FDIC Federal Register Citations

[Federal Register: February 16, 1999 (Volume 64, Number 30)]

[Notices]

[Page 7689-7692]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr16fe99-127]

=======================================================================

-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

Federal Reserve System

Federal Deposit Insurance Corporation

Agency Information Collection Activities: Submission for OMB

Review; Joint Comment Request

AGENCIES: Office of the Comptroller of the Currency (OCC), Treasury;

Board of Governors of the Federal Reserve System (Board); and Federal

Deposit Insurance Corporation (FDIC).

ACTION: Submission for OMB review; joint agency comment request.

-----------------------------------------------------------------------

SUMMARY: On October 1, 1998, the OCC, the Board, and the FDIC (the

agencies) requested public comment for 60 days on proposed revisions to

the Consolidated Reports of Condition and Income (Call Report), which

are currently approved collections of information. After considering

the comments received, the Federal Financial Institutions Examination

Council (FFIEC), of which the agencies are members, approved the

proposed revisions, including selecting one of two alternatives for one

proposed change. Therefore, in accordance with the requirements of the

Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the agencies

hereby give notice that they plan to submit to the Office of Management

and Budget (OMB) requests for review of the Call Report collections of

information.

In accordance with the requirements of the Paperwork Reduction Act

of 1995, the OCC, the Board, and the FDIC may not conduct or sponsor,

and the respondent is not required to respond to, an information

collection that has been extended, revised, or implemented on or after

October 1, 1995, unless it displays a currently valid Office of

Management and Budget (OMB) control number.

Comments are invited on: (a) Whether the Call Report collections of

information are necessary for the proper performance of the agencies'

functions, including whether the information has practical utility; (b)

the accuracy of the agencies' estimates of the burden of the

information collections, including the validity of the methodology and

assumptions used; (c) ways to enhance the quality, utility, and clarity

of the information to be collected; (d) ways to minimize the burden of

the collections on respondents, including through the use of automated

collection techniques or other forms of information technology; and (e)

estimates of capital or startup costs and costs of operation,

maintenance, and purchase of services to provide information.

DATES: Comments must be submitted on or before March 18, 1999.

Addresses: interested parties are invited to submit written comments to

any or all of the agencies. All comments, which should refer to the OMB

control number(s), will be shared among the agencies.

OCC: Written comments should be submitted to the Communications

Division, Office of the Comptroller of the Currency, 250 E Street, SW,

Third Floor, Washington, DC 20219; Attention: Paperwork Docket No.

1557-0081 [Fax number (202) 874-5274; Internet address:

regs.comments@occ.treas.gov]. Comments will be available for inspection

and photocopying at the ODD's Public Reference Room, 250 E Street, SW,

Washington, DC 20219 between 9:00 a.m. and 5:00 p.m. on business days.

Appointments for inspection of comments may be made by calling (202)

874-5043.

Board: Written comments should be addressed to Jennifer J. Johnson,

Secretary, Board of Governors of the Federal Reserve System, 20th and C

Streets, NW, Washington, DC 20551, or delivered to the Board's mail

room between 8:45 a.m. and 5:15 p.m., and to the security control room

outside of those hours. Both the mail room and the security control

room are accessible from the courtyard entrance on 20th Street between

Constitution Avenue and C Street, NW. Comments received may be

inspected in room M-P-500 between 9:00 a.m. and 5:00 p.m., except as

provided in Sec. 261.12 of the Board's Rules Regarding Availability of

Information, 12 CFR 261.12(a).

FDIC: Written comments should be addressed to Robert E. Feldman,

Executive Secretary, Attention: Comments/OES, Federal Deposit Insurance

Corporation, 550 17th Street, NW, Washington, DC 20429. Comments may be

hand delivered to the guard station at the rear of the 550 17th Street

Building (located on F Street) on business days between 7:00 a.m. and

5:00 p.m. (Fax number: (202) 898-3838; Internet address:

comments@fdic.gov). Comments may be inspected and photocopied in the

FDIC Public Information Center, Room, 100, 801 17th Street, NW,

Washington, DC, between 9:00 a.m. and 4:30 p.m. on business days.

A copy of the comments may also be submitted to the OMB desk

officer for the agencies: Alexander T. Hunt, Office

[[Page 7690]]

of Information and Regulatory Affairs, Office of Management and Budget,

New Executive Office Building, room 3208, Washington, DC 20503.

for further information contact: Requests for additional information or

a copy of the submission may be obtained by contacting:

OCC: Jessie Gates, OCC Clearance Officer, or Camille Dixon,

Legislative and Regulatory Activities Division, (202) 874-5090, Office

of the Comptroller of the Currency, 250 E Street, SW, Washington, DC

20219.

Board: Mary M. West, Chief, Financial Reports Section, (202) 452-

3829, Division of Research and Statistics, Board of Governors of the

Federal Reserve System, 20th and C Streets, NW, Washington, DC 20551.

Telecommunications Device for the Deaf (TDD) users may contact Diane

Jenkins, (202) 452-3544, Board of Governors of the Federal Reserve

System, 20th and C Streets, NW, Washington, DC 20551.

FDIC: Steven F. Hanft, FDIC Clearance Officer, (202) 898-3907,

Office of the Executive Secretary, Federal Deposit Insurance

Corporation, 550 17th Street NW, Washington, DC 20429.

supplementary information: Request for OMB approval to extend, with

revision, the following currently approved collections of information:

Report Title: Consolidated Reports of Condition and Income (Call

Report).

Form Number: FFIEC 031, 032, 033, 034.\1\

---------------------------------------------------------------------------

\28\ The FFIEC 031 report form is filed by banks with domestic

and foreign offices. The FFIEC 032 report form is filed by banks

with domestic offices only and total assets of $100 million or more

but less than $300 million. The FFIEC 034 report form is filed by

banks with domestic offices only and total assets of less than $100

million.

---------------------------------------------------------------------------

Frequency of Response: Quarterly.

Affected Public: Business or other for-profit.

For OCC

OMB Number: 1557-0081.

Estimated Number of Respondents: 2,600 national banks.

Estimated Time per Response: 39.92 burden hours.

Estimated Total Annual Burden: 415,220 burden hours.

For Board

OMB Number: 7100-0036.

Estimated Number of Respondents: 994 state member banks.

Estimated Time per Response: 45.80 burden hours.

Estimated Total Annual Burden: 182,101 burden hours.

For FDIC

OMB Number: 3064-0052.

Estimated Number of Respondents: 5,985 insured state nonmember

banks.

Estimated Time per Response: 29.67 burden hours.

Estimated Total Annual Burden: 710,345 burden hours.

The estimated time per response is an average which varies by

agency because of differencies in the composition of the banks under

each agency's supervision (e.g., size distribution of banks, types of

activities in which they are engaged, and number of banks with foreign

offices). The time per response for a bank is estimated to range from

15 to 400 hours, depending on individual circumstances.

General Description of Report

This information collection is mandatory: 12 U.S.C. 161 (for

national banks), 12 U.S.C. 324 (for state member banks), and 12 U.S.C.

1817 (for insured state nonmember commercial and savings banks). Except

for select sensitive items, this information collection is not given

confidential treatment. Small business (i.e., small banks) are

affected.

Abstract

Banks file Call Reports with the agencies each quarter for the

agencies' use in monitoring the condition and performance of reporting

banks and the industry as a whole. In addition, Call Reports provide

the most current statistical data available for evaluating bank

corporate applications such as mergers, for identifying areas of focus

for both on-site and off-site examinations, and for monetary and other

public policy purposes. Call Reports are also used to calculate all

banks' deposit insurance and Financing Corporation assessments and

national banks' semiannual assessment fees.

Current Actions

On October 1, 1998, the OCC, the Board, and the FDIC jointly

published a notice soliciting comments for 60 days on proposed

revisions to the Call Report (63 FR 52794). The notice described the

specific changes that the agencies, with the approval of the FFIEC,

were proposing to implement as of March 31, 1999.

The agencies initially proposed to revise the Call Report effective

March 31, 1999, by: deleting the existing items from the amortized cost

and fair value of high-risk mortgage securities and (on the FFIEC 034

report) for losses deferred pursuant to 12 U.S.C. 1823(j); adding new

items for accumulated net gains (losses) on cash flow hedges and for

the year-to-date change in this new component of equity capital in

response to the issuance of a new accounting standard for derivative

instruments and hedging activities; either adding a new item or

expanding the scope of an existing item in order to distinguish

nonmortgage servicing assets from other intangible assets; and making a

number of instructional changes, primarily to incorporate recent

changes in accounting standards, to further conform with generally

accepted accounting principles in other areas, and to improve the

reporting of certain regulatory capital information.

After considering the comments, the FFIEC and the agencies decided

to proceed with all of the proposed changes. With respect to

nonmortgage servicing assets, the FFIEC and the agencies selected the

proposed approach under which the scope of the existing item for

``purchased credit card relationships'' would be expanded to include

these servicing assets.

Comments

In response to this notice, the agencies collectively received two

comment letters, both of which were from bankers' associations. One

association supported the proposed reductions in detail, accepted the

new items proposed for accumulated net gains (losses) on cash flow

hedges, preferred the approach for reporting nonmortgage servicing

assets which the FFIEC and the agencies have decided to implement, and

supported the proposed instructional change affecting the reporting of

market risk equivalent assets. This association did not address the

other proposed instructional changes. The second association stated

that it ``generally concurs with the proposals'' and favored adding a

new item to the Call Report for nonmortgage servicing assets, an

approach that the FFIEC and the agencies decided not to take. This

association did not comment on any of the proposed instructional

changes. However, it recommended that ``unless there is an overriding

need for immediate implementation * * * any changes to the Call Report

be postponed until the March 31, 2000 report to avoid complicating Year

2000 systems compliance requirements.''

The FFIEC and the agencies believe that it may be less problematic

to implement the new cash flow hedge items and the nonmortgage

servicing assets reporting change in 1999 than to delay implementation

until the first quarter of 2000. Because of their fiscal years, some

banks must implement Financial Accounting Standards Board (FASB)

Statement No. 133, Accounting for Derivative Instruments and Hedging

Activities (FAS 133), in the third or

[[Page 7691]]

fourth quarter of 1999. Other banks may choose to adopt FAS 133 earlier

than required at the beginning of any fiscal quarter in 1999, e.g., as

of January 1, 1999. The information to be reported in the new cash flow

hedge items is information that banks adopting FAS 133 in 1999 will be

required to report in financial statements prepared under generally

accepted accounting principles in 1999. Banks not required to adopt FAS

133 until the year 2000 will not have any amounts to report in the new

items during 1999. In addition, only a relatively small percentage of

banks hold freestanding derivatives that are subject to FAS 133. As of

September 30, 1998, approximately 500 of the more than 8,900 FDIC-

insured commercial banks reported having such derivatives. Some banks

may also hold financial instruments with embedded derivatives that may

be separated from the host contract and accounted for as a derivative

under FAS 133.

As for nonmortgage servicing assets, the regulatory capital

amendment which led the agencies to propose this reporting change took

effect on October 1, 1998. Banks with nonmortgage servicing assets that

wish to include these assets in regulatory capital, subject to the

limits set forth in the agencies' capital standards, have already

modified their internal regulatory capital calculation procedures for

this change and are already reporting regulatory capital information in

Call Report Schedule RC-R--Regulatory Capital in accordance with the

amended capital standards. Under these capital standards, nonmortgage

servicing assets must be combined with purchased credit card

relationships for purposes of applying a Tier 1 capital sublimit.

Therefore, revising the existing Call Report item for purchased credit

card relationships to include nonmortgage servicing assets (rather than

having separate items for each of these two types of intangibles, which

the agencies had also proposed as an alternative) is similar to the

approach taken in the capital standards. In addition, this Call Report

revision should affect only a small number of banks. Fewer than 100

reported that they had any purchased credit card relationships as of

September 30, 1998. Call Report data for that date also suggest that

fewer than 100 banks had any nonmortgage servicing assets.

In its comment letter, the first bankers' association also

commented that the agencies have not yet made significant progress in

satisfying the requirements of Section 307 of the Riegle Community

Development and Regulatory Improvement Act of 1994. Section 307

requires the four federal banking and thrift agencies to work jointly

to develop a single form for the filing of core information by banks,

savings associations, and bank holding companies. It also directs the

agencies to review the information they collect from these institutions

that supplements the core information and eliminate those reporting

requirements that are not warranted for safety and soundness or other

public purposes. In this regard, the FFIEC and the agencies regularly

review the existing Call Report requirements in order to identify items

that are no longer sufficiently useful to warrant their continued

collection. Since 1995 these reviews have led to the elimination of

numerous items and reductions in the level of detail in several areas.

In addition, the FFIEC and the agencies have, as part of their

Section 307 efforts, adopted generally accepted accounting principles

as the reporting basis for the Call Report; combined the four sets of

Call Report instructions into a single comprehensive set; developed an

index to the instructions; made the Call Report forms, instructions,

and data available on the Internet; and implemented an electronic

filing requirement for the Call Report. The FFIEC and the agencies are

currently surveying Call Report users within the agencies and are

continuing to review the uses of individual Call Report items in order

to ascertain their relative importance to the agencies. These actions

are part of the agencies' ongoing effort to eliminate information with

the least practical utility and to increase uniformity among regulatory

reports.

Summary of the Revisions to the Call Report

The revisions to the Call Report listed below, which have been

approved by the FFIEC, must be reviewed and approved by OMB. The

agencies expect to implement these changes as of the March 31, 1999,

report date. Unless otherwise indicated, the revisions will apply to

all four sets of report forms (FFIEC 031, 032, 033, and 034).

Nonetheless, as is customary for Call Report changes, banks are advised

that, for the March 31, 1999, report date, reasonable estimates may be

provided for any new or revised item for which the requested

information is not readily available.

Deletions

(1) In Schedule RC-B--Securities, the agencies are deleting

Memorandum items 8.a and 8.b for the amortized cost and fair value of

``High-risk mortgage securities.''

(2) The agencies are deleting the balance sheet items on the FFIEC

034 report forms for small banks relating to deferred agricultural loan

losses (Schedule RC, items 12.b, 12.c, 28.b, and 28.c).

New or Revised Items

(1) The agencies are adding a new item 26.c to the equity capital

section of Schedule RC--Balance Sheet for accumulated net gains

(losses) on cash flow hedges under FASB Statement No. 133, Accounting

for Derivative Instruments and Hedging Activities. The agencies also

are adding a new item 11.b to Schedule RI-A--Changes in Equity Capital

for the year-to-date change in these accumulated net gains (losses).

Existing item 11 on Schedule RI-A is renumbered as item 11.a.

(2) In Schedule RC-M--Memoranda, the agencies are expanding the

scope of item 6.b.(1), ``Purchased credit card relationships,'' to

cover ``Purchased credit card relationships and nonmortgage servicing

assets,'' with item 6.b.(2) covering the remaining ``All other

identifiable intangible assets.'' Through 1998, nonmortgage servicing

assets have been reported in item 6.b.(2).

Instructional Changes

(1) The agencies are revising the instructions to conform with

American Institute of Certified Public Accountants' Statements of

Position 98-1, Accounting for the Costs of Computer Software Developed

or Obtained for Internal Use, and 98-5, Reporting on the Costs of

Start-Up Activities.

(2) The agencies are adding a new entry to the Glossary section of

the instructions which discusses the reporting of securities

activities, including descriptions of certain trading practices. These

practices were previously discussed in the agencies' 1992 Supervisory

Policy Statement on Securities Activities, which was replaced in April

1998 by a revised policy statement on investment securities that does

not address these reporting issues.

(3) The agencies are revising the Glossary entry for ``Allowance

for Loan and Lease Losses'' to indicate that the cost basis of a loan

or lease that has been reduced through a direct write-down may not be

increased at a later date by reversing the previous write-down.

(4) The agencies are revising the Glossary entry for ``Business

Combinations'' and the instructions for the Schedule RC-M, item 6.c,

``Goodwill,'' to clarify that goodwill cannot ordinarily be sold or

dividended

[[Page 7692]]

to a parent company or affiliate or charged off in the year of

acquisition.

(5) For banks subject to the market risk capital guidelines, the

agencies are revising the instructions for reporting ``Net risk-

weighted assets'' in item 3.d.(1) of Schedule RC-R--Regulatory Capital

so that the bank's ``Market risk equivalent assets'' are included in

this item. The caption for item 3.d.(2) of Schedule RC-R is modified to

read ``Market risk equivalent assets included in net risk-weighted

assets above.'' This makes the reporting of ``Net risk-weighted

assets'' in the Call Report consistent with the reporting of this item

in the FR Y-9C bank holding company report.

(6) The agencies are revising the instructions for reporting low

level recourse transactions in Schedule RC-R to explain how the

allowable amount of the allowance for loan and lease losses should be

calculated by banks that use the ``direct reduction method'' for these

transactions.

Dated: February 5, 1999.

Mark J. Tenhundfeld,

Assistant Director, Legislative and Regulatory Activities Division,

Office of the Comptroller of the Currency.

Board of Governors of the Federal Reserve System, February 8,

1999.

Jennifer J. Johnson,

Secretary of the Board.

Dated at Washington, DC, this 4th day of February, 1999.

Federal Deposit Insurance Corporation

Robert E. Feldman,

Executive Secretary.

[FR Doc. 99-3620 Filed 2-12-99; 8:45 am]

BILLING CODES 4810-33-M, 6210-01-M, 6714-01-M