Proposed Agency Information Collection Activities; Comment Request, 44361-44376 [2020-15788]
Download as PDF
<![CDATA[
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: https://
www.federalreserve.gov. Follow the
instructions for submitting comments at:
https://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]
=======================================================================
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
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: https://www.federalreserve.gov. Follow the
instructions for submitting comments at: https://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).
---------------------------------------------------------------------------
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).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
\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.''
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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
