Regulatory paperwork continues to occupy far too many community bank resources that could be dedicated to improving local communities, and the problem is only getting worse. A new ICBA survey spotlights the tangible impact of one of the more onerous burdens that is only getting heavier—the quarterly call report.
While regulators are proposing to yet again expand call report requirements for all banks, ICBA’s new survey details the impact of existing reporting rules.
The 2014 ICBA Community Bank Call Report Burden Survey found that the annual cost of preparing the call report has increased for 86 percent of respondents over the past 10 years. Meanwhile, the total hours dedicated to preparing the call report increased for 73 percent of respondents. Further, one in three survey respondents said the number of employees involved in call report preparation has increased, with more than 60 percent saying they have at least two employees who prepare their report.
Why the increasing time and expense? Here’s a reason—the call report has grown from 18 pages in 1986 to 29 pages in 2003 to nearly 80 pages today! The instructions alone are 630 pages, and regulators are considering padding that with another 57. In fact, the call report—which community banks have to submit every 65 business days—has more pages than the typical U.S. community bank has employees.
Make no mistake—the additional staff time and resources that community banks devote to the call report are resources that cannot be used to expand our economy. That is why ICBA is proposing a simpler and more streamlined approach for smaller and less complex banks.
Instead of continuing to add to the paperwork overload, we propose that regulators allow highly rated, well-capitalized community banks to file a short-form call report twice per year. This report would cover the first and third quarters of the year, with community banks continuing to submit the usual long-form call report during the second and fourth quarters.
Think it will help? Community bankers sure do. According to our call report survey, 98 percent of respondents said the short-form call report would reduce their regulatory burden, and 72 percent said the reduction would be substantial.
Look, enough is enough. The truth is that new regulatory burdens detract from the ability of community banks to serve their communities. Instead of tying up local institutions in knots of red tape, let’s free their hand and allow them to promote the sustainable economic growth our nation desperately needs.
Finer Points 
As a CFO who is responsible for the Call Report I understand the burden involved in preparation of the Call Report, but your proposal has “issues” in that the detail Call Report is the foundation for our FRY reports at the holding company level, so any reduction to just the Call Report would not be helpful if the same data is required for the holding company level reports. In addition, the Call Report data is a foundation for a lot of analytics that is available in the marketplace (of which we have several subscriptions) so I would not want to see a stripped down version that can not be compared to all banks quarterly. The better solution is to reduce the unnecessary parts of the reporting for ALL community banks and not just the highest performer banks (of which my bank is one). Start with any reporting that can not be captured easily from the core system of most banks and challenge the need or if eliminating it from all but the largest 50 banks really would cause any “harm” to the governing bodies that want the information. In particular, most of the Memoranda and RC-C Part II loan analysis data and all of RC-S, RC-T and RC-V. Otherwise, I would like for the governing bodies to be required to summarize what every set of data is use for and why it can be justified. Maybe if we understood what “good” it does, maybe it would not seem like such a burden. It seems like new reporting is always added but rarely is something dropped for lack of importance.
As a provider of Call Report software we certainly have seen many changes to both the overall volume of financial information that is being collected by the banking regulatory agencies as well as the method for actual collection of Call Report related data.
One of the most dramatic changes we have seen is the ability for a bank to automate much of the preparation of the quarterly Call Report. For example, newer technology now available enables us as a software provider to map and import most of the data from existing bank reports, spreadsheets, data files and virtually any other source directly into the Call Report. Not only can automation greatly reduce the amount of time spent on Call Reporting but it also allows for easy access to detailed audit trails showing where exactly the data is coming from.
While some banks in the U.S. have automated much of their Call Report preparation, most banks are for the most part still using older manual key punch methods for Call Report preparation. The time and cost to set up automation now is relatively minor in relation to the overall burden of Call Reporting but a basic reticence to change the existing report preparation process that is cumbersome but “works”, continues to be the most common reason for not automating.
Streamlining the Call Report to reduce the reporting burden for community banks is clearly a worthy effort but use of newer 21st century technology to automate Call Report preparation will both reduce the reporting burden for Call Report preparers and provide the regulators and other analysis systems with the important data they need and when they need it.