The Commission proposes to rescind Industry Guide 3 and to modernize and codify certain of its required disclosures into a new Subpart 1400 of Regulation S-K.
The SEC has proposed rules to update the statistical disclosure required of bank and savings and loan registrants. The proposed rules would update, codify, or eliminate certain disclosures currently made in response to items set forth in Industry Guide 3 and would apply to bank holding companies, banks, savings and loan holding companies, and savings and loan associations. The codified disclosures would be relocated to a new subpart of Regulation S-K, and Guide 3 itself would be rescinded (Update of Statistical Disclosures for Bank and Savings and Loan Registrants, Release No. 33-10688, September 17, 2019).
Industry Guide 3. Statistical Disclosure by Bank Holding Companies, Release No. 33-5735 ("Guide 3") was first published in 1976. The Guide outlines the Commission's policies and practices and was intended to serve as a reference for the statistical disclosures sought by the staff of the Division of Corporation Finance in registration statements and other disclosures documents filed by bank holding companies, and savings and loan holding companies, as applicable; the policies and practices in Guide 3 are not Commission rules.
Guide 3 was last revised in 1986. Since then, new disclosure requirements have been adopted or issued by the Commission and the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB). As a result, some of the disclosures called for in Guide 3 now overlap with Commission rules, U.S. GAAP, or IFRS. A March 2017 request for comment on changes to Guide 3 sought feedback on what disclosures should be modified or eliminated, and if the scope of the Guide should be broadened, and commenters expressed a range of views.
Proposed rules. The Commission proposed to update and codify certain Guide 3 disclosures in a new Subpart 1400 of Regulation S-K. The proposal notes that this approach has been used when other Industry Guides have been modernized (e.g., Guide 2 was codified in Subpart 1200 of Regulation S-K). The proposed disclosure requirements would apply to bank holding companies, banks, savings and loan holding companies, and savings and loan associations.
The proposed rules would require disclosure from both domestic and foreign registrants about:
- Distribution of assets, liabilities and stockholders’ equity, the related interest income and expense, and interest rates and interest differential (Item 1402, codifying all of the disclosures currently called for by Item I of Guide 3 and further disaggregating the categories of interest-earning assets and interest-bearing liabilities required for disclosure);
- Weighted average yield of investments in debt securities by maturity (Item 1403, codifying the weighted average yield disclosure for each range of maturities by category of debt securities currently called for by Item II.B, but changing the categories presented);
- Maturity analysis of the loan portfolio including the amounts that have predetermined interest rates and floating or adjustable interest rates (Item 1404, codifying the maturity by loan category disclosure currently called for by Item III.B and eliminating overlapping requirements);
- An allocation of the allowance for credit losses and certain credit ratios (Item 1405, eliminating the analysis of loss experience disclosure currently called for by Item IV.A, and codifying the ratio of net charge-offs during the period to average loans outstanding); and
- Information about bank deposits including amounts that are uninsured (Item 1406, codifying the majority of the disclosures currently called for by Item V, with some revisions).
"Guide 3 has not been substantively updated for more than 30 years" said SEC Chairman Jay Clayton. "Today’s proposals are another example of how thoughtful reviews can improve disclosures for the benefit of investors and public companies."
Comments are due 60 days after the proposal is published in the Federal Register.
The release is No. 33-10688.
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