Last week, the Federal Deposit Insurance Corporation (FDIC) issued financial institution letter FIL-37-2023 about the correct way to report estimated uninsured deposits in compliance with the Call Report (Consolidated Reports of Condition and Income) instructions. The FDIC noted that this FIL does not impact institutions with less than $1 billion in total assets that do not report estimated uninsured deposits.
The FDIC observed that some insured depository institutions are incorrectly reducing the amount of uninsured deposits reported because the uninsured deposits are collateralized by pledged assets. In the view of the FDIC, this is an incorrect way of reporting because the existence of collateral has no bearing on the portion of a deposit that is covered by federal deposit insurance. Deposit insurance and collateral are separate things. This FIL advises that if an institution has deposit accounts with balances in excess of the federal deposit insurance limit that it has collateralized by pledging assets, such as deposits of the U.S. Government and of states and political subdivisions, the institution should make a reasonable estimate of the portion of these deposits that is uninsured.
The FDIC also observed that some institutions are incorrectly reducing the amount reported on Schedule RC-O (Other Data for Deposit Insurance Assessments) by excluding intercompany deposit balances of subsidiaries. The General Instructions for the Call Report state that all deposits of subsidiaries (other than a subsidiary that is accounted for under the equity method of accounting instead of consolidating) that are consolidated and, therefore, eliminated from reported deposits on the balance sheet, must be reported in Schedule RC-O, items 1 through 3, Memorandum item 1, and, if applicable, Memorandum item 2, estimated amount of uninsured deposits.
As each financial institution is responsible for the accuracy of their own Call Report data and for filing amendments as necessary to ensure Call Report accuracy, the FDIC has instructed institutions that reducing the amount of reported uninsured deposits to reflect collateralization by pledged assets or by excluding intercompany deposit balances of subsidiaries, causes these reports to be inaccurate. As such, uninsured deposit data should be amended to Call Reports already filed, with the appropriate changes being made and the new data submitted to the Central Data Repository using the same process as the original filing. Insured Depository institutions can submit up to three years of Call Report revisions, or more if appropriate.
The Call Report forms and instructions can be accessed from the FDIC Call Reports webpage. These forms and instructions are also available for printing and downloading from the Federal Financial Institutions Examination Council’s (FFIEC’s) Reporting Forms webpage for each version of the Call Report.
Feel free to reach out to us on the hotline with any questions about this financial institution letter, or any questions you might have about the Call Report in general. Whether it’s Community-Reinvestment-Act-related or just a standard line of questioning, it’s not always easy to sift through the Call Report instructions and determine how transactions should be reported. Compliance Alliance is here to help.