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INSTRUCTION BOOK UPDATE
SEPTEMBER 2012
FILING INSTRUCTIONS
NOTE: This instruction book update is designed for two-sided (duplex) printing. The pages listed in the
column below headed “Remove Pages” are no longer needed in the Instructions for Preparation of
Consolidated Reports of Condition and Income and should be removed and discarded. The pages listed in
the column headed “Insert Pages” are included in this instruction book update and should be filed promptly
in your instruction book.
Remove Pages
Insert Pages
iii – iv (6-12)
RI-5 – RI-6 (3-10)
RI-A-3 – RI-A-5 (6-09, 6-12)
RI-B-3 – RI-B-4 (3-12)
RC-3 – RC-6 (3-11, 9-11)
RC-A-5 – RC-A-6 (9-11)
RC-E-1 – RC-E-2 (9-11)
RC-E-7 – RC-E-10 (3-11, 9-11)
RC-K-1 – RC-K-4 (9-11)
RC-L-1 – RC-L-2 (3-11)
RC-O-19 – RC-O-22 (3-12)
RC-P-5 – RC-P-6 (6-12)
A-33 – A-34 (9-11)
A-34c – A-36 (9-10)
A-63 – A-64 (9-10)
A-81 – A-82 (6-10)
A-87 – A-88 (9-10)
iii – iv (9-12)
RI-5 – RI-6 (9-12)
RI-A-3 – RI-A-5 (9-12)
RI-B-3 – RI-B-4 (9-12)
RC-3 – RC-6 (9-12)
RC-A-5 – RC-A-6 (9-12)
RC-E-1 – RC-E-2 (9-12)
RC-E-7 – RC-E-10 (9-12)
RC-K-1 – RC-K-5 (9-12)
RC-L-1 – RC-L-2 (9-12)
RC-O-19 – RC-O-22 (9-12)
RC-P-5 – RC-P-6 (9-12)
A-33 – A-34 (9-12)
A-34c – A-36 (9-12)
A-63 – A-64 (9-12)
A-81 – A-82 (9-12)
A-87 – A-88 (9-12)
(9-12)
FFIEC 031 and 041
CONTENTS
GLOSSARY
Accounting Changes
A-1
Accrued Interest Receivable Related to Credit Card Securitizations
A-2b
Acquisition, Development, or Construction (ADC) Arrangements
A-2c
Allowance for Loan and Lease Losses
A-3
Bankers Acceptances
A-4
Bank-Owned Life Insurance
A-7
Banks, U.S. and Foreign
A-8
Borrowings and Deposits in Foreign Offices
A-9
Brokered Deposits
A-9
Broker's Security Draft
A-10a
Business Combinations
A-11
Capital Contributions of Cash and Notes Receivable
A-13
Capitalization of Interest Costs
A-14
Cash Management Arrangements
A-14
Commercial Paper
A-14a
Commodity or Bill-of-Lading Draft
A-14a
Coupon Stripping, Treasury Receipts, and STRIPS
A-14b
Custody Account
A-14b
Dealer Reserve Account
A-14b
Deferred Compensation Agreements
A-15
Depository Institutions in the U.S.
A-16a
Deposits
A-17
Derivative Contracts
A-25
Dividends
A-32
Domestic Office
A-32a
Domicile
A-32a
Due Bills
A-32a
Edge and Agreement Corporation
A-32a
Equity-Indexed Certificates of Deposit
A-32b
Equity Method of Accounting
A-34
Excess Balance Account
A-34
Extinguishments of Liabilities
A-34a
Extraordinary Items
A-34b
Fails
A-34b
Fair Value
A-34b
FFIEC 031 and 041
iii
(9-12)
CONTENTS
FFIEC 031 and 041
CONTENTS
GLOSSARY (cont.)
Federal Funds Transactions
A-34c
Federally-Sponsored Lending Agency
A-34d
Foreclosed Assets
A-34d
Foreign Currency Transactions and Translation
A-37
Foreign Debt Exchange Transactions
A-39
Foreign Governments and Official Institutions
A-40
Foreign Office
A-40
Hypothecated Deposit
A-41
Income Taxes
A-41
Internal-Use Computer Software
A-48
International Banking Facility (IBF)
A-49
Lease Accounting
A-51
Letter of Credit
A-53
Loan
A-54
Loan Fees
A-55
Loan Impairment
A-57
Loan Secured by Real Estate
A-58
Loss Contingencies
A-59
Mandatory Convertible Debt
A-59
Nonaccrual of Interest
A-59
Offsetting
A-63
Overdraft
A-64
Pass-through Reserve Balances
A-64
Placements and Takings
A-65
Preferred Stock
A-65
Premiums and Discounts
A-66
Purchased Credit-Impaired Loans and Debt Securities
A-66
Reciprocal Balances
A-66c
Repurchase/Resale Agreements
A-66c
Sales of Assets for Risk-Based Capital Purposes
A-68
Securities Activities
A-72
Securities Borrowing/Lending Transactions
A-74
Servicing Assets and Liabilities
A-74a
Shell Branches
FFIEC 031 and 041
A-75
iv
(9-12)
CONTENTS
FFIEC 031 and 041
RI - INCOME STATEMENT
FFIEC 041 FFIEC 031
Item No. Item No. Caption and Instructions
1.a.(4)
1.a.(1)(e)
Interest and fee income on loans to foreign governments and official
institutions. Report all interest, fees, and similar charges levied against or
associated with all loans (in domestic offices) reportable in Schedule RC-C,
part I, item 7, "Loans to foreign governments and official institutions."
1.a.(5)
1.a.(1)(f)
Interest and fee income on all other loans. On the FFIEC 041, report interest,
fees, and similar charges levied against or associated with loans reportable in
Schedule RC-C, part I, item 2, “Loans to depository institutions and acceptances
of other banks,” item 3, “Loans to finance agricultural production and other loans
to farmers,” item 8, “Obligations (other than securities and leases) of states and
political subdivisions in the U.S.,” and item 9, “Loans to nondepository financial
institutions and other loans.”
On the FFIEC 031, report interest, fees, and similar charges levied against or
associated with loans in domestic offices reportable in Schedule RC-C, part I,
item 2, “Loans to depository institutions and acceptances of other banks,” item 8,
“Obligations (other than securities and leases) of states and political subdivisions
in the U.S.,” and item 9, “Loans to nondepository financial institutions and other
loans.”
-
1.a.(6)
1.a.(2)
Interest and fee income on loans in foreign offices, Edge and Agreement
subsidiaries, and IBFs. Report all interest, fees, and similar charges levied
against or associated with all loans in foreign offices, Edge and Agreement
subsidiaries, and IBFs reportable in Schedule RC-C, part I, items 1 through 9.
1.a.(3)
Total interest and fee income on loans. On the FFIEC 041, report the sum of
items 1.a.(1) through 1.a.(5) in item 1.a.(6). On the FFIEC 031, report the sum of
items 1.a.(1)(a) through 1.a.(2) in item 1.a.(3).
FFIEC 031 and 041
Item No. Caption and Instructions
1.b
Income from lease financing receivables. Report all income from direct financing and
leveraged leases reportable in Schedule RC-C, part I, item 10, "Lease financing receivables
(net of unearned income)." (See the Glossary entry for "lease accounting.")
Exclude from income from lease financing receivables:
(1) Any investment tax credit associated with leased property (include in Schedule RI,
item 9, "Applicable income taxes (on item 8)").
(2) Provision for possible losses on leases (report in Schedule RI, item 4, "Provision for
loan and lease losses").
(3) Rental fees applicable to operating leases for furniture and equipment rented to others
(report as "Other noninterest income" in Schedule RI, item 5.l).
1.c
Interest income on balances due from depository institutions. Report all income on
assets reportable in Schedule RC, item 1.b, “Interest-bearing balances due from depository
institutions,” including interest-bearing balances maintained to satisfy reserve balance
requirements, excess balances, and term deposits due from Federal Reserve Banks. Include
interest income earned on interest-bearing balances due from depository institutions that are
reported at fair value under a fair value option. However, exclude earnings credits
associated with clearing balances due from Federal Reserve Banks, which are applied to an
institution’s monthly billing service charges to offset the cost of eligible Federal Reserve
services.
FFIEC 031 and 041
RI-5
(9-12)
RI - INCOME STATEMENT
FFIEC 031 and 041
Item No.
1.d
RI - INCOME STATEMENT
Caption and Instructions
Interest and dividend income on securities. Report in the appropriate subitem all income
on assets that are reportable in Schedule RC-B, Securities. Include accretion of discount
and deduct amortization of premium on securities. Refer to the Glossary entry for
"premiums and discounts."
Include interest and dividends on securities held in the bank's held-to-maturity and
available-for-sale portfolios, even if such securities have been lent, sold under agreements
to repurchase that are treated as borrowings, or pledged as collateral for any purpose.
Include interest received at the sale of securities to the extent that such interest had not
already been accrued on the bank's books.
Do not deduct accrued interest included in the purchase price of securities from income on
securities and do not charge to expense. Record such interest in a separate asset account
(to be reported in Schedule RC, item 11, "Other assets") to be offset upon collection of the
next interest payment.
Report income from detached U.S. Government security coupons and ex-coupon
U.S. Government securities not held for trading in Schedule RI, item 1.d.(3), as interest and
dividend income on "All other securities." Refer to the Glossary entry for "coupon stripping,
Treasury receipts, and STRIPS."
Exclude from interest and dividend income on securities:
(1) Realized gains (losses) on held-to-maturity securities and on available-for-sale securities
(report in Schedule RI, items 6.a and 6.b, respectively).
(2) Net unrealized holding gains (losses) on available-for-sale securities (include the amount
of such net unrealized holding gains (losses) in Schedule RC, item 26.b, “Accumulated
other comprehensive income,” and the calendar year-to-date change in such net
unrealized holding gains (losses) in Schedule RI-A, item 10, “Other comprehensive
income”).
(3) Income from advances to, or obligations of, majority-owned subsidiaries not
consolidated, associated companies, and those corporate joint ventures over which the
bank exercises significant influence (report as "Noninterest income" in the appropriate
subitem of Schedule RI, item 5).
1.d.(1)
Interest and dividend income on U.S. Treasury securities and U.S. Government agency
obligations (excluding mortgage-backed securities). Report income from all securities
reportable in Schedule RC-B, item 1, “U.S. Treasury securities,” and item 2,
“U.S. Government agency obligations.” Include accretion of discount on U.S. Treasury bills.
1.d.(2)
Interest and dividend income on mortgage-backed securities. Report income from all
securities reportable in Schedule RC-B, item 4, “Mortgage-backed securities.”
1.d.(3)
Interest and dividend income on all other securities. Report income from all securities
reportable in Schedule RC-B, item 3, “Securities issued by states and political subdivisions
in the U.S.,” item 5, “Asset-backed securities and structured financial products,” item 6,
“Other debt securities,” and item 7, “Investments in mutual funds and other equity securities
with readily determinable fair values.”
FFIEC 031 and 041
RI-6
(9-12)
RI - INCOME STATEMENT
FFIEC 031 and 041
Item No.
Caption and Instructions
5
(cont.)
Include in this item:
RI-A - EQUITY CAPITAL
(1) The net decrease in equity capital that occurs when cash is distributed in lieu of fractional
shares in a stock dividend.
(2) The net increase in equity capital when a stockholder who receives a fractional share
from a stock dividend purchases the additional fraction necessary to make a whole
share.
Exclude treasury stock transactions from this item (report such transactions in
Schedule RI-A, item 6, below).
For banks opened since January 1 of the year-to-date reporting period, report opening
(original) equity capital in this item. Pre-opening income earned and expenses incurred from
the bank's inception until the date the bank commenced operations should be reported in the
Report of Income using one of the two following methods, consistent with the manner in
which the bank reports pre-opening income and expenses for other financial reporting
purposes:
(1) Pre-opening income and expenses for the entire period from the bank's inception until
the date the bank commenced operations should be reported in the appropriate items of
Schedule RI, Income Statement, each quarter during the calendar year in which
operations commenced; or
(2) Pre-opening income and expenses for the period from the bank's inception until the
beginning of the calendar year in which the bank commenced operations should be
included, along with the bank's opening (original) equity capital, in this item. The net
amount of these pre-opening income and expenses should be identified and described in
Schedule RI-E, item 7. Pre-opening income earned and expenses incurred during the
calendar year in which the bank commenced operations should be reported in the
appropriate items of Schedule RI, Income Statement, each quarter during the calendar
year in which operations commenced.
6
Treasury stock transactions, net. Report the change in the bank’s total equity capital
during the calendar year to date from the acquisition (without retirement) and resale or other
disposal of the bank's own perpetual preferred stock or common stock, i.e., treasury stock
transactions (see the Glossary entry for "treasury stock").
7
Changes incident to business combinations, net. If the bank purchased another bank or
business during the year-to-date reporting period, report the fair value of any perpetual
preferred or common shares issued (less the direct cost of issuing the shares). Exclude the
fair value of limited-life preferred stock issued in connection with purchase acquisitions.
Refer to the Glossary entry for "business combinations" for further information on purchase
acquisitions.
If the bank has been acquired in a transaction accounted for using push down accounting,
report in this item the initial increase or decrease in equity capital that results from the
application of push down accounting, i.e., the difference between the bank's total equity
capital as of the end of the previous calendar year and its restated equity capital after the
push down adjusting entries have been recorded as of the acquisition date. For further
information on push down accounting, refer to the Glossary entry for "business
combinations."
FFIEC 031 and 041
RI-A-3
(9-12)
RI-A - EQUITY CAPITAL
FFIEC 031 and 041
RI-A - EQUITY CAPITAL
Item No.
Caption and Instructions
7
(cont.)
If the bank entered into a reorganization that became effective during the year-to-date
reporting period and has been accounted at historical cost in a manner similar to a pooling of
interests, report in this item the historical equity capital balances as of the end of the previous
calendar year of the bank or other business that was combined in the reorganization. For
further information on reorganizations, refer to the Glossary entry for "business
combinations."
8
LESS: Cash dividends declared on preferred stock. Report all cash dividends declared
on limited-life preferred and perpetual preferred stock during the calendar year-to-date,
including dividends not payable until after the report date.
Do not include dividends declared during the previous calendar year but paid in the current
period.
Refer to the Glossary entry for "dividends" for further information on cash dividends.
9
LESS: Cash dividends declared on common stock. Report all cash dividends declared
on common stock during the calendar year-to-date, including dividends not payable until after
the report date.
Do not include dividends declared during the previous calendar year but paid in the current
period.
For further information on cash dividends, see the Glossary entry for "dividends."
10
Other comprehensive income. Report the institution’s other comprehensive income,
including reclassification adjustments, for the calendar year-to-date, net of applicable income
taxes, if any. Reclassification adjustments are adjustments made to avoid double counting of
items in comprehensive income that are presented as part of net income for the calendar
year-to-date reporting period that also had been presented as part of other comprehensive
income in that reporting period or earlier reporting periods. If the amount to be reported in
this item represents a reduction in the institution’s equity capital, report the amount with a
minus (-) sign.
Items of other comprehensive income include:
(1) The change in net unrealized holding gains (losses) on the institution’s available-for-sale
securities.
(2) Unrealized holding gains (losses) that result from a debt security being transferred into
the available-for-sale category from the held-to-maturity category.
(3) For a debt security transferred into the held-to-maturity category from the available-forsale category, amortization of the unrealized holding gain (loss) on the security at the
date of transfer. Consistent with ASC Subtopic 320, Investments-Debt and Equity
Securities (formerly FASB Statement No. 115, “Accounting for Certain Investments in
Debt and Equity Securities,” as amended), this unrealized holding gain (loss) should be
amortized over the remaining life of the security as an adjustment of yield.
(4) The portion of other-than-temporary impairment losses on available-for-sale and
held-to-maturity debt securities that was not recognized in earnings in accordance with
ASC Topic 320, Investments-Debt and Equity Securities, subsequent decreases (if not
FFIEC 031 and 041
RI-A-4
(9-12)
RI-A - EQUITY CAPITAL
FFIEC 031 and 041
Item No.
RI-A - EQUITY CAPITAL
Caption and Instructions
10
(cont.)
other-than-temporary impairment losses) or increases in the fair value of available-forsale debt securities previously written down as other-than-temporarily impaired, and
subsequent accretion (based on the amount and timing of future estimated cash flows) of
the portion of other-than-temporary impairment losses on held-to-maturity debt securities
not recognized in earnings.
(5) The change in the institution’s accumulated net gains (losses) (effective portion) on
derivative instruments that are designated and qualify as cash flow hedges.
(6) On the FFIEC 031 only, the change in the institution’s cumulative foreign currency
translation adjustments and gains (losses) on certain foreign currency transactions.
Refer to the Glossary entry for "foreign currency transactions and translation" for further
information on accounting for foreign currency translation.
(7) Gains (losses) and transition assets or obligations associated with single-employer
defined benefit pension and other postretirement plans not recognized immediately as a
component of net periodic benefit cost and prior service costs or credits associated with
such plans, which are accounted for in accordance with ASC Subtopic 715-20,
Compensation-Retirement Benefits – Defined Benefit Plans-General (formerly FASB
Statement No. 87, “Employers’ Accounting for Pensions”; FASB Statement No. 106,
“Employers’ Accounting for Postretirement Benefits Other Than Pension”; and FASB
Statement No. 158, “Employers’ Accounting for Defined Benefit Pension and Other
Postretirement Plans”).
For further guidance on reporting other comprehensive income, see ASC Topic 220,
Comprehensive Income (formerly FASB Statement No. 52, “Foreign Currency Translation”;
FASB Statement No. 115, “Accounting for Certain Investments in Debt and Equity
Securities,” as amended; FASB Statement No. 133, “Accounting for Derivative Instruments
and Hedging Activities”; and FASB Statement No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans”).
11
Other transactions with parent holding company. Report the net aggregate amount of
transactions with the bank's parent holding company which affect equity capital directly, other
than those reported in Schedule RI-A, items 5, 6, 8, and 9, above, such as:
(1) Capital contributions other than those for which stock has been issued to the parent
holding company (report issuances of perpetual preferred and common stock and sales
of treasury stock in Schedule RI-A, items 5 and 6, respectively; issuances of limited-life
preferred stock are not reported in this schedule).
(2) Dividends to the holding company in the form of property rather than cash (report cash
dividends in Schedule RI-A, items 8 or 9, as appropriate). Record such property
dividends at the fair value of the transferred asset. Include any gain or loss recognized
on the disposition of the asset in the determination of net income for the calendar
year-to-date in Schedule RI, Income Statement. Refer to the Glossary entry for
"dividends" for additional information on property dividends.
State the dollar amount of and describe each transaction included in this item in
Schedule RI-E, item 5.
12
Total bank equity capital end of current period. Report the sum of items 3 through 12.
This item must equal Schedule RC, item 27.a, "Total bank equity capital."
FFIEC 031 and 041
RI-A-5
(9-12)
RI-A - EQUITY CAPITAL
This page intentionally left blank.
FFIEC 031 and 041
RI-B - ALLOWANCE
Part I. (cont.)
Item No.
2
Caption and Instructions
Loans to depository institutions and acceptances of other banks. Report in columns A
and B, as appropriate, loans to depository institutions and acceptances of other banks (as
defined for Schedule RC-C, part I, item 2) charged-off and recovered.
NOTE: Items 2.a, 2.b, and 3 are applicable only to banks filing the FFIEC 031 report form.
2.a
To U.S. banks and other U.S. depository institutions. Report in columns A and B, as
appropriate, loans to and acceptances of U.S. banks and other U.S. depository institutions
(as defined for Schedule RC-C, part 1, items 2.a.(2), 2.b, and 2.c.(1), column A) charged-off
and recovered.
2.b
To foreign banks. Report in columns A and B, as appropriate, loans to and acceptances of
foreign banks (as defined for Schedule RC-C, part I, items 2.a.(1) and 2.c.(2), column A)
charged-off and recovered.
3
Loans to finance agricultural production and other loans to farmers. Report in
columns A and B, as appropriate, loans to finance agricultural production and other loans to
farmers (as defined for Schedule RC-C, part I, item 3, column A) charged-off and recovered.
4
Commercial and industrial loans. Report in columns A and B, as appropriate, commercial
and industrial loans (as defined for Schedule RC-C, part I, item 4) charged-off and recovered.
NOTE: Items 4.a and 4.b are applicable only to banks filing the FFIEC 031 report form.
4.a
To U.S. addressees (domicile). Report in columns A and B, as appropriate, commercial
and industrial loans to U.S. addressees (as defined for Schedule RC-C, part I, item 4.a,
column A) charged-off and recovered.
4.b
To non-U.S. addressees. Report in columns A and B, as appropriate, commercial and
industrial loans to non-U.S. addressees (as defined for Schedule RC-C, part I, item 4.b,
column A) charged-off and recovered.
5
Loans to individuals for household, family, and other personal expenditures. Report in
the appropriate subitem and column loans to individuals for household, family, and other
personal expenditures (as defined for Schedule RC-C, part I, item 6) charged-off and
recovered.
5.a
Credit cards. Report in columns A and B, as appropriate, all extensions of credit under
credit cards (as defined for Schedule RC-C, part I, items 6.a) charged-off and recovered.
5.b
Automobile loans. Report in columns A and B, as appropriate, all loans arising from retail
sales of passenger cars and other vehicles such as minivans, vans, sport-utility vehicles,
pickup trucks, and similar light trucks for personal use (as defined for Schedule RC-C, part I,
item 6.c) charged-off and recovered.
FFIEC 031 and 041
RI-B-3
(9-12)
RI-B - ALLOWANCE
FFIEC 031 and 041
RI-B - ALLOWANCE
Part I. (cont.)
Item No.
Caption and Instructions
5.c
Other (includes revolving credit plans other than credit cards and other consumer
loans). Report in columns A and B, as appropriate, all other extensions of credit to
individuals for household, family, and other personal expenditures (as defined for
Schedule RC-C, part I, items 6.b and 6.d) charged-off and recovered.
6
Loans to foreign governments and official institutions. Report in columns A and B,
as appropriate, loans to foreign governments and official institutions (as defined for
Schedule RC-C, part I, item 7) charged-off and recovered.
7
All other loans. On the FFIEC 041, report in columns A and B, as appropriate, loans to
finance agricultural production and other loans to farmers, obligations (other than securities
and leases) of states and political subdivisions in the U.S., and loans to nondepository
financial institutions and other loans (as defined for Schedule RC-C, part I, items 3, 8, and 9)
charged-off and recovered. On the FFIEC 031, report in columns A and B, as appropriate,
obligations (other than securities and leases) of states and political subdivisions in the U.S.
and loans to nondepository financial institutions and other loans (as defined for
Schedule RC-C, part I, items 8 and 9) charged-off and recovered.
8
Lease financing receivables. Report in columns A and B, as appropriate, all lease
financing receivables (as defined for Schedule RC-C, part I, item 10) charged-off and
recovered.
NOTE: Items 8.a and 8.b are applicable only to banks filing the FFIEC 031 report form.
8.a
Leases to individuals for household, family, and other personal expenditures.
Report in columns A and B, as appropriate, all leases to individuals for household, family,
and other personal expenditures (as defined for Schedule RC-C, part I, item 10.a, column A)
charged-off and recovered.
8.b
All other leases. Report in columns A and B, as appropriate, all other leases (as defined for
Schedule RC-C, part I, item 10.b, column A) charged-off and recovered.
9
Total. Report in columns A and B the sum of item 1 through 8. The amount reported in
column A must equal Schedule RI-B, part II, item 3, “Charge-offs,” below. The amount
reported in column B must equal Schedule RI-B, part II, item 2, “Recoveries,” below.
FFIEC 031 and 041
RI-B-4
(9-12)
RI-B - ALLOWANCE
FFIEC 031 and 041
RC - BALANCE SHEET
Item No.
Caption and Instructions
1.a
(cont.)
Exclude from cash items in process of collection:
(1) Cash items for which the reporting bank has already received credit, provided that the
funds on deposit are subject to immediate withdrawal. The amount of such cash items is
considered part of the reporting bank's balances due from depository institutions.
(2) Credit or debit card sales slips in process of collection (report as noncash items in
Schedule RC-F, item 6, "All other assets”). However, when the reporting bank has been
notified that it has been given credit, the amount of such sales slips is considered part of
the reporting bank's balances due from depository institutions.
(3) Cash items not conforming to the definition of in process of collection, whether or not
cleared through Federal Reserve Banks (report in Schedule RC-F, item 6, "All other
assets”).
(4) Commodity or bill-of-lading drafts (including arrival drafts) not yet payable (because the
merchandise against which the draft was drawn has not yet arrived), whether or not
deposit credit has been given. (If deposit credit has been given, report as loans in the
appropriate item of Schedule RC-C, part I; if the drafts were received on a collection
basis, they should be excluded entirely from the bank's balance sheet, Schedule RC,
until the funds have actually been collected.)
Unposted debits are cash items in the bank's possession, drawn on itself, that are
immediately chargeable, but that have not been charged to the general ledger deposit control
account at the close of business on the report date. All banks including an amount for
unposted debits in this item should also see Schedule RC-O, item 1.a or 1.b, "Unposted
debits."
Currency and coin include both U.S. and foreign currency and coin owned and held in all
offices of the reporting bank, currency and coin in transit to a Federal Reserve Bank or to any
other depository institution for which the reporting bank has not yet received credit, and
currency and coin in transit from a Federal Reserve Bank or from any other depository
institution for which the reporting bank's account has already been charged. Foreign
currency and coin should be converted into U.S. dollar equivalents as of the report date.
Noninterest-bearing balances due from depository institutions include balances due from
commercial banks in the U.S., other depository institutions in the U.S. (e.g., credit unions,
mutual and stock savings banks, savings or building and loan associations, and cooperative
banks), Federal Home Loan Banks, banks in foreign countries, and foreign central banks.
Noninterest-bearing balances include those noninterest-bearing funds on deposit at other
depository institutions for which the reporting bank has already received credit and which are
subject to immediate withdrawal. Balances for which the bank has not yet received credit
and balances representing checks or drafts for which immediate credit has been given but
which are not subject to immediate withdrawal are considered "cash items in process of
collection."
FFIEC 031 and 041
RC-3
(9-12)
RC - BALANCE SHEET
FFIEC 031 and 041
RC - BALANCE SHEET
Item No.
Caption and Instructions
1.a
(cont.)
Include as noninterest-bearing balances due from depository institutions:
(1) Noninterest-bearing balances due from the reporting bank's correspondents, including
amounts that its correspondent is to pass through or already has passed through to a
Federal Reserve Bank on behalf of the reporting bank (see the Glossary entry for
"pass-through reserve balances" for further discussion).
(2) Noninterest-bearing balances that reflect deposit credit received by the reporting bank
because of credit or debit card sales slips that had been forwarded for collection. (Until
credit has been received, report as noncash items in process of collection in
Schedule RC-F, item 6, "All other assets.”)
(3) Amounts that the reporting bank has actually passed through to a Federal Reserve Bank
on behalf of its respondent depository institutions (see the Glossary entry for
"pass-through reserve balances" for further discussion).
Exclude from noninterest-bearing balances due from depository institutions:
(1) Balances due from Federal Reserve Banks (report as interest-bearing balances due from
depository institutions in Schedule RC, item 1.b).
(2) Deposit accounts "due to" other depository institutions that are overdrawn (report in
Schedule RC-C, part I, item 2, "Loans to depository institutions and acceptances of other
banks").
(3) All noninterest-bearing balances that the reporting bank's trust department maintains with
other depository institutions.
1.b
Interest-bearing balances. Report all interest-bearing balances due from depository
institutions whether in the form of demand, savings, or time balances, including certificates of
deposit, but excluding certificates of deposit held for trading. Include balances due from
Federal Reserve Banks (including balances maintained to satisfy reserve balance
requirements, excess balances, and term deposits), commercial banks in the U.S., other
depository institutions in the U.S., Federal Home Loan Banks, banks in foreign countries, and
foreign central banks. Include the fair value of interest-bearing balances due from depository
institutions that are accounted for at fair value under a fair value option.
On the FFIEC 031, the components of this item will also be included in the appropriate items
of Schedule RC-A, column A. On the FFIEC 041, for banks with $300 million or more in total
assets, the components of this item will also be included in the appropriate items of
Schedule RC-A.
Exclude from interest-bearing balances:
(1) Loans to depository institutions and acceptances of other banks (report in
Schedule RC-C, part I, item 2).
(2) All interest-bearing balances that the reporting bank's trust department maintains with
other depository institutions.
(3) Certificates of deposit held for trading (report in Schedule RC, item 5).
FFIEC 031 and 041
RC-4
(9-12)
RC - BALANCE SHEET
FFIEC 031 and 041
Item No.
RC - BALANCE SHEET
Caption and Instructions
2
Securities:
2.a
Held-to-maturity securities. Report the amount from Schedule RC-B, item 8, column A,
"Total amortized cost."
2.b
Available-for-sale securities. Report the amount from Schedule RC-B, item 8, column D,
"Total fair value."
3
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.
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, net of unearned
income").
(2) Securities resale agreements that have an original maturity of one business day or roll
over under a continuing contract, if the agreement requires the bank to resell the identical
security purchased or a security that meets the definition of substantially the same in the
case of a dollar roll (report in Schedule RC, item 3.b, "Securities purchased under
agreements to resell").
(3) Deposit balances due from a Federal Home Loan Bank (report as balances due from
depository institutions in Schedule RC, item 1.a or 1.b, as appropriate).
(4) Lending transactions in foreign offices involving immediately available funds with an
original maturity of one business day or under a continuing contract that are not
securities resale agreements (report in Schedule RC, item 4.b, "Loans and leases, net of
unearned income").
For further information, see the Glossary entry for "federal funds transactions."
FFIEC 031 and 041
RC-5
(9-12)
RC - BALANCE SHEET
FFIEC 031 and 041
Item No.
3.b
RC - BALANCE SHEET
Caption and Instructions
Securities purchased under agreements to resell. Report the outstanding amount of:
(1) Securities resale agreements, regardless of maturity, if the agreement requires the bank
to resell the identical security purchased or a security that meets the definition of
substantially the same in the case of a dollar roll.
(2) Purchases of participations in pools of securities, regardless of maturity.
Report securities purchased under agreements to resell on a gross basis, i.e., do not net
them against securities sold under agreements to repurchase, except to the extent permitted
under ASC Subtopic 210-20, Balance Sheet – Offsetting (formerly FASB Interpretation
No. 41, “Offsetting of Amounts Related to Certain Repurchase and Reverse Repurchase
Agreements”). Include the fair value of securities purchased under agreements to resell that
are accounted for at fair value under a fair value option.
Exclude from this item:
(1) Resale agreements involving assets other than securities (report in Schedule RC,
item 3.a, "Federal funds sold," or item 4.b, "Loans and leases, net of unearned income,"
as appropriate, depending on the maturity and office location of the transaction).
(2) Due bills representing purchases of securities or other assets by the reporting bank that
have not yet been delivered and similar instruments, whether collateralized or
uncollateralized (report in Schedule RC, item 4.b). See the Glossary entry for "due bills."
(3) So-called yield maintenance dollar repurchase agreements (see the Glossary entry for
"repurchase/resale agreements").
For further information, see the Glossary entry for "repurchase/resale agreements."
4
Loans and lease financing receivables. Report in the appropriate subitem loans and
leases held for sale and loans and leases that the reporting bank has the intent and ability to
hold for the foreseeable future or until maturity or payoff, i.e., held for investment. The sum of
Schedule RC, items 4.a and 4.b, must equal Schedule RC-C, part I, item 12, (column A on
the FFIEC 031).
4.a
Loans and leases held for sale. Report the amount of loans and leases held for sale.
Loans and leases held for sale should be reported at the lower of cost or fair value except for
those loans held for sale that the bank has elected to account for at fair value under a fair
value option, which should be reported in this item at fair value. For loan and leases held for
sale that are reported at the lower of cost or fair value, the amount by which cost exceeds fair
value, if any, shall be accounted for as a valuation allowance within this item. No allowance
for loan and lease losses should be included in Schedule RC, item 4.c, for loans and leases
held for sale. All loans and leases reported in this item must also be reported by loan
category in Schedule RC-C, part I.
4.b
Loans and leases, net of unearned income. Report the amount of loans and leases that
the reporting bank has the intent and ability to hold for the foreseeable future or until maturity
or payoff, i.e., loans held for investment. Include loans held for investment that the bank has
elected to account for at fair value under a fair value option, which should be reported in this
item at fair value. All loans and leases reported in this item must also be reported by loan
category in Schedule RC-C, part I.
FFIEC 031 and 041
RC-6
(9-12)
RC - BALANCE SHEET
FFIEC 031 and 041
RC-A - CASH AND DUE FROM
Item No.
Caption and Instructions
2
(cont.)
(2) Balances that reflect deposit credit received by the reporting bank because of credit or
debit card sales slips that had been forwarded for collection. (Until credit has been
received, report as noncash items in process of collection in Schedule RC-F, item 6, "All
other assets.”)
Exclude from Schedule RC-A, items 2, 2.a, and 2.b:
(1) Cash items in process of collection (including cash letters and "ledger credit" items) and
unposted debits (report in Schedule RC-A, item 1, above).
(2) All balances that the reporting bank's trust department maintains with other depository
institutions.
(3) Loans to depository institutions (report in Schedule RC-C, part I, item 2).
(4) Certificates of deposit held for trading (report in Schedule RC, item 5).
2.a
U.S. branches and agencies of foreign banks (including their IBFs). Report (on the
FFIEC 031, in column A) all balances due from U.S. branches and agencies of foreign banks
(including their IBFs).
2.b
Other depository institutions in the U.S. (including their IBFs). Report (on the
FFIEC 031, in column A) all balances due from depository institutions in the U.S., other than
U.S. branches and agencies of foreign banks.
3
Balances due from banks in foreign countries and foreign central banks. On the
FFIEC 031, report this item as a single total for the domestic offices of the bank in column B,
but with a breakdown between balances due from foreign branches of other U.S. banks
(Schedule RC-A, item 3.a) and balances due from other banks in foreign countries and
foreign central banks (Schedule RC-A, item 3.b) for the fully consolidated bank in column A.
On the FFIEC 041, report balances due from foreign branches of other U.S. banks in
Schedule RC-A, item 3.a, and balances due from other banks in foreign countries and foreign
central banks in Schedule RC-A, item 3.b.
Banks in foreign countries cover:
(1) foreign-domiciled branches of other U.S. banks; and
(2) foreign-domiciled branches of foreign banks.
See the Glossary entry for "banks, U.S. and foreign" for a description of banks in foreign
countries.
For purposes of this item, foreign central banks cover:
(1) Central banks in foreign countries;
(2) Departments of foreign central governments that have, as an important part of their
functions, activities similar to those of a central bank;
FFIEC 031 and 041
RC-A-5
(9-12)
RC-A - CASH AND DUE FROM
FFIEC 031 and 041
RC-A - CASH AND DUE FROM
Item No.
Caption and Instructions
3
(cont.)
(3) Nationalized banks and banking institutions owned by central governments that have,
as an important part of their functions, activities similar to those of a central bank; and
(4) The Bank for International Settlements (BIS).
Balances due from banks in foreign countries and foreign central banks cover all
interest-bearing and noninterest-bearing balances excluding any balances that the reporting
bank holds for trading. Balances, as reported in this item, should reflect funds on deposit at
other banks in foreign countries and at foreign central banks for which the reporting bank has
already received credit. Balances with foreign central banks should include all balances with
such entities, including reserve, operating, and investment balances. On the FFIEC 031,
balances reported in column A should include "placements and redeposits" between foreign
offices of the reporting bank and foreign offices of other banks.
Exclude from Schedule RC-A, items 3, 3.a, and 3.b:
(1) Balances with U.S. branches and agencies of foreign banks (report in Schedule RC-A,
item 2 above).
(2) Loans to foreign central banks (report in Schedule RC-C, part I, item 7).
(3) Loans to banks in foreign countries (report in Schedule RC-C, part I, item 2.c).
(4) Cash items in process of collection and unposted debits (report in Schedule RC-A, item 1
above).
(5) Any balances held for trading (report in Schedule RC, item 5).
3.a
Foreign branches of other U.S. banks. Report (on the FFIEC 031, in column A) all
balances due from foreign-domiciled branches of other U.S. banks.
3.b
Other banks in foreign countries and foreign central banks. Report (on the FFIEC 031,
in column A) all balances due from banks in foreign countries, other than foreign-domiciled
branches of other U.S. banks, and foreign central banks.
4
Balances due from Federal Reserve Banks. Report (on the FFIEC 031, in columns A
and B, as appropriate) the total balances due from Federal Reserve Banks as shown by the
reporting bank's books. This amount includes balances maintained to satisfy reserve
balance requirements, excess balances, and term deposits. Include the amount of balances
maintained to satisfy reserve balance requirements actually passed through to a Federal
Reserve Bank by the reporting bank on behalf of its respondent depository institutions. If the
reporting bank is an agent for an excess balance account at a Federal Reserve Bank, the
balances in the excess balance account should not be reflected as an asset or a liability on
the reporting bank’s balance sheet and should not be reported in this item. (See the
Glossary entries for “excess balance account” and “pass-through reserve balances.”)
On the FFIEC 031, include in column A balances of the bank's Edge and Agreement
subsidiaries with a Federal Reserve Bank.
5
Total. On the FFIEC 041, report the sum of items 1 through 4. On the FFIEC 031, report the
sum of items 1 through 4 in column A for the fully consolidated bank and in column B for its
domestic offices. On the FFIEC 041, this item must equal Schedule RC, sum of items 1.a
and 1.b. On the FFIEC 031, the total of column A must equal Schedule RC, sum of items 1.a
and 1.b.
FFIEC 031 and 041
RC-A-6
(9-12)
RC-A - CASH AND DUE FROM
FFIEC 031 and 041
RC-E - DEPOSITS
SCHEDULE RC-E – DEPOSIT LIABILITIES
General Instructions
A complete discussion of deposits is included in the Glossary entry entitled "deposits." That discussion
addresses the following topics and types of deposits in detail:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
Federal Deposit Insurance Act definition of deposits;
transaction accounts;
demand deposits;
NOW accounts;
ATS accounts;
telephone or preauthorized transfer accounts;
nontransaction accounts;
savings deposits;
money market deposit accounts;
other savings deposits;
time deposits;
time certificates of deposit;
time deposits, open account;
interest-bearing deposit accounts; and
noninterest-bearing deposit accounts.
Additional discussions pertaining to deposits will also be found under separate Glossary entries for:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
borrowings and deposits in foreign offices;
brokered deposits;
cash management arrangements;
dealer reserve accounts;
hypothecated deposits;
letter of credit (for letters of credit sold for cash and travelers letters of credit);
overdraft;
pass-through reserve balances;
placements and takings; and
reciprocal balances.
On the FFIEC 031 only, Schedule RC-E consists of two parts. Part I covers the deposit liabilities of the
domestic offices of the consolidated bank. Part II covers the deposit liabilities of the foreign offices
(including Edge and Agreement subsidiaries and IBFs) of the consolidated bank. (See the Glossary
entries for "domestic office" and "foreign office" for the definitions of these terms.)
NOTE: For information about the reporting of deposits for deposit insurance and FICO assessment
purposes, refer to Schedule RC-O.
NOTE: For the appropriate treatment of deposits of depository institutions for which the reporting bank is
serving as a pass-through agent for balances maintained to satisfy reserve balance
requirements, see the Glossary entry for "pass-through reserve balances."
NOTE: For banks that elect to report deposits at fair value under a fair value option, report the fair value
of those deposits in the same items and columns as similar deposits to which a fair value option
has not been applied. Currently, deposits that include a demand feature (e.g., demand and
savings deposits in domestic offices) are not eligible to be reported under a fair value election.
FFIEC 031 and 041
RC-E-1
(9-12)
RC-E - DEPOSITS
FFIEC 031 and 041
RC-E - DEPOSITS
(Part I. Deposits in Domestic Offices)
Definitions
The term "deposits" is defined in the Glossary and generally follows the definitions of deposits used in the
Federal Deposit Insurance Act and in Federal Reserve Regulation D.
Reciprocal balances between the reporting bank and other depository institutions may be reported on a
net basis when a right of setoff exists. See the Glossary entry for "offsetting" for the conditions that must
be met for a right of setoff to exist.
The following are not reported as deposits in Schedule RC-E:
(1) Deposits received in one office of the bank for deposit in another office of the bank.
(2) Outstanding drafts (including advices or authorizations to charge the bank's balance in another
depository institution) drawn in the regular course of business by the reporting bank on other
depository institutions.
(3) Trust funds held in the bank's own trust department that the bank keeps segregated and apart
from its general assets and does not use in the conduct of its business. NOTE: Such uninvested
trust funds must be reported as deposit liabilities in Schedule RC-O, item 1.
(4) Deposits accumulated for the payment of personal loans (i.e., hypothecated deposits), which should
be netted against loans in Schedule RC-C, Loans and Lease Financing Receivables.
(5) All obligations arising from assets sold under agreements to repurchase.
(6) Overdrafts in deposit accounts. Overdrafts are to be reported as loans in Schedule RC-C and not as
negative deposits. Overdrafts in one or more transaction accounts within a group of related
transaction accounts of a single type (i.e., demand deposit accounts or NOW accounts, but not a
combination thereof) maintained in the same right and capacity by a customer (a single legal entity)
that are established under a bona fide cash management arrangement by this customer are not to be
classified as loans unless there is a net overdraft position in the group of related transaction accounts
taken as a whole. For reporting and deposit insurance assessment purposes, such accounts function
as, and are regarded as, one account rather than multiple separate accounts. (NOTE: Affiliates and
subsidiaries are considered separate legal entities.) See the Glossary entry for "cash management
arrangements" for information on bona fide cash management arrangements.
(7) Time deposits sold (issued) by the reporting bank that it has subsequently purchased in the
secondary market (typically as a result of the bank's trading activities) and has not resold as of the
report date. For purposes of these reports, a bank that purchases a time deposit it has issued is
regarded as having paid the time deposit prior to maturity. The effect of the transaction is that the
bank has cancelled a liability as opposed to having acquired an asset for its portfolio.
The following are reported as deposits:
(1) Deposits of trust funds standing to the credit of other banks and all trust funds held or deposited in
any department of the reporting bank other than the trust department.
(2) Credit items that could not be posted to the individual deposit accounts but that have been credited to
the control accounts of the various deposit categories on the general ledger.
FFIEC 031 and 041
RC-E-2
(9-12)
RC-E - DEPOSITS
FFIEC 031 and 041
Item No.
RC-E - DEPOSITS
Caption and Instructions
1
(cont.)
(f) Outstanding travelers' checks, travelers' letters of credit and other letters of credit
(less any outstanding drafts accepted thereunder) sold for cash or its equivalent by
the reporting bank or its agents.
(g) Outstanding drafts and bills of exchange accepted by the reporting bank or its agents
for money or its equivalent, including drafts accepted against a letter of credit issued
for money or its equivalent.
(h) On the FFIEC 031, checks or drafts drawn by, or on behalf of, a non-U.S. office of
the reporting bank on an account maintained at a U.S. office of the reporting bank.
Such drafts are, for Report of Condition and federal deposit insurance assessment
purposes, the same as officers' checks. This would include "London checks,"
"Eurodollar bills payable checks," and any other credit items that the domestic bank
issues in connection with such transactions.
Exclude from this item deposits of:
(1) The U.S. Government (report in Schedule RC-E, item 2).
(2) States and political subdivisions in the U.S. (report in Schedule RC-E, item 3).
(3) Commercial banks in the U.S. (report in Schedule RC-E, item 4).
(4) Other depository institutions in the U.S. (report in Schedule RC-E, item 4).
(5) Banks in foreign countries (report in Schedule RC-E, item 5).
2
Deposits of U.S. Government. Report in the appropriate column all deposits of federal
public funds made by or for the account of the United States or some department, bureau, or
official thereof.
Include in this item:
(1) U.S. Treasury Tax and Loan Accounts, including deposits of federal income tax withheld
from employee salaries, from interest and dividend payments, and from distributions or
payments from pensions, annuities, and other deferred income including IRAs; social
security tax deposits and other federal tax payments; and the proceeds from sales of
U.S. Savings Bonds.
NOTE: Only deposits credited to the U.S. Treasury Tax and Loan demand deposit
accounts that represent funds received as of the close of business of the "current" day
should be reported as Treasury Tax and Loan Demand Deposits. (The "current" day's
deposits should reflect those deposits on the bank's books standing to the credit of the
U.S. Treasury's Tax and Loan Account as of the report date.) Funds credited to Tax and
Loan Demand Deposit Accounts as of the close of business on previous days should
already have been remitted to the Federal Reserve Bank (and thus excluded from this
report) or automatically converted into open-ended interest-bearing notes (to be reported
as “Other borrowings” in Schedule RC-M, item 5.b), depending on the option selected by
the reporting institution.
FFIEC 031 and 041
RC-E-7
(9-12)
RC-E - DEPOSITS
FFIEC 031 and 041
RC-E - DEPOSITS
Item No.
Caption and Instructions
2
(cont.)
(2) Deposits standing to the credit of certain quasi-governmental institutions when the
reporting bank has been designated by the U.S. Treasury as a depository for such funds.
(3) Deposits of the U.S. Postal Service and local post offices.
Exclude from this item deposits of U.S. Government agencies and instrumentalities. (Such
deposits are to be reported in Schedule RC-E, item 1, above.)
3
Deposits of states and political subdivisions in the U.S. Report in the appropriate
column all deposits standing to the credit of states, counties, municipalities, and local housing
authorities; school, irrigation, drainage, and reclamation districts; other instrumentalities of
one or more states of the United States, the District of Columbia, Puerto Rico, and U.S.
territories and possessions; and Indian tribes in the U.S.
Also include deposits of funds advanced to states and political subdivisions by U.S.
Government agencies and corporations and deposits of withheld income taxes of states and
political subdivisions.
4
Deposits of commercial banks and other depository institutions in the U.S. Report in
the appropriate column all deposits of commercial banks and other depository institutions
located in the U.S.
Commercial banks in the U.S. cover:
(1) U.S. branches and agencies of foreign banks; and
(2) all other commercial banks in the U.S., i.e., U.S. branches of U.S. banks.
Other depository institutions in the U.S. cover:
(1) Building or savings and loan associations, homestead associations, and cooperative
banks;
(2) credit unions; and
(3) mutual and stock savings banks.
For purposes of these reports, U.S. branches and agencies of foreign banks include U.S.
branches and agencies of foreign official banking institutions and investment companies that
are chartered under Article XII of the New York State banking law and that are
majority-owned by one or more foreign banks.
For the appropriate treatment of deposits of depository institutions for which the reporting
bank is serving as a pass-through correspondent for balances maintained to satisfy reserve
balance requirements, see the Glossary entry for "pass-through reserve balances." For the
appropriate treatment of deposits of depository institutions for which the reporting bank is
acting as an agent for an excess balance account at a Federal Reserve Bank, see the
Glossary entry for “excess balance account.”
Refer to the Glossary entries for "banks, U.S. and foreign" and "depository institutions in the
U.S." for further discussion of these terms.
FFIEC 031 and 041
RC-E-8
(9-12)
RC-E - DEPOSITS
FFIEC 031 and 041
RC-E - DEPOSITS
Item No.
Caption and Instructions
4
(cont.)
Exclude from this item deposits of the following depository institutions:
(1) Banks in foreign countries (report in Schedule RC-E, item 5, below). (See the Glossary
entry for "banks, U.S. and foreign" for the definition of this term.)
(2) On the FFIEC 031, IBFs (report in part II of Schedule RC-E).
5
Deposits of banks in foreign countries. Report in the appropriate column all deposits of
banks located in foreign countries.
Banks in foreign countries cover:
(1) foreign-domiciled branches of other U.S. banks; and
(2) foreign-domiciled branches of foreign banks.
See the Glossary entry for "banks, U.S. and foreign" for further discussion of these terms.
Exclude from this item deposits of foreign official institutions and foreign central banks (to be
reported in Schedule RC-E, item 6 below) and deposits of U.S. branches and agencies of
foreign banks and New York State investment companies (to be reported in Schedule RC-E,
item 4 above).
For the appropriate treatment of deposits of depository institutions for which the reporting
bank is serving as a pass-through agent for balances maintained to satisfy reserve balance
requirements, see the Glossary entry for "pass-through reserve balances."
6
Deposits of foreign governments and official institutions. Report in the appropriate
column all deposits of foreign governments and official institutions. (See the Glossary entry
for "foreign governments and official institutions" for the definition of this term.)
Exclude from this item deposits of:
(1) U.S. branches and agencies of foreign official banking institutions (report in
Schedule RC-E, item 4, above).
(2) Nationalized banks and other banking institutions that are owned by foreign governments
and that do not function as central banks, banks of issue, or development banks (report
in Schedule RC-E, item 5, above).
(3) Foreign government-owned nonbank commercial and industrial enterprises (report in
Schedule RC-E, item 1, above).
7
Total. Report in column B the total of all demand deposits. Report in columns A and C the
sum of items 1 through 6. The sum of columns A and C of this item must equal
Schedule RC, item 13.a, "Deposits in domestic offices."
FFIEC 031 and 041
RC-E-9
(9-12)
RC-E - DEPOSITS
FFIEC 031 and 041
RC-E - DEPOSITS
Memoranda
Item No.
Caption and Instructions
1
Selected components of total deposits. The amounts to be reported in Memorandum
items 1.a through 1.f below are included as components of total deposits (in domestic offices)
(Schedule RC-E, sum of item 7, columns A and C).
1.a
Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts. Report in this
Memorandum item the total of all IRA and Keogh Plan deposits included in total deposits
(in domestic offices) (Schedule RC-E, sum of item 7, columns A and C). IRAs include
traditional IRAs, Roth IRAs, Simplified Employee Pension (SEP) IRAs, and SIMPLE IRAs.
Exclude deposits in "Section 457" deferred compensation plans and self-directed defined
contribution plans, which are primarily 401(k) plan accounts. Also exclude deposits in Health
Savings Accounts, Medical Savings Accounts, and Coverdell Education Savings Accounts
(formerly known as Education IRAs).
1.b
Total brokered deposits. Report in this Memorandum item the total of all brokered deposits
included in total deposits (in domestic offices) (Schedule RC-E, sum of item 7, columns A
and C), regardless of size or type of deposit instrument. (See the Glossary entry for
"brokered deposits" for the definition of this term.)
Brokered deposits include “reciprocal deposits.” As defined in Section 327.8(s) of the FDIC’s
regulations, “reciprocal deposits” are deposits that an “institution receives through a deposit
placement network on a reciprocal basis, such that: (1) for any deposit received, the
institution (as agent for depositors) places the same amount with other insured depository
institutions through the network; and (2) each member of the network sets the interest rate to
be paid on the entire amount of funds it places with other network members.”
1.c
Fully insured brokered deposits. Report in the appropriate subitem all fully insured
brokered deposits (as defined in the Glossary entry for "brokered deposits") included in
Schedule RC-E, Memorandum item 1.b above.
In some cases, brokered certificates of deposit are issued in $1,000 amounts under a master
certificate of deposit issued by a bank to a deposit broker in an amount that exceeds
$250,000. For these so-called “retail brokered deposits,” multiple purchases by individual
depositors from an individual bank normally do not exceed the applicable deposit insurance
limit (currently $250,000), but under current deposit insurance rules the deposit broker is not
required to provide information routinely on these purchasers and their account ownership
capacity to the bank issuing the deposits. If this information is not readily available to the
issuing bank, these brokered certificates of deposit in $1,000 amounts may be rebuttably
presumed to be fully insured brokered deposits and should be reported in Schedule RC-E,
Memorandum item 1.c.(1), below. In addition, some brokered deposits are transaction
accounts or money market deposit accounts (MMDAs) that are denominated in amounts of
$0.01 and established and maintained by the deposit broker (or its agent) as agent,
custodian, or other fiduciary for the broker’s customers. An individual depositor’s deposits
within the brokered transaction account or MMDA normally do not exceed the applicable
deposit insurance limit. As with retail brokered deposits, if information on these depositors
and their account ownership capacity is not readily available to the bank establishing the
transaction account or MMDA, the amounts in the transaction account or MMDA may be
rebuttably presumed to be fully insured brokered deposits and should be reported in
Schedule RC-E, Memorandum item 1.c.(1), below.
FFIEC 031 and 041
RC-E-10
(9-12)
RC-E - DEPOSITS
FFIEC 031 and 041
RC-K – AVERAGES
SCHEDULE RC-K – QUARTERLY AVERAGES
General Instructions
Report for the items on this schedule the average of the balances as of the close of business for each day
for the calendar quarter or an average of the balances as of the close of business on each Wednesday
during the calendar quarter. For days that an office of the bank (or any of its consolidated subsidiaries or
branches) is closed (e.g., Saturdays, Sundays, or holidays), use the amount outstanding from the
previous business day. An office is considered closed if there are no transactions posted to the general
ledger as of that date.
If the reporting bank was the acquirer in a business combination accounted for under the acquisition
method for which the acquisition date was during the calendar quarter, the quarterly averages for the
bank should include in the numerator:
Dollar amounts for the reporting bank for each day (or each Wednesday) from the beginning of the
quarter until the acquisition date and
Dollar amounts for the reporting bank and the acquired bank or business for each day (or each
Wednesday) from the acquisition date through the end of the quarter
and should include in the denominator the number of days (or Wednesdays) in the entire quarter.
If the reporting bank was acquired in a transaction for which the acquisition date was during the calendar
quarter and push down accounting was used to account for the acquisition, the quarterly averages for the
bank should include only the dollar amounts for each day (or each Wednesday) from the acquisition date
to the end of the quarter in the numerator and the number of days (or Wednesdays) from the acquisition
date through the end of the quarter in the denominator.
If the reporting bank entered into a reorganization that became effective during the calendar quarter and
has been accounted for at historical cost in a manner similar to a pooling of interests, the quarterly
averages for the bank should include dollar amounts for both the reporting bank and the bank or business
that was combined in the reorganization for each day (or each Wednesday) from the beginning to the end
of the quarter in the numerator and the number of days (or Wednesdays) in the entire quarter in the
denominator.
For further information on business combinations, push down accounting, and reorganizations, see the
Glossary entry for "business combinations."
If the bank began operating during the calendar quarter, the quarterly averages for the bank should
include only the dollar amounts for the days (or Wednesdays) since the bank began operating in the
numerator and the number of days (or Wednesdays) since the bank began operating in the denominator.
For all banks, the loan categories specified in item 6 of this schedule correspond to the loan category
definitions for Schedule RC-C, part I, Loans and Leases.
Item Instructions
Item No.
Caption and Instructions
ASSETS
1
Interest-bearing balances due from depository institutions. Report the quarterly average
for the fully consolidated bank's interest-bearing balances due from depository institutions (as
defined for Schedule RC, item 1.b, "Interest-bearing balances").
FFIEC 031 and 041
RC-K-1
(9-12)
RC-K – AVERAGES
FFIEC 031 and 041
Item No.
RC-K – AVERAGES
Caption and Instructions
2
U.S. Treasury securities and U.S. Government agency obligations (excluding
mortgage-backed securities). Report the quarterly average of the amortized cost of the
bank's held-to-maturity and available-for-sale U.S. Treasury and Government agency
obligations (as defined for Schedule RC-B, items 1 and 2, columns A and C).
3
Mortgage-backed securities. Report the quarterly average of the amortized cost of the
bank's held-to-maturity and available-for-sale mortgage-backed securities (as defined for
Schedule RC-B, item 4, columns A and C).
4
All other securities. Report the quarterly average of the amortized cost of the bank's
held-to-maturity and available-for-sale securities issued by states and political subdivisions in
the U.S., asset-backed securities and structured financial products, and other debt securities
(as defined for Schedule RC-B, items 3, 5, and 6, columns A and C) plus the quarterly
average of the historical cost of investments in mutual funds and other equity securities with
readily determinable fair values (as defined for Schedule RC-B, item 7, column C).
5
Federal funds sold and securities purchased under agreements to resell. Report the
quarterly average for federal funds sold and securities purchased under agreements to resell
(as defined for Schedule RC, item 3).
6
Loans:
FFIEC 041 FFIEC 031
Item No. Item No. Caption and Instructions
-
6.a
6.a
6.a.(1)
Total loans (in domestic offices). Report the quarterly average for total loans,
net of unearned income (as defined for Schedule RC-C, part I, items 1 through 9,
less item 11, column B).
6.b
6.a.(2)
Loans secured by real estate:
6.a.(2)(a)
Loans secured by 1-4 family residential properties. Report the quarterly
average for loans secured by 1-4 family residential properties (in domestic
offices) (as defined for Schedule RC-C, part I, item 1.c, column B).
6.b.(1)
Loans in domestic offices:
Exclude “1-4 family residential construction loans” (in domestic offices) (as
defined for Schedule RC-C, part I, item 1.a.(1), column B).
6.b.(2)
6.a.(2)(b)
All other loans secured by real estate. Report the quarterly average for all
construction, land development, and other land loans; loans secured by
farmland; loans secured by multifamily (5 or more) residential properties; and
loans secured by nonfarm nonresidential properties (in domestic offices) (as
defined for Schedule RC-C, part I, items 1.a.(1), 1.a.(2), 1.b, 1.d, 1.e.(1), and
1.e.(2), column B).
Exclude loans “Secured by 1-4 family residential properties” (in domestic offices)
(as defined for Schedule RC-C, part I, items 1.c.(1), 1.c.(2)(a), and 1.c.(2)(b),
column B).
FFIEC 031 and 041
RC-K-2
(9-12)
RC-K – AVERAGES
FFIEC 031 and 041
RC-K – AVERAGES
FFIEC 041 FFIEC 031
Item No. Item No. Caption and Instructions
-
6.a.(3)
Loans to finance agricultural production and other loans to farmers. Report
the quarterly average for loans to finance agricultural production and other loans
to farmers in domestic offices (as defined for Schedule RC-C, part I, item 3,
column B).
6.c
6.a.(4)
Commercial and industrial loans. Report the quarterly average for
commercial and industrial loans (in domestic offices) (as defined for
Schedule RC-C, part I, item 4, column B).
6.d
6.a.(5)
Loans to individuals for household, family, and other personal
expenditures:
6.d.(1)
6.a.(5)(a)
Credit cards. Report the quarterly average for credit cards. For purposes of this
schedule, credit cards (in domestic offices) (as defined for Schedule RC-C, part I,
item 6.a, column B).
6.d.(2)
6.a.(5)(b)
Other. Report the quarterly average for loans (in domestic offices) to individuals
for household, family, and other personal expenditures other than credit cards
(as defined for Schedule RC-C, part I, items 6.b, 6.c, and 6.d, column B).
-
6.b
Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs.
Report the quarterly average for total loans, net of unearned income (as defined
for Schedule RC-C, part I, items 1 through 9, less item 11), held in the reporting
bank’s foreign offices, Edge and Agreement subsidiaries, and IBFs.
FFIEC 031 and 041
Item No. Caption and Instructions
NOTE: On the FFIEC 041, item 7 is to be completed by banks that have $100 million or more in
total assets.
7
Trading assets. Report the quarterly average for the fully consolidated bank's trading assets
(as defined for Schedule RC, item 5). Trading assets include trading derivatives with positive
fair values.
8
Lease financing receivables (net of unearned income). Report the quarterly average for
the fully consolidated bank's lease financing receivables, net of unearned income (as defined
for Schedule RC-C, part I, item 10, column B, on the FFIEC 041; column A on the
FFIEC 031).
9
Total assets. Report the quarterly average for the bank's total assets, as defined for "Total
assets," on Schedule RC, item 12, except that this quarterly average should reflect all debt
securities (not held for trading) at amortized cost and available-for-sale equity securities with
readily determinable fair values at the lower of cost or fair value, and equity securities without
readily determinable fair values at historical cost. In addition, to the extent that net deferred
tax assets included in the bank's total assets, if any, include the deferred tax effects of any
unrealized holding gains and losses on available-for-sale debt securities, these deferred tax
effects may be excluded from the determination of the quarterly average for total assets. If
these deferred tax effects are excluded, this treatment must be followed consistently over
time.
This item is not the sum of items 1 through 8 above.
FFIEC 031 and 041
RC-K-3
(9-12)
RC-K – AVERAGES
FFIEC 031 and 041
Item No.
RC-K – AVERAGES
Caption and Instructions
LIABILITIES
10
Interest-bearing transaction accounts (in domestic offices). Report the quarterly
average for interest-bearing transaction accounts (in domestic offices): interest-bearing
demand deposits, NOW accounts, ATS accounts, and telephone and preauthorized transfer
accounts (as defined for Schedule RC-E, (part I,) column A, "Total transaction accounts").
Exclude noninterest-bearing demand deposits.
See the Glossary entry for "deposits" for the definitions of “demand deposits,” "NOW
accounts," "ATS accounts," and "telephone or preauthorized transfer accounts."
11
Nontransaction accounts (in domestic offices):
11.a
Savings deposits. Report the quarterly average for savings deposits (as defined for
Schedule RC-E, (part I), Memorandum items 2.a.(1) and 2.a.(2)). Savings deposits include
money market deposit accounts (MMDAs) and other savings deposits.
11.b
Time deposits of $100,000 or more. Report the quarterly average for time deposits of
$100,000 or more (as defined for Schedule RC-E, (part I), Memorandum items 2.c and 2.d).
11.c
Time deposits of less than $100,000. Report the quarterly average for time deposits of less
than $100,000 (as defined for Schedule RC-E, (part I,) Memorandum item 2.b).
FFIEC 041 FFIEC 031
Item No. Item No. Caption and Instructions
-
12
Interest-bearing deposits in foreign offices, Edge and Agreement
subsidiaries, and IBFs. Report the quarterly average for interest-bearing
deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs
(as defined for Schedule RC, item 13.b.(2), "Interest-bearing").
12
13
Federal funds purchased and securities sold under agreements to
repurchase. Report the quarterly average for federal funds purchased and
securities sold under agreements to repurchase (as defined for Schedule RC,
item 14).
NOTE: On the FFIEC 041, item 13 is to be completed by banks that have $100 million or more in
total assets.
13
14
FFIEC 031 and 041
Other borrowed money. Report the quarterly average for the fully consolidated
bank's other borrowed money (as defined for Schedule RC, item 16).
RC-K-4
(9-12)
RC-K – AVERAGES
FFIEC 031 and 041
RC-K – AVERAGES
Memorandum
FFIEC 041
Item No. Caption and Instructions
NOTE: Memorandum item 1 is applicable only to banks filing the FFIEC 041 report. There are no
Schedule RC-K memorandum items on the FFIEC 031.
1
Loans to finance agricultural production and other loans to farmers.
Memorandum 1 is to be completed by:
banks with $300 million or more in total assets, and
banks with less than $300 million in total assets and with loans to finance agricultural
production and other loans to farmers (as reported in Schedule RC-C, part I, item 3,
column B) exceeding five percent of total loans, net of unearned income.
All other banks should report a zero or the word "none" in this item.
Report in this item the quarterly average for loans to finance agricultural production and other
loans to farmers (as defined for Schedule RC-C, part I, item 3, column B).
FFIEC 031 and 041
RC-K-5
(9-12)
RC-K – AVERAGES
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FFIEC 031 and 041
RC-L – DERIVATIVES AND OFF-BALANCE SHEET
SCHEDULE RC-L – DERIVATIVES AND OFF-BALANCE SHEET ITEMS
General Instructions
Schedule RC-L should be completed on a fully consolidated basis. In addition to information about
derivatives, Schedule RC-L includes the following selected commitments, contingencies, and other
off-balance sheet items that are not reportable as part of the balance sheet of the Report of Condition
(Schedule RC). Among the items not to be reported in Schedule RC-L are contingencies arising in
connection with litigation. For those asset-backed commercial paper program conduits that the reporting
bank consolidates onto its balance sheet (Schedule RC) in accordance with ASC Subtopic 810-10,
Consolidation – Overall (formerly FASB Interpretation No. 46 (Revised), “Consolidation of Variable
Interest Entities,” as amended by FASB Statement No. 167, “Amendments to FASB
Interpretation No. 46(R)”), any credit enhancements and liquidity facilities the bank provides to the
programs should not be reported in Schedule RC-L. In contrast, for conduits that the reporting bank does
not consolidate, the bank should report the credit enhancements and liquidity facilities it provides to the
programs in the appropriate items of Schedule RC-L.
Item Instructions
Item No.
1
Caption and Instructions
Unused commitments. Report in the appropriate subitem the unused portions of
commitments. Unused commitments are to be reported gross, i.e., include in the appropriate
subitem the unused amount of commitments acquired from and conveyed or participated to
others. However, exclude commitments conveyed or participated to others that the bank is
not legally obligated to fund even if the party to whom the commitment has been conveyed or
participated fails to perform in accordance with the terms of the commitment.
For purposes of this item, commitments include:
(1) Commitments to make or purchase extensions of credit in the form of loans or
participations in loans, lease financing receivables, or similar transactions.
(2) Commitments for which the bank has charged a commitment fee or other consideration.
(3) Commitments that are legally binding.
(4) Loan proceeds that the bank is obligated to advance, such as:
(a) Loan draws;
(b) Construction progress payments; and
(c) Seasonal or living advances to farmers under prearranged lines of credit.
(5) Rotating, revolving, and open-end credit arrangements, including, but not limited to, retail
credit card lines and home equity lines of credit.
(6) Commitments to issue a commitment at some point in the future, where the bank has
extended terms, the borrower has accepted the offered terms, and the extension and
acceptance of the terms:
(a) Are in writing, regardless of whether they are legally binding on the bank and the
borrower, or
FFIEC 031 and 041
RC-L-1
(9-12)
RC-L – DERIVATIVES AND OFF-BALANCE SHEET
FFIEC 031 and 041
Item No.
RC-L – DERIVATIVES AND OFF-BALANCE SHEET
Caption and Instructions
(b) If not in writing, are legally binding on the bank and the borrower,1
1
(cont.)
even though the related loan agreement has not yet been signed and even if the
commitment to issue a commitment is revocable, provided any revocation has not yet
taken effect as of the report date.
(7) Overdraft protection on depositors’ accounts offered under a program where the bank
advises account holders of the available amount of overdraft protection, for example,
when accounts are opened or on depositors' account statements or ATM receipts.
(8) The bank’s own takedown in securities underwriting transactions.
(9) Revolving underwriting facilities (RUFs), note issuance facilities (NIFs), and other similar
arrangements, which are facilities under which a borrower can issue on a revolving basis
short-term paper in its own name, but for which the underwriting banks have a legally
binding commitment either to purchase any notes the borrower is unable to sell by the
rollover date or to advance funds to the borrower.
Exclude forward contracts and other commitments that meet the definition of a derivative
and must be accounted for in accordance with ASC Topic 815, Derivatives and Hedging
(formerly FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging
Activities,” as amended), which should be reported in Schedule RC-L, item 12. Include the
amount (not the fair value) of the unused portions of loan commitments that do not meet the
definition of a derivative that the bank has elected to report at fair value under a fair value
option. Also include forward contracts that do not meet the definition of a derivative.
The unused portions of commitments are to be reported in the appropriate subitem
regardless of whether they contain “material adverse change” clauses or other provisions
that are intended to relieve the issuer of its funding obligations under certain conditions and
regardless of whether they are unconditionally cancelable at any time.
In the case of commitments for syndicated loans, report only the bank’s proportional share of
the commitment.
For purposes of reporting the unused portions of revolving asset-based lending
commitments, the commitment is defined as the amount a bank is obligated to fund – as of
the report date – based on the contractually agreed upon terms. In the case of revolving
asset-based lending, the unused portions of such commitments should be measured as the
difference between (a) the lesser of the contractual borrowing base (i.e., eligible collateral
times the advance rate) or the note commitment limit, and (b) the sum of outstanding loans
and letters of credit under the commitment. The note commitment limit is the overall
maximum loan amount beyond which the bank will not advance funds regardless of the
amount of collateral posted. This definition of “commitment” is applicable only to revolving
asset-based lending, which is a specialized form of secured lending in which a borrower uses
current assets (e.g., accounts receivable and inventory) as collateral for a loan. The loan is
structured so that the amount of credit is limited by the value of the collateral.
1.a
Revolving, open-end lines secured by 1-4 family residential properties. Report the
unused portions of commitments to extend credit under revolving, open-end lines of credit
secured by 1-4 family residential properties. These lines, commonly known as home equity
lines, are typically secured by a junior lien and are usually accessible by check or credit card.
1
For example, either the extension or the acceptance of the terms or both are verbal, but they are nonetheless
legally binding on both parties under applicable law.
FFIEC 031 and 041
RC-L-2
(9-12)
RC-L – DERIVATIVES AND OFF-BALANCE SHEET
FFIEC 031 and 041
RC-O - ASSESSMENTS
Memoranda
Item No.
Caption and Instruction
5
(cont.)
more than $250,000, this sum should be reported in Memorandum item 5.a and the swept
funds and the related noninterest-bearing transaction account should be reported as one
account in Memorandum item 5.b.
Include public funds held in “noninterest-bearing transaction accounts” of more than
$250,000 whether or not they are collateralized with pledged securities or other pledged
assets.
Report in the appropriate subitem on an unconsolidated single FDIC certificate number basis
the amount outstanding and the number of noninterest-bearing transaction accounts (as
defined above and in the FDIC’s regulations implementing Section 343) with a balance on the
report date of more than $250,000. An institution may exclude noninterest-bearing
transaction accounts with a balance of more than $250,000 if the entire balance in the
account is fully insured under the FDIC’s regular deposit insurance rules (i.e., without
considering the insurance protection provided under Section 343), such as joint account
relationship rules or “pass-through” insurance coverage rules. In noninterest-bearing
transaction accounts with a balance of more than $250,000 where the entire balance is not
fully insured, an institution may exclude any amounts over $250,000 that are otherwise
insured under the FDIC’s regular deposit insurance rules. These amounts may be excluded
to the extent that they can be determined by the institution and fully supported in the
institution’s workpapers for this report. An institution is not required to make a determination
of amounts otherwise insured but may do so at its option.
5.a
Amount of noninterest-bearing transaction accounts of more than $250,000.
Report on an unconsolidated single FDIC certificate number basis the aggregate balance of
all noninterest-bearing transaction accounts (as defined in Schedule RC-O, Memorandum
item 5, above) with a balance on the report date of more than $250,000. This amount should
represent the total of the balances of the noninterest-bearing transaction accounts
enumerated in Call Report Schedule RC-O, Memorandum item 5.b, below.
5.b
Number of noninterest-bearing transaction accounts of more than $250,000.
Report on an unconsolidated single FDIC certificate number basis the total number of
noninterest-bearing transaction accounts (as defined in Schedule RC-O, Memorandum
item 5, above) with a balance on the report date of more than $250,000.
General Instructions for Schedule RC-O, Memorandum items 6 through 17
Memorandum items 6 through 17 are applicable only to large institutions and/or highly complex
institutions as defined below. Amounts reported in Memorandum items 6 through 9, 14, and 15 will not
be made available to the public on an individual institution basis. Large institutions and highly complex
institutions should complete Memorandum items 6 through 17, as appropriate, on a fully consolidated
basis. Thus, when a large institution or highly complex institution owns another FDIC-insured institution
as a subsidiary, it should complete Memorandum items 6 through 17, as appropriate, on a fully
consolidated basis.
According to Section 327.8(f) of the FDIC’s regulations, a large institution is an FDIC-insured bank or
savings association that reported total assets of $10 billion or more as of December 31, 2006, that does
not meet the definition of a highly complex institution. After December 31, 2006, if a bank or savings
association not previously classified as a large institution reports total assets of $10 billion or more for
four consecutive quarters, the bank or savings association will be classified as a large institution
beginning the following quarter. In the Consolidated Reports of Condition and Income, an FDIC-insured
depository institution’s total assets is reported in Schedule RC, item 12.
FFIEC 031 and 041
RC-O-19
(9-12)
RC-O - ASSESSMENTS
FFIEC 031 and 041
RC-O - ASSESSMENTS
Memoranda
General Instructions for Schedule RC-O, Memorandum items 6 through 17 (cont.)
According to Section 327.8(g) of the FDIC’s regulations, a highly complex institution is an FDIC-insured
bank or savings association (excluding a credit card bank1) that:
(1) Has had $50 billion or more in total assets for at least four consecutive quarters that either is
controlled by a U.S. parent holding company that has had $500 billion or more in total assets for four
consecutive quarters, or is controlled by one or more intermediate U.S. parent holding companies
that are controlled by a U.S. holding company that has had $500 billion or more in total assets for four
consecutive quarters; or
(2) Is a processing bank or trust company that has had $10 billion or more in total assets for at least four
consecutive quarters. According to Section 327.8(s) of the FDIC’s regulations, a processing bank or
trust company is “an institution whose last three years’ non-lending interest income, fiduciary
revenues, and investment banking fees, combined, exceed 50 percent of total revenues (and its last
three years fiduciary revenues are non-zero), and whose total fiduciary assets total $500 billion or
more.”
If, after December 31, 2010, a bank or savings association classified as a highly complex institution falls
below $50 billion in total assets for four consecutive quarters, or its parent company or companies fall
below $500 billion in total assets for four consecutive quarters, or a processing bank or trust company
falls below $10 billion in total assets for four consecutive quarters, the FDIC will reclassify the bank or
savings association as a large institution or a small institution, as appropriate, beginning the quarter after
the fourth consecutive quarter.
Transition Guidance for Reporting “Subprime Consumer Loans” and “Leveraged Loans and Securities”
as Defined for Assessment Purposes Only in FDIC Regulations2 – For loans originated or purchased
prior to April 1, 2013, and for securities where the underlying loans were originated predominantly prior to
April 1, 2013, for which the reporting institution does not have the information necessary to determine
subprime consumer or leveraged status in accordance with the definitions of these asset categories set
forth in the FDIC’s assessment regulations and these instructions, the institution may use its existing
internal methodology for identifying subprime consumer or leveraged loans and securities as the basis for
reporting these assets for deposit insurance assessment purposes in Schedule RC-O, Memorandum
items 8 and 9. Institutions that do not have an existing methodology in place to identify subprime
consumer or leveraged loans and securities (because they are not required to report on these exposures
to their primary federal regulator for examination or other supervisory purposes or did not measure and
monitor loans and securities with these characteristics for internal risk management purposes) may, as
an alternative to applying the definitions in the FDIC’s assessment regulations to pre-April 1, 2013, loans
and securities, apply existing guidance provided by their primary federal regulator, the agencies’ 2001
3
Expanded Guidance for Subprime Lending Programs, or the February 2008 Comptroller’s Handbook on
1
As defined in Section 327.8(t) of the FDIC’s regulation, a credit card bank is “a bank for which credit card
receivables plus securitized receivables exceed 50 percent of assets plus securitized receivables.”
2
The definitions for subprime consumer and leveraged loans included in these Instructions are essentially the same
as the definitions for subprime consumer and leveraged loans included in the FDIC’s assessment regulations
(12 CFR Part 327, Subpart A, Appendix C, as amended in February 2011,
http://www.fdic.gov/regulations/laws/federal/2011/11FinalFeb25.pdf). However, to assist institutions in properly
identifying subprime consumer and leveraged loans for reporting in Schedule RC-O and deposit insurance pricing
purposes, certain clarifications to the definitions in the assessment regulations have been included in these
instructions to facilitate the identification of such loans for assessment reporting purposes.
3
http://www.fdic.gov/news/news/press/2001/pr0901a.html.
FFIEC 031 and 041
RC-O-20
(9-12)
RC-O - ASSESSMENTS
FFIEC 031 and 041
RC-O - ASSESSMENTS
Memoranda
General Instructions for Schedule RC-O, Memorandum items 6 through 17 (cont.)
Leveraged Lending1 for purposes of identifying subprime consumer and leveraged loans originated or
purchased prior to April 1, 2013, and subprime consumer and leveraged securities where the underlying
loans were originated predominantly prior to April 1, 2013. All loans originated on or after April 1, 2013,
and all securities where the underlying loans were originated predominantly on or after April 1, 2013,
must be reported according to the definitions of these asset categories set forth in the FDIC’s assessment
regulations and these instructions.
However, for such pre-April 1, 2013, loans and securities, leveraged loans that are renewed and
subprime consumer loans that are refinanced on or after April 1, 2013, must then be reported as
leveraged or subprime consumer loans and securities according to the definitions of these higher-risk
asset categories set forth in the FDIC’s assessment regulations and these instructions.
For loans purchased on or after April 1, 2013, institutions may apply this transition guidance to loans
originated prior to that date. Loans purchased on or after April 1, 2013, that also were originated on or
after that date must be reported as subprime or leveraged according to the definitions of these asset
categories set forth in the FDIC’s assessment regulations and these instructions.
Large and highly complex institutions may need to revise their data systems to support the reporting of
newly originated or purchased subprime consumer and leveraged loans and securities for assessment
purposes only in accordance with the definitions in the FDIC’s assessment regulations and these
instructions on a going-forward basis beginning no later than April 1, 2013. Large and highly complex
institutions relying on the transition guidance described above for reporting pre-April 1, 2013, subprime
consumer and leveraged loans and securities will be expected to provide the FDIC qualitative
descriptions of how the characteristics of the assets reported using their existing internal methodologies
for identifying loans and securities in these higher-risk asset categories differ from those specified in the
subprime consumer and leveraged loan definitions for assessment purposes only in the FDIC’s
assessment regulations and these instructions, including the principal areas of difference between these
two approaches for each higher-risk asset category. The FDIC may review these descriptions of
differences and assess the extent to which institutions’ existing internal methodologies align with the
applicable supervisory policy guidance for categorizing these loans. Any departures from such
supervisory policy guidance discovered in these reviews, as well as institutions’ progress in planning and
implementing necessary data systems changes, will be considered when forming supervisory strategies
for remedying departures from existing supervisory policy guidance and exercising deposit insurance
pricing discretion for individual large and highly complex institutions.
Amounts Guaranteed or Insured by the U.S. Government, its Agencies, or its Government-Sponsored
Agencies – The instructions for Schedule RC-O, Memorandum items 6 through 9, 10.b, 11, 13, and 16
refer to amounts recoverable from, or guaranteed or insured by, the U.S. government, its agencies, or its
government-sponsored agencies under guarantee or insurance provisions. Examples include
guarantees or insurance (or reinsurance) provided by the Department of Veterans Affairs, the Federal
Housing Administration, the Small Business Administration (SBA), the Department of Agriculture Rural
Development Loan Program, and the Department of Education for individual loans as well as coverage
provided by the FDIC under loss-sharing agreements. For loan securitizations and securities, examples
include those guaranteed by the Government National Mortgage Association, the Federal National
Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac)
as well as SBA Guaranteed Loan Pool Certificates and securities covered by FDIC loss-sharing
agreements. However, if an institution holds securities backed by mortgages it has transferred to
Fannie Mae or Freddie Mac with recourse or other transferor-provided credit enhancements, these
1
http://www.occ.gov/static/publications/handbook/LeveragedLending.pdf.
FFIEC 031 and 041
RC-O-21
(9-12)
RC-O - ASSESSMENTS
FFIEC 031 and 041
RC-O - ASSESSMENTS
Memoranda
General Instructions for Schedule RC-O, Memorandum items 6 through 17 (cont.)
securities should not be considered guaranteed to the extent of the institution’s maximum contractual
credit exposure arising from the credit enhancements. NOTE: Because certain information on coverage
under FDIC loss-sharing agreements is reported elsewhere in the Consolidated Reports of Condition and
Income, the treatment of FDIC loss-sharing agreements varies in Schedule RC-O, Memorandum items 6
through 9, 10.b, 11, 13, and 16.
Item No.
Caption and Instruction
NOTE: Memorandum items 6 through 12 are to be completed on a fully consolidated basis by “large
institutions” and “highly complex institutions.”
6
Criticized and classified items. Criticized and classified items should be reported on a
consolidated basis and include all on- and off-balance sheet items an institution or its primary
federal regulator has graded Special Mention or worse (Substandard, Doubtful, or Loss).
Such items include, but are not limited to, retail items adversely classified under the
agencies’ Uniform Retail Credit Classification and Account Management Policy,1 securities,
funded and unfunded loans,2 other real estate owned, other assets, and marked-to-market
counterparty positions (less credit valuation adjustments for these counterparty positions).3
Criticized and classified items exclude loans and securities reported as trading assets, and
the amount recoverable on an on- or off-balance sheet item from the U.S. government, its
agencies, or its government-sponsored agencies under guarantee or insurance provisions,
including FDIC loss-sharing agreements.
For purposes of the criticized and classified items definition, Loss items include any items
graded Loss that have not yet been written off against the allowance for loan and lease
losses (or another valuation allowance) or charged directly to earnings, as appropriate.
However, because an item should be written off or charged off in the period in which the item
is deemed Loss, the amount reported in Memorandum item 6.d, below, generally should be
zero.
A marked-to-market counterparty position is equal to the sum of the net marked-to-market
derivative exposures for each counterparty. The net marked-to-market derivative exposure
equals the sum of all positive marked-to-market exposures net of legally enforceable netting
provisions and net of all collateral held under a legally enforceable Credit Support Annex plus
any exposure where excess collateral has been posted to the counterparty. For purposes of
this item, a marked-to-market counterparty position less any credit valuation adjustment can
never be less than zero.
6.a
Special mention. Report on a fully consolidated basis the amount of on- and off-balance
sheet items the reporting institution or its primary federal regulator has graded Special
Mention.
1
http://www.fdic.gov/news/news/financial/2000/fil0040a.pdf.
The amount of the unfunded loan that should be reported as criticized or classified should equal the amount that
the borrower is entitled to draw upon as of the reporting date, i.e., the unused commitment as defined in the
instructions for Schedule RC-L, item 1.
3
An institution that has not previously measured its marked-to-market counterparty positions net of any applicable
credit valuation adjustments for purposes of reporting criticized and classified items internally and to its primary
federal regulator may report these positions in this same manner in Schedule RC-O, Memorandum item 6, particularly
if the institution concludes that updating its reporting systems to net these adjustments would impose an undue
burden on the institution.
2
FFIEC 031 and 041
RC-O-22
(9-12)
RC-O - ASSESSMENTS
FFIEC 031 and 041
Item No.
6
RC-P - MORTGAGE BANKING ACTIVITIES
Caption and Instructions
Repurchases and indemnifications of 1-4 family residential mortgage loans during the
quarter. As a result of its 1–4 family residential mortgage banking activities, a bank may be
obligated to repurchase mortgage loans that it has sold or otherwise indemnify the loan
purchaser against loss because of borrower defaults, loan defects, other breaches of
representations and warranties, or for other reasons. Report in the appropriate subitem all
1-4 family residential mortgage loans previously sold by the bank or a consolidated subsidiary
subject to an obligation to repurchase or indemnify that have been repurchased or
indemnified during the calendar quarter ending on the report date. Do not reduce this
amount by any third-party indemnifications or reimbursements that the bank has received.
Repurchased 1-4 family residential mortgage loans include loans that the bank (or a
consolidated subsidiary) had sold but subsequently repurchased under repurchase obligation
provisions of the sales agreement because of a delinquency, noncompliance with the sellers’
representations and warranties, fraud or misrepresentation, or any other contractual
requirement. Exclude 1-4 family residential mortgage loans that have been repurchased
solely at the discretion of the bank (such as delinquent mortgage loans backing GNMA
mortgage-backed securities), i.e., where the sales agreement contains a repurchase option
(which may be conditional), but not a repurchase obligation.
Indemnifications of 1-4 family residential mortgage loans are limited to reimbursements to
loan purchasers or other third parties for credit losses on loans that the bank (or a
consolidated subsidiary) has sold. Include reimbursements made on loans where the bank
has agreed with the purchaser or other third party not to repurchase the loan as required
under the sales agreement, but rather to guarantee that no credit loss is sustained.
Indemnifications also include loans for which payments have been made by the bank (or a
consolidated subsidiary) to purchasers or other third parties as reimbursements for deficiency
balances arising from sales of real estate collateral (whether or not foreclosed) on loans that
the bank (or a consolidated subsidiary) has sold. Exclude indemnification arrangements that
are limited to reimbursements of legal fees or administrative costs.
6.a
Closed-end first liens. Report the total principal amount outstanding as of the date of
repurchase or indemnification of closed-end first lien 1-4 family residential mortgage loans
previously sold by the bank or a consolidated subsidiary that have been repurchased or
indemnified during the calendar quarter ending on the report date.
6.b
Closed-end junior liens. Report the total principal amount outstanding as of the date of
repurchase or indemnification of closed-end junior lien 1-4 family residential mortgage loans
previously sold by the bank or a consolidated subsidiary that have been repurchased or
indemnified during the calendar quarter ending on the report date.
6.c
Open-end loans extended under lines of credit:
6.c.(1)
Total commitment under the lines of credit. Report the total amount of open-end
commitments under revolving, open-end lines of credit secured by 1-4 family residential
properties that have been repurchased or indemnified during the calendar quarter ending on
the report date.
6.c.(2)
Principal amount funded under the lines of credit. Report the total principal amount
funded under open-end commitments associated with the revolving, open-end lines of credit
secured by 1-4 family residential properties reported in item 6.c.(1) above that have been
repurchased or indemnified during the calendar quarter ending on the report date.
FFIEC 031 and 041
RC-P-5
(9-12)
RC-P - MORTGAGE BANKING ACTIVITIES
FFIEC 031 and 041
Item No.
7
RC-P - MORTGAGE BANKING ACTIVITIES
Caption and Instructions
Representation and warranty reserves for 1-4 family residential mortgage loans sold.
When an institution sells or securitizes mortgage loans, it typically makes certain
representations and warranties to the investors or other purchasers of the loans at the time
of the sale and to any financial guarantors or mortgage insurers of the loans sold. The
specific representations and warranties may relate to the ownership of the loan, the validity of
the lien securing the loan, and the loan’s compliance with specified underwriting standards.
Under ASC Subtopic 450-20, Contingencies – Loss Contingencies (formerly FASB Statement
No. 5, “Accounting for Contingencies”), an institution is required to accrue loss contingencies
relating to the representations and warranties made in connection with its mortgage
securitization activities and mortgage loan sales when it is probable that a loss has been
incurred and the amount of the loss can be reasonably estimated.
Report in the appropriate subitem the amount of representation and warranty reserves
included in Schedule RC-G, item 4, “All other liabilities,” that the institution maintains for
1-4 family residential mortgage loans sold, including those mortgage loans transferred in
securitizations accounted for as sales.
Amounts reported in Schedule RC-P, items 7.a and 7.b, will not be made available to the
public on an individual institution basis. Amounts reported in Schedule RC-P, item 7.c, will be
publicly available.
7.a
For representations and warranties made to U.S. Government agencies and
Government-sponsored agencies. Report the amount of reserves that the institution
maintains for representations and warranties made to U.S. Government agencies and
Government-sponsored agencies in connection with sales of 1-4 family residential mortgage
loans, including mortgage loans transferred in securitizations accounted for as sales.
U.S. Government agencies and Government-sponsored agencies include, but are not limited
to, such agencies as the Federal Housing Administration (FHA), the Department of Veterans
Affairs (VA), the Government National Mortgage Association (GNMA), the Federal Home
Loan Mortgage Corporation (FHLMC), and the Federal National Mortgage Association
(FNMA).
7.b
For representations and warranties made to other parties. Report the amount of
reserves that the institution maintains for representations and warranties made to parties
other than U.S. Government agencies and Government-sponsored agencies in connection
with sales of 1-4 family residential mortgage loans, including mortgage loans transferred in
securitizations accounted for as sales.
7.c
Total representation and warranty reserves. Report the sum of items 7.a and 7.b.
FFIEC 031 and 041
RC-P-6
(9-12)
RC-P - MORTGAGE BANKING ACTIVITIES
FFIEC 031 and 041
GLOSSARY
Equity-Indexed Certificates of Deposit (cont.):
Unless the bank elects to account for the equity-indexed certificate of deposit in its entirety at fair value,
the notional amount of the embedded equity call option must be reported in Schedule RC-L,
item 12.d.(1), column C, and item 14, column C, and its fair value (which will always be negative or zero,
but not positive) must be reported in Schedule RC-L, item 15.b.(2), column C. The notional amount of
the freestanding equity derivative must be reported in the appropriate subitem of Schedule RC-L,
item 12, column C (e.g., item 12.e, column C, if it is an equity swap), and in Schedule RC-L, item 14,
column C. The fair value of the freestanding equity derivative must be included in the appropriate
subitem of Schedule RC-L, item 15.b, column C. The equity derivative embedded in the equity-indexed
certificate of deposit is a written option, which is not covered by the agencies' risk-based capital
standards. However, the freestanding equity derivative is covered by these standards.
For deposit insurance assessment purposes, if the carrying value of the certificate of deposit host
contract and the fair value of the embedded equity derivative are combined and reported together as a
deposit liability on the balance sheet, the difference between these combined amounts and the face
amount of the certificate of deposit should be treated as an unamortized premium or discount, as
appropriate, for purposes of reporting total deposit liabilities in Schedule RC-O, item 1. If these two
amounts are not combined and only the carrying value of the certificate of deposit host contract is
reported as a deposit liability on the balance sheet, the difference between the carrying value and the
face amount of the certificate of deposit should be treated as an unamortized discount in
Schedule RC-O, item 1. If the bank elects to account for the equity-indexed certificate of deposit in its
entirety at fair value, the difference between the fair value and the face amount of the certificate of
deposit should be treated as an unamortized premium or discount, as appropriate, in Schedule RC-O,
item 1.
A bank that purchases an equity-indexed certificate of deposit for investment purposes must either
account for the embedded purchased equity call option separately from the certificate of deposit host
contract or irrevocably elect to account for the hybrid instrument (the equity-indexed certificate of
deposit) in its entirety at fair value.
If the bank accounts for the purchased equity call option separately from the certificate of deposit,
the fair value of this embedded derivative on the date of purchase must be deducted from the
purchase price of the certificate, creating a discount on the deposit that must be accreted into
income over the term of the deposit using the effective interest method. This accretion should be
reported in the income statement in Schedule RI, item 1.c. The embedded equity derivative must
be "marked to market" at least quarterly with any changes in its fair value recognized in earnings.
These fair value changes should be reported consistently in Schedule RI in either item 5.l, "Other
noninterest income," or item 7.d, "Other noninterest expense." The carrying value of the certificate
of deposit host contract and the fair value of the embedded equity derivative may be combined and
reported together as interest-bearing balances due from other depository institutions on the
balance sheet in Schedule RC, item 1.b.
If the bank elects to account for the equity-indexed certificate of deposit in its entirety at fair value,
no discount is to be recorded on the certificate of deposit. Rather, the equity-indexed certificate of
deposit must be “marked to market” at least quarterly, with changes in the instrument’s fair value
reported in the income statement consistently in either item 5.l, "Other noninterest income," or
item 7.d, "Other noninterest expense,” excluding interest income that is reported in Schedule RI,
item 1.c.
Unless the bank elects to account for the equity-indexed certificate of deposit in its entirety at fair value,
the notional amount of the embedded derivative must be reported in Schedule RC-L, item 12.d.(2),
column C, and item 14, column C, and its fair value (which will always be positive or zero, but not
negative) must be reported in Schedule RC-L, item 15.b.(1), column C. The embedded equity
derivative in the equity-indexed certificate of deposit is a purchased option, which is subject to the
agencies' risk-based capital standards unless the fair value election has been made.
FFIEC 031 and 041
A-33
(9-12)
GLOSSARY
FFIEC 031 and 041
GLOSSARY
Equity Method of Accounting: The equity method of accounting shall be used to account for:
(1) Investments in subsidiaries that have not been consolidated; associated companies; and corporate
joint ventures, unincorporated joint ventures, and general partnerships over which the bank
exercises significant influence; and
(2) Noncontrolling investments in:
(a) Limited partnerships; and
(b) Limited liability companies that maintain “specific ownership accounts” for each investor and
are within the scope of ASC Subtopic 323-30, Investments-Equity Method and Joint Ventures –
Partnerships, Joint Ventures, and Limited Liability Entities (formerly EITF Issue No. 03-16,
“Accounting for Investments in Limited Liability Companies”)
unless the investment in the limited partnership or limited liability company is so minor that the
limited partner or investor may have virtually no influence over the operating and financial policies
of the partnership or company. Consistent with guidance in ASC Subtopic 323-30,
Investments-Equity Method and Joint Ventures – Partnerships, Joint Ventures, and Limited Liability
Entities (formerly EITF Topic D-46, “Accounting for Limited Partnership Investments”),
noncontrolling investments of more than 3 to 5 percent are considered to be more than minor.
The entities in which these investments have been made are collectively referred to as “investees.”
Under the equity method, the carrying value of a bank’s investment in an investee is originally recorded
at cost but is adjusted periodically to record as income the bank’s proportionate share of the investee’s
earnings or losses and decreased by the amount of cash dividends or similar distributions received
from the investee. For purposes of these reports, the date through which the carrying value of the
bank’s investment in an investee has been adjusted should, to the extent practicable, match the report
date of the Report of Condition, but in no case differ by more than 93 days from the report.
See also "subsidiaries."
Excess Balance Account: An excess balance account (EBA) is a limited-purpose account at a Federal
Reserve Bank established for maintaining the excess balances of one or more depository institutions
(participants) that are eligible to earn interest on balances held at the Federal Reserve Banks. An EBA
is managed by another depository institution that has its own account at a Federal Reserve Bank (such
as a participant’s pass-through correspondent) and acts as an agent on behalf of the participants.
Balances in an EBA represent a liability of a Federal Reserve Bank directly to the EBA participants and
not to the agent. The Federal Reserve Banks pay interest on the average balance in the EBA over a
7-day maintenance period and the agent disburses that interest to each participant in accordance with
the instructions of the participant. Only a participant’s excess balances may be placed in an EBA; the
account balance cannot be used to satisfy the participant’s reserve balance requirement.
The reporting of an EBA by participants and agents differs from the required reporting of a passthrough reserve relationship, which is described in the Glossary entry for “pass-through reserve
balances.”
FFIEC 031 and 041
A-34
(9-12)
GLOSSARY
FFIEC 031 and 041
GLOSSARY
Fair Value (cont.):
Level 1 fair value measurement inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that a bank has the ability to access at the measurement date. In addition, a
Level 1 fair value measurement of a liability can also include the quoted price for an identical liability
when traded as an asset in an active market when no adjustments to the quoted price of the asset are
required.
Level 2 fair value measurement inputs are inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or indirectly. If the asset or liability has a
specified (contractual) term, a Level 2 input must be observable for substantially the full term of the
asset or liability. Depending on the specific factors related to an asset or a liability, certain adjustments
to Level 2 inputs may be necessary to determine the fair value of the asset or liability. If those
adjustments are significant to the asset or liability’s fair value in its entirety, the adjustments may render
the fair value measurement to a Level 3 measurement.
Level 3 fair value measurement inputs are unobservable inputs for the asset or liability. Although these
inputs may not be readily observable in the market, the fair value measurement objective is,
nonetheless, to develop an exit price for the asset or liability from the perspective of a market
participant. Therefore, Level 3 fair value measurement inputs should reflect the bank’s own
assumptions about the assumptions that a market participant would use in pricing an asset or liability
and should be based on the best information available in the circumstances.
Refer to ASC Topic 820 for additional fair value measurement guidance, including considerations
related to holding large positions (blocks), the existence of multiple active markets, and the use of
practical expedients.
Measurement of Fair Values in Stressed Market Conditions – The measurement of various assets and
liabilities on the balance sheet – including trading assets and liabilities, available-for-sale securities,
loans held for sale, assets and liabilities accounted for under the fair value option, and foreclosed
assets – involves the use of fair values. During periods of market stress, the fair values of some
financial instruments and nonfinancial assets may be difficult to determine. Institutions are reminded
that, under such conditions, fair value measurements should be determined consistent with the
objective of fair value set forth in ASC Topic 820.
ASC Topic 820 provides guidance on determining fair value when the volume and level of activity for
an asset or liability have significantly decreased when compared with normal market activity for the
asset or liability (or similar assets or liabilities). According to ASC Topic 820, if there has been such a
significant decrease, transactions or quoted prices may not be determinative of fair value because, for
example, there may be increased instances of transactions that are not orderly. In those
circumstances, further analysis of transactions or quoted prices is needed, and a significant adjustment
to the transactions or quoted prices may be necessary to estimate fair value in accordance with ASC
Topic 820.
Federal Funds Transactions: For purposes of the Reports of Condition and Income, federal funds
transactions involve the reporting bank's lending (federal funds sold) or borrowing (federal funds
purchased) in domestic offices of immediately available funds under agreements or contracts that have
an original maturity of one business day or roll over under a continuing contract. However, funds lent
or borrowed in the form of securities resale or repurchase agreements, due bills, borrowings from the
Discount and Credit Department of a Federal Reserve Bank, deposits with and advances from a
Federal Home Loan Bank, and overnight loans for commercial and industrial purposes are excluded
from federal funds. Transactions that are to be reported as federal funds transactions may be secured
or unsecured or may involve an agreement to resell loans or other instruments that are not securities.
FFIEC 031 and 041
A-34c
(9-12)
GLOSSARY
FFIEC 031 and 041
GLOSSARY
Federal Funds Transactions (cont.):
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.
The borrowing and lending of immediately available funds has an original maturity of one business day
if the funds borrowed on one business day are to be repaid or the transaction reversed on the next
business day, that is, if immediately available funds borrowed today are to be repaid tomorrow (in
tomorrow's immediately available funds). Such transactions include those made on a Friday to mature
or be reversed the following Monday and those made on the last business day prior to a holiday (for
either or both of the parties to the transaction) to mature or be reversed on the first business day
following the holiday.
A continuing contract is a contract or agreement that remains in effect for more than one business day,
but has no specified maturity and does not require advance notice of either party to terminate. Such
contracts may also be known as rollovers or as open-ended agreements.
Federal funds may take the form of the following two types of transactions in domestic offices provided
that the transactions meet the above criteria (i.e., immediately available funds with an original maturity
of one business day or under a continuing contract):
(1) Unsecured loans (federal funds sold) or borrowings (federal funds purchased). (In some market
usage, the term "fed funds" or "pure fed funds" is confined to unsecured loans of immediately
available balances.)
(2) Purchases (sales) of financial assets (other than securities) under agreements to resell
(repurchase) that have original maturities of one business day (or are under continuing contracts)
and are in immediately available funds.
Any borrowing or lending of immediately available funds in domestic offices that has an original
maturity of more than one business day, other than securities repurchase or resale agreements, is to
be treated as a borrowing or as a loan, not as federal funds. Such transactions are sometimes referred
to as "term federal funds."
Federally-Sponsored Lending Agency: A federally-sponsored lending agency is an agency or
corporation that has been chartered, authorized, or organized as a result of federal legislation for the
purpose of providing credit services to a designated sector of the economy. These agencies include
Banks for Cooperatives, Federal Home Loan Banks, the Federal Home Loan Mortgage Corporation,
Federal Intermediate Credit Banks, Federal Land Banks, the Federal National Mortgage Association,
and the Student Loan Marketing Association.
Fees, Loan: See "loan fees."
Foreclosed Assets: The accounting and reporting standards for foreclosed assets are set forth in
ASC Subtopic 310-40, Receivables – Troubled Debt Restructurings by Creditors (formerly
FASB Statement No. 15, "Accounting by Debtors and Creditors for Troubled Debt Restructurings"), and
ASC Topic 360, Property, Plant, and Equipment (formerly FASB Statement No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets"). Subsequent to the issuance of Statement No. 144,
AICPA Statement of Position (SOP) No. 92-3, "Accounting for Foreclosed Assets," was rescinded.
Certain provisions of SOP 92-3 are not present in Statement No. 144, but the application of these
provisions represents prevalent practice in the banking industry and is consistent with safe and sound
banking practices and the accounting objectives set forth in Section 37(a) of the Federal Deposit
Insurance Act. These provisions of SOP 92-3 have been incorporated into this Glossary entry, which
banks must follow for purposes of preparing their Reports of Condition and Income.
FFIEC 031 and 041
A-34d
(9-12)
GLOSSARY
FFIEC 031 and 041
GLOSSARY
Foreclosed Assets (cont.):
A bank that receives from a borrower in full satisfaction of a loan either receivables from a third party,
an equity interest in the borrower, or another type of asset (except a long-lived asset that will be sold)
shall initially measure the asset received at its fair value at the time of the restructuring. When a bank
receives a long-lived asset, such as real estate, from a borrower in full satisfaction of a loan, the
long-lived asset is rebuttably presumed to be held for sale and the bank shall initially measure this
asset at its fair value less cost to sell. The fair value (less cost to sell, if applicable) of the asset
received in full satisfaction of the loan becomes the "cost" of the asset. The amount, if any, by which
the recorded amount of the loan1 exceeds the fair value (less cost to sell, if applicable) of the asset is a
loss which must be charged to the allowance for loan and lease losses at the time of restructuring,
foreclosure, or repossession. In those cases where property is received in full satisfaction of an asset
other than a loan (e.g., a debt security), the loss should be reported on the income statement in a
manner consistent with the balance sheet classification of the asset satisfied.
If an asset is sold shortly after it is received in a restructuring, foreclosure, or repossession, it would
generally be appropriate to substitute the value received in the sale (net of the cost to sell for a longlived asset, such as real estate, that has been sold) for the fair value (less cost to sell for a long-lived
asset, such as real estate, that will be sold) that had been estimated at the time of restructuring,
foreclosure, or repossession. Any adjustments should be made to the loss charged against the
allowance.
An asset received in partial satisfaction of a loan should be initially measured as described above and
the recorded amount of the loan should be reduced by the fair value (less cost to sell, if applicable) of
the asset at the time of restructuring, foreclosure, or repossession.
The measurement and accounting subsequent to acquisition for real estate received in full or partial
satisfaction of a loan, including through foreclosure or repossession, is discussed below in this
Glossary entry. For other types of assets that a bank receives in full or partial satisfaction of a loan,
the bank generally should subsequently measure and account for such assets in accordance with other
applicable generally accepted accounting principles and regulatory reporting instructions for such
assets.
For purposes of these reports, foreclosed assets include loans where the bank, as creditor, has
received physical possession of a borrower's assets, regardless of whether formal foreclosure
proceedings take place. In such situations, the secured loan should be recategorized on the balance
sheet in the asset category appropriate to the underlying collateral (e.g., as other real estate owned for
real estate collateral) and accounted for as described above.
The amount of any senior debt (principal and accrued interest) to which foreclosed real estate is
subject at the time of foreclosure must be reported as a liability in Schedule RC-M, item 5.b, "Other
borrowings."
After foreclosure, each foreclosed real estate asset (including any real estate for which the bank
receives physical possession, regardless of whether formal foreclosure proceedings take place) must
be carried at the lower of (1) the fair value of the asset minus the estimated costs to sell the asset or
(2) the cost of the asset (as defined in the preceding paragraphs). This determination must be made
on an asset-by-asset basis. If the fair value of a foreclosed real estate asset minus the estimated costs
to sell the asset is less than the asset's cost, the deficiency must be recognized as a valuation
allowance against the asset which is created through a charge to expense. The valuation allowance
should thereafter be increased or decreased (but not below zero) through charges or credits to
expense for changes in the asset's fair value or estimated selling costs.
1
The recorded amount of the loan is the loan balance adjusted for any unamortized premium or discount and
unamortized loan fees or costs, less any amount previously charged off, plus recorded accrued interest.
FFIEC 031 and 041
A-35
(9-12)
GLOSSARY
FFIEC 031 and 041
GLOSSARY
Foreclosed Assets (cont.):
If a foreclosed real estate asset is held for more than a short period of time, any declines in value after
foreclosure and any gain or loss from the sale or disposition of the asset shall not be reported as a loan
or lease loss or recovery and shall not be debited or credited to the allowance for loan and lease
losses. Such additional declines in value and the gain or loss from the sale or disposition shall be
reported net on the income statement in Schedule RI, item 5.j, “Net gains (losses) on sales of other
real estate owned.”
Dispositions of Foreclosed Real Estate – The primary accounting guidance for sales of foreclosed real
estate is ASC Subtopic 360-20, Property, Plant, and Equipment – Real Estate Sales (formerly FASB
Statement No. 66, "Accounting for Sales of Real Estate"). This standard, which applies to all
transactions in which the seller provides financing to the buyer of the real estate, establishes the
following methods to account for dispositions of real estate. If a profit is involved in the sale of real
estate, each method sets forth the manner in which the profit is to be recognized. Regardless of which
method is used, however, any losses on the disposition of real estate should be recognized
immediately.
Full Accrual Method – Under the full accrual method, the disposition is recorded as a sale. Any profit
resulting from the sale is recognized in full and the asset resulting from the seller's financing of the
transaction is reported as a loan. This method may be used when the following conditions have been
met:
(1) A sale has been consummated;
(2) The buyer's initial investment (down payment) and continuing investment (periodic payments) are
adequate to demonstrate a commitment to pay for the property;
(3) The receivable is not subject to future subordination; and
(4) The usual risks and rewards of ownership have been transferred.
Guidelines for the minimum down payment that must be made in order for a transaction to qualify for
the full accrual method are set forth in the Appendix A to ASC Subtopic 360-20. These vary from
five percent to 25 percent of the property's sales value. These guideline percentages vary by type of
property and are primarily based on the inherent risk assumed for the type and characteristics of the
property. To meet the continuing investment criteria, the contractual loan payments must be sufficient
to repay the loan over the customary loan term for the type of property involved. Such periods may
range up to 30 years for loans on single family residential property.
Installment Method – Dispositions of foreclosed real estate that do not qualify for the full accrual
method may qualify for the installment method. This method recognizes a sale and the corresponding
loan. Any profits on the sale are only recognized as the bank receives payments from the
purchaser/borrower. Interest income is recognized on an accrual basis, when appropriate.
The installment method is used when the buyer's down payment is not adequate to allow use of the full
accrual method but recovery of the cost of the property is reasonably assured if the buyer defaults.
Assurance of recovery requires careful judgment on a case-by-case basis. Factors which should be
considered include: the size of the down payment, loan-to-value ratios, projected cash flows from the
property, recourse provisions, and guarantees.
Since default on the loan usually results in the seller's reacquisition of the real estate, reasonable
assurance of cost recovery may often be achieved with a relatively small down payment. This is
especially true in situations involving loans with recourse to borrowers who have verifiable net worth,
liquid assets, and income levels. Reasonable assurance of cost recovery may also be achieved when
the purchaser/borrower pledges additional collateral.
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GLOSSARY
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 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.
(2) The reporting party has the right to set off the amount owed with the amount owed by the other
party.
(3) The reporting party intends to set off. This condition does not have to be met for fair value
amounts recognized for conditional or exchange contracts that have been executed with the same
counterparty under a master netting arrangement.
(4) The right of setoff is enforceable at law. Legal constraints should be considered to determine
whether the right of setoff is enforceable. Accordingly, the right of setoff should be upheld in
bankruptcy (or receivership). Offsetting is appropriate only if the available evidence, both positive
and negative, indicates that there is reasonable assurance that the right of setoff would be upheld
in bankruptcy (or receivership).
According to ASC Subtopic 210-20, for forward, interest rate swap, currency swap, option, and other
conditional and exchange contracts, a master netting arrangement exists if the reporting bank has
multiple contracts, whether for the same type of conditional or exchange contract or for different types
of contracts, with a single counterparty that are subject to a contractual agreement that provides for the
net settlement of all contracts through a single payment in a single currency in the event of default or
termination of any one contract.
Offsetting the assets and liabilities recognized for conditional or exchange contracts outstanding with
a single counterparty results in the net position between the two counterparties being reported as an
asset or a liability in the Report of Condition. The reporting entity's choice to offset or not to offset
assets and liabilities recognized for conditional or exchange contracts must be applied consistently.
Offsetting of assets and liabilities is also permitted by other accounting pronouncements identified in
ASC Subtopic 210-20. These pronouncements apply to such items as leveraged leases, pension plan
and other postretirement benefit plan assets and liabilities, and deferred tax assets and liabilities.
In addition, ASC Subtopic 210-20, Balance Sheet – Offsetting (formerly FASB Interpretation No. 41,
"Offsetting of Amounts Related to Certain Repurchase and Reverse Repurchase Agreements"),
describes the circumstances in which amounts recognized as payables under repurchase agreements
may be offset against amounts recognized as receivables under reverse repurchase agreements and
reported as a net amount in the balance sheet. The reporting entity's choice to offset or not to offset
payables and receivables under ASC Subtopic 210-20 must be applied consistently.
According to the AICPA Audit and Accounting Guide for Depository and Lending Institutions,
ASC Subtopic 210-20 does not apply to securities borrowing or lending transactions. Therefore,
for purposes of the Report of Condition, banks should not offset securities borrowing and lending
transactions in the balance sheet unless all the conditions set forth in ASC Subtopic 210-20 are met.
See also "reciprocal balances."
One-Day Transaction: See "federal funds transactions."
Option: See "derivative contracts."
Organization Costs: See "start-up activities."
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Other Depository Institutions in the U.S.: See "depository institutions in the U.S."
Other Real Estate Owned: See "foreclosed assets" and the instruction to Schedule RC-M, item 3.
Overdraft: An overdraft can be either planned or unplanned. An unplanned overdraft occurs when a
depository institution honors a check or draft drawn against a deposit account when insufficient funds
are on deposit and there is no advance contractual agreement to honor the check or draft. When a
contractual agreement has been made in advance to allow such credit extensions, overdrafts are
referred to as planned or prearranged. Any overdraft, whether planned or unplanned, is an extension
of credit and is to be treated and reported as a "loan" rather than being treated as a negative deposit
balance.
Planned overdrafts in depositors' accounts are to be classified in Schedule RC-C, part I, by type of loan
according to the nature of the overdrawn depositor. For example, a planned overdraft by a commercial
customer is to be classified as a "commercial and industrial loan."
Unplanned overdrafts in depositors' accounts are to be classified in Schedule RC-C, part I, as "All other
loans," unless the depositor is a depository institution, a foreign government or foreign official
institution, or a state or political subdivision in the U.S. Such unplanned overdrafts would be reported
in Schedule RC-C, part I, item 2, "Loans to depository institutions and acceptances of other banks,"
item 7, "Loans to foreign governments and official institutions," and item 8, "Obligations (other than
securities and leases) of states and political subdivisions in the U.S.," respectively.
For purposes of treatment of overdrafts in depositors' accounts, a group of related transaction accounts
of a single type (i.e., demand deposit accounts or NOW accounts, but not a combination thereof)
maintained in the same right and capacity by a customer (a single legal entity) that is established under
a bona fide cash management arrangement by this customer function as, and are regarded as, one
account rather than as multiple separate accounts. In such a situation, overdrafts in one or more of the
transaction accounts within the group are not to be classified as loans unless there is a net overdraft
position in the group of related transaction accounts taken as a whole. (NOTE: Affiliates and
subsidiaries are considered separate legal entities.) For further information, see "cash management
arrangements."
The reporting bank's overdrafts on deposit accounts it holds with other banks (i.e., its "due from"
accounts) are to be reported as borrowings in Schedule RC, item 16, except overdrafts arising in
connection with checks or drafts drawn by the reporting bank and drawn on, or payable at or through,
another depository institution either on a zero-balance account or on an account that is not routinely
maintained with sufficient balances to cover checks or drafts drawn in the normal course of business
during the period until the amount of the checks or drafts is remitted to the other depository institution
(in which case, report the funds received or held in connection with such checks or drafts as deposits in
Schedule RC-E until the funds are remitted).
Participations: See "transfers of financial assets."
Participations in Acceptances: See "bankers acceptances."
Participations in Pools of Securities: See "repurchase/resale agreements."
Pass-through Reserve Balances: Under the Monetary Control Act of 1980, and as reflected in
Federal Reserve Regulation D, depository institutions that are members of the Federal Reserve
System must hold their balances maintained to satisfy reserve balance requirements (in excess of
vault cash) directly with a Federal Reserve Bank. However, nonmember depository institutions may
hold their balances maintained to satisfy reserve balance requirements (in excess of vault cash) in
one of two ways: either (1) directly with a Federal Reserve Bank or (2) indirectly in an account with
another institution (referred to here as a "correspondent"), which, in turn, is required to
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GLOSSARY
Transfers of Financial Assets (cont.):
If a transfer of an entire financial asset, a group of entire financial assets, or a participating interest in
an entire financial asset does not meet the conditions for sale treatment, or if a transfer of a portion of
an entire financial interest does not meet the definition of a participating interest (discussed below), the
transferor and the transferee shall account for the transfer as a secured borrowing with pledge of
collateral. The transferor shall continue to report the transferred financial assets in its financial
statements with no change in their measurement (i.e., the original basis of accounting for the
transferred financial assets is retained).
Accounting for a Transfer of an Entire Financial Asset or a Group of Entire Financial Assets That
Qualifies as a Sale1 – Upon the completion of a transfer of an entire financial asset or a group of entire
financial assets that satisfies all three of the conditions to be accounted for as a sale, the transferee(s)
(i.e., purchaser(s)) must recognize all assets obtained and any liabilities incurred and initially measure
them at fair value. The transferor (seller) should:
(1) Derecognize or remove the transferred financial assets from the balance sheet.
(2) Recognize and initially measure at fair value servicing assets, servicing liabilities, and any other
assets obtained (including a transferor’s beneficial interest in the transferred financial assets) and
liabilities incurred in the sale.
(3) Recognize in earnings any gain or loss on the sale.
If, as a result of a change in circumstances, a bank transferor regains control of a transferred financial
asset after a transfer that was previously accounted for as a sale because one or more of the
conditions for sale accounting in ASC Topic 860 are no longer met or a transferred portion of an entire
financial asset no longer meets the definition of a participating interest, such a change generally
should be accounted for in the same manner as a purchase of the transferred financial asset from the
former transferee (purchaser) in exchange for a liability assumed. The transferor should recognize
(rebook) the financial asset on its balance sheet together with a liability to the former transferee,
measuring the asset and liability at fair value on the date of the change in circumstances. If the
rebooked financial asset is a loan, it must be reported as a loan in Schedule RC-C, part I, either as a
loan held for sale or a loan held for investment, based on facts and circumstances, in accordance with
generally accepted accounting principles. The liability to the former transferee should be reported as a
secured borrowing in Schedule RC-M, item 5.b, “Other borrowings.” This accounting and reporting
treatment applies, for example, to U.S. Government-guaranteed or -insured residential mortgage loans
backing Government National Mortgage Association (GNMA) mortgage-backed securities that a bank
services after it has securitized the loans in a transfer accounted for as a sale. If and when individual
loans later meet delinquency criteria specified by GNMA, they are eligible for repurchase (buy-back)
and the bank is deemed to have regained effective control over these loans. The delinquent loans
must be brought back onto the bank's books and recorded as loans, regardless of whether the bank
intends to exercise the buy-back option.
Banks should refer to ASC Topic 860 for implementation guidance for accounting for transfers of
certain lease receivables, securities lending transactions, repurchase agreements including "dollar
rolls," "wash sales," loan syndications, loan participations (discussed below), risk participations in
bankers acceptances, factoring arrangements, and transfers of receivables with recourse. However,
this accounting standard does not provide guidance on the accounting for most assets and liabilities
recorded on the balance sheet following a transfer accounted for as a sale. As a result, after their
initial measurement or carrying amount allocation, these assets and liabilities should be accounted for
in accordance with the existing generally accepted accounting principles applicable to them.
1
The guidance in this section of this Glossary entry does not apply to a transfer of a participating interest in an entire
financial asset that qualifies as a sale. The accounting for such a transfer is discussed in a separate section later in
this Glossary entry.
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Transfers of Financial Assets (cont.):
Participating Interests – Before considering whether the conditions to be accounted for as a sale have
been met (as discussed above), the transfer of a portion of an entire financial asset must first meet the
definition of a participating interest. If the transferred portion of the entire financial asset is a qualifying
participating interest (as defined below), then it should be determined whether the transfer of the
participating interest meets the sales conditions discussed above.
A participating interest in an entire financial asset, as defined by ASC Topic 860, has all of the following
characteristics:
(1) From the date of the transfer, it must represent a proportionate (pro rata) ownership interest in an
entire financial asset;
(2) From the date of the transfer, all cash flows received from the entire financial asset, except any
cash flows allocated as compensation for servicing or other services performed (which must not be
subordinated and must not significantly exceed an amount that would fairly compensate a
substitute service provider should one be required), must be divided proportionately among the
participating interest holders in an amount equal to their share of ownership;
(3) The rights of each participating interest holder (including the lead lender) must have the same
priority, no interest is subordinated to another interest, and no participating interest holder has
recourse to the lead lender or another participating interest holder other than standard
representations and warranties and ongoing contractual servicing and administration obligations;
and
(4) No party has the right to pledge or exchange the entire financial asset unless all participating
interest holders agree to do so.
Thus, under ASC Topic 860, so-called “last-in, first-out” (LIFO) participations in which all principal cash
flows collected on the loan are paid first to the party acquiring the participation do not meet
the definition of a participating interest. Similarly, so-called “first-in, first-out” (FIFO) participations in
which all principal cash flows collected on the loan are paid first to the lead lender do not meet the
definition of a participating interest. As a result, neither LIFO nor FIFO participations transferred on
or after the beginning of an institution’s first annual reporting period that begins after November 15, 2009
(i.e., January 1, 2010, for a bank with a calendar year fiscal year) will qualify for sale accounting and
instead must be reported as secured borrowings.
The participating interest definition also applies to transfers of government-guaranteed portions of
loans, such as those guaranteed by the Small Business Administration (SBA). In this regard, for a
transfer of the guaranteed portion of an SBA loan at a premium that settled before February 15, 2011,
the "seller" was obligated by the SBA to refund the premium to the “purchaser” if the loan was repaid
within 90 days of the transfer. This premium refund obligation was a form of recourse, which meant
that the transferred guaranteed portion of the loan did not meet the definition of a "participating
interest" for the 90-day period that the premium refund obligation existed. As a result, the transfer was
required to be accounted for as a secured borrowing during this period. After the 90-day period,
assuming the transferred guaranteed portion and the retained unguaranteed portion of the SBA loan
then met the definition of a "participating interest," the transfer of the guaranteed portion could be
accounted for as a sale if all of the conditions for sale accounting were met. In contrast, for transfers of
guaranteed portions of SBA loans at a premium that settled on or after February 15, 2011, the SBA has
eliminated the premium refund requirement. With the elimination of the premium refund obligation from
such transfers, the transferred guaranteed portion and the retained unguaranteed portion of the SBA
loan should normally meet the definition of a “participating interest” on the transfer date. Assuming the
definition of “participating interest” is met and all of the conditions for sale accounting are met, the
transfer of the guaranteed portion of an SBA loan at a premium on or after February 15, 2011, would
qualify as a sale on the transfer date. The conditions for sale accounting are described above under
“Determining Whether a Transfer Should be Accounted for as a Sale or a Secured Borrowing” in this
Glossary entry.
On the other hand, if the guaranteed portion of the SBA loan is transferred at par in a so-called “par
sale” in which the “seller” agrees to pass interest through to the “purchaser” at less than the contractual
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FFIEC 031 and 041
GLOSSARY
Trust Preferred Securities: As bank investments, trust preferred securities are hybrid instruments
possessing characteristics typically associated with debt obligations. Although each issue of these
securities may involve minor differences in terms, under the basic structure of trust preferred securities a
corporate issuer, such as a bank holding company, first organizes a business trust or other special
purpose entity. This trust issues two classes of securities: common securities, all of which are
purchased and held by the corporate issuer, and trust preferred securities, which are sold to investors.
The business trust’s only assets are deeply subordinated debentures of the corporate issuer, which the
trust purchases with the proceeds from the sale of its common and preferred securities. The corporate
issuer makes periodic interest payments on the subordinated debentures to the business trust, which
uses these payments to pay periodic dividends on the trust preferred securities to the investors. The
subordinated debentures have a stated maturity and may also be redeemed under other circumstances.
Most trust preferred securities are subject to mandatory redemption upon the repayment of the
debentures.
Trust preferred securities meet the definition of a security in ASC Topic 320, Investments-Debt and
Equity Securities (formerly FASB Statement No. 115, "Accounting for Certain Investments in Debt and
Equity Securities"). Because of the mandatory redemption provision in the typical trust preferred
security, investments in trust preferred securities would normally be considered debt securities for
financial accounting purposes. Accordingly, regardless of the authority under which a bank is
permitted to invest in trust preferred securities, banks should report these investments as debt
securities for purposes of these reports (unless, based on the specific facts and circumstances of a
particular issue of trust preferred securities, the securities would be considered equity rather than debt
securities under ASC Topic 320). If not held for trading purposes, an investment in trust preferred
securities issued by a single U.S. business trust should be reported in Schedule RC-B, item 6.a, “Other
domestic debt securities.” If not held for trading purposes, an investment in a structured financial
product, such as a collateralized debt obligation, for which the underlying collateral is a pool of trust
preferred securities issued by U.S. business trusts should be reported in Schedule RC-B, item 5.b.(1),
“Cash instruments,” and in the appropriate subitem of Schedule RC-B, Memorandum item 6,
“Structured financial products by underlying collateral or reference assets.”
U.S. Banks: See "banks, U.S. and foreign."
U.S. Territories and Possessions: United States territories and possessions include American Samoa,
Guam, the Northern Mariana Islands, and the U.S. Virgin Islands.
Valuation Allowance: In general, a valuation allowance is an account established against a specific
asset category or to recognize a specific liability, with the intent of absorbing some element of
estimated loss. Such allowances are created by charges to expense in the Report of Income and
those established against asset accounts are netted from the accounts to which they relate for
presentation in the Report of Condition. Provisions establishing or augmenting such allowances are to
be reported as "Other noninterest expense" except for the provision for loan and lease losses which is
reported in a separate, specifically designated income statement item on Schedule RI.
Variable Interest Entity: A variable interest entity (VIE), as described in ASC Subtopic 810-10,
Consolidation – Overall (formerly FASB Interpretation No.46 (revised December 2003), “Consolidation
of Variable Interest Entities,” as amended by FASB Statement No. 167, "Amendments to FASB
Interpretation No. 46(R)”), is an entity in which equity investors do not have sufficient equity at risk for
that entity to finance its activities without additional subordinated financial support or, as a group, the
holders of the equity investment at risk lack one or more of the following three characteristics: (a) the
power, through voting rights or similar rights, to direct the activities of an entity that most significantly
impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the
entity, or (c) the right to receive the expected residual returns of the entity.
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Variable Interest Entity (cont.):
Variable interests in a VIE are contractual, ownership, or other pecuniary interests in an entity that
change with changes in the fair value of the entity’s net assets exclusive of variable interests. For
example, equity ownership in a VIE would be a variable interest as long as the equity ownership is
considered to be at risk of loss.
ASC Subtopic 810-10 provides guidance for determining when a bank or other company must
consolidate certain special purposes entities, such as VIEs. Under ASC Subtopic 810-10, a bank must
perform a qualitative assessment to determine whether it has a controlling financial interest in a VIE. This
must include an assessment of the characteristics of the bank’s variable interest or interests and other
involvements (including involvement of related parties and de facto agents), if any, in the VIE, as well as
the involvement of other variable interest holders. The assessment must also consider the entity’s
purpose and design, including the risks that the entity was designed to create and pass through to its
variable interest holders. In making this assessment, only substantive terms, transactions, and
arrangements, whether contractual or noncontractual, are to be considered. Any term, transaction, or
arrangement that does not have a substantive effect on an entity’s status as a VIE, the bank’s power
over a VIE, or the bank’s obligation to absorb losses or its right to receive benefits of the VIE are to be
disregarded when applying the provisions of ASC Subtopic 810-10.
If a bank has a controlling financial interest in a VIE, it is deemed to be the primary beneficiary of the VIE
and, therefore, must consolidate the VIE. An entity is deemed to have a controlling financial interest in a
VIE if it has both of the following characteristics:
The power to direct the activities of a variable interest entity that most significantly impact the
entity’s economic performance.
The obligation to absorb losses of the entity that could potentially be significant to the variable
interest entity or the right to receive benefits from the entity that could potentially be significant to
the variable interest entity.
If a bank holds a variable interest in a VIE, it must reassess each reporting period to determine whether
it is the primary beneficiary. Based on a bank’s reassessment it may be required to consolidate or
deconsolidate the VIE if a change in the bank’s status as the primary beneficiary has occurred.
ASC Subtopic 810-10 provides guidance on the initial measurement of a VIE that the primary
beneficiary must consolidate. For example, if the primary beneficiary and the VIE are not under
common control, the initial consolidation of a VIE that is a business is a business combination and
must be accounted for in accordance with ASC Topic 805, Business Combinations (formerly FASB
Statement No. 141 (revised 2007), "Business Combinations"). If a bank is required to deconsolidate a
VIE, it must follow the guidance for deconsolidating subsidiaries in ASC Subtopic 810-10 (formerly
FASB Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements”).
When a bank is required to consolidate a VIE because it is the primary beneficiary, the standard
principles of consolidation apply after initial measurement (see “Rules of Consolidation” in the General
Instructions). The assets and liabilities of consolidated VIEs should be reported on the Report of
Condition balance sheet (Schedule RC) in the balance sheet category appropriate to the asset or
liability. An institution that consolidates one or more VIEs must complete Schedule RC-V, Variable
Interest Entities, to report, by balance sheet category, (a) the assets of consolidated VIEs that can be
used only to settle obligations of the consolidated VIEs and (b) the liabilities of consolidated VIEs for
which creditors do not have recourse to the general credit of the reporting institution. Such an
institution also must report in Schedule RC-V the total amount of assets and the total amount of
liabilities of its consolidated VIEs that do not meet these criteria.
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| File Type | application/pdf |
| File Modified | 2012-09-28 |
| File Created | 2012-09-24 |