Download:
pdf |
pdfDraft Revisions to the Call Report Instructions for Proposed Revisions to the FFIEC 031
and FFIEC 041 Call Reports with Effective Dates Beginning with the March 31, 2020,
Report Date
These draft instructions, which are subject to change, present the pages from the FFIEC 031 and FFIEC 041
instruction book as they are proposed to be revised, subject to final approval by the U.S. Office of Management and
Budget. These proposed revisions are described in the federal banking agencies’ initial Paperwork Reduction Act
(PRA) Federal Register notice published on July 22, 2020. As discussed in the agencies’ final PRA Federal Register
notice published in the Federal Register on November 23, 2020, the agencies are proceeding with the revisions to the
FFIEC 051 Call Report instruction book, with certain modifications. The initial and final notices are available on the
FFIEC’s web pages for the FFIEC 031 Call Report and the FFIEC 041 Call Report.
AF
T
The revisions to the report form with the effective date of June 30, 2020, pertain to interim final rules (IFRs) and a final
rule published by one or all of the banking agencies from March through June 2020 as well as Section 4013 of the
2020 Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which provides optional temporary relief from
accounting for eligible loan modifications as troubled debt restructurings. The IFRs and final rule revise certain
aspects of the agencies’ regulatory capital rule, amend the Federal Reserve Board’s (Board) Regulation D on reserve
requirements, except certain insider loans from the Board’s Regulation O, and modify the Federal Deposit Insurance
Corporation’s (FDIC) deposit insurance assessment rules. In the second quarter, the agencies received emergency
approvals from the U.S. Office of Management and Budget to implement changes to the Call Report arising from these
interim final rules, the final rule, and Section 4013 of the CARES Act.
D
R
Certain other proposed revisions to the FFIEC 031 and FFIEC 041 Call Report instruction books with effective dates
beginning with the December 31, 2020, report date also are included in these draft instructions.
1
Table of Contents
Impacted Instructions
Page
Call Report Effective Dates: March 31, 2020 and June 30, 2020
1. Schedule RC-R, Part I, Regulatory Capital Components and Ratios .................................................................... 5
2. Schedule RC-R, Part II, Risk-Weighted Assets .................................................................................................... 34
Call Report Effective Date: June 30, 2020
3. Schedule RC-C, Part I, Loans and Leases, Memorandum Items 17.a and 17.b, “Eligible loan modifications
under Section 4013, Temporary Relief from Troubled Debt Restructurings, of the 2020 Coronavirus Aid, Relief,
and Economic Security Act”… .............................................................................................................................. 54
AF
T
4. Schedule RC-E, Deposit Liabilities, and the Glossary Entry for “Deposits” related to the Interim Final
Rule for Reserve Requirements of Depository Institutions (Regulation D)… ....................................................... 55
5. Schedule RC-M, Memoranda, Items 1.a and 1.b, Extensions of credit by the reporting bank to its executive
officers, directors, principal shareholders, and their related interests as of the report date ................................. 67
6. Schedule RC-M, Memoranda, Items 17.a through 17.e, U.S. Small Business Administration Paycheck
Protection Program (PPP) loans and the Federal Reserve PPP LiquidityFacility (PPPLF). ...............................68
7. Schedule RC-M, Memoranda, Items 18.a and 18.b, “Money Market Mutual Fund Liquidity Facility (MMLF)”…. 69
Proposed Call Report Effective Date: March 31, 2021
8. Schedule RI, Income Statement, Item 4, “Provision for loan and lease losses” and Item 7.d, “Other noninterest
expense”… ........................................................................................................................................................... 71
9. Schedule RI-B, Part II, Changes in Allowances for Credit Losses, Item 5, “Provision for credit losses” .............. 75
R
10. Schedule RI-B, Part II, Changes in Allowances for Credit Losses, Memorandum item 5, “Provision for credit losses
on other financial assets measured at amortized cost (not included in item 5, above)” ...................................... 76
11. Schedule RI-B, Part II, Changes in Allowances for Credit Losses, Memorandum Item 7, “Provision
for credit losses on off-balance-sheet credit exposures”………………………………………………………………77
D
12. Schedule RI-B, Part II, Changes in Allowances for Credit Losses, Memorandum Item 8, “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”)” and Glossary
Entry for “Allowance for Credit Losses”…………………………………………………………………………………77
13. Schedule RI-D, Income From Foreign Offices, Item 3, “Provision for loan and lease losses in foreign offices...80
14. Schedule RC-M, Memoranda, Items 16.a and 16.b.(1) through 16.b.(3), “International remittance transfers
offered to consumers”……………………………………………………………………………………………………81
15. Schedule RC-N, Past Due and Nonaccrual Loans, Leases, and Other Assets, Nonaccrual Treatment of
Purchased Deteriorated Assets and Glossary Entries for “Nonaccrual Status” and “Purchased CreditDeteriorated Assets”… ........................................................................................................................................ 84
16. Glossary Entry for “Deposits” related to the Interim Final Rule for Reserve Requirements
of Depository Institutions (Regulation D)… ........................................................................................................ 96
Proposed Call Report Effective Date: TBD
17. Schedule RC-B, Securities, Item 7, “Unallocated last-of-layer fair value hedge basis adjustments”…..............102
18. Schedule RC-C, Part I, Loans and Leases, Item 11, “LESS: Any unearned income on
loans reflected in Items 1-9 above” ....................................................................................................................105
2
Table of Contents (cont.)
Impacted Instructions
Page
Additional Instructional Matters:
Proposed Call Report Effective Date December 31, 2020
19. Schedule RC, Balance Sheet, Item 2.c, “Equity securities with readily determinable fair values not held for
trading” ………………………………………………………………………………………………….…..............107
20. Schedule RC-B, Securities, Memorandum item 1, “Pledged Securities” ....…………………………………110
21. Glossary Entry “Accrued Interest Receivable"...………………………………………………………………...111
Proposed Call Report Effective Date March 31, 2021
AF
T
22. Schedule RI, Income Statement, Item 5.d “Income from securities-related and insurance activities”………………….112
Total Loss Absorbing Capacity (TLAC) Investments Rule
Proposed Call Report Effective Date June 30, 2021
23. Schedule RC-R, Part I, Regulatory Capital Components and Ratios…………………………………………115
D
R
24. Schedule RC-R, Part II, Risk-Weighted Assets………………………………………………………………...128
3
D
R
AF
T
Note: The changes to the instructions for Schedule RC-R, Part I, and Schedule RC-R, Part II,
on pages 5 through 52 are effective as of the March 31, 2020 and June 30, 2020, report dates.
4
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
SCHEDULE RC-R – REGULATORY CAPITAL
General Instructions for Schedule RC-R
The instructions for Schedule RC-R should be read in conjunction with the regulatory capital rules issued
by the primary federal supervisory authority of the reporting bank or saving association (collectively,
banks): 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 instructions exclude updates pertaining to the regulatory capital-related interim final rules
(IFRs) issued by the banking agencies from March through June 2020. See the separate
standalone June 2020 COVID-19 Related Supplemental Instructions (Call Report) for instructional
changes related to these IFRs.
AF
T
Part I. Regulatory Capital Components and Ratios
Contents – Part I. Regulatory Capital Components and Ratios
General Instructions for Schedule RC-R, Part I
RC-R-2
Community Bank Leverage Ratio Framework
RC-R-2
3-Year and 5-Year 2020 CECL Transition Provisions
RC-R-X
Advanced Approaches Institutions
RC-R-3
Item Instructions for Schedule RC-R, Part I
RC-R-4
Common Equity Tier 1 Capital
RC-R-4
Common Equity Tier 1 Capital: Adjustments and Deductions
RC-R-9
RC-R-31
Tier 1 Capital
RC-R-39
Total Assets for the Leverage Ratio
RC-R-39
Leverage Ratio
RC-R-42
Qualifying Criteria and Other Information for CBLR Institutions
RC-R-42
Tier 2 Capital
RC-R-45
Total Capital
RC-R-55
Total Risk-Weighted Assets
RC-R-55
Risk-Based Capital Ratios
RC-R-55
Capital Buffer
RC-R-56
Supplementary Leverage Ratio
RC-R-60
D
R
Additional Tier 1 Capital
FFIEC 031 and 041
RC-R-1
(6-20)
RC-R – REGULATORY CAPITAL
5
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
General Instructions for Schedule RC-R, Part I.
In the FFIEC 031, Schedule RC-R, Part I, has two columns for items 11 through 19. Items 11 through 19
in column A are to be completed by non-advanced approaches institutions (including institutions subject
to Category III capital standards1) and items 11 through 19 in column B are to be completed by advanced
approaches institutions.2
In the FFIEC 041, Schedule RC-R, Part I, has only one column for items 11 through 19 because
advanced approaches institutions are required to complete the FFIEC 031.
Community Bank Leverage Ratio Framework
AF
T
Opting into the Community Bank Leverage Ratio (CBLR) Framework ‒ A qualifying institution may opt
into the CBLR framework. A qualifying institution opts into and out of the framework through its reporting
in Call Report Schedule RC-R. A qualifying institution that opts into the CBLR framework (CBLR electing
institution) must complete Schedule RC-R, Part I, items 1 through 37, and, if applicable, items 38.a
through 38.c, and can make that election on Schedule RC-R, Part I, item 31.a. A qualifying institution can
opt out of the CBLR framework by completing Schedule RC-R, Parts I and II, excluding Schedule RC-R,
Part I, items 32 through 38.c. However, an otherwise qualifying institution’s primary federal supervisory
authority may disallow the institution’s use of the CBLR framework based on the supervisory authority’s
evaluation of the risk profile of the institution.
R
On April 23, 2020, the federal banking agencies published two interim final rules to provide temporary
relief to community banking organizations with respect to the CBLR framework. The statutory interim final
rule implements Section 4012 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act),
which requires the agencies to temporarily lower the community bank leverage ratio qualifying criterion
from 9 percent to 8 percent. The temporary changes to the CBLR framework implemented by the
statutory interim final rule will cease to be effective as of the earlier of the termination date of the national
emergency concerning the coronavirus disease declared by the President on March 13, 2020, under the
National Emergencies Act (National Emergency), or December 31, 2020. After this date, the transition
interim final rule becomes effective and provides community banking organizations with a clear and
gradual transition, by January 1, 2022, back to the greater than 9 percent leverage ratio qualifying
criterion previously established by the agencies. The other qualifying criteria in the CBLR framework
have not been modified by the interim final rules.
D
A qualifying institution with a leverage ratio that exceeds the applicable leverage ratio requirement and
opts into the CBLR framework shall be considered to have met: (i) the generally applicable risk-based
and leverage capital requirements in the agencies’ capital rules; (ii) the capital ratio requirements to be
Category III institutions include institutions, which are not advanced approaches institutions, that have (1) at least
$250 billion in average total consolidated assets or (2) at least $100 billion in average total consolidated assets and at
least $75 billion in average total nonbank assets, average weighted short-term wholesale funding; or average
off-balance sheet exposure. In addition, depository institution subsidiaries of Category III institutions are considered
Category III institutions.
2 An institution that is subject to the advanced approaches capital rule (i.e., an advanced approaches institution as
defined in the federal banking agencies’ regulatory capital rules) is (i) a subsidiary of a global systemically important
bank holding company, as identified pursuant to 12 CFR 217.402; (ii) a Category II institution; (iii) a subsidiary of a
depository institution that uses the advanced approaches pursuant to subpart E of 12 CFR part 3 (OCC), 12 CFR
part 217 (Board), or 12 CFR part 324 (FDIC) to calculate its risk-based capital requirements; (iv) a subsidiary of a
bank holding company or savings and loan holding company that uses the advanced approaches pursuant to
subpart E of 12 CFR part 217 to calculate its risk-based capital requirements; or (v) an institution that elects to use
the advanced approaches to calculate its risk-based capital requirements.
Category II institutions include institutions with (1) at least $700 billion in total consolidated assets or (2) at least
$75 billion in cross-jurisdictional activity and at least $100 billion in total consolidated assets. In addition, depository
institution subsidiaries of Category II institutions are considered Category II institutions.
1
FFIEC 031 and 041
RC-R-2
(6-20)
RC-R – REGULATORY CAPITAL
6
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
General Instructions for Schedule RC-R, Part I. (cont.)
considered well capitalized under the agencies’ prompt corrective action (PCA) framework (in the case of
insured depository institutions); and (iii) any other applicable capital or leverage requirements.1
Temporary Change to the Leverage Ratio Requirement under the CBLR Framework (i.e., the statutory
interim final rule) – Under this temporary change in the CBLR framework, an institution may qualify for the
CBLR framework if its leverage ratio is equal to or greater than 8 percent (as reported in Schedule RC-R,
Part I, item 31) and it meets the qualifying criteria: it has less than $10 billion in total consolidated assets
(Schedule RC-R, Part I, item 32); is not part of an advanced approaches banking organization; has total
trading assets and trading liabilities of 5 percent or less of total consolidated assets (Schedule RC-R,
Part I, item 33); and has total off-balance sheet exposures (excluding derivatives other than sold credit
derivatives and unconditionally cancelable commitments) of 25 percent or less of total consolidated
assets (Schedule RC-R, Part I, item 34).
AF
T
This temporary change in the CBLR framework will cease to be effective as of the earlier of the
termination date of the National Emergency or December 31, 2020. The statutory interim final rule also
includes a grace period. When this rule is in effect, the minimum leverage ratio under the grace period is
equal to or greater than 7 percent.
Transition Provisions (i.e., the transition interim final rule) – Upon the expiration of the statutory interim
final rule, the transition interim final rule will become effective. Under the provisions of the transition
interim final rule, an institution may qualify for the CBLR framework if its leverage ratio is greater than
8 percent in the second through fourth quarters of calendar year 2020 (if applicable), greater than
8.5 percent in calendar year 2021, and greater than 9 percent in calendar year 2022 and thereafter
and it meets the qualifying criteria listed in the preceding section on the statutory interim final rule. Also,
the two-quarter grace period for a qualifying institution will take into account the graduated increase in the
community bank leverage ratio requirement qualifying criterion. In order to maintain eligibility for the
CBLR framework during the transition period, an institution’s leverage ratio cannot fall more than one
percentage point below the community bank leverage ratio requirement qualifying criterion.
Table 1 – Schedule of Community Bank Leverage Ratio Requirements
(transition interim final rule)
R
Minimum Leverage
Ratio under the
applicable grace
period (percent)
2020 (2Q-4Q)*
> 8.0
> 7.0
2021
> 8.5
> 7.5
2022
> 9.0
> 8.0
* Table 1 reflects the leverage ratio requirement under the transition interim final rule. Effective for the
second quarter of 2020 when the statutory interim final rule is in effect, the community bank leverage ratio
qualifying criterion is equal to or greater than 8 percent. Similarly, the minimum leverage ratio under the
grace period when the statutory interim final rule is in effect is equal to or greater than 7 percent.
Community Bank
Leverage Ratio
(percent)
D
Calendar Year
Community Bank Leverage Ratio (CBLR) Framework in Calendar Year 2022 and Thereafter ‒
In general, an institution may qualify for the CBLR framework if it has a leverage ratio greater than
9 percent (as reported in Schedule RC-R, Part I, item 31); has less than $10 billion in total consolidated
assets (Schedule RC-R, Part I, item 32); is not an advanced approaches institution; has total trading
assets and trading liabilities of 5 percent or less of total consolidated assets (Schedule RC-R, Part I,
item 33); and has total off-balance sheet exposures (excluding derivatives other than sold credit
1
See 12 CFR 3 (OCC); 12 CFR 217 (Board); 12 CFR 324 (FDIC).
FFIEC 031 and 041
RC-R-2a
(6-20)
RC-R – REGULATORY CAPITAL
7
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
derivatives and unconditionally cancelable commitments) of 25 percent or less of total consolidated
assets (Schedule RC-R, Part I, item 34). However, an otherwise qualifying institution’s primary federal
Category III institutions include institutions, which are not advanced approaches institutions, that have (1) at least
$250 billion in average total consolidated assets or (2) at least $100 billion in average total consolidated assets and at
least $75 billion in average total nonbank assets, average weighted short-term wholesale funding; or average
off-balance sheet exposure. In addition, depository institution subsidiaries of Category III institutions are considered
Category III institutions.
2 An institution that is subject to the advanced approaches capital rule (i.e., an advanced approaches institution as
defined in the federal banking agencies’ regulatory capital rules) is (i) a subsidiary of a global systemically important
bank holding company, as identified pursuant to 12 CFR 217.402; (ii) a Category II institution; (iii) a subsidiary of a
depository institution that uses the advanced approaches pursuant to subpart E of 12 CFR part 3 (OCC), 12 CFR
part 217 (Board), or 12 CFR part 324 (FDIC) to calculate its risk-based capital requirements; (iv) a subsidiary of a
bank holding company or savings and loan holding company that uses the advanced approaches pursuant to
subpart E of 12 CFR part 217 to calculate its risk-based capital requirements; or (v) an institution that elects to use
the advanced approaches to calculate its risk-based capital requirements.
Category II institutions include institutions with (1) at least $700 billion in total consolidated assets or (2) at least
$75 billion in cross-jurisdictional activity and at least $100 billion in total consolidated assets. In addition, depository
institution subsidiaries of Category II institutions are considered Category II institutions.
D
R
AF
T
1
FFIEC 031 and 041
RC-R-2b
(6-20)
RC-R – REGULATORY CAPITAL
8
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
General Instructions for Schedule RC-R, Part I. (cont.)
supervisory authority may disallow the institution’s use of the CBLR framework based on the supervisory
authority’s evaluation of the risk profile of the institution.
A qualifying institution with a leverage ratio that exceeds 9 percent and opts into the CBLR framework
shall be considered to have met: (i) the generally applicable risk-based and leverage capital
requirements in the agencies’ capital rules; (ii) the capital ratio requirements to be considered well
capitalized under the agencies’ prompt corrective action (PCA) framework (in the case of insured
depository institutions); and (iii) any other applicable capital or leverage requirements.1
AF
T
Ceasing to Meet the Leverage Ratio Requirement under the Have a CBLR FrameworkGreater Than 9
Percent or Failing to Meet Any of the Other CBLR Qualifying Criteria ‒ A qualifying institution that
temporarily fails to meet any of the qualifying criteria, including the applicablegreater than 9 percent
leverage ratio requirement, generally would still be deemed well-capitalized so long as the institution
maintains a leverage ratio that does not fall more than one percentage point below the leverage ratio
requirement during the two-quarter grace periodgreater than 8 percent. At the end of the grace period
(see below for an example), the institution must meet all qualifying criteria to remain in the community
bank leverage ratioCBLR framework or otherwise must apply and report under the generally applicable
capital rule. Similarly, an institution with a leverage ratio that is not within one percentage point of the
leverage ratio requirement qualifying criterion under the CBLR framework of 8 percent or less is not
eligible for the grace period and must comply with the generally applicable capital rule, i.e., for the
calendar quarter in which the institution reports a leverage ratio of 8 percent or less, by completing all of
Schedule RC-R, Parts I and II, as applicable, excluding Schedule RC-R, Part I, items 32 through 38.c.
R
Under the CBLR framework, the grace period will begin as of the end of the calendar quarter in which the
CBLR electing institution ceases to satisfy any of the qualifying criteria and has a maximum period ofwill
end after two consecutive calendar quarters. For example, if the CBLR electing institution had met all of
the qualifying criteria as of March 31, 2020, but no longer meets one of the qualifying criteria as of
FebruaryMay 15, 2020, and still does not meet the criteria as of the end of that quarter, the grace period
for such an institution will begin as of the end of the quarter ending March 31June 30, 2020. The
institution may continue to use the community bank leverage ratioCBLR framework as of JuneSeptember
30, 2020, but will need to comply fully with the generally applicable capital rule (including the associated
Schedule RC-R reporting requirements) as of September 30December 31, 2020, unless the institution
once again meets all qualifying criteria of the CBLR framework, including athe leverage ratio requirement
qualifying criterionof greater than 9 percent, before that time.
D
If a CBLR electing institution is in the grace period when the required community bank leverage ratio
increases, the institution would be subject, as of the date of that change, to both the higher community
bank leverage ratio requirement and higher grace period leverage ratio requirement. For example, if a
CBLR electing institution that had met all of the qualifying criteria as of September 30, 2020, has a 7.2
percent community bank leverage ratio (but meets all of the other qualifying criteria) as of December 31,
2020, the grace period for such an institution will begin as of the end of the fourth quarter of 2020. The
institution may continue to use the CBLR framework as of March 31, 2021, if the institution has a leverage
ratio of greater than 7.5 percent, and will need to comply fully with the generally applicable capital rule
(including the associated Schedule RC-R reporting requirements) as of June 30, 2021, unless the
institution has a leverage ratio of greater than 8.5 percent (and meets all of the other qualifying criteria) by
that date. In this example, if the institution has a leverage ratio equal to or less than 7.5 percent as of
March 31, 2021, it would not be eligible to use the CBLR framework and would be subject immediately to
the requirements of the generally applicable capital rule.
FFIEC 031 and 041
RC-R-3
(6-20)
RC-R – REGULATORY CAPITAL
9
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
3-Year and 5-Year 2020 CECL Transition Provisions
In 2019, the federal banking agencies issued a final rule that, among other provisions, revised the
agencies’ regulatory capital rule and included a transition option that allows institutions to phase in over a
3-year transition period the day-one effects of adopting the current expected credit losses methodology
(CECL) on their regulatory capital ratios (2019 CECL rule).
In 2020, the agencies issued a final rule that provides institutions that implement CECL during the 2020
calendar year the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative
to the incurred loss methodology’s effect on regulatory capital, followed by a 3-year transition period,
thereby resulting in a 5-year transition period (2020 CECL rule).
AF
T
Eligibility for, and Transition Period under, the 3-Year CECL Transition – An institution is eligible to use
the 3-Year CECL transition provision if it experiences a reduction in retained earnings due to CECL
adoption as of the beginning of the fiscal year in which the institution adopts CECL. The transition period
under the 3-year CECL transition provision means the three-year period beginning the first day of the
fiscal year in which an institution adopts CECL and reflects CECL in its first Call Report filed after that
date.
An institution that is eligible to use the 3-year CECL transition provision may elect to phase in the
regulatory capital impact of adopting CECL over a 3-year transition period (a 3-year CECL electing
institution). A 3-year CECL electing institution is required to begin applying the 3-year CECL transition
provision as of the electing banking organization’s CECL adoption date. A 3-year CECL electing
institution must indicate in Schedule RC-R, Part I, item 2.a, its election to use the 3-year CECL transition
provision and must report the transitional amounts, as defined below and as applicable, in the affected
items of Schedule RC-R, adjusted for the transition provisions, beginning in the Call Report for the quarter
in which the institution first reports its credit loss allowances as measured under CECL.
An institution that does not elect to use the 3-year CECL transition provision in the Call Report for the
quarter in which it first reports its credit loss allowances as measured under CECL is not permitted to
make an election in subsequent reporting periods and is required to reflect the full effect of CECL in its
regulatory capital ratios beginning as of the institution’s CECL adoption date.
R
An institution that initially elects to use the 3-year CECL transition provision, but opts out of this
transition provision in a subsequent reporting period, is not permitted to resume using the 3-year CECL
transition provision at a later date within the 3-year transition period. An institution may opt out of
applying the transition provision by reflecting the full impact of CECL on regulatory capital in Call Report
Schedule RC-R.
D
Eligibility for the 5-Year 2020 CECL Transition – An institution is eligible to use the 5-Year 2020 CECL
transition provision if it adopts CECL under U.S. GAAP as of the first day of a fiscal year that begins
during the 2020 calendar year and:
(1) Reports a decrease in retained earnings immediately upon adoption of CECL; or
(2) Would report a positive modified CECL transitional amount (as defined below) in any quarter ending
in 2020 after adopting CECL.
An institution must indicate in Schedule RC-R, Part I, item 2.a, its election to use the 5-year 2020 CECL
transition provision in calendar year 2020 in the first Call Report filed after the institution adopts CECL or
the same Call Report in which the institution first reports a positive modified CECL transitional amount for
any calendar quarter ending in 2020 (5-year CECL electing institution).
Even if an institution elects to use the 5-Year 2020 CECL transition provision, the institution may only
reflect the regulatory capital adjustments set forth in the 2020 CECL rule in the quarter or quarters in
which the institution implements CECL for regulatory reporting purposes. An institution that has elected
the 5-year 2020 CECL transition provision, but would not report a positive modified CECL transitional
amount in a particular quarter, is not required to make the adjustments in Call Report Schedule RC-R in
that quarter.
FFIEC 031 and 041
RC-R-4
(6-20)
RC-R – REGULATORY CAPITAL
10
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Transition Period under the 5-Year 2020 CECL Transition – Beginning with the earlier of:
(1) The first quarter of the fiscal year in which an institution was required to adopt CECL under
U.S. GAAP (as in effect on January 1, 2020), or
(2) The first day of a fiscal year that begins in the 2020 calendar year in which the institution files
Call Reports reflecting CECL,
and for the subsequent 19 quarters (for a total of 20 quarters or the five-year transition period), an
institution is permitted to make the adjustments described below to amounts used in calculating
regulatory capital. If an institution temporarily ceases using CECL during this period (i.e., due to election
of Section 4014 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) 1), the institution
may not reflect regulatory capital adjustments for any quarter (during the first 8 quarters) in which it did
not implement CECL, but it would be allowed to apply the transition in subsequent quarters when the
institution uses CECL. However, an institution that has elected the transition, but does not apply it in any
quarter, does not receive any extension of the transition period.
AF
T
Example 1: An institution was required to adopt CECL on January 1, 2020. This institution, however,
delays adoption of CECL under Section 4014 of the CARES Act until July 1, 2020, and elects to use
the 5-Year 2020 CECL transition provision. This institution’s transition period begins on January 1,
2020, despite not adopting CECL until July 1, 2020. As such, on July 1, 2020, this institution would
have 18 quarters, 2 including the quarter of adoption, remaining in its transition period.
Example 2: An institution was required to adopt CECL on October 1, 2020, and elects to use the
5-Year 2020 CECL transition provision. This institution does not delay adoption of CECL under
Section 4014 of the CARES Act. This institution’s transition period begins on October 1, 2020. As
such, on October 1, 2020, this institution would have 20 quarters, including the quarter of adoption,
remaining in its transition period.
For the first 8 quarters after the start of its transition period, an institution is permitted to make an
adjustment of 100 percent of the transitional items calculated below for each quarter in which the
institution applies CECL. Beginning with the ninth quarter of the transition period, the institution phases
out the cumulative adjustment as calculated at the end of the eighth quarter (i.e., the first two years of the
5-Year 2020 CECL transition provision) over the following 12 quarters as follows: 75 percent adjustment
in quarters 9-12 (i.e., Year three); 50 percent adjustment in quarters 13-16 (i.e., Year four); and
25 percent adjustment in quarters 17-20 (i.e., Year five).
CECL transitional amount means the difference, net of any deferred tax assets (DTAs), in the amount
of an institution’s retained earnings as of the beginning of the fiscal year in which the institution
adopts CECL from the amount of the institution’s retained earnings as of the closing of the fiscal yearend immediately prior to the institution’s adoption of CECL.
D
•
R
Definitions – Institutions that elect either the 3-year CECL transition provision or the 5-year 2020 CECL
transition provision must calculate the following amounts, as applicable. AACL refers to Adjusted
Allowances for Credit Losses and ALLL refers to the Allowance for Loan and Lease Losses, both as
defined in the regulatory capital rule (12 CFR 3.2 (OCC); 12 CFR 217.2 (Board); and 12 CFR 324.2
(FDIC)).
•
DTA transitional amount means the difference in the amount of an institution’s DTAs arising from
temporary differences as of the beginning of the fiscal year in which the institution adopts CECL from
the amount of the institution’s DTAs arising from temporary differences as of the closing of the fiscal
year-end immediately prior to the institution’s adoption of CECL.
Section 4014 allows an institution to delay the adoption of Accounting Standards Update No. 2016-13, “Financial
Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” (ASU 2016-13),
i.e., CECL, until the earlier of (1) December 31, 2020, or (2) the termination of the national emergency concerning the
coronavirus disease declared by the President on March 13, 2020, under the National Emergencies Act.
1
2
Six quarters of the initial transition followed by 12 quarters of the phase-out of the transition.
FFIEC 031 and 041
RC-R-5
(6-20)
RC-R – REGULATORY CAPITAL
11
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
•
AACL transitional amount means the difference in the amount of an institution’s AACL as of the
beginning of the fiscal year in which the institution adopts CECL and the amount of the institution’s
ALLL as of the closing of the fiscal year-end immediately prior to the institution’s adoption of CECL.
•
Eligible credit reserves transitional amount means the difference in the amount of an advanced
approaches institution’s eligible credit reserves as of the beginning of the fiscal year in which the
institution adopts CECL from the amount of the institution’s eligible credit reserves as of the closing of
the fiscal year-end immediately prior to the institution’s adoption of CECL.
In addition, institutions that elect the 5-year 2020 CECL transition provision must calculate the following
amounts:
Modified CECL transitional amount means:
o During the first two years of the transition period, the difference between the AACL as reported in
the most recent Call Report, and the AACL as of the beginning of the fiscal year in which the
institution adopts CECL, multiplied by 0.25, plus the CECL transitional amount, and
o During the last three years of the transition period, the difference between the AACL as reported
in the Call Report at the end of the second year of the transition period and the AACL as of the
beginning of the fiscal year in which the institution adopts CECL, multiplied by 0.25, plus the
CECL transitional amount.
•
Modified AACL transitional amount means:
o During the first two years of the transition period, the difference between the AACL as reported in
the most recent Call Report, and the AACL as of the beginning of the fiscal year in which the
institution adopts CECL, multiplied by 0.25, plus the AACL transitional amount, and
o During the last three years of the transition period, the difference between the AACL as reported
in the Call Report at the end of the second year of the transition period and the AACL as of the
beginning of the fiscal year in which the institution adopts CECL, multiplied by 0.25, plus the
AACL transitional amount.
AF
T
•
R
A 3-year or 5-year CECL electing advanced approaches institution (1) that has completed the parallel run
process and has received notification from its primary federal regulator pursuant to section 121(d) under
subpart E of the regulatory capital rules, (2) whose amount of expected credit loss exceeded its eligible
credit reserves immediately prior to the adoption of CECL, and (3) would have an increase in common
equity tier 1 capital as of the beginning of the fiscal year in which it adopts CECL after including the first
year portion of the CECL transitional amount or modified CECL transitional amount, as applicable, must
decrease its CECL transitional amount or modified CECL transitional amount, as applicable, by its DTA
transitional amount.
D
Example and a Worksheet Calculation for the 3-year CECL Transition Provision –
Assumptions:
•
•
•
•
For example, consider an institution that elects to apply the 3-year CECL transition and has a CECL
effective date of January 1, 2020, and a 21 percent tax rate.
On the closing balance sheet date immediately prior to adopting CECL (i.e., December 31, 2019), the
3-year CECL electing institution has $10 million in retained earnings and $1 million in the allowance
for loan and lease losses. On the opening balance sheet date immediately after adopting CECL
(i.e., January 1, 2020), the 3-year CECL electing institution has $1.2 million in allowances for credit
losses (ACL), which also equals $1.2 million of AACL, as defined in the regulatory capital rules.
The 3-year CECL electing institution recognizes the effect of the adoption of CECL as of January 1,
2020, by recording an increase in its ACL of $200,000 (credit), with an offsetting increase in
temporary difference DTAs of $42,000 (debit) and a reduction in beginning retained earnings of
$158,000 (debit).
For each of the quarterly reporting periods in year 1 of the transition period (i.e., 2020), the 3-year
CECL electing institution increases both retained earnings and average total consolidated assets by
$118,500 ($158,000 x 75 percent), decreases temporary difference DTAs by $31,500 ($42,000 x
75 percent), and decreases AACL by $150,000 ($200,000 x 75 percent) for purposes of calculating its
FFIEC 031 and 041
RC-R-6
(6-20)
RC-R – REGULATORY CAPITAL
12
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
regulatory capital ratios. The remainder of the 3-year CECL transition provision of the 3-year CECL
electing institution is transitioned into regulatory capital according to the schedule provided in Table 1
below.
Table 1 – Example of a 3-Year CECL Transition Provision Schedule
Dollar Amounts in
Thousands
DTA transitional
amount = $42
Transitional Amounts Applicable During Each Year
of the 3-Year Transition Period
Year 1 at 75%
Year 2 at 50%
Year 3 at 25%
Column B
Column C
Column D
$118.50
$79
$39.50
$31.50
$21
$10.50
AF
T
1. Increase retained
earnings and average total
consolidated assets by the
CECL transitional amount
2. Decrease temporary
difference DTAs by the
DTA transitional amount
3. Decrease AACL by the
AACL transitional amount
Transitional
Amounts
Column A
CECL transitional
amount = $158
AACL transitional
amount = $200
$150
$100
$50
Example of Application of the 5-Year CECL Transition Provision for Third Quarter 2020 –
As an example, assume an institution is required under U.S. GAAP to adopt CECL on January 1, 2020.
This institution chose not to delay adoption of CECL for Call Report purposes under the provisions of
Section 4014 of the CARES Act, and elected to use the 5-year 2020 CECL transition provision in the
March 31, 2020, Call Report. This institution’s 5-year 2020 CECL transition period begins on January 1,
2020.
R
The institution’s December 31, 2019, Call Report reflected the following amounts:
• ALLL: $120
• Temporary Difference DTAs: $20
• Retained earnings: $200
• Eligible credit reserves (advanced approaches institutions only): $110
D
On January 1, 2020, the institution adopted CECL and reflected the following amounts:
• AACL: $150
• AACL transitional amount = $150 - $120 = $30
(AACL on 1/1/20 – ALLL on 12/31/19)
• Temporary difference DTAs: $30
• DTA transitional amount = $30 - $20 = $10
(DTAs on 1/1/20 – DTAs on 12/31/19)
• Retained earnings: $180
• CECL transitional amount = $200 - $180 = $20
(Retained earnings on 12/31/19 – retained earnings on 1/1/20)
• Eligible credit reserves (advanced approaches institutions only): $140
• Eligible credit reserves transitional amount (advanced approaches institutions only) = $140 - $110 = $30
(Eligible credit reserves on 1/1/20 – eligible credit reserves on 12/31/19)
On September 30, 2020, the institution reflected the following amounts:
• AACL: $170
• Modified AACL transitional amount = ($170-$150)*0.25 + $30 = $35
(AACL on 9/30/20 – AACL on 1/1/20)*0.25 + AACL transitional amount)
• Modified CECL transitional amount = ($170-$150)*0.25 + $20 = $25
(AACL on 9/30/20 – AACL on 1/1/20)*0.25 + CECL transitional amount)
FFIEC 031 and 041
RC-R-7
(6-20)
RC-R – REGULATORY CAPITAL
13
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
The institution would adjust the following items in its September 30, 2020, Call Report, Schedule RC-R:
• Part I, Item 2 (Retained earnings): Add $25 (modified CECL transitional amount)
• Part I, Item 15, 15.a, or 15.b, as applicable (temporary difference DTAs): Subtract $10 (DTA
transitional amount) when calculating temporary difference DTAs subject to deduction
• Part I, Item 27 (Average total consolidated assets): Add $25 (modified CECL transitional amount)
An institution that is not electing the CBLR framework in its September 30, 2020, Call Report, would make
these additional Schedule RC-R adjustments:
• Part I, Item 42 (Allowances in tier 2 capital): Subtract $35 (modified AACL transitional amount)
• Part II, Item 8 (All other assets): Subtract $10 (DTA transitional amount)
An institution subject to the supplementary leverage ratio (advanced approaches and Category III
institutions) would make this additional Schedule RC-R adjustment in its September 30, 2020,
Call Report:
• Part I, Item 55.a (Total leverage exposure for SLR): Add $25 (modified CECL transitional amount)
AF
T
An institution subject to the advanced approaches capital rule that has exited parallel run would make this
additional Schedule RC-R adjustment in its September 30, 2020, Call Report:
• Part I, Item 42.b (Eligible credit reserves): Deduct $30 (eligible credit reserves transitional amount)
Advanced Aapproaches Iinstitutions:
Advanced approaches institutions may use the amounts reported in Schedule RC-R, Part I, to complete
the FFIEC 101, Schedule A, as applicable. As described in the General Instructions for the FFIEC 101,
an institution must begin reporting on the FFIEC 101, Schedule A, except for a few specific line items, at
the end of the quarter after the quarter in which the institution triggers one of the threshold criteria for
applying the advanced approaches rule or elects to use the advanced approaches rule (an opt-in
institution),21 and it must begin reporting data on the remaining schedules of the FFIEC 101 at the end of
the first quarter in which it has begun its parallel run period.
See 12 CFR 3 (OCC); 12 CFR 217 (Board); 12 CFR 324 (FDIC).
D
1
R
Advanced approaches institutions must continue to file Schedule RC-R, Regulatory Capital, as well as the
FFIEC 101.
21 An institution is deemed to have elected to use the advanced approaches rule on the date that its primary federal
supervisor receives from the institution a board-approved implementation plan pursuant to section 121(b)(2) of the
regulatory capital rules. After that date, in addition to being required to report on the FFIEC 101, Schedule A, the
institution may no longer apply the AOCI opt-out election in section 22(b)(2) of the regulatory capital rules and it
becomes subject to the supplementary leverage ratio in section 10(c)(4) of the rules.
FFIEC 031 and 041
RC-R-8
(6-20)
RC-R – REGULATORY CAPITAL
14
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Item Instructions for Schedule RC-R, Part I.
Item No.
Caption and Instructions
Common Equity Tier 1 Capital
1
Common stock plus related surplus, net of treasury stock and unearned employee
stock ownership plan (ESOP) shares. Report the sum of Schedule RC, items 24, 25,
and 26.c, as follows:
(1) Common stock: Report the amount of common stock reported in Schedule RC, item 24,
provided it meets the criteria for common equity tier 1 capital based on the regulatory
capital rules of the institution’s primary federal supervisor. Include capital instruments
issued by mutual banking organizations that meet the criteria for common equity tier 1
capital.
AF
T
(2) Related surplus: Adjust the amount reported in Schedule RC, item 25 as follows: include
the net amount formally transferred to the surplus account, including capital contributions,
and any amount received for common stock in excess of its par or stated value on or
before the report date; exclude adjustments arising from treasury stock transactions.
(3) Treasury stock, unearned ESOP shares, and any other contra-equity components:
Report the amount of contra-equity components reported in Schedule RC, item 26.c.
Because contra-equity components reduce equity capital, the amount reported in
Schedule RC, item 26.c, is a negative amount.
2
Retained earnings. Report the amount of the institution’s retained earnings as reported in
Schedule RC, item 26.a.
R
An institution that has adopted FASB Accounting Standards Update No. 2016-13
(ASU 2016-13), which governs the accounting for credit losses and introduces the current
expected credit losses methodology (CECL), and has elected to apply the 3-year CECL
transition provision (3-year CECL electing institution) should also include in this item its
applicable CECL transitional amount, in accordance with section 301 of the regulatory capital
rules. Specifically, a 3-year CECL electing institution includesshould increase retained
earnings by 75 percent of its CECL transitional amount during the first year of the transition
period, 50 percent of its CECL transitional amount during the second year of the transition
period, and 25 percent of its CECL transitional amount during the third year of the transition
period.
D
An institution that has adopted ASU 2016-13, and has elected to apply the 5-year 2020 CECL
transition provision (5-year CECL electing institution) should also include in this item its
applicable modified CECL transitional amount in accordance with section 301 of the
regulatory capital rules. Specifically, a 5-year CECL electing institution should increase
retained earnings by 100 percent of its modified CECL transitional amount during the first and
second years of the transition period, 75 percent of its modified CECL transitional amount
during the third year of the transition period, 50 percent of its modified CECL transitional
amount during the fourth year of the transition period, and 25 percent of its modified CECL
transitional amount during the fifth year of the transition period.
FFIEC 031 and 041
RC-R-4
(6-20)
RC-R – REGULATORY CAPITAL
15
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
Caption and Instructions
2
(cont.)
A 3-year or 5-year CECL electing advanced approaches institution (1) that has completed the
parallel run process and has received notification from its primary federal regulator pursuant
to section 121(d) under subpart E of the regulatory capital rules, (2) whose amount of
expected credit loss exceeded its eligible credit reserves immediately prior to the adoption of
CECL, and (3) would have an increase in CET1 capital as of the beginning of the fiscal year
in which it adopts CECL after including the first year portion of the CECL transitional amount
or modified CECL transitional amount, as applicable, must decrease its CECL transitional
amount or modified CECL transitional amount, as applicable, by its DTA transitional amount.
For further information on the 3-year and 5-year CECL transition provisions, see the General
Instructions for Schedule RC-R, Part I.
To be completed only by institutions that have adopted ASU 2016-13: Does your
institution have a CECL transition election in effect as of the quarter-end report date?
An institution may make a one-time election to use the 3-year CECL transition provision (a
3-year CECL electing institution) or the 5-year 2020 CECL transition provision (a 5-year
CECL electing institution), as described in section 301 of the regulatory capital rules and in
the General Instructions for Schedule RC-R, Part I. Such an institution is required to begin
applying the CECL transition provision as of the institution’s CECL adoption date. An
institution must indicate its election to use the CECL transition provision beginning in the
quarter that it first reports its credit loss allowances in the Call Report as measured under
CECL.
AF
T
2.a
D
R
An institution that is required to use CECL for regulatory reporting purposes and intends to
use the 3-year or the 5-year 2020 CECL transition provision must elect to use the 3-year or
the 5-year 2020 CECL transition provision in the first Call Report the institution files that
includes CECL after the institution is required to use CECL for regulatory reporting purposes.
An institution that does not elect to use the 3-year or the 5-year 2020 CECL transition
provision in the quarter that it first reports its credit loss allowances in as of the first
FFIEC 031 and 041
RC-R-5
(6-20)
RC-R – REGULATORY CAPITAL
16
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
Caption and Instructions
2.a
(cont.)
Call Report as measured underthe institution files that includes CECL after the institution is
required to use CECL for regulatory reporting purposes would not be permitted to make an
election to use the 3-year or the 5-year 2020 CECL transition provision in subsequent
reporting periods.1 For example, an institution that adopts CECL as of January 1, 2020
(i.e., does not delay adoption of CECL under Section 4014 of the Coronavirus Aid, Relief, and
Economic Security Act), records a reduction in retained earnings due to the adoption of
CECL, and does not elect to use the CECL transition provision in its Call Report for the
March 31, 2020, report date would not be permitted to use the 3-year or the 5-year 2020
CECL transition provision in any subsequent reporting period.
AF
T
An institution that has adopted CECL and has elected to apply the 3-year CECL transition
provision must enter “1” for “Yes with a 3-year CECL transition election” in item 2.a for each
quarter in which the institution uses the transition provisions. An institution that has adopted
CECL and has elected to apply the 5-year 2020 CECL transition provision must enter “2” for
“Yes with a 5-year 2020 CECL transition election” in item 2.a for each quarter in which the
institution uses the transition provision. An institution that has adopted CECL and has
elected not to use thea CECL transition provision must enter a “0” for “No” in item 2.a. An
institution that has not adopted CECL should leave item 2.a blank.
An institution that did not make a 5-year 2020 CECL transition provision election because it did not record a
reduction in retained earnings due to the adoption of CECL as of the beginning of the fiscal year in which the
institution adopted CECL may use the 5-year 2020 CECL transition provision if it has a positive modified CECL
transitional amount during any quarter ending in 2020 and makes the election in the Call Report filed for the same
quarter.
D
R
1
FFIEC 031 and 041
RC-R-5a
(6-20)
RC-R – REGULATORY CAPITAL
17
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
Caption and Instructions
2.a
(cont.)
Each institution should complete item 2.a beginning in the quarter that it first reports its
credit loss allowances in the Call Report as measured under CECL and in each subsequent
Call Report thereafter until item 2.a is removed from the report. Effective December 31,
2026, item 2.a will be removed from Schedule RC-R, Part I, because the optional three3-year
and 5-year 2020 transition phase-in periods will have ended for all CECL electing institutions.
If an individual CECL electing institution’s three3-year or 5-year transitionphase-in period
ends before item 2.a is removed (e.g., its phase-intransition period ends December 31,
2022), the institution would report “0” in item 2.a to indicate that it no longer has a CECL
transition election in effect.
Accumulated other comprehensive income (AOCI). Report the amount of AOCI as
reported under U.S. generally accepted accounting principles (GAAP) that is included in
Schedule RC, item 26.b.
3.a
AOCI opt-out election.
AF
T
3
(i) All institutions, except advanced approaches institutions
An institution that is not an advanced approaches institution may make a one-time election to
become subject to the AOCI-related adjustments in Schedule RC-R, Part I, items 9.a through
9.e. That is, such an institution may opt out of the requirement to include most components
of AOCI in common equity tier 1 capital (with the exception of accumulated net gains and
losses on cash flow hedges related to items that are not recognized at fair value on the
balance sheet). An institution that makes an AOCI opt-out election must enter “1” for “Yes” in
this item 3.a.
D
R
Each institution (except an advanced approaches institution) in existence as of March 31,
2015, made its AOCI opt-out election on the institution’s March 31, 2015, Call Report.
For an institution that comes into existence after March 31, 2015, or becomes a nonadvanced approaches institution, the institution must make its AOCI opt-out election in the
first Call Report the institution files after the occurrence of this event. After an institution
initially makes its AOCI opt-out election, the institution must report its election in each
quarterly Call Report thereafter. Each of the institution’s depository institution subsidiaries, if
any, must elect the same option as the institution. With prior notice to its primary federal
supervisor, an institution resulting from a merger, acquisition, or purchase transaction may
make a new AOCI opt-out election, as described in section 22(b)(2) of the regulatory capital
rules.
(ii) Institutions that do not make an AOCI opt-out election and all advanced
approaches institutions:
An institution that does not make an AOCI opt-out election and enters “0” for “No” in this
item 3.a and all advanced approaches institutions are subject to the AOCI-related adjustment
in Schedule RC-R, Part I, item 9.f.
4
Common equity tier 1 minority interest includable in common equity tier 1 capital.
Report the aggregate amount of common equity tier 1 minority interest, calculated as
described below and in section 21 of the regulatory capital rules. Common equity tier 1
minority interest is the portion of common equity tier 1 capital in a reporting institution’s
subsidiary not attributable, directly or indirectly, to the parent institution. Note that a bank
may only include common equity tier 1 minority interest if: (a) the subsidiary is a depository
institution or a foreign bank; and (b) the capital instruments issued by the subsidiary meet all
of the criteria for common equity tier 1 capital (qualifying common equity tier 1 capital
instruments).
FFIEC 031 and 041
RC-R-6
(6-20)
RC-R – REGULATORY CAPITAL
18
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
Caption and Instructions
10.b
(cont.)
The institution must look through any holdings of index securities to deduct investments
in its own capital instruments. In addition:
AF
T
(i) Gross long positions in investments in an institution’s own regulatory capital
instruments resulting from holdings of index securities may be netted against short
positions in the same underlying index;
(ii) Short positions in index securities to hedge long cash or synthetic positions may be
decomposed to recognize the hedge; and
(iii) The portion of the index composed of the same underlying exposure that is being
hedged may be used to offset the long position only if both the exposure being
hedged and the short position in the index are covered positions under the market
risk rule, and the hedge is deemed effective by the institution’s internal control
processes.
(4) Reciprocal cross-holdings in the capital of financial institutions in the form of
common stock. Include investments in the capital of other financial institutions (in the
form of common stock) that the institution holds reciprocally (this is the corresponding
deduction approach). Such reciprocal crossholdings may result from a formal or informal
arrangement to swap, exchange, or otherwise intend to hold each other’s capital
instruments.
(5) Equity investments in financial subsidiaries. Include the aggregate amount of the
institutions’ outstanding equity investments, including retained earnings, in its financial
subsidiaries (as defined in 12 CFR 5.39 (OCC); 12 CFR 208.77 (Board); and
12 CFR 362.17 (FDIC)). The assets and liabilities of financial subsidiaries may not be
consolidated with those of the parent institution for regulatory capital purposes. No other
deduction is required for these investments in the capital instruments of financial
subsidiaries.
R
(6) Advanced approaches institutions only that exit parallel run.1 Include the amount of
expected credit loss that exceeds the institution’s eligible credit reserves.
D
An advanced approaches institution that has exited parallel run, has adopted Accounting
Standards Update No. 2016-13 (ASU 2016-13) on credit losses, and has elected to apply
the 3-year CECL transition provision (3-year CECL electing advanced approaches
institution) should decrease its eligible credit reserves by the applicable eligible credit
reserves transitional amount in accordance with section 301 of the regulatory capital
rules. Specifically, a 3-year CECL electing advanced approaches institution should
reduce the amount of its eligible credit reserves by 75 percent of its eligible credit
reserves transitional amount during the first year of the transition period, 50 percent of its
eligible credit reserves transitional amount during the second year of the transition period,
and 25 percent of its eligible credit reserves transitional amount during the third year of
the transition period.
An advanced approaches institution that has exited parallel run, has adopted ASU
2016-13, and has elected to apply the 5-year 2020 CECL transition provision (5-year
CECL electing advanced approaches institution) should decrease its eligible credit
reserves by the applicable eligible credit reserves transitional amount in accordance with
section 301 of the regulatory capital rules. Specifically, a 5-year CECL electing advanced
approaches institution should reduce the amount of its eligible credit reserves by
100 percent of its eligible credit reserves transitional amount during the first and second
years of the transition period, 75 percent of its eligible credit reserves transitional amount
during the third year of the transition period, 50 percent of its eligible credit reserves
transitional amount during the fourth year of the transition period, and 25 percent of its
FFIEC 031 and 041
RC-R-14
(3-20)
RC-R – REGULATORY CAPITAL
19
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
eligible credit reserves transitional amount during the fifth year of the transition period
(see Example of Application of the 5-Year 2020 CECL Transition Provision for Second
Quarter 2020 in the instructions for Schedule RC-R, Part I, item 2).
(7) Deductions for non-includable subsidiaries. A savings association that has a nonincludable subsidiary must deduct its outstanding investments (both equity and debt) in,
and extensions of credit to, the subsidiary in this item 10.b.
An advanced approaches institution that exits the parallel run is an advanced approaches institution that has
completed the parallel run process and that has received notification from the primary federal supervisor pursuant to
section 121(d) of subpart E of the regulatory capital rules.
D
R
AF
T
1
FFIEC 031 and 041
RC-R-14a
(3-20)
RC-R – REGULATORY CAPITAL
20
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
FFIEC 041 FFIEC 031
Item No. Item No. Caption and Instructions
-
14.b
(cont.)
For advanced approaches institutions, apply a 250 percent risk-weight to MSAs
that are not deducted from common equity tier 1 capital, without regard to any
associated DTLs.
Example and a worksheet calculation:
AF
T
Assumptions:
For example, assume that an institution:
• Has $20 of MSAs, net of associated DTLs, and
• Has total common equity tier 1 capital subtotal (reported in Schedule RC-R,
Part I, item 12, (column B on the FFIEC 031) of $60.
(1)
Total amount of MSAs, net of associated DTLs
$20
(2)
Multiply the total common equity tier 1 capital subtotal by
10 percent.
Determine if (1) is greater than (2), and if so, the difference
between (1) and (2) must be deducted from regulatory capital.
$60 x 10% = $6
(3)
$20 > $6, so the amount
deducted is $20-$6 = $14
NOTE: On the FFIEC 041, item 15 is to be completed by all reporting institutions. On the FFIEC 031,
item 15.a is to be completed only by non-advanced approaches institutions.
15
15.a
LESS: 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 25 percent of item 12.
D
R
(1) Determine the amount of DTAs arising from temporary differences that could
not be realized through net operating loss carrybacks, net of any related
valuation allowances and net of associated DTLs (for example, DTAs
resulting from the institution’s allowance for loan and lease losses (ALLL) or
allowances for credit losses (ACL), as applicable).
(2) If the amount in (1) is greater than 25 percent of Schedule RC-R, Part I,
item 12 (column A on the FFIEC 031), report the difference in this item 15 on
the FFIEC 041; item 15.a on the FFIEC 031.
(3) If the amount in (1) is less than or equal to 25 percent of Schedule RC-R,
Part I, item 12 (column A on the FFIEC 031), enter zero in this item 15 on the
FFIEC 041; item 15.a on the FFIEC 031.
FFIEC 031 and 041
RC-R-23
(6-20)
RC-R – REGULATORY CAPITAL
21
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
FFIEC 041 FFIEC 031
Item No. Item No. Caption and Instructions
15
(cont.)
15.a
(cont.)
DTAs arising from temporary differences that could be realized through net
operating loss carrybacks are not subject to deduction, and instead must be
assigned to a 100 percent risk-weight category, except for institutions that have a
community bank leverage ratio (CBLR) framework election in effect as of the
quarter-end report date. For an institution that is a member of a consolidated
group for tax purposes, the amount of DTAs that could be realized through net
operating loss carrybacks may not exceed the amount that the institution could
reasonably expect to have refunded by its parent holding company.
AF
T
All institutions must apply a 250 percent risk-weight to DTAs arising from
temporary differences that could not be realized through net operating loss
carrybacks that are not deducted from common equity tier 1 capital, without
regard to any associated DTLs, except for institutions subject to thethat have a
community bank leverage ratio (CBLR) framework election in effect as of the
quarter-end report date.
An institution that has adopted FASB Accounting Standards Update No. 2016-13
(ASU 2016-13), which governs the accounting for credit losses and introduces
the current expected credit losses methodology (CECL), and has elected to apply
the 3-year CECL transition provision (3-year CECL electing institution) should
decrease its DTAs arising from temporary differences by the applicable DTA
transitional amount in accordance with section 301 of the regulatory capital rules.
Specifically, a 3-year CECL electing institution should reduce the amount of its
DTAs arising from temporary differences by 75 percent of its DTA transitional
amount during the first year of the transition period, 50 percent of its DTA
transitional amount during the second year of the transition period, and
25 percent of its DTA transitional amount during the third year of the transition
period (see Table 1 in the instructions for Schedule RC-R, Part I, item 2).
D
R
An institution that has adopted ASU 2016-13 and has elected to apply the 5-year
2020 CECL transition provision (5-year CECL electing institution) should
decrease its DTAs arising from temporary differences by the applicable DTA
transitional amount in accordance with section 301 of the regulatory capital rules.
Specifically, a 5-year CECL electing institution should reduce the amount of its
DTAs arising from temporary differences by 100 percent of its DTA transitional
amount during the first and second years of the transition period, 75 percent of its
DTA transitional amount during the third year of the transition period, 50 percent
of its DTA transitional amount during the fourth year of the transition period, and
25 percent of its DTA transitional amount during the fifth year of the transition
period (see Example of Application of the 5-Year 2020 CECL Transition
Provision for Second Quarter 2020 in the instructions for Schedule RC-R, Part I,
item 2).
Example and a worksheet calculation:
Assumptions:
For example, assume that an institution:
• Has $20 of DTAs arising from temporary differences that could not be
realized through net operating loss carrybacks net of any related valuation
allowances and net of associated DTLs, and
• Has total common equity tier 1 capital subtotal (reported in Schedule RC-R,
Part I, item 12, (column A on the FFIEC 031) of $60.
FFIEC 031 and 041
RC-R-24
(6-20)
RC-R – REGULATORY CAPITAL
22
FFIEC 031 and 041
(1)
RC-R – REGULATORY CAPITAL
Total amount of DTAs arising from temporary differences that
could not be realized through net operating loss carrybacks
net of any related valuation allowances and net of associated
DTLs.
Multiply the total common equity tier 1 capital subtotal by
25 percent.
Determine if (1) is greater than (2), and if so, the difference
between (1) and (2) must be deducted from regulatory capital.
(2)
(3)
$20
$60 x 25% = $15
$20 > $15, so the amount
deducted is $20-$15 = $5
NOTE: On the FFIEC 031, item 15.b is to be completed only by advanced approaches institutions.
Item 15.b is not applicable to institutions that file the FFIEC 041.
15.b
LESS: 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.
AF
T
-
D
R
(1) Determine the amount of DTAs arising from temporary differences that could
not be realized through net operating loss carrybacks net of any related
valuation allowances and net of associated DTLs (for example, DTAs
resulting from the institution’s allowance for loan and lease losses (ALLL) or
allowances for credit losses (ACL), as applicable).
(2) If the amount in (1) is greater than 10 percent of Schedule RC-R, Part I,
item 12 (column B on the FFIEC 031), report the difference in this item 15.b.
(3) If the amount in (1) is less than 10 percent of Schedule RC-R, Part I, item 12
(column B on the FFIEC 031), enter zero in this item 15.b.
FFIEC 031 and 041
RC-R-24a
(6-20)
RC-R – REGULATORY CAPITAL
23
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
FFIEC 041 FFIEC 031
Item No. Item No. Caption and Instructions
-
15.b
(cont.)
DTAs arising from temporary differences that could be realized through net
operating loss carrybacks are not subject to deduction, and instead must be
assigned to a 100 percent risk-weight category. For an institution that is a
member of a consolidated group for tax purposes, the amount of DTAs that could
be realized through net operating loss carrybacks may not exceed the amount
that the institution could reasonably expect to have refunded by its parent holding
company.
AF
T
For advanced approaches institutions, apply a 250 percent risk weight to DTAs
arising from temporary differences that could not be realized through net
operating loss carrybacks that are not deducted from common equity tier 1
capital, without regard to any associated DTLs
An institution that has adopted FASB Accounting Standards Update No. 2016-13
(ASU 2016-13), which governs the accounting for credit losses and introduces
the current expected credit losses methodology (CECL), and has elected to apply
the 3-year CECL transition provision (3-year CECL electing institution) should
decrease its DTAs arising from temporary differences by the applicable DTA
transitional amount in accordance with section 301 of the regulatory capital rules.
Specifically, a 3-year CECL electing institution should reduce the amount of its
DTAs arising from temporary differences by 75 percent of its DTA transitional
amount during the first year of the transition period, 50 percent of its DTA
transitional amount during the second year of the transition period, and
25 percent of its DTA transitional amount during the third year of the transition
period (see Table 1 in the instructions for Schedule RC-R, Part I, item 2).
D
R
An institution that has adopted ASU 2016-13 and has elected to apply the 5-year
2020 CECL transition provision (5-year CECL electing institution) should
decrease its DTAs arising from temporary differences by the applicable DTA
transitional amount in accordance with section 301 of the regulatory capital rules.
Specifically, a 5-year CECL electing institution should reduce the amount of its
DTAs arising from temporary differences by 100 percent of its DTA transitional
amount during the first and second years of the transition period, 75 percent of its
DTA transitional amount during the third year of the transition period, 50 percent
of its DTA transitional amount during the fourth year of the transition period, and
25 percent of its DTA transitional amount during the fifth year of the transition
period (see Example of Application of the 5-Year 2020 CECL Transition
Provision for Second Quarter 2020 in the instructions for Schedule RC-R, Part I,
item 2).
Example and a worksheet calculation:
Assumptions:
For example, assume that an institution:
• Has $20 of DTAs arising from temporary differences that could not be
realized through net operating loss carrybacks, net of any related valuation
allowances and net of associated DTLs, and
• Has total common equity tier 1 capital subtotal (reported in Schedule RC-R,
Part I, item 12, (column B on the FFIEC 031) of $60.
FFIEC 031 and 041
RC-R-25
(6-20)
RC-R – REGULATORY CAPITAL
24
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
Caption and Instructions
24
(cont.)
(4) Significant investments in the capital of unconsolidated financial institutions not in
the form of common stock to be deducted from additional tier 1 capital. Report the
total amount of significant investments in the capital of unconsolidated financial
institutions in the form of additional tier 1 capital.
(5) Other adjustments and deductions. Include adjustments and deductions applied to
additional tier 1 capital due to insufficient tier 2 capital to cover deductions (related to
reciprocal cross-holdings, non-significant investments in the tier 2 capital of
unconsolidated financial institutions, and significant investments in the tier 2 capital of
unconsolidated financial institutions).
25
Additional tier 1 capital. Report the greater of Schedule RC-R, Part I, item 23 minus
item 24, or zero.
Tier 1 Capital
26
AF
T
In addition, insured state banks with real estate subsidiaries whose continued operations
have been approved by the FDIC pursuant to Section 362.4 of the FDIC's Rules and
Regulations generally should include as a deduction from additional tier 1 capital their
equity investment in the subsidiary. (Insured state banks with FDIC-approved phase-out
plans for real estate subsidiaries need not make these deductions.) Insured state banks
with other subsidiaries (that are not financial subsidiaries) whose continued operations
have been approved by the FDIC pursuant to Section 362.4 should include as a
deduction from additional Tier 1 capital the amount required by the approval order.
Tier 1 capital. Report the sum of Schedule RC-R, Part I, items 19 and 25.
Total Assets for the Leverage Ratio
Average total consolidated assets. All institutions must report the amount of average total
consolidated assets as reported in Schedule RC-K, item 9.
R
27
D
An institution that has adopted FASB Accounting Standards Update No. 2016-13 (ASU
2016-13), which governs the accounting for credit losses and introduces the current expected
credit losses methodology (CECL), and has elected to apply the 3-year CECL transition
provision (3-year CECL electing institution) should increase its average total consolidated
assets by its applicable CECL transitional amount, in accordance with section 301 of the
regulatory capital rules. Specifically, a 3-year CECL electing institution should increase its
average total consolidated assets as reported on the Call Report for purposes of the leverage
ratio by 75 percent of its CECL transitional amount during the first year of the transition
period, 50 percent of its CECL transitional amount during the second year of the transition
period, and 25 percent of its CECL transitional amount during the third year of the transition
period (see Table 1 in the instructions for Schedule RC-R, Part I, item 2).
An institution that has adopted ASU 2016-13 and has elected to apply the 5-year 2020 CECL
transition provision (5-year CECL electing institution) should increase its average total
consolidated assets by its applicable modified CECL transitional amount, in accordance with
section 301 of the regulatory capital rules. Specifically, a 5-year CECL electing institution
should increase its average total consolidated assets as reported on the Call Report for
purposes of the leverage ratio by 100 percent of its modified CECL transitional amount during
the first and second years of the transition period, 75 percent of its modified CECL
transitional amount during the third year of the transition period, 50 percent of its modified
CECL transitional amount during the fourth year of the transition period, and 25 percent of its
modified CECL transitional amount during the fifth year of the transition period (see Example
of Application of the 5-Year 2020 CECL Transition Provision for Second Quarter 2020 in the
instructions for Schedule RC-R, Part I, item 2).
FFIEC 031 and 041
RC-R-39
(6-20)
RC-R – REGULATORY CAPITAL
25
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
28
Caption and Instructions
LESS: Deductions from common equity tier 1 capital and additional tier 1 capital.
(i) Non-advanced approaches institutions:
On the FFIEC 041, report the sum of the amounts deducted from common equity tier 1
capital and additional tier 1 capital in Schedule RC-R, Part I, items 6, 7, 8, 10.b, 13 through
15, 17, and 24.
On the FFIEC 031, report the sum of the amounts deducted from common equity tier 1
capital and additional tier 1 capital in Schedule RC-R, Part I, items 6, 7, 8, 10.b, 13.a, 14.a,
15.a, 17 (column A), and 24.
AF
T
On the FFIEC 031 and the FFIEC 041, also exclude the amount reported in Schedule RC-R,
Part I, item 17, that is due to insufficient amounts of additional tier 1 capital, and which is
included in the amount reported in Schedule RC-R, Part I, item 24. (This is to avoid double
counting.)
(ii) Advanced approaches institutions:
Report the sum of the amounts deducted from common equity tier 1 capital and additional
tier 1 capital in Schedule RC-R, Part I, items 6, 7, 8, 10.b, 11, 13.b, 14.b, 15.b, 16, 17
(column B), and 24. Also exclude the amount reported in Schedule RC-R, Part I, item 17,
that is due to insufficient amounts of additional tier 1 capital, and which is included in the
amount reported in Schedule RC-R, Part I, item 24. (This is to avoid double counting.)
29
LESS: Other deductions from (additions to) assets for leverage ratio purposes. Based
on the regulatory capital rules of the bank’s primary federal supervisor, report the amount of
any deductions from (additions to) total assets for leverage ratio purposes that are not
included in Schedule RC-R, Part I, item 28, as well as the items below, if applicable. If the
amount is a net deduction, report it as a positive value in this item. If the amount is a net
addition, report it as a negative value in this item.
D
R
Include as a deduction the quarterly average amount of Paycheck Protection Program (PPP)
loans pledged to the PPP Liquidity Facility (PPPLF). This quarterly average should be
consistent with and calculated using the same averaging method used for calculating the
quarterly average for “Total assets” reported in Schedule RC-K, item 9. Institutions also
should report in Schedule RC-M, item 17.e, the quarterly average amount of PPP loans
pledged to the PPPLF that are included as a deduction in this item 29.
Include as a deduction the quarterly average amount of assets purchased under the Money
Market Mutual Fund Liquidity Facility (MMLF). This quarterly average should be consistent
with and calculated using the same averaging method used for calculating the quarterly
average for “Total assets” reported in Schedule RC-K, item 9. Institutions also should report
in Schedule RC-M, item 18.b, the quarterly average amount of assets purchased under the
MMLF that are included as a deduction in this item 29.
Institutions that make the AOCI opt-out election in Schedule RC-R, Part I, item 3.a –
Defined benefit postretirement plans:
If the reporting institution sponsors a single-employer defined benefit postretirement plan,
such as a pension plan or health care plan, accounted for in accordance with ASC Topic 715,
Compensation-Retirement Benefits (formerly FASB Statement No. 158, “Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans”), the institution
should adjust total assets for leverage ratio purposes for any amounts included in
Schedule RC, item 26.b, “Accumulated other comprehensive income” (AOCI), affecting
assets as a result of the initial and subsequent application of ASC Topic 715. The
FFIEC 031 and 041
RC-R-40
(6-20)
RC-R – REGULATORY CAPITAL
26
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
FFIEC 041 FFIEC 031
Item No. Item No. Caption and Instructions
42
42.a
Allowance for loan and lease losses includable in tier 2 capital. Report the
portion of the institution’s allowance for loan and lease losses (ALLL) or adjusted
allowances for credit losses (AACL), as applicable, for regulatory capital
purposes that is includable in tier 2 capital. None of the institution’s allocated
transfer risk reserve, if any, is includable in tier 2 capital.
AF
T
For an institution that has not adopted FASB Accounting Standards Update No.
2016-13 (ASU 2016-13), which governs the accounting for credit losses and
introduces the current expected credit losses methodology (CECL), the
institution’s ALLL for regulatory capital purposes equals Schedule RC, item 4.c,
“Allowance for loan and lease losses”; less any allocated transfer risk reserve
included in Schedule RC, item 4.c; plus Schedule RC-G, item 3, “Allowance for
credit losses on off-balance sheet credit exposures.”
For an institution that has adopted ASU 2016-13, the institution’s AACL for
regulatory capital purposes equals Schedule RI-B, Part II, item 7, columns A
and B, “Balance end of current period” for loans and leases held for investment
and held-to-maturity debt securities, respectively; plus Schedule RI-B, Part II,
Memorandum item 6, “Allowance for credit losses on other financial assets
measured at amortized cost (not included in item 7, above)”; less
Schedule RC-R, Part II, sum of Memorandum items 4.a, 4.b, and 4.c, “Amount of
allowances for credit losses on purchased credit-deteriorated assets” for loans
and leases held for investment, held-to-maturity debt securities, and other
financial assets measured at amortized cost, respectively; less any allocated
transfer risk reserve included in Schedule RI-B, Part II, item 7, columns A and B,
and Memorandum item 6; plus Schedule RC-G, item 3, ‘‘Allowance for credit
losses on off-balance sheet credit exposures.’’
D
R
An institution that has adopted ASU 2016-13 and has elected to apply the 3-year
CECL transition provision (3-year CECL electing institution) should decrease its
AACL by the applicable AACL transitional amount in accordance with section 301
of the regulatory capital rules. Specifically, a 3-year CECL electing institution
should reduce the amount of its AACL includable in tier 2 capital by 75 percent of
its AACL transitional amount during the first year of the transition period, 50
percent of its AACL transitional amount during the second year of the transition
period, and 25 percent of its AACL transitional amount during the third year of the
transition period (see Table 1 in the instructions for Schedule RC-R, Part I,
item 2).
An institution that has adopted ASU 2016-13 and has elected to apply the 5-year
2020 CECL transition provision (5-year CECL electing institution) should
decrease its AACL by the applicable modified AACL transitional amount in
accordance with section 301 of the regulatory capital rules. Specifically, a 5-year
CECL electing institution should reduce the amount of its AACL by 100 percent
of its modified AACL transitional amount during the first and second years of the
transition period, 75 percent of its modified AACL transitional amount during the
third year of the transition period, 50 percent of its modified AACL transitional
amount during the fourth year of the transition period, and 25 percent of its
modified AACL transitional amount during the fifth year of the transition period
(see Example of Application of the 5-Year 2020 CECL Transition Provision for
Second Quarter 2020 in the instructions for Schedule RC-R, Part I, item 2).
FFIEC 031 and 041
RC-R-49
(6-20)
RC-R – REGULATORY CAPITAL
27
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
D
R
AF
T
The amount to be reported in this item is the lesser of (1) the institution’s ALLL
or AACL, as applicable, for regulatory capital purposes, as defined above, or
(2) 1.25 percent of the institution’s risk-weighted assets base for the ALLL or
AACL calculation, as applicable, as reported in Schedule RC-R, Part II, item 26.
In calculating the risk-weighted assets base for this purpose, an institution would
not include items that are deducted from capital under section 22(a). However,
an institution would include risk-weighted asset amounts of items deducted from
capital under sections 22(c) through (f) of the regulatory capital rule. While
amounts deducted from capital under sections 22(c) through (f) are included in
the risk-weighted assets base for the ALLL or AACL calculation, as applicable,
such amounts are excluded from standardized total risk-weighted assets used in
the denominator of the risk-based capital ratios.
FFIEC 031 and 041
RC-R-49a
(6-20)
RC-R – REGULATORY CAPITAL
28
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
FFIEC 041 FFIEC 031
Item No. Item No. Caption and Instructions
42.a
(cont.)
The amount, if any, by which an institution’s ALLL or AACL, as applicable, for
regulatory capital purposes exceeds 1.25 percent of the institution’s riskweighted assets base for the ALLL or AACL calculation (as reported in Schedule
RC-R, Part II, item 26), as applicable, should be reported in Schedule RC-R,
Part II, item 29, “LESS: Excess allowance for loan and lease losses.” For an
institution that has not adopted ASU 2016-13, the sum of the amount of ALLL
includable in tier 2 capital reported in Schedule RC-R, Part I, item 42.a on the
FFIEC 031, item 42 on the FFIEC 041; plus the amount of excess ALLL reported
in Schedule RC-R, Part II, item 29, must equal Schedule RC, item 4.c, less any
allocated transfer risk reserve included in Schedule RC, item 4.c, plus
Schedule RC-G, item 3.
AF
T
42
(cont.)
NOTE: On the FFIEC 031, item 42.b is to be completed only by advanced approaches institutions that
exit parallel run. Item 42.b is not applicable to institutions that file the FFIEC 041.
-
42.b
Advanced approaches institutions that exit parallel run only: eligible credit
reserves includable in tier 2 capital. Report the amount of eligible credit
reserves includable in tier 2 capital as reported in FFIEC 101, Schedule A,
item 50.
R
An advanced approaches institution that has exited parallel run, has adopted
Accounting Standards Update No. 2016-13 (ASU 2016-13) on credit losses, and
has elected to apply the 3-year CECL transition provision (3-year CECL electing
advanced approaches institution) should decrease its eligible credit reserves by
the applicable eligible credit reserves transitional amount in accordance with
section 301 of the regulatory capital rules. Specifically, a 3-year CECL electing
advanced approaches institution should reduce the amount of its eligible credit
reserves by 75 percent of its eligible credit reserves transitional amount during
the first year of the transition period, 50 percent of its eligible credit reserves
transitional amount during the second year of the transition period, and
25 percent of its eligible credit reserves transitional amount during the third year
of the transition period.
D
An advanced approaches institution that has exited parallel run, has adopted
ASU 2016-13, and has elected to apply the 5-year 2020 CECL transition
provision (5-year CECL electing advanced approaches institution) should
decrease its eligible credit reserves by the applicable eligible credit reserves
transitional amount in accordance with section 301 of the regulatory capital rules.
Specifically, a 5-year CECL electing advanced approaches institution should
reduce the amount of its eligible credit reserves by 100 percent of its eligible
credit reserves transitional amount during the first and second years of the
transition period; 75 percent of its eligible credit reserves transitional amount
during the third year of the transition period; 50 percent of its eligible credit
reserves transitional amount during the fourth year of the transition period; and
25 percent of its eligible credit reserves transitional amount during the fifth year
of the transition period (see Example of Application of the 5-Year 2020 CECL
Transition Provision for Second Quarter 2020 in the instructions for
Schedule RC-R, Part I, item 2).
FFIEC 031 and 041
RC-R-50
(6-20)
RC-R – REGULATORY CAPITAL
29
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
Caption and Instructions
52.a
(cont.)
For all institutions, except advanced approaches institutions that exit parallel run:
(1) Schedule RC-R, Part I, item 49, column A, less 4.5000 percent, which is the minimum
common equity tier 1 capital ratio requirement under section 10 of the regulatory capital
rules;
(2) Schedule RC-R, Part I, item 50, column A, less 6.0000 percent, which is the minimum
tier 1 capital ratio requirement under section 10 of the regulatory capital rules; and
(3) Schedule RC-R, Part I, item 51, column A, less 8.0000 percent, which is the minimum
total capital ratio requirement under section 10 of the regulatory capital rules.
AF
T
However, if any of the three ratios calculated above is less than zero (i.e., is negative), the
institution’s capital conservation buffer is zero.
For advanced approaches institutions that exit parallel run only:
(1) The lower of Schedule RC-R, Part I, item 49, column A and column B, less
4.5000 percent, which is the minimum common equity tier 1 capital ratio requirement
under section 10 of the regulatory capital rules;
(2) The lower of Schedule RC-R, Part I, item 50, column A and column B, less
6.0000 percent, which is the minimum tier 1 capital ratio requirement under section 10
of the regulatory capital rules; and
(3) The lower of Schedule RC-R, Part I, item 51, column A and column B, less
8.0000 percent, which is the minimum total capital ratio requirement under section 10
of the regulatory capital rules.
However, if any of the three ratios calculated above is less than zero (i.e., is negative), the
institution’s capital conservation buffer is zero.
Advanced approaches institutions (FFIEC 031) and institutions subject to Category III
capital standards (FFIEC 031 and FFIEC 041) only: Total applicable capital buffer.
Report the total applicable capital buffer requirement for the reporting institution as specified
in the capital rule. The total applicable capital buffer requirement is the sum of the capital
conservation buffer (2.5000 percent) plus any countercyclical capital buffer that is in place
plus any countercyclical capital buffers in other jurisdictions to which the institution is subject.
R
52.b
D
NOTE: Non-advanced approaches institutions other than Category III institutions must complete
Schedule RC-R, Part I, item 53, only if the amount reported in Schedule RC-R, Part I, item 52.a,
above, is less than or equal to 2.5000 percent. Advanced approaches institutions and Category III
institutions must complete Schedule RC-R, Part I, item 53, only if the amount reported in
Schedule RC-R, Part I, item 52.a, above, is less than or equal to the amount reported in
Schedule RC-R, Part I, item 52.b, above.
Item No.
53
Caption and Instructions
Eligible retained income. Report the amount of eligible retained income as the greater of
(1) the reporting institution’s net income attributable to the institution for the four preceding
calendar quarters preceding the current calendar quarter, net of any distributions and
associated tax effects not already reflected in net income. , and (2) the average of the
reporting institution’s net income over the four preceding calendar quarters. (See the
instructions for Schedule RC-R, Part I, item 54, for the definition of “distributions” from
section 2 of the regulatory capital rules.)
For example, the amount of eligible retained income to be reported in this item 53 for the
December 31, 2019, report date would be based on the net income attributable to the
institution for the four calendar quarters ending on December 31, 2019. This net income
FFIEC 031 and 041
RC-R-57
(6-20)
RC-R – REGULATORY CAPITAL
30
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
Caption and Instructions
53
(cont.)
For purposes of this item 53, the four preceding calendar quarters refers to the calendar
quarter ending on the last day of the current reporting period and the three preceding
calendar quarters as illustrated in the example below. The average of an institution’s amount
would equal the net income over the four preceding calendar quarters refers to the average
of three-month net income for the calendar quarter ending on the last day of the current
reporting period and the three-month net income for the three preceding calendar quarters as
illustrated in the example below.
Example and a worksheet calculation:
Assumptions:
(cont.)
AF
T
Eligible retained income is calculated for the Call Report date of March 31, 2020.
The institution reported the following on its Call Reports in Schedule RI, Income
Statement, item 14, “Net income (loss) attributable to the institution most recently
reported in bank”:
Schedule RI, item 14, for December 31, 2019 (i.e., after adjustments for amended
Consolidated Reports of Income).
•
•
This net income amount would next be reduced by any distributions and associated tax
effects not already reflected in net income; the resulting amount would be the eligible retained
income to be reported in this item 53. Thus, if the institution had declared dividends on its
common stock during each calendar quarter in 2019 and had no other distributions during
2019, the institution would reduce its net income amount by the total amount of the dividends
declared in 2019 and report the resulting amount as its eligible net income in this item 53.
R
As an additional example, the amount of eligible retained income to be reported in this
item 53 for the March 31, 2020, report date would be based on the net income attributable to
the institution for the four calendar quarters ending on March 31, 2020. This net income
amount would be calculated by:
D
(1) Subtracting the net income attributable to the institution most recently reported in
Schedule RI, item 14, for March 31, 2019 (i.e., after adjustments for amended
Consolidated Reports of Income), from the net income attributable to the institution most
recently reported in Schedule RI, item 14, for December 31, 2019 (i.e., after adjustments
for amended Consolidated Reports of Income), and
(2) Adding the result from (1) above to the net income attributable to the institution most
recently reported in Schedule RI, item 14, for March 31, 2020 (i.e., after adjustments for
amended Consolidated Reports of Income).
This net income amount would next be reduced by any distributions and associated tax
effects not already reflected in net income
Call Report Date
Amount Reported in
Three-Month Net
Item 14
Income
March 31, 2019
$400 (A)
$400
June 30, 2019
$900 (B)
$500 (B-A)
September 30, 2019
$1,500 (C)
$600 (C-B)
December 31, 2019
$1,900 (D)
$400 (D-C)
March 31, 2020
$200 (E)
$200 (E)
FFIEC 031 and 041
RC-R-57a
(6-20)
RC-R – REGULATORY CAPITAL
31
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
Caption and Instructions
53
(cont.)
•
The distributions and associated tax effects not already reflected in net income
(e.g., dividends declared on the institution’s common stock between April 1, 2019, and
March 31, 2020); the resulting amount would be the eligible retained income to be
reported in this item 53 in this example are $400 in each of the four preceding calendar
quarters.
(1)
(2)
(3)
Q2 2019
$500
($400)
Q3 2019
$600
($400)
Q4 2019
$400
($400)
Q1 2020
$200
($400)
AF
T
Net Income
Adjustments for
distributions and
associated tax effects
not already reflected
in net income
Adjusted Net Income
(Net Income –
Adjustments)
$100
$200
$0
($200)
Calculate 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.
Calculate the average of an institution’s three-month net income over the
four preceding calendar quarters.
Take the greater of step (1) and step (2) and report the amount in Schedule
RC-R, Part I, item 53.
$100 + $200
+ $0 + ($200)
= $100
($500 + $600
+ $400 +
$200) / 4 =
$425*
$425
R
*From a practical perspective, an institution may use the year-to-date net income reflected in
Schedule RI for December 31, 2019; subtract from it the net income reflected in Schedule RI,
item 14, for March 31, 2019; and then add the net income in Schedule RI, item 14, for
March 31, 2020, to calculate the numerator in step 2, above. For the example above, the
average of an institution’s three-month net income over the four preceding calendar quarters
would be: ($1,900 (D) less $400 (A) plus $200 (E)) divided by 4 = $425.
D
NOTE: Non-advanced approaches institutions other than Category III institutions must complete
Schedule RC-R, Part I, item 54, only if the amount reported in Schedule RC-R, Part I, item 52.a, in
the Call Report for the previous calendar quarter-end report date was less than or equal to 2.5000
percent. Advanced approaches institutions and Category III institutions must complete Schedule
RC-R, Part I, item 54, only if the amount reported in Schedule RC-R, Part I, item 52.a, in the Call
Report for the previous calendar quarter-end report date was less than or equal to the amount
reported in Schedule RC-R, Part I, item 52.b, in the Call Report for the previous calendar quarterend report date.
Item No.
54
Caption and Instructions
Distributions and discretionary bonus payments during the quarter. An institution must
complete this item only if the amount of its institution-specific capital buffer, as reported as of
the previous calendar quarter-end report date, was less than its applicable required buffer
percentage on that previous calendar quarter-end report date. For an institution that must
complete this item 54, report the amount of distributions and discretionary bonus payments
during the calendar quarter ending on the report date.
FFIEC 031 and 041
RC-R-58
(6-20)
RC-R – REGULATORY CAPITAL
32
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Supplementary Leverage Ratio
Item No.
Caption and Instructions
NOTE: Schedule RC-R, Part I, items 55.a and 55.b, are to be completed only by advanced approaches
institutions, including those that have not exited parallel run, and institutions subject to Category III capital
standards. All other institutions should leave Schedule RC-R, Part I, items 55.a and 55.b, blank.
Advanced approaches institutions (FFIEC 031) and institutions subject to Category III
capital standards (FFIEC 031 and FFIEC 041): Supplementary leverage ratio
information. Report in the appropriate subitem the institution’s total leverage exposure and
its supplementary leverage ratio.
55.a
Total leverage exposure. Report the institution’s total leverage exposure as measured in
accordance with section 10(c)(4)(ii)(A) through (H) of the regulatory capital rules, as adjusted
pursuant to section 10(c)(4)(ii)(I) for a clearing member institution and section 10(c)(4)(ii)(J)
for a custody bank; sections 302 and 305 of these rules for exposures related to the Money
Market Mutual Fund Liquidity Facility and the Paycheck Protection Program Liquidity Facility;
and, for an electing advanced approaches or Category III depository institution, the applicable
section of these rules for U.S. Treasury securities and deposits in the institution’s accounts at
Federal Reserve Banks (section 303 for an institution supervised by the Federal Reserve;
section 304 for an institution supervised by the OCC or the FDIC).
AF
T
55
R
An advanced approaches or Category III institution that has adopted FASB Accounting
Standards Update No. 2016-13, (ASU 2016-13), which governs the accounting for credit
losses and introduces the current expected credit losses methodology (CECL), and has
elected to apply the 3-year CECL transition provision (3-year CECL electing institution)
should increase its total leverage exposure by its applicable CECL transitional amount, in
accordance with section 301(c)(2)(i) of the regulatory capital rules. For example, a 3-year
CECL electing institution should increase its total leverage exposure for purposes of the
supplementary leverage ratio by 75 percent of its CECL transitional amount during the first
year of the transition period, 50 percent of its CECL transitional amount during the second
year of the transition period, and 25 percent of its CECL transitional amount during the third
year of the transition period.
D
An advanced approaches or Category III institution that has adopted ASU 2016-13 and has
elected to apply the 5-year 2020 CECL transition provision (5-year CECL electing institution)
should increase its total leverage exposure by its applicable modified CECL transitional
amount, in accordance with section 301 of the regulatory capital rules. Specifically, a 5-year
CECL electing institution should increase its total leverage exposure for purposes of the
supplementary leverage ratio by 100 percent of its modified CECL transitional amount during
the first and second years of the transition period, 75 percent of its modified CECL
transitional amount during the third year of the transition period, 50 percent of its modified
CECL transitional amount during the fourth year of the transition period, and 25 percent of its
modified CECL transitional amount during the fifth year of the transition period (see Example
of Application of the 5-Year 2020 CECL Transition Provision for Second Quarter 2020 in the
instructions for Schedule RC-R, Part I, item 2).
55.b
Supplementary leverage ratio. Report the institution’s supplementary leverage ratio as a
percentage, rounded to four decimal places. Divide Schedule RC-R, Part I, item 26, “Tier 1
capital,” by Schedule RC-R, Part I, item 55.a, “Total leverage exposure.”
FFIEC 031 and 041
RC-R-60
(6-20)
RC-R – REGULATORY CAPITAL
33
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. Risk-Weighted Assets
These instructions exclude updates pertaining to the regulatory capital-related interim final rules
(IFRs) issued by the banking agencies from March through June 2020. See the separate
standalone June 2020 COVID-19 Related Supplemental Instructions (Call Report) for instructional
changes related to these IFRs.
Contents – Part II. Risk-Weighted Assets
Community Bank Leverage Ratio Framework
RC-R-62
General Instructions for Schedule RC-R, Part II
RC-R-62
Exposure Amount Subject to Risk Weighting
RC-R-63
Amounts to Report in Column B
RC-R-64
Treatment of Collateral and Guarantees
RC-R-66
RC-R-66
b. Guarantees and Credit Derivatives
RC-R-67
AF
T
a. Collateralized Transactions
Treatment of Equity Exposures
RC-R-67
Treatment of Sales of 1-4 Family Residential First Mortgage Loans
with Credit-Enhancing Representations and Warranties
RC-R-69
Treatment of Exposures to Sovereign Entities and Foreign Banks
RC-R-70
Summary of Risk Weights for Exposures to Government and
Public Sector Entities
RC-R-72
Risk-Weighted Assets for Securitization Exposures
RC-R-72
RC-R-73
b. Simplified Supervisory Formula Approach
RC-R-74
c. Gross-Up Approach
RC-R-76
R
a. Exposure Amount Calculation
d. 1,250 Percent Risk Weight Approach
RC-R-78
RC-R-79
Adjustments for Financial Subsidiaries
RC-R-80
Treatment of Embedded Derivatives
RC-R-81
Reporting Exposures Hedged with Cleared Eligible Credit Derivatives
RC-R-82
Treatment of Certain Centrally Cleared Derivative Contracts
RC-R-82
Treatment of FDIC Loss-Sharing Agreements
RC-R-84
Allocated Transfer Risk Reserve
RC-R-84
D
Banks That Are Subject to the Market Risk Capital Rule
Item Instructions for Schedule RC-R, Part II
RC-R-85
Balance Sheet Asset Categories
RC-R-85
Securitization Exposures: On- and Off-Balance Sheet
RC-R-126
Total Assets
RC-R-132
Derivatives, Off-Balance Sheet Items, and Other Items Subject
To Risk Weighting (Excluding Securitization Exposures)
RC-R-133
Totals
RC-R-157
Memoranda
RC-R-160
FFIEC 031 and 041
RC-R-61
(6-20)
RC-R – REGULATORY CAPITAL
34
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Community Bank Leverage Ratio Framework
A qualifying community banking organization that decides to opt into the community bank leverage ratio
(CBLR) framework (i.e., has a CBLR framework election in effect as of the quarter-end report date, as
reported in Schedule RC-R, Part I, item 31.a) should not complete Schedule RC-R, Part II. All other
institutions should complete Schedule RC-R, Part II. A qualifying institution can opt out of the community
bank leverage ratio framework by completing Schedule RC-R, Parts I and II, excluding Schedule RC-R,
Part I, items 32 through 38.c. Please refer to the General Instructions for Schedule RC-R, Part I, for
information on the reporting requirements that apply when an institution ceases to meet the applicable
have a leverage ratio requirement under the CBLR framework greater than 9 percent or fails to meet any
of the other CBLR qualifying criteria and is no longer in the grace period.
General Instructions for Schedule RC-R, Part II.
AF
T
The instructions for Schedule RC-R, Part II, items 1 through 22, provide general directions for the
allocation of bank balance sheet assets, credit equivalent amounts of derivatives and off-balance sheet
items, and unsettled transactions to the risk-weight categories in columns C through Q (and, for items 1
through 10 only, to the adjustments to the totals in Schedule RC-R, Part II, column A, to be reported in
column B). In general, the aggregate amount allocated to each risk-weight category is then multiplied by
the risk weight associated with that category. The resulting risk-weighted values from each of the risk
categories are added together, and generally this sum is the bank's total risk-weighted assets, which
comprises the denominator of the risk-based capital ratios.
D
R
These instructions should provide sufficient guidance for most banks for risk weighting their balance
sheet assets and credit equivalent amounts. However, these instructions do not address every type of
exposure. Banks should review the regulatory capital rules of their primary federal supervisory authority
for the complete description of capital requirements.
FFIEC 031 and 041
RC-R-62
(6-20)
RC-R – REGULATORY CAPITAL
35
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Item Instructions for Schedule RC-R, Part II.
Balance Sheet Asset Categories
Item No.
1
Caption and Instructions
Cash and balances due from depository institutions. Report in column A the amount of
cash and balances due from depository institutions reported in Schedule RC, sum of
items 1.a and 1.b, excluding those balances due from depository institutions that qualify as
securitization exposures as defined in §.2 of the regulatory capital rules.
The amount of those balances due from depository institutions reported in Schedule RC,
items 1.a and 1.b, that qualify as securitization exposures must be reported in
Schedule RC-R, Part II, item 9.d, column A.
In column C–0% risk weight, include:
o The amount of currency and coin reported in Schedule RC, item 1.a;
o Any balances due from Federal Reserve Banks reported in Schedule RC, item 1.b;
and
o The insured portions of deposits in FDIC-insured depository institutions and NCUAinsured credit unions reported in Schedule RC, items 1.a and 1.b; and
o The amount of negotiable certificates of deposit purchased through the Money
Market Mutual Fund Liquidity Facility.
•
In column G–20% risk weight, include:
o Any balances due from depository institutions and credit unions that are organized
under the laws of the United States or a U.S. state reported in Schedule RC,
items 1.a and 1.b, in excess of any applicable FDIC or NCUA deposit insurance limits
for deposit exposures or where the depository institutions are not insured by either
the FDIC or the NCUA;
o Any balances due from Federal Home Loan Banks reported in Schedule RC,
items 1.a and 1.b; and
o The amount of cash items in the process of collection reported in Schedule RC,
item 1.a.
R
AF
T
•
In column I–100% risk weight, include all other amounts that are not reported in
columns C through H and J.
•
Cash and balances due from depository institutions that must be risk weighted according
to the Country Risk Classification (CRC) methodology
o In column C–0% risk weight; column G–20% risk weight; column H–50% risk weight;
column I–100% risk weight; column J–150% risk weight. Assign these exposures to
risk weight categories based on the CRC methodology described above in the
General Instructions for Part II. Include:
o The amounts reported in Schedule RC, items 1.a and 1.b, composed of balances
due from foreign banks; and
o Any balances due from foreign central banks.
D
•
If the reporting bank is the correspondent bank in a pass-through reserve balance
relationship, report in column C the amount of its own reserves as well as those reserve
balances actually passed through to a Federal Reserve Bank on behalf of its respondent
depository institutions.
If the reporting bank is the respondent bank in a pass-through reserve balance relationship,
report in column C the amount of the bank's reserve balances due from its correspondent
bank that its correspondent has actually passed through to a Federal Reserve Bank on the
reporting bank's behalf, i.e., for purposes of this item, treat these balances as balances due
FFIEC 031 and 041
RC-R-85
(3-20)
RC-R – REGULATORY CAPITAL
36
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Item No.
Caption and Instructions
2.a
(cont.)
earnings in accordance with ASC Topic 320, Investments-Debt Securities (formerly FASB
Statement No. 115, “Accounting for Certain Investments in Debt and Equity Securities”).
Thus, for an HTM security with such an unrealized gain (loss), report in column B any
difference between the carrying value of the security reported in column A of this item and its
exposure amount reported under the appropriate risk weighting column C through J.
In column B for non-advanced approaches institutions, include the amount of:
o Investments in the capital of unconsolidated financial institutions in the form of tier 2
capital that are reported in Schedule RC, item 2.a, and have been deducted from
capital in Schedule RC-R, Part I, item 45.
•
In column B for advanced approaches institutions, include the amount of:
o Non-significant investments in tier 2 capital of unconsolidated financial institutions
that are reported in Schedule RC, item 2.a, and have been deducted from capital in
Schedule RC-R, Part I, item 45.
o Significant investments in the capital of unconsolidated financial institutions in the
form of tier 2 capital that are reported in Schedule RC, item 2.a, and have been
deducted from capital in Schedule RC-R, Part I, item 45.
•
For an institution that has adopted the current expected credit losses methodology
(CECL), include as a negative number in column B:
o The portion of Schedule RI-B, Part II, item 7, column B, “Balance end of current
period” for HTM debt securities that relates to HTM securities reported in column A of
this item, less
o The portion of Schedule RC-R, Part II, Memorandum item 4.b, “Amount of
allowances for credit losses on purchased credit-deteriorated assets” for HTM debt
securities that relates to purchased credit-deteriorated HTM securities reported in
column A of this item.
For example, if an institution reports $100 in Schedule RI-B, Part II, item 7, column B,
and $10 in Schedule RC-R, Part II, Memorandum item 4.b, the institution would report
($90) in this column B.
R
AF
T
•
In column C–0% risk weight. The zero percent risk weight applies to exposures to the
U.S. government, a U.S. government agency, or a Federal Reserve Bank, and those
exposures otherwise unconditionally guaranteed by the U.S. government. Include
exposures to or unconditionally guaranteed by the FDIC or the NCUA. Certain foreign
government exposures and certain entities listed in §.32 of the regulatory capital rules
may also qualify for the zero percent risk weight. Also include the exposure amount of
HTM debt securities purchased through the Money Market Mutual Fund Liquidity Facility.
Include the exposure amounts of securities reported in Schedule RC-B, column A, that do
not qualify as securitization exposures that qualify for the zero percent risk weight. Such
securities may include portions of, but may not be limited to:
D
•
FFIEC 031 and 041
RC-R-87
(6-20)
RC-R – REGULATORY CAPITAL
37
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Item No.
Caption and Instructions
○
2.b
(cont.)
In column C–0% risk weight, the zero percent risk weight applies to exposures to the
U.S. government, a U.S. government agency, or a Federal Reserve Bank, and those
exposures otherwise unconditionally guaranteed by the U.S. government. Include
exposures to or unconditionally guaranteed by the FDIC or the NCUA. Certain foreign
government exposures and certain entities listed in §.32 of the regulatory capital rules
may also qualify for zero percent risk weight. Also include the exposure amount of AFS
debt securities purchased through the Money Market Mutual Fund Liquidity Facility.
Include the exposure amounts of those debt securities reported in Schedule RC-B,
column C, that do not qualify as securitization exposures that qualify for the zero percent
risk weight. Such debt securities may include portions of, but may not be limited to:
○ Item 1, "U.S. Treasury securities,"
o Item 2, those obligations issued by U.S. Government agencies,
o Item 4.a.(1), Residential mortgage pass-through securities "Guaranteed by GNMA,”
o Portions of item 4.b.(1), Other residential mortgage-backed securities (MBS) "Issued
or guaranteed by U.S. Government agencies or sponsored agencies," such as
GNMA exposures,
o Item 4.c.(1)(a), certain portions of commercial MBS “Issued or guaranteed by FNMA,
FHLMC, or GNMA” that represent GNMA securities, and
o Item 4.c.(2)(a), certain portions of commercial MBS “Issued or guaranteed by U.S.
Government agencies or sponsored agencies” that represent GNMA securities.
o The portion of any exposure reported in Schedule RC, item 2.b, that is secured by
collateral or has a guarantee that qualifies for the zero percent risk weight.
R
AF
T
•
Significant investments in the capital of unconsolidated financial institutions in the
form of common stock reported in Schedule RC, item 2.b (for a bank that is not
yet required to adopt ASU 2016-01) or item 2.c (for a bank that is required to have
adopted ASU 2016-01), that are subject to the 10 percent and 15 percent common
equity tier 1 capital threshold limitations and have been deducted for risk-based
capital purposes in Schedule RC-R, Part I, items 13.b and 16, column B, on the
FFIEC 031.
In column G–20% risk weight, the 20 percent risk weight applies to general obligations of
U.S. states, municipalities, and U.S. public sector entities. It also applies to exposures to
U.S. depository institutions and credit unions, exposures conditionally guaranteed by the
U.S. government, as well as exposures to U.S. government sponsored enterprises.
Certain foreign government and foreign bank exposures may qualify for the 20 percent
risk weight as indicated in §.32 of the regulatory capital rules. Include the exposure
amounts of those debt securities reported in Schedule RC-B, column C, that do not
qualify as securitization exposures that qualify for the 20 percent risk weight. Such debt
securities may include portions of, but may not be limited to:
o Item 2, those obligations issued by U.S. Government-sponsored agencies (exclude
interest-only securities),
o Item 3, "Securities issued by states and political subdivisions in the U.S." that
represent general obligation securities,
o Item 4.a.(2), Residential mortgage pass-through securities "Issued by FNMA and
FHLMC" (exclude interest-only securities),
o Item 4.b.(1), Other residential MBS "Issued or guaranteed by U.S. Government
agencies or sponsored agencies," (exclude interest-only securities),
o Item 4.c.(1)(a), those commercial MBS “Issued or guaranteed by FNMA, FHLMC, or
GNMA” that represent FHLMC and FNMA securities (exclude interest-only
securities),
o Item 4.c.(2)(a), those commercial MBS “Issued or guaranteed by U.S. Government
agencies or sponsored agencies” that represent FHLMC and FNMA securities
(exclude interest-only securities),
D
•
FFIEC 031 and 041
RC-R-93
(6-20)
RC-R – REGULATORY CAPITAL
38
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Item No.
Caption and Instructions
4.a
(cont.)
Exclude from this item:
• HFS loans secured by multifamily residential properties included in Schedule RC-C,
Part I, item 1.d, that do not meet the definition of a residential mortgage exposure or a
statutory multifamily mortgage and are not securitization exposures, and
• HFS 1-4 family residential construction loans reported in Schedule RC-C, Part I,
item 1.a.(1), that are not securitization exposures.
These HFS loans should be reported in Schedule RC-R, Part II, item 4.c, if they are past due
90 days or more or on nonaccrual. Otherwise, these HFS loans should be reported in
Schedule RC-R, Part II, item 4.d.
In column C–0% risk weight, include the portion of any exposure that meets the definition
of residential mortgage exposure or statutory multifamily mortgage reported in
Schedule RC, item 4.a, that is secured by collateral or has a guarantee that qualifies for
the zero percent risk weight. This would include loans collateralized by deposits at the
reporting institution.
•
In column G–20% risk weight, include the carrying value of the guaranteed portion of
HFS Federal Housing Administration (FHA) and Veterans Administration (VA) mortgage
loans included in Schedule RC-C, Part I, item 1.c.(2)(a). Also include the portion of any
exposure that meets the definition of residential mortgage exposure or statutory
multifamily mortgage reported in Schedule RC, item 4.a, that is secured by collateral or
has a guarantee that qualifies for the 20 percent risk weight. This would include the
portion of such an exposure covered by an FDIC loss-sharing agreement.
•
In column H–50% risk weight, include the carrying value of HFS loans secured by
1-4 family residential properties included in Schedule RC-C, Part I, item 1.c.(1) (only
include qualifying first mortgage loans); qualifying loans from Schedule RC-C, Part I,
items 1.c.(2)(a) and 1.d; and those loans that meet the definition of a residential
mortgage exposure and qualify for 50 percent risk weight under §.32(g) of the regulatory
capital rules. For residential mortgage exposures, the loans must be prudently
underwritten, be fully secured by first liens on 1-4 family residential properties (regardless
of the original and outstanding amount of the loan) or multifamily residential properties
(with an original and outstanding amount of $1 million or less), not 90 days or more past
due or in nonaccrual status, and have not been restructured or modified (unless modified
or restructured (1) solely pursuant to the U.S. Treasury’s Home Affordable Mortgage
Program (HAMP) or (2) consistent with the agencies’ April 7, 2020, interagency
statement,1 solely due to short-term modifications of 1-4 family residential mortgages
made on a good faith basis in response to the Coronavirus Disease 2019 (COVID-19),
provided that the loans are prudently underwritten and not 90 days or more past due or
carried in nonaccrual status). Also include loans that meet the definition of statutory
multifamily mortgage in §.2 of the regulatory capital rules. Also include the portion of
any exposure that meets the definition of residential mortgage exposure reported in
Schedule RC, item 4.a, that is secured by collateral or has a guarantee that qualifies for
the 50 percent risk weight.
D
R
AF
T
•
1
As discussed in the April 7, 2020, Interagency Statement on Loan Modifications and Reporting for Financial
Institutions Working with Customers Affected by the Coronavirus (Revised), Section 4013 of the Coronavirus Aid,
Relief, and Economic Security Act provides financial institutions the option to temporarily suspend certain
requirements under U.S. generally accepted accounting principles related to troubled debt restructurings for a limited
period of time to account for the effects of COVID-19.
FFIEC 031 and 041
RC-R-100
(3-20)
RC-R – REGULATORY CAPITAL
39
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
D
R
AF
T
Notes:
1. Refer to the definition of “residential mortgage exposure” in §.2 of the regulatory capital
rules, and refer to the requirements for risk weighting residential mortgage loans in §.32
of the regulatory capital rules.
2. A residential mortgage loan may receive a 50 percent risk weight if it meets the
qualifying criteria in §.32(g) of the regulatory capital rules:
o A property is owner-occupied or rented;
o The loan is prudently underwritten including the loan amount as a
percentage of the appraised value of the real estate collateral.
o The loan is not 90 days or more past due or on nonaccrual;
FFIEC 031 and 041
RC-R-100a
(3-20)
RC-R – REGULATORY CAPITAL
40
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Caption and Instructions
○
4.a
(cont.)
The loan is not restructured or modified (except for loans restructured (1) solely pursuant
to the U.S. Treasury’s HAMP or (2) solely due to a short-term modification made on a
good faith basis in response to COVID-19, provided that the loan is prudently
underwritten and not 90 days or more past due or carried in nonaccrual status).
○ If the bank holds the first lien and junior lien(s) on a residential mortgage exposure,
and no other party holds an intervening lien, the bank must combine the exposures
and treat them as a single first-lien residential mortgage exposure.
3. A first lien home equity line (HELOC) may qualify for 50 percent risk weight if it meets
the qualifying criteria in §.32(g) listed above.
4. A residential mortgage loan of $1 million or less on a property of more than 4 units
may qualify for 50 percent risk weight if it meets the qualifying criteria in §.32(g) listed
above.
AF
T
Item No.
In column I–100% risk weight, include the carrying value of HFS loans that are residential
mortgage exposures reported in Schedule RC, item 4.a, that are not included in
columns C, G, H, or R. Include HFS loans that are junior lien residential mortgage
exposures if the bank does not hold the first lien on the property, except the portion of
any junior lien residential mortgage exposure that is secured by collateral or has a
guarantee that qualifies for the zero percent, 20 percent, or 50 percent risk weight.
Include HFS loans that are residential mortgage exposures that have been restructured
or modified, except:
o Those loans restructured or modified solely pursuant to the U.S. Treasury’s HAMP,
and
o The portion of any restructured or modified residential mortgage exposure that is
secured by collateral or has a guarantee that qualifies for the zero percent,
20 percent, or 50 percent risk weight.
•
In columns R and S–Application of Other Risk-Weighting Approaches, include the portion
of any HFS exposure reported in Schedule RC, item 4.a, that meets the definition of
residential mortgage exposure or statutory multifamily mortgage and is secured by
qualifying financial collateral that meets the definition of a securitization exposure in §.2
of the regulatory capital rules or is a mutual fund only if the bank chooses to recognize
the risk-mitigating effects of the securitization exposure or mutual fund collateral under
the Simple Approach outlined in §.37 of the regulatory capital rules. Under the Simple
Approach, the risk weight assigned to the collateralized portion of the exposure may not
be less than 20 percent.
o Include in column R the carrying value of the portion of an HFS exposure that is
secured by the fair value of securitization exposure or mutual fund collateral that
meets the general requirements of the Simple Approach in §.37. In addition, the
bank must apply the same approach to securitization exposure collateral – either the
Simplified Supervisory Formula Approach or the Gross-Up Approach – that it applies
to determine the risk-weighted asset amounts of its on- and off-balance sheet
securitization exposures that are reported in Schedule RC-R, Part II, items 9 and 10.
o Report in column S the risk-weighted asset amount of the securitization exposure or
mutual fund collateral that collateralizes the portion of the HFS exposure secured by
such collateral. Any remaining portion of the HFS exposure that is uncollateralized or
collateralized by other qualifying collateral would be reported in columns C through I,
as appropriate.
For further information, see the discussions of “Treatment of Collateral and Guarantees”
and “Risk-Weighted Assets for Securitization Exposures” in the General Instructions for
Schedule RC-R, Part II.
D
R
•
FFIEC 031 and 041
RC-R-101
(6-20)
RC-R – REGULATORY CAPITAL
41
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Item No.
Caption and Instructions
4.c
(cont.)
90 days or more past due or in nonaccrual status (report such past due and nonaccrual
exposures in Schedule RC-R, Part II, item 4.d and item 4.a, respectively). Also do not
include HFS high volatility commercial real estate exposures that are 90 days or more past
due or in nonaccrual status (report such exposures in Schedule RC-R, Part II, item 4.b).
In column C–0% risk weight, include the portion of loans and leases HFS included in
Schedule RC, item 4.a, that are 90 days or more past due or in nonaccrual status (except
as noted above), that is secured by collateral or has a guarantee that qualifies for the
zero percent risk weight. This would include U.S. Small Business Administration
Paycheck Protection Program loans and the portion of loans and leases HFS
collateralized by deposits at the reporting institution.
•
In column G–20% risk weight, include the portion of loans and leases HFS included in
Schedule RC, item 4.a, that are 90 days or more past due or in nonaccrual status (except
as noted above), that is secured by collateral or has a guarantee that qualifies for the 20
percent risk weight. This would include the portion of HFS loans covered by an FDIC
loss-sharing agreement.
•
In column H–50% risk weight, include the portion of loans and leases HFS included in
Schedule RC, item 4.a, that are 90 days or more past due or in nonaccrual status (except
as noted above), that is secured by collateral or has a guarantee that qualifies for the 50
percent risk weight.
•
In column I–100% risk weight,, include the portion of loans and leases HFS included in
Schedule RC, item 4.a, that are 90 days or more past due or in nonaccrual status (except
as noted above), that is secured by collateral or has a guarantee that qualifies for the
100 percent risk weight.
•
In column J–150% risk weight, include the carrying value of loans and leases HFS
included in Schedule RC, item 4.a, that are 90 days or more past due or in nonaccrual
status (except as noted above), excluding those portions that are covered by qualifying
collateral or eligible guarantees as described in §.37 and §.36, respectively, of the
regulatory capital rules.
R
AF
T
•
In columns R and S–Application of Other Risk-Weighting Approaches, include the
portion of any loans and leases HFS included in Schedule RC, item 4.a, that are 90
days or more past due or in nonaccrual status (except as noted above), that is
secured by qualifying financial collateral that meets the definition of a securitization
exposure in §.2 of the regulatory capital rules or is a mutual fund only if the bank
chooses to recognize the risk-mitigating effects of the securitization exposure or
mutual fund collateral under the Simple Approach outlined in §.37 of the regulatory
capital rules. Under the Simple Approach, the risk weight assigned to the
collateralized portion of the exposure may not be less than 20 percent.
Include in column R the carrying value of the portion of an HFS loan or lease that is
90 days or more past due or in nonaccrual status that is secured by the fair value of
securitization exposure or mutual fund collateral that meets the general requirements
of the Simple Approach in §.37. In addition, the bank must apply the same approach
to securitization exposure collateral – either the Simplified Supervisory Formula
Approach or the Gross-Up Approach – that it applies to determine the risk-weighted
asset amounts of its on- and off-balance sheet securitization exposures that are
reported in Schedule RC-R, Part II, items 9 and 10.
Report in column S the risk-weighted asset amount of the securitization exposure or
mutual fund collateral that collateralizes the portion of the HFS exposure that is
secured by such collateral. Any remaining portion of the HFS exposure that is
D
•
o
o
FFIEC 031 and 041
RC-R-104
(6-20)
RC-R – REGULATORY CAPITAL
42
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Caption and Instructions
4.c
(cont.)
All other exposures. Report in column A the carrying value of loans and leases held for
sale (HFS) reported in Schedule RC, item 4.a, that are not reported in Schedule RC-R,
Part II, items 4.a through 4.c above.
•
In column C–0% risk weight, include the carrying value of the unconditionally guaranteed
portion of HFS Small Business Administration (SBA) “Guaranteed Interest Certificates”
purchased in the secondary market that are included in Schedule RC-C, Part I. Also
include the portion of any loans and leases HFS that that are not reported in
Schedule RC-R, Part II, items 4.a through 4.c above, that is secured by collateral or
has a guarantee that qualifies for the zero percent risk weight. This would include U.S.
Small Business Administration Paycheck Protection Program loans and the portion of
loans and leases HFS collateralized by deposits at the reporting institution.
•
In column G–20% risk weight, include the carrying value of HFS loans to and
acceptances of other U.S. depository institutions that are reported in Schedule RC-C,
Part I, item 2, plus the carrying value of the guaranteed portion of HFS SBA loans
originated and held by the reporting bank included in Schedule RC-C, Part I, and the
carrying value of the portion of HFS student loans reinsured by the U.S. Department of
Education included in Schedule RC-C, Part I, item 6.d, "Other consumer loans."
Also include the portion of any loans and leases HFS that that are not reported in
Schedule RC-R, Part II, items 4.a through 4.c above, that is secured by collateral or
has a guarantee that qualifies for the 20 percent risk weight. This would include the
portion of loans and leases HFS covered by FDIC loss-sharing agreements.
R
4.d
uncollateralized or collateralized by other qualifying collateral would be reported in
columns C through J, as appropriate.
For further information, see the discussions of “Treatment of Collateral and Guarantees”
and “Risk-Weighted Assets for Securitization Exposures” in the General Instructions for
Schedule RC-R, Part II.
AF
T
Item No.
In column H–50% risk weight, include the carrying value of HFS loans that meet the
definition of presold construction loan in §.2 of the regulatory capital rules that qualify for
the 50 percent risk weight. Also include the portion of any loans and leases HFS that that
are not reported in Schedule RC-R, Part II, items 4.a through 4.c above, that is secured
by collateral or has a guarantee that qualifies for the 50 percent risk weight.
•
In column I–100% risk weight, include the carrying value of HFS loans and leases
reported in Schedule RC, item 4.a, that are not included in columns C through H, J, or R.
This item would include 1-4 family construction loans reported in Schedule RC-C, Part I,
item 1.a.(1) and loans secured by multifamily residential properties reported in
Schedule RC-C, Part I, item 1.d, with an original amount of more than $1 million. Also
include the carrying value of HFS loans that meet the definition of presold construction
loan in §.2 of the regulatory capital rules that qualify for the 100 percent risk weight. Also
include the portion of any loans and leases HFS that that are not reported in
Schedule RC-R, Part II, items 4.a through 4.c above, that is secured by collateral or has
a guarantee that qualifies for the 100 percent risk weight.
•
In columns R and S–Application of Other Risk-Weighting Approaches, include the portion
of any HFS loans and leases, including HFS eligible margin loans, reported in
Schedule RC, item 4.a, that is secured by qualifying financial collateral that meets the
definition of a securitization exposure in §.2 of the regulatory capital rules or is a mutual
fund only if the bank chooses to recognize the risk-mitigating effects of the securitization
exposure or mutual fund collateral under the Simple Approach, or the collateral margin
approach for eligible margin loans, outlined in §.37 of the regulatory capital rules. Under
D
•
FFIEC 031 and 041
RC-R-105
(6-20)
RC-R – REGULATORY CAPITAL
43
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Item No.
Caption and Instructions
5.a
(cont.)
Exclude from this item:
• Loans HFI secured by multifamily residential properties included in Schedule RC-C,
Part I, item 1.d, that do not meet the definition of a residential mortgage exposure or a
statutory multifamily mortgage and are not securitization exposures, and
• 1-4 family residential construction loans HFI reported in Schedule RC-C, Part I,
item 1.a.(1), that are not securitization exposures,
These loans should be reported in Schedule RC-R, Part II, item 5.c, if they are past due
90 days or more or on nonaccrual. Otherwise, these HFI loans should be reported in
Schedule RC-R, Part II, item 5.d.
In column B, an institution that has adopted the current expected credit losses
methodology (CECL) should include as a positive number the portion of Schedule RC-R,
Part II, Memorandum item 4.a, “Amount of allowances for credit losses on purchased
credit-deteriorated assets” for loans and leases held for investment that are applicable to
purchased credit-deteriorated residential mortgage exposures.
•
In column C–0% risk weight, include the portion of any HFI exposure that meets the
definition of residential mortgage exposure or statutory multifamily mortgage reported in
Schedule RC, item 4.b, that is secured by collateral or has a guarantee that qualifies for
the zero percent risk weight. This would include loans HFI collateralized by deposits at
the reporting institution.
•
In column G–20% risk weight, include the carrying value of the guaranteed portion of
FHA and VA mortgage loans HFI included in Schedule RC-C, Part I, item 1.c.(2)(a).
Also include the portion of any loan HFI which meets the definition of residential
mortgage exposure or statutory multifamily mortgage reported in Schedule RC, item 4.b,
that is secured by collateral or has a guarantee that qualifies for the 20 percent risk
weight. This would include the portion of loans HFI covered by an FDIC loss-sharing
agreement.
R
AF
T
•
In column H–50% risk weight, include the carrying value of loans HFI secured by
1-4 family residential properties included in Schedule RC-C, Part I, item 1.c.(1) (only
include qualifying first mortgage loans); qualifying loans from Schedule RC-C, Part I,
items 1.c.(2)(a) and 1.d; and those loans that meet the definition of a residential
mortgage exposure and qualify for 50 percent risk weight under §.32(g) of the regulatory
capital rules. For residential mortgage exposures, the loans must be prudently
underwritten, be fully secured by first liens on 1-4 family residential properties (regardless
of the original and outstanding amount of the loan) or multifamily residential properties
(with an original and outstanding amount of $1 million or less), not 90 days or more past
due or in nonaccrual status, and have not been restructured or modified (unless modified
or restructured (1) solely pursuant to the U.S. Treasury’s Home Affordable Mortgage
Program (HAMP) or (2) consistent with the agencies’ April 7, 2020, interagency
statement,1 solely due to short-term modifications of 1-4 family residential mortgages
made on a good faith basis in response to the Coronavirus Disease 2019 (COVID-19),
provided that the loans are prudently underwritten and not 90 days or more past due or
carried in nonaccrual status). Also include loans HFI that meet the definition of statutory
multifamily mortgage in §.2 of the regulatory capital rules. Also include the portion of any
D
•
1
As discussed in the April 7, 2020, Interagency Statement on Loan Modifications and Reporting for Financial
Institutions Working with Customers Affected by the Coronavirus (Revised), Section 4013 of the Coronavirus Aid,
Relief, and Economic Security Act provides financial institutions the option to temporarily suspend certain
requirements under U.S. generally accepted accounting principles related to troubled debt restructurings for a limited
period of time to account for the effects of COVID-19.
FFIEC 031 and 041
RC-R-107
(3-20)
RC-R – REGULATORY CAPITAL
44
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
loan HFI which meets the definition of residential mortgage exposure reported in
Schedule RC, item 4.b, that is secured by collateral or has a guarantee that qualifies for
the 50 percent risk weight.
D
R
AF
T
Notes:
1. Refer to the definition of “residential mortgage exposure” in §.2 of the regulatory capital
rules, and refer to the requirements for risk weighting residential mortgage loans in §.32
of the regulatory capital rules.
FFIEC 031 and 041
RC-R-107a
(3-20)
RC-R – REGULATORY CAPITAL
45
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Caption and Instructions
5.a
(cont.)
2. A residential mortgage loan may receive a 50 percent risk weight if it meets the
qualifying criteria in §.32(g) of the regulatory capital rules:
o A property is owner-occupied or rented;
o The loan is prudently underwritten including the loan amount as a
percentage of the appraised value of the real estate collateral.
o The loan is not 90 days or more past due or on nonaccrual;
o The loan is not restructured or modified (except for loans restructured
(1) solely pursuant to the U.S. Treasury’s HAMP or (2) solely due to a
short-term modification made on a good faith basis in response to
COVID-19, provided that the loan is prudently underwritten and not 90 days
or more past due or carried in nonaccrual status).
o If the bank holds the first lien and junior lien(s) on a residential mortgage
exposure, and no other party holds an intervening lien, the bank must
combine the exposures and treat them as a single first-lien residential
mortgage exposure.
3. A first lien home equity line (HELOC) may qualify for 50 percent risk weight if it meets
the qualifying criteria in §.32(g) listed above.
4. A residential mortgage loan of $1 million or less on a property of more than 4 units
may qualify for 50 percent risk weight if it meets the qualifying criteria in §.32(g) listed
above.
In column I–100% risk weight, include the carrying value of loans HFI related to
residential mortgages exposures reported in Schedule RC, item 4.b, that are not included
in columns C, G, H, or R. Include loans HFI that are junior lien residential mortgage
exposures if the bank does not hold the first lien on the property, except the portion of
any junior lien residential mortgage exposure that is secured by collateral or has a
guarantee that qualifies for the zero percent, 20 percent, or 50 percent risk weight. Also
include loans HFI that are residential mortgage exposures that have been restructured or
modified, except
○ Those loans restructured or modified solely pursuant to the U.S. Treasury’s HAMP,
and
o The portion of any restructured or modified residential mortgage exposure that is
secured by collateral or has a guarantee that qualifies for the zero percent,
20 percent, or 50 percent risk weight.
R
•
AF
T
Item No.
In columns R and S–Application of Other Risk-Weighting Approaches, include the portion
of any loan HFI reported in Schedule RC, item 4.b, that meets the definition of residential
mortgage exposure or statutory multifamily mortgage and is secured by qualifying
financial collateral that meets the definition of a securitization exposure in §.2 of the
regulatory capital rules or is a mutual fund only if the bank chooses to recognize the riskmitigating effects of the securitization exposure or mutual fund collateral under the Simple
Approach outlined in §.37 of the regulatory capital rules. Under the Simple Approach, the
risk weight assigned to the collateralized portion of the exposure may not be less than
20 percent.
○ Include in column R the carrying value of the portion of an HFI loan exposure that is
secured by the fair value of securitization exposure or mutual fund collateral that
meets the general requirements of the Simple Approach in §.37. In addition, the
bank must apply the same approach to securitization exposure collateral – either the
Simplified Supervisory Formula Approach or the Gross-Up Approach – that it applies
to determine the risk-weighted asset amounts of its on- and off-balance sheet
securitization exposures that are reported in Schedule RC-R, Part II, items 9 and 10.
o Report in column S the risk-weighted asset amount of the securitization exposure or
mutual fund collateral that collateralizes the portion of the HFI loan exposure secured
D
•
FFIEC 031 and 041
RC-R-108
(3-20)
RC-R – REGULATORY CAPITAL
46
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Caption and Instructions
○
5.b
(cont.)
5.c
Include in column R the carrying value of the portion of an HFI HVCRE exposure that
is secured by the fair value of securitization exposure or mutual fund collateral that
meets the general requirements of the Simple Approach in §.37. In addition, the
bank must apply the same approach to securitization exposure collateral – either the
Simplified Supervisory Formula Approach or the Gross-Up Approach – that it applies
to determine the risk-weighted asset amounts of its on- and off-balance sheet
securitization exposures that are reported in Schedule RC-R, Part II, items 9 and 10.
o Report in column S the risk-weighted asset amount of the securitization exposure or
mutual fund collateral that collateralizes the portion of the HFI HVCRE exposure that
is secured by such collateral. Any remaining portion of the HFI exposure that is
uncollateralized or collateralized by other qualifying collateral would be reported in
columns C through J, as appropriate.
For further information, see the discussions of “Treatment of Collateral and Guarantees”
and “Risk-Weighted Assets for Securitization Exposures” in the General Instructions for
Schedule RC-R, Part II.
AF
T
Item No.
Exposures past due 90 days or more or on nonaccrual. Report in column A the carrying
value of loans and leases HFI reported in Schedule RC, item 4.b, that are 90 days or more
past due or in nonaccrual status according to the requirements set forth in §.32(k) of the
regulatory capital rules. Do not include sovereign exposures or residential mortgage
exposures, as described in §.32(a) and §.32(g), respectively, that are 90 days or more
past due or in nonaccrual status (report such past due and nonaccrual exposures in
Schedule RC-R, Part II, items 5.d and 5.a, respectively). Also do not include high volatility
commercial real estate exposures that are 90 days or more past due or in nonaccrual status
(report such exposures in Schedule RC-R, Part II, item 5.b).
In column B, an institution that has adopted the current expected credit losses
methodology (CECL) should include as a positive number the portion of Schedule RC-R,
Part II, Memorandum item 4.a, “Amount of allowances for credit losses on purchased
credit-deteriorated assets” for loans and leases held for investment that are applicable to
purchased credit-deteriorated exposures past due 90 days or more or on nonaccrual.
R
•
In column C–0% risk weight, include the portion of loans and leases HFI included in
Schedule RC, item 4.b, that are 90 days or more past due or in nonaccrual status (except
as noted above), that is secured by collateral or has a guarantee that qualifies for the
zero percent risk weight. This would include U.S. Small Business Administration
Paycheck Protection Program loans and the portion of loans and leases HFI
collateralized by deposits at the reporting institution.
D
•
•
In column G–20% risk weight, include the portion of loans and leases HFI included in
Schedule RC, item 4.b, that are 90 days or more past due or in nonaccrual status (except
as noted above), that is secured by collateral or has a guarantee that qualifies for the
20 percent risk weight. This would include the portion of loans and leases HFI covered
by an FDIC loss-sharing agreement.
•
In column H–50% risk weight, include the portion of loans and leases HFI included in
Schedule RC, item 4.b, that are 90 days or more past due or in nonaccrual status (except
as noted above), that is secured by collateral or has a guarantee that qualifies for the
50 percent risk weight.
•
In column I–100% risk weight, include the portion of loans and leases HFI included in
Schedule RC, item 4.b, that are 90 days or more past due or in nonaccrual status (except
as noted above), that is secured by collateral or has a guarantee that qualifies for the
100 percent risk weight.
FFIEC 031 and 041
RC-R-110
(3-20)
RC-R – REGULATORY CAPITAL
47
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Caption and Instructions
5.c
(cont.)
•
In column J–150% risk weight, include the carrying value of loans and leases HFI
included in Schedule RC, item 4.b, that are 90 days or more past due or in nonaccrual
status (except as noted above), excluding those portions that are covered by qualifying
collateral or eligible guarantees as described in §.37 and §.36, respectively, of the
regulatory capital rules.
•
In columns R and S–Application of Other Risk-Weighting Approaches, include the portion
of any loans and leases HFI included in Schedule RC, item 4.b, that are 90 days or more
past due or in nonaccrual status (except as noted above), that is secured by qualifying
financial collateral that meets the definition of a securitization exposure in §.2 of the
regulatory capital rules or is a mutual fund only if the bank chooses to recognize the riskmitigating effects of the securitization exposure or mutual fund collateral under the Simple
Approach outlined in §.37 of the regulatory capital rules. Under the Simple Approach, the
risk weight assigned to the collateralized portion of the exposure may not be less than
20 percent.
o Include in column R the carrying value of the portion of a loan or lease HFI that is
90 days or more past due or in nonaccrual status that is secured by the fair value of
securitization exposure or mutual fund collateral that meets the general requirements
of the Simple Approach in §.37. In addition, the bank must apply the same approach
to securitization exposure collateral – either the Simplified Supervisory Formula
Approach or the Gross-Up Approach – that it applies to determine the risk-weighted
asset amounts of its on- and off-balance sheet securitization exposures that are
reported in Schedule RC-R, Part II, items 9 and 10.
o Report in column S the risk-weighted asset amount of the securitization exposure or
mutual fund collateral that collateralizes the portion of the loan or lease HFI that is
secured by such collateral. Any remaining portion of the HFI loan or lease exposure
that is uncollateralized or collateralized by other qualifying collateral would be
reported in columns C through J, as appropriate.
For further information, see the discussions of “Treatment of Collateral and Guarantees”
and “Risk-Weighted Assets for Securitization Exposures” in the General Instructions for
Schedule RC-R, Part II.
R
AF
T
Item No.
5.d
All other exposures. Report in column A the carrying value of loans and leases HFI
reported in Schedule RC, item 4.b., that are not reported in items 5.a through 5.c above.
In column B, an institution that has adopted the current expected credit losses
methodology (CECL) should include as a positive number the portion of Schedule RC-R,
Part II, Memorandum item 4.a, “Amount of allowances for credit losses on purchased
credit-deteriorated assets” for loans and leases held for investment that are applicable to
all purchased credit-deteriorated exposures not reported in items 5.a through 5.c above.
D
•
•
In column C–0% risk weight, include the carrying value of the unconditionally guaranteed
portion of HFI SBA “Guaranteed Interest Certificates” purchased in the secondary market
that are included in Schedule RC-C, Part I, net of unearned income. Also include the
portion of any loans and leases HFI not reported in Schedule RC-R, Part II, items 5.a
through 5.c above, that is secured by collateral or has a guarantee that qualifies for the
zero percent risk weight. This would include U.S. Small Business Administration
Paycheck Protection Program loans and the portion of loans and leases HFI
collateralized by deposits at the reporting institution.
•
In column G–20% risk weight, include the carrying value of HFI loans to and acceptances
of other U.S. depository institutions that are reported in Schedule RC-C, Part I, item 2
(excluding the carrying value of any long-term exposures to non-OECD banks), plus the
FFIEC 031 and 041
RC-R-111
(3-20)
RC-R – REGULATORY CAPITAL
48
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Caption and Instructions
7
(cont.)
In column B for advanced approaches institutions, include the amount of:
○ Non-significant investments in the capital of unconsolidated financial institutions that
are reported in Schedule RC, item 5, and have been deducted from capital in
Schedule RC-R, Part I, item 11, item 24, and item 45 on the FFIEC 031.
o Significant investments in the capital of unconsolidated financial institutions not in the
form of common stock that are reported in Schedule RC, item 5, and have been
deducted from capital in Schedule RC-R, Part I, item 24 and item 45 on the
FFIEC 031.
o Significant investments in the capital of unconsolidated financial institutions in the
form of common stock reported in Schedule RC, item 5, that are subject to the
10 percent and 15 percent common equity tier 1 capital threshold limitations and
have been deducted for risk-based capital purposes in Schedule RC-R, Part I,
items 13.b and 16, column B, on the FFIEC 031.
AF
T
Item No.
Also include in column B the fair value of any unsettled transactions (failed trades) that
are reported as trading assets in Schedule RC, item 5. For purposes of risk weighting,
unsettled transactions are to be reported in Schedule RC-R, Part II, item 22.
In column C–0% risk weight, if the bank completes Schedule RC-D, include the fair value
of those trading assets reported in Schedule RC-D that do not qualify as securitization
exposures that qualify for the zero percent risk weight. Such trading assets may include
portions of, but may not be limited to:
o Item 1, "U.S. Treasury securities,"
o The portion of the amount reported in item 2 that represents the fair value of
securities issued by U.S. Government agencies, and
o The portion of the amounts reported in item 4 that represents the fair value of
mortgage-backed securities (MBS) guaranteed by GNMA.
o If the bank does not complete Schedule RC-D, include the portion of the amount
reported in Schedule RC, item 5, that represents the fair value of the preceding types
of securities. Exclude those trading assets reported in Schedule RC, item 5, that
qualify as securitization exposures and report them in Schedule RC-R, Part II,
item 9.c.
o Include the fair value of assets purchased through the Money Market Mutual Fund
Liquidity Facility that are held for trading.
o Also include the portion of the fair value of any trading assets that is secured by
collateral or has a guarantee that qualifies for the zero percent risk weight. This
would include U.S. Small Business Administration Paycheck Protection Program
loans held for trading and the portion of trading assets collateralized by deposits at
the reporting institution.
D
R
•
•
FFIEC 031 and 041
In column G–20% risk weight, if the bank completes Schedule RC-D, include the fair
value of those trading assets reported in Schedule RC-D that do not qualify as
securitization exposures that qualify for the 20 percent risk weight. Such trading assets
may include portions of, but may not be limited to:
o The portion of the amount reported in item 2 that represents the fair value of
securities issued by U.S. Government-sponsored agencies,
o The portion of the amount reported in item 3 that represents the fair value of general
obligations issued by states and political subdivisions in the United States,
o The portion of the amount reported in item 4 that represents the fair value of MBS
issued by FNMA and FHLMC,
RC-R-114
(6-20)
RC-R – REGULATORY CAPITAL
49
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Item No.
Caption and Instructions
8
(cont.)
•
AF
T
In column B for advanced approaches institutions, also include the amount of:
○ Non-significant investments in the capital of unconsolidated financial institutions that
are reported in Schedule RC, item 8 or item 11, and have been deducted from capital
in Schedule RC-R, Part I, item 11, item 24, and item 45 on the FFIEC 031;
o Significant investments in the capital of unconsolidated financial institutions not in the
form of common stock that are reported in Schedule RC, item 8 or item 11, and have
been deducted from capital in Schedule RC-R, Part I, item 24 and item 45 on the
FFIEC 031; and
o Items subject to the 10 percent and 15 percent common equity tier 1 capital
threshold limitations that have been deducted for risk-based capital purposes in
Schedule RC-R, Part I, items 13.b, 14.b, 15.b, and 16 on the FFIEC 031. These
excess amounts pertain to three items:
Significant investments in the capital of unconsolidated financial institutions in the
form of common stock;
MSAs; and
DTAs arising from temporary differences that could not be realized through net
operating loss carrybacks, net of related valuation allowances.
R
An institution that has adopted the current expected credit losses methodology (CECL)
should report as a negative number in column B:
o The portion of Schedule RI-B, Part II, Memorandum item 6, “Allowance for credit
losses on other financial assets measured at amortized cost,” that relates to assets
reported in column A of this item, less
o The portion of Schedule RC-R, Part II, Memorandum item 4.c, “Amount of allowances
for credit losses on purchased credit-deteriorated assets” for other financial assets
measured at amortized cost that relates to assets reported in column A of this item.
For example, if an institution reports $100 in Schedule RI-B, Part II, Memorandum item 6
(and the entire amount relates to assets reported in this item 8, column A), and $10 in
Schedule RC-R, Part II, Memorandum item 4.c (and the entire amount relates to assets
reported in this item 8, column A), the institution would report ($90) in this column B.
D
An institution that has adopted CECL and has elected to apply the 3-year CECL transition
provision (3-year CECL electing institution) should report as a positive number in column
B the amount by which it has decreased its DTAs arising from temporary differences for
its applicable DTA transitional amount from temporary difference DTAs, in accordance
with section 301 of the regulatory capital rules. Specifically, a 3-year CECL electing
institution reduces its temporary difference DTAs by 75 percent of its DTA transitional
amount during the first year of the transition period, 50 percent of its DTA transitional
amount during the second year of the transition period, and 25 percent of its DTA
transitional amount during the third year of the transition period.
An institution that has adopted CECL and has elected to apply the 5-year 2020 CECL
transition provision (5-year CECL electing institution) should report as a positive number
in column B the amount by which it has decreased its DTAs arising from temporary
differences for its applicable DTA transitional amount in accordance with section 301 of
the regulatory capital rules. Specifically, a 5-year CECL electing institution reduces its
temporary difference DTAs by 100 percent of its DTA transitional amount during the first
and second years of the transition period, 75 percent of its DTA transitional amount
during the third year of the transition period, 50 percent of its DTA transitional amount
during the fourth year of the transition period, and 25 percent of its DTA transitional
amount during the fifth year of the transition period.
FFIEC 031 and 041
RC-R-120
(6-20)
RC-R – REGULATORY CAPITAL
50
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Report as a negative number in column B the amount of default fund contributions in the
form of commitments made by a clearing member to a central counterparty’s mutualized
loss-sharing arrangement.
In column C–0% risk weight, include:
○ The carrying value of Federal Reserve Bank stock included in Schedule RC-F,
item 4;
D
R
AF
T
•
FFIEC 031 and 041
RC-R-120a
(6-20)
RC-R – REGULATORY CAPITAL
51
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Item No.
Caption and Instructions
○
8
(cont.)
o
o
AF
T
○
Accrued interest receivable on assets included in the zero percent risk weight
category (column C of Schedule RC-R, Part II, items 1 through 7);
The carrying value of gold bullion not held for trading that is held in the bank's own
vault or in another bank's vault on an allocated basis, and exposures that arise from
the settlement of cash transactions (such as equities, fixed income, spot foreign
exchange, and spot commodities) with a central counterparty where there is no
assumption of ongoing credit risk by the central counterparty after settlement of the
trade and associated default fund contributions;
The carrying value of assets purchased through the Money Market Mutual Fund
Liquidity Facility that are reported in Schedule RC, item 11; and
The portion of assets reported in Schedule RC, items 6 through 11, that is secured by
collateral or has a guarantee that qualifies for the zero percent risk weight. This
would include the portion of these assets collateralized by deposits in the reporting
institution.
In column G–20% risk weight, include:
○ The carrying value of Federal Home Loan Bank stock included in Schedule RC-F,
item 4;
○ Accrued interest receivable on assets included in the 20 percent risk weight category
(column G of Schedule RC-R, Part II, items 1 through 7);
o The portion of customers' acceptance liability reported in Schedule RC, item 11, that
has been participated to other depository institutions; and
o The portion of assets reported in Schedule RC, items 6 through 11, that is secured by
collateral or has a guarantee that qualifies for the 20 percent risk weight. This would
include the portion of these assets covered by FDIC loss-sharing agreements.
•
In column H–50% risk weight, include accrued interest receivable on assets included
in the 50 percent risk weight category (column H of Schedule RC-R, Part II, items 1
through 7). Also include the portion of assets reported in Schedule RC, items 6 through
11, that is secured by collateral or has a guarantee that qualifies for the 50 percent risk
weight.
R
•
In column I–100% risk weight, include:
o Accrued interest receivable on assets included in the 100 percent risk weight
category (column I of Schedule RC-R, Part II, items 1 through 7);
o Publicly traded and not publicly traded equity exposures, equity exposures without
readily determinable fair values, and equity exposures to investment funds, to the
extent that the aggregate carrying value of the bank’s equity exposures does not
exceed 10 percent of total capital. If the bank’s aggregate carrying value of equity
exposures is greater than 10 percent of total capital, the bank must report its equity
exposures reported in Schedule RC, items 6 through 11, in either columns L, M, or N,
as appropriate;
○ The portion of assets reported in Schedule RC, items 6 through 11, that is secured by
collateral or has a guarantee that qualifies for the 100 percent risk weight; and
o The amount of all other assets reported in column A that is not included in columns C
through H, J through N, or R.
D
•
•
FFIEC 031 and 041
In column J–150% risk weight, include accrued interest receivable on assets included in
the 150 percent risk weight category (column J of Schedule RC-R, Part II, items 1
through 7). Also include the portion of assets reported in Schedule RC, items 6 through
11, that is secured by collateral or has a guarantee that qualifies for the 150 percent risk
weight.
RC-R-121
(6-20)
RC-R – REGULATORY CAPITAL
52
D
R
AF
T
Note: The changes to the instructions for Schedule RC-C, Part I; Schedule RC-E; and
Schedule RC-M, on pages 54 through 69 are effective as of the June 30, 2020, report date.
53
FFIEC 031 and 041
Item No.
17
RC-C - LOANS AND LEASES
Caption and Instructions
Eligible loan modifications under Section 4013, Temporary Relief from Troubled
Debt Restructurings, of the 2020 Coronavirus Aid, Relief, and Economic Security
Act. As provided for under the 2020 Coronavirus Aid, Relief, and Economic Security Act,
a financial institution may elect to account for an eligible loan modification under Section
4013 of that Act (Section 4013 loan). If a loan modification is not eligible under Section
4013, or if the institution elects not to account for an eligible loan modification under
Section 4013, the institution should not report the loan in Memorandum items 17.a and
17.b and should instead evaluate whether the modified loan is a troubled debt
restructuring (TDR) under ASC Subtopic 310-40, Receivables–Troubled Debt
Restructurings by Creditors.
AF
T
To be an eligible loan modification under Section 4013, a loan modification must be (1)
related to the Coronavirus Disease 2019 (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 concerning the COVID-19 outbreak declared by the President on March 13,
2020, under the National Emergencies Act or (B) December 31, 2020.
Institutions accounting for eligible loan modifications 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.
However, consistent with the statute, the agencies are collecting information on a fully
consolidated basis about the volume of Section 4013 loans, including the number of
Section 4013 loans outstanding (Memorandum item 17.a) and the outstanding balance of
Section 4013 loans (Memorandum item 17.b). These two items are collected on a
confidential basis at the institution level.
R
For further information on loan modifications, including those that may not be eligible
under Section 4013 or for which an institution elects not to apply Section 4013,
institutions may refer to the Interagency Statement on Loan Modifications and Reporting
for Financial Institutions Working with Customers Affected by the Coronavirus (Revised),
issued April 7, 2020.
Number of Section 4013 loans outstanding. Report the number of Section 4013 loans
outstanding held by the reporting institution as of the report date whose outstanding
balances are included in the amount reported in Schedule RC-C, Part I, Memoranda item
17.b, below.
D
17.a
17.b
FFIEC 031 and 041
Outstanding balance of Section 4013 loans. Report the aggregate amount at which
Section 4013 loans held for investment and held for sale are included in Schedule RC-C,
Part I, and Section 4013 loans held for trading are included in Schedule RC, item 5, as of
the report date.
RC-C-XX
(6-20)
RC-C - LOANS AND LEASES
54
FFIEC 031 and 041
RC-E - DEPOSITS
Definitions (cont.)
charged to the control accounts of the various deposit categories on the general ledger, should be
credited to (added back to) the appropriate deposit control totals and reported in Schedule RC-F, item 6,
"All other assets.”
The Monetary Control Act of 1980 and the resulting revision to Federal Reserve Regulation D, "Reserve
Requirements of Depository Institutions," established, for purposes of federal reserve requirements on
deposit liabilities, a category of deposits designated as "transaction accounts." The distinction between
transaction and nontransaction accounts is discussed in detail in the Glossary entry for "deposits.”
NOTE: Money market deposit accounts (MMDAs) are regarded as savings deposits and are specifically
excluded from the "transaction account" classification.
AF
T
Summary of Transaction Account Classifications (See the Glossary entry for "deposits" for detailed
definitions and further information.)
A. Always regarded as transaction accounts:
1. Demand deposits.
2. NOW accounts.
3. ATS accounts.
4. Accounts (other than savings deposits) from which payments may be made to third parties by
means of an automated teller machine (ATM), a remote service unit (RSU), or another electronic
device, including by debit card.
5. Accounts (other than savings deposits) that permit third party payments through use of checks,
drafts, negotiable instruments, or other similar instruments.
R
B. Deposits or accounts that are regarded as transaction accounts if the following specified conditions
exist:
1. Accounts that otherwise meet the definition of savings deposits but that authorize or permit the
depositor to exceed the transfer and withdrawal rules for a savings deposit.
D
2. Any deposit or account that otherwise meets the definition of a time deposit but that allows
withdrawals within the first six days after the date of deposit and that does not require an early
withdrawal penalty of at least seven days' simple interest on amounts withdrawn within those first
six days, unless the deposit or account meets the definition of a savings deposit. Any such
deposit or account that meets the definition of a savings deposit shall be reported as a savings
deposit, otherwise it shall be reported as a demand deposit, which is a transaction account.
3. The remaining balance of a time deposit from which a partial early withdrawal is made, unless the
remaining balance either (a) is subject to additional early withdrawal penalties of at least seven
days' simple interest on amounts withdrawn within six days after each partial withdrawal (in which
case the deposit or account continues to be reported as a time deposit) or (b) is placed in an
account that meets the definition of a savings deposit (in which case the deposit or account shall
be reported as a savings deposit). Otherwise, the deposit or account shall be reported as a
demand deposit, which is a transaction account.
FFIEC 031 and 041
RC-E-4
(12-18)
(6-20)
RC-E - DEPOSITS
55
FFIEC 031 and 041
RC-E - DEPOSITS
Summary of Transaction Account Classifications (cont.)
C. Not regarded as transaction accounts (unless specified above):
1. Savings deposits (including accounts commonly known as money market deposit accounts
(MMDAs)).
2. Accounts that permit telephone or preauthorized transfers or transfers by ATMs or RSUs to repay
loans made or serviced by the same depository institution.
3. Accounts that permit telephone or preauthorized withdrawals where the proceeds are to be
mailed to or picked up by the depositor.
D
R
AF
T
4. Accounts that permit transfers to other accounts of the depositor at the same institution through
ATMs or RSUs.
FFIEC 031 and 041
RC-E-4a
(9-09)
(6-20)
RC-E - DEPOSITS
56
FFIEC 031 and 041
GLOSSARY
Deposits (cont.):
(4) outstanding draft (including advice or authorization to charge a bank's or a savings
association's balance in another bank or savings association), cashier's check, money order,
or other officer's check issued in the usual course of business for any purpose, including
without being limited to those issued in payment for services, dividends, or purchases, and
(5) such other obligations of a bank or savings association as the Board of Directors [of the
Federal Deposit Insurance Corporation], after consultation with the Comptroller of the
Currency and the Board of Governors of the Federal Reserve System, shall find and
prescribe by regulation to be deposit liabilities by general usage, except that the following
shall not be a deposit for any of the purposes of this Act or be included as part of the total
deposits or of an insured deposit:
AF
T
(A) any obligation of a depository institution which is carried on the books and records of an
office of such bank or savings association located outside of any State, unless –
(i) such obligation would be a deposit if it were carried on the books and records of the
depository institution, and would be payable at, an office located in any State; and
(ii) the contract evidencing the obligation provides by express terms, and not by
implication, for payment at an office of the depository institution located in any State;
and
(B) any international banking facility deposit, including an international banking facility time
deposit, as such term is from time to time defined by the Board of Governors of the
Federal Reserve System in regulation D or any successor regulation issued by the
Board of Governors of the Federal Reserve System; and
(C) any liability of an insured depository institution that arises under an annuity contract, the
income of which is tax deferred under section 72 of title 26 [the Internal Revenue Code].
R
(II) Transaction-nontransaction deposit distinction – The Monetary Control Act of 1980 and the current
Federal Reserve Regulation D, "Reserve Requirements of Depository Institutions," establish, for
purposes of federal reserve requirements on deposit liabilities, a category of deposits designated
as "transaction accounts." All deposits that are not transaction accounts are "nontransaction
accounts."
D
(1) Transaction accounts – With the exceptions noted below, a "transaction account," as defined
in Regulation D and in these instructions, is a deposit or account from which the depositor or
account holder is permitted to make transfers or withdrawals by negotiable or transferable
instruments, payment orders of withdrawal, telephone transfers, or other similar devices for
the purpose of making payments or transfers to third persons or others or from which the
depositor may make third party payments at an automated teller machine (ATM), a remote
service unit (RSU), or another electronic device, including by debit card.
Excluded from transaction accounts are savings deposits (both money market deposit
accounts (MMDAs) and other savings deposits) as defined below in the nontransaction
account category, even though such deposits permit some third-party transfers. However, an
account that otherwise meets the definition of a savings deposit but that authorizes or permits
the depositor to exceed the transfer limitations specified for that account shall be reported as
a transaction account. (Please refer to the definition of savings deposits for further detail.)
FFIEC 031 and 041
A-18
(12-18)
(6-20)
GLOSSARY
57
FFIEC 031 and 041
GLOSSARY
Deposits (cont.):
NOTE: Under the Federal Reserve's current Regulation D, no transaction account,
regardless of its other characteristics, is classified either as a savings deposit or as a time
deposit. Thus, those transaction accounts that are not demand deposits – NOW accounts,
ATS (Automatic Transfer Service) accounts, and telephone and preauthorized transfer
accounts – are excluded from Regulation D time and savings deposits. For all items in the
Consolidated Reports of Condition and Income involving time or savings deposits, a strict
distinction, based on Regulation D definitions, is to be maintained between transaction
accounts and time and savings accounts.
Transaction accounts consist of the following types of deposits: (a) demand deposits;
(b) NOW accounts; (c) ATS accounts; and (d) telephone and preauthorized transfer
accounts, all as defined below. Interest that is paid by the crediting of transaction accounts is
also included in transaction accounts.
AF
T
(a) Demand deposits are deposits that are payable immediately on demand, or that are
issued with an original maturity or required notice period of less than seven days, or that
represent funds for which the depository institution does not reserve the right to require
at least seven days' written notice of an intended withdrawal. Demand deposits include
any matured time deposits without automatic renewal provisions, unless the deposit
agreement provides for the funds to be transferred at maturity to another type of
account. Effective July 21, 2011, demand deposits may be interest-bearing or
noninterest-bearing. Demand deposits do not include: (i) money market deposit
accounts (MMDAs) or (ii) NOW accounts, as defined below in this entry.
(b) NOW accounts are interest-bearing deposits (i) on which the depository institution has
reserved the right to require at least seven days' written notice prior to withdrawal or
transfer of any funds in the account and (ii) that can be withdrawn or transferred to third
parties by issuance of a negotiable or transferable instrument.
NOW accounts, as authorized by federal law, are limited to accounts held by:
Individuals or sole proprietorships;
R
(i)
Organizations that are operated primarily for religious, philanthropic, charitable,
educational, or other similar purposes and that are not operated for profit. These
include organizations, partnerships, corporations, or associations that are not
organized for profit and are described in section 501(c)(3) through (13) and (19)
and section 528 of the Internal Revenue Code, such as church organizations;
professional associations; trade associations; labor unions; fraternities, sororities
and similar social organizations; and nonprofit recreational clubs; or
D
(ii)
(iii) Governmental units including the federal government and its agencies and
instrumentalities; state governments; county and municipal governments and their
political subdivisions; the District of Columbia; the Commonwealth of Puerto Rico,
American Samoa, Guam, and any territory or possession of the United States and
their political subdivisions.
Also included are the balances of all NOW accounts of certain other nonprofit
organizations that may not fall within the above description but that had established
NOW accounts with the reporting institution prior to September 1, 1981.
FFIEC 031 and 041
A-19
(12-18)
(6-20)
GLOSSARY
58
FFIEC 031 and 041
GLOSSARY
Deposits (cont.):
NOTE: There are no regulatory requirements with respect to minimum balances to be
maintained in a NOW account or to the amount of interest that may be paid on a NOW
account.
(c) ATS accounts are deposits or accounts of individuals or sole proprietorships on which
the depository institution has reserved the right to require at least seven days' written
notice prior to withdrawal or transfer of any funds in the account and from which,
pursuant to written agreement arranged in advance between the reporting institution and
the depositor, withdrawals may be made automatically through payment to the
depository institution itself or through transfer of credit to a demand deposit or other
account in order to cover checks or drafts drawn upon the institution or to maintain a
specified balance in, or to make periodic transfers to, such other accounts.
AF
T
Some institutions may have entered into agreements with their customers providing that
in the event the customer should overdraw a demand deposit (checking) or
NOW account, the institution will transfer from that customer's savings account an
amount sufficient to cover the overdraft. The availability of the overdraft protection plan
would not in and of itself require that such a savings account be regarded as a
transaction account provided that the overall transfer and withdrawal restrictions of a
savings deposit are not exceeded. Please refer to the definition of savings deposit for
further detail.
R
(d) Telephone or preauthorized transfer accounts consist of deposits or accounts, other
than savings deposits, (1) in which the entire beneficial interest is held by a party eligible
and
to hold a NOW account, (2) on which the reporting institution has reserved the right to
require at least seven days' written notice prior to withdrawal or transfer of any funds in
the account, and (3) under the terms of which, or by practice of the reporting institution,
the depositor is permitted or authorized to make more than six withdrawals per month or
statement cycle (or similar period) of at least four weeks for purposes of transferring
funds to another account of the depositor at the same institution (including a transaction
account) or for making payment to a third party by means of preauthorized transfer, or
telephonic (including data transmission) agreement, order or instruction. An account
that permits or authorizes more than six such withdrawals in a "month" (a calendar
month or any period approximating a month that is at least four weeks long, such as a
statement cycle) is a transaction account whether or not more than six such withdrawals
actually are made in the "month."
D
A "preauthorized transfer" includes any arrangement by the reporting institution to pay a
third party from the account of a depositor (1) upon written or oral instruction (including
an order received through an automated clearing house (ACH)), or (2) at a
predetermined time or on a fixed schedule.
Telephone and preauthorized transfer accounts also include:
(i)
FFIEC 031 and 041
Deposits or accounts maintained in connection with an arrangement that permits
the depositor to obtain credit directly or indirectly through the drawing of a
negotiable or nonnegotiable check, draft, order or instruction or other similar
device (including telephone or electronic order or instruction) on the issuing
institution that can be used for the purpose of making payments or transfers to third
parties or others, or to another deposit account of the depositor.
A-20
(6-20)
(12-18)
GLOSSARY
59
FFIEC 031 and 041
GLOSSARY
Deposits (cont.):
(ii)
The balance of deposits or accounts that otherwise meet the definition of time
deposits, but from which payments may be made to third parties by means of a
debit card, an automated teller machine, remote service unit or other electronic
device, regardless of the number of payments made.
However, an account is not a transaction account merely by virtue of arrangements that
permit the following types of transfers or withdrawals, regardless of the number:
Transfers for the purpose of repaying loans and associated expenses at the same
depository institution (as originator or servicer).
(ii)
Transfers of funds from this account to another account of the same depositor at
the same depository institution when made by mail, messenger, automated teller
machine, or in person.
AF
T
(i)
(iii) Withdrawals for payment directly to the depositor when made by mail, messenger,
automated teller machine, in person, or by telephone (via check mailed to the
depositor).
(2) Nontransaction accounts – All deposits that are not transaction accounts (as defined above)
are nontransaction accounts. Nontransaction accounts include: (a) savings deposits
((i) money market deposit accounts (MMDAs) and (ii) other savings deposits) and (b) time
deposits ((i) time certificates of deposit and (ii) time deposits, open account). Regulation D
no longer distinguishes between money market deposit accounts (MMDAs) and other
savings deposits. However, these two types of accounts are defined below for purposes of
these reports, which call for separate data on each in Schedule RC-E, (part I,) Memorandum
items 2.a.(1) and (2).
R
NOTE: Under the Federal Reserve's current Regulation D, no transaction accounts,
regardless of other characteristics, are defined as savings or time deposits. Thus, savings
deposits as defined here, under the heading nontransaction accounts, constitute the entire
savings deposit category. Likewise, time deposits, also defined here under nontransaction
accounts, constitute the entire time deposits category.
D
(a) Savings deposits are deposits with respect to which the depositor is not required by the
deposit contract but may at any time be required by the depository institution to give
written notice of an intended withdrawal not less than seven days before withdrawal is
made, and that is not payable on a specified date or at the expiration of a specified time
after the date of deposit.
The term savings deposit also means a deposit or account, such as an account
commonly known as a passbook savings account, a statement savings account, or a
money market deposit account (MMDA), that otherwise meets the requirements of the
preceding paragraph. and from which, under the terms of the deposit contract or by
practice of the depository institution, the depositor is permitted or authorized to make no
more than six transfers and withdrawals, or a combination of such transfers and
withdrawals, per calendar month or statement cycle (or similar period) of at least four
weeks, to another account (including a transaction account) of the depositor at the same
institution or to a third party by means of a preauthorized or automatic transfer, or
FFIEC 031 and 041
A-21
(12-18)
(6-20)
GLOSSARY
60
FFIEC 031 and 041
GLOSSARY
Deposits (cont.):
telephonic (including data transmission) agreement, order, or instruction; or by check,
draft, debit card, or similar order made by the depositor and payable to third parties.
Transfers from savings deposits for purposes of covering overdrafts (overdraft protection
plans) are included under the withdrawal limits specified for savings deposits.
There are no regulatory restrictions on the following types of transfers or withdrawals
from a savings deposit account, regardless of the number:
(1) Transfers for the purpose of repaying loans and associated expenses at the same
depository institution (as originator or servicer).
AF
T
(2) Transfers of funds from this account to another account of the same depositor at
the same institution when made by mail, messenger, automated teller machine, or
in person.
(3) Withdrawals for payment directly to the depositor when made by mail, messenger,
automated teller machine, in person, or by telephone (via check mailed to the
depositor).
Further, for a savings deposit account, no minimum balance is required by regulation,
there is no regulatory limitation on the amount of interest that may be paid, and no
minimum maturity is required (although depository institutions must reserve the right to
require at least seven days' written notice prior to withdrawal as stipulated above for a
savings deposit).
Insert 1
Any depository institution may place restrictions and requirements on savings deposits
in addition to those stipulated above. In the case of such further restrictions, the
account would still be reported as a savings deposit.
R
On the other hand, an account that otherwise meets the definition of a savings deposit
but that authorizes or permits the depositor to exceed the six-transfer/withdrawal rule
shall be reported as a transaction account, as follows:
(1) If the depositor is ineligible to hold a NOW account, such an account is considered
a demand deposit.
D
(2) If the depositor is eligible to hold a NOW account, the account will be considered
either a NOW account, a telephone or preauthorized transfer account, or an ATS
account:
(a) If withdrawals or transfers by check, draft, or similar instrument are permitted
or authorized, the account is considered a NOW account.
(b) If withdrawals or transfers by check, draft, or similar instrument are not
permitted or authorized, the account is considered either an ATS account or a
telephone or preauthorized transfer account.
Regulation D no longer distinguishes between money market deposit accounts
(MMDAs) and other savings deposits. However, these two types of accounts are
defined as follows for purposes of these reports, which call for separate data on each.
FFIEC 031 and 041
A-22
(12-18)
(6-20)
GLOSSARY
61
,QVHUW
Treatment of Accounts where Reporting Institutions Have Suspended Enforcement of the Six Transfer
Limit per Regulation D
:KHUH WKH UHSRUWLQJ LQVWLWXWLRQ KDV VXVSHQGHG WKH HQIRUFHPHQW RI WKH VL[ WUDQVIHU OLPLW UXOH RQ DQ
DFFRXQW WKDW PHHWV WKH GHILQLWLRQ RI D VDYLQJV GHSRVLW WKH UHSRUWLQJ LQVWLWXWLRQ PD\ FRQWLQXH WR UHSRUW
VXFK GHSRVLWV DV D VDYLQJV DFFRXQW RU PD\ FKRRVH WR UHSRUW WKHP DV WUDQVDFWLRQ DFFRXQWV EDVHG RQ
DQ DVVHVVPHQW RI WKH FKDUDFWHULVWLFV RI WKH DFFRXQW DV LQGLFDWHG EHORZ
,I WKH UHSRUWLQJ LQVWLWXWLRQ GRHV QRW UHWDLQ WKH UHVHUYDWLRQ RI ULJKW WR UHTXLUH DW leastVHYHQGD\V
ZULWWHQ QRWLFH EHIRUH DQ LQWHQGHG ZLWKGUDZDO UHSRUW WKH DFFRXQW DV D GHPDQG GHSRVLW
'
DD
5
RRA
$AF)F
T7
T
,I WKH UHSRUWLQJ LQVWLWXWLRQ GRHV UHWDLQ WKH UHVHUYDWLRQ RI ULJKW WR UHTXLUH DW leastVHYHQGD\V
ZULWWHQ
QRWLFH EHIRUH DQ LQWHQGHG ZLWKGUDZDO DQG WKH GHSRVLWRU LV HOLJLEOH WR KROG D 12: DFFRXQW UHSRUW WKH
DFFRXQW DV HLWKHU DQ $76 DFFRXQW 12: DFFRXQW RU D WHOHSKRQH DQG SUHDXWKRUL]HG WUDQVIHU DFFRXQW
,I WKH UHSRUWLQJ LQVWLWXWLRQ GRHV UHWDLQ WKH UHVHUYDWLRQ RI ULJKW WR UHTXLUH DW leastVHYHQGD\V
ZULWWHQ
QRWLFH EHIRUH DQ LQWHQGHG ZLWKGUDZDO DQG WKH GHSRVLWRU LV LQHOLJLEOH WR KROG D 12: DFFRXQW WKH
DFFRXQW VKRXOG FRQWLQXH WR EH UHSRUWHG DV D VDYLQJV GHSRVLW
62
FFIEC 031 and 041
GLOSSARY
Deposits (cont.):
(1) Money market deposit accounts (MMDAs) are deposits or accounts that meet the
above definition of a savings deposit and that permit up to (but no more than) six
allowable transfers to be made by check, draft, debit card or similar order made by
unlimited
the depositor and payable to third parties.
transfers
(2) Other savings deposits are deposits or accounts that meet the above definition of a
savings deposit but that permit no transfers by check, draft, debit card, or similar
order made by the depositor and payable to third parties. Other savings deposits
are commonly known as passbook savings or statement savings accounts.
Examples illustrating distinctions between MMDAs and other savings deposits for
purposes of these reports are provided at the end of this Glossary entry.
AF
T
(b) Time deposits are deposits that the depositor does not have a right, and is not
permitted, to make withdrawals from within six days after the date of deposit unless the
deposit is subject to an early withdrawal penalty of at least seven days' simple interest
on amounts withdrawn within the first six days after deposit. A time deposit from which
partial early withdrawals are permitted must impose additional early withdrawal penalties
of at least seven days' simple interest on amounts withdrawn within six days after each
partial withdrawal. If such additional early withdrawal penalties are not imposed, the
account ceases to be a time deposit. The account may become a savings deposit if it
meets the requirements for a savings deposit; otherwise it becomes a demand deposit.
NOTE: The above prescribed penalties are the minimum required by Federal Reserve
Regulation D. Institutions may choose to require penalties for early withdrawal in
excess of the regulatory minimums.
Time deposits take two forms:
Time certificates of deposit (including rollover certificates of deposit) are deposits
evidenced by a negotiable or nonnegotiable instrument, or a deposit in book entry
form evidenced by a receipt or similar acknowledgement issued by the bank, that
provides, on its face, that the amount of such deposit is payable to the bearer, to
any specified person, or to the order of a specified person, as follows:
R
(i)
(1) on a certain date not less than seven days after the date of deposit,
D
(2) at the expiration of a specified period not less than seven days after the date
of the deposit, or
(3) upon written notice to the bank which is to be given not less than seven days
before the date of withdrawal.
(ii)
Time deposits, open account are deposits (other than time certificates of deposit)
for which there is in force a written contract with the depositor that neither the whole
nor any part of such deposit may be withdrawn prior to:
(1) the date of maturity which shall be not less than seven days after the date of
the deposit, or
(2) the expiration of a specified period of written notice of not less than seven
days.
FFIEC 031 and 041
A-23
(12-18)
(6-20)
GLOSSARY
63
FFIEC 031 and 041
GLOSSARY
Deposits (cont.):
These deposits include those club accounts, such as Christmas club and vacation
club accounts, that are made under written contracts that provide that no withdrawal
shall be made until a certain number of periodic deposits has been made during a
period of not less than three months, even though some of the deposits are made
within six days of the end of such period.
Time deposits do not include the following categories of liabilities even if they have an
original maturity of seven days or more:
AF
T
(1) Any deposit or account that otherwise meets the definition of a time deposit but that
allows withdrawals within the first six days after deposit and that does not require an
early withdrawal penalty of at least seven days' simple interest on amounts
withdrawn within those first six days. Such deposits or accounts that meet the
definition of a savings deposit shall be reported as savings deposits; otherwise they
shall be reported as demand deposits.
(2) The remaining balance of a time deposit if a partial early withdrawal is made and the
remaining balance is not subject to additional early withdrawal penalties of at least
seven days' simple interest on amounts withdrawn within six days after each partial
withdrawal. Such time deposits that meet the definition of a savings deposit shall be
reported as savings deposits; otherwise they shall be reported as demand deposits.
R
Reporting of Retail Sweep Arrangements Affecting Transaction and Nontransaction Accounts –
In an effort to reduce their reserve requirements, some banks have established “retail sweep
arrangements” or “retail sweep programs.” In a retail sweep arrangement, a depository
institution transfers funds between a customer’s transaction account(s) and that customer’s
nontransaction account(s) (usually savings deposit account(s)) by means of preauthorized or
automatic transfers, typically in order to reduce transaction account reserve requirements
while providing the customer with unlimited access to the funds.
two
There are three key criteria for retail sweep programs to comply with the Federal Reserve
Regulation D definitions of “transaction account” and “savings deposit:”
(1) A depository institution must establish by agreement with its transaction account
customer two legally separate accounts: a transaction account (a NOW account or
demand deposit account) and a savings deposit account, including those sometimes
called a “money market deposit account” or “MMDA”;
D
(2) The swept funds must actually be moved from the customer’s transaction account to the
customer’s savings deposit account on the official books and records of the depository
institution as of the close of the business on the day(s) on which the depository
institution intends to report the funds in question as savings deposits and not transaction
accounts, and vice versa. In addition to actually moving the customer’s funds between
accounts and reflecting this movement at the account level:
(a) If the depository institution’s general ledger is sufficiently disaggregated to
distinguish between transaction and savings deposit accounts, the aforementioned
movement of funds between the customer’s transaction account and savings
deposit account must be reflected on the general ledger.
FFIEC 031 and 041
A-24
(12-18)
(6-20)
GLOSSARY
64
FFIEC 031 and 041
GLOSSARY
Deposits (cont.):
(b) If the depository institution’s general ledger is not sufficiently disaggregated, the
distinction may be reflected in supplemental records or systems, but only if such
supplemental records or systems constitute official books and records of the
institution and are subject to the same prudent managerial oversight and controls as
the general ledger.
A retail sweep program may not exist solely in records or on systems that do not
constitute official books and records of the depository institution and that are not used
for any purpose other than generating its Report of Transaction Accounts, Other
Deposits and Vault Cash (FR 2900) for submission to the Federal Reserve; and
AF
T
(3) The maximum number of preauthorized or automatic funds transfers (“sweeps”) out of a
savings deposit account and into a transaction account in a retail sweep program is
limited to not more than six per month. Transfers out of the transaction account and into
the savings deposit account may be unlimited in number.
either of these
If any of the three criteria is not met, all swept funds must continue to be reported as
transaction accounts, both for purposes of these reports and of FR 2900 deposit reports.
All three criteria must be met in order to report the nontransaction account component of a
retail sweep program as a nonreservable savings deposit account.
both
R
Further, for purposes of the Consolidated Reports of Condition and Income, if all three of
the criteria above are met, a bank must report the transaction account and nontransaction
account components of a retail sweep program separately when it reports its quarter-end
deposit information in Schedules RC, RC-E, and RC-O; its quarterly averages in
Schedule RC-K; and its interest expense (if any) in Schedule RI. Thus, when reporting
quarterly averages in Schedule RC-K, a bank should include the amounts held in the
transaction account (if interest-bearing) and the nontransaction savings account components
of retail sweep arrangements each day or each week in the appropriate separate items for
average deposits. In addition, if the bank pays interest on accounts involved in retail sweep
arrangements, the interest expense reported in Schedule RI should be allocated between
the transaction account and the nontransaction (savings) account based on the balances in
these accounts during the reporting period.
For additional information, refer to the Federal Reserve Board staff guidance relating to the
requirements for a retail sweep program under Regulation D at
http://www.federalreserve.gov/boarddocs/legalint/FederalReserveAct/2007/20070501/200705
01.pdf.
D
(III) Interest-bearing-noninterest-bearing deposit distinction –
(a) Interest-bearing deposit accounts consist of deposit accounts on which the issuing depository
institution makes any payment to or for the account of any depositor as compensation for the
use of funds constituting a deposit. Such compensation may be in the form of cash,
merchandise, or property or as a credit to an account. An institution’s absorption of
expenses incident to providing a normal banking function or its forbearance from charging a
fee in connection with such a service is not considered a payment of interest.
Deposits with a zero percent interest rate that are issued on a discount basis are to be
treated as interest-bearing. Deposit accounts on which the interest rate is periodically
adjusted in response to changes in market interest rates and other factors should be reported
as interest-bearing even if the rate has been reduced to zero, provided the interest rate on
these accounts can be increased as market conditions change.
FFIEC 031 and 041
A-24a
(12-18)
(6-20)
GLOSSARY
65
FFIEC 031 and 041
GLOSSARY
Deposits (cont.):
(b) Noninterest-bearing deposit accounts consist of deposit accounts on which the issuing
depository institution makes no payment to or for the account of any depositor as
compensation for the use of funds constituting a deposit. An institution’s absorption of
expenses incident to providing a normal banking function or its forbearance from charging a
fee in connection with such a service is not considered a payment of interest.
Noninterest-bearing deposit accounts include (i) matured time deposits that are not
automatically renewable (unless the deposit agreement provides for the funds to be
transferred at maturity to another type of account) and (ii) deposits with a zero percent stated
interest rate that are issued at face value.
See also "brokered deposits" and "hypothecated deposits."
Example 1
AF
T
Examples Illustrating Distinctions Between
MONEY MARKET DEPOSIT ACCOUNTS (MMDAs) and OTHER SAVINGS DEPOSITS
A savings deposit account permits no transfers of any type to other accounts or to third parties.
Report this account as an other savings deposit.
Example 2
unlimited
A savings deposit permits up to six, but no more than six, "preauthorized, automatic, or
telephonic" transfers to other accounts or to third parties. None of the third-party payments may be
made by check, draft, or similar order (including debit card).
Report this account as an other savings deposit.
Example 3
unlimited
R
A savings deposit permits no more than six "preauthorized, automatic, or telephonic" transfers to
other accounts or to third parties, any or all which may be by check, draft, debit card or similar order
made by the depositor and payable to third parties.
Report this account as an MMDA.
D
Derivative Contracts: Banks commonly use derivative instruments for managing (positioning or
hedging) their exposure to market risk (including interest rate risk and foreign exchange risk), cash flow
risk, and other risks in their operations and for trading. The accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in other contracts, and for
hedging activities are set forth in ASC Topic 815, Derivatives and Hedging (formerly FASB Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended), which banks
must follow for purposes of these reports. ASC Topic 815 requires all derivatives to be recognized on
the balance sheet as either assets or liabilities at their fair value. A summary of the principal provisions
of ASC Topic 815 follows. For further information, see ASC Topic 815, which includes the
implementation guidance issued by the FASB's Derivatives Implementation Group.
FFIEC 031 and 041
A-25
(3-12)
(6-20)
GLOSSARY
66
FFIEC 031 and 041
RC-M - MEMORANDA
SCHEDULE RC-M – MEMORANDA
Item No.
1
C aption and Instructions
Extensions of credit by the reporting bank to its executive officers, directors,
principal shareholders, and their related interests as of the report date. For purposes
of this item, the terms "extension of credit," "executive officer," "director," "principal
shareholder," and "related interest" are as defined in Federal Reserve Board Regulation O
and 12 U.S.C. 375b(9)(D).
AF
T
An "extension of credit" is a making or renewal of any loan, a granting of a line of credit, or an
extending of credit in any manner whatsoever. Extensions of credit include, among others,
loans, overdrafts, cash items, standby letters of credit, and securities purchased under
agreements to resell. For lines of credit, the amount to be reported as an extension of credit
is normally the total amount of the line of credit extended to the insider, not just the current
balance of the funds that have been advanced to the insider under the line of credit. An
extension of credit also includes having a credit exposure arising from a derivative
transaction, repurchase agreement, reverse repurchase agreement, securities lending
transaction, or securities borrowing transaction. See Section 215.3 of Regulation O and
12 U.S.C. 375b(9)(D)(i) for further details.
Loans that are guaranteed under the U.S. Small Business Administration (SBA) Paycheck
Protection Program (PPP) are excepted from the requirements of section 22(h) of the Federal
Reserve Act and the corresponding provisions of Regulation O if they are not prohibited by
SBA lending restrictions. Accordingly, such PPP loans should not be reported in Schedule
RC-M, items 1.a and 1.b, below. See Section 215.3(b)(8) of Regulation O for further details.
An "executive officer" of the reporting bank generally means a person who participates or has
authority to participate (other than in the capacity of a director) in major policymaking
functions of the reporting bank, an executive officer of a bank holding company of which the
bank is a subsidiary, and (unless properly excluded by the bank's board of directors or
bylaws) an executive officer of any other subsidiary of that bank holding company. See
Section 215.2(e) of Regulation O for further details.
R
A "director" of the reporting bank generally means a person who is a director of a bank,
whether or not receiving compensation, a director of a bank holding company of which the
bank is a subsidiary, and (unless properly excluded by the bank's board of directors or
bylaws) a director of any other subsidiary of that bank holding company. See
Section 215.2(d) of Regulation O for further details.
D
A "principal shareholder" of the reporting bank generally means an individual or a company
(other than an insured bank or foreign bank) that directly or indirectly owns, controls, or has
the power to vote more than ten percent of any class of voting securities of the reporting
bank. See Section 215.2(m) of Regulation O for further details.
A "related interest" means (1) a company (other than an insured bank or a foreign bank) that
is controlled by an executive officer, director, or principal shareholder or (2) a political or
campaign committee that is controlled by or the funds or services of which will benefit an
executive officer, director, or principal shareholder. See Section 215.2(n) of Regulation O.
1.a
Aggregate amount of all extensions of credit to all executive officers, directors,
principal shareholders, and their related interests. Report the aggregate amount
outstanding as of the report date of all extensions of credit by the reporting bank to all of its
executive officers, directors, and principal shareholders, and to all of the related interests of
its executive officers, directors, and principal shareholders.
Include each extension of credit by the reporting bank in the aggregate amount only one time,
regardless of the number of executive officers, directors, principal shareholders, and related
interests thereof to whom the extension of credit has been made.
FFIEC 031 and 041
RC-M-1
(6-20)
RC-M - MEMORANDA
67
FFIEC 031 and 041
Item No.
17
RC-M - MEMORANDA
Caption and Instructions
U.S. Small Business Administration Paycheck Protection Program (PPP) loans and
the Federal Reserve PPP Liquidity Facility (PPPLF). The PPP was established by
Section 1102 of the 2020 Coronavirus Aid, Relief, and Economic Security Act, which was
enacted on March 27, 2020 and amended on June 5, 2020. PPP covered loans (PPP
loans) are fully guaranteed as to principal and accrued interest by the U.S. Small
Business Administration (SBA).
The PPPLF was authorized by the Board of Governors of the Federal Reserve System
on April 8, 2020, under Section 13(3) of the Federal Reserve Act (12 U.S.C. 343(3)).
Under the PPPLF, the Federal Reserve Banks will extend non-recourse loans to eligible
lenders, with the extensions of credit secured by SBA-guaranteed PPP loans that the
lenders have originated or purchased.
AF
T
Items 17.a through 17.e should be completed on a fully consolidated basis.
17.a
Number of PPP loans outstanding. Report the number of PPP loans outstanding held
by the reporting institution as of the report date whose outstanding balances are included
in the amount reported in Schedule RC-M, Memoranda item 17.b, below.
17.b
Outstanding balance of PPP loans. Report the aggregate amount at which PPP loans
held for investment and held for sale are included in Schedule RC-C, Part I, and PPP
loans held for trading are included in Schedule RC, item 5, as of the report date.
17.c
Outstanding balance of PPP loans pledged to the PPPLF. For PPP loans pledged to
the PPPLF, report the aggregate amount at which such PPP loans held for investment
and held for sale are included in Schedule RC-C, Part I, and such PPP loans held for
trading are included in Schedule RC, item 5, as of the report date.
R
Pledged PPP loans held for investment or held for sale that should be included in this
item will also have been included in Schedule RC-C, Part I, Memorandum item 14,
“Pledged loans and leases.” On the FFIEC 031, pledged PPP loans held for trading that
should be included in this item will also have been included in Schedule RC-D,
Memorandum item 4.b, “Pledged loans.”
Outstanding balance of borrowings from Federal Reserve Banks under the PPPLF
with a remaining maturity of. Report in the appropriate subitem the specified
information about the outstanding amount of borrowings from Federal Reserve Banks
under the PPPLF reported in Schedule RC, item 16. The maturity date of an extension of
credit under the PPPLF equals the maturity date of the PPP loan pledged to secure the
extension of credit, which is either two or five years from origination of the PPP loan.
However, the maturity date of the extension of credit will be accelerated and the
institution is required to repay the extension of credit under the PPPLF prior to its maturity
date when the institution has been reimbursed by the SBA for a PPP loan forgiveness (to
the extent of the forgiveness), has received payment from the SBA representing exercise
of the PPP loan guarantee, or has received payment from the PPP borrower of the
underlying PPP loan (to the extent of the payment received).
D
17.d
The remaining maturity is the amount of time remaining from the report date until the final
contractual maturity of the borrowing without regard to the borrowing’s repayment
schedule, if any.
17.d.(1)
FFIEC 031 and 041
One year or less. Report the outstanding amount as of the report date of borrowings by
the reporting institution from a Federal Reserve Bank under the PPPLF with a remaining
maturity of one year or less.
RC-M-X
(6-20)
RC-M - MEMORANDA
68
FFIEC 031 and 041
RC-M - MEMORANDA
.
The borrowings that should be included in this item will also have been included in
(1) Schedule RC-M, item 5.b.(1)(a), Other borrowings with a remaining “maturity or next
repricing date of “One year or less,” (2) Schedule RC-M, item 5.b.(2), “Other borrowings
with a remaining maturity of one year or less,” and (3) Schedule RC-M, item 10.b,
“Amount of ‘Other borrowings’ that are secured.”
17.d.(2)
More than one year. Report the outstanding amount as of the report date of borrowings
by the reporting institution from a Federal Reserve Bank under the PPPLF with a
remaining maturity of more than one year.
17.e
AF
T
The borrowings that should be included in this item will also have been included in (1)
Schedule RC-M, item 5.b.(1)(b), Other borrowings with a remaining maturity or next
repricing date of “Over one year through three years,” or Schedule RC-M, item 5.b.(1)(c),
“Over three years through five years,” as appropriate, and (2) Schedule RC-M, item 10.b,
“Amount of ‘Other borrowings’ that are secured.”
Quarterly average amount of PPP loans pledged to the PPPLF and excluded from
“Total assets for the leverage ratio” reported in Schedule RC-R, Part I, item 30.
Report the quarterly average amount of PPP loans pledged to the PPPLF that are
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 “Total assets
for the leverage ratio” reported in Schedule RC-R, Part I, item 30.
This quarterly average should be consistent with and calculated using the same
averaging method used for calculating the quarterly average for “Total assets” reported in
Schedule RC-K, item 9.
Money Market Mutual Fund Liquidity Facility (MMLF). To prevent the disruption in the
money markets from destabilizing the financial system, the Board of Governors of the
Federal Reserve System authorized the Federal Reserve Bank of Boston on March 19,
2020, to establish the MMLF pursuant to Section 13(3) of the Federal Reserve Act (12
U.S.C. 343(3)). Under the MMLF, the Federal Reserve Bank of Boston will extend nonrecourse loans to eligible borrowers to purchase eligible assets from money market
mutual funds, which will be posted as collateral to the Federal Reserve Bank of Boston.
R
18
Outstanding balance of assets purchased under the MMLF. Report on a fully
consolidated basis the aggregate amount at which the reporting institution’s holdings of
assets purchased under the MMLF are included in Schedule RC, item 1.b, “Interestbearing balances” due from depository institutions; item 2.a, “Held-to-maturity securities;”
item 2.b, “Available-for-sale securities;” item 5, “Trading assets;” and item 11, “Other
assets;” as appropriate, as of the report date.
D
18.a
18.b
Quarterly average amount of assets purchased under the MMLF and excluded from
“Total assets for the leverage ratio” reported in Schedule RC-R, Part I, item 30.
Report the quarterly average amount of assets purchased under the MMLF that are
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 “Total assets
for the leverage ratio” reported in Schedule RC-R, Part I, item 30.
This quarterly average should be consistent with and calculated using the same
averaging method used for calculating the quarterly average for “Total assets” reported in
Schedule RC-K, item 9.
FFIEC 031 and 041
RC-M-X
(6-20)
RC-M - MEMORANDA
69
D
R
AF
T
Note: The proposed revisions to the instructions for Schedule RI; Schedule RI-B, Part II;
Schedule RI-D; Schedule RC-E; Schedule RC-M; and Schedule RC-N, on pages 71 through
100 are proposed to be effective as of the March 31, 2021, report date.
70
FFIEC 031 and 041
Item No.
2.c
RI - INCOME STATEMENT
Caption and Instructions
Interest on trading liabilities and other borrowed money. Report the interest expense
on all liabilities reportable in Schedule RC, item 15, "Trading liabilities," and item 16, "Other
borrowed money." Include interest expense incurred on other borrowed money reported at
fair value under a fair value option.
Include amortization of debt issuance costs associated with other borrowed money (unless
the borrowed money reported at fair value under a fair value option, in which case issuance
costs should be expensed as incurred).
2.d
Interest on subordinated notes and debentures. Report the interest expense on all
liabilities reportable in Schedule RC, item 19, "Subordinated notes and debentures." Include
interest expense incurred on subordinated notes and debentures reported at fair value under
a fair value option.
AF
T
Include amortization of debt issuance costs associated with subordinated notes and
debentures (unless the notes and debentures are reported at fair value under a fair value
option, in which case issuance costs should be expensed as incurred).
Exclude dividends declared or paid on limited-life preferred stock (report dividends declared
in Schedule RI-A, item 8).
Total interest expense. Report the sum of Schedule RI, items 2.a through 2.d.
3
Net interest income. Report the difference between Schedule RI, item 2.e, “Total interest
expense,” and Schedule RI, item 1.h, “Total interest income.” If the amount is negative,
report it with a minus (-) sign.
4
Provision for loan and lease losses. Institutions that have not adopted FASB Accounting
Standards Update No. 2016-13 (ASU 2016-13), which governs the accounting for credit
losses, should report the amount needed to make the allowance for loan and lease losses, as
reported in Schedule RC, item 4.c, adequate to absorb estimated credit losses, based upon
management's evaluation of the reporting institution’s loans and leases held for investment,
excluding such loans and leases reported at fair value under a fair value option. Loans and
leases held for investment are those that the reporting institution has the intent and ability to
hold for the foreseeable future or until maturity or payoff. Also include in this item any
provision for allocated transfer risk related to loans and leases. The amount reported in this
item must equal Schedule RI-B, Part II, item 5, column A, “Provision for credit losses.”
Report negative amounts with a minus (-) sign.
D
R
2.e
Institutions that have adopted ASU 2016-13 should report amounts expensed as provisions
for credit losses (or reversals of provisions) during the calendar year to date on all financial
assets and off-balance-sheet credit exposures within the scope of the ASU., i.e., fFinancial
assets within the scope of the ASU include those measured at amortized cost (including
loans held for investment and held-to-maturity debt securities), net investments in leases,
and available- for-sale debt securities. Provisions for credit losses (or reversals of provisions)
on financial assets measured at amortized cost and net investments in leases represent the
amounts necessary to adjust the related allowances for credit losses at the quarter-end
report date for management’s current estimate of expected credit losses on these assets.
Provisions for credit losses (or reversals of provisions) on available-for-sale debt securities
represent changes during the calendar year to date in the amount of impairment related to
credit losses on individual available-for-sale debt securities. Provisions for credit losses (or
reversals of provisions) on off-balance-sheet credit exposures represent the amounts
necessary to adjust the related allowance for credit losses at the quarter-end report date for
management’s current estimate of expected credit losses on these exposures. Exclude the
initial allowance gross-up amounts established upon the purchase of credit-deteriorated
financial assets, which are recorded at the date of acquisition as an addition to the purchase
price to determine the initial amortized cost basis of the assets. The amount reported in this
FFIEC 031 and 041
RI-8b
(3-1921)
RI - INCOME STATEMENT
71
FFIEC 031 and 041
RI - INCOME STATEMENT
D
R
AF
T
item must equal the sum of Schedule RI-B, Part II, item 5, columns A through C, plus
Schedule RI-B, Part II, Memorandum items 5 and 7. Report negative amounts with a minus
(-) sign.
FFIEC 031 and 041
RI-8b
(3-1921)
RI - INCOME STATEMENT
72
FFIEC 031 and 041
RI - INCOME STATEMENT
Item No.
Caption and Instructions
4
(cont.)
Exclude any provision for credit losses on off-balance sheet credit exposures, which should
be reported in Schedule RI, item 7.d, “Other noninterest expense.”
The amount reported here may differ from the bad debt expense deduction taken for federal
income tax purposes.
D
R
AF
T
Refer to the Glossary entries for "allowance for loan and lease losses," and “loan
impairment,” and “allowance for credit losses,” as applicable, for additional information.
FFIEC 031 and 041
RI-8c
(3-1921)
RI - INCOME STATEMENT
73
FFIEC 031 and 041
Item No.
RI - INCOME STATEMENT
Caption and Instructions
in the current or future periods when the “fee reduction” or “fee waiver” takes place.
(See the example after the instructions to Schedule RC-T, Memorandum item 4.e.)
For institutions required to complete Schedule RC-T, item 24, the amount of net losses
from fiduciary and related services also is reported in that item.
7.d
(cont.)
(26) Losses from robberies, defalcations, and other criminal acts not covered by the bank's
blanket bond.
(27) Travel and entertainment expenses, including costs incurred by bank officers and
employees for attending meetings and conventions.
(28) Dues, fees, and other expenses associated with memberships in country clubs, social or
private clubs, civic organizations, and similar clubs and organizations.
AF
T
(29) Civil money penalties and fines.
(30) All service charges, commissions, and fees levied by others for the repossession of
assets and the collection of the bank's loans or other assets, including charged-off loans
or other charged-off assets.
(31) Expenses (except salaries) related to handling credit card or charge sales received from
merchants when the bank does not carry the related loan accounts on its books. Banks
are also permitted to net these expenses against their charges to merchants for the
bank's handling of these sales in Schedule RI, item 5.l.
(32) Expenses related to the testing and training of officers and employees.
(33) The cost of bank newspapers and magazines prepared for distribution to bank officers
and employees or to others.
(34) Depreciation expense of furniture and equipment rented to others under operating
leases.
R
(35) Cost of checks provided to depositors.
D
(36) Amortization expense of purchased computer software and of the costs of computer
software to be sold, leased, or otherwise marketed capitalized in accordance with the
provisions of ASC Subtopic 985-20, Software – Costs of Software to Be Sold, Leased or
Marketed (formerly FASB Statement No. 86, “Accounting for the Cost of Computer
Software to Be Sold, Leased, or Otherwise Marketed”).
(37) For institutions that have not adopted FASB Accounting Standards Update No. 2016-13
(ASU 2016-13), which governs the accounting for credit losses, Pprovisions for credit
losses on off-balance sheet credit exposures. For institutions that have adopted
ASU 2016-13, exclude provisions for credit losses on off-balance-sheet credit
exposures from this item 7.d; report these provisions in Schedule RI-B, Part II,
Memorandum item 7, and include them in Schedule RI, item 4, “Provision for loan and
lease losses.”
(38) Net losses (gains) from the extinguishment of liabilities (debt), including losses resulting
from the payment of prepayment penalties on borrowings such as Federal Home Loan
Bank advances. However, if a bank's debt extinguishments normally result in net gains
over time, then the bank should consistently report its net gains (losses) in Schedule RI,
item 5.l, "Other noninterest income."
(39) Automated teller machine (ATM) and interchange expenses from bank card and credit
card transactions. (Report the amount of such expenses in Schedule RI-E, item 2.j, if
this amount is greater than $100,000 and exceeds 7 percent of the amount reported in
Schedule RI, item 7.d.)
FFIEC 031 and 041
RI-23
(3-2021)
RI - INCOME STATEMENT
74
FFIEC 031 and 041
RI-B - ALLOWANCE
Part II. (cont.)
Caption and Instructions
5
(cont.)
For an institution that has adopted ASU 2016-13, report in columns A, B, and C the amounts
columns A, B, and C the amounts expensed as provisions for credit losses (or reversals of
provisions) on loans and leases held for investment, held-to-maturity debt securities, and
available-for-sale debt securities, respectively, during the calendar year-to-date. Provisions
for credit losses (or reversals of provisions) on loans and leases held for investment and
held-to-maturity debt securities represent the amounts necessary to adjust the related
allowances for credit losses at the quarter-end report date for management’s current estimate
of expected credit losses on these assets. Provisions for credit losses (or reversals of
provisions) on available-for-sale debt securities represent changes during the calendar year
to date in the amount of impairment related to credit losses on individual available-for-sale
debt securities. The sum of the amounts reported in item 5, columns A through C, plus
Schedule RI-B, Part II, Memorandum items 5, “Provisions for credit losses on other financial
assets measured at amortized cost,” and 7, “Provisions for credit losses on off-balance-sheet
credit exposures,” must equal Schedule RI, item 4. If the amount reported in column A, B, or
C for this item is negative, report it with a minus (-) sign.
6
AF
T
Item No.
Adjustments. Report all activity in the allowance for loan and lease losses or the allowances
for credit losses, as applicable, that cannot be properly reported in Schedule RI-B, Part II,
items 2 through 5, above.
D
R
If the reporting institution was acquired in a transaction that became effective during the yearto-date reporting period, retained its separate corporate existence, and elected to apply
pushdown accounting in its separate financial statements (including its Consolidated Reports
of Condition and Income):
• A reporting institution that has not adopted ASU 2016-13 should report in column A of
this item as a negative amount the balance of the allowance for loan and lease losses
most recently reported for the end of the previous calendar year, as reported in
Schedule RI-B, Part II, item 1, column A, above.
• A reporting institution that has adopted ASU 2016-13 should report as negative amounts
in columns A, B, and C of this item the balances of the allowances for credit losses on
loans and leases held for investment, held-to-maturity debt securities, and available-forsale debt securities, respectively, most recently reported for the end of the previous
calendar year in Schedule RI-B, Part II, item 1, columns A, B, and C, above. In addition,
when applying pushdown accounting, for those financial assets that management has
determined to be purchased credit-deteriorated as of the institution’s acquisition date, the
institution should report as positive amounts in columns A, B, and C of this item, as
appropriate, the initial allowance gross-up amounts established as of the acquisition date,
which are recorded as an addition to the acquisition-date fair values of these purchased
credit-deteriorated assets to determine their initial amortized cost basis.
If the reporting institution was involved in a transaction between entities under common
control that became effective during the year-to-date reporting period and has been
accounted for in a manner similar to a pooling of interests:
• A reporting institution that has not adopted ASU 2016-13 should report in column A of
this item the balance as of the end of the previous calendar year of the allowance for loan
and lease losses of the institution or other business that combined with the reporting
institution in the common control transaction.
• A reporting institution that has adopted ASU 2016-13 should report in columns A, B, and
C of this item the balances as of the end of the previous calendar year of the allowances
for credit losses on loans and leases held for investment, held-to-maturity debt securities,
and available-for-sale debt securities, respectively, of the institution or other business that
combined with the reporting institution in the common control transaction.
FFIEC 031 and 041
RI-B-10
(3-1921)
RI-B - ALLOWANCE
75
FFIEC 031 and 041
RI-B - ALLOWANCE
Part II. (cont.)
Memoranda
Item No.
Caption and Instructions
3
(cont.)
An institution that has adopted ASU 2016-13 should report in this item the amount of the
allowance for credit losses on loans and leases that is attributable to outstanding fees and
finance charges on credit cards (as defined for Schedule RC-C, part I, item 6.a). This
amount is a component of the amount reported in Schedule RC, item 4.c, and Schedule RI-B,
part II, item 7, column A.
Do not include in this item the amount of any valuation allowance established for impairment
in retained interests in accrued interest receivable related to securitized credit cards.
Amount of allowance for post-acquisition credit losses on purchased credit-impaired
loans accounted for in accordance with FASB ASC 310-30 (former AICPA Statement of
Position 03-3). Report in this item the amount of any valuation allowances established after
acquisition for decreases in cash flows expected to be collected on purchased credit-impaired
loans and pools of purchased credit-impaired loans reported as held for investment in
Schedule RC, item 4.b, and accounted for in accordance with ASC Subtopic 310-30,
Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality (formerly
AICPA Statement of Position 03-3, “Accounting for Certain Loans or Debt Securities
Acquired in a Transfer”). These post-acquisition allowances should be included in the bank's
allowance for loan and lease losses as reported in Schedule RC, item 4.c, and
Schedule RI-B, part II, item 7. Under ASC Subtopic 310-30, for a purchased credit-impaired
loan accounted for individually (and not accounted for as a debt security), if, upon evaluation
subsequent to acquisition, it is probable based on current information and events that an
institution will be unable to collect all cash flows expected at acquisition (plus additional cash
flows expected to be collected arising from changes in estimate after acquisition), the
purchased credit-impaired loan should be considered impaired for purposes of establishing
an allowance pursuant to ASC Subtopic 450-20, Contingencies – Loss Contingencies
(formerly FASB Statement No. 5, “Accounting for Contingencies”) or ASC Topic 310,
Receivables (formerly FASB Statement No. 114, “Accounting by Creditors for Impairment of
a Loan”), as appropriate. For purchased credit-impaired loans with common risk
characteristics that are aggregated and accounted for as a pool, this impairment analysis
should be performed subsequent to acquisition at the pool level as a whole and not at the
individual loan level.
D
R
4
AF
T
NOTE: Memorandum item 4 is to be completed only by institutions that have not adopted FASB
Accounting Standards Update No. 2016-13 (ASU 2016-13), which governs the accounting for credit
losses. Institutions that have adopted ASU 2016-13 should leave Memorandum item 4 blank.
NOTE: Memorandum item 5 is to be completed only by institutions that have adopted FASB Accounting
Standards Update No. 2016-13, which governs the accounting for credit losses. Institutions that have not
adopted ASU 2016-13 should leave Memorandum item 5 blank.
5
Provisions for credit losses on other financial assets measured at amortized cost (not
included in item 5, above). Report in this item the year-to-date amount of provisions for
credit losses (or reversals of provisions) included in Schedule RI, item 4, on financial assets
measured at amortized cost other than loans and leases held for investment, held-tomaturity debt securities, and available-for-sale debt securities. Provisions for credit losses
(or reversals of provisions) on these other financial assets measured at amortized cost
represent the amounts necessary to adjust the related allowances for credit losses at the
quarter-end report date for management’s current estimate of expected credit losses on
these assets.
Exclude provisions for credit losses on off-balance sheet credit exposures, which are
reported in Schedule RI, item 7.d, “Other noninterest expenseSchedule RI-B, Part II,
Memorandum item 7, below.”
FFIEC 031 and 041
RI-B-13
(3-1921)
RI-B -ALLOWANCE
76
FFIEC 031 and 041
RI-B - ALLOWANCE
Part II. (cont.)
Memoranda
Item No.
Caption and Instructions
NOTE: Memorandum items 6, 7, and 8 are to be completed only by institutions that have adopted FASB
Accounting Standards Update No. 2016-13, which governs the accounting for credit losses. Institutions
that have not adopted ASU 2016-13 should leave Memorandum items 6, 7, and 8, blank.
Allowances for credit losses on other financial assets measured at amortized cost (not
included in item 7, above). Report in this item the total amount of allowances for credit
losses on financial assets measured at amortized cost other than loans and leases held for
investment, held-to-maturity debt securities, and available-for-sale debt securities. The
allowances to be included in this item are associated with the provisions for credit losses
reported in Memorandum item 5, above.
AF
T
6
Exclude the allowance for credit losses on off-balance sheet credit exposures, which is
reported in Schedule RC-G, item 3.
7
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). Report in this item the estimated amount of expected
recoveries of amounts previously written off1 included within the allowance for credit losses on loans
and leases held for investment. This item applies to loans and leases held for investment, including
purchased credit-deteriorated loans held for investment, and does not apply to held-to-maturity debt
securities or available-for sale-debt securities.
R
8
Provisions for credit losses on off-balance-sheet credit exposures. Report in this item
the year-to-date amount of provisions for credit losses (or reversals of provisions) on offbalance-sheet credit exposures included in the amount reported in Schedule RI, item 4.
Provisions for credit losses (or reversals of provisions) on off-balance-sheet credit exposures
represent the amounts necessary to adjust the related allowance for credit losses at the
quarter-end report date for management’s current estimate of expected credit losses on
these exposures.
D
Expected recoveries of amounts previously written off and expected to be written off shall be included in
the allowance for credit losses and shall not exceed the aggregate of amounts previously written off and
expected to be written off by an institution. However, exclude from this item the estimated amount of
expected recoveries of amounts expected to be written off included in the allowance for credit losses.
In accordance with ASU 2016-13, estimated expected recoveries are a component of management’s
estimation of the net amount expected to be collected for a financial asset or a pool of financial assets.
If an institution can support an estimate of expected recoveries for a pool of unsecured loans, each of
which was deemed uncollectible and fully written off on an individual asset basis, the institution reduces
the allowance for credit losses by the institution’s estimate of recoveries expected on a pool basis.
The term “written off” as used in ASU 2016-13 and in the instructions for this item is used interchangeably with the term
77
“charged off,” which is used elsewhere in the Call Report instructions.
1
FFIEC 031 and 041
GLOSSARY
Acquisition, Development, or Construction (ADC) Arrangements (cont.):
consideration for purposes of determining whether a credit facility is an HVCRE exposure for regulatory
capital purposes. Thus, a loan can be treated as an HVCRE exposure for regulatory capital purposes
even though it does not provide for the institution to participate in the property’s expected residual
profit.
Agreement Corporation: See "Edge and Agreement Corporation."
Allowance for Credit Losses: This entry applies to institutions that have adopted ASC Topic 326
(introduced by Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses
(Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13)). Institutions that
have not adopted ASC Topic 326 should continue to refer to the Glossary entry for “Allowance for Loan
and Lease Losses.” For more information on the allowance for credit losses (ACL), institutions should
also refer to the Interagency Policy Statement on Allowances for Credit Losses issued in May 2020.
AF
T
Standards for accounting for an ACL for financial assets measured at amortized cost and net
investments in leases (hereafter referred to collectively as financial assets measured at amortized
cost), as well as certain off-balance sheet credit exposures, are set forth in ASC Subtopic 326-20,
Financial Instruments–Credit Losses–Measured at Amortized Cost. For financial assets measured at
amortized cost, the ACL is a valuation account that is deducted from, or added to, the amortized cost
basis of financial assets to present the net amount expected to be collected over the contractual term
of the financial assets.
For institutions that have adopted ASC Topic 326, standards for measuring credit losses on availablefor-sale (AFS) debt securities are set forth in ASC Subtopic 326-30, Financial Instruments—Credit
Losses—Available-for-Sale Debt Securities. See the Glossary entry for “Securities Activities” for
guidance on allowances for credit losses on AFS debt securities.
The following sections of this Glossary entry apply to financial assets measured at amortized cost and
also to off-balance sheet credit exposures within the scope of ASC Subtopic 326-20.
R
Measurement – An ACL shall be established upon the origination or acquisition of a financial asset(s)
measured at amortized cost. A separate ACL shall be reported for each type of financial asset
measured at amortized cost (e.g., loans and leases held for investment, held-to-maturity (HTM) debt
securities, and receivables that relate to repurchase agreements and securities lending agreements) as
of the end of each reporting period.
D
As of the end of each quarter, or more frequently if warranted, each institution must evaluate the
collectability of its financial assets measured at amortized cost, including, if applicable, any recorded
accrued interest receivable (i.e., not already reversed or charged off, as applicable), and make
adjusting entries to maintain the balance of each of the separate ACLs reported on the balance sheet
at an appropriate level.
An institution shall measure expected credit losses on a collective or pool basis when financial assets
share similar risk characteristics. If a financial asset does not share similar risk characteristics with
other assets, expected credit losses for that asset should be evaluated individually. Individually
evaluated assets should not be included in a collective assessment of expected credit losses. If a
financial asset ceases to share similar risk characteristics with other assets in its pool, it should be
moved to a different pool with assets sharing similar risk characteristics, if such a pool exists.
ASC Subtopic 326-20 does not require the use of a specific loss estimation method for purposes of
determining ACLs. Various methods may be used to estimate the expected collectibility of financial
assets measured at amortized cost, with those methods generally applied consistently over time. The
same loss estimation method does not need to be applied to all financial assets. An institution is not
precluded from selecting a different method when it determines the method will result in a better
estimate of ACLs.
FFIEC 031 and 041
A-6
(9-20)
GLOSSARY
78
FFIEC 031 and 041
GLOSSARY
Allowance for Credit Losses (cont.):
ASC Subtopic 326-20 requires an institution to measure estimated expected credit losses over the
contractual term of its financial assets, considering expected prepayments. Renewals, extensions, and
modifications are excluded from the contractual term of a financial asset for purposes of estimating the
ACL unless there is a reasonable expectation of executing a troubled debt restructuring or the renewal
and extension options are part of the original or modified contract and are not unconditionally
cancellable by the institution. If such renewal or extension options are present, an institution must
evaluate the likelihood of a borrower exercising those options when determining the contractual term.
In estimating the net amount expected to be collected on financial assets measured at amortized cost,
an institution should consider the effects of past events, current conditions, and reasonable and
supportable forecasts on the collectibility of the institution’s financial assets. Under ASC Subtopic
326-20, an institution is required to use relevant forward-looking information and expectations drawn
from reasonable and supportable forecasts when estimating expected credit losses.
AF
T
Expected recoveries, prior to collection, are a component of management’s estimate of the net amount
expected to be collected for a financial asset. Expected recoveries of amounts previously charged off
or expected to be charged off that are included in ACLs may not exceed the aggregate amounts
previously charged off or expected to be charged off. All assumptions related to expected recoveries
should be appropriately documented and supported. When estimating expected recoveries,
management may conclude that amounts previously charged off are not collectible.
R
Changes in the ACL – Additions to, or reductions of, the ACL to adjust its level to management’s
current estimate of expected credit losses are to be made through charges or credits to the "provision
for credit losses on financial assets" (provision) in item 4 of Schedule RI, Income Statement, except for
changes to adjust the level of the ACL for off-balance-sheet credit exposures. When available
information confirms that specific financial assets measured at amortized cost, or portions thereof, are
uncollectible, these amounts should be promptly charged off against the related ACL in the period in
which the financial assets are deemed uncollectible. Under no circumstances can expected credit
losses on financial assets measured at amortized cost be charged directly to "Retained earnings" after
the initial adoption of ASC Topic 326, for which the change from the incurred loss to the current
expected credit losses methodology is required to be recorded through a cumulative-effect adjustment
to retained earnings. This cumulative-effect adjustment is reported in Schedule RI-A, item 2,
“Cumulative effect of changes in accounting principles and corrections of material accounting errors,”
and disclosed in Schedule RI-E, item 4.a, “Effect of adoption of current expected credit losses
methodology – ASU 2016-13.”
D
Recoveries on financial assets measured at amortized cost represent collections on amounts that were
previously charged off against the related ACL. Recoveries shall be credited to the ACL, provided that
the total amount credited to the ACL as recoveries on a financial asset (which may include amounts
representing principal, interest, and fees) is limited to the amount previously charged off against the
ACL on that financial asset. Any amounts collected in excess of this limit should generally be
recognized as noninterest income upon collection.
Charge-Offs and Establishment of a New Amortized Cost Basis – When an institution makes a full or
partial charge-off of a financial asset measured at amortized cost that is deemed uncollectible, the
institution establishes a new cost basis for that financial asset. Consequently, once a new cost basis
has been established for a financial asset through a charge-off, this amortized cost basis may not be
directly "written up" at a later date. Reversing the previous charge-off and "re-booking" the charged-off
asset after the institution concludes that the prospects for recovering the charge-off have improved,
regardless of whether the institution assigns a new account number to the asset or the borrower signs
a new note, is not an acceptable accounting practice. Nevertheless, as stated above, management’s
estimate of the net amount expected to be collected for a financial asset, as reflected in the related
ACL, considers expected recoveries.
FFIEC 031 and 041
A-7
(9-20)
(3-21)
GLOSSARY
79
RI-D – FOREIGN OFFICE INCOME
FFIEC 031
SCHEDULE RI-D – INCOME FROM FOREIGN OFFICES
General Instructions
Schedule RI-D is applicable only to certain banks that file the FFIEC 031 report forms.
Banks with foreign offices are required to complete this schedule if (1) their foreign office assets are
$10 billion or more and (2) their foreign office assets, revenues, or net income account for more than
10 percent of the bank’s consolidated total assets, total revenues, or net income; otherwise, banks need
not complete this schedule. Banks should use foreign office and consolidated total revenues (net interest
income plus noninterest income) and net income from the preceding calendar year and foreign office and
consolidated total assets as of the preceding calendar year end when determining whether they exceed
the $10 billion foreign office asset-size threshold and the 10 percent threshold for completing this
schedule each quarter during the next calendar year.
AF
T
For purposes of these reports, a foreign office of the reporting bank is a branch or consolidated subsidiary
located in a foreign country; an Edge or Agreement subsidiary, including both its U.S. and its foreign
offices; or an IBF. In addition, if the reporting bank is chartered and headquartered in the 50 states of the
United States and the District of Columbia, a branch or consolidated subsidiary located in Puerto Rico or
a U.S. territory or possession is a foreign office. Branches on U.S. military facilities wherever located are
treated as domestic offices, not foreign offices.
Banks that are required to complete Schedule RI-D should report all income and expense in foreign
offices and related amounts for the calendar year-to-date. Amounts should be reported in this schedule
(except items 7, 11, and 12) on a foreign office consolidated basis, i.e., before eliminating the effects of
transactions with domestic offices, but after eliminating the effects of transactions between foreign offices.
For the most part, the income and expense items in Schedule RI-D mirror categories of income and
expense reported in Schedule RI. Therefore, where appropriate, banks should refer to the instructions for
Schedule RI for the definitions of the income and expense items in this schedule.
Item Instructions
1
Total interest income in foreign offices. Report total interest income (as defined for
Schedule RI, item 1.h) in foreign offices, including fees and similar charges associated with
foreign office assets.
Total interest expense in foreign offices. Report total interest expense (as defined for
Schedule RI, item 2.e) on deposits, borrowings, and other liabilities in foreign offices.
D
2
Caption and Instructions
R
Item No.
3
Provision for loan and lease losses in foreign offices. Institutions that have not adopted
FASB Accounting Standards Update No. 2016-13 (ASU 2016-13), which governs the
accounting for credit losses, should report the provision for loan and lease losses (as defined
for Schedule RI, item 4) in foreign offices. Institutions that have adopted ASU 2016-13
should report the provision for credit losses (as defined for Schedule RI, item 4) in foreign
offices for all financial assets and off-balance-sheet credit exposures that fall within the
scope of the standard. If the amount to be reported in this item is negative, report it with a
minus (-) sign.
4
Noninterest income in foreign offices:
4.a
Trading revenue. Report trading revenue (as defined for Schedule RI, item 5.c) in foreign
offices, including the net gain or loss from trading cash instruments and derivative contracts
(including commodity contracts), related revaluation adjustments, and incidental income that
has been recognized in foreign offices. If the amount to be reported in this item is a net loss,
report it with a minus (-) sign.
FFIEC 031
RI-D-1
(3-1921)
RI-D – FOREIGN OFFICE INCOME
80
FFIEC 031 and 041
Item No.
RC-M - MEMORANDA
Caption and Instructions
NOTE: Items 16.a and, if appropriate, items 16.b.(1) through 16.b.(3) are to be completed by all
institutions annually in the December report only.
16
International remittance transfers offered to consumers. Report in Schedule RC-M,
item 16.a and, if appropriate, items 16.b.(1) through 16.b.(3), information about
international electronic transfers of funds offered to consumers in the United States that:
(1) Are “remittance transfers” as defined by Subpart B of Regulation E (12 CFR
§ 1005.30(e)), or
(2) Would qualify as “remittance transfers” under Subpart B of Regulation E (12 CFR
§ 1005.30(e)), but are excluded from that definition only because the provider is not
providing those transfers in the normal course of its business. See 12 CFR §
1005.30(f).
AF
T
For purposes of items 16.a and 16.b.(1) through 16.b.(3), such transfers are referred to as
international remittance transfers.
Under Subpart B of Regulation E, which took effect on October 28, 2013, and was most
recently amended effective July 21, 2020, a ‘‘remittance transfer’’ is an electronic transfer of
funds requested by a sender to a designated recipient that is sent by a remittance transfer
provider. The term applies regardless of whether the sender holds an account with the
remittance transfer provider, and regardless of whether the transaction is also an “electronic
fund transfer,” as defined in Regulation E. See 12 CFR § 1005.30(e).
A “sender” is a consumer in a State who primarily for personal, family, or household purposes
requests a remittance transfer provider to send a remittance transfer to a designated
recipient. See 12 CFR § 1005.30(g).
A “designated recipient” is any person specified by the sender as the authorized recipient of a
remittance transfer to be received at a location in a foreign country. See 12 CFR §
1005.30(c).
R
A “remittance transfer provider” is any person that provides remittance transfers for a
consumer in the normal course of its business, regardless of whether the consumer holds an
account with such person. See 12 CFR § 1005.30(f).
D
Examples of “remittance transfers” include the following (see Regulation E, Subpart B,
comment 30(e)-3.i):
(1) Transfers where the sender provides cash or another method of payment to a money
transmitter or financial institution and requests that funds be sent to a specified location
or account in a foreign country.
(2) Consumer wire transfers, where a financial institution executes a payment order upon a
sender’s request to wire money from the sender’s account to a designated recipient.
(3) An addition of funds to a prepaid card by a participant in a prepaid card program, such as
a prepaid card issuer or its agent, that is directly engaged with the sender to add these
funds, where the prepaid card is sent or was previously sent by a participant in the
prepaid card program to a person in a foreign country, even if a person located in a State
(including a sender) retains the ability to withdraw such funds.
(4) International automated clearing house (ACH) transactions sent by the sender’s financial
institution at the sender’s request.
(5) Online bill payments and other electronic transfers that a sender schedules in advance,
including preauthorized remittance transfers, made by the sender’s financial institution at
the sender’s request to a designated recipient.
FFIEC 031 and 041
RC-M-22
(3-21)
RC-M - MEMORANDA
81
FFIEC 031 and 041
RC-M - MEMORANDA
Item No.
Caption and Instructions
16
(cont.)
Under Subpart B of Regulation E, the term “remittance transfer” does not include,
for example:
AF
T
(1) Small value transactions, i.e., transfer amounts, as described in 12 CFR
§ 1005.31(b)(1)(i), of $15 or less. See 12 CFR § 1005.30(e)(2)(i).
(2) Securities and commodities transfers that are excluded from the definition of
electronic fund transfer under 12 CFR § 1005.3(c)(4). See 12 CFR §
1005.30(e)(2)(ii).
(3) A consumer’s provision of a debit, credit or prepaid card, directly to a foreign merchant
as payment for goods or services because the issuer is not directly engaged with the
sender to send an electronic transfer of funds to the foreign merchant when the issuer
provides payment to the merchant. See Regulation E, Subpart B, comment 30(e)-3.ii.A.
(4) A consumer’s deposit of funds to a checking or savings account located in a
State, because there has not been a transfer of funds to a designated recipient.
See Regulation E, Subpart B, comment 30(e)-3.ii.B.
(5) Online bill payments and other electronic transfers that senders can schedule in
advance, including preauthorized transfers, made through the Web site of a merchant
located in a foreign country and via direct provision of a checking account, credit card,
debit card or prepaid card number to the merchant, because the financial institution is
not directly engaged with the sender to send an electronic transfer of funds to the
foreign merchant when the institution provides payment to the merchant. See
Regulation E, Subpart B, comment 30(e)-3.ii.C.
Estimates: For purposes of items 16.a and, if appropriate, items 16.b.(1) through 16.b.(3),
estimates should be based on a reasonable and supportable methodology. Estimated
figures should include only international remittance transfers for which your institution was
the provider. Do not count transfers for which another entity was the provider and your
institution sent the transfer as a correspondent bank or agent for the other provider. An
international remittance transfer should be counted as of the date of the transfer.
Estimated number of international remittance transfers provided by your institution during the
calendar year ending on the report date. Report the estimated number of international remittance
transfers that your institution provided during the calendar year ending on the report date. Estimates
should be based on a reasonable and supportable methodology.
R
16.a
D
NOTE: Items 16.b.(1) through 16.b.(3) are to be completed by institutions that reported 501 or more international
remittance transfers in item 16.a in either or both of the current report or the most recent prior report in which
item 16.a was required to be completed. For the December 31, 2021, report date, your institution should
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 31, 2021, Call Report or if it reported a combined total of
501 or more international remittance transfers in Schedule RC-M, item 16.d.(1), in the June 30 and December 31,
2020, Call Reports
16.b
16.b.(1)
Estimated dollar value of remittance transfers provided by your institution and usage of
regulatory exceptions during the calendar year ending on the report date:
Estimated dollar value of international remittance transfers. Report the estimated
dollar value of international remittance transfers that your institution provided during the
calendar year ending on the report date. The dollar value is not required to be estimated
in thousands of dollars. In other words, if an estimate is in the millions of dollars, the
institution may report zeros for the thousands of dollars.
FFIEC 031 and 041
RC-M-23
(3-21)
RC-M - MEMORANDA
82
FFIEC 031 and 041
RC-M - MEMORANDA
Caption and Instructions
16.b.(2)
Estimated number of international remittance transfers for which your institution
applied the permanent exchange rate exception. Report the estimated number of
international remittance transfers that your institution provided during the calendar year
ending on the report date for which your institution applied the permanent exchange rate
exception set forth in 12 CFR § 1005.32(b)(4).
16.b.(3)
Estimated number of international remittance transfers for which your institution
applied the permanent covered third-party fee exception. Report the estimated number
of international remittance transfers that your institution provided during the calendar year
ending on the report date for which your institution applied the permanent covered thirdparty fee exception set forth in 12 CFR § 1005.32(b)(5).
D
R
AF
T
Item No.
FFIEC 031 and 041
RC-M-24
(3-21)
RC-M - MEMORANDA
83
FFIEC 031 and 041
RC-N - PAST DUE
Definitions
Past Due – The past due status of a loan or other asset should be determined in accordance with its
contractual repayment terms. For purposes of this schedule, grace periods allowed by the bank after a
loan or other asset technically has become past due but before the imposition of late charges are not to
be taken into account in determining past due status. Furthermore, loans, leases, debt securities, and
other assets are to be reported as past due when either interest or principal is unpaid in the following
circumstances:
AF
T
(1) Closed-end installment loans, amortizing loans secured by real estate, and any other loans and lease
financing receivables with payments scheduled monthly are to be reported as past due when the
borrower is in arrears two or more monthly payments. (At a bank's option, loans and leases with
payments scheduled monthly may be reported as past due when one scheduled payment is due and
unpaid for 30 days or more.) Other multipayment obligations with payments scheduled other than
monthly are to be reported as past due when one scheduled payment is due and unpaid for 30 days
or more.
(2) Open-end credit such as credit cards, check credit, and other revolving credit plans are to be reported
as past due when the customer has not made the minimum payment for two or more billing cycles.
(3) Single payment and demand notes, debt securities, and other assets providing for the payment of
interest at stated intervals are to be reported as past due after one interest payment is due and
unpaid for 30 days or more.
(4) Single payment notes, debt securities, and other assets providing for the payment of interest at
maturity are to be reported as past due after maturity if interest or principal remains unpaid for
30 days or more.
(5) Unplanned overdrafts are to be reported as past due if the account remains continuously overdrawn
for 30 days or more.
D
R
For purposes of this schedule, banks should use one of two methods to recognize partial payments on
“retail credit,” i.e., open-end and closed-end credit extended to individuals for household, family, and
other personal expenditures, including consumer loans and credit cards, and loans to individuals secured
by their personal residence, including home equity and home improvement loans. A payment equivalent
to 90 percent or more of the contractual payment may be considered a full payment in computing
delinquency. Alternatively, a bank may aggregate payments and give credit for any partial payment
received. For example, if a regular monthly installment is $300 and the borrower makes payments of only
$150 per month for a six-month period, the loan would be $900 ($150 shortage times six payments), or
three monthly payments past due. A bank may use either or both methods for its retail credit, but may not
use both methods simultaneously with a single loan.
For institutions that have not adopted ASU 2016-13, when accrual of income on a purchased creditimpaired (PCI) loan accounted for individually or a purchased credit-impairedPCI debt security is
appropriate, the delinquency status of the individual asset should be determined in accordance with its
contractual repayment terms for purposes of reporting the amount of the loan or debt security as past
due in the appropriate items of Schedule RC-N, column A or B. When accrual of income on a pool of
purchased credit-impairedPCI loans with common risk characteristics is appropriate, delinquency status
should be determined individually for each loan in the pool in accordance with the individual loan’s
contractual repayment terms for purposes of reporting the amount of individual loans within the pool as
past due in the appropriate items of Schedule RC-N, column A or B. For further information, see the
Glossary entry for “purchased credit-impaired loans and debt securities.”
For institutions that have adopted ASU 2016-13, any purchased credit-impairedPCI loans and debt
securities held as of the adoption date of the standard should prospectively be accounted for as
purchased credit-deteriorated (PCD) assets. As of the adoption date of the standard, the remaining
noncredit discount or premium on a purchased credit-deterioratedPCD asset, after the adjustment for the
allowance for credit
FFIEC 031 and 041
RC-N-2
(3-21)
RC-N - PAST DUE
84
FFIEC 031 and 041
RC-N - PAST DUE
Definitions (cont.)
losses, should be accreted to interest income at the new effective interest rate on the asset, if the asset is
not required to be placed on nonaccrual. 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. For a PCD loan, debt security, or other financial asset within the
scope of ASU 2016-13 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 (fair value for a PCD available-for-sale debt security) as past due in
Schedule RC-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 was previously PCI, but 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. For further information, see the
Glossary entry for “purchased credit-deteriorated assets.”
AF
T
Nonaccrual – For purposes of this schedule, an asset is to be reported as being in nonaccrual status if:
(1) It is maintained on a cash basis because of deterioration in the financial condition of the borrower,
(2) Payment in full of principal or interest is not expected, or
(3) Principal or interest has been in default for a period of 90 days or more unless the asset is both well
secured and in the process of collection.
An asset is "well secured" if it is secured (1) by collateral in the form of liens on or pledges of real or
personal property, including securities, that have a realizable value sufficient to discharge the debt
(including accrued interest) in full, or (2) by the guarantee of a financially responsible party. An asset is
"in the process of collection" if collection of the asset is proceeding in due course either (1) through legal
action, including judgment enforcement procedures, or, (2) in appropriate circumstances, through
collection efforts not involving legal action which are reasonably expected to result in repayment of the
debt or in its restoration to a current status in the near future.
R
For purposes of applying the third test for nonaccrual status listed above, the date on which an asset
reaches nonaccrual status is determined by its contractual terms. If the principal or interest on an asset
becomes due and unpaid for 90 days or more on a date that falls between report dates, the asset should
be placed in nonaccrual status as of the date it becomes 90 days past due and it should remain in
nonaccrual status until it meets the criteria for restoration to accrual status described below.
D
In the following situations, an asset need not be placed in nonaccrual status:
(1) The criteria for accrual of income under the interest method specified in ASC Subtopic 310-30,
Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality (formerly AICPA
Statement of Position 03-3, "Accounting for Certain Loans or Debt Securities Acquired in a Transfer"),
are met for a purchased credit-impaired loan, pool of loans, or debt security accounted for in
accordance with that Subtopic, regardless of whether the loan, the loans in the pool, or debt security
had been maintained in nonaccrual status by its seller. (For purchased credit-impaired loans with
common risk characteristics that are aggregated and accounted for as a pool, the determination of
nonaccrual or accrual status should be made at the pool level, not at the individual loan level.) For
further information, see the Glossary entry for "purchased credit-impaired loans and debt securities."
(2)(1) The asset upon which principal or interest is due and unpaid for 90 days or more is a consumer loan
(as defined for Schedule RC-C, part I, item 6, "Loans to individuals for household, family, and other
personal expenditures") or a loan secured by a 1-to-4 family residential property (as defined for
Schedule RC-C, part I, item 1.c, Loans "Secured by 1-4 family residential properties"). Nevertheless,
such loans should be subject to other alternative methods of evaluation to assure that the bank's net
income is not materially overstated. To the extent that the bank has elected to carry such a loan in
nonaccrual status on its books, the loan must be reported as nonaccrual in this schedule.
FFIEC 031 and 041
RC-N-3
(3-21)
RC-N - PAST DUE
85
FFIEC 031 and 041
RC-N - PAST DUE
(2) For an institution that has not adopted ASU 2016-13, the criteria for accrual of income under the
interest method specified in ASC Subtopic 310-30, Receivables – Loans and Debt Securities Acquired
with Deteriorated Credit Quality, are met for a PCI loan, pool of loans, or debt security accounted for in
accordance with that Subtopic, regardless of whether the loan, the loans in the pool, or debt security
had been maintained in nonaccrual status by its seller. (For PCI loans with common risk
characteristics that are aggregated and accounted for as a pool, the determination of nonaccrual or
accrual status should be made at the pool level, not at the individual loan level.) For further
information, see the Glossary entry for "purchased credit-impaired loans and debt securities."
(3) For an institution that has adopted ASU 2016-13, the following criteria are met for 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”):
AF
T
(a) The institution reasonably estimates the timing and amounts of cash flows expected to be
collected, and
(b) 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.
R
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, regardless of whether a PCD asset is in nonaccrual or accrual status,
an institution is not permitted to accrete the credit-related discount embedded in the purchase price of
such an 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 (fair value for a PCD available-for-sale debt security) in Schedule
RC-N, column C. (For PCD assets for which the institution has made a policy election to maintain
previously existing pools of PCI loans upon adoption of ASU 2016-13, the determination of nonaccrual
or accrual status should be made at the pool level, not the individual asset level.) For further
information, see the Glossary entry for “purchased credit-deteriorated assets.”
As a general rule, a nonaccrual asset may be restored to accrual status when:
(1) None of its principal and interest is due and unpaid, and the bank expects repayment of the remaining
contractual principal and interest; or
D
(2) When it otherwise becomes well secured and in the process of collection.
FFIEC 031 and 041
RC-N-4
(3-21)
(3-21)
RC-N - PAST DUE
86
FFIEC 031 and 041
RC-N - PAST DUE
Definitions (cont.)
For purposes of meeting the first test for restoration to accrual status, the bank must have received
repayment of the past due principal and interest unless, as discussed in the Glossary entry for
"nonaccrual status":
(1) The asset has been restructured in a troubled debt restructuring and qualifies for accrual status;
(2) The asset is a purchased credit-impaired loan, pool of loans, or debt security accounted for in
accordance with ASC Subtopic 310-30 and it meets the criteria for accrual of income under the
interest method specified in that Subtopic; or
AF
T
(3) The borrower has resumed paying the full amount of the scheduled contractual interest and principal
payments on a loan that is past due and in nonaccrual status, even though the loan has not been
brought fully current, and certain repayment criteria are met.
For further information, see the Glossary entry for "nonaccrual status."
Restructured in Troubled Debt Restructurings – A troubled debt restructuring is a restructuring of a loan in
which a bank, for economic or legal reasons related to a borrower's financial difficulties, grants a
concession to the borrower that it would not otherwise consider. For purposes of this schedule, the
concession consists of a modification of terms, such as a reduction of the loan’s stated interest rate,
principal, or accrued interest or an extension of the loan’s maturity date at a stated interest rate lower
than the current market rate for new debt with similar risk, regardless of whether the loan is secured or
unsecured and regardless of whether the loan is guaranteed by the government or by others.
R
Once an obligation has been restructured in a troubled debt restructuring, it continues to be considered a
troubled debt restructuring until paid in full or otherwise settled, sold, or charged off (or meets the
conditions discussed under “Accounting for a Subsequent Restructuring of a Troubled Debt
Restructuring” in the Glossary entry for “troubled debt restructurings). However, if a restructured
obligation is in compliance with its modified terms and the restructuring agreement specifies an interest
rate that at the time of the restructuring is greater than or equal to the rate that the bank was willing to
accept for a new extension of credit with comparable risk, the loan need not continue to be reported as a
troubled debt restructuring in calendar years after the year in which the restructuring took place. A loan
extended or renewed at a stated interest rate equal to the current interest rate for new debt with similar
risk is not considered a troubled debt restructuring. Also, a loan to a third party purchaser of "other real
estate owned" by the reporting bank for the purpose of facilitating the disposal of such real estate is not
considered a troubled debt restructuring.
D
For further information, see the Glossary entry for "troubled debt restructurings."
FFIEC 031 and 041
RC-N-5
(3-19)
RC-N - PAST DUE
87
FFIEC 031 and 041
GLOSSARY
Loss Contingencies: A loss contingency is an existing condition, situation, or set of circumstances that
involves uncertainty as to possible loss that will be resolved when one or more future events occur or
fail to occur. An estimated loss (or expense) from a loss contingency (for example, pending or
threatened litigation) must be accrued by a charge to income if it is probable that an asset has been
impaired or a liability incurred as of the report date and the amount of the loss can be reasonably
estimated.
A contingency that might result in a gain, for example, the filing of an insurance claim, shall not be
recognized as income prior to realization.
For further information, see ASC Subtopic 450-20, Contingencies – Loss Contingencies (formerly
FASB Statement No. 5, "Accounting for Contingencies").
Majority-Owned Subsidiary: See "subsidiaries."
AF
T
Mandatory Convertible Debt: Mandatory convertible debt is a subordinated note or debenture with a
maturity of 12 years or less that obligates the holder to take the common or perpetual preferred stock
of the issuer in lieu of cash for repayment of principal by a date at or before the maturity date of the
debt instrument (so-called "equity contract notes").
Mergers: See "business combinations."
Money Market Deposit Account (MMDA): See "deposits."
Nonaccrual Status: This entry covers, for purposes of these reports, the criteria for placing assets in
nonaccrual status (presented in the general rule below) and related exceptions, the reversal of
previously accrued but uncollected interest, the treatment of cash payments received on nonaccrual
assets and the criteria for cash basis income recognition, the restoration of a nonaccrual asset to
accrual status, and the treatment of multiple extensions of credit to one borrower.
R
General rule – Banks shall not accrue interest, amortize deferred net loan fees or costs, or accrete
discount on any asset (1) which is maintained on a cash basis because of deterioration in the financial
condition of the borrower, (2) for which payment in full of principal or interest is not expected, or (3)
upon which principal or interest has been in default for a period of 90 days or more unless the asset is
both well secured and in the process of collection.
D
An asset is "well secured" if it is secured (1) by collateral in the form of liens on or pledges of real or
personal property, including securities, that have a realizable value sufficient to discharge the debt
(including accrued interest) in full, or (2) by the guarantee of a financially responsible party. An asset is
"in the process of collection" if collection of the asset is proceeding in due course either (1) through
legal action, including judgment enforcement procedures, or, (2) in appropriate circumstances, through
collection efforts not involving legal action which are reasonably expected to result in repayment of the
debt or in its restoration to a current status in the near future.
For purposes of applying the third test for nonaccrual status listed above, the date on which an asset
reaches nonaccrual status is determined by its contractual terms. If the principal or interest on an
asset becomes due and unpaid for 90 days or more on a date that falls between report dates, the asset
should be placed in nonaccrual status as of the date it becomes 90 days past due and it should remain
in nonaccrual status until it meets the criteria for restoration to accrual status described below.
Any state statute, regulation, or rule that imposes more stringent standards for nonaccrual of interest
takes precedence over this instruction.
FFIEC 031 and 041
A-59
(3-201)
(3-21)
GLOSSARY
88
FFIEC 031 and 041
GLOSSARY
Nonaccrual Status (cont.):
Exceptions to the general rule – In the following situations, an asset need not be placed in nonaccrual
status:
AF
T
(1) The criteria for accrual of income under the interest method specified in ASC Subtopic 310-30,
Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality (formerly
AICPA Statement of Position 03-3, “Accounting for Certain Loans or Debt Securities Acquired in a
Transfer”), are met for a purchased credit-impaired loan, pool of loans, or debt security accounted
for in accordance with that Subtopic, regardless of whether the loan, the loans in the pool, or debt
security had been maintained in nonaccrual status by its seller. (For purchased credit-impaired
loans with common risk characteristics that are aggregated and accounted for as a pool, the
determination of nonaccrual or accrual status should be made at the pool level, not at the individual
loan level.) For further information, see the Glossary entry for "purchased credit-impaired loans
and debt securities." For institutions that have adopted ASC Topic 326, Financial Instruments–
Credit Losses, as discussed in the “Definitions” section of the instructions for Schedule RC-N, this
exception is no longer available.
(21)The asset upon which principal or interest is due and unpaid for 90 days or more is a consumer
loan (as defined for Schedule RC-C, part I, item 6, "Loans to individuals for household, family, and
other personal expenditures") or a loan secured by a 1-to-4 family residential property (as defined
for Schedule RC-C, part I, item 1.c, Loans "Secured by 1-4 family residential properties").
Nevertheless, such loans should be subject to other alternative methods of evaluation to assure
that the bank's net income is not materially overstated. However, to the extent that the bank has
elected to carry such a loan in nonaccrual status on its books, the loan must be reported as
nonaccrual in Schedule RC-N, column C.
R
(2) For an institution that has not adopted FASB Accounting Standards Update No. 2016-13
(ASU 2016-13), which governs the accounting for credit losses, the criteria for accrual of income
under the interest method specified in ASC Subtopic 310-30, Receivables – Loans and Debt
Securities Acquired with Deteriorated Credit Quality, are met for a purchased credit-impaired (PCI)
loan, pool of loans, or debt security accounted for in accordance with that Subtopic, regardless of
whether the loan, the loans in the pool, or debt security had been maintained in nonaccrual status
by its seller. (For PCI loans with common risk characteristics that are aggregated and accounted
for as a pool, the determination of nonaccrual or accrual status should be made at the pool level,
not at the individual loan level.) For further information, see the Glossary entry for "purchased
credit-impaired loans and debt securities."
D
(3) For an institution that has adopted ASU 2016-13, the following criteria are met for a purchased
credit-deteriorated (PCD) asset, including a PCD asset that was previously a PCI asset or part of a
pool of PCI loans, that would otherwise be required to be placed in nonaccrual status under the
general rule:
(a) The institution reasonably estimates the timing and amounts of cash flows expected to be
collected, and
(b) 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.
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. 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 Schedule RC-N, column C. (For PCD loans for which the institution has made a policy election
to maintain previously existing pools of PCI loans upon adoption of ASU 2016-13, the
determination of nonaccrual or accrual status should be made at the pool level, not the individual
asset level.) For further information, see the Glossary entry for “purchased credit-deteriorated
assets.”
FFIEC 031 and 041
A-60
(3-201)
(3-21)
GLOSSARY
89
FFIEC 031 and 041
GLOSSARY
Treatment of previously accrued interest – The reversal of previously accrued but uncollected interest
applicable to any asset placed in nonaccrual status should be handled in accordance with generally
accepted accounting principles. Acceptable accounting treatment includes a reversal of all previously
accrued but uncollected interest applicable to assets placed in a nonaccrual status against appropriate
income and balance sheet accounts.
AF
T
For example, for institutions that have not adopted ASC Topic 326, one acceptable method of
accounting for such uncollected interest on a loan placed in nonaccrual status is (1) to reverse all of the
unpaid interest by crediting the "accrued interest receivable" account on the balance sheet, (2) to
reverse the uncollected interest that has been accrued during the calendar year-to-date by debiting the
appropriate "interest and fee income on loans" account on the income statement, and (3) to reverse
any uncollected interest that had been accrued during previous calendar years by debiting the
"allowance for loan and lease losses" account on the balance sheet. The use of this method presumes
that bank management's additions to the allowance through charges to the "provision for loan and
lease losses" on the income statement have been based on an evaluation of the collectability of the
loan and lease portfolios and the "accrued interest receivable" account.
Institutions that have adopted ASC Topic 326 should refer to the Glossary entry for “accrued interest
receivable” for information on the treatment of previously accrued interest.
Treatment of cash payments and criteria for the cash basis recognition of income – When doubt exists
as to the collectibility of the remaining recorded investment in a nonaccrual asset (or the amortized cost
basis of a nonaccrual asset, if the institution has adopted ASC Topic 326), any payments received
must be applied to reduce the recorded investment in, or the amortized cost basis of, the asset, as
applicable, to the extent necessary to eliminate such doubt. Placing an asset in nonaccrual status
does not, in and of itself, require a charge-off, in whole or in part, of the asset's recorded investment or
amortized cost basis, as applicable. However, any identified losses must be charged off.
D
R
While an asset is in nonaccrual status, some or all of the cash interest payments received may be
treated as interest income on a cash basis as long as the remaining recorded investment in, or the
FFIEC 031 and 041
A-61
(3-201)
GLOSSARY
90
FFIEC 031 and 041
GLOSSARY
Nonaccrual Status (cont.):
amortized cost basis of, the asset, as applicable, (i.e., after charge-off of identified losses, if any) is
deemed to be fully collectible.3 A bank's determination as to the ultimate collectibility of the asset's
remaining recorded investment, or amortized cost basis, as applicable, must be supported by a current,
well documented credit evaluation of the borrower's financial condition and prospects for repayment,
including consideration of the borrower's historical repayment performance and other relevant factors.
AF
T
When recognition of interest income on a cash basis is appropriate, it should be handled in accordance
with generally accepted accounting principles. One acceptable accounting practice involves allocating
contractual interest payments among interest income, reduction of the recorded investment in, or the
amortized cost basis of, the asset, as applicable, and recovery of prior charge-offs. If this method is
used, the amount of income that is recognized would be equal to that which would have been accrued
on the asset's remaining recorded investment at the contractual rate. A bank may also choose to
account for the contractual interest in its entirety either as income, reduction of the recorded investment
in, or the amortized cost basis of, the asset, as applicable, or recovery of prior charge-offs, depending
on the condition of the asset, consistent with its accounting policies for other financial reporting
purposes.
Restoration to accrual status – As a general rule, a nonaccrual asset may be restored to accrual status
when (1) none of its principal and interest is due and unpaid, and the bank expects repayment of the
remaining contractual principal and interest, or (2) when it otherwise becomes well secured and in the
process of collection. If any interest payments received while the asset was in nonaccrual status were
applied to reduce the recorded investment in, or the amortized cost basis of, the asset, as applicable,
as discussed in the preceding section of this entry, the application of these payments to the asset's
recorded investment or amortized cost basis, as applicable, should not be reversed (and interest
income should not be credited) when the asset is returned to accrual status.
For purposes of meeting the first test, the bank must have received repayment of the past due principal
and interest unless:, as discussed below,
D
R
(1) Tthe asset has been formally restructured and qualifies for accrual status, as discussed below;
(2) For an institution that has not adopted ASU 2016-13, the asset is a purchased credit-impairedPCI
loan, pool of loans, or debt security accounted for in accordance with ASC Subtopic 310-30 and it
meets the criteria for accrual of income under the interest method specified therein,; or
(3) For an institution that has adopted ASU 2016-13, the asset is a PCD asset and it meets the two
criteria specified in the third exception to the general rule discussed above; or
(4) Tthe borrower has resumed paying the full amount of the scheduled contractual interest and
principal payments on a loan that is past due and in nonaccrual status, even though the loan has
not been brought fully current, and the following two criteria are met. These criteria are, first, that
all principal and interest amounts contractually due (including arrearages) are reasonably assured
of repayment within a reasonable period and, second, that there is a sustained period of
repayment performance (generally a minimum of six months) by the borrower in accordance with
the contractual terms involving payments of cash or cash equivalents. A loan that meets these two
criteria may be restored to accrual status, but must continue to be disclosed as past due in
Schedule RC-N until it has been brought fully current or until it later must be placed in nonaccrual
status. For institutions that have adopted ASC Topic 326, the second exception above, which
applies to purchased credit-impaired assets, is no longer available.
A loan or other debt instrument that has been formally restructured in a troubled debt restructuring so
as to be reasonably assured of repayment (of principal and interest) and of performance according to
its modified terms need not be maintained in nonaccrual status, provided the restructuring and any
charge-off taken on the asset are supported by a current, well documented credit evaluation of the
borrower's financial condition and prospects for repayment under the revised terms. Otherwise, the
3
An asset in nonaccrual status that is subject to the cost recovery method required by ASC Subtopic 325-40,
Investments-Other – Beneficial Interests in Securitized Financial Assets (formerly Emerging Issues Task Force Issue
No. 99-20, "Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial
FFIEC 031 and 041
A-61
(3-201)
(3-21)
GLOSSARY
91
FFIEC 031 and 041
GLOSSARY
D
R
AF
T
Interests That Continue to Be Held by a Transferor in Securitized Financial Assets"), should follow that method for
reporting purposes. In addition, when a PCIpurchased credit-impaired loan, pool of loans, or debt security that is
accounted for in accordance with ASC Subtopic 310-30 (or when a PCDpurchased credit-deteriorated asset that is
accounted for in accordance with ASC Subtopic 326-20, if the institution has adopted ASC Topic 326) has been
placed oin nonaccrual status, the cost recovery method should be used, when appropriate.
FFIEC 031 and 041
A-62
(3-201)
(3-21)
GLOSSARY
92
FFIEC 031 and 041
GLOSSARY
Nonaccrual Status (cont.):
restructured asset must remain in nonaccrual status. The evaluation must include consideration of the
borrower's sustained historical repayment performance for a reasonable period prior to the date on
which the loan or other debt instrument is returned to accrual status. A sustained period of repayment
performance generally would be a minimum of six months and would involve payments of cash or cash
equivalents. (In returning the asset to accrual status, sustained historical repayment performance for a
reasonable time prior to the restructuring may be taken into account.) Such a restructuring must
improve the collectability of the loan or other debt instrument in accordance with a reasonable
repayment schedule and does not relieve the bank from the responsibility to promptly charge off all
identified losses.
AF
T
A troubled debt restructuring may involve a multiple note structure in which, for example, a troubled
loan is restructured into two notes. The first or "A" note represents the portion of the original loan
principal amount that is expected to be fully collected along with contractual interest. The second or
"B" note represents the portion of the original loan that has been charged off and, because it is not
reflected as an asset and is unlikely to be collected, could be viewed as a contingent receivable. For a
troubled debt restructuring of a collateral-dependent loan involving a multiple note structure, the
amount of the “A” note should be determined using the fair value of the collateral. The "A" note may
be returned to accrual status provided the conditions in the preceding paragraph are met and:
(1) there is economic substance to the restructuring and it qualifies as a troubled debt restructuring
under generally accepted accounting principles, (2) the portion of the original loan represented by the
"B" note has been charged off before or at the time of the restructuring, and (3) the "A" note is
reasonably assured of repayment and of performance in accordance with the modified terms.
Until the restructured asset is restored to accrual status, if ever, cash payments received must be
treated in accordance with the criteria stated above in the preceding section of this entry. In addition,
after a formal restructuring, if a restructured asset that has been returned to accrual status later meets
the criteria for placement in nonaccrual status as a result of past due status based on its modified
terms or for any other reasons, the asset must be placed in nonaccrual status.
For further information on formally restructured assets, see the Glossary entry for "troubled debt
restructurings."
D
R
Treatment of multiple extensions of credit to one borrower – As a general principle, nonaccrual status
for an asset should be determined based on an assessment of the individual asset's collectability and
payment ability and performance. Thus, when one loan to a borrower is placed in nonaccrual status, a
bank does not automatically have to place all other extensions of credit to that borrower in nonaccrual
status. When a bank has multiple loans or other extensions of credit outstanding to a single borrower,
and one loan meets the criteria for nonaccrual status, the bank should evaluate its other extensions of
credit to that borrower to determine whether one or more of these other assets should also be placed in
nonaccrual status.
Noninterest-Bearing Account: See "deposits."
Nontransaction Account: See "deposits."
NOW Account: See "deposits."
Offsetting: Offsetting is the reporting of assets and liabilities on a net basis in the balance sheet. Banks
are permitted to offset assets and liabilities recognized in the Consolidated Report of Condition when a
"right of setoff" exists. Under ASC Subtopic 210-20, Balance Sheet – Offsetting (formerly FASB
Interpretation No. 39, "Offsetting of Amounts Related to Certain Contracts"), a right of setoff exists
when all of the following conditions are met:
(1) Each of two parties owes the other determinable amounts. Thus, only bilateral netting is permitted.
FFIEC 031 and 041
A-63
(3-201)
GLOSSARY
93
FFIEC 031 and 041
GLOSSARY
Public Business Entity (cont.):
With respect to the second condition under the fifth criterion, an insured depository institution with
$500 million or more in total assets as of the beginning of its fiscal year is required by Section 36 of the
Federal Deposit Insurance Act and Part 363 of the FDIC’s regulations, “Annual Independent Audits and
Reporting Requirements,” to prepare and make publicly available audited annual U.S. GAAP financial
statements. In certain circumstances, an insured depository institution with $500 million or more in
total assets that is a subsidiary of a holding company may choose to satisfy this annual financial
statement requirement at a holding company level rather than at the institution level. An insured
depository institution of this size that satisfies the financial statement requirement of Section 36 and
Part 363 at either the institution level or the holding company level would meet the fifth criterion’s
second condition.
Purchase Acquisition: See "business combinations."
AF
T
Purchased Credit-Deteriorated Assets: This Glossary entry applies to institutions that have adopted
ASC Topic 326, Financial Instruments–Credit Losses. Institutions that have not adopted ASC
Topic 326 should continue to refer to the Glossary entry for “purchased credit-impaired loans and
debt securities.”
Purchased credit-deteriorated (PCD) assets are acquired financial assets that, at acquisition, have
experienced a more-than-insignificant deterioration in credit quality since origination, as determined by
an acquirer’s assessment.
In accordance with ASC Topic 326, institutions are required to estimate and record an allowance for
credit losses (ACL) for PCD assets at the time of purchase. This acquisition date ACL is added to the
purchase price of the financial assets rather than recording these losses through provisions for credit
losses. This establishes the initial amortized cost basis of the PCD assets. An institution may use
either a discounted or an undiscounted cash flow method at acquisition to determine this ACL.
Subsequent ACL measurements for acquired financial assets with more-than-insignificant credit
deterioration since origination are to be measured under ASC Topic 326 as with (1) originated financial
assets and (2) purchased financial assets that do not have a more-than-insignificant deterioration in
credit quality at acquisition.
D
R
Institutions that measure expected credit losses for PCD assets on a pool basis shall continue to
evaluate whether financial assets in the pool continue to share similar risk characteristics with the other
financial assets in the pool. If there have been changes in credit risk, borrower circumstances,
recognition of a charge-off, or cash collections of interest applied to principal while the asset is in
nonaccrual status, an institution may determine that either the financial asset has similar risk
characteristics with another pool or the credit loss measurement should be performed on an individual
financial asset basis because the financial asset does not share risk characteristics with other financial
assets. Institutions that measure the ACL on a collective basis shall allocate the ACL and any
noncredit discount or premium to the individual PCD assets unless the institution elected the transition
option to account for existing purchased credit-impaired (PCI) financial assetloan pools as PCD pools
upon adoption of ASC Topic 326.
Any difference between the unpaid principal balance of the PCD asset and the amortized cost basis of
the asset as of the acquisition date is the noncredit discount or premium. Provided the asset remains
oin accrual status, the noncredit discount or premium recorded at acquisition is accreted into interest
income over the remaining life of the PCD asset on a level-yield basis. In contrast, regardless of
whether a PCD asset is in nonaccrual or accrual status, an institution is not permitted to accrete the
credit-related discount embedded in the purchase price of the 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). In addition, 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.
ASC Subtopic 310-10, Receivables – Overall, does not prohibit an institution from placing a PCD asset
in nonaccrual status. Because a PCD asset is an acquired financial asset that, at acquisition, has
FFIEC 031 and 041
A-66b
(3-201)
(3-21)
GLOSSARY
94
FFIEC 031 and 041
GLOSSARY
Purchased Credit-Deteriorated Assets (cont.):
experienced a more-than-insignificant deterioration in credit quality since origination, as determined by
an acquiring institution’s assessment, the acquiring institution must determine upon acquisition whether
it is appropriate to place the PCD asset in accrual status, including accreting the noncredit discount or
premium.
AF
T
For purposes of these reports, if an institution has a PCD asset, including a PCD asset that was
previously a PCI asset or part of a pool of PCI loans, that would otherwise be required to be placed in
nonaccrual status (see the Glossary entry for “nonaccrual status”), the institution may elect to accrue
interest income on the PCD asset and not report the PCD asset as being in nonaccrual status if the
following criteria are met:
(a) The institution reasonably estimates the timing and amounts of cash flows expected to be
collected, and
(b) 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.
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. 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 (fair value for a
PCD available-for-sale debt security) in Schedule RC-N, column C.
For PCD assets for which the institution has made a policy election to maintain previously existing
pools of PCI loans upon adoption of ASU 2016-13, the determination of nonaccrual or accrual status
should be made at the pool level, not the individual asset level.
R
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 (fair value for a PCD available-for-sale debt security) as past due in
Schedule RC-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 was previously PCI, but 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.
For further information on the reporting of interest income on PCD assets, institutions should refer
toence the Glossary entry for “nonaccrual status” and ASC Subtopic 310-10, Receivables – Overall.
D
Deferred Tax Asset Considerations – An institution’s provisions for credit losses that increase the
amount of the ACL also increase the amount of the deductible temporary difference associated with the
FFIEC 031 and 041
A-67b
(3-21)
(3-201)
GLOSSARY
95
FFIEC 031 and 041
GLOSSARY
Deposits (cont.):
telephonic (including data transmission) agreement, order, or instruction; or by check,
draft, debit card, or similar order made by the depositor and payable to third parties.
Transfers from savings deposits for purposes of covering overdrafts (overdraft protection
plans) are included under the withdrawal limits specified for savings deposits.
There are no regulatory restrictions on the following types of transfers or withdrawals
from a savings deposit account, regardless of the number:
(1) Transfers for the purpose of repaying loans and associated expenses at the same
depository institution (as originator or servicer).
AF
T
(2) Transfers of funds from this account to another account of the same depositor at
the same institution when made by mail, messenger, automated teller machine, or
in person.
(3) Withdrawals for payment directly to the depositor when made by mail, messenger,
automated teller machine, in person, or by telephone (via check mailed to the
depositor).
Further, for a savings deposit account, no minimum balance is required by regulation,
there is no regulatory limitation on the amount of interest that may be paid, and no
minimum maturity is required (although depository institutions must reserve the right to
require at least seven days' written notice prior to withdrawal as stipulated above for a
savings deposit).
Insert 2
Any depository institution may place restrictions and requirements on savings deposits
in addition to those stipulated above. In the case of such further restrictions, the
account would still be reported as a savings deposit.
R
On the other hand, an account that otherwise meets the definition of a savings deposit
but that authorizes or permits the depositor to exceed the six-transfer/withdrawal rule
shall be reported as a transaction account, as follows:
(1) If the depositor is ineligible to hold a NOW account, such an account is considered
a demand deposit.
D
(2) If the depositor is eligible to hold a NOW account, the account will be considered
either a NOW account, a telephone or preauthorized transfer account, or an ATS
account:
(a) If withdrawals or transfers by check, draft, or similar instrument are permitted
or authorized, the account is considered a NOW account.
(b) If withdrawals or transfers by check, draft, or similar instrument are not
permitted or authorized, the account is considered either an ATS account or a
telephone or preauthorized transfer account.
Regulation D no longer distinguishes between money market deposit accounts
(MMDAs) and other savings deposits. However, these two types of accounts are
defined as follows for purposes of these reports, which call for separate data on each.
FFIEC 031 and 041
A-22
(12-18)
(3-21)
GLOSSARY
96
Insert
Treatment of Accounts where Reporting Institutions Have Suspended Enforcement of the Six
Transfer Limit per Regulation D
Where the reporting institution has suspended the enforcement of the six transfer limit rule on
an account that meets the definition of a savings deposit, the reporting institution is required to
report such deposits as a savings account or a transaction account based on an assessment
of the characteristics of the account as indicated below:
AF
T
1) If the reporting institution does not retain the reservation of right to require at least
seven days' written notice before an intended withdrawal, report the account as a
demand deposit (and as a "transaction account").
D
R
2) If the reporting institution does retain the reservation of right to require at least seven days'
written notice before an intended withdrawal, report the account as either a NOW 1 account
(and as a "transaction account") or as a savings deposit (and as a nontransaction account).
1
The option to report as a NOW account (and a transaction account) is only applicable to institutions that
offer NOW accounts. Institutions that do not offer NOW accounts should continue to report such deposits
as a savings deposit (and as a nontransaction account).
(3-21)
97
FFIEC 031 and 041
GLOSSARY
Deposits (cont.):
(ii) Time deposits, open account are deposits (other than time certificates of deposit) for
which there is in force a written contract with the depositor that neither the whole
nor any part of such deposit may be withdrawn prior to:
(1) the date of maturity which shall be not less than seven days after the date of
the deposit, or
(2) the expiration of a specified period of written notice of not less than seven
days.
AF
T
These deposits include those club accounts, such as Christmas club and vacation
club accounts, that are made under written contracts that provide that no withdrawal
shall be made until a certain number of periodic deposits has been made during a
period of not less than three months, even though some of the deposits are made
within six days of the end of such period.
Time deposits do not include the following categories of liabilities even if they have an
original maturity of seven days or more:
(1) Any deposit or account that otherwise meets the definition of a time deposit but that
allows withdrawals within the first six days after deposit and that does not require an
early withdrawal penalty of at least seven days' simple interest on amounts
withdrawn within those first six days. Such deposits or accounts that meet the
definition of a savings deposit shall be reported as savings deposits; otherwise they
shall be reported as demand deposits.
(2) The remaining balance of a time deposit if a partial early withdrawal is made and the
remaining balance is not subject to additional early withdrawal penalties of at least
seven days' simple interest on amounts withdrawn within six days after each partial
withdrawal. Such time deposits that meet the definition of a savings deposit shall be
reported as savings deposits; otherwise they shall be reported as demand deposits.
Insert 3
D
R
Reporting of Retail Sweep Arrangements Affecting Transaction and Nontransaction Accounts –
In an effort to reduce their reserve requirements, some banks have established “retail sweep
arrangements” or “retail sweep programs.” In a retail sweep arrangement, a depository
institution transfers funds between a customer’s transaction account(s) and that customer’s
nontransaction account(s) (usually savings deposit account(s)) by means of preauthorized or
automatic transfers, typically in order to reduce transaction account reserve requirements
while providing the customer with unlimited access to the funds.
There are three key criteria for retail sweep programs to comply with the Federal Reserve
Regulation D definitions of “transaction account” and “savings deposit:”
(1) A depository institution must establish by agreement with its transaction account
customer two legally separate accounts: a transaction account (a NOW account or
demand deposit account) and a savings deposit account, including those sometimes
called a “money market deposit account” or “MMDA”;
(2) The swept funds must actually be moved from the customer’s transaction account to the
customer’s savings deposit account on the official books and records of the depository
institution as of the close of the business on the day(s) on which the depository
institution intends to report the funds in question as savings deposits and not transaction
accounts, and vice versa. In addition to actually moving the customer’s funds between
accounts and reflecting this movement at the account level:
FFIEC 031 and 041
A-38
(9-20)
(3-21)
GLOSSARY
98
Insert
Reporting of Retail Sweep Arrangements – When a depository institution establishes a retail sweep
program, the depository institution must ensure that its customer account agreements provide for
the existence of two distinct accounts rather than a single account and the funds are actually
transferred between these two accounts as described in the customer contract.
There are two key criteria for retail sweep programs:
A depository institution must establish by agreement with its customer two legally separate
accounts;
AF
T
The swept funds must actually be moved between the customer’s two accounts on the official books
and records of the depository institution as of the close of the business on the day(s) on which the
depository institution intends to report the funds
A retail sweep program may not exist solely in records or on systems that do not constitute official books
and records of the depository institution and that are not used for any purpose other than generating its
Report of Transaction Accounts, Other Deposits and Vault Cash (FR 2900) for submission to the Federal
Reserve.
D
R
Further, for purposes of the Consolidated Reports of Condition and Income, if all of the criteria above are
met, a bank must determine the appropriate reporting of the accounts that are components of a retail
sweep program separately when it reports its quarter-end deposit information in Schedules RC, RC-E,
and RC-O; its quarterly averages in Schedule RC-K; and its interest expense (if any) in Schedule RI.
Thus, when reporting quarterly averages in Schedule RC-K, a bank should include the accounts
(excluding noninterest-bearing demand deposits) involved in the retail sweep arrangements each day or
each week in the appropriate separate items for average deposits. In addition, if the bank pays interest
on accounts involved in retail sweep arrangements, the interest expense reported in Schedule RI should
be allocated between both accounts based on the balances in these accounts during the reporting period.
(3-21)
99
FFIEC 031 and 041
GLOSSARY
Deposits (cont.):
(a) If the depository institution’s general ledger is sufficiently disaggregated to
distinguish between transaction and savings deposit accounts, the aforementioned
movement of funds between the customer’s transaction account and savings
deposit account must be reflected on the general ledger.
(b) If the depository institution’s general ledger is not sufficiently disaggregated, the
distinction may be reflected in supplemental records or systems, but only if such
supplemental records or systems constitute official books and records of the
institution and are subject to the same prudent managerial oversight and controls as
the general ledger.
AF
T
A retail sweep program may not exist solely in records or on systems that do not
constitute official books and records of the depository institution and that are not used
for any purpose other than generating its Report of Transaction Accounts, Other
Deposits and Vault Cash (FR 2900) for submission to the Federal Reserve; and
(3) The maximum number of preauthorized or automatic funds transfers (“sweeps”) out of a
savings deposit account and into a transaction account in a retail sweep program is
limited to not more than six per month. Transfers out of the transaction account and into
the savings deposit account may be unlimited in number.
If any of the three criteria is not met, all swept funds must continue to be reported as
transaction accounts, both for purposes of these reports and of FR 2900 deposit reports.
All three criteria must be met in order to report the nontransaction account component of a
retail sweep program as a nonreservable savings deposit account.
R
Further, for purposes of the Consolidated Reports of Condition and Income, if all three of
the criteria above are met, a bank must report the transaction account and nontransaction
account components of a retail sweep program separately when it reports its quarter-end
deposit information in Schedules RC, RC-E, and RC-O; its quarterly averages in
Schedule RC-K; and its interest expense (if any) in Schedule RI. Thus, when reporting
quarterly averages in Schedule RC-K, a bank should include the amounts held in the
transaction account (if interest-bearing) and the nontransaction savings account components
of retail sweep arrangements each day or each week in the appropriate separate items for
average deposits. In addition, if the bank pays interest on accounts involved in retail sweep
arrangements, the interest expense reported in Schedule RI should be allocated between
the transaction account and the nontransaction (savings) account based on the balances in
these accounts during the reporting period.
D
For additional information, refer to the Federal Reserve Board staff guidance relating to the
requirements for a retail sweep program under Regulation D at
http://www.federalreserve.gov/boarddocs/legalint/FederalReserveAct/2007/20070501/200705
01.pdf.
(III) Interest-bearing-noninterest-bearing deposit distinction –
(a) Interest-bearing deposit accounts consist of deposit accounts on which the issuing depository
institution makes any payment to or for the account of any depositor as compensation for the
use of funds constituting a deposit. Such compensation may be in the form of cash,
merchandise, or property or as a credit to an account. An institution’s absorption of
expenses incident to providing a normal banking function or its forbearance from charging a
fee in connection with such a service is not considered a payment of interest.
FFIEC 031 and 041
A-39
(9-20)
(3-21)
GLOSSARY
100
D
R
AF
T
Note: The proposed effective date for the proposed revisions to the instructions for Schedule
RC-B and Schedule RC-C, Part I, on pages 102 through 105 is TBD.
101
FFIEC 031 and 041
Item No.
RC-B - SECURITIES
Caption and Instructions
NOTE: Item 7 is to be completed only by institutions that have not adopted FASB Accounting Standards
Update No. 2016-01 (ASU 2016-01), which includes provisions governing the accounting for investments
in equity securities, including investment in mutual funds, and eliminates the concept of available-for-sale
equity securities. ASU 2016-01 requires holdings of equity securities with readily determinable fair values
(except those accounted for under the equity method or that result in consolidation) to be measured at fair
value with changes in the fair value recognized through net income.
Institutions that have adopted ASU 2016-01 should leave item 7 blank and report their holdings of equity
securities with readily determinable fair values not held for trading in Schedule RC, item 2.c.
7
AF
T
For institutions that are public business entities, as defined in U.S. GAAP, ASU 2016-01 is effective for
fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For
example, an institution with a calendar year fiscal year that is a public business entity must begin to apply
ASU 2016-01 in its Call Report for March 31, 2018. For all other institutions, ASU 2016-01 is effective for
fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after
December 15, 2019. For example, an institution with a calendar year fiscal year that is not a public
business entity must begin to apply ASU 2016-01 in its Call Report for December 31, 2019. Early
application of ASU 2016-01 is permitted for all institutions that are not public business entities as of
fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.
Unallocated last-of-layer fair value hedge basis adjustments. Report the total amount of last-of-layer
fair value hedge basis adjustments (FVHBA) not allocated to individual AFS debt securities in column C
only.
As defined in Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815), “Targeted
Improvements to Accounting for Hedging Activities” (ASU 2017-02), the last-of-layer method was added
to allow entities to apply hedge accounting to a portfolio of prepayable fixed-rate financial assets or one or
more beneficial interests secured by a portfolio of prepayable financial instruments. Under ASU 2017-12,
different types of qualifying assets can be grouped together in a last-of-layer hedge.
R
Due to the aggregation of assets in a last-of-layer closed portfolio, institutions may find it challenging to
allocate the last-of-layer FVHBAs to the individual AFS debt security level. As such, an institution that
applies the last-of-layer method to a closed portfolio of AFS debt securities is not required to allocate the
portfolio-level, last-of-layer FVHBAs to a more granular level and should report these unallocated
amounts in this item 7, column C.
D
If the amount to be reported in this item represents a reduction in the amounts reported in Schedule RCB, items 1 through 6, column C, report the amount with a minus (-) sign.
Investments in mutual funds and other equity securities with readily determinable fair
values. Institutions that have not adopted ASU 2016-01 should report in columns C and D
the historical cost and fair value, respectively, of all investments in mutual funds and other
equity securities (as defined in ASC Topic 320, Investments-Debt and Equity Securities
(formerly FASB Statement No. 115, “Accounting for Certain Investments in Debt and Equity
Securities”)) with readily determinable fair values. Such securities include, but are not limited
to, money market mutual funds, mutual funds that invest solely in U.S. Government
securities, common stock, and perpetual preferred stock. Perpetual preferred stock does not
have a stated maturity date and cannot be redeemed at the option of the investor, although it
may be redeemable at the option of the issuer.
According to ASC Topic 320, the fair value of an equity security is readily determinable if
sales prices or bid-and-asked quotations are currently available on a securities exchange
registered with the U.S. Securities and Exchange Commission (SEC) or in the over-thecounter market, provided that those prices or quotations for the over-the-counter market are
publicly reported by the National Association of Securities Dealers Automated Quotations
FFIEC 031 and 041
RC-B-12
(6-18)
TBD
RC-B - SECURITIES
102
FFIEC 031 and 041
RC-B - SECURITIES
systems or by OTC Markets Group Inc. (“Restricted stock” meets that definition if the
restriction terminates within one year.) The fair value of an equity security traded only in a
foreign market is readily determinable if that foreign market is of a breadth and scope
comparable to one of the U.S. markets referred to above. The fair value of an investment in
a mutual fund is readily determinable if the fair value per share (unit) is determined and
published and is the basis for current transactions.
Investments in mutual funds and other equity securities with readily determinable fair values
may have been purchased by the reporting bank or acquired for debts previously contracted.
D
R
AF
T
Include in this item common stock and perpetual preferred stock of the Federal National
Mortgage Association (Fannie Mae), common stock and perpetual preferred stock of the
Federal Home Loan Mortgage Corporation (Freddie Mac), Class A voting and Class C
non-voting common stock of the Federal Agricultural Mortgage Corporation (Farmer Mac),
and common and preferred stock of SLM Corporation (the private-sector successor to the
Student Loan Marketing Association).
FFIEC 031 and 041
RC-B-12
(6-18)
TBD
RC-B - SECURITIES
103
FFIEC 031 and 041
Item No.
RC-B - SECURITIES
Caption and Instructions
7 Exclude from investments in mutual funds and other equity securities with readily
(cont.)
determinable fair values:
(1) Federal Reserve Bank stock (report as an equity security without a readily
determinable fair value in Schedule RC-F, item 4).
(2) Federal Home Loan Bank stock (report as an equity security without
a readily determinable fair value in Schedule RC-F, item 4).
(3) Common and preferred stocks that do not have readily determinable fair
values, such as stock of bankers' banks and Class B voting common stock of
the Federal Agricultural Mortgage Corporation (Farmer Mac) (report in
Schedule RC-F, item 4).
AF
T
(4) Preferred stock that by its terms either must be redeemed by the issuing
enterprise or is redeemable at the option of the investor (i.e., redeemable or
limited-life preferred stock), including trust preferred securities subject to
mandatory redemption (report such preferred stock as an other debt security in
Schedule RC-B, item 6, above).
(5) "Restricted stock," i.e., equity securities for which sale is restricted by
governmental or contractual requirement (other than in connection with being
pledged as collateral), except if that requirement terminates within one year or if
the holder has the power by contract or otherwise to cause the requirement to
be met within one year (if the restriction does not terminate within one year,
report "restricted stock" as an equity security that does not have a readily
determinable fair value in Schedule RC-F, item 4).
(6) Participation certificates issued by a Federal Intermediate Credit Bank, which
represent nonvoting stock in the bank (report as an equity security that does
not have a readily determinable fair value in Schedule RC-F, item 4).
D
R
(7) Minority interests held by the reporting bank in any companies not meeting the
definition of associated company (report as equity securities that do not have a
readily determinable fair value in Schedule RC-F, item 4), except minority
holdings that indirectly represent bank premises (report in Schedule RC, item 6)
or other real estate owned (report in Schedule RC, item 7), provided that the fair
value of any capital stock representing the minority interest is not readily
determinable. (See the Glossary entry for "subsidiaries" for the definition of
associated company.)
(8) Equity holdings in those corporate joint ventures over which the reporting bank
does not exercise significant influence (report as equity securities that do not
have a readily determinable fair value in Schedule RC-F, item 4), except
equity holdings that indirectly represent bank premises (report in Schedule
RC, item 6) or other real estate owned (report in Schedule RC, item 7). (See
the Glossary entry for "subsidiaries" for the definition of corporate joint
venture.)
(9) Holdings of capital stock of and investments in unconsolidated subsidiaries,
associated companies, and those corporate joint ventures over which the
reporting bank exercises significant influence (report in Schedule RC, item 8,
"Investments in unconsolidated subsidiaries and associated companies").
8
Total. Report the sum of items 1 through 7. For institutions that have not adopted FASB
Accounting Standards Update No. 2016-13 (ASU 2016-13), which governs the accounting for
credit losses, the total of column A for this item must equal Schedule RC, item 2.a, "Held-tomaturity securities." For institutions that have adopted ASU 2016-13, the total of column A
for this item must equal Schedule RC, item 2.a, "Held-to-maturity securities," plus
FFIEC 031 and 041
RC-B-13
(3-19)
TBD
RC-B - SECURITIES
104
FFIEC 031 and 041
RC-C - LOANS AND LEASES
Part I. (cont.)
Item No.
Caption and Instructions
10
(cont.)
appropriate subitems of column A a breakdown of these leases between leases to individuals
for household, family, and other personal expenditures and all other leases. On the
FFIEC 031, all banks should report the total amount of these leases in domestic offices in
column B and a breakdown of these leases for the fully consolidated bank between leases to
individuals for household, family, and other personal expenditures and all other leases.
These balances should include the estimated residual value of leased property and must be
net of unearned income. For further discussion of leases where the bank is the lessor, refer
to the Glossary entry for "lease accounting."
Include all leases to states and political subdivisions in the U.S. in this item.
AF
T
NOTE: Items 10.a and 10.b are not applicable to banks filing the FFIEC 041 report forms that have less
than $300 million total assets.
Leases to individuals for household, family, and other personal expenditures. Report
in column A all outstanding balances relating to direct financing and leveraged leases on
property acquired by the fully consolidated bank for leasing to individuals for household,
family, and other personal expenditures (i.e., consumer leases). For further information on
extending credit to individuals for consumer purposes, refer to the instructions for
Schedule RC-C, part I, item 6.d, “Other consumer loans.”
10.b
All other leases. Report in column A all outstanding balances relating to all other direct
financing and leveraged leases on property acquired by the fully consolidated bank for
leasing to lessees other than for household, family, and other personal expenditure purposes.
11
LESS: Any unearned income on loans reflected in items 1-9 above. To the extent
possible, the preferred treatment is to report the specific loan categories net of both unearned
income and net unamortized loan fees. A reporting bank should enter (on the FFIEC 041, in
column B; on the FFIEC 031, in columns A and B, as appropriate) unearned income and net
unamortized loan fees only to the extent that these amounts are included in (i.e., not
deducted from) the various loan items of this schedule (Schedule RC-C, part I, items 1
through 9). If a bank reports each loan item of this schedule net of both unearned income
and net unamortized loan fees, enter a zero in this item.
R
10.a
D
As defined in Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic
815), “Targeted Improvements to Accounting for Hedging Activities” (ASU 2017-12), the lastof-layer method was added to allow entities to apply hedge accounting to a portfolio of
prepayable fixed-rate financial assets or one or more beneficial interests secured by a portfolio of
prepayable financial instruments. Under ASU 2017-12, different types of qualifying
assets can be grouped together in a last-of-layer hedge.
Due to the aggregation of assets in a last-of-layer closed portfolio, institutions may find it challenging to
allocate the last-of-layer fair value hedge basis adjustments (FVHBAs) to the individual loan level. As
such, an institution that applies the last-of-layer method to a closed portfolio of loans is not required to
allocate the portfolio-level, last-of-layer FVHBAs to a more granular level and should include these
unallocated amounts in this item 11.
If an institution reports each loan item in this schedule net of both unearned income and net
unamortized loan fees and has no unallocated last-of-layer FVHBAs applicable to loans, enter a zero
in this item. If the amount to be reported in this item represents an addition to the amounts reported in
Schedule RC-C, Part I, items 1 through 10, because of unallocated last-of-layer FVHBAs, report the
amount with a minus (-) sign.
Do not include net unamortized direct loan origination costs in this item; such costs must be
added to the related loan balances reported in Schedule RC-C, part I, items 1 through 9. In
addition, do not include unearned income on lease financing receivables in this item. Leases
should be reported net of unearned income in Schedule RC-C, part I, item 10.
12
Total loans and leases held for investment and held for sale. On the FFIEC 041, report
105
TBD
D
R
AF
T
The Call Report instructional clarifications to Schedule RC and Schedule RC-B for pledged
equity securities and the Glossary entry for “Accrued Interest Receivable” on pages 107 to 111
would take effect December 31, 2020. The instructional clarifications to Schedule RI for shared
fees and commissions from securities-related and insurance activities on pages 112 to 113
would take effect March 31, 2021.
106
FFIEC 031 and 041
Item No.
RC - BALANCE SHEET
Caption and Instructions
2
Securities:
2.a
Held-to-maturity securities. For institutions that have not adopted FASB Accounting
Standards Update No. 2016-13 (ASU 2016-13), which governs the accounting for credit
losses, report the amount from Schedule RC-B, item 8, column A, "Total amortized cost."
For institutions that have adopted ASU 2016-13, report the amortized cost of held-to-maturity
securities net of any applicable allowances for credit losses, i.e., report the amount from
Schedule RC-B, item 8, column A, “Total amortized cost,” less the amount of allowances
for credit losses on held-to-maturity securities reported in Schedule RI-B, Part II, item 7,
column B, “Balance end of current period.”
Available-for-sale securities. Report the amount from Schedule RC-B, item 8, column D,
"Total fair value."
AF
T
2.b
NOTE: Item 2.c is to be completed only by institutions that have adopted FASB Accounting Standards
Update No. 2016-01 (ASU 2016-01), which includes provisions governing the accounting for investments
in equity securities, including investment in mutual funds, and eliminates the concept of available-for-sale
equity securities. ASU 2016-01 requires holdings of equity securities (except those accounted for under
the equity method or that result in consolidation), including other ownership interests (such as
partnerships, unincorporated joint ventures, and limited liability companies), to be measured at fair value
with changes in the fair value recognized through net income. However, an institution may choose to
measure equity securities and other equity investments that do not have readily determinable fair values
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.
Institutions that have not adopted ASU 2016-01 should leave item 2.c blank and report their holdings of
equity securities with readily determinable fair values not held for trading as available-for-sale equity
securities in Schedule RC-B, item 7, and in Schedule RC, item 2.b.
D
R
For institutions that are public business entities, as defined in U.S. GAAP, ASU 2016-01 is effective for
fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For
example, an institution with a calendar year fiscal year that is a public business entity must begin to apply
ASU 2016-01 in its Call Report for March 31, 2018. For all other institutions, ASU 2016-01 is effective for
fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after
December 15, 2019. For example, an institution with a calendar year fiscal year that is not a public
business entity must begin to apply ASU 2016-01 in its Call Report for December 31, 2019. Early
application of ASU 2016-01 is permitted for all institutions that are not public business entities as of
fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.
2.c
Equity securities with readily determinable fair values not held for trading. Report the
fair value of all investments in mutual funds and other equity securities (as defined in ASC
Topic 321, Investments-Equity Securities) with readily determinable fair values that are not
held for trading. Such securities include, but are not limited to, money market mutual funds,
mutual funds that invest solely in U.S. Government securities, common stock, and perpetual
preferred stock. Perpetual preferred stock does not have a stated maturity date and cannot
be redeemed at the option of the investor, although it may be redeemable at the option of the
issuer.
Exclude equity securities held for trading from Schedule RC, item 2.c. For purposes of the
Call Report balance sheet, trading activities typically include (a) regularly underwriting or
dealing in securities; interest rate, foreign exchange rate, commodity, equity, and credit
derivative contracts; other financial instruments; and other assets for resale, (b) acquiring or
taking positions in such items principally for the purpose of selling in the near term or
FFIEC 031 and 041
RC-5
(6-20)
RC - BALANCE SHEET
107
FFIEC 031 and 041
RC - BALANCE SHEET
Item No.
Caption and Instructions
2.c
(cont.)
otherwise with the intent to resell in order to profit from short-term price movements, and
(c) acquiring or taking positions in such items as accommodations to customers, provided
that acquiring or taking such positions meets the definition of “trading” in ASC Topic 320,
Investments–Debt Securities, and ASC Topic 815, Derivatives and Hedging, and the
definition of “trading purposes” in ASC Topic 815. When an institution’s holdings of equity
securities with readily determinable fair values fall within the scope of the preceding
description of trading activities, the equity securities should be reported as trading assets in
Schedule RC, item 5. Otherwise, the equity securities should be reported in this item 2.c.
AF
T
According to ASC Topic 321, the fair value of an equity security is readily determinable if sales
prices or bid-and-asked quotations are currently available on a securities exchange registered
with the U.S. Securities and Exchange Commission (SEC) or in the over-the-counter market,
provided that those prices or quotations for the over-the-counter market are publicly reported
by the National Association of Securities Dealers Automated Quotations systems or by
OTC Markets Group Inc. (“Restricted stock” meets that definition if the restriction terminates
within one year.) The fair value of an equity security traded only in a foreign market is readily
determinable if that foreign market is of a breadth and scope comparable to one of the
U.S. markets referred to above. The fair value of an investment in a mutual fund (or in a
structure similar to a mutual fund, i.e., a limited partnership or a venture capital entity) is
readily determinable if the fair value per share (unit) is determined and published and is the
basis for current transactions.
Investments in mutual funds and other equity securities with readily determinable fair values
may have been purchased by the reporting institution or acquired for debts previously
contracted.
R
The fair value of pledged
equity securities with readily
determinable fair values not
held for trading reported in
Schedule RC, item 2.c should
be included in the amount
reported in Schedule RC-B,
Memorandum item 1.
Include in this item common stock and perpetual preferred stock of the Federal National
Mortgage Association (Fannie Mae), common stock and perpetual preferred stock of the
Federal Home Loan Mortgage Corporation (Freddie Mac), Class A voting and Class C
non-voting common stock of the Federal Agricultural Mortgage Corporation (Farmer Mac),
and common and preferred stock of SLM Corporation (the private-sector successor to the
Student Loan Marketing Association).
Exclude from equity securities with readily determinable fair values not held for trading:
(1) Federal Reserve Bank stock (report as an equity investment without a readily
determinable fair value in Schedule RC-F, item 4).
D
(2) Federal Home Loan Bank stock (report as an equity investment without a readily
determinable fair value in Schedule RC-F, item 4).
(3) Common and preferred stocks without readily determinable fair values, such as stock of
bankers' banks and Class B voting common stock of the Federal Agricultural Mortgage
Corporation (Farmer Mac) (report in Schedule RC-F, item 4).
(4) Preferred stock that by its terms either must be redeemed by the issuing enterprise or is
redeemable at the option of the investor (i.e., redeemable or limited-life preferred stock),
including trust preferred securities subject to mandatory redemption (report such
preferred stock as an other debt security in Schedule RC-B, item 6).
(5) "Restricted stock," i.e., equity securities for which sale is restricted by governmental or
contractual requirement (other than in connection with being pledged as collateral),
except if that requirement terminates within one year or if the holder has the power by
contract or otherwise to cause the requirement to be met within one year (if the restriction
does not terminate within one year, report "restricted stock" as an equity investment
without a readily determinable fair value in Schedule RC-F, item 4).
FFIEC 031 and 041
RC-6
(6-20)
(12-20)
RC - BALANCE SHEET
108
FFIEC 031 and 041
RC - BALANCE SHEET
Item No.
Caption and Instructions
2.c
(cont.)
(6) Participation certificates issued by a Federal Intermediate Credit Bank, which represent
nonvoting stock in the bank (report as an equity investment without a readily
determinable fair value in Schedule RC-F, item 4).
(7) Minority interests held by the reporting institution in any companies not meeting the
definition of associated company (report as equity investments without readily
determinable fair values in Schedule RC-F, item 4), except minority holdings that
indirectly represent bank premises (report in Schedule RC, item 6) or other real estate
owned (report in Schedule RC, item 7), provided that the fair value of any capital stock
representing the minority interest is not readily determinable. (See the Glossary entry for
"subsidiaries" for the definition of associated company.)
AF
T
(8) Equity holdings in those corporate joint ventures over which the reporting institution does
not exercise significant influence (report as equity investments without readily
determinable fair value in Schedule RC-F, item 4), except equity holdings that indirectly
represent bank premises (report in Schedule RC, item 6) or other real estate owned
(report in Schedule RC, item 7). (See the Glossary entry for "subsidiaries" for the
definition of corporate joint venture.)
(9) Holdings of capital stock of and investments in unconsolidated subsidiaries, associated
companies, and those corporate joint ventures over which the reporting bank exercises
significant influence (report in Schedule RC, item 8, "Investments in unconsolidated
subsidiaries and associated companies").
Federal funds sold and securities purchased under agreements to resell:
3.a
Federal funds sold (in domestic offices). Report the outstanding amount of federal funds
sold, i.e., immediately available funds lent (in domestic offices) under agreements or
contracts that have an original maturity of one business day or roll over under a continuing
contract, excluding such funds lent in the form of securities purchased under agreements to
resell (which should be reported in Schedule RC, item 3.b) and overnight lending for
commercial and industrial purposes (which generally should be reported in Schedule RC,
item 4.b). Transactions that are to be reported as federal funds sold may be secured or
unsecured or may involve an agreement to resell loans or other instruments that are not
securities.
R
3
D
Immediately available funds are funds that the purchasing bank can either use or dispose of
on the same business day that the transaction giving rise to the receipt or disposal of the
funds is executed. A continuing contract, regardless of the terminology used, is an
agreement that remains in effect for more than one business day, but has no specified
maturity and does not require advance notice of the lender or the borrower to terminate.
Report federal funds sold on a gross basis; i.e., do not net them against federal funds
purchased, except to the extent permitted under ASC Subtopic 210-20, Balance Sheet –
Offsetting (formerly FASB Interpretation No. 39, “Offsetting of Amounts Related to Certain
Contracts”). Include the fair value of federal funds sold that are accounted for at fair value
under a fair value option.
Also exclude from federal funds sold:
(1) Sales of so-called "term federal funds" (as defined in the Glossary entry for "federal funds
transactions") (report in Schedule RC, item 4.b, "Loans and leases held for investment").
FFIEC 031 and 041
RC-6a
(3-19)
RC - BALANCE SHEET
109
FFIEC 031 and 041
RC-B - SECURITIES
Memoranda
Item No.
Caption and Instructions
Pledged securities. Report the amortized cost of all held-to-maturity debt securities
included in Schedule RC-B, column A, above; and the fair value of all available-for-sale
debt securities included in Schedule RC-B, column D, above; and the fair value of all equity
securities with readily determinable fair values not held for trading included in Schedule RC,
item 2.c that are pledged to secure deposits, repurchase transactions, or other borrowings
(regardless of the balance of the deposits or other liabilities against which the securities are
pledged); as performance bonds under futures or forward contracts; or for any other
purpose. Include as pledged securities:
1
AF
T
(1) Held-to-maturity debt securities, and available-for-sale debt securities, and equity securities
with readily determinable fair values not held for trading that have been "loaned" in
securities borrowing/lending transactions that do not qualify as sales under ASC Topic
860, Transfers and Servicing (formerly FASB Statement No. 140, “Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities," as amended).
(2) Held-to-maturity debt securities,and available-for-sale debt securities, and equity securities
with readily determinable fair values not held for trading held by consolidated variable
interest entities (VIEs) that can be used only to settle obligations of the same consolidated
VIEs (the amounts of which are also reported in Schedule RC-V, item 1.b).
R
2
(3) Held-to-maturity debt securities,and available-for-sale debt securities, and equity securities
with readily determinable fair values not held for trading owned by consolidated insurance
subsidiaries and held in custodial trusts that are pledged to insurance companies external
to the consolidated bank.
Maturity and repricing data for debt securities. Report in the appropriate subitem maturity
and repricing data for the bank's holdings of debt securities (reported in Schedule RC-B,
items 1 through 6 above). Report the amortized cost of held-to-maturity debt securities and
the fair value of available-for-sale debt securities in the appropriate maturity and repricing
subitems. Exclude from Memorandum item 2 the bank's holdings of equity securities with
readily determinable fair values (reported in Schedule RC-B, item 7, above) (e.g.,
investments in mutual funds, common stock, preferred stock). Also exclude those debt
securities that are reported as "nonaccrual" in Schedule RC-N, item 10, column C.
D
The sum of Memorandum items 2.a.(1) through 2.c.(2) plus the amount of any nonaccrual
debt securities included in Schedule RC-N, item 10, column C, must equal Schedule RC-B,
sum of items 1 through 6, columns A and D.
On the FFIEC 031, banks that have more than one office in foreign countries (including
offices of consolidated foreign subsidiaries but excluding "shell" branches, offices in Puerto
Rico or U.S. territories and possessions, and IBFs) have the option of excluding the smallest
of such non-U.S. offices from Memorandum item 2. Such banks may omit the smallest of
their offices in foreign countries (other than "shell" branches) when arrayed by total assets
provided that the assets of the excluded offices do not exceed 50 percent of the total assets
of the bank's offices (excluding "shells") in foreign countries and do not exceed 10 percent of
the total consolidated assets of the reporting bank as of the report date. (Note: In
determining the total assets of offices in foreign countries eligible for exclusion from these
memorandum items, banks should exclude not only "shell" branches but also offices in
Puerto Rico and U.S. territories and possessions, domestic offices of Edge and Agreement
subsidiaries, and IBFs even though these are sometimes referred to as "foreign" offices.
Also, the asset totals for all offices in foreign countries should be the component of the total
consolidated assets, i.e., should exclude all intrabank transactions.)
For purposes of this memorandum item, the following definitions apply:
A fixed interest rate is a rate that is specified at the origination of the transaction, is fixed and
invariable during the term of the debt security, and is known to both the borrower and the
FFIEC 031 and 041
RC-B-14
(3-19)
(12-20)
RC-B - SECURITIES
110
FFIEC 031 and 041
GLOSSARY
Accrued Interest Receivable: Accrued interest receivable is the recorded amount of interest that has
been earned in current or prior periods on interest-bearing assets that has not yet been collected.
For institutions that have not adopted ASC Topic 326, Financial Instruments–Credit Losses, refer to
the Glossary entry on “nonaccrual status” for the treatment of previously accrued interest. Accrued
interest receivable that is not reported elsewhere on Schedule RC, Balance Sheet, as a component of
the balance sheet amount of the associated financial asset should be reported in Schedule RC-F,
item 1, “Accrued interest receivable.”
For institutions that have adopted ASC Topic 326, ASC Topic 326 permits a series of accounting policy
elections related to accrued interest receivable. These elections are made upon adoption of ASC
Topic 326 and may differ by class of financing receivable or major security- type level. The available
accounting policy elections are:
AF
T
(1) Institutions may elect to separately present accrued interest receivable separately from the
associated related financial asset. The accrued interest receivable is presented net of an
allowance for credit losses (ACL), if any. An institution that elects to present accrued interest
receivable separately from the amount reported for the related financial asset (e.g., loans, leases,
debt securities, and other interest-bearing assets) on Schedule RC, Balance Sheet (rather than
as a component of the balance sheet amount reported for the related financial asset), should
report the accrued interest receivable in Schedule RC-F, item 1, “Accrued interest receivable.”
(2) Institutions that charge off uncollectible accrued interest receivable in a timely manner, i.e., in
accordance with the Glossary entry for “nonaccrual status,” may elect, at the class of financing
receivable or the major security-type level, not to not measure an ACL for accrued interest
receivable. For purposes of these reports, if an institution makes this policy election, the
institution should debit (i.e., reduce) the appropriate category of interest income on Schedule RI,
Income Statement, for the amount of uncollectible accrued interest receivable being charged off.
If an institution does not make this policy election for a particular class of financing receivable or
major security type, the institution should measure an allowance for credit lossesACL on accrued
interest receivable for that class of financing receivable or major security type and should charge
off any uncollectible accrued interest receivable against the allowance for credit losses.
R
An institution may make a separate policy election, at the class of financing receivable or major security
type level, to charge off any uncollectible accrued interest receivable by reversing interest income,
recognizing credit loss expense (i.e., provision expense), or a combination of both. If an institution
reverses interest income, the institution should debit (i.e., reduce) the appropriate category of interest
income on Schedule RI, Income Statement, for the amount of uncollectible accrued interest receivable
being charged off. Furthermore, for purposes of these reports, an institution may charge off
uncollectible accrued interest receivable against an ACL by debiting (i.e., reducing) the ACL.
D
See also the Glossary entries for “allowance for loan and lease losses” or “allowance for credit losses”
as applicable, “amortized cost basis,” and “nonaccrual status.”
Accrued Interest Receivable Related to Credit Card Securitizations: In a typical credit card
securitization, an institution transfers a pool of receivables and the right to receive the future collections
of principal (credit card purchases and cash advances), finance charges, and fees on the receivables
to a trust. If a securitization transaction qualifies as a sale under ASC Topic 860, Transfers and
Servicing, the selling institution removes the receivables that were sold from its reported assets and
continues to carry any retained interests in the transferred receivables on its balance sheet. The
“accrued interest receivable” (AIR) asset typically consists of the seller’s retained interest in the
investor’s portion of (1) the accrued fees and finance charges that have been billed to customer
accounts, but have not yet been collected (“billed but uncollected”), and (2) the right to finance charges
that have been accrued on cardholder accounts, but have not yet been billed (“accrued but unbilled”).
FFIEC 031 and 041
A-4
(129-20)
GLOSSARY
111
FFIEC 031 and 041
RI - INCOME STATEMENT
Caption and Instructions
5.d
Income from securities-related and insurance activities. For items 5.d.(1) and 5.d.(5) below, when an institution
partners with, or otherwise joins with, a third party to conduct securities brokerage, investment banking, investment
advisory, securities underwriting, insurance and annuity sales, insurance underwriting, or any other securities-related
and insurance activities, and any fees and commissions generated by these activities are shared with the third party,
the reporting institution should report its share of the fees or commissions in the appropriate subitem of this item 5.d
rather than reporting the gross fees and commissions in the appropriate subitem and the third party’s share of the
fees and commissions in Schedule RI, item 7.d, “Other noninterest expense.”
5.d.(1)
Fees and commissions from securities brokerage. Report fees and commissions from
securities brokerage activities, from the sale and servicing of mutual funds, from the purchase
and sale of securities and money market instruments where the bank is acting as agent for
other banks or customers, and from the lending of securities owned by the bank or by bank
customers (if these fees and commissions are not included in Schedule RI, item 5.a, “Income
from fiduciary activities,” or item 5.c, “Trading revenue”). However, exclude fees and
commissions from the sale of annuities (fixed, variable, and other) to bank customers by the
bank or any securities brokerage subsidiary (report such income in Schedule RI, item 5.d.(3),
“Fees and commissions from annuity sales”).
AF
T
Item No.
Also include the bank’s proportionate share of the income or loss before discontinued
operations from its investments in equity method investees that are principally engaged in
securities brokerage activities. Equity method investees include unconsolidated subsidiaries;
associated companies; and corporate joint ventures, unincorporated joint ventures, general
partnerships, and limited partnerships over which the bank exercises significant influence.
5.d.(2)
Investment banking, advisory, and underwriting fees and commissions. Report fees and
commissions from underwriting (or participating in the underwriting of) securities, private
placements of securities, investment advisory and management services, merger and
acquisition services, and other related consulting fees. Include fees and commissions from
the placement of commercial paper, both for transactions issued in the bank's name and
transactions in which the bank acts as an agent for a third party issuer.
R
Also include the bank’s proportionate share of the income or loss before discontinued
operations from its investments in equity method investees that are principally engaged in
investment banking, advisory, or securities underwriting activities. Equity method investees
include unconsolidated subsidiaries; associated companies; and corporate joint ventures,
unincorporated joint ventures, general partnerships, and limited partnerships over which the
bank exercises significant influence.
Fees and commissions from annuity sales. Report fees and commissions from sales of
annuities (fixed, variable, and other) by the bank and any subsidiary of the bank and fees
earned from customer referrals for annuities to insurance companies and insurance agencies
external to the consolidated bank. Also include management fees earned from annuities.
D
5.d.(3)
However, exclude fees and commissions from sales of annuities by the bank's trust
department (or by a consolidated trust company subsidiary) that are executed in a fiduciary
capacity (report in Schedule RI, item 5.a, "Income from fiduciary activities").
Also include the bank’s proportionate share of the income or loss before discontinued
operations from its investments in equity method investees that are principally engaged in
annuity sales. Equity method investees include unconsolidated subsidiaries; associated
companies; and corporate joint ventures, unincorporated joint ventures, general partnerships,
and limited partnerships over which the bank exercises significant influence.
5.d.(4)
Underwriting income from insurance and reinsurance activities. Report the amount of
premiums earned by bank subsidiaries engaged in insurance underwriting or reinsurance
activities. Include earned premiums from (a) life and health insurance and (b) property and
casualty insurance, whether (direct) underwritten business or ceded or assumed (reinsured)
business. Insurance premiums should be reported net of any premiums transferred to other
insurance underwriters/reinsurers in conjunction with reinsurance contracts.
FFIEC 031 and 041
RI-11
(39-2116)
RI - INCOME STATEMENT
112
FFIEC 031 and 041
RI - INCOME STATEMENT
Item No.
Caption and Instructions
5.d.(4)
(cont.)
Also include the bank's proportionate share of the income or loss before discontinued
operations from its investments in equity method investees that are principally engaged in
insurance underwriting or reinsurance activities. Equity method investees include
unconsolidated subsidiaries; associated companies; and corporate joint ventures,
unincorporated joint ventures, general partnerships, and limited partnerships over which the
bank exercises significant influence.
Exclude income from sales and referrals involving insurance products and annuities (see the
instructions for Schedule RI, items 5.d.(5) and 5.d.(3), respectively, for information on
reporting such income).
5.d.(5)
Income from other insurance activities. Report income from insurance product sales and
referrals, including:
AF
T
(1) Service charges, commissions, and fees earned from insurance sales, including credit,
life, health, property, casualty, and title insurance products.
(2) Fees earned from customer referrals for insurance products to insurance companies and
insurance agencies external to the consolidated bank.
Also include management fees earned from separate accounts and universal life products.
Exclude income from annuity sales and referrals (see the instructions for Schedule RI,
item 5.d.(3), above, for information on reporting such income).
R
Also include the bank's proportionate share of the income or loss before discontinued
operations from its investments in equity method investees that are principally engaged in
insurance product sales and referrals. Equity method investees include unconsolidated
subsidiaries; associated companies; and corporate joint ventures, unincorporated joint
ventures, general partnerships, and limited partnerships over which the bank exercises
significant influence.
5.e
Venture capital revenue. In general, venture capital activities involve the providing of
funds, whether in the form of loans or equity, and technical and management assistance,
when needed and requested, to start-up or high-risk companies specializing in new
technologies, ideas, products, or processes. The primary objective of these investments is
capital growth.
D
Report as venture capital revenue market value adjustments, interest, dividends, gains, and
losses (including impairment losses) on venture capital investments (loans and securities).
Include any fee income from venture capital activities that is not reported in one of the
preceding items of Schedule RI, Income Statement.
Also include the bank’s proportionate share of the income or loss before discontinued
operations from its investments in equity method investees that are principally engaged in
venture capital activities. Equity method investees include unconsolidated subsidiaries;
associated companies; and corporate joint ventures, unincorporated joint ventures, general
partnerships, and limited partnerships over which the bank exercises significant influence.
FFIEC 031 and 041
RI-12
(9-16)
RI - INCOME STATEMENT
113
D
R
AF
T
The Call Report instructional clarifications to Schedule RC-R, Part I and Part II on pages 115 to
138 would take effect June 30, 2021.
114
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
11
Caption and Instructions
LESS: Non-significant investments in the capital of unconsolidated financial
institutions in the form of common stock that exceed the 10 percent threshold for
non-significant investments.
(i) All non-advanced approaches institutions (column A on the FFIEC 031):
Not applicable. Proceed to Schedule RC-R, Part I, item 12, (column A on the FFIEC 031,)
to complete the subtotal calculation.
AF
T
(ii) All advanced approaches institutions (column B on the FFIEC 031):
An institution has a non-significant investment in the capital of an unconsolidated financial
institution if it owns 10 percent or less of the issued and outstanding common shares of that
institution.
Report the amount of non-significant investments in the capital of unconsolidated financial
institutions in the form of common stock that, in the aggregate , with covered debt
instruments, as applicable, 1 exceed the 10 percent threshold for non-significant investments,
calculated as described below. 2 The institution may apply associated DTLs to this deduction.
Example and a worksheet calculation for all advanced approaches institutions:
D
R
Assumptions:
• Assume that an institution has a total of $200 in non-significant investments in the
capital of unconsolidated financial institutions, of which $100 is in common shares.
For this example, all of the $100 in common shares is in the common stock of a
publicly traded financial institution.
• Assume the amount reported in Schedule RC-R, Part I, item 5, “Common equity tier 1
capital before adjustments and deductions,” is $1,000.
• Assume the amounts reported in Schedule RC-R, Part I, items 6 through 9.f, are
all $0.
Covered debt instrument is defined in 12 CFR 3.2, 12 CFR 217.2, and 12 CFR 324.2, as applicable.
An institution may exclude covered debt instruments (as defined in 12 CFR 3.2, 12 CFR 217.2, and 12 CFR 324.2,
as applicable) from the calculation of non-significant investments in the capital and covered debt instruments of
unconsolidated financial institutions. An institution subject to the advanced approaches rule that is not a subsidiary of
a global systemically important bank holding company, as defined in 12 CFR 217.2, or a subsidiary of a global
systemically important banking organization, as defined in 12 CFR 252 may exclude covered debt instruments up to
an amount of 5 percent of the amount in Schedule RC-R, Part I, item 12, column B.
1
2
FFIEC 031 and 041
RC-R-15
(6-20)
RC-R – REGULATORY CAPITAL
115
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
11
(cont.)
Caption and Instructions
(1)
(2)
(3)
(4)
(5)
Determine the aggregate amount of non-significant
investments in the capital of unconsolidated financial
institutions (including in the form of common stock, additional
tier 1, and tier 2 capital, and covered debt instruments (as
applicable)).
Determine the amount of non-significant investments in the
capital of unconsolidated financial institutions in the form of
common stock.
Subtract from Schedule RC-R, Part I, item 5, the amounts in
Schedule RC-R, Part I, items 6, 7, 8, 9, 10.a, and 10.b.
Multiply the amount in step (3) by 10 percent. This is “the ten
percent threshold for non-significant investments.”
If (1) is greater than (4), subtract (4) from (1) and multiply the
result by the ratio of (2) divided by (1). Report this amount in
this Schedule RC-R, Part I, item 11.
If (1) is less than (4), enter zero in this item 11.
(6)
$200
$100
$1,000 - $0 = $1,000
$1,000 x 10% = $100
AF
T
Item No.
Assign the applicable risk weight to the amount of nonsignificant investments in the capital of unconsolidated
financial institutions that does not exceed the ten percent
threshold for non-significant investments.
Line (1) is greater than
line (4); therefore, $200 $100 = $100. Then
($100 x 100/200) = $50.
Report $50 in this item
11.
Of the $100 in common
shares, $50 are deducted
in this item 11. The
remaining $50 needs to
be included in riskweighted assets in
Schedule RC-R, Part II. *
D
R
* In this case (assuming that publicly traded equity exposures do not qualify for a 100 percent risk
weight under section 52(b)(3)(iii) of the regulatory capital rules), $50 x 300 percent risk weight for
publicly traded common shares under section 52(b)(5) of the capital rules = $150 in risk weighted
assets for the portion of common shares in an unconsolidated financial institution that are not
deducted.
FFIEC 031 and 041
RC-R-16
(6-20)
RC-R – REGULATORY CAPITAL
116
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
FFIEC 041 and
FFIEC 031
Item No. Caption and Instructions
17
LESS: Deductions applied to common equity tier 1 capital due to insufficient amounts
of additional tier 1 capital and tier 2 capital to cover deductions.
(i) All non-advanced approaches institutions (column A on the FFIEC 031):
AF
T
Report the total amount of deductions related to investments in own additional tier 1 and
tier 2 capital instruments, reciprocal cross-holdings, and investments in the capital of
unconsolidated financial institutions if the reporting institution does not have a sufficient
amount of additional tier 1 capital before deductions (reported in Schedule RC-R, Part I,
item 23) and tier 2 capital before deductions (reported in Schedule RC-R, Part I, item 44 on
the FFIEC 041; item 44.a on the FFIEC 031) to absorb these deductions in Schedule RC-R,
Part I, items 24 or 45, as appropriate.
Since the community bank leverage ratio (CBLR) framework does not have a total capital
requirement, a CBLR electing institution is neither required to calculate tier 2 capital nor make
any deductions that would have been taken from tier 2 capital under the generally applicable
capital rule. Therefore, if a CBLR electing institution has investments in the capital
instruments of an unconsolidated financial institution that would qualify as tier 2 capital of the
CBLR electing institution under the generally applicable capital rule (tier 2 qualifying
investments), and the institution’s total investments in the capital of unconsolidated financial
institutions exceed the threshold for deduction, the institution is not required to deduct the
tier 2 qualifying investments.
(ii) All advanced approaches institutions (column B on the FFIEC 031):
D
R
Report the total amount of deductions related to investments in own additional tier 1
and tier 2 capital instruments; investments in own covered debt instruments, asif
applicable; reciprocal cross holdings; non-significant investments in the capital and
covered debt instruments, as applicable, of unconsolidated financial institutions;
investments in nonqualifying excluded covered debt instruments, as applicable; 3 and
non-common stock significant investments in the capital and covered debt instruments
investments in the capital of unconsolidated financial institutions if the reporting institution
does not have a sufficient amount of additional tier 1 capital before deductions (reported
in Schedule RC-R, Part I, item 23) and tier 2 capital before deductions (reported in
Schedule RC-R, Part I, items 44.a and 44.b) to absorb these deductions in Schedule RCR, Part I, items 24 or 45, as appropriate.
3
18
Total adjustments and deductions for common equity tier 1 capital. Report the sum of
Schedule RC-R, Part I, items 13 through 17.
19
Common equity tier 1 capital. Report Schedule RC-R, Part I, item 12 less item 18. Except
for a CBLR electing institution under the community bank leverage ratio framework, the
amount reported in this item is the numerator of the institution’s common equity tier 1 riskbased capital ratio.
Excluded covered debt instrument is defined in 12 CFR 3.2; 12 CFR 217.2, and 12 CFR 324.2, as applicable.
FFIEC 031 and 041
RC-R-30
(6-20)
RC-R – REGULATORY CAPITAL
117
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
Caption and Instructions
24
(cont.)
The institution must look through any holdings of index securities to deduct investments
in its own capital instruments. In addition:
AF
T
(i) Gross long positions in investments in an institution’s own regulatory capital
instruments resulting from holdings of index securities may be netted against short
positions in the same index;
(ii) Short positions in index securities that are hedging long cash or synthetic positions
can be decomposed to recognize the hedge; and
(iii) The portion of the index that is composed of the same underlying exposure that is
being hedged may be used to offset the long position if both the exposure being
hedged and the short position in the index are covered positions under the market
risk capital rule, and the hedge is deemed effective by the institution’s internal control
processes.
(2) Reciprocal cross-holdings in the capital of financial institutions. Include
investments in the additional tier 1 capital instruments of other financial institutions that
the institution holds reciprocally, where such reciprocal cross-holdings result from a
formal or informal arrangement to swap, exchange, or otherwise intend to hold each
other’s capital instruments. If the institution does not have a sufficient amount of a
specific component of capital to effect the required deduction, the shortfall must be
deducted from the next higher (that is, more subordinated) component of regulatory
capital.
For example, if an institution is required to deduct a certain amount from additional tier 1
capital and it does not have additional tier 1 capital, then the deduction should be from
common equity tier 1 capital in Schedule RC-R, Part I, item 17.
R
(3) Investments in the capital of unconsolidated financial institutions that exceed the
25 percent threshold to be deducted from additional tier 1 capital. Report the total
amount of investments in the capital of unconsolidated financial institutions in the form of
additional tier 1 capital that exceed the 25 percent threshold.
D
(1) Determine the amount of investments in the capital of unconsolidated financial
institutions, net of associated DTLs.
(2) If the amount in (1) is greater than 25 percent of Schedule RC-R, Part I, item 12
(column A on the FFIEC 031), report the difference across Schedule RC-R, Part I,
item 13 on the FFIEC 041; item 13.a on the FFIEC 031, as applicable; item 24, or
item 43, depending on the tier of capital for which the investments in the capital of
unconsolidated financial institutions qualifies. The institution can elect which
investments it must deduct and which it must risk weight. The institution’s election
and the component of capital for which the underlying instrument would qualify will
determine if the instrument will be deducted and reported in Schedule RC-R, Part I,
item 13 on the FFIEC 041, item 13.a on the FFIEC 031, as applicable; or be
deducted and reported in Schedule RC-R, Part I, item 24 or 43.
(3) If the amount in (1) is less than or equal to 25 percent of Schedule RC-R, Part I,
item 12 (column A on the FFIEC 031), no deduction is needed.
See the instructions for Schedule RC-R, Part I, item 13 on the FFIEC 041; item 13.a on
the FFIEC 031, for an example of how to deduct amounts of investments in the capital of
unconsolidated financial institutions that exceed the 25 percent threshold.
FFIEC 031 and 041
RC-R-36
(6-20)
RC-R – REGULATORY CAPITAL
118
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
Caption and Instructions
24
(cont.)
Since the community bank leverage ratio framework does not have a total capital
requirement, a CBLR electing institution is neither required to calculate tier 2 capital nor
make any deductions that would have been taken from tier 2 capital under the generally
applicable rule. Therefore, if a CBLR electing institution has investments in the capital
instruments of an unconsolidated financial institution that would qualify as tier 2 capital of
the CBLR electing institution under the generally applicable rule (tier 2 qualifying
investments), and the institution’s total investments in the capital of unconsolidated
financial institutions exceed the threshold for deduction, the institution is not required to
deduct the tier 2 qualifying investments.
AF
T
(4) Other adjustments and deductions. Include adjustments and deductions applied to
additional tier 1 capital due to insufficient tier 2 capital to cover deductions (related to
reciprocal cross-holdings, and investments in the tier 2 capital of unconsolidated financial
institutions,).
Eligible institutions that opt into the community bank leverage ratio framework are not
required to calculate tier 2 capital and would not be required to make any deductions that
would be taken from tier 2 capital.
In addition, insured state banks with real estate subsidiaries whose continued operations
have been approved by the FDIC pursuant to Section 362.4 of the FDIC's Rules and
Regulations generally should include as a deduction from additional tier 1 capital their
equity investment in the subsidiary. (Insured state banks with FDIC-approved phase-out
plans for real estate subsidiaries need not make these deductions.) Insured state banks
with other subsidiaries (that are not financial subsidiaries) whose continued operations
have been approved by the FDIC pursuant to Section 362.4 should include as a
deduction from additional tier 1 capital the amount required by the approval order.
(ii) Advanced approaches institutions:
R
(1) Investments in own additional tier 1 capital instruments. Report the institution’s
investments in (including any contractual obligation to purchase) its own additional tier 1
capital instruments, whether held directly or indirectly.
D
An institution may deduct gross long positions net of short positions in the same
underlying instrument only if the short positions involve no counterparty risk.
The institution must look through any holdings of index securities to deduct investments
in its own capital instruments. In addition:
(i) Gross long positions in investments in an institution’s own regulatory capital
instruments resulting from holdings of index securities may be netted against short
positions in the same index;
(ii) Short positions in index securities that are hedging long cash or synthetic positions
can be decomposed to recognize the hedge; and
FFIEC 031 and 041
RC-R-37
(6-20)
RC-R – REGULATORY CAPITAL
119
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
Caption and Instructions
24
(cont.)
(iii) The portion of the index that is composed of the same underlying exposure that is
being hedged may be used to offset the long position if both the exposure being
hedged and the short position in the index are covered positions under the market
risk capital rule, and the hedge is deemed effective by the institution’s internal control
processes.
AF
T
(2) Reciprocal cross-holdings in the capital of financial institutions. Include investments
in the additional tier 1 capital instruments of other financial institutions that the institution
holds reciprocally, where such reciprocal cross-holdings result from a formal or informal
arrangement to swap, exchange, or otherwise intend to hold each other’s capital
instruments. If the institution does not have a sufficient amount of a specific component
of capital to effect the required deduction, the shortfall must be deducted from the next
higher (that is, more subordinated) component of regulatory capital.
For example, if an institution is required to deduct a certain amount from additional tier 1
capital and it does not have additional tier 1 capital, then the deduction should be from
common equity tier 1 capital in Schedule RC-R, Part I, item 17.
(3) Non-significant investments in additional tier 1 capital of unconsolidated financial
institutions that exceed the 10 percent threshold for non-significant investments.
As noted in the instructions for Schedule RC-R, Part I, item 11 above, an institution has a
non-significant investment in the capital of an unconsolidated financial institution if it owns
10 percent or less of the issued and outstanding common shares of that institution.
Calculate this amount as follows:
R
(1) Determine the aggregate amount of non-significant investments in the capital of
unconsolidated financial institutions in the form of common stock, additional tier 1
capital, and tier 2 capital and covered debt instruments (as applicable). 4
(2) Determine the amount of non-significant investments in the capital of unconsolidated
financial institutions in the form of additional tier 1 capital.
(3) If the amount in (1) is greater than the ten percent threshold for non-significant
investments (Schedule RC-R, Part I, item 11, step (4)), then multiply the difference by
the ratio of (2) over (1). Report this product in this item 24.
(4) If the amount in (1) is less than the 10 percent threshold for non-significant
investments, report zero.
D
For example, assume an institution has a total of $200 in non-significant investments
(step 1), including $60 in the form of additional tier 1 capital (step 2), and its ten percent
threshold for non-significant investments is $100 (as calculated in step 4 of item 11).
Since the aggregate amount of non-significant investments exceeds the ten percent
threshold for non-significant investments by $100 ($200-$100), the institution would
multiply $100 by the ratio of 60/200 (step 3). Thus, the institution would need to deduct
$30 from its additional tier 1 capital.
4 An institution may exclude covered debt instruments (as defined in 12 CFR 3.2, 12 CFR 217.2, and 12 CFR 324.2,
as applicable) from the calculation of non-significant investments in the capital and covered debt instruments of
unconsolidated financial institutions. An institution subject to the advanced approaches rule that is not a subsidiary of
a global systemically important bank holding company, as defined in 12 CFR 217.2, or a subsidiary of a global
systemically important banking organization, as defined in 12 CFR 252 may exclude covered debt instruments up to
an amount of 5 percent of the amount in Schedule RC-R, Part I, item 12, column B.
FFIEC 031 and 041
RC-R-38
(6-20)
RC-R – REGULATORY CAPITAL
120
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
Caption and Instructions
24
(cont.)
(4) Significant investments in the capital of unconsolidated financial institutions not in
the form of common stock to be deducted from additional tier 1 capital. Report the
total amount of significant investments in the capital of unconsolidated financial
institutions in the form of additional tier 1 capital.
AF
T
(5) Other adjustments and deductions. Include adjustments and deductions applied to
additional tier 1 capital due to insufficient tier 2 capital to cover deductions (related to
reciprocal cross-holdings,; non-significant investments in the tier 2 capital of
unconsolidated financial institutions;, and significant investments in the tier 2 capital of
unconsolidated financial institutions ); and, for advanced approaches institutions, as
applicable, significant investments in the covered debt instruments of unconsolidated
financial institutions, non-significant investments in the covered debt instruments of
unconsolidated financial institutions, and investments in nonqualifying excluded covered
debt instruments).
In addition, insured state banks with real estate subsidiaries whose continued operations
have been approved by the FDIC pursuant to Section 362.4 of the FDIC's Rules and
Regulations generally should include as a deduction from additional tier 1 capital their
equity investment in the subsidiary. (Insured state banks with FDIC-approved phase-out
plans for real estate subsidiaries need not make these deductions.) Insured state banks
with other subsidiaries (that are not financial subsidiaries) whose continued operations
have been approved by the FDIC pursuant to Section 362.4 should include as a
deduction from additional Tier 1 capital the amount required by the approval order.
25
Additional tier 1 capital. Report the greater of Schedule RC-R, Part I, item 23 minus
item 24, or zero.
Tier 1 Capital
Tier 1 capital. Report the sum of Schedule RC-R, Part I, items 19 and 25.
R
26
Total Assets for the Leverage Ratio
Average total consolidated assets. All institutions must report the amount of average total
consolidated assets as reported in Schedule RC-K, item 9.
D
27
An institution that has adopted FASB Accounting Standards Update No. 2016-13, which
governs the accounting for credit losses and introduces the current expected credit losses
methodology (CECL), and has elected to apply the 3-year CECL transition provision (3-year
CECL electing institution) should increase its average total consolidated assets by its
applicable CECL transitional amount, in accordance with section 301(c)(1)(iv) of the
regulatory capital rules. For example, a 3-year CECL electing institution should increase its
average total consolidated assets as reported on the Call Report for purposes of the leverage
ratio by 75 percent of its CECL transitional amount during the first year of the transition
period, 50 percent of its CECL transitional amount during the second year of the transition
period, and 25 percent of its CECL transitional amount during the third year of the transition
period (see Table 1 in the instructions for Schedule RC-R, Part I, item 2).
FFIEC 031 and 041
RC-R-39
(6-20)
RC-R – REGULATORY CAPITAL
121
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
FFIEC 041 FFIEC 031
Item No. Item No. Caption and Instructions
44
44.a
Tier 2 capital before deductions. On the FFIEC 041, report the sum of
Schedule RC-R, Part I, items 39 through 43. On the FFIEC 031, report the sum
of Schedule RC-R, Part I, items 39 through 42.a, plus item 43.
NOTE: On the FFIEC 031, item 44.b is to be completed only by advanced approaches institutions that
exit parallel run. Item 44.b is not applicable to institutions that file the FFIEC 041.
-
44.b
Advanced approaches institutions that exit parallel run only: tier 2 capital
before deductions. Report the sum of Schedule RC-R, Part I, items 39 through
41, plus items 42.b and 43.
45
AF
T
FFIEC 041 and
FFIEC 031
Item No. Caption and Instructions
LESS: Tier 2 capital deductions. Report total tier 2 capital deductions as the sum of the
following elements.
Note that an institution should report tier 2 capital deductions in this item 45 irrespective of
the amount of tier 2 capital before deductions reported in Schedule RC-R, Part I, item 44 on
the FFIEC 041; item 44.a on the FFIEC 031. If an institution does not have a sufficient
amount of tier 2 capital before deductions in item 44 or item 44.a, as applicable, to absorb
these deductions, then the institution must deduct the shortfall from additional tier 1 capital
before deductions in Schedule RC-R, Part I, item 24, or, if there is not enough additional
tier 1 capital before deductions, from common equity tier 1 capital in Schedule RC-R, Part I,
item 17.
R
For example, if an institution reports $98 of “Tier 2 capital before deductions” in
Schedule RC-R, Part I, item 44 or item 44.a, as applicable, and must make $110 in tier 2
capital deductions, the institution would report $110 in this item 45, include the additional $12
in deductions in Schedule RC-R, Part I, item 24 (and in Schedule RC-R, Part I, item 17, in the
case of insufficient “Additional tier 1 capital before deductions” in Schedule RC-R, Part I,
item 23, from which to make the deduction in Schedule RC-R, Part I, item 24), and report $0
in Schedule RC-R, Part I, item 46.a, “Tier 2 capital.”
D
Advanced approaches institutions with insufficient tier 2 capital for deductions will make the
following adjustments: an advanced approaches institution will make deductions on this
schedule under the generally applicable rules that apply to all institutions. It will use
FFIEC 101, Schedule A, to calculate its capital requirements under the advanced
approaches. Therefore, in the case of an advanced approaches institution with insufficient
tier 2 capital to make tier 2 deductions, it will use the corresponding deduction approach and
the generally applicable rules to take excess tier 2 deductions from additional tier 1 capital
in Schedule RC-R, Part I, item 24, and if necessary from common equity tier 1 capital in
Schedule RC-R, Part I, item 17. It will use the advanced approaches rules to take deductions
on the FFIEC 101 form.
For example, assume tier 2 capital is $100 under the advanced approaches and $98 under
the generally applicable rules (due to the difference between the amount of eligible credit
reserves includable in tier 2 capital under the advanced approaches, and the amount of the
allowance for loan and lease losses or adjusted allowances for credit losses, as applicable,
FFIEC 031 and 041
RC-R-51
(6-20)
RC-R – REGULATORY CAPITAL
122
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
Caption and Instructions
45
(cont.)
includable in tier 2 capital under the standardized approach). If the required deduction from
tier 2 capital is $110, then the advanced approaches institution would add $10 to the required
additional tier 1 capital deductions (on FFIEC 101, Schedule A, item 42, and FFIEC 101,
Schedule A, item 27, if necessary), and would add $12 to its required additional tier 1 capital
deductions for the calculation of the standardized approach regulatory capital ratios in this
schedule (Schedule RC-R, Part I, item 24, and Schedule RC-R, Part I, item 17, if necessary).
(i) Non-advanced approaches institutions:
(1) Investments in own tier 2 capital instruments. Report the institution’s investments in
(including any contractual obligation to purchase) its own tier 2 instruments, whether held
directly or indirectly.
AF
T
An institution may deduct gross long positions net of short positions in the same
underlying instrument only if the short positions involve no counterparty risk.
The institution must look through any holdings of index securities to deduct investments
in its own capital instruments. In addition:
(i) Gross long positions in investments in an institution’s own regulatory capital
instruments resulting from holdings of index securities may be netted against short
positions in the same index;
(ii) Short positions in index securities that are hedging long cash or synthetic positions
can be decomposed to recognize the hedge; and
(iii) The portion of the index that is composed of the same underlying exposure that is
being hedged may be used to offset the long position if both the exposure being
hedged and the short position in the index are covered positions under the market
risk capital rule, and the hedge is deemed effective by the institution’s internal control
processes.
R
(2) Reciprocal cross-holdings in the capital of financial institutions. Include
investments in the tier 2 capital instruments of other financial institutions that the
institution holds reciprocally, where such reciprocal crossholdings result from a formal or
informal arrangement to swap, exchange, or otherwise intend to hold each other’s capital
instruments.
D
(3) Investments in the capital of unconsolidated financial institutions that exceed the
25 percent threshold to be deducted from tier 2 capital. Report the total amount of
investments in the capital of unconsolidated financial institutions in the form of tier 2
capital that exceeds the 25 percent threshold. Calculate this amount as follows:
(1) Determine the amount of investments in the capital of unconsolidated financial
institutions, net of associated DTLs.
(2) If the amount in (1) is greater than 25 percent of Schedule RC-R, Part I, item 12,
(column A on the FFIEC 031,) report the difference across Schedule RC-R, Part I,
item 13 on the FFIEC 041, item 13.a on the FFIEC 031; item 24; or item 45,
depending on the tier of capital for which the investments in the capital of
FFIEC 031 and 041
RC-R-52
(6-20)
RC-R – REGULATORY CAPITAL
123
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
Caption and Instructions
45
(cont.)
unconsolidated financial institutions qualify. The institution can elect which
investments it must deduct and which it must risk weight. The institution’s election
and the component of capital for which the underlying instrument would qualify will
determine if it will be deducted and reported in item 13 or item 13.a, as applicable, or
be deducted and reported in item 24 or item 45.
(3) If the amount in (1) is less than or equal to 25 percent of Schedule RC-R, Part I,
item 12, (column A on the FFIEC 031,) no deduction is needed.
See Schedule RC-R, Part I, item 13 on the FFIEC 041, item 13.a on the FFIEC 031, for
an example of how to deduct amounts of investments in the capital of unconsolidated
financial institutions that exceed the 25 percent threshold.
AF
T
(4) Other adjustments and deductions. Include any other applicable adjustments and
deductions applied to tier 2 capital in accordance with the regulatory capital rules of the
primary federal supervisor.
(ii) Advanced approaches institutions:
(1) Investments in own tier 2 capital instruments. Report the institution’s investments in
(including any contractual obligation to purchase) its own tier 2 instruments, whether held
directly or indirectly.
An institution may deduct gross long positions net of short positions in the same
underlying instrument only if the short positions involve no counterparty risk.
The institution must look through any holdings of index securities to deduct investments
in its own capital instruments. In addition:
D
R
(i) Gross long positions in investments in an institution’s own regulatory capital
instruments resulting from holdings of index securities may be netted against short
positions in the same index;
(ii) Short positions in index securities that are hedging long cash or synthetic positions
can be decomposed to recognize the hedge; and
(iii) The portion of the index that is composed of the same underlying exposure that is
being hedged may be used to offset the long position if both the exposure being
hedged and the short position in the index are covered positions under the market
risk capital rule, and the hedge is deemed effective by the institution’s internal control
processes.
Also report investments in (including any contractual obligation to purchase) own covered
debt instruments, as applicable, whether held directly or indirectly.
(2) Reciprocal cross-holdings in the capital of financial institutions. Include
investments in the tier 2 capital instruments of other financial institutions that the
institution holds reciprocally, where such reciprocal crossholdings result from a formal or
informal arrangement to swap, exchange, or otherwise intend to hold each other’s capital
instruments. Also include investments in the covered debt instruments of other financial
institutions that the institution holds reciprocally, as applicable, where such reciprocal
crossholdings result from a formal or informal arrangement to swap, exchange, or
otherwise intend to hold each other's instruments.
FFIEC 031 and 041
RC-R-53
(6-20)
RC-R – REGULATORY CAPITAL
124
RC-R – REGULATORY CAPITAL
D
R
AF
T
FFIEC 031 and 041
FFIEC 031 and 041
RC-R-54
(6-20)
RC-R – REGULATORY CAPITAL
125
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part I. (cont.)
Item No.
45
Caption and Instructions
(3) For institutions subject to the advanced approaches rule that are subsidiaries of
(a) global systematically important bank holding companies or (b) global
systemically important banking organizations: investments in nonqualifying
excluded covered debt instruments.
A subsidiary of a global systemically important bank holding company, as defined in 12
CFR 217.2, or an institution that is a subsidiary of a global systemically important banking
organization, as defined in 12 CFR 252.2, must report the amount of any investment, on
a gross long basis, in a covered debt instrument that was originally designated as an
excluded covered debt instrument, in accordance with 12 CFR 3.22(c)(4)(iv)(A), 12 CFR
217.22(c)(4)(iv)(A), and 12 CFR 324.22(c)(4)(iv)(A), as applicable, but is:
•
no longer held in connection with market making-related activities permitted under 12
CFR 44.4, 12 CFR 248.4, and 12 CFR 351.4, as applicable; or
a direct exposure or an indirect exposure to a covered debt instrument held in
connection with market making-related activities permitted under 12 CFR 44.4, 12
CFR 248.4, and 12 CFR 351.4, as applicable, and has beenis held for more than 30
business days.:
AF
T
•
Such an institution must also report its aggregate investment in excluded covered debt
instruments that exceeds 5 percent of the institution's common equity tier 1 capital,
calculated as follows:
(1) Determine the aggregate amount of investments in excluded covered debt
instruments measured on a gross long basis in accordance with 12 CFR 3.22(h)(2),
12 CFR 217.22(h)(2), and 12 CFR 324.22(h)(2), as applicable.
(2) If the amount in (1) is greater than 5 percent of the amount reported in Schedule
RC-R, Part I, item 12, column B, report the difference in this item 45.
R
(4) Non-significant investments in tier 2 capital and covered debt instruments of
unconsolidated financial institutions that exceed the 10 percent threshold for nonsignificant investments.
D
An institution that is a subsidiary of a global systemically important bank holding
company, as defined in 12 CFR 217.2, or an institution that is a subsidiary of a global
systemically important banking organization, as defined in 12 CFR 252.2, should proceed
directly to step (2) below.
Calculate the amount as described below:
(1) An institution subject to the advanced approaches rule that is not a subsidiary of a
global systemically important bank holding company, as defined in 12 CFR 217.2, or
an institution that is a subsidiary of a global systemically important banking
organization, as defined in 12 CFR 252.2: determine the amount of covered debt
instruments subject to the non-significant investments threshold.
(i) Determine the aggregate amount of non-significant investments in the capital of
unconsolidated financial institutions in the form of common stock covered debt
instruments measured on a gross long basis in accordance with 12 CFR 3.22(h)(2),
12 CFR 217.22(h)(2), and 12 CFR 324.22(h)(2), as applicable. , additional tier 1, and
tier 2 capital
(ii) If the amount in (i) is greater than 5 percent of the amount reported in Schedule
RC-R, item 12, column B, report the difference, on a net long position basis, in
FFIEC 031 and 041
RC-R-55
(6-20)
RC-R – REGULATORY CAPITAL
126
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
accordance with 12 CFR 3.22(h)(1), 12 CFR 217.22(h)(1), and 12 CFR 324.22(h)(1),
as applicable, in steps (2) and (3) below as the institution's amount of “covered debt
instruments.”
(2) Determine the amount of non-significant investments in the capital of unconsolidated
financial institutions in the form of tier 2 capital and covered debt instruments.
(3) If (12) is greater than the ten percent threshold for non-significant investments
(Schedule RC-R, Part I, item 11, step (4)), then multiply the difference by the ratio of
(23) over (12). Report this product in this item.
(4) If (12) is less than the ten percent threshold for non-significant investments, enter
zero.
AF
T
For example, assume an institution has an aggregate total of $200 in non-significant
investments (step 21), including $40 in the form of tier 2 capital and $10 in covered debt
instruments (step 23), and its ten percent threshold for non-significant investments is
$100 (as calculated in Schedule RC-R, Part I, item 11, step 4). Since the aggregate
amount of non-significant investments exceeds the ten percent threshold for nonsignificant investments by $100 ($200-$100), the institution would multiply $100 by the
ratio of 4050/200 (step 3). Thus, the institution would need to deduct $205 from its tier 2
capital.
(54)Significant investments in the capital of unconsolidated financial institutions not in
the form of common stock to be deducted from tier 2 capital. Report the total
amount of significant investments in the capital of unconsolidated financial institutions in
the form of tier 2 capital and covered debt instruments.
D
R
(56)Other adjustments and deductions. Include any other applicable adjustments and
deductions applied to tier 2 capital in accordance with the regulatory capital rules of the
primary federal supervisor.
FFIEC 031 and 041
RC-R-56
(6-20)
RC-R – REGULATORY CAPITAL
127
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
General Instructions for Schedule RC-R, Part II. (cont.)
(7) For an exposure that is an eligible margin loan or repo-style transaction (including a cleared
transaction) for which the bank calculates the exposure amount as provided in §.37, the exposure
amount determined under §.37 of the regulatory capital rules.
(8) For an exposure that is a securitization exposure, the exposure amount determined under §.42 of the
regulatory capital rules.
Amounts to Report in Column B
The amount to report in column B will vary depending upon the nature of the particular item.
R
AF
T
For items 1 through 8 and 11 of Schedule RC-R, Part II, column B should include the amount of the
reporting bank's on-balance sheet assets that are deducted or excluded (not risk weighted) in the
determination of risk-weighted assets. Column B should include assets that are deducted from capital
such as:
• Goodwill;
• Other intangible assets (other than mortgage servicing assets (MSAs));
• Gain on sale of securitization exposures;
• For non-advanced approaches institutions, threshold deductions above the 25 percent individual
limits for (1) deferred tax assets (DTAs) arising from temporary differences that could not be realized
through net operating loss carrybacks, (2) MSAs, net of associated deferred tax liabilities (DTLs), and
(3) investments in the capital of unconsolidated financial institutions;
• For advanced approaches institutions, threshold deductions above the 10 percent individual or
15 percent combined limits for (1) DTAs arising from temporary differences that could not be realized
through net operating loss carrybacks, (2) MSAs, net of associated DTLs, and (3) significant
investments in the capital of unconsolidated financial institutions in the form of common stock;
• For advanced approaches institutions, non-significant investments in the capital of unconsolidated
financial institutions in the form of common stock that exceed the 10 percent threshold for
non-significant investments;
• For advanced approaches institutions, investments in covered debt instruments and nonqualifying
excluded covered debt instruments, 1 as applicable; and
• Any other assets that must be deducted in accordance with the requirements of a bank's primary
federal supervisory authority.
D
Column B should also include items that are excluded from the calculation of risk-weighted assets, such
as the allowance for loan and lease losses or allowances for credit losses, as applicable; allocated
transfer risk reserves; and certain on-balance sheet asset amounts associated with derivative contracts
that are included in the calculation of the credit equivalent amounts of the derivative contracts. In
addition, for items 1 through 8 and 11 of Schedule RC-R, Part II, column B should include any difference
between the balance sheet amount of an on-balance sheet asset and its exposure amount as described
above under “Exposure Amount Subject to Risk Weighting.” Note: For items 1 through 8 and 11 of
Schedule RC-R, Part II, the sum of columns B through R must equal the balance sheet asset amount
reported in column A.
1
Nonqualifying excluded covered debt instruments are those subject to deduction according to the instructions for
RC-R, Part I, item 45.
FFIEC 031 and 041
RC-R-64
(6-20)
RC-R – REGULATORY CAPITAL
128
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Item No.
Caption and Instructions
1
(cont.)
from a Federal Reserve Bank. This treatment differs from that required in Schedule RC-A,
item 2, "Balances due from depository institutions in the U.S.," which treats pass-through
reserve balances held by a bank's correspondent as balances due from a depository
institution as opposed to balances due from the Federal Reserve.
If the reporting bank is a participant in an excess balance account at a Federal Reserve
Bank, report in column C the bank’s balance in this account.
AF
T
If the reporting bank accounts for any holdings of certificates of deposit (CDs) like availablefor-sale debt securities that do not qualify as securitization exposures, report in column A the
fair value of such CDs. If the bank has made the Accumulated Other Comprehensive Income
opt-out election in Schedule RC-R, Part I, item 3.a, include in column B the difference
between the fair value and amortized cost of these CDs. When fair value exceeds amortized
cost, report the difference as a positive number in column B. When amortized cost exceeds
fair value, report the difference as a negative number (i.e., with a minus (-) sign) in column B.
Risk weight the amortized cost of these CDs in columns C through J, as appropriate.
2
Securities. Do not include securities that qualify as securitization exposures in items 2.a
and 2.b below; instead, report these securities in Schedule RC-R, Part II, items 9.a and 9.b.
In general, under the regulatory capital rules, securitizations are exposures that are
“tranched” for credit risk. Refer to the definitions of securitization, traditional securitization,
synthetic securitization and tranche in §.2 of the regulatory capital rules.
2.a
Held-to-maturity securities. Report in column A the amount of held-to-maturity (HTM)
securities reported in Schedule RC, item 2.a, excluding those HTM securities that qualify as
securitization exposures as defined in §.2 of the regulatory capital rules.
R
The amount of those HTM securities reported in Schedule RC, item 2.a, that qualify as
securitization exposures are to be reported in Schedule RC-R, Part II, item 9.a, column A.
The sum of Schedule RC-R, Part II, items 2.a and 9.a, column A, must equal Schedule RC,
item 2.a.
D
Exposure amount to be used for purposes of risk weighting – bank cannot or has not made
the Accumulated Other Comprehensive Income (AOCI) opt-out election in Schedule RC-R,
Part I, item 3.a:
For a security classified as HTM where the bank cannot or has not made the AOCI opt-out
election (i.e., most AOCI is included in regulatory capital), the exposure amount to be risk
weighted by the bank is the carrying value of the security, which is the value of the asset
reported (a) on the balance sheet of the bank determined in accordance with GAAP and
(b) in Schedule RC-R, Part II, item 2.a, column A.
Exposure amount to be used for purposes of risk weighting – bank has made the AOCI
opt-out election in Schedule RC-R, Part I, item 3.a:
For a security classified as HTM where the bank has made the AOCI opt-out election (i.e.,
most AOCI is not included in regulatory capital), the exposure amount to be risk weighted by
the bank is the carrying value of the security reported (a) on the balance sheet of the bank
and (b) in Schedule RC-R, Part II, item 2.a, column A, less any unrealized gain on the
exposure or plus any unrealized loss on the exposure included in AOCI. For purposes of
determining the exposure amount of an HTM security, an unrealized gain (loss), if any, on
such a security that is included in AOCI is (i) the unamortized balance of the unrealized gain
(loss) that existed at the date of transfer of a debt security transferred into the
held-to-maturity category from the available-for-sale category, or (ii) the unaccreted portion of
other-than-temporary impairment losses on an HTM debt security that was not recognized in
FFIEC 031 and 041
RC-R-86
(3-20)
RC-R – REGULATORY CAPITAL
129
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Item No.
Caption and Instructions
2.a
(cont.)
earnings in accordance with ASC Topic 320, Investments-Debt Securities (formerly FASB
Statement No. 115, “Accounting for Certain Investments in Debt and Equity Securities”).
Thus, for an HTM security with such an unrealized gain (loss), report in column B any
difference between the carrying value of the security reported in column A of this item and its
exposure amount reported under the appropriate risk weighting column C through J.
In column B for non-advanced approaches institutions, include the amount of:
o Investments in the capital of unconsolidated financial institutions in the form of tier 2
capital that are reported in Schedule RC, item 2.a, and have been deducted from
capital in Schedule RC-R, Part I, item 45.
•
In column B for advanced approaches institutions, include the amount of:
o Non-significant investments in tier 2 capital of unconsolidated financial institutions
that are reported in Schedule RC, item 2.a, and have been deducted from capital in
Schedule RC-R, Part I, item 45.
o Significant investments in the capital and covered debt instruments of unconsolidated
financial institutions in the form of tier 2 capital that are reported in Schedule RC, item
2.a, and have been deducted from capital in Schedule RC-R, Part I, item 45.
o For advanced approaches institutions, investments in nonqualifying excluded
covered debt instruments that are reported in Schedule RC, item 2.a, and have been
deducted from capital in Schedule RC-R, Part 1, item 17, item 24, and item 45.
•
For an institution that has adopted the current expected credit losses methodology
(CECL), include as a negative number in column B:
o The portion of Schedule RI-B, Part II, item 7, column B, “Balance end of current
period” for HTM debt securities that relates to HTM securities reported in column A of
this item, less
o The portion of Schedule RC-R, Part II, Memorandum item 4.b, “Amount of
allowances for credit losses on purchased credit-deteriorated assets” for HTM debt
securities that relates to purchased credit-deteriorated HTM securities reported in
column A of this item.
For example, if an institution reports $100 in Schedule RI-B, Part II, item 7, column B,
and $10 in Schedule RC-R, Part II, Memorandum item 4.b, the institution would report
($90) in this column B.
R
AF
T
•
In column C–0% risk weight. The zero percent risk weight applies to exposures to the
U.S. government, a U.S. government agency, or a Federal Reserve Bank, and those
exposures otherwise unconditionally guaranteed by the U.S. government. Include
exposures to or unconditionally guaranteed by the FDIC or the NCUA. Certain foreign
government exposures and certain entities listed in §.32 of the regulatory capital rules
may also qualify for the zero percent risk weight. Include the exposure amounts of
securities reported in Schedule RC-B, column A, that do not qualify as securitization
exposures that qualify for the zero percent risk weight. Such securities may include
portions of, but may not be limited to:
D
•
FFIEC 031 and 041
RC-R-87
(6-20)
RC-R – REGULATORY CAPITAL
130
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Caption and Instructions
2.b
(cont.)
Exposure amount to be used for purposes of risk weighting by a bank that has made the
AOCI opt-out election in Schedule RC-R, Part I, item 3.a:
• For institutions that are not yet required to adopt ASU 2016-01, for a security classified as
AFS where the bank has made the AOCI opt-out election (i.e., most AOCI is not included
in regulatory capital), the exposure amount to be risk weighted by the bank is:
o For a debt security: the carrying value, less any unrealized gain on the exposure or
plus any unrealized loss on the exposure included in AOCI.
o For equity securities and preferred stock classified as an equity under GAAP:
the carrying value less any net unrealized gains that are reflected in such carrying
value but are excluded from the bank’s regulatory capital components.
• For institutions that are required to have adopted ASU 2016-01, for a security reported in
Schedule RC-R, Part II, item 2.b, column A, where the bank has made the AOCI opt-out
election (i.e., most AOCI is not included in regulatory capital), the exposure amount to be
risk weighted by the bank is:
o For a debt security: the carrying value, less any unrealized gain on the exposure or
plus any unrealized loss on the exposure included in AOCI.
o For equity securities and preferred stock classified as an equity under GAAP
with readily determinable fair values: the adjusted carrying value.1
AF
T
Item No.
In column B, a bank that has made the AOCI opt-out election should include the
difference between the fair value and amortized cost of those AFS debt securities that do
not qualify as securitization exposures. This difference equals the amounts reported in
Schedule RC-B, items 1 through 6, column D, minus items 1 through 6, column C, for
those AFS debt securities included in these items that are not securitization exposures.
o When fair value exceeds cost, report the difference as a positive number in
Schedule RC-R, Part II, item 2.b, column B.
o When cost exceeds fair value, report the difference as a negative number (i.e., with a
minus (-) sign) in Schedule RC-R, Part II, item 2.b, column B.
•
In column B, for a bank that has made the AOCI opt-out election and is not yet required
to adopt ASU 2016-01:
o If AFS equity securities with readily determinable fair values have a net unrealized
gain (i.e., Schedule RC-B, item 7, column D, exceeds item 7, column C), the portion
of the net unrealized gain (55 percent) not included in Tier 2 capital should be
included in Schedule RC-R, Part II, item 2.b, column B. The portion that is not
included in Tier 2 capital equals Schedule RC-B, item 7, column D minus column C,
minus Schedule RC-R, Part I, item 43.
D
R
•
Example: A bank reports an AFS debt security that is not a securitization exposure on its
balance sheet in Schedule RC, item 2.b, at a carrying value (i.e., fair value) of $105. The
amortized cost of the debt security is $100. The bank has made the AOCI opt-out
election in Schedule RC-R, Part I, item 3.a. The AFS debt security has a $5 unrealized
gain that is included in AOCI. In Schedule RC-R, Part II, item 2.b, the bank would report
in Schedule RC-R, Part II, item 2.b:
Adjusted carrying value applies only to equity exposures and is defined in §.51 of the regulatory capital rules. In
general, it includes an on-balance sheet amount as well as application of conversion factors to determine on-balance
sheet equivalents of any off-balance sheet commitments to acquire equity exposures. For institutions that have made
the AOCI opt-out election, the adjusted carrying value of an on-balance sheet equity exposure, such as an equity
security with a readily determinable fair value not held for trading, is equal to the carrying value of the equity
exposure, i.e., the value of the asset on the balance sheet determined in accordance with U.S. GAAP. Refer to §.51
for the precise definition.
1
FFIEC 031 and 041
RC-R-91
(6-20)
RC-R – REGULATORY CAPITAL
131
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Caption and Instructions
2.b
(cont.)
a. $105 in column A. This is the carrying value of the AFS debt security on the bank’s
balance sheet.
b. $5 in column B. This is the difference between the carrying value (i.e., fair value) of
the debt security and its exposure amount that is subject to risk weighting. For a
bank that has made the AOCI opt-out election, column B will typically represent the
amount of the unrealized gain or unrealized loss on the security. Gains are reported
as positive numbers; losses as negative numbers. (Note: If the bank has not made
or cannot make the opt-out election, there will be no adjustment to be reported in
column B.)
c. $100 is the exposure amount subject to risk weighting. This amount will be reported
under the appropriate risk weight associated with the exposure (columns C through
J). For a bank that has made the opt-out election, the exposure amount typically will
be the carrying value (i.e., fair value) of the debt security excluding any unrealized
gain or loss.
AF
T
Item No.
In column B, for a bank that has made the AOCI opt-out election and is required to have
adopted ASU 2016-01, no amount should be included for equity securities and preferred
stock classified as an equity under GAAP with readily determinable fair values that are
reported in Schedule RC-R, Part II, item 2.b, column A.
•
In column B for non-advanced approaches institutions, include the amount of investments
in the capital of unconsolidated financial institutions that are reported in Schedule RC,
item 2.b (for a bank that is not yet required to adopt ASU 2016-01) or item 2.c (for a bank
that is required to have adopted ASU 2016-01), and have been deducted from capital in
Schedule RC-R, Part I, item 13.a, item 24, and item 45 on the FFIEC 031; item 13,
item 17, item 24, and item 45 on the FFIEC 041.
•
In column B for advanced approaches institutions, include the amount of:
o Non-significant investments in the capital and covered debt instruments of
unconsolidated financial institutions that are reported in Schedule RC, item 2.b (for a
bank that is not yet required to adopt ASU 2016-01) or item 2.c (for a bank that is
required to have adopted ASU 2016-01), and have been deducted from capital in
Schedule RC-R, Part I, item 11, item 17, item 24, and item 45 on the FFIEC 031.
o Significant investments in the capital and covered debt instruments of unconsolidated
financial institutions not in the form of common stock that are reported in Schedule
RC, item 2.b (for a bank that is not yet required to adopt ASU 2016-01) or item 2.c
(for a bank that is required to have adopted ASU 2016-01), and have been deducted
from capital in Schedule RC-R, Part I, item 17, item 24 and item 45 on the FFIEC
031.
o Investments in nonqualifying excluded covered debt instruments that are reported in
Schedule RC, item 2.b (for a bank that has not adopted ASU 2016-01) or item 2.c (for
a bank that has adopted ASU 2016-01), and have been deducted from capital in
Schedule RC-R, Part I, item 17, item 24 and item 45.
o Significant investments in the capital of unconsolidated financial institutions in the
form of common stock reported in Schedule RC, item 2.b (for a bank that has not
adopted ASU 2016-01) or item 2.c (for a bank that has adopted ASU 2016-01), that
are subject to the 10 percent and 15 percent common equity tier 1 capital threshold
limitations and have been deducted for risk-based capital purposes in Schedule RCR, Part I, items 13.b and 16.
D
R
•
FFIEC 031 and 041
RC-R-92
(6-20)
RC-R – REGULATORY CAPITAL
132
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Caption and Instructions
2.b
(cont.)
○
Significant investments in the capital of unconsolidated financial institutions in the
form of common stock reported in Schedule RC, item 2.b (for a bank that is not
yet required to adopt ASU 2016-01) or item 2.c (for a bank that is required to have
adopted ASU 2016-01), that are subject to the 10 percent and 15 percent common
equity tier 1 capital threshold limitations and have been deducted for risk-based
capital purposes in Schedule RC-R, Part I, items 13.b and 16, column B, on the
FFIEC 031.
•
In column C–0% risk weight, the zero percent risk weight applies to exposures to the
U.S. government, a U.S. government agency, or a Federal Reserve Bank, and those
exposures otherwise unconditionally guaranteed by the U.S. government. Include
exposures to or unconditionally guaranteed by the FDIC or the NCUA. Certain foreign
government exposures and certain entities listed in §.32 of the regulatory capital rules
may also qualify for zero percent risk weight. Include the exposure amounts of those
debt securities reported in Schedule RC-B, column C, that do not qualify as securitization
exposures that qualify for the zero percent risk weight. Such debt securities may include
portions of, but may not be limited to:
○ Item 1, "U.S. Treasury securities,"
o Item 2, those obligations issued by U.S. Government agencies,
o Item 4.a.(1), Residential mortgage pass-through securities "Guaranteed by GNMA,”
o Portions of item 4.b.(1), Other residential mortgage-backed securities (MBS) "Issued
or guaranteed by U.S. Government agencies or sponsored agencies," such as
GNMA exposures,
o Item 4.c.(1)(a), certain portions of commercial MBS “Issued or guaranteed by FNMA,
FHLMC, or GNMA” that represent GNMA securities, and
o Item 4.c.(2)(a), certain portions of commercial MBS “Issued or guaranteed by U.S.
Government agencies or sponsored agencies” that represent GNMA securities.
o The portion of any exposure reported in Schedule RC, item 2.b, that is secured by
collateral or has a guarantee that qualifies for the zero percent risk weight.
•
In column G–20% risk weight, the 20 percent risk weight applies to general obligations of
U.S. states, municipalities, and U.S. public sector entities. It also applies to exposures to
U.S. depository institutions and credit unions, exposures conditionally guaranteed by the
U.S. government, as well as exposures to U.S. government sponsored enterprises.
Certain foreign government and foreign bank exposures may qualify for the 20 percent
risk weight as indicated in §.32 of the regulatory capital rules. Include the exposure
amounts of those debt securities reported in Schedule RC-B, column C, that do not
qualify as securitization exposures that qualify for the 20 percent risk weight. Such debt
securities may include portions of, but may not be limited to:
o Item 2, those obligations issued by U.S. Government-sponsored agencies (exclude
interest-only securities),
o Item 3, "Securities issued by states and political subdivisions in the U.S." that
represent general obligation securities,
o Item 4.a.(2), Residential mortgage pass-through securities "Issued by FNMA and
FHLMC" (exclude interest-only securities),
o Item 4.b.(1), Other residential MBS "Issued or guaranteed by U.S. Government
agencies or sponsored agencies," (exclude interest-only securities),
o Item 4.c.(1)(a), those commercial MBS “Issued or guaranteed by FNMA, FHLMC, or
GNMA” that represent FHLMC and FNMA securities (exclude interest-only
securities),
o Item 4.c.(2)(a), those commercial MBS “Issued or guaranteed by U.S. Government
agencies or sponsored agencies” that represent FHLMC and FNMA securities
(exclude interest-only securities),
D
R
AF
T
Item No.
FFIEC 031 and 041
RC-R-93
(9-20)
RC-R – REGULATORY CAPITAL
133
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Item No.
Caption and Instructions
5.d
(cont.)
•
All other loans and leases HFI that must be risk weighted according to the Country Risk
Classification (CRC) methodology
o In column C–0% risk weight; column G–20% risk weight; column H–50% risk weight;
column I–100% risk weight; column J–150% risk weight. Assign these exposures to
risk-weight categories based on the CRC methodology described above in the
General Instructions for Part II:
o The carrying value of other loans and leases HFI reported in Schedule RC, item 4.b,
that are not reported in Schedule RC-R, Part II, items 5.a through 5.c above.
LESS: Allowance for loan and lease losses. Report in columns A and B the balance of
the allowance for loan and lease losses or the allowance for credit losses on loans and
leases, as applicable, reported in Schedule RC, item 4.c.
7
Trading assets. Report in column A the fair value of trading assets reported in
Schedule RC, item 5, excluding those trading assets that are securitization exposures, as
defined in §.2 of the regulatory capital rules.
AF
T
6
The fair value of those trading assets reported in Schedule RC, item 5, that qualify as
securitization exposures must be reported in Schedule RC-R, Part II, item 9.c, column A.
The sum of Schedule RC-R, Part II, items 7 and 9.c, column A, must equal Schedule RC,
item 5.
If the bank is subject to the market risk capital rule, include in column B the fair value of all
trading assets that are covered positions as defined in Schedule RC-R, Part II, item 27
(except those trading assets that are both securitization exposures and covered positions,
which are excluded from column A of this item 7 and are to be reported instead in
Schedule RC-R, Part II, item 9.c, column A). The bank will report its standardized market
risk-weighted assets in Schedule RC-R, Part II, item 27.
R
For banks not subject to the market risk capital rule and for those trading assets reported in
column A that are held by banks subject to the market risk capital rule and do not meet the
definition of a covered position:
In column B, if the bank completes Schedule RC-D, include the fair value of derivative
contracts that are reported as assets in Schedule RC-D, item 11. If the bank does not
complete Schedule RC-D, include the portion of the amount reported in Schedule RC,
item 5, that represents the fair value of derivative contracts that are assets. Exclude from
column B those derivative contracts reported in these items that qualify as securitization
exposures. For purposes of risk weighting, include the credit equivalent amounts of
these derivatives, determined in accordance with the regulatory capital rules, in the riskweight categories in Schedule RC-R, Part II, items 20 and 21, as appropriate. Do not risk
weight these derivatives in this item.
D
•
In column B for non-advanced approaches institutions, include the amount of:
○ Investments in the capital of unconsolidated financial institutions that are reported in
Schedule RC, item 5, and have been deducted from capital in Schedule RC-R, Part I,
item 13.a, item 17, item 24, and item 45 on the FFIEC 031; item 13, item 17, item 24,
and item 45 on the FFIEC 041.
FFIEC 031 and 041
RC-R-113
(6-20)
RC-R – REGULATORY CAPITAL
134
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Caption and Instructions
7
(cont.)
In column B for advanced approaches institutions, include the amount of:
○ Non-significant investments in the capital and covered debt instruments of
unconsolidated financial institutions that are reported in Schedule RC, item 5, and
have been deducted from capital in Schedule RC-R, Part I, item 11, item 17, item 24,
and item 45 on the FFIEC 031.
o Investments in nonqualifying excluded covered debt instruments that are reported in
Schedule RC, item 5, and have been deducted from capital in Schedule RC-R, Part I,
item 17, item 24 and item 45.
o Significant investments in the capital and covered debt instruments of unconsolidated
financial institutions not in the form of common stock that are reported in Schedule
RC, item 5, and have been deducted from capital in Schedule RC-R, Part I, item 17,
item 24 and item 45 on the FFIEC 031.
o Significant investments in the capital of unconsolidated financial institutions in the
form of common stock reported in Schedule RC, item 5, that are subject to the
10 percent and 15 percent common equity tier 1 capital threshold limitations and
have been deducted for risk-based capital purposes in Schedule RC-R, Part I,
items 13.b and 16, column B, on the FFIEC 031.
AF
T
Item No.
Also include in column B the fair value of any unsettled transactions (failed trades) that
are reported as trading assets in Schedule RC, item 5. For purposes of risk weighting,
unsettled transactions are to be reported in Schedule RC-R, Part II, item 22.
In column C–0% risk weight, if the bank completes Schedule RC-D, include the fair value
of those trading assets reported in Schedule RC-D that do not qualify as securitization
exposures that qualify for the zero percent risk weight. Such trading assets may include
portions of, but may not be limited to:
o Item 1, "U.S. Treasury securities,"
o The portion of the amount reported in item 2 that represents the fair value of
securities issued by U.S. Government agencies, and
o The portion of the amounts reported in item 4 that represents the fair value of
mortgage-backed securities (MBS) guaranteed by GNMA.
o If the bank does not complete Schedule RC-D, include the portion of the amount
reported in Schedule RC, item 5, that represents the fair value of the preceding types
of securities. Exclude those trading assets reported in Schedule RC, item 5, that
qualify as securitization exposures and report them in Schedule RC-R, Part II,
item 9.c.
o Also include the portion of the fair value of any trading assets that is secured by
collateral or has a guarantee that qualifies for the zero percent risk weight. This
would include the portion of trading assets collateralized by deposits at the reporting
institution.
D
R
•
•
FFIEC 031 and 041
In column G–20% risk weight, if the bank completes Schedule RC-D, include the fair
value of those trading assets reported in Schedule RC-D that do not qualify as
securitization exposures that qualify for the 20 percent risk weight. Such trading assets
may include portions of, but may not be limited to:
o The portion of the amount reported in item 2 that represents the fair value of
securities issued by U.S. Government-sponsored agencies,
o The portion of the amount reported in item 3 that represents the fair value of general
obligations issued by states and political subdivisions in the United States,
o The portion of the amount reported in item 4 that represents the fair value of MBS
issued by FNMA and FHLMC,
RC-R-114
(6-20)
RC-R – REGULATORY CAPITAL
135
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Item No.
Caption and Instructions
7
(cont.)
•
AF
T
8
Trading assets that must be risk-weighted according to the Country Risk Classification
(CRC) methodology
o In column C–0% risk weight; column G–20% risk weight; column H–50% risk weight;
column I–100% risk weight; column J–150% risk weight. Assign these exposures to
risk-weight categories based on the CRC methodology described above in the
General Instructions for Part II. Include the portions of those exposures reported in
Schedule RC-D that are directly and unconditionally guaranteed by foreign central
governments or are exposures to foreign banks that do not qualify as securitization
exposures. Such exposures may include portions of, but may not be limited to:
o The fair value of those MBS reported in Schedule RC-D, item 4, "Mortgage-backed
securities," and other debt securities reported in Schedule RC-D, Item 5, "Other debt
securities," issued by foreign banks and foreign sovereign units.
o If the bank does not complete Schedule RC-D, include the portion of the amount
reported in Schedule RC, item 5, that represents the fair value of the preceding types
of trading assets. Exclude those trading assets reported in Schedule RC, item 5, that
qualify as securitization exposures and report them in Schedule RC-R, Part II,
item 9.c.
All other assets. Report in column A the sum of the amounts reported in Schedule RC,
item 6, "Premises and fixed assets”; item 7, "Other real estate owned”; item 8, "Investments
in unconsolidated subsidiaries and associated companies”; item 9, “Direct and indirect
investments in real estate ventures”; item 10, "Intangible assets"; and item 11, "Other assets,"
excluding those assets reported in Schedule RC, items 6 through 11, that qualify as
securitization exposures as defined in §.2 of the regulatory capital rules. The amount of
those assets reported in Schedule RC, items 6 through 11, that qualify as securitization
exposures (as well as the amount reported in Schedule RC, item 11, for accrued interest
receivable on on-balance sheet securitization exposures, regardless of where the
securitization exposures are reported on the balance sheet in Schedule RC) must be
reported in Schedule RC-R, Part II, item 9.d, column A.
R
The sum of item 8, columns B through R (including items 8.a and 8.b, column R), must equal
item 8, column A. Amounts reported in Schedule RC-R, Part II, items 8.a and 8.b, column R,
should not also be reported in Schedule RC-R, Part II, item 8, column R.
D
Treatment of Defined Benefit Postretirement Plan Assets – Applicable Only to Banks That
Have Made the Accumulated Other Comprehensive Income (AOCI) Opt-Out Election in
Schedule RC-R, Part I, item 3.a
If the reporting institution sponsors a single-employer defined benefit postretirement plan,
such as a pension plan or health care plan, accounted for in accordance with ASC Topic 715,
Compensation-Retirement Benefits (formerly FASB Statement No. 158, “Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans”), the institution
should adjust the asset amount reported in column A of this item for any amounts included in
Schedule RC, item 26.b, “Accumulated other comprehensive income,” affecting assets as a
result of the initial and subsequent application of the funded status and measurement date
provisions of ASC Topic 715. The adjustment also should take into account subsequent
amortization of these amounts from AOCI into earnings. The intent of the adjustment
reported in this item (together with the amount reported in Schedule RC-R, Part I, item 9.d) is
to reverse the effects on AOCI of applying ASC Topic 715 for regulatory capital purposes.
Specifically, assets recognized or derecognized as an adjustment to AOCI as part of the
incremental effect of applying ASC Topic 715 should be reported as an adjustment to assets
in column B of this item. For example, the derecognition of an asset recorded as an offset to
FFIEC 031 and 041
RC-R-119
(3-20)
RC-R – REGULATORY CAPITAL
136
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Item No.
Caption and Instructions
8
(cont.)
AOCI as part of the initial incremental effect of applying ASC Topic 715 should be reported in
this item as a negative amount in column B and as a positive amount in column I. As another
example, the portion of a benefit plan surplus asset that is included in Schedule RC,
item 26.b, as an increase to AOCI and in column A of this item should be excluded from
risk-weighted assets by reporting the amount as a positive number in column B of this item.
In column B for all institutions, include the amount of:
○ Any goodwill reported in Schedule RC-M, item 2.b, without regard to any associated
DTLs;
○ Intangible assets (other than goodwill and mortgage servicing assets (MSAs))
reported as a deduction from common equity tier 1 capital in Schedule RC-R, Part I,
item 7, without regard to any associated DTLs;
○ Deferred tax assets (DTAs) that arise from net operating loss and tax credit
carryforwards, net of any related valuation allowances and net of DTLs reported in
Schedule RC-R, Part I, item 8;
○ The fair value of over-the-counter derivative contracts (as defined in §.2 of the
regulatory capital rules) and derivative contracts that are cleared transactions (as
described in §.2 of the regulatory capital rules) that are reported as assets in
Schedule RC, item 11 (banks should risk weight the credit equivalent amount of
these derivative contracts in Schedule RC-R, Part II, item 20 or 21, as appropriate);
and
Note: The fair value of derivative contracts reported as assets in Schedule RC,
item 11, that are neither over-the-counter derivative contracts nor derivative
contracts that are cleared transactions under §.2 of the regulatory capital rules
should not be reported in column B. Such derivative contracts include written
option contracts, including so-called “derivative loan commitments,” i.e., a
lender’s commitment to originate a mortgage loan that will be held for resale.
The fair value of such derivative contracts should be reported in the appropriate
risk-weight category in this item 8.
○ Unsettled transactions (failed trades) that are reported as “Other assets” in
Schedule RC, item 11. For purposes of risk weighting, unsettled transactions are to
be reported in Schedule RC-R, Part II, item 22.
R
AF
T
•
In column B for non-advanced approaches institutions, also include the amount of:
○ Investments in the capital of unconsolidated financial institutions that are reported
in Schedule RC, item 8 or item 11, and have been deducted from capital in
Schedule RC-R, Part I, item 13.a, item 24, and item 45 on the FFIEC 031; item 13,
item 24, and item 45 on the FFIEC 041; and
o Items subject to the 25 percent common equity tier 1 capital threshold limitation
that have been deducted for risk-based capital purposes in Schedule RC-R, Part I,
items 13.a, 14.a, and 15.a on the FFIEC 031; items 13 through 15 on the FFIEC 041.
These excess amounts pertain to three items:
Investments in the capital of unconsolidated financial institutions;
MSAs; and
DTAs arising from temporary differences that could not be realized through net
operating loss carrybacks, net of related valuation allowances.
D
•
FFIEC 031 and 041
RC-R-120
(6-20)
RC-R – REGULATORY CAPITAL
137
FFIEC 031 and 041
RC-R – REGULATORY CAPITAL
Part II. (cont.)
Item No.
Caption and Instructions
8
(cont.)
•
AF
T
In column B for advanced approaches institutions, also include the amount of:
○ Non-significant investments in the capital and covered debt instruments of
unconsolidated financial institutions that are reported in Schedule RC, item 8 or
item 11, and have been deducted from capital in Schedule RC-R, Part I, item 11, item
17, item 24, and item 45 on the FFIEC 031;
• Investments in nonqualifying excluded covered debt instruments that are reported in
Schedule RC, item 8 or item 11, and have been deducted from capital in Schedule
RC-R, Part I, item 117, item 24, and item 45;
o Significant investments in the capital and covered debt instruments of unconsolidated
financial institutions not in the form of common stock that are reported in Schedule
RC, item 8 or item 11, and have been deducted from capital in Schedule RC-R,
Part I, item 17, item 24 and item 45 on the FFIEC 031; and
o Items subject to the 10 percent and 15 percent common equity tier 1 capital
threshold limitations that have been deducted for risk-based capital purposes in
Schedule RC-R, Part I, items 13.b, 14.b, 15.b, and 16 on the FFIEC 031. These
excess amounts pertain to three items:
Significant investments in the capital of unconsolidated financial institutions in the
form of common stock;
MSAs; and
DTAs arising from temporary differences that could not be realized through net
operating loss carrybacks, net of related valuation allowances.
R
An institution that has adopted the current expected credit losses methodology (CECL)
should report as a negative number in column B:
o The portion of Schedule RI-B, Part II, Memorandum item 6, “Allowance for credit
losses on other financial assets measured at amortized cost,” that relates to assets
reported in column A of this item, less
o The portion of Schedule RC-R, Part II, Memorandum item 4.c, “Amount of allowances
for credit losses on purchased credit-deteriorated assets” for other financial assets
measured at amortized cost that relates to assets reported in column A of this item.
For example, if an institution reports $100 in Schedule RI-B, Part II, Memorandum item 6
(and the entire amount relates to assets reported in this item 8, column A), and $10 in
Schedule RC-R, Part II, Memorandum item 4.c (and the entire amount relates to assets
reported in this item 8, column A), the institution would report ($90) in this column B.
D
An institution that has adopted CECL and has elected to apply the 3-year CECL transition
provision (3-year CECL electing institution) should report as a positive number in column
B its applicable DTA transitional amount from temporary difference DTAs, in accordance
with section 301 of the regulatory capital rules. Specifically, a 3-year CECL electing
institution reduces its temporary difference DTAs by 75 percent of its DTA transitional
amount during the first year of the transition period, 50 percent of its DTA transitional
amount during the second year of the transition period, and 25 percent of its DTA
transitional amount during the third year of the transition period.
Report as a negative number in column B the amount of default fund contributions in the
form of commitments made by a clearing member to a central counterparty’s mutualized
loss-sharing arrangement.
•
FFIEC 031 and 041
In column C–0% risk weight, include:
○ The carrying value of Federal Reserve Bank stock included in Schedule RC-F,
item 4;
RC-R-121
(6-20)
RC-R – REGULATORY CAPITAL
138
| File Type | application/pdf |
| Author | OCC |
| File Modified | 2020-11-25 |
| File Created | 2020-08-05 |