Federal Banking Agencies Seek Public Comment on Proposed Rule to Reduce Reporting Burden on Small Institutions

The OCC, the Board of Governors of the Federal Reserve System, and the FDIC released a joint notice for comments on a proposed rule implementing Section 205 of the Economic Growth, Regulatory Relief, and Consumer Protection Act.  The proposed rule would: (1) expand the entities eligible to file the agencies’ most streamlined report of condition, the FFIEC 051 Call Report, to include certain insured depository institutions with less than $5 billion in total consolidated assets that meet other criteria; and (2) establish reduced reporting on the FFIEC 051 Call Report for the first and third reports of condition for a year.

Currently, only institutions with less than $1 billion in total assets and that only have domestic offices, are not branches of foreign banks, and are not required or have not elected to use Subpart E of the agencies’ regulatory capital rules to calculate their risk-based capital requirements may use the FFIEC 051 Call Report.

The proposed rule would expand the number of entities who may file an FFIEC 051 Call Report by defining a “covered depository institution” as an insured depository institution that: (1) has less than $5 billion in total consolidated assets as reported in its report of condition for the second calendar quarter of the preceding calendar year; (2) has no foreign offices; (3) is not required to or has not elected to use Subpart E of the agencies’ regulatory capital rules to calculate its risk-based capital requirements; and (4) is not a large or highly complex institution for purposes of FDIC’s assessment regulations.  Notably, the OCC’s definition of a “covered depository institution” under the proposed rule would scope out institutions that file the FFIEC 002 report of condition, while the FDIC’s definition would exclude state-licensed insured branches of foreign banks.

Under the terms of the proposed rule, the agencies would also reduce 37% of data items being reported in the FFIEC 051 Call Report for covered depository institutions in the first and third calendar quarter.  The main areas where reporting would be reduced include data items related to categories of risk-weighing of various types of assets and other exposures under the agencies’ regulatory capital rules, fiduciary and related service assets and income, and troubled debt restructurings by loan category.

However, the proposed rule would also add certain data items to the FFIEC 051 Call Report that would only apply to covered depository institutions with $1 billion or more total assets.  Among others, the additional data items include disaggregated data on the allowance for loan and lease losses and estimated amounts of uninsured deposits, including related interest accrued and unpaid.  These items are currently reported by institutions with total assets of $1 billion or more that file the FFIEC 031 or FFIEC 041 Call Report, but they are not required from institutions with less than $1 billion in total assets that file the FFIEC 051 Call Report.

The proposed rule also leaves a reservation of authority for the appropriate federal banking agencies, along with the applicable state chartering authority, to require a covered depository institution to file the FFIEC 041 Call Report, or any successor, in the calendar quarters in which the covered depository institution would otherwise be eligible to file the FFIEC 051 Call Report, if the agencies determines that such filing is necessary for supervisory purposes.

Notably, under the proposed rule the OCC and the Board would extend the use of the reduced reporting requirement to uninsured state member banks if they meet the same criteria for covered depository institutions identified in the proposed rule.

The request for public comment is for all aspects of the proposed rule, but specifically, among others, on topics such as: whether institutions would find the proposal to reduce the reporting frequency of the risk-weighting data for various types of assets to be beneficial in terms of reducing reporting burden associated with the FFIEC 051 Call Report; ways to enhance the quality, utility, and clarity of the information to be collected; and ways to minimize the burden of the information collections on respondents, including through the use of automated collection techniques or other forms of information technology.

Comments on the proposed rule will be accepted until January 18, 2019.

The full text of the proposed rule may be found here.