[Federal Register Volume 70, Number 79 (Tuesday, April 26, 2005)]
[Notices]
[Pages 21494-21495]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-8281]



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DEPARTMENT OF THE TREASURY

Office of Thrift Supervision


Proposed Agency Information Collection Activities; Comment 
Request--Thrift Financial Report: Schedule VA

AGENCY: Office of Thrift Supervision (OTS), Treasury.

ACTION: Notice and request for comment.

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SUMMARY: The Department of the Treasury, as part of its continuing 
effort to reduce paperwork and respondent burden, invites the general 
public and other Federal agencies to comment on proposed and continuing 
information collections, as required by the Paperwork Reduction Act of 
1995, 44 U.S.C. 3507. The Office of Thrift Supervision within the 
Department of the Treasury will submit the proposed information 
collection requirement described below to the Office of Management and 
Budget (OMB) for review, as required by the Paperwork Reduction Act. 
Today, OTS is soliciting public comments on proposed changes to the 
Thrift Financial Report (TFR), Schedule VA--Consolidated Valuation 
Allowances and Related Data, effective with the September 30, 2005, 
report.
    At the end of the comment period, the comments and recommendations 
received will be analyzed to determine the extent to which OTS should 
modify the proposed revisions prior to giving its final approval. OTS 
will then submit the revisions to OMB for review and approval.

DATES: Submit written comments on or before June 27, 2005.

ADDRESSES: Send comments to Information Collection Comments, Chief 
Counsel's Office, Office of Thrift Supervision, 1700 G Street, NW., 
Washington, DC 20552; send facsimile transmissions to FAX number (202) 
906-6518; send e-mails to [email protected]; or 
hand deliver comments to the Guard's Desk, east lobby entrance, 1700 G 
Street, NW., on business days between 9 a.m. and 4 p.m. All comments 
should refer to ``Revisions to TFR Schedule VA, OMB No. 1550-0023.'' 
OTS will post comments and the related index on the OTS Internet Site 
at http://www.ots.treas.gov. In addition, interested persons may 
inspect comments at the Public Reading Room, 1700 G Street, NW., by 
appointment. To make an appointment, call (202) 906-5922, send an e-
mail to [email protected], or send a facsimile transmission to 
(202) 906-7755.

FOR FURTHER INFORMATION CONTACT: You can access sample copies of the 
proposed September 2005 TFR form on OTS's Web site at http://www.ots.treas.gov or you may request them by electronic mail from 
[email protected]. You can request additional information 
about this proposed information collection from James Caton, Director, 
Financial Monitoring and Analysis Division, (202) 906-5680, Office of 
Thrift Supervision, 1700 G Street, NW., Washington, DC 20552.

SUPPLEMENTARY INFORMATION: The effect of the proposed revisions to the 
reporting requirements of these information collections will vary from 
institution to institution, depending on the extent to which an 
institution acquired loans with evidence of deterioration or credit 
quality since origination, including acquisitions of such loans in 
business combinations accounted for using the purchase method. OTS 
expects that the proposed revisions will generally apply only to the 
limited number of institutions that are involved in purchase business 
combinations or that engage as a business activity in purchases of 
loans with credit quality deterioration since origination. Furthermore, 
the proposed revisions entail the reporting of information included in 
disclosures required under applicable generally accepted accounting 
principles. Therefore, OTS estimates that the implementation of these 
reporting revisions will result in a nominal increase in the current 
reporting burden imposed on all savings associations by the TFR.

Abstract

    Those OTS-regulated savings associations affected by the proposed 
revisions must comply with the information collections described in 
this notice. OTS collects this information each calendar quarter, or 
less frequently if so stated. OTS needs this information to monitor the 
condition, performance, and risk profile of the savings association 
industry.

Current Action

    These revisions are proposed in response to Statement of Position 
03-3, Accounting for Certain Loans or Debt Securities Acquired in a 
Transfer (SOP 03-3), which was issued by the American Institute of 
Certified Public Accountants (AICPA) and is effective for loans 
acquired in fiscal years beginning after December 15, 2004. OTS is 
proposing to add three items to the TFR relating to loans within the 
scope of SOP 03-3. In addition, OTS is revising the TFR instructions to 
explain how the delinquency status of loans within the scope of SOP 03-
3 should be determined for purposes of disclosing past due loans in the 
TFR.
    OTS intends to implement the proposed TFR changes as of the 
September 30, 2005, report date. Nonetheless, as is customary for TFR 
changes, if the information required to be reported in accordance with 
the proposed reporting revisions is not readily available, institutions 
are advised that they may report reasonable estimates of this 
information for the report date as of which the proposed changes first 
take effect.
    In December 2003, the AICPA issued SOP 03-3. In general, this 
Statement of Position applies to ``purchased impaired loans,'' i.e., 
loans that a savings association has purchased, including those 
acquired in a purchase business combination, when there is evidence of 
deterioration of credit quality since the origination of the loan and 
it is probable, at the purchase date, that the savings association will 
be unable to collect all contractually required payments receivable. 
The Statement of Position applies to loans acquired in fiscal years 
beginning after December 15, 2004, with early adoption permitted. 
Savings associations must follow SOP 03-3 for TFR purposes in 
accordance with its effective date based on their fiscal years. The 
Statement of Position does not apply to the loans that a savings 
association has originated. SOP 03-3 also excludes certain acquired 
loans from its scope.
    Under SOP 03-3, a purchased impaired loan is initially recorded at 
its purchase price (in a purchase business combination, the present 
value of amounts to be received). The Statement of Position limits the 
yield that may be accreted on the loan (the accretable yield) to the 
excess of the savings association's estimate of the undiscounted 
principal, interest, and other cash flows expected at acquisition to be 
collected on the loan over the savings association's initial investment 
in the loan. The excess of contractually required cash flows over the 
cash flows expected to be collected on the loan, which is referred to 
as the nonaccretable difference, must not be recognized as an 
adjustment of yield, loss accrual, or valuation allowance. Neither the 
accretable yield nor the nonaccretable difference may be shown on the 
balance sheet. After acquisition, increases in the cash flows expected 
to be collected generally should be recognized prospectively as an 
adjustment of the loan's yield over its remaining life.

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Decreases in cash flows expected to be collected should be recognized 
as an impairment.
    The Statement of Position prohibits a savings association from 
``carrying over'' or creating valuation allowances (loan loss 
allowances) in the initial accounting for purchased impaired loans. 
This prohibition applies to the purchase of an individual impaired 
loan, a pool or group of impaired loans, and impaired loans acquired in 
a purchase business combination. As a consequence, SOP 03-3 provides 
that valuation allowances should reflect only those losses incurred 
after acquisition, that is, the present value of all cash flows 
expected at acquisition that ultimately are not to be received. Thus, 
because of the accounting model set forth in SOP 03-3, savings 
associations will need to segregate their purchased impaired loans, if 
any, from the remainder of their loan portfolio for purposes of 
determining their overall allowance for loan and lease losses.
    According to the Basis for Conclusions of SOP 03-3, the AICPA's 
Accounting Standards Executive Committee ``believes that the accounting 
for acquired loans within the scope of this SOP is sufficiently 
different from the accounting for originated loans, particularly with 
respect to provisions for impairment * * * such that the amount of 
loans accounted for in accordance with this SOP should be disclosed 
separately in the notes to financial statements.'' OTS agrees with this 
assessment and has considered the disclosures required by SOP 03-3. 
Therefore, to assist OTS in understanding the relationship between the 
allowances for loan and lease losses and the carrying amount of the 
loan portfolios of those savings associations whose portfolios include 
purchased impaired loans, OTS is proposing to add three items to the 
TFR. All three of these items represent information included in the 
disclosures required by SOP 03-3. OTS would add three Memorandum items 
to Schedule VA--Consolidated Valuation Allowances and Related Data: (1) 
The outstanding balance of the purchased impaired loans held for 
investment, (2) the carrying amount as of the report date of the 
purchased impaired loans held for investment,\1\ and (3) the amount of 
loan loss allowances for purchased impaired loans held for investment 
that is included in the total amount of the allowance for loan and 
lease losses as of the report date.
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    \1\ Loans held for investment are those loans that the savings 
association has the intent and ability to hold for the foreseeable 
future or until maturity or payoff. Thus, the outstanding balance 
and carrying amount of any purchased impaired loans that are held 
for sale would not be reported in these proposed Memorandum items.
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    OTS also plans to revise the instructions to Schedule VA--
Consolidated Valuation Allowances and Related Data, to explain how 
purchased impaired loans should be reported in this schedule. SOP 03-3 
does not prohibit placing loans on nonaccrual status and any nonaccrual 
purchased impaired loans should be reported accordingly in Schedule 
PD--Consolidated Past Due and Nonaccrual. For those purchased impaired 
loans that are not on nonaccrual status, savings associations should 
determine their delinquency status in accordance with the contractual 
repayment terms of the loans without regard to the purchase price of 
(initial investment in) these loans or the amount and timing of the 
cash flows expected at acquisition.

Request for Comments

    OTS may not conduct or sponsor an information collection, and 
respondents are not required to respond to an information collection, 
unless the information collection displays a currently valid OMB 
control number.
    In this notice, OTS is soliciting comments concerning the following 
information collection.
    Report Title: Thrift Financial Report.
    OMB Number: 1550-0023.
    Form Number: OTS 1313.
    Statutory Requirement: 12 U.S.C. 1464(v) imposes reporting 
requirements for savings associations.
    Type of Review: Revision of currently approved collections.
    Affected Public: Savings Associations.
    Estimated Number of Respondents and Recordkeepers: 880.
    Estimated Burden Hours per Respondent: 36.4 hours average for 
quarterly schedules.
    Estimated Frequency of Response: Quarterly.
    Estimated Total Annual Burden: 128,128 hours.
    As part of the approval process, we invite comments addressing one 
or more of the following points:
    a. Whether the proposed revisions to the TFR collection of 
information are necessary for the proper performance of the agency's 
functions, including whether the information has practical utility;
    b. The accuracy of the agency's estimate of the burden of the 
collection of information;
    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, the Internet, 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.
    OTS will summarize the comments that we receive and include them in 
the request for OMB approval. All comments will become a matter of 
public record.
    Clearance Officer: Marilyn K. Burton, (202) 906-6467, Office of 
Thrift Supervision, 1700 G Street, NW., Washington, DC 20552.
    OMB Reviewer: Mark D. Menchik, (202) 395-3176, Office of Management 
and Budget, Room 10236, New Executive Office Building, Washington, DC 
20503.

    Dated: April 20, 2005.

    By the Office of Thrift Supervision.
James E. Gilleran,
Director.
[FR Doc. 05-8281 Filed 4-25-05; 8:45 am]
BILLING CODE 6720-01-P