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Inactive Financial Institution Letters 


			December 31, 1996
        	 REVISIONS TO THE REPORTS OF CONDITION AND INCOME
                     		(CALL REPORTS) FOR 1997

                             Contents

Deletions and Reductions in Detail                              1
     Schedule RC -- Balance Sheet                               1
     Schedule RC-B -- Securities                                2
     Schedule RC-C, Part I -- Loans and Leases                  3
     Schedule RC-E -- Deposit Liabilities                       3
     Schedule RC-H -- Selected Balance Sheet Items for Domestic Offices3
     Schedule RC-K -- Quarterly Averages                        3
     Schedule RC-L -- Off-Balance Sheet Items                   4
     Schedule RC-M -- Memoranda                                 4
     Schedule RC-R -- Regulatory Capital                        4
     Schedule RI -- Income Statement                            5
     Schedule RI-C -- Applicable Income Taxes by Taxing Authority6

Elimination of Call Report Instructions That Differ From Generally Accepted Accounting
   Principles, Related New Items, and Other Affected Call Report Items and Instructions7
     Instructional Changes for Conformity With GAAP             7
     New and Modified Call Report Items Resulting From the Adoption of GAAP11
          Schedule RC-F -- Other Assets                        11
          Schedule RC-L -- Off-Balance Sheet Items             11
          Schedule RC-M -- Memoranda                           12
          Schedule RC-O -- Other Data for Deposit Insurance and FICO Assessments13
     Other Call Report Instructions Affected by the Adoption of GAAP14

New Call Report Items for Interest Rate Risk                   15
     Schedule RC -- Balance Sheet                              16
     Schedule RC-B -- Securities                               16
     Schedule RC-C, Part I -- Loans and Leases                 18
     Schedule RC-E -- Deposit Liabilities                      19
     Schedule RC-L -- Off-Balance Sheet Items                  20
     Schedule RC-M -- Memoranda                                21

Other New Items                                                21
     Subchapter S Election for Federal Income Tax Purposes     21
     Reporting of "Adjusted Attributable Deposit Amounts" by Oakar Institutions22
     Credit Derivatives                                        22

Other Instructional Changes                                    23
     Reporting of Assets That are Deducted When Measuring Regulatory Capital23
     Residential Mortgage Loan Commitments                     23
     Firm Commitments to Sell Residential Mortgage Loans       24
     Reporting the Number of Full-Time Equivalent Employees and
        Their Compensation Expense                             24
     Loans and Leases Held for Sale                            24
     Assets Indirectly Representing Premises and Fixed Assets  25                                               
.
		December 31, 1996
         REVISIONS TO THE REPORTS OF CONDITION AND INCOME
                     (CALL REPORTS) FOR 1997


Unless otherwise indicated, the revisions described below apply to all four versions of the Call Report
forms (FFIEC 031, 032, 033, and 034).  Where appropriate, samples of the revised schedules, or portions
thereof, generally from the FFIEC 034 set of forms, are shown to illustrate the specific changes in
reporting requirements.

Deletions and Reductions in Detail

Deletions and reductions in detail, along with modifications of certain related items, will be made to the
following Call Report schedules as of March 31, 1997.  

Schedule RC -- Balance Sheet:

Items 3.a and 3.b, "Federal funds sold" and "Securities purchased under agreements to resell," will be
combined into a single item (item 3).  Similarly, items 14.a and 14.b, "Federal funds purchased" and
"Securities sold under agreements to repurchase," will be combined into a single item (item 14).  In
addition, on the FFIEC 031 report form, these Schedule RC items will begin to be reported on a fully
consolidated basis (rather than including only the domestic offices of the bank, the domestic offices of the
bank's Edge and Agreement subsidiaries, and International Banking Facilities) and corresponding changes
will be made to Schedule RC-K -- Quarterly Averages, items 5 and 13, and Schedule RI -- Income
Statement, items 1.f and 2.b.

Item 17, "Mortgage indebtedness and obligations under capitalized leases," will be combined with existing
item 16, "Other borrowed money."  In addition, on the FFIEC 031, 032, and 033 report forms, a
corresponding change in definition will apply to Schedule RC-K -- Quarterly Averages, item 14, "Other
borrowed money."

Item 22, "Limited-life preferred stock and related surplus," will be combined with existing item 19,
"Subordinated notes and debentures."

Schedule RC-B -- Securities:

Items 6.a and 6.b, "Investments in mutual funds" and "Other equity securities with readily determinable
fair values," will be combined into a single item (item 6.a).  Current item 6.c, "All other equity
securities," will be renumbered as item 6.b.


In addition, Memorandum item 4, "Held-to-maturity debt securities restructured and in compliance with
modified terms," will be deleted.Schedule RC-C, Part I -- Loans and Leases:
.
Memorandum item 1, "Commercial paper included in Schedule RC-C, part I, above," which is completed
only by banks filing the FFIEC 031, 032, and 033 report forms, will be deleted.  In addition, the
instructions will be revised for all banks to indicate that commercial paper should no longer be reported as
a loan in Schedule RC-C, but should be reported as a security in Call Report Schedule RC-B, normally in
item 5, "Other debt securities."

Schedule RC-E -- Deposit Liabilities:

Memorandum item 2.d, "Open-account time deposits of $100,000 or more" (in domestic offices), will be
combined with existing Memorandum item 2.c, "Time certificates of deposit of $100,000 or more" (in
domestic offices).  Memorandum item 2.c will be recaptioned "Total time deposits of $100,000 or more."


As a result of this change to Schedule RC-E, corresponding changes will be made to the coverage of the
existing items for interest expense on and the quarterly averages for time deposits in Schedules RI and RC-K, 
respectively.  These revisions are discussed below under the respective schedules.

Schedule RC-H -- Selected Balance Sheet Items for Domestic Offices:

On the FFIEC 031 report forms, items 16.a and 16.b, "Investments in mutual funds" and "Other equity
securities with readily determinable fair values," will be combined into a single item (item 16.a).  Current
item 16.c, "All other equity securities," will be renumbered as item 16.b.

Schedule RC-K -- Quarterly Averages:

Consistent with the revision to Schedule RC-E, the coverage of the existing items for the quarterly
averages for "Time certificates of deposit of $100,000 or more" and "All other time deposits" (items 9.c
and 9.d on the FFIEC 034 report forms; items 11.c and 11.d on the FFIEC 031, 032, and 033 report
forms) will be revised by moving open-account time deposits of $100,000 or more from the latter item to
the former item.  The latter quarterly average item will refer to "Time deposits of less than $100,000" and
the caption for the former item will refer to "Time deposits of $100,000 or more."

Schedule RC-L -- Off-Balance Sheet Items:

Items 10.a and 10.b, "Gross commitments to purchase" and "Gross commitments to sell" when-issued
securities, will be eliminated as separate items, but these commitments will continue to be reportable in
Schedule RC-L.  Banks generally will report their when-issued securities commitments as off-balance sheet
derivative contracts in items 14 through 17.  The notional amount of these commitments will be included in
item 14.b, "Forward contracts," generally in column A, "Interest rate contracts," and in items 15 and 16
based on their purpose.  On the FFIEC 031, 032, and 033 report forms, the fair values of these
commitments will be reported in item 17.  However, banks that do not include these commitments as part
of their disclosures about off-balance sheet derivatives for other financial reporting purposes will be
permitted to report commitments to sell when-issued securities as "Other off-balance sheet assets" in item
13 and commitments to purchase when-issued securities as "Other off-balance sheet liabilities" in item 12,
subject to the existing reporting thresholds for these two items.  The Glossary entry for "when-issued
securities transactions" also will be revised.

Schedule RC-M -- Memoranda:

Item 8.c, "Total assets of unconsolidated subsidiaries and associated companies," will be deleted. 
Memorandum item 1.b, "Nonreciprocal holdings of banking organizations' capital instruments," which is
collected in the December report only, also will be deleted.

Schedule RC-R -- Regulatory Capital:

The separate maturity distributions for "Subordinated Debt and Intermediate Term Preferred Stock" in
items 2.a through 2.f, column A, and "Other Limited-Life Capital Instruments" in items 2.a through 2.f,
column B, will be replaced by two single separate items (designated items 2.a and 2.b) for the qualifying
portion of each of these two types of capital components that is includible in Tier 2 capital.


     2.   Portion of qualifying limited-life capital instruments (original
       weighted average maturity of at least five years) that is includible
       in Tier 2 capital:                           ____________ 
       a. Subordinated debt and intermediate term preferred stock|___|___|___|
       b. Other limited-life capital instruments    |___|___|___|

For banks that complete Schedule RC-R in its entirety, item 4.a.(1), "Securities issued by, other claims
on, and claims unconditionally guaranteed by, the U.S. Government and its agencies and other OECD
central governments," and item 4.a.(2), "All other" assets assigned to the zero percent risk category, will
be combined into a single revised item 4.a for all zero percent risk weight assets recorded on the balance
sheet.  Similarly, item 5.a.(1), "Claims conditionally guaranteed by the U.S. Government and its agencies
and other OECD central governments," item 5.a.(2), "Claims collateralized by securities issued by the
U.S. Government and its agencies and other OECD central governments; by securities issued by U.S.
Government-sponsored agencies; and by cash on deposit," and item 5.a.(3), "All other" assets assigned to
the 20 percent risk category, will be combined into a single revised item 5.a for all 20 percent risk weight
assets recorded on the balance sheet.


Schedule RI -- Income Statement:

Consistent with the revision to Schedule RC-E, the coverage of the existing items for interest expense on
"Time certificates of deposit of $100,000 or more" and "All other time deposits" (items 2.a.(2)(c) and
2.a.(2)(d) on the FFIEC 032, 033, and 034 report forms; items 2.a.(1)(b)(3) and 2.a.(1)(b)(4) on the
FFIEC 031 report forms) will be revised by moving the interest expense on open-account time deposits of
$100,000 or more from the latter item to the former item.  The latter interest expense item will refer to
"Time deposits of less than $100,000" and the caption for the former item will refer to interest expense on
"Time deposits of $100,000 or more."

As a result of one of the revisions to Schedule RC noted above, item 2.d, "Interest on mortgage
indebtedness and obligations under capitalized leases," will be deleted.  Interest expense on these types of
liabilities will be included in existing item 2.c, "Interest on demand notes issued to the U.S., trading
liabilities, and other borrowed money."

On the FFIEC 031, 032, and 033 report forms, item 5.d, "Other foreign transaction gains (losses)," will
be eliminated.  This item has been used for reporting the net gain or loss from all transactions involving
foreign currency or foreign exchange other than trading transactions.  Banks (including those that file the
FFIEC 034 report forms) should now report these net gains (losses) consistently as part of either "All other
noninterest income" (item 5.b.(2) on the FFIEC 034; item 5.f.(2) on the FFIEC 031, 032, and 033) or
"Other noninterest expense" (item 7.c). 

Items 11.a and 11.b, "Extraordinary items and other adjustments, gross of income taxes," and "Applicable
income taxes (on item 11.a)," will be deleted.  Only the amount of "Extraordinary items and other
adjustments, net of income taxes" (current item 11.c), will continue to be reported in Schedule RI. 
Current item 11.c will be renumbered as item 11.   All extraordinary items and their related tax effects
will continue to be separately itemized and described in Schedule RI-E, item 3.

Schedule RI-C -- Applicable Income Taxes by Taxing Authority:

This schedule, which is completed only for the December report, will be eliminated, except for the item
for the "deferred portion" of total applicable income taxes (item 4 on the FFIEC 034 report forms; item 5
on the FFIEC 031, 032, and 033 report forms).  The item for the "deferred portion" of applicable income
taxes will be moved to the Memorandum section of the income statement (Schedule RI) and designated
Memorandum item 12.  This information will continue to be collected with the December report only.


     Schedule RI -- Memoranda

     12.  Deferred portion of total applicable income taxes included in Schedule RI,____________ 
        items 9 and 11 (to be reported with the December Report of Income)|___|___|___|



Elimination of Call Report Instructions That Differ From Generally Accepted Accounting Principles,
Related New Items, and Other Affected Call Report Items and Instructions

As previously announced in November 1995, the Examination Council has approved the adoption of
generally accepted accounting principles (GAAP) as the reporting basis for the balance sheet, income
statement, and related schedules in the Call Report, effective with the March 31, 1997, report date. 
Adopting GAAP as the reporting basis in the basic schedules of the Call Report will eliminate existing
differences between bank regulatory reporting standards and GAAP, thereby producing greater consistency
in the information collected in regulatory reports and general purpose financial statements and reducing
reporting burden.  However, bank regulatory capital ratios will continue to be calculated in accordance
with the agencies' capital standards.  These standards and the related Call Report instructions will continue
to govern the completion of Schedule RC-R -- Regulatory Capital.

Instructional Changes for Conformity With GAAP

In connection with this move to GAAP, existing Call Report instructions that depart from GAAP,
including those enumerated below, will be revised to bring them into conformity with GAAP.  The section
of the Call Report's General Instructions on the "Applicability of Generally Accepted Accounting
Principles to Regulatory Reporting Requirements" will also be revised.  Nevertheless, because the Call
Report is a bank-level report, each bank is considered an "accounting entity" and normally must prepare
its Call Report on a separate entity basis.  Furthermore, this section of the General Instructions will
continue to state that

     when a bank's primary federal bank supervisory agency's interpretation of how GAAP
     should be applied to a specified event or transaction (or series of related events or
     transactions) differs from the bank's interpretation, the supervisory agency may require
     the bank to reflect the event(s) or transaction(s) in its Reports of Condition and Income in
     accordance with the agency's interpretation and to amend previously submitted reports.  

As this instructional language indicates, this reporting policy is intended to apply when an agency
concludes that a bank has not properly applied GAAP given the facts and circumstances surrounding a
specific event or transaction.

When discussing the need for a bank to amend previous reports, the General Instructions to the Call Report
separately state that a bank's supervisory agency may require amendments if reports contain significant
errors.  The Glossary entry for "Accounting Changes" in the Call Report instructions also states that a
bank may be directed to file amended reports for periods that were significantly affected by a material
error.  Materiality is a qualitative characteristic of accounting information which the Financial Accounting
Standards Board (FASB) defines in Statement of Financial Accounting Concepts No. 2 as

     the magnitude of an omission or misstatement of accounting information that, in light of
     surrounding circumstances, makes it probable that the judgment of a reasonable person
     relying on the information would have been changed or influenced by the omission or
     misstatement.

At the end of each Statement of Financial Accounting Standards, the FASB states that the Statement's
provisions "need not be applied to immaterial items."  Therefore, when dealing with the recognition and
measurement of events and transactions in the Call Report, the General Instructions' reference to
"significant" errors should be interpreted to mean errors that are "material" for the reporting bank.
  
The following Call Report instructions will be revised to eliminate their current differences from GAAP:

(1)  The treatment of assets sold with recourse in the Glossary entry for "Sales of Assets" and the
     section of the Glossary entry for "Participations in Pools of Residential Mortgages" on "Privately-issued 
	 certificates of participation in pools of residential mortgages."  (As discussed below under
     "Other Call Report Instructions Affected by Adoption of GAAP," the banking agencies' risk-based
     capital standards refer to the existing Call Report instructions as the source for the definition of asset
     sales with recourse.  The existing Call Report Glossary entry will be recaptioned "Sales of Assets for
     Risk-Based Capital Purposes" and the relevant portions thereof will be retained to provide guidance
     for identifying those asset sales that are reportable as recourse transactions in Call Report Schedule
     RC-R -- Regulatory Capital.  A new Glossary entry describing, in a manner consistent with GAAP,
     the reporting for transfers of financial assets for Call Report balance sheet and income statement
     purposes will be added to the instructions.)

(2)  The treatment of excess servicing fees (as that term is used in the accounting standards in effect
     before January 1, 1997) in the "Income Statement Effect of Sales of Assets" section of the Glossary
     entry for "Sales of Assets" and in the instruction to Schedule RC-F, item 3, "Excess residential
     mortgage servicing fees receivable."  (Note:  The accounting for excess servicing fees under GAAP
     changes on January 1, 1997, when FASB Statement No. 125, "Accounting for Transfers and
     Servicing of Financial Assets and Extinguishments of Liabilities" (FAS 125), takes effect.)

(3)  The treatment of futures, forward, and option contracts in the Glossary entry for "Futures,
     Forward, and Standby Contracts."

(4)  The general prohibition on the netting of assets and liabilities in the Call Report set forth in the
     Glossary entry for "Offsetting" and in the General Instructions.

(5)  The initial valuation of foreclosed assets in the Glossary entries for "Foreclosed Assets" and
     "Troubled Debt Restructurings" and in the instructions to Schedule RC-M, item 8.a.(2), "All other
     real estate owned."

(6)  The maximum amortization period for intangible assets set forth in the section of the Glossary entry
     for "Business Combinations" on "Purchase acquisition" and in the instructions to Schedule RC-M,
     item 6, "Intangible assets."  Consistent with the views expressed by the Securities and Exchange
     Commission (SEC) in Staff Accounting Bulletins, the revised instructions would indicate that
     amortization periods in excess of 25 years generally would not be appropriate for Call Report
     purposes.

(7)  The prohibition on the consolidation of domestic subsidiaries of the reporting bank that are
     commercial banks, savings banks, or savings associations as discussed in the section of the
     General Instructions on "Scope of the 'Consolidated Bank' Required to be Reported in the Submitted
     Reports."

(8)  The treatment of third party credit card solicitation costs in the Glossary entry for "Loan Fees."

(9)  The maximum interest rate for capitalizing interest costs on internally financed projects set forth in
     the Glossary entry for "Capitalization of Interest Costs."

(10) The treatment of repurchase agreements to maturity and long-term repurchase agreements in
     the Glossary entry for "Repurchase/Resale Agreements."

(11) The treatment of loan fees charged in connection with international loans in the Glossary entry
     for "Loan Fees."

(12) The treatment of reciprocal balances in the Glossary entry for "Reciprocal Balances," in the
     instructions to Schedule RC-A, item 2, "Balances due from depository institutions in the U.S.," for
     the FFIEC 031, 032, and 033 report forms, and in the instructions to Schedule RC, item 1.a,
     "Noninterest-bearing balances and currency and coin," for the FFIEC 034 report forms.

(13) The treatment of securities transactions with settlement periods exceeding regular way
     settlement time limits that have been reported as forward contracts according to the instructions to
     Schedule RC-L, item 14, "Gross amounts (e.g., notional amounts) of off-balance sheet derivatives." 

(14) The treatment of the cumulative effect of changes in accounting principles that are applied
     retroactively through the restatement of prior years' financial statements prepared in accordance with
     GAAP in the "Changes in accounting principles" section of the Glossary entry for "Accounting
     Changes."

To further aid in reducing reporting burden, new or revised instructions in the following additional areas
will permit banks to report certain information in their Call Reports in accordance with prevalent banking
industry practice in GAAP financial statements:

(1)  Net gains and losses on other real estate owned currently must be reported as "Other noninterest
     income" and "Other noninterest expense," respectively.  Banks may choose to follow the existing
     instructions or to report net costs of other real estate owned (whether a net debit or a net credit)
     consistently as "Other noninterest expense."

(2)  Net gains and losses on sales of loans and certain other asset categories currently must be reported as
     "Other noninterest income" and "Other noninterest expense," respectively.  Banks may choose to
     follow the existing instructions or to report these net amounts (whether a net debit or a net credit)
     consistently as other noninterest income or expense.

(3)  Former bank premises held for sale currently must be categorized as "Other real estate owned" on
     the balance sheet.  Banks may choose to follow this existing instruction or to include such property in
     "Premises and fixed assets" on the balance sheet.

(4)  The amortization of mortgage servicing rights currently must be reported as "Other noninterest
     expense."  Banks may choose to follow this existing instruction or to report the amortization as a
     reduction of mortgage servicing revenue.

(5)  The portion of credit card merchant discount passed through the interchange to cardholders' banks
     currently must be reported as "Other noninterest expense."  Banks may choose to follow this existing
     instruction or to net this portion of the merchant discount against the gross merchant discount
     reported in "Other fee income."

(6)  Contractual interest payments received on partially charged-off nonaccrual loans for which
     recognition of interest income on a cash basis is appropriate currently must be allocated among
     interest income, reduction of principal, or recovery of the prior charge-off and reported accordingly. 
     Banks may choose to follow this existing instruction or to report the receipt of this contractual
     interest in its entirety either as interest income, reduction of principal, or recovery of prior charge-off, 
	 depending on the condition of the loan, consistent with its accounting policies for other financial
     reporting purposes.

(7)  The Call Report instructions currently do not provide guidance on the regulatory reporting treatment
     of a bank's costs associated with the development of software for internal use.   Banks should report
     these costs in a manner consistent with GAAP and in accordance with their accounting policy for
     other financial reporting purposes.  In other words, if these costs are expensed as incurred in other
     financial reports issued by the bank (or by its parent holding company), they should be reported in
     the same manner in the Call Report (i.e., as a period cost component of "Other noninterest
     expense").  This is considered the preferable accounting method.  However, if the bank (or its parent
     holding company) has previously adopted an accounting policy of capitalizing and amortizing these
     costs for other financial reporting purposes, the bank may use this accounting method for Call Report
     purposes.  A bank that does not currently capitalize these costs should not adopt this method for Call
     Report purposes.

Banks that have engaged in any of the preceding types of transactions or activities prior to January 1,
1997, and have reported them in the Call Report in accordance with the existing instructions that differ
from GAAP are permitted to report them in accordance with GAAP beginning in 1997.  Because Call
Reports for 1996 and prior years have not been prepared entirely in accordance with GAAP, the effect of
this retroactive application of GAAP on the amount of a bank's Call Report undivided profits as of January
1, 1997, net of applicable income taxes, (i.e., the amount of the "catch-up" adjustment) should be
reported as a direct adjustment to equity capital in Schedule RI-A, item 9, and itemized and described in
Schedule RI-E, item 5.

In a limited number of instances, the Call Report instructions and the banking agencies' supervisory
guidance contain specific reporting instructions that fall within the range of acceptable practice under
GAAP.  These instructions, which have been adopted to achieve safety and soundness objectives or to
ensure comparability, will be retained.  Should the need arise in the future, the Examination Council and
the agencies will, when appropriate, issue other specific reporting guidance that falls within GAAP. 
Current Call Report instructions providing such specific reporting guidance include the nonaccrual rules in
the Glossary entry for "Nonaccrual Status," the treatment of impaired collateral dependent loans in the
Glossary entry for "Loan Impairment," the Glossary entry for the "Allowance for Loan and Lease Losses"
which references the 1993 Interagency Policy Statement on this subject, the separate entity method of
accounting for income taxes of bank subsidiaries of holding companies in the Glossary entry for "Income
Taxes," the push down accounting rules in the Glossary entry for "Business Combinations," and the
treatment of property dividends in the Glossary entry for "Dividends."

New and Modified Call Report Items Resulting From the Adoption of GAAP

For some of the preceding types of transactions or activities which will be affected by the elimination of
Call Report instructions that differ from GAAP, the potential impact of these transactions and activities on
the safety and soundness of banks is of concern to the banking agencies.  In other cases, the instructional
changes may affect the reported amount of a bank's deposits and, thereby, its assessable deposits for
deposit insurance and Financing Corporation (FICO) debt service purposes.  In order to identify the extent
of bank involvement in these areas or the effect on reported deposits, the Examination Council has
approved the addition of certain new items to the Call Report and the modification of a number of existing
Call Report items, as follows:

Schedule RC-F -- Other Assets -- Existing item 3, "Excess residential mortgage servicing fees receivable,"
will be replaced by two new items in response to FAS 125.  In new item 3.a, banks will report
"interest-only strips receivable" held for other than trading purposes (that are not in the form of a security)
that represent the contractual right to receive some or all of the interest due on mortgage loans.  In new
item 3.b, banks will report "interest-only strips receivable" held for other than trading purposes (that are
not in the form of a security) that represent the contractual right to receive some or all of the interest due
on interest-bearing financial assets other than mortgages.  Consistent with FAS 125, these strips receivable
would be measured at fair value like available-for-sale securities.


     3.   Interest-only strips receivable (not in the form of a security) on:____________ 
       a. Mortgage loans                            |___|___|___|
       b. Other financial assets                    |___|___|___|


Schedule RC-L -- Off-Balance Sheet Items -- Items 9.a through 9.c on residential mortgage loans and
agricultural mortgage loans transferred with recourse in transactions that have been treated as sales for
Call Report purposes will be replaced.  In new items 9.a.(1) and 9.a.(2), banks will report the outstanding
principal balance and the amount of retained recourse exposure, respectively, on first lien 1-to-4 family
residential mortgages that have been transferred with recourse in transactions reported as sales for Call
Report balance sheet purposes.  In new items 9.b.(1) and 9.b.(2), banks will report these two amounts on
other financial assets (excluding small business obligations) that have been transferred with recourse in
transactions reported as sales.  Existing items 9.d.(1) and 9.d.(2) on small business obligations transferred
with recourse will be retained, but will be renumbered as items 9.c.(1) and 9.c.(2).


     9.   Financial assets transferred with recourse that have been treated as
       sold for Call Report purposes:
       a. First lien 1-to-4 family residential mortgage loans: 
          (1)     Outstanding principal balance of mortgages transferred____________ 
             as of the report date                  |___|___|___|
          (2)     Amount of recourse exposure on these mortgages____________ 
             as of the report date                  |___|___|___|
       b. Other financial assets (excluding small business obligations
          reported in item 9.c): 
          (1)     Outstanding principal balance of assets transferred____________ 
             as of the report date                  |___|___|___|
          (2)     Amount of recourse exposure on these assets____________ 
             as of the report date                  |___|___|___|
       c. Small business obligations transferred with recourse under
          Section 208 of the Riegle Community Development and
          Regulatory Improvement Act of 1994:
          (1)     Outstanding principal balance of small business obligations____________ 
             transferred as of the report date      |___|___|___|
          (2)     Amount of retained recourse on these obligations____________ 
             as of the report date                  |___|___|___|



Schedule RC-M -- Memoranda -- New items 11 and 12 will be added to this schedule, as follows:

(1)  Item 11:  "Net unamortized realized deferred gains (losses) on off-balance sheet derivative contracts
     included in assets and liabilities reported in Schedule RC."  For available-for-sale securities reported
     on the balance sheet at fair value, this new item 11 will include any deferred gains (losses) that are
     part of the amortized cost basis of such securities.

(2)  Item 12:  "Amount of assets netted against nondeposit liabilities on the balance sheet (Schedule RC)
     in accordance with generally accepted accounting principles."  On the FFIEC 031, this item will also
     include assets netted against deposits in foreign offices other than insured branches in Puerto Rico
     and U.S. territories and possessions.  This new item 12 would include securities purchased under
     agreements to resell that have been netted against securities sold under agreements to repurchase
     under FASB Interpretation No. 41, back-to-back loans involving deposits in foreign offices other than
     insured branches, receivables and payables arising from unsettled trades, in-substance defeasance
     transactions grandfathered under FAS 125, and any other assets netted against nondeposit liabilities
     (and deposits in foreign offices other than insured branches) under FASB Interpretation No. 39. 
     However, the item will exclude netted on-balance sheet amounts associated with off-balance sheet
     derivative contracts, deferred tax assets netted against deferred tax liabilities, and assets netted in
     accounting for pensions.

Schedule RC-O -- Other Data for Deposit Insurance and FICO Assessments --

(1)  New item 12 and new Memorandum item 3 will be added to this schedule, as follows:

   (a)    Item 12, "Amount of assets netted against deposit liabilities in domestic offices on the balance
          sheet (Schedule RC) in accordance with generally accepted accounting principles."  On the
          FFIEC 031, this item will also include assets netted against deposits in insured branches in
          Puerto Rico and U.S. territories and possessions.  Banks will separately report asset amounts
          netted against demand deposits and asset amounts netted against time and savings deposits in new
          items 12.a and 12.b, respectively.  These items will exclude data on net reciprocal demand
          balances and related adjustments reported in Schedule RC-O, item 11.

   (b)    In new Memorandum item 3, a question will ask whether the reporting institution has been
          consolidated with a parent bank or savings association in that parent bank's or savings
          association's Call Report or Thrift Financial Report.  If so, the reporting institution must report
          the legal title and FDIC Certificate Number of the parent bank or savings association.



     Memoranda

     3.   Has the reporting institution been consolidated with a parent bank
       or savings association in that parent bank's or parent savings association's
       Call Report or Thrift Financial Report?  
       If so, report the legal title and FDIC Certificate Number of the 
       parent bank or parent savings association:  FDIC Cert No.  
                                                                                                         |__|__|__|__|__|

       

(2)  Existing items 11.a through 11.c on reciprocal demand balances will be revised.  As indicated above,
     the current Call Report instructions on reciprocal balances will be revised to conform with GAAP. 
     At present, the instructions require banks to report reciprocal demand balances with commercial
     banks in the U.S. on a net basis on the balance sheet (Schedule RC) and in the deposit schedule
     (Schedule RC-E).  All other reciprocal deposit relationships are to be reported gross.  Because this
     netting instruction differs from the reciprocal deposit netting provisions in Section 7(a)(4) of the
     Federal Deposit Insurance Act, Schedule RC-O contains three netting-related items (items 11.a
     through 11.c) used to adjust reported deposits so they conform with the statute.  The Call Report
     instructions on reciprocal balances, after they are revised to conform with GAAP, will still differ
     from Section 7(a)(4), but in a different manner than at present.  Thus, items 11.a through 11.c of
     Schedule RC-O will be modified to ensure that banks' assessable deposits continue to be properly
     measured.  In addition, on the FFIEC 031, the coverage of these items will be expanded to include
     adjustments to demand deposits in insured branches in Puerto Rico and U.S. territories and
     possessions, rather than demand deposits in domestic offices only.  As revised, these three items will
     be as follows:
   

.     11.  Adjustments to demand deposits in domestic offices (and in insured
        branches in Puerto Rico and U.S. territories and possessions) reported
        in Schedule RC-E for certain reciprocal demand balances:
        a.   Amount by which demand deposits would be reduced if the
          reporting bank's reciprocal demand balances with the domestic
          offices of U.S. banks and savings associations (and insured
          branches in Puerto Rico and U.S. territories and possessions)
          that were reported on a gross basis in Schedule RC-E had been____________ 
          reported on a net basis                   |___|___|___|
        b.   Amount by which demand deposits would be increased if the
          reporting bank's reciprocal demand balances with foreign banks
          and foreign offices of other U.S. banks (other than insured
          branches in Puerto Rico and U.S. territories and possessions)
          that were reported on a net basis in Schedule RC-E had been____________ 
          reported on a gross basis                 |___|___|___|
        c.   Amount by which demand deposits would be reduced if cash
          items in process of collection were included in the calculation
          of the reporting bank's net reciprocal demand balances with the 
          domestic offices of U.S. banks and savings associations (and 
          insured branches in Puerto Rico and U.S. territories and ____________ 
          possessions) in Schedule RC-E             |___|___|___|


Other Call Report Instructions Affected by the Adoption of GAAP

Although the treatment of assets sold with recourse will be brought into conformity with GAAP for
purposes of the Call Report balance sheet, income statement, and related schedules, the agencies'
risk-based capital standards refer to the existing Call Report instructions as the source for the definition of
asset sales with recourse.  The relevant Call Report instructions are contained in the Glossary entry for
"Sales of Assets" with its general rule for determining whether an asset transfer must be reported as a sale
or as a financing transaction.  Thus, this Glossary entry will be recaptioned "Sales of Assets for Risk-Based 
Capital Purposes" and its existing general rule will remain applicable for purposes of identifying
those assets sold with recourse that are no longer reflected on the asset side of the balance sheet, but whose
credit equivalent amounts must be reported by risk weight category in Call Report Schedule RC-R --
Regulatory Capital.

In particular, as a result of the aforementioned change to the instructions for the balance sheet treatment of
assets sold with recourse, banks may be able to reflect as an asset previously nonrecognized (for Call
Report purposes) contractual cash flows (e.g., excess servicing fees that are placed in so-called "spread
accounts") that act as credit enhancements for assets (typically credit card receivables) that have been
transferred and securitized.  However, asset transfers that qualify for sale treatment under GAAP, but
which use such cash flows as credit enhancements and carry them as on-balance sheet assets at a
discounted amount, would be treated as sales with recourse under the "Sales of Assets for Risk-Based
Capital Purposes" general rule because the bank has retained risk of loss with respect to these asset
amounts.  In addition, these asset transfers must be reported as off-balance sheet sales with recourse on
Schedule RC-L (new item 9.a or 9.b, as appropriate) because of the bank's retention of risk.  This means
that a bank will have to hold risk-based capital against the full amount of the assets transferred with
recourse, but such transfers may qualify for low-level recourse capital treatment.

When "spread accounts" act as credit enhancements (and no other features of the asset transfer constitute a
retention of risk of loss or obligation for payment), the low-level recourse capital treatment limits the
required amount of capital to the carrying amount of these contractual cash flows net of any noncapital
GAAP recourse liability account associated with the asset transfer.  However, the move to GAAP for
reporting transfers of financial assets with recourse on the Call Report balance sheet was not intended to
produce a significant change in a bank's risk-based capital ratios as calculated from the data reported on its
risk-based capital schedule.  To ensure this outcome, the Call Report instructions relating to the completion
of the regulatory capital schedule will permit banks to apply the low-level recourse capital rule on a net of
tax basis to "spread accounts" that act as credit enhancements for asset transfers.

New Call Report Items for Interest Rate Risk

On June 26, 1996, the banking agencies published a Joint Agency Policy Statement on Interest Rate Risk. 
Under this policy statement, the agencies are pursuing a risk assessment approach for evaluating a bank's
capital adequacy for interest rate risk.  The policy statement explicitly notes that the agencies intend to
"use various quantitative screens and filters to identify banks that may have high exposures or complex risk
profiles, to allocate examiner resources, and to set examination priorities.  These tools rely on Call Report
data and various economic indicators and data."  Thus, in adopting this policy statement, the agencies
anticipated making revisions to the existing maturity and repricing data in the Call Report because these
data are not adequate for the quantitative screens and filters the agencies are developing as they implement
the policy statement.

Therefore, beginning with the Call Report for June 30, 1997, the FFIEC is modifying the existing
reporting requirements pertaining to interest rate risk and adding certain new items.  The agencies have
chosen to make only those modifications to the Call Report that afford the greatest potential benefit to off-site 
risk identification and resource allocation.  These reporting changes are discussed below.  Moreover,
these Call Report revisions are a small fraction of the proposed data collection requirements contained in
the "Supervisory Policy Statement Concerning a Supervisory Framework for Measuring and Assessing
Banks' Interest Rate Risk Exposure" which the agencies proposed in August 1995 and which the June 1996
policy statement replaced.

Because these Call Report changes will not take effect until June 1997, commercial banks will report the
existing Call Report items that provide maturity and repricing data in March 1997.  FDIC-supervised
savings banks will complete their supplemental interest rate risk schedule (Schedule RC-J) in March 1997,
except for the weighted average cost and yield factors and the memorandum items on principal payments
received which will be eliminated for that quarter.  Supplemental Schedule RC-J for savings banks will
then be eliminated in June 1997. 

The specific changes that will take effect as of the June 30, 1997, report date are as follows:

Schedule RC -- Balance Sheet:

Item 16.b, "Other borrowed money with a remaining maturity of more than one year," will be split into
two separate items for borrowings with remaining maturities of more than one year through three years
(new item 16.b) and more than three years (new item 16.c).

Schedule RC-B -- Securities:

Memorandum item 2, "Maturity and repricing data for debt securities," will be revised and will begin to
be completed by FDIC-supervised savings banks:

First, in revised Memorandum items 2.a and 2.b, banks will begin to separately report maturity and
repricing data for "Non-mortgage debt securities" and "Mortgage pass-through securities," with fixed rate
and floating rate securities reported on a combined basis.  However, the current instructions on how these
securities should be reported generally will not change.  Banks will still report the amortized cost of 
held-to-maturity securities and the fair value of available-for-sale debt securities in the appropriate
Memorandum items.  Fixed rate securities will continue to be reported based on their remaining maturity,
i.e., the amount of time remaining from the report date until the final contractual maturity of the security
without regard to the security's repayment schedule, if any.  Floating rate securities will continue to be
reported based on their repricing frequency, i.e., how often the contract permits the interest rate on the
debt security to be changed without regard to the length of time between the report date and the date the
rate can next change.

In addition, the existing "Over one year through five years" time band will be split into two separate
bands:  "Over one year through three years" and "Over three years through five years."  The existing
"Over five years" time band will also be split into two separate bands:  "Over five years through fifteen
years" and "Over fifteen years."

Second, new Memorandum item 2.c will cover those mortgage-backed securities other than pass-through
securities, e.g., CMOs, REMICs, and stripped mortgage-backed securities, that are reported in Schedule
RC-B, item 4.b.  A two-way breakdown of these instruments by expected weighted average life would be
reported:  those with an expected weighted average life of "Three years or less" and those with an
expected weighted average life of "Over three years."

Under the Examination Council's Supervisory Policy Statement on Securities Activities, prior to purchase
and at subsequent testing dates, banks must test mortgage derivative products to determine whether they
are "high-risk" or "nonhigh-risk."  These tests include one for expected weighted average life, although
certain mortgage derivative products are not subject to this test.  For purposes of Memorandum item 2.c,
mortgage derivative products subject to the expected weighted average life test should be reported based on
the average life determined at their most recent testing date or more current information, if available.  For
mortgage derivative products not subject to this test, banks should report based on the most recent average
life information obtained within the twelve months preceding the report date.

Third, because fixed rate debt securities will no longer be reported separately by remaining maturity in
revised Memorandum item 2, current Memorandum item 6, "Floating rate debt securities with a remaining
life of one year or less," will be expanded to cover all debt securities, will be renumbered as
Memorandum item 2.d, and will begin to be completed by FDIC-supervised savings banks.

     Memoranda

     2.   Maturity and repricing data for debt securities (excluding those in 
       nonaccrual status):
       a. Non-mortgage debt securities with a remaining maturity
          or repricing frequency of (sum of Memorandum items 
          2.a.(1) through 2.a.(6) must equal total non-mortgage
          debt securities from Schedule RC-B, sum of items 1, 2, 3, 
          and 5, columns A and D, minus nonaccrual non-mortgage 
          debt securities included in Schedule RC-N, item 9, column C):____________ 
          (1)     Three months or less              |___|___|___|
          (2)     Over three months through 12 months|___|___|___|
          (3)     Over one year through three years |___|___|___|
          (4)     Over three years through five years|___|___|___|
          (5)     Over five years through 15 years  |___|___|___|
          (6)     Over 15 years                     |___|___|___|
       b. Mortgage pass-through securities with a remaining maturity
          or repricing frequency of (sum of Memorandum items 
          2.b.(1) through 2.b.(6) must equal total mortgage
          pass-through securities from Schedule RC-B, item 4.a, 
          columns A and D, minus nonaccrual mortgage pass-through
          securities included in Schedule RC-N, item 9, column C):____________ 
          (1)     Three months or less              |___|___|___|
          (2)     Over three months through 12 months|___|___|___|
          (3)     Over one year through three years |___|___|___|
          (4)     Over three years through five years|___|___|___|
          (5)     Over five years through 15 years  |___|___|___|
          (6)     Over 15 years                     |___|___|___|
       c. Other mortgage-backed securities (include CMOs, REMICs,
          and stripped MBS) with an expected average life of 
          (sum of Memorandum items 2.c.(1) and 2.c.(2) must
          equal total other mortgage-backed securities from 
          Schedule RC-B, item 4.b, columns A and D, minus 
          nonaccrual other mortgage-backed securities included
          in Schedule RC-N, item 9, column C):      ____________ 
          (1)     Three years or less               |___|___|___|
          (2)     Over three years                  |___|___|___|
       d. Total debt securities with a remaining maturity of one year 
          or less (included in Memorandum items 2.a through ____________ 
          2.c above)                                |___|___|___|

Schedule RC-C, Part I -- Loans and Leases:

The Memorandum item for "Maturity and repricing data for loans and leases" (Memorandum item 2 on
the FFIEC 034 report forms; Memorandum item 3 on the FFIEC 031, 032, and 033 report forms) will be
revised and will begin to be completed by FDIC-supervised savings banks.  Revised subitems a. and b.
will cover maturity and repricing data for "Loans secured by real estate" and "Other loans and leases,"
with fixed rate and floating rate instruments reported on a combined basis.  However, as with the revised
items for debt securities, the current instructions on how loans and leases should be reported generally will
not change.  Fixed rate loans and leases will continue to be reported based on their remaining contractual
maturity.  Floating rate loans will continue to be reported based on their repricing frequency.  In addition,
the same changes in time bands will be made as were described above for debt securities under Schedule
RC-B.

Because fixed rate loans and leases will no longer be reported separately by remaining maturity in this
revised Memorandum item, the current Memorandum item for "Floating rate loans with a remaining
maturity of one year or less" (current Memorandum item 2.d on the FFIEC 034 report forms;
Memorandum item 3.d on the FFIEC 031, 032, and 033 report forms) will be expanded to cover all loans
and leases; will be renumbered as Memorandum item 2.c on the FFIEC 034 report forms and as
Memorandum item 3.c on the FFIEC 031, 032, and 033 report forms; and will begin to be completed by
FDIC-supervised savings banks.

New Memorandum items will be added for "Loans secured by nonfarm nonresidential real estate with a
remaining maturity or repricing frequency of over five years" and "Commercial and industrial loans with a
remaining maturity or repricing frequency of over three years" (Memorandum items 2.d and 2.e on the
FFIEC 034 report forms; Memorandum items 3.d and 3.e on the FFIEC 031, 032, and 033 report forms).


     Memoranda (item numbers are from the FFIEC 034 report forms)

     2.   Maturity and repricing data for loans and leases (excluding those in 
       nonaccrual status):
       a. Loans secured by real estate with a remaining maturity
          or repricing frequency of (sum of Memorandum items 
          2.a.(1) through 2.a.(6) must equal total loans secured
          by real estate from Schedule RC-C, part I, sum of items 1.a
          through 1.e, minus total nonaccrual real estate loans from
          Schedule RC-N, item 1, column C):         ____________ 
          (1)     Three months or less              |___|___|___|
          (2)     Over three months through 12 months|___|___|___|
          (3)     Over one year through three years |___|___|___|
          (4)     Over three years through five years|___|___|___|
          (5)     Over five years through 15 years  |___|___|___|
          (6)     Over 15 years                     |___|___|___|
.       b. Other loans and leases with a remaining maturity
          or repricing frequency of (sum of Memorandum items 
          2.b.(1) through 2.b.(6) must equal total other
          loans and leases from Schedule RC-C, part I, sum of  
          items 2 through 9, minus total nonaccrual other loans
          and leases from Schedule RC-N, sum of items 2 through 5,
          column C):                                ____________ 
          (1)     Three months or less              |___|___|___|
          (2)     Over three months through 12 months|___|___|___|
          (3)     Over one year through three years |___|___|___|
          (4)     Over three years through five years|___|___|___|
          (5)     Over five years through 15 years  |___|___|___|
          (6)     Over 15 years                     |___|___|___|
       c. Total loans and leases with a remaining maturity of  
          one year or less (included in Memorandum items 2.a and ____________ 
          2.b above)                                |___|___|___|
       d. Loans secured by nonfarm nonresidential properties 
          with a remaining maturity or repricing frequency 
          of over five years (included in Memorandum items ____________ 
          2.a.(5) and 2.a.(6) above)                |___|___|___|
       e. Commercial and industrial loans with a remaining 
          maturity or repricing frequency of over three years 
          (included in Memorandum items 2.b.(4) through ____________ 
          2.b.(6) above)                            |___|___|___|



Schedule RC-E -- Deposit Liabilities:

Memorandum items 5 and 6, "Maturity and repricing data for time deposits of less than $100,000" and
"Maturity and repricing data for time deposits of $100,000 or more," will be revised and will begin to be
completed by FDIC-supervised savings banks.

Memorandum item 5.a for fixed rate deposits of less than $100,000 and Memorandum item 5.b for
floating rate deposits of less than $100,000 will be reported on a combined basis in revised Memorandum
item 5.a.  Memorandum items 6.a and 6.b covering time deposits of $100,000 or more will be combined
in the same manner in revised Memorandum item 6.a.  As with the revised items for debt securities and
loans and leases, the current instructions on how time deposits should be reported generally will not
change.  Fixed rate time deposits will continue to be reported based on their remaining contractual
maturity.  Floating rate time deposits will continue to be reported based on their repricing frequency.

For time deposits of less than $100,000 (reported in revised Memorandum item 5.a), the existing "Over
one year" time band will be split into two separate time bands:  "Over one year through three years" and
"Over three years."  For time deposits of $100,000 or more (reported in revised Memorandum item 6.a),
the existing "Over one year through five years" and "Over five years" time bands will be changed to
"Over one year through three years" and "Over three years."

Because fixed rate time deposits would no longer be reported separately by remaining maturity in these
revised Memorandum items, current Memorandum items 5.c and 6.c, "Floating rate time deposits of less
than $100,000 with a remaining maturity of one year or less" and "Floating rate time deposits of $100,000
or more with a remaining maturity of one year or less," will each be expanded to cover all time deposits of
that respective size and will be renumbered as Memorandum items 5.b and 6.b.


     Memoranda

     5.   Maturity and repricing data for time deposits of less than $100,000 
       (sum of Memorandum items 5.a.(1) through 5.a.(4) must equal 
       Memorandum item 2.b above):
       a. Time deposits of less than $100,000 with a remaining maturity
          or repricing frequency of:                ____________ 
          (1)     Three months or less              |___|___|___|
          (2)     Over three months through 12 months|___|___|___|
          (3)     Over one year through three years |___|___|___|
          (4)     Over three years                  |___|___|___|
       b. Time deposits of less than $100,000 with a remaining maturity
          of one year or less (included in Memorandum items 5.a.(1)____________ 
          through 5.a.(4) above)                    |___|___|___|
     6.   Maturity and repricing data for time deposits of $100,000 or more 
       (sum of Memorandum items 6.a.(1) through 6.a.(4) must equal 
       Memorandum item 2.c above):
       a. Time deposits of $100,000 or more with a remaining maturity
          or repricing frequency of:                ____________ 
          (1)     Three months or less              |___|___|___|
          (2)     Over three months through 12 months|___|___|___|
          (3)     Over one year through three years |___|___|___|
          (4)     Over three years                  |___|___|___|
       b. Time deposits of $100,000 or more with a remaining maturity
          of one year or less (included in Memorandum items 6.a.(1)____________ 
          through 6.a.(4) above)                    |___|___|___|



Schedule RC-L -- Off-Balance Sheet Items:

A new item 16.c, column A, will be added for the total gross notional amount of "Interest rate swaps
where the bank has agreed to pay a fixed rate."  This item applies only to those interest rate swaps held for
purposes other than trading.



Schedule RC-M -- Memoranda: 

One new item will be added to all four versions of the Call Report forms and a second new item will be
added only to the FFIEC 031, 032, 033 report forms.  First, all banks with capitalized mortgage servicing
assets, the carrying value of which is currently reported in item 6.a of this schedule, will begin to report
the estimated fair value of these mortgage servicing assets in new item 6.a.(1).  Second, on the FFIEC
031, 032, and 033 report forms, banks that service for others more than $10 million of loans other than 1-to-4 
family residential mortgage loans and have a servicing volume for these loans that exceeds 10 percent
of total assets as of the report date must complete new item 13, "Outstanding principal balance of loans
other than 1-to-4 family residential mortgage loans that are serviced for others."


     All banks:

     FFIEC 031, 032, and 033 only:

     13.  Outstanding principal balance of loans other than 1-to-4 family 
        residential mortgage loans that are serviced for others (to be
        completed if this balance is more than $10 million and exceeds____________ 
        10 percent of total assets)                 |___|___|___|



Other New Items

The Examination Council has approved the addition of a small number of other new items to the Call
Report effective as of the March 31, 1997, report date.  As discussed below, these new items pertain to the
Subchapter S election for federal income tax purposes, the reporting of "Adjusted Attributable Deposit
Amounts" by Oakar institutions, and credit derivatives.  

Subchapter S Election for Federal Income Tax Purposes

The Small Business Job Protection Act of 1996, enacted on August 20, 1996, amended Subchapter S of the
Internal Revenue Code to allow banks, savings associations, and their parent holding companies to elect
Subchapter S corporation status for federal income tax purposes beginning in 1997 if they meet certain
eligibility criteria.  A Subchapter S corporation is treated as a pass-through entity for federal income tax
purposes, similar to a partnership, and generally is not subject to any tax at the corporate level.  This tax
treatment will affect a Subchapter S bank's reported earnings and dividends and the banking agencies will
need to be able to identify these institutions from the standpoint of off-site monitoring and pre-examination
planning.  Accordingly, in new Memorandum item 11 to Schedule RI -- Income Statement, a "yes/no"
question will ask whether the reporting bank has a Subchapter S election in effect for the current tax year.


     Schedule RI -- Memoranda

     11.  Does the reporting bank have a Subchapter S election in effect for   YES   NO   
        federal income tax purposes for the current tax year?|_____|_____|


Reporting of "Adjusted Attributable Deposit Amounts" by Oakar Institutions

On December 10, 1996, the FDIC published a final rule amending certain provisions of its assessment
regulations that pertain to so-called Oakar institutions, i.e., institutions that belong to one insurance fund
(primary fund), but hold deposits that are treated as insured by the other insurance fund (secondary fund). 
The final rule calls for the FDIC to take over from Oakar institutions the responsibility for calculating the
"Adjusted Attributable Deposit Amount" (AADA) resulting from previous assumptions of secondary-fund
deposits.  To support the FDIC's calculation of this amount, the Examination Council will replace the
existing item for AADAs in Schedule RC-O -- Other Data for Deposit Insurance and FICO Assessments
(item 8) with two items that Oakar institutions currently report on a separate FDIC form that will be
eliminated and with one new item.  These Schedule RC-O items, which are illustrated below, generally
would exclude deposits in foreign offices.


     8.   To be completed by banks with "Oakar deposits." 
       a. Deposits purchased or acquired from other FDIC-insured
          institutions during the quarter (exclude deposits purchased
          or acquired from foreign offices other than insured branches
          in Puerto Rico and U.S. territories and possessions):
          (1)     Total deposits purchased or acquired from other ____________ 
             FDIC-insured institutions during the quarter|___|___|___|
          (2)     Amount of purchased or acquired deposits reported
             in item 8.a.(1) above attributable to a secondary
             fund (i.e., BIF members report deposits attributable 
             to SAIF; SAIF members report deposits attributable____________ 
             to BIF)                                |___|___|___|
       b. Total deposits sold or transferred during the quarter
          (exclude sales or transfers by the reporting bank of deposits in
          foreign offices other than insured branches in Puerto Rico and ____________ 
          U.S. territories and possessions)         |___|___|___|


Credit Derivatives

Credit derivatives are off-balance sheet arrangements that allow one party, the beneficiary, to transfer the
credit risk of a "reference asset" to another party, the guarantor.  The market for this new type of
instrument is expected to grow significantly over the next few years.  Each of the three banking agencies
issued supervisory guidance on credit derivatives during 1996.

In order to identify the extent of bank involvement with these instruments, both on an individual institution
basis and for the industry, the Examination Council is adding two new items to Schedule RC-L -- Off-Balance 
Sheet Items.  The first item, item 10.a, will be for the notional amount of all credit derivatives on
which the reporting bank is the guarantor.  The second item, item 10.b, will be for the notional amount of
all credit derivatives on which the reporting bank is the beneficiary.  Banks should include the notional
amounts of credit default swaps, total rate of return swaps, and other credit derivative instruments.


     10.  Notional amount of credit derivatives:    ____________ 
        a.   Credit derivatives on which the reporting bank is the guarantor|___|___|___|
        b.   Credit derivatives on which the reporting bank is the beneficiary|___|___|___|


The notional amount of credit derivatives should not be reported as interest rate, foreign exchange, equity
derivative, or commodity derivative contracts in Schedule RC-L or Schedule RC-R -- Regulatory Capital. 
Banks engaging in credit derivative transactions should refer to the supervisory guidance issued by their
primary federal regulatory agency for information on how they should treat credit derivatives for risk-based 
capital purposes.

Other Instructional Changes

The Examination Council also has approved some other instructional or reporting changes for 1997. 
These changes cover the reporting of assets that are deducted when measuring regulatory capital,
residential mortgage loan commitments, firm commitments to sell residential mortgage loans, the number
of full-time equivalent employees and their compensation expense, loans and leases held for sale, and
assets indirectly representing premises and fixed assets.  A more detailed discussion of these instructional
matters follows.

Reporting of assets that are deducted when measuring regulatory capital -- At present, those banks that are
required to complete Schedule RC-R -- Regulatory Capital, in its entirety must report as 100 percent risk-weight 
assets in item 7, column A, those on-balance sheet assets that are deducted from their assets and
capital as part of their regulatory capital calculations.  These assets include goodwill, core deposit
intangibles, disallowed mortgage servicing rights, disallowed deferred tax assets, and reciprocal holdings
of bank capital instruments.   It is misleading to report these assets in item 7, column A, as if they were
subject to a 100 percent risk weight.  Instead, it would be more appropriate for these assets to be reported
in item 8, column A, of the regulatory capital schedule along with the asset amounts that are excluded
from the risk-based capital calculation.  Furthermore, the agencies' optional regulatory capital worksheet
treats these deducted assets in this manner.  Therefore, the instructions for items 7 and 8, column A, of
Schedule RC-R and the caption for item 8, column A, will be revised so that these deducted assets are
reported in item 8, column A.   

Residential mortgage loan commitments -- Banks currently report unused commitments in Schedule RC-L,
items 1.a through 1.e, according to the type of commitment.  Item 1.a applies to revolving, open-end lines
of credit secured by 1-to-4 family residential properties (e.g., home equity lines).  All other commitments
secured by 1-to-4 family residential mortgages are reportable in item 1.e, "Other unused commitments." 
However, because neither the caption to item 1.e nor the instructions to this item specifically refer to such
residential mortgage loan commitments, banks have asked where commitments of this type should be
reported in Schedule RC-L.  Therefore, the instructions to item 1.e will be clarified by stating that the item
includes commitments to extend credit (other than revolving, open-end lines) secured by 1-to-4 family
residential properties for which the bank has charged a commitment fee or other consideration, or
otherwise has a legally binding commitment to extend credit.

Firm commitments to sell residential mortgage loans -- The instructions to Schedule RC-L, item 14.b,
column A, "Interest rate forwards," direct banks to report forward contracts committing the bank to
purchase or sell financial instruments and whose predominant risk characteristic is interest rate risk. 
Questions have been raised about whether firm commitments to sell loans secured by 1-to-4 family
residential properties should be reported as interest rate forwards.  For Call Report purposes, those
residential mortgage loan sales commitments that have a specific interest rate, delivery date, and dollar
amount should be considered forward contracts.  The instructions to Schedule RC-L, item 14.b, column A,
will be revised accordingly.

Reporting the number of full-time equivalent employees and their compensation expense -- Banks report
the number of their full-time equivalent employees in an income statement memorandum item (Schedule
RI, Memorandum item 5 on the FFIEC 034; Memorandum item 4 on the FFIEC 031, 032, and 033).  The
salaries and employee benefits of bank employees are reported in Schedule RI, item 7.a.  The instruction
to this item also directs banks to exclude from "salaries and employee benefits" amounts paid to individuals
who are not salaried officers and employees of the bank.  However, for business reasons, some banking
organizations recently have established employment arrangements under which most or all of the persons
who work for or at a specific bank are, in form, employed by an affiliate of the bank rather than by the
bank itself.  Because of the wording of the current Call Report instructions, certain banks that participate
in these employment arrangements have been reporting that they have no employees and no "salaries and
employee benefits."  These employment arrangements should be reported in accordance with their
substance rather than their form in the Call Report.  Hence, the relevant Call Report instructions will be
revised to explain that a bank should include as employees individuals who, in form, are employed by an
affiliate but who, in substance, do substantially all of their work for that reporting bank.  This instructional
revision is not intended to require banking organizations to segregate the compensation component of other
intercompany cost allocations and calculate the related pro rata number of full-time equivalent employees.

Loans and leases held for sale -- Banks currently must include their loans and leases held for sale as part of
their loan and lease portfolio and must report the carrying value of these loans and leases in Schedule RC-C, 
part I,
Memorandum item 5, "Loans and leases held for sale." However, the General Instructions to Schedule RC-C incorrectly indicate that a bank should include its loans and leases held for sale in its loan and lease portfolio only if it reports these loans and leases in its portfolio for other financial reporting purposes. These General Instructions will be corrected to eliminate this discrepancy. Banks should note that loans and leases held for short-term trading purposes and marked-to-market through the income statement should continue to be reported as trading assets in Schedule RC, item 5, and should not be considered "loans and leases held for sale." Assets indirectly representing premises and fixed assets -- The instructions to Schedule RC -- Balance Sheet, item 6, "Premises and fixed assets," direct banks to include loans and advances to individuals, partnerships, and nonmajority-owned corporations for the purpose of purchasing or holding land, buildings, or fixtures occupied or used by the bank in that asset category rather than in Schedule RC, item 4, "Loans and lease financing receivables." The requirement to reclassify these loans and report them on the balance sheet as part of bank premises will be eliminated.
Last Updated 07/17/1999 communications@fdic.gov