Proposed SEC Guide 3 Changes Entail Streamlined Bank Disclosures


In September, the Securities and Exchange Commission (“SEC”) proposed a series of updates to Guide 3 of Regulation S-K, which sets out statistical disclosure requirements for Bank Holding Companies (“BHCs”) and Savings & Loans associations (“S&Ls”).[1]  First published in 1976, Guide 3 has remained unchanged since 1986, leading to substantial overlap with succeeding accounting standards adopted by the SEC.[2]  Following the closure of the 60-day notice and comment period, this post presents a concise review of the proposed changes and their reception among commenters in law and accounting.

The proposed rule changes generally update certain risk disclosures and remove others entirely with the aim of eliminating overlap or conflict with Commission rules, Generally Accepted Accounting Principles (“GAAP”), and International Financial Reporting Standards (“IFRS”).[3]  There is also some overlap with the Basel Pillar 3 standardized bank disclosure standards, though Basel disclosures generally are not required under Guide 3 regulations.[4]

For background, Regulation S-K sets out disclosure requirements for registration statements and annual reports filed with the SEC.[5]  Intended to aid investor analysis of complex BHCs with highly diversified portfolios, Guide 3 prescribes specific, periodic disclosure requirements under the Securities Act and the Exchange Act.[6]  The guide covers disclosure in seven operational areas, including: “(1) distribution of assets, liabilities and stockholders’ equity; interest rates and interest differential, (2) investment portfolios, (3) loan portfolios, (4) summary of loan loss experience, (5) deposits, (6) return on equity and assets, and (7) short-term borrowings.”[7]

The most significant disclosure required by Guide 3 is the Average Balance Sheet, which must show major asset and liability categories and average interest income/expense rates on each.[8]  The proposed changes codify several additional mandatory subcategories of short-term liabilities, including repurchase agreements, commercial paper, and federal funds sales and purchases.[9]  The goal of mandating more detailed disclosures of these transactions appears to be to provide more transparency into short-term lending and borrowing by BHCs, particularly in light of recent liquidity crunches in the repo market.[10]

A number of categories redundant with existing GAAP disclosures would be eliminated under the proposed rules, including the book value of securities portfolios, issuer concentrations above 10%, and disclosure of loans by industry type.[11]  Commenters took particular issue with existing financial ratio disclosure requirements,[12] such as Return on Equity, that are not required by GAAP and other SEC rules and can readily be calculated from financial statements.[13]  The proposed update would eliminate disclosure of ROE and ROA ratios while requiring more detailed information on allowances for charge-offs on loans.[14]

A number of commenters requested clarity as to exactly which businesses engaged in lending would be covered under Guide 3.[15]  Maintaining Guide 3’s focus on depository institutions, the proposed rule changes reject extending the regulation’s scope to other sectors.[16]  Though insurance companies and fintech companies increasingly participate in the type of lending activities covered under Regulation S-K, the SEC proposes to maintain the focus on banks and S&Ls.[17]  Notably, the proposed rules recognize the relatively higher systemic importance of large BHCs by imposing more stringent “scaled” disclosure requirements on banks with more than $200 million in assets.[18]

The overall purpose of the Guide 3 update is to eliminate burdensome and redundant financial disclosures, while heightening disclosure for systemically risky areas of the balance sheet, particularly overnight borrowing and credit risk allowances.  By tying certain heightened disclosures to bank size, the proposed rule changes aim to ensure greater transparency in the holdings of systemically important institutions without excessively burdening the smaller lenders also covered under Regulation S-K.


[1] See SEC, Press Release, SEC Proposes Rules to Update Statistical Disclosures for Banking Registrants (Sept. 17, 2019),

[2] See Update of Statistical Disclosures for Bank and Savings and Loan Registrants, Exchange Act Release No. 33,10688, 84 Fed. Reg. 52936, *6 (Sept. 17, 2019), (hereinafter “SEC Guide 3 Proposal”).

[3] See id. at *1.

[4] See Memorandum from Davis Polk, Better Late Than Never: SEC Proposes Guide 3 Update, *7–8, (Sept. 23, 2019), (hereinafter “Davis Polk Memo”).

[5] See 69 Am. Jur. 2d Securities RegulationFederal § 691 (2019).

[6] See SEC Guide 3 Proposal at *5; see also SEC Industry Guides, No. 2056 (5-08), *2–9, *33 (Last visited Nov. 23, 2019),

[7] See SEC Guide 3 Proposal at *5 (internal quotation marks omitted).

[8] See Davis Polk Memo at *3.

[9] See id.

[10] Despite multiple Federal Reserve interventions introducing billions in liquidity since the rate spike in September, volatility in the repo market has persisted.  See generally, Daniel Kruger, Some Investors Resolve to Ring in the New Year by Lending Cash, Wall St. J. (Nov. 15, 2019),

[11] See Davis Polk Memo at *4.

[12] See, e.g., PwC letter at *2.

[13] See SEC Guide 3 Proposal at *76.

[14] See Davis Polk Memo at *6.

[15] See Letter from PricewaterhouseCoopers to Brent J. Fields, Secretary, SEC, *1 (June 28, 2017), accessed via (hereinafter “PwC Letter”).

[16] See SEC Guide 3 Proposal at *13.

[17] See id.

[18] See id. at *90–93.


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