SEC Proposes to Update Disclosure Requirements for Banking Registrants

On September 17, 2019, the SEC proposed rules that are aimed to update and modernize certain statistical disclosure requirements for banking registrants.[1] The proposal is part of the SEC’s broader Disclosure Effectiveness Initiative to improve the readability of disclosures and eliminate overlapping and duplicative disclosures. The proposal follows a Request for Comment issued in 2017 that solicited input on the overall scope and applicability of Industry Guide 3 (“Guide 3”) disclosures and feedback on whether the disclosures continue to provide the information investors need to make informed investing and voting decisions. 

As proposed, new subpart 1400 of Regulation S-K would rescind and replace Guide 3. Guide 3 was first published over 40 years ago and has remained substantially unchanged while other SEC rules and accounting standards (both US GAAP and IFRS) have evolved over time to address changes within the financial services industry.

The proposed rules would codify certain statistical disclosures under Guide 3 that are not already required by other rules and accounting standards and also introduce some new disclosure requirements.  Examples of such new disclosure requirements include:

  • Disaggregated categories of interest-earning assets and interest-bearing liabilities for disclosures required for by Item I of Guide 3;

  • Weighted average yield by maturities for each category of debt securities;

  • Disclosure of net charge-off ratio on a more disaggregated basis based on loan categories;

  • Credit ratios (including each of the components used in their calculations) by loan categories; and

  • Uninsured time deposits by maturity.

The proposal is subject to a 60-day public comment period after publication in the Federal Register.

[1] The proposed rules would apply to bank holding companies, banks, savings and loan holding companies, and savings and loan associations.