Banking agencies finalize call reports (and others) with CECL, EGRRCPA changes

Federal banking agencies have finalized condition of income (call reports) and other reports addressing changes in the “current expected credit loss” (CECL) accounting standard and last year’s regulatory relief legislation, according to a letter sent to banks and thrifts by the federal insurer of bank deposits Friday.

According to the Federal Deposit Insurance Corp. (FDIC) “Financial Institution Letter” letter (FIL-12-2019), that agency, the Federal Reserve and the Office of the Comptroller of the Currency (OCC) – acting as members of the Federal Financial Institutions Examination Council (FFIEC) – finalized revisions to the Consolidated Reports of Condition and Income (the call report) and certain other FFIEC reports that mostly address changes in the CECL accounting standard. Issued by the Financial Accounting Standards Board (FASB), the standard is known officially as the “Accounting Standards Update (ASU) 2016-13.”

Other revisions to the call reports, the FDIC letter notes, result from last year’s Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S.2155). Those changes, the letter stated, relate to the reporting of high volatility commercial real estate (HVCRE) exposures and reciprocal deposits.

The letter lists several highlights in the finalized changes, including:

  • All three versions of the consolidated call report (FFIEC 031, FFIEC 041, and FFIEC 051) are affected, as well as several others that are applicable to a limited number of institutions, including:
    • Foreign Branch Report of Condition (FFIEC 030),
    • Abbreviated Foreign Branch Report of Condition (FFIEC 030S), and
    • Regulatory Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework (FFIEC 101).
  • The changes to the Call Report and the FFIEC 101 report implement the agencies’ recent revisions to the regulatory capital rules for the CECL methodology in ASU 2016-13, including a CECL regulatory capital transition.
  • Because ASU 2016-13 has different effective dates for different institutions, the reporting changes related to credit losses will be phased in between March 31, 2019, and December 31, 2022.
  • The reporting changes involving HVCRE exposures reporting and reciprocal deposits come from two sections of EGRRCPA that were effective upon enactment last spring (May 24, 2018). These changes, the letter states, affected reporting in the call report and the FFIEC 101 report beginning as of the June 30, 2018, report date.
  • Redlined copies of the FFIEC report forms showing the reporting changes related to credit losses are available on the report forms webpage on the FFIEC’s website.

The letter also notes that the banking agencies are considering the comments received on a separate proposal to implement Section 205 of EGRRCPA on reduced reporting for covered institutions in the call report (outlined in last November’s  FIL 74-2018). “Although the proposal included revisions to the FFIEC 051 reporting requirements that were proposed to take effect March 31, 2019, these reporting changes, if finalized, would take effect no earlier than June 30, 2019,” the letter states.

The letter notes that the changes it outlined are subject to approval by the White House Office of Management and Budget (OMB).

(FIL 12-2019) Revisions to the Consolidated Reports of Condition and Income and Other Regulatory Reports

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