FDIC Federal Register Citations
Register: September 11, 2007 (Volume 72, Number 175)]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
Proposed Agency Information Collection Activities; Comment
AGENCIES: Office of the Comptroller of the Currency (OCC), Treasury;
Board of Governors of the Federal Reserve System (Board); Federal
Deposit Insurance Corporation (FDIC); and Office of Thrift Supervision
SUMMARY: In accordance with the requirements of the Paperwork Reduction
Act of 1995 (44 U.S.C. chapter 35), the OCC, the Board, the FDIC, and
the OTS (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. The Federal Financial Institutions Examination
Council (FFIEC), of which the agencies are members, has approved the
agencies' publication for public comment of a proposal to extend, with
revision, the Consolidated Reports of Condition and Income (Call
Report) for banks and the Thrift Financial Report (TFR) for savings
associations, which are currently approved collections of information.
At the end of the comment period, the comments and recommendations
received will be analyzed to determine the extent to which the FFIEC
and the agencies should modify the proposed revisions prior to giving
final approval. The agencies will then submit the revisions to OMB for
review and approval.
DATES: Comments must be submitted on or before November 13, 2007.
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: Communications Division, Office of the Comptroller of
Currency, Public Information Room, Mailstop 1-5, Attention: 1557-0081,
250 E Street, SW., Washington, DC 20219. In addition, comments may be
sent by fax to (202) 874-4448, or by electronic mail to firstname.lastname@example.org. You may personally inspect and photocopy
the comments at the OCC's Public Information Room, 250 E Street, SW.,
Washington, DC 20219. For security reasons, the OCC requires that
visitors make an appointment to inspect comments. You may do so by
calling (202) 874-5043. Upon arrival, visitors will be required to
present valid government-issued photo identification and submit to
security screening in order to inspect and photocopy comments.
Board: You may submit comments, which should refer to
``Consolidated Reports of Condition and Income, 7100-0036, March 2008''
by any of the following methods:
Agency Web Site:
the instructions for submitting comments on the http://.
Follow the instructions for submitting comments.
number in the subject line of the message.
FAX: 202-452-3819 or 202-452-3102.
Mail: Jennifer J. Johnson, Secretary, Board of
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
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
FDIC: You may submit comments, which should refer to
Reports of Condition and Income, 3064-0052,'' by any of the following
E-mail: comments@FDIC.gov. Include ``Consolidated Reports
of Condition and Income, 3064-0052'' in the subject line of the
Mail: Steven F. Hanft (202-898-3907), Clearance
Attn: Comments, Room MB-2088, Federal Deposit Insurance Corporation,
550 17th Street, NW., Washington, DC 20429.
Hand Delivery: Comments may be hand-delivered to the
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
including any personal information provided. Comments may be inspected
at the FDIC Public Information Center, Room E-1002, 3501 Fairfax Drive,
Arlington, VA 22226, between 9 a.m. and 5 p.m. on business days.
OTS: You may submit comments, identified by ``1550-0023 (TFR:
Schedule DI Revisions),'' by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Please include ``1550-0023 (TFR: March 2008 Revisions)'' in the subject
line of the message and include your name and telephone number in the
Fax: (202) 906-6518.
Mail: Information Collection Comments, Chief Counsel's
Office, Office of Thrift Supervision, 1700 G Street, NW., Washington,
DC 20552, Attention: ``1550-0023 (TFR: March 2008 Revisions).''
Hand Delivery/Courier: Guard's Desk, East Lobby
1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, Attention:
Information Collection Comments, Chief Counsel's Office, Attention:
``1550-0023 (TFR: March 2008 Revisions).''
Instructions: All submissions received must include the
and OMB Control Number for this information collection. All comments
received will be posted without change to the OTS Internet Site at http://www.ots.treas.gov/pagehtml.cfm?catNumber=67&an=1, including any
personal information provided.
Docket: For access to the docket to read background documents
comments received, go to
In addition, you may inspect comments
at the Public Reading Room, 1700 G Street, NW., by appointment. To make
an appointment for access, call (202) 906-5922, send an e-mail to email@example.com, or send a facsimile transmission to (202)
906-7755. (Prior notice identifying the materials you will be
requesting will assist us in serving you.) We schedule appointments on
business days between 10 a.m. and 4 p.m. In most cases, appointments
will be available the next business day following the date we receive a
Additionally, commenters may send a copy of their comments to
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 the
Call Report forms can be obtained at the FFIEC's Web site (http: // http://www.ffiec.gov/ffiec_report_forms.htm). Copies of the TFR can be
OCC: Mary Gottlieb, OCC Clearance Officer, Office of the
Comptroller of the Currency, 250 E Street, SW., Washington, DC 20219.
Board: Michelle E. Shore, Federal Reserve Board Clearance
(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
FDIC: Steven F. Hanft, Paperwork Clearance Officer, (202)
Legal Division, Federal Deposit Insurance Corporation, 550 17th Street,
NW., Washington, DC 20429.
OTS: Ira L. Mills, OTS Clearance Officer, at
Ira.Mills@ots.treas.gov, (202) 906-6531, or facsimile number (202) 906-
6518, Litigation Division, Chief Counsel's Office, Office of Thrift
Supervision, 1700 G Street, NW., Washington, DC 20552.
SUPPLEMENTARY INFORMATION: The agencies are proposing to revise and
extend for three years the Call Report and the TFR, which are currently
approved collections of information.\1\
\1\ The proposed changes to the Call Report and the TFR that
the subject of this notice would take effect March 31, 2008. The
banking agencies (the OCC, the Board, and the FDIC) are also
considering a separate proposal to incorporate the FDIC's Summary of
Deposits report (OMB No. 3064-0061) into the Call Report effective
June 30, 2008. If the FFIEC and the banking agencies approve the
proposed inclusion of the Summary of Deposits in the Call Report,
the banking agencies will publish a request for comment on this
proposal in accordance with the requirements of the Paperwork
Reduction Act of 1995.
1. Report Title: Consolidated Reports of Condition and Income
Form Number: Call Report: FFIEC 031 (for banks with domestic
foreign offices) and FFIEC 041 (for banks with domestic offices only).
Frequency of Response: Quarterly.
Affected Public: Business or other for-profit.
OMB Number: 1557-0081.
Estimated Number of Respondents: 1,750 national banks.
Estimated Time per Response: 45.42 burden hours.
Estimated Total Annual Burden: 317,967 burden hours.
OMB Number: 7100-0036.
Estimated Number of Respondents: 885 state member banks.
Estimated Time per Response: 52.07 burden hours.
Estimated Total Annual Burden: 184,328 burden hours.
OMB Number: 3064-0052.
Estimated Number of Respondents: 5,218 insured state
Estimated Time per Response: 36.16 burden hours.
Estimated Total Annual Burden: 754,732 burden hours.
The estimated time per response for the Call Report is an
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 635 hours per quarter,
depending on an individual institution's circumstances.
2. Report Title: Thrift Financial Report (TFR).
Form Number: OTS 1313 (for savings associations).
Frequency of Response: Quarterly; Annually.
Affected Public: Business or other for-profit.
OMB Number: 1550-0023.
Estimated Number of Respondents: 838 savings associations.
Estimated Time per Response: 36.50 burden hours.
Estimated Total Annual Burden: 193,881 burden hours.
General Description of Reports
These information collections are mandatory: 12 U.S.C. 161
national banks), 12 U.S.C. 324 (for state member banks), 12 U.S.C. 1817
(for insured state nonmember commercial and savings banks), and 12
U.S.C. 1464 (for savings associations). Except for selected data items,
these information collections are not given confidential treatment.
Institutions submit Call Report and TFR data to the agencies
quarter for the agencies' use in monitoring the condition, performance,
and risk profile of individual institutions and the industry as a
whole. Call Report and TFR data provide the most current statistical
data available for evaluating institutions' corporate applications, for
identifying areas of focus for both on-site and off-site examinations,
and for monetary and other public policy purposes. The agencies use
Call Report and TFR data in evaluating interstate merger and
acquisition applications to determine, as required by law, whether the
resulting institution would control more than ten percent of the total
amount of deposits of insured depository institutions in the United
States. Call Report and TFR data are also used to calculate all
institutions' deposit insurance and Financing Corporation assessments,
national banks' semiannual assessment fees, and the OTS's assessments
on savings associations.
The four agencies are proposing to revise the Call Report and
instructions for reporting daily average deposit data by newly insured
institutions for deposit insurance assessment purposes to conform the
instructions with the FDIC's assessment regulations (12 CFR Part 327).
These revisions are discussed in Section II.A of this notice.
In addition, the OCC, the Board, and the FDIC (the banking
agencies) propose to implement a number of other changes to the Call
Report requirements, which are discussed in detail in Sections II.B
through II.F of this notice. The OTS may issue a separate notice and
request for comment if it determines that the TFR should be revised to
include some or all of the proposed changes to the Call Report. The
Call Report changes include several related to 1-4 family residential
mortgage loans such as reporting interest and fee income on and the
quarterly average for such mortgages separately from income on and the
quarterly average for all other real estate loans and the addition of
new items for restructured troubled mortgages and mortgage loans in
process of foreclosure. Call Report Schedule RC-P on closed-end 1-4
family residential mortgage banking activities, which is completed by
larger banks and smaller banks with a significant level of such
activities, would be expanded to include originations, purchases, and
sales of open-end mortgages as well as closed-end and open-end mortgage
loan repurchases and indemnifications during the quarter. The Call
Report's trading account definition would be modified in response to
the creation of a fair value option in generally accepted accounting
principles (GAAP). Call Report Schedule RC-Q, which collects data on
fair value measurements for trading assets and liabilities and other
assets and liabilities accounted for under a fair value option, and
certain other schedules, including the loan schedule (Schedule RC-C),
would also be revised to enhance the information available on
instruments accounted for under this option. Revisions would also be
made to the schedule on trading assets and liabilities (Schedule RC-D).
The Call Report instructions would be clarified for reporting credit
derivative data in the risk-based capital schedule (Schedule RC-R) and
a corresponding change would be made to the schedule itself. The
threshold for reporting significant items of other noninterest income
and expense in the explanations schedule (Schedule RI-E) would also be
changed. The instructions for reporting fully insured brokered deposits
in Schedule RC-E, Deposit Liabilities, would be revised to conform to
the instructions for reporting time deposits in this schedule.
The preceding proposed revisions to the Call Report and the
which have been approved for publication by the FFIEC and are discussed
in more detail below, would take effect as of March 31, 2008. The
specific wording of the captions for the new or revised Call Report
data items discussed in this proposal and the numbering of these data
items should be regarded as preliminary.
Finally, the banking agencies request comment on a plan to
discontinue the mailing of paper Call Report forms and instructions to
banks, which is discussed in Section III of this notice.
Type of Review: Revision and extension of currently approved
II. Discussion of Proposed Revisions
A. Reporting of Data for Deposit Insurance Assessments in the Call
Report and TFR by Newly Insured Institutions
Section 327.5(a)(1) of the FDIC's assessment regulations (12
327.5(a)(1)) states that ``[a]n institution that becomes newly insured
after the first report of condition allowing for average daily balances
shall have its assessment base determined using average daily
balances.'' For purposes of these regulations, the term ``report of
condition'' includes the Call Report and the TFR. Both of these reports
first allowed an institution to report average daily balances for the
deposit data used to determine its assessment base as of the March 31,
2007, report date. This change was introduced as of that date in
conjunction with a revision and reduction in the overall reporting
requirements related to deposit insurance assessments in Call Report
Schedule RC-O and TFR Schedule DI that was intended to simplify
regulatory reporting. As part of these revised overall reporting
requirements, the agencies provided an interim period covering the
March 31, 2007, through December 31, 2007, report dates during which
each institution has the option to submit its Call Reports or TFRs
using either the current or revised formats for reporting the data used
to measure their assessment base. The revised reporting format will
take effect for all institutions on March 31, 2008, at which time the
current reporting format will be eliminated.
The instructions issued in March 2007 for the revised
format state that an institution that becomes newly insured on or after
April 1, 2008, would be required to report daily average balances
beginning in the first quarterly Call Report or TFR that it files.
However, these instructions do not conform to the previously cited
language in the FDIC's assessments regulations with respect to their
treatment of institutions that become insured between April 1, 2007,
and March 31, 2008. Therefore, the agencies are revising the
instructions to Call Report Schedule RC-O and TFR Schedule DI to
require an institution that becomes insured after March 31, 2007, but
on or before March 31, 2008, to begin reporting daily average balances
in its Call Report or TFR for the March 31, 2008, report date. The
requirement for an institution that
becomes insured on or after April 1, 2008, to report daily average
deposit data beginning in its first quarterly Call Report or TFR would
remain in effect.
B. Call Report Revisions Related to 1-4 Family Residential Mortgage
Since year-end 2000, commercial bank holdings of 1-4 family
residential mortgage loans in domestic offices have increased nearly
108 percent to more than $1.9 trillion. Nearly 98 percent of all banks
hold such mortgages. 1-4 family residential mortgages now represent the
single largest category of loans held by commercial banks, surpassing
commercial and industrial loans as the largest category in 2002. As a
percentage of total loans and leases at commercial banks, 1-4 family
residential mortgages have grown from 24 percent at year-end 2000 to 32
percent at year-end 2006. Similarly, 1-4 family residential mortgages
have increased from less than 15 percent of total assets to nearly 19
percent of total assets during this period. During the first quarter of
2007, bank originations and purchases of closed-end 1-4 family
residential mortgages for resale exceeded $287 billion. There has been
a growing use of nontraditional residential mortgage products and an
increasing number of banks offering such products. In addition, the
volume of 1-4 family residential mortgage loans extended to subprime
borrowers has increased. At the same time, home prices have stagnated
or even declined in many areas of the country. The higher concentration
of 1-4 family residential mortgages across the industry and the
changing risk profile of the loans with which banks are associated in
some capacity has led the banking agencies to evaluate the information
they collect about such loans in the Call Report. As a result, the
banking agencies are proposing several Call Report changes that are
intended to enhance their ability to monitor the nature and extent of
banks' involvement with 1-4 family residential mortgage loans as
originators, holders, sellers, and servicers of such loans.
1. Interest and Fee Income and Quarterly Average
At present, banks report the total amount of interest and fee
income on their ``Loans secured by real estate'' (in domestic offices)
in the Call Report income statement (Schedule RI, item 1.a.(1)(a) on
the FFIEC 031 and item 1.a.(1) on the FFIEC 041) and the quarterly
average for these loans (in domestic offices) in the quarterly averages
schedule (Schedule RC-K, item 6.a.(2) on the FFIEC 031 and item 6.b on
the FFIEC 041). The banking agencies are proposing to split these
existing income statement and quarterly average items into separate
items for the interest and fee income on and the quarterly averages of
``Loans secured by 1-4 family residential properties'' and ``All other
loans secured by real estate.''
2. Restructured Mortgages
Banks currently report information on the amount of loans
terms have been modified, because of a deterioration in the financial
condition of the borrower, to provide for a reduction of either
interest or principal. When such restructured loans are past due 30
days or more or are in nonaccrual status in relation to their modified
terms as of the report date, they are reported in Schedule RC-N,
Memorandum item 1. In contrast, when such restructured loans are less
than 30 days past due and are not otherwise in nonaccrual status, that
is, when they are deemed to be in compliance with their modified terms
as discussed in the Call Report instructions, banks report the amount
of these loans in the Call Report loan schedule (Schedule RC-C, part I,
Memorandum item 1). However, the instructions advise banks to exclude
restructured loans secured by 1-4 family residential properties from
these Memorandum items.
This exclusion was incorporated into the Call Report
because the original disclosure requirements for troubled debt
restructurings under GAAP provided that creditors need not disclose
information on restructured real estate loans secured by 1-4 family
residential properties.\2\ However, this exemption from disclosure
under GAAP has since been eliminated.\3\ Accordingly, the banking
agencies are proposing to add a new Memorandum item to Schedule RC-C,
part I, for ``Loans secured by 1-4 family residential properties (in
domestic offices)'' that have been restructured and are in compliance
with their modified terms and a new Memorandum item to Schedule RC-N,
for restructured ``Loans secured by 1-4 family residential properties
(in domestic offices)'' that are past due 30 days or more or in
\2\ See Financial Accounting Standards Board Statement No.
Accounting by Debtors and Creditors for Troubled Debt
Restructurings, footnote 25.
\3\ See Financial Accounting Standards Board Statement No.
Accounting by Creditors for Impairment of a Loan, paragraph 22(f).
3. Mortgages in Foreclosure
The banking agencies currently collect data on the amount of
secured by 1-4 family residential properties that are past due 30 days
or more or are in nonaccrual status (Schedule RC-N, item 1.c) and on
the amount of foreclosed 1-4 family residential properties held by the
bank (Schedule RC-M, item 3.b.(3)). However, regardless of whether the
bank owns the loans or services the loans for others, banks do not
report the volume of 1-4 family residential mortgage loans that are in
process of foreclosure, an indicator of potential additions to the
bank's ``other real estate owned'' in the near term. The banking
agencies propose to add two new Memorandum items for the amount of 1-4
family residential mortgage loans owned by the bank and serviced by the
bank that are in foreclosure as of the quarter-end report date.
Mortgage loans in foreclosure would be those for which the legal
process of foreclosure has been initiated, but for which the
foreclosure process has not yet been resolved at quarter-end.\4\ These
Memorandum items would be added to the Call Report loan schedule
(Schedule RC-C, part I) and the servicing, securitization, and asset
sale activities schedule (Schedule RC-S), with the carrying amount
(before any applicable allowance for loan and leases losses) reported
in the former Memorandum item and the principal amount reported in the
latter Memorandum item. Reporting mortgage loans as being in process of
foreclosure will not exempt those loans owned by the bank from being
reported as past due or nonaccrual, as appropriate, in Call Report
Schedule RC-N, and will not exempt those loans serviced by the bank
that are reported in Schedule RC-S, item 1, from being reported as past
due, as appropriate, in that schedule.
\4\ For banks that participate in the Mortgage Bankers
Association's (MBA) National Delinquency Survey, the time at which
mortgage loans would become reportable as being in process of
foreclosure for Call Report purposes would be the same time at which
mortgage loans become reportable as being in ``foreclosure
inventory'' for MBA survey purposes (although the dollar amount of
such loans would be reported in the Call Report while the number of
such loans are reported for MBA survey purposes).
4. Open-end 1-4 Family Residential Mortgage Banking Activities
Banks with $1 billion or more in total assets and smaller
that meet certain criteria currently provide data on originations,
purchases, and sales of closed-end 1-4 family residential mortgage
loans during the quarter arising from their mortgage banking activities
in domestic offices in Call Report Schedule RC-P. These banks also
report the amount of closed-end 1-4 family residential mortgage loans
for sale at quarter-end as well as the noninterest income for the
quarter from the sale, securitization, and servicing of these mortgage
loans. Data (other than for noninterest income) is provided separately
for first lien and junior lien mortgages in Schedule RC-P. About 650
banks complete Schedule RC-P, less than 300 of which have total assets
of less than $1 billion. However, this information does not provide a
complete picture of banks' mortgage banking activities since it
excludes open-end 1-4 family residential mortgages extended under lines
of credit. From year-end 2001 to year-end 2006, bank holdings of 1-4
family residential mortgage loans extended under lines of credit more
than tripled to nearly $470 billion. Accordingly, the banking agencies
are proposing to expand the scope of Schedule RC-P to include separate
items for originations, purchases, and sales of open-end 1-4 family
residential mortgages during the quarter; the amount of such mortgages
held for sale at quarter-end; and noninterest income for the quarter
from the sale, securitization, and servicing of open-end residential
mortgages. When reporting the originations, purchases, sales, and
mortgages held for sale, banks would report both the total commitment
under the line of credit and the principal amount funded under the
line. For banks with less than $1 billion in total assets, the criteria
used to determine whether Schedule RC-P must be completed would be
modified to include both closed-end and open-end 1-4 family residential
mortgage bank activities.
5. Mortgage Repurchases and Indemnifications
As a result of its 1-4 family residential mortgage banking
activities, a bank may be obligated to repurchase mortgage loans that
it has sold or otherwise indemnify the loan purchaser against loss
because of borrower defaults, loan defects, other breaches of
representations and warranties, or for other reasons, thereby exposing
the bank to additional risk. Such information is not currently captured
in Call Report Schedule RC-P. Therefore, the banking agencies propose
to add four new items to Schedule RC-P to collect data on mortgage loan
repurchases and indemnifications during the quarter. For both closed-
end first lien and closed-end junior lien 1-4 family residential
mortgages, banks would report the principal amount of mortgages
repurchased or indemnified. For open-end 1-4 family residential
mortgages, banks would report both the total commitment under the line
of credit and the principal amount funded under the line for mortgages
repurchased or indemnified.
C. Call Report Data on Trading Assets and Liabilities and Other Assets
and Liabilities Accounted for Under a Fair Value Option
1. Reporting of Assets and Liabilities Under the Fair Value Option as
On February 15, 2007, the Financial Accounting Standards
(FASB) issued Statement No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities (FAS 159), which is effective for
fiscal years beginning after November 15, 2007. Earlier adoption of FAS
159 was permitted as of the beginning of an earlier fiscal year,
provided the bank (i) Also adopts all of the requirements of FASB
Statement No. 157, Fair Value Measurements (FAS 157) at the early
adoption date of FAS 159; (ii) has not yet issued a financial statement
or submitted Call Report data for any period of that fiscal year; and
(iii) satisfies certain other conditions. Thus, a bank with a calendar
year fiscal year may have voluntarily adopted FAS 159 as of January 1,
2007. Changes in the fair value of financial assets and liabilities to
which the fair value option is applied are reported in current earnings
as is currently the case for trading assets and liabilities. Since the
fair value option standard allows a bank to elect fair value
measurement through earnings for financial assets and financial
liabilities, the banking agencies understand that some institutions
would like to reclassify certain loans elected to be accounted for
under the fair value option as trading assets. The Call Report
instructions currently do not allow loans held for sale to be reported
as trading assets.
Under FAS 159, all securities within the scope of FASB
No. 115, Accounting for Certain Investments in Debt and Equity
Securities (FAS 115), that a bank has elected to report at fair value
under a fair value option should be classified as trading securities.
Recognizing the provisions of FAS 159, the banking agencies are
proposing the following clarification to the Call Report instructions,
including the Call Report Glossary entry for ``Trading Account.'' Banks
may classify assets (other than securities within the scope of FAS 115
for which a fair value option is elected) and liabilities as trading if
the bank applies fair value accounting, with changes in fair value
reported in current earnings, and manages these assets and liabilities
as trading positions, subject to the controls and applicable regulatory
guidance related to trading activities. For example, a bank would
generally not classify a loan to which it has applied the fair value
option as a trading asset unless the bank holds the loan, which it
manages as a trading position, for one of the following purposes: (1)
For market making activities, including such activities as accumulating
loans for sale or securitization; (2) to benefit from actual or
expected price movements; or (3) to lock in arbitrage profits.
2. Revision of Certain Fair Value Measurement and Fair Value Option
Information in the Call Report
Effective for the March 31, 2007, report date, the banking
started collecting information on certain assets and liabilities
measured at fair value on Call Report Schedule RC-Q, Financial Assets
and Liabilities Measured at Fair Value. Schedule RC-Q was intended to
be consistent with the disclosure and other requirements contained in
FAS 157 and FAS 159. Based on the banking agencies' review of initial
industry practice and inquiries from banks, the agencies have
determined that industry practice for preparing and reporting FAS 157
disclosures has evolved differently than the process for the
information collected on Schedule RC-Q. This divergence has resulted in
unnecessary burden and less transparency for the affected banks in two
First, Schedule RC-Q does not allow banks to separately
each of the three levels of fair value measurements prescribed by FAS
157. The banking agencies included Level 1 fair value measurements in
the total fair value amount in column A of Schedule RC-Q as a means of
minimizing reporting burden. However, the omission of a separate column
on Schedule RC-Q for Level 1 fair value measurements has increased the
time bank managements spend preparing and reviewing Schedule RC-Q
because the fair value disclosures on Schedule RC-Q differ from those
in the banks' other financial statements. Second, Schedule RC-Q does
not allow banks to separately identify any amounts by which the gross
fair values of assets and liabilities reported for Level 2 and 3 fair
value measurements included in columns B and C have been offset
(netted) in the determination of the total fair value reported on the
Call Report balance sheet (Schedule RC), which is disclosed in column A
of Schedule RC-Q. Based on a review of industry practice, these
disclosures are commonly made in the banks' other financial statements.
To reduce confusion related to the differences in industry
and the Call Report, the banking agencies
propose to add two columns to Schedule RC-Q to allow banks to report
any netting adjustments and Level 1 fair value measurements separately
in a manner consistent with industry practice. The new columns would be
captioned column B, Amounts Netted in the Determination of Total Fair
Value Reported on Schedule RC, and column C, Level 1 Fair Value
Measurements. Existing column B, Level 2 Fair Value Measurements, and
column C, Level 3 Fair Value Measurements, of Schedule RC-Q would be
recaptioned as columns D and E, respectively. Column A would remain
The banking agencies have also given further consideration to
information that will be necessary to effectively assess the safety and
soundness of banks that utilize the fair value option pursuant to FAS
159. Based on this assessment, the banking agencies propose to amend
certain other Call Report schedules to improve the agencies' ability to
make comparisons among entities that elect a fair value option and
those that do not. The primary focus of these proposed changes is to
enhance the information provided by banks that elect the fair value
option for loans. The proposed changes are based on the principal
objectives for disclosures and the required disclosures in FAS 159,
which were intended to provide ``information to enable users to
understand the differences between fair value and contractual cash
flows''' and to provide information ``that would have been disclosed if
the fair value option had not been elected.''
Specifically, the banking agencies propose to add items to
RC-C, part I, Loans and Leases, to collect data on the loans reported
in this schedule that are measured at fair value under a fair value
option: (1) The fair value of such loans measured by major loan
category, (2) the unpaid principal balance of such loans by major loan
category, and (3) the aggregate amount of the difference between the
fair value and the unpaid principal balance of such loans that is
attributable (a) to changes in the credit risk of the loan since its
origination and (b) to all other factors. Comments are invited on: (1)
The availability of information necessary to separately report the
aggregate difference between fair value and the unpaid principal that
is attributable to changes in credit risk since origination, (2) the
reliability of estimating the amount attributable to changes in credit
risk since origination, and (3) ways to minimize the burden of
collecting information regarding the effect of changes in credit risk
on the carrying amount of loans measured at fair value.
Because Schedule RC-C, part I, provides data on loans held
investment and for sale, the banking agencies propose to add the same
items to Schedule RC-D, Trading Assets and Liabilities, for loans
measured at fair value under a fair value option that are designated as
held for trading. The banking agencies also propose to add a new item
to Schedule RC-D for ``Other trading liabilities'' in recognition of a
bank's ability to elect to measure certain liabilities at fair value in
accordance with FAS 159 and designate them as held for trading.
The banking agencies propose to add two items to Schedule
Past Due and Nonaccrual Loans, Leases, and Other Assets, to collect
data on the fair value and unpaid principal balance of loans measured
at fair value under a fair value option that are past due or in
nonaccrual status. The items would follow the existing three column
breakdown on Schedule RC-N that banks utilize to report all other past
due and nonaccrual loans. Since trading assets are not currently
reported on Schedule RC-N, the banking agencies propose to add similar
items to Schedule RC-D to collect the total fair value and unpaid
principal balance of loans 90 days or more past due that are classified
as trading. Finally, the banking agencies propose to add items to
Schedule RI, Income Statement, to collect information on: (1) Net gains
(losses) recognized in earnings on assets that are reported at fair
value under a fair value option; (2) estimated net gains (losses) on
loans attributable to changes in instrument-specific credit risk; (3)
net gains (losses) recognized in earnings on liabilities that are
reported at fair value under a fair value option; (4) estimated net
gains (losses) on liabilities attributable to changes in the
instrument-specific credit risk.
3. Other Revisions to the Call Report Information on Trading Assets and
Since 2000, the total trading assets reported by banks has
increased approximately 124 percent to $682 billion or 7 percent of
total industry assets as of March 31, 2007. In terms of concentrations,
approximately 64 percent of total trading assets now are either
reported in the category of ``Trading assets held in foreign offices''
(approximately 53 percent of total trading assets) or ``Other trading
assets in domestic offices'' (approximately 11 percent of total trading
assets). Schedule RC-D, Trading Assets and Liabilities, currently does
not provide any specific detail on the trading assets held in foreign
offices or other trading assets in domestic offices. This limits the
banking agencies' ability to assess bank exposures to market,
liquidity, credit, operational, and other risks posed by these assets.
To appropriately assess the safety and soundness of banks with these
exposures and banks with significant concentrations in trading assets,
the banking agencies propose three revisions to Schedule RC-D.
First, the banking agencies propose to eliminate the single
item for trading assets in foreign offices on the FFIEC 031 Call Report
form and revise the schedule to include separate columns for the
consolidated bank and for domestic offices. This will provide detail on
the assets in foreign offices in a manner consistent with disclosures
about trading assets throughout the bank. Second, the banking agencies
propose to change the reporting threshold for Schedule RC-D. At
present, a bank must complete Schedule RC-D each quarter during a
calendar year if the bank reported a quarterly average for trading
assets of $2 million or more in Schedule RC-K, item 7, for any quarter
of the preceding calendar year.\5\ As proposed, Schedule RC-D would be
completed in any quarter when the quarterly average for trading assets
was $2 million or more in any of the four preceding quarters.\6\ This
change will enable the banking agencies to more quickly and readily
monitor the composition and risk exposures of the trading accounts of
banks that become more significantly involved in trading activities.
During 2006, 118 banks reported average trading assets of $2 million or
more in any quarter of the year.
\5\ This same reporting threshold applies to Schedule RI,
Memorandum item 8, in which banks report a breakdown of trading
revenue by risk exposure, but the banking agencies are not proposing
to change the threshold for this Memorandum item.
\6\ For example, if a bank reported a quarterly average for
trading assets of $2 million or more for the first time in its March
31, 2008, Call Report, it would begin to complete Schedule RC-D in
its June 30, 2008, Call Report. At present, the bank would not begin
to complete Schedule RC-D until its March 31, 2009, Call Report.
Third, the banking agencies propose to require banks with
trading assets of $1 billion or more in any of the four preceding
quarters to provide additional detail on trading assets and liabilities
currently included in the ``other'' trading asset and liability
categories. These banks would provide additional breakouts for asset-
backed securities by major category, collateralized debt obligations
(both synthetic and non-synthetic), retained
interests in securitizations, equity securities (both with and without
readily determinable fair values), and loans held pending
securitization. In addition, these banks would be required to provide a
description of and report the fair value of any type of trading asset
or liability in the ``Other trading assets'' and ``Other trading
liabilities'' categories that is greater than $25,000 and exceeds 25
percent of the amount reported in that trading category. This threshold
is comparable to the threshold that all banks use for providing
additional detail on other assets and other liabilities reported in
Schedules RC-F and RC-G, respectively.
D. Reporting Credit Derivative Data for Risk-Based Capital Purposes in
the Call Report
Approximately 50 banks report that they have entered into
derivative contracts either as a guarantor or beneficiary. For credit
derivative contracts that are covered by the banking agencies' risk-
based capital standards, the Call Report instructions require banks to
report these credit derivatives in item 52, ``All other off-balance
sheet liabilities,'' of Schedule RC-R, Regulatory Capital, unless the
credit derivatives represent recourse arrangements or direct credit
substitutes, which are reported in one of the preceding items in the
Derivatives and Off-Balance Sheet Items section of the schedule. This
reporting approach was developed to enable banks that sold credit
protection and held the credit derivative to apply a 100 percent risk
weight to the notional amount consistent with the risk-based capital
treatment of standby letters of credit and guarantees. At present,
Schedule RC-R, item 54, ``Derivative contracts,'' specifically excludes
credit derivatives and does not include a 100 percent risk weight
column because the maximum risk weight on the counterparty credit risk
charge for other types of derivatives is 50 percent.
However, this reporting approach does not consider that some
derivative positions are subject to a counterparty credit risk charge,
which is calculated for other derivative positions in item 54, even if
the credit derivatives are held by a bank that is subject to the market
risk capital rules. The banking agencies also understand that credit
derivatives often are included in bilateral netting arrangements. When
derivatives are subject to such an arrangement, the instructions to
Schedule RC-R, item 54, permit a bank to report a net amount
representing its exposure to a counterparty for all derivative
transactions under the bilateral netting arrangement with that
counterparty. However, by instructing a bank not to report its
counterparty credit risk exposure for credit derivatives in Schedule
RC-R, item 54, the banking agencies are, in effect, requiring the bank
to separate its exposures resulting from credit derivatives from its
net exposure to a counterparty. As a consequence, the bank is unable to
recognize the netting benefit in its risk-based capital calculation.
The banking agencies are proposing to modify the Call Report
instructions for Schedule RC-R to allow the reporting of the credit
equivalent amount of credit derivatives subject to the counterparty
credit risk charge in item 54 of the schedule. In addition, the banking
agencies would extend the existing 100 percent risk weight column in
Schedule RC-R to item 54, ``Derivative contracts.''
E. Revision of Reporting Threshold for Other Noninterest Income and
Other Noninterest Expense in the Call Report
In 2001, the banking agencies changed the threshold for
detail on the components of ``Other noninterest income,'' included in
Schedule RI, item 5.l, and ``Other noninterest expense,'' reported in
Schedule RI, item 7.d, to require banks separately to disclose on
Schedule RI-E, Explanations, the description and amount of any
component included in other noninterest income and other noninterest
expense that exceeded 1 percent of the sum of interest income and
noninterest income. Since that time, the banking agencies have
monitored bank disclosures of the types of noninterest income and
noninterest expenses in excess of this threshold to assess the safety
and soundness considerations associated with the changing sources of
these income and expense streams. Based on this review, the banking
agencies have determined that the current threshold does not provide
sufficient information on the sources of bank noninterest income and
noninterest expenses to adequately address their safety and soundness
concerns. As a result, the banking agencies are proposing to change the
threshold for reporting detail information on the components of other
noninterest income and other noninterest expense.
Prior to 2001, banks were required to separately disclose the
description and amount of any item included in other noninterest income
that exceeded 10 percent of other noninterest income and any item
included in other noninterest expense that exceeded 10 percent of other
noninterest expense. The banking agencies have determined that
thresholds based on a percentage of other noninterest income and other
noninterest expense are more relevant criteria for determining when a
bank should provide more detail. The banking agencies propose to change
the threshold to require banks to separately disclose the description
and amount of any item included in other noninterest income that
exceeds 3 percent of other noninterest income and any item included in
other noninterest expense that exceeds 3 percent of other noninterest
expense. This percentage is intended to initially result in a reporting
threshold that is comparable to the current 1 percent of interest
income plus noninterest income threshold. It is also expected to
provide more relevant disclosures than the current threshold as the
amounts reported in noninterest income and noninterest expense change
In addition, based on a review of recent bank disclosures of
components of other noninterest income and other noninterest expense
reported in Schedule RI-E, the banking agencies plan to add one new
preprinted caption for other noninterest income and four new preprinted
captions for other noninterest expense to help banks comply with the
disclosure requirements. As with the existing preprinted captions for
other noninterest income and other noninterest expense, banks are only
required to use these descriptions and provide the amounts for these
components when the amounts included in other noninterest income or
other noninterest expense exceed the reporting threshold. The new
preprinted other noninterest income caption is bank card/credit card
interchange fees. The new preprinted noninterest expense captions are:
(1) Accounting and auditing expenses, (2) consulting and advisory
expenses, (3) automated teller machine (ATM) and interchange expenses,
and (4) telecommunications expenses.
F. Reporting Brokered Time Deposits Participated Out by the Broker in
the Call Report
The banking agencies revised the instructions for Schedule
Memorandum items 2.b, ``Total time deposits of less than $100,000,''
and 2.c, ``Total time deposits of $100,000 or more,'' in March 2007.
This was done so that brokered time deposits issued in denominations of
$100,000 or more that are participated out by the broker in shares of
less than $100,000 would be reported in the former rather than the
latter Memorandum item. However, the
banking agencies did not make a conforming instructional revision to
Schedule RC-E, Memorandum items 1.c.(1) and 1.c.(2), on fully insured
brokered deposits. This means that these participated brokered time
deposits continue to be reported as brokered deposits of greater than
$100,000 rather than brokered deposits of less than $100,000.
Consistent reporting of these brokered time deposits across these
Schedule RC-E Memorandum items is needed for purposes of measuring a
bank's non-core liabilities. Therefore, the banking agencies are
proposing to revise Schedule RC-E, Memorandum items 1.c.(1) and
1.c.(2), so that brokered time deposits issued in denominations of
$100,000 or more that are participated out by the broker in shares of
less than $100,000 are reported in Memorandum item 1.c.(1) as fully
insured brokered deposits of less than $100,000.
III. Discontinuance of Mailing of Call Report Forms and Instructions
The banking agencies are planning to discontinue the mailing
report forms and instructions for the FFIEC 031 and FFIEC 041. In March
2006, the banking agencies advised banks that beginning in June 2006
they would no longer mail sample Call Report forms to banks each
quarter. At that time, the agencies stated that they planned to mail
sample forms to banks only in those quarters when significant revisions
are made to the report forms. The banking agencies have continued to
mail updates to the Call Report instruction book in those quarters when
such updates have been issued. Based on their current practice, the
banking agencies' next mailing would take place in March 2008.
The Call Report forms and their instructions are available on
FFIEC's Web site (http://www.ffiec.gov/ffiec_report_forms.htm) and the
FDIC's Web site (http://www.fdic.gov/regulations/resources/call/
instructions are completed. A paper copy of the report forms and
instructions can be printed from the Web sites. In addition, banks that
use Call Report software generally can print paper copies of blank
forms from their software. The banking agencies request comment on this
IV. Request for Comment
Public comment is requested on all aspects of this joint
Comments are invited on:
(a) Whether the proposed revisions to the Call Report and TFR
collections of information are necessary for the proper performance of
the agencies' functions, including whether the information has
(b) The accuracy of the agencies' estimates of the burden of
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
maintenance, and purchase of services to provide information.
Comments submitted in response to this joint notice will be
among the agencies and will be summarized or included in the agencies'
requests for OMB approval. All comments will become a matter of public
Dated: September 4, 2007.
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, September
Jennifer J. Johnson,
Secretary of the Board.
Dated at Washington, DC, this 31st day of August, 2007.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Dated: August 30, 2007.
Senior Deputy Chief Counsel, Regulations and Legislation Division,
Office of Thrift Supervision.
[FR Doc. 07-4420 Filed 9-10-07; 8:45 am]