log in
All Articles | Back

Member Articles


FDIC Seeking to Transition from Quarterly Call Reports 

by Wes Scott, Kevin Tran

Published: October, 2020

Submission: November, 2020

 



The Federal Deposit Insurance Corporation (“FDIC”) Advisory Committee of State Regulators (“Committee”) recently announced a new technology initiative designed to transition to real-time financial reporting and to modernize the collection of data. More specifically, the FDIC would prefer to eliminate call reports, which can be filed as late as thirty (30) days after the end of a fiscal quarter, in favor of a new reporting prototype that allows for current and more targeted reporting of bank data. A move toward real-time data would likely reduce regulatory burdens for banks, increase transparency and facilitate M&A activity.


“What we would like to do is frankly make the call reports obsolete, and not because we wouldn’t have the data but because we would have better data and we would have more timely data,” FDIC Chairman Jelena McWilliams told the Wall Street Journal.


For more than 150 years, Congress has mandated that banks provide quarterly call reports to assess the health of the banking industry. However, recent technological advances have sparked doubts that gathering financial information on a quarterly schedule is sufficient. For instance, the results of the 2020 second quarter call reports were not submitted until July - four months after the beginning of the quarter. Call reports are often many pages in length and contain thousands of data points. These delays and the voluminous nature of these reports make it increasingly difficult for the FDIC to track the current impact of certain phenomena—like COVID-19­—on the banking industry and to react quickly to credit exposure and deposit information. The information gap is particularly acute at the community bank level. Although the FDIC utilizes technology to supplement information between quarterly call reports for larger banks, this technology is often missing for community banks.


In response, the FDIC has called for more frequent financial reporting to identify market trends earlier. Recently, the FDIC invited twenty technology firms to compete to create a new supervisory system that will collect bank data more frequently and organize that data in a more granular, accessible way. According to the Committee, this initiative will permit “supervisors to identify bank-specific and system-wide risk sooner and more efficiently, while reducing the compliance burdens on individual institutions.”


Although the FDIC emphasized the importance of this new technology initiative, it has maintained that call reports will continue to be an important supervisory tool in the near term because a reporting prototype is not realistically expected for months. When a prototype does exist, the FDIC will not mandate its use; however, banks will be incentivized to use it. Regardless, the industry should be cognizant of the FDIC’s steps toward transitioning away from quarterly call reports.


 


Click here to read more.


 


 

MEMBER COMMENTS

 

 

WSG Member: Please login to add your comment.

    Disclaimer

WSG's members are independent firms and are not affiliated in the joint practice of professional services. Each member exercises its own individual judgments on all client matters.

HOME | SITE MAP | GLANCE | PRIVACY POLICY | DISCLAIMER |  © World Services Group, 2021