[Federal Register Volume 66, Number 43 (Monday, March 5, 2001)]
[Notices]
[Pages 13368-13377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-5242]


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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; Comment Request

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

ACTION: Notice of information collection to be submitted to OMB for 
review and approval under the Paperwork Reduction Act of 1995.

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SUMMARY: In accordance with the requirements of the Paperwork Reduction 
Act of 1995 (44 U.S.C. chapter 35), the OCC, the Board, and the FDIC 
(the ``agencies'') may not conduct or sponsor, and the respondent is 
not required to respond to, an information collection unless it 
displays a currently valid Office of Management and Budget (OMB) 
control number. On May 31, 2000, 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 the agencies received, the Federal Financial Institutions 
Examination Council (FFIEC), of which the agencies are members, adopted 
several modifications to the revised reporting requirements initially 
proposed. However, the proposed reporting of subprime lending data 
remains under study and the collection of these data will not be 
implemented as of March 31, 2001, as proposed.

DATES: Comments must be submitted on or before April 4, 2001.

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., 
Public Information Room, Mail Stop 1-5, Attention: 1557-0081, 
Washington, DC 20219. In addition, comments may be sent by facsimile 
transmission to (202) 874-4448, or by electronic mail to 
[email protected]. Comments will be available for inspection 
and photocopying at the OCC's Public Reference Room, 250 E Street, SW., 
Washington, DC 20219. 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, submitted by electronic mail to 
[email protected], 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 a.m. and 5 p.m., except as provided 
in section 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 a.m. 
and 5 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 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 of Information and 
Regulatory Affairs, Office of Management and Budget, New Executive 
Office Building, Room 3208, Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: Sample copies of the two versions of 
the Call Report forms (designated forms FFIEC 031 and FFIEC 041) that 
will replace the current four versions of the Call Report (forms FFIEC 
031, 032, 033, and 034) effective March 31, 2001, can be obtained at 
the FFIEC's web site (www.ffiec.gov) and at the FDIC's web site.\1\ 
Sample copies of these revised Call Report forms also may be requested 
from any of the agency clearance officers whose names appear below.
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    \1\ On the FDIC's web site, a sample copy of the FFIEC 031 
report form for March 31, 2001, can be accessed at http://www.fdic.gov/news/news/financial2001/fi10105d.pdf. A sample copy of 
the FFIEC 041 report form for March 31, 2001, can be accessed at 
http://www.fdic.gov/new/news/financial/2001/fi10105e.pdf.
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    OCC: Jessie Dunaway, OCC Clearance Officer, or Camille Dixon, (202) 
874-5090, Legislative and Regulatory Activities Division, Office of the 
Comptroller of the Currency, 250 E Street, SW., Washington, DC 20219.
    Board: 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.
    Form Number: Current form numbers: FFIEC 031, 032, 033, and 034. 
Revised form numbers: FFIEC 031 and 041.\2\
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    \2\ The FFIEC 031 report form will continue to be filed by banks 
with domestic and foreign offices. At present, the FFIEC 032 report 
form is filed by banks with domestic offices only and $300 million 
or more in total assets, the FFIEC 033 report form is filed by banks 
with domestic offices only and $100 million or more but less than 
$300 million in total assets, and the FFIEC 034 report form is filed 
by banks with domestic offices only and less than $100 million in 
total assets. The FFIEC 041 report form will replace the FFIEC 032, 
033, and 034 report forms and will be filed by all banks with 
domestic offices only.

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[[Page 13369]]

    Frequency of Response: Quarterly.
    Affected Public: Business or other for-profit.
    For OCC:
    OMB Number: 1557-0081.
    Estimated Number of Respondents: 2,300 national banks.
    Estimated Time per Response: 41.11 burden hours.
    Estimated Total Annual Burden: 378,194 burden hours.
    For Board:
    OMB Number: 7100-0036.
    Estimated Number of Respondents: 1,001 state member banks.
    Estimated Time per Response: 47.15 burden hours.
    Estimated Total Annual Burden: 188,789 burden hours.
    For FDIC:
    OMB Number: 3064-0052.
    Estimated Number of Respondents: 5,640 insured state nonmember 
banks.
    Estimated Time per Response: 31.76 burden hours.
    Estimated Total Annual Burden: 716,612 burden hours.
    The estimated time per response is an average which varies by 
agency because of differences 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 
14 to 500 hours, depending on individual circumstances. Moreover, 
because the revisions to the Call Report will be phased in over several 
quarters rather than all at once, the time per response represents an 
estimate of the reporting burden when the phase-in has been completed 
on March 31, 2002.
    In addition, the effect on the time per response of the changes to 
the Call Report that are the subject of this submission for OMB review 
will vary from bank to bank. Except for the one-time additional burden 
associated with their initial adjustment to the revisions to the 
reporting requirements, many smaller banks should experience an overall 
decrease in time per response, after considering eliminations of items 
and reductions in detail, because they are not involved in the 
activities for which most of the new information will be collected. In 
contrast, the time per response for many large banks is expected to 
increase, even after considering eliminations of items and reductions 
in detail, because the proposed new information will be applicable to 
them and because the reporting of trust activities will be moved into 
the Call Report from two separate trust activities reports.\3\
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    \3\ The Annual Report of Trust Assets (FFIEC 001) and the Annual 
Report of International Fiduciary Activities (FFIEC 006): for the 
OCC, OMB Number 1557-0127; for the Board, OMB Number 7100-0031; and 
for the FDIC, OMB Number 3064-0024. The FDIC does not collect the 
FFIEC 006.
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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 selected items, this information collection is not given 
confidential treatment. Small businesses (i.e., small banks) are 
affected.

Abstract

    Banks file Call Reports with the agencies each quarter for the 
agencies' use in monitoring the condition, performance, and risk 
profile 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

    The agencies requested comment on proposed revisions to the Call 
Report that are intended to make the content of the report more 
relevant to the agencies. The more significant of the proposed 
revisions included:
     Streamlining the present reporting requirements through 
deletions of items and reductions in detail that would produce a 
decrease of approximately 10 percent in the overall number of 
individual data items currently contained on the four existing versions 
of the Call Report forms (excluding items reported for regulatory 
capital purposes), the collection of which is no longer warranted;
     Adopting a new regulatory capital reporting approach that 
uses step-by-step ``building blocks'' to compute the key elements of 
the capital ratios;
     Combining the three separate report forms for banks of 
different sizes that have only domestic offices into a single form 
while retaining the separate form for banks with foreign offices;
     Collecting new information on:
     Nontraditional and higher risk bank activities, i.e., 
subprime loans, securitizations and asset sale activities, additional 
categories of noninterest income, and restructured derivative 
contracts, and
     Federal Home Loan Bank advances and other borrowings;
     Replacing the two separate trust activities reports with a 
single, streamlined trust schedule in the Call Report;
     Eliminating the confidential treatment for loans, leases, 
and other assets that are past due 30 through 89 days; and
     Eliminating the additional 15-day period that banks with 
more than one foreign office are given for submitting their Call 
Reports.
    These revised reporting requirements were also designed to 
complement the agencies' emphasis on risk-focused supervision. 
Furthermore, the revisions address certain aspects of sections 307(b) 
and (c) of the Riegle Community Development and Regulatory Improvement 
Act of 1994 (the Riegle Act). These sections direct the federal banking 
agencies to work jointly toward more uniform reporting, review the 
information that institutions currently report, and eliminate existing 
reporting requirements that are not warranted for safety and soundness 
or other public policy purposes.\4\
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    \4\ Sections 1211(b) and (c) of the American Homeownership and 
Economic Opportunity Act of 2000, Pub. L. 106-569, which was signed 
into law on December 27, 2000, are identical to Sections 307(b) and 
(c) of the Riegle Act. As a consequence, the Call Report revisions 
that are the subject of this submission likewise address certain 
aspects of Sections 1211(b) and (c) of Pub. L. 106-569.
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    After considering the comments the agencies received, the FFIEC 
approved several modifications to the initial set of proposed 
revisions. However, the proposed reporting of subprime lending data 
remains under study and the collection of these data will not be 
implemented as of March 31, 2001, as proposed. The comments on the 
agencies' initial Call Report proposal and the changes made in response 
to the comments are discussed below.
    Type of Review: Revisions of currently approved collections.
    On May 31, 2000, the agencies jointly published a notice soliciting 
comments for 60 days on proposed revisions to their currently approved 
Call Report information collections (65 FR 34801). The notice described 
the specific changes that the agencies, with the approval of the FFIEC, 
were proposing to implement as of March 31, 2001.
    In response to this notice, the agencies collectively received 
comments

[[Page 13370]]

from 110 respondents: 86 banks and banking organizations, 15 state and 
national banking trade groups and other bankers' organizations, 4 
community groups, 2 bank supervisory groups, a mortgage insurance trade 
group, a law firm, and a government-sponsored enterprise. Of these 110 
respondents, 88 commented on the proposed reporting of subprime lending 
data and the majority of these commenters addressed only this aspect of 
the proposal. The agencies and the FFIEC have considered all of the 
comments received on the proposal.
    Most of the commenters that discussed the streamlining of the 
information currently collected in the Call Report supported this 
portion of the proposed revisions. However, several small banks 
complained that the Call Report forms they would be receiving in 2001 
would be increasing from 29 to 41 pages and some of these institutions 
recommended that the agencies continue to keep a separate form for 
small banks. Nevertheless, the agencies note that the single form for 
all banks with domestic offices only, which has been designated the 
FFIEC 041, contains reporting thresholds for certain schedules and 
portions of schedules that will exempt smaller institutions from having 
to complete these schedules or portions thereof. In addition, because 
of the specialized nature of the activities covered in the new schedule 
on securitizations and asset sales, this schedule will not be 
applicable to most banks. The Call Report's new schedule on trust 
activities, which replaces two separate trust activities reports, will 
only be applicable to about 2,300 institutions.
    In addition, one national banking trade group, while urging the 
FFIEC and the agencies to move forward with the proposed deletions and 
reductions in detail in March 2001, stated that the proposed revisions 
did not achieve the goal of streamlining the Call Report burden as 
required by the Riegle Act. This trade group indicated that the 
agencies' review of information that banks report in the Call Report 
failed to meet the statute's mandate to ``eliminate requirements that 
are not warranted for reasons of safety and soundness or other public 
purposes.'' The FFIEC and the agencies have interpreted ``public 
purposes'' to mean public policy purposes. The FFIEC and the agencies 
therefore believe that the Riegle Act permits the agencies to retain 
(and impose) reporting requirements for purposes other than safety and 
soundness that assist the agencies in fulfilling their missions.
    In contrast, the banking trade group stated that Congress intended 
``that information required for another public purpose was intended to 
be narrowly construed'' because ``the conference report [on the Riegle 
Act] gives only one example of a `public purpose,' '' i.e., information 
needed to determine an institution's deposit insurance premiums. The 
agencies believe that, by using the word ``purposes,'' which is plural, 
Congress clearly intended for the agencies to read the statutory 
language more broadly than the trade group suggested with respect to 
the purposes for which data collection is warranted.
    In developing the streamlining portion of the proposed Call Report 
revisions, the agencies carefully reviewed the purposes for which each 
existing Call Report data item is used. This process involved 
requesting feedback from the staffs within the agencies on the specific 
uses of each Call Report item. The trade group's comment letter asked 
the agencies to ``release their compilation of `the purposes for which 
and extent to which they use each data item.' '' In this regard, the 
results of the agencies' review of the uses of the Call Report items 
were not compiled as a single statistical report. Rather, each agency 
analyzed its use of each Call Report item in order to determine whether 
and, if so, how the item was essential to the agency's safety and 
soundness efforts or critical for other public policy purposes. Those 
items lacking sufficient practical utility were proposed for 
elimination or collection in a more appropriate aggregate form.
    As a result, the agencies believe the principal reason for 
collecting virtually all of the items in the Call Report as it has been 
streamlined, aside from those items used for deposit insurance 
assessment calculations, directly relate to their safety and soundness 
objectives. The principal safety and soundness uses of Call Report data 
were identified as examination activities, including pre-examination 
planning and report preparation; analysis of industry performance and 
risk exposures; off-site surveillance and modeling, e.g., the Uniform 
Bank Performance Report, the FDIC's SCOR (Statistical CAMELS Off-site 
Rating), and the Board's SEER (System to Estimate Examination Ratings) 
models; the evaluation of bank applications; and assessing compliance 
with safety and soundness laws and regulations such as regulatory 
capital requirements. The agencies acknowledge that Call Report data 
are also used for public policy purposes besides deposit insurance 
assessments, such as assessing consumer compliance issues including the 
Community Reinvestment Act, constructing and benchmarking various 
financial aggregate measures, constructing sources and uses of funds 
for the banking sector in the flow of funds accounts and debt 
aggregates, and publishing banking statistics. However, the agencies 
believe that items collected solely for these other public policy 
purposes are a small percentage of the Call Report items when compared 
to those collected for safety and soundness purposes.
    More specific information on the comments received is presented 
below.
    Implementation Timetable for the Call Report Revisions--With 
respect to the proposed information that would be new to the Call 
Report, two trade groups whose members include large banks that would 
be subject to these new reporting requirements and four large banks 
addressed the proposed March 31, 2001, effective date for this new 
information. They stated that, considering the complexity of a number 
of the proposed Call Report changes and changes in generally accepted 
accounting principles taking effect at the beginning of 2001, they 
would not have time to put reporting systems in place by March 31. Some 
of these commenters suggested that the agencies should phase in the 
reporting of the new data (including trust data) quarter by quarter 
over the course of 2001 or delaying it until 2002. A few smaller banks 
also commented that there would be insufficient time to modify software 
and reporting systems by March 31 and to train personnel in the 
proposed new reporting requirements.
    The FFIEC and the agencies have concluded that deferring the 
starting dates for reporting certain new information until the dates 
recommended by respondents would be a reasonable response to bankers' 
concerns about the need for lead time to make necessary systems changes 
and train staff. The remainder of the revisions to the Call Report that 
the FFIEC and the agencies have decided to proceed with will take 
effect in March 2001 as originally proposed, except as discussed in the 
following section.
    In this regard, those respondents that suggested a specific 
implementation schedule recommended the introduction of the proposed 
securitization and asset sales activity schedule in June 2001, the 
subprime loan reporting requirements in September 2001, and the trust 
activity reporting in December 2001. As discussed further below, 
because the agencies are continuing to evaluate how to proceed with the 
proposed subprime

[[Page 13371]]

lending reporting requirements, the collection of subprime lending data 
will not be implemented as of March 31, 2001, as proposed.
    Reporting Loan Information by Loan Category Outside the Loan 
Schedule--The Call Report currently uses two different definitional 
schemes for reporting information on loan income, loan averages, past 
due and nonaccrual loans, and charge-offs and recoveries by loan 
category. The definitional scheme applicable to a particular bank 
depends primarily on its size. Banks that file the FFIEC 033 and 034 
report forms, i.e., banks with domestic offices only and less than $300 
million in total assets, are permitted to report these four types of 
loan information using general loan categories. These banks define for 
themselves which of their loans to include in the general loan 
categories based upon their own individual loan systems. In contrast, 
banks that currently file the FFIEC 031 and 032 report forms, i.e., 
banks with foreign offices or with $300 million or more in total 
assets, must provide these four types of loan information using the 
standard loan category definitions from the Call Report's loan schedule 
(Schedule RC-C, part I).
    To obtain more consistent loan information, the agencies proposed 
to adopt uniform loan categories and definitions based on the standard 
loan categories found in the loan schedule. These standard loan 
categories would be used by all banks for reporting loan income, loan 
averages, past due and nonaccrual loans, and loan charge-offs and 
recoveries by loan category. However, banks with less than $25 million 
in assets currently are not required to report a breakdown of their 
total loan income or their quarterly average of total loans by loan 
category. The agencies requested comment on the merits of eliminating 
this exemption.
    In their comment letters, a few small banks indicated that it would 
be difficult to change from reporting certain loan information using 
self-defined general loan categories to reporting based on the standard 
loan category definitions. One bank trade group also observed that 
community banks would have to modify various general ledger accounts in 
order to implement this reporting change, which would be a significant 
burden for many of them. However, other small banks commented favorably 
on parts of the proposal without mentioning the change in the loan 
category definitions that they would have to use. The only bank with 
less than $25 million in assets that commented on the proposed changes 
to the existing reporting requirements urged the agencies to leave the 
Call Report unchanged in its entirety.
    All banks regardless of size currently provide a breakdown of the 
loans in their loan portfolios as of the Call Report date each quarter 
using the standard loan categories. Therefore, the definitions for the 
standard loan categories should not be entirely foreign to banks with 
less than $300 million in assets. Nevertheless, considering the 
concerns expressed by commenters, the FFIEC and the agencies believe 
that a transition rule for banks with domestic offices only and less 
than $300 million in assets (as of June 30, 2000) would help to address 
their concerns about this reporting change. Therefore, these banks may 
use their best efforts through year-end 2001 to report information on 
loan income, loan averages, past due and nonaccrual loans, and charge-
offs and recoveries by loan category based on the standard Call Report 
loan category definitions.\5\ However, banks with less than $25 million 
in assets that do not currently report loan income and averages by loan 
category would retain this reporting exemption during 2001. This will 
provide the smallest banks with one year to plan for and make whatever 
changes may be needed in their records and reporting systems. The 
transition period will end in the first quarter of 2002, at which time 
all banks should be reporting loan information outside the loan 
schedule based on that schedule's standard loan category definitions.
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    \5\ For example, for each new loan, a bank could begin reporting 
loan information using the appropriate standard loan category in 
2001. For existing loans, the banks could make reasonable estimates 
of the amounts that should be reallocated from the general loan 
categories to the various standard loan categories.
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    Regulatory Capital Reporting--The agencies proposed to adopt a 
revised regulatory capital reporting approach and schedule that uses 
step-by-step building blocks to compute the key elements of the capital 
ratios for all banks. More commenters supported this revised approach 
than objected to it. However, one bank trade group pointed out that the 
schedule would be expanded for many banks that are not required to 
complete the existing schedule in its entirety if a capital ratio test 
is met. One respondent suggested that the changes to the schedule 
should be deferred until the new capital framework under development 
internationally by the Basel Committee on Banking Supervision takes 
effect. In this regard, the Basel Committee has proposed that 
implementation of its new framework begin in 2004. Moreover, a number 
of larger banking organizations have for some time been recommending 
that a more logical reporting format for regulatory capital 
information, such as the format used in bank holding company reports 
filed with the Board on form FR Y-9C, be incorporated into the Call 
Report. The regulatory capital schedule proposed by the agencies would 
accomplish this. After considering all the comments addressing the 
proposed new approach, the FFIEC and the agencies have concluded that 
they should proceed with the capital reporting revisions.
    Nevertheless, one banking organization commented that the portion 
of the proposed regulatory capital schedule in which assets are 
allocated to appropriate risk weight categories was more detailed than 
necessary. The bank suggested that the agencies could reduce the number 
of separate asset categories in this part of the schedule without any 
real loss of information because of the typical risk weights to which 
these assets would be assigned. The agencies agreed with this 
suggestion and have simplified the schedule in the manner the bank 
recommended. Accordingly, the proposed separate lines for reporting 
interest- and noninterest-bearing balances due from depository 
institutions have been combined as have six separate lines for such 
``other assets'' as bank premises, other real estate owned, and 
intangible assets.
    Even with this reduction in the number of separate asset 
categories, the agencies recognize that the revised regulatory capital 
schedule may give some banks that were previously not required to 
complete existing Schedule RC-R in its entirety the impression that 
they are now required to go through an extensive exercise in risk-
weighting their assets and off-balance sheet items. The agencies' 
proposal reminded banks that they are not required to identify each on-
balance sheet asset and off-balance sheet item that qualifies for a 
risk weight of less than 100 percent. Rather, each bank can decide for 
itself how detailed an analysis of its assets and off-balance sheet 
items it wishes to perform and how many of the specific lower risk-
weighted items it wishes to identify. In other words, a bank can choose 
from among its assets and off-balance sheet items that have a risk 
weight of less than 100 percent which ones to risk-weight at an 
appropriate lower risk weight, or it can simply risk-weight some or all 
of these items at a 100 percent risk weight. A statement along these 
lines has been placed at the beginning of the risk-weighting section of 
Schedule RC-R in the Call Report forms to ensure that banks are aware 
of

[[Page 13372]]

this. The FFIEC and the agencies also reiterated this position on risk-
weighting in materials they issued to all banks on January 17, 2001, 
describing all of the revisions to the Call Report. For banks that were 
previously not required to complete existing Schedule RC-R in its 
entirety, these materials also describe a simplified risk-weighting 
process they could follow in the revised schedule that is similar to 
the one they have been using when they perform the capital ratio test 
in the existing schedule.
    The proposal also noted that the agencies are reviewing and 
implementing applicable provisions of the Gramm-Leach-Bliley Act. One 
area where the agencies' review of the Act indicated the need to modify 
the Call Report involves regulatory capital requirements for banks with 
financial subsidiaries. In this regard, the agencies decided to add six 
new items to the regulatory capital schedule. These items cover the 
adjustments to regulatory capital that are necessary to calculate the 
capital ratios of banks with financial subsidiaries, i.e., adjustments 
to total risk-based capital, risk-weighted assets, and average total 
assets for the leverage ratio. Over the near term, these financial 
subsidiary items are likely to be applicable to only a small percentage 
of banks.
    Finally, one bank observed that, in the version of Schedule RC-R 
that appeared in the proposed Call Report forms, the items for ``Net 
unrealized gains (losses) on available-for-sale debt securities'' and 
``Net unrealized gains on available-for-sale equity securities'' in the 
leverage ratio section of the schedule appeared to be unnecessary 
because of the manner in which average total assets is calculated. The 
FFIEC and the agencies agree with this commenter and have deleted these 
two items.
    New Data on Subprime Lending Activities--The agencies proposed to 
collect information on subprime lending to make possible the early 
detection and proper supervision of subprime lending programs through 
offsite monitoring procedures. Banks involved in subprime lending would 
report quarter-end data for eight categories of subprime loans as well 
as past due and nonaccrual subprime loans and the year-to-date charge-
offs and recoveries on these loans for two broader categories of loans. 
The proposal acknowledged that the quality and validity of the proposed 
Call Report information on subprime lending would depend on the 
agencies' ability to develop a workable definition of subprime lending. 
The agencies also indicated that subprime loans could be defined on the 
basis of either (a) loan portfolios or programs that possess certain 
characteristics or (b) individual loans with these characteristics. The 
proposal included numerous questions pertaining to the definition and 
specifically requested comment on this issue. The proposed definition 
was based on the definition in the agencies' March 1999 guidelines for 
subprime lending and, in part, characterized these loans as 
``extensions of credit to borrowers who, at the time of the loan's 
origination, exhibit characteristics indicating a significantly higher 
risk of default than traditional bank lending customers.''
    Virtually every commenter that addressed the proposed collection of 
data on subprime lending had unfavorable comments on the agencies' 
proposed definition of this term. The commenters observed that, without 
a clearer definition of subprime lending, the proposed reporting 
requirement would result in inconsistent information across banks while 
imposing a significant burden on banks.
    In light of the comments received on the proposed collection of 
subprime lending data, the agencies are continuing to evaluate how to 
proceed with this part of the proposal. In this regard, the banking 
agencies issued expanded examination guidance for subprime lending 
programs on January 31, 2001, which defines subprime lending. Thus, the 
agencies are considering whether this definition should form the basis 
for reporting requirements on banks' subprime lending activities. In 
the meantime, however, the FFIEC and the agencies are delaying the 
effective date for the reporting of subprime lending data in the Call 
Report until after March 31, 2001, the effective date that had been 
proposed. Banks will be notified when the FFIEC and the agencies 
complete their deliberations concerning the introduction of a subprime 
loan reporting requirement. At that time, in accordance with the 
Paperwork Reduction Act of 1995, the agencies will request comment on 
this reporting requirement, including the definition of subprime 
lending to be used for reporting purposes, when they submit this 
requirement to OMB for review and approval.
    Bank Securitization and Asset Sale Activities--The agencies 
proposed to revise and expand the information collected in the Call 
Report on bank involvement in securitization and asset sale activities 
in order to facilitate more effective analysis of these activities on 
bank credit exposures. This revision would be accomplished by creating 
a new Schedule RC-S to comprehensively capture information related to 
bank securitizations and asset sales.
    In their proposal, the agencies requested comment on the reporting 
of data on ownership (or seller's) interests in securitizations. As 
proposed, the agencies would collect data for seller's interests 
carried as securities, but they asked whether (and, if so, how) these 
data should cover seller's interests carried as loans. One commenter 
pointed out that, for seller's interests carried as loans, the 
delinquency and charge-off information is already included in the 
separate Call Report schedules for past due and nonaccrual loans and 
for loan charge-offs and recoveries. Thus, this bank observed that 
having banks combine this information in Schedule RC-S with the 
delinquency and charge-off information for loans underlying seller's 
interests carried as securities would create duplicate reporting in the 
Call Report. As a consequence, the FFIEC and the agencies decided to 
modify the Schedule RC-S proposal to add an item to this new schedule 
that asks banks to report seller's interests carried as loans, but 
without any additional disclosures about delinquencies and charge-offs.
    One commenter recommended that the agencies compare the Call 
Report's new asset securitization disclosures in proposed Schedule RC-S 
to those that were to be promulgated by the Financial Accounting 
Standards Board (FASB) in its amendment to FASB Statement No. 125, 
Accounting for Transfers and Servicing of Financial Assets and 
Extinguishments of Liabilities (FAS 125). This commenter and one other 
added that the agencies should make every effort to coordinate these 
Call Report disclosures with those in the FAS 125 amendment and with 
the agencies' revisions to the risk-based capital rules on recourse. 
The agencies note that, in designing Schedule RC-S, their intent was 
for the content of the schedule to be consistent with the direction 
they were taking in their proposed amendments to the risk-based capital 
treatment of recourse and securitizations.
    The agencies reviewed the securitization disclosure provisions 
contained in the May 2000 preballot draft of the FASB Statement 
amending FAS 125 and the final Statement amending FAS 125 itself, which 
was issued in September 2000 and designated FASB Statement No. 140 (FAS 
140). The disclosure requirements of FAS 140 covering securitizations 
(paragraphs 17(f) and (g)) require information to be presented for each 
major asset type and the standard cites mortgage loans, credit card 
receivables,

[[Page 13373]]

and automobile loans as examples of asset types. Similarly, new 
Schedule RC-S requires disclosures for seven major asset types 
including 1-4 family residential mortgages, credit card receivables, 
and auto loans.
    When an institution has securitized financial assets during any 
period presented in its financial statements and it accounts for the 
transfer as a sale, paragraph 17(f) of FAS 140 requires the institution 
to describe its ``continuing involvement with transferred assets, 
including, but not limited to, servicing, recourse, and restrictions on 
retained interests.'' As proposed, Schedule RC-S required the reporting 
of information on securitizations when the continuing involvement was 
in the form of recourse or other seller-provided credit enhancements, 
including retained interest-only strips. The agencies' proposal, 
however, did not include securitizations where the continuing 
involvement is limited to servicing. For this reason, the agencies 
requested comment on the manner in which banks' internal management 
reports capture information on asset securitization activities, i.e., 
are these reports prepared based on whether the bank provides credit 
enhancements (which was how the proposed Schedule RC-S was structured) 
or on whether the bank services the securitized assets. One bank 
commented that its internal reporting for the residential mortgage 
loans it sells is based on the retention of servicing rather than 
retention of recourse or other credit enhancements. After considering 
this aspect of FAS 140 and the one comment on this issue, the FFIEC and 
the agencies agreed to revise the securitization disclosures in 
Schedule RC-S so that they would cover transactions in which servicing 
is retained as well as those in which the bank retains recourse or 
provides other credit enhancements for the assets it securitizes.
    The disclosure requirements of paragraph 17(g) of FAS 140 also 
direct an institution that has retained interests in securitized 
financial assets as of the financial statement date to separately 
disclose for each major asset type the total principal amount 
outstanding, including the portion no longer carried on the balance 
sheet and the portion that continues to be carried on the balance 
sheet, delinquencies, and credit losses (net of recoveries) during the 
period. Schedule RC-S also collects data by major asset type on the 
principal amount outstanding for the portion of securitized assets no 
longer carried on the balance sheet and on the carrying amount, rather 
than the principal amount, of seller's interests that continue to be 
carried on the balance sheet. For the off-balance sheet portion of 
these securitizations and for the on-balance sheet portion carried as 
securities, Schedule RC-S requires disclosure of delinquencies and of 
charge-offs and recoveries during the year-to-date period. For Schedule 
RC-S, as discussed above, a bank must report this information when it 
retains interests that act as credit enhancements, when it otherwise 
provides recourse, and when it retains servicing. In contrast, this FAS 
140 disclosure requirement does not apply when an institution has 
provided recourse or has retained servicing, but has no retained 
interest. The agencies acknowledge that this represents a difference 
between Schedule RC-S and FAS 140. Nevertheless, when a bank is the 
servicer of loans and leases it has sold and securitized, but has no 
other continuing involvement, the bank should have information on the 
outstanding principal balance of these assets as well as the 
delinquencies, charge-offs, and recoveries. As servicer, it would need 
to report this information to trustees, investors, and/or other 
providers of credit enhancements. If the bank does not service the 
loans and leases it has securitized, but provides recourse or other 
credit enhancements, sound risk management practices would dictate that 
the bank should regularly receive the same type of performance 
information so that it can evaluate its ongoing credit exposure.
    One bank noted that reporting past due and charge-off data may be 
an issue when the securitization structure contains loans sold by 
multiple banks because the ongoing reporting of the loans in the 
structure is not concerned with who the original seller of the loans 
was. As Schedule RC-S is designed, a bank that has sold loans to 
another institution with recourse or other seller-provided credit 
enhancements (but was not the bank that securitized the loans) would 
not have to report delinquency and charge-off information for these 
loans. The FFIEC and the agencies have attempted to address this 
concern by providing appropriate guidance in the instructions for 
Schedule RC-S.
    Another bank raised general concerns about the content of some of 
the proposed items in Schedule RC-S and indicated that the agencies' 
instructions for the schedule should be clear and concise. This bank 
recommended that the FFIEC and the agencies circulate these 
instructions to the banking industry prior to the implementation of the 
schedule. The FFIEC issued draft instructions for Schedule RC-S on 
January 17, 2001, mailing them to each bank and making them available 
on the Internet on the FFIEC's and the FDIC's Web sites. The FFIEC 
invited institutions to submit questions and comments on these 
instructions.
    Under the existing Call Report requirements, banks report certain 
information related to securitizations, asset sales, and servicing in 
Schedules RC-L--Off-Balance Sheet Items--and RC-M--Memoranda. To avoid 
the loss of this information until the new Schedule RC-S is implemented 
on June 30, 2001, these existing items will be moved and reported in 
the Memoranda section of Schedule RC-S for the March 31, 2001, report 
date. These existing items cover: the outstanding principal balance and 
amount of recourse exposure on single family residential mortgage 
loans, small business obligations, and other financial assets that have 
been sold with recourse; the amount outstanding of consumer credit 
cards and related plans that have been securitized and sold with 
servicing retained; and residential mortgage loan and other loan 
servicing volume. To the extent that some of this information is 
currently collected only from banks that meet certain reporting 
thresholds, these thresholds would continue to apply for purposes of 
reporting this information as of the March 31, 2001, report date.
    Additional Information on Components of Noninterest Income--The 
agencies proposed to collect a more detailed breakdown of noninterest 
income in the Call Report income statement (Schedule RI) in order to 
identify the principal types of revenue-generating services in which 
banks are involved and the amount of income earned from them. One 
commenter questioned how meaningful the proposed noninterest income 
category for ``loan and other credit-related fees'' would be and 
suggested that it be eliminated as a required income category. The 
agencies considered the merits of this suggestion in light of the 
accounting standards that govern the recognition of fees associated 
with lending and other extensions of credit and decided to eliminate 
this proposed item.
    Trading Revenue from Cash Instruments--Banks with $100 million or 
more in assets currently report a four-way breakdown of their trading 
revenue by risk exposure (interest rate, foreign exchange, equity, and 
other including commodity). Under the proposal, banks with $5 billion 
or more in notional amount of derivatives held for trading were to 
begin to also report the amount of their trading revenue derived from 
cash instruments using the same four-way breakdown. Comments from large

[[Page 13374]]

banks opposed the collection of this additional information on trading 
revenue. These banks indicated that they often manage market risk or 
use trading strategies that involve managed positions in combinations 
of cash instruments and derivative contracts. Because the revenue 
resulting from these managed positions is generally not separated by 
instrument (cash versus derivative), significant information systems 
modifications would be needed to capture these data. Even if the data 
were available, these banks believe that evaluating cash instrument 
revenue figures in isolation would be misleading because their linkage 
to managed positions would not be seen. After considering these 
comments, the agencies decided against collecting the proposed cash 
instrument trading revenue information.
    Federal Home Loan Bank Advances--To improve their monitoring and 
understanding of individual banks' funding sources, asset-liability 
management, and liquidity, the agencies proposed to have banks report 
Federal Home Loan Bank advances separately from their remaining ``Other 
borrowed money,'' including the existing three-way maturity breakdown 
on these borrowings. The only commenter addressing the segregation of 
advances from other borrowings, a national banking trade group, 
supported this proposed reporting change. The FFIEC and the agencies 
are implementing this revision as proposed.
    One government-sponsored enterprise further recommended that a 
bank's ``Other borrowings'' be split so that secured and unsecured 
borrowings are reported separately. This commenter stated that, given 
the different treatment that secured and unsecured borrowings receive 
when an institution fails, this information would be of great value to 
regulators, analysts, and all of a bank's creditors. The agencies 
acknowledge that data on secured and unsecured borrowings would be of 
some value to them, and they may consider proposing such a reporting 
change in the future.
    Restructured Derivative Contracts--The agencies proposed to require 
banks with foreign offices or with $300 million or more in assets to 
report the fair value of derivative contracts carried as assets that 
have been restructured or renegotiated for reasons related to the 
counterparty's financial difficulties. This information was intended to 
supplement data these banks currently report on past due derivative 
contracts. Comments from large banks questioned the need for this 
information because derivative contracts will be reported at fair value 
and this value will reflect any decline in the counterparty's credit 
risk. They noted that such contracts will typically be included in a 
bank's derivatives held for trading and these losses in value will be 
charged to earnings. Furthermore, these banks stated that it would be 
difficult for them to identify derivative contracts that were 
restructured in prior years for credit reasons. Based on these 
comments, the agencies concluded that the proposed new item for 
restructured derivatives should not be implemented.
    Reporting of Trust Data--Currently, banks that exercise fiduciary 
powers and have fiduciary assets or accounts report information on 
their trust activities each December 31 in the Annual Report of Trust 
Assets (FFIEC 001). Institutions with trust operations in foreign 
offices also complete the Annual Report of International Fiduciary 
Activities (FFIEC 006).
    The agencies proposed to change the manner in which banks report 
information on their trust activities by replacing these separate 
reports with a new Call Report schedule on fiduciary and related 
services. This new schedule significantly reduces the amount of detail 
reported in the current forms, but continues to collect information on 
the number of accounts and market value of trust assets for specified 
categories of fiduciary activities, fiduciary and related services 
income, corporate trust activities, collective investment funds and 
common trust funds, fiduciary settlements and other losses, and types 
of managed assets held in personal trust and agency accounts.
    As originally proposed, institutions (including all nondeposit 
trust companies that file Call Reports) with total fiduciary assets 
greater than $100 million or with fiduciary income greater than 10 
percent of their net interest income plus noninterest income would be 
required to report some of the trust information quarterly and the rest 
annually. Other institutions with trust activities would report only 
annually, but would not be required to report fiduciary income and loss 
information.
    Four commenters questioned the need for quarterly reporting by 
larger trust institutions, indicating that the agencies should better 
justify this change in reporting frequency. The collection of quarterly 
data is limited to essential trust asset and income information. The 
agencies believe that this information is necessary to carry out their 
respective supervisory responsibilities, particularly because the 
income generated from fiduciary activities (before expenses) is a 
significant contributor to the earnings of large banks.\6\ 
Specifically, quarterly data will allow the agencies to identify and 
monitor in a timely manner those institutions with significant exposure 
to fiduciary-related risks, accurately monitor and measure fiduciary 
asset and income profiles and trends both on an individual institution 
basis and on an industry basis, and respond to changing risk profiles 
by allocating examiner resources toward areas of increasing or 
significant risk.
---------------------------------------------------------------------------

    \6\ For commercial banks with $1 billion or more in total 
assets, income from fiduciary activities has approximated 30 percent 
of these banks' aggregate net income each year since 1993.
---------------------------------------------------------------------------

    Two banks with trust departments commented that the $100 million in 
fiduciary assets test is too low a threshold for imposing a quarterly 
trust reporting requirement given the limited amount of revenue and 
risk arising from that level of trust department business. The FFIEC 
and the agencies reviewed the proposed fiduciary asset size threshold 
for quarterly reporting and decided to increase this threshold to $250 
million in fiduciary assets. Thus, under the phased-in implementation 
schedule discussed above, annual reporting of trust data by all trust 
institutions will take effect December 31, 2001, and quarterly 
reporting of trust data by institutions meeting the fiduciary assets or 
income test will begin in March 2002. Institutions subject to the 
quarterly reporting requirement hold more than 90 percent of total 
fiduciary assets.
    In their comments opposing the introduction of quarterly reporting 
for larger trust operations, a number of banks stated that they have 
not developed automated systems for capturing certain trust data. 
Because of the significant amount of manual data gathering and 
compilation that would be entailed, these banks regard quarterly 
reporting of a trust income statement as imposing a significant 
additional burden. The expense information in the trust income 
statement was specifically cited as one area where data are developed 
manually.
    The agencies' primary supervisory interest in the quarterly trust 
income information is in institutions' fee income rather than net trust 
income. Consequently, the FFIEC and the agencies concluded that only 
fee income data should be reported in March, June, and September by 
institutions subject to quarterly reporting. Thus, institutions with 
larger trust operations will continue to report fiduciary expenses, 
losses, and intracompany income credits only annually as of December 
31, consistent with current reporting

[[Page 13375]]

requirements. Trust institutions with more than $100 million but less 
than $250 million in fiduciary assets that do not meet the fiduciary 
income threshold will complete the trust income statement in the Call 
Report once each year as of December 31, which is also consistent with 
their current reporting requirements.
    After comparing the information proposed to be reported on 
corporate trust and agency accounts in Schedule RC-T, Memorandum item 
2, with the existing reporting requirements, the agencies are reducing 
the amount of data they will collect on this trust activity. 
Institutions with fiduciary activities will report the number of issues 
and principal amount outstanding for ``Corporate and municipal 
trusteeships'' in Memorandum item 2.a and only the number of issues for 
``Transfer agent, registrar, paying agent, and other corporate agency'' 
in Memorandum item 2.b. The agencies are also correcting two lines in 
the fiduciary assets section of the schedule. For corporate trust and 
agency accounts (Schedule RC-T, item 6), the proposed forms that the 
agencies distributed to banks erroneously indicated that the two items 
for the number of accounts were not to be reported. However, 
institutions should report the number of managed and non-managed 
accounts (columns C and D). For investment management agency accounts 
(Schedule RC-T, item 7), institutions should report the market value of 
managed assets and the number of managed accounts (columns A and C) 
whereas the proposed forms incorrectly showed that the market value of 
non-managed assets and the number of non-managed accounts (columns B 
and D) were also to be reported.
    Eliminating Confidential Treatment for Certain Past Due and 
Nonaccrual Data--The information that banks report in the Call Report 
on the amount of their loans, leases, and other assets that are past 
due 30 through 89 days and still accruing (and on the amount of 
restructured loans and leases that are past due 90 days or more and 
still accruing or in nonaccrual status) has been accorded confidential 
treatment on an individual bank basis since its collection began 18 
years ago. In contrast, Call Report data on assets that are 90 days or 
more past due and still accruing or that are in nonaccrual status have 
been publicly available, after an initial transition period, for the 
past 17 years. The agencies proposed to eliminate the confidential 
treatment for the 30-89 days past due (and restructured) items 
beginning with the amounts banks would report as of March 31, 2001.
    The five banks and bank trade groups that commented on this issue 
opposed the public disclosure of the currently confidential information 
on past due (and restructured) assets. The two bank supervisory groups 
that commented on this proposal supported the elimination of 
confidential treatment.
    In their comments objecting to the proposal, bankers stated that 
30-89 day delinquencies, particularly those that are 30-59 days past 
due, are not highly correlated with actual losses and a material 
percentage of these accounts return to current status. One large bank 
observed that the amount of its 30-89 day past due loans is subject to 
periodic volatility due to seasonal factors that vary with the type of 
loan. These bankers therefore believe that the value of this 
delinquency information as a performance indicator is not reliable and 
can be misleading. As a result, by releasing information that is highly 
susceptible to misinterpretation, the agencies will reduce rather than 
enhance market discipline.
    One trade group also indicated that the disclosure of this past due 
information would put U.S. banks at a competitive disadvantage with 
domestic nonbank financial institutions and foreign banks that are not 
subject to a comparable disclosure requirement. This group also 
suggested that this disclosure may exaggerate the public's perception 
of a bank's credit risk and could cause an unjustifiable loss of 
funding. The group recommended that the agencies should await the 
American Institute of Certified Public Accountants' decisions on 
additional public disclosures about the loan loss allowance and loan 
quality as part of its project to provide additional accounting and 
disclosure guidance about the allowance.
    Two smaller banks stated that many of the delinquencies in the 30-
89 day range are due to technicalities and do not represent additional 
credit risk. As an example, they cited matured loans where the borrower 
is still making the normal monthly payment, but the renewal process has 
not yet been completed because the borrower has not provided all the 
necessary information for the bank to approve the renewal. It was 
suggested that public disclosure would cause banks to imprudently renew 
loans to avoid having to report them as past due, which would be an 
unsafe and unsound practice. However, if a bank follows sound loan 
administration procedures, the process for determining whether to renew 
a loan should be initiated prior to maturity for those loans whose 
repayment schedule indicates that a renewal request is expected to be 
made. As a result, the delinquency situations these banks described 
should occur infrequently.
    The FFIEC and the agencies have considered the comments received on 
this issue and have decided to proceed with the elimination of the 
confidential treatment now accorded the 30-89 day past due (and 
restructured) assets effective March 31, 2001. However, for periods 
prior to March 31, 2001, data on loans, leases, and other assets past 
due 30 through 89 days and still accruing (and on restructured loans 
and leases that are 90 days or more past due and still accruing or that 
are in nonaccrual status) will not be publicly disclosed on an 
individual bank basis.
    The agencies have consistently found 30-89 day past due information 
helpful in identifying potential problem banks when used in conjunction 
with other key measures of financial performance and condition. 
Further, they use the 30-89 day past due information in econometric 
surveillance models that flag weak and potentially weak banks for 
review between on-site examinations.\7\ These models have consistently 
shown data on 30-89 day past due loans to be among the items that are 
statistically significant in contributing to bank deterioration and 
supervisory rating (CAMELS) downgrades. Therefore, the FFIEC and the 
agencies believe that the 30-89 day delinquency information complements 
data currently available publicly and is useful in the assessment of 
general asset quality.
---------------------------------------------------------------------------

    \7\ The FDIC uses the delinquency date in SCOR (Statistical 
CAMELS Off-site Rating), a model designed to identify banks with a 
relatively high likelihood of receiving a downgrade to a less than 
satisfactory CAMELS rating. The Board uses the 30-89 day past due 
loan data in its two SEER (System to Estimate Examination Ratings) 
models. The SEER ratings model estimates a bank's current CAMELS 
using its current Call Report data. The SEER risk rank model 
estimates the probability that a bank will fail or become critically 
undercapitalized within the next two years.
---------------------------------------------------------------------------

    Moreover, when presented in the Uniform Bank Performance Report, a 
publicly available analytical tool created for bank supervisory, 
examination, and bank management purposes, ratios of 30-89 day past due 
loans to total loans will be supplemented with the peer average ratio 
for banks of similar size. This will assist the public in evaluating 
the significance of a bank's level of 30-89 day past due loans. In 
addition, banks have the option to include in their Call Report a brief 
narrative statement that provides explanatory comments about any data 
disclosure which they feel may be subject to

[[Page 13376]]

misinterpretation, the text of which is available to the public.
    The agencies consider market discipline an important public policy 
issue as it is used to complement supervisory resources. Market 
discipline relies on market participants having information about the 
risks and financial condition of banking organizations. The agencies 
believe that disclosure that increases transparency of asset quality 
information should lead to more accurate market assessments of risk and 
value that, in turn, should result in more effective market discipline 
on banking organizations.
    Call Report Submission Period for Banks with Foreign Offices--Banks 
that have (or have previously had) more than one foreign office are 
given 45 days to submit their Call Reports rather than the 30 days 
which applies to all other banks. Because of technological advances 
that have improved the timeliness with which data from overseas 
locations can be gathered and to put all banks on an equal footing in 
terms of the amount of time available to complete their Call Reports, 
the agencies proposed to eliminate the additional 15 days that these 
banks with foreign offices receive for filing their reports.
    Banks with foreign offices strongly objected to this proposed 
change. While some acknowledged that the additional 15 days is not 
needed from a data collection perspective, they argued that this extra 
time is needed because banks with foreign offices must report a larger 
amount of data in their Call Reports than other banks are required to 
report. These banks also pointed out that they will be the ones who are 
most significantly affected by the new reporting requirements the 
agencies have proposed and by the incorporation of quarterly trust 
activity reporting into the Call Report. Thus, these banks believe that 
a 45-day reporting deadline is necessary to ensure that they report 
high quality data given the large number of departments and entities 
within their organizations that are involved in preparing the detailed 
data required in the Call Report. The 45-day filing period also enables 
these banks to reconcile their Call Report data to the comparable 
consolidated holding company data their organizations report to the 
Board in the FR Y-9C report and to the information in the holding 
company reports their organizations (if they are public companies) file 
with the Securities and Exchange Commission, which have 45-day or 
longer deadlines.
    After considering these comments, the FFIEC and the agencies 
concluded that they should retain the existing 45-day Call Report 
submission period for banks with foreign offices.
    Subchapter S Bank Dividends--A bank that has elected Subchapter S 
status is treated as a pass-through entity for federal income tax 
purposes and generally is not subject to any federal income taxes. 
Instead, the bank's shareholders pay federal income taxes on their 
proportionate share of the bank's taxable income.
    The agencies requested comment on whether they should add an item 
to the Call Report in which Subchapter S banks would report the amount 
of dividends distributed to cover shareholders' personal tax 
liabilities. Adding such an item was considered as a way to improve the 
agencies' comparisons of the dividend rates and after-tax earnings of 
Subchapter S banks and banks that are subject to federal corporate 
income taxes, i.e., Subchapter C banks, in the Uniform Bank Performance 
Report (UBPR).
    Two Subchapter S banks and one bank trade group commented on the 
proposed dividend item and each opposed adding it to the Call Report. 
These banks considered the item to be unnecessary and one indicated 
that it would be difficult for a bank to determine the amount to report 
in the item. The trade group stated that the information would most 
likely be unavailable and, if available, inappropriate to report. Based 
on these comments, the FFIEC and the agencies decided against adding an 
item to the Call Report for dividends distributed by Subchapter S banks 
to their shareholders to cover their personal tax liabilities.
    Other Comments--The agencies proposed to modify the Call Report 
income statement (Schedule RI) to segregate the amortization expense of 
goodwill from the amortization expense of other intangible assets. 
Under this proposal, banks would report ``Goodwill charges,'' i.e., 
goodwill amortization expense net of applicable income taxes, after 
their ``Income (loss) before extraordinary items and other 
adjustments'' rather than as part of noninterest expense. The agencies 
proposed this change in response to the FASB's proposed accounting 
standard, Business Combinations and Intangible Assets, which would 
require this method of financial statement presentation for goodwill 
charges. Two commenters questioned whether this change in presentation 
should be implemented in the Call Report based on a FASB proposal.
    Because the FASB has not yet adopted a final standard on accounting 
for business combinations and intangible assets, the agencies agree 
that it would be premature to implement the proposed method of 
presenting goodwill charges. Accordingly, goodwill amortization expense 
will be reported as part of ``Amortization expense of intangible 
assets'' in the noninterest expense section of the Call Report income 
statement. However, in their submissions to OMB, the agencies are 
requesting approval to revise the Call Report income statement in the 
first calendar quarter of the first calendar year after the effective 
date of the final FASB standard so it will conform automatically with 
the method of presentation ultimately prescribed by the FASB for 
goodwill amortization or impairment losses.
    The agencies requested comment on the current thresholds for 
itemizing and describing in Schedule RI-E--Explanations--significant 
components of other noninterest income and expense. At present, the 
reporting threshold is 10 percent of the total amount reported for 
other noninterest income and expense, respectively, in the Call Report 
income statement. In particular, the agencies asked whether it would be 
more appropriate to base these disclosure thresholds on the sum of 
``Net interest income'' plus ``Total noninterest income.'' Two banks 
recommended that the agencies adopt a disclosure threshold of 1 percent 
of total interest and noninterest income, which is consistent with the 
Securities and Exchange Commission's threshold for the disclosure by 
bank holding companies of components of other noninterest income and 
expense in Regulation S-X, Section 210.9-04 (17 CFR 210.9-04). The 
FFIEC and the agencies agreed with this recommendation and are revising 
this Schedule RI-E disclosure threshold accordingly.
    Another bank suggested that the agencies should significantly 
expand the reporting of noninterest expenses in Schedule RI-E so that 
banks can benchmark expenses against their peers. This bank proposed 
several specific categories of noninterest expenses that all banks 
should report in Schedule RI-E. While the agencies believe that it 
would be nice to know the amount of noninterest expenses in these 
categories for all banks, requiring this information from all banks 
would trigger the reporting of amounts that would be immaterial for 
some banks. Therefore, instead of implementing this bank's suggestion, 
the agencies will proceed with their proposal to add preprinted 
captions to Schedule RI-E, item 2 (and item 1) for the most commonly 
itemized and described categories of other

[[Page 13377]]

noninterest expense (and other noninterest income). These disclosures 
would be made only if the dollar amount for a particular category of 
expense (or income) exceeded the revised disclosure threshold discussed 
above.
    One state banking trade group recommended that the agencies combine 
two items in Schedule RC-A--Cash and Balances Due From Depository 
Institutions--so that the amount of a bank's ``Currency and coin'' is 
not separately reported. This trade group stated that having the amount 
of a bank's currency and coin available to the public on the Call 
Report could facilitate and encourage more people to commit robberies 
and burglaries at those institutions that disclose a large amount of 
cash on hand. While the current Call Report requirements call upon all 
banks to report the amount of currency and coin they have, this 
commenter may have overlooked the agencies' proposal to eliminate this 
reporting requirement for all banks with less than $300 million in 
total assets that do not have foreign offices. Thus, only the largest 
banks must continue to disclose the amount of their ``Currency and 
coin'' in the Call Report, which essentially achieves this trade 
group's objective.
    One bank trade group stated that differences in the information 
required for Call Reports versus the information required by the Board 
in the quarterly holding company reports on form FR Y-9C is a source of 
frustration for bankers. The trade group suggested that differences in 
these reports should be minimized. As the agencies noted in their 
proposal, some of their proposed revisions were designed to reduce 
these differences. Furthermore, in its notice requesting comment on 
revisions to the FR Y-9C for 2001, which was published on November 17, 
2000 (65 FR 69525), the Board proposed several reporting changes that 
will introduce more uniformity to certain aspects of regulatory 
reporting. These reporting changes include bringing a number of items 
on the FR Y-9C, as well as the overall reporting format of the FR Y-9C, 
into closer alignment with the Call Report.

Request for Comment

    Comments are invited on:
    (a) Whether the proposed revisions to the Call Report collections 
of information are necessary for the proper performance of the 
agencies' functions, including whether the information has practical 
utility;
    (b) The accuracy of the agencies' estimates of the burden of the 
information collections as they are proposed to be revised, including 
the validity of the methodology and assumptions used;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (d) Ways to minimize the burden of information collections on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    (e) Estimates of capital or start up costs and costs of operation, 
maintenance, and purchase of services to provide information.
    Comments submitted in response to this Notice will be shared among 
the agencies. All comments will become a matter of public record. 
Written comments should address the accuracy of the burden estimates 
and ways to minimize burden as well as other relevant aspects of the 
information collection request.

    Dated: February 26, 2001.
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 26, 
2001.
Jennifer J. Johnson,
Secretary of the Board.
    Dated at Washington, DC., this 27th day of February, 2001.

    Federal Deposit Insurance Corporation.
Robert E. Feldman,
 Executive Secretary.
[FR Doc. 01-5242 Filed 3-2-01; 8:45 am]
BILLING CODE 4810-33-P, 6210-01-P, 6714-01-P