Compliance Update – June 2021

The Federal Financial Institutions Examination Council (FFIEC) has announced that it will proceed with two sets of proposed Bank Call Report changes. One set impact Schedule RC-O and the other set impacts RC-E.

Schedule RC-O

The following new item will be added to Schedule RC-O (Other Data for Deposit Insurance Assessments) in the FFIEC 031 and FFIEC 041 Call Reports.

New Memo Item 5: This will allow the applicable portion of the CECL transitional amount or modified CECL transitional amount that has been added to retained earnings for regulatory capital purposes. 

This new item will be reported by large and highly complex institutions that have adopted Accounting Standards Update 2016-13 and reported have a CECL transition election in effect as of the quarter-end report date.

Schedule RC-E

The following new items will be added to Schedule RC-E in all versions of the Call Report:

• Fully Insured, Affiliate Sweep Deposits (New Memo Item 1(h)(1)
• Not Fully Insured, Affiliate Sweep Deposits (New Memo Item 1(h)(2)
• Fully Insured, Non-Affiliate Sweep Deposits (New Memo Item 1(h)(3)
• Not Fully Insured, Non-Affiliate Sweep Deposits (New Memo Item 1(h)(4)
• Total Sweep Deposits that are not Brokered Deposits (New Memo Item 1(i)

These new items will be reported quarterly on the FFIEC 031 and FFICE 041 report forms, and semi-annually on the FFIEC 051 form.

In addition, there will be additional new items added to the Schedule RC-E in the FFIEC 031 Call Report only. See the reference for this additional information.

Reference: Federal Register; May 24,2021; pp. 27961-27966

Question: Can a Bank Charge a late fee if a borrower does not pay an existing late fee?

Answer: No. You cannot charge a late fee for a late fee. This is called pyramiding of late fees and is prohibited in the servicing practices section of Regulation Z 1026.36(c)(2).

Reference: 12 CFR 1026.36(c)(2).

Question: Does the phrase Annual Percentage Rate need to be explained in the advertisement?

Answer: No. The term annual percentage rate needs to be used, but it is not required to be explained. While Regulation Z advertising requirements states that the abbreviation APR may be used, a common practice has been to use the term first and then the abbreviation in the same advertisement.

Reference: Regulation Z 12 CFR 1024.24(c)