Article 9 of Regulation S-X sets forth the special financial statement requirements relating to banks and bank holding companies and provides rules for the form and content of bank financial statements filed with the SEC. The SEC requirements are in addition to meeting all of the GAAP requirements. Entities should disclose how basis adjustments from active portfolio hedging relationships are disclosed within the Regulation S-X disclosures.

12.12.1 Balance sheet presentation and disclosures (banks)

There are several sources of specific disclosure requirements related to loans and investments. Regulation S-X (banks)

S-X 9-03 lists the various items that, if applicable, should appear on the face of the balance sheet of banks and bank holding companies. The following line items are relevant in the context of loans and investments:
  • Interest-bearing deposits in other banks
  • Federal funds sold and securities purchased under resale agreements or similar arrangements (which should be presented gross rather than netted against Federal funds purchased and securities sold under repurchase agreements).
  • Trading account assets (which include securities or any other investments held for trading purposes only)
  • Other short-term investments
  • Investment securities
Companies are required to disclose the aggregate book value of investment securities and show the aggregate market value on the face of the balance sheet. The carrying value and market value of should be disclosed in a note for securities of:
1. US treasury and other government agencies and corporations
2. States of the US and political subdivisions
3. Other securities
  • Loans
Separate disclosure is required for total loans, the related allowance for losses, and unearned income.
On the balance sheet or in the notes, reporting entities should disclose the amount of total loans by categories (e.g., commercial, financial, and agricultural; real estate – construction; real estate – mortgage; installment loans to individuals; lease financing; foreign; and other). However, other categories may be used if more appropriate.
The amount of foreign loans is required to be disclosed if S-X 9-05 applies. S-X 9-05 applies once foreign activities – measured by specific indicators such as assets, revenue, and other – exceed a threshold of 10% for that indicator.
For each period for which an income statement is presented, disclosure is required of changes in the allowance for loan losses showing the balance at the beginning and end of the period, the provision charged to income, recoveries of amounts charged off, and losses charged to the allowance.
As of each balance sheet date, disclosure is required of all loans above a specified threshold granted to directors, executive officers, or principal holders of securities, or any associate of such persons. If the aggregate amount of such loans exceeds 5% of stockholder’s equity, an analysis of activity for the most recent year should be provided.
Question LI 12-4
Do the disclosure requirements of Regulation S-X Article 9 and Guide 3 also apply to registrants that are not bank holding companies but that are engaged in similar lending and deposit activities?
PwC response
ASC 942-10-S99-4 explains that while S-X Article 9 and Guide 3 apply to bank holding companies, they may provide useful guidance to certain other registrants, including savings and loan holding companies, on disclosures relevant to an understanding of the registrant's operations. To the extent particular guidance is relevant and material to the operations of a reporting entity, the SEC staff believes that comparable data should be provided.

S-X 9-03 does not require banks to present classified balance sheets; therefore, the distinction between current and noncurrent is not relevant for banks and bank holding companies. ASC 942, Financial services—Depository and Lending

If deposits in other institutions are material, then those deposits should be presented as a separate amount in the balance sheet.
The following disclosures apply to banks, savings and loan associations, savings banks, credit unions, finance companies, and insurance entities. Debt and equity securities in the scope of ASC 942-320 are required to be disclosed based on the following major security type (additional types also may be necessary):
  • Equity securities, segregated by either industry type, entity size, or investment objective
  • Debt securities issued by the US Treasury and other US government corporations and agencies. Investments in mutual funds that invest only in US government debt securities may be shown separately.
  • Debt securities issued by states of the United States and political subdivisions of the states
  • Debt securities issued by foreign governments
  • Corporate debt securities
  • Residential mortgage-backed securities
  • Commercial mortgage-backed securities
  • Collateralized debt obligations
  • Other debt obligations
In addition, the specified financial institutions are also required to disclose the fair value and the net carrying amount of their debt securities that are in the scope of ASC 942-320, segregated by at least the following four maturity groupings (within 1 year, 1- 5 years, 5-10 years, and after 10 years). This would not include any basis adjustments from active portfolio layer method hedges, but a reporting entity would be required to separately disclose any basis adjustments from active portfolio layer method hedges.
The carrying amount of investment assets that serve as collateral to secure public funds, securities sold under repurchase agreements, and other borrowings, that are not otherwise disclosed under ASC 860, Transfers and Servicing, should also be disclosed.
Investments in Federal Home Loan Bank or Federal Reserve Bank stock cannot be shown with securities accounted for under ASC 321, and are usually presented in other investments or other assets.
See ASC 942-825-50-1 and ASC 942-825-50-2 for specific requirements related to the disclosure of off-balance sheet credit risk. ASC 948, Financial Services—Mortgage Banking

Mortgage banking entities should distinguish between mortgage loans held for sale and mortgage loans held for long-term investment. Mortgage banking entities are required to disclose the method used in determining the lower of cost or fair value of mortgage loans (aggregate or individual loan basis).

12.12.2 Income statement presentation and disclosures (banks)

S-X 9-04 lists the various items that, if applicable, should appear on the face of the income statement of banks and bank holding companies. It also details specific disclosure requirements. The following disclosures are relevant for loans and investments:
  • Interest and fees on loans. This line item should include commitment and origination fees, late charges, and the current amortization of premium and accretion of discount on loans that are related to (or are an adjustment of) the loan interest rate.
  • Interest and dividends on investment securities. Separate disclosure should be made for (1) taxable interest income, (2) nontaxable interest income, and (3) dividends.
  • Trading account interest
  • Other interest income
  • Total interest income
  • Interest on deposits
  • Provision for loan losses. S-X 9-03 requires disclosure of the changes in the allowance for each period for which an income statement is required.

12.12.3 Financial statement schedules (banks)

In accordance with ASC 948-310-S99-1, the financial statement schedule required by S-X 12-29, which contains details regarding mortgage loans on real estate held by real estate companies, is also required for companies subject to ASC 948.
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