Proposed Revisions to the Reports of Condition and Income (Call Report)

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FDIC Financial Institution Letters › Proposed Revisions to the Reports of Condition and Income (Call Report)

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49363

Federal Register / Vol. 70, No. 162 / Tuesday, August 23, 2005 / Notices

physical demonstrations will be

included. If physical demonstrations are

conducted, sessions may extend into

September 22, 2005.

I. Introduction

II. Background Information on the San

Angelo Test Facility and Treadwear Test

Course

III. FMVSS No. 138 Final Rule Highlights

IV. OVSC Test Procedure TP–138 Content

A. Overview of Suggested Test Equipment

and Instrumentation

B. Test Preparation Requirements

C. Test Execution

V. Vehicle Manufacturer Test Specification

Form

VI. Issues with Test Procedure TP–138

VII. Questions & Answers

VIII. Simulated and/or Physical

Demonstration of a TPMS-Equipped

Vehicle Using the Test Procedures

Issued: August 17, 2004.

Claude H. Harris,

Director, Office of Vehicle, Safety

Compliance.

Editorial Note: This document was

received at the Office of the Federal Register

August 17, 2005.

[FR Doc. 05–16631 Filed 8–22–05; 8:45 am]

BILLING CODE 4910–59–P

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the

Currency

FEDERAL RESERVE SYSTEM

FEDERAL DEPOSIT INSURANCE

CORPORATION

Proposed Agency Information

Collection Activities; 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: Joint notice and request for

comment.

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

int notice and request for

comment.

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. The Federal

Financial Institutions Examination

Council (FFIEC), of which the agencies

are members, has approved the

agencies’ publication for public

comment of proposed revisions to the

Consolidated Reports of Condition and

Income (Call Report), 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 October 24, 2005.

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

57–0081] 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://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

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:

• http://www.FDIC.gov/regulations/

laws/federal/propose.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

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:

• http://www.FDIC.gov/regulations/

laws/federal/propose.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/propose.html including any

personal information provided.

Comments may be inspected at the FDIC

Public Information Center, Room 100,

801 17th Street, NW., between 9 a.m.

and 4:30 p.m. on business days.

A copy of the comments may also be

submitted to the OMB desk officer for

the agencies: Mark Menchik, Office of

Information and Regulatory Affairs,

Office of Management and Budget, New

Executive Office Building, Room 10235,

Washington, DC 20503, or electronic

mail to mmenchik@omb.eop.gov.

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 Dixon, (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

ficers

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 Dixon, (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.

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Federal Register / Vol. 70, No. 162 / Tuesday, August 23, 2005 / Notices

SUPPLEMENTARY INFORMATION: The

agencies are proposing 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: Call Report: 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:

1,950 national banks.

Estimated Time per Response: 43.80

burden hours (represents a decrease of

4.47 hours associated with testing and

enrollment in the Central Data

Repository (CDR) and a net increase of

1.81 hours for proposed new items and

deletions).

Estimated Total Annual Burden:

341,621 burden hours.

Board:

OMB Number: 7100–0036.

Estimated Number of Respondents:

919 State member banks

national banks.

Estimated Time per Response: 43.80

burden hours (represents a decrease of

4.47 hours associated with testing and

enrollment in the Central Data

Repository (CDR) and a net increase of

1.81 hours for proposed new items and

deletions).

Estimated Total Annual Burden:

341,621 burden hours.

Board:

OMB Number: 7100–0036.

Estimated Number of Respondents:

919 State member banks.

Estimated Time per Response: 50.38

burden hours (represents a decrease of

4.01 hours associated with testing and

enrollment in the CDR and a net

increase of 2.01 hours for proposed new

items and deletions).

Estimated Total Annual Burden:

185,197 burden hours.

FDIC:

OMB Number: 3064–0052.

Estimated Number of Respondents:

5,243 insured state nonmember banks.

Estimated Time per Response: 34.73

burden hours (represents a decrease of

4.16 hours associated with testing and

enrollment in the CDR and a net

increase of 1.79 hours for proposed new

items and deletions).

Estimated Total Annual Burden:

728,274 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 proposed 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 proposed

changes apply

er quarter, depending on an

individual institution’s circumstances.

Furthermore, the effect on reporting

burden of the proposed 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 proposed

changes apply. This proposal would add

several new data items to the Call

Report, revise certain existing items,

eliminate a limited number of items,

and remove the burden hours associated

with testing and enrollment in the new

CDR system, which had been added to

the Call Report burden estimate in 2004,

because these CDR activities will be

completed prior to the implementation

of the proposed revisions. Since the

reduction in burden related to the CDR

exceeds the net increase in burden from

the proposed revisions to the content of

the Call Report, the proposal as a whole

would produce a net decrease in

reporting burden for banks of all sizes.

Nevertheless, the proposed new items

and revisions of existing items, taken

together, would have an effect on all

banks. Therefore, as discussed more

fully below in Section I. Overview, the

agencies encourage banks and other

interested parties to comment on such

matters as data availability, data

alternatives, and reporting thresholds

for each proposal for new or revised

data. Such comments will assist the

agencies in determining the content of

the final set of revisions to the Call

Report. For purposes of this proposal,

the following burden estimates include

the effect of all of the proposed

revisions without anticipating any

possible modifications resulting from

the public comment process that may

lessen the impact of the revisions on

some or all banks.

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

burden estimates include

the effect of all of the proposed

revisions without anticipating any

possible modifications resulting from

the public comment process that may

lessen the impact of the revisions on

some or all banks.

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

The agencies last revised the form and

content of the Call Report in a manner

that significantly affected a substantial

percentage of banks in March 2002. The

revisions that have taken effect since

March 2002 (i.e., in March 2003 and

June 2005) were narrowly focused on

certain specific activities in order to

improve the information available to the

agencies for those banks engaging in

these activities. These focused revisions

meant that the new or revised Call

Report items pertaining to each of these

activities were directly applicable to

small percentages of banks rather than

to most or all banks

, in March 2003 and

June 2005) were narrowly focused on

certain specific activities in order to

improve the information available to the

agencies for those banks engaging in

these activities. These focused revisions

meant that the new or revised Call

Report items pertaining to each of these

activities were directly applicable to

small percentages of banks rather than

to most or all banks.

During this recent period of limited

revisions to the Call Report, the FFIEC

and the agencies having been working

toward the October 1, 2005,

implementation of the CDR, the

Internet-based system they are

developing to modernize and streamline

how Call Report data are collected,

validated, managed, and distributed. At

the same time, the agencies have also

been carefully evaluating their

information needs. In this regard, the

agencies recognize that the Call Report

imposes reporting burden, which is a

component of the overall regulatory

burden that banks face. Another

contributor to this overall burden is the

examination process, particularly on-

site examinations during which bank

management and staff spend time and

effort responding to inquiries and

requests for information that are

designed to assist examiners in

evaluating the condition and risk profile

of the institution. The amount of

attention that examiners initially direct

to the various risk areas of the bank

under examination is, in large part,

determined from Call Report data. These

data, and analytical reports generated

from Call Report data such as the

Uniform Bank Performance Report,

assist examiners in making their

preliminary assessments of risks and in

scoping efforts during the planning

phase of the examination process

examiners initially direct

to the various risk areas of the bank

under examination is, in large part,

determined from Call Report data. These

data, and analytical reports generated

from Call Report data such as the

Uniform Bank Performance Report,

assist examiners in making their

preliminary assessments of risks and in

scoping efforts during the planning

phase of the examination process.

The more risk-focused the

information available to examiners from

a bank’s Call Report, the better the job

examiners can do before the start of

their on-site work in making their

preliminary assessments as to whether

each of the risk areas of the bank

presents greater than normal, normal, or

less than normal risk. The degree of

perceived risk determines the extent of

the examination procedures, and the

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Federal Register / Vol. 70, No. 162 / Tuesday, August 23, 2005 / Notices

1 In addition, a smaller bank with significant

involvement in these activities, as determined by its

primary federal regulator, could be directed by its

regulator to report this information.

resultant regulatory burden, that are

initially planned for each risk area. If

the outcome of these procedures begins

to reveal a greater than expected level of

risk in a particular risk area, the

examination scope and procedures are

adjusted accordingly, adding to the

regulatory burden imposed on the bank.

Call Report data are also a vital source

of information for the agencies’ off-site

examination and surveillance activities.

Among their benefits, these activities

aid in determining whether the

frequency of a bank’s examination cycle

should remain at maximum allowed

time intervals, thereby lessening overall

regulatory burden

cordingly, adding to the

regulatory burden imposed on the bank.

Call Report data are also a vital source

of information for the agencies’ off-site

examination and surveillance activities.

Among their benefits, these activities

aid in determining whether the

frequency of a bank’s examination cycle

should remain at maximum allowed

time intervals, thereby lessening overall

regulatory burden. More risk-focused

Call Report data enhance the agencies’

ability to assess whether an institution

is experiencing changes in its risk

profile that warrant immediate follow-

up, which may include accelerating the

timing of an on-site examination.

In developing this proposal, the

agencies have considered a range of

potential information needs,

particularly in the areas of credit risk,

liquidity, and liabilities, and have

identified those additions to the Call

Report that are believed to be most

critical and relevant to the agencies as

they seek to fulfill their supervisory

responsibilities. At the same time, the

agencies have identified certain existing

Call Report data that are no longer

sufficiently critical or useful to warrant

their continued collection from either

all banks or banks that meet certain

criteria (e.g., an asset size threshold). On

balance, the agencies recognize that the

reporting burden that would result from

the addition to the Call Report of all of

the new items discussed in this

proposal would not be fully offset by the

proposed elimination of, or

establishment of reporting thresholds

for, a limited number of other Call

Report items, thereby resulting in a net

increase in reporting burden.

Nevertheless, when viewing these

proposed revisions to the Call Report

within a larger context, they are

intended to enhance the agencies’ on-

and off-site supervision activities,

which should help to control the overall

regulatory burden on banks

tablishment of reporting thresholds

for, a limited number of other Call

Report items, thereby resulting in a net

increase in reporting burden.

Nevertheless, when viewing these

proposed revisions to the Call Report

within a larger context, they are

intended to enhance the agencies’ on-

and off-site supervision activities,

which should help to control the overall

regulatory burden on banks.

Thus, the agencies are requesting

comment on the following proposed

revisions to the Call Report, which

would take effect as of March 31, 2006.

For each of the proposed revisions of

existing items or proposed new items,

the agencies are particularly interested

in comments from banks on whether the

information that is proposed to be

collected is readily available from

existing bank records. The agencies also

invite comment on whether there are

particular proposed revisions for which

the new data would be of limited

relevance for purposes of assessing risks

in a specific segment of the banking

industry. In such cases, comments are

requested on what criteria, e.g., an asset

size threshold or some other measure,

should be established for identifying the

specific segment of the banking industry

that should be required to report the

proposed new information. Finally, the

agencies seek comment on whether, for

a particular proposed revision, there is

an alternative set of information that

could satisfy the agencies’ data needs in

that area and be less burdensome for

banks to report than the new or revised

items that the agencies have proposed.

The agencies will consider all of the

comments they receive as they

formulate a final set of revisions to the

Call Report for implementation in

March 2006.

rticular proposed revision, there is

an alternative set of information that

could satisfy the agencies’ data needs in

that area and be less burdensome for

banks to report than the new or revised

items that the agencies have proposed.

The agencies will consider all of the

comments they receive as they

formulate a final set of revisions to the

Call Report for implementation in

March 2006.

(1) Burden-reducing revisions:

• Eliminating Schedule RC-O,

Memorandum item 2, ‘‘Estimated

amount of uninsured deposits,’’ for

banks with less than $1 billion in assets;

• Collecting only the total amount of

a bank’s holdings of asset-backed

securities in Schedule RC–B from banks

that only have domestic offices and are

less than $1 billion in assets (but

continuing to collect the breakdown by

type of asset-backed security from all

other banks);

• Eliminating items for reporting the

impact on income of derivatives held for

purposes other than trading (Schedule

RI, Memorandum items 9.a through 9.c);

and

• Eliminating items pertaining to

bankers acceptances (Schedule RC,

items 9 and 18; Schedule RC–H, items

1 and 2; and Schedule RC–L, item 5).

(2) Revisions of existing items and

new items:

• Splitting ‘‘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 (Schedule

RC–C, part I, item 1.a; Schedule RC–N,

item 1.a; Schedule RI–B, part I, item 1.a;

and Schedule RC–L, item 1.c.1);

• Splitting loans ‘‘Secured by

nonfarm nonresidential properties’’

(commercial real estate loans) into

separate categories for owner-occupied

and other commercial real estate

(Schedule RC–C, part I, item 1.e;

Schedule RC–N, item 1.e; Schedule RI–

B, part I, item 1.e);

• Replacing the breakdown of ‘‘Lease

financing receivables’’ between leases

from U.S. and non-U.S

ule RC–L, item 1.c.1);

• Splitting loans ‘‘Secured by

nonfarm nonresidential properties’’

(commercial real estate loans) into

separate categories for owner-occupied

and other commercial real estate

(Schedule RC–C, part I, item 1.e;

Schedule RC–N, item 1.e; Schedule RI–

B, part I, item 1.e);

• Replacing the breakdown of ‘‘Lease

financing receivables’’ between leases

from U.S. and non-U.S. addressees with

a breakdown of leases between retail

(consumer) leases and commercial

leases for banks with foreign offices or

with domestic offices only and $300

million or more in total assets (Schedule

RC–C, part I, items 10.a and 10.b;

Schedule RC–N, items 8.a and 8.b on

the FFIEC 031 and Memorandum item

3.d on the FFIEC 041; and Schedule RI–

B, part I, items 8.a and 8.b on the FFIEC

031 and Memorandum item 2.d on the

FFIEC 041);

• Collecting further information on

Federal Home Loan Bank advances,

which are currently reported in

Schedule RC–M, item 5.a, by adding

breakdowns of advances by type and by

next repricing date and by splitting the

existing item for advances with a

remaining maturity of more than three

years into two items;

• Adding two items to the past due

and nonaccrual assets schedule

(Schedule RC–N) for ‘‘Additions to

nonaccrual assets during the quarter’’

and ‘‘Nonaccrual assets sold during the

quarter;’’

• Collecting additional information

on credit derivatives by adding a

breakdown by type of contract to the

notional amounts currently reported in

Schedule RC–L, item 7, along with new

items for the maximum amounts

payable and receivable on credit

derivatives; adding credit derivatives to

the existing maturity distribution of

derivatives in Schedule RC–R,

Memorandum item 2; adding credit

derivatives to the breakdown of trading

revenue by type of exposure currently

collected in Schedule RI, Memorandum

item 8; and adding a new income

statement Memorandum item for the

effect on earnings of credit derivatives

held for purposes other than trading;

• Adding a n

derivatives to

the existing maturity distribution of

derivatives in Schedule RC–R,

Memorandum item 2; adding credit

derivatives to the breakdown of trading

revenue by type of exposure currently

collected in Schedule RI, Memorandum

item 8; and adding a new income

statement Memorandum item for the

effect on earnings of credit derivatives

held for purposes other than trading;

• Adding a new Schedule RC–P to

collect data pertaining to closed-end 1–

4 family residential mortgage banking

activities for banks with $1 billion or

more in total assets,1 including quarter-

end loans held for sale and quarterly

originations, purchases, and sales,

segregated between first and junior

liens, and noninterest income from

these activities;

• Changing the category of

noninterest income in which banks

report income from certain sales of

annuities from ‘‘Income from other

insurance activities’’ (Schedule RI, item

5.h.(2)) to ‘‘Investment banking,

advisory, brokerage, and underwriting

fees and commissions’’ (Schedule RI,

item 5.d);

• Splitting the income statement item

for ‘‘Investment banking, advisory,

brokerage, and underwriting fees and

commissions’’ (Schedule RI, item 5.d)

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Federal Register / Vol. 70, No. 162 / Tuesday, August 23, 2005 / Notices

2 In Schedule RC–B, the asset-backed securities

reported in items 5.a through 5.f exclude mortgage-

backed securities, which are reported separately in

items 4.a(1) through 4.b(3) of the schedule

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2 In Schedule RC–B, the asset-backed securities

reported in items 5.a through 5.f exclude mortgage-

backed securities, which are reported separately in

items 4.a(1) through 4.b(3) of the schedule.

into separate items for fees and

commissions from securities brokerage,

fees and commissions from sales of

annuities, and other fees and

commissions;

• Adding new items for the amounts

included in ‘‘Federal funds purchased

(in domestic offices)’’ (Schedule RC,

item 14.b) and ‘‘Other borrowings’’

(Schedule RC–M, item 5.b) that are

secured;

• Adding an item to Schedule RC–F,

‘‘Other Assets,’’ for the carrying value of

the bank’s life insurance assets, which

would replace the item in this schedule

for reporting such assets if they exceed

25 percent of ‘‘All other assets’’;

• Revising Schedule RI–D, ‘‘Income

from International Operations,’’ on the

FFIEC 031 to focus on activity

conducted in foreign offices; and

• Revising the scope of Schedule RC–

S, column G, ‘‘All Other Loans and All

Leases,’’ to cover securitizations and

credit-enhanced asset sales involving

assets other than loans and leases.

(3) Other matters:

• Clarifying the instructions to

Schedule RC–S, Memorandum item 2,

to indicate that the servicing of home

equity lines should be included in the

servicing of ‘‘Other financial assets’’

rather than 1–4 family residential

mortgages; and

• Revising the officer declaration and

director attestation requirements and

signatures that apply to the Call Report.

These proposed revisions to the Call

Report, which have been approved for

publication by the FFIEC for the

purpose of soliciting comments from

banks and other interested parties, are

discussed in more detail below.

Type of Review: Revision and

extension of currently approved

collections

ficer declaration and

director attestation requirements and

signatures that apply to the Call Report.

These proposed revisions to the Call

Report, which have been approved for

publication by the FFIEC for the

purpose of soliciting comments from

banks and other interested parties, are

discussed in more detail below.

Type of Review: Revision and

extension of currently approved

collections.

As mentioned above, the agencies

plan to implement the proposed

changes as of the March 31, 2006, report

date. Nonetheless, as is customary for

Call Report changes, institutions are

advised that they may report reasonable

estimates for any new or revised item in

their reports for March 31, 2006, if the

information to be reported is not readily

available. In addition, the specific

wording of the captions for the new and

revised Call Report items discussed in

this proposal and the numbering of

these items in the report should be

regarded as preliminary.

II. Discussion of Proposed Revisions

A. Burden-Reducing Revisions

1. Uninsured Deposits

All banks have been required to report

the ‘‘Estimated amount of uninsured

deposits’’ in Schedule RC–O,

Memorandum item 2, since March 2002.

To limit reporting burden, the FFIEC

and the agencies advised banks that

they were not expected to modify their

information systems or acquire new

systems solely for purposes of making

this estimate. Rather, banks were

instructed to base their estimates of the

uninsured portion of their deposits on

data that are readily available from the

information systems and other records

the bank has in place. Nonetheless,

smaller banks continue to indicate that

they find this Memorandum item

burdensome and, as a consequence,

many resort to reporting a simple

estimate based on the number and

amount of their deposit accounts of

more than $100,000, the current limit of

deposit insurance

sits on

data that are readily available from the

information systems and other records

the bank has in place. Nonetheless,

smaller banks continue to indicate that

they find this Memorandum item

burdensome and, as a consequence,

many resort to reporting a simple

estimate based on the number and

amount of their deposit accounts of

more than $100,000, the current limit of

deposit insurance.

Because banks already report the

number and amount of such deposit

accounts in Schedule RC–O,

Memorandum item 1, the agencies are

able to calculate the same simple

estimate of uninsured deposits as these

banks have done. A comparison of the

amounts banks have reported for their

estimated uninsured deposits in

Memorandum item 2 with a simple

estimate calculated by the agencies from

the information reported in

Memorandum item 1 revealed

insignificant differences between the

two figures for banks with less than $1

billion in assets, which currently hold

only about 20 percent of banks’ total

domestic deposits. Only at larger

institutions were the differences

between banks’ reported estimates and

the calculated simple estimate

significant enough to have a potential

effect on the estimate of insured

deposits used by the FDIC in the

determination of deposit insurance

assessment premiums. Accordingly, the

agencies are proposing that banks with

less than $1 billion in total assets would

no longer be required to complete

Schedule RC–O, Memorandum item 2.

Banks with $1 billion or more in total

assets would continue to report the

‘‘Estimated amount of uninsured

deposits’’ in this Memorandum item.

ed by the FDIC in the

determination of deposit insurance

assessment premiums. Accordingly, the

agencies are proposing that banks with

less than $1 billion in total assets would

no longer be required to complete

Schedule RC–O, Memorandum item 2.

Banks with $1 billion or more in total

assets would continue to report the

‘‘Estimated amount of uninsured

deposits’’ in this Memorandum item.

2. Holdings of Asset-Backed Securities

In Schedule RC–B, ‘‘Securities,’’ the

agencies collect a six-way breakdown of

banks’ holdings of asset-backed

securities (not held for trading

purposes) in items 5.a through 5.f.2

Because banks with domestic offices

only and less than $1 billion in total

assets hold only a nominal percentage of

the industry’s investments in asset-

backed securities, the agencies have

determined that continuing to request a

breakdown by category of these

institutions’ limited holdings is no

longer warranted. Instead, these banks

would report only their total holdings of

asset-backed securities in Schedule RC–

B. However, all banks with foreign

offices and other banks with $1 billion

or more in total assets would continue

to report the existing breakdown of their

asset-backed securities in this schedule.

3. Impact of Derivatives on Income

Banks with foreign offices or with

$100 million or more in total assets

report the effect that their use of

derivatives outside the trading account

has had on their year-to-date interest

income, interest expense, and net

noninterest income in income statement

(Schedule RI) Memorandum items 9.a

through 9.c. The amounts reported in

these Memorandum items are aggregates

of all nontrading derivative positions

and combine derivatives that may have

substantially different underlying risk

exposures, e.g., interest rate risk, foreign

exchange risk, and credit risk. In

recognition of the new data on credit

derivatives that the agencies are

proposing to collect (see Section II.B.6

s 9.a

through 9.c. The amounts reported in

these Memorandum items are aggregates

of all nontrading derivative positions

and combine derivatives that may have

substantially different underlying risk

exposures, e.g., interest rate risk, foreign

exchange risk, and credit risk. In

recognition of the new data on credit

derivatives that the agencies are

proposing to collect (see Section II.B.6.

below), the agencies have identified the

three income statement Memorandum

items as being of lesser utility and

propose to delete them.

4. Bankers Acceptances

The Call Report balance sheet

(Schedule RC) has long required banks

to separately disclose the amount of

their ‘‘Customers’’ liability to this bank

on acceptances outstanding’’ (item 9)

and their ‘‘Bank’s liability on

acceptances executed and outstanding’’

(item 18). For banks with foreign offices,

corresponding amounts are disclosed for

acceptance assets and liabilities in

domestic offices (Schedule RC–H, items

1 and 2). In addition, banks with foreign

offices or $100 million or more in total

assets also report the amount of

‘‘Participations in acceptances conveyed

to others by the reporting bank’’

(Schedule RC–L, item 5). Over time, the

volume of acceptance assets and

liabilities as a percentage of industry

assets and liabilities has declined

substantially to a nominal amount, with

only a small number of banks reporting

these items. The agencies are proposing

to delete these five items and banks

would be instructed to include any

acceptance assets and liabilities in

‘‘Other assets’’ and ‘‘Other liabilities,’’

respectively, on the Call Report balance

sheet.

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y a small number of banks reporting

these items. The agencies are proposing

to delete these five items and banks

would be instructed to include any

acceptance assets and liabilities in

‘‘Other assets’’ and ‘‘Other liabilities,’’

respectively, on the Call Report balance

sheet.

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Federal Register / Vol. 70, No. 162 / Tuesday, August 23, 2005 / Notices

B. Revisions of Existing Items and New

Items

1. Construction Land Development, and

Other Land Loans

Construction, land development, and

other land lending are highly

specialized activities with inherent risks

that must be managed and controlled to

ensure that these activities remain

profitable. Management’s ability to

identify, measure, monitor, and control

the risks from these types of loans

through effective underwriting policies,

systems, and internal controls is crucial

to a sound lending program. In areas of

the country that experience high levels

of construction activity and an

extremely competitive lending

environment, these factors often lead to

thinner profit margins on CLD&OL loans

and looser underwriting standards.

Moreover, the risk profiles, including

loss rates, of CLD&OL loans vary across

loan types because of differences in

such factors as underwriting and

repayment source. The agencies’ real

estate lending standards recognize these

differences in risk, for example, by

setting higher supervisory loan-to-value

limits for 1–4 family residential

construction loans than for other

construction loans.

The agencies have seen substantial

growth in the volume of CLD&OL loans

in recent years. At commercial banks

and state-chartered savings banks, these

loans grew more rapidly than loan

portfolios as a whole during 2003 and

2004

ferences in risk, for example, by

setting higher supervisory loan-to-value

limits for 1–4 family residential

construction loans than for other

construction loans.

The agencies have seen substantial

growth in the volume of CLD&OL loans

in recent years. At commercial banks

and state-chartered savings banks, these

loans grew more rapidly than loan

portfolios as a whole during 2003 and

2004. The faster growth in CLD&OL

lending than overall lending occurred

each year not only for institutions as a

whole, but also for banks with less than

$100 million in assets, banks with $100

million to $1 billion in assets, and for

banks with more than $1 billion in

assets. At year-end 2004, banks’

CLD&OL loans totaled more than $300

billion, up nearly 40 percent from their

level of $217 billion two years earlier.

In addition, at banks with less than $100

million in assets, CLD&OL loans were a

higher percentage of total loans and

leases at year-end 2004 (7 percent) than

at banks with more than $1 billion in

assets (less than 5 percent). Nearly 88

percent of all banks reported holding

CLD&OL loans at year-end 2004,

including almost 79 percent of banks

with less than $100 million in assets

and more than 91 percent of banks with

more than $1 billion in assets.

In the Thrift Financial Report (TFR)

(Form 1313, OMB No. 1550–0023) that

the Office of Thrift Supervision (OTS)

collects from the savings associations

under its supervision, these institutions

are required to report the amount of

construction loans for 1–4 family

residential properties separately from

other construction loans. Charge-offs

and recoveries on 1–4 family residential

property construction loans are also

reported separately from other

construction loan charge-offs and

recoveries in the TFR

lects from the savings associations

under its supervision, these institutions

are required to report the amount of

construction loans for 1–4 family

residential properties separately from

other construction loans. Charge-offs

and recoveries on 1–4 family residential

property construction loans are also

reported separately from other

construction loan charge-offs and

recoveries in the TFR. The National

Association of Home Builders (NAHB),

in letters submitted to the agencies in

January 2003 and May 2005 in response

to the agencies’ requests for comment on

past proposed revisions to the Call

Report, has requested that the agencies

‘‘consider itemizing the construction

and land development lending data that

are currently aggregated’’ to distinguish

between different types of construction

loans. The NAHB noted that their

analysis of TFR data on construction

loans revealed that residential

construction loans ‘‘perform much

better than most other real estate loans’’

and expressed concern that the ‘‘current

lack of credible activity and

performance data’’ on construction

lending in the Call Report ‘‘impedes the

Agencies’’ ability to accurately evaluate

the level of risk associated with such

activities.’’

The agencies agree with the NAHB

that it would be beneficial to improve

their ability to monitor the construction

lending activities of individual banks

and the industry as a whole by

obtaining separate data on 1–4 family

residential CLD&OL loans and all other

CLD&OL loans, particularly in light of

the substantial growth in this type of

lending by banks. Such information

would also enable the agencies to

identify institutions that significantly

shift from 1–4 family residential

construction lending to other

construction lending, and vice versa,

and to identify when institutions that

had been solely 1–4 family residential

construction lenders move into other

types of construction lending

ubstantial growth in this type of

lending by banks. Such information

would also enable the agencies to

identify institutions that significantly

shift from 1–4 family residential

construction lending to other

construction lending, and vice versa,

and to identify when institutions that

had been solely 1–4 family residential

construction lenders move into other

types of construction lending.

Therefore, the agencies are proposing

to split the existing item for

‘‘Construction, land development, and

other land loans’’ in the loan schedule

(Schedule RC–C, part I, item 1.a), the

past due and nonaccrual schedule

(Schedule RC–N, item 1.a), and the

charge-offs and recoveries schedule

(Schedule RI–B, part I, item 1.a) 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.

2. Loans Secured by Nonfarm

Nonresidential Properties

Loans secured by nonfarm

nonresidential properties (commercial

real estate loans) include loans made to

the occupants of such properties and

loans to non-occupant investors. These

two types of commercial real estate

loans present different risk profiles.

Loans secured by owner-occupied

properties perform more like

commercial and industrial loans

because the success of the occupant’s

business is the primary source of

repayment. To ensure repayment of

loans to non-occupant investors, the

property must generate sufficient cash

flow from the parties who are the

occupants.

The volume of commercial real estate

loans at banks has also increased

significantly in recent years

properties perform more like

commercial and industrial loans

because the success of the occupant’s

business is the primary source of

repayment. To ensure repayment of

loans to non-occupant investors, the

property must generate sufficient cash

flow from the parties who are the

occupants.

The volume of commercial real estate

loans at banks has also increased

significantly in recent years. As with

CLD&OL loans, commercial real estate

loans grew more rapidly than loan

portfolios as a whole at commercial

banks and state-chartered savings banks

during 2003 and 2004, both for the

industry as a whole and for small,

medium, and large banks. At year-end

2004, banks’ commercial real estate

loans stood at nearly $700 billion, a

jump of 20 percent from the $584 billion

in such loans at year-end 2002. The

$700 billion in commercial real estate

loans represented almost 14 percent of

loans at all commercial banks and state-

chartered savings banks at year-end

2004, but such loans were 19 percent of

loans at banks with less than $100

million in assets versus 11 percent of

loans at banks with more than $1 billion

in assets. Almost all banks hold

commercial real estate loans, including

96 percent of banks with less than $100

million in assets and 93 percent of

banks with more than $1 billion in

assets.

Because of the significant and

growing level of bank involvement in

commercial real estate lending and the

different risk characteristics of owner-

occupied and other commercial

properties, separate reporting of these

two categories of commercial real estate

would enhance the agencies’ monitoring

and risk-scoping capabilities

and 93 percent of

banks with more than $1 billion in

assets.

Because of the significant and

growing level of bank involvement in

commercial real estate lending and the

different risk characteristics of owner-

occupied and other commercial

properties, separate reporting of these

two categories of commercial real estate

would enhance the agencies’ monitoring

and risk-scoping capabilities. The

agencies propose to split the existing

item for loans ‘‘Secured by nonfarm

nonresidential properties’’ in the loan

schedule (Schedule RC–C, part I, item

1.e), the past due and nonaccrual

schedule (Schedule RC–N, item 1.e),

and the charge-offs and recoveries

schedule (Schedule RI–B, part I, item

1.e) into separate items for loans

secured by owner-occupied nonfarm

nonresidential properties and loans

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49368

Federal Register / Vol. 70, No. 162 / Tuesday, August 23, 2005 / Notices

3 Banks with domestic offices only and less than

$300 million in total assets are not required to

provide this breakdown.

secured by other nonfarm

nonresidential properties.

When a commercial property that is

partially occupied by the owner and

partially occupied (or available to be

occupied) by other parties, the property

would be considered owner-occupied

when the owner occupies more than

half of the property’s usable space.

Properties such as hotels and motels

would not be considered owner-

occupied. The agencies request

comment on the reporting of partially

owner-occupied properties and on any

other definitional issues that may arise

when determining whether to report a

loan as secured by owner-occupied

property.

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

e reporting of partially

owner-occupied properties and on any

other definitional issues that may arise

when determining whether to report a

loan as secured by owner-occupied

property.

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, and certain related schedules.3

Because banks lease various types of

property to various types of customers,

the current addressee breakdown, in

which only a limited number of banks

report having leases to non-U.S.

addressees, does not provide

satisfactory risk-related information

about this type of financing activity.

When reporting information on their

loans that are not secured by real estate

in the Call Report loan schedule and

related schedules, banks distinguish, for

example, between consumer (retail)

loans and commercial loans. As with

retail and commercial loans, there are

differences between the underwriting of

and repayment sources for retail and

commercial leases.

The agencies believe that the different

risk characteristics of these two types of

leases warrant replacing the existing

addressee breakdown of leases with a

retail versus commercial lease

breakdown in the Call Report schedules

for loans and leases, past due and

nonaccrual assets, and charge-offs and

recoveries. 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 expenditures.

Commercial leases would encompass all

other lease financing receivables. This

proposed reporting change would affect

only the approximately 500 banks with

foreign offices or with $300 million or