Annual adjustments for reserve requirements and deposit reporting. (Announcements).

The Federal Reserve Board announced on October 18, 2001, the annual adjustments in the amount of net transaction accounts used in the calculation of reserve requirements and the cutoff level used to determine the detail and frequency of deposit reporting.

All depository institutions must retain a percentage of certain types of deposits in the form of vault cash, or as a deposit in a Federal Reserve Bank, or as a pass-through account at a correspondent institution. Reserve requirements currently are assessed on the depository institution's net transaction accounts (mostly checking accounts).

For net transaction accounts in 2002, the first $5.7 million, up from $5.5 million in 2001, will be exempt from reserve requirements. A 3 percent reserve ratio will be assessed on net transaction accounts over $5.7 million to and including $41.3 million, down from $42.8 million in 2001. A 10 percent reserve ratio will be applied above $41.3 million.

These annual adjustments--known as the low reserve tranche adjustment and the reservable liabilities exemption adjustment--are based on growth in net transaction accounts and total reservable liabilities, respectively, at all depository institutions between June 30, 2000, and June 30, 2001.

Additionally, the Board increased the deposit cutoff level that is used with the exemption level to determine the frequency and detail of deposit reporting.

Effective September 2002, depository institutions with total reservable liabilities greater than the exemption level ($5.7 million) are subject to detailed deposit reporting and are called nonexempt institutions. Those nonexempt institutions with total deposits greater than or equal to $106.9 million, up from the $101.0 million cutoff that became effective September 2001, must report their deposit levels weekly. Those with total deposits less than $106.9 million must report their deposit levels quarterly.

Depository institutions with total reservable liabilities equal to or less than the exemption level of $5.7 million are not subject to detailed deposit reporting and are called exempt depository institutions. Exempt depository institutions with total deposits of $5.7 million or more file a less-detailed deposit report once each year. Exempt depository institutions with total deposits less than $5.7 million are not required to file deposit reports.

U.S. branches and agencies of foreign banks and Edge and agreement corporations must file deposit reports weekly, regardless of size.

For depository institutions that report weekly, the low reserve tranche adjustment and the reservable liabilities exemption adjustment will apply to the reserve computation period that begins November 27, 2001, and the corresponding reserve maintenance period that begins December 27, 2001.

For institutions that report quarterly, the low reserve tranche adjustment and the reservable liabilities exemption adjustment will apply to the reserve computation period that begins December 18, 2001, and the corresponding reserve maintenance period that begins January 17, 2002.