Call reports: Meaning, Criticisms & Real-World Uses

What Are Call Reports?

Call reports are comprehensive quarterly financial statements that U.S. commercial banks, savings banks, and certain other depository institutions are required to submit to federal bank regulatory agencies. These reports provide detailed information on a bank's financial condition, income, and expenses, serving as a critical component of regulatory financial reporting. The data contained in call reports is essential for regulators to monitor the safety and soundness of individual financial institutions and the banking system as a whole.

Specifically, call reports encompass a bank's balance sheet, income statement, and various supporting schedules that detail everything from loan portfolios and deposit structures to regulatory capital and off-balance-sheet activities. The Federal Financial Institutions Examination Council (FFIEC), on behalf of the Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), prescribes the content and format of these reports.

History and Origin

The requirement for banks to submit detailed financial statements to a central authority has deep roots in U.S. financial history. The origin of call reports can be traced back to the National Bank Act of 1864 and further solidified by an act of Congress on March 3, 1869. This act mandated national banks to submit a "full statement of condition" several times a year, as of a past date announced without warning by the Comptroller of the Currency. These reporting dates became known as "call" dates, and the resulting "Report of Condition" eventually evolved into what is known today as the call report. The unannounced nature of the "call" was designed to prevent banks from temporarily altering their financial positions to appear more sound than they were. Over time, the scope and detail of call reports expanded significantly to meet evolving supervisory needs and reflect the increasing complexity of the financial sector.⁵

Key Takeaways

Call reports are mandatory quarterly financial filings for U.S. banks, submitted to federal regulatory agencies.
They provide detailed data on a bank's assets, liabilities, equity, income, and expenses.
The data from call reports is used by regulators for bank supervision and to assess the financial health of the banking system.
Call reports are also a significant source of public data for analysts, researchers, and the public to evaluate bank performance.

Interpreting Call Reports

Interpreting call reports involves a thorough analysis of the detailed financial data provided within them. While the reports themselves are raw data, regulatory bodies and analysts use this information to derive key performance indicators and assess a bank's overall financial health. For instance, analysts examine trends in a bank's asset quality, levels of liquidity, and profitability (reflected in earnings) over multiple reporting periods. They also compare a bank's performance to its peer group, allowing for an evaluation of its relative strengths and weaknesses. The comprehensive nature of call reports allows for deep dives into specific areas, such as the composition of a loan portfolio or the sources of non-interest income and expense, providing insights crucial for both regulatory oversight and investment analysis.

Hypothetical Example

Consider "Horizon Community Bank," a hypothetical FDIC-insured institution. At the end of a quarter, Horizon's finance department compiles its call report. This involves aggregating data from its various departments:

The lending department provides details on all loans, including commercial, real estate, and consumer loans, along with any non-performing loans.
The treasury department supplies information on cash reserves, investment securities, and funding sources like deposits and borrowings.
The accounting department prepares the bank's financial statements, including the balance sheet and income statement, based on these inputs.

The aggregated data—showing, for example, $500 million in total assets, $450 million in liabilities (mostly deposits), and $50 million in equity—is then submitted electronically to the FFIEC. A regulatory analyst might review Horizon's call report and note a slight increase in its provision for loan losses, prompting further inquiry into specific loan categories and the bank's risk management practices.

Practical Applications

Call reports have several critical practical applications across the financial ecosystem:

Regulatory Oversight: Federal agencies like the FDIC, FRB, and OCC use call reports to conduct off-site surveillance of banks. This helps identify potential issues, monitor compliance with regulations, and inform supervisory actions. The FDIC, for example, publishes a Quarterly Banking Profile that aggregates data from call reports to provide an overview of the entire banking industry's condition.
⁴ Industry Analysis: Economists, researchers, and financial analysts utilize call report data to study banking trends, assess systemic risks, and conduct academic research. The detailed breakdown allows for granular analysis of various aspects of bank operations and performance.
Public Information: Call reports are generally made available to the public, fostering transparency in the banking sector. This enables investors, shareholders, and rating agencies to perform due diligence and evaluate a bank's financial stability and performance.
Bank Management: Banks themselves use their own call reports, as well as those of their peers, for internal performance benchmarking and strategic planning.
Bank Holding Company Reporting: In addition to banks, bank holding companies are required to submit analogous reports, such as the FR Y-9C Consolidated Financial Statements for Holding Companies, to the Federal Reserve Board, providing a consolidated view of the larger financial organization.

Cu³rrent call report forms and detailed instructions are regularly published by the FDIC to guide institutions in their submissions.

##² Limitations and Criticisms

Despite their comprehensive nature, call reports have certain limitations. One primary criticism revolves around the sheer volume and complexity of the data. While providing extensive detail, this complexity can make accurate interpretation challenging, particularly for non-experts. The FFIEC, which standardizes these reporting forms, maintains a vast array of forms for different types of financial institutions and reporting requirements, underscoring this intricacy. Add¹itionally, call reports represent a snapshot of a bank's financial condition at a specific point in time (the end of the quarter). They may not fully capture rapidly evolving risks or immediate changes in market conditions that occur between reporting periods. While efforts are made to ensure accuracy, the data is reliant on the reporting bank's internal systems and processes, and like any large data collection, it can be subject to errors or misinterpretations.

Call Reports vs. Uniform Bank Performance Report (UBPR)

Call reports and the Uniform Bank Performance Report (UBPR) are closely related but serve distinct purposes. Call reports are the raw, detailed financial filings submitted by individual banks to regulators, containing extensive line-item data on a bank's condition and income. They are the foundational source documents for bank financial information.

In contrast, the UBPR is an analytical tool generated by the FFIEC that takes the raw data from call reports and presents it in a standardized, comparative format. The UBPR computes key ratios, percentages, and dollar amounts, and compares an individual bank's performance against its peers (banks of similar size and economic environment) and industry averages. While call reports are the source, the UBPR is the interpretive report, designed to aid examiners and bank management in evaluating a bank's performance and identifying potential issues by contextualizing its financial data against industry benchmarks.

FAQs

What information is included in a call report?

A call report includes a bank's complete financial statements, such as its balance sheet and income statement, along with numerous supporting schedules. These schedules detail specific asset classes (like loans and investments), liabilities (deposits, borrowings), capital accounts, interest income and expense, non-interest income and expense, and off-balance-sheet items.

How often are call reports filed?

Call reports are filed quarterly by U.S. commercial banks, savings banks, and other depository institutions. The deadlines for submission are typically 30 days after the end of each calendar quarter.

Who uses call report data?

Call report data is primarily used by federal bank regulatory agencies (FDIC, Federal Reserve, OCC) for supervisory purposes. However, it is also used extensively by financial analysts, economists, researchers, rating agencies, and the general public for evaluating the financial health and performance of individual banks and the banking industry.

Are call reports publicly available?

Yes, with some exceptions for confidential information, the vast majority of data contained in call reports is publicly available. The FFIEC and FDIC websites provide access to these reports and related analytical tools.

Do all financial institutions file call reports?

No, specifically, credit unions file similar but distinct reports with the National Credit Union Administration (NCUA), not call reports. Investment banks or broker-dealers that are not depository institutions also have different reporting requirements to their respective regulators (e.g., SEC or FINRA).