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January J 993

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UPERVISORY
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Supervisory
_News and Views
~for the Eighth District

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the beginning of the year in
which the revisions take effect.
To comply with the Federal
Deposit Insurance Corporation
Improvement Act o_f1991
(FDICIA) , several changes
have been made to the Call
Report. The changes affect
several existing schooules and
apply to all four reporting
forms (FFIEC 031, 032, 033
and 034) ., Changes that take

Call Report Chang~s to
Take Effect March 31
Under an int~ragency policy
statement-adopted in May
1992, federal banking agencies
- agreed to announce changes to
- the Reports of Condition and
Income-(Call Report) before/
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definition of brokered
deposits on Schedule RC-E
will be modified to con, form with the definition of
"deposit broker" contained
in Section 29 (g) of the
·Federal Deposit Insurance
Act. The definition of
"deposit broker" is being
modified to-conform with
new limits on brokered
deposits in FDI CIA.
1
9 3 ;~- Schedule RC-Fwpl incorp9, •··
orate a new item for
"deferred tax assets," such
-as
certain tax carry forward~
~~!1::l~~onn-

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(continued on next page)

ation on "preferred
deposits." In addition, the

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Tips for·
Prepari~t
HMDA Data


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

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W

ith the increasing
emphasis on Heme
~Mortgage Disclo$ure Act
" (HMDA) _reporting, it is 1
essential that all institutions'
HMDA data are accurate.
Wjth this in mind, the following tips are d€signed to help in
filing accurate HMDA data.

1992 _
R~portin,t
Every lending institution's 1992
HMDA data are due to its
applicable federal regulator by

March 1, 1993. When
submitting the 1992 Loan/
Application Register CLAR) ,
verify the following:
• That 1990 census tract
information was used to
identify and code the
property location
• That the names or social
security numbers of
borrowers and applicants
are not used,
• That income is reported as
the gross annual income

used in the credit decision
• That the contact name
-and mailing address listed
is accurate because it is
used to mail the HMDA
Disclosu're Statement.
~

1993 Reporting •
Regulation C
Revisions
When recording 1993
HMDA data, please keep in
mind the recent changes to
(continued on next page)

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The following change will
data on-loans to small bu~tnonaccru'al status but are
(continuedfrom front page)
- nesses and small farms, the.
wholly or partially"guaran- take effect with-the June 30,
Federal Register published
~eed by the U.S. government 1993, Call Report:
benefits, that cannot be
• Schedule RC-C will be ,
·proposed reporting require- '
or a U.S. government
modified with a new Part II ments-on small business ,!nd •
useg to meenegulatory
agency.
to collect data on 'loans to
small farm lending for a
·capital requir,ements.
• Schedule RC-Owill be
• Schedule RC-L will be
modified with a new item
small businesses and small 30-day public comm<i!nt period
modified with a new item
for "deposits in lifeline
farms. This data will be
on May 20, 1992: The FFIEC
to collect "all other offreported annually for loans , - received 575 letters in response
accounts." Although this
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item will be added-to the
balance sheet assets."
outstanding as of June 30.
to its request for public
• information tollected on
In general, banks will be
'com~ents, and some of the
report forms for March 31,
1993', banks' are11ot re~ • '
required to report informreporting changes have been
''extensions of credit by'the
ation on_the number and
amended to reflect these
reporting bank to its
dollar amount outstanding comments.
executive officers, principal
Some of the report- -shareholders, and their
-of (a) nonfarm, nonFor more information
_ing changes w~re -,
residential real estate loans, regarding upcoming changes,
related-interests" on ,
and commercial lqans in
refer to the Eederal Register
amended to refle~t
scheaule R~-M will be
_
the'
following
categories:
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nobce ppblished Nov. 16, 1992.
expanded to include
public comments
"directors and their- related received.
original loa,n/line of credit
interests." In addition,
of $100,000 or less, more
than·' $100,000 through
schedule RC-,M will be
\1,
quired 'to repost this item
' $250,000, and more than ,
m~dified to collect until~the Federal Reserve
$250,000 through
, 'information on intangibles
System and FDIC establish
$1,000,000; and (b) •
that are "grandf~thered" to •
minimum requirements for
count toward regulatory
agricultural real estate and
lifeline accounts. Schedule
agricultural loans in the
capital requirements even
RC-O will ·also be modified
following categories:
though new rules disallow
them ..'
with a new memorandum
original loans of $100,000
item to gather information
or less, more than $100,000
• To better reflect the risk
on "estimated uninsured
through $250,000, and
inherent in an institution's
deposits
(in
domestic
more than ·$250,000
loan portfolio, schedule
offices) of the baHk. " This
RC-Nwill be modified to through $500,000.
change will make the
collect
information
.
. on
In developing the
scheduJe comply with
loans that are past due 30
requirements for reporting
section 141(c) ofFDICIA.
daysi>r more or are in

Call Reports
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amended to expandcoverage of
mortgage companies. The rule
requires a mortgage ~ompany
with an office in a metropolitan area to disclose data
about home lending activity if
its assets ex~eeaed $10 million ,
or if the company made 100 or
more home purchas,,_e loans in
the preceding calendar year.-

HMDA lips

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(continuedfrom front page)

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Regulation C, which were
published in the Federal
Register on Dee. 2, 1992. The
amended rule revises the
•fnsttuctions for repo(ting loan'
applications received through a
loan broker or ·correspondent.
Loans approved and sub- ·
sequenrly acquirel according
- to a preclosing arrangement
should be repotted as originations (regardless of whether
they closed in your institution's
name).
Regulation Cwas also


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

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Data Entry PC '
Software
Mortgage lenders-subject to
the reporting requirements of
Regulation, Care expected to
report their HMDA data in _

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machine_~readable format.
Experience clearly indicates
that electronic filing not only
is mo~e efficient, but also
improves data quality. _Built-in
edits further verify data for
,
correct format, accur~cy,and ,)
completeness.To facilitate electronic
reporting, a PC software
program was dev~lopeq jointly ,
•
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1 by five federal regulatory
agencies (FRS, OCC, FDIC,
NCUA, and HUD). The HMDA
Data Entry System will help
institutions-manage the
ongoing staius of lof-n appli-

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-cations and will ultimately
expedite the processing of disclosure and,aggregate reports. ,
The software was scheduled for
distribution to institutions jn
mid-January.' If you have not
yet received the package, please
contactyour federal regult!tor.

Examiners to Emghasize Accurate HMDA Data in 1993
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ith
mortgage
lending
disparities
making
pational
headlines, examiners_are '
pl.acing ren~wed emp~asis on
accurate HMDA data reporting.
It is not unusual for examiners

_ information at the same
a home or home improvetime they process loan
ment.
applications. _
• Failing to do_cument
the Face ornational origin, • Establish periodic reviews to
verify HMDA LAR 'infor- .
sex and income of the
maiion.
applicant.
• Identifying ineorrectly the1
• l(eep tH~ LAR.s up to da1e.
property' location
to which '' I
the loan applicatjon relates. _. _ _\_ _ _ _ _ __
.., ~eporting incorrectly the
type of action taken and the Many sources are
date of the loan application. available to help
The application date should -rep,o rt HMDA data
be recorded as the actual
accurately.
date a loan application is
,
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received, not the date all
necessary documentation is
• Automate HMDA data
- received.
- collection and use the
• Reporting incorrectly the
public edits developed by
loan type and purpose.
the FFIEC.
• Reporting incorrectly the
dollar amount of the loan
Remember that many
requested.
sources
are available to help
• Failing to post a notice
report
HMDA
data accurately.'
regarding the availabil!ty of
•
The
instruqtions
to Reg~lation
the HMDA Disclosure
C
andA
Guide
to
HMDA
Statement.
Reporting: Getting it Right!
• Reporting incorrectly_the
are two valuable sources.
type of entity purchasing
Review HMDA data carethe loan.
fullybefore submitting the
These violations commonly information to your regulator.
result from insufficient train- " It is extremely important that
Federal regulators
all HMDA data are accurate,
may require banks to ing and inadequate procedures for data collection and especially con-sidering the
resubmit HMDA LARs
possibility of civil money
data verification. Federal
depending on how
penalties for report- ing
regulators may require banks
violations.
Please do not
many vioiations are
to resubmit HMDA LARs
hesitate
to
contact
your regudepending on how many
found. Resubmitting
lator
for
help
in
meeting
the
violations are found. Resub- ,
a HM:Q_A 1=AR is a
reporting
requirements
of
.
milting a HMDA LAR is a timet~~-<;onsuming
' consuming_process that can be Regulation_ C.
process that can be
prevent~d easily. With proper
prevented easily.
procedures in-place, compiling
HMDA LARs can be simplified.
The followir:igtips should help:
installment instead of the
• Make certain that employreal estate loan portfolio.
ees know the requirements
• Reporting loans that,
of Regulation C.
although secured by real
• Establish procedures to
estate, are not used for the
ensure that loan officers
purchas~ or refinancing of
collect and recor~ required
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https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

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Fed Addresses Money Laundering
-----• h;·law

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enforcement
community
both within the
United States
and abroad has _ _
.become increasingly concerned ,
' about money11'aundering
through funds trtnsfer systelll;S, \
On Dec, 23, 1992, on the
recommendati6n of the Federal
Financial Institutions Exam- ination Council, the Federal
Reserve Board issued a policy
.. " _
statement to address this
~
I
bl
, _s -,~~,\\\ \ 1 !1i't ,' ,/1 1 ,f;- -_ pro em.
1
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_ -,_ -:: ~ -~ • '-' i '
' 1/ ~~~~' The Fed policy statement
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':~\\'encourages financial insti-__-:_:,_-:
tutions to inc,l~de, where
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practlcal, complete information on the sender and
recipient of large payment
orders,over any funds transfer
syst_em, including Fedwire,
CHIPS,-SWIFT, and any
proprietary networks, The
state)TI~nt recorpmends tha~
½very payment order indude '
the name, address and account
number of the person who
initiated the first payment
order in the funds transfer (the
originator): If available, the
beneficiary's name, address and accoµnt number shou ld
also be provided in the message
text. Finally; the identity of the
first bank that accepts ajlayI

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a

ment order from nonbank
should be noted ·a~d-retained
through all subse._quent processing of the funds transfer
CHIPS and SWIFT have
recently issued statements
encouraging thetr participants
to .include this information in 1
funds;transfets pr~ce~eq;
through their systems, The
Fedwire format, however, limits ,
the amount of information
tbat can be included in a
Fedwire funds transfer ~Until
changes in the Fedwire format
• implemented, the Board
are
encourages originating banks
to ensure that as-much information on the non-bank originator, beneficiary, and any
instructing bank is included in
each Fedwire funds transfer
without excluding information
necessary for' payment
processing.

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HUD Amend$ T heDepartmentofHousing
•
and Urban Development's
Regulat1.on X; (HUD) RegulationXwas
DA '(h
, _ recently amended, andaddRES rll ange itionar'amendments to reflect

f O Offle
·c


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

~

Regulation Xnow apply to
refinancing horn~ loans, as
well as to home purchases.
Additional amendments
regarding coverage beyond
first-lien
mortgages will reflect
changes t9 tlJe Real Estate
changes to RESPA passed by
Settlement Procedures Act
Congress in October 1992. The
(RESPA) will be forthcoming.
effective
date of these changes,
Effective Dec. 2, 1992,
however,
has caused confusion,
Regulation Xwas revised to
expand RESPA's_coverage of all Although the official effective
first-lien mortgages, regardless date of these amendments,
, which were par\ of the Housing
of whether a transaction ,
and Community Development
involves the transfer of title.
Act of 1992', is Oct. 28, _1992,
Therefore ~11 provisions of

Congress gave HUD 180 days
from the statute's passage to
implement changes to
Regulation X. ' , _
To clarify the discrepancy
between the effective date of the
statute and the date for imple- •
menting the rules, HUD has
said that the RESPA amendments will not become effective
until HUD issues the additional
regulations needed to implement the am~ndments covering junior-lien·mortgages.

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·BANK PERFORMANCE
Fed Rates Most District Banks
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"Well Capitalize<J"

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uring much of ln,erest Income vs. -ln~er_est Expense
l 99Z-, bankersAs a Percent of Ave~age Earning A_s~ets
and_l)anking
regulators
Percent
12
focused on
10
preparation for
compliance with the Federal
Depo~it Insurance Corporation
·1mproverpentAct (FDICIA) ,
This legislation requires,that
feder~l bank smeervjsors place
each institution for which they
are responsible into one of five
0
zones based on Sept. 30, 1992,
■ Interest Expense
• lnter~st Income
Call~eport data. The zones
Net
Interest
Margin
Shown
in
Brackets Adjusted for Tax Equivalency
range from "well capitalizedt
1
to ''critically undercapitalized. '
I
' Banks falling in the lowest
.
8 percent, whereas year-to-date
~ tier 1' to risk-weighted assets,
three zones, indicating-some
asset growth is only 2 percent.
and total capital to riskform of undercapitalization,
weighted assets. To be rated ~ Areyiew of asset quality and
are subject to more scrutiny
earnings ratios indicates con-.
well capitalized, an institution
and review from regulators.
tinuing improvement in all
' The following ratios are
must maintain these ratios at
y
performance measures.
least 5 percent, 6percent, and
calculated for banks: leverage
Specifically, the-return on
10 percent, respe~tively.
(t~ngible equity/total_as~ets) ,
Based on thir9: quarter 1992 average assets (ROM) and the
data, only 12 District banks fall net interest margin both_
increased for the third conbelow the well capitalized
Asset and Equity Growth
category;
all
but
one
of
th~se
secutive
quarter toJ.17 percent
Percent
6 r - - - - - - r - - - - - - - - - -- -- ----,
and 4.47 perceht, respectively.
banks are categorized as adeAlthoughjhe ROM reflects ·: '
quately capitalized. These
~ , banks represent 1 percent of all
f)rimarily interest 'income, each
4
, District banks and l~ss than 5 - quarter included some -secur~p.ercent of District hanking : - ities gains. ·_ As,of Sept. 30, 1992,
_assets. More. important, no _,
year-to~date securities gains •
District banks are rated in the ) constituted 8p-ercent of ~et
lowest zone, "critically
income.
undercapitalized."
Overall, the consistency
0
with which performance ratios
Third quarter 1992 District
-1 1 - - - -banking data reflect both this
have improved during the year
-2
strength and continuing equity suggests that fourth quarter
9/90 12/90 3/91 6/91 9/91 12/91 3/92 6/92 9/92
growth. Aggregate annualized .results'will confirm that 1992
\
■ Assets ■ Equity '
was a goo_d year for District
bank equity growth for 1992
banks.through the third-quarter is _
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https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

New Regulation CC
Brochure Available
new brochure on
Regulation CC,
recently developed by the
r Federal Reserve
1 Board of Governors, is now available. The
brochure covers the five most
common Regulation CC
- violations cited by examiners
and provides detailed information on funds availability. If
you would like a copy of the
brochure, please call Debbie
Dawe at 1-800-333-0810,
extension 8809.

A Guide t

0
Re
Co '{Jula_tion cc

, mp/Janee --

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Post Office Box 442
St. Louis, Missouri 63166

tube 09

CAROL THAXTON
t:tcopies 2

Supervisory Issues is
published bi-monthly by the
Banking Supervision and
Regulation Division_of the
Federal Reserve Bank of
St. Louis. Views expressed are
not necessarily official
opinions of the Federal Reserve
System or the Federal Reserve _
Bank of St. Louis.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

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