[Federal Register Volume 71, Number 16 (Wednesday, January 25, 2006)]
[Rules and Regulations]
[Pages 4033-4035]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-684]



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  Federal Register / Vol. 71, No. 16 / Wednesday, January 25, 2006 / 
Rules and Regulations  

[[Page 4033]]



NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 741


Requirements for Insurance

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: NCUA is amending its rule concerning financial and statistical 
reports to require all federally insured credit unions to file the same 
quarterly Financial and Statistical Report with NCUA. The amendment 
requires all federally insured credit unions to file Form NCUA 5300 
quarterly and, beginning with the third quarter 2006 cycle, eliminates 
the alternate Form NCUA 5300SF for credit unions with assets of less 
than ten million dollars. In conjunction with the change in the 
reporting requirement for small credit unions, NCUA is issuing a number 
of revisions to Form 5300. All credit unions must use the revised form 
beginning with the second quarter 2006 reports, due July 20, 2006.

DATES: This rule is effective February 24, 2006, and applies to 
quarters beginning on or after April 1, 2006.

FOR FURTHER INFORMATION CONTACT: Debra Tobin, Risk Management Officer, 
or Larry Fazio, Director, Division of Risk Management, Office of 
Examination and Insurance, at the above address or telephone number 
(703) 518-6360; or Regina M. Metz or Elizabeth Wirick, Staff Attorneys, 
Office of General Counsel, at the above address or telephone number 
(703) 518-6540.

SUPPLEMENTARY INFORMATION:

Background

    On September 21, 2005, the NCUA Board issued proposed revisions to 
Sec.  741.6(a), the provision governing the filing of quarterly 
Financial and Statistical Reports, also known as Call Reports or 5300 
reports. 70 FR 55308 (Sept. 21, 2005). The NCUA Board is issuing the 
final rule without change from its proposal. The effect of this 
revision is that all federally insured credit unions will file the same 
quarterly call report form beginning with the second quarter of 2006 
and the revision eliminates the special short form for credit unions 
with less than ten million dollars in assets beginning with the third 
quarter of 2006.
    The NCUA Board last revised Sec.  741.6(a) in 2002. 67 FR 12464, 
March 19, 2002. Before those 2002 revisions, this section required all 
federally insured credit unions with assets in excess of $50 million to 
file a quarterly call report with NCUA. All other federally insured 
credit unions filed semiannually.
    Since the 2002 amendments, all federally insured credit unions are 
required to file quarterly Call Reports, but credit unions with less 
than ten million dollars in assets have the option of filing a short 
form for the first and third quarters. The amendment requires all 
federally insured credit unions to file the same quarterly call report 
form, a revised Form NCUA 5300. Small credit unions, accordingly, will 
no longer have the option of using a short form beginning with the 
third quarter 2006 reporting cycle.
    NCUA has also revised its Call Report form, and will require credit 
unions to use the new form for reporting cycles beginning with the 
second quarter of 2006. NCUA usually makes revisions to Form 5300 every 
year and requires use of the revised form for the first quarter of each 
year. Revisions to the Form 5300 do not require a change to NCUA's 
regulation. Because this rule change eliminates the short form for 
small credit unions, NCUA has delayed implementation of the revised 
form until the second quarter in 2006.
    The revised Form NCUA 5300 consolidates information, reduces 
ancillary schedules, and is easier to read and use. Based on the 
revisions, the short form is no longer needed, and the new design 
provides many benefits for credit unions. The Call Report form will 
have a consistent appearance each cycle, which will eliminate confusion 
for smaller credit unions, and it is shorter: 16 pages compared to 19 
pages in the current version. In addition, the revised form is designed 
so small credit unions generally will not have to complete supporting 
schedules. Only the first ten pages require input by all credit unions. 
For comparison, the current short form is only eight pages but the new, 
easier format will reduce the burden. NCUA currently reports to the 
Office of Management and Budget an average completion time of 6.6 hours 
for the regular Form NCUA 5300 and 6.0 hours for the Form NCUA 5300SF. 
The consolidated form should not materially impact the time spent by 
smaller credit unions, meaning those under ten million dollars in 
assets.
    The new design also provides efficiencies and benefits to NCUA. By 
eliminating the short form NCUA only has to maintain one 5300 form, one 
set of edits and warnings, and one set of Financial Performance Report 
specifications. This will improve efficiency and reduce the likelihood 
of introducing errors in the reporting system. In addition, the burden 
on the Office of the Chief Financial Officer and the cost of printing 
and mailing will be reduced with the distribution of a single form. 
Both internal and external quarterly financial trend analysis will be 
improved, since comprehensive quantitative data will be reported by all 
credit unions. Further, the shift to one Call Report will simplify 
maintenance of the Financial Performance Report and provide additional 
data needed for small credit unions to use the expanded Financial 
Performance Report fully. Additionally, trend reports from NCUA's 
Automated Integrated Regulatory Examination System (AIRES) will be more 
consistent and detailed for smaller credit unions. For example, 
quarterly detail that is currently not provided for real estate loans 
and investments will be available.
    In summary, the consolidation of the Call Report and elimination of 
the Form NCUA 5300SF will improve the agency's efficiency, increase the 
accuracy of the information collected, and simplify the reporting 
process for credit unions, large and small. The revised form will be 
used beginning with the second quarter 2006 call reports, due July 20, 
2006.

Summary of Comments

    The NCUA Board received six comment letters regarding the proposal: 
Three from national trade associations; one from a state credit union 
league;

[[Page 4034]]

and two from FCUs. All commenters supported the proposed changes and 
stated that the benefit of having a consistent reporting system 
outweighs any possible new burden for smaller credit unions. All 
commenters also supported NCUA's goals to streamline the reporting 
process and reduce regulatory burdens and agreed that the proposed 
revisions would contribute to these goals. Three commenters stated that 
credit unions should only be required to submit revised reports for the 
third quarter cycle ending in September 2006 if the final revisions to 
the call report were issued before year-end 2005. One commenter stated 
support for the planned implementation date without any conditions. One 
commenter requested that credit unions have six months to one year 
after the issuance of the final form before they are required to use 
it.
    NCUA agrees that credit unions need sufficient time to prepare for 
filing the new form. The final version of the form is unchanged from 
the proposal issued in September 2005 and is being issued January 19, 
2006. Three commenters suggested that the final rule should be issued 
by the end of 2005 if compliance for the third quarter of 2006 would be 
required. This final rule is being issued less than a month after the 
issuance date suggested by the three commenters and NCUA has determined 
that credit unions will have ample time, approximately six months, to 
become familiar with the new form before its due date.
    For Call Report revisions occurring apart from regulatory changes, 
NCUA generally provides about three months' notice. Thus, by 
implementing the changes for the second quarter, NCUA has at least 
doubled its usual notice for changes of this type.
    Two commenters suggested other ways that NCUA could make the call 
report process less burdensome. These suggestions included: Not 
requiring credit unions to repeat information that is unchanged from 
previous call reports, making reporting categories mutually exclusive 
and improving explanations for requested information, and importing 
information between sections of the report. These suggestions are 
outside the scope of the proposed rule and, therefore, NCUA cannot 
incorporate them into the final rule; NCUA would have to issue a second 
proposal with a second comment period. NCUA wants to implement the 
single call report form for the reasons discussed above without delay 
but believes the commenters have made interesting suggestions that 
deserve further review. NCUA notes it welcomes these suggestions for 
further improvement and will consider them in future call report 
revisions.

Regulatory Procedures

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 and Office of Management and 
Budget (OMB) regulations require that the public be provided an 
opportunity to comment on the paperwork requirements, including an 
agency's estimate of the burden of the paperwork requirements. The NCUA 
Board previously determined that the rule to require all federally 
insured credit unions to file a Call Report form on a quarterly basis 
is covered under the Paperwork Reduction Act.
    Currently, credit unions with assets less than ten million dollars 
have the option in the first and third quarters of filing the NCUA 
5300SF with NCUA. We now report to OMB an average completion time of 
6.6 hours for the regular Form NCUA 5300 and 6.0 hours for the Form 
NCUA 5300SF. NCUA estimated annually 38,050 forms are submitted to 
NCUA, with an average annual completion time of 251,130 hours, at an 
annual cost of $5,497,542. OMB approved the information collections 
under both Forms NCUA 5300 and NCUA 5300SF as OMB number 3133-0004.
    NCUA submitted a copy of the proposed rule and revised Form NCUA 
5300 to OMB and has received its approval under OMB number 3133-0004.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires NCUA to prepare an 
analysis to describe any significant economic impact any proposed 
regulation may have on a substantial number of small entities. 5 U.S.C. 
601-612. NCUA considers credit unions having less than ten million 
dollars in assets to be small for purposes of RFA. Interpretive Ruling 
and Policy Statement (IRPS) 87-2 as amended by IRPS 03-2. The final 
rule requires all federally insured credit unions to complete the same, 
revised, Form NCUA 5300.
    The NCUA has determined and certifies that this final rule will not 
have a significant economic impact on a substantial number of small 
credit unions. Accordingly, the NCUA has determined that an RFA 
analysis is not required. NCUA requested comments on its determination 
and received no comments either agreeing or disagreeing with this 
analysis.

Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their regulatory actions on state and local 
interests. In adherence to fundamental federalism principles, NCUA, an 
independent regulatory agency as defined in 44 U.S.C. 3502(5), 
voluntary complies with the executive order. This final rule will not 
have substantial direct effects on the states, on the relationship 
between the national government and states, or on the distribution of 
power and responsibilities among the various levels of government. NCUA 
has determined the final rule does not constitute a policy that has 
federalism implications for purposes of the executive order.

Treasury and General Government Appropriations Act, 1999

    NCUA has determined that the final rule will not affect family 
well-being within the meaning of section 654 of the Treasury and 
General Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681 
(1998).

Agency Regulatory Goal

    NCUA's seeks to minimize the reporting burdens on federally insured 
credit unions. Commenters agreed that the amendment is understandable 
and imposes minimal regulatory burden.

List of Subjects in 12 CFR Part 741

    Credit unions, Requirements for insurance.

    By the National Credit Union Administration Board on January 19, 
2006.
Mary Rupp,
Secretary of the Board.

0
Accordingly, NCUA amends 12 CFR part 741 as follows:

PART 741--REQUIREMENTS FOR INSURANCE

0
1. The authority citation for part 741 continues to read as follows:

    Authority: 12 U.S.C. 1757, 1766(a), and 1781-1790; Pub. L. 101-
73.


0
2. Amend Sec.  741.6 by revising paragraph (a) to read as follows:


Sec.  741.6  Financial and statistical and other reports.

    (a) Each operating insured credit union must file with the NCUA a 
quarterly Financial and Statistical Report on Form NCUA 5300 according 
to the deadlines published on the Form NCUA 5300, which occur in 
January (for quarter-end December 31), April (for quarter-end March 
31), July (for quarter-

[[Page 4035]]

end June 30), and October (for quarter-end September 30) of each year.
* * * * *
[FR Doc. 06-684 Filed 1-24-06; 8:45 am]
BILLING CODE 7535-01-P