Schedule RC-B Tips from an Antique Banker

My friend Fritz is Cashier at a bank in a tiny Texas town that the highway department left off their maps about thirty years ago. Every day they close the bank for an hour at lunchtime. Everyone in the bank then walks across the street, stepping around the sleeping dogs, and has lunch in the café. They eat the same thing every day because, well, there is really only one thing on the menu.

Fritz was complaining to me the other day about the problems working in an antique bank. “Back in 1907, whoever set up the general ledger decided that the bank just needed two accounts for investment securities. To make it worse, the chairman’s ex-brother-in-law, Bubba, comes in part-time every afternoon to post the transactions. You never know what that knucklehead is going to book.”

Fritz shared with me some tips on how he copes when preparing the Call Report. The first thing he does is to reconcile the investment accounting reports from his correspondent bank with the two general ledger accounts. He admits that it would be easier if there were more accounts that correspond to the RC-B schedule items, but he says the chairman won’t let him add any. At least he can balance to the overall totals for amortized cost for HFS, fair value for AFS, and the accrued interest receivable.

One of the problem areas he has seen is mistakes in booking changes to unrealized gains and losses. “Bubba is not really up on his debits and credits, and gets confused about whether gains and losses have increased or declined.” “I made him a cheat sheet to use,” Fritz related, “And that has helped. I always check afterwards to be sure we are in balance.”

The other thing that Fritz does is to check the investment income accounts to be sure that Bubba doesn’t post something there by mistake.  “One time the Call Report software threw a quality edit because he posted the expense of the steer we bought at the stock show to interest income.”

My friend is holding out hope that someday soon he will be able to add some more general ledger accounts to make his job easier. Meanwhile, he knows what to do to avoid RC-B validity and quality edits when drafting the quarterly reports. He has other reasons to be hopeful. After all, he finally convinced the president that they didn’t have to turn over the calculator tapes to use the other side.