The Fed, FDIC, and OCC, as members of the FFIEC, recently announced that the implementation of a streamlined Call Report Form (FFIEC 051) for eligible small institutions—financial institutions with only domestic offices and less than $1 billion in total assets—which is proposed to take effect March 31, 2017. The FFIEC’s action is the result of an ongoing initiative to reduce the burden associated with Call Report requirements for community banks. Among other things, the streamlined Call Report reduces the existing Call Report from 85 to 61 pages, resulting from the removal of approximately 950 (or about 40 percent) of the nearly 2,400 data items in the Call Report. Because the OMB must approve the revisions before they can be implemented, the above-referenced banking agencies have also issued a joint notice reflecting that they have submitted the information collection to OMB for review.
On December 30, the FDIC announced new regulatory actions against a Florida-based bank. Along with the Florida Office of Financial Regulation, the FDIC issued a new Consent Order against the $121.5 million-asset bank, based on allegations that the bank had engaged in “unsafe or unsound” banking practices, or practices which constituted a violation of law or regulation in the following areas: (i) weakness in asset quality, (ii) capital adequacy, earnings, (iii) management effectiveness, (iv) liquidity, (v) sensitivity to market risk, and (vi) compliance with the Bank Secrecy Act (BSA).
Among other things, the Order notes that the bank currently falls short of FDIC requirements for qualifying as “well capitalized,” qualifying merely as “adequately capitalized,” and therefore must boost its capital levels or face continued restrictions on its operations. The Order also states that the bank—which consented to the Order without admitting or denying the charges—now has 120 days to meet its capital requirements and 60 days to submit a capital plan to both: (i) achieve and maintain the capital requirements; and (ii) provide for a contingency plan to sell or merge the bank.
On December 13, the FDIC announced that its board of directors has approved a $2.18 billion operating budget for 2017, representing a 2.4 percent decrease from 2016 and a 46 percent decrease from its peak funding in 2010 at the height of the financial crisis. Commenting on the budget and staffing levels, FDIC Chairman Martin J. Gruenberg said, “This is the seventh consecutive reduction in the FDIC’s annual operating budget. These reductions are made possible by continuing steady improvement in the health of the U.S. banking industry.”
The FDIC published a Notice of an Interim Final Rule and Request for Comment in the November 22 edition of the Federal Register. The new rule amends FDIC regulations in accordance with requirements set forth in the FOIA Improvement Act of 2016. The new rule also codifies changes brought about by prior amendments that had already been incorporated into agency practice. To meet the Act’s statutory deadline, the interim rule was adopted without prior notice and comment and became effective immediately upon publication on November 22. Comments on the interim rule are due on January 23, 2017, after which the FDIC will remove the interim designation.
FDIC Board Approves Final Rule on Deposit Account Recordkeeping Requirements to Facilitate Timely Payment of Insured Deposits in Large Bank Failures
On November 15, the FDIC approved a final rule establishing systems and recordkeeping requirements for large FDIC-insured institutions to facilitate the prompt payment of insured deposits to customers upon the failure of any such depository institution. The final rule requires each insured depository institution that has two million or more deposit accounts to: (i) configure its IT system so that it is capable of calculating insured and uninsured amounts in each deposit account by ownership right and capacity; and (ii) maintain complete and accurate records with all information needed by the FDIC to determine deposit insurance coverage with respect to each deposit account. The final rule will become effective April 1, 2017.