FFIEC002_FFIEC002S_20180427_omb

Supporting Statement for the
Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks
(FFIEC 002; OMB No. 7100-0032) and
Report of Assets and Liabilities of a Non-U.S. Branch that is Managed or Controlled by a
U.S. Branch or Agency of a Foreign (Non-U.S.) Bank
(FFIEC 002S; OMB No. 7100-0032)
Summary
The Board of Governors of the Federal Reserve System (Board) requests approval from
the Office of Management and Budget (OMB) to extend for three years, with revision, the
Federal Financial Institutions Examination Council (FFIEC) Report of Assets and Liabilities of
U.S. Branches and Agencies of Foreign Banks (FFIEC 002; OMB No. 7100-0032) and Report of
Assets and Liabilities of a Non-U.S. Branch that is Managed or Controlled by a U.S. Branch or
Agency of a Foreign (Non-U.S.) Bank (FFIEC 002S; OMB No. 7100-0032). The Board submits
this request on behalf of the Federal Deposit Insurance Corporation (FDIC) and the Office of the
Comptroller of the Currency (OCC). No separate submission will be made by either of those
agencies.
The FFIEC 002 is required and must be submitted quarterly by U.S. branches and
agencies of foreign banks. All U.S. branches and agencies of foreign banks are required to file
detailed schedules of assets and liabilities in the form of a condition report and a variety of
supporting schedules. This information is used to fulfill the supervisory and regulatory
requirements of the International Banking Act of 1978 (IBA). This report is mandated by the
FFIEC for collection by the Board, FDIC, and OCC (collectively, the agencies) in accordance
with procedures under Title 10 of the Financial Institutions Regulatory Act. The FFIEC 002S is
a mandatory supplement to the FFIEC 002 and collects information on assets and liabilities of
any non-U.S. branch that is managed or controlled by a U.S. branch or agency of a foreign bank.1
A separate supplement is completed for each applicable foreign branch. The FFIEC 002S data
improve U.S. deposit and credit data and data on international indebtedness, and are of assistance
to U.S. bank supervisors in determining the extent of assets managed or controlled by the U.S.
agency or branch of the foreign bank.
The agencies propose to delete or consolidate certain items, establish certain reporting
thresholds, account for changes in the accounting for equity investments, and make instructional
clarifications consistent with those previously made to or currently proposed for the
Consolidated Reports of Condition and Income (Call Reports) (FFIEC 031, FFIEC 041, and
FFIEC 051; OMB No. 7100-0036). The proposed revisions would result in an overall reduction
in burden, and would be effective for the June 30, 2018, report date. The estimated annual
burden for the FFIEC 002 is 21,259 hours. The proposed revisions would result in a net decrease
in burden of 1,304 hours. The estimated annual burden for the FFIEC 002S is 912 hours and
would remain unchanged.
1

Managed or controlled means that a majority of the responsibility for business decisions, including but not limited
to decisions with regard to lending or asset management or funding or liability management, or the responsibility for
recordkeeping in respect of assets or liabilities for that foreign branch resides at the U.S. branch or agency.

Background and Justification
Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks
(FFIEC 002)
The agencies use the FFIEC 002 report for supervisory and regulatory purposes. The
Board also uses the data to make decisions concerning monetary policy. The report is similar to
the Call Report required of all U.S. commercial banks and savings associations, although the
FFIEC 002 collects fewer data items.
The IBA expresses the intent of the Congress to equalize the supervisory and regulatory
treatment between foreign and domestic-owned financial institutions operating in the United
States, which specifies that foreign banks’ branches and agencies in the United States are to be
subject to the supervisory authority of the U.S. federal banking agencies and that responsibility
for federal supervision is to be shared among the agencies.
As one step in carrying out the supervisory and regulatory responsibilities imposed by the
IBA, the agencies instituted the FFIEC 002 in June 1980. The FFIEC 002 replaced a Federal
Reserve report, FR 886a that had been collected from U.S. branches and agencies since 1972.
The FFIEC 002 was revised extensively effective December 1985, when several schedules were
deleted, data items were added to collect separate data on International Banking Facilities (IBFs),
and schedules were added covering quarterly averages (Schedule K), commitments and
contingencies (Schedule L), and past due loans (Schedule N). The report also was revised to
conform as closely as possible to the quarterly Call Report for domestic banks.
Effective June 2001, the agencies expanded the information collected in the FFIEC 002
to facilitate more effective analysis of the impact of securitization and asset sale activities on
credit exposures, introduced a separate new schedule (Schedule S) that comprehensively captures
information related to securitization and asset sale activities, and eliminated the confidential
treatment for the information on Schedule N. Effective December 2001, the agencies changed
the manner in which branches and agencies report information on their trust activities. Branches
and agencies that previously filed the Annual Report of Trust Assets (FFIEC 001) instead began
to file a new Fiduciary and Related Services Schedule (Fiduciary Schedule) (Schedule T) as part
of the FFIEC 002. Branches and agencies that have fiduciary or related activity are required to
report certain trust information in Schedule T annually.
On February 7, 2011, the FDIC Board adopted a final rule amending the FDIC’s
regulations to redefine the assessment base used for calculating deposit insurance as prescribed
by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act).
In June 2011, the agencies implemented the following assessment-related reporting revisions to
the FFIEC 002 and FFIEC 002S through the emergency clearance process, effective with the
June 30, 2011, report date: (1) the deletion of existing data items for the total daily averages of
deposit liabilities before exclusions, allowable exclusions, and foreign deposits and (2) the
addition of data items for reporting average consolidated total assets, average tangible equity,
and the holdings of long-term unsecured debt issued by other FDIC-insured depository
institutions.

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In addition to its supervisory and regulatory uses, the FFIEC 002 provides information
needed for monetary and financial analysis essential for the conduct of monetary policy. The
branches and agencies of foreign banks are a large and growing part of the U.S. banking system,
with assets exceeding $2 trillion as of March 31, 2017. The FFIEC 002 provides the benchmark
data needed to derive adequate weekly estimates from the sample report titled Weekly Report of
Selected Assets and Liabilities of Domestically Chartered Commercial Banks and U.S. Branches
and Agencies of Foreign Banks (FR 2644; OMB No. 7100-0075). The weekly estimates are
used to analyze credit developments and sources and uses of funds for the banking sector and to
assess current financial developments within the entire U.S. banking system. They help to
interpret the bank credit and deposit information needed for both monetary policy decisions and
for gauging the response to those decisions.
Report of Assets and Liabilities of a Non-U.S. Branch that is Managed or Controlled
by a U.S. Branch or Agency of a Foreign (Non-U.S.) Bank (FFIEC 002S)
For a number of years foreign banks have conducted a large banking business at branches
domiciled in offshore centers, primarily in the Cayman Islands and the Bahamas. For a fee,
foreign banks are able to use these offshore branches to conduct a banking business free of any
U.S. reserve requirements or FDIC premiums. While nominally domiciled in these offshore
centers, these branches are often largely run out of the banks’ U.S. agency or branch office, with
a separate set of books but often with overlapping management responsibilities. The transactions
of these offshore branches are often largely with U.S. residents.
The FFIEC 002S is collected for several reasons: (1) to monitor deposit and credit
transactions of U.S. residents, (2) to monitor the impact of policy changes such as changes in
reserve requirements, (3) to analyze structural issues concerning foreign bank activities in U.S.
markets, (4) to understand flows of banking funds and indebtedness of developing countries in
connection with data collected by the International Monetary Fund and the Bank for
International Settlements that are used in economic analysis, and (5) to provide information to
assist in the supervision of U.S. offices of foreign banks, which often are managed jointly with
these branches.
The FFIEC 002S collects detail on transactions with U.S. residents and with residents of
the banks’ home country. In most cases these data cover a large proportion of their total
activities since many of the non G-10 bank branches have heavy exposures to their home
countries and G-10 banks are dealing largely with U.S. customers.2 The data improve U.S.
deposit and credit data and data on international indebtedness, and are of assistance to U.S. bank
supervisors in determining the extent of assets managed or controlled by the U.S. agency or
branch of the foreign bank. In theory a foreign bank with an offshore branch and no U.S.
presence would escape reporting. In practice this omission is likely to be relatively minor
because each of the 50 largest non-U.S. banks in the world operates at least one agency or branch
in the United States.

2

The Group of Ten (G-10) is made up of eleven industrial countries (Belgium, Canada, France, Germany, Italy,
Japan, the Netherlands, Sweden, Switzerland, the United Kingdom, and the United States) which consult and
cooperate on economic, monetary and financial matters.

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Description of Information Collection
The reporting panel for the FFIEC 002 includes all U.S. branches and agencies (including
their IBFs) of foreign banks, whether federally licensed or state chartered, insured or uninsured.
The FFIEC 002S is a supplement to the FFIEC 002, and is completed by any non-U.S. branch
that is managed or controlled by a U.S. branch or agency of a foreign bank.
The FFIEC 002 consists of a summary schedule of assets and liabilities (Schedule RAL)
and several supporting schedules. Information is required in each schedule on balances of the
entire reporting branch or agency. On the schedules for cash (Schedule A), loans (Schedule C),
and deposits (Schedule E), separate detail is reported on balances of IBFs. Unlike the Call
Report, the FFIEC 002 collects no income data.
The FFIEC 002S covers all of the foreign branch’s assets and liabilities, regardless of the
currency in which they are payable. The supplement also covers transactions with all entities,
both related and nonrelated, regardless of location. All due from/due to relationships with
related institutions, both depository and nondepository, are reported on a gross basis, that is,
without netting due from and due to data items against each other.
Proposed Revisions
The proposed revisions are meant to align with revisions either implemented or proposed
to be implemented in the Call Report. Below is a list of the specific proposed revisions to the
FFIEC 002 and FFIEC 002S. The proposed revisions are segmented by schedule except for the
revisions relating to the accounting for equity securities, which can be found following the
section regarding proposed revisions to FFIEC 002 Schedule S, Servicing, Securitization, and
Asset Sale Activities. Other than proposed revisions to the Report of Assets and Liabilities in
the ensuing paragraph, which pertain to the FFIEC 002S, all other proposed revisions pertain
only to the FFIEC 002.
Schedule RAL (FFIEC 002) and Report of Assets and Liabilities (FFIEC 002S)
In an effort to improve clarity, conformity with current accounting terminology, and
internal consistency across schedules, the agencies propose to revise the caption in the
FFIEC 002 and FFIEC 002S forms and instructions from “loans and leases, net of unearned
income” to “loans and leases held for investment and held for sale.” These two captions are
intended to represent the same reported amounts. Accordingly, the agencies will replace the
former caption with the latter caption in affected data items and related instructions across all
applicable schedules.
Each year in the March FFIEC 002, each institution indicates in Schedule RAL, Assets
and Liabilities, Memorandum item 17, the most comprehensive level of auditing work performed
for the branch or agency by, or on behalf of, the parent organization during the preceding
calendar year. In completing Memorandum item 17, each institution selects from seven
statements describing a range of levels of auditing work the one statement that best describes the
level of auditing work performed for it. Certain statements from which an institution must

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choose do not reflect current auditing practices performed in accordance with applicable
standards and procedures promulgated by the U.S. auditing standard setters, namely the Public
Company Accounting Oversight Board (PCAOB) and the Auditing Standards Board (ASB) of
the American Institute of Certified Public Accountants. The PCAOB establishes auditing and
related professional practice standards used in the performance and reporting of audits of the
financial statements and the internal control over financial reporting (ICFR) of public companies.
The ASB establishes auditing and quality control standards applicable to the performance and
issuance of audit reports for entities that are not public companies, e.g. private companies.
The PCAOB’s Auditing Standard No. 5 (AS 5), An Audit of Internal Control Over
Financial Reporting That Is Integrated with An Audit of Financial Statements, became effective
for fiscal years ending on or after November 15, 2007, and provides guidance regarding the
integration of audits of ICFR with audits of financial statements for public companies. Those
public companies not required to undergo an integrated audit must have an audit of their
financial statements.
The ASB has separately provided similar guidance in Statement on Auditing Standards
Number 130 (SAS 130), An Audit of Internal Control Over Financial Reporting That Is
Integrated With an Audit of Financial Statements, which became effective for integrated audits
for periods ending on or after December 15, 2016. Consistent with the PCAOB, the ASB states
in SAS 130 that “[a]n audit of ICFR is required to be integrated with an audit of financial
statements.” Unless a private company is required to or elects to have an integrated audit of its
financial statements and ICFR, the private company may be required to or can choose to have an
external auditor perform an audit of its financial statements. The existing wording of statements
1 and 2 of Schedule RAL, Memorandum item 17, reads as follows:
1 = “Independent annual audit of the branch or agency conducted in accordance with U.S.
generally accepted auditing standards by a certified public accounting firm.”
2 = “Independent annual audit of the branch or agency conducted in accordance with
home-country auditing standards by an independent accounting firm.”
Because these statements no longer fully and properly describe the types of external
auditing services performed for institutions under current professional standards and to enhance
the information institutions provide the agencies annually about the level of auditing external
work performed for them, the agencies are proposing to replace existing statements 1 and 2 with
new statements 1a and 1b and revised statement 2. These statements would read as follows:
1a = “An integrated audit of the branch or agency and its internal control over financial
reporting conducted in accordance with the auditing standards of the American Institute
of Certified Public Accountants (AICPA) or the Public Company Accounting Oversight
Board (PCAOB) by an independent public accountant.”
1b = “An audit of the branch or agency conducted in accordance with the auditing
standards of the AICPA or the PCAOB by an independent public accountant.”
2 = “An audit of the branch or agency conducted in accordance with home-country
auditing standards by an independent public accountant.”
Further, the agencies also propose to revise the caption to Memorandum item 17 to explicitly
state that the work is performed by independent external auditors and to remove the reference to
work performed on behalf of the parent organization.

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The agencies also propose to consolidate the detail on the fair value and the unpaid
principal balance of loans held for trading collected in Schedule RAL. For loans secured by 1-4
family residential properties, breakouts for revolving, open-end loans secured by 1-4 family
residential properties and extended under lines of credit, as well as closed-end loans secured by
1-4 family residential properties, would be consolidated into a single item. In addition,
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 would be consolidated into a single item. Specifically, existing Memorandum items
5.a.(3)(a) and 5.a.(3)(b) would be consolidated into new Memorandum item 5.a.(1), while
existing Memorandum items 5.a.(1), 5.a.(2), 5.a.(4), and 5.a.(5) would be consolidated into new
Memorandum item 5.a.(2). Existing Memorandum items 6.a.(3)(a) and 6.a.(3)(b) would be
consolidated into new Memorandum item 6.a.(1), while existing Memorandum items 6.a.(1),
6.a.(2), 6.a.(4), and 6.a.(5) would be consolidated into new Memorandum item 6.a.(2). The
agencies no longer need this current level of detail on loans held for trading in the FFIEC 002.
Schedule A
On Schedule A, Cash and Balances Due from Depository Institutions, the agencies
propose to consolidate the reporting of an institution’s balances due from depository institutions
in the U.S., which are currently reported in items 3.a for balances due from U.S. branches and
agencies of foreign banks (including their international banking facilities (IBFs)) and 3.b for
balances due from other depository institutions in the U.S. (including their IBFs), into a single
item 3. In addition, the agencies propose to consolidate the reporting of an institution’s balances
due from foreign branches of U.S. banks (item 4.a), balances due from banks in the reporting
institution’s home country and its home country central bank (item 4.b), and balances due from
all other banks in foreign countries and foreign central banks (item 4.c), into a single item 4,
Balances due from banks in foreign countries and foreign central banks. The agencies no longer
need this current level of detail for these balances in the FFIEC 002.
Schedule C, Part I
At present, institutions that have elected to measure loans held for investment or held for
sale at fair value under a fair value option are required to report the fair value and unpaid
principal balance of such loans in Memorandum items 5 and 6, respectively, of Schedule C, Part
I, Loans and Leases. Because Schedule C, Part I, must be completed by all institutions,
Memorandum items 5 and 6 also must be completed by all institutions although only a nominal
number of institutions have disclosed reportable amounts for any of the categories of fair value
option loans reported in the subitems of these two Memorandum items. Accordingly, the
agencies are proposing to move Memorandum items 5 and 6 on the fair value and unpaid
principal balance of fair value option loans from Schedule C, Part I, to Schedule Q, Financial
Assets and Liabilities Measured at Fair Value on a Recurring Basis, and to designate them as
Memorandum items 3 and 4, respectively.
The agencies also propose to consolidate the detail on loans held for investment or held
for sale measured at fair value and the unpaid principal balance of such loans that would be
moved to Schedule Q. Breakouts for revolving, open-end loans secured by 1-4 family residential

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properties and extended under lines of credit, as well as closed-end loans secured by 1-4 family
residential properties, would be consolidated into a single item for loans secured by 1-4 family
residential properties. In addition, 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 would be consolidated into a single item for loans
secured by real estate other than 1-4 family residential properties. Specifically, existing
Memorandum items 5.a.(3)(a) and 5.a.(3)(b) would be consolidated into new Memorandum item
5.a.(1), while existing Memorandum items 5.a.(1), 5.a.(2), 5.a.(4), and 5.a.(5) would be
consolidated into new Memorandum item 5.a.(2). Existing Memorandum items 6.a.(3)(a) and
6.a.(3)(b) would be consolidated into new Memorandum item 6.a.(1), while existing
Memorandum items 6.a.(1), 6.a.(2), 6.a.(4), and 6.a.(5) would be consolidated into new
Memorandum item 6.a.(2). The agencies no longer need this current level of detail in the
FFIEC 002.
Schedule C, Part II
The agencies propose to remove items 1.a and 1.b on Schedule C, Part II, Loans to Small
Businesses and Small Farms. Item 1.a requires FDIC-insured branches to indicate on an annual
basis whether all or substantially all of the institution’s dollar volume of reported “Commercial
and industrial loans to U.S. addressees” consist of loans with original amounts of $100,000 or
less. If a branch reports “Yes” in item 1.a, then it must provide the number of “Commercial and
industrial loans to U.S. addressees” outstanding in item 1.b. This change aligns this schedule
with revisions made to the corresponding schedule in the FFIEC 031 Call Report.
Schedule Q
The agencies propose to modify the reporting criteria for Schedule Q, Financial Assets
and Liabilities Measured at Fair Value on a Recurring Basis, by applying only an activity
threshold and not an asset-size threshold, which currently is $500 million. As proposed,
Schedule Q is to be completed by branches and agencies that (1) have elected to report financial
instruments or servicing assets and liabilities at fair value under a fair value option with changes
in fair value recognized in earnings or (2) reported total trading assets of $10 million or more in
any of the four preceding calendar quarters. Institutions that do not meet either of these criteria
would no longer need to complete this schedule, regardless of asset size. The agencies believe
the activity thresholds are more appropriate than the existing simple asset-size threshold for
determining which institutions must complete this schedule.
The agencies also propose to raise the dollar portion of the threshold from $25,000 to
$100,000 for itemizing and describing the components of “All other assets” and “All other
liabilities,” which are reported in Memorandum items 1 and 2, respectively. The percentage
portion of the existing thresholds would not be changed. Based on a preliminary evaluation of
the existing reporting thresholds, the agencies have concluded that the dollar portion of the
thresholds that currently apply to these items can be increased to provide a reduction in reporting
burden without a loss of data that would be necessary for supervisory or other public policy
purposes.

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Schedule S
The agencies propose the following revisions to Schedule S, Servicing, Securitization,
and Asset Sale Activities, as they no longer need the current level of detail on securitization and
asset sale activities in the FFIEC 002:
(1) Consolidate the maximum amount of credit exposures arising from recourse or other
seller-provided credit enhancements in the forms of retained interest-only strips, subordinated
securities and other residual interests, and standby letters of credit and other enhancements
reported in items 2.a, 2.b, and 2.c, respectively, into a single new item 2.
(2) Create a reporting threshold of $100 billion or more in total assets for reporting in
item 3, which is for reporting unused commitments to provide liquidity to structures reported in
item 1 involving assets sold and securitized by the reporting institution with servicing retained or
with recourse or other seller-provided credit enhancements.
(3) Consolidate ownership (or seller’s) interests carried as securities and loans, which are
reported in items 6.a and 6.b, respectively, into a single new item 6. The agencies also propose
to create a reporting threshold of $10 billion or more in total assets for reporting this new
combined item 6.
(4) Remove items 7.a and 7.b, which contain loan amounts included in ownership (or
seller’s) interests carried as securities that are 30-89 days past due and 90 days or more past due,
respectively.
(5) Consolidate columns B and C of item 9, which contain the maximum amount of
credit exposure arising from credit enhancements provided by the reporting institution to other
institutions’ securitization structures, into existing column G. The activities covered in columns
B and C pertain to home equity lines and credit card receivables, respectively. The amounts
previously reported in columns B and C would be reported in column G, “All other loans, all
leases, and all other assets.”
(6) Create a reporting threshold of $10 billion or more in total assets for reporting unused
commitments to provide liquidity to other institutions’ securitization structures in item 10. The
agencies also propose to consolidate columns B and C of item 10 into existing column G. The
activities covered in columns B and C pertain to home equity lines and credit card receivables,
respectively. The amounts previously reported in columns B and C by institutions with $10
billion or more in total assets would be included in column G, “All other loans, all leases, and all
other assets.”
(7) Consolidate columns B through F of item 11, which contain assets sold with recourse
or other seller-provided credit enhancements and not securitized, into existing column G. The
activities covered in columns B through F pertain to home equity lines, credit card receivables,
auto loans, other consumer loans, and commercial and industrial loans, respectively. The
amounts previously reported in columns B through F would be included in column G, “All other
loans, all leases, and all other assets.”

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(8) Consolidate columns B through F of item 12, which contain the maximum amount of
credit exposure arising from recourse or other seller-provided credit enhancements on assets sold
with recourse or other seller-provided credit enhancements and not securitized, into existing
column G. The activities covered in columns B through F pertain to home equity lines, credit
card receivables, auto loans, other consumer loans, and commercial and industrial loans,
respectively. The amounts previously reported in columns B through F would be included in
column G, “All other loans, all leases, and all other assets.”
(9) Create a reporting threshold of $10 billion or more in total assets for reporting detail
on asset-backed commercial paper conduits in Memorandum item 1. Institutions report the
maximum amount of credit exposure arising from credit enhancements provided to asset-backed
commercial paper conduits sponsored by the reporting institution or related institutions, and by
unrelated institutions, in Memorandum items 1.a.(1) and 1.a.(2), respectively. Institutions report
unused commitments to provide liquidity to asset-backed commercial paper conduits sponsored
by the reporting institution or related institutions, and by unrelated institutions, in Memorandum
items 1.b.(1) and M.1.b.(2), respectively.
Proposed Revisions to Address Changes in Accounting for Equity Investments
In January 2016, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update (ASU) No. 2016-01, “Recognition and Measurement of Financial Assets and
Financial Liabilities.” In its summary of this ASU, the FASB described how one of the main
provisions of the ASU differs from current U.S. generally accepted accounting principles
(GAAP) as follows:
The amendments in this Update supersede the guidance to classify equity securities with
readily determinable fair values into different categories (that is, trading or available-forsale) and require equity securities (including other ownership interests, such as
partnerships, unincorporated joint ventures, and limited liability companies) to be
measured at fair value with changes in the fair value recognized through net income. An
entity’s equity investments that are accounted for under the equity method of accounting
or result in consolidation of an investee are not included within the scope of this Update.
The FASB further stated in the summary that “an entity may choose to measure equity
investments that do not have readily determinable fair values at cost minus impairment, if any,
plus or minus changes resulting from observable price changes in orderly transactions for the
identical or a similar investment of the same issuer.”
The instructions to the FFIEC 002 require that respondents must utilize U.S. GAAP when
filing the report. The agencies propose to revise the FFIEC 002 report form and instructions to
account for the changes to U.S. GAAP set forth in ASU 2016-01.3 These proposed revised
reporting requirements would become effective for different sets of respondents as those
respondents become subject to the ASU. Institutions that are public business entities, as defined
in U.S. GAAP, are subject to ASU 2016-01 for fiscal years beginning after December 15, 2017,
including interim periods within those fiscal years. Therefore, for an institution with a calendar
3

No revisions to the FFIEC 002S regarding equity securities are being proposed.

9

year fiscal year that is a public business entity, the proposed revised reporting requirements
would become effective for its FFIEC 002 for June 30, 2018. As discussed below, interim
guidance would be provided for purposes of reporting by such an institution in accordance with
the ASU in its FFIEC 002 beginning with the March 31, 2018, report date. All other institutions
become subject to the ASU for fiscal years beginning after December 15, 2018, and interim
periods within fiscal years beginning after December 15, 2019. Therefore, for an institution with
a calendar year fiscal year that is not a public business entity, the proposed revised reporting
requirements would become effective for its FFIEC 002 for December 31, 2019. The period
over which institutions will be implementing this ASU ranges from the first quarter of 2018
through the fourth quarter of 2020. December 31, 2020, will be the first quarter-end FFIEC 002
report date as of which all institutions would be required to prepare their FFIEC 002 in
accordance with ASU 2016-01 and the proposed revised reporting requirements.
The changes to the accounting for equity investments under ASU 2016-01 will affect
several existing data items in the FFIEC 002. One outcome of these accounting changes is the
elimination of the concept of available-for-sale (AFS) equity securities, which are measured at
fair value on the balance sheet with changes in fair value recognized through other
comprehensive income. At present, the historical cost and fair value of AFS equity securities,
i.e., investments in mutual funds and other equity securities with readily determinable fair values
that are not held for trading, are reported in Schedule RAL, item 1.c.(4), “All other” bonds,
notes, debentures, and corporate stock, and Memorandum item 3, “Fair value of available-forsale securities.” The total fair value of AFS securities reported in Schedule RAL, Memorandum
item 3, also is reported in item 1, column A, of Schedule Q. Institutions then report in columns
C, D, and E of item 1 of Schedule Q a breakdown of their AFS securities by the level in the fair
value hierarchy within which the fair value amounts of these securities fall (Level 1, 2, or 3).
Any balance sheet netting adjustments to these fair value amounts are reported in column B of
item 1 of Schedule Q.
Another outcome of the changes in the accounting for equity investments under
ASU 2016-01 is that equity securities and other equity investments without readily determinable
fair values that are within the scope of ASU 2016-01 and are not held for trading must be
measured at fair value through net income, rather than at cost (less impairment, if any), unless
the measurement election described above is applied to individual equity investments. In
general, institutions currently report their holdings of such equity securities without readily
determinable fair values as a component of other assets in Schedule RAL, item 1.h.
At present, AFS equity securities and equity investments without readily determinable
fair values are included in the quarterly averages reported in Schedule K, Quarterly Averages.
Institutions report the quarterly average for “Total claims on nonrelated parties” in item 5 of this
schedule. This average reflects all equity securities not held for trading on a cost basis. In
addition, for branches whose deposits are insured by the FDIC, AFS equity securities and equity
investments without readily determinable fair values are included in the quarterly averages
reported in Schedule O, Other Data for Deposit Insurance Assessments. Institutions report the
quarterly average for “Average consolidated total assets for the calendar quarter” in item 4 of
this schedule. This average reflects AFS equity securities with readily determinable fair values

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at the lower of cost or fair value, and equity securities without readily determinable fair values at
historical cost.
The agencies have considered the changes to the accounting for equity investments under
ASU 2016-01 and the effect of these changes on the manner in which data on equity securities
and other equity investments are currently reported in the FFIEC 002, which has been described
above. Accordingly, the proposed revisions to the FFIEC 002 report form and instructions to
address the equity securities accounting changes are as follows:
(1) In Schedule RAL, Assets and Liabilities, a new Memorandum item 4, “Fair value of
equity securities with readily determinable fair values not held for trading,” would be added
effective June 30, 2018. From June 30, 2018, through September 30, 2020, the instructions for
Memorandum item 4 and the reporting form for Schedule RAL would include guidance stating
that Memorandum item 4 is to be completed only by institutions that have adopted ASU 201601. Institutions that have not adopted ASU 2016-01 would leave Memorandum item 4 blank.
Existing Memorandum items 3, “Fair value of available-for-sale securities,” and 4, “Amortized
cost of available-for-sale securities,” would be renumbered as Memorandum items 3.a and 3.b,
respectively, effective June 30, 2018. During the period from June 30, 2018, through September
30, 2020, the instructions for Schedule RAL, Memorandum items 3.a and 3.b, would explain that
institutions that have adopted ASU 2016-01 should include only debt securities in Memorandum
items 3.a and 3.b. Effective December 31, 2020, the caption for Memorandum items 3.a and 3.b
would be revised to “Fair value of available-for-sale debt securities” and “Amortized cost of
available-for-sale debt securities,” respectively, and all institutions would report their holdings of
equity securities with readily determinable fair values not held for trading in Memorandum
item 4.
(2) In Schedule RAL, equity securities and other equity investments without readily
determinable fair values not held for trading, which are currently reported in item 1.h, would
continue to be reported in this item. However, the instructions would be revised as of June 30,
2018, to state that, after the effective date of ASU 2016-01 for an institution, the equity securities
and other equity investments the institution reports in item 1.h would be measured in accordance
with the ASU.
(3) In Schedule K, Quarterly Averages, the instructions for item 5, “Total claims on
nonrelated parties,” would include guidance from June 30, 2018, through September 30, 2020,
stating that, for purposes of reporting the quarterly average for total claims:
 Institutions that have adopted ASU 2016-01 should reflect the quarterly average of all debt
securities not held for trading on an amortized cost basis, and
 Institutions that have not adopted ASU 2016-01 should reflect the quarterly average for all
securities not held for trading on an amortized cost basis.
Then, effective December 31, 2020, the instructions for item 5 would indicate that, for debt
securities not held for trading, the quarterly average for total claims should reflect such securities
on an amortized cost basis.

11

(4) In Schedule O, Other Data for Deposit Insurance Assessments, the instructions for
item 4, “Average consolidated total assets for the calendar quarter,” would include guidance
from June 30, 2018, through September 30, 2020, stating that, for purposes of reporting the
quarterly average for total assets:
 Institutions that have adopted ASU 2016-01 should reflect the quarterly average for debt
securities not held for trading at amortized cost, and
 Institutions that have not adopted ASU 2016-01 should reflect the quarterly average for
all debt securities not held for trading at amortized cost, 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.
Then, effective December 31, 2020, the instructions for item 4 would indicate that, for debt
securities not held for trading, the quarterly average for total assets should reflect such securities
at amortized cost.
(5) In Schedule Q, the caption for item 1, “Available-for-sale securities,” would be
changed to “Available-for-sale debt securities and equity securities with readily determinable fair
values not held for trading” effective June 30, 2018. From June 30, 2018, through September 30,
2020, the instructions for item 1 and the reporting form for Schedule Q would include guidance
stating that, for institutions that have adopted ASU 2016-01, the amount reported in item 1,
column A, must equal the sum of Schedule RAL, Memorandum items 3.a and 4, and for
institutions that have not adopted ASU 2016-01, the amount reported in item 1, column A, must
equal Schedule RAL, Memorandum item 3.a. Effective December 31, 2020, this guidance
would indicate that the amount reported in item 1, column A, must equal the sum of Schedule
RAL, Memorandum items 3.a and 4.
Institutions that apply ASU 2016-01 in the first quarter of 2018 will need to report their
holdings of equity securities and other equity investments in accordance with this accounting
standard within the existing structure of the FFIEC 002 for March 31, 2018. Interim guidance
accompanied the Board’s transmittal letter to institutions for the March 31, 2018, report date, and
advised institutions that have adopted ASU 2016-01 to (a) continue to report the fair value and
historical cost of their holdings of equity securities with readily determinable fair values not held
for trading (which were reportable as available-for-sale equity securities prior to the adoption of
ASU 2016-01) in existing Memorandum items 3 and 4 of Schedule RAL, (b) measure their
holdings of equity securities and other equity investments without readily determinable fair
values not held for trading in accordance with the ASU and continue to report them in
Schedule RAL, item 1.h, (c) report Schedule K, item 5, consistent with the measurement of
Schedule RAL, item 1.i, except that all debt securities not held for trading should be measured
on an amortized cost basis, (d) report Schedule O, item 4, consistent with the measurement of
Schedule RAL, item 3, except that all debt securities not held for trading should be measured at
amortized cost, and (e) continue to report the amount from Memorandum item 3 of Schedule
RAL in Schedule Q, item 1, column A.

12

Time Schedule for Information Collection and Publication
The proposed revisions do not alter the time schedule or publication of the FFIEC 002 or
FFIEC 002S. The FFIEC 002 and FFIEC 002S are collected as of the end of the last calendar
day of March, June, September, and December. U.S. branches and agencies of foreign banks
must submit the FFIEC 002 and FFIEC 002S to the appropriate Federal Reserve Bank within 30
calendar days following the report date. After the processing and editing functions have been
completed, the Board sends the data to the FDIC and OCC for their use in monitoring the U.S.
activities of foreign banks under their supervision.
Aggregate data for all U.S. branches and agencies that file the FFIEC 002 are published
in the Federal Reserve Bulletin and are also used in developing flow of funds estimates and the
estimates published in the Federal Reserve weekly H.8 statistical release, Assets and Liabilities
of Commercial Banks in the United States. Aggregate data for the FFIEC 002S are available to
the public upon request. Individual respondent data are available on the FFIEC public website at
www.ffiec.gov/nicpubweb/nicweb/nichome.aspx.
Legal Status
The Board is authorized to collect information on the FFIEC 002 and FFIEC 002S
pursuant to section 7(c)(2) of the IBA (12 U.S.C. 3105(c)(2)). In addition, section 4(b) of the
IBA (12 U.S.C. 3102(b)) authorizes the OCC to collect the information from Federal branches
and agencies of foreign banks. Further, section 7(a) of the Federal Deposit Insurance Act (12
U.S.C. 1817(a)) authorizes the agencies to collect the information from insured branches of
foreign banks. The obligation to respond is mandatory.
The individual respondent information on the FFIEC 002 contained in Schedule M (Due
from/Due to Related Institutions in the U.S. and in Foreign Countries) and the FFIEC 002S is
exempt from disclosure pursuant to the Freedom of Information Act (5 U.S.C. 552(b)(4) and
(b)(8)). Information from all other schedules of the FFIEC 002 is available to the public on
request. The proposed items would not be held confidential.
Consultation Outside the Agency
On December 27, 2017, the Board, under the auspices of the FFIEC, published an initial
notice in the Federal Register (82 FR 61294) requesting public comment for 60 days on the
extension, with revision, of the FFIEC 002 and FFIEC 002S. The comment period for this notice
expired on February 26, 2018. The Board received two comments on the proposal, one specific
comment from an individual and one general comment from a government entity. The
government entity did not raise concerns about the proposal itself, but stated that it uses certain
data items in the FFIEC 002 and FFIEC 002S in preparing economic statistics on international
transactions, and encouraged the agencies to continue collecting those items. The comment from
the individual pertained to the most comprehensive level of auditing performed for the branch or
agency by, or on behalf of, its parent organization during the preceding calendar year, which
every FFIEC 002 filer is required to report in Schedule RAL, Memorandum item 17, on its
March report.

13

In response to certain auditing standards issued by the PCAOB and the ASB, the Board
proposed to revise two of the existing statements describing the most comprehensive level of
auditing work performed for the branch or agency during the preceding year. The Board also
proposed to revise the information collected in Memorandum item 17 to refer to the work
performed by independent external auditors and to remove the reference to work performed on
behalf of the parent organization. The individual requested clarification as to which branches
and agencies are required to have an integrated audit conducted by independent external auditors
as mentioned in the text for proposed statement 1a in the response to Memorandum item 17.
Specifically, the individual wanted to confirm that only public companies and companies with a
market capitalization greater than $75 million are required to have an integrated audit.
Under section 363.3(b) of the FDIC’s regulations (12 CFR 363.3(b)), the independent
public accountant who audits the financial statements of an FDIC-insured branch of a foreign
bank with $1 billion or more in total claims on nonrelated parties is required to audit and report
on the effectiveness of the branch’s internal control over financial reporting (ICFR). Standards
issued by the PCAOB and the ASB provide guidance regarding the integration of audits of ICFR
with audits of financial statements. Thus, statement 1a and its reference to an integrated audit
are applicable to certain FDIC-insured branches, which means that the requirement for an
integrated audit is not limited to the circumstances described by the commenter. However, the
Board will clarify statement 1a of Memorandum item 17 by adding “(e.g., as required for FDICinsured branches subject to Part 363 of the FDIC’s regulations that have $1 billion or more in
total claims on nonrelated parties)” at the end of the proposed text of this statement.
After considering the comments received on the proposal, the agencies will proceed with
the proposed reporting revisions to the FFIEC 002 and FFIEC 002S, while incorporating one
clarification in response to the specific comment described above. These reporting revisions
would take effect as of the June 30, 2018, report date. On April 27, 2018, the Board published a
final notice in the Federal Register (83 FR 18562).
Estimate of Respondent Burden
The current annual reporting burden for the FFIEC 002 is estimated to be 21,259 hours
and would decrease to 19,955 hours. The average estimated hours per response for FFIEC 002
would decrease from 25.43 hours to 23.87 hours due to the proposed changes. The FFIEC 002S
is estimated to be 912 hours and would remain unchanged. These reporting requirements
represent less than 1 percent of the total Federal Reserve paperwork burden.

14

Number of
respondents4

Annual
frequency

FFIEC 002

209

4

FFIEC 002S

38

4

FFIEC 002 and
FFIEC 002S

Estimated
average hours
per response

Estimated
annual burden
hours

Current
25.43
6

Total

21,259
912
22,171

Proposed
FFIEC 002

209

4

FFIEC 002S

38

4

23.87
6

19,955
912

Total

20,867

Change

(1,304)

The current total annual cost to the public for the FFIEC 002 and FFIEC 002S is estimated to be
$1,242,685 and with the proposed revisions would decrease to $1,169,595.5
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The proposed cost to the Federal Reserve System for collecting and processing the
FFIEC 002 and FFIEC 002S is estimated to be $198,700 per year, an increase of $13,300 from
the current cost of $185,400. The one-time cost to implement the revised report is estimated to
be $17,200. The Federal Reserve System collects and processes the data for all three of the
agencies.
4

Of these respondents, 63 FFIEC 002 and 7 FFIEC 002S are considered small entities as defined by the Small
Business Administration (i.e., entities with $550 million or less in total assets) www.sba.gov/contracting/gettingstarted-contractor/make-sure-you-meet-sba-size-standards/table-small-business-size-standards.
5
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $18, 45% Financial Managers at
$69, 15% Lawyers at $68, and 10% Chief Executives at $94). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2017, published March 30, 2018, www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined using
the BLS Occupational Classification System, www.bls.gov/soc/.

15