FDIC Federal Register Citations

[Federal Register: February 17, 2006 (Volume 71, Number 33)]

[Notices]

[Page 8649-8657]

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

[DOCID:fr17fe06-134]

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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: Notice of information collection to be submitted to OMB for

review and approval under the Paperwork Reduction Act.

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SUMMARY: In accordance with the requirements of the Paperwork Reduction

Act of 1995 (44 U.S.C. chapter 35), the OCC, the Board, and the FDIC

(the ``Agencies'') may not conduct or sponsor, and the respondent is

not required to respond to, an information collection unless it

displays a currently valid Office of Management and Budget (OMB)

control number. On August 23, 2005, the Financial Institutions

Examination Council (FFIEC), of which the Agencies are members,

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, the FFIEC has modified some of the proposed changes and will

stagger the effective dates of the revisions from March 31, 2006,

through March 31, 2008. The burden-reducing revisions included in the

proposal will be implemented March 31, 2006, as proposed.

DATES: Comments must be submitted on or before March 20, 2006.

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: You may submit comments, identified by [Attention: 1557-0081],

by any of the following methods:

E-mail: regs.comments@occ.treas.gov. Include [Attention:

1557-0081] in the subject line of the message.

Fax: (202) 874-4448.

Mail: Public Information Room, Office of the Comptroller

of the Currency, 250 E Street, SW., Mailstop 1-5, Washington, DC 20219;

Attention: 1557-0081.

Public Inspection: You may inspect and photocopy comments at the

Public Information Room. You can make an appointment to inspect the

comments by calling (202) 874-5043.

Board: You may submit comments, which should refer to

``Consolidated Reports of Condition and Income, 7100-0036,'' by any of

the following methods:

Agency Web site: http://www.federalreserve.gov Follow the instructions for submitting comments on the http://.

http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.

Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

E-mail: regs.comments@federalreserve.gov. Include docket

number in the subject line of the message.

FAX: 202-452-3819 or 202-452-3102.

Mail: Jennifer J. Johnson, Secretary, Board of Governors

of the Federal Reserve System, 20th Street and Constitution Avenue,

NW., Washington, DC 20551.

All public comments are available from the Board's Web site at

http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as

submitted, unless modified for technical reasons. Accordingly, your

comments will not be edited to remove any identifying or contact

information. Public comments may also be viewed electronically or in

paper in Room MP-500 of the Board's Martin Building (20th and C

Streets, NW.) between 9 a.m. and 5 p.m. on weekdays.

FDIC: You may submit comments, which should refer to ``Consolidated

Reports of Condition and Income, 3064-0052,'' by any of the following

methods:

Agency Web site: http://www.FDIC.gov/regulations/laws/federal/notices.html.

. E-mail: comments@FDIC.gov. Include ``Consolidated Reports

of Condition and Income, 3064-0052'' in the subject line of the

message.

Mail: Steven F. Hanft (202-898-3907), Paperwork Clearance

Officer, Room MB-3064, Federal Deposit Insurance Corporation, 550 17th

Street, NW., Washington, DC 20429.

Hand Delivery: 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 a.m. and 5 p.m.

Public Inspection: All comments received will be posted without

change to http://www.fdic.gov/regulations/laws/federal/notices.html

including any personal information provided. Comments may be inspected

at the FDIC Public Information Center, Room E-1002, 3502 North Fairfax

Drive, Arlington, VA 22226, between 9 a.m. and 5 p.m. on business days.

Additionally, commenters should send a copy of their comments to

the OMB desk officer for the Agencies by mail to the Office of

Information and Regulatory Affairs, U.S. Office of Management and

Budget, New Executive Office Building, Room 10235, 725 17th Street,

NW., Washington, DC 20503, or by fax to (202) 395-6974.

FOR FURTHER INFORMATION CONTACT: For further information about the

revisions discussed in this notice, please contact any of the agency

clearance officers whose names appear below. In addition, copies of

Call Report forms can be obtained at the FFIEC's Web site (http://www.ffiec.gov/ffiec_report_forms.htm

).

OCC: Mary Gottlieb, OCC Clearance Officer, or Camille Dickerson,

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

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

20219.

Board: Michelle E. Long, Federal Reserve Clearance Officer, (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 call

(202) 263-4869.

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

Legal Division, Federal Deposit Insurance Corporation, 550 17th Street,

NW., Washington, DC 20429.

SUPPLEMENTARY INFORMATION: The Agencies are requesting OMB approval to

revise and extend for three years the Call Report, which is currently

an approved collection of information for each of the Agencies.

Report Title: Consolidated Reports of Condition and Income (Call

Report).

Form Number: FFIEC 031 (for banks with domestic and foreign

offices) and FFIEC 041 (for banks with domestic offices only).

Frequency of Response: Quarterly.

Affected Public: Business or other for-profit.

OCC:

OMB Number: 1557-0081.

Estimated Number of Respondents: 1,900 national banks.

Estimated Time per Response: 43.73 burden hours (incorporates a

reduction

[[Page 8650]]

of 4.47 hours resulting from the completion of testing and enrollment

in the Central Data Repository (CDR) in 2005 and an average net

increase of 1.81 hours for the Call Report revisions to be phased in

from March 2006 to March 2008).

Estimated Total Annual Burden: 332,331 burden hours.

Board:

OMB Number: 7100-0036.

Estimated Number of Respondents: 919 state member banks.

Estimated Time per Response: 50.69 burden hours (incorporates a

reduction of 4.01 hours resulting from the completion of testing and

enrollment in the CDR in 2005 and an average net increase of 2.32 hours

for the Call Report revisions to be phased in from March 2006 to March

2008).

Estimated Total Annual Burden: 186,321 burden hours.

FDIC:

OMB Number: 3064-0052.

Estimated Number of Respondents: 5,247 insured state nonmember

banks.

Estimated Time per Response: 34.94 burden hours (incorporates a

reduction of 4.16 hours resulting from the completion of testing and

enrollment in the CDR in 2005 and an average net increase of 2.00 hours

for the Call Report revisions to be phased in from March 2006 to March

2008).

Estimated Total Annual Burden: 733,321 burden hours.

The estimated time per response for the Call Report is an average

that varies by agency because of differences in the composition of the

institutions under each agency's supervision (e.g., size distribution

of institutions, types of activities in which they are engaged, and

existence of foreign offices). The average reporting burden for the

Call Report is estimated to range from 16 to 625 hours per quarter,

depending on an individual institution's circumstances.

Furthermore, the effect on reporting burden of the revisions to the

Call Report requirements will vary from institution to institution

depending, in some cases, on the institution's asset size and, in other

cases, on its involvement with the types of activities or transactions

to which the changes apply.

General Description of Reports

These information collections are 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 selected items, these information collections are not given

confidential treatment.

Abstract

Institutions file Call Reports with the Agencies each quarter for

the Agencies' use in monitoring the condition, performance, and risk

profile of individual institutions and the industry as a whole. In

addition, Call Reports provide the most current statistical data

available for evaluating institutions' 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 institutions' deposit insurance

and Financing Corporation assessments and national banks' semiannual

assessment fees.

Current Actions

I. Overview

On August 23, 2005, the Agencies requested comment on proposed

revisions to the Call Report. The proposed effective date for all of

the revisions was March 31, 2006. After considering the comments, the

Agencies approved several modifications to the initial set of proposed

revisions and decided to phase-in the changes beginning March 31, 2006,

through March 31, 2008, to provide banks sufficient time to make system

and processing changes. The Agencies will move forward with reporting

changes on March 31, 2006, that primarily consist of deletions,

revisions to the reporting of international income, and certain new

data on credit derivatives. The Agencies will delay the implementation

for certain items providing additional detail on balance sheet items,

mortgage banking activities, and credit derivatives to September 30,

2006, and other items providing additional detail on income statement

items and certain loans to March 31, 2007. The Agencies will also

further delay implementation of certain loan items for small banks that

meet specified criteria to March 31, 2008. In addition, revised officer

signature requirements also take effect September 30, 2006.

The Agencies collectively received comments from 30 respondents: 21

banks and banking organizations, 3 national banking trade groups and

other bankers' organizations, 2 insurance consultants, a nonbanking

trade group, a government agency, a data processing company, and a

federal bank examiner.

Many of the commenters were concerned with the reporting burden

being imposed by the changes and questioned whether the costs of the

proposed changes outweighed the perceived supervisory benefit. Two

commenters recommended the Agencies consider collecting different types

of data on different frequencies for banks of different asset sizes.

Several commenters expressed concerns about the accuracy of the

Agencies' burden estimates, especially those associated with the CDR

testing and enrollment. Other commenters recommended the Agencies

reassess the importance of all supplemental schedule information to the

Agencies' supervisory and other responsibilities and prioritize the

collection of this data based on relative risk.

Other commenters cited concerns with the relatively short

implementation time-frame that the Agencies were providing banks to

make the proposed changes. In particular, many of the commenters

objected to the proposal to split ``Construction, land development, and

other land loans'' (CLD&OL loans) into separate categories for 1-4

family residential CLD&OL loans and all other CLD&OL loans, and to

split loans ``Secured by nonfarm nonresidential properties''

(commercial real estate loans) into separate categories for owner-

occupied and other commercial real estate loans based on reporting

burden related considerations. Other commenters objected to the

proposed changes to the officer and director signature and attestation

requirements based on burden and the perceived minimal benefit to the

supervisory process. Three commenters requested that the Agencies

consider materiality when proposing to collect further information on

Federal Home Loan Bank advances and other supplemental and memorandum

information. These commenters suggested imposing a minimum reporting

threshold for certain information. Commenters also requested

clarification on the maximum amount payable and receivable for credit

derivatives and the meaningfulness of breaking out the trading revenue

from credit derivatives.

One commenter recommended a change to the reporting of deposits of

``Individuals, partnerships, and corporations,'' which banks currently

report in item 1 of Schedule RC-E, ``Deposits.'' The Agencies did not

propose to make any changes to this category of depositor. The

commenter recommended separating this category into three subcategories

for ``Individuals,'' ``Sole proprietorships and partnerships,'' and

``Corporations.'' At present, the Agencies'' supervisory and other

primary mission objectives can be effectively accomplished without the

additional breakouts recommended by the commenter. Therefore, the

Agencies are not proposing to add any

[[Page 8651]]

additional breakouts for categories of depositors at this time.

A summary of the Agencies' responses to the comments and the final

revisions are presented below.

II. Discussion of Revisions

Overall Reporting Burden

In March 2001, the Agencies revised the Call Report from four

versions (FFIEC 031, 032, 033, and 034) to the existing two versions

(FFIEC 031 and 041). A major reason for this change was to reduce

burden and to more closely align the information collected in the Call

Report to the Agencies' supervisory and other public policy objectives.

Since that time, the Agencies have made efforts to target revisions to

those areas of highest importance to these objectives. The Agencies

realize that institutions of different sizes incur different amounts of

burden and the estimates of burden hours are intended to reflect the

average burden per institution. As indicated above following the

Agencies' individual burden estimates as well as on the second page of

the Call Report forms, the range of burden for the Call Report is

estimated to be from 16 to 625 hours per response. The burden

associated with the testing of and enrollment in the CDR was filed with

OMB in 2004 when testing began and is required to be removed from the

Agencies' records with OMB since this CDR-related burden is no longer

applicable. As stated in the initial Federal Register notice, the

Agencies have recently conducted a careful review of the information

needed to accomplish the Agencies' supervisory and other public policy

objectives and have proposed to delete those items determined to be no

longer critical to this mission.

Call Report Revisions Effective as of the March 31, 2006, Report Date

A. Burden-Reducing Revisions

Several commenters supported (or did not oppose) the four proposed

burden-reducing revisions discussed below, but one commenter stated

that these revisions would not meaningfully reduce burden.

1. Uninsured Deposits

Banks with less than $1 billion in total assets will no longer be

required to complete Memorandum item 2, ``Estimated amount of uninsured

deposits,'' in Schedule RC-O, ``Other Data for Deposit Insurance and

FICO Assessments.'' Banks with $1 billion or more in total assets will

continue to report this estimate in Memorandum item 2. To determine

whether a bank must complete Memorandum item 2 during 2006, the $1

billion asset size test is based on the total assets reported on the

bank's Call Report balance sheet for June 30, 2005. Each year

thereafter, this asset size test will be determined based on the total

assets reported in the previous year's June 30 Call Report. Once a bank

surpasses the $1 billion total asset threshold, it must continue to

report its estimated uninsured deposits regardless of subsequent

changes in its total assets. When estimating the uninsured portion of

its deposits, a bank with $1 billion or more in total assets should

base its estimate on data that are readily available from the

information systems and other records pertaining to its deposits that

the bank has in place.

2. Holdings of Asset-Backed Securities

Banks with domestic offices only and less than $1 billion in total

assets will no longer provide a six-way breakdown of their holdings of

asset-backed securities (not held for trading purposes) in Schedule RC-

B, ``Securities,'' items 5.a through 5.f. Instead, these banks would

report only their total holdings of asset-backed securities in Schedule

RC-B, item 5. Banks with foreign offices and other banks with $1

billion or more in total assets will continue to report the existing

breakdown of their asset-backed securities, but this information will

be collected in new Memorandum items 5.a through 5.f of Schedule RC-B.

The $1 billion asset size test will be applied in the same manner as

discussed above under Uninsured Deposits.

3. Impact of Derivatives on Income

In Schedule RI, ``Income Statement,'' the Agencies are eliminating

Memorandum items 9.a through 9.c, which collect data on the ``Impact on

income of derivatives held for purposes other than trading.'' These

Memorandum items are currently reported by banks with foreign offices

or with $100 million or more in total assets.

4. Bankers Acceptances

The following items for reporting information on bankers

acceptances will be eliminated:

Schedule RC, ``Balance Sheet''

[cir] Item 9, ``Customers' liability to this bank on acceptances

outstanding''

[cir] Item 18, ``Bank's liability on acceptances executed and

outstanding''

Schedule RC-L, ``Derivatives and Off-Balance Sheet

Items,'' item 5, ``Participations in acceptances conveyed to others by

the reporting bank''

Schedule RC-H, ``Selected Balance Sheet Items for Domestic

Offices'' (FFIEC 031 only)

[cir] Item 1, ``Customers' liability to this bank on acceptances

outstanding''

[cir] Item 2, ``Bank's liability on acceptances executed and

outstanding''

With the elimination of separate balance sheet items for

acceptances on Schedule RC, banks should include any acceptance assets

and acceptance liabilities in ``Other assets'' (Schedule RC, item 11)

and ``Other liabilities'' (Schedule RC, item 20), respectively.

B. Revisions of Existing Items and New Items

1. Life Insurance Assets

At present, banks include their holdings of life insurance assets

(e.g., the cash surrender value reported to the bank by the insurance

carrier, less any applicable surrender charges not reflected by the

carrier in this reported value) in Schedule RC-F, ``Other Assets,''

item 5, ``All other assets.'' If the carrying amount of a bank's life

insurance assets included in item 5 is greater than $25,000 and exceeds

25 percent of its ``All other assets,'' the bank must disclose this

carrying amount in Schedule RC-F, item 5.b. Schedule RC-F will be

revised by adding a new item 5 in which all banks will report their

holdings of life insurance assets. Existing item 5, ``All other

assets,'' in Schedule RC-F will be renumbered as item 6. Commenters

specifically addressing this reporting change either supported it or

indicated it would not present problems.

For purposes of reporting ``Life insurance assets'' in new item 5

of Schedule RC-F, banks should include the cash surrender value of life

insurance reported by the insurance carrier, less any applicable

surrender charges not reflected by the carrier in this reported value,

on all forms of permanent life insurance policies owned by the bank,

its consolidated subsidiaries, and grantor (rabbi) trusts established

by the bank or its consolidated subsidiaries, regardless of the

purposes for acquiring the insurance and regardless of whether the

insurance is a general account obligation of the insurer or a separate

account obligation of the insurer. Permanent life insurance refers to

whole and universal life insurance, including variable universal life

insurance. Purposes for which insurance may be acquired include

offsetting pre- and post-retirement costs for employee compensation and

benefit plans, protecting against the loss of key persons, and

providing retirement and death benefits to employees. Include as

[[Page 8652]]

life insurance assets the bank's interest in insurance policies under

split-dollar life insurance arrangements with directors, officers, and

employees under both the endorsement and collateral assignment methods.

2. Credit Derivatives by Type and Remaining Maturity

In item 7 of Schedule RC-L, ``Derivatives and Off-Balance Sheet

Items,'' banks currently report the notional amounts of the credit

derivatives on which they are the guarantor and on which they are the

beneficiary as well as the gross positive and negative fair values of

these credit derivatives. These existing items will be revised so that

banks with credit derivatives will provide a breakdown of these

notional amounts by type of credit derivative--credit default swaps,

total return swaps, credit options, and other credit derivatives--in

items 7.a.(1) through 7.a.(4) of Schedule RC-L, with those on which the

bank is the guarantor reported in column A and those on which the bank

is the beneficiary in column B. Banks will continue to separately

report the gross positive and negative fair values of credit

derivatives on which they are the guarantor and the beneficiary without

a breakdown by type of credit derivative (items 7.b.(1) and 7.b.(2),

columns A and B).

In addition, banks currently present a maturity distribution for

six categories of derivative contracts that are subject to the risk-

based capital standards in Schedule RC-R, ``Regulatory Capital,''

Memorandum item 2. A new category will be added for credit derivatives

that are subject to these standards. The remaining maturities of these

credit derivatives will be reported separately for those where the

underlying reference asset is rated investment grade or, if not rated,

is the equivalent of investment grade under the bank's internal credit

rating system (Memorandum item 2.g.(1)) and those where the underlying

reference asset is rated below investment grade (``subinvestment

grade'') or, if not rated, is the equivalent of below investment grade

under the bank's internal credit rating system (Memorandum item

2.g.(2)).

None of the commenters specifically addressed these two reporting

changes.

3. Income From Foreign Offices

At present in the FFIEC 031 version of the Call Report, banks with

foreign offices whose international operations account for more than 10

percent of total revenues, total assets, or net income must complete

Schedule RI-D, ``Income from International Operations.'' Banks that

complete this schedule are currently directed to report estimates of

the amounts of their income and expense attributable to international

operations. These estimates must eliminate intrabank accounts and

should reflect all appropriate internal allocations of income and

expense.

Existing Schedule RI-D will be revised to capture income from

foreign offices (as that term is currently defined for Call Report

purposes) in place of income from ``international operations.'' The

schedule will be renamed ``Income from Foreign Offices'' and the

threshold for completing revised Schedule RI-D will continue to be

based on a 10 percent test, but the test would compare a bank's foreign

office revenues, assets, and net income to its consolidated total

revenues, total assets, and net income. Total revenues (net interest

income plus noninterest income) and net income will be determined from

the preceding calendar year (2005 for purposes of reporting in Schedule

RI-D beginning March 31, 2006) and total assets will be measured as of

the preceding calendar year end (December 31, 2005, for purposes of

reporting in Schedule RI-D beginning March 31, 2006).

The following categories of foreign office income and expense will

be reported in revised Schedule RI-D:

Total interest income.

Total interest expense.

Provision for loan and lease losses.

Trading revenue.

Investment banking, advisory, brokerage, and underwriting

fees and commissions.

Net securitization income.

All other noninterest income.

Realized gains (losses) on held-to-maturity and available-

for-sale securities.

Total noninterest expense.

Adjustments to pretax income in foreign offices for

internal allocations to foreign offices to reflect the effect of equity

capital on overall bank funding costs.

Applicable income taxes.

Extraordinary items and other adjustments, net of income

taxes.

Internal allocations of income and expense applicable to

foreign offices.

Eliminations arising from the consolidation of foreign

offices with domestic offices.

The amounts reported in the preceding income and expense categories

(except the categories for adjustments to pretax income, internal

allocations, and eliminations) are to be reported on a foreign office

consolidated basis, i.e., before eliminating the effects of

transactions with domestic offices, but after eliminating the effects

of transactions between foreign offices. This is a change from the

current Schedule RI-D approach under which amounts are reported net of

all intrabank transactions.

The Agencies received no comments specifically addressing the

proposed revisions to Schedule RI-D.

4. Standby Letters of Credit Issued by a Federal Home Loan Bank

Banks are currently required to report standby letters of credit

issued by a Federal Home Loan Bank on their behalf in Schedule RC-L,

item 9, ``All other off-balance sheet liabilities,'' when these letters

of credit exceed 10 percent of the bank's total equity capital. When

these letters of credit exceed 25 percent of total equity capital, the

amount must also be separately identified and disclosed in Schedule RC-

L. To facilitate the reporting and identification of these standby

letters of credit when the amount exceeds 25 percent of total equity

capital, banks with this volume of standby letters of credit issued by

a Federal Home Loan Bank will report them in Schedule RC-L, item 9.c.,

to which the Agencies are adding an appropriate preprinted caption.

No comments were received on this specific element of the Agencies'

proposal.

5. Scope of Securitizations To Be Included in Schedule RC-S

In column G of Schedule RC-S, ``Servicing, Securitization, and

Asset Sale Activities,'' banks report information on securitizations

and on asset sales with recourse or other seller-provided credit

enhancements involving loans (other than those covered in columns A

through F of the schedule) and all leases. Although the scope of

Schedule RC-S was intended to cover all of a bank's securitizations and

credit-enhanced asset sales, as currently structured column G does not

capture transactions involving assets other than loans and leases.

Therefore, the Agencies are revising the scope of column G to encompass

``All Other Loans, All Leases, and All Other Assets.'' As a result,

column G will begin to reflect securitization transactions involving

such assets as securities.

The Agencies received no comments on this change in scope.

C. Instructional Clarification for Servicing of Home Equity Lines

Banks report the outstanding principal balance of assets serviced

for others in Memorandum item 2 of Schedule RC-S, ``Servicing,

[[Page 8653]]

Securitization, and Asset Sale Activities.'' In Memorandum items 2.a

and 2.b, the amounts of 1-4 family residential mortgages serviced with

recourse and without recourse, respectively, are reported. Memorandum

item 2.c covers all other financial assets serviced for others, but

banks are required to report the amount of such servicing only if the

servicing volume is more than $10 million.

The Agencies will clarify the instructions by stating that

servicing of home equity lines should be included in Memorandum item

2.c. Memorandum items 2.a and 2.b should include servicing of closed-

end loans secured by first or junior liens on 1-4 family residential

properties only. The only commenter addressing this clarification

stated that it was reasonable.

Call Report Revisions Effective as of the September 30, 2006, Report

Date

A. Revisions of Existing Items and New Items

1. Federal Home Loan Bank Advances and Other Borrowings

Banks currently report separate breakdowns by remaining maturity of

Federal Home Loan Bank (FHLB) advances and other borrowings in Schedule

RC-M, items 5.a and 5.b., respectively. The Agencies proposed to add

two additional breakdowns of FHLB advances. The first would collect

data on four categories of advances: Fixed rate, variable rate,

callable structured advances, and other structured advances. The second

would collect data on advances by time remaining until the next

repricing date using four time intervals: One year or less, over one

year through three years, over three years through five years, and over

five years. In addition, the existing remaining maturity data for both

FHLB advances and other borrowings were to be modified by adding a new

remaining maturity period of over five years.

Three commenters suggested the Agencies limit the application of

certain information on FHLB advances to institutions whose FHLB

advances are material to their overall operations. In contrast, another

commenter, a banking trade group, stated that its members did not

believe it would be burdensome in most cases to provide the proposed

additional information. The Agencies evaluated various alternative

materiality thresholds for FHLB advances and concluded that, for many

institutions, such thresholds would effectively increase, rather than

reduce, the burden associated with providing the requested information.

Burden would effectively increase because these institutions would have

to assess whether they exceed the reporting threshold as of each report

date and would need to develop a system for capturing the information

whenever the threshold is exceeded. Once the threshold is exceeded

institutions would continue to report the information until the volume

of FHLB advances declined and remained below a threshold for a

sufficient period of time to indicate that the advances were no longer

an integral part of the institution's operations. Therefore, the

Agencies are not establishing a materiality threshold for these items.

Nevertheless, in response to commenters' concerns about burden, the

Agencies reconsidered the amount of data they proposed to collect on

FHLB advances and other borrowings and decided to modify their proposal

by reducing the amount of information to be reported by banks.

Thus, banks will separately report their FHLB advances and their

other borrowings based on the amount of time until the next repricing

date (one year or less, over one year through three years, over three

years through five years, and over five years) in items 5.a.(1)(a)-(d)

and 5.b.(1)(a)-(d) of Schedule RC-M, respectively.\1\ Banks will also

report the amounts of advances and other borrowings with a remaining

maturity of one year or less in items 5.a.(2) and 5.b.(2),

respectively, rather than the proposed four-period breakdown by

remaining maturity.

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\1\ The sum of Schedule RC-M, items 5.a.(1)(a)-(d) and items

5.b.(1)(a)-(d), must equal Schedule RC, item 16, ``Other borrowed

money.''

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In addition, banks will report only the amount of structured FHLB

advances included in their advances outstanding in item 5.a.(3) of

Schedule RC-M instead of the four-way breakdown of advances that had

been proposed. Structured advances are advances containing options.

Structured advances include (1) callable advances, i.e., fixed rate

advances that the FHLB has the option to call after a specified amount

of time, (2) convertible advances, i.e., fixed rate advances that the

FHLB has the option to convert to floating rate after a specified

amount of time, and (3) putable advances, i.e., fixed rate advances

that the bank has the option to prepay without penalty on a specified

date or dates. Any other advances that have caps, floors, or other

embedded derivatives should also be reported as structured advances.

2. Nonaccrual Assets

Two new items will be added to Schedule RC-N, ``Past Due and

Nonaccrual Loans, Leases, and Other Assets,'' pertaining to nonaccrual

assets: Memorandum item 7, ``Additions to nonaccrual assets during the

quarter,'' and Memorandum item 8, ``Nonaccrual assets sold during the

quarter.'' Identical items are already collected from bank holding

companies that file the Consolidated Financial Statements for Bank

Holding Companies (FR Y-9C). The one institution that specifically

commented on the proposed new nonaccrual items observed that, because

it files the FR Y-9C, these items would not create additional burden.

In Memorandum item 7, report the gross amount of all loans, leases,

debt securities, and other assets (net of unearned income) that have

been placed in nonaccrual status since the prior quarter-end. Include

those assets placed in nonaccrual status during the quarter that are

included as of the quarter-end report date in Schedule RC-N, column C,

items 1 through 9. Also include those assets placed in nonaccrual

status during the quarter that, before the current quarter-end, have

been sold, paid off, charged-off, settled through foreclosure or

concession of collateral (or any other disposition of the nonaccrual

asset) or have been returned to accrual status. In other words, the

gross amount of assets placed in nonaccrual status since the prior

quarter-end that should be reported in Memorandum item 7 should not be

reduced, for example, by any charge-offs or sales of such nonaccrual

assets. If a given asset is placed in nonaccrual status more than once

during the quarter, report the amount of the asset only once.

In Memorandum item 8, report the gross outstanding balance of all

loans, leases, debt securities, and other assets held in nonaccrual

status (i.e., reportable in Schedule RC-N, column C, items 1 through 9)

that were sold during the current quarter. The amount to be reported is

the outstanding balance of the asset at the time of the sale. Do not

include any gains or losses from the sale. For purposes of this item,

only include those nonaccrual asset sales that meet the criteria for a

sale as set forth in FASB Statement No. 140, Accounting for Transfers

and Servicing of Financial Assets and Extinguishments of Liabilities.

3. Secured Borrowings

The Agencies are adding two items to Schedule RC-M, ``Memoranda,''

in which banks will report the amount of their ``Federal funds

purchased'' (as reported in Schedule RC, item 14.a), and their ``Other

borrowings'' (as reported in Schedule RC-M, item 5.b) that are secured.

Two commenters specifically

[[Page 8654]]

addressed these proposed items. One did not object to these items, but

the other suggested that materiality thresholds be applied to the

reporting of these two items. Consistent with the discussion above

under FHLB advances and other borrowings, the Agencies decided against

establishing a materiality threshold for these items.

Banks should include in these items the amount of ``Federal funds

purchased'' and ``Other borrowings'' for which the bank (or a

consolidated subsidiary) has pledged securities, loans, or other assets

as collateral for the borrowings. Transfers of financial assets

accounted for as financing transactions because they do not satisfy the

criteria for sale accounting under FASB Statement No. 140, mortgages

payable on bank premises and other real estate owned, and obligations

under capitalized leases should be included as ``Secured other

borrowings.''

4. Closed-End 1-4 Family Residential Mortgage Banking Activities

The Agencies will add a new Schedule RC-P to the Call Report that

will contain a series of items that are focused on closed-end 1-4

family residential mortgage banking activities. The schedule will

include items for the principal amount of retail originations during

the quarter of mortgage loans for resale, wholesale originations and

purchases during the quarter of mortgage loans for resale, and mortgage

loans sold during the quarter. The schedule will also collect

information on the carrying amount of mortgage loans held for sale at

quarter-end. Data will be reported separately for first lien and junior

lien mortgages.\2\

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\2\ As will be discussed in the following section, an additional

item on noninterest income earned during the quarter from these

mortgage banking activities will be added to Schedule RC-P effective

March 31, 2007.

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

The Agencies proposed that Schedule RC-P would be completed by all

banks with $1 billion or more in total assets and that smaller banks

that are significantly involved in mortgage banking activities, as

determined by their primary federal regulator, could be directed by

their regulator to complete the schedule. One commenter stated that

this reporting approach for banks with less than $1 billion in total

assets could result in confusion and inconsistent treatment of such

banks. This commenter recommended against leaving the reporting

decision up to a bank's regulator, suggesting instead that a reporting

threshold by mortgage volume be established for banks with less than $1

billion in assets. This commenter also stated that data collection for

this new schedule would be time consuming and some information may need

to be compiled manually. Three other commenters urged the Agencies to

delay the implementation of proposed Schedule RC-P to provide more lead

time to prepare for it. Another commenter requested clear instructional

guidance for the information to be reported in this new Call Report

schedule. As discussed in the following paragraph, the Agencies have

established a mortgage volume threshold for reporting in Schedule RC-P

by banks with less than $1 billion in total assets. The effective date

of the schedule has also been delayed from the proposed March 31, 2006,

implementation date. The instructions have been refined from those

included in the proposal.

Schedule RC-P is to be completed by (1) all banks with $1 billion

or more in total assets \3\ and (2) banks with less than $1 billion in

total assets whose closed-end 1-4 family residential mortgage banking

activities exceed a specified level. More specifically, if either

closed-end (first lien and junior lien) 1-4 family residential mortgage

loan originations and purchases for resale from all sources, loan

sales, or quarter-end loans held for sale exceed $10 million for two

consecutive quarters, a bank with less than $1 billion in total assets

must complete Schedule RC-P beginning the second quarter and continue

to complete the schedule through the end of the calendar year. For

example, for a bank with less than $1 billion in total assets, if the

bank's closed-end 1-4 family residential mortgage loan originations

plus purchases for resale from all sources exceeded $10 million during

the quarter ended June 30, 2006, and the bank's sales of such loans

exceeded $10 million during the quarter ended September 30, 2006, the

bank would be required to complete Schedule RC-P in its September 30

and December 31, 2006, Call Reports. The level of the bank's mortgage

banking activities during the fourth quarter of 2006 and the first

quarter of 2007 would determine whether it would need to complete

Schedule RC-P each quarter during 2007 beginning March 31, 2007.

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\3\ The $1 billion asset size test is generally based on the

total assets reported on the Call Report balance sheet (Schedule RC,

item 12) as of June 30 of the preceding year. Banks with $1 billion

or more in total assets as of June 30, 2005, must complete Schedule

RC-P beginning September 30, 2006.

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Retail originations of closed-end 1-4 family residential mortgage

loans for resale include those mortgage loans for which the origination

and underwriting process was handled exclusively by the bank or a

consolidated subsidiary of the bank. Therefore, retail originations

would exclude those closed-end 1-4 family residential mortgage loans

for which the origination and underwriting process was handled in whole

or in part by another party, such as a correspondent or mortgage

broker, even if the loan was closed in the name of the bank or a

consolidated subsidiary of the bank. Such loans would be treated as

wholesale originations or purchases, as would acquisitions of closed-

end 1-4 family residential mortgage loans that were closed in the name

of a party other than the bank or a consolidated subsidiary of the

bank. Closed-end 1-4 family residential mortgage loans originated or

purchased for the reporting bank's own loan portfolio should be

excluded from amounts reported as originations or purchases for resale

in Schedule RC-P.

Closed-end 1-4 family residential mortgage loans sold during the

quarter include those transfers of loans originated or purchased for

resale from retail or wholesale sources that have been accounted for as

sales in accordance with FASB Statement No. 140, i.e., those transfers

where the loans are no longer included in the bank's consolidated total

assets. Sales of closed-end 1-4 family residential mortgage loans

directly from the bank's loan portfolio during the quarter should also

be reported as loans sold.

Closed-end 1-4 family residential mortgage loans held for sale at

quarter-end should be reported at the lower of cost or fair value

consistent with their presentation in the Call Report balance sheet.

Such loans would include any mortgage loans transferred at any time

from the bank's loan portfolio to a held-for-sale account that have not

been sold by quarter-end.

5. Amounts Payable and Receivable on Credit Derivatives

Banks with credit derivatives currently report the notional amount

and fair value of these instruments in item 7 of Schedule RC-L,

``Derivatives and Off-Balance Sheet Instruments.'' The Agencies will

add new items 7.c.(1) and (2) to Schedule RC-L to collect information

on the maximum amounts that the reporting bank can collect or must pay

on the credit derivatives it has entered into. One commenter requested

further clarification regarding what is meant by ``maximum'' in this

context and the agencies will make such a clarification.

[[Page 8655]]

B. Other Revisions

1. Officer and Director Signature Requirements

Several commenters expressed concern regarding the Agencies'

proposal to revise the Call Report's existing officer declaration to

require that the report be signed by each bank's chief executive

officer (or the person performing similar functions) and chief

financial officer (or the person performing similar functions) rather

than by an ``authorized officer.'' Under the proposal, the officer

declaration was also to be revised to state that these officers are

responsible for establishing and maintaining internal control over

financial reporting, including controls over regulatory reports. In

addition, the Agencies proposed to revise the director attestation to

require that the directors who sign the Call Report be members of the

bank's audit committee, if one exists. Commenters indicated that it

would be difficult to obtain the required review and signatures of the

audit committee members, chief executive officer, and chief financial

officer in the short timeframe allowed for completion and submission of

the Call Report.

Several commenters also expressed concern that the Agencies were

trying to impose certification and internal control standards similar

to those contained in the Sarbanes-Oxley Act of 2002 for compliance

with regulatory reporting guidelines. However, statutory requirements

already specify that the Call Report must be signed by an authorized

officer of the bank and attested to by not less than two directors

(trustees) for state nonmember banks and three directors for national

and state member banks. These statutes further require that, in signing

the Call Report, the officer and directors address the correctness of

the reported information. The statutes also recognize that banks are

responsible for maintaining procedures to ensure the accuracy of this

information.

After considering the comments received, the Agencies are revising

the existing officer signature requirement so that the Call Report must

be signed by the bank's chief financial officer (or the individual

performing an equivalent function) rather than by any authorized

officer of the bank. In signing the Reports of Condition and Income,

the chief financial officer would attest that the reports have been

prepared in conformance with the instructions and are true and correct

to the best of the officer's knowledge and belief. The requirement for

signatures by directors would not be changed (i.e., the directors

signing the Call Report need not be members of the bank's audit

committee).

The introductory paragraph preceding the statements concerning the

preparation of the Call Report that must be signed by the chief

financial officer and two or three directors will note that each bank's

board of directors and senior management are responsible for

establishing and maintaining an effective system of internal control,

including controls over the Reports of Condition and Income. (This

language concerning internal control does not appear in the statements

to be signed by the chief financial officer and the directors.) Similar

references to the responsibility of the board and senior management for

the internal control system are contained in the Agencies' March 2003

Interagency Policy Statement on the Internal Audit Function and Its

Outsourcing. Internal control and its relationship to timely and

accurate regulatory reports are also addressed in the Interagency

Guidelines Establishing Standards for Safety and Soundness.

Call Report Revisions To Be Implemented March 31, 2007 (and 2008)

A. Revisions of Existing Items and New Items

1. Construction, Land Development, and Other Land Loans

At present, banks report the total amount of their ``Construction,

land development, and other land loans'' in the loan schedule (Schedule

RC-C, part I, item 1.a) and they also disclose the amount of these

loans that are past due 30 days or more or in nonaccrual status

(Schedule RC-N, item 1.a) and that have been charged off and recovered

(Schedule RI-B, part I, item 1.a). The agencies proposed to split the

existing item for ``Construction, land development, and other land

loans'' in these three schedules into separate items for ``1-4 family

residential construction, land development, and other land loans'' and

``Other construction, land development, and other land loans.'' In

addition, the agencies would similarly split the item for ``Commitments

to fund commercial real estate, construction, and land development

loans secured by real estate'' in the off-balance sheet items schedule

(Schedule RC-L, item 1.c.(1)) into two items.

A significant number of commenters expressed concern about the

burden associated with distinguishing 1-4 family residential

construction loans from other loans currently reported in the existing

construction loan category and making the system changes that would be

required to provide this information, particularly in light of the

relatively short timeframe banks would be provided to make these

changes, i.e., by March 31, 2006, under the proposal. One other

commenter, a nonbanking trade group, recommended that all residential

construction loans, both 1-4 family and multifamily, be segregated from

other construction loans and that banks separately report data on 1-4

family and multifamily residential construction loans. Based on the

comments received, the Agencies are retaining a two-way breakout of

``Construction, land development, and other land loans,'' but are

clarifying the scope of the two new loan categories and implementing

the changes in two phases through March 31, 2008. The changes will take

effect March 31, 2007, for (1) all banks with $300 million or more in

total assets as of December 31, 2005, or with foreign offices, and (2)

banks without foreign offices and with less than $300 million in total

assets whose total construction, multifamily, and nonfarm

nonresidential real estate loans (Schedule RC-C, sum of items 1.a, 1.d,

and 1.e) is greater than 150 percent of total equity capital (Schedule

RC, item 28) as of December 31, 2005. Banks with less than $300 million

in total assets that do not meet this percentage test will begin

reporting the breakdown of their construction loans as of March 31,

2008.

The Agencies are splitting the existing construction loan item in

schedules RC-C, RC-N, and RI-B into separate items for ``1-4 family

residential construction loans'' and ``Other construction loans and all

land development and other land loans.'' In addition, the Agencies will

split the existing item for commitments to fund commercial real estate,

construction, and land development loans secured by real estate in

Schedule RC-L into separate items for ``1-4 family residential

construction loan commitments'' and ``Commercial real estate, other

construction loan, and land development loan commitments.''

``1-4 family residential construction loans'' are those loans for

the purpose of constructing 1-4 family residential properties, which

will secure the loan. The term ``1-4 family residential properties'' is

defined in Schedule RC-C, part I, item 1.c. The new loan category for

``1-4 family residential construction loans'' would exclude loans for

the development of building lots and loans secured by vacant land,

unless the same loan finances the construction of 1-4 family

residential properties on the property.

[[Page 8656]]

2. Loans Secured by Nonfarm Nonresidential Properties

Banks currently report the total amount of their loans ``Secured by

nonfarm nonresidential properties'' in the loan schedule (Schedule RC-

C, part I, item 1.e) along with the amounts of these loans that are

past due 30 days or more or in nonaccrual status (Schedule RC-N, item

1.e) and the amounts that have been charged off and recovered (Schedule

RI-B, part I, item 1.e). The agencies proposed to split the existing

item for loans ``Secured by nonfarm nonresidential properties'' in

these three schedules into separate items for loans secured by owner-

occupied nonfarm nonresidential properties and loans secured by other

nonfarm nonresidential properties.

A significant number of commenters expressed concern about the

burden of the nonfarm nonresidential real estate loan proposal similar

to that discussed above with respect to construction loans. One

commenter noted in particular the difficulties in determining how

``mixed-use'' properties should be categorized in the Call Report loan

schedule. Commenters also expressed concern about the relatively short

timeframe banks would be provided to make these changes, i.e., by March

31, 2006, under the proposal. Based on the comments received, the

Agencies are modifying the scope of the two new loan categories and

implementing the changes in two phases through March 31, 2008, in a

manner consistent with the phase-in schedule for the construction loan

items listed above. As with the changes for construction loans

discussed above, the changes for nonfarm nonresidential real estate

loans will take effect March 31, 2007, for (1) all banks with $300

million or more in total assets as of December 31, 2005, or with

foreign offices, and (2) banks without foreign offices and with less

than $300 million in total assets whose total construction,

multifamily, and nonfarm nonresidential real estate loans (Schedule RC-

C, sum of items 1.a, 1.d, and 1.e) is greater than 150 percent of total

equity capital (Schedule RC, item 28) as of December 31, 2005. Banks

with less than $300 million in total assets that do not meet this

percentage test will begin reporting the breakdown of their nonfarm

nonresidential real estate loans as of March 31, 2008.

The new category for ``Loans secured by other nonfarm

nonresidential properties'' includes those nonfarm nonresidential real

estate loans where the primary or a significant source of repayment is

derived from rental income associated with the property (i.e., loans

for which 50 percent or more of the source of repayment comes from

third party, nonaffiliated, rental income) or the proceeds of the sale,

refinancing, or permanent financing of the property. Thus, the primary

or a significant source of repayment for ``Loans secured by owner-

occupied nonfarm nonresidential properties'' is the cash flow from the

ongoing operations and activities conducted by the party, or an

affiliate of the party, who owns the property, rather than from third

party, nonaffiliated, rental income or the proceeds of the sale,

refinancing, or permanent financing of the property. The determination

as to whether a property is considered ``owner-occupied'' should be

made upon acquisition (origination or purchase) of the loan. However,

for purposes of determining whether existing nonfarm nonresidential

real estate loans should be reported as ``owner-occupied'' beginning

March 31, 2007, or 2008, banks may consider the source of repayment

either when the loan was acquired or based on the most recent available

information. Once a bank determines whether a loan should be reported

as ``owner-occupied'' or not, this determination need not be reviewed

thereafter.

3. Retail and Commercial Leases

Banks with foreign offices or with $300 million or more in total

assets currently report a breakdown of their lease financing

receivables between those from U.S. and non-U.S. addressees in Schedule

RC-C, part I, items 10.a and 10.b. Addressee information on leases is

also reported in the past due and nonaccrual schedule (Schedule RC-N,

item 8 on the FFIEC 031 and Memorandum item 3.d on the FFIEC 041) and

on the charge-offs and recoveries schedule (Schedule RI-B, part I, item

8 on the FFIEC 031 and Memorandum item 2.d on the FFIEC 041).\4\ The

Agencies are replacing the existing addressee breakdown of leases with

a breakdown between retail (consumer) leases and commercial leases in

these three Call Report schedules effective March 31, 2007. Retail

(consumer) leases would be defined in a manner similar to consumer

loans, i.e., as leases to individuals for household, family, and other

personal expenditure purposes. Commercial leases would encompass all

other lease financing receivables. The only commenter who specifically

addressed the proposed revision to the reporting of leases did not

foresee any difficulty with the change.

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\4\ Banks with domestic offices only and less than $300 million

in total assets are not required to provide this breakdown.

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

4. Income From Annuity Sales, Investment Banking, Advisory, Brokerage,

and Underwriting

In the Call Report income statement (Schedule RI), banks currently

report commissions and fees from sales of annuities (fixed, variable,

and deferred) and related referral and management fees in one of three

items: Income from sales of annuities by a bank's trust department (or

a consolidated trust company subsidiary) that are executed in a

fiduciary capacity is reported in ``Income from fiduciary activities''

(Schedule RI, item 5.a); income from sales of annuities to bank

customers by a bank's securities brokerage subsidiary is reported in

``Investment banking, advisory, brokerage, and underwriting fees and

commissions'' (Schedule RI, item 5.d); and income from all other

annuity sales is reported in ``Income from other insurance activities''

(Schedule RI, item 5.h.(2)). Existing item 5.d also collects the amount

of noninterest income from a variety of other activities.

To better distinguish between banks' noninterest income from

investment banking (dealer) activities and their sales (brokerage)

activities, the Agencies are revising the noninterest income section of

the Call Report income statement effective March 31, 2007. A new item

will be added for ``Fees and commissions from annuity sales,'' which

will include income from sales of annuities and related referral and

management fees (other than income from sales by a bank's trust

department or a consolidated trust company subsidiary executed in a

fiduciary capacity, which will continue to be reported in Schedule RI,

item 5.a). Existing item 5.d will be replaced by separate items for

``Fees and commissions from securities brokerage'' and ``Investment

banking, advisory, and underwriting fees and commissions.'' Securities

brokerage income would include fees and commissions from sales of

mutual funds and from purchases and sales of other securities and money

market instruments for customers (including other banks) where the bank

is acting as agent. Other than moving annuity-related income to the new

item for such income, there would be no other changes to the existing

item 5.h.(2), ``Income from other insurance activities.'' In connection

with these changes, the items in the noninterest income section of the

Call Report income statement (Schedule RI) would be renumbered.

[[Page 8657]]

One commenter, an insurance consultant, supported the proposed

income statement changes relating to income from annuity sales,

securities brokerage, and investment banking. However, this commenter

also recommended that banks report additional detail on income from

annuity sales, a change that the Agencies are not implementing.

5. Income From 1-4 Family Residential Mortgage Banking Activities

In new Schedule RC-P on 1-4 family residential mortgage banking

activities, which will begin to be completed by certain banks beginning

September 30, 2006, an item will be added to the schedule on March 31,

2007, to collect data on noninterest income generated from these

activities. New item 5 of Schedule RC-P, ``Noninterest income for the

quarter from the sale, securitization, and servicing of closed-end 1-4

family residential mortgage loans,'' will capture the portion of a

bank's ``Net servicing fees,'' ``Net securitization income,'' and ``Net

gains (losses) on sales of loans and leases'' (current items 5.f, 5.g,

and 5.i of Schedule RI) earned during the quarter that is attributable

to 1-4 family residential mortgage loans. The March 31, 2007, effective

date for this new Schedule RC-P item responds to commenters' request

that the Agencies delay the implementation of this schedule from its

proposed March 31, 2006, effective date.

6. Revenues From Credit Derivatives and Related Exposures

In Schedule RI, Memorandum item 8, banks that reported average

trading assets of $2 million or more for any quarter of the preceding

calendar year currently provide a four-way breakdown of trading revenue

by type of risk exposure: interest rate, foreign exchange, equity, and

commodity. Although banks also trade credit derivatives and credit cash

instruments, there is no specific existing category in which to report

the revenue from these trading activities. Accordingly, the Agencies

proposed to add a new risk exposure category to Memorandum item 8 for

credit derivatives.

One commenter stated that adding credit derivatives to the

breakdown of trading revenue by type of exposure may not be meaningful

because credit derivative positions are often hedged with cash

instruments. After considering this comment, the Agencies have modified

their proposal and will instead add a new risk exposure category for

credit-related exposures effective March 31, 2007. In this new

Memorandum item 8.e, a bank should report its net gains (losses) from

trading cash instruments and derivative contracts that it manages as

credit exposures. The sum of Memorandum items 8.a through 8.e must

equal the amount of trading revenue reported in the Call Report income

statement in Schedule RI, item 5.c.

The Agencies are also adding new Memorandum items 9.a and 9.b to

Schedule RI, ``Income Statement,'' as of March 31, 2007, in which banks

must report the net gains (losses) recognized in earnings on credit

derivatives that economically hedge credit exposures held outside the

trading account, regardless of whether the credit derivative is

designated as and qualifies as a hedging instrument under generally

accepted accounting principles. Credit exposures outside the trading

account include, for example, nontrading assets (such as available-for-

sale securities or loans held for investment) and unused lines of

credit. To address the commenter's concern about the use of credit

derivatives for hedging, banks will report such net gains (losses) on

credit derivatives held for trading in Memorandum item 9.a and on

credit derivatives held for purposes other than trading in Memorandum

item 9.b. Thus, those net gains (losses) on credit derivatives reported

in Schedule RI, Memorandum item 9.a, will also have been included in

the amount reported in new Memorandum item 8.e of Schedule RI.

III. Request for Comment

Public comment is requested on all aspects of this joint notice. In

addition, comments are invited on:

(a) Whether the proposed revisions to 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 as they are proposed to be revised, 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 information collections on

respondents, including through the use of automated collection

techniques or other forms of information technology; and

(e) Estimates of capital or start up costs and costs of operation,

maintenance, and purchase of services to provide information.

Comments submitted in response to this joint notice will be shared

among the Agencies. All comments will become a matter of public record.

Written comments should address the accuracy of the burden estimates

and ways to minimize burden as well as other relevant aspects of the

information collection request.

Dated: February 10, 2006.

Stuart E. Feldstein,

Assistant Director, Legislative and Regulatory Activities Division,

Office of the Comptroller of the Currency.

Board of Governors of the Federal Reserve System, February 13,

2006.

Jennifer J. Johnson,

Secretary of the Board.

Dated at Washington, DC this 10th day of February, 2006.

Federal Deposit Insurance Corporation.

Valerie J. Best,

Assistant Executive Secretary.

[FR Doc. 06-1495 Filed 2-16-06; 8:45am]

BILLING CODE 4810-33-P