Document ID: SEC-2020-1645-0001
Agency: sec
Document Type: Rule
Title: Update of Statistical Disclosures for Bank and Savings and Loan Registrants
Posted Date: 2020-10-16T04:00Z

[Federal Register Volume 85, Number 201 (Friday, October 16, 2020)]
[Rules and Regulations]
[Pages 66108-66143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-20655]

[[Page 66107]]

Vol. 85

Friday,

No. 201

October 16, 2020

Part V

 Securities and Exchange Commission

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17 CFR Parts 210, 229, and 249

Update of Statistical Disclosures for Bank and Savings and Loan 
Registrants; Final Rule

  Federal Register / Vol. 85 , No. 201 / Friday, October 16, 2020 / 
Rules and Regulations  

[[Page 66108]]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 210, 229, and 249

[Release No. 33-10835; 34-89835; File No. S7-02-17]
RIN 3235-AL79

Update of Statistical Disclosures for Bank and Savings and Loan 
Registrants

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: We are adopting rules to update our statistical disclosure 
requirements for banking registrants. These registrants currently 
provide many disclosures in response to the items set forth in Industry 
Guide 3 (``Guide 3''), Statistical Disclosure by Bank Holding 
Companies, which are not Commission rules. The amendments update and 
expand the disclosures that registrants are required to provide, codify 
certain Guide 3 disclosure items and eliminate other Guide 3 disclosure 
items that overlap with Commission rules, U.S. Generally Accepted 
Accounting Principles (``U.S. GAAP''), or International Financial 
Reporting Standards (``IFRS''). In addition, we are relocating the 
codified disclosure requirements to a new subpart of Regulation S-K and 
rescinding Guide 3.

DATES: 
    Effective date: These final rules are effective November 16, 2020, 
except for the amendments to 17 CFR 229.801(c) and 229.802(c), which 
are effective on January 1, 2023.
    Compliance date: See Section V for further information on 
transitioning to the final rules.

FOR FURTHER INFORMATION CONTACT: Stephanie Sullivan, Associate Chief 
Accountant, Division of Corporation Finance, at (202) 551-3400, U.S. 
Securities and Exchange Commission, 100 F Street NE, Washington, DC 
20549.

SUPPLEMENTARY INFORMATION:

    The Commission is amending 17 CFR 229.404 (``Item 404 of Regulation 
S-K'') under the Securities Act of 1933 (``Securities Act'') \1\ and 
the Securities Exchange Act of 1934 (``Exchange Act''); \2\ 17 CFR 
210.9-01 (``Rule 9-01 of Regulation S-X'') and 17 CFR 210.9-03 (``Rule 
9-03 of Regulation S-X'') under the Securities Act and the Exchange 
Act; and 17 CFR 249.220f (``Form 20-F'') under the Exchange Act. In 
addition, the Commission is adding a new subpart, 17 CFR 229.1400 
(``Item 1400 of Regulation S-K''), which will include 17 CFR 229.1401 
through 17 CFR 229.1406, and rescinding 17CFR 229.801(c) and 229.802(c) 
under the Securities Act and Exchange Act.
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    \1\ 15 U.S.C. 77a et seq.
    \2\ 15 U.S.C. 78a et seq.
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Table of Contents

I. Introduction
II. New Subpart 1400 of Regulation S-K
    A. Codification
    B. Location of Codification Requirements and XBRL
    C. Scope
    D. Applicability to Domestic Registrants and Foreign Registrants
    E. Reporting Periods
    F. Distribution of Assets, Liabilities and Stockholders' Equity; 
Interest Rate and Interest Differential (Average Balance, Interest 
and Yield/Rate Analysis and Rate/Volume Analysis)
    G. Investment Portfolio
    H. Loan Portfolio
    I. Allowance for Credit Losses
    J. Deposits
III. Certain Existing Guide 3 Disclosures That Would Not Be Codified 
in Proposed Subpart 1400 of Regulation S-K
    A. Return on Equity and Assets
    B. Short-Term Borrowings
IV. Changes to Article 9 of Regulation S-X
V. Compliance Date
VI. Other Matters
VII. Economic Analysis
    A. Introduction
    B. Baseline
    C. Economic Effects
    D. Effects on Efficiency, Competition, and Capital Formation
VIII. Paperwork Reduction Act
    A. Summary of the Collections of Information
    B. Burden and Cost Estimates Related to the Proposed Rules
IX. Regulatory Flexibility Act Certification
X. Statutory Authority
Text of the Amendments

I. Introduction

    On September 17, 2019, we proposed rules \3\ to update the 
disclosure of information that banks, bank holding companies 
(``BHCs''), savings and loan associations, and savings and loan holding 
companies (together, ``bank and savings and loan registrants'') provide 
in response to the items set forth in Guide 3.\4\ By its terms, Guide 3 
applies to BHCs. However, the disclosures called for by Guide 3 are 
also provided by other registrants with material lending and deposit 
activities, including savings and loan holding companies.\5\ Guide 3 
calls for disclosure in seven areas: (1) Distribution of assets, 
liabilities and stockholders' equity; interest rates and interest 
differential, (2) investment portfolios, (3) loan portfolios, (4) 
summary of loan loss experience, (5) deposits, (6) return on equity and 
assets, and (7) short-term borrowings. We proposed to include within 
the rules' scope the registrants that under existing practice provide 
the disclosures called for by Guide 3: Banks, savings and loan 
associations, and savings and loan holding companies. We also proposed 
to update the disclosures that bank and savings and loan registrants 
must provide to investors, including the elimination of disclosure 
items that overlap with Commission rules, U.S. GAAP, or IFRS.\6\ 
Finally, we proposed to codify the updated disclosure requirements in a 
new Subpart 1400 of Regulation S-K and to rescind Guide 3.
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    \3\ Update of Statistical Disclosures for Bank and Savings and 
Loan Registrants, Release No. 33-10688 (Sept. 17, 2019) [84 FR 52936 
(Oct. 3, 2019)] (``Proposing Release'').
    \4\ Guides for Statistical Disclosure by Bank Holding Companies, 
Release No. 33-5735 (Aug. 31, 1976) [41 FR 39007 (Sept. 14, 1976)] 
(``Guide 3 Release''). When it published the Guide 3 Release, the 
Commission stated that ``[t]he Guides are not Commission rules nor 
do they bear the Commission's official approval; they represent 
policies and practices followed by the Commission's Division of 
Corporation Finance in administering the disclosure requirements of 
the federal securities laws.'' Guide 3 was originally published as 
Securities Act Guide 61 and Exchange Act Guide 3. In 1982, 
Securities Act Guide 61 and Exchange Act Guide 3 were redesignated 
as Securities Act Industry Guide 3 and Exchange Act Industry Guide 
3. See Rescission of Guides and Redesignation of Industry Guides, 
Release No. 33-6384 (Mar. 3, 1982) [47 FR 11476 (Mar. 16, 1982)].
    \5\ Many registrants refer to Staff Accounting Bulletin Topic 
11:K--Application of Article 9 and Guide 3 (``SAB 11:K''), which 
states that ``[t]he SEC staff believes [Guide 3 information] would 
be material to a description of business of [non-BHC] registrants 
with material lending and deposit activities . . .'' The Industry 
Guides and SAB 11:K are not rules, regulations or statements of the 
Commission. In light of the adoption of these amendments, the staff 
intends to rescind SAB 11:K.
    \6\ References to IFRS throughout are to IFRS as issued by the 
International Accounting Standards Board (``IASB'').
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    We received a number of comment letters in response to the 
Proposing Release.\7\ Many of the commenters generally supported the 
Commission's efforts to revise existing Guide 3

[[Page 66109]]

disclosure items.\8\ Several of the commenters who supported the 
proposed rules also suggested certain revisions to the proposed 
disclosure requirements.\9\ We have reviewed and considered all of the 
comments that we received on the proposed rules. After taking into 
consideration the public comments, we are adopting rules substantially 
as proposed.
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    \7\ See, e.g., letters from Aimee Heilig (Nov. 9, 2019) (``A. 
Heilig''); American Bankers Association (Dec. 23, 2019) (``ABA''); 
Bank of America Corporation (Dec. 2, 2019) (``BAC''); Bank Policy 
Institute and Securities Industry and Financial Markets Association 
(Dec. 2, 2019) (``BPI/SIFMA''); Center for Audit Quality (Nov. 25, 
2019) (``CAQ''); CFA Institute (Jan. 9, 2020) (``CFA''); Crowe LLP 
(Nov. 25, 2019) (``Crowe''); Deloitte & Touche LLP (Nov. 25, 2019) 
(``Deloitte''); Ernst & Young LLP (Nov. 27, 2019) (``EY''); KPMG LLP 
(Dec. 2, 2019) (``KPMG''); Maria Deering (Nov. 10, 2019) (``M. 
Deering''); PricewaterhouseCoopers LLP (Nov. 21, 2019) (``PwC''); 
Qing Burke, Assistant Professor of Accounting, et al., Miami 
University (Oct. 3, 2019) (``Prof. Burke''); XBRL US, Inc. (Dec. 2, 
2019) (``XBRL''). The comments on the Proposing Release are 
available at: https://www.sec.gov/comments/s7/-02/-17/s70217.htm.
    \8\ See, e.g., letters from A. Heilig; ABA; BAC; BPI/SIFMA; CAQ; 
Crowe; Deloitte; EY; KPMG; and PwC.
    \9\ See, e.g., letters from ABA; BAC; BPI/SIFMA; CAQ; Crowe; 
Deloitte; EY; KPMG; and PwC.
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II. New Subpart 1400 of Regulation S-K

A. Codification

    We proposed to update and codify certain Guide 3 disclosure items 
in a new Subpart 1400 of Regulation S-K, consistent with the approach 
the Commission has taken when it modernized other Industry Guides. A 
number of commenters agreed with this proposal,\10\ and no commenters 
opposed codification. Accordingly, the final rules codify the updated 
disclosure requirements in a new Subpart 1400 of Regulation S-K.
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    \10\ (One hour x 0.75) x $400 = $300.
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B. Location of Disclosure Requirements and XBRL

    Consistent with existing Guide 3, we did not propose to require the 
disclosures required by new Subpart 1400 of Regulation S-K to be 
presented in the notes to the financial statements. Therefore, if 
disclosures are provided outside the financial statements, the 
disclosures would not be required to be audited, nor would they be 
subject to the Commission's requirement to file financial statements in 
a machine-readable format using XBRL. The Proposing Release requested 
comment as to whether we should require the proposed disclosures to be 
included in the notes to the financial statements, as well as whether 
we should require the proposed disclosures to be provided in a 
structured format.\11\
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    \11\ Registrants subject to the financial disclosure 
requirements of Regulation S-K are either currently required or will 
be required to file their financial statements and filing cover page 
disclosures in the Inline XBRL format. See [17 CFR 229.601(b)(101)]; 
[17 CFR 229.601(b)(104)]. See also Inline XBRL Filing of Tagged 
Data, Securities Act Release No. 10514 (June 28, 2018) [83 FR 40846 
(Aug. 16, 2018), at 40851] (``Inline XBRL Adopting Release'').
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    A number of commenters observed that the existing Guide 3 
disclosures are typically included within Management's Discussion & 
Analysis (``MD&A''), the Business section, or the notes to the 
financial statements.\12\ Several of these commenters agreed that the 
proposed disclosure items should not be required to be presented in the 
notes to the financial statements, thus retaining the existing 
flexibility for registrants to determine where the disclosures are 
provided.\13\ One commenter stated that allowing registrants to decide 
where best to present each disclosure will result in ``superior 
disclosures,'' with related disclosures being grouped together.\14\ A 
few commenters encouraged the Commission to consider input from 
investors and others as to whether the disclosures should be included 
in the audited financial statements before mandating such an 
approach.\15\ Several commenters observed that if we were to require 
the disclosures in the notes to the financial statements, the note 
disclosures would be subject to audit procedures, and registrants would 
need to file them in an XBRL format.\16\ Two of these commenters 
specifically noted that mandating footnote disclosure of specified data 
would likely increase audit costs.\17\ However, these commenters also 
noted that footnote disclosures are subject to XBRL tagging and are 
more likely to be uniform in their content and location compared to 
information outside the financial statements, which would reduce search 
costs for users.
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    \12\ See e.g., letters from BAC; BPI/SIFMA; CAQ; Crowe; and EY.
    \13\ See letters from ABA; BAC; BPI/SIFMA; and EY.
    \14\ See letter from BPI/SIFMA.
    \15\ See letters from CAQ; EY; and PWC.
    \16\ See letters from CAQ; Deloitte; and EY.
    \17\ See letters from CAQ and EY.
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    Several commenters stated that the proposed disclosures should not 
be subject to the Commission's requirements to file financial 
statements in a machine-readable format using XBRL.\18\ Two of these 
commenters noted that requiring a structured format could be difficult 
for registrants or confusing for investors because registrants may 
provide the disclosures in MD&A, which would result in some MD&A 
disclosures being provided in an XBRL format while other MD&A 
disclosures would not be.\19\ For example, one of these commenters 
stated that the cost of selectively providing these disclosures in XBRL 
format in MD&A could be significant to registrants.\20\
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    \18\ See letters from ABA; BAC; and BPI/SIFMA.
    \19\ See letters from BAC and BPI/SIFMA.
    \20\ See letter from BPI/SIFMA.
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    A few commenters supported the use of a machine-readable format for 
the disclosure items that would be codified in Subpart 1400 of 
Regulation S-K.\21\ These commenters recommended requiring registrants 
to tag all Subpart 1400 data in XBRL, regardless of location, to ensure 
that a machine-readable format of these disclosures is consistently 
available across all registrants providing them. Furthermore, these 
commenters recommended that Inline XBRL be used for Subpart 1400 data 
because it is already supported in the marketplace for other required 
disclosures, specifically the financial statements and data on the 
cover page of certain filings.\22\ These commenters stated that data 
provided in a machine-readable format improves the productivity of the 
data collection process, which reduces the cost of analysis and 
encourages more robust and in-depth analysis. These commenters also 
stated that the costs for XBRL preparation have declined and that they 
do not believe that the additional tags required for Subpart 1400 data 
would pose a significant burden.\23\
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    \21\ See letters from CFA and XBRL.
    \22\ See letters from CFA and XBRL.
    \23\ See id. (citing the pricing study for small reporting 
companies conducted by the AICPA and XBRL, available at: https://www.aicpa.org/InterestAreas/FRC/AccountingFinancialReporting/XBRL/DownloadableDocuments/XBRL%20Costs%20for%20Small%20Companies.pdf).
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    The final rules do not require bank and savings and loan 
registrants to include Item 1400 of Regulation S-K disclosures in a 
specified location. We agree with commenters that retaining flexibility 
as to where to provide the disclosures is important and will allow 
registrants to use their judgment to determine where the disclosures 
can best be included to maximize the readability and usefulness of the 
disclosure. We are cognizant of the additional costs that would be 
incurred if the disclosures were required to be included in the notes 
to the financial statements, and we believe investors are accustomed to 
locating this information in different locations within SEC filings 
given the current flexibility as to where to include the disclosures.
    As discussed above, we received mixed comments regarding the 
benefits, costs and practical challenges of requiring the proposed 
disclosures in a machine readable format. Therefore, like the proposed 
rules, the final rules do not require a registrant to present new 
Subpart 1400 of Regulation S-K in a machine-readable format unless the 
registrant elects to include the disclosures within the financial 
statements.

[[Page 66110]]

C. Scope

i. Proposal
    We proposed that Subpart 1400 of Regulation S-K would apply to bank 
and savings and loan registrants. In the Proposing Release, we 
expressed the view that identifying and codifying the types of 
registrants within the scope of the proposed rules would clarify the 
existing practice of providing Guide 3 disclosures when registrants 
have material lending and deposit-taking activities.\24\ We also 
indicated that the proposed scope would capture the majority of 
registrants that predominantly engage in the activities covered by 
existing Guide 3 and for which these activities are material.\25\
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    \24\ See supra note 5.
    \25\ See note 44 of the Proposing Release observing that there 
were only four registrants with loans and bank deposits on their 
balance sheets that would not have been within the scope of the 
proposed rules. However, as discussed in note 169, we estimate that 
the final rules will capture all of the registrants that we have 
identified in Section VII.B.ii as currently being covered by 
existing Guide 3. See infra note 169 for a description of 
methodology used to determine this set of registrants.
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ii. Comments on Proposal
    One commenter stated that the scope of the proposed rules would 
largely capture the majority of registrants who currently provide the 
disclosures called for by Guide 3.\26\ Another commenter recommended 
expanding the scope of the proposed rules to cover any institution that 
performs the services under the scope of the proposed rules, even if it 
is not their primary role or sole function, provided it does not place 
undue burden on the institution.\27\ One commenter encouraged the 
Commission to consider input from investors and others regarding the 
scope of registrant applicability.\28\
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    \26\ See letter from BAC.
    \27\ See letter from M. Deering.
    \28\ See letter from PwC.
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iii. Final Rules
    After considering the comments, we are adopting rules related to 
the scope as proposed. Subpart 1400 of Regulation S-K applies to bank 
and savings and loan registrants. We received limited feedback 
suggesting that the scope should be expanded to include other 
registrants in the financial services industry, and we did not receive 
any feedback from investors or others explaining how the proposed 
disclosures would be valuable for assessing registrants outside of the 
proposed scope. We continue to believe there is not a large population 
of non-bank and savings and loan registrants that are providing Guide 3 
disclosures today that will be outside the scope of Subpart 1400 of 
Regulation S-K. This is because those registrants likely engage in only 
one or a few of the activities addressed by Guide 3 (e.g., lending and 
deposit-taking). We also continue to believe that registrants should be 
able to ascertain easily whether they are a bank or savings and loan 
registrant for purposes of these rules, reducing any potential 
confusion regarding the applicability of the disclosure requirements to 
non-bank and savings and loan registrants.

D. Applicability to Domestic Registrants and Foreign Registrants

i. Proposal
    Consistent with existing Guide 3, we proposed that the rules would 
apply to both domestic registrants, including Regulation A issuers, and 
foreign registrants, notwithstanding the differences between U.S. GAAP 
and IFRS in some of the items called for by Guide 3, such as the 
measurement of credit losses and disclosures of financial instruments, 
among other areas.\29\ The proposed rules would explicitly exempt 
foreign private issuers applying IFRS (``IFRS registrants'') from 
certain of the disclosure requirements that are not applicable under 
IFRS in order to address certain challenges foreign private issuers may 
face in providing the proposed disclosures.\30\
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    \29\ See note 56 in the Proposing Release.
    \30\ Foreign private issuers are a subset of foreign 
registrants, and include any foreign issuer other than a foreign 
government, except for an issuer that has more than 50% of its 
outstanding voting securities held of record by U.S. residents and 
any of the following: A majority of its officers or directors are 
citizens or residents of the United States; more than 50% of its 
assets are located in the United States; or its business is 
principally administered in the United States. See Rule 405 of 
Regulation C [17 CFR 230.405] and Exchange Act Rule 3b-4(c) [17 CFR 
240.3b-4(c)].
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    We also proposed not to codify the undue burden or expense 
accommodation for foreign registrants in Guide 3's General Instruction 
6, which states that the disclosure items also apply to foreign 
registrants to the extent the information is available or can be 
compiled without unwarranted or undue burden and expense. In doing so, 
we noted that all registrants, not just foreign registrants, can avail 
themselves of relief from providing information that is ``unknown and 
not reasonably available to the registrant'' under 17 CFR 230.409 
(``Securities Act Rule 409'') and 17 CFR 240.12b-21 (``Exchange Act 
Rule 12b-21'').\31\
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    \31\ Securities Act Rule 409 and Exchange Act Rule 12b-21 state 
that information required need be given only insofar as it is known 
or reasonably available to the registrant. If any required 
information is unknown and not reasonably available to the 
registrant, either because the obtaining thereof would involve 
unreasonable effort or expense, or because it rests peculiarly 
within the knowledge of another person not affiliated with the 
registrant, the information may be omitted. The rule provides two 
additional conditions. The first is that the registrant must give 
such information on the subject that it possesses or can acquire 
without unreasonable effort or expense, together with the sources of 
that information. The second is that the registrant must include a 
statement either showing that unreasonable effort or expense would 
be involved or indicating the absence of any affiliation with the 
person within whose knowledge the information rests and stating the 
result of a request made to such person for the information.
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ii. Comments on Proposal
    One commenter stated that the proposed rules should apply to both 
domestic and foreign registrants, but asked the Commission to consider 
carve-outs and add other exceptions that align with the registrant's 
applicable accounting standards in their domicile countries.\32\ This 
commenter did not provide any examples of exceptions in accounting 
standards that were not addressed in the proposed rules.
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    \32\ See letter from BAC.
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    Another commenter stated that the proposed rules would modify 
certain of the requirements for foreign registrants filing Form 20-F 
using IFRS and supported those changes.\33\ However, this commenter 
also noted that many foreign registrants currently report Guide 3 
information on a modified basis as a result of prior consultations with 
Commission staff and asked the Commission to confirm in the adopting 
release that the proposed amendments are not intended to change 
existing interpretations of hardship or prior staff guidance to foreign 
registrants with respect to the disclosure requirements. This commenter 
also stated the Commission should codify the undue burden or expense 
accommodation in General Instruction 6.\34\ Other commenters noted that 
they had seen limited use of the accommodation in Rules 409 and 12b-21 
and therefore surmised that it may be rare for a registrant to be able 
to demonstrate that the required information is not reasonably 
available or that obtaining it may require unreasonable effort or 
expense.\35\ These commenters asked the Commission to provide guidance 
on factors the registrant should consider when evaluating whether the 
requested information is unknown or that obtaining it would require 
unreasonable effort or expense. Several commenters stated it is unclear 
whether registrants

[[Page 66111]]

would be required to discuss an accommodation or alternative 
presentation with the staff if they relied on the guidance in Rules 409 
and 12b-21 and suggested clarifying any expectations.\36\ One commenter 
recommended using language based on Item 3.A.1 of Form 20-F,\37\ which 
they stated provides a similar hardship accommodation for foreign 
private issuers.\38\
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    \33\ See letter from BPI/SIFMA.
    \34\ See id.
    \35\ See, e.g., letters from CAQ; Crowe; Deloitte; and KPMG.
    \36\ See letters from CAQ; Crowe; and Deloitte.
    \37\ Item 3.A.1 of Form 20-F states, in part, that selected 
financial data for either or both of the earliest two years of the 
five-year period may be omitted if the company represents that such 
information cannot be provided, or cannot be provided on a restated 
basis, without unreasonable effort or expense. The Commission 
recently proposed to delete this Item and the related instructions. 
See Management's Discussion & Analysis, Selected Financial Data, and 
Supplementary Financial Information, Release No. 33-10750 (Jan. 30, 
2020) (the ``2020 MD&A Proposing Release'').
    \38\ See letter from CAQ.
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iii. Final Rules
    After considering the comments, we are adopting the rules as 
proposed. The rules apply to domestic registrants, including Regulation 
A issuers,\39\ and to foreign registrants.\40\ In considering whether 
to codify the undue burden or expense accommodation for foreign 
registrants in General Instruction 6, we note that no commenters 
provided examples of disclosures that would involve an undue hardship 
to provide. We also note that the staff has not received any requests 
for accommodation during the past ten years and that prior 
accommodation requests tended to request relief with respect to 
reporting periods or categories or classes of financial instruments 
that were different from those called for by Guide 3. We believe the 
final rules address these matters by linking the disclosure 
requirements to categories or classes of financial instruments 
disclosed in the registrant's U.S. GAAP or IFRS financial statements, 
aligning the reporting period requirements with those required to be 
presented in the financial statements, and explicitly exempting IFRS 
registrants from certain of the disclosure requirements. We also 
acknowledge commenter feedback that requested that we consider carve-
outs and add other exceptions that align with the foreign registrants' 
applicable accounting standards in their domicile countries. However, a 
foreign registrant that presents financial statements prepared in 
accordance with its home-country accounting standards is required to 
reconcile the financial statements to U.S. GAAP and to provide all 
other information required by U.S. GAAP and Regulation S-X, unless the 
requirements specifically do not apply to the foreign registrant.\41\ 
Therefore, the information required to be disclosed under Item 1400 of 
Regulation S-K would always be in accordance with U.S. GAAP or IFRS, 
which eliminates the need for an exception for the accounting standards 
in the registrant's domicile country for the purpose of these 
disclosures. For the reasons discussed above, we do not believe 
codifying the accommodation in General Instruction 6 is necessary.
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    \39\ Item 7(c) of Form 1-A [17 CFR 239.90] states that the 
disclosure guidelines in all Securities Act Industry Guides must be 
followed, and to the extent that the industry guides are codified 
into Regulation S-K, the Regulation S-K industry disclosure items 
must be followed. Therefore, issuers in Tier 1 and Tier 2 offerings 
are required to comply with the final rules in Regulation A offering 
statements. Additionally, issuers in Tier 2 offerings are required 
to file annual reports on Form 1-K [17 CFR 239.91]. Item 1 of Form 
1-K requires the information required by Item 7 of Form 1-A to be 
included in annual reports.
    \40\ We have added an Instruction to Item 4 of Form 20-F to 
state that if a registrant is a bank, BHC, savings and loan 
association, or savings and loan holding company, it must provide 
the information specified in Subpart 1400 of Regulation S-K.
    \41\ See Item 18 of Form 20-F.
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    Securities Act Rule 409 and Exchange Act Rule 12b-21, however, 
remain applicable to all registrants, including foreign registrants. 
Although several commenters requested guidance related to the 
application of Securities Act Rule 409 and Exchange Act Rule 12b-21 by 
foreign registrants, we do not believe it is necessary to do so because 
registrants have applied these rules for many years in a variety of 
other contexts without the need for additional guidance. Additionally, 
we believe the application of Rule 409 or Rule 12b-21 is dependent on 
the registrant's specific facts and circumstances. To the extent that a 
registrant believes Rule 409 or Rule 12b-21 applies to its facts and 
circumstances for any of the disclosures required by Item 1400 of 
Regulation S-K, there is no requirement to discuss such application or 
analysis in advance with the staff.

E. Reporting Periods

i. Proposal
    We proposed defining the term ``reported period'' for purposes of 
Subpart 1400 of Regulation S-K to mean each annual period for which 
Commission rules require a registrant to provide financial statements. 
Commission rules generally require two years of balance sheets and 
three years of income statements,\42\ except that smaller reporting 
companies (``SRCs'') \43\ may present only two years of income 
statements,\44\ and emerging growth companies (``EGCs'') \45\ may 
present only two years of financial statements in initial public 
offerings of common equity securities.\46\ Lastly, Commission rules for 
Regulation A issuers generally require two years of annual financial 
statements for Tier 1 and Tier 2 offerings.\47\
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    \42\ 17 CFR 210.3 (``Article 3 of Regulation S-X'').
    \43\ An SRC is an issuer (other than an investment company, an 
asset-backed issuer, or a majority-owned subsidiary of a parent that 
is not an SRC) that had a public float of less than $250 million as 
of the last business day of its most recently completed second 
fiscal quarter; or had annual revenues of less than $100 million 
during its most recently completed fiscal year, and no public float 
or a public float of less than $700 million as of the last business 
day of its most recently completed second fiscal quarter. See Rule 
405 of Regulation C, Rule 12b-2 of the Exchange Act [17 CFR 240.12b-
2], and Item 10(f) of Regulation S-K [17 CFR 229.10(f)].
    \44\ 17 CFR 210.8 (``Article 8 of Regulation S-X'').
    \45\ An EGC is an issuer with less than $1.07 billion in total 
annual gross revenues during its most recently completed fiscal 
year. If an issuer qualifies as an EGC as of the first day of its 
most recently completed fiscal year it maintains that status until 
the earliest of: (1) The last day of the fiscal year of the issuer 
during which it has total annual gross revenues of $1.07 billion or 
more; (2) the last day of its fiscal year following the fifth 
anniversary of the first sale of its common equity securities 
pursuant to an effective registration statement; (3) the date on 
which the issuer has, during the previous 3-year period, issued more 
than $1 billion in non-convertible debt; or (4) the date on which 
the issuer is deemed to be a ``large accelerated filer'' (as defined 
in Exchange Act Rule 12b-2). See Rule 405 of Regulation C under the 
Securities Act and Rule 12b-2 of the Exchange Act.
    \46\ Securities Act Sec.  7(a)(2)(A), 15 U.S.C. 77g(a)(2)(A).
    \47\ Part F/S(b) of Form 1-A requires two years of annual 
financial statements for Tier 1 offerings, which need not be on an 
audited basis, and Part F/S(c)(ii) of Form 1-A requires two years of 
audited annual financial statements for Tier 2 offerings. Issuers in 
Tier 2 offerings are required to file an annual report on Form 1-K 
containing two years of audited financial statements.
---------------------------------------------------------------------------

    We also proposed requiring interim period disclosures if there is a 
material change in the information or the trend evidenced thereby. 
Lastly, we proposed to require new bank and savings and loan 
registrants to disclose certain credit ratios for each of their last 
five fiscal years in initial registration statements and Regulation A 
offering statements.\48\ Consistent with Securities Act Rule 409 and 
Exchange Act Rule 12b-21, the information would be required only 
insofar as it is known or reasonably available to the registrant.
---------------------------------------------------------------------------

    \48\ See discussion of credit ratios disclosure in Section 
II.I.iv of the Proposing Release.
---------------------------------------------------------------------------

ii. Comments on Proposal
    One commenter agreed with each of the proposed changes to reporting 
periods.\49\ A number of commenters agreed with the proposal to reduce 
the number of reporting periods and align them with the annual periods 
for which

[[Page 66112]]

Commission rules require financial statements to be presented.\50\ One 
of these commenters supported the proposal to modify the current 
interim period instruction to clarify that the threshold to include an 
additional interim period is based on whether there is a material 
change in the information or the trend evidenced thereby, stating that 
this is consistent with other Commission guidance and FASB 
guidance.\51\ However, another commenter stated that the Commission 
should align the threshold for interim reporting to the threshold in 
Rule 10-01(a)(5) of Regulation S-X,\52\ which only requires disclosure 
of information to the extent sufficient to keep the interim disclosures 
from being misleading.\53\
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    \49\ See letter from M. Deering.
    \50\ See letters from ABA; BAC; BPI/SIFMA; and EY.
    \51\ See letter from BPI/SIFMA.
    \52\ See 17 CFR 210.10-01(a)(5).
    \53\ See letter from BAC.
---------------------------------------------------------------------------

    A few commenters were supportive of the proposed credit ratio 
disclosures for each of the last five fiscal years in initial 
registration statements and initial Regulation A offering 
statements.\54\ One of these commenters cited the lack of publicly 
available prior period information for these reporting periods as 
reason for its support.\55\ Another commenter stated it was supportive 
only if the information is known or reasonably available to the 
registrant.\56\ This commenter indicated that the use of Rules 409 and 
12b-21 is very limited, and observed that registrants generally have 
omitted information that could not be produced without unreasonable 
effort or expense only when the exception is codified in the specific 
disclosure requirement (e.g., Item 3 of Form 20-F \57\ as it relates to 
Selected Financial Data for the earliest two years).
---------------------------------------------------------------------------

    \54\ See letters from BAC and EY.
    \55\ See letter from BAC.
    \56\ See letter from EY.
    \57\ See supra note 37.
---------------------------------------------------------------------------

    Several other commenters encouraged the Commission to consider 
requiring the credit ratio disclosure for only the number of years 
presented in the financial statements in the initial registration 
statement.\58\ One of these commenters questioned whether the five-year 
requirement was consistent with disclosure effectiveness and investor 
protection.\59\ All of these commenters requested that the Commission, 
at a minimum, align the reporting periods to the financial statement 
periods for EGCs in order for the requirement to be consistent with the 
underlying principles and objectives of the Jumpstart Our Business 
Startups Act \60\ (``JOBS Act'').\61\ Two of these commenters also 
recommended that the Commission consider this revised approach for 
Regulation A issuers that would otherwise qualify as EGCs.\62\
---------------------------------------------------------------------------

    \58\ See letters from CAQ; Crowe; and Deloitte.
    \59\ See letter from Crowe.
    \60\ Public Law 112-106, Sec. 102, 126 Stat. 309 (2012).
    \61\ See letters from CAQ; Crowe; and Deloitte.
    \62\ See letters from CAQ and Crowe.
---------------------------------------------------------------------------

iii. Final Rules
    After considering the comments, we are adopting the rules as 
proposed for the annual and interim reporting period definitions. We 
continue to believe it is appropriate to align the required reporting 
periods with the relevant annual periods for which Commission rules 
require a registrant to provide financial statements because the 
Subpart 1400 of Regulation S-K disclosures are integrally related to 
the financial statements. There have been changes in technology since 
Guide 3 was originally issued, particularly the availability of past 
financial statements and other disclosure made in filings on the 
Commission's Electronic Data Gathering, Analysis, and Retrieval system 
(``EDGAR''). As such, the historical information provided pursuant to 
Guide 3 that is not required by Subpart 1400 of Regulation S-K will 
generally be accessible through the registrant's prior filings on 
EDGAR. Furthermore, the elimination of repetitive disclosures, 
reduction in costs and burdens to registrants, and availability of 
technology reflected in the final rules is in line with the 2015 Fixing 
America's Surface Transportation Act (``FAST Act'') mandate \63\ and 
the related Commission rulemaking.\64\ Finally, we do not believe it is 
necessary to align the threshold for interim reporting with the 
threshold in Rule 10-01(a)(5) of Regulation S-X. Investors and bank and 
savings and loan registrants are familiar with the interim period 
threshold we are codifying, and we believe that threshold strikes the 
appropriate balance for when additional information would be material 
to an investment decision.
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    \63\ Public Law 114-94, Sec. 72003, 129 Stat. 1312 (2015).
    \64\ FAST Act Modernization and Simplification of Regulation S-
K. Release No. 33-10618 (Mar. 20, 2019) [84 FR 12674 (Apr. 2, 
2019)].
---------------------------------------------------------------------------

    After considering commenter feedback, we are not adopting the 
proposed rules that would have required certain credit ratio 
disclosures for each of the registrant's last five fiscal years in 
initial registration statements and in initial Regulation A offering 
statements of bank and savings and loan registrants. Instead, the final 
rules limit the required credit ratio disclosures to the periods for 
which financial statements are required, consistent with the 
requirements for periodic reports and other registration statements. As 
commenters indicated, the JOBS Act provided scaled disclosure 
requirements for EGCs, including reducing the maximum number of years 
for which financial statements are required from three to two. As 
raised by a commenter, the proposed five-year requirement is 
inconsistent with the staff practice to accept only two years of 
summary financial data \65\ in an EGC's initial registration statement 
instead of the five years required in non-EGCs' registration 
statements.\66\ We agree that EGCs and Regulation A issuers should be 
able to align the credit ratio reporting periods with the periods for 
which they provide financial statements, similar to other financial 
reporting requirements. Additionally, after consideration of commenter 
feedback and additional staff analysis as to the frequency of initial 
registration statements filed by EGCs and Regulation A bank and savings 
and loan registrants relative to all initial registration statements 
filed by bank and savings and loan registrants, we do not believe it is 
necessary to require a different reporting requirement for the limited 
non-EGC bank and savings and loan registrants filing initial 
registration statements. There was only one initial registration 
statement in the last two years that was filed by a non-EGC bank and 
savings and loan registrant.\67\ Therefore, all registrants and 
Regulation A issuers will be required to provide the ratios for the 
same periods for which they provide financial statements. After further 
consideration and analysis, we believe this approach is appropriate 
because it is unclear how useful the limited credit ratio information 
would be without the additional context of other financial statement 
information for those additional periods. Additionally, we note that 
our existing rules already

[[Page 66113]]

require a discussion of known trends,\68\ and the Commission has issued 
guidance emphasizing the requirement to provide trend disclosure in 
MD&A.\69\ Therefore to the extent that additional historical 
information is necessary to discuss those trends, such as information 
outside the financial statement periods included in the filing, 
registrants will continue to be required to provide that information.
---------------------------------------------------------------------------

    \65\ Item 301 of Regulation S-K [17 CFR 229.301]. The Commission 
recently proposed to eliminate Item 301 of Regulation S-K. See 2020 
MD&A Proposing Release at supra note 37.
    \66\ See the JOBS Act Frequently Asked Questions document issued 
by the Division of Corporation Finance addressing generally 
applicable questions on Title 1 of the JOBS Act available at: 
https://www.sec.gov/divisions/corpfin/guidance/cfjjobsactfaq-title-i-general.htm.
    \67\ Based on staff analysis, the total number of bank and 
savings and loan registrants' initial registration statements that 
went effective from May 1, 2018 to May 1, 2020 was 32. Based on XBRL 
data, 31 were EGCs. No bank and savings and loan registrants' 
offering statements were qualified during this period.
    \68\ Item 303 of Regulation S-K [17 CFR 229.303] requires a 
registrant to discuss its financial condition, changes in financial 
condition, and results of operations. Instruction 3 to paragraph 
303(a) states that the discussion shall focus on the material events 
and uncertainties known to management that would cause reported 
financial information not to be necessarily indicative of future 
operating results or of future financial condition. The instruction 
further states that this would include descriptions and amounts of 
matters that: (A) Would have an impact on future operations and have 
not had an impact in the past, and (B) have had an impact on 
reported operations and are not expected to have an impact on future 
operations.
     Similarly, for foreign private issuers, Item 5.D. of Form 20-F 
requires a foreign private issuer to discuss, for at least the 
current financial year, any known trends, uncertainties, demands, 
commitments or events that are reasonably likely to have a material 
effect on the company's net sales or revenues income from continuing 
operations, profitability, liquidity, or capital resources, or that 
would cause reported financial information not necessarily to be 
indicative of future operating results or financial condition.
    \69\ See, e.g., Management's Discussion and Analysis of 
Financial Condition and Results of Operations; Certain Investment 
Company Disclosures, Release No. 33-6835 (May 18, 1989) [54 FR 22427 
(May 24, 1989)] and Commission Guidance Regarding Management's 
Discussion and Analysis of Financial Condition and Results of 
Operation, Release No. 33-8350 (Dec. 19, 2003) [68 FR 75056 (Dec. 
29, 2003)] (the ``2003 MD&A Interpretive Release'').
---------------------------------------------------------------------------

F. Distribution of Assets, Liabilities and Stockholders' Equity; 
Interest Rate and Interest Differential (Average Balance, Interest and 
Yield/Rate Analysis and Rate/Volume Analysis)

i. Proposal
    We proposed to codify in proposed Item 1402 of Regulation S-K all 
of the average balance sheet, interest and yield/rate analysis, and 
rate/volume analysis disclosure items currently in Item I of Guide 3. 
We also proposed to further disaggregate the categories of interest-
earning assets and interest-bearing liabilities required to be 
disclosed. Specifically, we proposed to require registrants to separate 
(1) federal funds sold \70\ from securities purchased with agreements 
to resell and (2) federal funds purchased from securities sold under 
agreements to repurchase \71\ and to disaggregate commercial paper.\72\ 
Finally, we proposed to codify the instructions related to foreign 
activities contained in General Instruction 7 \73\ and Instruction 5 of 
Item I \74\ of Guide 3.
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    \70\ Federal funds sold are reserves of a banking institution 
that are lent to other institutions overnight.
    \71\ ASC 860-10 defines a repurchase agreement as an arrangement 
under which a transferor (repo party) transfers a security to a 
transferee (repo counterparty or reverse party) in exchange for cash 
and concurrently agrees to reacquire the security at a future date 
for an amount equal to the cash exchanged plus a stipulated interest 
factor.
    \72\ Commercial paper consists of short-term promissory notes 
issued primarily by corporations. Maturities of commercial paper 
range up to 270 days but average about 30 days.
    \73\ General Instruction 7 of Guide 3 clarifies that foreign 
data need not be presented if the registrant is not required to make 
separate disclosures concerning its foreign activities pursuant to 
the test set forth in Rule 9-05 of Regulation S-X [17 CFR 210.9-05]. 
Rule 9-05 requires disclosure when foreign activities, which include 
loans and other revenue producing assets, exceed 10% of (1) assets, 
(2) revenue, (3) income (loss) before income tax expense, or (4) net 
income (loss).
    \74\ Instruction 5 to Item I of Guide 3 states that if 
disclosure regarding foreign activities is required pursuant to 
General Instruction 7 of Guide 3, the information required by 
paragraphs A, B and C of Item I should be further segregated between 
domestic and foreign activities for each significant category of 
assets and liabilities disclosed pursuant to Item I.A, as well as 
disclosure of the percentage of total assets and total liabilities 
attributable to foreign activities.
---------------------------------------------------------------------------

ii. Comments on Proposal
    One commenter supported the proposal to codify the average balance 
and rate section of Guide 3, stating that the disclosures are unique to 
Guide 3 and that users of its financial statements find the information 
useful.\75\ In contrast, another commenter stated that the additional 
disaggregation that would be required by the proposal appears to remove 
any element of professional judgment based on quantitative or 
qualitative materiality assessments, and therefore may result in 
disaggregation that will be of little value to users.\76\ A different 
commenter stated that the required disaggregation is more granular than 
current practice and financial statement requirements.\77\ This 
commenter noted that, for example, federal funds sold and securities 
purchased with agreements to resell are typically aggregated on a 
single line item on the balance sheet. This commenter also stated that 
separating these items and requiring them to be disclosed on an average 
balance basis may not be relevant or may be confusing to investors. 
Several commenters recommended either retaining Guide 3's existing 
language of ``should include,'' or revising the language in proposed 
Item 1402 to state ``must include, if material'' when referring to the 
disaggregation requirement, in order to give registrants the 
flexibility to present this information in a way that they believe is 
most relevant to users.\78\
---------------------------------------------------------------------------

    \75\ See letter from BAC.
    \76\ See letter from BPI/SIFMA.
    \77\ See letter from ABA.
    \78\ See letters from ABA and BPI/SIFMA.
---------------------------------------------------------------------------

iii. Final Rules
    After considering the comments, we are adopting the rules 
substantially as proposed. Item 1402 of Regulation S-K codifies all of 
the average balance sheet, interest and yield/rate analysis and rate/
volume analysis disclosure items currently in Item I of Guide 3, along 
with General Instruction 7 and Instruction 5 of Item 1 of Guide 3. We 
also are adopting the requirement to disaggregate the categories of 
interest-earning assets and interest-bearing liabilities required to be 
disclosed, as proposed.
    In a change from the proposal, as suggested by commenters, Item 
1402(a) of Regulation S-K states that the categories enumerated in Item 
1402(a) ``must be included, if material,'' rather than the proposed 
language, which stated that disclosure ``must include, at a minimum.'' 
While we continue to believe this disclosure can elicit useful 
information about the drivers of the changes in net interest earnings 
across registrants in a simple and comparable format, we acknowledge 
commenters' concerns about requiring disaggregated information when it 
is not material to investors. We believe the adopted approach strikes 
an appropriate balance between providing sufficient information to help 
investors understand material changes in interest income and interest 
expense from period to period, and permitting the omission of 
immaterial information that could make it more difficult to understand 
the material drivers of business results. Furthermore, we believe that 
in practice registrants have applied a materiality qualifier in 
providing the existing disclosures called for by Guide 3, and therefore 
we believe that this change aligns the language in the final rules with 
how registrants apply the existing descriptions of ``major categories 
of interest-earning assets and interest-bearing liabilities.'' In 
addition, while we acknowledge one commenter's statement that federal 
funds sold and securities purchased with agreements to resell are 
typically aggregated in a single line item on the balance sheet, the 
type of collateral could vary under the two categories, which could 
drive differences in weighted average interest rates and related 
changes in the rate/volume analysis. As a result, we continue to 
believe it is appropriate to list these two

[[Page 66114]]

categories separately but note that the final rules only require 
disaggregation if material.

G. Investment Portfolio

i. Proposal
    We proposed to codify in Item 1403 of Regulation S-K the 
requirement to disclose weighted average yield for each range of 
maturities by category of debt securities and proposed to use the 
categories required by U.S. GAAP \79\ or IFRS,\80\ rather than those 
categories currently called for by Item II.B of Guide 3. In the 
Proposing Release, we stated our belief that the proposed weighted 
average yield disclosure would provide investors with information to 
evaluate more effectively the performance of the portfolio and that 
revising the categories of debt securities to conform to the categories 
presented in accordance with U.S. GAAP or IFRS would enhance the 
consistency and usefulness of the registrant's investment portfolio 
disclosures.\81\ As proposed, this disclosure requirement would apply 
only to debt securities that are not carried at fair value through 
earnings. Due to the substantial overlap with U.S. GAAP and IFRS 
disclosure requirements, we proposed not to codify in Item 1403 the 
following disclosure items in Item II of Guide 3: (a) Book value 
information; (b) the maturity analysis of book value information; and 
(c) the disclosures related to investments exceeding 10% of 
stockholders' equity.
---------------------------------------------------------------------------

    \79\ ASC 320-10 addresses the accounting and reporting for debt 
securities. ASC 320-10-50-1B states that major security types should 
be based on the nature and risks of the security and that an entity 
should consider all of the following when considering whether 
disclosure for a particular security type is necessary: (a) Shared 
activity or business sector, (b) vintage, (c) geographic 
concentration, (d) credit quality, and (e) economic characteristics. 
Financial institutions, including banks, savings and loan 
associations, savings banks, credit unions, finance companies and 
insurance entities are required to include the nine securities 
categories listed in ASC 942-320-50-2, although additional types may 
also be necessary: (a) Equity securities, segregated by either (1) 
industry type or (2) registrant size, or (3) investment objective; 
(b) debt securities issued by U.S. Treasury and other U.S. 
government corporations and agencies; (c) debt securities issued by 
states of the United States and political subdivisions of the 
states; (d) debt securities issued by foreign governments; (e) 
corporate debt securities; (f) residential mortgage-backed 
securities; (g) commercial mortgage-backed securities; (h) 
collateralized debt obligations; and (i) other debt obligations.
    \80\ IFRS 7 addresses disclosures for financial instruments. 
IFRS 7.6 requires disclosures by classes of financial instruments, 
which are defined as ``. . . classes that are appropriate to the 
nature of the information disclosed and that take into account the 
characteristics of those financial instruments.''
    \81\ See Section II.F.iii of the Proposing Release.
---------------------------------------------------------------------------

ii. Comments on Proposal
    One commenter supported the proposal to eliminate the investment 
portfolio disclosure items that overlap with U.S. GAAP.\82\ This 
commenter also supported moving away from the bright-line thresholds in 
Guide 3.\83\ Furthermore, this commenter also supported the proposal to 
require disclosure of weighted average yields of each category of debt 
securities not carried at fair value through earnings by specified 
range of maturities because it would provide decision-useful 
information to investors. While not commenting specifically on the 
investment portfolio disclosure requirements, many commenters generally 
supported the elimination of disclosure items that overlap with those 
in Commission rules, U.S. GAAP, or IFRS.\84\
---------------------------------------------------------------------------

    \82\ See letter from BAC.
    \83\ For example, the disclosures related to investments 
exceeding 10% of stockholders' equity. See further discussion in 
Section II.F of the Proposing Release.
    \84\ See, e.g., letters from ABA; BPI/SIFMA; CAQ; Crowe; 
Deloitte; EY; KPMG; M. Deering; and PwC.
---------------------------------------------------------------------------

iii. Final Rules
    After considering the comments, we are adopting Item 1403 of 
Regulation S-K as proposed. Item 1403 of Regulation S-K codifies the 
requirement to disclose weighted average yield for each range of 
maturities by category of debt securities required to be disclosed in 
the registrant's U.S. GAAP or IFRS financial statements. As proposed, 
the final rules only apply to debt securities that are not carried at 
fair value through earnings. The final rules do not codify the 
following disclosure items in Item II of Guide 3: (a) Book value 
information; (b) the maturity analysis of book value information; and 
(c) the disclosures related to investments exceeding 10% of 
stockholders' equity, because these items substantially overlap with 
U.S. GAAP and IFRS disclosure requirements.

H. Loan Portfolio

i. Proposal
    We proposed to codify in Item 1404 of Regulation S-K the 
requirement to disclose the maturity by loan category and the total 
amount of loans due after one year that have (a) predetermined interest 
rates and (b) floating or adjustable interest rates disclosure 
currently called for by Item III.B, by the loan categories disclosed in 
the registrant's U.S. GAAP \85\ or IFRS \86\ financial statements. 
Currently Item III.B of Guide 3 provides for the exclusion of certain 
loan categories (real estate-mortgage, installment loans to individuals 
and lease financing) from these disclosures and the aggregation of 
other loan categories (foreign loans to governments and official 
institutions, banks and other financial institutions, commercial and 
industrial and other loans). The proposed rules would not provide for 
any exclusion of loan categories, or permit the aggregation of loan 
categories for purposes of this disclosure. Additionally, we proposed 
to codify the existing Guide 3 instruction stating that the 
determination of maturities should be based on contractual terms. We 
proposed to clarify the ``rollover policy'' for these disclosures by 
stating that, to the extent non-contractual rollovers or extensions are 
included for purposes of measuring the allowance for credit losses 
under U.S. GAAP or IFRS, such non-contractual rollovers or extensions 
should be included for purposes of the maturities classification and 
the policy should be briefly disclosed.
---------------------------------------------------------------------------

    \85\ ASC 310-10-45-2 and ASC 310-10-50-3 require that major 
categories of loans or trade receivables be presented separately 
either in the balance sheet or in the notes to the financial 
statements.
    \86\ See supra note 80.
---------------------------------------------------------------------------

    We proposed not to codify the following Guide 3 disclosure items 
because they call for disclosures that are reasonably similar to 
disclosures already required by Commission rules, U.S. GAAP, or IFRS: 
\87\
---------------------------------------------------------------------------

    \87\ See Section II.G of the Proposing Release.
---------------------------------------------------------------------------

     The loan category disclosures called for by Item III.A of 
Guide 3;
     The loan portfolio risk elements disclosure called for by 
Item III.C, which among other disclosures, included disclosure of loan 
concentrations exceeding 10% of loans that are not otherwise disclosed 
in the loan category disclosure in Item III.A and disclosure of cross 
border outstandings to borrowers in each foreign country where such 
outstandings exceed 1% of total assets; and
     The other interest bearing assets disclosure called for by 
Item III.D.\88\
---------------------------------------------------------------------------

    \88\ We also proposed to delete the loan presentation disclosure 
required under 17 CFR 210.9-03(7)(a)-(c) (``Rule 9-03(7)(a)-(c) of 
Regulation S-X''). See Section IV below.
---------------------------------------------------------------------------

ii. Comments on Proposal
    One commenter supported aligning the requirements with the loan 
categories under existing U.S. GAAP and IFRS requirements but asked the 
Commission to allow registrants to

[[Page 66115]]

exclude any loan categories from the maturity and sensitivity to 
interest rate changes disclosure that are not material to the 
registrant.\89\ This commenter stated that, similar to disclosure 
requirements for U.S. GAAP, registrants should have the ability to 
aggregate certain loan categories for purposes of the disclosure on the 
basis of relevance, materiality, and other considerations. This 
commenter also supported moving away from the bright-line thresholds in 
Guide 3 and instead relying on existing U.S. GAAP and IFRS requirements 
that call for the disclosure of significant concentrations of credit 
risk. Finally, this commenter stated that the use of the 
``significant'' threshold in U.S. GAAP and IFRS would not result in the 
loss of material information.
---------------------------------------------------------------------------

    \89\ See letter from BAC.
---------------------------------------------------------------------------

    Another commenter recommended the Commission continue to allow 
registrants to exclude or aggregate certain loan categories if they 
determine an alternative presentation is more appropriate.\90\ This 
commenter stated that mirroring the loan categories and classes 
presented in the financial statements, without the flexibility to 
exclude certain loan categories, would not result in more meaningful 
disclosures. For example, this commenter stated it is likely that large 
portfolios of consumer loans, such as credit cards, would be classified 
in the ``within 1 year'' category, whereas residential real estate 
loans would generally be in the ``over 10 year'' category.
---------------------------------------------------------------------------

    \90\ See letter from BPI/SIFMA.
---------------------------------------------------------------------------

iii. Final Rules
    After considering the comments, we are adopting final rules 
substantially as proposed. Consistent with the proposal, Item 1404(a) 
of Regulation S-K codifies the requirement to disclose the maturity by 
loan category disclosure currently called for by Item III.B of Guide 3, 
with the loan categories based on the categories required by U.S. GAAP 
\91\ or IFRS \92\ in the financial statements, but in response to 
comments received, the final rules also require additional maturity 
categories to provide investors with sufficient information on the 
potential interest rate risk associated with the loans in the 
portfolio. The final rules also codify the existing Guide 3 instruction 
stating the determination of maturities should be based on contractual 
terms, and also codifies the language, as proposed, regarding the 
``rollover policy'' for these disclosures.
---------------------------------------------------------------------------

    \91\ See supra note 85.
    \92\ See supra note 80.
---------------------------------------------------------------------------

    Item 1404(b) of Regulation S-K codifies the disclosure items in 
Item III.B of Guide 3 regarding the total amount of loans due after one 
year that have (a) predetermined interest rates or (b) floating or 
adjustable interest rates, and specifies that this disclosure should 
also be disaggregated by the loan categories disclosed in the 
registrant's U.S. GAAP or IFRS financial statements.
    While we acknowledge commenter feedback suggesting that the final 
rules should allow registrants to exclude certain loan categories from 
the Item 1404 of Regulation S-K disclosure, we do not believe any 
exceptions are necessary as the disclosure is driven by the loan 
categories required by U.S. GAAP or IFRS. U.S. GAAP \93\ considers 
materiality, so such immaterial loan categories generally would not be 
presented in the financial statements, and therefore would not be 
required by these disclosure requirements. The staff has observed that 
registrants typically aggregate immaterial loan categories into an 
``other'' loan category, or will combine these immaterial loan 
categories with the most comparable material loan category. We would 
not expect this ``other'' loan category to be disaggregated further for 
purposes of this disclosure. Rather, this ``other'' loan category would 
be disclosed as a single additional category, consistent with the 
presentation in the U.S. GAAP or IFRS financial statements. We continue 
to believe conforming the loan categories required in this disclosure 
to those required by U.S. GAAP or IFRS promotes consistency of loan 
portfolio disclosures throughout a registrant's filing, and elicits 
trend information about interest income and potential interest rate 
risk.
---------------------------------------------------------------------------

    \93\ See supra note 85.
---------------------------------------------------------------------------

    In response to commenter feedback about large portfolios being 
concentrated in a single maturity category, the final rules require 
additional maturity categories. Specifically, we have separated the 
proposed ``after five years'' maturity category into two categories: 
(1) After five years through 15 years, and (2) after 15 years. We 
believe these additional maturity categories will elicit more decision-
relevant information for investors by capturing the maturity periods of 
commonly offered residential mortgage loan products, such as 15-year 
and 30-year residential mortgages. For example, we expect that under 
the final rules, residential mortgage loans would no longer be 
classified in a single maturity category, as noted by a commenter, thus 
providing investors additional information about the risk profile of 
those loans. Furthermore, for as long as the loans remain outstanding, 
the loans would move through the maturity categories until they are 
paid off or sold, such that over time, even 30-year residential 
mortgage loans would migrate into different maturity categories.
    Consistent with the proposal, the final rules do not codify the 
loan category disclosure items in Item III.A of Guide 3, the loan 
portfolio risk element disclosure items in Item III.C, or the other 
interest bearing asset disclosure items in Item III.D. The rules codify 
the Guide 3 loan disclosure items that we believe elicit information 
material to an investment decision and do not overlap with other 
existing disclosure requirements or principles. The final rules will 
thereby elicit disclosure that assists investors in evaluating the 
registrant's loan portfolio while also limiting the burdens on 
registrants to prepare such disclosures as registrants should be able 
to derive this information from their existing books and records.

I. Allowance for Credit Losses

i. Proposal
    We proposed to require in Item 1405 of Regulation S-K the 
disclosure of the ratio of net charge-offs during the period to average 
loans outstanding based on the loan categories required to be disclosed 
in the registrant's U.S. GAAP or IFRS financial statements, instead of 
on a consolidated basis as called for by Guide 3. We also proposed to 
require registrants to provide the tabular allocation of the allowance 
disclosure called for by Item IV.B of Guide 3, except that the 
allocation would be based on the loan categories presented in the U.S. 
GAAP financial statements, instead of the loan categories specified in 
Item IV.B of Guide 3, which we believe is not a substantive change from 
existing practice given the existing instruction \94\ in Item IV of 
Guide 3 which permits other loan categories to be used if considered a 
more appropriate presentation.\95\ We did not propose to codify the 
rollforward of the allowance for loan loss disclosures called for by 
Item IV.A of Guide 3, given the overlap of this requirement with U.S. 
GAAP and IFRS.
---------------------------------------------------------------------------

    \94\ See Instruction 3 to Item IV of Guide 3.
    \95\ As explained in the Proposing Release, we did not propose 
to apply this requirement to IFRS registrants because IFRS 7.35H 
already requires this information at a similar level of 
disaggregation in the financial statements. See Section II.H.iii of 
the Proposing Release.
---------------------------------------------------------------------------

    The proposed rules did not require any incremental disclosures 
related to

[[Page 66116]]

the New Credit Loss Standard or IFRS 9 because, as explained in the 
Proposing Release, we first wanted to assess the disclosures provided 
under the new U.S. GAAP and IFRS standards and evaluate whether 
additional information is necessary.\96\ However, the Proposing Release 
contained a number of requests for comments seeking feedback on the 
types of disclosures that may be material upon the adoption of the New 
Credit Loss Standard.
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    \96\ See Section II.H of the Proposing Release. Accounting 
Standards Update (``ASU'') 2016-13- Financial Instruments--Credit 
Losses (Topic 326) (``New Credit Loss Standard'') replaces the 
current U.S. GAAP incurred loss methodology with a methodology that 
reflects expected credit losses over the entire contractual terms of 
the financial instruments. Absent an election to suspend adoption 
under Section 4014 of the Coronavirus Aid, Relief, and Economic 
Security Act (``CARES Act''), as discussed further below, the New 
Credit Loss Standard became effective for public business entities 
that meet the definition of an SEC filer for their fiscal years 
beginning after December 15, 2019, including interim periods within 
those fiscal years. Public Law 116-136, 134 Stat. 281 (Mar. 27, 
2020). However, SEC filers that are eligible to be SRCs, as defined 
by the SEC, and entities that are not SEC filers, are provided a 
delayed effective date of three years. Thus, SRCs, certain EGCs, and 
non-SEC filers are able to elect to defer adopting the New Credit 
Loss Standard until their fiscal year beginning after December 15, 
2022.
    The CARES Act provides an insured depository institution, a bank 
holding company, or any affiliate thereof with the option to 
temporarily suspend application of the New Credit Loss Standard 
until the earlier of the date on which the national emergency 
concerning COVID-19 terminates or December 31, 2020.
    IFRS 9--Financial Instruments was effective January 1, 2018 for 
calendar year companies and requires a 12-month expected credit loss 
measurement unless there has been a significant increase in credit 
risk, in which case it is a lifetime expected credit loss 
measurement.
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ii. Comments on Proposal
    Several commenters supported eliminating the allowance for credit 
losses disclosure items, such as the five-year analysis of loan loss 
experience called for by Item IV.A of Guide 3, that are duplicative of 
U.S. GAAP or IFRS.\97\ One commenter was supportive of the proposed 
allocation of the allowance for credit losses disclosure 
requirement.\98\ Another commenter stated that the tabular allocation 
of the allowance for credit losses would not be burdensome to prepare 
and that it provides a convenient location for such information to be 
obtained by investors.\99\ However, this commenter and another 
commenter indicated that the disclosures should be at the same level as 
the allowance disclosures under U.S. GAAP, which is at the portfolio 
segment level, and that further disaggregation is not warranted.\100\ 
One of these commenters stated that there will be significant 
operational difficulties in allocating the allowance in ways that would 
not conform to U.S. GAAP reporting.\101\ The other commenter 
recommended retaining the instruction to Item III.A of Guide 3, which 
provides latitude to registrants to use loan categories outside of 
those identified in Guide 3 ``if considered a more appropriate 
presentation.'' \102\
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    \97\ See letters from ABA and BAC.
    \98\ See letter from A. Heilig.
    \99\ See letter from ABA.
    \100\ See letters from ABA and BPI/SIFMA.
    \101\ See letter from ABA.
    \102\ See letter from BPI/SIFMA.
---------------------------------------------------------------------------

    One commenter asserted that the proposed requirement to disclose 
disaggregated net charge-offs to average loans ratios by loan category 
may not provide meaningful information to the extent the disaggregated 
ratios are not significant drivers of business results.\103\ Another 
commenter stated that the charge-off ratios will have little, if any, 
relation to credit loss provisions or the allowance for credit losses 
upon the adoption of the New Credit Loss Standard, especially for loans 
with longer terms, such as many consumer loan products, and therefore 
appears not to support the requirement to provide this ratio.\104\ This 
commenter further stated that charge-off ratios on these product lines 
might confuse investors and others who are trying to assess credit 
performance, as allowances will be recorded at origination or 
commitment and can significantly change based on economic forecasts. 
One commenter stated that the charge-off ratios should not be more 
disaggregated than at the portfolio segment level, which is the level 
U.S. GAAP requires for allowance disclosures.\105\ Several commenters 
stated there may be operational challenges or systems limitations 
associated with calculating the ratio of net charge-offs to average 
loans on a disaggregated basis versus on a consolidated basis as 
provided today.\106\ These commenters highlighted the estimated 
increase in burden hours as well as professional costs related to these 
disclosure requirements from the Paperwork Reduction Act analysis in 
the Proposing Release and recommended the Commission consider feedback 
from investors and others to determine whether the benefits justify 
these costs.\107\
---------------------------------------------------------------------------

    \103\ See letter from BPI/SIFMA.
    \104\ See letter from ABA.
    \105\ See letter from ABA.
    \106\ See letters from CAQ (stating that the ratio would not be 
computable from disclosures in the financial statements) and Crowe.
    \107\ See Table 12: Estimated Change in Internal Burden Hours 
and Costs for Outside Professionals from the Aggregated Portions of 
the Proposed Rules in Section VII of the Proposing Release.
---------------------------------------------------------------------------

    In response to request for comments on disclosure requirements 
related to the New Credit Loss Standard or IFRS 9, no commenters 
indicated that we should require disclosures incremental to the New 
Credit Loss Standard or IFRS 9 at this time. A few commenters stated 
that it was premature to determine which incremental disclosures may be 
useful to investors given that the standard-setting processes for the 
New Credit Loss Standard and IFRS 9 were only recently completed and 
have resulted in major changes to previous accounting standards.\108\ 
These commenters recommended that the Commission provide registrants 
the opportunity to determine the most appropriate way to communicate to 
their investors about the new standard, including how best to explain 
period-to-period changes in expected credit losses, consideration of 
loan mix and volume, credit performance related to expectations, 
changes in key inputs and assumptions, or other factors over the next 
few years before proposing any additional disclosure requirements.
---------------------------------------------------------------------------

    \108\ See letters from ABA and KPMG.
---------------------------------------------------------------------------

    One of these commenters cautioned that, while the inputs and 
assumptions made to the New Credit Loss Standard models will be 
critical to credit loss estimates and thus will be important to 
investment decisions, and disclosure of such inputs initially appears 
helpful to investors, the complexity of credit loss modeling (for 
example, non-linear relationships of changes in certain economic 
conditions to loss given default) will likely frustrate many investors 
who wish to use inputs in their own modeling.\109\ This commenter 
stated that any future required disclosure related to the New Credit 
Loss Standard methodology should not be required in a formulaic manner 
or template. This commenter also noted that due to the broad range of 
credit loss modeling methods that will be performed by banks, it 
expects there to be a wide diversity in how qualitative adjustments are 
defined and applied in the credit loss modeling, not only between 
registrants, but also between periods within a registrant.
---------------------------------------------------------------------------

    \109\ See letter from ABA.
---------------------------------------------------------------------------

iii. Final Rules
    After considering the comments, we are adopting the rules as 
proposed. Item 1405(c) of Regulation S-K codifies the requirement to 
provide a tabular allocation of the allowance disclosures based on the 
loan categories presented in the U.S. GAAP financial statements

[[Page 66117]]

for registrants applying or reconciling to U.S. GAAP. Item 1405(c) of 
Regulation S-K does not apply to IFRS registrants because IFRS already 
requires this information at a similar level of disaggregation in the 
financial statements.\110\ While one commenter recommended retaining 
the instruction to Item III.A of Guide 3, which provides latitude to 
registrants to use loan categories outside of those identified in Guide 
3, we do not believe this is necessary as we have tied the loan 
categories for this disclosure to the loan categories presented in the 
U.S. GAAP financial statements. We continue to believe the tabular 
allocation required by this Item will provide for easier analysis by 
investors when reviewing these disclosures. The final rules also codify 
the requirement to disclose disaggregated net charge-off ratios. We 
continue to believe that, in many circumstances, disclosure of 
disaggregated net charge-off ratios may provide material information to 
investors in terms of transparency and comparability. For example, the 
staff has observed that credit cards and other unsecured loans often 
have higher net charge-off ratios relative to secured loans, such as 
residential mortgage loans or commercial loans. Therefore, to the 
extent a bank and savings and loan registrant has a material loan 
category with higher net charge-offs relative to other loan categories 
in its loan portfolio, a single disclosure of the consolidated net 
charge-off ratio may not reveal trends present in the loan portfolio 
because the portfolio performance can be skewed by a specific loan 
category or by the number and type of loan products. Furthermore, 
disaggregated net charge-off ratio disclosures can facilitate 
comparison of loan performance by specific loan category among banks of 
varying sizes and operations.
---------------------------------------------------------------------------

    \110\ IFRS 7.35H.
---------------------------------------------------------------------------

    While one commenter noted that the meaningfulness of the 
disaggregation of the net charge-off ratio may be contingent on whether 
the ratios are significant drivers of business results, and another 
stated that the charge-off ratio will have little, if any, relation to 
the provisions or the allowance for credit losses upon the adoption of 
the New Credit Loss Standard, we believe disaggregated net charge-off 
ratios generally are key performance measures for bank and savings and 
loan registrants. This is evident from the disclosure that bank and 
savings and loan registrants provide in SEC filings, including earnings 
releases, which often includes information about charge-offs by loan 
category, and in some cases, the net charge-off ratio at the loan 
category level. The staff has observed that some bank and savings and 
loan registrants have continued to provide this information in their 
quarterly reports after their recent adoption of the New Credit Loss 
Standard. Additionally, the staff has observed that some bank and 
savings and loan registrants have disclosed expectations of future 
charge-off amounts as part of their disclosure of projections or 
earnings guidance for the forecasted period upon their adoption of the 
New Credit Loss Standard. We also note that the Federal Deposit 
Insurance Corporation (``FDIC'') publishes a quarterly banking profile 
(``FDIC Quarterly'') that provides a comprehensive summary of the 
financial results for all FDIC-insured institutions.\111\ Both prior 
to, and after, the adoption of the New Credit Loss Standard, the FDIC 
Quarterly reports, among other things, the net charge-off amounts and 
the net charge-off ratio on an industry-wide basis, including the 
charge-off ratio at the loan category level. We therefore continue to 
believe this information may be material for investors to understand a 
registrant's financial results. Furthermore, we did not receive any 
comments from registrants indicating that the disaggregated net charge-
off ratios would be costly or burdensome to provide. We acknowledge 
that adoption of the New Credit Loss Standard affects the relationship 
between the net charge-off ratio to the provision for loan losses and 
the allowance for credit losses, but we continue to believe this 
information is used by investors, as evidenced by the fact that the 
information is still disclosed by a number of registrants. 
Additionally, despite the change in the allowance for credit loss 
methodology upon the adoption of the New Credit Loss Standard, we note 
that both components of the disaggregated net charge-off ratios (net 
charge-offs during the period and average loans outstanding during the 
period), and therefore the ratio itself, are generally not materially 
affected by the New Credit Loss Standard. The New Credit Loss Standard 
did not directly change the applicable U.S. GAAP guidance for charge-
offs and total loans. Therefore, we believe that changes in these 
ratios over time, including prior to and after adoption of the New 
Credit Loss Standard, may provide material trend information to 
investors about how the portfolio is performing.
---------------------------------------------------------------------------

    \111\ Federal Deposit Insurance Corporation, Quarterly Banking 
Profile (Second Quarter 2020), available at https://www.fdic.gov/bank/analytical/quarterly/2020-vol14-3/fdic-v14n3-2q2020.pdf.
---------------------------------------------------------------------------

    Consistent with the proposal, and the suggestions of several 
commenters, the final rules do not codify the disclosure items in Item 
IV of Guide 3 that overlap with U.S. GAAP and IFRS and do not require 
any disclosures related to the New Credit Loss Standard or IFRS 9.
iv. Proposal--New Credit Ratios Disclosure
    Guide 3 currently calls for the disclosure of one credit ratio, net 
charge-offs during the period to average loans outstanding, as outlined 
in Item IV.A of Guide 3. As discussed in Section II.I.i above, we 
proposed to codify the requirement to disclose this ratio by the loan 
categories disclosed in the U.S. GAAP or IFRS financial statements. In 
addition, we also proposed to require in Item 1405(a) of Regulation S-K 
disclosure of the following new credit ratios on a consolidated basis, 
along with each of the components used in their calculation: (1) 
Allowance for Credit Losses \112\ to Total Loans; (2) Nonaccrual Loans 
to Total Loans; and (3) Allowance for Credit Losses \113\ to Nonaccrual 
Loans. The proposed rules would also require a discussion of the 
factors that drove material changes in the ratios, or related 
components, during the periods presented. As discussed in Section 
II.E.iii above, the credit ratios would be required for each annual 
period for which Commission rules require financial statements, and any 
additional interim period if there was a material change in the 
information or the trends evidenced thereby. The proposed rules would 
not require disclosure of the ratio of nonaccrual loans to total loans 
or the allowance for credit losses to nonaccrual loans for IFRS 
registrants, as

[[Page 66118]]

there is no concept of nonaccrual loans in IFRS.
---------------------------------------------------------------------------

    \112\ Allowance for Credit Losses refers to the allowance for 
loan losses recorded on the registrant's loan portfolio calculated 
in accordance with U.S. GAAP or IFRS. To the extent that net 
investments in leases by a lessor are included in the total loans 
denominator, the allowance for credit losses also includes the 
related allowance for credit losses for the net investment in 
leases. The allowance for credit losses excludes any allowance for 
credit losses recorded related to the securities portfolio or 
unfunded commitments, which are not considered as part of the total 
loan portfolio in the denominator of this ratio.
    \113\ To the extent that net investments in leases by a lessor 
are included in the nonaccrual loans denominator, the allowance for 
credit losses also includes the related allowance for credit losses 
for the net investment in leases. The allowance for credit losses 
excludes any allowance for credit losses recorded related to the 
securities portfolio or unfunded commitments, which are not 
considered within nonaccrual loans in the denominator of this ratio.
---------------------------------------------------------------------------

v. Comments on Proposal
    We received limited feedback on our proposal to require credit 
ratios disclosure. The primary feedback we received was that these 
credit ratios may no longer be as relevant to investors upon the 
adoption of the New Credit Loss Standard.\114\
---------------------------------------------------------------------------

    \114\ See letter from ABA.
---------------------------------------------------------------------------

    One commenter stated that each of the ratios, excluding the net 
charge-off to average loans ratio, is readily calculable from U.S. GAAP 
disclosures already provided in the financial statements and encouraged 
the Commission to consider feedback from users to determine whether 
separate disclosure of the amounts is necessary.\115\ Another commenter 
stated that many analysts and investors already calculate and monitor 
these ratios and that disclosing them would not be substantially 
burdensome to banks.\116\ However, this commenter recommended not 
codifying the requirement to disclose the ratios due to the potential 
changes resulting from the adoption of the New Credit Loss 
Standard.\117\ This commenter noted that under the incurred loss 
accounting methodology, increases in nonaccrual loans will typically 
coincide with higher allowance levels and higher credit loss 
provisions, but this relationship is significantly diminished under the 
New Credit Loss Standard as credit performance should effectively be 
anticipated at origination.\118\ This commenter further cautioned that, 
due to the significant changes in the measurement basis of the 
allowance for credit losses from the New Credit Loss Standard, the 
ratio disclosures may be confusing to analysts, not only in comparing 
the ratios based on the incurred loss methodology prior to the adoption 
of the New Credit Loss Standard, but also in comparing registrants that 
are adopting the New Credit Loss Standard in 2020 to those that will 
adopt in 2023.\119\
---------------------------------------------------------------------------

    \115\ See letter from CAQ.
    \116\ See letter from ABA.
    \117\ The New Credit Loss Standard replaces the current incurred 
loss methodology with a methodology that reflects expected credit 
losses over the entire contractual term of the financial 
instruments. See ASC Topic 326.
    \118\ This comment relates only to the allowance for credit 
losses to nonaccrual loans and not the other three credit ratios 
proposed.
    \119\ See supra note 96.
---------------------------------------------------------------------------

    One commenter noted the proposed credit ratios are not required by 
U.S. GAAP and IFRS.\120\ This commenter recommended that we not require 
disclosures beyond those required by U.S. GAAP or IFRS until such time 
as it is clear that incremental disclosures are necessary given that 
the standard-setting processes for the New Credit Loss Standard and 
IFRS 9 were only recently completed by the FASB and IASB and have 
resulted in major changes to the previous accounting standards.
---------------------------------------------------------------------------

    \120\ See letter from KPMG.
---------------------------------------------------------------------------

    A few commenters stated the Commission should not require a 
discussion of the factors that drove material changes in credit 
ratios.\121\ One of these commenters said the proposed disclosure 
requirement overlaps with Item 303(a) of Regulation S-K's requirement 
to provide such other information that the registrant believes is 
necessary to an understanding of its financial condition, changes in 
financial condition, and results of operations.\122\ Another commenter 
cited the complexity of what can drive the New Credit Loss Standard 
estimate.\123\ For example, this commenter observed that nonaccrual 
loans and charge-offs result from credit deterioration events, which 
are not necessarily direct drivers of the New Credit Loss Standard 
allowance estimate, and therefore would not necessarily drive changes 
in ratios to the extent they have been accurately forecast. As a 
result, according to this commenter, a discussion of these metrics may 
be confusing to analysts or investors. Finally, although the proposed 
rules would not have required disclosure of the ratio of nonaccrual 
loans to total loans or the allowance for credit losses to nonaccrual 
loans for IFRS registrants as there is no concept of nonaccrual loans 
in IFRS, this commenter asked the Commission to explore how ``Stage 3'' 
\124\ assets under IFRS 9 may be considered comparable to nonaccrual 
loans within U.S. GAAP.
---------------------------------------------------------------------------

    \121\ See e.g., letters from ABA and BPI/SIFMA.
    \122\ See letter from BPI/SIFMA.
    \123\ See letter from ABA.
    \124\ The term ``Stage 3 assets'' is not formally defined in 
IFRS 9 but has become part of the common description of the IFRS 9 
methodology. In this context, Stage 3 assets are considered to be 
non-performing or credit-impaired loans.
---------------------------------------------------------------------------

vi. Final Rules
    Having considered the comments, we are adopting the rules as 
proposed. We continue to believe that investors evaluate these ratios 
when making investment decisions and that disclosure of the components 
used in the calculation of the ratios, along with the proposed 
narrative disclosure of the factors driving material changes in the 
ratio or related components, would further aid investors' understanding 
of the reasons for the material changes in ratios. The staff has 
observed that these credit ratios are already commonly disclosed by 
most bank and savings and loan registrants with material lending 
portfolios, and the staff has observed that many bank and savings and 
loan registrants have continued to provide these credit ratios in their 
earnings releases and periodic reports after the adoption of the New 
Credit Loss Standard. Therefore, we believe these registrants may 
continue to find that this information may be material for an 
investor's understanding of their financial results.\125\
---------------------------------------------------------------------------

    \125\ See supra note 96. As illustrated by Table 2 in Section 
VII, around 44% of bank and savings and loan registrants are either 
SRCs or EGCs and are not required to adopt the New Credit Loss 
Standard until fiscal years beginning after December 15, 2022. 
Therefore, over the next few years, there will continue to be a 
significant population of bank and savings and loan registrants that 
apply the incurred loss approach and not the New Credit Loss 
Standard.
---------------------------------------------------------------------------

    We also note that the FDIC Quarterly,\126\ both prior to and after 
the adoption of the New Credit Loss Standard, continues to collect and 
report industry-wide data on the components, or similar components, of 
these ratios, and the related ratios or similar ratios. For example, 
the FDIC Quarterly reports industry-wide data on the allowance for 
credit losses and total loans, and the related allowance for credit 
losses to total loans outstanding ratio. Additionally, the FDIC 
Quarterly reports noncurrent loans and leases,\127\ the noncurrent 
loans to total loans ratio, and the ratio of the allowance for credit 
losses to noncurrent loans and leases, which is similar to, but not the 
same as, the two nonaccrual \128\ ratios (nonaccrual loans to total 
loans outstanding at each period end and allowance for credit losses to 
nonaccrual loans at each period end) that we are codifying in Item 1405 
of Regulation S-K. Furthermore, while we acknowledge commenter feedback 
that the ratios are affected by the adoption of the New Credit Loss 
Standard, the staff has observed that registrants that continue to 
disclose them have provided disclosure to explain the impact of the 
change in the accounting for credit losses on the ratios from period to 
period. Additionally, despite the change in the allowance for credit 
loss methodology upon the adoption of the New Credit Loss Standard, we 
note that both components of the nonaccrual loans to total loans ratio 
(nonaccrual loans and total loans outstanding at

[[Page 66119]]

period end), and therefore the ratio itself, are generally not 
materially affected by the New Credit Loss Standard. The New Credit 
Loss Standard did not directly change the applicable U.S. GAAP guidance 
for nonaccrual loans or total loans outstanding. Therefore, we believe 
that changes in this ratio over time, including prior to and after 
adoption of the New Credit Loss Standard, can provide material trend 
information to investors about how the portfolio is performing.
---------------------------------------------------------------------------

    \126\ See supra note 111.
    \127\ The FDIC Quarterly defines noncurrent loans as loans that 
are past due 90 days or more or that are in nonaccrual status.
    \128\ Nonaccrual loans represent loans that are in nonaccrual 
status. See ASC 326-20-50-16.
---------------------------------------------------------------------------

    We recognize that, under the incurred loss approach, changes in the 
allowance for credit losses are based on changes in losses incurred to 
date, whereas under the New Credit Loss Standard, changes in the 
allowance for credit losses are based on changes in estimates of 
expected credit losses over the life of the loan portfolio. As such, 
the allowance for credit losses to total loans ratio and allowance for 
credit losses to nonaccrual loans ratio convey different information to 
investors under the two approaches. We believe that, despite this 
important difference in the information contained in these ratios under 
alternative credit loss approaches, the disclosure of these two ratios 
along with the discussion of the factors that led to material changes 
in these ratios or their components could be material to investors, 
regardless of the approach used (incurred loss approach or New Credit 
Loss Standard). This is because investors are familiar with these 
ratios and are accustomed to analyzing them, and while the drivers of 
the changes in the ratios are affected by the New Credit Loss Standard, 
we believe the ratios continue to convey information that is relevant 
to evaluating a registrant's credit risk and lending policy decisions. 
For example, the ratio of nonaccrual loans to total loans conveys 
information about the registrant's lending decisions and how their 
portfolio has performed since origination. Similarly, the allowance for 
credit losses to total loans provides information about the level of 
credit losses estimated relative to the loan portfolio, with a higher 
ratio reflecting a higher estimate of credit losses in the portfolio. 
Over time, investors can evaluate changes in trends in these ratios, 
which may give material quantitative information about how changes in 
the registrant's underwriting policies or servicing decisions can 
affect the credit quality of their portfolio, or how the loan portfolio 
is affected by macroeconomic and other factors. Furthermore, having 
this information disclosed on a ratio basis allows for comparability of 
credit trends across bank and savings and loan registrants of all 
sizes. For example, the ratios take into account the size of the loan 
portfolio, and thus a small community bank's ratio could be compared 
against a large bank's ratio, in addition to peers of a similar size. 
This could allow investors to assess credit trends more broadly. While 
we acknowledge commenter feedback that with the adoption of the New 
Credit Loss Standard, credit deterioration events, including those that 
result in nonaccrual loans and charge-offs, may not necessarily 
directly drive changes in the ratios, another commenter stated that 
analysts and investors calculate and monitor these ratios.\129\ The 
final rules ensure these ratios are calculated on a consistent and 
comparable basis among all bank and savings and loan registrants. The 
benefit to investors of having these consistent and comparable ratio 
disclosures along with their components and discussion of the material 
changes to the ratios already disclosed in the filing, without 
investors having to perform their own calculations and analysis, 
justifies the limited burden on a registrant to disclose this 
information.
---------------------------------------------------------------------------

    \129\ See letter from ABA.
---------------------------------------------------------------------------

    We acknowledge commenter feedback that the ratio disclosures may be 
confusing to analysts, not only in comparing a registrant's prior 
ratios based on the incurred loss methodology to the ratios after the 
adoption of the New Credit Loss Standard, but also in comparing 
registrants that are adopting the New Credit Loss Standard in 2020 to 
those that will adopt in 2023. However, it is common for any new 
accounting standard to have different adoption dates based on the size 
or type of entity, so this is not unique to the New Credit Loss 
Standard, and we believe investors and analysts are accustomed to 
making adjustments to their analysis as a result. Furthermore, since 
the final rules require registrants to disclose material changes in the 
credit ratios, we believe investors should have the information 
available to understand the factors driving the changes in the ratios, 
which may include how they are affected upon the adoption of the New 
Credit Loss Standard, or material changes in the credit quality of the 
loan portfolio.
    We also acknowledge that a few commenters stated that we should not 
require a discussion of the factors that drove material changes in the 
credit ratios. However, we continue to believe that this narrative 
disclosure is necessary for an investor's understanding of the material 
changes in the ratios and credit quality of the loan portfolio, and we 
believe management has the information readily available to them to 
discuss the drivers of the material changes in the ratios because the 
individual components are already required by U.S. GAAP and IFRS. We 
believe this information could be provided within MD&A if management 
believes it is the most appropriate place to discuss the information. 
To the extent that there were no material changes in the credit ratios 
or the related components, there would be no requirement to provide 
this narrative discussion.
    We also note that U.S. GAAP, both before and after the adoption of 
the New Credit Loss Standard, requires disclosure of many of the 
components of these ratios, such as nonaccrual loans, and the 
rollforward of the allowance for credit losses by portfolio segment, 
which includes separate line items showing charge-offs against the 
allowance and recoveries of amounts previously charged off (that 
together can be used to calculate net charge-offs, which is the 
numerator to the disaggregated net charge-off ratio). We believe this 
indicates that these components, and potentially the related ratios, 
continue to have relevance upon the adoption of the New Credit Loss 
Standard.\130\ As noted by a commenter, we believe this will limit the 
burden a registrant will have in providing these disclosures.\131\
---------------------------------------------------------------------------

    \130\ ASC 310-10-50-7 (and ASC 326-20-50-16 upon the adoption of 
the New Credit Loss Standard) requires disclosure of nonaccrual 
loans by class of financing receivable. ASC 310-10-50-11B (and ASC 
326-20-50-13 upon the adoption of the New Credit Loss Standard) 
requires disclosure of a rollforward of the allowance for credit 
losses, by portfolio segment, showing the beginning and ending 
balance, the current period provision, writeoffs charged against the 
allowance, and recoveries of amounts previously charged off.
    \131\ See letter from ABA.
---------------------------------------------------------------------------

J. Deposits

i. Proposal
    We proposed to codify in Item 1406 of Regulation S-K the majority 
of the deposit disclosure items in Item V of Guide 3, with some 
revisions. Specifically, we proposed to replace the ``amount of 
outstanding domestic time certificates of deposit and other time 
deposits equal to or in excess of $100,000'' by maturity disclosure 
called for by Item V.D with a requirement to disclose the ``amount of 
time deposits in uninsured accounts'' by maturity. We proposed to 
require separate presentation of: (1) U.S. time deposits in amounts in 
excess of the FDIC insurance limit, and (2) time deposits that are

[[Page 66120]]

otherwise uninsured (including, for example, U.S. time deposits in 
uninsured accounts, non-U.S. time deposits in uninsured accounts, or 
non-U.S. time deposits in excess of any country-specified insurance 
fund), by time remaining until maturity of: (A) Three months or less; 
(B) over three through six months; (C) over six through 12 months; and 
(D) over 12 months. The proposed rules did not have a defined dollar 
threshold for the disclosure, which we indicated would make the rules 
easier to apply when there is a change in the FDIC insurance 
limit.\132\
---------------------------------------------------------------------------

    \132\ See Section II.I.iii of the Proposing Release.
---------------------------------------------------------------------------

    Additionally, we proposed that bank and savings and loan 
registrants quantify the amount of uninsured deposits as of the end of 
each reported period. The proposed rules defined uninsured deposits for 
bank and savings and loan registrants that are U.S. federally insured 
deposit institutions as individual deposits in U.S. offices of amounts 
exceeding the FDIC insurance limit and investment products such as 
mutual funds, annuities, or life insurance policies. The proposed rules 
would require foreign bank and savings and loan registrants to disclose 
how they define uninsured deposits for purposes of this disclosure 
given that the definition varies from jurisdiction to jurisdiction.
ii. Comments on Proposal
    One commenter stated that the proposed deposit disclosures would 
provide transparency with respect to a registrant's source of funding 
and liquidity risk profile.\133\ Another commenter was supportive of 
the proposed disclosures related to bank deposits, including the 
amounts that are uninsured. \134\
---------------------------------------------------------------------------

    \133\ See letter from BAC.
    \134\ See letter from A. Heilig.
---------------------------------------------------------------------------

    One commenter stated the Commission should emphasize that the rules 
would change existing practice regarding the disclosure of uninsured 
deposits as existing Guide 3 disclosures do not call for the separate 
disclosure of the uninsured portion of time deposits or any other 
deposits.\135\ Several commenters highlighted that there may be 
potential complexity and costs or operational challenges involved in 
calculating a precise amount for uninsured deposits.\136\ Most of these 
commenters attributed these challenges to complex deposit insurance 
rules \137\ that apply across accounts.\138\ A few of these commenters 
also noted that depository institutions report estimated uninsured 
amounts in their call reports.\139\
---------------------------------------------------------------------------

    \135\ See letter from CAQ.
    \136\ See e.g., letters from ABA; BPI/SIFMA; CAQ; Crowe; EY; and 
PwC.
    \137\ 12 CFR 1821(a).
    \138\ See letters from ABA; BPI/SIFMA; CAQ; Crowe; and PwC.
    \139\ See letters from CAQ; Crowe; and PwC.
---------------------------------------------------------------------------

    Several commenters mentioned the FDIC's new rule, Recordkeeping for 
Timely Deposit Insurance Determination (FDIC Part 370 Rule),\140\ which 
became effective on April 1, 2020, and is limited to insured depository 
institutions with greater than two million deposit accounts.\141\ This 
rule requires such institutions to configure information systems to 
accurately calculate insured and uninsured deposits. One of these 
commenters encouraged the Commission to consider further outreach to 
the FDIC and registrants about the potential difficulty and cost of 
preparing the proposed disclosure and whether the disclosure objective 
could be achieved in another way.\142\ This commenter also asked the 
Commission to consider whether certain information provided in investor 
and analyst presentations with respect to registrant's sources of 
deposits might achieve the same objective as the proposed rule.
---------------------------------------------------------------------------

    \140\ 12 CFR part 370. See also Federal Deposit Insurance 
Corporation, 12 CFR part 370 Recordkeeping for Timely Deposit 
Insurance Determination (July 17, 2020), available at https://www.fdic.gov/regulations/resources/recordkeeping/.
    \141\ See e.g., letters from ABA; BPI/SIFMA; and PwC.
    \142\ See letter from Crowe.
---------------------------------------------------------------------------

    One commenter suggested that given the complexities and the FDIC's 
new standard of accuracy in reporting that will differ between the 
largest and other depository institutions, the Commission should 
consider aligning its proposed disclosures with other regulatory 
requirements and standards, or otherwise simplify the proposed 
disclosure requirements.\143\ Another commenter stated that providing 
total uninsured deposits would not address the purpose of the proposed 
disclosure to allow users of the financial statements to assess a 
firm's potential liquidity risk, because disclosing only total 
uninsured deposits provides an incomplete picture of a firm's liquidity 
risk and, on its own, could result in an investor making an uninformed 
judgment.\144\ This commenter further stated that the disclosure of 
uninsured deposits would present significant challenges and costs for 
registrants, and the lack of comparability among different deposit 
schemes may prove misleading to investors and therefore should not be 
adopted.
---------------------------------------------------------------------------

    \143\ See letter from PwC.
    \144\ See letter from BPI/SIFMA.
---------------------------------------------------------------------------

    Several commenters stated that, if adopted, the Commission should 
clarify the definition of uninsured deposits.\145\ For example:
---------------------------------------------------------------------------

    \145\ See e.g., letters from ABA; BPI/SIFMA; CAQ; and EY.
---------------------------------------------------------------------------

     A few commenters sought clarity on whether the amount to 
be disclosed would be the portion of the individual deposit account 
balance that is greater than the FDIC limit, or the total deposit 
account balance.\146\
---------------------------------------------------------------------------

    \146\ See letters from ABA; BPI/SIFMA; CAQ and EY.
---------------------------------------------------------------------------

     One commenter sought clarification on whether the amount 
of uninsured deposits should be measured for each individual account or 
should include all accounts or persons to whom the insurance limits 
apply.\147\
---------------------------------------------------------------------------

    \147\ See letter from EY.
---------------------------------------------------------------------------

     Another commenter noted that certain states such as 
Massachusetts have their own deposit insurance funds and recommended 
that deposits covered by these and other similar regimes be considered 
insured for purposes of the proposed disclosure.\148\
---------------------------------------------------------------------------

    \148\ See letter from BPI/SIFMA.
---------------------------------------------------------------------------

     A few commenters stated that the final rule should explain 
how the term ``uninsured deposits'' would be applied to investment 
products such as mutual funds, annuities, or life insurance 
policies.\149\
---------------------------------------------------------------------------

    \149\ See letters from ABA and BPI/SIFMA.
---------------------------------------------------------------------------

    One commenter commended the Commission for proposing to remove the 
$100,000 threshold for uninsured deposits and replace it with a more 
principles-based requirement and to provide foreign registrants with 
the flexibility to disclose the definition of uninsured deposits 
appropriate for their country of domicile.\150\ However, this commenter 
stated that U.S. GAAP disclosure requirements largely address the 
proposed disclosure of outstanding time deposits in uninsured accounts 
by maturity and recommended not adopting this disclosure 
requirement.\151\
---------------------------------------------------------------------------

    \150\ See letter from BAC.
    \151\ See letter from BAC (stating that ASC-942-405-50-1 
requires disclosure of the aggregate amount of time deposit accounts 
(including certificates of deposits) in denominations that meet or 
exceed the FDIC insurance limit and ASC 470-10-50-1 requires 
disclosure of time deposits having a remaining term of more than one 
year and the aggregate amount of maturities for each of the five 
years following the balance sheet date).
---------------------------------------------------------------------------

iii. Final Rules
    After considering the comments, we are adopting the rules 
substantially as proposed. Item 1406 of Regulation S-K codifies the 
majority of the disclosure items in Item V of Guide 3, with some 
revisions.

[[Page 66121]]

    The final rules define uninsured deposits for bank and savings and 
loan registrants that are U.S. federally insured depository 
institutions as the portion of deposit accounts in U.S. offices that 
exceed the FDIC insurance limit or similar state deposit insurance 
regimes and amounts in any other uninsured investment or deposit 
accounts that are classified as deposits and not subject to any federal 
or state deposit insurance regimes. This definition varies slightly 
from the proposal based on commenter feedback. Specifically, we have 
clarified that the amount to be disclosed for uninsured deposits is 
based on the portion of the account balance greater than the FDIC 
insurance limit and that registrants may consider other similar state 
deposit insurance regimes in evaluating whether a deposit is insured. 
We also eliminated the reference to ``individual'' deposits in the 
revised definition to address commenter feedback seeking clarity on 
whether uninsured deposits are measured based on each individual 
account, or include all accounts or persons to whom the insurance 
limits apply. Consistent with the proposal, the final rules require 
foreign bank and savings and loan registrants to disclose the 
definition of uninsured deposits appropriate for their country of 
domicile. However, in response to commenter concerns about how the 
proposed disclosure requirements would interact with overlapping 
regulatory regimes, the final rules specify that all registrants should 
determine the amount of uninsured deposits for purposes of Item 1406 
based on the same methodologies and assumptions used for regulatory 
reporting requirements, to the extent applicable. This clarification 
better aligns the final rules with U.S. bank regulatory reporting 
requirements and provides some additional parameters for foreign 
registrants that may operate in several different jurisdictions and 
therefore may be subject to different insurance regimes. We believe 
this change should reduce the cost of providing this disclosure and 
reduce some of the comparability concerns for registrants operating in 
different jurisdictions. Unlike the proposed rules, however, the final 
rules do not expressly reference other investment products such as 
mutual funds, annuities or life insurance policies or otherwise address 
whether such products would be considered uninsured deposits as some 
commenters requested. We believe bank and savings and loan registrants 
already evaluate whether any particular product is subject to an FDIC 
insurance regime, or similar state deposit insurance regimes, and 
therefore additional guidance is unnecessary.
    In another change from the proposal, and consistent with commenter 
feedback, we have revised the final rules to permit a registrant to 
disclose uninsured deposits at the reported date based on an estimate 
of uninsured deposits if it is not reasonably practicable to provide a 
precise measure of uninsured deposits. To avail itself of this 
accommodation, a registrant must disclose that the amounts are based on 
estimated amounts of uninsured deposits, and the estimates must be 
based on the same methodologies and assumptions used for the bank or 
savings and loan registrant's regulatory reporting requirements, such 
as the FDIC rules. We believe this change will reduce complexity and 
better align the requirements with U.S. bank regulatory reporting 
requirements, which should reduce the cost of providing this 
disclosure.
    Consistent with the proposal, the rules require disclosure of (1) 
U.S. time deposits in excess of the FDIC insurance limit, and (2) time 
deposits that are otherwise uninsured by time remaining until maturity 
of: (A) Three months or less; (B) over three through six months; (C) 
over six through 12 months; and (D) over 12 months. While U.S. GAAP 
\152\ requires disclosure of time deposits that meet or exceed the 
insured limit, it does not require this information to be disaggregated 
into the same maturity categories. Furthermore, U.S. GAAP does not 
require disclosure of time deposits that are otherwise uninsured by 
time remaining until maturity. IFRS does not specifically require any 
of the deposit disclosures in Item 1406 of Regulation S-K.\153\ While 
we acknowledge commenter feedback that U.S. GAAP disclosure 
requirements are similar to the uninsured deposit disclosures, we 
continue to believe the disaggregated maturity categories provide 
material information about deposits that are more prone to withdrawals 
if a registrant experiences financial difficulty, which may help 
investors better evaluate potential risks to the registrant's short-
term liquidity position. While we acknowledge commenters' concerns that 
disclosing only total uninsured deposits may present an incomplete 
picture of a firm's liquidity risk, we believe the disclosure of 
uninsured deposits, along with the other deposit disclosures required 
by the final rules, as well as the liquidity disclosures required 
within MD&A, would significantly mitigate these concerns.
---------------------------------------------------------------------------

    \152\ ASC 942-405-50-1(a).
    \153\ See Section II.I of the Proposing Release.
---------------------------------------------------------------------------

    Overall, in light of the revisions and clarifications we have made, 
we believe the final rules provide transparency regarding a material 
source of funding for bank and savings loan registrants, while 
balancing any operational costs and burdens a registrant may incur in 
providing this disclosure.\154\
---------------------------------------------------------------------------

    \154\ See Section VII.C.i below.
---------------------------------------------------------------------------

III. Certain Existing Guide 3 Disclosures That Would Not Be Codified in 
Subpart 1400 of Regulation S-K

A. Return on Equity and Assets

    Item VI of Guide 3 calls for disclosure of four specific ratios for 
each reported period, including return on assets, return on equity, a 
dividend payout ratio, and an equity to assets ratio. We proposed not 
to codify the requirement to disclose these ratios in Subpart 1400 of 
Regulation S-K because these ratios are not unique to bank and savings 
and loan registrants, and the Commission's guidance on MD&A already 
requires registrants to identify and discuss key performance measures 
when they are used to manage the business and would be material to 
investors.\155\ Furthermore, the Commission recently issued additional 
guidance on the disclosure of key performance indicators and metrics in 
MD&A that highlights the requirement to provide disclosure that a 
registrant believes is necessary to an understanding of its financial 
condition, changes in financial condition, and results of 
operations.\156\ We did not receive any commenter feedback on this 
aspect of the proposal. For the reasons noted in the Proposing Release, 
and in light of this recent guidance, we are adopting the rules as 
proposed and are not codifying the requirement to disclose any of the 
ratios currently called for by Item VI of Guide 3.
---------------------------------------------------------------------------

    \155\ See Section III.A of the Proposing Release.
    \156\ See Commission Guidance on Management's Discussion and 
Analysis of Financial Condition and Results of Operations, Release 
No. 33-10751 (Jan. 30, 2020) (the ``2020 MD&A Interpretive 
Release'').
---------------------------------------------------------------------------

B. Short-Term Borrowings

    We proposed not to codify the short-term borrowing disclosure items 
in Item VII of Guide 3 in their current form. Instead, we proposed to 
codify as part of proposed Item 1402 of Regulation S-K the average 
balance and related average rate paid for each major category of 
interest-bearing liability disclosures currently called for by Item 
I.B.1 and I.B.3 of Guide 3, and to further require disaggregation of 
the major

[[Page 66122]]

categories of interest-bearing liabilities to include those referenced 
in Item VII of Guide 3 and Article 9 \157\ of Regulation S-X. We did 
not propose to codify any of the other existing disclosure items in 
Item VII because we believed these are substantially covered by 
existing Commission rules \158\ and the financial statement 
requirements.\159\ We did not receive any commenter feedback on this 
aspect of the proposal, and are adopting the rules as proposed for the 
reasons noted in the Proposing Release.
---------------------------------------------------------------------------

    \157\ 17 CFR 210.9-01 through 9-07. Article 9 sets forth the 
form and content of the consolidated financial statements filed for 
bank holding companies and for any financial statements of banks 
that are included in filings with the Commission.
    \158\ In the Proposing Release, the Commission referred to the 
Commission Guidance on Presentation of Liquidity and Capital 
Resources Disclosures in Management's Discussion and Analysis, 
Release No. 33-9144 (Sept. 17, 2010) [75 FR 59893 (Sept. 28, 2010)], 
as support for the idea that Item 303 of Regulation S-K elicits 
disclosure of any trends or uncertainties that may arise related to 
the maximum month-end amounts of short-term borrowings called for by 
Item VII.2. See Section III.B.i of the Proposing Release.
    \159\ See Section II.F.i discussing the proposed codification of 
the requirement to disclose the average amount outstanding during 
the period and the interest paid on such amount, and the average 
rate paid, for each major category of interest-bearing liability. 
Article 9 of Regulation S-X requires disclosure of the period-end 
amount outstanding by the short-term borrowing categories.
---------------------------------------------------------------------------

IV. Changes to Article 9 of Regulation S-X

    Rule 9-01 of Regulation S-X states that Article 9 is applicable to 
the consolidated financial statements filed for BHCs and to any 
financial statements of banks that are included in filings with the 
Commission, although other registrants with material lending and 
deposit activities also apply the rules in Article 9 of Regulation S-
X.\160\ In light of our proposal to codify the scope of Subpart 1400 of 
Regulation S-K to include savings and loan associations and savings and 
loan holding companies, we proposed to amend Rule 9-01 of Regulation S-
X to include these registrants within the scope of Article 9 of 
Regulation S-X as well. However, we also noted that, if registrants 
other than bank and savings and loan registrants believe the Article 9 
presentation would be material to an understanding of their business, 
the proposed rules would not preclude that presentation for those 
registrants. Additionally, we proposed deleting Rule 9-03(7)(a)-(c) of 
Regulation S-X due to overlapping requirements with both U.S. GAAP 
\161\ and IFRS.\162\ We did not receive any commenter feedback on this 
aspect of the proposal, and are adopting the amendments as proposed for 
the reasons noted in the Proposing Release.
---------------------------------------------------------------------------

    \160\ See supra note 5.
    \161\ See supra note 85.
    \162\ See supra note 80.
---------------------------------------------------------------------------

V. Compliance Date

    After considering feedback from commenters,\163\ registrants will 
be required to apply the final rules for the first fiscal year ending 
on or after December 15, 2021 (the ``mandatory compliance date''). 
Registrants filing initial registration statements are not required to 
apply the final rules until an initial registration statement is first 
filed containing financial statements for a period on or after the 
mandatory compliance date. Until the mandatory compliance date, bank 
and savings and loan registrants should continue to refer to Guide 3 
for assistance in meeting their disclosure obligations.
---------------------------------------------------------------------------

    \163\ See letters from BPI/SIFMA and KPMG. BPI/SIFMA recommended 
that the Commission not require the rules to be effective until at 
least the December 31, 2021 Form 10-K to allow registrants 
sufficient time to source and test the information and ensure the 
information produced is accurate and reliable. KPMG encouraged the 
Commission to provide detailed transition guidance that includes 
consideration of the timing of the rule's effective date and 
approaching relevant filing deadlines.
---------------------------------------------------------------------------

    Voluntary early compliance with the final rules is permitted \164\ 
in advance of the registrant's mandatory compliance date, provided that 
the final rules are applied in their entirety from the date of early 
compliance.
---------------------------------------------------------------------------

    \164\ To the extent that registrants have questions about 
application of the rules in connection with early compliance, they 
should reach out to Commission staff for additional transition 
guidance.
---------------------------------------------------------------------------

VI. Other Matters

    If any of the provisions of these rules, or the application thereof 
to any person or circumstance, is held to be invalid, such invalidity 
shall not affect other provisions or application of such provisions to 
other persons or circumstances that can be given effect without the 
invalid provisions or application.
    Pursuant to the Congressional Review Act,\165\ the Office of 
Information and Regulatory Affairs has designated these rules as not a 
``major rule,'' as defined by 5 U.S.C. 804(2).
---------------------------------------------------------------------------

    \165\ 5 U.S.C. 801 et seq.
---------------------------------------------------------------------------

VII. Economic Analysis

A. Introduction

    The Commission is adopting rules to rescind Guide 3 and to update 
and codify into a new Subpart 1400 of Regulation S-K certain Guide 3 
disclosure items that do not overlap with existing disclosure 
requirements in Commission rules, U.S. GAAP, or IFRS, while adding to 
that Subpart certain credit ratio disclosure requirements. New Subpart 
1400 applies to bank and savings and loan registrants. The final rules 
are expected to streamline bank and savings and loan registrants' 
compliance efforts and may enhance comparability across issuers, to the 
benefit of both registrants and investors.
    We are mindful of the costs imposed by, and the benefits obtained 
from, our rules. In this section, we analyze potential economic effects 
stemming from the final rules and alternatives considered by the 
Commission, including those posed by commenters.\166\ We analyze these 
effects against a baseline that consists of the current regulatory 
framework and current market practices.
---------------------------------------------------------------------------

    \166\ Securities Act Section 2(a) and Exchange Act Section 3(f) 
require the Commission, when engaging in rulemaking where it is 
required to consider or determine whether an action is necessary or 
appropriate in the public interest, to consider, in addition to the 
protection of investors, whether the action will promote efficiency, 
competition, and capital formation. Further, Exchange Act Section 
23(a)(2) requires the Commission, when making rules under the 
Exchange Act, to consider the impact that the rules would have on 
competition and prohibits the Commission from adopting any rule that 
would impose a burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Exchange Act.
---------------------------------------------------------------------------

    Where possible, we have attempted to quantify the expected economic 
effects of the final rules. In many cases, however, we are unable to 
quantify these economic effects. Some of the primary economic effects, 
such as the effect on investors' search costs, are inherently difficult 
to quantify. In many instances, we lack the information or data 
necessary to provide reasonable estimates for the economic effects of 
the final rules. Furthermore, we did not receive any information from 
commenters that would allow us to further quantify the economic 
effects. Where we cannot quantify the relevant economic effects, we 
discuss them in qualitative terms. In addition, the broader economic 
effects of the final rules, such as those related to efficiency, 
competition, and capital formation, are difficult to quantify with any 
degree of certainty because the final rules simultaneously codify 
certain disclosure requirements, add new credit ratio disclosure 
requirements, and rescind disclosure items that overlap with Commission 
rules, U.S. GAAP, or IFRS. Therefore, it is difficult to quantitatively 
attribute the overall effects on efficiency, competition, and capital 
formation to specific aspects of the final rules.

[[Page 66123]]

B. Baseline

    Our baseline consists of the disclosures currently called for by 
Guide 3, as well as those provided under current market practices.
i. Regulation
    In general, Guide 3 calls for disclosures related to interest-
earning assets and interest-bearing liabilities of both domestic and 
foreign BHC registrants and registrants that have material lending and 
deposit-taking activities.\167\ Since the last substantive revision of 
Guide 3 in 1986, certain U.S. GAAP and IFRS disclosure requirements 
have changed for registrants engaged in the activities addressed in 
Guide 3, resulting in some overlap between the Guide 3 disclosure items 
and other disclosure requirements, which may impose compliance costs on 
registrants without providing additional material information to 
investors.
---------------------------------------------------------------------------

    \167\ See supra Section I for a description of Guide 3 
disclosure categories. See also instructions to Item 4 of Form 20-F, 
which indicate that the information specified in any industry guide 
that applies to the registrant should be furnished. In addition, the 
staff has observed that, although not required, Form 40-F filers 
that are banking institutions typically provide the disclosures 
called for by Guide 3.
---------------------------------------------------------------------------

    Guide 3 calls for five years of loan portfolio and loan loss 
experience data and three years of all other data. This timeframe goes 
beyond the financial statement periods specified in Commission 
rules,\168\ which generally require two years of balance sheets and 
three years of income statements for registrants other than EGCs and 
SRCs. Guide 3 provides that registrants with less than $200 million of 
assets or less than $10 million of net worth may present only two years 
of information. In contrast, the scaled disclosure regimes in 
Commission rules for SRCs and EGCs are based on other thresholds, such 
as public float, total annual revenues, or a combination of both. As 
such, some SRCs and EGCs may not qualify for scaled disclosure under 
Guide 3.
---------------------------------------------------------------------------

    \168\ See Articles 3 and 8 of Regulation S-X.
---------------------------------------------------------------------------

ii. Affected Registrants
    We define the scope of Guide 3 as the population of registrants 
that currently may be providing Guide 3 disclosures. Table 1 below 
shows the estimated number of registrants within the Guide 3 
scope,\169\ along with their cumulative assets by type and domestic/
foreign status.\170\
---------------------------------------------------------------------------

    \169\ To estimate the scope, we first identify registrants that 
meet the definition of a BHC in Rule 1-02(e) of Regulation S-X or 
that are BHCs under the Bank Holding Company Act. To estimate the 
number of BHC registrants, staff reviewed Commission filings by 
registrants in the following Standard Industrial Classification 
(``SIC'') codes to determine if the registrant met the definition of 
a BHC under Rule 1-02(e) of Regulation S-X: 6021, 6022, 6029, 6035, 
and 6036. For purposes of this economic analysis, we only considered 
BHCs that are within the following SIC codes: 6021, 6022, 6029, 
6035, 6036, 6099, 6111, 6141, 6153, 6159, 6162, 6163, 6172, 6199, 
6200, 6211, 6221, 6282, 6311, 6321, 6324, 6331, 6351, 6361, 6399, 
6411, 6500, 6510, 6519, 6798, and 7389. We note that registrants 
with SIC codes other than these may be BHCs. As such, the population 
of BHCs may be underestimated.
    We also identify certain other financial services registrants 
that have both lending and deposit-taking activities but are not 
BHCs, as these registrants may be providing Guide 3 disclosures as a 
result of their activities. For purposes of this economic analysis, 
we assume that a registrant is a financial services registrant if 
its type of business is identified by one of the following SIC 
codes: 6021, 6022, 6029, 6035, 6036, 6099, 6111, 6141, 6153, 6159, 
6162, 6163, 6172, 6199, 6200, 6211, 6221, 6282, 6311, 6321, 6324, 
6331, 6351, 6361, 6399, 6411, 6500, 6510, 6519, 6798, and 7389. We 
note that registrants with SIC codes other than these may be 
providing financial services and some registrants with the specified 
above SIC codes may not be providing financial services. As such, 
the population of financial services registrants may be under- or 
overestimated.
    For the purposes of this analysis, we define the subset of 
financial services registrants that have both lending and deposit-
taking activities as those financial services registrants that have 
any amounts of loans and deposits reported in Commission filings. We 
note that amounts of loans and deposits may not be material for some 
registrants in the subset. Therefore, the number of registrants that 
currently may be providing Guide 3 disclosures due to their 
activities may be overestimated.
    This analysis is based on data from XBRL filings and staff 
review of filings for financial services registrants that did not 
submit XBRL filings. To identify financial services registrants that 
have both lending and deposit-taking activities, we used XBRL tags 
commonly used for loans and deposits. Staff reviewed the financial 
statements of identified registrants to determine whether the tags 
were related to the type of activities described in Guide 3 and 
excluded those with unrelated activities. We note that some 
registrants may use non-standard or custom XBRL tags to identify 
their lending or deposit-taking activities. As such, the number of 
financial services registrants with lending and deposit-taking 
activities may be underestimated.
    We also note that registrants with SIC codes other than those 
specified above may have lending and deposit-taking activities. For 
example, based on data from XBRL filings, staff identified 22 
registrants that report both holdings of loans and deposit-taking 
activities and that may provide some Guide 3 disclosures.
    \170\ For purposes of this economic analysis, we define domestic 
registrants as those that file Forms 10-K and foreign registrants as 
those that file Forms 20-F.

                                                    Table 1--Registrants Within the Guide 3 Scope \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Domestic                         Foreign                          Total
                                                         -----------------------------------------------------------------------------------------------
                          Type                                              Assets,\2\
                                                              Number           $bln           Number       Assets, $bln       Number       Assets, $bln
--------------------------------------------------------------------------------------------------------------------------------------------------------
BHCs \3\................................................             391          18,251              26          23,246             417          41,497
Financial services registrants with lending and deposit-              60           1,737              16           3,104              76           4,840
 taking activities: \4\.................................
    SLHCs \5\...........................................              49             637               0               0              49             637
    Banks...............................................              11           1,099              16           3,104              27           4,203
                                                         -----------------------------------------------------------------------------------------------
        Total...........................................             451          19,988              42          26,350             493          46,337
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The estimates are based on the data as of May 1, 2020. We define active registrants as those that have filed an annual, periodic, or current report
  or registration statement with the Commission during the period beginning May 1, 2019 and ending May 1, 2020.
In the Proposing Release, we identified 487 registrants within the Guide 3 scope. Upon further review of filings, we identified four registrants
  included in Table 1 of the Proposing Release that were either inactive or no longer met the definition of a BHC or a bank; and 17 registrants that
  were inadvertently excluded from the scope of registrants providing Guide 3 disclosures. Therefore, we are updating the scope estimate for May 1, 2019
  reported in the Proposing Release from 487 to 500.
Our estimate of the scope as of May 1, 2020 excludes 30 BHC, SLHC, and bank registrants that became inactive during the period between May 1, 2019 and
  May 1, 2020 (based on the definition of active registrants for the period ending May 1, 2020) and includes 23 new financial service registrants that
  became active during the period between May 1, 2019 and May 1, 2020. As a result, the estimated number of registrants within the Guide 3 scope
  decreased from 500 to 493 during the period between May 1, 2019 and May 1, 2020.
\2\ The estimates for total assets of registrants are based on these registrants' most recent Form 10-K or Form 20-F filed as of May 1, 2020. The
  analysis is based on data from XBRL filings and staff review of filings for financial services registrants that did not submit XBRL filings. For
  foreign registrants that report total assets in local currency, we used exchange rates as of December 31, 2019 to convert their reported value to U.S.
  dollars.

[[Page 66124]]

 
\3\ Data on holding companies subject to the Bank Holding Company Act was obtained from Reporting Form FR Y-9C for holding companies as of Q4 2019.
\4\ In Table 1 of the Proposing Release, we identified four registrants in the ``other'' category. We defined other registrants as those that did not
  meet the definition of a bank, savings and loan holding company (``SLHC''), or savings and loan association (``SLA''). Upon further stuff review, we
  reclassified these four registrants as BHCs because they met the definition of a BHC under Rule 1-02(e) of Regulation S-X, as of May 1, 2020.
\5\ We identified only SLHCs and did not identify any SLAs within the population of financial services registrants with lending and deposit-taking
  activities.

    We estimate that, among registrants identified as being within the 
scope of Guide 3, approximately 84.6% are BHCs that in aggregate hold 
approximately 89.6% of total Guide 3 registrants' total assets. We also 
estimate that, among the registrants within the scope of Guide 3, 91.4% 
are domestic registrants that in aggregate hold 43.1% of total Guide 3 
registrants' total assets. Although the number of foreign registrants 
is much smaller than the number of domestic registrants, foreign 
registrants in aggregate hold approximately 56.9% of total assets, as 
shown by the total assets in Table 1.
    Table 2 below shows the estimated number of registrants within the 
scope of Guide 3 that qualify for scaled Guide 3 disclosures, as well 
as the number of registrants that qualify for SRC and/or EGC status.

Table 2--Scaled Disclosure Thresholds for Registrants Within the Guide 3
                                Scope \1\
------------------------------------------------------------------------
                                            Qualifying registrants
                                     -----------------------------------
     Scaled disclosure threshold                          Total assets
                                           Number             $bln
------------------------------------------------------------------------
Guide 3 scaled threshold registrants                 7                 7
SRC registrants.....................               204               257
EGC registrants.....................                73               143
------------------------------------------------------------------------
\1\ To estimate the number of registrants that meet the Guide 3 scaled
  disclosure threshold, the staff analyzed the most recent Form 10-K or
  Form 20-F filed as of May 1, 2020. The analysis was based on data from
  XBRL filings and staff review of filings for those registrants that
  did not submit their filings in XBRL format. The estimates for the
  number of affected registrants that are SRCs are based on information
  from their most recent annual filing, as of May 1, 2020. The estimates
  for the number of affected registrants that are EGCs are based on
  their most recent periodic filings, as of May 1, 2020.

    Among the 493 registrants within the Guide 3 scope, 44% are either 
SRCs or EGCs.\171\ However, only 1% of registrants within the Guide 3 
scope qualify for scaled disclosure in Guide 3. We also estimate that 
among the seven registrants that qualify for scaled Guide 3 disclosure, 
six are either an SRC, an EGC, or both.
---------------------------------------------------------------------------

    \171\ We note that 54 affected registrants are both SRCs and 
EGCs.
---------------------------------------------------------------------------

C. Economic Effects

    The economic effects of the final rules primarily stem from changes 
to the substance and reporting periods of the Guide 3 disclosure items, 
including, among other things, the addition of certain new credit ratio 
disclosure requirements. As a result, the affected bank and savings and 
loan registrants would experience changes in their compliance costs. In 
particular, affected registrants would experience a decrease in 
compliance costs stemming from a removal of overlapping disclosure 
items and reduced reporting periods. However, this reduction may be 
fully or partially offset by an increase in costs stemming from the 
proposed new credit ratio disclosure requirements and more 
disaggregated disclosure requirements. As discussed in Section VIII.B.v 
below, we estimate that the final rules will on aggregate increase 
paperwork and reporting burdens for the affected registrants.\172\ As a 
result, these costs may flow through to customers in the form of higher 
costs for financial services, and to shareholders in the form of lower 
earnings. On the other hand, the final rules are expected to decrease 
investors' search costs and reduce information asymmetries between 
investors and affected registrants, which may lead to increased 
allocative efficiency and lower cost of capital. Below, we first 
discuss the economic effects of changes to the substance and reporting 
periods of the disclosure requirements, followed by a discussion of 
economic effects related the scope and applicability of the disclosure 
requirements and the location and format of the required disclosures.
---------------------------------------------------------------------------

    \172\ See infra Section VIII for a discussion of our estimates--
for PRA purposes--of the burdens and costs associated with the final 
rules.
---------------------------------------------------------------------------

i. Codified Disclosures
    The final rules codify in a new Subpart 1400 of Regulation S-K 
Guide 3 disclosure items that do not significantly overlap with 
disclosure requirements in other Commission rules, U.S. GAAP, and IFRS.
a. Costs and Benefits
    Codifying Guide 3 disclosure items that do not significantly 
overlap with disclosure requirements in Commission rules, U.S. GAAP, 
and IFRS provides a single source of disclosure requirements about the 
specified financial activities, which will facilitate compliance and 
may make it easier for registrants to understand their disclosure 
obligations. Codifying disclosure requirements in Regulation S-K may 
cause affected registrants to expend additional resources to produce 
the disclosures, as the status of the disclosure items would be 
elevated from staff guidance to a rule, which could result in 
additional costs. However, this effect may be fully or partially 
offset, due to the elimination of uncertainty around the existing 
disclosure structure for BHCs and registrants with material lending and 
deposit-taking activities under Guide 3, as well as any uncertainty on 
the part of registrants as to whether specific disclosures are 
required, given the staff guidance status of Guide 3.
    The final rules modify some of the disclosure requirements that are 
being codified to better align them with other existing reporting 
practices. Specifically, the final rules align the investment 
categories in Item II.B and loan categories in Items III.B, IV.A, and 
IV.B of Guide 3 with the respective debt securities and loan categories 
required to be disclosed in the registrant's U.S. GAAP or IFRS 
financial statements. One commenter generally supported aligning the 
loan categories to the existing U.S.

[[Page 66125]]

GAAP and IFRS requirements.\173\ We believe that revising loan and debt 
securities categories to conform to financial statement categories will 
promote comparability and consistency of disclosures within a 
registrant's filing and reduce the preparation burdens and other 
related costs imposed on affected registrants. However, we recognize 
that, to the extent that Guide 3 loan and investment categories provide 
information incremental to financial statement categories, and bank and 
savings and loan registrants currently provide these disclosures based 
on the Guide 3 categories, investors may lose this information.
---------------------------------------------------------------------------

    \173\ See letter from BAC.
---------------------------------------------------------------------------

    In the Proposing Release, we proposed to codify Guide 3 maturity 
categories for loan disclosures without a change: Due in one year or 
less, due in one to five years, and due after five years. However, two 
commenters indicated that some loan categories may be predominantly 
classified into a single maturity bucket due to their nature, and, 
therefore, requiring disaggregation by maturity for such loan 
categories would not provide more meaningful information to 
investors.\174\ Another commenter submitted a study concluding that 
disaggregated information may be value-relevant to investors because 
such information may have predictive and confirmatory value.\175\ In 
response to commenters' feedback, the final rules further disaggregate 
the categories of interest-earning assets and interest-bearing 
liabilities in Item I disclosures and further disaggregate the ``after 
5 year'' maturity category for loan disclosures in Item III into ``5 
years through 15 years'' and ``after 15 years.'' We expect that, under 
the final rules, some loan categories, such as real estate loans, will 
no longer be classified within a single ``after five years'' maturity 
bucket. Therefore, the final rules should provide more decision-
relevant information to investors by better accommodating maturity 
periods on commonly offered loan products. We recognize that additional 
disaggregation may increase compliance costs for the affected 
registrants, which could be passed onto customers and investors. 
However, this increase in compliance costs may be offset by a potential 
reduction in cost of capital that could arise as a result of increased 
transparency and decreased information asymmetries between investors 
and affected registrants. To the extent that investors view loans with 
maturities of 5 to 15 years and loans with maturities of 15 years or 
longer differently in terms of their risk profile, investors may be 
able to make more efficient portfolio allocation decisions.
---------------------------------------------------------------------------

    \174\ See letters from BAC and BPI/SIFMA.
    \175\ See letter from Prof. Burke (citing Qing L. Burke, Terry 
D. Warfield, & Matthew M. Wieland, Value Relevance of Disaggregated 
Information: An Examination of the Volume and Rate Analysis of Bank 
Net Interest Income, Acct. Horizons (forthcoming, 2020)).
---------------------------------------------------------------------------

    The final rules do not exclude certain loan categories from the 
sensitivities of loans to changes in interest rates disclosure 
requirement.\176\ One commenter noted that the maturity and 
sensitivities to changes in interest rates disclosures should allow for 
exclusion of loan categories that are not material to the 
registrant.\177\ Another commenter stated that mirroring loan 
categories and classes presented in the financial statements without 
the flexibility to exclude certain loan categories from the maturity 
disclosure would not result in more meaningful disclosures.\178\ 
However, as discussed in section II.H.iii above, we believe that 
immaterial loan categories generally would not be presented in the 
financial statements.\179\ Therefore, we expect the maturity 
disclosures for each reported loan category to be relevant to 
investors. Specifically, the maturity table may help investors and 
other users of Commission filings to better understand the liquidity 
profile of registrants' assets, and the interest rate disclosures may 
help them understand the interest rate risk associated with specific 
loan categories. As a result, investors' search costs, as well as 
information asymmetries between investors and affected registrants may 
decrease. In addition, while we agree with commenters that some loan 
categories historically have been predominantly classified into a 
single maturity bucket, we do not expect this always to be the case. 
For example, in an environment with decreasing interest rates, it can 
be beneficial for individuals and businesses to refinance their loans. 
In this case, the maturity of such loans may be extended, provided that 
borrowers refinanced loans with the same original maturity across 
institutions. As a result, multiple loans within a specific loan 
category presented by a registrant may have similar maturities. 
However, we do not expect the same effect to be present in an 
environment with rising interest rates.
---------------------------------------------------------------------------

    \176\ Currently, Guide 3 excludes the following domestic loan 
categories from the maturity by loan category disclosure: Real 
estate mortgage loans, installment loans to individuals, and lease 
financing.
    \177\ See letter from BAC.
    \178\ See letter from BPI/SIFMA.
    \179\ Because U.S. GAAP considers materiality, we believe that 
immaterial loan categories would not be presented as a response to 
the adopted disclosure requirements. Under the current baseline, 
Part III.A of Guide 3 calls for disclosure for each specified loan 
category, regardless of materiality.
---------------------------------------------------------------------------

    We proposed to require separate presentation of federal funds sold 
and securities purchased with agreements to resell. One commenter 
indicated that the required disaggregation of federal funds sold and 
securities purchased with agreements to resell may not be relevant for 
certain institutions and may be confusing to investors.\180\ Another 
commenter stated that the additional disaggregation in Item I appears 
to remove any element of professional judgment based on quantitative or 
qualitative materiality assessments, and therefore may result in 
disaggregation that will be of little value to users.\181\ While we 
continue to believe that more disaggregated categories of assets and 
liabilities may provide investors with insight into the drivers of 
changes in the affected registrants' net interest earnings, we 
recognize that only material categories would be relevant to investors. 
The final rules clarify that only major categories that are material 
must be disaggregated in the disclosure. We do not expect this 
clarification to substantially reduce the amount of information about 
interest-earning assets and interest-bearing liabilities available to 
investors, relative to the baseline. At the same time, this 
clarification should help registrants avoid the burden associated with 
providing such information when it is not material.
---------------------------------------------------------------------------

    \180\ See letter from ABA.
    \181\ See letter from BPI/SIFMA.
---------------------------------------------------------------------------

    The final rules also modify the categories of deposits in Item V of 
Guide 3 and require separate presentation of uninsured deposits. The 
final rules link the definition of uninsured deposits to federal or 
state deposit insurance regimes for U.S. registrants and provides 
foreign registrants the flexibility to use and disclose a definition of 
uninsured deposits appropriate for their country of domicile. 
Additionally, the final rules permit a registrant to disclose an 
estimate of uninsured deposits based on the same methodologies and 
assumptions used for the registrant's regulatory reporting requirements 
if it is not practicable to provide a precise measure of uninsured 
deposits at the reported period. Two commenters supported replacing the 
$100,000 bright-line threshold in Guide 3 with a threshold that aligns 
with federal or state deposit insurance limits.\182\ We

[[Page 66126]]

believe that by avoiding specific reference to existing dollar limits, 
the final rules better accommodate future changes in the deposit 
insurance regimes that are applicable to registrants, as it would allow 
registrants to avoid calculating two different amounts for uninsured 
deposits if the FDIC limit changes. This aspect of the final rules will 
also provide investors with more clarity as to which deposits should be 
classified as insured and which should not, potentially reducing the 
associated compliance burden and providing greater transparency for 
investors with respect to the affected registrants' sources of funding 
and risks related to these particular types of funding.
---------------------------------------------------------------------------

    \182\ See letters from BAC and A. Heilig.
---------------------------------------------------------------------------

    The final rules require disclosure of uninsured deposits. One 
commenter suggested that due to the lack of comparability among 
different deposit schemes, the disclosure of uninsured deposits may be 
misleading to investors and, therefore, should not be required.\183\ 
However, other commenters indicated that disclosure of uninsured 
deposits would provide transparency with respect to a registrant's 
sources of funding and liquidity risk profile.\184\ While recognizing 
that comparability of uninsured deposits among affected registrants may 
be limited due to different insurance regimes and differences in 
methodologies used to calculate amounts of uninsured deposits, we 
believe that the final rules provide transparency with respect to 
affected registrants' sources of funding and risks related to these 
particular types of funding. As a result, requiring disclosure of 
uninsured deposits may reduce information asymmetries between investors 
and registrants and may increase allocative efficiency.
---------------------------------------------------------------------------

    \183\ See letter from BPI/SIFMA.
    \184\ See letters from BAC and A. Heilig.
---------------------------------------------------------------------------

    The final rules also require disclosure of net charge-offs on a 
disaggregated basis, as proposed. Two commenters stated that there may 
be operational challenges or systems limitations associated with 
calculating the ratio of net charge-offs to average loans on a 
disaggregated basis.\185\ We recognize that, to the extent that some 
bank and savings and loan registrants currently may not be compiling 
data that is sufficiently granular to compute these ratios on such a 
basis, providing the disaggregated information would increase costs for 
these registrants. Another commenter indicated that this disclosure 
might not provide meaningful information to investors to the extent the 
disaggregated ratios are not significant drivers of business 
results.\186\ However, we believe that more disaggregated data for the 
net charge-off ratio may provide material information, as it could help 
investors better understand drivers of the changes in a bank and 
savings and loan registrant's charge-offs and the related provision for 
loan losses. This may result in decreased information asymmetries 
between registrants and investors and increased allocative efficiency.
---------------------------------------------------------------------------

    \185\ See letters from CAQ and Crowe.
    \186\ See letter from BPI/SIFMA.
---------------------------------------------------------------------------

b. Alternatives
    As an alternative, we could have defined uninsured deposits of 
FDIC-insured registrants based solely on whether the amount of deposits 
exceeds the FDIC insurance limit, as proposed. This alternative 
definition would count deposits that are insured by states or other 
similar deposit insurance regimes as uninsured deposits, as also 
pointed out by a commenter,\187\ despite similar risk profile between 
FDIC-insured deposits and deposits insured by states or other similar 
deposit insurance regimes. In addition, this alternative would include 
state or other regulator-insured deposits within the definition of 
uninsured deposits for FDIC-insured registrants while excluding 
deposits insured by similar deposit regimes for foreign registrants, 
which could make uninsured deposits of domestic and foreign registrants 
less comparable relative to the final rules. Therefore, we have revised 
the final definition of uninsured deposits to exclude deposits covered 
by state deposit insurance regimes.
---------------------------------------------------------------------------

    \187\ See id.
---------------------------------------------------------------------------

    As another alternative, we could have defined uninsured deposits to 
expressly include investment products such as mutual funds, annuities, 
or life insurance policies, as proposed. This alternative would have 
helped to ensure that such products are considered by registrants when 
disclosing their uninsured deposits. In response to the proposal, two 
commenters called for the final rules to explain how the term 
``uninsured deposits'' would be applied to investment products such as 
mutual funds, annuities, or life insurance policies.\188\ To avoid 
regulatory complexity, the final rules do not specify what products are 
considered uninsured deposits; rather, they allow the affected 
registrants to apply the methodology used for regulatory bank reporting 
to make such determinations. Relative to the proposal, this aspect of 
the final rules may increase comparability in the disclosure of 
uninsured deposits among registrants that share similar regulatory 
reporting requirements (as they would apply the same methodology used 
for regulatory reporting purposes) while decreasing the operational 
complexity associated with providing such disclosures.
---------------------------------------------------------------------------

    \188\ See letters from ABA and BPI/SIFMA.
---------------------------------------------------------------------------

    Finally, we could have required all affected registrants to 
disclose precise amounts of uninsured deposits, as proposed. Under this 
alternative, comparability among registrants would increase relative to 
the final rules. However, several commenters urged the Commission to 
consider operational complexities and costs of calculating the precise 
amounts of uninsured deposits rather than providing an estimate, which 
is more consistent with industry practices.\189\ We recognize that, in 
some instances, due to complex deposit insurance rules that apply 
across accounts, it may be operationally challenging and costly for 
registrants to report precise amounts of uninsured deposits. Therefore, 
the final rules allow disclosure of an estimate of uninsured deposits 
if it is not practicable to provide a precise measure. To mitigate 
potential loss of comparability due to disclosure of estimated rather 
than the precise amount of uninsured deposits, the final rules require 
that the methodologies and assumptions used for the estimate be the 
same as those used for the registrant's regulatory reporting.
---------------------------------------------------------------------------

    \189\ See e.g., letters from ABA; BPI/SIFMA; CAQ; Crowe; and 
PWC.
---------------------------------------------------------------------------

ii. New Credit Ratios
    The final rules require disclosure of three additional credit 
ratios for bank and savings and loan registrants, along with each of 
the components used in the ratios' calculation and a discussion of the 
factors that led to material changes in the ratios or related 
components.\190\ In the Proposing Release, we indicated that the 
additional compliance burden for the proposed credit ratio disclosure 
requirements would not be significant for existing bank and savings and 
loan registrants, as the components of each proposed ratio are already 
required disclosures in bank and savings and loan registrants' 
financial statements. One commenter agreed with this assessment.\191\
---------------------------------------------------------------------------

    \190\ The final rules also include an instruction stating that 
affected IFRS registrants do not have to provide either of the 
nonaccrual ratios as there is no concept of nonaccrual in IFRS.
    \191\ See letter from ABA.
---------------------------------------------------------------------------

    For similar reasons, we also stated in the Proposing Release that 
the benefit to investors of requiring these additional

[[Page 66127]]

credit ratios may be modest. One commenter agreed that the ratios are 
easily calculable from the information already required in the 
financial statements, and on that basis, questioned whether the 
separate disclosure of the ratios is necessary.\192\ We note that, 
although the ratios can be calculated from the financial statements 
under the final rules, disclosure of these ratios will be accompanied 
by a discussion of the factors that led to material changes in the 
ratios or their components. This discussion may be material information 
to investors and can potentially reduce information asymmetries between 
registrants and investors, resulting in more efficient investment 
decisions and potentially lowering cost of capital for the affected 
registrants. While we recognize that the ratios themselves can be 
calculated from the financial statements, we believe that the required 
discussion of changes to ratios or their components would be more 
complete and likely more informative with disclosure of the ratios 
themselves.
---------------------------------------------------------------------------

    \192\ See letter from CAQ.
---------------------------------------------------------------------------

    Two commenters indicated that, under the New Credit Loss 
Standard,\193\ some of the new ratios may not be as relevant to 
investors.\194\ We recognize that, under the current approach, changes 
in the allowance for credit losses are based on changes in losses 
incurred to date, whereas under the New Credit Loss Standard, changes 
in the allowance for credit losses are based on changes in estimates of 
expected losses over the life of the loan portfolio. As such, the 
allowance for credit losses to total loans ratio and allowance for 
credit losses to nonaccrual loans ratio convey different information to 
investors under the two approaches. We believe that, despite this 
important difference in the information contained in these ratios under 
alternative credit loss approaches, the disclosure of these two ratios 
along with the discussion of the factors that led to material changes 
in these ratios or their components could be material to investors, 
regardless of the approach used (New Credit Loss Standard or incurred 
loss approach). To the extent that the ratios are material to 
investors, the final rules may result in increased information 
efficiency, allowing investors to better allocate their investment 
portfolios and potentially reducing cost of capital for the affected 
registrants.
---------------------------------------------------------------------------

    \193\ See supra note 96.
    \194\ See letters from ABA and KPMG.
---------------------------------------------------------------------------

    Commenters also stated that because the timeline for the 
implementation of the New Credit Loss Standard differs among the types 
of affected registrants (e.g., a regional bank that is not an SRC 
versus a community bank that is an SRC), it may be difficult or 
confusing to compare these credit ratios across all bank and savings 
and loan registrants. We recognize that comparability of ratios across 
registrants may be reduced until all affected registrants adopt the New 
Credit Loss Standard. However, we believe that the discussion of the 
factors that led to material changes in the ratios or their components 
may mitigate this concern, as investors will be able to understand how 
the ratios and their components differ across registrants. In addition, 
as discussed in Section II.I above, we believe that the majority of 
affected registrants will adopt New Credit Loss Standard by the 
mandatory compliance date of the final rules.
iii. Not Codified Disclosures and Instructions
    The final rules do not codify the following Guide 3 disclosure 
items and instructions that overlap with Commission rules, U.S. GAAP, 
or IFRS:
     Short-term borrowing disclosures called for by Item VII.1 
and 2;
     Book value information, the maturity analysis of book 
value information, and the disclosures related to investments exceeding 
10% of stockholders' equity called for by Item II;
     Loan category disclosure, the loan portfolio risk elements 
disclosure, and the other interest-bearing assets disclosure called for 
by Item III;
     The analysis of loss experience disclosure called for by 
Item IV.A;
     The breakdown of the allowance disclosures called for by 
Item IV.B for IFRS registrants; and
     General Instruction 6 to Guide 3.
    The final rules also do not codify the disclosure items in Item VI 
of Guide 3 related to return on assets, return on equity, dividend 
payout, and equity to assets ratios. Because we are rescinding Guide 3, 
we do not anticipate affected registrants would provide any Guide 3 
disclosures not required by new subpart 1400, unless required by other 
Commission rules, U.S. GAAP, or IFRS. However, registrants may 
voluntarily continue to provide these disclosures.
a. Costs and Benefits
    To the extent that the disclosure items not codified are reasonably 
similar to disclosure requirements in Commission rules, U.S. GAAP, or 
IFRS, not including these disclosure requirements in Regulation S-K 
should facilitate bank and savings and loan registrants' compliance 
efforts by reducing the need to replicate disclosures or reconcile 
overlapping disclosure requirements, and decrease the reporting burdens 
for the registrants that currently may be following Guide 3. This is 
consistent with feedback received from some commenters, who stated that 
the removal of overlapping disclosure requirements will streamline 
compliance efforts and decrease registrants' reporting burdens.\195\
---------------------------------------------------------------------------

    \195\ See, e.g., letter from BAC.
---------------------------------------------------------------------------

    Investors should not be adversely affected by the decision not to 
codify the aforementioned disclosure items, given that the overlapping 
disclosure requirements in Commission rules, U.S. GAAP, or IFRS elicit 
reasonably similar information. Moreover, some commenters pointed out 
that duplication of information and/or presentation of information that 
is almost, but not quite, the same, can prove confusing to 
investors.\196\ To the extent that this effect is present, the more 
streamlined presentation of information may reduce search costs for 
investors and decrease information asymmetries between registrants and 
investors. On the other hand, to the extent that the Guide 3 disclosure 
items elicit incremental information to investors, not codifying these 
disclosure items could marginally increase information asymmetries and 
investor search costs.
---------------------------------------------------------------------------

    \196\ See, e.g., letter from BPI/SIFMA.
---------------------------------------------------------------------------

    The final rules do not codify the ratios in Item VI of Guide 3. 
Because these ratios are not specific to the activities of bank and 
savings and loan registrants, we believe that in most cases the Item VI 
ratios do not provide additional information about the risks that are 
particular to the affected registrants. In addition, to the extent the 
Item VI ratios may be relevant to some affected registrants, 
codification of these ratios could be viewed as duplicative because 
Commission guidance on Item 303 of Regulation S-K states that companies 
should identify and discuss key performance indicators when they are 
used to manage the business and would be material to investors.\197\ 
Moreover, users of financial disclosures can calculate the ratios based 
on information already disclosed in Commission filings. Therefore, 
eliminating the disclosure of these ratios should not result in the 
loss of material information.
---------------------------------------------------------------------------

    \197\ See Proposing Release at note 264 (citing the 2003 MD&A 
Interpretive Release, supra note 69). See also the 2020 MD&A 
Interpretive Release, supra note 156.
---------------------------------------------------------------------------

    The final rules also do not codify the undue burden or expense 
accommodation for foreign registrants in General Instruction 6 of Guide 
3. One

[[Page 66128]]

commenter indicated that this accommodation should be codified,\198\ 
and several commenters \199\ noted that they had seen limited use of 
the accommodation in Rules 409 and 12b-21 and therefore surmised that 
it may be rare for a registrant to be able to demonstrate that the 
required information is not reasonably available or that obtaining it 
may require unreasonable effort or expense.\200\ However, these 
commenters did not provide any specific examples of when reliance on 
the accommodation in General Instruction 6 of Guide 3 would be 
necessary, notwithstanding the flexibility in disclosure provided to 
IFRS registrants under the final rules and the ability of all 
registrants to rely on Securities Act Rule 409 and Exchange Act Rule 
12b-21. To the extent that some registrants currently rely on the undue 
burden accommodation in General Instruction 6 and would be unable to 
rely on Securities Act Rule 409 or Exchange Act Rule 12b-21, these 
registrants may experience an increase in compliance costs. However, 
the final rules' linkage of categories of debt securities and loans 
with those required by U.S. GAAP and IFRS should reduce the need for 
foreign registrants to seek regulatory accommodations with respect to 
the final disclosure requirements. In addition, as noted in Section 
II.D above, the staff has not received any requests from foreign 
registrants seeking relief under General Instruction 6 during the past 
10 years. Thus, we do not expect any such increase in compliance costs 
to be substantial.
---------------------------------------------------------------------------

    \198\ See letter from BPI/SIFMA.
    \199\ See letters from CAQ; Crowe; Deloitte; and KPMG.
    \200\ See supra note 31.
---------------------------------------------------------------------------

iv. Reporting Periods
    The final rules align the reporting periods for the required 
disclosures with the periods required by Commission rules for financial 
statements, rather than the longer periods called for by Guide 3.
a. Costs and Benefits
    Consistent with commenters' feedback,\201\ we believe that 
alignment of reporting periods with the periods required by Commission 
rules for financial statements will reduce compliance costs for 
registrants currently following Guide 3 and will make it easier for 
both investors and bank and savings and loan registrants to determine 
which periods should be disclosed and why they are disclosed. We 
believe that the cost reduction associated with this alignment will be 
more pronounced for affected registrants that are EGCs or SRCs. As 
indicated in Table 2 above, only seven registrants within the Guide 3 
scope qualify for scaled disclosure under Guide 3. However, we estimate 
that 223 registrants within the Guide 3 scope are either EGCs, SRCs, or 
both; and among these, only six qualify for the scaled disclosure under 
Guide 3. In contrast, under Commission rules, all EGCs and SRCs qualify 
for scaled disclosure. As such, the final rules will provide the same 
relief to these registrants as they have under other Commission rules, 
reducing their compliance costs.
---------------------------------------------------------------------------

    \201\ See, e.g., letters from ABA; BAC; BPI/SIFMA; and EY.
---------------------------------------------------------------------------

    Because prior period information for existing registrants is 
publicly available on EDGAR, scaling the number of reporting periods 
required to be presented in a particular filing should not have a 
significant adverse impact on investors of existing registrants. We 
acknowledge, however, that, to the extent that investors of new bank 
and savings and loan registrants rely on Guide 3 information that 
covers a longer period of time than the required reporting periods 
under the final rules, information asymmetries between investors and 
new bank and savings registrants may increase.
b. Alternatives
    As an alternative, we considered codifying the current Guide 3 
reporting periods. Under this alternative, all bank and savings and 
loan registrants with total assets over $200 million or net worth over 
$10 million, including SRCs and EGCs, would provide the loan and 
allowance for credit losses disclosures for five years and the rest of 
the disclosures for three years. As such, the data would be required 
for a longer period of time than Commission rules require for financial 
statements. On the one hand, additional historical periods may benefit 
investors in new bank and savings and loan registrants, as historical 
information is not publicly available for these registrants.\202\ On 
the other hand, under this alternative, the majority of SRCs and EGCs 
would not realize the benefits of scaled disclosure, which would impose 
higher compliance costs for these registrants. On balance, we believe 
benefits of scaled disclosure justify the reduction in historical 
information.
---------------------------------------------------------------------------

    \202\ See letters from BAC and EY.
---------------------------------------------------------------------------

v. Scope
a. Costs and Benefits
    The final rules will apply to bank and savings and loan 
registrants. One commenter agreed that the final rules' scope captures 
the majority of registrants who currently provide Guide 3 
disclosures.\203\ We agree with the commenter and expect that this 
approach will not subject any additional registrants to requirements to 
disclose information currently called for by Guide 3 and will not 
exclude any registrants that are within the Guide 3 scope from the 
final rules' disclosure requirements, as our analysis indicates that 
the population identified above in Table 1 includes all bank and 
savings and loan registrants within the financial services industry. At 
the same time, the final rules' scope will provide more certainty to 
registrants with lending and deposit-taking activities because they no 
longer will need to assess the applicability of Guide 3 based on the 
materiality of their activities and, instead, will be explicitly 
required to provide disclosure based on whether they are a bank and 
savings and loan registrant.
---------------------------------------------------------------------------

    \203\ See letter from BAC.
---------------------------------------------------------------------------

b. Alternatives
    As an alternative to the final scope, we considered a scope that 
would not be limited to bank and savings and loan registrants, but 
instead would encompass all financial services registrants that conduct 
the activities addressed in the final rules. Such an approach was 
supported by one commenter.\204\ Tables 3 below shows the estimated 
number of financial services registrants \205\ that conduct activities 
addressed in the final rules and Table 4 lists these financial services 
registrants by their type of business. Both tables display the 
applicability of the final rules to these registrants.
---------------------------------------------------------------------------

    \204\ See letter from M. Deering.
    \205\ See supra note 169.

[[Page 66129]]

                                                  Table 3--Activities of Financial Services Registrants
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Holding debt securities \1\            Holding loans                  Deposit-taking
             Financial services registrants              -----------------------------------------------------------------------------------------------
                                                              Number       Assets, $bln       Number       Assets, $bln       Number       Assets, $bln
--------------------------------------------------------------------------------------------------------------------------------------------------------
Within final rules' scope...............................             493          46,337             493          46,337             493          46,337
Not within final rules' scope...........................             527          19,759             296          16,979               0               0
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................           1,020          66,096             789          63,316             493          46,337
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For purposes of this economic analysis, we define financial services registrants holding debt securities as those that have any investment
  securities reported in their financial statements. The analysis was based on data from XBRL filings and staff review of filings for financial services
  registrants that did not submit XBRL filings. To the extent that the estimate includes financial services registrants that hold equity and not debt
  securities or that hold debt securities that are not material, the number of financial services registrants with holdings of debt securities may be
  overestimated. To the extent that some financial services registrants may use non-standard or custom XBRL tags to identify their investment activities
  or that there are financial services registrants outside of the SIC codes specified in note 169, supra, the number of financial services registrants
  with holdings of debt securities may be underestimated. To estimate the number of registrants holding debt securities, the staff analyzed the most
  recent Form 10-K or Form 20-F filed as of May 1, 2020 for financial services registrants.

                                                   Table 4--Financial Services Registrants by Type \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Within final rules' scope     Not within final rules' scope               Total
               Type of financial services                -----------------------------------------------------------------------------------------------
                                                              Number       Assets, $bln       Number       Assets, $bln       Number       Assets, $bln
--------------------------------------------------------------------------------------------------------------------------------------------------------
Banking and saving \2\..................................             461          40,995               2               0             463          40,995
Credit and finance......................................              20           1,706              62           6,552              82           8,258
Brokers, dealers, and exchanges.........................               7           3,436              93             832             100           4,268
Investment advice.......................................               1             152              43             263              44             415
Insurance...............................................               1              12             142          10,460             143          10,471
Real estate.............................................               0               0             213           1,658             213           1,658
Other financial services................................               3              37              65             510              68             547
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................             493          46,337             620          20,274           1,113          66,612
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ We used SIC codes 6021, 6022, 6029, 6035, and 6036 to identify banks and saving institutions; SIC codes 6111, 6141, 6153, 6159, 6162, 6172, and 6199
  to identify credit and finance services registrants; SIC codes 6163, 6200, 6211, and 6221 to identify brokers, dealers, and exchanges; SIC code 6282
  to identify investment advisers; SIC codes 6311, 6321, 6324, 6331, 6351, 6361, 6399, and 6411 to identify insurance services companies; SIC codes
  6500, 6510, 6519, and 6798 to identify real estate registrants; and SIC codes 6099 and 7389 to identify registrants that provide other financial
  services.
\2\ We note that there are 30 registrants outside of the SIC codes 6021, 6022, 6029, 6035, and 6036 (and thus not included in the 463 banking and
  savings registrants) that are either identified as BHCs under the BHC Act or Rule 1-02(e) of Regulation S-X, or identified as SLHCs.

    We estimate that, out of 1,113 financial services registrants that 
report at least one of the activities addressed in the final rules in 
their filings, 620 registrants that in aggregate hold 30.4% of 
financial services registrants' assets are not within the scope of the 
final rules. Under the alternative approach discussed above, these 620 
financial services registrants would be subject to the final rules and 
would experience an increase in compliance costs as a result of new 
disclosure obligations. Among these 620 registrants, 203 report 
holdings of debt securities and loans, 93 report holdings of loans 
only, and 324 report holdings of debt securities only. We also estimate 
that all of 493 financial services registrants that report deposit-
taking activities will be within the final rules' scope; however, out 
of 1,020 financial services registrants that hold debt securities, 527 
registrants that in aggregate hold approximately 29.9% of assets among 
financial services registrants with debt securities would not be within 
the final rules' scope; out of 789 financial services registrants that 
hold loans, 296 registrants that in aggregate hold approximately 26.8% 
of assets among financial services registrants with holdings of loans 
would not be within the final rules' scope. Under the alternative 
approach discussed above, the disclosure of these activities would be 
required for the financial services registrants that do not fall under 
the definition of a banking and savings registrant.
    To the extent that certain types of registrants outside the final 
rules' scope conduct activities similar to bank and savings and loan 
registrants, this alternative approach could lead to more consistent 
and comparable disclosure among registrants that provide similar 
financial services and help investors better compare registrants that 
conduct similar activities, which in turn could increase allocative 
efficiency. In addition, to the extent registrants that conduct one of 
the activities addressed by the final rules are not within the final 
rules' scope, and to the extent that these registrants currently have a 
competitive advantage over registrants providing Guide 3 disclosures 
due to lower costs, the alternative may decrease this disparity. 
However, given that many of the 620 registrants that do not fall within 
the final rules' scope may not currently provide the disclosures we are 
codifying, the increased costs due to this alternative approach may be 
significant. However, we note that even for a registrant that will not 
be subject to disclosure requirements under the final rules, other 
Commission disclosure requirements, such as MD&A, or investor demand 
may elicit certain disclosure about financial activities of these 
registrants to the extent they are material.
vi. Applicability of Disclosure
a. Costs and Benefits
    Guide 3 calls for disclosure related to lending, deposit-taking, 
and investment activities, regardless of materiality of these 
activities; and specifies a few bright-line thresholds for disclosure 
of specific items related to these activities. The final rules codify 
the 10% bright-line disclosure threshold for deposit categories 
disclosure, clarify that disaggregation of Item I disclosures is

[[Page 66130]]

required only for material items,\206\ and do not specify disclosure 
thresholds, similar to Guide 3, for any of the other disclosure 
requirements that are being codified. As such, we believe that this 
aspect of the final rules will not result in meaningful economic 
effects for registrants and investors as compared to the baseline.
---------------------------------------------------------------------------

    \206\ The existing language in Item I of Guide 3 indicates that 
registrants ``should'' rather than ``must'' include specific 
disaggregated categories. We believe that clarifying the final rules 
to add a materiality qualifier should bring the required disclosures 
more in line with existing disclosure practices under Guide 3. See 
supra Section VII.C.i.a for a discussion of economic effects related 
to disaggregation of Item I.
---------------------------------------------------------------------------

b. Alternatives
    As an alternative, we considered requiring disclosures based on the 
materiality of the relevant financial activities to the registrant's 
business or financial statements. While a materiality-based approach 
may result in a more tailored compliance regime and elicit disclosure 
that is more relevant to a registrant's operations, such an approach 
could increase uncertainty about whether bank and savings and loan 
registrants need to provide disclosures, as these registrants would 
have to make a judgment about which of their activities are material. 
This alternative approach may also lead to a decreased comparability 
between registrants that conduct activities specified in the final 
rules. In addition, if certain investors have a different perception 
than registrants about what activities are material, these investors 
may have less information on which to base their investment decisions.
    As another alternative, we considered using a bright-line threshold 
for all proposed disclosure requirements. Such an approach may be 
easier to apply as it would not require judgment and would reduce bank 
and savings and loan registrants' uncertainty about whether they need 
to provide disclosures. However, a bright-line threshold may be under- 
or over-inclusive, especially for bank and savings and loan registrants 
with a level of activities just below or over the specified threshold. 
As a result, disclosures by registrants that fall just below the 
threshold would be less comparable to those of registrants above the 
threshold, despite conducting similar activities. In addition, under 
this alternative, some bank and savings and loan registrants may be 
incentivized to actively manage their activity to the level just below 
the threshold such that they would not have to provide the disclosures 
for specified activities, even though those activities could be 
material to their business. In this instance, the bright-line approach 
would be under-inclusive.
vii. Location of Disclosures
a. Costs and Benefits
    Investors and other users of Commission filings may process 
information located in different places within a registrant's filing 
differently. The final rules provide bank and savings and loan 
registrants with flexibility to determine where in the filing to 
present the required information, just as they do under the current 
Guide 3 instructions.\207\ As such, we expect that this aspect of the 
final rules will not result in meaningful economic effects for 
registrants and investors as compared to the baseline.
---------------------------------------------------------------------------

    \207\ Based on the staff's review of financial services 
registrants' annual reports that contain Guide 3 disclosures, there 
currently is diversity in location of the disclosures, with some 
registrants providing the disclosures in the Business section and 
others providing it in MD&A. Several commenters also noted that the 
disclosures currently called for by Guide 3 are typically included 
in the Business section or in MD&A. See letters from CAQ; Crowe; and 
EY. Two other commenters noted that many preparers include existing 
Guide 3 disclosures in MD&A in conjunction with other required MD&A 
disclosures, while others include the information within their 
financial statements. See letters from BAC and BPI/SIFMA.
---------------------------------------------------------------------------

b. Alternatives
    As an alternative, we could have required disclosures to be placed 
in the footnotes to the financial statements. Several commenters noted 
that under this alternative approach, the footnote disclosures would be 
subjected to audit procedures, and registrants would need to file the 
disclosures in an XBRL format.\208\ One of these commenters stated that 
requiring the disclosures to be included in the footnotes would likely 
increase audit costs.\209\ As such, we expect that affected 
registrants' compliance costs would be higher under this alternative, 
relative to the final rules.
---------------------------------------------------------------------------

    \208\ See e.g., letters from CAQ; Deloitte; and EY.
    \209\ See letter from EY.
---------------------------------------------------------------------------

    In the Proposing Release, we noted that requiring the disclosure to 
be located in the footnotes to financial statements could increase 
reliability of disclosures and decrease search costs for users of 
financial statements and information asymmetries between investors and 
bank and savings and loan registrants. One commenter, however, 
indicated that allowing registrants to decide where best to present the 
disclosure will result in a superior presentation, with related 
disclosures being grouped together.\210\ We agree that prescribing a 
specific location for the disclosures could diminish bank and savings 
and loan registrants' ability to present the information in the context 
in which it is most relevant and understandable for investors reading 
the report. In addition, this alternative would increase compliance 
costs for those bank and savings and loan registrants that currently 
provide the aforementioned disclosures within the MD&A section.
---------------------------------------------------------------------------

    \210\ See letter from BPI/SIFMA. Several other commenters 
supported retaining the existing flexibility to determine where the 
disclosures are provided. See letters from ABA; BAC; BPI/SIFMA; and 
EY.
---------------------------------------------------------------------------

viii. Format of Disclosures
    In the Proposing Release, we requested comment on whether the 
disclosures addressed in the final rules should be provided in a 
structured machine-readable format. A few commenters supported the use 
of the structured machine-readable Inline XBRL format for disclosures 
addressed in the final rules, regardless of their location.\211\ 
According to these commenters, this requirement would ensure 
consistency of data across all affected registrants.\212\ In addition, 
these commenters stated that data provided in a structured format 
encourages more robust and in-depth analysis due to reduced costs of 
analysis.\213\
---------------------------------------------------------------------------

    \211\ See letters from CFA and XBRL.
    \212\ Id. See also letter from EY.
    \213\ See letters from CFA and XBRL.
---------------------------------------------------------------------------

    On the other hand, two commenters stated that the cost to 
registrants of providing the information in XBRL format could be 
significant.\214\ One commenter indicated that such an approach would 
be confusing for users of financial statements and would reduce 
comparability among registrants.\215\ In addition, some commenters 
indicated that it may be difficult for registrants that provide 
disclosures addressed in the final rules within their MD&A section to 
selectively provide such disclosures in a structured data format while 
providing other MD&A disclosures in a non-structured data format.\216\
---------------------------------------------------------------------------

    \214\ See letters from ABA and BPI/SIFMA.
    \215\ See letter from BAC.
    \216\ See letters from BPI/SIFMA and BAC.
---------------------------------------------------------------------------

    While we recognize that having the data provided in a structured 
machine-readable format could increase financial statement 
comparability and enable investors and other users of Commission 
filings to access and use disclosures more easily, thus reducing 
information asymmetries between investors and affected registrants, we 
also recognize

[[Page 66131]]

the challenges of providing data in structured format.\217\
---------------------------------------------------------------------------

    \217\ See Section VI.C.vii of the Proposing Release for a 
discussion of academic research on the benefits and costs of XBRL.
---------------------------------------------------------------------------

    Specifically, requiring final rules' disclosures to be submitted in 
a structured machine-readable format regardless of their location may 
impose additional compliance costs on those affected registrants that 
currently provide the disclosures within their MD&A section in a non-
structured format. Even though the costs of providing disclosures in 
XBRL format may have declined in the recent years,\218\ requiring 
registrants that provide the final rules' disclosures within their MD&A 
section to provide these disclosures in a structured data format may 
initially increase their compliance costs, relative to unaffected 
registrants, for which MD&A disclosures are not required to be in a 
structured data format. Ultimately, for the reasons discussed in 
Section II.B above, we decided not to adopt this alternative.
---------------------------------------------------------------------------

    \218\ Two commenters referenced a study that estimates that XBRL 
preparation costs for small companies declined by 45% from 2014 to 
2017, and that the average cost of a full-year of fully outsourced 
XBRL preparation for such companies in 2017 was less than $5,500. 
See letters from CFA and XBRL. See also Press Release, AICPA, XBRL 
Costs for Small Companies Have Declined 45%, According to AICPA 
Study (Aug. 18, 2018), available at https://www.aicpa.org/press/pressreleases/2018/xbrl-costs-have-declined-according-to-aicpa-study.
    As a baseline matter, all affected registrants currently are 
subject to Inline XBRL tagging requirements for the financial 
statements and cover pages in their periodic reports and for the 
financial statements in certain registration statements.
---------------------------------------------------------------------------

D. Effects on Efficiency, Competition, and Capital Formation

    Consistent with commenters' feedback, we believe that the 
codification of certain Guide 3 disclosure items may promote 
comparability among filings, increase the quality and availability of 
information about bank and savings and loan registrants' activities, 
and help avoid uncertainty about when the disclosures are required. As 
a result, the final rules may reduce information asymmetries, allowing 
investors to achieve better allocative efficiency which, in turn, may 
increase the demand for securities offerings, reduce costs of capital, 
and enhance capital formation.
    The outcome of not codifying the disclosure requirements that 
overlap with Commission rules, U.S. GAAP, and IFRS on informational 
efficiency depends on the balance of two effects. On the one hand, the 
clarity of information presented in Commission filings may increase, 
which would reduce search costs for investors who do not use 
computerized search tools for locating data and lead to more efficient 
information processing. Given that some investors may have limited 
attention and limited information processing capabilities \219\ and may 
invest more in firms with more concise disclosures,\220\ we believe 
that eliminating overlapping or duplicative information should 
facilitate more efficient investment decision-making, enhancing the 
informational and allocative efficiency of the market and facilitating 
capital formation. On the other hand, not codifying certain Guide 3 
disclosure items could lead to increased information asymmetries 
between investors and bank and savings and loan registrants to the 
extent that some of the Guide 3 disclosure items that overlap with, but 
are not entirely duplicative of, U.S. GAAP or IFRS disclosures would no 
longer be called for by an industry guide. This impact may be 
heightened for smaller registrants and first time entrants, as these 
types of registrants may exhibit more information asymmetries due to 
less historical information being available for investors. We did not 
receive any comments that quantify the size of either of these two 
effects. As such, we acknowledge that both effects may be present.
---------------------------------------------------------------------------

    \219\ See, e.g., David Hirshleifer & Siew Hong Teoh, Limited 
Attention, Information Disclosure, and Financial Reporting, 36 J. 
Acct. & Econ. 337 (2003).
    \220\ See, e.g., Alastair Lawrence, Individual Investors and 
Financial Disclosure, 56 J. Acct. & Econ. 130 (2013); Michael S. 
Drake, Jeffrey Hales, & Lynn Rees, Disclosure Overload? A 
Professional User Perspective on the Usefulness of General Purpose 
Financial Statements, 36 Contemp. Acct. Res. 1935 (2019).
---------------------------------------------------------------------------

    The final rules also may have several effects on competition.\221\ 
First, to the extent that compliance costs increase for bank and 
savings and loan registrants under the final rules, private banking 
companies may gain additional competitive advantage from not incurring 
such increased costs. Second, to the extent that certain costs related 
to required disclosures are fixed, these burdens may have a larger 
impact on smaller bank and savings and loan registrants, potentially 
reducing their ability to offer banking products and terms that would 
enable them to better compete with their larger peers. Third, the cost 
savings from not codifying all of the Guide 3 disclosure items may be 
larger for IFRS bank and savings and loan registrants, as they often 
face particular challenges in presenting the Guide 3 disclosures that 
presume a U.S. GAAP presentation; however; we do not anticipate this 
effect to be substantial.\222\ Although we requested comment on the 
extent of the aforementioned effects on competition, we did not receive 
any feedback from commenters. As such, we acknowledge that all three 
effects may be present.
---------------------------------------------------------------------------

    \221\ See Section VI.D of the Proposing Release for a more 
detailed discussion.
    \222\ See id.
---------------------------------------------------------------------------

VIII. Paperwork Reduction Act

A. Summary of the Collections of Information

    Certain provisions of our rules that would be affected by the final 
rules contain ``collection of information'' requirements within the 
meaning of the Paperwork Reduction Act of 1995 (``PRA'').\223\ The 
Commission published a notice requesting comment on the collection of 
information requirements in the Proposing Release, and submitted the 
proposed rules to the Office of Management and Budget (``OMB'') for 
review in accordance with the PRA.\224\ While some commenters provided 
comments on the possible costs of the proposed rules,\225\ no 
commenters specifically addressed our PRA analysis. Where appropriate, 
we have revised our burden estimates after considering other relevant 
comments as well as differences between the proposed and final rules.
---------------------------------------------------------------------------

    \223\ 44 U.S.C. 3501 et seq.
    \224\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
    \225\ See, e.g., letters from ABA; BPI/SIFMA; CAQ; Crowe; EY; 
and PWC.
---------------------------------------------------------------------------

    The hours and costs associated with preparing and filing the forms 
and reports constitute reporting and cost burdens imposed by each 
collection of information. An agency may not conduct or sponsor, and a 
person is not required to respond to, a collection of information 
requirement unless it displays a currently valid OMB control number. 
Compliance with the information collections is mandatory. Responses to 
the information collections are not kept confidential and there is no 
mandatory retention period for the information disclosed. The titles 
for the affected collections of information are:
     Regulation S-K (OMB Control No. 3235-007); \226\
---------------------------------------------------------------------------

    \226\ The paperwork burden from Regulation S-K is imposed 
through the forms that are subject to the requirements in that 
regulation and is reflected in the analysis of those forms. To avoid 
a PRA inventory reflecting duplicative burdens and for 
administrative convenience, we do not assign paperwork burdens to 
Regulation S-K.
---------------------------------------------------------------------------

     Form S-1 \227\ (OMB Control No. 3235-0065);
---------------------------------------------------------------------------

    \227\ 17 CFR 239.11.

---------------------------------------------------------------------------

[[Page 66132]]

     Form S-3 \228\ (OMB Control No. 3235-0073); \229\
---------------------------------------------------------------------------

    \228\ 17 CFR 239.13.
    \229\ The paperwork burdens for Form S-3 and Form F-3 that would 
result from the final rules are imposed through the forms from which 
they are incorporated by reference and reflected in the analysis of 
those forms.
---------------------------------------------------------------------------

     Form S-4 \230\ (OMB Control No. 3235-0324);
---------------------------------------------------------------------------

    \230\ 17 CFR 239.25.
---------------------------------------------------------------------------

     Form F-1 \231\ (OMB Control No. 3235-0258);
---------------------------------------------------------------------------

    \231\ 17 CFR 239.31.
---------------------------------------------------------------------------

     Form F-3 \232\ (OMB Control No. 3235-0256);
---------------------------------------------------------------------------

    \232\ 17 CFR 239.33.
---------------------------------------------------------------------------

     Form F-4 \233\ (OMB Control No. 3235-0325);
---------------------------------------------------------------------------

    \233\ 17 CFR 239.34.
---------------------------------------------------------------------------

     Form 10 \234\ (OMB Control No. 3235-0064);
---------------------------------------------------------------------------

    \234\ 17 CFR 249.210.
---------------------------------------------------------------------------

     Form 10-K \235\ (OMB Control No. 3235-0064);
---------------------------------------------------------------------------

    \235\ 17 CFR 249.310.
---------------------------------------------------------------------------

     Form 10-Q \236\ (OMB Control No. 3235-0070);
---------------------------------------------------------------------------

    \236\ 17 CFR 249.308a.
---------------------------------------------------------------------------

     Form 20-F (OMB Control No. 3235-0063); and
     Regulation A (Form 1-A) \237\ (OMB Control No. 3235-0286).
---------------------------------------------------------------------------

    \237\ 17 CFR 239.90.
---------------------------------------------------------------------------

    The regulations and forms listed above were adopted under the 
Securities Act or the Exchange Act. The regulations and forms set forth 
the disclosure requirements for registration statements, offering 
statements, and periodic reports filed by registrants and issuers to 
help investors make informed investment decisions. A description of the 
final rules, including the need for the information and its use, as 
well as a description of the likely respondents, can be found in 
Sections II through V above, and a discussion of the economic effects 
of the proposed rules can be found in Section VII above.

B. Burden and Cost Estimates Related to the Proposed Rules

i. Affected Registrants and Forms
    We estimate that, currently, approximately 493 bank and savings and 
loan registrants provide the disclosures set forth in Guide 3. These 
registrants have to provide the disclosures required by the final rules 
in Securities Act registration statements filed on Forms S-1, S-3, S-4, 
F-1, F-3, and F-4, Exchange Act registration statements on Forms 10 and 
20-F, Exchange Act annual reports on Forms 10-K and 20-F, Exchange Act 
quarterly reports on Form 10-Q, and Regulation A offering statements on 
Form 1-A. We refer to these registrants in this PRA analysis as 
``affected registrants.''
    The final rules codify certain disclosure items in Guide 3 and 
eliminate other Guide 3 disclosure items that overlap with Commission 
rules, U.S. GAAP, or IFRS. Although the disclosure Items in Guide 3 are 
not Commission rules, under existing practice, affected registrants 
currently provide many of these disclosures in response to Guide 3. 
Therefore, the burdens associated with these disclosure requirements 
are already included in the current burden hours and costs for the 
affected forms. As such, for PRA purposes, we are only revising the 
burdens and costs of the affected forms to reflect changes to the 
existing Guide 3 disclosure items in the final rules.
    For example, as discussed in greater detail below,\238\ the final 
rules do not codify in Item 1403 the disclosure items in Item II of 
Guide 3 that substantially overlap with U.S. GAAP and IFRS disclosure 
requirements, and those disclosure requirements that the final rules do 
codify in Item 1403 are consistent with the current disclosure items in 
Item II. Therefore, we estimate that there would be no change to the 
burdens and costs of affected registrants as a result of Item 1403 
because the Item would include disclosure items that are already 
included in Guide 3. In contrast, as discussed below,\239\ Item 1404, 
in addition to codifying the loan disclosure items in Item III of Guide 
3 that do not overlap with Commission rules, U.S. GAAP, or IFRS, 
requires certain interest rate disclosures that are not currently 
called for by Guide 3. Therefore, we estimate that Item 1404 would 
increase the burden and costs to affected registrants.
---------------------------------------------------------------------------

    \238\ See Section VIII.B.iii.b below.
    \239\ See Section VIII.B.iii.c below.
---------------------------------------------------------------------------

    Additionally, for PRA purposes, we have allocated the burden and 
costs estimates related to the final rules to annual reports on Forms 
10-K and 20-F. We have not adjusted the burdens and costs of a 
registrant filing its quarterly reports on Form 10-Q, as the registrant 
would be required to collect and disclose almost the same information 
related to the final rules cumulatively in its annual report as in each 
of its prior quarterly reports. Therefore, including the burden and 
cost estimates in both annual and quarterly reports would result in a 
PRA inventory reflecting duplicative burdens.
    Further, as with quarterly reports on Form 10-Q, a registrant would 
be required to collect and disclose almost the same information related 
to the final rules in a registration or offering statement as it would 
in an annual report. However, we recognize that there could be some 
additional burdens and costs associated with a registration or offering 
statement that may not apply to an annual report. Therefore, we assign 
a small incremental increase in burdens and costs to all affected 
registration and offering statements, including Forms 20-F, S-1, S-4, 
F-1, F-4, 10, and 1-A.
ii. Standard Estimated Burden Allocation for Specified Forms
    For purposes of the PRA, total burden is to be allocated between 
internal burden hours and outside professional costs. A registrant's 
internal burden is estimated in internal burden hours and its outside 
professional costs are estimated at $400 per hour.\240\ Table 5 below 
sets forth the percentage estimates we typically use for the burden 
allocation for each form.
---------------------------------------------------------------------------

    \240\ We recognize that the costs of retaining outside 
professionals may vary depending on the nature of the professional 
services, but for purposes of this PRA analysis, we estimate that 
such costs will be an average of $400 per hour. This estimate is 
based on consultations with several registrants, law firms, and 
other persons who regularly assist registrants in preparing and 
filing reports with the Commission.

    Table 5--Standard Estimated Burden Allocation for Specified Forms
------------------------------------------------------------------------
                                                              Outside
                  Form type                     Internal   professionals
                                               (percent)     (percent)
------------------------------------------------------------------------
Form 10-K                                              75             25
Form 20-F                                              25             75
Form S-1                                               25             75
Form S-4                                               25             75
Form F-1                                               25             75
Form F-4                                               25             75
Form 10                                                25             75
Form 1-A                                               75             25
------------------------------------------------------------------------

iii. Burden Change for Specific Portions of the Final Rules
a. Disclosure Related to Distribution of Assets, Liabilities, and 
Stockholders' Equity; and Interest Rate and Interest Differential (Item 
I of Guide 3/Item 1402)
    The final rules in Item 1402 require additional disaggregation to 
include the categories under Item VII of Guide 3 and certain other 
categories in Article 9 of Regulation S-X. We are adopting the rules 
substantially as proposed. In a change from the proposed rules, the 
final rules clarify that the categories enumerated in the final rules 
``must be included, if material,'' rather than the disclosure ``must 
include, at a minimum.'' We do not believe this change affects our 
burdens and costs

[[Page 66133]]

estimate from the Proposing Release as in many cases we believe the 
additional disaggregation will provide material information. Therefore, 
we estimate that the burdens and costs of an affected annual report 
will increase by two hours per year and the burdens and costs of an 
affected registration or offering statement will increase by one hour 
per year. Table 6 below shows the resulting estimated change in an 
affected registrant's internal burden hours and costs for outside 
professionals due to the disclosure related to the distribution of 
assets, liabilities, and stockholders' equity and interest rate and 
interest differential.

 Table 6--Estimated Increase in Internal Burden Hours and Costs for Professionals From the Disclosure Related to
   Distribution of Assets, Liabilities, and Stockholders' Equity; and Interest Rate and Interest Differential
                                          [Item I of Guide 3/Item 1402]
----------------------------------------------------------------------------------------------------------------
                                                                                    Increase in        Total
                                     Number of      Increase in        Total          outside       increase in
              Form                   affected        internal       increase in    professional       outside
                                      filings      burden hours      internal        cost per      professional
                                                  per registrant   burden hours     registrant         cost
(A)                                          (B)             (C)      (D) [(B) *             (E)      (F) [(B) *
                                                                            (C)]                            (E)]
----------------------------------------------------------------------------------------------------------------
                                            Annual Reports = +2 hours
----------------------------------------------------------------------------------------------------------------
Form 10-K.......................             450         \1\ 1.5             675        \2\ $200         $90,000
Form 20-F.......................              43         \3\ 0.5            21.5         \4\ 600          25,800
----------------------------------------------------------------------------------------------------------------
                                 Registration and Offering Statements = +1 hour
----------------------------------------------------------------------------------------------------------------
Form 20-F.......................               1        \5\ 0.25            0.25         \6\ 300             300
Form S-1........................              15        \7\ 0.25            3.75         \8\ 300           4,500
Form S-4........................              87        \9\ 0.25           21.75        \10\ 300          26,100
Form F-1........................               1       \11\ 0.25            0.25        \12\ 300             300
Form F-4........................               2       \13\ 0.25             0.5        \14\ 300             600
Form 10.........................               2       \15\ 0.25             0.5        \16\ 300             600
Form 1-A........................               1       \17\ 0.75            0.75        \18\ 100              75
----------------------------------------------------------------------------------------------------------------
\1\ Two hours x 0.75 = 1.5 hours.
\2\ (Two hours x 0.25) x $400 = $200.
\3\ Two hours x 0.25 = 0.5 hours.
\4\ (Two hours x 0.75) x $400 = $600.
\5\ One hour x 0.25 = 0.25 hours.
\6\ (One hour x 0.75) x $400 = $300.
\7\ One hour x 0.25 = 0.25 hours.
\8\ (One hour x 0.75) x $400 = $300.
\9\ One hour x 0.25 = 0.25 hours.
\10\ (One hour x 0.75) x $400 = $300.
\11\ One hour x 0.25 = 0.25 hours.
\12\ (One hour x 0.75) x $400 = $300.
\13\ One hour x 0.25 = 0.25 hours.
\14\ (One hour x 0.75) x $400 = $300.
\15\ One hour x 0.25 = 0.25 hours.
\16\ (One hour x 0.75) x $400 = $300.
\17\ One hour x 0.75 = 0.75 hours.
\18\ (One hour x 0.25) x $400 = $100.

b. Disclosure Related to Investment Portfolios (Item II of Guide 3/Item 
1403)
    We are adopting final rules as proposed. The disclosure items in 
Item II of Guide 3 that the final rules do not codify in Item 1403 
substantially overlap with U.S. GAAP and IFRS disclosure requirements, 
and those that the final rules codify in Item 1403 are consistent with 
the current disclosure items in Item II of Guide 3. Therefore, we 
estimate that there will be no change to the burdens and costs of an 
affected annual report or registration or offering statement as a 
result of this aspect of the final rules.
c. Disclosure Related to Loan Portfolios (Item III of Guide 3/Item 
1404)
    In Item 1404, the final rules codify the loan disclosure items in 
Item III of Guide 3 that do not overlap with Commission rules, U.S. 
GAAP, or IFRS. We are adopting final rules substantially as proposed. 
In a change from the proposed rules, the final rules separate the 
``after five years'' maturity category is into two separate categories. 
We do not believe this change affects our burdens and costs estimate 
from the Proposing Release because the change requires only a slightly 
different calculation. The final rules in Item 1404 require additional 
disclosure regarding interest rates for all loan categories, so we 
estimate that the burdens and costs of an affected annual report will 
increase by three hours per year and the burdens and costs of an 
affected registration or offering statement will increase by one hour 
per year. Table 7 below shows the resulting estimated change in an 
affected registrant's internal burden hours and costs for outside 
professionals due to the final disclosure requirements related to loan 
portfolios.

[[Page 66134]]

   Table 7--Estimated Change in Internal Burden Hours and Costs for Outside Professionals From the Disclosure
                                           Related to Loan Portfolios
                                         [Item III of Guide 3/Item 1404]
----------------------------------------------------------------------------------------------------------------
                                                                                    Increase in
                                     Number of      Increase in   Total increase      outside     Total increase
              Form                   affected        internal       in internal    professional     in outside
                                      filings      burden hours    burden hours      cost per      professional
                                                  per registrant                    registrant         cost
(A)                                          (B)             (C)      (D) [(B) *             (E)      (F) [(B) *
                                                                            (C)]                            (E)]
----------------------------------------------------------------------------------------------------------------
                                            Annual Reports = +3 hours
----------------------------------------------------------------------------------------------------------------
Form 10-K.......................             450       \1\ 2.25;         1,012.5        \2\ $300        $135,000
Form 20-F.......................              43        \3\ 0.75           32.25         \4\ 900          38,700
----------------------------------------------------------------------------------------------------------------
                                    Registration and Offering Statements = +1
----------------------------------------------------------------------------------------------------------------
Form 20-F.......................               1        \5\ 0.25            0.25         \6\ 300             300
Form S-1........................              15        \7\ 0.25            3.75         \8\ 300           4,500
Form S-4........................              87        \9\ 0.25           21.75        \10\ 300          26,100
Form F-1........................               1       \11\ 0.25            0.25        \12\ 300             300
Form F-4........................               2       \13\ 0.25             0.5        \14\ 300             600
Form 10.........................               2       \15\ 0.25             0.5        \16\ 300             600
Form 1-A........................               1       \17\ 0.75            0.75        \18\ 100              75
----------------------------------------------------------------------------------------------------------------
\1\ Three hours x 0.75 = 2.25 hours.
\2\ (Three hours x 0.25) x $400 = $300.
\3\ Three hours x 0.25 = 0.75 hours.
\4\ (Three hours x 0.75) x $400 = $900.
\5\ One hour x 0.25 = 0.25 hours.
\6\ (One hour x 0.75) x $400 = $300.
\7\ One hour x 0.25 = 0.25 hours.
\8\ (One hour x 0.75) x $400 = $300.
\9\ One hour x 0.25 = 0.25 hours.
\10\ (One hour x 0.75) x $400 = $300.
\11\ One hour x 0.25 = 0.25 hours.
\12\ (One hour x 0.75) x $400 = $300.
\13\ One hour x 0.25 = 0.25 hours.
\14\ (One hour x 0.75) x $400 = $300.
\15\ One hour x 0.25 = 0.25 hours.
\16\ (One hour x 0.75) x $400 = $300.
\17\ One hour x 0.75 = 0.75 hours.
\18\ (One hour x 0.25) x $400 = $100.

d. Disclosure Related to Allowance for Credit Losses (Item IV of Guide 
3/Item 1405(c))
    We are adopting final rules as proposed. The disclosure items in 
Item IV of Guide 3 that the final rules do not codify in proposed Item 
1405(c) substantially overlap with U.S. GAAP and IFRS disclosure 
requirements, and those disclosure items that the final rules do codify 
in Item 1405(c) are consistent with the current disclosure items in 
Item IV of Guide 3. Therefore, we estimate that there will be no change 
to the burdens and costs of an affected annual report or registration 
or offering statement as a result of this aspect of the final rules.
e. Disclosure Related to Deposits (Item V of Guide 3/Item 1406)
    The final rules in Item 1406 codify the majority of the disclosure 
items in Item V of Guide 3, with some revisions. We are adopting final 
rules substantially as proposed. In a change from the proposed rules, 
the final rules state that uninsured deposits may be based on estimated 
amounts of uninsured deposits as of the reporting period end, to the 
extent it is not practicable to provide a precise measure of uninsured 
deposits. The final rules also differ from the proposed rules by 
requiring that such estimates of uninsured deposits be based on the 
same methodologies and assumptions used for the applicable bank or 
savings and loan registrant's regulatory reporting requirements. We do 
not believe these changes affect our burdens and costs estimate from 
the Proposing Release as they represent modest accommodations that do 
not fundamentally alter the registrant's disclosure obligations. We 
estimate that burdens and costs of an affected annual report will 
increase by three burden hours per year and the burdens and costs of an 
affected registration or offering statement will increase by one hour 
per year. Table 8 below shows the resulting estimated change in an 
affected registrant's internal burden hours and costs for outside 
professionals due to the final disclosure related to deposits.

[[Page 66135]]

   Table 8--Estimated Change in Internal Burden Hours and Costs for Outside Professionals From the Disclosure
                                               Related to Deposits
                                          [Item V of Guide 3/Item 1406]
----------------------------------------------------------------------------------------------------------------
                                                                                    Increase in
                                     Number of      Increase in   Total increase      outside     Total increase
              Form                   affected        internal       in internal    professional     in outside
                                      filings      burden hours    burden hours      cost per      professional
                                                  per registrant                    registrant         cost
(A)                                          (B)             (C)      (D) [(B) *             (E)      (F) [(B) *
                                                                            (C)]                            (E)]
----------------------------------------------------------------------------------------------------------------
                                            Annual Reports = +3 hours
----------------------------------------------------------------------------------------------------------------
Form 10-K.......................             450        \1\ 2.25         1,012.5        \2\ $300        $135,000
Form 20-F.......................              43        \3\ 0.75           32.25         \4\ 900          38,700
----------------------------------------------------------------------------------------------------------------
                                    Registration and Offering Statements = +1
----------------------------------------------------------------------------------------------------------------
Form 20-F.......................               1        \5\ 0.25            0.25         \6\ 300             300
Form S-1........................              15        \7\ 0.25            3.75         \8\ 300           4,500
Form S-4........................              87        \9\ 0.25           21.75        \10\ 300          26,100
Form F-1........................               1       \11\ 0.25            0.25        \12\ 300             300
Form F-4........................               2       \13\ 0.25             0.5        \14\ 300             600
Form 10.........................               2       \15\ 0.25             0.5        \16\ 300             600
Form 1-A........................               1       \17\ 0.75            0.75            \18\              75
----------------------------------------------------------------------------------------------------------------
\1\ Three hours x 0.75 = 2.25 hours.
\2\ (Three hours x 0.25) x $400 = $300.
\3\ Three hours x 0.25 = 0.75 hours.
\4\ (Three hours x 0.75) x $400 = $900.
\5\ One hour x 0.25 = 0.25 hours.
\6\ (One hour x 0.75) x $400 = $300.
\7\ One hour x 0.25 = 0.25 hours.
\8\ (One hour x 0.75) x $400 = $300.
\9\ One hour x 0.25 = 0.25 hours.
\10\ (One hour x 0.75) x $400 = $300.
\11\ One hour x 0.25 = 0.25 hours.
\12\ (One hour x 0.75) x $400 = $300.
\13\ One hour x 0.25 = 0.25 hours.
\14\ (One hour x 0.75) x $400 = $300.
\15\ One hour x 0.25 = 0.25 hours.
\16\ (One hour x 0.75) x $400 = $300.
\17\ One hour x 0.75 = 0.75 hours.
\18\ (One hour x 0.25) x $400 = $100.

f. Disclosure Related to Return on Equity and Assets (Item VI of Guide 
3)
    As proposed, the final rules do not codify the disclosure items in 
Item VI of Guide 3. Therefore, we estimate that the burdens and costs 
of an affected annual report will decrease by two burden hours per year 
and the burdens and costs of an affected registration or offering 
statement will decrease by one hour per year. Table 9 below shows the 
resulting estimated change in an affected registrant's internal burden 
hours and costs for outside professionals due to this aspect of the 
final rules.

  Table 9--Estimated Decrease in Internal Burden Hours and Costs for Outside Professionals From the Disclosure
                                     Related to Return on Equity and Assets
                                              [Item VI of Guide 3]
----------------------------------------------------------------------------------------------------------------
                                                                                    Decrease in
                                     Number of      Decrease in   Total decrease      outside     Total decrease
              Form                   affected        internal       in internal    professional     in outside
                                      filings      burden hours    burden hours      cost per      professional
                                                  per registrant                    registrant         cost
(A)                                          (B)             (C)      (D) [(B) *             (E)      (F) [(B) *
                                                                            (C)]                            (E)]
----------------------------------------------------------------------------------------------------------------
                                            Annual Reports = -2 hours
----------------------------------------------------------------------------------------------------------------
Form 10-K.......................             450       \1\ (1.5)           (675)      \2\ ($200)       ($90,000)
Form 20-F.......................              43       \3\ (0.5)          (21.5)       \4\ (600)        (25,800)
----------------------------------------------------------------------------------------------------------------
                                 Registration and Offering Statements = -1 hour
----------------------------------------------------------------------------------------------------------------
Form 20-F.......................               1      \5\ (0.25)          (0.25)       \6\ (300)           (300)
Form S-1........................              15      \7\ (0.25)          (3.75)       \8\ (300)         (4,500)
Form S-4........................              87      \9\ (0.25)         (21.75)      \10\ (300)        (26,100)
Form F-1........................               1     \11\ (0.25)          (0.25)      \12\ (300)           (300)
Form F-4........................               2     \13\ (0.25)           (0.5)      \14\ (300)           (600)

[[Page 66136]]

 
Form 10.........................               2     \15\ (0.25)           (0.5)      \16\ (300)           (600)
Form 1-A........................               1     \17\ (0.75)          (0.75)      \18\ (100)            (75)
----------------------------------------------------------------------------------------------------------------
\1\ Two hours x 0.75 = 1.5 hours.
\2\ (Two hours x 0.25) x $400 = $200.
\3\ Two hours x 0.25 = 0.5 hours.
\4\ (Two hours x 0.75) x $400 = $600.
\5\ One hour x 0.25 = 0.25 hours.
\6\ (One hour x 0.75) x $400 = $300.
\7\ One hour x 0.25 = 0.25 hours.
\8\ (One hour x 0.75) x $400 = $300.
\9\ One hour x 0.25 = 0.25 hours.
\10\ (One hour x 0.75) x $400 = $300.
\11\ One hour x 0.25 = 0.25 hours.
\12\ (One hour x 0.75) x $400 = $300.
\13\ One hour x 0.25 = 0.25 hours.
\14\ (One hour x 0.75) x $400 = $300.
\15\ One hour x 0.25 = 0.25 hours.
\16\ (One hour x 0.75) x $400 = $300.
\17\ One hour x 0.75 = 0.75 hours.
\18\ (One hour x 0.25) x $400 = $100.

g. Disclosure Related to Short-Term Borrowings (Item VII of Guide 3/
Item 1402)
    We are adopting final rules as proposed. The final rules codify the 
average amount outstanding and interest paid disclosure items in Item 
VII of Guide 3 as part of Rule 1402, but do not codify the remaining 
disclosure items in Item VII. Therefore, we estimate that the burdens 
and costs of an affected annual report will decrease by four burden 
hours per year and the burdens and costs of an affected registration or 
offering statement will decrease by one hour per year. Table 10 below 
shows the resulting estimated change in an affected registrant's 
internal burden hours and costs for outside professionals due to the 
disclosure related to short-term borrowings.

 Table 10--Estimated Decrease in Internal Burden Hours and Costs for Outside Professionals From the Final Rules
                                        Related to Short-Term Borrowings
                                         [Item VII of Guide 3/Item 1402]
----------------------------------------------------------------------------------------------------------------
                                                                                    Decrease in
                                     Number of      Decrease in   Total decrease      outside     Total decrease
              Form                   affected        internal       in internal    professional     in outside
                                      filings      burden hours    burden hours      cost per      professional
                                                  per registrant                    registrant         cost
(A)                                          (B)             (C)      (D) [(B) *             (E)      (F) [(B) *
                                                                            (C)]                            (E)]
----------------------------------------------------------------------------------------------------------------
                                            Annual Reports = -4 hours
----------------------------------------------------------------------------------------------------------------
Form 10-K.......................             450         \1\ (3)         (1,350)      \2\ ($400)      ($180,000)
Form 20-F.......................              43         \3\ (1)            (43)     \4\ (1,200)        (51,600)
----------------------------------------------------------------------------------------------------------------
                                    Registration and Offering Statements = -1
----------------------------------------------------------------------------------------------------------------
Form 20-F.......................               1      \5\ (0.25)          (0.25)       \6\ (300)           (300)
Form S-1........................              15      \7\ (0.25)          (3.75)       \8\ (300)         (4,500)
Form S-4........................              87      \9\ (0.25)         (21.75)      \10\ (300)        (26,100)
Form F-1........................               1     \11\ (0.25)          (0.25)      \12\ (300)           (300)
Form F-4........................               2     \13\ (0.25)           (0.5)      \14\ (300)           (600)
Form 10.........................               2     \15\ (0.25)           (0.5)      \16\ (300)           (600)
Form 1-A........................               1     \17\ (0.75)          (0.75)      \18\ (100)            (75)
----------------------------------------------------------------------------------------------------------------
\1\ Four hours x 0.75 = 3 hours.
\2\ (Four hours x 0.25) x $400 = $400.
\3\ Four hours x 0.25 = 1 hours.
\4\ (Four hours x 0.75) x $400 = $1,200.
\5\ One hour x 0.25 = 0.25 hours.
\6\ (One hour x 0.75) x $400 = $300.
\7\ One hour x 0.25 = 0.25 hours.
\8\ (One hour x 0.75) x $400 = $300.

[[Page 66137]]

 
\9\ One hour x 0.25 = 0.25 hours.
\10\ (One hour x 0.75) x $400 = $300.
\11\ One hour x 0.25 = 0.25 hours.
\12\ (One hour x 0.75) x $400 = $300.
\13\ One hour x 0.25 = 0.25 hours.
\14\ (One hour x 0.75) x $400 = $300.
\15\ One hour x 0.25 = 0.25 hours.
\16\ (One hour x 0.75) x $400 = $300.
\17\ One hour x 0.75 = 0.75 hours.
\18\ (One hour x 0.25) x $400 = $100.

h. Disclosure Related to Credit Ratios (Items 1405(a) and (b))
    Under the final rules, credit ratios and related disclosures are 
required for the same periods for which our rules require financial 
statements for those filings. We proposed this same period requirement 
for all filings other than initial registration and offering 
statements, such that the proposed credit ratios and related 
disclosures for annual reports and registration or offering statements 
that are not initial registration or offering statements would be 
required for the same periods for which our rules require financial 
statements for those filings, which would be less than five years. 
Additionally, we proposed a period requirement of five years for 
initial registration and offering statements, such that an affected 
registrant filing its initial registration or offering statement would 
be required to provide its credit ratios and related disclosures for 
each of the last five years. The final rules eliminate this bifurcation 
and require credit ratios and related disclosures for the same periods 
for which our rules require financial statements for those filings.
    In the Proposing Release, we estimated that the burdens and costs 
of an annual report would increase by six burden hours per year and the 
burdens and costs of a registration or offering statement that is not 
an initial registration or offering statement would increase by one 
hour per year. Additionally, we estimated that providing the additional 
years of credit ratios and related disclosures that go beyond what 
would be required in an annual report or a registration or offering 
statement that is not an initial registration or offering statement 
would increase the burdens and costs for an initial registration or 
offering statement by six burden hours per year. Because the final 
rules do not include a five-year period requirement for credit ratio 
disclosures in initial registration statements, we estimate that the 
burdens and costs of an annual report will increase by six burden hours 
per year and the burdens and costs of a registration or offering 
statement, initial or otherwise, will increase by one hour per year.
    Table 11 below shows the resulting estimated change in an affected 
registrant's internal burden hours and costs for outside professionals 
due to the disclosure related to credit ratios.

  Table 11--Estimated Increase in Internal Burden Hours and Costs for Outside Professionals From the Disclosure
                                Related to Credit Ratios (Items 1405(a) and (b))
----------------------------------------------------------------------------------------------------------------
                                                                                    Increase in
                                     Number of      Increase in   Total increase      outside     Total increase
              Form                   affected        internal       in internal    professional     in outside
                                      filings      burden hours    burden hours      cost per      professional
                                                  per registrant                    registrant         cost
(A)                                          (B)             (C)      (D) [(B) *             (E)      (F) [(B) *
                                                                            (C)]                            (E)]
----------------------------------------------------------------------------------------------------------------
                                            Annual Reports = +6 hours
----------------------------------------------------------------------------------------------------------------
Form 10-K.......................             450         \1\ 4.5           2,025        \2\ $600        $270,000
Form 20-F.......................              43         \3\ 1.5            64.5       \4\ 1,800          77,400
----------------------------------------------------------------------------------------------------------------
                                 Registration and Offering Statements = +1 hours
----------------------------------------------------------------------------------------------------------------
Form 20-F.......................               1        \5\ 0.25            0.25         \6\ 300             300
Form S-1........................              15        \7\ 0.25            3.75         \8\ 300           4,500
Form S-4........................              87        \9\ 0.25           21.75        \10\ 300          26,100
Form F-1........................               1       \11\ 0.25            0.25        \12\ 300             300
Form F-4........................               2       \13\ 0.25             0.5        \14\ 300             600
Form 10.........................               2       \15\ 0.25             0.5        \16\ 300             600
Form 1-A........................               1       \17\ 0.75            0.75        \18\ 100              75
----------------------------------------------------------------------------------------------------------------
\1\ Six hours x 0.75 = 4.5 hours.
\2\ (Six hours x 0.25) x $400 = $600.
\3\ Six hours x 0.25 = 1.5 hours.
\4\ (Six hours x 0.75) x $400 = $1,800.
\5\ One hour x 0.25 = 0.25 hours.
\6\ (One hour x 0.75) x $400 = $300.
\7\ One hour x 0.25 = 0.25 hours.
\8\ (One hour x 0.75) x $400 = $300.
\9\ One hour x 0.25 = 0.25 hours.
\10\ (One hour x 0.75) x $400 = $300.
\11\ One hour x 0.25 = 0.25 hours.
\12\ (One hour x 0.75) x $400 = $300.
\13\ One hour x 0.25 = 0.25 hours.
\14\ (One hour x 0.75) x $400 = $300.
\15\ One hour x 0.25 = 0.25 hours.
\16\ (One hour x 0.75) x $400 = $300.
\17\ One hour x 0.75 = 0.75 hours.

[[Page 66138]]

 
\18\ (One hour x 0.25) x $400 = $100.

iv. Total Change in Burden Per Form as a Result of the Final Rules
    Table 12 below shows the resulting estimated change in an affected 
registrant's internal burden hours and costs for outside professionals 
per form as a result of the final rules.

  Table 12--Estimated Total Increase in Internal Burden Hours and Costs for Outside Professional as a Result of
                                                 the Final Rules
----------------------------------------------------------------------------------------------------------------
                                                                                      Outside      Total change
                                   Total number     Burden hour    Total change    professional     in outside
              Form                  of affected     change per      in internal    costs change    professional
                                       forms           form        burden hours      per form          cost
----------------------------------------------------------------------------------------------------------------
Form 10-K.......................  ..............  ..............           2,700  ..............        $360,000
----------------------------------------------------------------------------------------------------------------
Subsection a (Item 1402 of S-K).             450             1.5             675            $200         $90,000
Subsection b (Item 1403 of S-K).               0               0               0              $0               0
Subsection c (Item 1404 of S-K).             450            2.25         1,012.5            $300        $135,000
Subsection d (Item 1405(c) of S-               0               0               0              $0               0
 K).............................
Subsection e (Item 1406 of S-K).             450            2.25         1,012.5            $300        $135,000
Subsection f (Item VI of Guide               450           (1.5)           (675)          ($200)       ($90,000)
 3).............................
Subsection g (Item 1402 of S-K).             450             (3)         (1,350)          ($400)      ($180,000)
Subsection h (Items 1405(a) and              450             4.5           2,025            $600         270,000
 (b) of S-K)....................
----------------------------------------------------------------------------------------------------------------
Form 20-F.......................  ..............  ..............            86.5  ..............        $103,800
----------------------------------------------------------------------------------------------------------------
Form 20-F (Annual Report).......  ..............               2              86          $2,400        $103,200
Subsection a (Item 1402 of S-K).              43             0.5            21.5            $600         $25,800
Subsection b (Item 1403 of S-K).               0               0               0              $0               0
Subsection c (Item 1404 of S-K).              43            0.75           32.25            $900         $38,700
Subsection d (Item 1405(c) of S-               0               0               0              $0               0
 K).............................
Subsection e (Item 1406 of S-K).              43            0.75           32.25            $900         $38,700
Subsection f (Item VI of Guide                43           (0.5)          (21.5)          ($600)       ($25,800)
 3).............................
Subsection g (Item 1402 of S-K).              43             (1)            (43)        ($1,200)       ($51,600)
Subsection h (Items 1405(a) and               43             1.5            64.5          $1,800         $77,400
 (b) of S-K)....................
Form 20-F (Registration           ..............             0.5             0.5            $600            $600
 Statement).....................
Subsection a (Item 1402 of S-K).               1            0.25            0.25            $300            $300
Subsection b (Item 1403 of S-K).               0               0               0              $0              $0
Subsection c (Item 1404 of S-K).               1            0.25            0.25            $300            $300
Subsection d (Item 1405(c) of S-               0               0               0              $0              $0
 K).............................
Subsection e (Item 1406 of S-K).               1            0.25            0.25            $300            $300
Subsection f (Item VI of Guide                 1          (0.25)          (0.25)          ($300)          ($300)
 3).............................
Subsection g (Item 1402 of S-K).               1          (0.25)          (0.25)          ($300)          ($300)
Subsection h (Items 1405(a) and                1            0.25            0.25            $300            $300
 (b) of S-K)....................
----------------------------------------------------------------------------------------------------------------
Form S-1........................  ..............  ..............             7.5  ..............          $9,000
----------------------------------------------------------------------------------------------------------------
Subsection a (Item 1402 of S-K).              15            0.25            3.75            $300          $4,500
Subsection b (Item 1403 of S-K).               0               0               0               0               0
Subsection c (Item 1404 of S-K).              15            0.25            3.75            $300          $4,500
Subsection d (Item 1405(c) of S-               0               0               0               0               0
 K).............................
Subsection e (Item 1406 of S-K).              15            0.25            3.75            $300          $4,500
Subsection f (Item VI of Guide                15          (0.25)          (3.75)          ($300)        ($4,500)
 3).............................
Subsection g (Item 1402 of S-K).              15          (0.25)          (3.75)          ($300)        ($4,500)
Subsection h (Items 1405(a) and               15            0.25            3.75            $300          $4,500
 (b) of S-K)....................
----------------------------------------------------------------------------------------------------------------
Form S-4........................  ..............  ..............            43.5  ..............         $52,200
----------------------------------------------------------------------------------------------------------------
Subsection a (Item 1402 of S-K).              87            0.25           21.75            $300         $26,100
Subsection b (Item 1403 of S-K).               0               0               0               0               0
Subsection c (Item 1404 of S-K).              87            0.25           21.75            $300         $26,100
Subsection d (Item 1405(c) of S-               0               0               0               0               0
 K).............................
Subsection e (Item 1406 of S-K).              87            0.25           21.75            $300         $26,100
Subsection f (Item VI of Guide                87          (0.25)         (21.75)          ($300)       ($26,100)
 3).............................
Subsection g (Item 1402 of S-K).              87          (0.25)         (21.75)          ($300)       ($26,100)
Subsection h (Items 1405(a) and               87            0.25           21.75            $300         $26,100
 (b) of S-K)....................
----------------------------------------------------------------------------------------------------------------
Form F-1........................  ..............  ..............             0.5  ..............            $600
----------------------------------------------------------------------------------------------------------------
Subsection a (Item 1402 of S-K).               1            0.25            0.25            $300            $300
Subsection b (Item 1403 of S-K).               0               0               0               0              $0
Subsection c (Item 1404 of S-K).               1            0.25            0.25            $300            $300
Subsection d (Item 1405(c) of S-               0               0               0               0              $0
 K).............................

[[Page 66139]]

 
Subsection e (Item 1406 of S-K).               1            0.25            0.25            $300            $300
Subsection f (Item VI of Guide                 1          (0.25)          (0.25)          ($300)          ($300)
 3).............................
Subsection g (Item 1402 of S-K).               1          (0.25)          (0.25)          ($300)          ($300)
Subsection h (Items 1405(a) and                1            0.25            0.25            $300            $300
 (b) of S-K)....................
----------------------------------------------------------------------------------------------------------------
Form F-4........................  ..............  ..............             1.0  ..............          $1,200
----------------------------------------------------------------------------------------------------------------
Subsection a (Item 1402 of S-K).               2            0.25             0.5            $300            $600
Subsection b (Item 1403 of S-K).               0               0               0               0              $0
Subsection c (Item 1404 of S-K).               2            0.25             0.5            $300            $600
Subsection d (Item 1405(c) of S-               0               0               0               0              $0
 K).............................
Subsection e (Item 1406 of S-K).               2            0.25             0.5            $300            $600
Subsection f (Item VI of Guide                 2          (0.25)           (0.5)          ($300)          ($600)
 3).............................
Subsection g (Item 1402 of S-K).               2          (0.25)           (0.5)          ($300)          ($600)
Subsection h (Items 1405(a) and                2            0.25             0.5            $300            $600
 (b) of S-K)....................
----------------------------------------------------------------------------------------------------------------
Form 10.........................  ..............  ..............             1.0  ..............          $1,200
----------------------------------------------------------------------------------------------------------------
Subsection a (Item 1402 of S-K).               2            0.25             0.5            $300            $600
Subsection b (Item 1403 of S-K).               0               0               0               0              $0
Subsection c (Item 1404 of S-K).               2            0.25             0.5            $300            $600
Subsection d (Item 1405(c) of S-               0               0               0               0              $0
 K).............................
Subsection e (Item 1406 of S-K).               2            0.25             0.5            $300            $600
Subsection f (Item VI of Guide                 2          (0.25)           (0.5)          ($300)          ($600)
 3).............................
Subsection g (Item 1402 of S-K).               2          (0.25)           (0.5)          ($300)          ($600)
Subsection h (Items 1405(a) and                2            0.25             0.5            $300            $600
 (b) of S-K)....................
----------------------------------------------------------------------------------------------------------------
Form 1-A........................  ..............  ..............             1.5  ..............          $1,200
----------------------------------------------------------------------------------------------------------------
Subsection a (Item 1402 of S-K).               1            0.75            0.75            $600            $600
Subsection b (Item 1403 of S-K).               0               0               0              $0              $0
Subsection c (Item 1404 of S-K).               1            0.75            0.75            $600            $600
Subsection d (Item 1405(c) of S-               0               0               0              $0              $0
 K).............................
Subsection e (Item 1406 of S-K).               1            0.75            0.75            $600            $600
Subsection f (Item VI of Guide                 1          (0.75)          (0.75)          ($600)          ($600)
 3).............................
Subsection g (Item 1402 of S-K).               1          (0.75)          (0.75)          ($600)          ($600)
Subsection h (Items 1405(a) and                1            0.75            0.75            $600            $600
 (b) of S-K)....................
----------------------------------------------------------------------------------------------------------------
    Total.......................  ..............  ..............           2,842  ..............        $529,200
----------------------------------------------------------------------------------------------------------------

v. Total Paperwork Burden Under the Final Rules
    Table 13 below shows the total estimated internal burden hours and 
costs for outside professional under the final rules.\241\
---------------------------------------------------------------------------

    \241\ Figures in the table have been rounded to the nearest 
whole number.
---------------------------------------------------------------------------

                                                 Table 13--Total Paperwork Burden Under the Final Rules
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Change in       Change in
                                      Current annual      Current        Current cost       internal         outside      Burden hours      Costs for
                                         responses     burden hours         burden         registrant     professional    for affected       affected
                                                                                          burden hours        costs         responses       responses
                                                 (A)             (B)                (C)             (D)             (E)      (F) [(B) +  (G) [(C) + (E)]
                                                                                                                                   (D)]
--------------------------------------------------------------------------------------------------------------------------------------------------------
10-K................................           8,137      14,198,780     $1,895,224,719           2,700        $360,000      14,201,480   $1,895,584,719
20-F................................             725         479,304        576,875,025              87         103,800         479,391      576,978,825
S-1.................................             901         147,208        180,319,975               8           9,000         147,216      180,328,975
S-4.................................             551         562,465        677,378,579              44          52,200         562,509      677,430,779
F-1.................................              63          26,692         32,275,375               1             600          26,693       32,275,975
F-4.................................              39          14,049         17,073,825               1           1,200          14,050       17,075,025
10..................................             216          11,855         14,091,488               1           1,200          11,856       14,092,688
1-A.................................             179          98,396         13,111,912               2           1,200          98,398       13,113,112
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 66140]]

IX. Regulatory Flexibility Act Certification

    The Commission certified, under section 605(b) of the Regulatory 
Flexibility Act (``RFA''), that, when adopted, the proposed amendments 
to the rules would not have a significant economic impact on a 
substantial number of small entities. This certification, including our 
basis for the certification, was set forth in Section IX of the 
Proposing Release. The Commission solicited comments regarding this 
certification and received no comments. We continue to believe this 
certification is appropriate. As noted in the Proposing Release, the 
Commission identified only one issuer that potentially would be subject 
to the proposed amendments and that may be considered a small entity. 
In addition, the proposed rules would have resulted in only modest 
effects on registrants' compliance burdens, for example, by adding 
between six additional burden hours for annual reports and one 
additional burden hour for registration statements (initial or 
otherwise). We also do not believe the proposed rules would otherwise 
have a significant economic effect on any small entities.
    We are adopting the final rules as proposed with one substantive 
change relating to the proposed new credit ratio disclosure 
requirements. We do not believe that this change, which as discussed 
above will further limit the registrant's compliance burdens, alters 
the basis upon which the certification in the Proposing Release was 
made. Accordingly, we certify that the final rules will not have a 
significant economic impact on a substantial number of small entities.

X. Statutory Authority

    The amendments contained in this release are being adopted under 
the authority set forth in Sections 3(b), 7, 10, 19(a), and 28 of the 
Securities Act and Sections 3(b), 12, 13, 15(d), 23(a), and 36(a) of 
the Exchange Act.

List of Subjects

17 CFR Part 210

    Accountants, Accounting, Banks, Banking, Employee benefit plans, 
Holding companies, Insurance companies, Investment companies, Oil and 
gas exploration, Reporting and recordkeeping requirements, Securities, 
Utilities.

17 CFR Part 229

    Reporting and recordkeeping requirements, Securities.

17 CFR Part 249

    Brokers, Reporting and recordkeeping requirements, Securities.

    In accordance with the foregoing, Title 17, Chapter II of the Code 
of Federal Regulations is amended as follows:

PART 210--FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL 
STATEMENTS, SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 
1934, INVESTMENT COMPANY ACT OF 1940, INVESTMENT ADVISERS ACT OF 
1940, AND ENERGY POLICY AND CONSERVATION ACT OF 1975

0
1. The authority citation for part 210 continues to read as follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 
77aa(25), 77aa(26), 77nn(25), 77nn(26), 78c, 78j-1, 78l, 78m, 78n, 
78o(d), 78q, 78u-5, 78w, 78ll, 78mm, 80a-8, 80a-20, 80a-29, 80a-30, 
80a-31, 80a-37(a), 80b-3, 80b-11, 7202 and 7262, and sec. 102(c), 
Pub. L. 112-106, 126 Stat. 310 (2012), unless otherwise noted.

0
2. Revise Sec.  210.9-01 to read as follows:

Sec.  210.9-01  Application of Sec. Sec.  210.9-01 to 210.9-07

    The consolidated financial statements filed for bank holding 
companies, savings and loan holding companies, and the financial 
statements of banks and savings and loan associations, must apply the 
guidance in this article in filings with the Commission.

0
3. Amend Sec.  210.9-03 by:
0
a. Removing and reserving paragraphs 7(a) through (c); and
0
b. revising paragraph 7(e)(2).
    The revisions to read as follows:

Sec.  210.9-03  Balance sheets.

* * * * *
    7. * * *
    (e) * * *
    (2) If a significant portion of the aggregate amount of loans 
outstanding at the end of the fiscal year disclosed pursuant to 
(e)(1)(i) above relates to loans that are disclosed as past due, 
nonaccrual or troubled debt restructurings in the consolidated 
financial statements, so state and disclose the aggregate amounts of 
such loans along with such other information necessary to an 
understanding of the effects of the transactions on the financial 
statements.
* * * * *

PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES 
ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND 
CONSERVATION ACT OF 1975--REGULATION S-K

0
3. The authority citation for part 229 continues to read as follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj, 
77nnn, 77sss, 78c, 78i, 78j, 78j-3, 78l, 78m, 78n, 78n-1, 78o, 78u-
5, 78w, 78ll, 78 mm, 80a-8, 80a-9, 80a-20, 80a-29, 80a-30, 80a-
31(c), 80a-37, 80a-38(a), 80a-39, 80b-11 and 7201 et seq.; 18 U.S.C. 
1350; sec. 953(b), Pub. L. 111-203, 124 Stat. 1904 (2010); and sec. 
102(c), Pub. L. 112-106, 126 Stat. 310 (2012).

0
4. Amend Sec.  229.404 by revising Instruction 4.c under ``Instructions 
to Item 404(a)'' to read as follows:

Sec.  229.404  (Item 404) Transactions with Related Persons, Promoters 
and Certain Control Persons

* * * * *
    Instructions to Item 404(a)
* * * * *
    4. * * *
    c. If the lender is a bank, savings and loan association, or 
broker-dealer extending credit under Federal Reserve Regulation T (12 
CFR part 220) and the loans are not disclosed as past due, nonaccrual 
or troubled debt restructurings in the consolidated financial 
statements, disclosure under paragraph (a) of this Item may consist of 
a statement, if such is the case, that the loans to such persons:
    i. Were made in the ordinary course of business;
    ii. Were made on substantially the same terms, including interest 
rates and collateral, as those prevailing at the time for comparable 
loans with persons not related to the lender; and
    iii. Did not involve more than the normal risk of collectibility or 
present other unfavorable features.
* * * * *

Sec.  229.801  [Amended]

0
5. Amend Sec.  229.801 by removing and reserving paragraph (c).

Sec.  229.802  [Amended]

0
6. Amend Sec.  229.802 by removing and reserving paragraph (c).

0
7. Add subpart 229.1400, consisting of Sec. Sec.  229.1400 through 
229.406, to read as follows:

Subpart 229.1400--Disclosure by Bank and Savings and Loan 
Registrants

Sec.

[[Page 66141]]

229.1401 (Item 1401) General instructions.
229.1402 (Item 1402) Distribution of assets, liabilities and 
stockholders' equity; interest rates and interest differential.
229.1403 (Item 1403) Investments in debt securities.
229.1404 (Item 1404) Loan portfolio.
229.1405 (Item 1405) Allowance for Credit Losses.
229.1406 (Item 1406) Deposits.

Sec.  229.1401  (Item 1401) General instructions.

    (a) A bank, bank holding company, savings and loan association, or 
savings and loan holding company (``bank and savings and loan 
registrants'') must provide the disclosure required by this subpart.
    (b) When the term ``reported period'' is used in this subpart, it 
refers to each of the periods described below:
    (1) Each annual period required by 17 CFR part 210 (``Regulation S-
X'') or 17 CFR 239.90 (``Form 1-A''); and--
    (2) Any additional interim period subsequent to the most recent 
fiscal year end if a material change in the information or the trend 
evidenced thereby has occurred.
    (c) In this subpart, registrants are required to use daily averages 
unless otherwise indicated. Registrants may use weekly or month-end 
averages where the collection of data on a daily average basis would 
involve unwarranted or undue burden or expense; provided that such 
averages are representative of the registrant's operations. Registrants 
must disclose the basis used for presenting averages.
    (d) In various provisions throughout this subpart, registrants are 
required to disclose information relating to certain foreign financial 
activities. For purposes of this subpart, a registrant only is required 
to present this information if the registrant meets the threshold to 
make separate disclosures concerning its foreign activities in its 
consolidated financial statements pursuant to the test set forth in 
Sec.  210.9-05 of Regulation S-X.

Sec.  229.1402  (Item 1402) Distribution of assets, liabilities and 
stockholders' equity; interest rates and interest differential.

    (a) For each reported period, present average balance sheets 
containing the information specified below. The format of the average 
balance sheets may be condensed from consolidated financial statements, 
provided that the condensed average balance sheets indicate the 
significant categories of assets and liabilities, including all major 
categories of interest-earning assets and interest-bearing liabilities. 
Major categories of interest-earning assets must include, if material, 
loans, taxable investment securities, non-taxable investment 
securities, interest bearing deposits in other banks, federal funds 
sold, securities purchased with agreements to resell, and other short-
term investments. Major categories of interest-bearing liabilities must 
include, if material, savings deposits, other time deposits, federal 
funds purchased, securities sold under agreements to repurchase, 
commercial paper, other short-term debt, and long-term debt.
    (b) For each reported period, present an analysis of net interest 
earnings as follows:
    (1) For each major category of interest-earning asset and each 
major category of interest-bearing liability, the average amount 
outstanding during the period and the interest earned or paid on such 
amount.
    (2) The average yield for each major category of interest-earning 
asset.
    (3) The average rate paid for each major category of interest-
bearing liability.
    (4) The average yield on all interest-earning assets and the 
average rate paid on all interest-bearing liabilities.
    (5) The net yield on interest-earning assets (net interest earnings 
divided by total interest-earning assets, with net interest earnings 
equaling the difference between total interest earned and total 
interest paid).
    (6) The registrant may, at its option, present its analysis in 
connection with the average balance sheet required by paragraph (a) of 
this section.
    (c) For the interest rates and interest differential analysis,
    (1) Present for each comparative reporting period
    (i) The dollar amount of change in interest income, and
    (ii) The dollar amount of change in interest expense.
    (2) For each major category of interest-earning asset and interest-
bearing liability, segregate the changes presented pursuant to 
paragraph (c)(1) of this section into amounts attributable to:
    (i) Changes in volume (change in volume times old rate),
    (ii) Changes in rates (change in rate times old volume), and
    (iii) Changes in rates and volume (change in rate times change in 
volume).
    (3) The rates and volume variances presented pursuant to paragraph 
(c)(2) must be allocated on a consistent basis between rates and volume 
variances, and the basis of allocation disclosed in a note to the 
table.
    Instructions to Item 1402:
    1. If material, disclose how non-accruing loans have been treated 
for purposes of the analyses required by paragraph (b).
    2. In the calculation of the changes in the interest income and 
interest expense required by paragraph (c), exclude any out-of-period 
items and adjustments and disclose the types and amounts of items 
excluded in a note to the table.
    3. If material loan fees are included in the interest income 
computation, disclose the amount of such fees.
    4. If tax-exempt income is calculated on a tax equivalent basis, 
describe the extent of recognition of exemption from Federal, state, 
and local taxation and the combined marginal or incremental rate used 
in a brief note to the table.
    5. If disclosure regarding foreign activities is required pursuant 
to Item 1401(d) of this subpart, the information required by paragraphs 
(a), (b) and (c) of this section must be further segregated between 
domestic and foreign activities for each significant category of assets 
and liabilities disclosed pursuant to paragraph (a). In addition, for 
each reported period, present separately, on the basis of averages, the 
percentage of total assets and total liabilities attributable to 
foreign activities.

Sec.  229.1403  (Item 1403) Investments in debt securities.

    (a) As of the end of the latest reported period, state the weighted 
average yield of each category of debt securities not carried at fair 
value through earnings for which disclosure is required in the 
financial statements and is due:
    (1) In one year or less,
    (2) After one year through five years,
    (3) After five years through ten years, and
    (4) After ten years.
    (b) Disclose how the weighted average yield has been calculated. 
Additionally, state whether yields on tax-exempt obligations have been 
computed on a tax-equivalent basis (see Instruction 4 to Item 1402 of 
this subpart). Discuss any major changes in the tax-exempt portfolio.

Sec.  229.1404  (Item 1404) Loan portfolio.

    (a) As of the end of the latest reported period, present separately 
the amount of loans in each category for which disclosure is required 
in the financial statements that are due:
    (1) In one year or less,
    (2) After one year through five years,
    (3) After five years through 15 years, and
    (4) After 15 years.
    (b) For each loan category for which disclosure is provided in 
response to paragraph (a), present separately the total amount of loans 
in such loan category that are due after one year that
    (1) Have predetermined interest rates and

[[Page 66142]]

    (2) Have floating or adjustable interest rates.
    Instructions to Item 1404:
    1. Report scheduled repayments in the maturity category in which 
the payment is due.
    2. Report demand loans, loans having no stated schedule of 
repayments and no stated maturity, and overdrafts as due in one year or 
less.
    3. Determinations of maturities shall be based upon contractual 
terms. However, to the extent that non-contractual rollovers or 
extensions are included for purposes of measuring the allowance for 
credit losses under U.S. GAAP or IFRS, include such non-contractual 
rollovers or extensions for purposes of the maturities classification 
and briefly discuss this methodology.

Sec.  229.1405  (Item 1405) Allowance for Credit Losses.

    (a) For each reported period, disclose the following credit ratios, 
along with each component of the ratio's calculation:
    (1) Allowance for credit losses to total loans outstanding at each 
period end.
    (2) Nonaccrual loans to total loans outstanding at each period end.
    (3) Allowance for credit losses to nonaccrual loans at each period 
end.
    (4) Net charge-offs during the period to average loans outstanding 
during the period. Provide this ratio for each loan category for which 
disclosure is required in the financial statements.
    (b) Provide a discussion of the factors that drove material changes 
in the ratios in (a) above, or the related components, during the 
periods presented.
    (c) At the end of each reported period, provide a breakdown of the 
allowance for credit losses by each loan category for which disclosure 
is required by U.S. GAAP in the following format:

              Allocation of the Allowance for Credit Losses
------------------------------------------------------------------------
                                                  Reported period
                                         -------------------------------
                                                            Percent of
 Balance at End of Period Applicable to:                   loans in each
                                              Amount        category to
                                                            total loans
------------------------------------------------------------------------
Each loan category required by U.S. GAAP              $X              X%
                                         -------------------------------
                                                                    100%
------------------------------------------------------------------------

    Instructions to Item 1405:
    1. A foreign private issuer that prepares its financial statements 
in accordance with IFRS as issued by the IASB does not need to provide 
disclosure responsive to Items 1405(a)(2), (a)(3) and Item 1405(c).
    2. Net charge-offs must be based on current period net charge-offs 
for each loan category.

Sec.  229.1406  (Item 1406) Deposits.

    (a) For each reported period, present separately the average amount 
of and the average rate paid on each of the following deposit 
categories that are in excess of 10 percent of average total deposits:
    (1) Noninterest bearing demand deposits.
    (2) Interest-bearing demand deposits.
    (3) Savings deposits.
    (4) Time deposits.
    (5) Other.
    (b) If the registrant believes other categories more appropriately 
describe the nature of the deposits, those categories may be used.
    (c) If material, separately present domestic deposits and foreign 
deposits for all amounts reported under (a) above. Foreign deposits as 
used here means deposits from depositors who are not in the 
registrant's country of domicile.
    (d) If material, the registrant must disclose separately the 
aggregate amount of deposits by foreign depositors in domestic offices. 
Registrants are not required to identify the nationality of the 
depositors.
    (e) As of the end of each reported period, present separately the 
amount of uninsured deposits. For registrants that are U.S. federally 
insured depository institutions, uninsured deposits are the portion of 
deposit accounts in U.S. offices that exceed the Federal Deposit 
Insurance Corporation insurance limit or similar state deposit 
insurance regime, and amounts in any other uninsured investment or 
deposit accounts that are classified as deposits and not subject to any 
federal or state deposit insurance regime. Foreign banking or savings 
and loan registrants must disclose the definition of uninsured deposits 
appropriate for their country of domicile. All registrants should 
consider the methodologies and assumptions used for regulatory 
reporting of uninsured deposits, to the extent applicable, for 
disclosure of uninsured deposits. To the extent it is not reasonably 
practicable to provide a precise measure of uninsured deposits at the 
reported period, the registrant must disclose that the amounts are 
based on estimated amounts of uninsured deposits as of the reported 
period. Such estimates must be based on the same methodologies and 
assumptions used for the applicable bank or savings and loan 
registrant's regulatory reporting requirements.
    (f) As of the end of the latest reported period, state the amount 
outstanding of:
    (1) The portion of U.S. time deposits, by account, that are in 
excess of the Federal Deposit Insurance Corporation insurance limit or 
similar state deposit insurance regime; and
    (2) Time deposits that are otherwise uninsured (including for 
example, U.S. time deposits in uninsured accounts, non-U.S. time 
deposits in uninsured accounts, or non-U.S. time deposits in excess of 
any country-specific insurance fund limit), by time remaining until 
maturity of:
    (i) 3 months or less;
    (ii) Over 3 through 6 months;
    (iii) Over 6 through 12 months; and
    (iv) Over 12 months.

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

0
9. The authority citation for part 249 continues to read in part as 
follows:

    Authority:  15 U.S.C. 78a et seq. and 7201 et seq.; 12 U.S.C. 
5461 et seq.; 18 U.S.C. 1350; Sec. 953(b) Public Law 111-203, 124 
Stat. 1904; Sec. 102(a)(3), Public Law 112-106, 126 Stat. 309 
(2012); Sec. 107, Public Law 112-106, 126 Stat. 313 (2012), and Sec. 
72001, Public Law 114-94, 129 Stat. 1312 (2015), unless otherwise 
noted.

0
10. Amend Form 20-F (referenced in Sec.  249.220f) by:
0
a. Adding Instruction 4 to Item 4; and
0
b. revising Instruction 2 to Item 7.B.
    The addition and revisions to read as follows:

    Note: The text of Form 20-F does not, and this amendment will 
not, appear in the Code of Federal Regulations.

[[Page 66143]]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, DC 20549

FORM 20-F

* * * * *

PART I

* * * * *
    Instructions to Item 4: * * *
    4. If you are bank, bank holding company, savings and loan 
association or savings and loan holding company, provide the 
information specified in Subpart 1400 of Regulation S-K (Sec.  229.1400 
et seq. of this chapter).
* * * * *
    Instructions to Item 7.B: * * *
    2. In response to Item 7.B.2, if the lender is a bank, savings and 
loan association, or broker dealer extending credit under Federal 
Reserve Regulation T, and the loans are not disclosed as past due, 
nonaccrual or troubled debt restructurings in the consolidated 
financial statements, your response may consist of a statement, if 
true, that the loans in question (A) were made in the ordinary course 
of business, (B) were made on substantially the same terms, including 
interest rates and collateral, as those prevailing at the time for 
comparable transactions with other persons, and (C) did not involve 
more than the normal risk of collectability or present other 
unfavorable features.
* * * * *

    By the Commission.

    Dated: September 11, 2020.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2020-20655 Filed 10-15-20; 8:45 am]
BILLING CODE 8011-01-P