FRB Releases Regulation D 2014 Reserve Requirements

The Federal Reserve Board (FRB) has announced the annual indexing of the amounts used in determining reserve requirements of depository institutions and deposit-reporting panels effective in 2014.

All depository institutions must hold a percentage of certain types of deposits as reserves in the form of vault cash, as a deposit in a Federal Reserve Bank, or as a deposit in a pass-through account at a correspondent institution. Reserve requirements currently are assessed on the depository institution’s net transaction accounts (mostly checking accounts). Depository institutions must also regularly submit reports of their deposits and other reservable liabilities.

For net transaction accounts in 2014, the first $13.3 million will be exempt from reserve requirements, up from $12.4 million in 2013. A 3-percent reserve ratio will be assessed on net transaction accounts over $13.3 million, up to and including $89 million; that’s an increase from $79.5 million in 2013. A 10-percent reserve ratio will be assessed on net transaction accounts in excess of $89 million.

These annual adjustments, known as the low reserve tranche adjustment and the reserve requirement exemption amount adjustment, are based on growth in net transaction accounts and total reservable liabilities, respectively, at all depository institutions between June 30, 2012 and June 30, 2013.

The new low reserve tranche and reserve requirement exemption amount will apply to the 14-day reserve maintenance period that begins Jan. 23, 2014.  For depository institutions that report deposit data weekly, this maintenance period corresponds to the 14-day computation period that begins Tuesday, Dec. 24, 2013.  For depository institutions that report deposit data quarterly, this maintenance period corresponds to the seven-day computation period that begins Tuesday, Dec. 17, 2013.

The Board also announced changes in two other amounts — the nonexempt deposit cutoff level and the reduced reporting limit, that are used to determine the frequency with which depository institutions must submit deposit reports.

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance.