Full text of District Notices (Federal Reserve Bank of Dallas) : Amendment to Regulation D (Reserve Requirements of Depository Institutions), Notice 2005-61

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Federal Reserve Bank of Dallas
2200 N. PEARL ST.
DALLAS, TX 75201-2272

October 12, 2005

Notice 05-61
TO: The Chief Executive Officer of each
financial institution and others concerned
in the Eleventh Federal Reserve District
SUBJECT
Amendment to Regulation D
(Reserve Requirements of Depository Institutions)
DETAILS
The Board of Governors has amended Regulation D (Reserve Requirements of Depository
Institutions) to reflect the annual indexing of the low reserve tranche and the reserve requirement
exemption amount for 2006.
The amendments increase the amount of net transaction accounts at each depository
institution that is subject to a 3 percent reserve requirement in 2006 from $47.6 million to $48.3
million. This amount is known as the low reserve tranche. The Regulation D amendments also
increase the amount of total reservable liabilities of each depository institution that is subject to a
zero percent reserve requirement in 2006 from $7 million to $7.8 million. This amount is known
as the reserve requirement exemption amount. The adjustments to both amounts are derived
using statutory formulas specified in the Federal Reserve Act.
The Board is also announcing increases in two other amounts—the nonexempt deposit
cutoff level and the reduced reporting limit—that are used to determine the frequency with which
depository institutions must submit deposit reports. These amounts are indexed annually to
reduce reporting burden for smaller depository institutions.
For depository institutions that report weekly, the adjusted low reserve tranche and reserve
requirement exemption amount will apply to the 14-day reserve computation period that begins

For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal
Reserve Bank of Dallas: Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012;
Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.

-2Tuesday, November 22, 2005, and the corresponding 14-day reserve maintenance period
beginning Thursday, December 22, 2005. For depository institutions that report quarterly, the
adjusted low reserve tranche and reserve requirement exemption amount will apply to the sevenday reserve computation period beginning Tuesday, December 20, 2005, and the corresponding
seven-day reserve maintenance period beginning Thursday, January 19, 2006.
For all depository institutions, the nonexempt deposit cutoff level, the reserve requirement
exemption amount, and the reduced reporting limit will be used for 2006 deposit report screening
to determine reporting frequency for the 12-month period that begins in September 2006.
ATTACHMENT
A copy of the Board’s notice as it appears on pages 58603–05, Vol. 70, No. 194 of the
Federal Register dated October 7, 2005, is attached.
MORE INFORMATION
For more information regarding reserve requirements, depository institutions in the Dallas
and El Paso territories should contact this Bank’s Reserve and Risk Management Division at
(214) 922-5646. Depository institutions in the Houston territory should contact the Reserve
Maintenance Division in the Houston Office at (713) 483-3108. Depository institutions in the
San Antonio territory should contact the Reserve Maintenance Division in the San Antonio
Office at (210) 978-1426.
Previous Federal Reserve Bank notices are available on our web site at
www.dallasfed.org/banking/notices/index.html or by contacting the Public Affairs Department
at (214) 922-5254.

58603

Rules and Regulations

Federal Register
Vol. 70, No. 194
Friday, October 7, 2005

FEDERAL RESERVE SYSTEM
12 CFR Part 204
[Regulation D; Docket No. R–1236]

Reserve Requirements of Depository
Institutions
Board of Governors of the
Federal Reserve System.
ACTION: Final rule.
AGENCY:

SUMMARY: The Board is amending
Regulation D, Reserve Requirements of
Depository Institutions, to reflect the
annual indexing of the low reserve
tranche and of the reserve requirement
exemption amount for 2006. The
Regulation D amendments increase the
amount of net transaction accounts at
each depository institution that is
subject to a three percent reserve
requirement in 2006 from $47.6 million
to $48.3 million. This amount is known
as the low reserve tranche. The
Regulation D amendments also increase
the amount of total reservable liabilities
of each depository institution that is
subject to a zero percent reserve
requirement in 2006 from $7.0 million
to $7.8 million. This amount is known
as the reserve requirement exemption
amount. The adjustments to both of
these amounts are derived using
statutory formulas specified in the
Federal Reserve Act.
The Board is also announcing
increases in two other amounts, the
nonexempt deposit cutoff level and the
reduced reporting limit, that are used to
determine the frequency with which
depository institutions must submit
deposit reports. These amounts are
indexed annually in order to reduce
reporting burden for smaller depository
institutions.
DATES: Effective date: November 7,
2005.
Compliance dates: For depository
institutions that report weekly, the
adjusted low reserve tranche and

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reserve requirement exemption amount
will apply to the fourteen-day reserve
computation period that begins
Tuesday, November 22, 2005, and the
corresponding fourteen-day reserve
maintenance period that begins
Thursday, December 22, 2005. For
depository institutions that report
quarterly, the adjusted low reserve
tranche and reserve requirement
exemption amount will apply to the
seven-day reserve computation period
that begins Tuesday, December 20,
2005, and the corresponding seven-day
reserve maintenance period that begins
Thursday, January 19, 2006. For all
depository institutions, the nonexempt
deposit cutoff level, the reserve
requirement exemption amount, and the
reduced reporting limit will be used for
2006 deposit report screening to
determine reporting frequency for the
twelve-month period that begins in
September 2006.
FOR FURTHER INFORMATION CONTACT:
Heatherun Allison, Senior Counsel
(202/452–3565), Legal Division, or
Gretchen Weinbach, Senior Economist
(202/452–2841), Division of Monetary
Affairs; for user of Telecommunications
Device for the Deaf (TDD) only, contact
(202/263–4869); Board of Governors of
the Federal Reserve System, 20th and C
Streets, NW., Washington, DC 20551.
SUPPLEMENTARY INFORMATION: Section
19(b)(2) of the Federal Reserve Act (12
U.S.C. 461(b)(2)) requires each
depository institution to maintain
reserves against its transaction accounts
and nonpersonal time deposits, as
prescribed by Board regulations, for the
purpose of implementing monetary
policy. Section 11(a)(2) of the Federal
Reserve Act (12 U.S.C. 248(a)(2))
authorizes the Board to require reports
of liabilities and assets from depository
institutions to enable the Board to
conduct monetary policy. The Board’s
actions with respect to each of these
provisions are discussed in turn below.
1. Reserve Requirements. Pursuant to
section 19(b)(2) of the Federal Reserve
Act, transaction account balances
maintained at each depository
institution up to a certain amount,
known as the low reserve tranche, are
subject to a three percent reserve
requirement. Transaction account
balances over the low reserve tranche
are subject to a ten percent reserve
requirement. Section 19(b)(2) also
provides that, before December 31 of

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each year, the Board shall issue a
regulation adjusting the low reserve
tranche for the next calendar year. The
Act requires the adjustment in the low
reserve tranche to be 80 percent of the
percentage increase or decrease in total
transaction accounts of all depository
institutions over the one-year period
that ends on the June 30 prior to the
adjustment.
Currently, the low reserve tranche is
$47.6 million. Net transaction accounts
of all depository institutions rose 1.8
percent (from $700.4 billion to $713.1
billion) between June 30, 2004 and June
30, 2005. Accordingly, the Board is
amending Regulation D (12 CFR part
204) to increase the low reserve tranche
for net transaction accounts by $0.7
million, from $47.6 million for 2005 to
$48.3 million for 2006.
Section 19(b)(11)(A) of the Federal
Reserve Act (12 U.S.C. 461(b)(11)(A))
provides that a zero percent reserve
requirement shall apply at each
depository institution to total reservable
liabilities that do not exceed a certain
amount, known as the reserve
requirement exemption amount.
Section 19(b)(11)(B) provides that,
before December 31 of each year, the
Board shall issue a regulation adjusting
the reserve requirement exemption
amount for the next calendar year if
total reservable liabilities held at all
depository institutions increase from
one year to the next. Unlike the low
reserve tranche, which can be adjusted
upward or downward, no adjustment is
made to the reserve requirement
exemption amount if total reservable
liabilities held at all depository
institutions should decrease during the
applicable time period. The Act requires
the percentage increase in the reserve
requirement exemption amount to be 80
percent of the increase in total
reservable liabilities of all depository
institutions over the one-year period
that ends on the June 30 prior to the
adjustment.
Total reservable liabilities of all
depository institutions increased by
13.7 percent (from $2,946.2 billion to
$3,350.0 billion) between June 30, 2004,
and June 30, 2005. Accordingly, the
Board is amending Regulation D to
increase the reserve requirement
exemption amount by $0.8 million, from

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07OCR1

58604

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Rules and Regulations

$7.0 million for 2005 to $7.8 million for
2006.1
For depository institutions that report
weekly, the adjusted low reserve
tranche and reserve requirement
exemption amount will be effective for
the fourteen-day reserve computation
period beginning Tuesday, November
22, 2005, and for the corresponding
fourteen-day reserve maintenance
period beginning Thursday, December
22, 2005. For depository institutions
that report quarterly, the adjusted low
reserve tranche and reserve requirement
exemption amount will be effective for
the seven-day reserve computation
period beginning Tuesday, December
20, 2005, and for the corresponding
seven-day reserve maintenance period
beginning Thursday, January 19, 2006.
2. Deposit Reports. Section 11(b)(2) of
the Federal Reserve Act authorizes the
Board to require depository institutions
to file reports of their liabilities and
assets as the Board may determine to be
necessary or desirable to enable it to
discharge its responsibility to monitor
and control the monetary and credit
aggregates. The Board screens
depository institutions each year and
assigns them to one of four deposit
reporting panels (weekly reporters,
quarterly reporters, annual reporters, or
nonreporters). An institution’s panel
assignment is effective with the annual
deposit panel shifts in September of the
screening year.
In order to ease the reporting burden,
the Board permits institutions with net
transaction account above the reserve
requirement exemption amount but
with total deposits below a specified
level (the ‘‘nonexempt deposit cutoff’’)
to report quarterly. The Board requires
certain large depository institutions to
report weekly regardless of the level of
their net transaction accounts if their
total deposits exceed a specified level
(the ‘‘reduced reporting limit’’). The
annual adjustment to the first amount,
the reserve requirement exemption
amount, is described in Section 1 above.
The nonexempt deposit cutoff level and
the reduced reporting limit are also

adjusted annually, by an amount equal
to 80 percent of the increase, if any, in
total deposits of all depository
institutions over the one-year period
that ends on the June 30 prior to the
adjustment.
Total deposits at all depository
institutions increased 8.3 percent (from
$6,962.1 billion to $7,540.4 billion)
between June 30, 2004 and June 30,
2005. Accordingly, the Board is
adjusting the nonexempt deposit cutoff
level upward by $11.3 million, from its
current level of $169.8 million for 2005
to $181.1 million for 2006. The Board is
also adjusting the reduced reporting
limit upward by $75 million, from its
current level of $1.131 billion for 2005
to $1.206 billion for 2006.2
Beginning in September 2006, the
boundaries of the four deposit reporting
panels will be defined as follows. Those
depository institutions with net
transaction accounts over $7.8 million
(the reserve requirement exemption
amount) or total deposits greater than or
equal to $1.206 billion (the reduced
reporting limit) are subject to detailed
reporting, and must file an FR 2900
report either weekly or quarterly. Of this
group, those with total deposits greater
than or equal to $181.1 million (the
nonexempt deposit cutoff level) are
required to file the FR 2900 report each
week, while those with total deposits
less than $181.1 million are required to
file the FR 2900 report each quarter.
Those depository institutions with net
transaction accounts less than or equal
to $7.8 million (the reserve requirement
exemption amount) and with total
deposits less than $1.206 billion (the
reduced reporting limit) are eligible for
reduced reporting, and must either file
a deposit report annually or not at all.
Of this group, those with total deposits
greater than $7.8 million (but less than
$1.206 billion) are required to file the
FR 2910a report annually, while those
with total deposits less than or equal to
$7.8 million are not required to file a
deposit report. A depository institution
that manipulates its reporting, however,
in an attempt to qualify for less frequent

reporting or to reduce its reserve
requirement may be required to report
the FR 2900 on a weekly basis and
maintain appropriate reserve balances
with its Reserve Bank, regardless of its
most recent panel assignment.
Notice and Regulatory Flexibility Act.
The provisions of 5 U.S.C. 553(b)
relating to notice of proposed
rulemaking have not been followed in
connection with the adoption of these
amendments. The amendments involve
expected, ministerial adjustments
prescribed by statute and by the Board’s
policy concerning reporting practices.
The increases in the reserve requirement
exemption amount, the low reserve
tranche, the nonexempt deposit cutoff
level, and the reduced reporting limit
serve to reduce regulatory burdens on
depository institutions. Accordingly, the
Board finds good cause for determining,
and so determines, that notice in
accordance with 5 U.S.C. 553(b) is
unnecessary. Consequently, the
provisions of the Regulatory Flexibility
Act, 5 U.S.C. 601, do not apply to these
amendments.
List of Subjects in 12 CFR Part 204
Banks, Banking, Reporting and
recordkeeping requirements.
For the reasons set forth in the
preamble, the Board is amending 12
CFR part 204 as follows:

■

PART 204—RESERVE
REQUIREMENTS OF DEPOSITORY
INSTITUTIONS (REGULATION D)
1. The authority citation for part 204
continues to read as follows:

■

Authority: 12 U.S.C. 248(a), 248(c), 371a,
461, 601, 611, and 3105.

2. Section 204.9 is revised to read as
follows:

■

§ 204.9

Full text of District Notices (Federal Reserve Bank of Dallas) : Amendment to Regulation D (Reserve Requirements of Depository Institutions), Notice 2005-61

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