr. 2019), https:// files.consumerfinance.gov/f/documents/bcfp_ remittance-rule-assessment_report_corrected_201903.pdf 54 84 FR 17971 (Apr. 29, 2019). 55 84 FR 67132 (Dec. 6, 2019). 56 85 FR 34870 (Jun. 5, 2020). VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 December Call Report only. Item 16.b.(1) through 16.b.(3) would be completed only by institutions that reported 501 or more international remittance transfers in Schedule RC–M, item 16.a, in either the current report or the report for the previous calendar year-end report date.57 The revised items 16.b.(1) through (3) would request data on the estimated dollar value of remittance transfers provided by an institution during the calendar year ending on the report date and its usage during this same period of the permanent exceptions for insured institutions as incorporated into the Remittance Rule by the Bureau’s 2020 Final Rule. Specifically, an institution would report the following information in revised items 16.b.(1) through (3), if applicable: (1) Estimated dollar value of international remittance transfers; (2) Estimated number of international remittance transfers for which your institution applied the permanent exchange rate exception; and (3) Estimated number of international remittance transfers for which your institution applied the permanent covered third-party fee exception. Consistent with the current instructions for reporting estimated numbers and dollar values for international remittance transfers in Schedule RC–M, item 16, the estimates reported in revised items 16.a and 16.b.(1) through (3) should be based on a reasonable and supportable methodology and the estimated dollar value of international remittance transfers, if required to be reported in item 16.b.(1), is not required to be estimated in thousands of dollars. III. Timing The revisions associated with the interim final rules, the proposed and final deposit insurance assessments rule, and the CARES Act provisions have been approved by OMB through the emergency clearance process, and these revisions have taken effect for the March 31, 2020, Call Report and FFIEC 101 or the June 30, 2020, Call Report, FFIEC 101, and FFIEC 002, or will take effect for the September 30, 2020, FFIEC 002, as discussed in Sections II.A and B. For the additional proposed revisions to the Call Report and FFIEC 002 instructions that are related to the 57 For the transitional December 2021 Call Report only, an institution would complete Schedule RC– M, items 16.b.(1) through 16.b.(3), only if it reports 501 or more international remittance transfers in Schedule RC–M, item 16.a, in the December 2021 Call Report or it reported a combined total of 501 or more international remittance transfers in Schedule RC–M, item 16.d.(1), in the June and December 2020 Call Reports. PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 44375 amendment of the Board’s Regulation D, as discussed in section II.A, the agencies propose to make these revisions effective for reporting beginning in the first quarter of 2021. For the accounting changes discussed in Section II.C, the agencies propose to make the revisions effective as of the March 31, 2021, report date, except for the revisions for last-of-layer hedging, which would be implemented following the FASB’s adoption of a final last-oflayer hedge accounting standard. A final standard is not expected to be issued before the second half of 2021. The agencies propose to make the revisions to Schedule RC–M for the international remittance transfer items discussed in Section II.D effective March 31, 2021.58 The agencies invite comment on any difficulties that institutions would expect to encounter in implementing the systems changes necessary to accommodate the proposed revisions to the Call Reports, FFIEC 101, and FFIEC 002 consistent with those effective dates. The specific wording of the captions for the new or revised Call Report, FFIEC 101, and FFIEC 002 data items discussed in this proposal and the numbering of these data items should be regarded as preliminary. IV. Request for Comment Public comment is requested on all aspects of this joint notice. Comment is specifically invited on: (a) Proposed new Memorandum item 8, ‘‘Estimated amount of expected recoveries of amounts previously written off included within the allowances for credit losses on loans and leases held for investment (included in item 7, ‘‘Balance end of current period,’’ above),’’ would be added to Schedule RI–B, Part II, Changes in Allowances for Credit Losses. (1) Do institutions have information readily available on the estimated amount of these expected recoveries that is proposed to be collected? If not, what additional steps would institutions need to take to be able to report this estimated amount? (2) Although, as proposed, this item applies to the overall allowance for credit losses on loans and leases held for investment, would reporting institutions or users of allowance data prefer a different or more disaggregated 58 Therefore, institutions will report current Schedule RC–M, item 16, in December 2020; will not report current Schedule RC–M, item 16, at all in June 2021; and will report the proposed revised Schedule RC–M, item 16, in December 2021 (covering all of calendar year 2021). E:\FR\FM\22JYN1.SGM 22JYN1 jbell on DSKJLSW7X2PROD with NOTICES 44376 Federal Register / Vol. 85, No. 141 / Wednesday, July 22, 2020 / Notices collection of information on expected recoveries? If so, please provide specific reasons and describe the preferred different or more disaggregated collection. (b) Proposed changes for reporting last-of-layer FVHBAs would be made to Call Report Schedule RC–B, Securities, and Schedule RC–C, Part I, Loans and Leases, and FFIEC 002 Schedule RAL, Assets and Liabilities, and Schedule C, Part I, Loans and Leases, following the FASB’s adoption of a final last-of-layer hedge accounting standard. (1) How do institutions that have implemented last-of-layer hedging under ASU 2017–12 currently report the FVHBAs associated with loans and AFS debt securities in the Call Report or the FFIEC 002? (2) Do such institutions find it challenging to allocate these last-oflayer FVHBAs on an individual asset basis or on a portfolio basis for financial and regulatory reporting purposes? If so, please explain whether these challenges are greater for regulatory reporting than financial reporting purposes and describe the reasons for this. (3) Should the agencies consider implementing the changes for reporting FVHBAs proposed in Section II.C.4 or some other interim reporting treatment for FVHBAs before the FASB’s adoption of a final last-of-layer hedge accounting standard, provided the resulting reporting of FVHBAs would not be inconsistent with GAAP? Please describe any suggested other interim reporting treatment. (c) 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; (d) 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; (e) Ways to enhance the quality, utility, and clarity of the information to be collected; (f) 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 (g) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. VerDate Sep<11>2014 18:11 Jul 21, 2020 Jkt 250001 Comments submitted in response to this joint notice will be shared among the agencies. Theodore J. Dowd, Deputy Chief Counsel, Office of the Comptroller of the Currency. Board of Governors of the Federal Reserve System. Michele Taylor Fennell, Assistant Secretary of the Board. Federal Deposit Insurance Corporation. Dated at Washington, DC, on July 16, 2020. James P. Sheesley, Acting Assistant Executive Secretary. [FR Doc. 2020–15788 Filed 7–21–20; 8:45 am] BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P DEPARTMENT OF THE TREASURY Office of Foreign Assets Control Notice of OFAC Sanctions Actions Office of Foreign Assets Control, Department of the Treasury. ACTION: Notice. AGENCY: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is publishing the names of persons whose property and interests in property have been unblocked and have been removed from the list of Specially Designated Nationals and Blocked Persons. DATES: See SUPPLEMENTARY INFORMATION section for effective date. FOR FURTHER INFORMATION CONTACT: OFAC: Associate Director for Global Targeting, tel: 202–622–2420; Assistant Director for Licensing, tel.: 202–622– 2480; Assistant Director for Regulatory Affairs, tel.: 202–622–4855; or Assistant Director for Sanctions Compliance & Evaluation, tel.: 202–622–2490. SUPPLEMENTARY INFORMATION: SUMMARY: Electronic Availability The Specially Designated Nationals and Blocked Persons List (SDN List) and additional information concerning OFAC sanctions programs are available on OFAC’s website (https:// www.treasury.gov/ofac). Notice of OFAC Actions On July 17, 2020, OFAC determined that the property and interests in property subject to U.S. jurisdiction of the following persons are unblocked and they have been removed from the SDN List under the relevant sanctions authorities listed below. Individuals 1. LIRA JIRON, Bismarck Antonio (a.k.a. JIRON LIRA, Bismarck Antonio), PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 Residencial Altos de Santo Domingo, Las Cuatro Esquinas, Managua, Nicaragua; 1 Cine Leon, 3 Cuadras al Norte 1/2 Cuadra al Oeste, Monsenor Lezcano, Managua, Nicaragua; Achuapa, Leon, Nicaragua; Petronic El Carmen, 7 C al Oeste y 2 1/2 C al Sur, Barrio Williams Fonseca, Esteli, Nicaragua; DOB 27 Apr 1973; POB Esteli, Nicaragua; Cedula No. 288–270473– 0002Y (Nicaragua) (individual) [SDNTK]. 2. ROMAN DOMINGUEZ, Erika, c/o TAURA S.A., Cali, Colombia; Cedula No. 66955540 (Colombia) (individual) [SDNT]. 3. ISSA FAWAZ, Benny (a.k.a. ISSA FAUSE, Benny), Calle 12, No. 10–79, Maicao, La Guajira, Colombia; Calle 13, No. 7–49, Barrio El Centro, Maicao, La Guajira, Colombia; DOB 29 Sep 1974; POB Barranquilla, Colombia; Cedula No. 72204490 (Colombia); Passport 72204490 (Colombia) (individual) [SDNTK] (Linked To: YORUMA SHIPPING COMPANY, S.A.; Linked To: FAUSSE ISSA Y CIA. S. EN C.; Linked To: FAMILY FEDCO; Linked To: FEDCO IMPORT & EXPORT, S.A.; Linked To: MICRO EMPRESA ASHQUI). 4. JIMENEZ NARANJO, Carlos Mario (a.k.a. ‘‘MACACO’’), Calle 10C No. 25– 45, Medellin, Colombia; DOB 26 Feb 1966; POB Envigado, Antioquia, Colombia; Cedula No. 71671990 (Colombia); Passport AH521672 (Colombia); alt. Passport AE915378 (Colombia) (individual) [SDNT]. 5. LONDONO VASQUEZ, Marco Julio, c/o ADMINISTRADORA GANADERA EL 45 LTDA., Medellin, Colombia; c/o CASA DEL GANADERO S.A., Medellin, Colombia; c/o INVERSIONES EL MOMENTO S.A., Medellin, Colombia; c/o SOCIEDAD MINERA GRIFOS S.A., El Bagre, Antioquia, Colombia; Carrera 63B No. 42–50, Medellin, Colombia; DOB 04 Dec 1955; POB Fredonia, Antioquia, Colombia; Cedula No. 15345634 (Colombia); Passport AG062408 (Colombia) (individual) [SDNT]. 6. HERRERA RAMIREZ, Linda Nicolle, c/o INDUSTRIA AVICOLA PALMASECA S.A., Cali, Colombia (individual) [SDNT]. 7. HERRERA RAMIREZ, Giselle, c/o AGROPECUARIA Y REFORESTADORA HERREBE LTDA., Cali, Colombia; c/o INDUSTRIA AVICOLA PALMASECA S.A., Cali, Colombia; c/o INVERSIONES HERREBE LTDA., Cali, Colombia (individual) [SDNT]. 8. MEJIA MOLINA, Luis Bernardo, c/ o BOSQUES DE AGUA SOCIEDAD POR ACCIONES SIMPLIFICADA, Medellin, Colombia; c/o BROKER CMS EL AGRARIO S.A., Envigado, Antioquia, Colombia; c/o FUMIGACIONES Y E:\FR\FM\22JYN1.SGM 22JYN1

Agencies

[Federal Register Volume 85, Number 141 (Wednesday, July 22, 2020)]
[Notices]
[Pages 44361-44376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15788]


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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 the 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 (Call Reports) (FFIEC 031, FFIEC 041, and FFIEC 
051) and Regulatory Capital Reporting for Institutions Subject to the 
Advanced Capital Adequacy Framework (FFIEC 101), which are currently 
approved collections of information. 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), which also are currently approved collections of 
information. The agencies are requesting comment on revisions to the 
Call Reports, FFIEC 101, and FFIEC 002 related to interim final rules 
and a final rule issued in response to disruptions related to the 
Coronavirus Disease 2019 (COVID-19) that revise the agencies' capital 
rule, the Board's regulations on reserve requirements and insider 
loans, and the FDIC's assessments regulations as well as certain 
sections of the Coronavirus Aid, Relief, and Economic Security Act 
(CARES Act) for which the agencies received emergency approvals from 
OMB. In addition, the agencies are proposing changes to the Call Report 
and the FFIEC 002 related to U.S. generally accepted accounting 
principles (GAAP). Further, the agencies are proposing revisions to the 
Call Report to reflect the expiration of the temporary exception for 
estimated disclosures on international remittance transfers and certain 
amendments to the Remittance Rule recently finalized by the Consumer 
Financial Protection Bureau (Bureau), which is a member of the FFIEC.

DATES: Comments must be submitted on or before September 21, 2020.

ADDRESSES: Interested parties are invited to submit written comments to 
any or all of the agencies. All comments, which should refer to the 
``Call Report, FFIEC 101, and FFIEC 002 Revisions,'' will be shared 
among the agencies.
    OCC: You may submit comments, which should refer to ``Call Report, 
FFIEC 101, and FFIEC 002 Revisions,'' by any of the following methods:
     Email: [email protected].
     Mail: Chief Counsel's Office, Office of the Comptroller of 
the Currency, Attention: 1557-0081 and 1557-0239, 400 7th Street, SW, 
suite 3E-218, Washington, DC 20219.
     Hand Delivery/Courier: 400 7th Street, SW, suite 3E-218, 
Washington, DC 20219.
    Instructions: You must include ``OCC'' as the agency name and 
``1557-0081 and 1557-0239'' in your comment. In general, the OCC will 
publish comments on www.reginfo.gov without change, including any 
business or personal information provided, such as name and address 
information, email addresses, or phone numbers. 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 review comments and other related materials that pertain to 
this information collection beginning on the date of publication of the 
second notice for this collection by the following method:
     Viewing Comments Electronically: Go to www.reginfo.gov. 
Click on the ``Information Collection Review'' tab. Underneath the 
``Currently under Review'' section heading, from the drop-down menu 
select ``Department of Treasury'' and then click ``submit.'' This 
information collection can be located by searching by OMB control 
number ``1557-0081'' or ``1557-0239.'' Upon finding the appropriate 
information collection, click on the related ``ICR Reference Number.'' 
On the next screen, select ``View Supporting Statement and Other 
Documents'' and then click on the link to any comment listed at the 
bottom of the screen.
     For assistance in navigating www.reginfo.gov, please 
contact the Regulatory Information Service Center at (202) 482-7340.
    Board: You may submit comments, which should refer to ``Call 
Report, FFIEC 101, and FFIEC 002 Revisions,'' by any of the following 
methods:

[[Page 44362]]

     Agency website: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at: http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Email: [email protected]. Include ``Call 
Report, FFIEC 101, and FFIEC 002 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 on the Board's website at https://www.federalreserve.gov/apps/foia/proposedregs.aspx as submitted, 
unless modified for technical reasons. Accordingly, your comments will 
not be edited to remove any identifying or contact information.
    FDIC: You may submit comments, which should refer to ``Call Report, 
FFIEC 101, and FFIEC 002 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 ``Call Report, FFIEC 
101, and FFIEC 002 Revisions'' in the subject line of the message.
     Mail: Manuel E. Cabeza, Counsel, Attn: Comments, Room MB-
3128, 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 officers 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 report forms for the Call Reports, 
FFIEC 101, FFIEC 002, and FFIEC 002S can be obtained at the FFIEC's 
website (https://www.ffiec.gov/ffiec_report_forms.htm).
    OCC: Kevin Korzeniewski, Counsel, Chief Counsel's Office, (202) 
649-5490, or for persons who are deaf or hearing impaired, TTY, (202) 
649-5597.
    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:

Table of Contents

I. Affected Reports
II. Current Actions
    A. Regulation-Related Items
     1. Definition of Eligible Retained Income
     2. Money Market Mutual Fund Liquidity Facility
     3. 5-Year 2020 CECL Transition Provision
     4. Community Bank Leverage Ratio
     5. Paycheck Protection Program (PPP) Loans and Liquidity 
Facility
     6. Board Regulation D Amendments
     7. Loans to Executive Officers, Directors, and Principal 
Shareholders
     8. Temporary Exclusions from the Supplementary Leverage Ratio
    B. Revisions Related to Section 4013 of the CARES Act
    C. Revisions Related to U.S. GAAP
    1. Provisions for Credit Losses on Off-Balance-Sheet Credit 
Exposures
    2. Expected Recoveries of Amounts Previously Charged Off 
Included within the Allowances for Credit Losses
    3. Nonaccrual Treatment of Purchased Credit-Deteriorated Assets
    4. Last-of-Layer Hedging
    D. Revisions Related to International Remittance Transfers
III. Timing
IV. Request for Comment

I. Affected Reports

    The proposed changes discussed below affect the Call Reports, FFIEC 
101, and FFIEC 002.

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 Number: FFIEC 031 (Consolidated Reports of Condition and 
Income for a Bank with Domestic and Foreign Offices), FFIEC 041 
(Consolidated Reports of Condition and Income for a Bank with Domestic 
Offices Only), and FFIEC 051 (Consolidated Reports of Condition and 
Income for a Bank with Domestic Offices Only and Total Assets Less Than 
$5 Billion).
    Frequency of Response: Quarterly.
    Affected Public: Business or other for-profit.
    Type of Review: Revision and extension of currently approved 
collections.
    OCC:
    OMB Control No.: 1557-0081.
    Estimated Number of Respondents: 1,136 national banks and federal 
savings associations.
    Estimated Average Burden per Response: 42.56 burden hours per 
quarter to file.
    Estimated Total Annual Burden: 193,393 burden hours to file.
    Board:
    OMB Control No.: 7100-0036.
    Estimated Number of Respondents: 756 state member banks.
    Estimated Average Burden per Response: 45.43 burden hours per 
quarter to file.
    Estimated Total Annual Burden: 137,380 burden hours to file.
    FDIC:
    OMB Control No.: 3064-0052.
    Estimated Number of Respondents: 3,335 insured state nonmember 
banks and state savings associations.
    Estimated Average Burden per Response: 40.62 burden hours per 
quarter to file.
    Estimated Total Annual Burden: 541,871 burden hours to file.
    The estimated average burden hours collectively reflect the 
estimates for the FFIEC 051, the FFIEC 041, and the FFIEC 031 reports 
for each agency. In the agencies' most recently published Federal 
Register notice for the submission of Call Report revisions for OMB 
review, the estimated burden hours per quarter for each agency for the 
Call Report information collection (based on the data reported by the 
institutions under each agency's supervision as of September 30, 2019) 
were 41.24 hours for the OCC, 44.45 hours for the Board, and 39.43 
hours for the FDIC.\1\ In connection with the agencies' emergency 
clearance requests that were submitted to, and approved by, OMB in the 
second quarter of 2020

[[Page 44363]]

for the COVID-19-related Call Report revisions outlined in Sections 
II.A and II.B, below, these estimates were adjusted based on Call 
Report data reported as of December 31, 2019, before estimating that 
these revisions would produce an increase of approximately 0.92 burden 
hours per quarter for each of the three versions of the Call Report. 
The estimated burden hours per quarter by agency for the Call Report as 
currently approved by OMB, i.e., in response to the agencies' emergency 
clearance requests, are 42.20 hours for the OCC, 45.07 hours for the 
Board, and 40.26 hours for the FDIC. The Call Report revisions proposed 
in this notice related to U.S. GAAP and international remittance 
transfers would represent a further increase in estimated average 
burden hours per quarter by agency of 0.36 hours.
---------------------------------------------------------------------------

    \1\ 85 FR 4780 (January 27, 2020).
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    When the estimates are calculated by type of report across the 
agencies, the estimated average burden hours per quarter are 37.98 
(FFIEC 051), 51.39 (FFIEC 041), and 96.68 (FFIEC 031). The estimated 
burden hours for the currently approved reports are 37.62 (FFIEC 051), 
51.02 (FFIEC 041), and 96.30 (FFIEC 031), so the revisions proposed in 
this notice related to U.S. GAAP and international remittance transfers 
would represent an increase in estimated average burden hours per 
quarter by type of report of 0.36 (FFIEC 051), 0.37 (FFIEC 041), and 
0.38 (FFIEC 031).
    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 institutions under each agency's supervision 
(e.g., size distribution of institutions, types of activities in which 
they are engaged, and existence of foreign offices).
    Type of Review: Extension and revision of currently approved 
collections.
Legal Basis and Need for Collections
    The Call Report information collections are mandatory: 12 U.S.C. 
161 (national banks), 12 U.S.C. 324 (state member banks), 12 U.S.C. 
1817 (insured state nonmember commercial and savings banks), and 12 
U.S.C. 1464 (federal and state savings associations). At present, 
except for selected data items and text, these information collections 
are not given confidential treatment.
    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 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 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 assessments and national 
banks' and federal savings associations' semiannual assessment fees.

B. 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: 5 national banks and federal 
savings associations.
    Estimated Time per Response: 674 burden hours per quarter to file 
for banks and federal savings associations.
    Estimated Total Annual Burden: 13,480 burden hours to file.
    Board:
    OMB Control No.: 7100-0319.
    Estimated Number of Respondents: 4 state member banks; 5 bank 
holding companies and savings and loan holding companies that complete 
Supplementary Leverage Ratio (SLR) Tables 1 and 2 only; 9 other bank 
holding companies and savings and loan holding companies; and 6 
intermediate holding companies.
    Estimated Time per Response: 674 burden hours per quarter to file 
for state member banks; 3 burden hours per quarter to file for bank 
holding companies and savings and loan holding companies that complete 
Supplementary Leverage Ratio (SLR) Tables 1 and 2 only; 677 burden 
hours per quarter to file for other bank holding companies and savings 
and loan holding companies; and 3 burden hours per quarter to file for 
intermediate holding companies.
    Estimated Total Annual Burden: 10,784 burden hours for state member 
banks to file; 60 burden hours for bank holding companies and savings 
and loan holding companies that complete Supplementary Leverage Ratio 
(SLR) Tables 1 and 2 only to file; 24,372 burden hours for other 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: 1 insured state nonmember bank and 
state savings association.
    Estimated Time per Response: 674 burden hours per quarter to file.
    Estimated Total Annual Burden: 2,696 burden hours to file.
    Type of Review: Extension and revision of currently approved 
collections.
Legal Basis and Need for Collections
    Each advanced approaches institution \2\ is required to report 
quarterly regulatory capital data on the FFIEC 101. Each top-tier 
advanced approaches institution and top-tier Category III institution 
\3\ is required to report supplementary leverage ratio information on 
the FFIEC 101. The FFIEC 101 information collections are mandatory for 
advanced approaches and top-tier Category III 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 (federal and state 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).
---------------------------------------------------------------------------

    \2\ 12 CFR 3.100(b) (OCC); 12 CFR 217.100(b) (Board); 12 CFR 
324.100(b) (FDIC).
    \3\ 12 CFR 3.2 (OCC); 12 CFR 217.2 (Board); 12 CFR 324.2 (FDIC).
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    The agencies use data reported in the FFIEC 101 to assess and 
monitor the levels and components of each reporting entity's applicable 
capital requirements and the adequacy of the entity's capital under the 
Advanced Capital Adequacy

[[Page 44364]]

Framework \4\ and the supplementary leverage ratio,\5\ as applicable; 
to evaluate the impact of the Advanced Capital Adequacy Framework and 
the supplementary leverage ratio, as applicable, 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 and 
top-tier Category III institutions in understanding expectations 
relating to the system development necessary for implementation and 
validation of the Advanced Capital Adequacy Framework and the 
supplementary leverage ratio, as applicable. Submitted data that are 
released publicly will also provide other interested parties with 
additional information about advanced approaches institutions' and top-
tier Category III institutions' regulatory capital.
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    \4\ 12 CFR part 3, subpart E (OCC); 12 CFR part 217, subpart E 
(Board); 12 CFR part 324, subpart E (FDIC).
    \5\ 12 CFR 3.10(c)(4) (OCC); 12 CFR 217.10(c)(4) (Board); 12 CFR 
324.10(c)(4) (FDIC).
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C. FFIEC 002 and 002S

    The Board proposes to extend for three years, with revision, 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--24.87 hours; 
FFIEC 002S--6.0 hours.
    Estimated Total Annual Burden: FFEIC 002--20,791 hours; FFIEC 
002S--912 hours.
    Type of Review: Revision of currently approved collections.
Legal Basis and Need for Collection
    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 in respect of 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. 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)). 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.

II. Current Actions

A. Regulation-Related Revisions

    From March through June 2020, in response to the impact on the 
financial markets and the strains on the U.S. economy as a result of 
COVID-19, the agencies published in the Federal Register numerous 
interim final rules to make certain changes to their regulatory capital 
and liquidity rules to support prudent lending by banking organizations 
and facilitate banking organizations' use of the Board's emergency 
facilities. These revisions primarily affect the instructions for the 
calculation of certain amounts reported on Schedule RC-R, Regulatory 
Capital, and apply to the three versions of the Call Report (FFIEC 031, 
FFIEC 041, and FFIEC 051) and for the calculation of certain amounts 
reported on Schedule A, Advanced Approaches Regulatory Capital, on the 
FFIEC 101. Certain revisions also involve the addition of new data 
items to Call Report Schedule RC-M, Memoranda. In addition, the Board 
made revisions to its Regulation D (12 CFR 204) that affect the 
reporting of deposit liabilities on Call Report Schedule RC-E, Deposit 
Liabilities, and FFIEC 002, Schedule E, Deposit Liabilities and Credit 
Balances, and issued an interim final rule that provides a certain 
exception to the reporting of extensions of credit to insiders on Call 
Report Schedule RC-M, required by section 22(h) of the Federal Reserve 
Act and the corresponding provisions of the Board's Regulation O (12 
CFR 215). The FDIC proposed and subsequently adopted revisions to its 
deposit insurance assessment rules that require the collection of new 
data items on Call Report Schedule RC-M and FFIEC 002 Schedule O, Other 
Data for Deposit Insurance Assessments.
    The agencies requested and received emergency approvals on April 3, 
2020, from OMB to implement revisions to the Call Report and FFIEC 101 
that took effect beginning with the March 31, 2020, report date. 
Subsequently, the agencies requested and received emergency approvals 
on May 27, 2020, from OMB to implement revisions to the Call Report, 
FFIEC 101, and FFIEC 002 that take effect beginning with the June 30, 
2020, report date. The Board requested and received emergency approvals 
on June 8, 2020, and July 8, 2020, from OMB to implement further 
revisions to the FFIEC 002 that take effect beginning with the June 30, 
2020, and September 30, 2020, report dates, respectively. The agencies 
are requesting comment on whether there should be any further changes 
to the items or instructions developed by the agencies to implement the 
revisions for which emergency approvals were received from OMB, and in 
regard to the Board Regulation D amendments, on whether to adopt 
proposed revisions to the Call Report and the FFIEC 002 to remove a 
reporting option that was implemented by the emergency approvals and 
could result in the collection of ambiguous data.
    Further, the agencies have requested comment in connection with 
each of the interim final rules described below. If modifications are 
made to the associated final rules, the agencies would modify the 
information collection revisions in

[[Page 44365]]

this proposal to incorporate such changes.
1. Definition of Eligible Retained Income
    Under the capital rule, a banking organization must maintain a 
minimum amount of regulatory capital. In addition, a banking 
organization must maintain a buffer of regulatory capital above its 
minimum capital requirements to avoid restrictions on capital 
distributions and discretionary bonus payments. The agencies intend for 
the buffer requirements to limit the ability of banking organizations 
to distribute capital in the form of dividends and discretionary bonus 
payments and therefore strengthen the ability of banking organizations 
to continue lending and conducting other financial intermediation 
activities during stress periods. The agencies are concerned, however, 
that the existing calculation method could lead to sudden and severe 
distribution limits if such banking organizations were to experience 
even a modest reduction in their capital ratios.
    Therefore, the agencies adopted an interim final rule \6\ on March 
20, 2020, that revises the definition of eligible retained income 
(ERI). By modifying the definition of ERI and thereby allowing banking 
organizations to more freely use their capital buffers, this interim 
final rule should help to promote lending activity and other financial 
intermediation activities by banking organizations and avoid 
compounding disruptions due to COVID-19.
---------------------------------------------------------------------------

    \6\ 85 FR 15909 (March 20, 2020).
---------------------------------------------------------------------------

Call Report Revisions
    The instructions for Schedule RC-R, Part I, item 53, ``Eligible 
retained income,'' have been revised to incorporate the revisions 
reflected in the ERI interim final rule. Beginning with the March 31, 
2020, report date, institutions that are required to report amounts in 
item 53 should report the greater of (1) an institution's net income 
for the four preceding calendar quarters, net of any distributions and 
associated tax effects not already reflected in net income, and (2) the 
average of an institution's net income over the four preceding calendar 
quarters.
2. Money Market Mutual Fund Liquidity Facility
    To enhance the liquidity and functioning of money markets, the 
Federal Reserve Bank of Boston (FRBB) launched the Money Market Mutual 
Fund Liquidity Facility, or MMLF, on March 18, 2020.\7\ On March 23, 
2020, the agencies published an interim final rule, which permits 
banking organizations to exclude from regulatory capital requirements 
exposures related to the MMLF (MMLF interim final rule).\8\
---------------------------------------------------------------------------

    \7\ See https://www.federalreserve.gov/newsevents/pressreleases/monetary20200318a.htm.
    \8\ 85 FR 16232.
---------------------------------------------------------------------------

    The MMLF interim final rule modifies the agencies' capital rule to 
allow banking organizations to neutralize the effects of purchasing 
assets from money market mutual funds under the MMLF on their risk-
based and leverage capital ratios. This treatment extends to the 
community bank leverage ratio. Specifically, a banking organization may 
exclude from its total leverage exposure, average total consolidated 
assets, standardized total risk-weighted assets, and advanced 
approaches total risk-weighted assets, as applicable, any exposure 
acquired from an eligible money market mutual fund pursuant to a non-
recourse loan under the MMLF and pledged to the FRBB. The MMLF interim 
final rule applies only to activities under the MMLF. The facility is 
scheduled to terminate on September 30, 2020, unless the facility is 
extended by the Board.
    Consistent with U.S. GAAP, the agencies would expect banking 
organizations to report assets purchased from money market mutual funds 
under the MMLF on their balance sheets. To be eligible collateral for 
pledging to the FRBB, assets must be purchased from an eligible money 
market mutual fund at either the seller's amortized cost or fair value. 
Thereafter, banking organizations would subsequently measure the assets 
at amortized cost or fair value depending on the asset category in 
which the assets are reported on their balance sheets. The non-recourse 
nature of the transaction through the MMLF would impact the valuation 
of the liability to the FRBB. After reflecting any appropriate 
discounts on the assets purchased and the associated liabilities, 
organizations are not expected to report any material net gains or 
losses (if any) at the time of purchase. Any discounts generally would 
be accreted over time into income and expense.
    On May 12, 2020, the FDIC approved a proposed rule modifying its 
deposit insurance assessment rules to mitigate the effects of 
participation in the MMLF on insured depository institutions (IDIs).\9\ 
The proposed changes would remove the effect of participation in the 
MMLF program on certain adjustments to an IDI's assessment rate, 
provide an offset to an IDI's assessment for the increase to its 
assessment base attributable to participation in the MMLF, and remove 
the effect of participation in the MMLF program when classifying IDIs 
as small, large, or highly complex for assessment purposes. On June 26, 
2020, the FDIC published a final rule that mitigates the deposit 
insurance assessment effects of participating in the MMLF program on 
IDIs as proposed.\10\
---------------------------------------------------------------------------

    \9\ 85 FR 30649 (May 20, 2020). As discussed in Section II.A.5 
below, the FDIC's proposed rule also would modify its deposit 
insurance assessment rules to mitigate the effects of participation 
in the Paycheck Protection Program and the Paycheck Protection 
Program Liquidity Facility on IDIs.
    \10\ 85 FR 38282 (June 26, 2020). See also Section II.A.5 below.
---------------------------------------------------------------------------

Call Report Revisions
    Starting with the March 31, 2020, report date, banking 
organizations that file Call Reports would include their holdings of 
assets purchased from money market mutual funds under the MMLF in the 
appropriate asset category on Schedule RC, Balance Sheet, and Schedule 
RC-R, Regulatory Capital. On Schedule RC, banking organizations would 
report negotiable certificates of deposit not held for trading in item 
1.b, held-to-maturity securities in item 2.a, available-for-sale (AFS) 
securities in item 2.b, and negotiable certificates of deposit and 
securities held for trading in item 5, as appropriate.\11\ For 
regulatory capital reporting purposes, the balance sheet amounts of 
assets purchased through the MMLF would be reported in both Column A 
(Totals From Schedule RC) and Column C (0% risk-weight category) of the 
corresponding balance sheet asset categories of Schedule RC-R, Part II 
(i.e., in items 1, 2.a, 2.b, and 7, respectively).\12\
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    \11\ In addition, held-to-maturity and available-for-sale 
securities would be reported by securities category in Schedule RC-
B, Securities, and as pledged securities in Memorandum item 1 of 
this schedule on all three versions of the Call Report. Negotiable 
certificates of deposit and securities held for trading would be 
reported by asset category in Schedule RC-D, Trading Assets and 
Liabilities, by institutions required to complete this schedule on 
the FFIEC 031 and the FFIEC 041. Securities held for trading also 
would be reported as pledged securities in Schedule RC-D, Memorandum 
item 4.a, on the FFIEC 031.
    \12\ Reporting in Schedule RC-R, Part II, applies only to 
institutions that do not have a community bank leverage ratio 
framework election in effect as of the quarter-end report date, as 
reported in Schedule RC-R, Part I, item 31.a.
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    If a consolidated broker-dealer subsidiary of an institution that 
files Call Reports has purchased assets from money market mutual funds 
under the MMLF that the institution reports as ``Other assets'' on its 
consolidated balance sheet for financial reporting purposes, the 
institution should also

[[Page 44366]]

report these assets in Schedule RC, Balance Sheet, item 11, ``Other 
assets.'' Further, for risk-based capital reporting purposes, if 
applicable, the parent institution of the broker-dealer should report 
these assets in Column A (Totals From Schedule RC) and Column C (0% 
risk-weight category) of Schedule RC-R, Part II, item 8, ``All other 
assets.''
    The quarterly average of an institution's holdings of assets 
purchased from money market mutual funds under the MMLF, including 
those purchased by a consolidated broker-dealer subsidiary of the 
institution, would be included as a deduction in Schedule RC-R, Part I, 
item 29, ``LESS: Other deductions from (additions to) assets for 
leverage ratio purposes,'' and thus excluded from Schedule RC-R, Part 
I, item 30, ``Total assets for the leverage ratio.''
    Borrowings from the FRBB would be included in Schedule RC, item 16, 
``Other borrowed money,'' and included in Schedule RC-M, items 
5.b.(1)(a), Other borrowings with a remaining maturity or next 
repricing date of ``One year or less,'' 5.b.(2), ``Other borrowings 
with a remaining maturity of one year or less,'' and 10.b, ``Amount of 
`Other borrowings' that are secured.''
    Starting with the June 30, 2020, report date, banking organizations 
that file Call Reports would report the outstanding balance of assets 
purchased under the MMLF program in new item 18.a on Schedule RC-M and 
the quarterly average amount outstanding of assets purchased under the 
MMLF that were excluded from Schedule RC-R, Part I, item 30, ``Total 
assets for the leverage ratio,'' in new item 18.b on Schedule RC-M. The 
amounts reported in these items would include assets purchased by a 
consolidated broker-dealer subsidiary. These new items would enable the 
agencies to monitor the impact of the MMLF interim final rule on a 
banking organization's leverage ratio and, if applicable, its risk-
weighted assets. In addition, the FDIC would use these new items to 
implement the modifications to its deposit insurance assessment rules 
to mitigate the effects of participation in the MMLF on IDIs.
    The collection of the two new Schedule RC-M data items related to 
the MMLF program is expected to be time-limited. The agencies plan to 
propose to discontinue the collection of each item once the aggregate 
industry activity has diminished to a point where individual 
institution information is of limited practical utility and is no 
longer needed for deposit insurance assessment purposes, where 
applicable.\13\
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    \13\ These new items will be reviewed in connection with the 
statutorily mandated review of the Call Report that the agencies 
must complete by year-end 2022. Per Section 604 of the Financial 
Services Regulatory Relief Act of 2006, the agencies must conduct a 
review of the information and schedules collected on the Call Report 
every five years with the purpose of reducing or eliminating 
requirements that are no longer necessary or appropriate.
---------------------------------------------------------------------------

    Institutions subject to the supplementary leverage ratio 
requirement would report their adjusted ``Total leverage exposure'' and 
``Supplementary leverage ratio'' in Schedule RC-R, Part I, items 55.a 
and 55.b, respectively. These institutions would adjust their existing 
calculations of ``Total leverage exposure'' by excluding assets 
purchased from money market funds under the MMLF. The instructions for 
item 55.a would be revised to state that institutions should measure 
their total leverage exposure in accordance with section 10(c)(4) of 
the regulatory capital rules and section 302 of these rules for 
exposures related to the MMLF.
FFIEC 101 Revisions
    Starting with the March 31, 2020, report date, advanced approaches 
banking organizations should not include assets purchased from money 
market funds under the MMLF in the ``Total risk-weighted assets'' 
reported in the FFIEC 101, Schedule A, item 60, or, for advanced 
approaches banking organizations that file Call Reports, in Schedule 
RC-R, Part I, item 48.b. For banking organizations subject to the 
supplementary leverage ratio requirement that file the FFIEC 101, 
assets purchased from money market funds under the MMLF would receive 
similar treatment as under the ``leverage ratio'' and should be 
reported in the FFIEC 101, Schedule A, SLR Tables. The outstanding 
balance of these assets would continue to be reported in SLR Table 1, 
item 1.1, ``Total consolidated assets as reported in published 
financial statements,'' and Table 2, item 2.1, ``The balance sheet 
carrying value of all on-balance sheet assets.'' The average amount of 
these assets calculated as of each day of the reporting quarter also 
would be reported in SLR Table 1, item 1.7.c, ``Adjustments for 
deductions of qualifying central bank deposits for custodial banking 
organizations,'' and in SLR Table 2, item 2.2.b, ``Deductions of 
qualifying central bank deposits from total on-balance sheet exposures 
for custodial banking organizations,'' even if a banking organization 
is not a custodial banking organization. Banking organizations subject 
to the supplementary leverage ratio requirement that file Call Reports 
would report their adjusted ``Total leverage exposure'' and 
``Supplementary leverage ratio'' in Schedule RC-R, Part I, items 55.a 
and 55.b.
FFIEC 002 Revisions
    In connection with the FDIC's deposit insurance assessments final 
rule, starting with the FFIEC 002 report as of June 30, 2020, FDIC-
insured branches would be required to separately report in Schedule O, 
Memorandum item 7, the quarterly average amount outstanding of assets 
purchased from money market funds under the MMLF with the collection of 
this item expected to be time-limited. The agencies plan to propose to 
discontinue the collection of this item once individual institution 
information is no longer needed for deposit insurance assessment 
purposes.\14\
---------------------------------------------------------------------------

    \14\ Findings from the statutorily mandated review of the Call 
Report will also be used for evaluating the FFIEC 002 new items. See 
footnote 13.
---------------------------------------------------------------------------

3. 5-Year 2020 CECL Transition Provision
    The instructions for certain items in Call Report Schedule RC-R, 
Parts I and II, and the FFIEC 101 have been revised effective as of the 
March 31, 2020, report date to incorporate revisions reflected in the 
interim final rule, Regulatory Capital Rule: Revised Transition for the 
Current Expected Credit Losses Methodology for Allowances, published in 
the Federal Register on March 27, 2020 (CECL interim final rule).\15\ 
This interim final rule provides institutions that were required to 
adopt the current expected credit losses methodology (CECL) for 
accounting purposes during the 2020 calendar year with the option to 
delay for two years the estimated impact of CECL on regulatory capital, 
followed by a three-year transition period to phase out the aggregate 
amount of the capital benefit provided during the initial two-year 
delay (i.e., a five-year transition, in total). The CECL interim final 
rule does not replace the current CECL transition option in the 
agencies' capital rule, which was adopted in 2019 and allows banking 
organizations to phase in over a three-year period the day-one effects 
on regulatory capital that may result from the adoption of CECL (2019 
CECL rule).\16\ This transition option remains available to 
institutions that adopt CECL. Thus, institutions required to adopt CECL 
in 2020, including those

[[Page 44367]]

that began reporting in accordance with CECL in their first quarter 
2020 regulatory reports, have the option to elect the three-year 
transition option contained in the 2019 CECL rule or the five-year CECL 
transition option contained in the CECL interim final rule, beginning 
with the Call Report and, if applicable, the FFIEC 101 for the March 
31, 2020, report date or such later report date in 2020 as of which 
institutions first report in accordance with CECL. Call Report 
Revisions
---------------------------------------------------------------------------

    \15\ 85 FR 17723. The agencies published a correcting amendment 
in the Federal Register on May 19, 2020 (85 FR 29839).
    \16\ 84 FR 4222 (February 14, 2019).
---------------------------------------------------------------------------

    The agencies have revised the Call Report Schedule RC-R 
instructions for the following items in Part I of the schedule to 
enable institutions that elect the five-year CECL transition option to 
report their regulatory capital data in accordance with the CECL 
interim final rule:
     Item 2, ``Retained earnings,''
     Item 15 on the FFIEC 041 and FFIEC 051 and items 15.a and 
15.b on the FFIEC 031, for certain deferred tax assets arising from 
temporary differences that exceed an institution's applicable common 
equity tier 1 capital deduction threshold,
     Item 27, ``Average total consolidated assets,''
     Item 42 on the FFIEC 041 and FFIEC 051 and item 42.a on 
the FFIEC 031, for the amount of adjusted allowances for credit losses 
includable in tier 2 capital,
     Item 42.b on the FFIEC 31, ``Eligible credit reserves 
includable in tier 2 capital,'' and
     Item 55.a on the FFIEC 031 and FFIEC 041, ``Total leverage 
exposure.''
    The instructions for Schedule RC-R, Part II, item 8, ``All other 
assets,'' also have been revised to account for the five-year CECL 
transition option.
    In addition, beginning with the June 30, 2020, Call Report, 
Schedule RC-R, Part I, item 2.a, ``Does your institution have a CECL 
transition election in effect as of the quarter-end report date? (enter 
``1'' for Yes; enter ``0'' for No.),'' will be revised to allow 
institutions that have adopted CECL to choose from among three entries 
rather than the current two entries. An institution that has adopted 
CECL will choose from the following CECL transition election entries: 
``0'' for adopted CECL with no transition election; ``1'' for a 3-year 
CECL transition election; and ``2'' for a 5-year 2020 CECL transition 
election. An institution that has not adopted CECL will continue to 
leave item 2.a blank.
FFIEC 101 Revisions
    The agencies have revised the FFIEC 101 instructions for the 
following items in Schedule A to enable advanced approaches 
institutions and top-tier Category III institutions that elect the 
five-year CECL transition option to report their regulatory capital 
data in accordance with the CECL interim final rule:
     Item 2, ``Retained earnings,''
     Item 21, ``DTAs arising from temporary differences that 
could not be realized through net operating loss carrybacks, net of 
related valuation allowances and net of DTLs, that exceed the 10 
percent common equity tier 1 capital deduction threshold,''
     Item 50, ``Eligible credit reserves includable in Tier 2 
capital,'' and
     SLR Table 1, Item 1.8, and Table 2, Item 2.21, ``Total 
leverage exposure.''
4. Community Bank Leverage Ratio
    Section 4012 of the CARES Act required the agencies to reduce the 
community bank leverage ratio (CBLR) requirement to 8 percent and 
provide a qualifying community banking organization whose leverage 
ratio falls below this community bank leverage ratio requirement a 
reasonable grace period to satisfy this requirement. Section 4012 also 
required that these CBLR changes be effective for a temporary period 
ending on the earlier of the termination date of the national emergency 
concerning the COVID-19 outbreak declared by the President on March 13, 
2020, under the National Emergencies Act (National Emergency) or 
December 31, 2020. The agencies implemented the requirements of Section 
4012 through an interim final rule.\17\ To provide further clarity 
around the possible end date of the statutory relief, the agencies also 
issued an interim final rule extending relief for the 8 percent 
leverage ratio for the remainder of 2020, providing relief through an 
8.5 percent leverage ratio in 2021, and resuming the previous 9 percent 
leverage ratio in 2022.\18\ Neither interim final rule changed the 
methodology for calculating the CBLR, merely the qualifying ratio for 
an institution to report as a CBLR bank.
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    \17\ 85 FR 22924 (April 23, 2020).
    \18\ 85 FR 22930 (April 23, 2020).
---------------------------------------------------------------------------

    There are no substantive Call Report revisions associated with the 
revised CBLR ratio. However, it is possible that some additional 
institutions that are now eligible CBLR banks under the lower ratio may 
choose to use the less burdensome regulatory capital reporting for CBLR 
banks on Schedule RC-R. At this time, the agencies cannot reliably 
estimate the number of institutions that might use the CBLR framework 
for regulatory capital reporting in the second quarter of 2020 under 
the reduced ratio. However, the agencies plan to revise the burden 
estimates after more data are available on institutions' use of the 
CBLR framework.
5. Paycheck Protection Program (PPP) Loans and Liquidity Facility 
(PPPLF)
    Section 1102 of the CARES Act allows banking organizations to make 
loans under the PPP of the U.S. Small Business Administration (SBA) in 
connection with COVID-19 disruptions to small businesses. Although the 
PPP loans are funded by lenders, the loans receive a guarantee from the 
SBA. The statute specified that these PPP loans should receive a zero 
percent risk weight for regulatory capital purposes. The Board 
subsequently established a liquidity facility, the PPPLF, to extend 
non-recourse loans to eligible financial institutions to fund PPP loans 
pledged to the PPPLF and thereby provide additional liquidity to these 
institutions.\19\
---------------------------------------------------------------------------

    \19\ See https://www.federalreserve.gov/newsevents/pressreleases/monetary20200406a.htm and https://www.federalreserve.gov/newsevents/pressreleases/monetary20200416a.htm.
---------------------------------------------------------------------------

    On April 13, 2020, the agencies published an interim final rule 
with an immediate effective date, which permits banking organizations 
to exclude from regulatory capital requirements PPP loans pledged to 
the PPPLF.\20\ This interim final rule modifies the agencies' capital 
rule to allow banking organizations to neutralize the effects on their 
risk-based capital and leverage ratios of making PPP loans that are 
pledged under the Board's liquidity facility. Specifically, a banking 
organization may exclude from its total leverage exposure, average 
total consolidated assets, standardized total risk-weighted assets, and 
advanced approaches total risk-weighted assets, as applicable, any 
exposure from a PPP loan pledged to the Board's liquidity facility. The 
interim final rule also codified the statutory zero percent risk weight 
for PPP loans.
---------------------------------------------------------------------------

    \20\ 80 FR 20387 (April 13, 2020).
---------------------------------------------------------------------------

    On May 12, 2020, the FDIC approved a proposed rule modifying its 
deposit insurance assessment rules to mitigate the effects of 
participation in the PPP and the PPPLF on IDIs.\21\ The proposed 
changes would remove the effect of participation in the PPP and PPPLF 
on various risk measures used to calculate an IDI's assessment rate, 
remove the effect of participation in the PPPLF program on certain 
adjustments to an IDI's assessment rate, provide an offset

[[Page 44368]]

to an IDI's assessment for the increase to its assessment base 
attributable to participation in the PPPLF, and remove the effect of 
participation in the PPPLF program when classifying IDIs as small, 
large, or highly complex for assessment purposes.
---------------------------------------------------------------------------

    \21\ 85 FR 30649 (May 20, 2020). As discussed in Section II.A.2 
above, the FDIC's proposed rule also would modify its deposit 
insurance assessment rules to mitigate the effects of participation 
in the MMLF on IDIs.
---------------------------------------------------------------------------

    On June 26, 2020, the FDIC published a final rule modifying its 
deposit insurance assessments rule to mitigate the effects of 
participation in the PPP and the PPPLF on IDIs.\22\ After the FDIC 
considered the comments on the proposed rule, the final rule provides 
an offset to an IDI's assessment amount for the increase to its 
assessment base attributable to participation in the PPP rather than to 
participation in the PPPLF as had been proposed.
---------------------------------------------------------------------------

    \22\ 85 FR 38282 (June 26, 2020).
---------------------------------------------------------------------------

Call Report Revisions
    Starting with the June 30, 2020, report date, institutions would 
report the outstanding balances of their PPP loans held for investment 
or held for sale in the appropriate loan category in Schedule RC-C, 
Part I, and, as applicable, in other Call Report schedules in which 
loan data are reported. The outstanding balance of such PPP loans 
pledged to the Board's liquidity facility would be included in Schedule 
RC-C, Part I, Memorandum item 14, ``Pledged loans and leases.'' Any PPP 
loans held for trading would be reported by all institutions on the 
Call Report balance sheet in Schedule RC, item 5, with the fair value 
and amortized cost of such loans reported by loan category in Schedule 
RC-D, Trading Assets and Liabilities, by institutions required to 
complete this schedule on the FFIEC 031 and the FFIEC 041. The 
outstanding balance of PPP loans held for trading that are pledged to 
the Board's liquidity facility would be included in Schedule RC-D, 
Memorandum item 4.b, ``Pledged loans,'' on the FFIEC 031.
    For regulatory capital reporting purposes, the balance sheet 
amounts of PPP loans should be reported in both Column A (Totals From 
Schedule RC) and Column C (0% risk-weight category) of the 
corresponding balance sheet asset categories of Schedule RC-R, Part II, 
(i.e., in items 4, 5, and 7, as appropriate).\23\ The quarterly average 
amount of PPP loans pledged to the Board's liquidity facility would be 
included as a deduction in Schedule RC-R, Part I, item 29, ``LESS: 
Other deductions from (additions to) assets for leverage ratio 
purposes,'' and thus excluded from Schedule RC-R, Part I, item 30, 
``Total assets for the leverage ratio.''
---------------------------------------------------------------------------

    \23\ Reporting in Schedule RC-R, Part II, applies only to 
institutions that do not have a community bank leverage ratio 
framework election in effect as of the quarter-end report date, as 
reported in Schedule RC-R, Part I, item 31.a.
---------------------------------------------------------------------------

    Borrowings from Federal Reserve Banks under the PPPLF would be 
included in Schedule RC, item 16, ``Other borrowed money;'' the 
appropriate subitems of Schedule RC-M, item 5.b, ``Other borrowings,'' 
based on their remaining maturity; and Schedule RC-M, item 10.b, 
``Amount of `Other borrowings' that are secured.''
    In addition, to implement the modifications to its deposit 
insurance assessment rules, the FDIC would remove the quarter-end 
balance sheet amount of PPP loans from an IDI's total assets and 
average total consolidated assets in certain risk measures and 
adjustments used to calculate the IDI's assessment rate. Furthermore, 
the FDIC would remove PPP loans from an IDI's loan portfolio in 
measures used to calculate its assessment rate.
    Since PPP loans, regardless of whether they are pledged to the 
liquidity facility, receive a zero percent risk weight, the reporting 
treatment described above for PPP loans effectively means that these 
loans are not included in the standardized total risk-weighted assets 
reported in Schedule RC-R. Similarly, advanced approaches banking 
organizations would not reflect PPP loans in ``total risk-weighted 
assets'' reported in Schedule RC-R, Part I, item 48.b.
    Institutions subject to the supplementary leverage ratio 
requirement would report their adjusted ``Total leverage exposure'' and 
``Supplementary leverage ratio'' in Schedule RC-R, Part I, items 55.a 
and 55.b, respectively. These institutions would adjust their existing 
calculations of ``Total leverage exposure'' by excluding PPP loans 
pledged to the Board's liquidity facility. The instructions for item 
55.a would be revised to state that institutions should measure their 
total leverage exposure in accordance with section 10(c)(4) of the 
regulatory capital rules and section 305 of these rules for exposures 
related to the Board's liquidity facility.
    In addition, in connection with their missions to supervise 
institutions, the agencies need to understand the number and total 
balance of PPP loans, as well as the amount and quarterly average of 
PPP loans pledged under the Board's liquidity facility. Therefore, the 
agencies requested and received emergency approvals from OMB to add 
four new data items to the Call Report to collect this information.
    Accordingly, starting with the June 30, 2020, report date, 
institutions will begin to report the total number of PPP loans 
outstanding; the total outstanding balance of PPP loans; the total 
outstanding balance of PPP loans pledged to the Board's liquidity 
facility; and the quarterly average amount of PPP loans pledged to the 
Board's liquidity facility and excluded from average total assets in 
the calculation of the leverage ratio in Schedule RC-R, Part I. These 
items have been added to Schedule RC-M as items 17.a, 17.b, 17.c, and 
17.e.
    In addition, in connection with the FDIC's final rule to mitigate 
the deposit insurance assessment effects of participation in the PPP 
and the PPPLF on IDIs, the FDIC needs to collect information on 
outstanding borrowings under the PPPLF. Starting with the June 30, 
2020, reporting period, the outstanding balance of borrowings from 
Federal Reserve Banks under the PPPLF with a remaining maturity of one 
year or less and the outstanding balance of borrowings from the Federal 
Reserve Banks under the PPPLF with a remaining maturity of more than 
one year would be reported in new items 17.d.(1) and 17.d.(2) of 
Schedule RC-M, respectively.
    The collection of the six data items related to PPP loans and the 
PPPLF is expected to be time-limited. The agencies plan to propose to 
discontinue the collection of each item once the aggregate industry 
activity has diminished to a point where individual institution 
information is of limited practical utility and is no longer needed for 
assessment purposes, where applicable.\24\
---------------------------------------------------------------------------

    \24\ These new items will be reviewed in connection with the 
statutorily mandated review of the Call Report. See footnote 13.
---------------------------------------------------------------------------

FFIEC 101 Revisions
    Starting with the June 30, 2020, report date, advanced approaches 
banking organizations would not include PPP loans in ``total risk-
weight assets'' under the advanced approaches reported in the FFIEC 
101, Schedule A, item 60. Since these loans already receive a zero 
percent risk weight, PPP loans are effectively excluded from advanced 
approaches total risk-weighted assets under the current capital rule.
    For banking organizations subject to the supplementary leverage 
ratio requirement that file the FFIEC 101, PPP loans pledged to the 
Board's liquidity facility would be deducted as part of the calculation 
of total leverage exposure for the supplementary leverage ratio. The 
outstanding balance of PPP loans would continue to be reported in SLR 
Table 1, item 1.1, ``Total consolidated assets as reported in published 
financial

[[Page 44369]]

statements,'' and Table 2, item 2.1, ``The balance sheet carrying value 
of all on-balance sheet assets.'' A banking organization calculating 
its supplementary leverage ratio also would include the average amount 
of PPP loans pledged to the PPPLF as of each day of the reporting 
quarter in SLR Table 1, item 1.7.c, ``Adjustments for deductions of 
qualifying central bank deposits for custodial banking organizations,'' 
and in SLR Table 2, item 2.2.b, ``Deductions of qualifying central bank 
deposits from total on-balance sheet exposures for custodial banking 
organizations,'' even if a banking organization is not a custodial 
banking organization.
FFIEC 002 Revisions
    In connection with the FDIC's deposit insurance assessments 
proposed rule, the Board requested and received emergency approval from 
OMB for FDIC-insured branches to separately report in Schedule O, Other 
Data for Deposit Insurance Assessments, Memorandum item 6, the 
quarterly average amount of PPP loans pledged to the PPPLF starting 
with the FFIEC 002 report as of the June 30, 2020, report date.
    In connection with the FDIC's deposit insurance assessments final 
rule, the Board requested and received emergency approval from OMB to 
change the information separately reported by FDIC-insured branches in 
Schedule O, Other Data for Deposit Insurance Assessments, Memorandum 
item 6, from the quarterly average of PPP loans pledged to the PPPLF to 
the quarter-end amount of PPP loans starting with the FFIEC 002 report 
as of the September 30, 2020, report date. The collection of this item 
would be time-limited. The agencies would expect to propose to 
discontinue the collection of this item once individual institution 
information is no longer needed for deposit insurance assessment 
purposes.\25\
---------------------------------------------------------------------------

    \25\ Findings from the statutorily mandated review of the Call 
Report will also be used for evaluating the FFIEC 002 new items. See 
footnote 13.
---------------------------------------------------------------------------

6. Board Regulation D Amendments
    The Board published in the Federal Register on April 28, 2020, an 
interim final rule that amends the Board's Regulation D (Reserve 
Requirements of Depository Institutions).\26\ The interim final rule 
amends the ``savings deposit'' definition in Regulation D by deleting 
the six-transfer-limit provisions in this definition that require 
depository institutions either to prevent transfers and withdrawals in 
excess of the limit or to monitor savings deposits ex post for 
violations of the limit. The interim final rule also makes conforming 
changes to other definitions in Regulation D that refer to ``savings 
deposit'' as necessary.
---------------------------------------------------------------------------

    \26\ 85 FR 23445.
---------------------------------------------------------------------------

    The interim final rule permits, but does not require, depository 
institutions to immediately suspend enforcement of the six-transfer 
limit and allow their customers to make an unlimited number of 
convenient transfers and withdrawals from their savings deposits. The 
interim final rule also does not require any changes to the deposit 
reporting practices of depository institutions.
    To implement the interim final rule, the agencies temporarily 
revised the instructions to the Call Reports and the FFIEC 002 via 
emergency approvals from OMB to reflect the revised definition of 
``savings deposits'' in Regulation D, beginning with reports for the 
June 30, 2020, report date. Specifically, the agencies published 
supplemental instructions to the Call Reports \27\ and the FFIEC 
002,\28\ which include temporary revisions to the General Instructions 
for Call Report Schedule RC-E and FFIEC 002 Schedule E, as well as the 
Glossary entries for ``Deposits'' in the Call Report and the FFIEC 002 
instructions, to remove references to the six-transfer limit. In 
addition, the supplemental instructions temporarily revised the General 
Instructions for Call Report Schedule RC-E and FFIEC 002 Schedule E to 
state that if a depository institution chooses to suspend enforcement 
of the six-transfer limit on a ``savings deposit,'' the depository 
institution may continue to report that account as a ``savings 
deposit'' or may instead choose to report that account as a 
``transaction account'' based on an assessment of certain 
characteristics of the account.
---------------------------------------------------------------------------

    \27\ 2Q2020 COVID-19 Related Supplemental Instructions (Call 
Report), https://www.ffiec.gov/pdf/FFIEC_forms/FFIEC031_FFIEC041_FFIEC051_suppinst_COVID_202006.pdf.
    \28\ 2Q2020 COVID-19 Related Supplemental Instructions (FFIEC 
002), https://www.ffiec.gov/pdf/FFIEC_forms/FFIEC002_suppinst_COVID_202006.pdf.
---------------------------------------------------------------------------

Call Reports and FFIEC 002 Revisions
    The agencies are revising the instructions to the Call Reports and 
the FFIEC 002 to reflect the revised definition of ``savings deposits'' 
in accordance with the amendments to Regulation D in the interim final 
rule, starting with the June 30, 2020, report date. Specifically, the 
agencies are revising the General Instructions for Call Report Schedule 
RC-E and FFIEC 002 Schedule E, as well as the Glossary entries for 
``Deposits'' in the Call Report and FFIEC 002 instructions, to remove 
references to the six-transfer limit from descriptions of ``savings 
deposits.''
    In the interim final rule, the Board amended the ``savings 
deposit'' definition in Regulation D to allow customers to be able to 
access savings deposits more easily. However, the agencies recognize 
that the corresponding temporary revisions to the instructions for the 
Call Reports and the FFIEC 002 created a reporting option that could 
result in the collection of ambiguous data by allowing a depository 
institution to report a savings deposit as either a ``savings deposit'' 
or a ``transaction account'' if the institution suspends enforcement of 
the six-transfer limit. To resolve this potential issue, the agencies 
propose to remove the reporting option and require instead that a 
depository institution report each account as a ``savings deposit'' or 
a ``transaction account'' based on the institution's assessment of 
account characteristics. Specifically, the agencies propose to revise 
the General Instructions for Call Report Schedule RC-E and FFIEC 002 
Schedule E, effective for reporting beginning in the first quarter of 
2021, to state that where the reporting institution has suspended the 
enforcement of the six-transfer limit rule on an account that otherwise 
meets the definition of a savings deposit, the institution must report 
such deposits as a ``savings deposit'' (and as a ``nontransaction 
account'') or a ``transaction account'' based on an assessment of the 
following characteristics:
    (i) If the reporting institution does not retain the reservation of 
right to require at least seven days' written notice before an intended 
withdrawal, the account must be reported as a demand deposit (and as a 
``transaction account'').
    (ii) If the reporting institution retains the reservation of right 
to require at least seven days' written notice before an intended 
withdrawal and the depositor is eligible to hold a NOW account, the 
account must be reported as an ATS account, NOW account, or a telephone 
and preauthorized transfer account (and as a ``transaction account'').
    (iii) If the reporting institution retains the reservation of right 
to require at least seven days' written notice before an intended 
withdrawal and the depositor is ineligible to hold a NOW account, the 
account must be reported as a savings deposit (and as a 
``nontransaction account'').
    The agencies anticipate that there will be no measurable increase 
in burden associated with these proposed revisions. The agencies may 
consider

[[Page 44370]]

further modifying the treatment of ``savings deposits'' and 
``transaction accounts'' in the instructions for the Call Report and 
the FFIEC 002 after a review of the reported data. Any such changes 
would be proposed by the agencies through a separate Federal Register 
notice pursuant to the PRA.
7. Loans to Executive Officers, Directors, and Principal Shareholders
    Under section 22(h) of the Federal Reserve Act and the Board's 
Regulation O (12 CFR 215), extensions of credit to insiders \29\ are 
subject to quantitative limits, prior approval requirements by an 
institution's board, and qualitative requirements concerning loan 
terms.\30\ On April 22, 2020, the Board issued an interim final rule 
that excepts certain loans that are guaranteed under the SBA's PPP from 
the requirements of section 22(h) of the Federal Reserve Act and the 
corresponding provisions of the Board's Regulation O.\31\ The interim 
final rule states that the Board has determined that PPP loans pose 
minimal risk because the SBA guarantees PPP loans at 100 percent of 
principal and interest and that PPP loans have fixed terms prescribed 
by the SBA. Accordingly, the interim final rule states that PPP loans 
will not be subject to section 22(h) or the corresponding provisions of 
Regulation O provided they are not prohibited by SBA lending 
restrictions.
---------------------------------------------------------------------------

    \29\ ``Insider means an executive officer, director, or 
principal shareholder, and includes any related interest of such a 
person.'' 12 CFR 215.2(h).
    \30\ 12 CFR 215.4.
    \31\ 85 FR 22345 (April 22, 2020).
---------------------------------------------------------------------------

    The agencies currently collect data on the number and outstanding 
balance of all ``extensions of credit'' to the reporting institution's 
executive officers, directors, principal shareholders, and their 
related interests that meet the definition of this term in Regulation 
O. This information is collected in Call Report Schedule RC-M, items 
1.a and 1.b. Call Report instructions refer to Regulation O for 
guidance in reporting extensions of credit to insiders in these items. 
In response to the changes to Regulation O, the agencies have revised 
the Call Report instructions effective as of the June 30, 2020, report 
date to note the PPP loan exception that has been added to Regulation O 
and clarify that PPP loans should not be reported in items 1.a and 1.b 
of Schedule RC-M. PPP loans did not exist in the first quarter of 2020, 
so the current reporting on Call Report Schedule RC-M does not include 
these loans. Therefore, the agencies do not believe that revising the 
instructions for this exception would change burden, as institutions 
would not need to revise the existing amounts reported in Schedule RC-
M, items 1.a and 1.b, in response to this change to Regulation O.
8. Temporary Exclusions From the Supplementary Leverage Ratio
    On April 14, 2020, the Board published in the Federal Register an 
interim final rule to temporarily exclude U.S. Treasury Securities 
(Treasuries) and deposits in their accounts at Federal Reserve Banks 
(deposits at Federal Reserve Banks) from total leverage exposure for 
bank holding companies, savings and loan holding companies, and 
intermediate holding companies subject to the supplementary leverage 
ratio through March 31, 2021.\32\
---------------------------------------------------------------------------

    \32\ 85 FR 20578.
---------------------------------------------------------------------------

    On June 1, 2020, the agencies published in the Federal Register an 
interim final rule (Depository Institution SLR IFR) to provide 
depository institutions subject to the supplementary leverage ratio the 
ability to temporarily exclude Treasuries and deposits at Federal 
Reserve Banks from total leverage exposure.\33\ An electing depository 
institution must notify its primary Federal banking regulator of its 
election within 30 days after the interim final rule is effective. The 
interim final rule will terminate after March 31, 2021.
---------------------------------------------------------------------------

    \33\ 85 FR 32980 (June 1, 2020).
---------------------------------------------------------------------------

Call Report Revisions
    Depository institutions subject to the supplementary leverage ratio 
report Treasuries not held for trading in Schedule RC-B, item 1, ``U.S. 
Treasury securities,'' and those held for trading in Schedule RC, item 
5, ``Trading assets'' (and, if applicable, in Schedule RC-D, item 1, 
``U.S. Treasury securities''). Such depository institutions report 
deposits at Federal Reserve Banks in Schedule RC-A, item 4, ``Balances 
due from Federal Reserve Banks.''
    Starting as of the June 30, 2020, report date, advanced approaches 
and Category III depository institutions that elect to opt into these 
temporary exclusions would exclude Treasuries and deposits at Federal 
Reserve Banks reported in the items identified above from Schedule RC-
R, Part I, item 55.a, ``Total leverage exposure.'' Custodial banking 
organizations will also be able to deduct from total leverage exposure 
deposits with qualifying foreign central banks reported as part of 
Schedule RC-A, item 3, ``Balances due from banks in foreign countries 
and foreign central banks,'' subject to the limits in the Section 402 
rule,\34\ in addition to the deductions under this interim final rule. 
For purposes of reporting the supplementary leverage ratio as of June 
30, 2020, electing depository institutions may reflect the exclusion of 
Treasuries and deposits at Federal Reserve Banks from total leverage 
exposure as if this interim final rule had been in effect for the 
entire second quarter of 2020. The instructions for item 55.a would be 
revised to state that institutions should measure their total leverage 
exposure in accordance with section 10(c)(4) of the regulatory capital 
rules and, for electing advanced approaches and Category III depository 
institutions, the applicable section of these rules for Treasuries and 
deposits at Federal Reserve Banks (section 303 for institutions 
supervised by the Board; section 304 for institutions supervised by the 
OCC or the FDIC). The temporary exclusions from total leverage exposure 
are available through the March 31, 2021, report date.
---------------------------------------------------------------------------

    \34\ The agencies recently issued a final rule, effective April 
1, 2020, which implements section 402 of the Economic Growth, 
Regulatory Relief, and Consumer Protection Act by amending the 
capital rule to allow a banking organization that qualifies as a 
custodial banking organization to exclude from total leverage 
exposure deposits at qualifying central banks, subject to limits 
(Section 402 rule). 85 FR 4569 (January 27, 2020).
---------------------------------------------------------------------------

FFIEC 101 Revisions
    For top-tier advanced approaches and Category III bank holding 
companies, savings and loan holding companies, and intermediate holding 
companies (and top-tier advanced approaches and Category III depository 
institutions that elect to opt into these temporary exclusions), 
Treasuries and deposits at Federal Reserve Banks would continue to be 
reported in the FFIEC 101, Schedule A, SLR Table 1, item 1.1, ``Total 
consolidated assets as reported in published financial statements,'' 
and Table 2, item 2.1, ``The balance sheet carrying value of all on-
balance sheet assets.'' Starting as of the June 30, 2020, report date, 
the average amount of Treasuries and deposits at Federal Reserve Banks 
calculated as of each day of the reporting quarter also would be 
reported in SLR Table 1, item 1.7.c, ``Adjustments for deductions of 
qualifying central bank deposits for custodial banking organizations,'' 
and in SLR Table 2, item 2.2.b, ``Deductions of qualifying central bank 
deposits from total on-balance sheet exposures for custodial banking 
organizations,'' even if a holding company or an electing depository 
institution is not a custodial banking organization.\35\ For purposes 
of

[[Page 44371]]

reporting the supplementary leverage ratio as of June 30, 2020, holding 
companies and electing depository institutions would be permitted the 
exclusion of Treasuries and deposits at Federal Reserve Banks from 
total leverage exposure as if these interim final rules had been in 
effect for the entire second quarter of 2020. The temporary exclusions 
from total leverage exposure would be available through the March 31, 
2021, report date.
---------------------------------------------------------------------------

    \35\ A holding company or electing depository institution may 
not deduct on-balance Treasuries in SLR Table 2, item 2.12, ``Gross 
assets for repo-style transactions, with no recognition of 
netting,'' if it already reports such on-balance sheet Treasuries in 
SLR Table 2, item 2.2.b.
---------------------------------------------------------------------------

    Custodial banking organizations would also be able to deduct from 
total leverage exposure deposits with qualifying foreign central banks, 
subject to the limits in the Section 402 rule, in addition to the 
deductions of Treasuries and deposits at Federal Reserve Banks under 
these interim final rules.

B. Revisions Related to Section 4013 of the CARES Act

    As provided for under the CARES Act, a financial institution may 
account for an eligible loan modification either under Section 4013 or 
in accordance with Financial Accounting Standards Board (FASB) 
Accounting Standards Codification (ASC) Subtopic 310-40, Receivables--
Troubled Debt Restructurings by Creditors. If a loan modification is 
not eligible under Section 4013, or if the institution elects not to 
account for the loan modification under Section 4013, the financial 
institution should evaluate whether the modified loan is a troubled 
debt restructuring (TDR) under ASC Subtopic 310-40.
    To be an eligible loan under Section 4013 (Section 4013 loan), a 
loan modification must be (1) related to COVID-19; (2) executed on a 
loan that was not more than 30 days past due as of December 31, 2019; 
and (3) executed between March 1, 2020, and the earlier of (A) 60 days 
after the date of termination of the National Emergency or (B) December 
31, 2020.
    Financial institutions accounting for eligible loans under Section 
4013 are not required to apply ASC Subtopic 310-40 to the Section 4013 
loans for the term of the loan modification. Financial institutions do 
not have to report Section 4013 loans as TDRs in regulatory reports.
Call Report and FFIEC 002 Revisions
    Consistent with Section 4013, the agencies requested and received 
emergency approvals from OMB to add two new data items for Section 4013 
loans to the Call Report and FFIEC 002, which would be collected 
quarterly beginning with the June 30, 2020, report date, with the 
collection of these items expected to be time-limited. These new items, 
Memorandum item 17.a, ``Number of Section 4013 loans outstanding,'' and 
Memorandum item 17.b, ``Outstanding balance of Section 4013 loans,'' 
would be added to Call Report Schedule RC-C, Part I, Loans and Leases, 
and Memorandum item 5.a, ``Number of Section 4013 loans outstanding,'' 
and Memorandum item 5.b, ``Outstanding balance of Section 4013 loans,'' 
would be added to FFIEC 002 Schedule C, Part I, Loans and Leases. These 
items would enable the agencies to monitor individual institutions' and 
the industry's use of the temporary relief provided by Section 4013 as 
well as the volume of loans modified in accordance with Section 4013. 
The agencies plan to propose to discontinue the collection of these 
specific items once the aggregate industry activity has diminished to a 
point where individual institution information is of limited practical 
utility.\36\
---------------------------------------------------------------------------

    \36\ These new Call Report items will be reviewed in connection 
with the statutorily mandated review of the Call Report. Findings 
from the statutorily mandated Call Report review will also be used 
for evaluating the FFIEC 002 new items. See footnote 13.
---------------------------------------------------------------------------

    The agencies will collect institution-level and branch-and-agency-
level Section 4013 loan information in the Call Report and the FFIEC 
002 on a confidential basis. While the agencies generally make 
institution-level Call Report and branch-and-agency-level FFIEC 002 
data publicly available, the agencies are collecting Section 4013 loan 
information as part of condition reports for the impacted entities and 
the agencies believe disclosure of these items at the institution level 
would not be in the public interest.\37\ Such information is permitted 
to be collected on a confidential basis, consistent with 5 U.S.C. 
552(b)(8).\38\
---------------------------------------------------------------------------

    \37\ 12 U.S.C. 1464(v)(2).
    \38\ Exemption 8 of the Freedom of Information Act (FOIA) 
specifically exempts from disclosure information ``contained in or 
related to examination, operating, or condition reports prepared by, 
on behalf of, or for the use of an agency responsible for the 
regulation or supervision of financial institutions.''
---------------------------------------------------------------------------

    The public disclosure of supervisory information on Section 4013 
loans could have a detrimental impact on financial institutions 
offering modifications under this provision to borrowers that need 
relief due to COVID-19. Financial institutions may be reluctant to 
offer modifications under Section 4013 if information on these 
modifications made by each institution is publicly available, as 
analysts, investors, and other users of public Call Report and FFIEC 
002 information may penalize an institution for using the relief 
provided by the CARES Act. The agencies have encouraged financial 
institutions to work with their borrowers during the National Emergency 
related to COVID-19, including use of the relief under Section 
4013.\39\
---------------------------------------------------------------------------

    \39\ See ``Interagency Statement on Loan Modifications and 
Reporting for Financial Institutions Working with Customers Affected 
by the Coronavirus (Revised)'' (April 7, 2020), available at https://www.occ.gov/news-issuances/news-releases/2020/nr-ia-2020-50a.pdf.
---------------------------------------------------------------------------

    The agencies may disclose Section 4013 loan data on an aggregated 
basis, consistent with confidentiality.

C. Revisions Related to U.S. GAAP

1. Provisions for Credit Losses on Off-Balance-Sheet Credit Exposures
    On June 16, 2016, the FASB issued Accounting Standards Update No. 
2016-13, Topic 326, Financial Instruments--Credit Losses (ASU 2016-13). 
Within Topic 326, paragraph 326-20-30-11 states, ``An entity shall 
report in net income (as a credit loss expense) the amount necessary to 
adjust the liability for credit losses for management's current 
estimate of expected credit losses on off-balance-sheet credit 
exposures.'' Off-balance-sheet credit exposures include unfunded loan 
commitments, financial standby letters of credit, and financial 
guarantees not accounted for as insurance, and other similar 
instruments except for those within the scope of ASC Topic 815 on 
derivatives and hedging.
    Throughout Topic 326, the FASB refers to provisions for credit 
losses as ``credit loss expense.'' For example, paragraph 326-20-30-1 
states, ``An entity shall report in net income (as a credit loss 
expense) the amount necessary to adjust the allowance for credit losses 
for management's current estimate of expected credit losses on 
financial assets(s).'' Thus, Topic 326 does not prohibit recording the 
adjustment to the liability for expected credit losses on off-balance-
sheet credit exposures within the provisions for credit losses reported 
in the income statement.
    The Call Report income statement instructions currently direct 
institutions that have adopted Topic 326 to report provisions for 
expected credit losses on off-balance-sheet credit exposures in 
Schedule RI, item 7.d, ``Other noninterest expense,'' and prohibit its 
inclusion in Schedule RI, item 4,

[[Page 44372]]

``Provision for loan and lease losses.'' \40\ Therefore, to align 
regulatory reporting to the guidance within Topic 326, the agencies 
propose to change the Call Report instructions to direct institutions 
that have adopted Topic 326 to report provisions for expected credit 
losses on off-balance-sheet credit exposures as part of the total 
amount of institutions' provisions for credit losses in Schedule RI, 
item 4.\41\ This Schedule RI instructional change would carry over to 
Schedule RI-D, Income from Foreign Offices, on the FFIEC 031.\42\ These 
instructional changes would apply only to institutions that have 
adopted Topic 326.
---------------------------------------------------------------------------

    \40\ A footnote to Schedule RI, item 4, on the Call Report forms 
currently states, ``Institutions that have adopted ASU 2016-13 
should report in item 4 the provisions for credit losses on all 
financial assets that fall within the scope of the standard.''
    \41\ The existing footnote to Schedule RI, item 4, also would be 
revised in the same manner.
    \42\ The existing footnote to Schedule RI-D, item 3, would be 
revised in the same manner as the footnote to Schedule RI, item 4.
---------------------------------------------------------------------------

    The inclusion of provisions for expected credit losses on off-
balance-sheet credit exposures in the provisions for credit losses 
presented in item 4 of the Call Report income statement will cause a 
loss of transparency within the overall reported amount of provisions 
for credit losses between provisions attributable to on- and off-
balance-sheet credit exposures. To enhance transparency and 
differentiate these provisions, the agencies propose adding a new 
Memorandum item 7, ``Provisions for credit losses on off-balance-sheet 
credit exposures,'' to Schedule RI-B, Part II, Changes in Allowances 
for Credit Losses, which will identify the portion of the overall 
amount of the provisions for credit losses reported in Schedule RI, 
item 4, attributable to the provisions for expected credit losses on 
off-balance-sheet credit exposures. Adding the new memorandum item to 
Schedule RI-B, Part II, will enable the agencies to monitor the 
underlying components of the total amount of an institution's 
provisions for credit losses (i.e., the separate provisions for 
expected credit losses attributable to loans and leases held for 
investment, held-to-maturity debt securities, AFS debt securities, 
other financial assets measured at amortized cost, and off-balance-
sheet credit exposures) and how these components change over time in 
relation to the amounts of the various categories of financial assets 
and off-balance-sheet credit exposures within the scope of ASC Topic 
326.
    In addition, footnote 5 on Schedule RI-B, Part II, item 5, 
``Provisions for credit losses,'' will be updated to reflect ``For 
institutions that have adopted ASU 2016-13, the sum of item 5, Column A 
through Column C, plus Schedule RI-B, Part II, Memorandum items 5 and 
7, below, must equal Schedule RI, item 4.''
2. Expected Recoveries of Amounts Previously Charged Off Included 
within the Allowances for Credit Losses
    As noted above, the FASB issued ASU 2016-13 on June 16, 2016, which 
has been amended by subsequent FASB ASUs. Within Topic 326, paragraph 
326-20-30-1 states, ``The allowance for credit losses is a valuation 
account that is deducted from, or added to, the amortized cost basis of 
the financial asset(s) to present the net amount expected to be 
collected on the financial asset. Expected recoveries of amounts 
previously written off and expected to be written off shall be included 
in the valuation account and shall not exceed the aggregate of amounts 
previously written off and expected to be written off by an entity.'' 
The terms ``written off'' as used in Topic 326 and ``charged off'' as 
used in Call Report instructions are used interchangeably in this 
discussion.
    Under GAAP before an institution's adoption of Topic 326, expected 
recoveries of amounts previously written off would not be included in 
the measurement of the allowance for loan and lease losses; recoveries 
would be recorded only when received. Under Topic 326, including 
expected recoveries of amounts previously written off within allowances 
for credit losses reduces the overall amount of these allowances. 
Amounts related to an individual asset are written off or charged off 
when deemed uncollectible. However, under ASC Topic 326, institutions 
could, in some circumstances, reduce the amount of the allowance for 
credit losses that would otherwise be calculated for a pool of assets 
with similar risk characteristics that includes charged-off assets on 
the same day the charge-offs were taken by the estimated amount of 
expected recoveries of amounts written off on these assets. Reducing 
the allowance for credit losses by amounts of expected recoveries prior 
to collection effectively ``reverses'' a charge-off. Therefore, to 
provide transparency for amounts with inherently higher risk that, 
before an institution's adoption of ASC Topic 326, were not allowed to 
be recorded until they were received, the agencies propose to add new 
Memorandum item 8 to Schedule RI-B, Part II, Changes in Allowances for 
Credit Losses, to capture the ``Estimated amount of expected recoveries 
of amounts previously written off included within the allowance for 
credit losses on loans and leases held for investment (included in item 
7, column A, `Balance end of current period,' above).'' This new item 
would be applicable to institutions only after they have adopted Topic 
326.
    Not including the proposed memorandum item for expected recoveries 
of amounts previously written off within the allowance for credit 
losses on loans and leases will cause a loss of transparency within the 
reported amount of this allowance between the portions of the allowance 
attributable to (1) expected credit losses on the amortized cost basis 
of loans and leases held for investment net of expected recoveries of 
amounts expected to be charged off in the future and (2) expected 
recoveries of loan and lease amounts previously charged off. Proposed 
new Memorandum item 8 will enhance transparency and differentiate these 
amounts within the period-end balance of the allowance for credit 
losses on loans and leases by separately identifying the estimated 
amount within this allowance attributable to expected recoveries of 
amounts previously written off. This proposed new memorandum item will 
enable the agencies, including their examiners, and other Call Report 
users to better understand key components underlying institutions' 
allowance for credit losses on loans and leases (i.e., amounts for 
expected credit losses on the amortized cost basis of loans and leases 
held for investment and amounts for expected recoveries of amounts 
previously written off on such loans and leases) and how these 
components change over time. This information will assist the agencies 
and other users in monitoring amounts with inherently higher credit 
risk, and changes therein, that contribute to reductions in the overall 
amount of the allowance for credit losses on loans and leases. This 
proposed new memorandum item will apply to loans and leases held for 
investment because this is the Call Report category of financial assets 
that is expected to have the greatest amount of estimated expected 
recoveries of amounts previously written off.
3. Nonaccrual Treatment of Purchased Credit-Deteriorated Assets
    ASU 2016-13 introduced the concept of purchased credit-deteriorated 
(PCD) assets. PCD assets are acquired financial assets that, at 
acquisition, have experienced more-than-insignificant deterioration in 
credit quality since origination. When recording the acquisition of PCD 
assets, the amount of expected credit losses as of the acquisition date 
is recorded as an

[[Page 44373]]

allowance and added to the purchase price of the assets rather than 
recording these acquisition date expected credit losses through 
provisions for credit losses. The sum of the purchase price and the 
initial allowance for credit losses (ACL) establishes the amortized 
cost basis of the PCD assets at acquisition. Any difference between the 
unpaid principal balance of the PCD assets and the amortized cost basis 
of the assets as of the acquisition date is a noncredit discount or 
premium. The initial ACL and any noncredit discount or premium 
determined on a collective basis at the acquisition date are allocated 
to the individual PCD assets.
    After acquisition, any noncredit discount or premium is accreted or 
amortized into interest income, as appropriate, over the remaining 
lives of the PCD assets on a level-yield basis. However, if a PCD asset 
is placed in nonaccrual status, institutions must cease accreting the 
noncredit discount or amortizing the noncredit premium into interest 
income consistent with the guidance in ASC paragraph 310-20-35-17.
    The current instructions for Call Report Schedule RC-N, Past Due 
and Nonaccrual Loans, Leases, and Other Assets, provide an exception to 
the general rule for placing financial assets in nonaccrual status set 
forth in the Call Report Glossary entry for ``Nonaccrual status'' for 
purchased credit-impaired (PCI) assets. The instructions for FFIEC 002 
Schedule N, Past Due, Nonaccrual, and Restructured Loans, include a 
similar exception for PCI assets. Topic 326 replaces the concept of PCI 
assets in previous GAAP with the concept of PCD assets.\43\ Although 
there is some similarity between the concepts of PCI and PCD assets, 
these two concepts are not identical. Nevertheless, ASU 2016-13 
provides that, upon adoption of Topic 326, all PCI assets will be 
deemed to be, and accounted for prospectively as, PCD assets. However, 
the Schedule RC-N instructions indicate that the nonaccrual exception 
for PCI assets was not extended to PCD assets by stating that ``For 
purchased credit-deteriorated loans, debt securities, and other 
financial assets that fall within the scope of ASU 2016-13, nonaccrual 
status should be determined and subsequent nonaccrual treatment, if 
appropriate, should be applied in the same manner as for other 
financial assets held by an institution.''
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    \43\ According to ASC paragraph 310-30-15-2, PCI assets, in 
general, are loans and debt securities with evidence of 
deterioration of credit quality since origination acquired by 
completion of a transfer for which it is probable, at acquisition, 
that the investor will be unable to collect all contractually 
required payments receivable.
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    As described in the Call Report Supplemental Instructions for March 
2020, if an institution has adopted ASU 2016-13 and has a PCD asset, 
including a PCD asset that was previously a PCI asset or part of a pool 
of PCI assets, that would otherwise be required to be placed in 
nonaccrual status (see the Glossary entry for ``Nonaccrual status''), 
the institution may elect to continue accruing interest income and not 
report the PCD asset as being in nonaccrual status if the following 
criteria are met:
    (1) The institution reasonably estimates the timing and amounts of 
cash flows expected to be collected, and
    (2) the institution did not acquire the asset primarily for the 
rewards of ownership of the underlying collateral, such as use of 
collateral in operations of the institution or improving the collateral 
for resale.
    Additionally, these Call Report Supplemental Instructions state 
that when a PCD asset that meets the criteria above is not placed in 
nonaccrual status, the asset should be subject to other alternative 
methods of evaluation to ensure that the institution's net income is 
not materially overstated. Further, an institution is not permitted to 
accrete the credit-related discount embedded in the purchase price of a 
PCD asset that is attributable to the acquirer's assessment of expected 
credit losses as of the date of acquisition (i.e., the contractual cash 
flows the acquirer did not expect to collect at acquisition). Interest 
income should no longer be recognized on a PCD asset to the extent that 
the net investment in the asset would increase to an amount greater 
than the payoff amount. If an institution is required or has elected to 
carry a PCD asset in nonaccrual status, the asset must be reported as a 
nonaccrual asset at its amortized cost basis in Call Report Schedule 
RC-N, column C.\44\
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    \44\ Similarly, in the FFIEC 002, any PCD loans in nonaccrual 
status would be reported in Schedule N, column C.
---------------------------------------------------------------------------

    For PCD assets for which the institution has made a policy election 
to maintain a previously existing pool of PCI assets as a unit of 
account for accounting purposes upon adoption of ASU 2016-13, the 
determination of nonaccrual or accrual status should be made at the 
pool level, not at the individual asset level.
    For a PCD asset that is not reported in nonaccrual status, the 
delinquency status of the PCD asset should be determined in accordance 
with its contractual repayment terms for purposes of reporting the 
amortized cost basis of the asset as past due in Schedule RC-N, column 
A or B, and in FFIEC 002 Schedule N, column A or B, as appropriate. If 
the PCD asset that is not reported in nonaccrual status consists of a 
pool of loans that were previously PCI assets that is being maintained 
as a unit of account after the adoption of ASU 2016-13, delinquency 
status should be determined individually for each loan in the pool in 
accordance with the individual loan's contractual repayment terms.
    The agencies are proposing to update the Call Report and FFIEC 002 
instructions to revise the nonaccrual treatment for PCD assets to 
provide institutions the option to not report PCD assets in nonaccrual 
status if they meet the criteria described above. The instructions also 
would incorporate the other reporting guidance for PCD assets in the 
Call Report Supplemental Instructions for March 2020 described above.
4. Last-of-Layer Hedging
    In ASU No. 2017-12, Derivatives and Hedging (Topic 815)-Targeted 
Improvements to Accounting for Hedging Activities, the FASB added the 
last-of-layer method to its hedge accounting standards to lessen the 
difficulties institutions encountered under existing accounting rules 
when seeking to enter into a fair value hedge of the interest rate risk 
of a closed portfolio of prepayable financial assets or one or more 
beneficial interests secured by a portfolio of prepayable financial 
instruments. Typically, prepayable financial assets would be loans and 
AFS debt securities.\45\ Under ASU 2017-12, there are no limitations on 
the types of qualifying assets that could be grouped together in a 
last-of-layer hedge other than meeting the following two criteria: (1) 
They must be prepayable financial assets that have a contractual 
maturity date beyond the period being hedged and (2) they must be 
eligible for fair value hedge accounting of interest rate risk (for 
example, fixed-rate instruments). For example, fixed-rate residential 
mortgages, auto loans, and collateralized mortgage obligations could 
all be grouped and hedged together in a single last-of-layer closed 
portfolio. For a last-of-layer hedge, ASC paragraph 815-10-50-5B states 
that an institution may need to allocate the related fair value hedge 
basis adjustment (FVHBA) ``to meet the objectives of disclosure 
requirements in other Topics.'' This ASC paragraph then explains that 
the

[[Page 44374]]

institution ``may allocate the basis adjustment on an individual asset 
basis or on a portfolio basis using a systematic and rational method.'' 
Due to the aggregation of assets in a last-of-layer closed portfolio, 
institutions may find it challenging to allocate the related FVHBA to 
the individual loan or AFS debt security level when necessary for 
financial reporting purposes.
---------------------------------------------------------------------------

    \45\ Prepayable held-to-maturity debt securities do not qualify 
for last-of-layer hedging.
---------------------------------------------------------------------------

    In March 2018, the FASB added a project to its agenda to expand 
last-of-layer hedging to multiple layers, thereby providing more 
flexibility to entities when applying hedge accounting to a closed 
portfolio of prepayable assets. In connection with this project, the 
FASB anticipated that there would be diversity in practice if entities 
were required to allocate portfolio-level, last-of-layer FVHBAs to more 
granular levels, which in turn could potentially hamper data quality 
and comparability. In addition, the allocation would increase 
operational burden on institutions with little, if any, added value to 
risk management or to users of the financial statements. As such, for 
financial reporting purposes, the FASB Board has tentatively decided 
that it would require these FVHBAs to be presented as a reconciling 
item, i.e., in the aggregate for loans and AFS debt securities, in 
disclosures required by other areas of GAAP.\46\
---------------------------------------------------------------------------

    \46\ The tentative decision was made at the FASB Board meeting 
on October 16, 2019. The Board meeting minutes are available at 
https://www.fasb.org/jsp/FASB/Document_C/DocumentPage&cid=1176173617941. Currently, no exposure draft or ASU 
associated with this project has been issued.
---------------------------------------------------------------------------

Call Report Revisions
    For regulatory reporting purposes, the agencies are proposing 
similar treatment for last-of-layer FVHBAs on Call Report Schedule RC-
C, Part I, Loans and Leases, and Schedule RC-B, Securities. As such, 
following the FASB's adoption of a final last-of-layer hedge accounting 
standard, the instructions for Schedule RC-C, Part I, item 11, ``LESS: 
Any unearned income on loans reflected in items 1-9 above,'' would be 
revised to explicitly state that last-of-layer FVHBAs associated with 
the loans reported in Schedule RC-C, Part I, should be included in this 
item.
    In addition, the agencies are proposing on Schedule RC-B, 
Securities, to rename existing item 7, ``Investments in mutual funds 
and other equity securities with readily determinable fair values,'' as 
``Unallocated last-of-layer fair value hedge basis adjustments.'' 
Institutions would report amounts for last-of-layer FVHBAs on AFS debt 
securities only in item 7, column C, ``Available-for-sale: Amortized 
Cost.'' To note, only a small number of institutions that have not have 
yet adopted ASU 2016-01, which includes provisions governing the 
accounting for investments in equity securities, continue to report 
amounts in item 7. Because all institutions are required to adopt ASU 
2016-01 for Call Report purposes by the December 31, 2020, report date, 
the agencies had previously determined that existing item 7 in Schedule 
RC-B would no longer be applicable to institutions for reporting 
purposes and could be removed as of that report date.\47\ Thus, the 
need for a new item in Schedule RC-B for reporting unallocated FVHBAs 
applicable to AFS debt securities following the FASB's adoption of a 
final last-of-layer hedge accounting standard can be readily 
accommodated through the redesignation of existing item 7, column C, 
for this purpose.
---------------------------------------------------------------------------

    \47\ 83 FR 945-946 (January 8, 2018).
---------------------------------------------------------------------------

FFIEC 002 Revisions
    The agencies are also proposing similar treatment for last-of-layer 
FVHBAs on FFIEC 002 Schedule C, Part I, Loans, and Schedule RAL, Assets 
and Liabilities, Memorandum item 3.b, ``Amortized cost of available-
for-sale securities,'' following the FASB's adoption of a final last-
of-layer hedge accounting standard. The instructions for Schedule C, 
Part I, item 10, ``LESS: Any unearned income on loans reflected in 
items 1-8 above,'' would be revised to explicitly state that last-of-
layer FVHBAs associated with the loans reported in Schedule C, Part I, 
should be included in this item.
    In addition, the agencies are proposing to revise the FFIEC 002 
instructions to state that institutions should report amounts for last-
of-layer FVHBAs applicable to available-for-sale debt securities in 
Schedule RAL, Memorandum item 3.b, ``Amortized cost of available-for-
sale securities.''

D. Revisions Related to International Remittance Transfers

    Section 1073 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act) \48\ amended the Electronic Fund 
Transfer Act (EFTA) \49\ to create comprehensive consumer protections 
for remittance transfers sent by consumers in the United States to 
individuals and businesses in foreign countries. The Bureau implemented 
these EFTA amendments through the Remittance Rule (12 CFR 1005.30 et 
seq.). EFTA and the Remittance Rule include a requirement that 
remittance transfer providers generally must disclose (both prior to 
and at the time the consumer pays for the transfer) the exact exchange 
rate that applies to a remittance transfer and the amount to be 
received by the designated recipient of the transfer. The Remittance 
Rule also requires remittance transfer providers to disclose certain 
fees and other information, among several other requirements.
---------------------------------------------------------------------------

    \48\ 12 U.S.C. 5601.
    \49\ 15 U.S.C. 1693 et seq.
---------------------------------------------------------------------------

    A person that provides remittance transfers in the normal course of 
its business is a remittance transfer provider subject to the 
Remittance Rule's requirements. Generally, whether a person provides 
remittance transfers in the normal course of its business depends on 
the facts and circumstances, such as the number and frequency of the 
remittance transfers the person provides. However, the Remittance Rule 
as originally adopted contained a safe harbor whereby a person that 
provided 100 or fewer remittance transfers in each of the previous and 
current calendar years was deemed not to be providing remittance 
transfers in the normal course of its business, and therefore was 
outside of the Remittance Rule's coverage.
    The EFTA and the Remittance Rule also contain exceptions that 
permit some remittance transfer providers to estimate certain 
information in the required disclosures in certain circumstances. Of 
relevance to the current Call Reports, as discussed in greater detail 
below, there is a ``temporary exception'' that permits certain insured 
institutions \50\ to estimate certain fees and the exchange rate (and 
information that depends on the fees and exchange rate) in their 
disclosures if certain conditions are met. Importantly, EFTA section 
919 expressly limits the length of the temporary exception to July 21, 
2020. As a result, the temporary exception will expire on July 21, 
2020.
---------------------------------------------------------------------------

    \50\ The term ``insured institution'' refers to ``an insured 
depository institution, as defined in section 1813 of title 12, or 
an insured credit union, as defined in section 1752 of title 12.'' 
15 U.S.C. 1693o-1(a)(4)(A).
---------------------------------------------------------------------------

    In 2014, item 16 was added to Schedule RC-M of the FFIEC 031 and 
FFIEC 041 Call Reports, citing Section 1073 of the Dodd-Frank Act and 
the Remittance Rule.\51\ In supporting the inclusion of this new item 
in the Call Reports, the agencies ``stated that the new item regarding 
remittance transfers could facilitate monitoring of market entry and 
exit, which would improve

[[Page 44375]]

understanding of the consumer payments landscape generally, and 
facilitate evaluation of the remittance transfer rule's impact. . .[as 
well as] enable the FFIEC and the agencies to refine supervisory 
procedures and policies. . .[and] help inform any later policy 
decisions regarding remittance transfers and activities regarding 
remittance transfers that are mandated by section 1073 of the Dodd-
Frank Act.'' \52\
---------------------------------------------------------------------------

    \51\ 79 FR 2509 (Feb. 14, 2014). Item 16 was later incorporated 
into the FFIEC 051 Call Report when that report was created.
    \52\ Ibid.
---------------------------------------------------------------------------

    In 2018, the Bureau published its report of its Dodd-Frank-mandated 
assessment of the Remittance Rule (``Assessment Report'').\53\ Based on 
information surfaced by the Bureau's assessment as well as a subsequent 
Request for Information,\54\ the Bureau proposed amendments to the 
Remittance Rule in 2019 (``Remittance Proposal'' or ``Proposal'').\55\ 
The Remittance Proposal included a proposed effective date of July 21, 
2020. On June 5, 2020, the Bureau published a Final Rule amending the 
Remittance Rule.\56\
---------------------------------------------------------------------------

    \53\ Bureau, Remittance Rule Assessment Report (Oct. 2018, rev. 
Apr. 2019), https://files.consumerfinance.gov/f/documents/bcfp_remittance-rule-assessment_report_corrected_2019-03.pdf
    \54\ 84 FR 17971 (Apr. 29, 2019).
    \55\ 84 FR 67132 (Dec. 6, 2019).
    \56\ 85 FR 34870 (Jun. 5, 2020).
---------------------------------------------------------------------------

    Currently, Schedule RC-M, Memoranda, item 16, ``International 
remittance transfers offered to consumers,'' and its instructions are 
identical across the FFIEC 031, FFIEC 041, and FFIEC 051 Call Report 
forms. The item consists of four questions, two of which are further 
subdivided into four and three questions, for a total of nine different 
data points requested of respondents that meet certain criteria 
outlined in the current Call Report instructions.
    Through the Remittance Proposal process, the Bureau identified 
certain proposed changes to the information collected in Schedule RC-M, 
item 16. These changes would better align item 16 with the Remittance 
Rule as amended, as well as streamline reporting for respondents and 
reduce burden where appropriate. The agencies propose that revised item 
16 would consist of two questions, one of which would be further 
subdivided into three questions, for a total of four different data 
points. Item 16.a would be renamed ``Estimated number of international 
remittance transfers provided by your institution during the calendar 
year ending on the report date.'' This data item would be proposed to 
be collected annually in the December Call Report only. Item 16.b.(1) 
through 16.b.(3) would be completed only by institutions that reported 
501 or more international remittance transfers in Schedule RC-M, item 
16.a, in either the current report or the report for the previous 
calendar year-end report date.\57\ The revised items 16.b.(1) through 
(3) would request data on the estimated dollar value of remittance 
transfers provided by an institution during the calendar year ending on 
the report date and its usage during this same period of the permanent 
exceptions for insured institutions as incorporated into the Remittance 
Rule by the Bureau's 2020 Final Rule. Specifically, an institution 
would report the following information in revised items 16.b.(1) 
through (3), if applicable:
---------------------------------------------------------------------------

    \57\ For the transitional December 2021 Call Report only, an 
institution would complete Schedule RC-M, items 16.b.(1) through 
16.b.(3), only if it reports 501 or more international remittance 
transfers in Schedule RC-M, item 16.a, in the December 2021 Call 
Report or it reported a combined total of 501 or more international 
remittance transfers in Schedule RC-M, item 16.d.(1), in the June 
and December 2020 Call Reports.
---------------------------------------------------------------------------

    (1) Estimated dollar value of international remittance transfers;
    (2) Estimated number of international remittance transfers for 
which your institution applied the permanent exchange rate exception; 
and
    (3) Estimated number of international remittance transfers for 
which your institution applied the permanent covered third-party fee 
exception.
    Consistent with the current instructions for reporting estimated 
numbers and dollar values for international remittance transfers in 
Schedule RC-M, item 16, the estimates reported in revised items 16.a 
and 16.b.(1) through (3) should be based on a reasonable and 
supportable methodology and the estimated dollar value of international 
remittance transfers, if required to be reported in item 16.b.(1), is 
not required to be estimated in thousands of dollars.

III. Timing

    The revisions associated with the interim final rules, the proposed 
and final deposit insurance assessments rule, and the CARES Act 
provisions have been approved by OMB through the emergency clearance 
process, and these revisions have taken effect for the March 31, 2020, 
Call Report and FFIEC 101 or the June 30, 2020, Call Report, FFIEC 101, 
and FFIEC 002, or will take effect for the September 30, 2020, FFIEC 
002, as discussed in Sections II.A and B. For the additional proposed 
revisions to the Call Report and FFIEC 002 instructions that are 
related to the amendment of the Board's Regulation D, as discussed in 
section II.A, the agencies propose to make these revisions effective 
for reporting beginning in the first quarter of 2021.
    For the accounting changes discussed in Section II.C, the agencies 
propose to make the revisions effective as of the March 31, 2021, 
report date, except for the revisions for last-of-layer hedging, which 
would be implemented following the FASB's adoption of a final last-of-
layer hedge accounting standard. A final standard is not expected to be 
issued before the second half of 2021.
    The agencies propose to make the revisions to Schedule RC-M for the 
international remittance transfer items discussed in Section II.D 
effective March 31, 2021.\58\
---------------------------------------------------------------------------

    \58\ Therefore, institutions will report current Schedule RC-M, 
item 16, in December 2020; will not report current Schedule RC-M, 
item 16, at all in June 2021; and will report the proposed revised 
Schedule RC-M, item 16, in December 2021 (covering all of calendar 
year 2021).
---------------------------------------------------------------------------

    The agencies invite comment on any difficulties that institutions 
would expect to encounter in implementing the systems changes necessary 
to accommodate the proposed revisions to the Call Reports, FFIEC 101, 
and FFIEC 002 consistent with those effective dates.
    The specific wording of the captions for the new or revised Call 
Report, FFIEC 101, and FFIEC 002 data items discussed in this proposal 
and the numbering of these data items should be regarded as 
preliminary.

IV. Request for Comment

    Public comment is requested on all aspects of this joint notice. 
Comment is specifically invited on:
    (a) Proposed new Memorandum item 8, ``Estimated amount of expected 
recoveries of amounts previously written off included within the 
allowances for credit losses on loans and leases held for investment 
(included in item 7, ``Balance end of current period,'' above),'' would 
be added to Schedule RI-B, Part II, Changes in Allowances for Credit 
Losses.
    (1) Do institutions have information readily available on the 
estimated amount of these expected recoveries that is proposed to be 
collected? If not, what additional steps would institutions need to 
take to be able to report this estimated amount?
    (2) Although, as proposed, this item applies to the overall 
allowance for credit losses on loans and leases held for investment, 
would reporting institutions or users of allowance data prefer a 
different or more disaggregated

[[Page 44376]]

collection of information on expected recoveries? If so, please provide 
specific reasons and describe the preferred different or more 
disaggregated collection.
    (b) Proposed changes for reporting last-of-layer FVHBAs would be 
made to Call Report Schedule RC-B, Securities, and Schedule RC-C, Part 
I, Loans and Leases, and FFIEC 002 Schedule RAL, Assets and 
Liabilities, and Schedule C, Part I, Loans and Leases, following the 
FASB's adoption of a final last-of-layer hedge accounting standard.
    (1) How do institutions that have implemented last-of-layer hedging 
under ASU 2017-12 currently report the FVHBAs associated with loans and 
AFS debt securities in the Call Report or the FFIEC 002?
    (2) Do such institutions find it challenging to allocate these 
last-of-layer FVHBAs on an individual asset basis or on a portfolio 
basis for financial and regulatory reporting purposes? If so, please 
explain whether these challenges are greater for regulatory reporting 
than financial reporting purposes and describe the reasons for this.
    (3) Should the agencies consider implementing the changes for 
reporting FVHBAs proposed in Section II.C.4 or some other interim 
reporting treatment for FVHBAs before the FASB's adoption of a final 
last-of-layer hedge accounting standard, provided the resulting 
reporting of FVHBAs would not be inconsistent with GAAP? Please 
describe any suggested other interim reporting treatment.
    (c) 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;
    (d) 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;
    (e) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (f) 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
    (g) 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.

Theodore J. Dowd,
Deputy Chief Counsel, Office of the Comptroller of the Currency.

Board of Governors of the Federal Reserve System.
Michele Taylor Fennell,
Assistant Secretary of the Board.

Federal Deposit Insurance Corporation.
    Dated at Washington, DC, on July 16, 2020.
James P. Sheesley,
Acting Assistant Executive Secretary.
[FR Doc. 2020-15788 Filed 7-21-20; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P