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

Draft Revisions to the FFIEC 002 Instructions for Proposed Revisions to the FFIEC 002
with Effective Dates Beginning with the June 30, 2020, Report Date

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These draft instructions, which are subject to change, include the pages in the instruction book for the Report
of Assets and Liabilities of U.S. Branches and Agencies (FFIEC 002) as they are proposed to be revised, subject to
final approval by the U.S Office of Management and Budget (OMB). These revisions are described in the federal
banking agencies’ initial Paperwork Reduction Act (PRA) Federal Register notice published on July 22, 2020. As
discussed in the agencies' final PRA Federal Register notice published in the Federal Register on November 23,
2020, the agencies are proceeding with the revisions to the FFIEC 002 instruction book, with certain modifications.
The initial and final notices are available on the FFIEC’s web page for the FFIEC 002.
The draft instructions with effective dates of June 30, 2020, or September 30, 2020, pertain to an interim final rule
that amends the Federal Reserve Board’s (Board) Regulation D on reserve requirements, a final rule adopted by the
Federal Deposit Insurance Corporation (FDIC) that modified its deposit insurance assessment rules in response to
disruptions related to the Coronavirus Disease 2019, and Section 4013 of the 2020 Coronavirus Aid, Relief, and
Economic Security Act (CARES Act), which provides optional temporary relief from accounting for eligible loan
modifications as troubled debt restructurings. In the second quarter, the agencies have received emergency
approvals from the OMB to implement changes to the FFIEC 002 arising from the Board’s interim final rule, the
FDIC’s final rule, and Section 4013 of the CARES Act.

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In addition, the draft instructions with effective dates beginning with the March 31, 2021, report date address
proposed revisions to the FFIEC 002 related to the application of specific aspects of U.S. generally accepted
accounting principles, which are described in the agencies’ initial and final Federal Register notice.

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Table of Contents
Impacted Instructions

Page

FFIEC 002 Effective Date: June 30, 2020
1. Schedule C, Part I, Loans and Leases, Memorandum Item 5, “Eligible loan modifications under
Section 4013, Temporary Relief from Troubled Debt Restructurings, of the 2020 Coronavirus Aid, Relief,
and Economic Security Act” ............................................................................................................................... 4
2. Schedule E, Deposit Liabilities, and the Glossary Entry for “Deposits” related to the Interim Final
Rule for Reserve Requirements of Depository Institutions (Regulation D) ........................................................ 6

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3. Schedule O, Other Data for Deposit Insurance Assessments, Memorandum Item 6, “Quarterly average
amount of Paycheck Protection Program loans pledged to the Federal Reserve Paycheck Protection
Program Liquidity Facility”……………………………………………………………………………………………... 14
4. Schedule O, Other Data for Deposit Insurance Assessments, Memorandum Item 7, “Quarterly average
amount of holdings of assets purchased from money market funds under the Money Market Mutual Fund
Liquidity Facility”.……………………………………………………….……………………………………………… 14
FFIEC 002 Effective Date: September 30, 2020

5. Schedule O, Other Data for Deposit Insurance Assessments, Memorandum Item 6, “Outstanding balance
of Paycheck Protection Program loans” ............................................................................................................ 17
Proposed FFIEC 002 Effective Date: March 31, 2021

6. Schedule N, Past Due, Nonaccrual, and Restructured Loans, Nonaccrual Treatment of Purchased CreditDeteriorated Assets, and Glossary Entries for “Nonaccrual Status,” “Purchased Credit-Deteriorated Assets,”
and “Purchased Credit-Impaired Loans and Debt Securities” .......................................................................... 19
7. Glossary Entry for “Deposits” related to the Interim Final Rule for Reserve Requirements of Depository
Institutions (Regulation D)……………………………………............................................................................... 32

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Proposed FFIEC 002 Effective Date: TBD

8. Schedule RAL, Assets and Liabilities, Memorandum Item 3.b, “Amortized cost of available-for-sale
securities”…....................................................................................................................................................... 38

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9. Schedule C, Part I, Loans and Leases, Item 10, “LESS: Any unearned income on loans reflected in
items 1-8 above” …………………………………………………………………………… ...................................... 39

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D

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Note: The changes to the instructions for Schedule C, Part I; Schedule E; the Glossary entry for
"Deposits"; and Schedule O on pages 4 through 15 are effective as of the June 30, 2020, report date.

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Schedule C

(2) Loans (excluding those held in the branch’s IBF)
with original amounts of $1 million or less that
have been reported in Schedule C, part I,
item 4(a), column A, “Commercial and industrial
loans to U.S. addressees.”

Item M4 Commercial and industrial loans with
remaining maturity of more than one year (excluding
those in nonaccrual status).
Report in the proper subitems below the amount outstanding on the report date of commercial and industrial loans (the sum of items 4(a) and 4(b) of this
schedule, column A) which have a remaining maturity
(from the report date until the final contractual maturity
date) of more than one year. Exclude demand loans,
loans with no stated repayment schedule and no stated
maturity, and overdrafts, which should be reported in
Memorandum item 3 above. Exclude those loans and
leases that are reported as nonaccrual in Schedule N,
column C.

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For purposes of this schedule, “loans to small farms”
consist of the following:

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(1) Loans secured by farmland (including farm residential and other improvements) (excluding those
held in the branch’s IBF) with original amounts
of $500,000 or less that have been reported in
Schedule C, part I, item 1, column A, “Loans
secured by real estate,” and

(2) Loans to finance agricultural production and
other loans to farmers (excluding those held in
the branch’s IBF) with original amounts of
$500,000 or less that have been reported in Schedule C, part I, item 8, column A, “All other loans.”

Item M4(a) With predetermined interest rates.
Report in this item those commercial and industrial
loans with remaining maturity of more than one year
with fixed or predetermined interest rates. The definition of this type of rate is found in Memorandum
item 3(a) above.
Insert A

The following guidelines should be used to determine
the “original amount” of a loan:

Item M4(b) With floating interest rates.
Report in this item those commercial and industrial
loans with a remaining maturity of more than one year
with floating interest rates. The definition of this type
of rate is found in Memorandum item 3(b) above.

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(1) For loans drawn down under lines of credit or
loan commitments, the “original amount” of the
loan is the size of the line of credit or loan commitment when the line of credit or loan commitment was most recently approved, extended, or
renewed prior to the report date. However, if the
amount currently outstanding as of the report
date exceeds this size, the “original amount” is the
amount currently outstanding on the report date.

Part II. Loans to Small Businesses and
Small Farms—General Instructions

Schedule C, part II, is to be completed only as of the
June 30 report date by branches whose deposits are
insured by the FDIC.

(2) For loan participations and syndications, the
“original amount” of the loan participation or
syndication is the entire amount of the credit
originated by the lead lender.

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Schedule C, part II, requests information on the number and amount currently outstanding of “loans to
small businesses” and “loans to small farms,” as
defined below. This information is being collected pursuant to Section 122 of the Federal Deposit Insurance
Corporation Improvement Act of 1991.

(3) For all other loans, the “original amount” is the
total amount of the loan at origination or the
amount currently outstanding as of the report
date, whichever is larger.
The “amount currently outstanding” for a loan is its
carrying value, i.e., the amount at which the loan is
reported in Schedule C, part I, items 1, 4(a), or 8,
above.

For purposes of this schedule, “loans to small businesses” consist of the following:
(1) Loans secured by nonfarm nonresidential properties (excluding those held in the branch’s IBF)
with original amounts of $1 million or less that
have been reported in Schedule C, part I, item 1,
column A, “Loans secured by real estate,” and

Except as noted below for “corporate” or “business”
credit card programs, when determining “original
amounts” and reporting the number and amount curC-13

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Insert A

Item M5 Eligible loan modifications under Section 4013, Temporary Relief from Troubled Debt Restructurings, of
the 2020 Coronavirus Aid, Relief, and Economic Security Act. As provided for under the 2020 Coronavirus Aid,
Relief, and Economic Security Act, a financial institution may elect to account for an eligible loan modification under
Section 4013 of that Act (Section 4013 loan). If a loan modification is not eligible under Section 4013, or if the institution
elects not to account for an eligible loan modification under Section 4013, the institution should not report the loan in
Memorandum items 5(a) and 5(b) and should evaluate whether the modified loan is a troubled debt restructuring (TDR)
under ASC Subtopic 310-40, Receivables -Troubled Debt Restructurings by Creditors.

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To be an eligible loan modification under Section 4013, a loan modification must be (1) related to the Coronavirus
Disease 2019 (COVID-19); (2) executed on a loan that was not more than 30 days past due as of December 31, 2019;
and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date of termination of the national
emergency concerning the COVID-19 outbreak declared by the President on March 13, 2020, under the National
Emergencies Act or (B) December 31, 2020.

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Financial Institutions accounting for eligible loan modifications under Section 4013 are not required to apply ASC
Subtopic 310-40 to the Section 4013 loans for the term of the loan modification. Financial institutions do not have to
report Section 4013 loans as TDRs in regulatory reports. However, consistent with the statute, the agencies are collecting
information about the volume of Section 4013 loans, including the number of Section 4013 loans outstanding
(Memorandum item 5(a)) and the outstanding balance of Section 4013 loans (Memorandum item 5(b)). These two items
are collected on a confidential basis at the branch-and-agency level.
For further information on loan modifications, including those that may not be eligible under Section 4013 or for which an
institution elects not to apply Section 4013, institutions may refer to the Interagency Statement on Loan Modifications and
Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised), issued April 7, 2020.
Item M5(a) Number of Section 4013 loans outstanding. Report the number of Section 4013 loans outstanding held
by the reporting institution as of the report date whose outstanding balances are included in the amount reported in
Schedule C, Part I, Memoranda item 5(b), below.

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Item M5(b) Outstanding balance of Section 4013 loans. Report the aggregate amount at which Section 4013 loans
held for investment and held for sale are included in Schedule C, Part I, and Section 4013 loans held for trading are
included in Schedule RAL, item 1(f)(5), as of the report date.

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Schedule E

(2) Any deposit or account that otherwise meets the
definition of a time deposit but that allows withdrawals within the first six days after the date of
deposit and that does not require an early withdrawal penalty of at least seven days’ simple interest on amounts withdrawn within those first six
days, unless the deposit or account meets the definition of a savings deposit. Any such deposit or
account that meets the definition of a savings
deposit shall be reported as a savings deposit, otherwise it shall be reported as a demand deposit,
which is a transaction account.

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stop payment, missing endorsement, post or stale date,
or account closed), but which have been charged to the
control accounts of the various deposit categories on
the general ledger, should be credited to (added back
to) the appropriate deposit control totals and reported
in Schedule RAL, item 1(h) “Other assets.”
The Monetary Control Act of 1980 and the resulting
revision to Federal Reserve Regulation D, “Reserve
Requirements of Depository Institutions,” established,
for purposes of federal reserve requirements on deposit
liabilities, a category of deposits identified as “transaction accounts.” The distinction between transaction
and nontransaction accounts is discussed in detail in
the Glossary entry for “deposits.” In particular, money
market deposit accounts (MMDAs) are regarded as
savings deposits and are specifically excluded from the
“transaction account” classification.

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(3) The remaining balance of a time deposit from
which a partial early withdrawal is made, unless
the remaining balance either (a) is subject to additional early withdrawal penalties of at least seven
days’ simple interest on amounts withdrawn
within six days after each partial withdrawal (in
which case the deposit or account continues to be
reported as a time deposit) or (b) is placed in an
account that meets the definition of a savings
deposit (in which case the deposit or account shall
be reported as a savings deposit). Otherwise, the
deposit or account shall be reported as a demand
deposit, which is a transaction account.

Summary of Transaction Account
Classifications

(See the Glossary entry for “deposits” for detailed definitions and further information.)
Always regarded as transaction accounts:

Not regarded as transaction accounts (unless specified
above):

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(1) Demand deposits.

(1) Savings deposits (including accounts commonly
known as money market deposit accounts
(MMDAs)).

(2) NOW accounts.
(3) ATS accounts.

(2) Accounts that permit telephone or preauthorized
transfers or transfers by ATMs or RSUs to repay
loans made or serviced by the same depository
institution.

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(4) Accounts (other than savings deposits) from
which payments may be made to third parties by
means of an automated teller machine (ATM), a
remote service unit (RSU), or another electronic
device, including by debit card.

(3) Accounts that permit telephone or preauthorized
withdrawals where the proceeds are to be mailed
to or picked up by the depositor.

(5) Accounts (other than savings deposits) that permit third party payments through use of checks,
drafts, negotiable instruments, or other similar
instruments.

(4) Accounts that permit transfers to other accounts
of the depositor at the same institution through
ATMs or RSUs.

Deposits or accounts that are regarded as transaction
accounts if the following specified conditions exist:

Column Instructions

(1) Accounts that otherwise meet the definition of
savings deposits but that authorize or permit the
depositor to exceed the transfer and withdrawal
rules for a savings deposit.

Deposits as summarized above are divided into two
general categories, “Transaction Accounts” (columns
A and B) and “Nontransaction Accounts” (column C).
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Glossary

(a) Demand deposits are deposits that are payable immediately on demand, or that are
issued with an original maturity or required
notice period of less than seven days, or that
represent funds for which the depository
institution does not reserve the right to
require at least seven days’ written notice of
an intended withdrawal. Demand deposits
include any matured time deposits without
automatic renewal provisions, unless the
deposit agreement provides for the funds to
be transferred at maturity to another type of
account. Effective July 21, 2011, demand
deposits may be interest-bearing or
noninterest-bearing. Demand deposits do
not include: (i) money market deposit
accounts (MMDAs) or (ii) NOW accounts,
as defined below in this entry.

of Depository Institutions,” establish, for purposes of
federal reserve requirements on deposit liabilities, a
category of deposits designated as “transaction
accounts.” All deposits that are not transaction
accounts are “nontransaction accounts.”

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(1) Transaction accounts—With the exceptions noted
below, a “transaction account,” as defined in
Regulation D and in these instructions, is a
deposit or account from which the depositor or
account holder is permitted to make transfers or
withdrawals by negotiable or transferable instruments, payment orders of withdrawal, telephone
transfers, or other similar devices for the purpose
of making payments or transfers to third persons
or others or from which the depositor may make
third party payments at an automated teller
machine (ATM), a remote service unit (RSU), or
another electronic device, including by debit card.

(b) NOW accounts are interest-bearing deposits
(i) on which the depository institution has
reserved the right to require at least seven
days’ written notice prior to withdrawal or
transfer of any funds in the account and
(ii) that can be withdrawn or transferred to
third parties by insurance of a negotiable or
transferable instrument. NOW accounts, as
authorized by federal law, are limited to
accounts held by:

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Excluded from transaction accounts are savings
deposits (both money market deposit accounts
(MMDAs) and other savings deposits) as defined
below in the nontransaction account category,
even though such deposits permit some thirdparty transfers. However, an account that otherwise meets the definition of a savings deposit but
that authorizes or permits the depositor to exceed
the transfer limitations specified for that account
shall be reported as a transaction account. (Please
refer to the definition of savings deposits for further detail.)

(i) Individuals or sole proprietorships;
(ii) Organizations that are operated primarily for religious, philanthropic,
charitable, educational, or other similar purposes and that are not operated
for profit. These include organizations,
partnerships, corporations, or associations that are not organized for profit
and are described in section
501(c)(3) through (13) and (19) and
section 528 of the Internal Revenue
Code, such as church organizations;
professional associations; trade associations; labor unions; fraternities,
sororities and similar social organizations; and non-profit recreational
clubs; or

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NOTE: Under the Federal Reserve’s current
Regulation D, no transaction account, regardless
of its other characteristics, is classified either as a
savings deposit or as a time deposit. Thus, those
transaction accounts that are not demand
deposits—NOW accounts, ATS (Automatic
Transfer Service) accounts, and telephone and
preauthorized transfer accounts—are excluded
from Regulation D time and savings deposits.
Transaction accounts consist of the following
types of deposits: (a) demand deposits; (b) NOW
accounts (including accounts previously designated as “Super NOWs”); (c) ATS accounts; and
(d) telephone and preauthorized transfer
accounts, all as defined below. Interest that is paid
by the crediting of transaction accounts is also
included in transaction accounts.

(iii) Governmental units including the federal government and its agencies and
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Glossary

(d) Telephone or preauthorized transfer accounts
consist of deposits or accounts, other than
savings deposits, (1) in which the entire
beneficial interest is held by a party eligible
and
to hold a NOW account, (2) on which the
reporting institution has reserved the right
to require at least seven days’ written notice
prior to withdrawal or transfer of any funds
in the account, and (3) under the terms of
which, or by practice of the reporting institution, the depositor is permitted or authorized to make more than six withdrawals per
month or statement cycle (or similar period)
of at least four weeks for purposes of transferring funds to another account of the
depositor at the same institution (including
a transaction account) or for making payment to a third party by means of preauthorized transfer, or telephonic (including data
transmission) agreement, order or instruction. An account that permits or authorizes
more than six such withdrawals in a
“month” (a calendar month or any period
approximating a month that is at least four
weeks long, such as a statement cycle) is a
transaction account whether or not more
than six such withdrawals actually are made
in the “month.” A “preauthorized transfer”
includes any arrangement by the reporting
institution to pay a third party from the
account of a depositor (1) upon written or
oral instruction (including an order received
through an automated clearing house
(ACH), or (2) at a predetermined time or on
a fixed schedule. Telephone and preauthorized transfer accounts also include:

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Also included are the balances of all NOW
accounts of certain other nonprofit organizations that may not fall within the above
description but that had established NOW
accounts with the reporting institution prior
to September 1, 1981.

deposit are not exceeded. Please refer to the
definition of savings deposit for further
detail.

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instrumentalities; state governments;
county and municipal governments
and their political subdivisions; the
District of Columbia; the Commonwealth of Puerto Rico, American
Samoa, Guam, and any territory or
possession of the United States and
their political subdivisions.

NOTE: There are no regulatory requirements with respect to minimum balances to
be maintained in a NOW account or to the
amount of interest that may be paid on a
NOW account.

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(c) ATS accounts are deposits or accounts of
individuals or sole proprietorships on which
the depository institution has reserved the
right to require at least seven days’ written
notice prior to withdrawal or transfer of any
funds in the account and from which, pursuant to written agreement arranged in
advance between the reporting institution
and the depositor, withdrawals may be made
automatically through payment to the
depository institution itself or through
transfer of credit to a demand deposit or
other account in order to cover checks or
drafts drawn upon the institution or to
maintain a specified balance in, or to make
periodic transfers to, such other accounts.
Some institutions may have entered into
agreements with their customers providing
that in the event the customer should overdraw a demand deposit (checking) or NOW
account, the institution will transfer from
that customer’s savings account an amount
sufficient to cover the overdraft. The availability of the overdraft protection plan
would not in and of itself require that such a
savings account be regarded as a transaction
account provided that the overall transfer
and withdrawal restrictions of a savings

(i) Deposits or accounts maintained in
connection with an arrangement that
permits the depositor to obtain credit
directly or indirectly through the drawing of a negotiable or nonnegotiable
check, draft, order or instruction or
other similar device (including telephone or electronic order or instruction) on the issuing institution that can

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Glossary

nontransaction accounts, constitute the entire savings deposit category. Likewise, time deposits, also
defined here under nontransaction accounts, constitute the entire time deposits category.

be used for the purpose of making payments or transfers to third parties or
others, or to another deposit account
of the depositor.

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However, an account is not a transaction
account merely by virtue of arrangements
that permit the following types of transfer
or withdrawals, regardless of the number:

(a) Savings deposits are deposits with respect to
which the depositor is not required by the
deposit contract but may at any time be
required by the depository institution to give
written notice of an intended withdrawal
not less than seven days before withdrawal is
made, and that is not payable on a specified
date or at the expiration of a specified time
after the date of deposit. The term savings
deposit also means a deposit or account,
such as an account commonly known as a
passbook savings account, a statement savings account, or a money market deposit
account (MMDA), that otherwise meets the
requirements of the preceding paragraph
and from which, under the terms of the
deposit contract or by practice of the
depository institution, the depositor is permitted or authorized to make no more than
six transfers and withdrawals, or a combination of such transfers and withdrawals, per
calendar month or statement cycle (or similar period) of at least four weeks, to another
account (including a transaction account) of
the depositor at the same institution or to a
third party by means of a preauthorized or
automatic transfer, or telephonic (including
data transmission) agreement, order, or
instruction; or by check, draft, debit card, or
similar order made by the depositor and
payable to third parties. Transfers from savings deposits for purposes of covering overdrafts (overdraft protection plans) are
included under the withdrawal limits
specified for savings deposits. There are no
regulatory restrictions on the following
types of transfers or withdrawals from a savings deposit account, regardless of the
number:

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(ii) The balance of deposits or accounts
that otherwise meet the definition of
time deposits, but from which payments may be made to third parties by
means of a debit card, an automated
teller machine, remote service unit or
other electronic device, regardless of
the number of payments made.

(i) Transfers for the purpose of repaying
loans and associated expenses at the
same depository institution (as originator or servicer).

(ii) Transfers of funds from this account
to another account of the same depositor at the same depository institution
when made by mail, messenger, automated teller machine, or in person.

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(iii) Withdrawals for payment directly to
the depositor when made by mail, messenger, automated teller machine, in
person, or by telephone (via check
mailed to the depositor).

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(2) Nontransaction accounts—All deposits that are
not transaction accounts (as defined above) are
nontransaction accounts. Nontransaction
accounts include: (a) savings deposits ((i) money
market deposit accounts (MMDAs) and (ii) other
savings deposits and (b) time deposits ((i) time
certificates of deposit and (ii) time deposits, open
account). Regulation D no longer distinguishes
between money market deposit accounts
(MMDAs) and other savings deposits. However,
these two types of accounts are defined below for
purposes of this report. NOTE: Under the Federal Reserve’s current Regulation D, no transaction accounts, regardless of other characteristics,
are defined as savings or time deposits. Thus, savings deposits as defined here, under the heading

(i) Transfers for the purpose of repaying
loans and associated expenses at the
same depository institution (as originator or servicer).
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Glossary

are not permitted or authorized, the
account is considered either an
ATS account or a telephone or preauthorized transfer account.

(ii) Transfers of funds from this account
to another account of the same depositor at the same institution when made
by mail, messenger, automated teller
machine, or in person.

(ii) Other savings deposits are deposits or
accounts that meet the above definition
of a savings deposit but that permit no
transfers by check, draft, debit card, or
similar order made by the depositor
and payable to third parties. Other savings deposits are commonly known as
passbook savings or statement savings
accounts.

Any depository institution may place
restrictions and requirements on savings
deposits in addition to those stipulated
above. In the case of such further restrictions, the account would still be reported as
a savings deposit. On the other hand, an
account that otherwise meets the definition
of a savings deposit but that authorizes or
permits the depositor to exceed the sixtransfer/withdrawal rule shall be reported as
a transaction account, as follows:

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Insert B

unlimited
transfers

(i) Money market deposit accounts
(MMDAs) are deposits or accounts
that meet the above definition of a savings deposit and that permit up to (but
no more than) six allowable transfers to
be made by check, draft, debit card or
similar order made by the depositor
and payable to third parties.

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Further, for a savings deposit account, no
minimum balance is required by regulation,
there is no regulatory limitation on the
amount of interest that may be paid, and no
minimum maturity is required (although
depository institutions must reserve the
right to require at least seven days’ written
notice prior to withdrawal as stipulated
above for a savings deposit).

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(iii) Withdrawals for payment directly to
the depositor when made by mail, messenger automated teller machine, in
person, or by telephone (via check
mailed to the depositor).

Regulation D no longer distinguishes
between money market deposit accounts
(MMDAs) and other savings deposits. However, these two types of accounts are defined
as follows for purposes of this report.

Examples illustrating distinctions between
MMDAs and other savings deposits for purposes of this report are provided at the end
of this Glossary entry.

(i) If the depositor is ineligible to hold a
NOW account, such an account is considered a demand deposit.

(b) Time deposits are deposits that the depositor
does not have a right, and is not permitted,
to make withdrawals from within six days
after the date of deposit unless the deposit is
subject to an early withdrawal penalty of at
least seven days’ simple interest on amounts
withdrawn within the first six days after
deposit. A time deposit from which partial
early withdrawals are permitted must
impose additional early withdrawal penalties
of at least seven days’ simple interest on
amounts withdrawn within six days after
each partial withdrawal. If such additional
early withdrawal penalties are not imposed,
the account ceases to be a time deposit. The
account may become a savings deposit if it

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(ii) If the depositor is eligible to hold a
NOW account, the account will be
considered either a NOW account, a
telephone or pre-authorized transfer
account, or an ATS account:

(a) If withdrawals or transfers by
check, draft, or similar instrument
are permitted or authorized, the
account is considered a NOW
account.

(b) If withdrawals or transfers by
check, draft, or similar instrument
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Insert B
Treatment of Accounts where Reporting Institutions Have Suspended Enforcement of the Six Transfer
Limit per Regulation D
Where the reporting institution has suspended the enforcement of the six transfer limit rule on an
account that meets the definition of a savings deposit, the reporting institution may continue to report
such deposits as a savings account, or may choose to report them as transaction accounts based on
an assessment of the characteristics of the account as indicated below:
1) If the reporting institution does not retain the reservation of right to require at least seven days'

written notice before an intended withdrawal, report the account as a demand deposit.

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2) If the reporting institution does retain the reservation of right to require at least seven days' written

notice before an intended withdrawal and the depositor is eligible to hold a NOW account, report the
account as either an ATS account, NOW account, or a telephone and preauthorized transfer account.
3) If the reporting institution does retain the reservation of right to require at least seven days' written

D

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notice before an intended withdrawal and the depositor is ineligible to hold a NOW account, the
account should continue to be reported as a savings deposit.

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Glossary

under written contracts that provide
that no withdrawal shall be made until
a certain number of periodic deposits
has been made during a period of not
less than three months, even though
some of the deposits are made within
six days of the end of such period.

NOTE: The above prescribed penalties are
the minimum required by Federal Reserve
Regulation D. Institutions may choose to
require penalties for early withdrawal in
excess of the regulatory minimums.
Time deposits take two forms:

T

meets the requirements for a savings deposit;
otherwise it becomes a demand deposit.

Time deposits do not include the following
categories of liabilities even if they have an
original maturity of seven days or more:

(i) Time certificates of deposit (including
rollover certificates of deposit) are
deposits evidenced by a negotiable or
nonnegotiable instrument, or a deposit
in book entry form evidenced by a
receipt or similar acknowledgment
issued by the branch or agency, that
provides, on its face, that the amount
of such deposit is payable to the bearer,
to any specified person, or to the order
of a specified person, as follows:

AF

(i) Any deposit or account that otherwise
meets the definition of a time deposit
but that allows withdrawals within the
first six days after deposit and that
does not require an early withdrawal
penalty of at least seven days’ simple
interest on amounts withdrawn within
those first six days. Such deposits or
accounts that meet the definition of a
savings deposit shall be reported as
savings deposits; otherwise they shall
be reported as demand deposits.

(a) on a certain date not less than seven
days after the date of deposit,

(ii) The remaining balance of a time
deposit if a partial early withdrawal is
made and the remaining balance is not
subject to additional early withdrawal
penalties of at least seven days’ simple
interest on amounts withdrawn within
six days after each partial withdrawal.
Such time deposits that meet the
definition of a savings deposit shall be
reported as savings deposits; otherwise
they shall be reported as demand
deposits.

(b) at the expiration of a specified
period not less than seven days
after the date of the deposit, or

R

(c) upon written notice to the branch
or agency which is to be given not
less than seven days before the date
of withdrawal.

D

(ii) Time deposits, open account are deposits (other than time certificates of
deposit) for which there is in force a
written contract with the depositor
that neither the whole nor any part of
such deposit may be withdrawn
prior to:

Reporting of Retail Sweep Arrangements Affecting
Transaction and Nontransaction Accounts

(a) the date of maturity which shall be
not less than seven days after the
date of the deposit, or

In an effort to reduce their reserve requirements, some
branches and agencies have established sweep arrangements that involve transfers of retail customers’ deposits between two subaccounts. In a typical arrangement,
a branch or agency creates a master account and two
subaccounts: a transaction subaccount (either a
demand deposit account or a NOW account), which is
subject to reserve requirements, and a nontransaction
savings subaccount (a special-purpose money market
deposit account (MMDA)), which is not subject to

(b) the expiration of a specified period
of written notice of not less than
seven days.
These deposits include those club
accounts, such as Christmas club and
vacation club accounts, that are made

GL-15
FFIEC 002

12

June 2012
June 2020

Glossary

T

Noninterest-bearing deposit accounts include
(i) matured time deposits that are not automatically renewable (unless the deposit agreement provides for the funds to be transferred at maturity to
another type of account) and (ii) deposits with a
zero percent stated interest rate that are issued at
face value.

See also “brokered deposits” and “hypothecated
deposits.”

Examples Illustrating Distinctions Between
MONEY MARKET DEPOSIT ACCOUNTS
(MMDAs) and OTHER SAVINGS DEPOSITS

AF

reserve requirements. Depending upon the balances in
the two subaccounts on a particular day, the branch or
agency will shift funds from the transaction subaccount to the MMDA subaccount or vice versa. On
some days, the balance in the MMDA subaccount may
be zero. (For purposes of the Federal Reserve’s Regulation D, there is no distinction between an MMDA and
any other form of savings account in terms of legally
required restrictions on transfers.) For purposes of this
report, the transaction subaccount and MMDA subaccount must be treated separately when a branch or
agency reports its quarter-end deposit information in
Schedules RAL, E, and O.

Example 1

(III) Interest-bearing-noninterest-bearing deposit
distinction

A savings deposit account permits no transfers of any
type to other accounts or to third parties.

(1) Interest-bearing deposit accounts consist of
deposit accounts on which the issuing depository
institution makes any payment to or for the
account of any depositor as compensation for the
use of funds constituting a deposit. Such compensation may be in the form of cash, merchandise, or property or as a credit to an account. An
institution’s absorption of expenses incident to
providing a normal banking function or its forbearance from charging a fee in connection with
such a service is not considered a payment of
interest.

Report this account as an other savings deposit.
Example 2unlimited

A savings deposit permits up to six, but no more than
six, “preauthorized, automatic, or telephonic” transfers to other accounts or to third parties. None of the
third-party payments may be made by check, draft, or
similar order (including debit card).

R

Report this account as an other savings deposit.
Example 3 unlimited
A savings deposit permits no more than six “preauthorized, automatic, or telephonic” transfers to other
accounts or to third parties any or all of which may be
made by check, draft, debit card or similar order made
by the depositor and payable to third parties.

Deposits with a zero percent interest rate that are
issued on a discount basis are to be treated as
interest-bearing. Deposit accounts on which the
interest rate is periodically adjusted in response to
changes in market interest rates and other factors
should be reported as interest-bearing even if the
rate has been reduced to zero, provided the interest rate on these accounts can be increased as
market conditions change.

D

Report this account as an MMDA.

Derivative Contracts
Branches and agencies commonly use derivative instruments for managing (positioning or hedging) their
exposure to market risk (including interest rate risk
and foreign exchange risk), cash flow risk, and other
risks in their operations and for trading. The accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in
other contracts, and for hedging activities are set forth
in ASC Topic 815, Derivatives and Hedging (formerly

(2) Noninterest-bearing deposit accounts consist of
deposit accounts on which the issuing depository
institution makes no payment to or for the
account of any depositor as compensation for the
use of funds constituting a deposit. An institution’s absorption of expenses incident to providing a normal banking function or its forbearance
from charging a fee in connection with such a service is not considered a payment of interest.

GL-16
June 2012
June
2020

13

FFIEC 002

Schedule O

this example). The institution has pledged securities
with a value of $300,000 to secure these deposits. Only
$250,000 of the political subdivision’s $350,000 in
deposits (the uninsured amount) would be considered
“preferred deposits.”

T

Item M5 Not applicable.

D

R

AF

Insert C

Item M4 Not applicable.

O-8
March 2014

June 2020

14

FFIEC 002

Insert C
Item M6 Quarterly average amount of Paycheck
Protection Program (PPP) loans pledged to the
Federal Reserve Paycheck Protection Program
Liquidity Facility (PPPLF).
Report the quarterly average amount of PPP loans
pledged to the PPPLF.

AF

T

This quarterly average should be consistent with and
calculated using the same averaging method used for
calculating the “Average consolidated total assets for
the calendar quarter” reported in Schedule O, item 4. If
the quarterly average reported in Schedule O, item 4, is
calculated on a daily average basis, the quarterly
average reported in this Memorandum item 6 should
also be calculated on a daily average basis. If the
quarterly average reported in Schedule O, item 4, is
calculated on a weekly average basis, the quarterly
average reported in this Memorandum item 6 should
also be calculated on a weekly average basis.
Item M7 Quarterly average amount of holdings of
assets purchased from money market funds under
the Money Market Mutual Fund Liquidity Facility
(MMLF).

R

Report the quarterly average amount of holdings of
assets purchased under the MMLF.

D

This quarterly average should be consistent with and
calculated using the same averaging method used for
calculating the “Average consolidated total assets for the
calendar quarter” reported in Schedule O, item 4. If the
quarterly average reported in Schedule O, item 4, is
calculated on a daily average basis, the quarterly
average reported in this Memorandum item 7 should
also be calculated on a daily average basis. If the
quarterly average reported in Schedule O, item 4, is
calculated on a weekly average basis, the quarterly
average reported in this Memorandum item 7 should
also be calculated on a weekly average basis.

15

D

R

AF
T

Note: The changes to the instructions for Schedule O on page 17 are effective as of the September
30, 2020, report date.

16

Schedule O

this example). The institution has pledged securities
with a value of $300,000 to secure these deposits. Only
$250,000 of the political subdivision’s $350,000 in
deposits (the uninsured amount) would be considered
“preferred deposits.”

Item M4 Not applicable.

Item M5 Not applicable.

T

Item M6 Outstanding balance of Paycheck
Protection Program (PPP) loans.

AF

The PPP was established by Section 1102 of the
2020 Coronavirus Aid, Relief, and Economic
Security Act, which was enacted on March 27,
2020. PPP covered loans, as defined in Section
7(a)(36) of the Small Business Act (15 U.S.C.
636(a)(36)), are fully guaranteed as to principal
and accrued interest by the U.S. Small Business
Administration.

D

R

Report the aggregate amount at which PPP loans
held for investment and held for sale are included
in Schedule C, Part I, and PPP loans held for
trading are included in Schedule RAL, item 1(f)(5),
as of the report date.

O-8
March
2014
September

2020

17

FFIEC 002

D

R

AF
T

Note: The proposed revisions to the instructions for Schedule N and the Glossary entries for
“Nonaccrual Status,” “Purchased Credit-Deteriorated Assets,” “Purchased Credit-Impaired Loans
and Debt Securities,” and "Deposits" on pages 19 through 36 are proposed to be effective as of
the March 31, 2021, report date.

18

(2) For an institution that has not adopted ASU 2016-13,

the criteria for accrual of income under the interest method
specified in ASC Subtopic 310-30, Receivables - Loans
and Debt Securities Acquired with Deteriorated Credit
Quality, are met for a PCI loan; or a pool of loans,
accounted for in accordance with that Subtopic, regardless
of whether the loan or; the loans in the pool, had been
maintained in nonaccrual status by its seller. (For PCI
loans with
common
characteristics
that
are aggregated
payment
mayrisk
be considered
a full
payment
in computand accounted
for
as
a
pool,
the
determination
ing delinquency. Alternatively, a branchofor agency may
nonaccrual
or accrual
statusand
should
madefor
at any
the pool
aggregate
payments
givebe
credit
partial paylevel, not
at
the
individual
loan
level.)
For
further
ment received. For example, if a regular monthly
information,
see theis Glossary
for "purchased
installment
$300 andentry
the borrower
makescreditpayments
of only
per month
for a six-month period, the
impaired
loans$150
and debt
securities."
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.

Schedule N

(1) The criteria for accrual of income under the interest method specified in ASC Subtopic 310-30,
Receivables—Loans and Debt Securities
Acquired with Deteriorated Credit Quality (formerly 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.
PCI

T

Insert D

has

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
credit-deteriorated 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.

AF

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
an
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.
PCD

R

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
Insert E
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.

a branch or agency

D

(2) The criteria for amortization
(i.e., accretion
of
chooses
to
discount) specified in AICPA Practice Bulletin
(4) No. 6 are met with respect to a loan or other debt
instrument acquired at a discount (because there
For purposes of applying the third test for nonaccrual
is uncertainty as to the amounts or timing of
status listed above, the date on which a loan reaches
future cash flows) from an unaffiliated third party
nonaccrual status is determined by its contractual or a loan (such as another institution or the receiver of a
terms. If the principal or interest on a loan becomes
failed institution), including those that the seller
due and unpaid for 90 days or more on a date that falls
had maintained in nonaccrual status.
between report dates, the loan should be placed in nonaccrual status as of the date it becomes 90 days past
(3) The loan upon which principal or interest is due
due and it should remain in nonaccrual status until it
(1) and unpaid for 90 days or more is a consumer
meets the criteria for restoration to accrual status
loan secured by a 1-to-4 family residential propdescribed below.
erty. Nevertheless, such loans should be subject to
other alternative methods of evaluation to assure
that the reporting institution’s net income is not
In the following situations, a loan need not be placed in
materially affected. To the extent that the reportnonaccrual status:
N-2
March
20192021
March

19

FFIEC 002

overstated

Insert D

T

For institutions that have not adopted ASU 2016-13, when accrual of income on a purchased credit- impaired
(PCI) loan accounted for individually is appropriate, the delinquency status of the individual loan should be
determined in accordance with its contractual repayment terms for purposes of reporting the amount of the
loan as past due in the appropriate items of Schedule N, column A or B. When accrual of income on a pool of
PCI loans with common risk characteristics is appropriate, delinquency status should be determined
individually for each loan in the pool in accordance with the individual loan's contractual repayment terms for
purposes of reporting the amount of individual loans within the pool as past due in the appropriate items of
Schedule N, column A or B. For further information, see the Glossary entry for “purchased credit-impaired
loans.”

D

R

AF

For institutions that have adopted ASU 2016-13, any PCI loans held as of the adoption date of the standard
should prospectively be accounted for as purchased credit-deteriorated (PCD) loans. As of the adoption date
of the standard, the remaining noncredit discount or premium on a PCD loan, after the adjustment for the
allowance for credit losses, should be accreted to interest income at the new effective interest rate on the loan,
if the loan is not required to be placed on nonaccrual. For a PCD loan that is not reported in nonaccrual status,
the delinquency status of the PCD loan should be determined in accordance with its contractual repayment
terms for purposes of reporting the amortized cost basis of the loan as past due in Schedule N, column A or B,
as appropriate. If PCD loan that is not reported in nonaccrual status consists of a pool of loans that was
previously PCI, but is being maintained as a unit of account after the adoption of ASU 2016-13, delinquency
status should be determined individually for each loan in the pool in accordance with the individual loan's
contractual repayment terms. For further information, see the Glossary entry for “purchased creditdeteriorated assets.”

20

Insert E

(3) For an institution that has adopted ASU 2016-13, the following criteria are met for a PCD loan, including a
PCD loan that was previously a PCI loan or part of a pool of PCI loans, that would otherwise be required to be
placed in nonaccrual status (see the Glossary entry for “Nonaccrual status”):
(a)
(b)

The institution reasonably estimates the timing and amounts of cash flows expected to be collected, and
The institution did not acquire the asset primarily for the rewards of ownership of the underlying
collateral, such as use of collateral in operations of the institutions or improving the collateral for resale.

D

R

AF

T

When a PCD loan that meets the criteria above is not placed in nonaccrual status, the loan should be subject to
other alternative methods of evaluation to ensure that the institution's net income is not materially overstated.
Further, regardless of whether a PCD loan is in nonaccrual or accrual status, an institution is not permitted to
accrete the credit-related discount embedded in the purchase price of such a loan that is attributable to the
acquirer's assessment of expected credit losses as of the date of acquisition (i.e., the contractual cash flows the
acquirer did not expect to collect at acquisition). Interest income should no longer be recognized on a PCD
loan to the extent that the net investment in the asset would increase to an amount greater than the payoff
amount. If an institution is required or has elected to carry a PCD loan in nonaccrual status, the loan must be
reported as a nonaccrual asset at its amortized cost basis in this schedule in column C. (For PCD loans for
which the institution has made a policy election to maintain previously existing pools of PCI loans upon
adoption of ASU 2016-13, the determination of nonaccrual or accrual status should be made at the pool level,
not the individual asset level.) For further information, see the Glossary entry for “purchased creditdeteriorated assets.”

21

Schedule N
See page 19

ing institution has elected to carry such a loan in
nonaccrual status on its books, the loan must be
reported as nonaccrual in this schedule.

tured 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”).

AF

T

As a general rule, a nonaccrual loan may be restored to
accrual status when (1) none of its principal and interest
and unpaid, and the reporting institution
for is
andue
institution
expects repayment of the remaining contractual princithat
hasinterest,
not or (2) when it otherwise becomes well
pal and
adopted
ASU
secured and
in the process of collection. For purposes
of meeting the first test for restoration to accrual sta2016-13,
tus, the reporting institution must have
received repayPCI
ment 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
Subtopic 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
(4) certain repayment criteria
brought fully current, and
are met. For further information, see the Glossary
entry for “nonaccrual status.”

Report as “restructured and in compliance with modi(3) terms”
for an all
institution
fied
restructured loans and leases as defined
above
that adopted
are in compliance with their modified terms,
that has
that
is, 2016-13,
restructuredthe
loans and leases (1) on which no
ASU
contractual payments of principal or interest schedloan is a PCD loan
uled under the modified repayment terms are due and
and it or
meets
unpaid
(2) onthe
which contractual payments of both
two criteria
principal
and interest scheduled under the modified
repayment
specifiedterms
in theare less than 30 days past due.
Exclude
from
“restructured and in compliance with
third situation
modified terms” all restructured loans secured by
discussed above in
1-to-4 family residential properties and all restructured
which
loan need
loans
toaindividuals
for household, family, and other
not be placed
in (However, any restructured
personal
expenditures.
loans
of these two
types that subsequently become past
nonaccrual
status,
due 30 days or more or are placed in nonaccrual status
should be reported accordingly.)

R

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.

Column Instructions

D

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

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 “restruc-

(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
N-3

FFIEC 002

22

2019
MarchMarch
2021

Glossary

real property. All loans satisfying the criteria above are
to be reported as loans secured by real estate (Schedule C, part I, item 1), regardless of whether secured by
first or junior liens, regardless of the department
within the branch or agency that made the loans,
regardless of how the loans are categorized in the
branch or agency’s records, and regardless of the purpose of the financing. Only in transactions where a lien
on real property has been taken as collateral solely
through an abundance of caution and where the terms
as a consequence have not been made more favorable
than they would have been in the absence of the lien,
would the loans not be considered to be secured by real
estate and not be classifiable as loans secured by real
estate in this report.

AF

All other lending-related costs, whether or not incremental, should be charged to expense as incurred,
including costs related to activities performed by the
lender for advertising, identifying potential borrowers,
soliciting potential borrowers, servicing existing loans,
and other ancillary activities related to establishing and
monitoring credit policies, supervision, and administration. Employees’ compensation and fringe benefits
related to these activities, unsuccessful loan origination
efforts, and idle time should be charged to expense as
incurred. Administrative costs, rent, depreciation, and
all other occupancy and equipment costs are considered indirect costs and should be charged to expense as
incurred.

T

related fringe benefits directly related to time spent
performing those activities for that particular loan and
other costs related to those activities that would not
have been incurred but for that particular loan.

Money Market Deposit Account (MMDA)

See “deposits.”

Net unamortized loan fees represent an adjustment of
the loan yield, and shall be reported in the same manner as unearned income on loans, i.e., deducted from
the related loan balances (to the extent possible) or
deducted from total loans in “Any unearned income on
loans reflected in items 1–8 above” in Schedule C,
part I. Net unamortized direct loan origination costs
shall be added to the related loan balances in Schedule C. Amounts of loan origination, commitment and
other fees and costs recognized as an adjustment of
yield should be included in interest income which is
recognized as part of unremitted profit and loss. Other
fees, such as (a) commitment fees that are recognized
during the commitment period or included in income
when the commitment expires (i.e., fees retrospectively
determined and fees for commitments where exercise is
remote) and (b) syndication fees that are not deferred,
should be included in noninterest income which is recognized as part of unremitted profit and loss.

NOW Account
See “deposits.”

and

Nonaccrual Status

D

R

Branches or agencies shall not accrue interest or discount on (1) any asset which is maintained on a cash
basis because of deterioration in the financial condition of the borrower, (2) any asset for which payment
in full of interest or principal is not expected, or (3) any
asset upon which principal or interest has been in
default for a period of 90 days or more unless it is both
well secured and in the process of collection. A nonaccrual asset may be restored to an accrual status when
none of its principal and interest is due and unpaid or
when it otherwise becomes well secured and in the process of collection.
For purposes of applying the third test for the nonaccrual of interest listed above, the date on which an asset
reaches nonaccrual status is determined by its contractual terms. If the principal or interest on an asset
becomes due and unpaid for 90 days or more on a date
that falls between report dates, the asset 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 above.

Loans Secured by Real Estate

For purposes of this report, loans secured by real estate
are loans predicated upon a security interest in real
property. A loan predicated upon a security interest in
real property is a loan secured wholly or substantially
by a lien on real property for which the lien is central to
the extension of the credit—that is, the borrower
would not have been extended credit in the same
amount or on terms as favorable without the lien on
GL-32

June 2018
March
2021

23

FFIEC 002

Glossary

T

permitted to offset assets and liabilities recognized in
the Report of Assets and Liabilities of U.S. Branches
and Agencies of Foreign Banks when a “right of setoff ” exists. Under ASC Subtopic 210-20, Balance
Sheet—Offsettting (formerly FASB Interpretation
No. 39, “Offsetting of Amounts Related to Certain
Contracts”), a right of setoff exists when all of the following conditions are met:
(1) Each of two parties owes the other determinable
amounts. Thus, only bilateral netting is
permitted.

(2) The reporting party has the right to set off the
amount owed with the amount owed by the other
party.

AF

An asset 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 through legal action, including judgment enforcement procedures, or, 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
Insert
F in the near future.

Consumer loans and loans secured by 1-to-4 family
residential properties on which principal and interest is
due and unpaid for 90 days or more are not required to
be placed in nonaccrual status. Nevertheless, such
loans should be subject to other alternative methods of
evaluation to assure that the branch or agency’s
income is not materially overstated.

(3) The reporting party intends to set off. This condition does not have to be met for fair value
amounts recognized for conditional or exchange
contracts that have been executed with the same
counterparty under a master netting
arrangement.

Any state statute, regulation, or rule that imposes more
stringent standards for nonaccrual of interest takes
Treatmentprecedence over this instruction.

(4) The right of setoff is enforceable at law. Legal
constraints should be considered to determine
whether the right of setoff is enforceable. Accordingly, the right of setoff should be upheld in
bankruptcy (or receivership). Offsetting is appropriate only if the available evidence, both positive
and negative, indicates that there is reasonable
assurance that the right of setoff would be upheld
in bankruptcy (or receivership). According to
ASC Subtopic 210-20, for forward, interest rate
swap, currency swap, option, and other conditional and exchange contracts, a master netting
arrangement exists if the reporting branch or
agency has multiple contracts, whether for the
same type of conditional or exchange contract or
for different types of contracts, with a single
counter-party that are subject to a contractual
agreement that provides for the net settlement of
all contracts through a single payment in a single
currency in the event of default or termination of
any one contract. Offsetting the assets and liabilities recognized for conditional or exchange contracts outstanding with a single counterparty
results in the net position between the two counterparties being reported as an asset or a liability
in the Report of Assets and Liabilities of U.S.
Branches and Agencies of Foreign Banks. The

R

of
The reversal of previously accrued but uncollected
previouslyinterest applicable to any asset
U.S.placed
GAAP
in nonaccrual
accrued status and the treatment of subsequent payments as
interest either principal or interest should be handled in accor-

dance with generally accepted accounting principles.
Acceptable accounting treatment includes a reversal of
all previously accrued but uncollected interest applicable to assets placed in a nonaccrual status against
appropriate income and balance sheet accounts.

D

For example, one acceptable method of accounting for
such uncollected interest on a loan placed in nonaccrual status is (1) to reverse all of the unpaid interest by
crediting the income earned, not collected, (2) to
reverse the uncollected interest that has been accrued
during the calendar year-to-date by debiting the appropriate interest and fee income account on the income
statement, and (3) to reverse any uncollected interest
that had been accrued during previous calendar years
by debiting the “allowance for loan and lease losses.”

Insert G

Offsetting
Offsetting is the reporting of assets and liabilities on a
net basis in Schedule RAL. Branches and agencies are

GL-33
FFIEC 002

24

2012
MarchJune
2021

Insert F
Exceptions to the general rule for nonaccrual status
In the following situations, an asset need not be placed in nonaccrual status:
(1) The asset upon which principal or interest is due and unpaid for 90 days or more is a consumer loan or a 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 branch or agency's income is not materially overstated. However, to the
extent that the branch or agency has elected to carry such a loan in nonaccrual status on its books, the loan must be
reported as nonaccrual in Schedule N, column C.

AF

T

(2) For a branch or agency that has not adopted FASB Accounting Standards Update No. 2016_13 (ASU 2016-13),
which governs the accounting for credit losses, the criteria for accrual of income under the interest method specified
in ASC Subtopic 310-30, Receivables - Loans and Debt Securities Acquired with Deteriorated Credit Quality, are
met for a purchased credit-impaired (PCI) loan, pool of loans, or debt security accounted for in accordance with that
Subtopic, regardless of whether the loan, the loans in the pool, or debt security had been maintained in nonaccrual
status by its seller. (For PCI loans with common risk characteristics that are aggregated and accounted for as a pool,
the determination of nonaccrual or accrual status should be made at the pool level, not at the individual loan level.)
For further information, see the Glossary entry for “purchased credit-impaired loans and debt securities.”
(3) For a branch or agency that has adopted ASU 2016-13, the following criteria are met for a purchased creditdeteriorated (PCD) asset, including a PCD asset that was previously a PCI asset or part of a pool of PCI loans, that
would otherwise be required to be placed in nonaccrual status under the general rule:
(a) The institution reasonably estimates the timing and amounts of cash flows expected to be collected, and
(b) The institution did not acquire the asset primarily for the rewards of ownership of the underlying collateral, such
as use of collateral in operations of the institution or improving the collateral for resale.

D

R

When a PCD asset that meets the criteria above is not placed in nonaccrual status, the asset should be subject to
other alternative methods of evaluation to ensure that the branch or agency's income is not materially overstated. If a
branch or agency is required or has elected to carry a PCD loan in nonaccrual status, the loan must be reported as a
nonaccrual loan at its amortized cost basis in Schedule N, column C. (For PCD loans for which the branch or
agency has made a policy election to maintain previously existing pools of PCI loans upon adoption of ASU
2016_13, the determination of nonaccrual or accrual status should be made at the pool level, not the individual asset
level.) For further information, see the Glossary entry for “purchased credit-deteriorated assets.”

25

Insert G
Treatment of cash payments and criteria for the cash basis recognition of income
When doubt exists as to the collectibility of the remaining recorded investment in a nonaccrual asset (or the
amortized cost basis of a nonaccrual asset, if the institution has adopted ASU 2016_13), any payments received
must be applied to reduce the recorded investment in, or the amortized cost basis of, the asset, as applicable, to the
extent necessary to eliminate such doubt. Placing an asset in nonaccrual status does not, in and of itself, require a
charge-off, in whole or in part, of the asset's recorded investment or amortized cost basis, as applicable. However,
any identified losses must be charged off.

D

R

AF

T

Unless an asset in nonaccrual status is subject to the cost recovery method under U.S. GAAP some or all of the cash
interest payments received may be treated as interest income on a cash basis as long as the remaining recorded
investment in, or the amortized cost basis of, the asset, as applicable, (i.e., after charge-off of identified losses, if
any) is deemed to be fully collectible. A branch or agency's determination as to the ultimate collectibility of the
asset's remaining recorded investment, or amortized cost basis, as applicable, must be supported by a current, well
documented credit evaluation of the borrower's financial condition and prospects for repayment, including
consideration of the borrower's historical repayment performance and other relevant factors. When recognition of
interest income on a cash basis is appropriate, it should be handled in accordance with U.S GAAP.

26

Insert G continued
Restoration to accrual status

T

As a general rule, a nonaccrual asset may be restored to accrual status when (1) none of its principal and interest is
due and unpaid, and the branch or agency expects repayment of the remaining contractual principal and interest, or
(2) when it otherwise becomes well secured and in the process of collection. If any interest payments received
while the asset was in nonaccrual status were applied to reduce the recorded investment in, or the amortized cost
basis of, the asset, as applicable, as discussed in the preceding section of this entry, the application of these
payments to the asset's recorded investment or amortized cost basis, as applicable, should not be reversed (and
interest income should not be credited) when the asset is returned to accrual status.
For purposes of meeting the first test for restoration to accrual status, the branch or agency must have received
repayment of the past due principal and interest unless:

AF

(1) The asset has been formally restructured and qualifies for accrual status, as discussed below;
(2) For an institution that has not adopted ASU 2016-13, the asset is a PCI loan, pool of loans, or debt security
accounted for in accordance with ASC Subtopic 310-30 and it meets the criteria for accrual of income under the
interest method specified therein;
(3) For an institution that has adopted ASU 2016-13, the asset is a PCD asset and it meets the two criteria specified
in the third exception to the general rule for nonaccrual status discussed above; or
(4)The borrower has resumed paying the full amount of the scheduled contractual 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 the
following two criteria are met. These criteria are, first, that all principal and interest amounts contractually due
(including arrearages) are reasonably assured of repayment within a reasonable period and, second, that there is a
sustained period of repayment performance (generally a minimum of six months) by the borrower in accordance
with the contractual terms involving payments of cash or cash equivalents. A loan that meets these two criteria
may be restored to accrual status, but must continue to be disclosed as past due in Schedule N until it has been
brought fully current or until it later must be placed in nonaccrual status.

D

R

A loan or other debt instrument that has been formally restructured in a troubled debt restructuring so as to be
reasonably assured of repayment (of principal and interest) and of performance according to its modified terms
need not be maintained in nonaccrual status, provided the restructuring and any charge-off taken on the asset are
supported by a current, well documented credit evaluation of the borrower's financial condition and prospects for
repayment under the revised terms. Otherwise, the restructured asset must remain in nonaccrual status. The
evaluation must include consideration of the borrower's sustained historical repayment performance for a
reasonable period prior to the date on which the loan or other debt instrument is returned to accrual status. A
sustained period of repayment performance generally would be a minimum of six months and would involve
payments of cash or cash equivalents. (In returning the asset to accrual status, sustained historical repayment
performance for a reasonable time prior to the restructuring may be taken into account.) Such a restructuring must
improve the collectability of the loan or other debt instrument in accordance with a reasonable repayment schedule
and does not relieve the bank from the responsibility to promptly charge off all identified losses.

27

Glossary

Insert H
note is materially different from the fair value of the
noncash assets exchanged. The noncash assets and the
related note shall be recorded at either the fair value of
the noncash assets or the market value of the note,
whichever is more clearly determinable.

Preauthorized Transfer Account
See “deposits”

Put Option

See “derivative contracts.”

Real Estate, Loans Secured By
See “loans secured by real estate.”

AF

A premium arises when a bank (including a branch or
agency) purchases a security, loan, or other asset at a
price in excess of its par or face value, typically because
the current level of interest rates for such assets is less
than its contract or stated rate of interest. The difference between the purchase price and par or face value
represents the premium which all banks are required to
amortize.

T

Premiums and Discounts

Reciprocal Balances

A discount arises when a bank (including a branch or
agency) purchases a security, loan, or other asset at a
price below its par or face value, typically because the
current level of interest rates for such assets is greater
than its contract or stated rate of interest. A discount is
also present on instruments which do not have a stated
rate of interest such as U.S. Treasury bills and commercial paper. The difference between par or face value and
the purchase price represents the discount which all
banks are required to accrete.

Reciprocal balances arise when two depository institutions maintain deposit accounts with each other; that
is, when a reporting branch or agency has both a due to
and a due from balance with another depository
institution.
For purposes of Schedule RAL, reciprocal balances
between the reporting branch or agency and other
depository institutions (including U.S. branches and
agencies of other foreign banks) may be reported on a
net basis in accordance with generally accepted
accounting principles.

R

Premiums and discounts are accounted for as adjustments to the yield on an asset over the life of the asset.
A premium must be amortized and a discount must be
accreted from date of purchase to maturity, not to call
or put date. The preferable method for amortizing premiums and accreting discounts involves the use of the
interest method for accruing income on the asset. The
objective of the interest method is to produce a constant yield or rate of return on the carrying value of the
asset (par or face value plus unamortized premium or
less unaccreted discount) at the beginning of each
amortization period over the asset’s remaining life. The
difference between the periodic interest income that is
accrued on the asset and interest at the stated rate is the
periodic amortization or accretion. However, a
straight-line method of amortization or accretion is
acceptable if the results are not materially different
from the interest method.

Related Institutions

D

For purposes of this report, “related institutions” of a
reporting U.S. branch or agency of a foreign bank
include the following depository institutions and their
majority-owned subsidiaries, whether they are located
in the U.S., in Puerto Rico or U.S. territories and possessions, or elsewhere outside of the U.S.:
(1) Head office of the foreign bank and its other
branches and agencies, hereafter referred to as the
foreign bank parent.
(2) Holding company of the foreign bank parent,
hereafter referred to as the parent bank holding
company.

A premium or discount may also arise when the reporting branch or agency, acting either as a lender or a borrower, is involved in an exchange of a note for assets
other than cash and the interest rate is either below the
market rate or not stated, or the face amount of the

(3) Other depository institutions (including their
branches and agencies and IBFs) majority-owned
by (1) or (2) above, or by their majority-owned
subsidiaries.

GL-36
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March
2021

28

FFIEC 002

Insert H
Purchased Credit-Deteriorated Assets
This Glossary entry applies to branches and agencies that have adopted ASC Topic 326, Financial Instruments Credit Losses. Branches and agencies that have not adopted ASC Topic 326 should refer to the Glossary entry for
“purchased credit-impaired loans and debt securities.”
Purchased credit-deteriorated (PCD) assets are acquired financial assets that, at acquisition, have experienced a
more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment.
PCD assets include loans, debt securities, and other financial assets within the scope of ASC Topic 326.

T

In accordance with ASC Topic 326, a branch or agency is required to estimate and record an allowance for credit
losses (ACL) for a PCD asset at the time of purchase. This acquisition date ACL is added to the purchase price of
the financial asset rather than recording these credit losses through a provision for credit losses expense. This
establishes the initial amortized cost basis of the PCD asset.

AF

Because branches and agencies may choose to, but are not required to, maintain ACLs on an office level, branches
and agencies that do not maintain office-level ACLs are not required to subsequently measure ACLs for PCD
assets after the time of purchase when the initial amortized cost bases of these assets is established.
Any difference between the unpaid principal balance of a PCD asset and the amortized cost basis of the asset as of
the acquisition date is the noncredit discount or premium. Provided the asset remains in accrual status, the
noncredit discount or premium recorded at acquisition is accreted into interest income over the remaining life of
the PCD asset on a level-yield basis. In contrast, regardless of whether a PCD asset is in nonaccrual or accrual
status, a branch or agency is not permitted to accrete the credit-related discount embedded in the purchase price of
the asset that is attributable to the acquirer's assessment of expected credit losses as of the date of acquisition (i.e.,
the contractual cash flows the acquirer did not expect to collect at acquisition). In addition, interest income should
no longer be recognized on a PCD asset to the extent that the net investment in the asset would increase to an
amount greater than the payoff amount.

R

Any purchased credit-impaired (PCI) loans and debt securities held as of the adoption date of ASC Topic 326
should prospectively be accounted for as PCD assets. The prospective application results in an adjustment to the
amortized cost of the asset to reflect the addition of the ACL at the adoption date. As of the adoption date, the
remaining noncredit discount or premium on the PCD asset, after the adjustment for the ACL, should be accreted
into interest income at the new effective interest rate on the PCD asset if the asset is not required to be placed on
nonaccrual.

D

ASC Subtopic 310-10, Receivables - Overall, does not prohibit a branch or agency from placing a PCD asset in
nonaccrual status. Because a PCD asset is an acquired financial asset that, at acquisition, has experienced a morethan-insignificant deterioration in credit quality since origination, as determined by an acquiring institution's
assessment, the acquiring branch or agency must determine upon acquisition whether it is appropriate to place the
PCD asset in accrual status, including accreting the noncredit discount or premium.

29

Insert H Continued
For purposes of this report, if a branch or agency has a PCD asset, including a PCD asset that was previously a
PCI asset or part of a pool of PCI loans, that would otherwise be required to be placed in nonaccrual status (see
the Glossary entry for “nonaccrual status”), the branch or agency may elect to accrue interest income on the
PCD asset and not place the PCD asset in nonaccrual status if the following criteria are met:
(a) The institution reasonably estimates the timing and amounts of cash flows expected to be collected, and
(b) The institution did not acquire the asset primarily for the rewards of ownership of the underlying collateral,
such as use of collateral in operations of the institution or improving the collateral for resale.

T

When a PCD asset that meets the criteria above is not placed in nonaccrual status, the asset should be subject to
other alternative methods of evaluation to ensure that the branch or agency's income is not materially
overstated. If a branch or agency is required or has elected to carry a PCD loan in nonaccrual status, the loan
must be reported as a nonaccrual loan at its amortized cost basis in Schedule N, column C. For further
information on PCD assets, refer to ASC Topic 326.

AF

Purchased Credit-Impaired Loans and Debt Securities

This Glossary entry applies to branches and agencies that have not adopted ASC Topic 326, Financial
Instruments -Credit Losses. Branches and agencies that have adopted ASC Topic 326 should refer to the
Glossary entry for “purchased credit-deteriorated assets.”

R

Purchased credit-impaired (PCI) loans and debt securities are loans and debt securities that a branch or agency
has purchased or otherwise acquired by completion of a transfer, including those acquired in a purchase
business combination, where there is evidence of deterioration of credit quality since the origination of the loan
or debt security and it is probable, at the acquisition date, that the institution will be unable to collect all
contractually required payments receivable. Such loans and debt securities must be accounted for in
accordance with ASC Subtopic 310-30, Receivables - Loans and Debt Securities Acquired with Deteriorated
Credit Quality. ASC Subtopic 310-30 does not apply to loans that a branch or agency has originated.

D

Under ASC Subtopic 310-30, a PCI loan or debt security is initially recorded at its purchase price (in a
purchase business combination, the present value of amounts to be received). ASC Subtopic 310-30 limits the
yield that may be accreted on the loan or debt security (the accretable yield) to the excess of the branch or
agency's estimate of the undiscounted principal, interest, and other cash flows expected at acquisition to be
collected on the asset over the institution's initial investment in the asset. The excess of the contractually
required payments receivable on the loan or debt security over the cash flows expected to be collected, which is
referred to as the nonaccretable difference, must not be recognized as an adjustment of yield, loss accrual, or
valuation allowance. Neither the accretable yield nor the nonaccretable difference may be shown on Schedule
RAL. After acquisition, increases in the cash flows expected to be collected generally should be recognized
prospectively as an adjustment of the asset's yield over its remaining life. Decreases in cash flows expected to
be collected should be recognized as an impairment.
For purposes of applying the guidance in ASC Subtopic 310-30 to loans not accounted for as debt securities, a
branch or agency may aggregate loans acquired in the same fiscal quarter that have common risk characteristics
and thereby use a composite interest rate and expectation of cash flows expected to be collected for the pool.
To be eligible for aggregation, each loan first should be determined individually to meet the scope criteria in
the second paragraph of this Glossary entry.
30

Insert H Continued
Upon establishment of a pool of PCI loans, the pool becomes the unit of account. Once a pool of PCI loans is
assembled, the integrity of the pool must be maintained. A branch or agency should remove an individual
loan from a pool of PCI loans only if it sells, forecloses, or otherwise receives assets in satisfaction of the loan
or if the loan is written off. When an individual loan is removed from a pool of PCI loans under these
circumstances, the loan shall be removed at its carrying amount.

AF

T

ASC Subtopic 310-30 does not prohibit a branch or agency from placing a PCI loan accounted for
individually, a pool of PCI loans with common risk characteristics, or a PCI debt security in nonaccrual status.
Because a loan (including a loan aggregated with other loans with common risk characteristics) or debt
security accounted for in accordance with ASC Subtopic 310-30 has evidence of deterioration of credit quality
since origination, an acquiring branch or agency must determine upon acquisition whether it is appropriate to
recognize the accretable yield as income over the life of the loan, pool of loans, or debt security using the
interest method. In order to apply the interest method, the branch or agency must have sufficient information
to reasonably estimate the amount and timing of the cash flows expected to be collected on the loan, loan
pool, or debt security.
Thus, when the amount and timing of the cash flows cannot be reasonably estimated at acquisition, the branch
or agency should place the PCI loan, pool, or debt security in nonaccrual status and then apply the cost
recovery method or cash basis income recognition to the asset. (For PCI loans with common risk
characteristics that are aggregated and accounted for as a pool, the determination of nonaccrual or accrual
status should be made at the pool level, not at the individual loan level.) In addition, if a PCI loan or debt
security is acquired primarily for the rewards of ownership of the underlying collateral, accrual of income is
inappropriate and the loan or debt security should be placed in nonaccrual status. The amount of a PCI loan
or pool of loans in nonaccrual status should be reported in the appropriate items of Schedule N, column C.

D

R

For further information on PCI loans and debt securities, refer to ASC Subtopic 310-30.

31

Glossary

are not permitted or authorized, the
account is considered either an
ATS account or a telephone or preauthorized transfer account.

(ii) Transfers of funds from this account
to another account of the same depositor at the same institution when made
by mail, messenger, automated teller
machine, or in person.

(ii) Other savings deposits are deposits or
accounts that meet the above definition
of a savings deposit but that permit no
transfers by check, draft, debit card, or
similar order made by the depositor
and payable to third parties. Other savings deposits are commonly known as
passbook savings or statement savings
accounts.

Any depository institution may place
restrictions and requirements on savings
deposits in addition to those stipulated
above. In the case of such further restrictions, the account would still be reported as
a savings deposit. On the other hand, an
account that otherwise meets the definition
of a savings deposit but that authorizes or
permits the depositor to exceed the sixtransfer/withdrawal rule shall be reported as
a transaction account, as follows:

R

Insert I

unlimited
transfers

(i) Money market deposit accounts
(MMDAs) are deposits or accounts
that meet the above definition of a savings deposit and that permit up to (but
no more than) six allowable transfers to
be made by check, draft, debit card or
similar order made by the depositor
and payable to third parties.

AF

Further, for a savings deposit account, no
minimum balance is required by regulation,
there is no regulatory limitation on the
amount of interest that may be paid, and no
minimum maturity is required (although
depository institutions must reserve the
right to require at least seven days’ written
notice prior to withdrawal as stipulated
above for a savings deposit).

T

(iii) Withdrawals for payment directly to
the depositor when made by mail, messenger automated teller machine, in
person, or by telephone (via check
mailed to the depositor).

Regulation D no longer distinguishes
between money market deposit accounts
(MMDAs) and other savings deposits. However, these two types of accounts are defined
as follows for purposes of this report.

Examples illustrating distinctions between
MMDAs and other savings deposits for purposes of this report are provided at the end
of this Glossary entry.

(i) If the depositor is ineligible to hold a
NOW account, such an account is considered a demand deposit.

(b) Time deposits are deposits that the depositor
does not have a right, and is not permitted,
to make withdrawals from within six days
after the date of deposit unless the deposit is
subject to an early withdrawal penalty of at
least seven days’ simple interest on amounts
withdrawn within the first six days after
deposit. A time deposit from which partial
early withdrawals are permitted must
impose additional early withdrawal penalties
of at least seven days’ simple interest on
amounts withdrawn within six days after
each partial withdrawal. If such additional
early withdrawal penalties are not imposed,
the account ceases to be a time deposit. The
account may become a savings deposit if it

D

(ii) If the depositor is eligible to hold a
NOW account, the account will be
considered either a NOW account, a
telephone or pre-authorized transfer
account, or an ATS account:

(a) If withdrawals or transfers by
check, draft, or similar instrument
are permitted or authorized, the
account is considered a NOW
account.

(b) If withdrawals or transfers by
check, draft, or similar instrument
GL-14
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32

FFIEC 002

Insert I
Treatment of Accounts where Reporting Institutions Have Suspended Enforcement of the Six Transfer
Limit per Regulation D
Where the reporting institution has suspended the enforcement of the six transfer limit rule on an
account that meets the definition of a savings deposit, the reporting institution is required to report
such deposits as a savings account or a transaction account based on an assessment of the
characteristics of the account as indicated below:
1) If the reporting institution does not retain the reservation of right to require at least seven days'

T

written notice before an intended withdrawal, report the account as a demand deposit (and as a
"transaction account").

D

R

AF

2) If the reporting institution does retain the reservation of right to require at least seven days' written
notice before an intended withdrawal the account should be reported either as a savings deposit (and
as a "nontransaction account") or as a NOW account1 (and as a transaction account).

1The

option to report as a NOW account (and a transaction account) is applicable to institutions that offer NOW accounts
to their depositors. Institutions that do not offer NOW accounts
33 to their depositors should continue to report such deposits
as a savings deposit (and as a nontransaction account).

Glossary

under written contracts that provide
that no withdrawal shall be made until
a certain number of periodic deposits
has been made during a period of not
less than three months, even though
some of the deposits are made within
six days of the end of such period.

NOTE: The above prescribed penalties are
the minimum required by Federal Reserve
Regulation D. Institutions may choose to
require penalties for early withdrawal in
excess of the regulatory minimums.
Time deposits take two forms:

T

meets the requirements for a savings deposit;
otherwise it becomes a demand deposit.

Time deposits do not include the following
categories of liabilities even if they have an
original maturity of seven days or more:

(i) Time certificates of deposit (including
rollover certificates of deposit) are
deposits evidenced by a negotiable or
nonnegotiable instrument, or a deposit
in book entry form evidenced by a
receipt or similar acknowledgment
issued by the branch or agency, that
provides, on its face, that the amount
of such deposit is payable to the bearer,
to any specified person, or to the order
of a specified person, as follows:

AF

(i) Any deposit or account that otherwise
meets the definition of a time deposit
but that allows withdrawals within the
first six days after deposit and that
does not require an early withdrawal
penalty of at least seven days’ simple
interest on amounts withdrawn within
those first six days. Such deposits or
accounts that meet the definition of a
savings deposit shall be reported as
savings deposits; otherwise they shall
be reported as demand deposits.

(a) on a certain date not less than seven
days after the date of deposit,

(b) at the expiration of a specified
period not less than seven days
after the date of the deposit, or

R

(c) upon written notice to the branch
or agency which is to be given not
less than seven days before the date
of withdrawal.

(ii) Time deposits, open account are deposits (other than time certificates of
deposit) for which there is in force a
written contract with the depositor
that neither the whole nor any part of
such deposit may be withdrawn
prior to:

D

Insert J

(ii) The remaining balance of a time
deposit if a partial early withdrawal is
made and the remaining balance is not
subject to additional early withdrawal
penalties of at least seven days’ simple
interest on amounts withdrawn within
six days after each partial withdrawal.
Such time deposits that meet the
definition of a savings deposit shall be
reported as savings deposits; otherwise
they shall be reported as demand
deposits.

Reporting of Retail Sweep Arrangements Affecting
Transaction and Nontransaction Accounts

(a) the date of maturity which shall be
not less than seven days after the
date of the deposit, or

In an effort to reduce their reserve requirements, some
branches and agencies have established sweep arrangements that involve transfers of retail customers’ deposits between two subaccounts. In a typical arrangement,
a branch or agency creates a master account and two
subaccounts: a transaction subaccount (either a
demand deposit account or a NOW account), which is
subject to reserve requirements, and a nontransaction
savings subaccount (a special-purpose money market
deposit account (MMDA)), which is not subject to

(b) the expiration of a specified period
of written notice of not less than
seven days.
These deposits include those club
accounts, such as Christmas club and
vacation club accounts, that are made

GL-15
FFIEC 002

34

June 2012

Insert J
Reporting of Retail Sweep Arrangements – When a depository institution establishes a retail
sweep program, the depository institution must ensure that its customer account agreements
provide for the existence of two distinct accounts rather than a single account and the funds are
actually transferred between these two accounts as described in the customer contract.
There are two key criteria for retail sweep programs:
(1) A depository institution must establish by agreement with its customer two legally separate
accounts;

AF
T

(2) The swept funds must actually be moved between the customer’s two accounts on the
official books and records of the depository institution as of the close of the business on the
day(s) on which the depository institution intends to report the funds.

A retail sweep program may not exist solely in records or on systems that do not constitute
official books and records of the depository institution and that are not used for any purpose
other than generating its Report of Transaction Accounts, Other Deposits and Vault Cash (FR
2900) for submission to the Federal Reserve.

D

R

For the purposes of this report, if all of the criteria above are met, a branch or agency must
determine the appropriate reporting of the accounts that are components of a retail sweep
program separately when it reports its quarter-end deposit information in Schedules RAL, E,
and O.

35

Glossary

T

Noninterest-bearing deposit accounts include
(i) matured time deposits that are not automatically renewable (unless the deposit agreement provides for the funds to be transferred at maturity to
another type of account) and (ii) deposits with a
zero percent stated interest rate that are issued at
face value.

See also “brokered deposits” and “hypothecated
deposits.”

Examples Illustrating Distinctions Between
MONEY MARKET DEPOSIT ACCOUNTS
(MMDAs) and OTHER SAVINGS DEPOSITS

AF

reserve requirements. Depending upon the balances in
the two subaccounts on a particular day, the branch or
agency will shift funds from the transaction subaccount to the MMDA subaccount or vice versa. On
some days, the balance in the MMDA subaccount may
be zero. (For purposes of the Federal Reserve’s Regulation D, there is no distinction between an MMDA and
any other form of savings account in terms of legally
required restrictions on transfers.) For purposes of this
report, the transaction subaccount and MMDA subaccount must be treated separately when a branch or
agency reports its quarter-end deposit information in
Schedules RAL, E, and O.

Example 1

(III) Interest-bearing-noninterest-bearing deposit
distinction

A savings deposit account permits no transfers of any
type to other accounts or to third parties.

(1) Interest-bearing deposit accounts consist of
deposit accounts on which the issuing depository
institution makes any payment to or for the
account of any depositor as compensation for the
use of funds constituting a deposit. Such compensation may be in the form of cash, merchandise, or property or as a credit to an account. An
institution’s absorption of expenses incident to
providing a normal banking function or its forbearance from charging a fee in connection with
such a service is not considered a payment of
interest.

Report this account as an other savings deposit.
Example 2unlimited

A savings deposit permits up to six, but no more than
six, “preauthorized, automatic, or telephonic” transfers to other accounts or to third parties. None of the
third-party payments may be made by check, draft, or
similar order (including debit card).

R

Report this account as an other savings deposit.
Example 3 unlimited

A savings deposit permits no more than six “preauthorized, automatic, or telephonic” transfers to other
accounts or to third parties any or all of which may be
made by check, draft, debit card or similar order made
by the depositor and payable to third parties.

Deposits with a zero percent interest rate that are
issued on a discount basis are to be treated as
interest-bearing. Deposit accounts on which the
interest rate is periodically adjusted in response to
changes in market interest rates and other factors
should be reported as interest-bearing even if the
rate has been reduced to zero, provided the interest rate on these accounts can be increased as
market conditions change.

D

Report this account as an MMDA.

Derivative Contracts
Branches and agencies commonly use derivative instruments for managing (positioning or hedging) their
exposure to market risk (including interest rate risk
and foreign exchange risk), cash flow risk, and other
risks in their operations and for trading. The accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in
other contracts, and for hedging activities are set forth
in ASC Topic 815, Derivatives and Hedging (formerly

(2) Noninterest-bearing deposit accounts consist of
deposit accounts on which the issuing depository
institution makes no payment to or for the
account of any depositor as compensation for the
use of funds constituting a deposit. An institution’s absorption of expenses incident to providing a normal banking function or its forbearance
from charging a fee in connection with such a service is not considered a payment of interest.

GL-16
June 2012

36

FFIEC 002

D

R

AF
T

Note: The proposed effective date for the proposed revisions to the instructions for Schedule RAL and
Schedule C, Part I, on pages 38 through 39 is TBD.

37

Schedule RAL

securities.
For institutions that have adopted FASB Accounting
Standards Update No. 2016-01 (ASU 2016-01), report
the amortized cost of available-for-sale debt securities.

Include in this item common stock and perpetual preferred stock of the Federal National Mortgage Association (Fannie Mae), common stock and perpetual
preferred stock of the Federal Home Loan Mortgage
Corporation
(Freddie Mac), Class A voting and Class
(AFS)
C non-voting common stock of the Federal Agricultural Mortgage Corporation (Farmer Mac), and common and preferred stock of SLM Corporation (the
private-sector successor to the Student Loan Marketing Association).

AF

For institutions that have not adopted ASU 2016-01,
report the amortized cost of available-for-sale debt
securities and the historical cost of equity securities
with readily determinable fair values not held for trading (i.e., available-for-sale equity securities).

T

value per share (unit) is determined and published and
For institutions that have not adopted ASU 2016-01,
is the basis for current transactions.
report the fair value of available-for-sale debt securities
and equity securities with readily determinable fair
Investments in mutual funds and other equity securivalues not held for trading (i.e., available-for-sale
Report
ties with readily determinable fair values may have
equity securities).
been purchased by the reporting institution or
acquired for debts previously contracted.
Item M3.b Amortized cost of available-for-sale

Exclude from equity securities with readily determin-

Item M4 Fair value of equity securities with readily

R

Institutions
should
include
theforamortized
cost of AFSable
debt
determinable
fair values
notin
held
trading.
fair values not held for trading:
securities
reported
in
this
item
the
total
amount
for
last-of-layer
Report the fair value of all investments in mutual funds
(1) Paid-infair
stock of a Federal Reserve Bank (report
and
other equity
(as defined
in ASCon
Topic
value
hedge
basissecurities
adjustments
(FVHBA)
AFS debt securities.
As investment without a readily deteras an equity
321,
Investments-Equity
Securities)
with
readily
deterdefined in ASU No. 2017-12, Derivatives and Hedging (Topic
815),
minable
fair value in Schedule RAL, item 1(h)).
minable fair values that are not held for trading. Such
“Targeted
Improvements
to
Accounting
for
Hedging
Activities”
(ASU
(2) Stock of a Federal Home Loan Bank (report as
securities include, but are not limited to, money market
2017-12),
last-of-layer
was
added
to investment without a readily determinan equity
mutual the
funds,
mutual fundsmethod
that invest
solely
in U.S.to allow entities
able fair value in Schedule RAL, item 1(h)).
apply
hedge accounting
to a portfolio
of prepayable
fixed-rate
Government
securities, common
stock, and
perpetual
preferred
stock.
preferred
stock doesinterests
not
financial
assets
orPerpetual
one or more
beneficial
secured
by a and preferred stocks that do not have
(3) Common
have
a
stated
maturity
date
and
cannot
be
redeemed
at
portfolio of prepayable financial instruments. Under ASU 2017-12,
readily determinable fair values, such as stock of
the option of the investor, although it may be redeembankers'
banks and Class B voting common stock
different
types
of
qualifying
assets
can
be
grouped
together
in a lastable at the option of the issuer.
of
the
Federal
Agricultural Mortgage Corporaof-layer hedge.

D

tion (Farmer Mac) (report in Schedule RAL,
According to ASC Topic 321, the fair value of an
item 1.(h)).
equity security is readily determinable if sales prices or
Due bid-and-asked
to the aggregation
of are
assets
in aavailable
last-of-layer
quotations
currently
on a closed portfolio,
(4) Preferred stock that by its terms either must be
institutions
find registered
it challenging
toU.S.
allocate
the last-of-layer
securitiesmay
exchange
with the
Securities
redeemed by the issuing enterprise or is redeemand Exchange
Commission
(SEC)
or insecurity
the over-theFVHBAs
to the individual
AFS
debt
level. As such,
anat the option of the investor (i.e., redeemable
able
counter
market,
provided
that
those
prices
or
quotainstitution that applies the last-of-layer method to a closed or
portfolio
of preferred stock), including trust
limited-life
tions for the over-the-counter market are publicly
preferredlastsecurities subject to mandatory redempAFSreported
debt securities
is
not
required
to
allocate
the
portfolio-level,
by the National Association of Securities
tion (report such preferred stock as an other debt
of-layer
FVHBAs
to aQuotations
more granular
Dealers
Automated
systemslevel
or by and
OTC should report these
security in Schedule RAL, item 1(c)(4)).
unallocated
amounts
in this item.
Markets Group
Inc. (“Restricted
stock” meets that
(5) “Restricted stock,” i.e., equity securities for which
definition if the restriction terminates within one year.)
sale is restricted by governmental or contractual
The fair value of an equity security traded only in a
requirement (other than in connection with being
foreign market is readily determinable if that foreign
pledged as collateral), except if that requirement
market is of a breadth and scope comparable to one of
terminates within one year or if the holder has
the U.S. markets referred to above. The fair value of an
the power by contract or otherwise to cause the
investment in a mutual fund (or in a structure similar
requirement to be met within one year (if the
to a mutual fund, i.e., a limited partnership or a venrestriction does not terminate within one year,
ture capital entity) is readily determinable if the fair
RAL-19
FFIEC 002

38

June 2018

TBD

Schedule C

include the estimated residual value of leased property
and must be net of unearned income. For further discussion of leases where the branch or agency is the lessor, refer to the Glossary entry for “lease accounting.”

Item M3 Commercial and industrial loans with
remaining maturity of one year or less (excluding those
in nonaccrual status).
Report in the proper subitems below the amount outstanding on report date of commercial and industrial
loans
(sum of items
4(a)also
and 4(b)
of thislast-of-layer
schedule, col- fair
An
institution
should
include
umn
A)
which
have
a
remaining
maturity
(from thenot
value hedge basis adjustments (FVHBAs)
report date until the final contractual maturity date) of
allocated to individual loans reported in items 1
one year or less. Demand loans, loans with no stated
through
8 of
this schedule.
Asmaturity,
definedand
in overAccounting
repayment
schedule
and no stated
Standards
Update
No. 2017-12,
Derivatives
drafts should
be considered
as having at
maturity of and
one year or
less and
included
here. AllImprovements
other commer- to
Hedging
(Topic
815),
“Targeted
cial and industrial
loans withActivities”
remaining maturity
of
Accounting
for Hedging
(ASU 2017-12),
the
more than one year are reported in Memorandum
last-of-layer method was added to allow entities to
item 4 below. Exclude those loans and leases that are
apply
hedge
accounting
to a portfolio
of C.
prepayable
reported
as nonaccrual
in Schedule
N, column

AF

Item 9(a) Of U.S. addressees (domicile).
Report all outstanding receivable balances relating to
direct financing and leveraged leases on property
acquired by the branch or agency for leasing to U.S.
addressees (see the Glossary entry for “domicile”).

Item M1 and M2 Not applicable.

T

Include all lease financing receivables of states and
political subdivisions in the U.S.

Memoranda

Item 9(b) Of non-U.S. addressees (domicile)
Report all outstanding receivable balances relating to
direct financing and leveraged leases on property
acquired by the branch or agency for leasing to nonU.S. addressees (see the Glossary entry for “domicile”).

D

R

Item 10 LESS: Any unearned income on loans
reflected in items 1–8 above.
To the extent possible, report the specific loan categories net of unearned income. A reporting institution
(including its IBF) should enter here unearned income
only to the extent that it is included in (i.e., not
deducted from) the various loan items (items 1 through
8) of this schedule. If a reporting institution reports
each loan item net of unearned income, enter a zero.
(Unearned income includes income received but not
yet earned, such as prepaid interest and the unamortized portion of loan origination fees.)

Do not include unearned income on lease financing
receivables in this item (deduct from Schedule C, part I,
item 9).

Item 11 Total loans and leases held for investment and
held for sale.
Report the sum of items 1 through 9 less the amount
reported in item 10. The amounts in columns A and B
must equal Schedule RAL, item 1(e), columns A and
B, respectively.

fixed-rate financial assets or one or more beneficial
interests secured by a portfolio of prepayable financial
Item M3(a) With predetermined interest rates.
instruments.
Under ASU 2017-12, different types of
Report in this item those commercial and industrial
qualifying
assets can be grouped together in a last-ofloans with a remaining maturity of one year or less
layer
with hedge.
fixed or predetermined interest rates. A predetermined interest rate is a rate that changes during the

termtoofthe
the aggregation
loan on a predetermined
the
Due
of assetsbasis,
in awith
last-of-layer
exact
rate
of
interest
over
the
life
of
the
loan
known
closed portfolio, institutions may find it challenging to
with certainty to both the borrower and the lender
allocate
the last-of-layer FVHBAs to the individual loan
when the loan (or instrument) is acquired.
level. As such, an institution that applies the last-oflayer method to a closed portfolio of loans is not
Item M3(b)
With floating
interest rates.
required
to allocate
the portfolio-level,
last-of-layer
Report
in
this
item
those
commercial
and
industrial
FVHBAs to a more granular level and should include
loans with a remaining maturity of one year or less
these
unallocated amounts in this item 10.

with floating or adjustable interest rates. A floating or
adjustable interest rate is a rate that varies, or can vary,
If in
anrelation
institution
reports
eachother
loaninterest
item in
this
schedule
to an index,
to some
rate
such
as the
rate on
certain U.S.income
Government
or the
net
of both
unearned
and securities
net unamortized
branch
or and
agency’s
rate,” or to some
other variloan
fees
has“prime
no unallocated
last-of-layer
able criterion the exact value of which cannot be
FVHBAs
applicable to loans, enter a zero in this item.
known in advance. Therefore, the exact rate the loan
If (or
theinstrument)
amount to
be reported
in this item
represents an
carries
at any subsequent
time cannot
addition
reported
Schedule
be knowntoatthe
the amounts
time of origination.
Allindemand
loansC, Part I,
should
considered
to have a floating
interest rate,
for
items
1 be
through
8, because
of unallocated
last-of-layer
purposes
of
this
report.
FVHBAs, report the amount with a minus (-) sign.

C-12
June 2018
TBD

39

FFIEC 002