TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE BANK
Interagency guidance regarding the appropriate accounting
treatment for dispositions of "other real estate owned" (OREO) is
attached. This guidance, which was briefly discussed in the June
10, 1993 Press Release announcing the credit availability
initiatives, generally conforms the regulatory reporting
requirements for sales of OREO with generally accepted accounting
principles (GAAP). This announcement is being issued jointly by
the Federal Reserve Board, the Federal Deposit Insurance
Corporation, and the Office of the Comptroller of the Currency.
The guidance indicates that banking organizations should
generally account for dispositions of OREO in accordance with
Statement of Financial Accounting Standards No. 66, "Accounting for
Sales of Real Estate." Beginning with the June 30, 1993 report
date, the instructions for OREO in Call Report Schedule RC-M have
been revised to generally conform certain minimum down payment
requirements to those required under GAAP for those circumstances
where banks both sell parcels of OREO property and provide
financing for these sales.
This document is being sent to each Reserve Bank separately by
the Board's Office of the Secretary with instructions that a copy
be forwarded to the chief executive officer of each state member
bank and bank holding company in your district.
It is important that a copy of this guidance be made available
to each supervisory official and examiner at the Reserve Bank as
soon as possible. Also, please ensure that this guidance is fully
understood and effectively implemented by all Reserve Bank
examiners and supervision staff.
Questions regarding this guidance may be directed to Gerald
Edwards at (202) 452-2741, or Charles Holm at (202) 452-3502.
Richard Spillenkothen
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