March 08, 2019

FDIC announced, via its Financial Institution Letter (FIL), that the US banking agencies, under the auspices of FFIEC, have finalized revisions to certain reports, including FFIEC 031, FFIEC 041, FFIEC 051, and FFIEC 101 reports, that primarily address changes in the accounting for credit losses under the Accounting Standards Update (ASU) 2016-13 of FASB. Other revisions to these reports result from the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCP Act) and relate to the reporting of high-volatility commercial real estate (HVCRE) exposures and reciprocal deposits. The revisions were issued for comment in September 2018 and are subject to approval by the U.S. Office of Management and Budget.

This FDIC Financial Institution Letter applies to all FDIC-supervised banks and savings associations, including community institutions. The changes related to credit loss reporting affect all three versions of the Call Reports (FFIEC 031, FFIEC 041, and FFIEC 051) as well as the following FFIEC reports that are applicable to a limited number of institutions:

  • Foreign Branch Report of Condition (FFIEC 030)
  • Abbreviated Foreign Branch Report of Condition (FFIEC 030S)
  • Regulatory Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework (FFIEC 101)

The changes to the Call Reports and the FFIEC 101 report implement the agencies' recent revisions to the regulatory capital rules for the current expected credit losses (CECL) methodology in ASU 2016-13, including a CECL regulatory capital transition. Since ASU 2016-13 has different effective dates for different institutions, the reporting changes related to credit losses will be phased in between March 31, 2019 and December 31, 2022. The reporting changes involving the reporting of HVCRE exposures and reciprocal deposits arise from two sections of EGRRCP Act that were effective on its enactment on May 24, 2018. Consequently, these changes affected reporting in the Call Reports and the FFIEC 101 report beginning as of the June 30, 2018 report date.

Additionally, the US Agencies (OCC, FED, and FDIC) are currently considering the comments received on a separate proposal to implement Section 205 of EGRRCPA on reduced reporting for covered institutions in the Call Report (dated November 19, 2018). Although the proposal included revisions to the FFIEC 051 reporting requirements that were proposed to take effect on March 31, 2019, these reporting changes, if finalized, would take effect no earlier than June 30, 2019.

 

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Keywords: Americas, US, Banking, IFRS 9, CECL, Reporting, HVCRE, Commercial Real Estate, FFIEC 031, FFIEC 041, FFIEC 051, FFIEC 101, EGRRCP Act, FDIC