[Federal Register Volume 64, Number 30 (Tuesday, February 16, 1999)]
[Notices]
[Pages 7689-7692]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-3620]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency
Federal Reserve System
Federal Deposit Insurance Corporation


Agency Information Collection Activities: Submission for OMB 
Review; Joint Comment Request

AGENCIES: Office of the Comptroller of the Currency (OCC), Treasury; 
Board of Governors of the Federal Reserve System (Board); and Federal 
Deposit Insurance Corporation (FDIC).

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

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SUMMARY: On October 1, 1998, the OCC, the Board, and the FDIC (the 
agencies) requested public comment for 60 days on proposed revisions to 
the Consolidated Reports of Condition and Income (Call Report), which 
are currently approved collections of information. After considering 
the comments received, the Federal Financial Institutions Examination 
Council (FFIEC), of which the agencies are members, approved the 
proposed revisions, including selecting one of two alternatives for one 
proposed change. Therefore, in accordance with the requirements of the 
Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the agencies 
hereby give notice that they plan to submit to the Office of Management 
and Budget (OMB) requests for review of the Call Report collections of 
information.
    In accordance with the requirements of the Paperwork Reduction Act 
of 1995, the OCC, the Board, and the FDIC may not conduct or sponsor, 
and the respondent is not required to respond to, an information 
collection that has been extended, revised, or implemented on or after 
October 1, 1995, unless it displays a currently valid Office of 
Management and Budget (OMB) control number.
    Comments are invited on: (a) Whether the Call Report collections of 
information are necessary for the proper performance of the agencies' 
functions, including whether the information has practical utility; (b) 
the accuracy of the agencies' estimates of the burden of the 
information collections, including the validity of the methodology and 
assumptions used; (c) ways to enhance the quality, utility, and clarity 
of the information to be collected; (d) ways to minimize the burden of 
the collections on respondents, including through the use of automated 
collection techniques or other forms of information technology; and (e) 
estimates of capital or startup costs and costs of operation, 
maintenance, and purchase of services to provide information.

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

Addresses: interested parties are invited to submit written comments to 
any or all of the agencies. All comments, which should refer to the OMB 
control number(s), will be shared among the agencies.
    OCC: Written comments should be submitted to the Communications 
Division, Office of the Comptroller of the Currency, 250 E Street, SW, 
Third Floor, Washington, DC 20219; Attention: Paperwork Docket No. 
1557-0081 [Fax number (202) 874-5274; Internet address: 
[email protected]]. Comments will be available for inspection 
and photocopying at the ODD's Public Reference Room, 250 E Street, SW, 
Washington, DC 20219 between 9:00 a.m. and 5:00 p.m. on business days. 
Appointments for inspection of comments may be made by calling (202) 
874-5043.
    Board: Written comments should be addressed to Jennifer J. Johnson, 
Secretary, Board of Governors of the Federal Reserve System, 20th and C 
Streets, NW, Washington, DC 20551, or delivered to the Board's mail 
room between 8:45 a.m. and 5:15 p.m., and to the security control room 
outside of those hours. Both the mail room and the security control 
room are accessible from the courtyard entrance on 20th Street between 
Constitution Avenue and C Street, NW. Comments received may be 
inspected in room M-P-500 between 9:00 a.m. and 5:00 p.m., except as 
provided in Sec. 261.12 of the Board's Rules Regarding Availability of 
Information, 12 CFR 261.12(a).
    FDIC: Written comments should be addressed to Robert E. Feldman, 
Executive Secretary, Attention: Comments/OES, Federal Deposit Insurance 
Corporation, 550 17th Street, NW, Washington, DC 20429. Comments may be 
hand delivered to the guard station at the rear of the 550 17th Street 
Building (located on F Street) on business days between 7:00 a.m. and 
5:00 p.m. (Fax number: (202) 898-3838; Internet address: 
[email protected]). Comments may be inspected and photocopied in the 
FDIC Public Information Center, Room, 100, 801 17th Street, NW, 
Washington, DC, between 9:00 a.m. and 4:30 p.m. on business days.
    A copy of the comments may also be submitted to the OMB desk 
officer for the agencies: Alexander T. Hunt, Office

[[Page 7690]]

of Information and Regulatory Affairs, Office of Management and Budget, 
New Executive Office Building, room 3208, Washington, DC 20503.

for further information contact: Requests for additional information or 
a copy of the submission may be obtained by contacting:
    OCC: Jessie Gates, OCC Clearance Officer, or Camille Dixon, 
Legislative and Regulatory Activities Division, (202) 874-5090, Office 
of the Comptroller of the Currency, 250 E Street, SW, Washington, DC 
20219.
    Board: Mary M. West, Chief, Financial Reports Section, (202) 452-
3829, Division of Research and Statistics, Board of Governors of the 
Federal Reserve System, 20th and C Streets, NW, Washington, DC 20551. 
Telecommunications Device for the Deaf (TDD) users may contact Diane 
Jenkins, (202) 452-3544, Board of Governors of the Federal Reserve 
System, 20th and C Streets, NW, Washington, DC 20551.
    FDIC: Steven F. Hanft, FDIC Clearance Officer, (202) 898-3907, 
Office of the Executive Secretary, Federal Deposit Insurance 
Corporation, 550 17th Street NW, Washington, DC 20429.

supplementary information: Request for OMB approval to extend, with 
revision, the following currently approved collections of information:
    Report Title: Consolidated Reports of Condition and Income (Call 
Report).
    Form Number: FFIEC 031, 032, 033, 034.\1\
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    \28\ The FFIEC 031 report form is filed by banks with domestic 
and foreign offices. The FFIEC 032 report form is filed by banks 
with domestic offices only and total assets of $100 million or more 
but less than $300 million. The FFIEC 034 report form is filed by 
banks with domestic offices only and total assets of less than $100 
million.
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    Frequency of Response: Quarterly.
    Affected Public: Business or other for-profit.

For OCC

    OMB Number: 1557-0081.
    Estimated Number of Respondents: 2,600 national banks.
    Estimated Time per Response: 39.92 burden hours.
    Estimated Total Annual Burden: 415,220 burden hours.

For Board

    OMB Number: 7100-0036.
    Estimated Number of Respondents: 994 state member banks.
    Estimated Time per Response: 45.80 burden hours.
    Estimated Total Annual Burden: 182,101 burden hours.

For FDIC

    OMB Number: 3064-0052.
    Estimated Number of Respondents: 5,985 insured state nonmember 
banks.
    Estimated Time per Response: 29.67 burden hours.
    Estimated Total Annual Burden: 710,345 burden hours.
    The estimated time per response is an average which varies by 
agency because of differencies in the composition of the banks under 
each agency's supervision (e.g., size distribution of banks, types of 
activities in which they are engaged, and number of banks with foreign 
offices). The time per response for a bank is estimated to range from 
15 to 400 hours, depending on individual circumstances.

General Description of Report

    This information collection is mandatory: 12 U.S.C. 161 (for 
national banks), 12 U.S.C. 324 (for state member banks), and 12 U.S.C. 
1817 (for insured state nonmember commercial and savings banks). Except 
for select sensitive items, this information collection is not given 
confidential treatment. Small business (i.e., small banks) are 
affected.

Abstract

    Banks file Call Reports with the agencies each quarter for the 
agencies' use in monitoring the condition and performance of reporting 
banks and the industry as a whole. In addition, Call Reports provide 
the most current statistical data available for evaluating bank 
corporate applications such as mergers, for identifying areas of focus 
for both on-site and off-site examinations, and for monetary and other 
public policy purposes. Call Reports are also used to calculate all 
banks' deposit insurance and Financing Corporation assessments and 
national banks' semiannual assessment fees.

Current Actions

    On October 1, 1998, the OCC, the Board, and the FDIC jointly 
published a notice soliciting comments for 60 days on proposed 
revisions to the Call Report (63 FR 52794). The notice described the 
specific changes that the agencies, with the approval of the FFIEC, 
were proposing to implement as of March 31, 1999.
    The agencies initially proposed to revise the Call Report effective 
March 31, 1999, by: deleting the existing items from the amortized cost 
and fair value of high-risk mortgage securities and (on the FFIEC 034 
report) for losses deferred pursuant to 12 U.S.C. 1823(j); adding new 
items for accumulated net gains (losses) on cash flow hedges and for 
the year-to-date change in this new component of equity capital in 
response to the issuance of a new accounting standard for derivative 
instruments and hedging activities; either adding a new item or 
expanding the scope of an existing item in order to distinguish 
nonmortgage servicing assets from other intangible assets; and making a 
number of instructional changes, primarily to incorporate recent 
changes in accounting standards, to further conform with generally 
accepted accounting principles in other areas, and to improve the 
reporting of certain regulatory capital information.
    After considering the comments, the FFIEC and the agencies decided 
to proceed with all of the proposed changes. With respect to 
nonmortgage servicing assets, the FFIEC and the agencies selected the 
proposed approach under which the scope of the existing item for 
``purchased credit card relationships'' would be expanded to include 
these servicing assets.

Comments

    In response to this notice, the agencies collectively received two 
comment letters, both of which were from bankers' associations. One 
association supported the proposed reductions in detail, accepted the 
new items proposed for accumulated net gains (losses) on cash flow 
hedges, preferred the approach for reporting nonmortgage servicing 
assets which the FFIEC and the agencies have decided to implement, and 
supported the proposed instructional change affecting the reporting of 
market risk equivalent assets. This association did not address the 
other proposed instructional changes. The second association stated 
that it ``generally concurs with the proposals'' and favored adding a 
new item to the Call Report for nonmortgage servicing assets, an 
approach that the FFIEC and the agencies decided not to take. This 
association did not comment on any of the proposed instructional 
changes. However, it recommended that ``unless there is an overriding 
need for immediate implementation * * * any changes to the Call Report 
be postponed until the March 31, 2000 report to avoid complicating Year 
2000 systems compliance requirements.''
    The FFIEC and the agencies believe that it may be less problematic 
to implement the new cash flow hedge items and the nonmortgage 
servicing assets reporting change in 1999 than to delay implementation 
until the first quarter of 2000. Because of their fiscal years, some 
banks must implement Financial Accounting Standards Board (FASB) 
Statement No. 133, Accounting for Derivative Instruments and Hedging 
Activities (FAS 133), in the third or

[[Page 7691]]

fourth quarter of 1999. Other banks may choose to adopt FAS 133 earlier 
than required at the beginning of any fiscal quarter in 1999, e.g., as 
of January 1, 1999. The information to be reported in the new cash flow 
hedge items is information that banks adopting FAS 133 in 1999 will be 
required to report in financial statements prepared under generally 
accepted accounting principles in 1999. Banks not required to adopt FAS 
133 until the year 2000 will not have any amounts to report in the new 
items during 1999. In addition, only a relatively small percentage of 
banks hold freestanding derivatives that are subject to FAS 133. As of 
September 30, 1998, approximately 500 of the more than 8,900 FDIC-
insured commercial banks reported having such derivatives. Some banks 
may also hold financial instruments with embedded derivatives that may 
be separated from the host contract and accounted for as a derivative 
under FAS 133.
    As for nonmortgage servicing assets, the regulatory capital 
amendment which led the agencies to propose this reporting change took 
effect on October 1, 1998. Banks with nonmortgage servicing assets that 
wish to include these assets in regulatory capital, subject to the 
limits set forth in the agencies' capital standards, have already 
modified their internal regulatory capital calculation procedures for 
this change and are already reporting regulatory capital information in 
Call Report Schedule RC-R--Regulatory Capital in accordance with the 
amended capital standards. Under these capital standards, nonmortgage 
servicing assets must be combined with purchased credit card 
relationships for purposes of applying a Tier 1 capital sublimit. 
Therefore, revising the existing Call Report item for purchased credit 
card relationships to include nonmortgage servicing assets (rather than 
having separate items for each of these two types of intangibles, which 
the agencies had also proposed as an alternative) is similar to the 
approach taken in the capital standards. In addition, this Call Report 
revision should affect only a small number of banks. Fewer than 100 
reported that they had any purchased credit card relationships as of 
September 30, 1998. Call Report data for that date also suggest that 
fewer than 100 banks had any nonmortgage servicing assets.
    In its comment letter, the first bankers' association also 
commented that the agencies have not yet made significant progress in 
satisfying the requirements of Section 307 of the Riegle Community 
Development and Regulatory Improvement Act of 1994. Section 307 
requires the four federal banking and thrift agencies to work jointly 
to develop a single form for the filing of core information by banks, 
savings associations, and bank holding companies. It also directs the 
agencies to review the information they collect from these institutions 
that supplements the core information and eliminate those reporting 
requirements that are not warranted for safety and soundness or other 
public purposes. In this regard, the FFIEC and the agencies regularly 
review the existing Call Report requirements in order to identify items 
that are no longer sufficiently useful to warrant their continued 
collection. Since 1995 these reviews have led to the elimination of 
numerous items and reductions in the level of detail in several areas.
    In addition, the FFIEC and the agencies have, as part of their 
Section 307 efforts, adopted generally accepted accounting principles 
as the reporting basis for the Call Report; combined the four sets of 
Call Report instructions into a single comprehensive set; developed an 
index to the instructions; made the Call Report forms, instructions, 
and data available on the Internet; and implemented an electronic 
filing requirement for the Call Report. The FFIEC and the agencies are 
currently surveying Call Report users within the agencies and are 
continuing to review the uses of individual Call Report items in order 
to ascertain their relative importance to the agencies. These actions 
are part of the agencies' ongoing effort to eliminate information with 
the least practical utility and to increase uniformity among regulatory 
reports.

Summary of the Revisions to the Call Report

    The revisions to the Call Report listed below, which have been 
approved by the FFIEC, must be reviewed and approved by OMB. The 
agencies expect to implement these changes as of the March 31, 1999, 
report date. Unless otherwise indicated, the revisions will apply to 
all four sets of report forms (FFIEC 031, 032, 033, and 034). 
Nonetheless, as is customary for Call Report changes, banks are advised 
that, for the March 31, 1999, report date, reasonable estimates may be 
provided for any new or revised item for which the requested 
information is not readily available.
Deletions
    (1) In Schedule RC-B--Securities, the agencies are deleting 
Memorandum items 8.a and 8.b for the amortized cost and fair value of 
``High-risk mortgage securities.''
    (2) The agencies are deleting the balance sheet items on the FFIEC 
034 report forms for small banks relating to deferred agricultural loan 
losses (Schedule RC, items 12.b, 12.c, 28.b, and 28.c).
New or Revised Items
    (1) The agencies are adding a new item 26.c to the equity capital 
section of Schedule RC--Balance Sheet for accumulated net gains 
(losses) on cash flow hedges under FASB Statement No. 133, Accounting 
for Derivative Instruments and Hedging Activities. The agencies also 
are adding a new item 11.b to Schedule RI-A--Changes in Equity Capital 
for the year-to-date change in these accumulated net gains (losses). 
Existing item 11 on Schedule RI-A is renumbered as item 11.a.
    (2) In Schedule RC-M--Memoranda, the agencies are expanding the 
scope of item 6.b.(1), ``Purchased credit card relationships,'' to 
cover ``Purchased credit card relationships and nonmortgage servicing 
assets,'' with item 6.b.(2) covering the remaining ``All other 
identifiable intangible assets.'' Through 1998, nonmortgage servicing 
assets have been reported in item 6.b.(2).
Instructional Changes
    (1) The agencies are revising the instructions to conform with 
American Institute of Certified Public Accountants' Statements of 
Position 98-1, Accounting for the Costs of Computer Software Developed 
or Obtained for Internal Use, and 98-5, Reporting on the Costs of 
Start-Up Activities.
    (2) The agencies are adding a new entry to the Glossary section of 
the instructions which discusses the reporting of securities 
activities, including descriptions of certain trading practices. These 
practices were previously discussed in the agencies' 1992 Supervisory 
Policy Statement on Securities Activities, which was replaced in April 
1998 by a revised policy statement on investment securities that does 
not address these reporting issues.
    (3) The agencies are revising the Glossary entry for ``Allowance 
for Loan and Lease Losses'' to indicate that the cost basis of a loan 
or lease that has been reduced through a direct write-down may not be 
increased at a later date by reversing the previous write-down.
    (4) The agencies are revising the Glossary entry for ``Business 
Combinations'' and the instructions for the Schedule RC-M, item 6.c, 
``Goodwill,'' to clarify that goodwill cannot ordinarily be sold or 
dividended

[[Page 7692]]

 to a parent company or affiliate or charged off in the year of 
acquisition.
    (5) For banks subject to the market risk capital guidelines, the 
agencies are revising the instructions for reporting ``Net risk-
weighted assets'' in item 3.d.(1) of Schedule RC-R--Regulatory Capital 
so that the bank's ``Market risk equivalent assets'' are included in 
this item. The caption for item 3.d.(2) of Schedule RC-R is modified to 
read ``Market risk equivalent assets included in net risk-weighted 
assets above.'' This makes the reporting of ``Net risk-weighted 
assets'' in the Call Report consistent with the reporting of this item 
in the FR Y-9C bank holding company report.
    (6) The agencies are revising the instructions for reporting low 
level recourse transactions in Schedule RC-R to explain how the 
allowable amount of the allowance for loan and lease losses should be 
calculated by banks that use the ``direct reduction method'' for these 
transactions.

    Dated: February 5, 1999.
Mark J. Tenhundfeld,
Assistant Director, Legislative and Regulatory Activities Division, 
Office of the Comptroller of the Currency.
    Board of Governors of the Federal Reserve System, February 8, 
1999.
Jennifer J. Johnson,

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

Federal Deposit Insurance Corporation
Robert E. Feldman,
Executive Secretary.
[FR Doc. 99-3620 Filed 2-12-99; 8:45 am]
BILLING CODES 4810-33-M, 6210-01-M, 6714-01-M