Federal banking agencies are paying close attention to the number of uninsured deposits reported at banks. Regulators remain focused on this issue, especially given some banks’ recent failings from having made too many uninsured deposits.
In a recent industry development, the Federal Deposit Insurance Corporation (FDIC) says some insured depository institutions (IDIs) are not accurately reporting estimated uninsured deposits in their Consolidated Reports of Condition and Income (Call Reports).
On July 24, 2023, the FDIC issued a Financial Institution Letter (FIL), Estimated Uninsured Deposits Reporting Expectations.
The FDIC’s FIL notes examples of incorrect reporting, which include institutions reducing the reported number of uninsured deposits based on collateralization with pledged assets— inaccurate since collateral does not affect deposit insurance coverage. Another common error is excluding intercompany deposit balances of subsidiaries from the reported amounts on Schedule RC-O.
Moving ahead, the FDIC emphasizes the importance of making a reasonable estimate of the portion of deposits exceeding the federal deposit insurance limit that are uninsured and collateralized by pledged assets.
It states all deposits of consolidated subsidiaries—except those accounted for under the equity method of accounting—should be reported in Schedule RC-O, items 1 through 3, as well as Memorandum item 1 and, if applicable, Memorandum item 2 (estimated amount of uninsured deposits). This applies to institutions with total assets below $1 billion that do not report estimated uninsured deposits, the FDIC says.
The chief financial officer and multiple directors of each IDI are required to attest to the correctness of the Call Report.
Therefore, those institutions that incorrectly reported uninsured deposits, such as by reflecting collateralization or excluding intercompany deposit balances, should amend their Call Reports and submit the revised data file to the Central Data Repository (CDR).
Says the FDIC, IDIs are advised to consult the general instructions for Call Reports to ensure accurate data submission. In case IDIs have inaccurately reported uninsured deposits, the FDIC recommends making necessary data adjustments and submitting a revised data file to the Central Data Repository.
It is critical that the information given to regulators is complete and correct.
Banks (IBAs) should include this information in their risk framework and organize it properly. This involves creating a system to report on time and accurately, following the rules for giving out information.
An awareness of what needs to be reported is critical, as is the ability to manage the process of reporting and ensure data moves correctly from its point of origin down to the final report.
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