Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks

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Draft Revisions to the Instructions to the
Report of Assets and Liabilities of U.S.
Branches and Agencies of Foreign Banks
(FFIEC 002) for the Proposed Credit Loss
Accounting Revisions Proposed to Take
Effect March 31, 2019

These draft instructions, which are subject to change, reflect the proposed
revisions to the FFIEC 002 that would take effect March 31, 2019, as described
in the federal banking agencies’ final Paperwork Reduction Act Federal Register
notice for this proposal that was published on February 14, 2019.

Draft as of February 15, 2019

Draft Revisions to the Instructions to the FFIEC 002
Proposed to Take Effect March 31, 2019
Contents
Page(s)

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Impacted Schedules
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Schedule RAL, Items 2(a) and 5(a)

RAL-12, RAL -17

Schedule C, Part I, General Instructions

C-1

Schedule M, General Instructions

M-1

Schedule M, Part I, Instructions, Item 2(a), column

M-2, M-3

B Schedule M, Part IV, Item 1

0

Schedule N, General Instructions

111

Schedule RAL
Institutions that have adopted ASU 2016-13 should exclude accrued interest receivable on interest-bearing assets
that is reported elsewhere on Schedule RAL.

which cannot properly be reported in Asset items
1(a) through 1(g) of this schedule.
Include:

Include:

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(1) Income earned or accrued but not collected on
loans, securities, and other interest-bearing
assets.

conforming to acceptable accounting principles
may be used. Do not deduct mortgages or other
liens on such property (report in Liability
item 4(f)).

(3) Accrued interest on securities purchased.

(a) Premises that are actually owned by the
reporting institution and that are entirely or
partly occupied (or are to be occupied, if
under construction) by the reporting
institution.

(4) Cash items not conforming to the definition of
“Cash items in process of collection” found in
the instructions to Schedule A, item 1.

(b) Leasehold improvements, vaults, and fixed
machinery and equipment.

(2) Prepaid expenses (i.e., those applicable as a
charge against operations in future periods).

(5) Credit or debit card sales slips in process of collection until the reporting branch or agency has
been notified that it has been given credit (thereafter report in Schedule A, item 3 or 4, as
appropriate).
(6) Derivative instruments with nonrelated parties
that have a positive fair value that are held for
purposes other than trading.

(7) Purchased computer software, net of accumulated amortization, and unamortized costs of
computer software to be sold, leased, or otherwise marketed capitalized in accordance with
the provisions of ASC Subtopic 985-20,
Software—Costs of Software to Be Sold,
Leased or Marketed (formerly FASB Statement
No. 86, “Accounting for the Cost of Computer
Software to Be Sold, Leased, or Otherwise
Marketed”).

(8) Bullion not held for trading (e.g., gold or silver).

(9) Original art objects, including paintings, antique
objects, and similar valuable decorative articles
(report at cost, unless there has been a decline in
value, judged to be other than temporary, in
which case the object should be written down to
its fair value).

(10) Cash surrender value of life insurance policies
for which the branch or agency is the
beneficiary.

(11) The book value, less accumulated depreciation
or amortization, of all premises, equipment, furniture and fixtures. Any method of depreciation

(c) Remodeling costs to existing premises, real
estate acquired and intended to be used for
future expansion, and parking lots, whether
adjoining or not adjoining the reporting
institution’s premises, that are owned by the
reporting institution and that are used by its
customers or employees.

(d) All furniture, fixtures, and movable
equipment.

(e) The amounts assigned to leases acquired in
purchase and assumption transactions.

(f) The amount of stocks and bonds that indirectly represent premises, equipment, furniture or fixtures. For institutions that have
adopted ASU 2016-01 (see the General
Instructions for Schedule RAL, Memorandum items 1 through 4), report such stocks
and investments at (i) fair value or (ii) if
chosen by the reporting institution for an
equity investment that does not have a readily determinable fair value, at cost minus
impairment, if any, plus or minus changes
resulting from observable price changes in
orderly transactions for the identical or similar investment of the same issuer.

(g) The amount of capital lease property (with
the reporting institution as lessee)—
premises, furniture, fixtures, and equipment.
See the discussion of “accounting with
branch or agency as lessee” contained in the
“lease accounting” section of the Glossary.

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FFIEC 002

Schedule RAL
, and any allowance accounts. This includes any allowance for loan losses, or, for
institutions that have adopted ASU 2016-13, any allowance for credit losses.

Home Loan Bank stock are carried at cost and
evaluated for impairment.

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(17) All other assets not specifically mentioned
herein nor in Asset items 1(a) through 1(g), such
as items temporarily held in suspense accounts.
See the entry for “suspense accounts” in the
Glossary.

tive amounts.) The positions reported in item 2 or 5
should reflect all balances due from and due to the
head office and related depository institutions wherever located including unremitted profits, any statutory
or regulatory capital requirement, and any reserve
accounts.

(18) The liability to the reporting institution of its
customers on drafts and bills of exchange that
have been accepted by the reporting institution,
or its agents, and that are outstanding (that is,
not held by the reporting branch or agency) on
the date of the report. Amounts reportable in
Liability item 4.f., “Other liabilities to nonrelated parties” cannot be netted against this item
or vice versa. Similarly, participations in
acceptances—regardless of form or
terminology—cannot be netted from this item.
For further information, see the Glossary entry
for “bankers acceptances.”

Exclude the following from this item:

(1) All assets due from or claims upon related
depository institutions which are to be reflected
in “Net due from” (item 2) or “Net due to”
(item 5) depending upon the overall due from/to
position of the reporting branch or agency visà-vis its related depository institutions.
(2) Holdings of bills representing purchases of
securities or other assets that have not yet been
delivered. Such holdings are to be reported in
Loans, item 1(e).

(3) Deferred tax assets. (See the Glossary entry for
“U.S. income taxes”).

Item 1(i) Total claims on nonrelated parties.
Report in this item the sum of items 1(a) through 1(h).

Item 2 Net due from related depository institutions.
All balances and positions due from and due to the
head office and related depository institutions should
be reported as a single net amount. If that single net
amount is a net due from, it should be entered in this
item; if the single net amount is a net due to, it should
be entered in Liability item 5. (Thus, there should be a
positive amount reported in either item 2 or item 5, but
not in both items, and neither item should show nega-

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Item 2(a) For the reporting branch or agency including
its IBF.
Report the net balances due from the head office and
other related depository institutions of the reporting
branch or agency, including its IBF. This balance is
calculated by subtracting item 1(i), column A, “Total
claims on nonrelated parties,” from item 4(g), column
A, “Total liabilities to nonrelated parties,” if
item 4(g) is greater than item 1(i); otherwise, enter zero
in this item.
Item 2(b) For the IBF of the reporting branch or
agency.
Report the net balances due from the establishing
entity, head office, and other related depository institutions of the IBF of the reporting branch or agency.
This balance is calculated by subtracting item 1(i), column B, from item 4(g), column B, if item 4(g) is greater
than item 1(i); otherwise, enter zero in this item.
Item 3 Total assets.
Report the sum of items 1(i) and 2(a), for item 3, column A. For column B, item 3, report the sum of items
1(i) and 2(b). These items must equal item 6, column A
or B, as appropriate, “Total liabilities.”
NOTE: Because of the structure of this schedule and
the separate identification in item 2(b) and 5(b) of the
net due from or due to position of the reporting branch
or agency’s IBF (if any) vis-à-vis its establishing entity,
head office, and other related depository institutions,
total assets of the IBF only, as reported in column B,
item 3, may not be a component of total assets of the
reporting branch or agency, including its IBF, as
reported in column A, item 3. However, the total of
IBF claims on unrelated parties or related nondepository institutions as reported in item 1(i), column B, is a
component of item 1(i), column A.

Liabilities

Item 4(a) Total deposits and credit balances.
Report in column A the sum of the amounts reported
in Schedule E, item 7, columns A, C, and D. Report in

(4) Institutions that have adopted ASU 2016-13, which governs the accounting for credit
losses, should exclude any accrued interest receivables on financial assets that are
reported elsewhere on Schedule RAL.

FFIEC 002

Schedule RAL
, and any allowance accounts. This includes any allowance for loan losses, or, for
institutions that have adopted ASU 2016-13, any allowance for credit losses.

nonrelated depository institutions that are not
reported in items 4(a), 4(b), and 4(c) above.

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Item 4(g) Total liabilities to nonrelated parties.
Report in this item the sum of items 4(a) through 4(f).

net due from or due to position of the reporting branch
or agency’s IBF (if any) vis-à-vis its establishing entity,
head office, and other related depository institutions,
total liabilities of the IBF only, as reported in column
B, item 6, may not be a component of total liabilities of
the reporting branch or agency, including its IBF, as
reported in column A, item 6. However, the total of
IBF claims on unrelated parties as reported in
item 4(g), column B, is a component of item 4(g), column A.

Item 5 Net due to related depository institutions.
All balances and positions due from and due to the
head office and related depository institutions should
be reported as a single net amount. If that single net
amount is a net due to, it should be entered in this item;
if the single net amount is a net due from, it should be
entered in Asset item 2. (Thus, there should be a positive amount reported in either item 2 or 5, but not in
both items, and neither item should show negative
amounts.) The positions reported in item 2 or 5 should
reflect all balances due from and due to the head office
and related depository institutions wherever located
including unremitted profits, any statutory or regulatory capital requirement, and any reserve accounts.
Item 5(a) For the reporting branch or agency including
its IBF.
Report the net balances due to the head office and
other related depository institutions of the reporting
branch or agency, including its IBF. This balance is
calculated by subtracting item 4(g), column A, “Total
liabilities to nonrelated parties,” from item 1(i), column A, “Total claims on nonrelated parties,” if
item 1(i) is greater than item 4(g); otherwise, enter zero
in this item.

Item 5(b) For the IBF of the reporting branch or
agency.
Report the net balances due to the establishing entity,
head office, and other related depository institutions of
the IBF of the reporting branch or agency. This balance is calculated by subtracting item 4(g), column B,
from item 1(i), column B, if item 1(i) is greater than
4(g); otherwise, enter zero in this item.
Item 6 Total liabilities.
Report the sum of items 4(g) and 5(a) for item 6, column A. For column B, item 6, report the sum of items
4(g) and 5(b). These items must equal item 3, “Total
assets,” column A or B, as appropriate.
NOTE: Because of the structure of this schedule and
the separate identification in item 2(b) and 5(b) of the

Memoranda

General Instructions for Memorandum
Items 1, 2, 3.a, 3.b, and 4:

Memorandum items 1 through 4 are for additional
information on the reporting branch or agency's securities reported in Schedule RAL, items 1(b) and 1(c),
which are securities not held for trading. Memorandum items 1 and 2 are for held-to-maturity securities
and Memorandum items 3.a and 3.b are for availablefor-sale securities.
Memorandum item 4 is for equity securities with readily determinable fair values not held for trading and is
to be completed only by institutions that have adopted
FASB Accounting Standards Update No. 2016-01
(ASU 2016-01), which includes provisions governing
the accounting for investments in equity securities,
including investments in mutual funds, and eliminates
the concept of available-for-sale equity securities. ASU
2016-01 requires holdings of equity securities (except
those accounted for under the equity method or that
result in consolidation), including other ownership
interests (such as interests in partnerships, unincorporated joint ventures, and limited liability companies),
to be measured at fair value with changes in fair value
recognized through net income. However, an institution may choose to measure equity securities and other
equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus
or minus changes resulting from observable price
changes in orderly transactions for the identical or a
similar investment of the same issuer.
Institutions that have not adopted ASU 2016-01
should leave Memorandum item 4 blank and report
the fair value and historical cost (not amortized cost)
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INSTRUCTIONS FOR THE PREPARATION OF

Loans
Schedule C

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For institutions that have adopted ASU 2016-13, the allowance for loan losses is the allowance for credit losses on
loans and leases.

Part I. Loans and Leases—
General Instructions

Loans (and lease financing receivables) are extensions
of credit resulting from either direct negotiation
between the bank and its customers or the purchase of
such assets from others. See the Glossary entries for
“loan,” “placements,” and “lease accounting” for further information.

The amounts reported in Column A are for the reporting branch or agency, including its IBF, and those
reported in Column B are for the reporting branch or
agency’s IBF only. If the reporting branch or agency
has no IBF, no amounts are to be reported in Column B. The shaded items in the IBF column reflect the
fact that certain types of assets are not permissible for
IBFs (refer to the Glossary entry “International Banking Facility (IBF)” for a further discussion). Unless
otherwise specified, the item instructions pertain to
both the reporting branch or agency, including its IBF,
and the IBF only. At times the instructions may discuss
assets that are permissible for the branch or agency but
not for the IBF. Report in the IBF column only those
permissible IBF assets.

Report the aggregate book value of all loans and leases
to nonrelated institutions (including related nondepository institutions) before deduction of any general
“Allowance for loan losses,” which is to be reflected in
Schedule RAL, item 2(a) or 5(a) and is to be reported
in Schedule M, Part IV, item 1, but net of any specific
reserves established for specific loans, or portions
thereof, that available information confirms are uncollectible. Each item in this schedule should be reported
net of (1) unearned income (to the extent possible) and
(2) deposits accumulated for the payment of personal
loans (hypothecated deposits). Net unamortized loan
fees represent an adjustment of the loan yield and
should be reported in the same manner as unearned

income on loans, i.e., deducted from the related loan
balances (to the extent possible) or from total loans in
item 10, “Less: Any unearned income on loans
reflected in items 1–8 above,” of this schedule. Net
unamortized direct loan origination costs should be
added to the related loan balances in each item of this
schedule. Loans held for sale should be reported at the
lower of cost or fair market.
If the bank has elected to apply the fair value option to
any loans held for investment or held for sale, it must
also report the fair value and unpaid principal balance
of these loans in the appropriate subitems of Schedule Q, Memorandum items 3 and 4, respectively.
Exclude all loans and leases held for trading purposes
(report in Schedule RAL, item 1(f), “Trading assets”).
Also exclude all intrabranch or intraagency transactions and all transactions with related depository institutions. However, include transactions with related
nondepository institutions. See the Glossary entries for
“related institutions” and “transactions with related
institutions” for additional discussion.
All loans are classified according to security, borrower,
or purpose. Loans covering two or more classifications
are sometimes difficult to classify. In such instances,
classify the entire loan according to the major
criterion.
Report in this schedule all loans that the reporting
institution has sold under repurchase agreements that
mature in more than one business day. Also report in
this schedule all loans and leases on the books of the
reporting institution even if on the report date they are
past due and collection is doubtful. Exclude any loans
or leases the reporting branch or agency has sold or
charged off. Also exclude assets received in full or partial satisfaction of a loan or lease (unless the asset
received is itself reportable as a loan or lease) and any
loans for which the branch or agency has obtained
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INSTRUCTIONS FOR THE PREPARATION OF

Due from/Due to Related Institutions
in the U.S. and in Foreign Countries

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Schedule M

General Instructions

in a foreign country, in Puerto Rico, or in a U.S. territory or possession.

Schedule M covers transactions of the reporting
branch or agency with related institutions, both in the
U.S. and in foreign countries. (For the definition of
“related institutions,” see the entry for “related institutions” in the Glossary section of these Instructions.)
Parts I and II of the schedule deal with due from/due to
relationships of the reporting branch or agency,
including its IBF, with related depository institutions
(with Part I covering such relationships of the entire
reporting branch or agency including its IBF and
Part II covering only those of its IBF). Part III deals
with the transactions of the reporting institution
(including its IBF) with related nondepository institutions. Part IV, item 1, reflects the amount of the general
allowance for loan losses, if any, carried on the books
of the reporting branch or agency, including its IBF.
Part IV, item 2, reflects the amount of other real estate
owned. Although this information does not relate specifically to due from/due to transactions, it is collected
in Schedule M as confidential information. Part V collects data on derivatives and off-balance sheet items
with related depository institutions.

All of the items in this schedule require the reporting of
amounts outstanding as of the report date, with the
exception of Memoranda items 1(a) and 1(b) in Part I,
which call for averages of daily amounts outstanding
during the preceding quarter.
All individual branch or agency data reported on this
schedule are regarded as confidential by the Federal
Financial Institutions Examination Council.

Instructions for Part I

Part I covers the gross due from/due to relationships of
the reporting institution (including its IBF) with its
head office and other related depository institutions
(including any related U.S. bank’s nondepository subsidiaries that are consolidated on the related U.S.
bank’s Consolidated Report of Condition) both in the
U.S. and in foreign countries. Exclude from Part I
transactions between the reporting branch or agency
and its own IBF (report in Part II, item 2).

The scope of Part I is determined by the scope of the
net due from/due to items that are shown in column A
of Schedule RAL—Asset item 2(a) or Liability
item 5(a). That is, report on the appropriate lines of
Part I all the gross due from relationships (column A)
and all the gross due to relationships (column B) with
The detail required in Parts I, II, and III is by location
related depository institutions that are reflected in
and type of related institution, not by type of claim or
Schedule RAL in Asset item 2(a), column A (Net due
liability. In the information required on the schedule, a
from related depository institutions) or in Liability
distinction is made between related institutions “domiitem 5(a), column A (Net due to related depository
ciled in the United States” and those “domiciled outinstitutions). Include all such due from and due to
side the United States.” For purposes of this schedule
items regardless of how they arose and regardless of
(and only this schedule), domiciled in the United States
the nature of any instrument involved. Thus, the gross
means offices domiciled in the 50 states of the United
due from and gross due to items to be reported will
States and the District of Columbia; domiciled outside
include claims between the reporting branch or agency
the United States (non-U.S.) means offices domiciled
or, for institutions that have adopted ASU 2016-13, which governs the
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accounting for credit losses, the allowances for credit losses on financial
FFIEC 002
September 2008
assets, as applicable,
Parts I, II, and III require the reporting of the due
from/due to relationships on a gross basis, i.e., without
netting due from and due to items against each other.

March 2019

Schedule M
or, for institutions that have adopted ASU 2016-13, allowances for
credit losses,
and any related depository institutions arising in connection with:
(1) deposits of any kind;

equals the entry for net due from or for net due to, as
appropriate, as calculated from Schedule RAL and
reported on item 2(a), column A, or item 5(a), column
A, of Schedule RAL.

(2) loans and borrowings of any kind;

Item Instructions for Part I

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(3) overdrafts, federal funds and repurchase and
resale agreements;

(4) claims resulting from clearing activities, foreign
exchange transactions, bankers acceptance
transactions (see Glossary entry for “bankers
acceptances”), and other activities;

(5) capital flows and contributions;

(6) gross unremitted profits and any accounting or
regulatory allocation entered on the books of
the reporting branch or agency (or its IBF) that
ultimately affect unremitted profits such as
statutory or regulatory capital requirements,
reserve accounts, net unrealized gains or losses
on available-for-sale securities, accumulated
gains (losses) on cash flow hedges, and allowance for loan losses, and any provision for
income taxes if the branch or agency pays U.S.
income taxes on behalf of their parent (See the
Glossary entry for “U.S. income taxes”);

NOTE: Consistent with ASC Topic 815, Derivatives and Hedging (formerly FASB Statement
No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended),
intercompany derivatives between a U.S. branch
or agency and a related party, including the
reporting branch or agency’s parent bank, may
qualify for hedge accounting if it meets the criteria outlined in ASC Topic 815.

(7) accrued interest receivable and payable;
(8) fair value of derivatives; and

(9) any other transactions or entries (including
on-balance sheet debit and credit amounts associated with off-balance sheet items) resulting in
claims between the reporting branch or agency
(including its IBF) and its head office and other
related depository institutions.

The coverage and reporting of the gross due from items
and the gross due to items must be such that their net
amount as calculated and reported on item 4 of Part I

Items 1 and 2
The gross due from and gross due to relations with
related depository institutions are to be reported on
items 1 and 2 of Part I with detail by location and type
of the related depository institutions. Separate reporting of such relations with related institutions domiciled
in the U.S. and with those domiciled outside the U.S. is
required in items 1 and 2: item 1 (and its subitems)
requires reporting of such relations with offices “domiciled in the United States” of related depository institutions; item 2 (and its subitems) requires reporting of
such relations with offices “domiciled outside the
United States” (non-U.S.) of related depository
institutions.
Include in items 1 and 2, as appropriate, the fair value
of all derivatives with related depository institutions.
Report positive values in column A, negative values in
column B.
The reporting in item 1 of gross due from and gross
due to relations with related depository institutions
domiciled in the United States (item 1) is further divided
into two parts:
Item 1(a)
Item 1(a) covers such relations with related branches
and agencies in the U.S. (including their IBFs). For purposes of this schedule, “related branches and agencies
in the U.S.” includes:
(1) other U.S. branches and agencies of the reporting branch or agency’s parent foreign bank, and
(2) U.S. branches and agencies of other related foreign banks.

Item 1(a) is further subdivided into two geographic
components—

Item 1(a)(1) Related branches and agencies in the U.S.
domiciled in the same state as the reporting office; and

Item 1(a)(2) Related branches and agencies in the U.S.
domiciled in other states.

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Schedule M

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Institutions that have adopted ASU 2016-13, which governs the accounting for credit losses, report the
allowances for credit losses, as applicable, in column B. If an institution chooses to establish them, the
allowances for credit losses reportable in this item could apply to loans, leases, other financial assets measured
at amortized cost and off-balance sheet credit exposures (but not available-for-sale securities, which are
reported at fair value on Schedule RAL).
Item 1(b)
Item 2(b)(1) Offices of the parent bank in the
Caribbean.
Item 1(b) covers the gross due from/due to relations
with offices in the U.S. of other related U.S. depository
Item 2(b)(1) includes offices domiciled in Puerto Rico
institutions (including their IBFs). The related U.S.
and the U.S. territories and possessions located in the
depository institutions include related U.S. banks
Caribbean; and
(including U.S.-domiciled offıces of nondepository subItem 2(b)(2) Other non-U.S. offices of the parent bank.
sidiaries of related banks that are consolidated on the
related U.S. banks’ Consolidated Report of CondiItem 2(b)(2) includes those offices of the parent bank
tion), Edge and Agreement subsidiaries of related
domiciled in foreign countries outside the Caribbean
banks (both U.S. and non-U.S.), and related New York
and in U.S. territories and possessions outside the
State (Article XII) investment companies. (TransacCaribbean.
tions with related U.S. banks’ offices (both branches
and depository subsidiaries) that are in foreign counItem 2(c)
tries, Puerto Rico, and U.S. territories and possessions
Item 2(c) covers such relations with other non-U.S.
and transactions with non-U.S. branches and subsidoffices of related depository institutions, including
iaries of related Edge and Agreement corporations and
offices in Puerto Rico and the U.S. territories and poswith non-U.S. offices of related New York investment
sessions; that is, all non-U.S. offices of related deposicompanies are to be reported in item 2(c))
tory institutions other than the reporting branch or
agency’s head office (reported in item 2(a)) and its
The reporting in item 2 of gross due from and gross
branches and agencies (reported in item 2(b)). Transacdue to relations with non-U.S. domiciled offices of
tions with foreign, Puerto Rican, and U.S. territorial
related depository institutions is further divided into
branches and depository subsidiaries of related U.S.
three parts:
banks, of related Edge and Agreement corporations,
and of related New York State (Article XII) investment
companies are also to be reported in this item.
Item 2(a)
Also report in item 2(c) transactions with the foreignItem 2(a) covers such relations with the head office of
domiciled offices of those U.S. nondepository subsidthe parent bank of the reporting branch or agency,
iaries of related U.S. banks that are consolidated in the
including unremitted profits and losses. Unremitted
related U.S. bank’s Consolidated Report of Condition.
profits and losses should be netted and, if a net profit,
Transactions with related U.S. banks’ nondepository
reported in column B of this item or, if a net loss,
subsidiaries that are domiciled outside the U.S. that are
reported as an adjustment to any capital contribution
not consolidated in the U.S. bank’s Consolidated
received from the foreign bank parent that is reported
Report of Condition are excluded entirely from Part I
in column B. However, if the net unremitted loss
of Schedule M since such subsidiaries are treated simiexceeds the capital contribution, report the amount of
larly to unrelated institutions and are not reflected in
the net loss in excess of the capital contribution in colitems 2(a) or 5(a) of Schedule RAL (net due from or
umn A. Also include any general allowance established
net due to related depository institutions).
for loan losses (specific reserves should be netted from
individual loans) and any provision for income taxes if
Item 3 Total.
the branch or agency pays U.S. income taxes on behalf
Report, in columns A and B, the sums of the amounts
of their parent (See the Glossary entry for U.S. income
reported for the preceding items as indicated on the
taxes”).
form.

Item 2(b)
Item 2(b) covers such relations with the non-U.S.
branches and agencies of the parent bank of the reporting branch or agency. Item 2(b) is further sub-divided
into two geographic components—

Item 4 Net due from head office and other related
depository institutions.
Report the difference between columns A and B on
item 3 above (i.e., item 3, column A, minus item 3, column B). Item 4 can be either positive or negative; if
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Schedule M
Institutions that have adopted ASU 2016-13, which governs the accounting for credit losses,
report the allowance for credit losses on loans and leases, as applicable, in item 1.

books of the head office of the parent bank or of
another branch. Exclude specific reserves on loans.
Item 2 Other real estate owned.
Report the net book value of all other real estate
owned. (NOTE: This information does not relate to
due from/due to related depository institutions transactions.) Include as all other real estate owned:

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tory subsidiaries that are consolidated in the related
U.S. banks’ Consolidated Report of Condition. The
amounts for transactions with related nondepository
institutions that are to be reported in Part III are components of amounts reported on the individual line
items of Schedule RAL other than items 2(a) and
5(a) of Schedule RAL (which the reporting institution’s net due from/due to relationship with related
depository institutions).
The gross due from and gross due to relations with
related nondepository institutions are required to be
reported with a breakdown between:

Item Instructions for Part III

Item 1 Related nondepository majority-owned
subsidiaries in the U.S.; and,
Item 2 Related nondepository majority-owned
subsidiaries in foreign countries.

Memorandum

Item M1
Part III also requires the reporting of gross due from/
due to relations with those related nondepository subsidiaries included in items 1 and 2 of Part III that are
wholly-owned, directly or indirectly, by the reporting
institution’s parent bank or by its bank holding
company.

Item Instructions for Part IV

1
Item 1 Amount of allowance for loan losses, if any,
carried on the books of the reporting branch or agency
including its IBF.
If the reporting branch or agency chooses to establish
a general allowance for loan losses, it can do so by
establishing a separate account which should be
included in the amount reported in Schedule M, Part I,
item 2(a), column B. Report in this item the total
amount of the allowance carried on the books of the
reporting institution, even if part of that allowance is
applicable to other branches. If no allowance is carried
on the books of the reporting institution, report a zero
or the word “none,” even if an allowance applicable to
the loans of the reporting institution is carried on the

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(1) Foreclosed real estate, i.e.,

(a) Real estate acquired in any manner for debts
previously contracted (including, but not
limited to, real estate acquired through foreclosure and real estate acquired by deed in
lieu of foreclosure), even if the branch or
agency has not yet received title to the
property.

(b) Real estate collateral underlying a loan when
the branch or agency has obtained physical
possession of the collateral, regardless of
whether formal foreclosure proceedings have
been instituted against the borrower.

Foreclosed real estate received in full or partial satisfaction of a loan should be recorded at the fair value
less cost to sell of the property at the time of foreclosure. This amount becomes the “cost” of the foreclosed real estate. When foreclosed real estate is
received in full satisfaction of a loan, the amount, if
any, by which the recorded amount of the loan exceeds
the fair value less cost to sell of the property is a loss
which must be charged to the allowance for loan and
lease losses at the time of foreclosure. 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 RAL, item 4(c), “Other borrowed money.”
After foreclosure, each foreclosed real estate asset 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 paragraph). This determination must be made on an assetby-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

1

Institutions that have adopted ASU 2016-13 should report the allowance for credit
losses on loans and leases.

FFIEC 002

INSTRUCTIONS FOR THE PREPARATION OF

Past Due, Nonaccrual, and
Restructured Loans

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Schedule N
Institutions that have adopted ASU 2016-13, which governs the accounting for credit
losses, should report financial assets without any deductions for any applicable
allowance for credit losses.

General Instructions

Report all loans, including lease financing receivables,
that are past due, are in nonaccrual status, or have been
restructured because of a deterioration in the financial
position of the obligor. All such loans and lease financing receivables held in the reporting branch or agency
and its IBF should be distributed by category and
reported net of any specific reserves. Loan amounts
should be reported net of unearned income to the
extent that the same categories of loans are reported
net of unearned income in Schedule C. Report the full
outstanding balances of past due, nonaccrual, and
restructured loans and lease financing receivables, as
reported for purposes of Schedule C, not simply the
delinquent payments.
Exclude interest earned but not collected on loans
(report in Schedule RAL, item 1(h), “Other assets
including other claims on nonrelated parties”).

NOTE: Exclude all transactions of the branch or
agency, including its IBF, with related depository institutions (report in Schedule M). However, include
transactions with related nondepository institutions.

Definitions

Past due. For purposes of this schedule, grace periods
allowed by the branch or agency, including its IBF,
after a loan technically has become past due, but before
the imposition of late charges, are not to be taken into
account in determining past due status. Furthermore,
loans and lease financing receivables are to be reported
as past due when either interest or principal is unpaid
in the following circumstances:
(1) Closed-end installment loans, amortizing loans
secured by real estate, and any other loans and
lease financing receivables with payments sched-

uled monthly are to be reported as past due
when the borrower is in arrears two or more
monthly payments. (Branches or agencies may
use 30 days as a proxy for a month if they prefer.) Other multipayment obligations with payments scheduled other than monthly are to be
reported as past due when one scheduled payment is due and unpaid for 30 days or more.

(2) Open-end credit such as charge-card plans,
check credit, and other revolving credit plans are
to be reported as past due when the customer
has not made the minimum payment for two or
more billing cycles.
(3) Single payment and demand notes providing for
the payment of interest at stated intervals are to
be reported as past due after one interest payment is due and unpaid for 30 days or more.
(4) Single payment notes providing for the payment
of interest at maturity are to be reported as past
due after maturity if interest or principal
remains unpaid for 30 days or more.
(5) Unplanned overdrafts are to be reported as past
due if the account remains continuously overdrawn for 30 days or more.

For purposes of this schedule, branches or agencies
should use one of two methods to recognize partial
payments on “retail credit,” i.e., open-end and closedend credit extended to individuals for household, family, and other personal expenditures, including consumer loans and credit cards, and loans to individuals
secured by their personal residence, including home
equity and home improvement loans. A payment
equivalent to 90 percent or more of the contractual
payment may be considered a full payment in computing delinquency. Alternatively, a branch or agency may
aggregate payments and give credit for any partial payN-1

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Schedule N

See Insert A
merly AICPA Statement of Position 03-3,
“Accounting for Certain Loans or Debt Securities Acquired in a Transfer”), are met for a purchased impaired loan or debt security accounted
for in accordance with that Subtopic, regardless
of whether the loan or debt security had been
maintained in nonaccrual status by its seller.

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ment received. For example, if a regular monthly
installment is $300 and the borrower makes payments
of only $150 per month for a six-month period, the
loan would be $900 ($150 shortage times six payments), or three monthly payments past due. A branch
or agency may use either or both methods for its retail
credit but may not use both methods simultaneously
with a single loan.

Nonaccrual. For purposes of this schedule, loans and
lease financing receivables are to be reported as being
in nonaccrual status if: (1) they are maintained on a
cash basis because of deterioration in the financial
position of the borrower, (2) payment in full of interest
or principal is not expected, or (3) principal or interest
has been in default for a period of 90 days or more
unless the obligation is both well secured and in the process of collection.
A debt is “well secured” if it is secured (1) by collateral
in the form of liens on or pledges of real or personal
property, including securities, that have a realizable
value sufficient to discharge the debt (including
accrued interest) in full, or (2) by the guarantee of a
financially responsible party. A debt is “in the process
of collection” if collection of the debt is proceeding in
due course either (1) through legal action, including
judgment enforcement procedures, or (2) in appropriate circumstances, through collection efforts not
involving legal action which are reasonably expected to
result in repayment of the debt or in its restoration to a
current status in the near future.

For purposes of applying the third test for nonaccrual
status listed above, the date on which a loan reaches
nonaccrual status is determined by its contractual
terms. If the principal or interest on a loan becomes
due and unpaid for 90 days or more on a date that falls
between report dates, the loan should be placed in nonaccrual status as of the date it becomes 90 days past
due and it should remain in nonaccrual status until it
meets the criteria for restoration to accrual status
described below.
In the following situations, a loan need not be placed in
nonaccrual status:
(1) The criteria for accrual of income under the
interest method specified in ASC Subtopic 31030, Receivables—Loans and Debt Securities
Acquired with Deteriorated Credit Quality (for-

(2) The criteria for amortization (i.e., accretion of
discount) specified in AICPA Practice Bulletin
No. 6 are met with respect to a loan or other
debt instrument acquired at a discount (because
there is uncertainty as to the amounts or timing
of future cash flows) from an unaffiliated third
party (such as another institution or the receiver
of a failed institution), including those that the
seller had maintained in nonaccrual status.
(3) The loan upon which principal or interest is due
and unpaid for 90 days or more is a consumer
loan secured by a 1-to-4 family residential property. Nevertheless, such loans should be subject
to other alternative methods of evaluation to
assure that the reporting institution’s net income
is not materially affected. To the extent that the
reporting institution has elected to carry such a
loan in nonaccrual status on its books, the loan
must be reported as nonaccrual in this schedule.

As a general rule, a nonaccrual loan may be restored to
accrual status when (1) none of its principal and interest is due and unpaid, and the reporting institution
expects repayment of the remaining contractual principal and interest, or (2) when it otherwise becomes well
secured and in the process of collection. For purposes
of meeting the first test for restoration to accrual status, the reporting institution must have received repayment of the past due principal and interest unless, as
discussed in the Glossary entry for “nonaccrual status,” (1) the loan has been restructured in a troubled
debt restructuring and qualifies for accrual status,
(2) the asset is a purchased credit-impaired loan, pool
of loans, or debt security accounted for in accordance
with ASC 310-30 and it meets the criteria for accrual of
income under the interest method specified in that
Subtopic, or (3) the borrower has resumed paying the
full amount of the scheduled contractural interest and
principal payments on a loan that is past due and in
nonaccrual status, even though the loan has not been
brought fully current, and certain repayment criteria

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Insert A
For institutions that have adopted ASU 2016-13, any outstanding purchased credit-impaired loans and
debt securities as of the adoption date should prospectively be accounted for as purchased creditdeteriorated loans and debt securities. Any remaining noncredit discount on such loans and debt
securities should be accreted into interest income at the effective interest rate on the adoption date of
ASU 2016-13 if a loan or debt security is not required to be placed in nonaccrual status. For purchased
credit-deteriorated loans acquired after the adoption date, ASU 2016-13 refers to ASC Subtopic 310-10
for guidance on recognition of interest income. For purchased credit-deteriorated loans with common
risk characteristics that are aggregated and accounted for as a pool for allowance measurement
purposes under ASU 2016-13, the determination of nonaccrual or accrual status should be made at the
individual loan level, not at the pool level.

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Schedule N
Institutions that have adopted ASU 2016-13 should report in columns A and B asset amounts
without any deduction for allowances for credit losses.

are met. For further information, see the Glossary
entry for “nonaccrual status.”

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Restructured and in compliance with modified terms.
For purposes of this schedule, restructured loans and
leases are those loans and leases whose terms have been
modified, because of a deterioration in the financial
condition of the borrower, to provide for a reduction of
either interest or principal, regardless of whether such
loans and leases are secured or unsecured, regardless of
whether such credits are guaranteed by the government
or by others, and (except as noted in the following
paragraph) regardless of the effective interest rate on
such credits.

1-to-4 family residential properties and all restructured
loans to individuals for household, family, and other
personal expenditures. (However, any restructured
loans of these two types that subsequently become past
due 30 days or more or are placed in nonaccrual status
should be reported accordingly.)

Once a loan or lease has been restructured because of
such credit problems, it continues to be considered
restructured until paid in full. However, a restructured
loan or lease that is in compliance with its modified
terms and yields a market rate (i.e., the recorded
amount of the obligation bears an effective interest
rate that at the time of the restructuring is greater than
or equal to the rate that the branch or agency is willing
to accept for a new extension of credit with comparable risk) need not continue to be reported as “restructured and in compliance with modified terms” in calendar years after the year in which the restructuring took
place. A loan extended or renewed at a stated interest
rate equal to the current interest rate for new debt with
similar risk is not considered a restructured loan. Also,
a loan to a purchaser of “other real estate owned” by
the reporting branch or agency for the purpose of
facilitating the disposal of such real estate is not considered a restructured loan. For further information,
see ASC Subtopic 310-40, Receivables—Troubled
Debt Restructurings by Creditors (formerly FASB
Statement No. 15, “Accounting by Debtors and Creditors for Troubled Debt Restructurings”).
Report as “restructured and in compliance with modified terms” all restructured loans and leases as defined
above that are in compliance with their modified terms,
that is, restructured loans and leases (1) on which no
contractual payments of principal or interest scheduled under the modified repayment terms are due and
unpaid or (2) on which contractual payments of both
principal and interest scheduled under the modified
repayment terms are less than 30 days past due.
Exclude from “restructured and in compliance with
modified terms” all restructured loans secured by

Column Instructions

Report in columns A and B (except for Memoranda
item 2) the full outstanding balances (not just delinquent payments) of loans, including lease financing
receivables, that are past due and upon which the
branch or agency, including its IBF, continues to
accrue interest, as follows:

(1) In column A, report closed-end monthly installment loans, amortizing loans secured by real
estate, lease financing receivables, and open-end
credit in arrears two or three monthly payments;
other multipayment obligations, with payments
scheduled other than monthly, when one scheduled payment is due and unpaid for 30 through
89 days; single payment and demand notes providing for payment of interest at stated intervals
after one interest payment is due and unpaid for
30 through 89 days; single payment notes providing for payment of interest at maturity, on
which interest or principal remains unpaid for 30
through 89 days after maturity; unplanned overdrafts, whether or not the branch or agency is
accruing interest on them, if the account
remains continuously overdrawn for 30 through
89 days.

(2) In column B, report the loans, including lease
financing receivables, as specified above on
which payment is due and unpaid for 90 days or
more.

Report in columns A and B of Memoranda item 2 the
fair value, if positive, of all interest rate, foreign
exchange rate, equity, and commodity and other contracts or which a required payment by the branch or
agency’s counter-party is due and unpaid for 30
through 89 days and due and unpaid for 90 days or
more, respectively.
Exclude from columns A and B all loans and lease
financing receivables that are in nonaccrual status and
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