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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...

Call Report preparers for banks that cannot opt for the Community Bank Leverage Ratio (“CBLR”) option get to experience the joys of Schedule RC-R Part II. I think it is the schedule we all love to hate more than any other. After slogging our way through schedules RI through RC-O at the end we are rewarded with the most tedious and arcane part of the Call Report.

3PR Inc. is often engaged to review banks’ call reports, including the infamous Schedule RC-R. Here are some of the more common issues we have seen:

Misstating the risk of due from depository institution balances. Balances due from depository institutions are generally weighted at 20%, but the first $250,000 in deposits at each institution are FDIC insured and may be weighted at 0%. But, if the bank’s outstanding cash items in process are included in the general ledger balance for a correspondent bank, that amount should be considered separately and weighted at 20%. Deposits at Federal Reserve banks carry a 0% risk weig...

In the current economic climate, more banks have decided to retain mortgage loans on the bank’s books rather than originating them and selling them shortly thereafter. Many mortgage loans have a requirement for escrow. The question then arises about how to handle escrow accounts for Call Report purposes. 

 Let’s first think about some definitions:

 Escrow-Funds held by the bank for the ultimate benefit of a person, or most likely, a taxing authority or insurance company. 

 Deposit-The Call Report documentation generally describes a deposit as “money held for others.”  Further, 12.CFR Part 204.2(a)(1)(ii) defines deposits as “Money received or held by a depository institution, or the credit given for money or its equivalent received or held by the depository institution in the usual course of business for a special or specific purpose, regardless of the legal relationships established thereby, including escrow funds.”

 With that said, funds held in escrow accounts must be reported o...

Early in my career I was the Call Report preparer in a small Texas country bank. The young woman who coded the loans was born and raised in the area and she habitually mis-coded loans secured by livestock. Her explanation was that they were not agriculture loans since they were made to ranchers and not to farmers, a clear distinction to her way of thinking. I had to convince her that the folks at the FDIC in Washington didn’t understand the difference, and that we had to go along with their definition.

At 3PR Inc. we occasionally do loan coding reviews for clients. While there is essentially no limit to the number of ways things can get messed up, we have noticed some patterns. Often it is the inconsistency between the different codes assigned to loans that is the culprit. In the Call Report preparer’s perfect world, the core system’s Call Report codes, general ledger codes, type codes, and collateral codes would be perfectly and consistently mapped to each other.

However, bank...

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 acc...

Well, we are going to get some relief regarding reporting International Remittance Transfers (IRTs) for the remainder of this year.  The items that were typically required for the June reporting period will be pushed to December 31, 2021 given the new threshold that is now effective for additional reporting.

Revisions related to reporting international remittance transfers (IRT) in RC-M item 16:

• The reporting revisions to Schedule RC-M will take effect March 31, 2021.
• Prior to the March 31, 2021 report date, both 041 and 051 filers were required to answer 4 questions.  The revision will reduce reporting to 2 questions: 16.a and 16.b, but 16.b will have 3 sub-questions so we still have 4 data points.
• The reporting items are renamed as “estimated” and revised item 16.b will only be required if revised item 16.a reported 501 or greater IRT in the current quarter or in the last year-end report.

What to look for?

• March 31, 2021 instructions and forms were revised, but no r
...

When high school football practices start every summer in Texas, the local TV station always goes out to cover the teams and interview the coaches. They always say the same thing, “We are going to concentrate on the fundamentals, basic blocking and tackling.” Before the plays can be run the players first have to master the basics.

Preparing the Call Report also calls for attention to the fundamentals. This means that the quality of the data and information used to prepare it should be accurate and well organized. In our practice we have seen some problem areas that, if addressed, will make a bank’s quarterly reporting more efficient and accurate.

The first fundamental is for a bank to ensure that subsidiary accounting ledgers, such as investment accounting reports and loan and deposit subsystem totals, are in balance with the general ledger. If the source of information used by the Call Report preparer does not match the general ledger, a lot of time can be wasted in reconcilin...

Another calendar quarter has ended which means Banks’ consolidated reports of condition and income for the first quarter ending March 31, 2021 were due by April 30.  Good news for some – the temporary asset thresholds allowed in an interim rule adopted last December is still applicable for certain institutions under $10 billion in assets.

The FDIC said the April 30 deadline applies to all institutions except some with foreign offices; an institution with more than one foreign office, other than a “shell” branch or an international banking facility, has until May 5 to file, according to the FDIC’s Financial Institution Letter (FIL-25-2021).

An interim final rule issued last December provides for temporary asset thresholds for financial institutions with less than $10 billion in assets as of Dec. 31, 2019. That interim final rule was issued to help mitigate temporary transition costs on banks related to the COVID-19 pandemic. The rule allows institutions that temporarily exceed t...

Without a doubt, Call Reports have become much more complex over the years.  Fortunately, most core data processing systems include at least some reporting modules designed to capture much of the data necessary to complete the Call Report.  Some of the most sophisticated core systems provide a means to map General Ledger and even individual loan and deposit accounts to the appropriate line items on the Call Report.  Of course, mapping the core system for Call Report purposes greatly enhances both accuracy and efficiency.

At this point you may ask yourself: My General Ledger, loan, and deposit accounts are all mapped and our Call Reports are routinely accepted for filing with the CDR so I can “Set it and Forget it,” right?  The answer is: Not always.

Even the most sophisticated mapping requires periodic reviews and updates.  Changes in banking laws, regulatory reporting rules, accounting pronouncements, glossary definitions, bank products, core systems, and personnel can wreak havoc w...

Your Bank President and Board of Directors may only think about the Call Report briefly, like four times or so each year. This is as it should be, and this is how it is in many banks. The efficient, accurate, and timely preparation of the quarterly reports is something that just happens, and may even be taken for granted.

If the Call Report ever does get noticed, it is sometimes for the wrong reason. Unless you have a hand in preparing it, you may underestimate how difficult it can be to do it right. There are changing bank variables, changing accounting rules, changing instructions, and changing definitions and coverages. You have to work with all of the departments in the bank, and understand the underlying schedules that are reported up through those departments. And that is not even mentioning that staff turnover in those departments can leave you hanging when the deadline is looming. We also know that some banks have learned the hard way that there really is no such thing as a...