FFIEC Annual Report

1 Na n ci a l I n F i s t it l Federa u t io s n Federal Financial Institutions cil Ex m i na un Examination Council a t io n C o Annual . Report . 2017. Board of Governors of the Federal Reserve System Consumer Financial Protection Bureau Federal Deposit Insurance Corporation National Credit Union Administration Office of the Comptroller of the Currency State Liaison Committee Members of the Council Martin J. Gruenberg, FFIEC Chairman, Chairman, Federal Deposit Insurance Corporation Mick Mulvaney, na n ci a l I n Randal K. Quarles, FFIEC Vice Chairman, Acting Director, Consumer Financial Fi s t it Member and Vice Chairman for Supervision, Board of Governors of Protection Bureau the Federal Reserve System l Federa u t io s cil n Ex m i na un a t io n C o Greg Gonzalez, Joseph M. Otting, Chairman, Comptroller of the Currency, State Liaison Committee, Office of the Comptroller of the Currency Commissioner, Tennessee Department of Financial Institutions J.

2 Mark McWatters, Chairman, National Credit Union Administration FFIEC Annual Report | 2017 iii Letter of Transmittal Federal Financial Institutions Examination Council 3501 Fairfax Drive Room B7081a Arlington, VA 22226-3550 (703) 516-5588 FAX (703) 562-6446 www. f f March 30, 2018. The President of the Senate The Speaker of the House of Representatives Pursuant to the provisions of section 1006(f) of the Financial Institutions Regulatory and Interest Rate Control Act of 1978 (12 3305), I am pleased to submit the 2017 Annual Report of the Federal Financial Institutions Examination Council. Respectfully, Martin J. Gruenberg Chairman Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, National Credit Union Administration, O ce of the Comptroller of the Currency, State Liaison Committee FFIEC Annual Report | 2017 v Table of Contents Members of the Council.

3 Ii Letter of Transmittal .. iv Table of Contents.. vi Chart of Selected Abbreviations .. viii Message from the FFIEC Chairman .. x Overview of the Federal Financial Institutions Examination Council Operations .. 4. Record of Council Activities.. 8. State Liaison Committee.. 12. Activities of the Interagency Staff Task Forces .. 14. Task Force on Consumer Compliance .. 15. Task Force on Examiner Education.. 17. Task Force on Information Sharing.. 21. Task Force on Reports.. 23. Task Force on Supervision.. 27. Task Force on Surveillance Systems.. 30. The Federal Financial Institution Regulatory Agencies and their Supervised Institutions .. 34. Board of Governors of the Federal Reserve System.. 36. Consumer Financial Protection Bureau.. 38. Federal Deposit Insurance Corporation.. 40. National Credit Union Administration .. 42. Office of the Comptroller of the Currency.. 43. Assets, Liabilities, and Net Worth of Commercial Banks, Savings Institutions, and Credit Unions as of December 31, 2017.

4 44. Income and Expenses of Commercial Banks, Savings Institutions, and Credit Unions for the Twelve Months Ending December 31, 2017.. 45. Appendix A: Relevant Statutes .. 46. Appendix B: 2017 Audit Report .. 54. Appendix C: Maps of Agency Regions and Districts.. 70. Board of Governors of the Federal Reserve System.. 72. Consumer Financial Protection Bureau.. 73. Federal Deposit Insurance Corporation Supervisory Regions.. 74. National Credit Union Administration .. 75. Office of the Comptroller of the Currency .. 76. Appendix D: Organizational Listing of Personnel.. 78. FFIEC Annual Report | 2017 vii Chart of Selected Abbreviations American Council of State Savings Board of Governors of the Federal Supervisors Reserve System Liaison Group Financial Stability Oversight Council Laundering Home Mortgage Disclosure Act of ASC ..Appraisal Subcommittee 1975. Assessment Tool Banking Act of 1978. Holding Company Technology Secrecy Act Advisory Group Call Consolidated Reports of Condition of Understanding and Income NASCUS.

5 National Association of State Credit Cybersecurity and Critical Union Supervisors Infrastructure Working Group National Credit Union Data Repository Administration Expected Credit Losses National Credit Union Share Consumer Financial Protection Insurance Fund Bureau Office of the Comptroller of the Federal Financial Institutions Currency Examination Council of Management and Budget Community Reinvestment Act of of Thrift Supervision 1977 Reduction Act of 1995. Conference of State Bank Supplementary Analysis Working Supervisors Group Insurance Fund Structure Data Reconciliation Dodd-Frank Dodd-Frank Wall Street Reform and Working Group Consumer Protection Act of 2010 Securities and Exchange Education Office Commission Economic Growth and Regulatory Systemically Important Financial Paperwork Reduction Act of 1996 Institution Federal Deposit Insurance Liaison Committee Corporation Savings and Loan Holding Federal Deposit Insurance Company Corporation Improvement Act of of Deposits 1991 Task Force on Consumer Federal Financial Institutions Compliance Examination Council Force on Examiner Education Holding Company Force on Information Sharing Financial Crimes Enforcement Force on Reports Network Force on Supervision Financial Institutions Regulatory Force on Surveillance Systems and Interest Rate Control Act of 1978.

6 Service Provider Financial Institutions Reform, Working Group Recovery, and Enforcement Act of Bank Performance Report 1989. FFIEC Annual Report | 2017 ix Message from the FFIEC Chairman Simplifying Capital Rules. In September 2017, the agencies sought industry feedback on a proposal to simplify the capital rules for community banks with respect to high volatility commercial real estate exposures, mortgages servicing assets, timing differ- ences of deferred tax assets and holdings on regulatory capital instruments. The agencies also proposed in August 2017, and finalized in November 2017, a revision to the regulatory capital rules to pause the phase-in of certain regulatory capital adjustments and deduc- tions that are a part of the Basel III capital standard. Reducing Regulatory Reporting. The FFIEC Chairman, Martin J. Gruenberg. agencies have adopted a new, streamlined Call Report for institutions that do not have foreign offices and hold total assets I am pleased to Report on the activities of the of less than $1 billion (Form FFIEC 051).

7 Federal Financial Institutions Examination This new Call Report became effective on Council. In 2017, the Council, its member March 31, 2017, and reduced the length of agencies, and the State Liaison Committee the Call Report for eligible small community (SLC) continued to advance its mission of institutions by removing approximately promoting uniformity and consistency in the 40 percent of the data items previously supervision of financial institutions by fostering required for institutions with domestic communication, cooperation, and coordination offices and reducing the number of pages among the members. from 85 to 61 pages. In June and November, The Council's efforts this year have been the agencies proposed additional burden- focused on completing the second decennial reducing revisions to all three versions of interagency review of regulations mandated the Call Report that will take effect June 30, by the Economic Growth and Regulatory 2018.

8 These changes, when combined with Paperwork Reduction Act of 1996 (EGRPRA) the Community Bank Call Report , will affect and implementing the resulting initiatives. In approximately 51 percent of required data March, the Council issued a Report to Congress items for smaller, less complex institutions, that described the regulatory and other and 28 percent of required data items for all initiatives already undertaken or planned by other institutions. the Council and member agencies to identify Raising the Appraisal Threshold for outdated, unnecessary, or unduly burdensome Commercial Real Estate Loans. In July 2017, regulations as they apply to insured depository the agencies issued a notice of proposed institutions (IDIs), especially smaller, rulemaking to raise the threshold for community institutions. Since that time, the commercial real estate transactions requiring Council, and its member agencies have focused appraisals from $250 thousand to $400.

9 On implementing planned initiatives outlined in thousand. The comment period closed in the March Report . The initiatives include: September 2017. The agencies are reviewing FFIEC Annual Report | 2017 1. the comments received from stakeholders and Referring Bank Secrecy Act and Anti-Money plan to issue a final rule in 2018. Laundering Comments. As was noted in the first EGRPRA Report to Congress in 2007, Addressing Appraiser Shortages in Rural the agencies do not have exclusive authority Areas. Title XI of the Financial Institutions over the threshold filing requirements for Reform, Recovery, and Enforcement Act Suspicious Activity Reports (SARs) and of 1989 (FIRREA) allows the Appraisal have no authority over the threshold filing Subcommittee of the FFIEC (ASC), after requirements for Currency Transaction making certain findings and with the Reports (CTRs). The Financial Crimes approval of the FFIEC , to grant temporary Enforcement Network (FinCEN), a bureau waivers of any requirement relating of the Department of the Treasury, is to certification or licensing of a person the delegated administrator of the BSA that to perform appraisals under title XI.

10 Issues regulations and interpretive guidance, Furthermore, state appraiser certifying and as such, any changes to the SAR or CTR. or licensing agencies may recognize, on a requirements would require a change in temporary basis, the certification or license FinCEN's regulations. The agencies provided of an appraiser issued by another state. In FinCEN with the comments received during May 2017, the agencies issued a statement the EGRPRA review and FinCEN provided to regulated entities reminding them of a response, which is attached to the Report the availability of both temporary waivers in appendix 5. In addition, the agencies and temporary practice permits, which are have established common training policies applicable to both commercial and residential for examiners, maintain an interagency appraisals, and may address temporary examination manual, and issued an appraiser shortages. Additionally, during interagency statement setting forth the policy the second half of the year, the Conference of for enforcing specific Anti-Money Laundering State Bank Supervisors (CSBS) arranged six (AML) requirements for greater consistency roundtables with the banking agencies, state in enforcement decisions on BSA matters commissioners, and rural community bankers through publication of the FFIEC BSA/AML.