Consolidated Reports of Condition and Income

FFIEC
Federal Financial Institutions Examination Council
Arlington, VA 22226

CALL REPORT DATE: December 31, 2019
FOURTH 2019 CALL, NUMBER 290

SUPPLEMENTAL INSTRUCTIONS
December 2019 Call Report Materials
There are no new Call Report data items in the FFIEC 031, FFIEC 041, or FFIEC 051 Call Report forms
this quarter. One new topic has been added to the Supplemental Instructions for December 2019, “Technical
Amendments to the Banking Agencies’ Regulatory Capital Rule,” which includes information on an
instructional clarification that revises the calculation applicable to an item in Schedule RC-R, Part I.
Separate updates to the instruction book for the FFIEC 051 Call Report and the instruction book for the
FFIEC 031 and FFIEC 041 Call Reports for December 2019 are available for printing and downloading from
the FFIEC’s website (https://www.ffiec.gov/ffiec_report_forms.htm) and the FDIC’s website
(https://www.fdic.gov/callreports). Sample FFIEC 051, FFIEC 041, and FFIEC 031 Call Report forms,
including the cover (signature) page, for December 2019 also can be printed and downloaded from these
websites. In addition, institutions that use Call Report software generally can print paper copies of blank forms
from their software. Please ensure that the individual responsible for preparing the Call Report at your
institution has been notified about the electronic availability of the December 2019 report forms, instruction
book updates, and these Supplemental Instructions. The locations of changes to the text of the previous
quarter’s Supplemental Instructions (except references to the quarter-end report date) are identified by a
vertical line in the right margin.
Submission of Completed Reports
Each institution’s Call Report data must be submitted to the FFIEC's Central Data Repository (CDR), an
Internet-based system for data collection (https://cdr.ffiec.gov/cdr/), using one of the two methods described
in the banking agencies' Financial Institution Letter (FIL) for the December 31, 2019, report date. The CDR
Help Desk is available from 9:00 a.m. until 8:00 p.m., Eastern Time, Monday through Friday, to provide
assistance with user accounts, passwords, and other CDR system-related issues. The CDR Help Desk can
be reached by telephone at (888) CDR-3111, by fax at (703) 774-3946, or by e-mail at CDR.Help@ffiec.gov.
Institutions are required to maintain in their files a signed and attested hard-copy record of the Call Report data
file submitted to the CDR. The appearance of this hard-copy record of the submitted data file need not match
exactly the appearance of the sample report forms on the FFIEC’s website, but the hard-copy record should
show at least the caption of each Call Report item and the reported amount. A copy of the cover page printed
from Call Report software or from the FFIEC’s website should be used to fulfill the signature and attestation
requirement. The signed cover page should be attached to the hard-copy record of the Call Report data file
that must be placed in the institution's files.
Currently, Call Report preparation software products marketed by (in alphabetical order) Axiom Software
Laboratories, Inc.; DBI Financial Systems, Inc.; Fed Reporter, Inc.; FIS Compliance Solutions; FiServ, Inc.;
KPMG LLP; SHAZAM Core Services; Vermeg (formerly Lombard Risk); and Wolters Kluwer Financial Services
meet the technical specifications for producing Call Report data files that are able to be processed by the
CDR. Contact information for these vendors is provided on the final page of these Supplemental Instructions.
Technical Amendments to the Banking Agencies’ Regulatory Capital Rule
The banking agencies’ capital simplifications final rule, which was published July 22, 2019, included technical
amendments to the agencies’ regulatory capital rule (for national banks and federal savings associations,
12 CFR Part 3; for state member banks, 12 CFR Part 217; and for state nonmember banks and state savings
associations, 12 CFR Part 324). These amendments took effect October 1, 2019, and made certain technical
corrections and clarifications to the capital rule.
The final rule clarifies the definition of “eligible retained income,” which is reported in Schedule RC-R, Part I,
item 47, if the amount of the capital conservation buffer reported in Schedule RC-R, Part I, item 46 on the
1

SUPPLEMENTAL INSTRUCTIONS – DECEMBER 2019

FFIEC 051, item 46.a on the FFIEC 031 and the FFIEC 041, in general, is less than or equal to the required
minimum capital conservation buffer of 2.5000 percent. The Call Report instruction book updates for this
quarter include clarified instructions for item 47 that result in a revision of the calendar quarters upon which
the eligible retained income to be reported in item 47 should be based. The clarified instructions state, for
example, that the amount of eligible retained income an institution would report in item 47 for the
December 31, 2019, report date should be based on the net income attributable to the institution for the four
calendar quarters ending on December 31, 2019.
In addition, the final rule adds the European Stability Mechanism and the European Financial Stability Facility
to the list of entities for which exposures to, and the portions of exposures guaranteed by, the entity receive a
zero percent risk weight. This risk weight applies to the reporting of such exposures for the December 31,
2019, report date. The “Summary of Risk Weights for Exposures to Government and Public Sector Entities” in
the General Instructions for Schedule RC-R, Part II, will be updated to reflect this addition at a future date.
Small Bank Assessment Credits
As of September 30, 2018, the Deposit Insurance Fund (DIF) reserve ratio, the balance of the DIF as a
percentage of estimated insured deposits, reached 1.36 percent, exceeding the statutorily required minimum
reserve ratio of 1.35 percent. Under FDIC regulations issued pursuant to the Dodd-Frank Wall Street Reform
and Consumer Protection Act, all insured depository institutions that were assessed as small institutions
(generally, those with total consolidated assets of less than $10 billion) at any time during the period from
July 1, 2016, through September 30, 2018, were awarded assessment credits (“small bank assessment
credits”) for the portion of their assessments that contributed to the growth in the reserve ratio from the former
minimum of 1.15 percent to 1.35 percent. The FDIC notified all such eligible institutions of their respective
assessment credit amounts in January 2019.
As amended November 27, 2019, FDIC regulations further provide that, effective as of July 1, 2019, the FDIC
will automatically apply small bank assessment credits up to the full amount of an institution’s credits or its
quarterly deposit insurance assessment, whichever is less, starting in the first quarterly assessment period in
which the DIF reserve ratio is at least 1.38 percent and in each of the next three assessment periods
thereafter in which this ratio is at least 1.35 percent. After assessment credits have been applied for four
quarterly assessment periods, the FDIC will remit the full nominal value of an institution’s remaining
assessment credits, if any, in a single lump-sum payment to the institution in the next assessment period in
which the DIF reserve ratio is at least 1.35 percent. The amended FDIC regulations are expected to result in
more stable and predictable application of credits to quarterly assessments, permitting insured depository
institutions to better budget for their assessment cash flow.
With the DIF reserve ratio reaching 1.40 percent as of June 30, 2019, the FDIC first applied small bank
assessment credits to offset institutions’ second quarter 2019 deposit insurance assessments, which were due
September 30, 2019. The reserve ratio increased to 1.41 percent as of September 30, 2019. Therefore, the
FDIC automatically applied small bank assessment credits to offset institutions’ third quarter 2019 deposit
insurance assessments, which were due December 30, 2019. When an institution that was awarded small
bank assessment credits prepares its Call Report for December 31, 2019, it should offset (i.e., reduce) its
deposit insurance assessment expense accruals for the second and third quarters of 2019 by the amount of
assessment credits the FDIC applied against its deposit insurance assessments for these two quarters.
Furthermore, consistent with the FDIC’s amended assessment regulations governing the use of small bank
assessment credits and considering the level and trend of the DIF reserve ratio, an institution awarded small
bank assessment credits also may offset (i.e., reduce) the deposit insurance assessment expense it has
accrued for the fourth quarter of 2019 by the remaining amount of its assessment credits or its assessment
expense for the quarter, whichever is less, when it prepares its December 31, 2019, Call Report. Thus, the
institution would include the amount of deposit insurance assessment expense accrued for the four quarters of
2019, net of the assessment credits applied or to be applied for the second, third, and fourth quarters of 2019,
in Schedule RI, item 7.d, and, if applicable, Schedule RI-E, item 2.g, of the Call Report for December 31, 2019.
Reporting High Volatility Commercial Real Estate (HVCRE) Exposures
Section 214 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), which
was enacted on May 24, 2018, adds a new Section 51 to the Federal Deposit Insurance Act governing the
2

SUPPLEMENTAL INSTRUCTIONS – DECEMBER 2019

risk-based capital requirements for certain acquisition, development, or construction (ADC) loans. EGRRCPA
provides that, effective upon enactment, the banking agencies may only require a depository institution to
assign a heightened risk weight to an HVCRE exposure if such exposure is an “HVCRE ADC Loan,” as
defined in this new law. Accordingly, an institution is permitted to risk weight at 150 percent only those
commercial real estate exposures it believes meet the statutory definition of an “HVCRE ADC Loan.” When
reporting HVCRE exposures in the Call Report regulatory capital schedule (Schedule RC-R) as of June 30,
2018, and subsequent report dates, institutions may use available information to reasonably estimate and
report only “HVCRE ADC Loans” held for sale and held for investment in Schedule RC-R, Part II, items 4.b
and 5.b, respectively. Any “HVCRE ADC Loans” held for trading would be reported in Schedule RC-R, Part II,
item 7. The portion of any “HVCRE ADC Loan” that is secured by collateral or has a guarantee that qualifies
for a risk weight lower than 150 percent may continue to be assigned a lower risk weight when completing
Schedule RC-R, Part II. Institutions may refine their estimates of “HVCRE ADC Loans” in good faith as they
obtain additional information, such as the final rule on the regulatory capital treatment for HVCRE exposures
published on December 13, 2019, and effective on April 1, 2020. However, institutions will not be required to
amend Call Reports previously filed for report dates on or after June 30, 2018, as these estimates are
adjusted, and institutions are not required to incorporate information contained in the final rule into their
reporting and risk weighting of HVCRE exposures until report dates after the April 1, 2020, effective date of the
final rule.
Alternatively, institutions may continue to report and risk weight HVCRE exposures in a manner consistent
with the current Call Report instructions for Schedule RC-R, Part II, until the June 30, 2020, report date when
the agencies’ final rule amending their regulatory capital rule revising the definition of an HVCRE exposure to
conform to the statutory definition of an “HVCRE ADC loan” takes effect for reporting purposes. For more
detail, see the agencies’ final rule published on December 13, 2019.
Section 214 of EGRRCPA, which includes the definition of “HVCRE ADC Loan,” is provided in the Appendix to
these Supplemental Instructions for your reference.
Goodwill Impairment Testing
In January 2017, the FASB issued Accounting Standards Update (ASU) No. 2017-04, “Simplifying the Test for
Goodwill Impairment,” to address concerns over the cost and complexity of the two-step goodwill impairment
test in Accounting Standards Codification (ASC) Subtopic 350-20, Intangibles‒Goodwill and Other ‒ Goodwill,
that applies to an entity that has not elected the private company alternative for goodwill (which is discussed in
the Glossary entry for “Goodwill” in the Call Report instructions). Thus, the ASU simplifies the subsequent
measurement of goodwill by eliminating the second step from the test, which involves the computation of the
implied fair value of a reporting unit’s goodwill. Instead, under the ASU, when an entity tests goodwill for
impairment, which must take place at least annually, the entity should compare the fair value of a reporting unit
with its carrying amount. In general, the entity should recognize an impairment charge for the amount, if any,
by which the reporting unit’s carrying amount exceeds its fair value. However, the loss recognized should not
exceed the total amount of goodwill allocated to that reporting unit. This one-step approach to assessing
goodwill impairment applies to all reporting units, including those with a zero or negative carrying amount.
An entity retains the option to perform the qualitative assessment for a reporting unit described in ASC
Subtopic 350-20 to determine whether it is necessary to perform the quantitative goodwill impairment test.
For an institution that is a public business entity and is also a U.S. Securities and Exchange Commission
(SEC) filer, as both terms are defined in U.S. generally accepted accounting principles (GAAP), the ASU is
effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. For a public
business entity that is not an SEC filer, the ASU is effective for goodwill impairment tests in fiscal years
beginning after December 15, 2020. For all other institutions, the ASU is effective for goodwill impairment
tests in fiscal years beginning after December 15, 2021. Early adoption is permitted for goodwill impairment
tests performed on testing dates after January 1, 2017. For Call Report purposes, an institution should apply
the provisions of ASU 2017-04 to goodwill impairment tests on a prospective basis in accordance with the
applicable effective date of the ASU. An institution that early adopts ASU 2017-04 for U.S. GAAP financial
reporting purposes should early adopt the ASU in the same period for Call Report purposes.
For additional information, institutions should refer to ASU 2017-04, which is available at
https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176168778106&acceptedDisclaimer=true.
3

SUPPLEMENTAL INSTRUCTIONS – DECEMBER 2019

Accounting and Reporting Implications of the Tax Cuts and Jobs Act
On January 18, 2018, the banking agencies issued an Interagency Statement on Accounting and Reporting
Implications of the New Tax Law. The tax law was enacted on December 22, 2017, and is commonly known
as the Tax Cuts and Jobs Act (the Act). U.S. GAAP requires the effect of changes in tax laws or rates to be
recognized in the period in which the legislation is enacted. Thus, in accordance with ASC Topic 740, Income
Taxes, the effects of the Act were to be recorded in an institution’s Call Report for December 31, 2017,
because the Act was enacted before year-end 2017. Changes in deferred tax assets (DTAs) and deferred tax
liabilities (DTLs) resulting from the Act’s lower corporate income tax rate and other applicable provisions of the
Act were to be reflected in an institution’s income tax expense in the period of enactment, i.e., the year-end
2017 Call Report. Institutions should refer to the Interagency Statement for guidance on the remeasurement
of DTAs and DTLs, assessing the need for valuation allowances for DTAs, the effect of the remeasurement of
DTAs and DTLs on amounts recognized in accumulated other comprehensive income (AOCI), the use for Call
Report purposes of the measurement period approach described in the Securities and Exchange
Commission’s Staff Accounting Bulletin No. 118 and a related FASB Staff Q&A, and regulatory capital effects
of the new tax law.
The Interagency Statement notes that the remeasurement of the DTA or DTL associated with an item reported
in AOCI, such as unrealized gains (losses) on available-for-sale (AFS) securities, results in a disparity
between the tax effect of the item included in AOCI and the amount recorded as a DTA or DTL for the tax
effect of this item. However, when the new tax law was enacted, ASC Topic 740 did not specify how this
disproportionate, or “stranded,” tax effect should be resolved. On February 18, 2018, the FASB issued
ASU No. 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,”
which allows institutions to eliminate the stranded tax effects resulting from the Act by electing to reclassify
these tax effects from AOCI to retained earnings. Thus, this reclassification is permitted, but not required.
ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods
within those fiscal years. An institution electing to reclassify its stranded tax effects for U.S. GAAP financial
reporting purposes should also reclassify these stranded tax effects in the same period for Call Report
purposes. For additional information, institutions should refer to ASU 2018-02, which is available at
http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176170041017&acceptedDisclaimer=true.
An institution that elects to reclassify the disproportionate, or stranded, tax effects of items within AOCI to
retained earnings should not report any amounts associated with this reclassification in Call Report
Schedule RI-A, Changes in Bank Equity Capital, because the reclassification is between two accounts within
the equity capital section of Schedule RC, Balance Sheet, and does not result in any change in the total
amount of equity capital.
When discussing the regulatory capital effects of the new tax law, the Interagency Statement explains that
temporary difference DTAs that could be realized through net operating loss (NOL) carrybacks are treated
differently from those that could not be realized through NOL carrybacks (i.e., those for which realization
depends on future taxable income) under the agencies’ regulatory capital rules. These latter temporary
difference DTAs are deducted from common equity tier 1 (CET1) capital if they exceed certain CET1 capital
deduction thresholds. However, for tax years beginning on or after January 1, 2018, the Act generally
removes the ability to use NOL carrybacks to recover federal income taxes paid in prior tax years. Thus,
except as noted in the following sentence, for such tax years, the realization of all federal temporary difference
DTAs will be dependent on future taxable income and these DTAs would be subject to the CET1 capital
deduction thresholds. Nevertheless, consistent with current practice under the regulatory capital rules, when
an institution has paid federal income taxes for the current tax year, if all federal temporary differences were to
fully reverse as of the report date during the current tax year and create a hypothetical federal tax loss that
would enable the institution to recover federal income taxes paid in the current tax year, the federal temporary
difference DTAs that could be realized from this source may be treated as temporary difference DTAs
realizable through NOL carrybacks as of the regulatory capital calculation date.
Presentation of Net Benefit Cost in the Income Statement
In March 2017, the FASB issued ASU No. 2017-07, “Improving the Presentation of Net Periodic Pension Cost
and Net Periodic Postretirement Benefit Cost,” which requires an employer to disaggregate the service cost
component from the other components of the net benefit cost of defined benefit plans. In addition, the ASU
4

SUPPLEMENTAL INSTRUCTIONS – DECEMBER 2019

requires these other cost components to be presented in the income statement separately from the service
cost component, which must be reported with the other compensation costs arising during the reporting period.
For institutions that are public business entities, as defined under U.S. GAAP, ASU 2017-07 is currently in
effect. For institutions that are not public business entities (i.e., that are private companies), the ASU is
effective for fiscal years beginning after December 15, 2018, and interim periods beginning after December 15,
2019. Early adoption is permitted as described in the ASU. Refer to the Glossary entries for “public business
entity” and “private company” in the Call Report instructions for further information on these terms.
For Call Report purposes, an institution should apply the new standard prospectively to the cost components
of net benefit cost as of the beginning of the fiscal year of adoption. The service cost component of net benefit
cost should be reported in Schedule RI, item 7.a, “Salaries and employee benefits.” The other cost
components of net benefit cost should be reported in Schedule RI, item 7.d, “Other noninterest expense.”
For additional information, institutions should refer to ASU 2017-07, which is available at
http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176168888120&acceptedDisclaimer=true.
Credit Losses on Financial Instruments
In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments,”
which introduces the current expected credit losses methodology (CECL) for estimating allowances for credit
losses. Under CECL, an allowance for credit losses is a valuation account, measured as the difference
between the financial assets’ amortized cost basis and the net amount expected to be collected on the
financial assets (i.e., lifetime credit losses). To estimate expected credit losses under CECL, institutions will
use a broader range of data than under existing U.S. GAAP. These data include information about past
events, current conditions, and reasonable and supportable forecasts relevant to assessing the collectability
of the cash flows of financial assets.
The ASU is applicable to all financial instruments measured at amortized cost (including loans held for
investment and held-to-maturity debt securities, as well as trade receivables, reinsurance recoverables, and
receivables that relate to repurchase agreements and securities lending agreements), a lessor’s net
investments in leases, and off-balance-sheet credit exposures not accounted for as insurance, including loan
commitments, standby letters of credit, and financial guarantees. The new standard does not apply to trading
assets, loans held for sale, financial assets for which the fair value option has been elected, or loans and
receivables between entities under common control.
The ASU also modifies the treatment of credit impairment on AFS debt securities. Under the new standard,
institutions will recognize a credit loss on an AFS debt security through an allowance for credit losses, rather
than the current practice required by U.S. GAAP of write-downs of individual securities for other-thantemporary impairment.
On November 15, 2019, the FASB issued ASU No. 2019-10 to defer the effective dates of ASU 2016-13 for
certain institutions. Under this ASU, for institutions that are U.S. Securities and Exchange Commission (SEC)
filers, excluding those that are “smaller reporting companies” as defined in the SEC’s rules, ASU 2016-13
continues to be effective for fiscal years beginning after December 15, 2019, including interim periods within
those fiscal years, i.e., January 1, 2020, for such entities with calendar year fiscal years. For all other entities,
including those SEC filers that are smaller reporting companies, ASU 2016-13 now will take effect for fiscal
years beginning after December 15, 2022, including interim periods within those fiscal years, i.e., January 1,
2023, for such entities with calendar year fiscal years. For all institutions, early application of the new credit
losses standard is permitted for fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years.
Institutions must apply ASU 2016-13 for Call Report purposes in accordance with the effective dates set forth
in the ASU as amended in November 2019. An institution that early adopts ASU 2016-13 for U.S. GAAP
financial reporting purposes should also early adopt the ASU in the same period for Call Report purposes.
The agencies revised several Call Report schedules as of the March 31, 2019, report date in response to the
revised accounting for credit losses under ASU 2016-13 (see FIL-10-2019, dated March 6, 2019). The
5

SUPPLEMENTAL INSTRUCTIONS – DECEMBER 2019

Call Report revisions also included reporting changes to Call Report Schedule RC-R, Regulatory Capital, to
align the schedule with the agencies’ final rule that amends their regulatory capital rule for the implementation
of and capital transition for CECL. This final capital rule for CECL was published on February 14, 2019.
For additional information, institutions should refer to the agencies’ Frequently Asked Questions on the New
Accounting Standard on Financial Instruments – Credit Losses, which were most recently updated on April 3,
2019; the agencies’ June 17, 2016, Joint Statement on the New Accounting Standard on Financial Instruments
– Credit Losses; and ASU 2016-13, which is available at
http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176168232528&acceptedDisclaimer=true.
Since the issuance of ASU 2016-13, the FASB has published the following amendments to the new credit
losses accounting standard:
• ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses,” available
at https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176171644373&acceptedDisclaimer=true;
• ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815,
Derivatives and Hedging, and Topic 825, Financial Instruments,” available at
https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176172541591&acceptedDisclaimer=true;
• ASU 2019-05, “Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief,” available
at https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176172668879&acceptedDisclaimer=true;
• ASU 2019-10, “Financial Instruments‒Credit Losses (Topic 326), Derivatives and Hedging (Topic 815),
and Leases (Topic 842): Effective Dates,” available at
https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176173775344&acceptedDisclaimer=true;
and
• ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses,” available
at https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176173831330&acceptedDisclaimer=true.
Accounting for Hedging Activities
In August 2017, the FASB issued ASU No. 2017-12, “Targeted Improvements to Accounting for Hedging
Activities.” This ASU amends ASC Topic 815, Derivatives and Hedging, to “better align an entity’s risk
management activities and financial reporting for hedging relationships through changes to both the
designation and measurement guidance for qualifying hedging relationships and the presentation of hedge
results.”
For institutions that are public business entities, as defined under U.S. GAAP, ASU 2017-12 is currently in
effect. For institutions that are not public business entities (i.e., that are private companies), the FASB issued
ASU 2019-10 on November 15, 2019, to defer the effective date of ASU 2017-12 by one year. As amended
by ASU 2019-10, ASU 2017-12 will take effect for entities that are not public business entities for fiscal years
beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15,
2021.
Early application of ASU 2017-12 is permitted for all institutions in any interim period or fiscal year before the
effective date of the ASU. Further, ASU 2017-12 specifies transition requirements and offers transition
elections for hedging relationships existing on the date of adoption (i.e., hedging relationships in which the
hedging instrument has not expired, been sold, terminated, or exercised or for which the institution has not
removed the designation of the hedging relationship). These transition requirements and elections should be
applied on the date of adoption of ASU 2017-12 and the effect of adoption should be reflected as of the
beginning of the fiscal year of adoption (i.e., the initial application date). Thus, if an institution early adopts the
ASU in an interim period, any adjustments shall be reflected as of the beginning of the fiscal year that includes
the interim period of adoption, e.g., as of January 1 for a calendar year institution. An institution that early
adopts ASU 2017-12 in an interim period for U.S. GAAP financial reporting purposes should also early adopt
the ASU in the same period for Call Report purposes.
The Call Report instructions, including the Glossary entry for “Derivative Contracts,” will be revised to conform
to the ASU at a future date.
For additional information, institutions should refer to ASU 2017-12, which is available at
http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176169282347&acceptedDisclaimer=true;
and ASU 2019-10, “Financial Instruments‒Credit Losses (Topic 326), Derivatives and Hedging (Topic 815),
6

SUPPLEMENTAL INSTRUCTIONS – DECEMBER 2019

and Leases (Topic 842): Effective Dates,” which is available at
https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176173775344&acceptedDisclaimer=true.
Recognition and Measurement of Financial Instruments: Investments in Equity Securities
In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and
Financial Liabilities.” This ASU makes targeted improvements to U.S. GAAP. As one of its main provisions,
the ASU requires investments in equity securities, except those accounted for under the equity method and
those that result in consolidation, to be measured at fair value with changes in fair value recognized in net
income. Thus, the ASU eliminates the existing concept of AFS equity securities, which are measured at
fair value with changes in fair value generally recognized in other comprehensive income. To be classified
as AFS under current U.S. GAAP, an equity security must have a readily determinable fair value and not be
held for trading. In addition, for an equity security that does not have a readily determinable fair value, the
ASU permits an entity to elect to measure the security at cost minus impairment, if any, plus or minus changes
resulting from observable price changes in orderly transactions for the identical or a similar investment of the
same issuer. When this election is made for an equity security without a readily determinable fair value, the
ASU simplifies the impairment assessment of such an investment by requiring a qualitative assessment to
identify impairment.
The ASU’s measurement guidance for investments in equity securities also applies to other ownership
interests, such as interests in partnerships, unincorporated joint ventures, and limited liability companies.
However, the measurement guidance does not apply to Federal Home Loan Bank stock and Federal Reserve
Bank stock.
For institutions that are public business entities, as defined under U.S. GAAP, ASU 2016-01 is currently in
effect. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2018, and
interim periods within fiscal years beginning after December 15, 2019. Early application of the ASU is
permitted for all institutions that are not public business entities as described in the ASU. Institutions must
apply ASU 2016-01 for Call Report purposes in accordance with the effective dates set forth in the ASU.
Institutions with a calendar year fiscal year that are not public business entities (and did not early adopt ASU
2016-01) must first report their investments in equity securities in accordance with the ASU in the Call Report
for December 31, 2019.
With the elimination of AFS equity securities upon an institution’s adoption of ASU 2016-01, the amount of
net unrealized gains (losses) on these securities, net of tax effect, that is included in AOCI on the Call Report
balance sheet (Schedule RC, item 26.b) as of the adoption date will be reclassified (transferred) from AOCI
into the retained earnings component of equity capital on the balance sheet (Schedule RC, item 26.a). For an
institution with a calendar year fiscal year that is not a public business entity (and did not early adopt ASU
2016-01), the adoption date is January 1, 2019. Thereafter, changes in the fair value of (i.e., the unrealized
gains and losses on) an institution’s equity securities that would have been classified as AFS under previous
U.S. GAAP will be recognized through net income rather than other comprehensive income (OCI). For an
institution’s holdings of equity securities without readily determinable fair values as of the adoption date for
which the measurement alternative is elected, the measurement provisions of the ASU are to be applied
prospectively to these securities.
An institution with a calendar year fiscal year that is not a public business entity, did not early adopt ASU
2016-01, and must first report its investments in equity securities in accordance with the ASU in the Call
Report for December 31, 2019, should report the fair value of its equity securities with readily determinable
fair values not held for trading in Schedule RC, item 2.c, and leave Schedule RC-B, item 7, columns C and D,
blank. If the institution is an insured state bank that has received FDIC approval in accordance with
Section 362.3(a) of the FDIC’s regulations to hold certain equity investments (“grandfathered equity
securities”), it also must report the cost basis of all equity securities with readily determinable fair values not
held for trading (that are reported in Schedule RC, item 2.c) in Schedule RC-M, item 4. Otherwise, the
institution should leave Schedule RC-M, item 4, blank. The institution should continue to report its equity
securities and other equity investments without readily determinable fair values not held for trading in
Schedule RC-F, item 4, or in Schedule RC, item 9, “Direct and indirect investments in real estate venture,” as
applicable. In addition, the institution should report the following in Schedule RI, item 8.b, “Unrealized holding
gains (losses) on equity securities not held for trading,” in its year-end 2019 Call Report:
7

SUPPLEMENTAL INSTRUCTIONS – DECEMBER 2019

•

•

•

Unrealized holding gains (losses) before applicable income taxes, if any, during the January 1 through
December 31, 2019, reporting period on equity securities with readily determinable fair values not held for
trading. Because these equity securities were previously reported as available-for-sale equity securities in
the Call Report, the year-to-date unrealized holding gains (losses) on these securities, net of applicable
income taxes, if any, were reported in Schedule RI-A, item 10, “Other comprehensive income,” in the
Call Report for September 30, 2019. No unrealized holding gains (losses) on available-for-sale equity
securities should be reported in Schedule RI-A, item 10, in the Call Report for December 31, 2019.
Unrealized holding gains (losses) during the January 1 through December 31, 2019, reporting period on
equity securities and other equity investments without readily determinable fair values not held for trading
that are measured at fair value through earnings. Also include in Schedule RI, item 8.b, impairment, if
any, plus or minus changes resulting from observable price changes during the January 1 through
December 31, 2019, reporting period on equity securities and other equity investments without readily
determinable fair values not held for trading for which this measurement election is made. Year-to-date
other-than temporary impairment losses on equity securities and other equity investments without readily
determinable fair values not held for trading (including those reported in Schedule RC, item 9) that were
reported in Schedule RI, item 5.k, in the Call Report for September 30, 2019, should be excluded from
item 5.k in the Call Report for December 31, 2019, when the valuation changes on such equities during
2019 described in the two preceding sentences must be reported in Schedule RI, item 8.b.
Realized gains (losses) on equity securities and other equity investments not held for trading during the
January 1 through December 31, 2019, reporting period. Year-to-date realized gains (losses) on such
equities (including those reported in Schedule RC, item 9) that were reported in Schedule RI, items 6.b
and 5.k, as applicable, in the Call Report for September 30, 2019, should be excluded from these items
and included in the amount reported in Schedule RI, item 8.b, in the Call Report for December 31, 2019.

For additional information, institutions should refer to ASU 2016-01, which is available at
http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176167762170&acceptedDisclaimer=true.
Institutions may also refer to the Glossary entry for “Securities Activities” in the Call Report instruction books,
which was updated in September 2019 in response to the changes in the accounting for investments in equity
securities summarized above.
Recognition and Measurement of Financial Instruments: Fair Value Option Liabilities
In addition to the changes in the accounting for equity securities discussed in the preceding section of these
Supplemental Instructions, ASU 2016-01 requires an institution to present separately in OCI the portion of the
total change in the fair value of a liability resulting from a change in the instrument-specific credit risk
(“own credit risk”) when the institution has elected to measure the liability at fair value in accordance with the
fair value option for financial instruments. Until an institution adopts the own credit risk provisions of the ASU,
U.S. GAAP requires the institution to report the entire change in the fair value of a fair value option liability in
earnings. The ASU does not apply to other financial liabilities measured at fair value, including derivatives.
For these other financial liabilities, the effect of a change in an entity’s own credit risk will continue to be
reported in net income.
The change due to own credit risk, as described above, is the difference between the total change in fair value
and the amount resulting from a change in a base market rate (e.g., a risk-free interest rate). An institution
may use another method that it believes results in a faithful measurement of the fair value change attributable
to instrument-specific credit risk. However, it will have to apply the method consistently to each financial
liability from period to period.
The effective dates of ASU 2016-01 are described in the preceding section of these Supplemental Instructions.
Notwithstanding these effective dates, early application of the ASU’s provisions regarding the presentation in
OCI of changes due to own credit risk on fair value option liabilities is permitted for all entities for financial
statements of fiscal years or interim periods that have not yet been issued or made available for issuance, and
in the same period for Call Report purposes.
When an institution with a calendar year fiscal year adopts the own credit risk provisions of ASU 2016-01, the
accumulated gains and losses as of the beginning of the fiscal year due to changes in the instrument-specific
credit risk of fair value option liabilities, net of tax effect, are reclassified from Schedule RC, item 26.a,
“Retained earnings,” to Schedule RC, item 26.b, “Accumulated other comprehensive income.” If an institution
8

SUPPLEMENTAL INSTRUCTIONS – DECEMBER 2019

with a calendar year fiscal year chooses to early apply the ASU’s provisions for fair value option liabilities in an
interim period after the first interim period of its fiscal year, any unrealized gains and losses due to changes in
own credit risk and the related tax effects recognized in the Call Report income statement during the interim
period(s) before the interim period of adoption should be reclassified from earnings to OCI. In the Call Report,
this reclassification would be from Schedule RI, item 5.l, “Other noninterest income,” and Schedule RI, item 9,
“Applicable income taxes,” to Schedule RI-A, item 10, “Other comprehensive income,” with a corresponding
reclassification from Schedule RC, item 26.a, to Schedule RC, item 26.b.
A similar approach would apply to an institution with a calendar year fiscal year that is not a public business
entity, did not early adopt the own credit risk provisions of ASU 2016-01, and must first report the changes in
the instrument-specific credit risk of fair value option liabilities in accordance with the ASU in the Call Report
for December 31, 2019. Such an institution should reclassify any year-to-date unrealized gains and losses
due to changes in own credit risk and the related tax effects that were included in Schedule RI, item 5.l, “Other
noninterest income,” and Schedule RI, item 9, “Applicable income taxes,” respectively, in the September 30,
2019, Call Report to Schedule RI-A, item 10, “Other comprehensive income,” in the Call Report for
December 31, 2019. The institution also must include the changes during the fourth quarter of 2019 in the
instrument-specific credit risk of fair value option liabilities, net of applicable income taxes, in the amount of
OCI reported in Schedule RI-A, item 10, as of December 31, 2019.
Additionally, for purposes of reporting on Schedule RC-R, Part I, institutions should report in item 10.a, “Less:
Unrealized net gain (loss) related to changes in the fair value of liabilities that are due to changes in own credit
risk,” the amount included in AOCI attributable to changes in the fair value of fair value option liabilities that are
due to changes in the institution’s own credit risk. Institutions should note that this AOCI amount is included in
the amount reported in Schedule RC-R, Part I, item 3, “Accumulated other comprehensive income (AOCI).”
For additional information, institutions should refer to ASU 2016-01, which is available at
http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176167762170&acceptedDisclaimer=true.
In addition, the instructions for certain data items in Schedules RI, RI-A, and RC were updated in the
Call Report instruction books in September 2019 in response to the change in accounting for own credit
risk on fair value option liabilities.
New Revenue Recognition Accounting Standard
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers,” which added
ASC Topic 606, Revenue from Contracts with Customers. The core principle of Topic 606 is that an entity
should recognize revenue at an amount that reflects the consideration to which it expects to be entitled
in exchange for transferring goods or services to a customer as part of the entity’s ordinary activities.
ASU 2014-09 also added Topic 610, Other Income, to the ASC. Topic 610 applies to income recognition that
is not within the scope of Topic 606, other Topics (such as Topic 840 on leases), or other revenue or income
guidance. As discussed in the following section of these Supplemental Instructions, Topic 610 applies to an
institution’s sales of repossessed nonfinancial assets, such as other real estate owned (OREO). The sale of
repossessed nonfinancial assets is not considered an “ordinary activity” because institutions do not typically
invest in nonfinancial assets. ASU 2014-09 and subsequent amendments are collectively referred to herein
as the “new standard.” For additional information on this accounting standard and the revenue streams to
which it does and does not apply, please refer to the Glossary entry for “Revenue from Contracts with
Customers,” which was included in the Call Report instruction book updates for September 2018.
For institutions that are public business entities, as defined under U.S. GAAP, the new standard is currently in
effect. For institutions that are not public business entities (i.e., that are private companies), the new standard
is effective for fiscal years beginning after December 15, 2018, and interim reporting periods within fiscal years
beginning after December 15, 2019. Early application of the new standard is permitted as described in the
standard. Institutions that are private companies with a calendar year fiscal year (that did not early adopt the
new standard) must first report revenue in accordance with the standard in the Call Report for December 31,
2019.
An institution that early adopts the new standard must apply it in its entirety. The institution cannot choose to
apply the guidance to some revenue streams and not to others that are within the scope of the new standard.

9

SUPPLEMENTAL INSTRUCTIONS – DECEMBER 2019

If an institution chooses to early adopt the new standard for financial reporting purposes, the institution should
implement the new standard in its Call Report for the same quarter-end report date.
For Call Report purposes, an institution must apply the new standard on a modified retrospective basis as of
the effective date of the standard. Under the modified retrospective method, an institution should apply a
cumulative-effect adjustment to affected accounts existing as of the beginning of the fiscal year the new
standard is first adopted for Call Report purposes (i.e., as of January 1, 2019, for an institution that is a private
company with a calendar year fiscal year that did not early adopt the new standard). In its Call Report for
December 31, 2019, an institution that is a private company with a calendar year fiscal year that did not early
adopt the new standard should report revenue for the entire calendar year (January 1 through December 31,
2019) in accordance with this new standard even though the year-to-date revenue it reported in its Call Report
for September 30, 2019, was recognized in accordance with previous U.S. GAAP. The cumulative-effect
adjustment to retained earnings for this change in accounting principle as of January 1, 2019, should be
reported in Schedule RI-A, item 2, of the December 31, 2019, Call Report.
For additional information, institutions should refer to the new standard, which is available at
http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176156316498.
Revenue Recognition: Accounting for Sales of OREO
As stated in the preceding section, Topic 610 applies to an institution’s sale of repossessed nonfinancial
assets, such as OREO. When the new standard becomes effective at the dates discussed above, Topic 610
will eliminate the prescriptive criteria and methods for sale accounting and gain recognition for dispositions of
OREO currently set forth in Subtopic 360-20, Property, Plant, and Equipment – Real Estate Sales. Under the
new standard, an institution will recognize the entire gain or loss, if any, and derecognize the OREO at the
time of sale if the transaction meets certain requirements of Topic 606. Otherwise, an institution will generally
record any payments received as a deposit liability to the buyer and continue reporting the OREO as an asset
at the time of the transaction.
The following paragraphs highlight key aspects of Topic 610 that will apply to seller-financed sales of OREO
once the new standard takes effect. When implementing the new standard, an institution will need to exercise
judgment in determining whether a contract (within the meaning of Topic 606) exists for the sale or transfer of
OREO, whether the institution has performed its obligations identified in the contract, and what the transaction
price is for calculation of the amount of gain or loss. For additional information, please refer to the Glossary
entry for “Foreclosed Assets” in the Call Report instruction books, which was updated in March 2017 to
incorporate guidance on the application of the new standard to sales of OREO.
Under Topic 610, when an institution does not have a controlling financial interest in the OREO buyer under
Topic 810, Consolidation, the institution’s first step in assessing whether it can derecognize an OREO asset
and recognize revenue upon the sale or transfer of the OREO is to determine whether a contract exists under
the provisions of Topic 606. In order for a transaction to be a contract under Topic 606, it must meet five
criteria. Although all five criteria require careful analysis for seller-financed sales of OREO, two criteria in
particular may require significant judgment. These criteria are the commitment of the parties to the transaction
to perform their respective obligations and the collectability of the transaction price. To evaluate whether a
transaction meets the collectability criterion, a selling institution must determine whether it is probable that it
will collect substantially all of the consideration to which it is entitled in exchange for the transfer of the OREO,
i.e., the transaction price. To make this determination, as well as the determination that the buyer of the
OREO is committed to perform its obligations, a selling institution should consider all facts and circumstances
related to the buyer’s ability and intent to pay the transaction price. As with the current accounting standards
governing seller-financed sales of OREO, the amount and character of a buyer’s initial equity in the property
(typically the cash down payment) and recourse provisions remain important factors to evaluate. Other factors
to consider may include, but are not limited to, the financing terms of the loan (including amortization and any
balloon payment), the credit standing of the buyer, the cash flow from the property, and the selling institution’s
continuing involvement with the property following the transaction.
If the five contract criteria in Topic 606 have not been met, the institution generally may not derecognize the
OREO asset or recognize revenue (gain or loss) as an accounting sale has not occurred. In contrast, if an
institution determines the contract criteria in Topic 606 have been met, it must then determine whether it has
10

SUPPLEMENTAL INSTRUCTIONS – DECEMBER 2019

satisfied its performance obligations as identified in the contract by transferring control of the asset to the
buyer. For seller-financed sales of OREO, the transfer of control generally occurs on the closing date of the
sale when the institution obtains the right to receive payment for the property and transfers legal title to the
buyer. However, an institution must consider all relevant facts and circumstances to determine whether
control of the OREO has transferred.
When a contract exists and an institution has transferred control of the asset, the institution should
derecognize the OREO asset and recognize a gain or loss for the difference between the transaction price and
the carrying amount of the OREO asset. Generally, the transaction price in a sale of OREO will be the
contract amount in the purchase/sale agreement, including for a seller-financed sale at market terms.
However, the transaction price may differ from the amount stated in the contract due to the existence of offmarket terms on the financing. In this situation, to determine the transaction price, the contract amount should
be adjusted for the time value of money by using as the discount rate a market rate of interest considering the
credit characteristics of the buyer and the terms of the financing.
As stated in the preceding section on the new revenue recognition accounting standard, for Call Report
purposes, an institution must apply the new standard on a modified retrospective basis. To determine the
cumulative-effect adjustment for the change in accounting for seller-financed OREO sales, an institution
should measure the impact of applying Topic 610 to the outstanding seller-financed sales of OREO currently
accounted for under Subtopic 360-20 using the installment, cost recovery, reduced-profit, or deposit method
as of the beginning of the fiscal year the new standard is first adopted for Call Report purposes (i.e., as of
January 1, 2019, for an institution that is a private company with a calendar year fiscal year that did not early
adopt the new standard). In its Call Report for December 31, 2019, an institution that is a private company
with a calendar year fiscal year that did not early adopt the new standard should recognize and report revenue
(gains and losses) on OREO transfers accounted for as sales in accordance with the new standard over the
entire calendar year (January 1 through December 31, 2019) even though the year-to-date revenue on OREO
transfers it reported in its Call Report for September 30, 2019, was recognized in accordance with previous
U.S. GAAP. The cumulative-effect adjustment to retained earnings for this change in accounting principle as
of January 1, 2019, should be reported in Schedule RI-A, item 2, of the December 31, 2019, Call Report.
Accounting for Leases
In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which added ASC Topic 842, Leases. Once
effective, this guidance, as amended by certain subsequent ASUs, supersedes ASC Topic 840, Leases.
Topic 842 does not fundamentally change lessor accounting; however, it aligns terminology between lessee
and lessor accounting and brings key aspects of lessor accounting into alignment with the FASB’s new
revenue recognition guidance in Topic 606. As a result, the classification difference between direct financing
leases and sales-type leases for lessors moves from a risk-and-rewards principle to a transfer of control
principle. Additionally, there is no longer a distinction in the treatment of real estate and non-real estate leases
by lessors.
The most significant change that Topic 842 makes is to lessee accounting. Under existing accounting
standards, lessees recognize lease assets and lease liabilities on the balance sheet for capital leases, but do
not recognize operating leases on the balance sheet. The lessee accounting model under Topic 842 retains
the distinction between operating leases and capital leases, which the new standard labels finance leases.
However, the new standard requires lessees to record a right-of-use (ROU) asset and a lease liability on the
balance sheet for operating leases. (For finance leases, a lessee’s lease asset also is designated an ROU
asset.) In general, the new standard permits a lessee to make an accounting policy election to exempt leases
with a term of one year or less at their commencement date from on-balance sheet recognition. The lease
term generally includes the noncancellable period of a lease as well as purchase options and renewal options
reasonably certain to be exercised by the lessee, renewal options controlled by the lessor, and any other
economic incentive for the lessee to extend the lease. An economic incentive may include a related-party
commitment. When preparing to implement Topic 842, lessees will need to analyze their existing lease
contracts to determine the entries to record on adoption of this new standard.
For a sale-leaseback transaction to qualify for sales treatment, Topic 842 requires certain criteria within
Topic 606 to be met. Topic 606 focuses on the transfer of control of the leased asset from the seller/lessee to
11

SUPPLEMENTAL INSTRUCTIONS – DECEMBER 2019

the buyer/lessor. A sale-leaseback transaction that does not transfer control is accounted for as a financing
arrangement. For a transaction currently accounted for as a sale-leaseback under existing U.S. GAAP, an
entity is not required to reassess whether the transaction would have qualified as a sale and a leaseback
under Topic 842 when it adopts the new standard.
Leases classified as leveraged leases prior to the adoption of Topic 842 may continue to be accounted for
under Topic 840 unless subsequently modified. Topic 842 eliminates leveraged lease accounting for leases
that commence after an institution adopts the new accounting standard.
For institutions that are public business entities, as defined under U.S. GAAP, ASU 2016-02 is currently in
effect. For institutions that are not public business entities, the FASB issued ASU 2019-10 on November 15,
2019, to defer the effective date of ASU 2016-02 by one year. As amended by ASU 2019-10, ASU 2016-02
will take effect for entities that are not public business entities for fiscal years beginning after December 15,
2020, and interim reporting periods within fiscal years beginning after December 15, 2021. An institution that
early adopts the new standard must apply it in its entirety to all lease-related transactions. If an institution
chooses to early adopt the new standard for financial reporting purposes, the institution should implement the
new standard in its Call Report for the same quarter-end report date.
Under ASU 2016-02, an institution must apply the new leases standard on a modified retrospective basis for
financial reporting purposes. Under the modified retrospective method, an institution should apply the leases
standard and the related cumulative-effect adjustments to affected accounts existing as of the beginning of the
earliest period presented in the financial statements. However, as explained in the “Changes in accounting
principles” section of the Glossary entry for “Accounting Changes” in the Call Report instructions, when a new
accounting standard (such as the leases standard) requires the use of a retrospective application method,
institutions should instead report the cumulative effect of adopting the new standard on the amount of retained
earnings at the beginning of the year in which the new standard is first adopted for Call Report purposes (net
of applicable income taxes, if any) as a direct adjustment to equity capital in the Call Report. For the adoption
of the new leases standard, the cumulative-effect adjustment to bank equity capital for this change in
accounting principle should be reported in Schedule RI-A, item 2, and disclosed in Schedule RI-E, item 4.b,
“Effect of adoption of lease accounting standard - ASC Topic 842.” In July 2018, the FASB issued
ASU 2018-11, “Targeted Improvements,” which provides an additional and “optional transition method” for
comparative reporting purposes at adoption of the new leases standard. Under this optional transition method,
an institution initially applies the new leases standard at the adoption date (e.g., January 1, 2019, for a public
business entity with a calendar year fiscal year) and, for Call Report purposes, the institution should recognize
and report a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption
consistent with the Glossary instructions described above.
For Call Report purposes, all ROU assets for operating leases and finance leases, including ROU assets for
operating leases recorded upon adoption of ASU 2016-02, should be reflected in Schedule RC, item 6,
“Premises and fixed assets.”
The agencies have received questions from institutions concerning the reporting of lease liabilities for
operating leases by a bank lessee. These institutions indicated that reporting operating lease liabilities as
other liabilities instead of other borrowings would better align the reporting of the single noninterest expense
item for operating leases (required by the standard and discussed below) with their balance sheet
classification and would be consistent with how these institutions report these lease liabilities internally. On
October 4, 2019, the agencies requested public comment on this proposed change in reporting with a
proposed effective date of March 31, 2020. However, until this proposed change takes effect, the agencies
will permit institutions to report the lease liability for operating leases in either Schedule RC-G, item 4, “All
other liabilities,” or Schedule RC-M, item 5.b, “Other borrowings.” If an institution chooses the latter reporting
treatment, the amount of operating lease liabilities reported in Schedule RC-M, item 5.b, should also be
reported in Schedule RC-M, item 10.b, “Amount of ‘Other borrowings’ that are secured,” consistent with the
current Call Report instructions for reporting obligations under capital leases, and this amount should not be
reported in Schedule RC-O, item 7, as “Unsecured ‘Other borrowings’.” An institution may choose to amend
the reporting of operating lease liabilities in its Call Reports for previous report dates in 2019 consistent with
this supplemental instruction. The agencies do not plan to make any changes to the reporting for a lessee’s
finance leases, the lease liabilities for which should be reported in Schedule RC-M, items 5.b and 10.b.

12

SUPPLEMENTAL INSTRUCTIONS – DECEMBER 2019

Regardless of a lessee institution’s balance sheet treatment of operating lease liabilities, a lessee should
report a single lease cost for an operating lease in the Call Report income statement, calculated so that the
cost of the lease is allocated over the lease term on a generally straight-line basis, in Schedule RI, item 7.b,
“Expenses of premises and fixed assets.” For a finance lease, a lessee should report interest expense on the
lease liability separately from the amortization expense on the ROU asset. The interest expense should be
reported on Schedule RI in item 2.c, “Other interest expense,” on the FFIEC 051 and in item 2.c, “Interest on
trading liabilities and other borrowed money,” on the FFIEC 031 and the FFIEC 041. The amortization
expense should be reported on Schedule RI in item 7.b, “Expenses of premises and fixed assets.”
The agencies have also received questions regarding how lessee institutions should treat ROU assets under
the agencies’ regulatory capital rules (12 CFR Part 3 (OCC); 12 CFR Part 217 (Board); and 12 CFR Part 324
(FDIC)). Those rules require that most intangible assets be deducted from regulatory capital. However, some
institutions are uncertain whether ROU assets are intangible assets. The agencies are clarifying that, to the
extent an ROU asset arises due to a lease of a tangible asset (e.g., building or equipment), the ROU asset
should be treated as a tangible asset not subject to deduction from regulatory capital. An ROU asset not
subject to deduction must be risk weighted at 100 percent under Section 32(l)(5) of the agencies’ regulatory
capital rules and included in a lessee institution’s calculations of total risk-weighted assets. In addition, such
an asset must be included in a lessee institution’s total assets for leverage capital purposes. The agencies
believe this treatment is consistent with the current treatment of capital leases under the rules, whereby a
lessee’s lease assets under capital leases of tangible assets are treated as tangible assets, receive a
100 percent risk weight, and are included in the leverage ratio denominator. This treatment is also consistent
with the approach taken by the Basel Committee on Banking Supervision
(https://www.bis.org/press/p170406a.htm).
For additional information on ASU 2016-02, institutions should refer to the FASB’s website at:
http://www.fasb.org/cs/ContentServer?c=FASBContent_C&pagename=FASB%2FFASBContent_C%2FCompl
etedProjectPage&cid=1176167904031, which includes a link to the new accounting standard.
Amending Previously Submitted Report Data
Should your institution find that it needs to revise previously submitted Call Report data, please make the
appropriate changes to the data, ensure that the revised data passes the FFIEC-published validation criteria,
and submit the revised data file to the CDR using one of the two methods described in the banking agencies'
FIL for the December 31, 2019, report date. For technical assistance with the submission of amendments to
the CDR, please contact the CDR Help Desk by telephone at (888) CDR-3111, by fax at (703) 774-3946, or by
e-mail at CDR.Help@ffiec.gov.
Other Reporting Matters
For the following topics, institutions should continue to follow the guidance in the specified Call Report
Supplemental Instructions:
•
•
•
•
•
•
•

“Purchased” Loans Originated By Others – Supplemental Instructions for September 30, 2015
(https://www.ffiec.gov/PDF/FFIEC_forms/FFIEC031_FFIEC041_suppinst_201509.pdf)
True-up Liability under an FDIC Loss-Sharing Agreement – Supplemental Instructions for June 30, 2015
(https://www.ffiec.gov/PDF/FFIEC_forms/FFIEC031_FFIEC041_suppinst_201506.pdf)
Troubled Debt Restructurings, Current Market Interest Rates, and ASU No. 2011-02 – Supplemental
Instructions for December 31, 2014
(https://www.ffiec.gov/PDF/FFIEC_forms/FFIEC031_FFIEC041_suppinst_201412.pdf)
Determining the Fair Value of Derivatives – Supplemental Instructions for June 30, 2014
(https://www.ffiec.gov/PDF/FFIEC_forms/FFIEC031_FFIEC041_suppinst_201406.pdf)
Indemnification Assets and ASU No. 2012-06 – Supplemental Instructions for June 30, 2014
(https://www.ffiec.gov/PDF/FFIEC_forms/FFIEC031_FFIEC041_suppinst_201406.pdf)
Other-Than-Temporary Impairment of Debt Securities – Supplemental Instructions for June 30, 2014
(https://www.ffiec.gov/PDF/FFIEC_forms/FFIEC031_FFIEC041_suppinst_201406.pdf)
Small Business Lending Fund – Supplemental Instructions for March 31, 2013
(https://www.ffiec.gov/PDF/FFIEC_forms/FFIEC031_FFIEC041_suppinst_201303.pdf)

13

SUPPLEMENTAL INSTRUCTIONS – DECEMBER 2019

•
•
•
•
•

Reporting Purchased Subordinated Securities in Schedule RC-S – Supplemental Instructions for
September 30, 2011
(https://www.ffiec.gov/PDF/FFIEC_forms/FFIEC031_FFIEC041_suppinst_201109.pdf)
Treasury Department’s Capital Purchase Program – Supplemental Instructions for September 30, 2011
(https://www.ffiec.gov/PDF/FFIEC_forms/FFIEC031_FFIEC041_suppinst_201109.pdf)
Deposit insurance assessments – Supplemental Instructions for September 30, 2009
(https://www.ffiec.gov/PDF/FFIEC_forms/FFIEC031_041_suppinst_200909.pdf)
Accounting for share-based payments under FASB Statement No. 123 (Revised 2004), Share-Based
Payment – Supplemental Instructions for December 31, 2006
(https://www.ffiec.gov/PDF/FFIEC_forms/FFIEC031_041_suppinst_200612.pdf)
Commitments to originate and sell mortgage loans – Supplemental Instructions for March 31, 2006
(https://www.ffiec.gov/PDF/FFIEC_forms/FFIEC031_041_suppinst_200603.pdf) and June 30, 2005
(https://www.ffiec.gov/PDF/FFIEC_forms/FFIEC031_041_suppinst_200506.pdf)

Call Report Software Vendors
For information on available Call Report preparation software products, institutions should contact:
Axiom Software Laboratories, Inc.
67 Wall Street, 17th Floor
New York, New York 10005
Telephone: (212) 248-4188
http://www.axiomsl.com

DBI Financial Systems, Inc.
P.O. Box 14027
Bradenton, Florida 34280
Telephone: (800) 774-3279
http://www.e-dbi.com

Fed Reporter, Inc.
28118 Agoura Road, Suite 202
Agoura Hills, California 91301
Telephone: (888) 972-3772
http://www.fedreporter.net

FIS Compliance Solutions
16855 West Bernardo Drive,
Suite 270
San Diego, California 92127
Telephone: (800) 825-3772
http://www.callreporter.com

FiServ, Inc.
1345 Old Cheney Road
Lincoln, Nebraska 68512
Telephone: (402) 423-2682
http://www.premier.fiserv.com

KPMG LLP
303 Peachtree Street, Suite 2000
Atlanta, Georgia 30308
Telephone: (404) 221-2355
https://advisory.kpmg.us/riskconsulting/frm/capitalmanagement.html

SHAZAM Core Services
6700 Pioneer Parkway
Johnston, Iowa 50131
Telephone: (888) 262-3348
http://www.cardinal400.com

Vermeg
(formerly Lombard Risk)
205 Lexington Avenue,
14th floor
New York, New York 10016
Telephone: (212) 682-4930
http://www.vermeg.com

Wolters Kluwer Financial Services
130 Turner Street, Building 3,
4th Floor
Waltham, Massachusetts 02453
Telephone (800) 261-3111
http://www.wolterskluwer.com

14

SUPPLEMENTAL INSTRUCTIONS – DECEMBER 2019

APPENDIX

Section 214 of EGRRCPA, which includes the definition of “HVCRE ADC Loan,” is as follows:
SEC. 214. PROMOTING CONSTRUCTION AND DEVELOPMENT ON MAIN STREET.
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by adding at the end the following
new section:
‘‘SEC. 51. CAPITAL REQUIREMENTS FOR CERTAIN ACQUISITION, DEVELOPMENT, OR
CONSTRUCTION LOANS.
‘‘(a) IN GENERAL.—The appropriate Federal banking agencies may only require a depository institution to
assign a heightened risk weight to a high volatility commercial real estate (HVCRE) exposure (as such term is
defined under section 324.2 of title 12, Code of Federal Regulations, as of October 11, 2017, or if a successor
regulation is in effect as of the date of the enactment of this section, such term or any successor term
contained in such successor regulation) under any risk-based capital requirement if such exposure is an
HVCRE ADC loan.
‘‘(b) HVCRE ADC LOAN DEFINED.—For purposes of this section and with respect to a depository
institution, the term ‘HVCRE ADC loan’—
‘‘(1) means a credit facility secured by land or improved real property that, prior to being reclassified by
the depository institution as a non-HVCRE ADC loan pursuant to subsection (d)—
‘‘(A) primarily finances, has financed, or refinances the acquisition, development, or construction
of real property;
‘‘(B) has the purpose of providing financing to acquire, develop, or improve such real property into
income-producing real property; and
‘‘(C) is dependent upon future income or sales proceeds from, or refinancing of, such real property
for the repayment of such credit facility;
‘‘(2) does not include a credit facility financing—
‘‘(A) the acquisition, development, or construction of properties that are—
‘‘(i) one- to four-family residential properties;
‘‘(ii) real property that would qualify as an investment in community development; or
‘‘(iii) agricultural land;
‘‘(B) the acquisition or refinance of existing income-producing real property secured by a mortgage
on such property, if the cash flow being generated by the real property is sufficient to support the debt
service and expenses of the real property, in accordance with the institution’s applicable loan
underwriting criteria for permanent financings;
‘‘(C) improvements to existing income-producing improved real property secured by a mortgage
on such property, if the cash flow being generated by the real property is sufficient to support the debt
service and expenses of the real property, in accordance with the institution’s applicable loan
underwriting criteria for permanent financings; or
‘‘(D) commercial real property projects in which—
‘‘(i) the loan-to-value ratio is less than or equal to the applicable maximum supervisory loan-tovalue ratio as determined by the appropriate Federal banking agency;
‘‘(ii) the borrower has contributed capital of at least 15 percent of the real property’s appraised,
‘as completed’ value to the project in the form of—
‘‘(I) cash;
‘‘(II) unencumbered readily marketable assets;
‘‘(III) paid development expenses out-of-pocket; or
‘‘(IV) contributed real property or improvements; and
‘‘(iii) the borrower contributed the minimum amount of capital described under clause (ii)
before the depository institution advances funds (other than the advance of a nominal sum made
in order to secure the depository institution’s lien against the real property) under the credit facility,
and such minimum amount of capital contributed by the borrower is contractually required to

15

SUPPLEMENTAL INSTRUCTIONS – DECEMBER 2019

remain in the project until the credit facility has been reclassified by the depository institution as a
non-HVCRE ADC loan under subsection (d);
‘‘(3) does not include any loan made prior to January 1, 2015; and
‘‘(4) does not include a credit facility reclassified as a non-HVCRE ADC loan under subsection (d).
‘‘(c) VALUE OF CONTRIBUTED REAL PROPERTY.—For purposes of this section, the value of any real
property contributed by a borrower as a capital contribution shall be the appraised value of the property as
determined under standards prescribed pursuant to section 1110 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3339), in connection with the extension of the credit facility
or loan to such borrower.
‘‘(d) RECLASSIFICATION AS A NON-HVRCE ADC LOAN.—For purposes of this section and with respect
to a credit facility and a depository institution, upon—
‘‘(1) the substantial completion of the development or construction of the real property being financed
by the credit facility; and
‘‘(2) cash flow being generated by the real property being sufficient to support the debt service and
expenses of the real property, in accordance with the institution’s applicable loan underwriting criteria for
permanent financings, the credit facility may be reclassified by the depository institution as a Non-HVCRE
ADC loan.
‘‘(e) EXISTING AUTHORITIES.—Nothing in this section shall limit the supervisory, regulatory, or
enforcement authority of an appropriate Federal banking agency to further the safe and sound operation of an
institution under the supervision of the appropriate Federal banking agency.’’.

16