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December 12, 2018

FED proposed to extend for three years, with revision, the FR Y-9, FR Y-7N, FR Y-11, and FR 2314 family of reports, in addition to the forms FR 2886b, FR Y-8, FR 2248, FR 2320, FR 2644, and FR 2886b. Comment period on the consultation ends on February 11, 2019.

FED proposed the following:

  • To implement changes to address the revised accounting standards for the adoption of the current expected credit loss (CECL) methodology across all of the reports
  • To make several revisions to the FR 2886b report, including updating references to applicable capital requirements, revising the eligibility criteria for reporting the trading schedule, and implementing changes pertaining to the accounting treatment of equity securities
  • To extend for three years through the normal delegated review process certain revisions to the FR Y-9C that the FED previously approved on a temporary basis to implement changes consistent with Section 214 and Section 202 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCP Act) pertaining to the risk-weighting of High Volatility Commercial Real Estate (HVCRE) exposures and the treatment of reciprocal deposits
  • To clarify reporting of unrealized holding gains and losses on equity securities on the FR Y-9C report

FR Y-9C serves as standardized financial statements for the consolidated holding company. The FR Y-9 family of reporting forms continues to be the primary source of financial data on holding companies that examiners rely on between on-site inspections. Financial data from these reporting forms is used to detect emerging financial problems, review performance, conduct pre-inspection analysis, monitor and evaluate capital adequacy, evaluate holding company mergers and acquisitions, and analyze a holding company's overall financial condition to ensure the safety and soundness of its operations. FED requires holding companies to provide standardized financial statements to fulfill its statutory obligation to supervise these organizations. Holding companies file the FRY-9C on a quarterly basis.

Additionally, the proposed reporting changes related to CECL are tied to the revisions proposed in the CECL notice of proposed rulemaking by FED, FDIC, and OCC (the US Agencies) to revise the regulatory capital rules related to the implementation and capital transition for CECL and to the corresponding proposed CECL revisions to the Consolidated Reports of Condition and Income (Call Reports FFIEC 031, FFIEC 041, and FFIEC 051; OMB No. 7100-0036). To the extent the agencies alter proposed elements of the CECL notice of proposed rulemaking or the Call Report CECL proposal, FED would make any necessary corresponding adjustments to the proposed CECL reporting revisions for the reports outlined in this notice prior to final approval of this proposal. The effective dates for adopting CECL vary depending on whether a firm is a public business entity, an SEC report filer, or an early adopter. The proposed non-CECL related revisions to the FR Y-9C and FR 2886b reports would be effective for the March 31, 2019, report date.

Due to the different effective dates for Accounting Standard Update (ASU) 2016-13, the period over which institutions may be implementing this ASU ranges from the first quarter of 2019 through the fourth quarter of 2022. December 31, 2022 will be the first quarter-end of which all institutions would be required to prepare their reports in accordance with ASU 2016-13. It is expected that the majority of institutions will implement the standard in the first or fourth quarter of 2021. Schedule titles or specific data item captions resulting from the change in nomenclature on the adoption of CECL generally would not be reflected in the reporting forms until March 31, 2021, as outlined in the schedule-by-schedule descriptions of the proposed changes to the affected reporting schedules. Due to the staggered adoption dates, FED proposes to implement the CECL revisions in stages:

  • First, FED would revise the reporting form and instructions and add data items and schedules for certain impacted reports effective for March 31, 2019. The changes would include guidance stating how institutions that have adopted ASU-2016-13 would report the data items related to the “provision for credit losses” and “allowance for credit losses," as applicable.
  • Next, for the transition period from March 31, 2021, through December 31, 2022, the reporting form and instructions for each impacted schedule title or data item would be updated to include guidance stating how institutions that have not adopted ASU 2016-13 would report the “provision for loan and lease losses” or the “allowance for loan and lease losses,” as applicable.

 

Related Link: Proposed Rule

Comment Due Date: February 11, 2019

Keywords: Americas, US, Banking, Reporting, CECL, IFRS 9, EGRRCP Act, FR Y-9C, Call Reports, FED

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