Proposed Revisions to Reports of Condition and Income (Call Report) for 2010

41973

Federal Register / Vol. 74, No. 159 / Wednesday, August 19, 2009 / Notices

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. 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),

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 19, 2009.

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 should direct all written

comments to: Communications

Division, Office of the Comptroller of

the Currency, Public Information Room,

Mailstop 2–3, Attention: 1557–0081,

250 E Street, SW., Washington, DC

20219

ies 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 should direct all written

comments to: Communications

Division, Office of the Comptroller of

the Currency, Public Information Room,

Mailstop 2–3, Attention: 1557–0081,

250 E Street, SW., Washington, DC

20219. In addition, comments may be

sent by fax to (202) 874–5274, or by

electronic mail to

regs.comments@occ.treas.gov. You may

personally inspect and photocopy

comments at the OCC, 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) 874–4700. Upon arrival, visitors

will be required to present valid

government-issued photo identification

and to 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,’’ 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 the OMB control number in the

subject line of the message.

• Fax: 202–452–3819 or 202–452–

3102.

• Mail: Jennifer J. Johnson, Secretary,

Board of Governors of the Federal

Reserve System, 20th Street and

Constitution Avenue, NW., Washington,

DC 20551.

All public comments are available from

the Board’s Web site at http://

www.federalreserve.gov/generalinfo/

foia/ProposedRegs.cfm as submitted,

unless modified for technical reasons.

Accordingly, your comments will not be

edited to remove any identifying or

contact information

oard of Governors of the Federal

Reserve System, 20th Street and

Constitution Avenue, NW., Washington,

DC 20551.

All public comments are available from

the Board’s Web site at http://

www.federalreserve.gov/generalinfo/

foia/ProposedRegs.cfm as submitted,

unless modified for technical reasons.

Accordingly, your comments will not be

edited to remove any identifying or

contact information. Public comments

may also be viewed electronically or in

paper in Room MP–500 of the Board’s

Martin Building (20th and C Streets,

NW.) between 9 a.m. and 5 p.m. on

weekdays.

FDIC: You may submit comments,

which should refer to ‘‘Consolidated

Reports of Condition and Income, 3064–

0052,’’ by any of the following methods:

• Agency Web site: http://

www.fdic.gov/regulations/laws/federal/

propose.html. Follow the instructions

for submitting comments on the FDIC

Web site.

• Federal eRulemaking Portal: http://

www.regulations.gov. Follow the

instructions for submitting comments.

• E-mail: comments@FDIC.gov.

Include ‘‘Consolidated Reports of

Condition and Income, 3064–0052’’ in

the subject line of the message.

• Mail: Herbert J. Messite (202–898–

6834), Counsel, Attn: Comments, Room

F–1052, 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 E–

1002, 3501 Fairfax Drive, Arlington, VA

22226, between 9 a.m. and 5 p.m. on

business days.

Additionally, commenters may send a

copy of their comments to the OMB

desk officer for the agencies by mail to

the Office of Information and Regulatory

Affairs, U.S

al/propose.html 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.

Additionally, commenters may send a

copy of their comments to the OMB

desk officer for the agencies by mail to

the Office of Information and Regulatory

Affairs, U.S. Office of Management and

Budget, New Executive Office Building,

Room 10235, 725 17th Street, NW.,

Washington, DC 20503, or by fax to

(202) 395–6974.

FOR FURTHER INFORMATION CONTACT: For

further information about the revisions

discussed in this notice, please contact

any of the agency clearance officers

whose names appear below. In addition,

copies of the 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, (202) 874–5090, Legislative and

Regulatory Activities Division, Office of

the Comptroller of the Currency, 250 E

Street, SW., Washington, DC 20219.

Board: Michelle Shore, Federal

Reserve Board 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: Herbert J. Messite, Counsel,

(202) 898–6834, Legal Division, Federal

Deposit Insurance Corporation, 550 17th

Street, NW., Washington, DC 20429.

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

agency.

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

h is currently an approved

collection of information for each

agency.

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:

1,569 national banks.

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Federal Register / Vol. 74, No. 159 / Wednesday, August 19, 2009 / Notices

1 Under the FASB Accounting Standards

Codification TM, see Topic 320, Investments—Debt

and Equity Securities.

Estimated Time per Response: 49.33

burden hours.

Estimated Total Annual Burden:

309,595 burden hours.

Board

OMB Number: 7100–0036.

Estimated Number of Respondents:

861 state member banks.

Estimated Time per Response: 55.08

burden hours.

Estimated Total Annual Burden:

189,696 burden hours.

FDIC

OMB Number: 3064–0052.

Estimated Number of Respondents:

5,032 insured state nonmember banks.

Estimated Time per Response: 39.15

burden hours.

Estimated Total Annual Burden:

788,011 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

655 hours per quarter, depending on an

individual institution’s circumstances.

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)

he

average reporting burden for the Call

Report is estimated to range from 16 to

655 hours per quarter, depending on an

individual institution’s circumstances.

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). At present, except for

selected data items, these information

collections are not given confidential

treatment.

Abstract

Institutions submit Call Report data to

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. Call Report 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 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 data are also

used to calculate institutions’ deposit

insurance and Financing Corporation

assessments and national banks’

semiannual assessment fees.

Current Actions

I. Overview

The agencies are proposing to

implement certain changes to the Call

Report requirements in 2010 that are

intended to provide data needed for

reasons of safety and soundness or other

public purposes. These proposed

revisions respond, for example, to a

change in accounting standards, a

temporary increase in the deposit

insurance limit, and credit availability

concerns.

The proposed Call Report changes

that are the subject of this proposal

would take effect as of March 31, 2010,

unless otherwise indicated

rovide data needed for

reasons of safety and soundness or other

public purposes. These proposed

revisions respond, for example, to a

change in accounting standards, a

temporary increase in the deposit

insurance limit, and credit availability

concerns.

The proposed Call Report changes

that are the subject of this proposal

would take effect as of March 31, 2010,

unless otherwise indicated. These

revisions, which are discussed in detail

in Sections II.A. through J. of this

notice, include:

• New items identifying total other-

than-temporary impairment losses on

debt securities, the portion of the total

recognized in other comprehensive

income, and the net losses recognized in

earnings, consistent with the

presentation requirements of a recent

accounting standard;

• Clarification of the instructions for

reporting unused commitments;

• Breakdowns of the existing items

for unused credit card lines and other

unused commitments, with the former

breakdown required only for certain

institutions, and a related breakdown of

the existing item for other loans;

• New items pertaining to reverse

mortgages that would be collected

annually as of December 31;

• A breakdown of the existing item

for time deposits of $100,000 or more

(in domestic offices);

• Revisions of existing items for

brokered deposits;

• New items for the interest expense

and quarterly averages for fully insured

brokered time deposits and other

brokered time deposits;

• A change in the reporting frequency

for small business and small farm

lending data from annually to quarterly;

• A change in the reporting frequency

for the number of certain deposit

accounts from annually to quarterly;

and

• The elimination of the item for

internal allocations of income and

expense from the schedule for income

from foreign offices.

The agencies seek to establish

reporting thresholds for the collection of

Call Report information where

practicable to limit the reporting burden

imposed on banking institutions

equency

for the number of certain deposit

accounts from annually to quarterly;

and

• The elimination of the item for

internal allocations of income and

expense from the schedule for income

from foreign offices.

The agencies seek to establish

reporting thresholds for the collection of

Call Report information where

practicable to limit the reporting burden

imposed on banking institutions. In

establishing such thresholds, the

agencies weigh the characteristics of the

institutions involved in the activity that

would be subject to the reporting

requirements, the number of institutions

affected by the reporting requirements,

the type of information being collected,

how that information will be used by

the agencies, and banks’ costs associated

with gathering and reporting the

requested information. The agencies

solicit comments from banking

institutions related to the proposals

described in this notice. Are there

appropriate reporting thresholds for

specific proposed changes that will

enable the agencies to collect

meaningful information without

creating undue burden for institutions?

Please provide specific feedback

regarding the amount of burden created

by the proposed amendments as well as

suggestions for thresholds that would

reduce this burden without

compromising the usefulness of the

data.

For the March 31 and December 31,

2010 report dates, banks may provide

reasonable estimates for any new or

revised Call Report item initially

required to be reported as of that date

for which the requested information is

not readily available. 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.

Type of Review: Revision and

extension of currently approved

collections.

II. Discussion of Proposed Call Report

Revisions

A

d as of that date

for which the requested information is

not readily available. 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.

Type of Review: Revision and

extension of currently approved

collections.

II. Discussion of Proposed Call Report

Revisions

A. Other-Than-Temporary Impairment

Losses on Debt Securities

On April 9, 2009, the Financial

Accounting Standards Board (FASB)

issued FASB Staff Position (FSP) No.

115–2 and 124–2, Recognition and

Presentation of Other-Than-Temporary

Impairments (FSP FAS 115–2).1 This

FSP amended the other-than-temporary

impairment guidance in other

accounting standards that applies to

investments in debt securities. Under

FSP FAS 115–2, if a bank intends to sell

a debt security or it is more likely than

not that it will be required to sell the

debt security before recovery of its

amortized cost basis, an other-than-

temporary impairment has occurred and

the entire difference between the

security’s amortized cost basis and its

fair value at the balance sheet date must

be recognized in earnings. FSP FAS

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2 73 FR 54811, September 23, 2008.

115–2 also provides that if the present

value of cash flows expected to be

collected on a debt security is less than

its amortized cost basis, a credit loss

exists. In this situation, if a bank does

not intend to sell the security and it is

not more likely than not that the bank

will be required to sell the debt security

before recovery of its amortized cost

basis less any current-period credit loss,

an other-than-temporary impairment

has occurred

xpected to be

collected on a debt security is less than

its amortized cost basis, a credit loss

exists. In this situation, if a bank does

not intend to sell the security and it is

not more likely than not that the bank

will be required to sell the debt security

before recovery of its amortized cost

basis less any current-period credit loss,

an other-than-temporary impairment

has occurred. The amount of the total

other-than-temporary impairment

related to the credit loss must be

recognized in earnings, but the amount

of the total impairment related to other

factors must be recognized in other

comprehensive income, net of

applicable taxes.

For other-than-temporary impairment

losses on held-to-maturity and

available-for-sale debt securities, banks

report the amount of the other-than-

temporary impairment losses that must

be recognized in earnings in items 6.a

and 6.b of the Call Report income

statement (Schedule RI), respectively.

Other-than-temporary impairment

losses that are to be recognized in other

comprehensive income, net of

applicable taxes, are reported in

Schedule RI–A, Changes in Bank Equity

Capital, item 10, ‘‘Other comprehensive

income.’’ However, because items 6.a

and 6.b of Schedule RI also include

other amounts such as gains (losses) on

sales of held-to-maturity and available-

for-sale securities, the agencies

currently are not able to determine the

effect on the net income of banks,

individually and in the aggregate, of

other-than-temporary impairment losses

that must be recognized in earnings.

Similarly, because item 10 of Schedule

RI–A includes all of the other

components of a bank’s other

comprehensive income, the agencies

cannot identify the portion of other

comprehensive income attributable to

other-than-temporary impairment losses

for banks individually and in the

aggregate

d in the aggregate, of

other-than-temporary impairment losses

that must be recognized in earnings.

Similarly, because item 10 of Schedule

RI–A includes all of the other

components of a bank’s other

comprehensive income, the agencies

cannot identify the portion of other

comprehensive income attributable to

other-than-temporary impairment losses

for banks individually and in the

aggregate.

According to FSP FAS 115–2, in a

period in which a bank determines that

a debt security’s decline in fair value

below its amortized cost basis is other

than temporary, the bank must present

the total other-than-temporary

impairment loss in the income

statement with an offset for the amount

of the total loss that is recognized in

other comprehensive income. This new

presentation provides additional

information about the amounts that a

bank does not expect to collect related

to its investments in debt securities held

for purposes other than trading.

Therefore, to enhance the agencies’

ability to evaluate the factors affecting

bank earnings, the agencies propose to

add three Memorandum items to the

Call Report income statement that

would mirror the presentation

requirements of FSP FAS 115–2. In

these new Memorandum items, banks

would report total other-than-temporary

impairment losses on debt securities for

the calendar year-to-date reporting

period, the portion of these losses

recognized in other comprehensive

income, and the net losses recognized in

earnings

B. Clarification of the Instructions for

Reporting Unused Commitments

Banks report unused commitments in

item 1 of Schedule RC–L, Derivatives

and Off-Balance Sheet Items

l other-than-temporary

impairment losses on debt securities for

the calendar year-to-date reporting

period, the portion of these losses

recognized in other comprehensive

income, and the net losses recognized in

earnings

B. Clarification of the Instructions for

Reporting Unused Commitments

Banks report unused commitments in

item 1 of Schedule RC–L, Derivatives

and Off-Balance Sheet Items. The

instructions for this item identify

various arrangements that should be

reported as unused commitments,

including but not limited to

commitments for which the bank has

charged a commitment fee or other

consideration, commitments that are

legally binding, loan proceeds that the

bank is obligated to advance,

commitments to issue a commitment,

and revolving underwriting facilities.

However, the agencies have found that

some banks have not reported

commitments that they have entered

into until they have signed the loan

agreement for the financing that they

have committed to provide. Although

the agencies consider these

arrangements to be commitments to

issue a commitment and, therefore,

within the scope of the existing

instructions for reporting commitments

in Schedule RC–L, they believe that

these instructions may not be

sufficiently clear. Therefore, the

agencies originally proposed to revise

the instructions for Schedule RC–L,

item 1, ‘‘Unused commitments,’’ as one

of the proposed Call Report changes for

implementation as of March 31, 2009.2

More specifically, with respect to

commitments to issue a commitment at

some point in the future, the agencies

proposed to add language to the

instructions for this item explicitly

stating that such commitments include

those that have been entered into even

though the related loan agreement has

not yet been signed.

In response to the agencies’ request

for comment on Call Report revisions

for 2009, three commenters specifically

addressed the proposed instructional

clarification pertaining to unused

commitments

d language to the

instructions for this item explicitly

stating that such commitments include

those that have been entered into even

though the related loan agreement has

not yet been signed.

In response to the agencies’ request

for comment on Call Report revisions

for 2009, three commenters specifically

addressed the proposed instructional

clarification pertaining to unused

commitments. One commenter agreed

that clarification is needed, but

recommended that commitments to

issue a commitment in the future,

including those entered into even

though the related loan agreement has

not yet been signed, should be removed

from the list of types of arrangements

that the instructions would direct banks

to report as unused commitments. A

second commenter expressed concern

about reporting ‘‘commitments that

contain a relatively high level of

uncertainty until a loan agreement has

been signed or the loan has been funded

with a first advance’’ and the reliability

of data on such commitments. The third

commenter stated that because some

banks do not have systems for tracking

such arrangements, the instructions

should in effect permit banks to exclude

commitment letters with an expiration

date of 90 days or less. Finally, the first

commenter also recommended that the

instructions for reporting unused

commitments should state that amounts

conveyed or participated to others that

the conveying or participating bank is

not obligated to fund should not be

reported as unused commitments by the

conveying or participating bank.

After evaluating these comments, the

agencies have refined their approach to

identifying commitments to issue a

commitment in a manner that is

intended to address the commenters’

concerns by focusing on a point in the

commitment process when the agencies

believe that banks’ systems should be

tracking their commitments

reported as unused commitments by the

conveying or participating bank.

After evaluating these comments, the

agencies have refined their approach to

identifying commitments to issue a

commitment in a manner that is

intended to address the commenters’

concerns by focusing on a point in the

commitment process when the agencies

believe that banks’ systems should be

tracking their commitments. Thus, the

instructions would state that

commitments to issue a commitment at

some point in the future are those where

the bank has extended terms and the

borrower has accepted the offered terms,

even though the related loan agreement

has not yet been signed. In addition, the

agencies agree with the commenter’s

recommendation concerning

commitments that have been conveyed

or participated to others and are

proposing to modify the instructions

accordingly.

The proposed revised instructions for

Schedule RC–L, item 1, would read as

follows:

Report in the appropriate subitem the

unused portions of commitments.

Unused commitments are to be reported

gross, i.e., include in the appropriate

subitem the unused amount of

commitments acquired from and

conveyed or participated to others.

However, exclude commitments

conveyed or participated to others that

the bank is not legally obligated to fund

even if the party to whom the

commitment has been conveyed or

participated fails to perform in

accordance with the terms of the

commitment.

For purposes of this item,

commitments include:

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(1) Commitments to make or purchase

extensions of credit in the form of loans

or participations in loans, lease

financing receivables, or similar

transactions.

(2) Commitments for which the bank

has charged a commitment fee or other

consideration.

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(1) Commitments to make or purchase

extensions of credit in the form of loans

or participations in loans, lease

financing receivables, or similar

transactions.

(2) Commitments for which the bank

has charged a commitment fee or other

consideration.

(3) Commitments that are legally

binding.

(4) Loan proceeds that the bank is

obligated to advance, such as:

(a) Loan draws;

(b) Construction progress payments;

and

(c) Seasonal or living advances to

farmers under prearranged lines of

credit.

(5) Rotating, revolving, and open-end

credit arrangements, including, but not

limited to, retail credit card lines and

home equity lines of credit.

(6) Commitments to issue a

commitment at some point in the future,

where the bank has extended terms and

the borrower has accepted the offered

terms, even though the related loan

agreement has not yet been signed.

(7) Overdraft protection on depositors’

accounts offered under a program where

the bank advises account holders of the

available amount of overdraft

protection, for example, when accounts

are opened or on depositors’ account

statements or ATM receipts.

(8) The bank’s own takedown in

securities underwriting transactions.

(9) Revolving underwriting facilities

(RUFs), note issuance facilities (NIFs),

and other similar arrangements, which

are facilities under which a borrower

can issue on a revolving basis short-term

paper in its own name, but for which

the underwriting banks have a legally

binding commitment either to purchase

any notes the borrower is unable to sell

by the rollover date or to advance funds

to the borrower.

Exclude forward contracts and other

commitments that meet the definition of

a derivative and must be accounted for

in accordance with FASB Statement No.

133, which should be reported in

Schedule RC–L, item 12

which

the underwriting banks have a legally

binding commitment either to purchase

any notes the borrower is unable to sell

by the rollover date or to advance funds

to the borrower.

Exclude forward contracts and other

commitments that meet the definition of

a derivative and must be accounted for

in accordance with FASB Statement No.

133, which should be reported in

Schedule RC–L, item 12. Include the

amount (not the fair value) of the

unused portions of loan commitments

that do not meet the definition of a

derivative that the bank has elected to

report at fair value under a fair value

option. Also include forward contracts

that do not meet the definition of a

derivative. The unused portions of

commitments are to be reported in the

appropriate subitem regardless of

whether they contain ‘‘material adverse

change’’ clauses or other provisions that

are intended to relieve the issuer of its

funding obligations under certain

conditions and regardless of whether

they are unconditionally cancelable at

any time.

In the case of commitments for

syndicated loans, report only the bank’s

proportional share of the commitment.

For purposes of reporting the unused

portions of revolving asset-based

lending commitments, the commitment

is defined as the amount a bank is

obligated to fund—as of the report

date—based on the contractually agreed

upon terms. In the case of revolving

asset-based lending, the unused

portions of such commitments should

be measured as the difference between

ional share of the commitment.

For purposes of reporting the unused

portions of revolving asset-based

lending commitments, the commitment

is defined as the amount a bank is

obligated to fund—as of the report

date—based on the contractually agreed

upon terms. In the case of revolving

asset-based lending, the unused

portions of such commitments should

be measured as the difference between

(a) the lesser of the contractual

borrowing base (i.e., eligible collateral

times the advance rate) or the note

commitment limit, and (b) the sum of

outstanding loans and letters of credit

under the commitment. The note

commitment limit is the overall

maximum loan amount beyond which

the bank will not advance funds

regardless of the amount of collateral

posted. This definition of

‘‘commitment’’ is applicable only to

revolving asset-based lending, which is

a specialized form of secured lending in

which a borrower uses current assets

(e.g., accounts receivable and inventory)

as collateral for a loan. The loan is

structured so that the amount of credit

is limited by the value of the collateral.

C. Additional Categories of Unused

Commitments and Loans

The extent to which banks are

reducing the supply of credit during the

current financial crisis has been of great

interest to the agencies and to Congress.

Also, bank lending plays a central role

in any economic recovery and the

agencies need data to better determine

when credit conditions have eased. One

way to measure the supply of credit is

to analyze the change in total lending

commitments by banks, considering

both the amount of loans outstanding

and the volume of unused credit lines.

These data are also needed for safety

and soundness purposes because draws

on commitments during periods when

banks face significant funding pressures,

such as during the fall of 2008, can

place significant and unexpected

demands on the liquidity and capital

positions of banks

g

commitments by banks, considering

both the amount of loans outstanding

and the volume of unused credit lines.

These data are also needed for safety

and soundness purposes because draws

on commitments during periods when

banks face significant funding pressures,

such as during the fall of 2008, can

place significant and unexpected

demands on the liquidity and capital

positions of banks. Therefore, the

agencies propose breaking out in further

detail two categories of unused

commitments on Schedule RC–L,

Derivatives and Off-Balance Sheet

Items. The agencies also propose to

break out in further detail one new loan

category on Schedule RC–C, part I,

Loans and Leases. These new data items

would improve the agencies’ ability to

obtain timely and accurate readings on

the supply of credit available to

households and businesses. These data

would also be useful in determining the

effectiveness of the government’s

economic stabilization programs.

Unused commitments associated with

credit card lines are reported in

Schedule RC–L, item 1.b. This data item

is not sufficiently meaningful for

monitoring the supply of credit because

it mixes consumer credit card lines with

credit card lines for businesses and

other entities. As a result of this

aggregation, it is not possible to fully

monitor credit available specifically to

households. Furthermore, bank

supervisors would benefit from the

split, because the usage patterns,

profitability, and evolution of credit

quality through the business cycle are

likely to differ for consumer credit cards

and business credit cards. Therefore, the

agencies propose to split Schedule RC–

L, item 1.b, into unused consumer credit

card lines and other unused credit card

lines. This breakout would be reported

by institutions with either $300 million

or more in total assets or $300 million

or more in unused credit card

commitments. Draws from these credit

lines that have not been sold are already

reported on Schedule RC–C, part I

re, the

agencies propose to split Schedule RC–

L, item 1.b, into unused consumer credit

card lines and other unused credit card

lines. This breakout would be reported

by institutions with either $300 million

or more in total assets or $300 million

or more in unused credit card

commitments. Draws from these credit

lines that have not been sold are already

reported on Schedule RC–C, part I. For

example, banks must report draws on

credit cards issued to nonfarm

nonfinancial businesses as commercial

and industrial (C&I) loans in Schedule

RC–C, part I, item 4, and draws on

personal credit cards as consumer loans

in Schedule RC–C, part I, item 6.a.

Schedule RC–L, item 1.e, aggregates

all other unused commitments, and

includes unused commitments to fund

C&I loans (other than credit card lines

to commercial and industrial

enterprises, which are reported in item

1.b, and commitments to fund

commercial real estate, construction,

and land development loans not secured

by real estate, which are reported in

item 1.c.(2)). Separating these C&I

lending commitments from the other

commitments included in other unused

commitments would considerably

improve the agencies’ ability to analyze

business credit conditions. A very large

percentage of banks responding to the

Federal Reserve’s Senior Loan Officer

Opinion Survey on Bank Lending

Practices (FR 2018; OMB No. 7100–

0058) reported having tightened lending

policies for C&I loans and credit lines

during 2008; however, C&I loans on

banks’ balance sheets expanded through

the end of October 2008, reportedly as

a result of substantial draws on existing

credit lines. In contrast, other unused

commitments reported on the Call

Report contracted, but without the

proposed breakouts of such

commitments, it was not possible to

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ober 2008, reportedly as

a result of substantial draws on existing

credit lines. In contrast, other unused

commitments reported on the Call

Report contracted, but without the

proposed breakouts of such

commitments, it was not possible to

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know how total business borrowing

capacity had changed. The FR 2018 data

are qualitative rather than quantitative

and are collected only from a sample of

institutions up to six times per year.

Having the additional unused

commitment data reported separately on

the Call Report, along with the proposed

changes to Schedule RC–C described

below, would have indicated more

clearly whether there was a widespread

restriction in new credit available to

businesses.

Therefore, the agencies propose to

split Schedule RC–L, item 1.e, into three

categories: Unused commitments to

fund commercial and industrial loans

(which would include only

commitments not reported in Schedule

RC–L, items 1.b and 1.c.(2), for loans

that, when funded, would be reported in

Schedule RC–C, item 4), unused

commitments to fund loans to financial

institutions (defined to include

depository institutions and

nondepository financial institutions,

i.e., real estate investment trusts,

mortgage companies, holding

companies of other depository

institutions, insurance companies,

finance companies, mortgage finance

companies, factors and other financial

intermediaries, short-term business

credit institutions, personal finance

companies, investment banks, the

bank’s own trust department, other

domestic and foreign financial

intermediaries, and Small Business

Investment Companies), and all other

unused commitments

ther depository

institutions, insurance companies,

finance companies, mortgage finance

companies, factors and other financial

intermediaries, short-term business

credit institutions, personal finance

companies, investment banks, the

bank’s own trust department, other

domestic and foreign financial

intermediaries, and Small Business

Investment Companies), and all other

unused commitments. With respect to

Schedule RC–C, part I, the agencies also

propose to revise item 9, ‘‘Other loans,’’

by breaking out a new category for loans

to nondepository financial institutions

(as defined above). Banks already report

data on loans to depository institutions

in Schedule RC–C, part I, item 2.

Lending by nondepository financial

institutions was a key characteristic of

the recent credit cycle and many such

institutions failed; however, little

information existed on the exposure of

the banking system to those firms as this

information was obscured by the current

structure of the Call Report’s loan

schedule. The proposed addition of

separate items for unused commitments

to financial institutions and loans to

nondepository financial institutions,

together with the existing data on loans

to depository institutions, will allow

supervisors and other interested parties

to more closely monitor the exposure of

individual banks to financial

institutions and to assess the impact

that changes in the credit availability to

this sector have on the economy.

D. Reverse Mortgage Data

Reverse mortgages are complex loan

products that leverage equity in homes

to provide lump sum cash payments or

lines of credit to borrowers. These

products are typically marketed to

senior citizens who own homes. The

agencies are currently unable to

effectively identify and monitor

institutions that offer these products

due to a lack of reverse mortgage data

my.

D. Reverse Mortgage Data

Reverse mortgages are complex loan

products that leverage equity in homes

to provide lump sum cash payments or

lines of credit to borrowers. These

products are typically marketed to

senior citizens who own homes. The

agencies are currently unable to

effectively identify and monitor

institutions that offer these products

due to a lack of reverse mortgage data.

The reverse mortgage market

currently consists of two basic types of

products: Proprietary products designed

and originated by financial institutions

and a federally-insured product known

as a Home Equity Conversion Mortgage

(HECM). Some reverse mortgages

provide for a lump sum payment to the

borrower at closing, with no ability for

the borrower to receive additional funds

under the mortgage at a later date. Other

reverse mortgages are structured like

home equity lines of credit in that they

provide the borrower with additional

funds after closing, either as fixed

monthly payments, under a line of

credit, or both. There are also reverse

mortgages that provide a combination of

a lump sum payment to the borrower at

closing and additional payments to the

borrower after the closing of the loan.

The volume of reverse mortgage

activity is expected to dramatically

increase in the coming years as the U.S.

population ages. A number of consumer

protection related risks and safety and

soundness related risks are associated

with these products and the agencies

need to collect information from banks

involved in the reverse mortgage

activities to monitor and mitigate those

risks. For example, proprietary reverse

mortgages structured as lines of credit,

which are not insured by the federal

government, expose borrowers to the

risk that the lender will be unwilling or

unable to meet its obligation to make

payments due to the borrower

d the agencies

need to collect information from banks

involved in the reverse mortgage

activities to monitor and mitigate those

risks. For example, proprietary reverse

mortgages structured as lines of credit,

which are not insured by the federal

government, expose borrowers to the

risk that the lender will be unwilling or

unable to meet its obligation to make

payments due to the borrower.

Additionally, in those circumstances in

which housing prices are declining,

there is the risk that the reverse

mortgage loan balance may exceed the

value of the underlying collateral value

of the home.

As stated above, access to data

regarding loan volumes, dollar amounts

outstanding, and the institutions

offering reverse mortgages or

participating in reverse mortgage

activity is severely limited. The U.S.

Department of Housing and Urban

Development provides a monthly report

for reverse mortgages endorsed for

federal insurance, by fiscal year, for

those loans that are part of the federally-

sponsored HECM program. While this

monthly report provides information

such as average expected interest rates,

average property values, average age of

the borrower, and the number of active

insured accounts, there is no aggregate

monthly data nor is there institution-

specific information that identifies the

institutions participating in the

program. For proprietary reverse

mortgage loans, there is no known data

on the volume of reverse mortgages,

dollar amounts outstanding, or the

institutions offering these products.

The agencies propose that new items

be added to the Call Report to collect

reverse mortgage data on an annual

basis beginning on December 31, 2010.

Collecting this information will provide

the agencies the necessary information

for policy development and the

management of risk exposures posed by

institutions’ involvement with reverse

mortgages

r the

institutions offering these products.

The agencies propose that new items

be added to the Call Report to collect

reverse mortgage data on an annual

basis beginning on December 31, 2010.

Collecting this information will provide

the agencies the necessary information

for policy development and the

management of risk exposures posed by

institutions’ involvement with reverse

mortgages. First, a new Memorandum

item would be added to Schedule RC–

C, part I, Loans and Leases, for ‘‘Reverse

mortgages outstanding that are held for

investment.’’ In this Memorandum item,

banks would separately report the

amount of HECM reverse mortgages and

the amount of proprietary reverse

mortgages that are held for investment

and included in Schedule RC–C, part I,

item 1.c, Loans ‘‘Secured by 1–4 family

residential properties.’’ Additionally,

new items would be added to Schedule

RC–L, Derivatives and Off-Balance

Sheet Items, to collect the amounts of

‘‘Unused commitments for HECM

reverse mortgages outstanding that are

held for investment’’ and ‘‘Unused

commitments for proprietary reverse

mortgages outstanding that are held for

investment.’’ Because these reverse

mortgages have been structured in

whole or in part like home equity lines

of credit, the unused commitments

associated with these mortgages are also

reportable in existing item 1.a,

‘‘Revolving, open-end lines secured by

1–4 family residential properties,’’ of

Schedule RC–L. The proposed new

unused commitment items would be

subsets of item 1.a.

In many instances, institutions do not

underwrite and fund reverse mortgages,

but refer borrowers to other reverse

mortgage lenders

unused commitments

associated with these mortgages are also

reportable in existing item 1.a,

‘‘Revolving, open-end lines secured by

1–4 family residential properties,’’ of

Schedule RC–L. The proposed new

unused commitment items would be

subsets of item 1.a.

In many instances, institutions do not

underwrite and fund reverse mortgages,

but refer borrowers to other reverse

mortgage lenders. These institutions

receive a fee for referring customers to

the reverse mortgage lender and they

may be involved in (although their

involvement may not be limited to) the

following activities: Marketing the

reverse mortgage loan product,

providing information on or answering

questions about the reverse mortgage

loan, selling products in conjunction

with reverse mortgages, and/or

accepting an application for a reverse

mortgage from the potential borrower.

This model enables consumers to deal

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3 The proposed linkage of the scope of the

Memorandum items on fully insured brokered

deposits in Schedule RC–E to the deposit insurance

limits in effect on the report date is consistent with

an existing linkage between the deposit insurance

limits in effect on the report date and the

Memorandum items in Schedule RC–O, Other Data

for Deposit Insurance and FICO Assessments, on

the amount and number of deposit accounts within

the insurance limit and in excess of the insurance

limit.

first with their local institutions without

the institutions having to build an

entirely new lending function. It also

provides an economy of scale for a

specialized lender because they will not

necessarily need a large physical branch

network when they can partner with

existing lenders

amount and number of deposit accounts within

the insurance limit and in excess of the insurance

limit.

first with their local institutions without

the institutions having to build an

entirely new lending function. It also

provides an economy of scale for a

specialized lender because they will not

necessarily need a large physical branch

network when they can partner with

existing lenders. The banking agencies

propose adding a new Memorandum

item to Schedule RC–C, part I, to

annually collect the estimated number

of fee-paid referrals during the year from

each bank making referrals beginning on

December 31, 2010. Banks would report

separately the estimated number of fee-

paid referrals for HECM reverse

mortgages and proprietary reverse

mortgages.

The agencies request specific

feedback from reporting institutions on

their ability to provide fee-paid referral

information for reverse mortgages. Do

banks maintain the data necessary to

provide an estimate of the number of fee

paid referrals they have made during the

year? Would it be less burdensome for

banks to report an estimated number of

fee-paid referrals for reverse mortgages

that falls within specified ranges of

numbers? Is there alternative

information that the agencies could

collect in order to better understand the

extent of banks’ reverse mortgage

referral activities?

Finally, many banks that originate

reverse mortgages routinely sell their

funded mortgages in the secondary

market. As a result, these loans will not

remain on the originating banks’ balance

sheets for long periods of time and,

therefore, the proposed items for reverse

mortgages outstanding that are held for

investment will not capture the extent

of banks’ reverse mortgage activity when

it involves the origination and sale of

these loans. Thus, the agencies propose

to add Memorandum items to Schedule

RC–C, part I, in which banks would

report the principal amount of reverse

mortgages originated for sale that have

been sold during the year

ms for reverse

mortgages outstanding that are held for

investment will not capture the extent

of banks’ reverse mortgage activity when

it involves the origination and sale of

these loans. Thus, the agencies propose

to add Memorandum items to Schedule

RC–C, part I, in which banks would

report the principal amount of reverse

mortgages originated for sale that have

been sold during the year. HECM and

proprietary reverse mortgages sold

would be reported separately. These

items are distinct and separate from the

items for the estimated number of

referrals because the referring bank is

not funding the loan, but is merely

taking an application or conducting

another service in order to refer the

borrower to another institution that

ultimately funds the reverse mortgage.

The information on loans sold during

the year also would be collected

annually beginning on December 31,

2010.

E. Time Deposits of $100,000 or More

On October 3, 2008, the Emergency

Economic Stabilization Act of 2008

temporarily raised the standard

maximum deposit insurance amount

(SMDIA) from $100,000 to $250,000 per

depositor. Under this legislation, the

SMDIA was to return to $100,000 after

December 31, 2009. However, on May

20, 2009, the Helping Families Save

Their Homes Act extended this

temporary increase in the SMDIA to

$250,000 per depositor through

December 31, 2013, after which the

SMDIA is scheduled to return to

$100,000.

At present, banks report a two-way

breakdown of their time deposits (in

domestic offices) in Schedule RC–E,

Deposit Liabilities, distinguishing

between time deposits of less than

$100,000 and time deposits of $100,000

or more. In response to the extension of

the temporary increase in the limit on

deposit insurance coverage, the agencies

understand that time deposits with

balances in excess of $100,000, but less

than or equal to $250,000, have been

growing and can be expected to increase

further

eposit Liabilities, distinguishing

between time deposits of less than

$100,000 and time deposits of $100,000

or more. In response to the extension of

the temporary increase in the limit on

deposit insurance coverage, the agencies

understand that time deposits with

balances in excess of $100,000, but less

than or equal to $250,000, have been

growing and can be expected to increase

further. However, given the existing

Schedule RC–E reporting requirements,

the agencies are unable to monitor

growth in banks’ time deposits with

balances within the temporarily

increased limit on deposit insurance

coverage.

Therefore, the agencies are proposing

to replace Schedule RC–E,

Memorandum item 2.c, ‘‘Total time

deposits of $100,000 or more,’’ with a

revised Memorandum item 2.c, ‘‘Total

time deposits of $100,000 through

$250,000,’’ and a new Memorandum

item 2.d, ‘‘Total time deposits of more

than $250,000.’’ Existing Memorandum

item 2.c.(1), ‘‘Individual Retirement

Accounts (IRAs) and Keogh Plan

accounts included in Memorandum

item 2.c, ‘Total time deposits of

$100,000 or more,’ above,’’ would be

renumbered and recaptioned as

Memorandum item 2.e, ‘‘Individual

Retirement Accounts (IRAs) and Keogh

Plan accounts of $100,000 or more

included in Memorandum items 2.c and

2.d above,’’ but the scope of this

Memorandum item would not change.

F. Revisions of Brokered Deposit Items

As mentioned in Section II.E. above,

the SMDIA has been increased

temporarily from $100,000 to $250,000

through year-end 2013. However, the

data that banks currently report in the

Call Report on fully insured brokered

deposits in Schedule RC–E,

Memorandum items 1.c.(1) and 1.c.(2),

is based on the $100,000 insurance limit

(except for brokered retirement deposit

accounts for which the deposit

insurance limit was already $250,000).

Therefore, in response to the temporary

increase in the SMDIA, the agencies are

proposing to revise the reporting of fully

insured brokered deposits in Schedule

RC–E

rokered

deposits in Schedule RC–E,

Memorandum items 1.c.(1) and 1.c.(2),

is based on the $100,000 insurance limit

(except for brokered retirement deposit

accounts for which the deposit

insurance limit was already $250,000).

Therefore, in response to the temporary

increase in the SMDIA, the agencies are

proposing to revise the reporting of fully

insured brokered deposits in Schedule

RC–E. Furthermore, given the linkage

between the deposit insurance limits

and the Memorandum items on fully

insured brokered deposits in Schedule

RC–E, the scope of these items needs to

be changed whenever deposit insurance

limits change. To ensure that the scope

of these Memorandum items, including

the dollar amounts cited in the captions

for these items, changes automatically

as a function of the deposit insurance

limit in effect on the report date,

Memorandum item 1.c, ‘‘Fully insured

brokered deposits,’’ would be footnoted

to state that the specific dollar amounts

used as the basis for reporting fully

insured brokered deposits in

Memorandum items 1.c.(1) and 1.c.(2)

reflect the deposit insurance limits in

effect on the report date. The

instructions for Memorandum item 1.c

would be similarly clarified.3

In addition, consistent with the

reporting of time deposits in other items

of Schedule RC–E, brokered deposits

would be reported based on their

balances rather than the denominations

in which they were issued.

Accordingly, Memorandum items

1.c.(1) and 1.c.(2) of Schedule RC–E and

their instructions would be revised as

follows:

• Memorandum item 1.c.(1),

‘‘Brokered deposits of less than

$100,000’’: Report in this item brokered

deposits with balances of less than

$100,000. Also report in this item time

deposits issued to deposit brokers in the

form of large ($100,000 or more)

certificates of deposit that have been

participated out by the broker in shares

with balances of less than $100,000

e revised as

follows:

• Memorandum item 1.c.(1),

‘‘Brokered deposits of less than

$100,000’’: Report in this item brokered

deposits with balances of less than

$100,000. Also report in this item time

deposits issued to deposit brokers in the

form of large ($100,000 or more)

certificates of deposit that have been

participated out by the broker in shares

with balances of less than $100,000. For

brokered deposits that represent

retirement deposit accounts (as defined

in Schedule RC–O, Memorandum item

1) eligible for $250,000 in deposit

insurance coverage, report such

brokered deposits in this item only if

their balances are less than $100,000.

• Memorandum item 1.c.(2),

‘‘Brokered deposits of $100,000 through

$250,000 and certain brokered

retirement deposit accounts’’: Report in

this item brokered deposits (including

brokered retirement deposit accounts)

with balances of $100,000 through

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4 The FDIC publishes a weekly schedule of

national rates and national interest-rate caps by

maturity, which can be accessed at http://

www.fdic.gov/regulations/resources/rates/.

5 http://www.financialstability.gov/

roadtostability/smallbusinesscommunity.html.

6 http://www.financialstability.gov/latest/

tg58-remarks.html.

7 Ibid.

$250,000. Also report in this item

brokered deposits that represent

retirement deposit accounts (as defined

in Schedule RC–O, Memorandum item

1) eligible for $250,000 in deposit

insurance coverage that have been

issued by the bank in denominations of

more than $250,000 that have been

participated out by the broker in shares

of $100,000 through exactly $250,000

tg58-remarks.html.

7 Ibid.

$250,000. Also report in this item

brokered deposits that represent

retirement deposit accounts (as defined

in Schedule RC–O, Memorandum item

1) eligible for $250,000 in deposit

insurance coverage that have been

issued by the bank in denominations of

more than $250,000 that have been

participated out by the broker in shares

of $100,000 through exactly $250,000.

The proposed revisions to Schedule

RC–E, Memorandum items 1.c.(1) and

1.c.(2), that relate to the temporary

increase in the SMDIA would remain in

effect during this increase, after which

the dollar amounts used as the basis for

reporting fully insured brokered

deposits in these items would revert to

the amounts in effect prior to the

temporary increase.

The agencies are not proposing to

revise the existing requirements for the

reporting of maturity data on brokered

deposits in Memorandum items 1.d.(1)

and 1.d.(2) of Schedule RC–E.

G. Interest Expense on and Quarterly

Averages for Brokered Deposits

Under Section 29 of the Federal

Deposit Insurance Act (12 U.S.C. 1831f),

an insured depository institution that is

less than well capitalized generally may

not pay a rate of interest that

significantly exceeds the prevailing rate

in the institution’s ‘‘normal market

area’’ and/or the prevailing rate in the

‘‘market area’’ from which the deposit is

accepted. In the case of an adequately

capitalized institution with a waiver to

accept brokered deposits, the institution

may not pay a rate of interest on

brokered deposits accepted from outside

the bank’s ‘‘normal market area’’ that

significantly exceeds the ‘‘national rate’’

as defined by the FDIC. On May 29,

2009, the FDIC’s Board of Directors

adopted a final rule making certain

revisions to the interest rate restrictions

under Section 337.6 of the FDIC’s

regulations. Under the final rule, the

‘‘national rate’’ is a simple average of

rates paid by U.S

ts accepted from outside

the bank’s ‘‘normal market area’’ that

significantly exceeds the ‘‘national rate’’

as defined by the FDIC. On May 29,

2009, the FDIC’s Board of Directors

adopted a final rule making certain

revisions to the interest rate restrictions

under Section 337.6 of the FDIC’s

regulations. Under the final rule, the

‘‘national rate’’ is a simple average of

rates paid by U.S. depository

institutions as calculated by the FDIC.4

When evaluating compliance with the

interest rate restrictions in Section 337.6

by an institution that is less than well

capitalized, the FDIC generally will

deem the national rate to be the

prevailing rate in all market areas. The

final rule is effective January 1, 2010.

At present, the agencies are unable to

evaluate the level and trend of the cost

of brokered time deposits to institutions

that have acquired such funds, nor can

the agencies compare the cost of such

deposits across institutions with

brokered time deposits. Data on the cost

of brokered deposits would also assist

the agencies in evaluating the overall

cost of institutions’ time deposits, for

which data have long been collected in

the Call Report. Furthermore, many of

the banks that have failed since the

beginning of 2008 have relied

extensively on brokered deposits to

support their asset growth. Therefore, to

enhance the agencies’ ability to evaluate

funding costs and the impact of

brokered time deposits on these costs,

the agencies are proposing to add two

Memorandum items to both Schedule

RC–K, Quarterly Averages, and

Schedule RI, Income Statement. In these

Memorandum items, banks would

report the interest expense and quarterly

averages for ‘‘fully insured brokered

time deposits’’ and ‘‘other brokered time

deposits.’’ The definition of ‘‘fully

insured brokered time deposits’’ would

be based on the definitions of ‘‘fully

insured brokered deposits’’ and ‘‘time

deposits’’ in Schedule RC–E, Deposit

Liabilities

ule RI, Income Statement. In these

Memorandum items, banks would

report the interest expense and quarterly

averages for ‘‘fully insured brokered

time deposits’’ and ‘‘other brokered time

deposits.’’ The definition of ‘‘fully

insured brokered time deposits’’ would

be based on the definitions of ‘‘fully

insured brokered deposits’’ and ‘‘time

deposits’’ in Schedule RC–E, Deposit

Liabilities. ‘‘Other brokered time

deposits’’ would consist of all brokered

time deposits that are not ‘‘fully insured

brokered deposits.’’

H. Change in Reporting Frequency for

Loans to Small Businesses and Small

Farms

Section 122 of the Federal Deposit

Insurance Corporation Improvement Act

requires the banking agencies to collect

from insured institutions annually the

information the agencies ‘‘may need to

assess the availability of credit to small

businesses and small farms.’’ To

implement these requirements, the

banking agencies added Schedule RC–C,

Part II—Loans to Small Businesses and

Small Farms to the Call Report effective

June 30, 1993. This schedule requests

information on the number and amount

currently outstanding of ‘‘loans to small

businesses’’ and ‘‘loans to small farms,’’

as defined in the Call Report

instructions, which all banks must

report annually as of June 30.

With the United States now more than

a year into a recession, the current

administration ‘‘firmly believes that

economic recovery will be driven in

large part by America’s small

businesses,’’ but ‘‘small business owners

are finding it harder to get the credit

necessary to stay in business.’’ 5 Because

‘‘[c]redit is essential to economic

recovery,’’ Treasury Secretary Geithner

stated on March 16, 2009, that ‘‘we need

our nation’s banks to go the extra mile

in keeping credit lines in place on

reasonable terms for viable

businesses.’’ 6 Accordingly, Secretary

Geithner asked the banking agencies ‘‘to

call for quarterly, as opposed to annual

reporting of small business loans, so

that we can carefully monitor the degre

onomic

recovery,’’ Treasury Secretary Geithner

stated on March 16, 2009, that ‘‘we need

our nation’s banks to go the extra mile

in keeping credit lines in place on

reasonable terms for viable

businesses.’’ 6 Accordingly, Secretary

Geithner asked the banking agencies ‘‘to

call for quarterly, as opposed to annual

reporting of small business loans, so

that we can carefully monitor the degree

that credit is flowing to our nation’s

entrepreneurs and small business

owners.’’ 7 In response to Secretary

Geithner’s request and to improve the

agencies’ own ability to assess the

availability of credit to small businesses

and small farms, the agencies propose to

change the frequency with which banks

must submit Call Report Schedule RC–

C, Part II, from annually to quarterly

beginning March 31, 2010. The agencies

are not proposing to make any revisions

to the information that banks are

required to report on this schedule.

I. Change in Reporting Frequency for the

Number of Certain Deposit Accounts

In Call Report Schedule RC–O—Other

Data for Deposit Insurance and FICO

Assessments, banks report the number

of deposit accounts based on whether

the amount of the account is within the

deposit insurance limit or is in excess

of this limit. Information is reported

separately for retirement deposit

accounts and all other deposit accounts.

At present, for deposit accounts for

which the amount of the account

exceeds the deposit insurance limit, the

number of accounts is reported

quarterly (Schedule RC–O,

Memorandum items 1.b.(2) and 1.d.(2)).

However, for deposit accounts for which

the amount of the account is within this

limit, the number of accounts is

reported annually as of June 30

(Schedule RC–O, Memorandum items

1.a.(2) and 1.c.(2)).

Data on the number of deposit

accounts are used to estimate average

deposit account balances and changes

therein as well as insured and

uninsured deposits

andum items 1.b.(2) and 1.d.(2)).

However, for deposit accounts for which

the amount of the account is within this

limit, the number of accounts is

reported annually as of June 30

(Schedule RC–O, Memorandum items

1.a.(2) and 1.c.(2)).

Data on the number of deposit

accounts are used to estimate average

deposit account balances and changes

therein as well as insured and

uninsured deposits. These data also

assist the FDIC in its planning efforts as

it seeks to resolve potential failures of

insured institutions. As a consequence,

the difference in reporting frequency for

deposit accounts with balances within

and in excess of the deposit insurance

limit hinders the effectiveness of these

analyses. Therefore, the agencies are

proposing to require all of the existing

Call Report items on the number of

deposit accounts to be reported

quarterly beginning March 31, 2010.

The agencies note that savings

associations already report the number

of all deposit accounts quarterly in the

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Federal Register / Vol. 74, No. 159 / Wednesday, August 19, 2009 / Notices

8 Statement of Financial Accounting Standards

No. 166, Accounting for Transfers of Financial

Assets, amends Statement No. 140, Accounting for

Transfers and Servicing of Financial Assets and

Extinguishments of Liabilities. Statement of

Financial Accounting Standards No. 167,

Amendments to FASB Interpretation No. 46(R),

amends FASB Interpretation No. 46(R),

Consolidation of Variable Interest Entities. In

general, under the FASB Accounting Standards

CodificationTM, see Topics 860, Transfers and

Servicing, and 810, Consolidation.

9 FASB News Release, June 12, 2009, http://

www.fasb.org/cs/ContentServer?c=FASBContent_C

&pagename=FASB/FASBContent_C/NewsPage&cid

=1176156240834&pf=true.

10 73 FR 54807.

Thrift Financial Report (OMB No. 1550–

0023)

,

Consolidation of Variable Interest Entities. In

general, under the FASB Accounting Standards

CodificationTM, see Topics 860, Transfers and

Servicing, and 810, Consolidation.

9 FASB News Release, June 12, 2009, http://

www.fasb.org/cs/ContentServer?c=FASBContent_C

&pagename=FASB/FASBContent_C/NewsPage&cid

=1176156240834&pf=true.

10 73 FR 54807.

Thrift Financial Report (OMB No. 1550–

0023). Thus, this proposed change in

reporting frequency in the Call Report

would conform the reporting

requirements in this area for banks and

savings associations.

J. Internal Income and Expense

Allocations Applicable to Foreign

Offices

In Schedule RI–D, Income from

Foreign Offices, banks are to report in

item 11 their best estimate of all

appropriate internal allocations of

income and expense applicable to

foreign offices, whether or not ‘‘booked’’

that way in the bank’s formal

accounting records. This estimate

includes, for example, allocations of

income and expense in domestic offices

applicable to foreign offices and

allocations of income and expense in

foreign offices applicable to domestic

offices. A review of Schedule RI–D data

indicates that few banks report any

amount for these internal allocations

and the usefulness of the amounts that

are reported appears to be limited.

Accordingly, the agencies propose to

eliminate item 11, ‘‘Internal allocations

of income and expense applicable to

foreign offices,’’ from Schedule RI–D.

III. Other Matters

A. Effect of New Accounting Standards

on Schedule RC–S, Servicing,

Securitization, and Asset Sale Activities

On June 12, 2009, the Financial

Accounting Standards Board (FASB)

issued Statements of Financial

Accounting Standards Nos. 166 and

167, which revise the existing standards

governing the accounting for financial

asset transfers and the consolidation of

variable interest entities.8 Statement No

New Accounting Standards

on Schedule RC–S, Servicing,

Securitization, and Asset Sale Activities

On June 12, 2009, the Financial

Accounting Standards Board (FASB)

issued Statements of Financial

Accounting Standards Nos. 166 and

167, which revise the existing standards

governing the accounting for financial

asset transfers and the consolidation of

variable interest entities.8 Statement No.

166 eliminates the concept of a

‘‘qualifying special-purpose entity,’’

changes the requirements for

derecognizing financial assets, and

requires additional disclosures.

Statement No. 167 changes how a

company determines when an entity

that is insufficiently capitalized or is not

controlled through voting (or similar

rights) should be consolidated. This

consolidation determination is based

on, among other things, an entity’s

purpose and design and a company’s

ability to direct the activities of the

entity that most significantly impact the

entity’s economic performance.9 In

general, the revised standards take effect

January 1, 2010. The standards are

expected to cause a substantial volume

of assets in bank-sponsored entities

associated with securitization and

structured finance activities to be

brought onto bank balance sheets.

The agencies currently collect data on

banks’ securitization and structured

finance activities in Schedule RC–S,

Servicing, Securitization, and Asset Sale

Activities. The agencies will continue to

collect Schedule RC–S after the effective

date of Statements Nos. 166 and 167 and

banks should continue to complete this

schedule in accordance with its existing

instructions, taking into account the

changes in accounting brought about by

these two FASB statements. In this

regard, items 1 through 8 of Schedule

RC–S involve the reporting of

information for securitizations that the

reporting bank has accounted for as

sales. Therefore, after the effective date

of Statements Nos

hould continue to complete this

schedule in accordance with its existing

instructions, taking into account the

changes in accounting brought about by

these two FASB statements. In this

regard, items 1 through 8 of Schedule

RC–S involve the reporting of

information for securitizations that the

reporting bank has accounted for as

sales. Therefore, after the effective date

of Statements Nos. 166 and 167, a bank

should report information in items 1

through 8 only for those securitizations

for which the transferred assets qualify

for sale accounting or are otherwise not

carried as assets on the bank’s

consolidated balance sheet. Thus, if a

securitization transaction that qualified

for sale accounting prior to the effective

date of Statements Nos. 166 and 167

must be brought back onto the reporting

bank’s consolidated balance sheet upon

adoption of these statements, the bank

would no longer report information

about the securitization in items 1

through 8 of Schedule RC–S.

Items 11 and 12 of Schedule RC–S are

applicable to assets that the reporting

bank has sold with recourse or other

seller-provided credit enhancements,

but has not securitized. In

Memorandum item 1 of Schedule RC–S,

a bank reports certain transfers of small

business obligations with recourse that

qualify for sale accounting. The scope of

these items will continue to be limited

to such sold financial assets after the

effective date of Statements Nos. 166

and 167. In Memorandum item 2 of

Schedule RC–S, a bank currently reports

the outstanding principal balance of

loans and other financial assets that it

services for others when the servicing

has been purchased or when the assets

have been originated or purchased and

subsequently sold with servicing

retained. Thus, after the effective date of

Statements Nos. 166 and 167, a bank

should report retained servicing for

those assets or portions of assets

reported as sold as well as purchased

servicing in Memorandum item 2

ancial assets that it

services for others when the servicing

has been purchased or when the assets

have been originated or purchased and

subsequently sold with servicing

retained. Thus, after the effective date of

Statements Nos. 166 and 167, a bank

should report retained servicing for

those assets or portions of assets

reported as sold as well as purchased

servicing in Memorandum item 2.

Finally, Memorandum item 3 of

Schedule RC–S collects data on asset-

backed commercial paper conduits

regardless of whether the reporting bank

must consolidate the conduit in

accordance with FASB Interpretation

No. 46(R). This will continue to be the

case after the effective date of Statement

No. 167, which amended this FASB

interpretation.

The agencies plan to evaluate the

disclosure requirements in Statements

Nos. 166 and 167 and the disclosure

practices that develop in response to

these requirements. This evaluation will

assist the agencies in determining the

need for revisions to Schedule RC–S

that will improve their ability to assess

the nature and scope of banks’

involvement with securitization and

structured finance activities, including

those accounted for as sales and those

accounted for as secured borrowings.

Such revisions, which would not be

implemented before March 2011, would

be incorporated into a formal proposal

that the agencies would publish with a

request for comment in accordance with

the requirements of the Paperwork

Reduction Act of 1995.

In addition, should new Call Report

data items pertaining to securitization

and structured finance transactions be

necessary for regulatory capital

calculation purposes after the effective

date of Statements No. 166 and 167, a

proposal to collect these data items

would be incorporated into any notice

of proposed rulemaking to amend the

agencies regulatory capital standards

that the agencies would publish for

comment in the Federal Register.

B

to securitization

and structured finance transactions be

necessary for regulatory capital

calculation purposes after the effective

date of Statements No. 166 and 167, a

proposal to collect these data items

would be incorporated into any notice

of proposed rulemaking to amend the

agencies regulatory capital standards

that the agencies would publish for

comment in the Federal Register.

B. Trading Assets That Are Past Due or

in Nonaccrual Status

In the proposed Call Report revisions

for 2009, which were issued for

comment on September 23, 2008,10 the

agencies proposed to replace Schedule

RC–N, Past Due and Nonaccrual Loans,

Leases, and Other Assets, item 9, for

‘‘Debt securities and other assets’’ that

are past due 30 days or more or in

nonaccrual status with two separate

items: item 9.a, ‘‘Trading assets,’’ and

item 9.b, ‘‘All other assets (including

available-for-sale and held-to-maturity

securities).’’ The agencies also proposed

to expand the scope of Schedule RC–D,

Trading Assets and Liabilities,

Memorandum item 3, ‘‘Loans measured

at fair value that are past due 90 days

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Federal Register / Vol. 74, No. 159 / Wednesday, August 19, 2009 / Notices

or more,’’ to include loans held for

trading and measured at fair value that

are in nonaccrual status. The agencies

proposed to collect this information to

improve their ability to assess the

quality of assets held for trading

purposes and generally enhance

surveillance and examination planning

efforts. One commenter on these

proposed reporting changes questioned

the meaningfulness of delinquency and

nonaccrual data for trading assets

because they are accounted for at fair

value through earnings

cies

proposed to collect this information to

improve their ability to assess the

quality of assets held for trading

purposes and generally enhance

surveillance and examination planning

efforts. One commenter on these

proposed reporting changes questioned

the meaningfulness of delinquency and

nonaccrual data for trading assets

because they are accounted for at fair

value through earnings. After fully

considering this commenter’s views, the

agencies have decided not to implement

the proposed revisions to Schedule RC–

N, item 9, and Schedule RC–D,

Memorandum item 3. These items will

remain in their current form.

C. Unpaid Premiums on Certain Credit

Derivatives

The agencies’ proposed Call Report

revisions for 2009 also included the

addition of new Memorandum items 3.a

and 3.b to Schedule RC–R, Regulatory

Capital, to collect the present value of

unpaid premiums on credit derivatives

for which the bank is the protection

seller that are defined as covered

positions under the agencies’ market

risk capital guidelines. This present

value information was to be reported by

remaining maturity and with a

breakdown between investment grade

and subinvestment grade for the rating

of the underlying reference asset. One

commenter on this proposed credit

derivative data requested clarification of

the impact of the reporting requirement

on a bank’s risk-based capital

calculations. The agencies have

reconsidered this proposed reporting

change and have decided not to add

these new Memorandum items to

Schedule RC–R.

IV. Request for Comment

Public comment is requested on all

aspects of this joint notice. Comments

are invited specifically on:

(a) Whether the proposed revisions to

the Call Report collections of

information are necessary for the proper

performance of the agencies’ functions,

including whether the information has

practical utility;

t to add

these new Memorandum items to

Schedule RC–R.

IV. Request for Comment

Public comment is requested on all

aspects of this joint notice. Comments

are invited specifically on:

(a) Whether the proposed revisions to

the Call Report collections of

information are necessary for the proper

performance of the agencies’ functions,

including whether the information has

practical utility;

(b) The accuracy of the agencies’

estimates of the burden of the

information collections as they are

proposed to be revised, including the

validity of the methodology and

assumptions used;

(c) Ways to enhance the quality,

utility, and clarity of the information to

be collected;

(d) Ways to minimize the burden of

information collections on respondents,

including through the use of automated

collection techniques or other forms of

information technology; and

(e) Estimates of capital or start up

costs and costs of operation,

maintenance, and purchase of services

to provide information.

Comments submitted in response to

this joint notice will be shared among

the agencies and will be summarized or

included in the agencies’ requests for

OMB approval. All comments will

become a matter of public record.

Dated: August 12, 2009.

Michele Meyer,

Assistant Director, Legislative and Regulatory

Activities Division, Office of the Comptroller

of the Currency.

Board of Governors of the Federal Reserve

System, August 13, 2009.

Jennifer J. Johnson,

Secretary of the Board.

Dated at Washington, DC, this 11th day of

August 2009.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Executive Secretary.

[FR Doc. E9–19911 Filed 8–18–09; 8:45 am]

BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

Proposed Agency Information

Collection Activities; Comment

Request—Thrift Financial Report:

Schedules SC, RM, CC, DI, and SB

AGENCY: Office of Thrift Supervision

(OTS), Treasury.

ACTION: Notice and request for comment

ldman,

Executive Secretary.

[FR Doc. E9–19911 Filed 8–18–09; 8:45 am]

BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

Proposed Agency Information

Collection Activities; Comment

Request—Thrift Financial Report:

Schedules SC, RM, CC, DI, and SB

AGENCY: Office of Thrift Supervision

(OTS), Treasury.

ACTION: Notice and request for comment.

SUMMARY: The Department of the

Treasury, as part of its continuing effort

to reduce paperwork and respondent

burden, invites the general public and

other federal agencies to comment on

proposed and continuing information

collections, as required by the

Paperwork Reduction Act of 1995, 44

U.S.C. 3507. Today, the Office of Thrift

Supervision within the Department of

the Treasury solicits comments on

proposed changes to the Thrift Financial

Report (TFR), Schedule SC—

Consolidated Statement of Condition,

Schedule CC—Consolidated

Commitments and Contingencies,

Schedule DI—Consolidated Deposit

Information, Schedule SB—

Consolidated Small Business Loans, and

on a proposed new schedule, Schedule

RM—Annual Supplemental

Consolidated Data on Reverse

Mortgages. The changes are proposed to

become effective in March 2010 except

for the proposed new schedule RM

which would become effective in

December 2010.

At the end of the comment period,

OTS will analyze the comments and

recommendations received to determine

if it should modify the proposed

revisions prior to giving its final

approval. OTS will then submit the

revisions to the Office of Management

and Budget (OMB) for review and

approval.

DATES: Submit written comments on or

before October 19, 2009

ld become effective in

December 2010.

At the end of the comment period,

OTS will analyze the comments and

recommendations received to determine

if it should modify the proposed

revisions prior to giving its final

approval. OTS will then submit the

revisions to the Office of Management

and Budget (OMB) for review and

approval.

DATES: Submit written comments on or

before October 19, 2009.

ADDRESSES: Send comments to

Information Collection Comments, Chief

Counsel’s Office, Office of Thrift

Supervision, 1700 G Street, NW.,

Washington, DC 20552; send facsimile

transmissions to FAX number (202)

906–6518; send e-mails to

infocollection.comments@ots.treas.gov;

or hand deliver comments to the

Guard’s Desk, east lobby entrance, 1700

G Street, NW., on business days

between 9 a.m. and 4 p.m. All

comments should refer to ‘‘TFR

Revisions—2010, OMB No. 1550–0023.’’

OTS will post comments and the related

index on the OTS Internet Site at

http://www.ots.treas.gov. In addition,

interested persons may inspect

comments at the Public Reading Room,

1700 G Street, NW., by appointment. To

make an appointment, call (202) 906–

5922, send an e-mail to

publicinfo@ots.treas.gov, or send a

facsimile transmission to (202) 906–

7755.

FOR FURTHER INFORMATION CONTACT: You

can access sample copies of the

proposed 2010 TFR forms on OTS’s

Web site at http://www.ots.treas.gov or

you may request them by electronic

mail from tfr.instructions@ots.treas.gov.

You can request additional information

about this proposed information

collection from James Caton, Director,

Financial Monitoring and Analysis

Division, (202) 906–5680, Office of

Thrift Supervision, 1700 G Street, NW.,

Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

Title: Thrift Financial Report.

OMB Number: 1550–0023.

Form Number: OTS 1313.

Abstract: OTS is proposing to revise

and extend for three years the TFR,

which is currently an approved

collection of information

ames Caton, Director,

Financial Monitoring and Analysis

Division, (202) 906–5680, Office of

Thrift Supervision, 1700 G Street, NW.,

Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

Title: Thrift Financial Report.

OMB Number: 1550–0023.

Form Number: OTS 1313.

Abstract: OTS is proposing to revise

and extend for three years the TFR,

which is currently an approved

collection of information.

All OTS-regulated savings

associations must comply with the

information collections described in this

notice. OTS collects this information

each calendar quarter or less frequently

if so stated. OTS uses this information

to monitor the condition, performance,

and risk profile of individual

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