"Sweeping" Reporting Changes

If you are one of those Call Report preparers who hopes that the regulators will add more reporting items accompanied by vague instructions, well you have got your wish! All banks are now required to report data on sweep deposits twice a year in their December and June reports. This requirement became effective for the December 2021 report for all filers.

The instructions define Sweep Deposits as, “A deposit held at the reporting institution by a customer or

counterparty through a contractual feature that automatically transfers to the reporting institution from

another regulated financial company at the close of each business day amounts under the agreement

governing the account from which the amount is being transferred.” I am glad that they make it so clear.

“Sweep Deposits” to be reported are a different animal from the kind of sweep arrangement where money is swept between deposit accounts within the same institution (“Retail Sweeps”). It has nothing to do with the “ATS Accounts” instructions that have been part of the reporting requirements for years. So exactly what are they?

For most banks that have them it will be reciprocal demand and savings products where funds are swept between insured financial institutions through a program provider. The largest and best established of these is the Intrafi Network (formerly Promontory Interfinancial). Their Insured Cash Sweep (ICS) program is the largest and best established. Reciprocal demand and savings accounts in this program are to be reported. CDARS time deposits are not reported since they do not sweep daily.

There are also some other vendors out there that have similar programs, such as Reich & Tang and Total Bank Solutions. All these vendors should be providing you with the required reporting information in their quarterly reports so that the amounts can be easily looked up and supported in the workpapers.

There are other types of programs that may also be swept up into new reporting. The exact definition applies deposits that are swept from “another regulated financial company”, which could be a brokerage firm. Programs that sweep balances into and from money market mutual funds need to be assessed for reporting. Again, the program provider should be of help in determining reporting requirements and providing figures.

There are also some innovative bank-specific programs that sweep deposits between banks and their bank and/or non-bank affiliates that need reporting. If so, don’t just sweep them under the rug, make sure to report them if required.

The reporting is done on the deposits schedule RC-E.M.h.1 through RC-E.M.i. The reporting is swept into five piles:

• 1. Fully insured, affiliate sweep deposits
• 2. Not fully insured, affiliate sweep deposits
• 3. Fully insured, non-affiliate sweep deposits
• 4. Not fully insured, non-affiliate sweep deposits
• Total sweep deposits that are not brokered deposits (included in items h.1. through h.4)

Whether or not a deposit is considered brokered is a whole other subject that I will sweep into the corner for now. I will say that reciprocal deposits in banks with a 1 or 2 CAMELS rating are considered non-brokered within limits. The good news is that when you have this all sorted out for your institution it will become just another routine for your quarterly Call Report work. After you have reported the Sweep Deposits you will be able to mop up the rest of the report in good order.