[Federal Register Volume 71, Number 210 (Tuesday, October 31, 2006)]
[Notices]
[Pages 63848-63854]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-8982]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

FEDERAL RESERVE SYSTEM

FEDERAL DEPOSIT INSURANCE CORPORATION

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision


Proposed Agency Information Collection Activities; Comment 
Request

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

ACTION: Joint notice and request for comment.

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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, the FDIC, and 
the OTS (the ``agencies'') may not conduct or sponsor, and the 
respondent is not required to respond to, an information collection 
unless it displays a currently valid Office of Management and Budget 
(OMB) control number. The Federal Financial Institutions Examination 
Council (FFIEC), of which the agencies are members, has approved the 
agencies' publication for public comment a proposal to extend, with 
revision, the Consolidated Reports of Condition and Income (Call 
Report) for banks and the Thrift Financial Report (TFR) for savings 
associations, which are currently approved collections of information. 
At the end of the comment period, the comments and recommendations 
received will be analyzed to determine the extent to which the FFIEC 
and the agencies should modify the proposed revisions prior to giving 
final approval. The agencies will then submit the revisions to OMB for 
review and approval.

DATES: Comments must be submitted on or before January 2, 2007.

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: Communications Division, Office of the Comptroller of the 
Currency, Public Information Room,

[[Page 63849]]

Mailstop 1-5, Attention: 1557-0081, 250 E Street, SW., Washington, DC 
20219. In addition, comments may be sent by fax to (202) 874-4448, or 
by electronic mail to [email protected]. You can inspect and 
photocopy the comments at the OCC's Public Information Room, 250 E 
Street, SW., Washington, DC 20219. You can make an appointment to 
inspect the comments by calling (202) 874-5043.
    Board: You may submit comments, which should refer to 
``Consolidated Reports of Condition and Income, 7100-0036,'' by any of 
the following methods:
     Agency Web site: http://www.federalreserve.gov. Follow the 
instructions for submitting comments on the http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm. 
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: [email protected]. Include docket 
number in the subject line of the message.
     Fax: 202-452-3819 or 202-452-3102.
     Mail: Jennifer J. Johnson, Secretary, Board of Governors 
of the Federal Reserve System, 20th Street and Constitution Avenue, 
NW., Washington, DC 20551.
    All public comments are available from the Board's Web site at 
http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as 
submitted, unless modified for technical reasons. Accordingly, your 
comments will not be edited to remove any identifying or contact 
information. Public comments may also be viewed electronically or in 
paper in Room MP-500 of the Board's Martin Building (20th and C 
Streets, NW.) between 9 a.m. and 5 p.m. on weekdays.
    FDIC: You may submit comments, which should refer to ``Consolidated 
Reports of Condition and Income, 3064-0052,'' by any of the following 
methods:
     http://www.FDIC.gov/regulations/laws/federal/notices.html. 

     E-mail: [email protected]. Include ``Consolidated Reports 
of Condition and Income, 3064-0052'' in the subject line of the 
message.
     Mail: Steven F. Hanft (202-898-3907), Clearance Officer, 
Attn: Comments, Room MB-2088, Federal Deposit Insurance Corporation, 
550 17th Street, NW., Washington, DC 20429.
     Hand Delivery: Comments may be hand delivered to the guard 
station at the rear of the 550 17th Street Building (located on F 
Street) on business days between 7 a.m. and 5 p.m.
    Public Inspection: All comments received will be posted without 
change to http://www.fdic.gov/regulations/laws/federal/notices.html 
including any personal information provided. Comments may be inspected 
at the FDIC Public Information Center, Room E-1002, 3501 Fairfax Drive, 
Arlington, VA 22226, between 9 a.m. and 5 p.m. on business days.
    OTS: You may submit comments, identified by ``1550-0023 (TFR: 
Schedule DI Revisions),'' by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail address: [email protected]. 
Please include ``1550-0023 (TFR: Schedule DI Revisions)'' in the 
subject line of the message and include your name and telephone number 
in the message.
     Fax: (202) 906-6518.
     Mail: Information Collection Comments, Chief Counsel's 
Office, Office of Thrift Supervision, 1700 G Street, NW., Washington, 
DC 20552, Attention: ``1550-0023 (TFR: Schedule DI Revisions).''
     Hand Delivery/Courier: Guard's Desk, East Lobby Entrance, 
1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, Attention: 
Information Collection Comments, Chief Counsel's Office, Attention: 
``1550-0023 (TFR: Schedule DI Revisions).''
    Instructions: All submissions received must include the agency name 
and OMB Control Number for this information collection. All comments 
received will be posted without change to the OTS Internet Site at 
http://www.ots.treas.gov/pagehtml.cfm?catNumber=67&an=1, including any 
personal information provided.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.ots.treas.gov/pagehtml.cfm?catNumber=67&an=1. In addition, you may inspect comments 
at the Public Reading Room, 1700 G Street, NW., by appointment. To make 
an appointment for access, call (202) 906-5922, send an e-mail to 
public.info@ots.treas.gov">public.info@ots.treas.gov, or send a facsimile transmission to (202) 
906-7755. (Prior notice identifying the materials you will be 
requesting will assist us in serving you.) We schedule appointments on 
business days between 10 a.m. and 4 p.m. In most cases, appointments 
will be available the next business day following the date we receive a 
request.
    Additionally, commenters may send a copy of their comments to the 
OMB desk officer for the Agencies by mail to the Office of Information 
and Regulatory Affairs, U.S. Office of Management and Budget, New 
Executive Office Building, Room 10235, 725 17th Street, NW., 
Washington, DC 20503, or by fax to (202) 395-6974.

FOR FURTHER INFORMATION CONTACT: For further information about the 
revisions discussed in this notice, please contact any of the agency 
clearance officers whose names appear below. In addition, copies of the 
Call Report forms can be obtained at the FFIEC's Web site (http://www.ffiec.gov/ffiec_report_forms.htm). Copies of the TFR can be 
obtained from the OTS's Web site (http://www.ots.treas.gov/main.cfm?catNumber=2&catParent=0).
    OCC: Mary Gottlieb, OCC Clearance Officer, or Camille Dickerson, 
(202) 874-5090, Legislative and Regulatory Activities Division, Office 
of the Comptroller of the Currency, 250 E Street, SW., Washington, DC 
20219.
    Board: Michelle E. Long, Federal Reserve Board Clearance Officer, 
(202) 452-3829, Division of Research and Statistics, Board of Governors 
of the Federal Reserve System, 20th and C Streets, NW., Washington, DC 
20551. Telecommunications Device for the Deaf (TDD) users may call 
(202) 263-4869.
    FDIC: Steven F. Hanft, Paperwork Clearance Officer, (202) 898-3907, 
Legal Division, Federal Deposit Insurance Corporation, 550 17th Street, 
NW., Washington, DC 20429.
    OTS: Marilyn K. Burton, OTS Clearance Officer, at 
[email protected], (202) 906-6467, or facsimile number (202) 
906-6518, Litigation Division, Chief Counsel's Office, Office of Thrift 
Supervision, 1700 G Street, NW., Washington, DC. 20552.

SUPPLEMENTARY INFORMATION: The agencies are proposing to revise and 
extend for three years the Call Report and the TFR, which are currently 
approved collections of information.
    1. Report Title: Consolidated Reports of Condition and Income (Call 
Report). Form Number: Call Report: FFIEC 031 (for banks with domestic 
and foreign offices) and FFIEC 041 (for banks with domestic offices 
only). Frequency of Response: Quarterly. Affected Public: Business or 
other for-profit.
    OCC: OMB Number: 1557-0081. Estimated Number of Respondents: 1,900 
national banks. Estimated Time per Response: 44.31 burden hours. 
Estimated Total Annual Burden: 336,756 burden hours.
    Board: OMB Number: 7100-0036. Estimated Number of Respondents: 919 
state member banks. Estimated Time per

[[Page 63850]]

Response: 51.27 burden hours. Estimated Total Annual Burden: 188,469 
burden hours.
    FDIC: OMB Number: 3064-0052. Estimated Number of Respondents: 5,247 
insured state nonmember banks. Estimated Time per Response: 35.52 
burden hours. Estimated Total Annual Burden: 745,494 burden hours.
    The estimated time per response for the Call Report is an average 
that varies by agency because of differences in the composition of the 
institutions under each agency's supervision (e.g., size distribution 
of institutions, types of activities in which they are engaged, and 
existence of foreign offices). The average reporting burden for the 
Call Report is estimated to range from 16 to 630 hours per quarter, 
depending on an individual institution's circumstances.
    2. Report Title: Thrift Financial Report (TFR). Form Number: OTS 
1313 (for savings associations). Frequency of Response: Quarterly. 
Affected Public: Business or other for-profit.
    OTS: OMB Number: 1550-0023. Estimated Number of Respondents: 854 
savings associations. Estimated Time per Response: 36.5 burden hours. 
Estimated Total Annual Burden: 124,684 burden hours.
    The TFR estimates in this notice are carried forward from the 
burden estimates that appeared in OTS's final Paperwork Reduction Act 
notice concerning items related to retirement deposit accounts (71 FR 
47866, August 18, 2006).

General Description of Reports

    These information collections are mandatory: 12 U.S.C. 161 (for 
national banks), 12 U.S.C. 324 (for state member banks), 12 U.S.C. 1817 
(for insured state nonmember commercial and savings banks), and 12 
U.S.C. 1464 (for savings associations). Except for selected data items, 
these information collections are not given confidential treatment.

Abstract

    Institutions submit Call Report and TFR data to the agencies each 
quarter for the agencies' use in monitoring the condition, performance, 
and risk profile of individual institutions and the industry as a 
whole.
    Call Report and TFR data provide the most current statistical data 
available for evaluating institutions' corporate applications, for 
identifying areas of focus for both on-site and off-site examinations, 
and for monetary and other public policy purposes. The agencies use 
Call Report and TFR data in evaluating interstate merger and 
acquisition applications to determine, as required by law, whether the 
resulting institution would control more than ten percent of the total 
amount of deposits of insured depository institutions in the United 
States. Call Report and TFR data are also used to calculate all 
institutions' deposit insurance and Financing Corporation assessments, 
national banks' semiannual assessment fees, and the OTS's assessments 
on savings associations.

Current Actions

I. Overview

    The four agencies are proposing to replace certain information 
currently collected in the Call Report and TFR for deposit insurance 
assessment purposes with the information described in proposed 
amendments to Part 327 of the FDIC's regulations (71 FR 28790, May 18, 
2006). The four agencies also propose to revise the information 
collected in the Call Report and TFR on time deposits, particularly 
with respect to certain retirement accounts affected by the FDIC's 
amended deposit insurance regulations.
    In addition, the OCC, the Board, and the FDIC (the banking 
agencies) propose to implement a number of other changes to the Call 
Report requirements, most of which are expected to apply to a small 
percentage of banks. First, the banking agencies would revise the Call 
Report to collect certain data on fair value measurements from those 
institutions that choose, under generally accepted accounting 
principles, to apply a fair value option to one or more financial 
instruments and one or more classes of servicing assets and liabilities 
and from certain institutions that report trading assets and 
liabilities. The banking agencies will also collect an item to capture 
the change in the fair value of liabilities under the fair value option 
that is attributable to a change in a bank's own creditworthiness for 
purposes of measuring a bank's regulatory capital under the banking 
agencies' capital adequacy standards. Second, the banking agencies 
propose to collect certain data in the Call Report on 1-4 family 
residential mortgages with terms that allow for negative amortization. 
The banking agencies currently do not collect any supervisory data on 
such loans. Finally, the banking agencies propose to clarify the Call 
Report instructions for assets serviced for others by explicitly 
stating that such servicing includes the servicing of loan 
participations.
    These proposed revisions to the Call Report and the TFR, which have 
been approved for publication by the FFIEC and are discussed in more 
detail below, would take effect as of March 31, 2007, and, for certain 
deposit insurance assessment revisions, March 31, 2008. The specific 
wording of the captions for the new or revised Call Report and TFR data 
items discussed in this proposal and the numbering of these data items 
should be regarded as preliminary.
    Type of Review: Revision and extension of currently approved 
collections.

II. Discussion of Proposed Revisions

A. Deposit Insurance Assessment Revisions to the Call Report and TFR
    On May 18, 2006, the FDIC issued proposed amendments to Part 327 of 
its regulations, ``Assessments,'' under which the FDIC's computation of 
deposit insurance assessments for certain institutions would be 
determined using daily averages for deposits rather than quarter-end 
balances. In addition to the proposed amendments, the agencies are 
proposing to revise and reduce the overall reporting requirements 
related to deposit insurance assessments in both the Call Report and 
the TFR in order to simplify regulatory reporting. Key elements of the 
proposed revised reporting requirements are:
     Institutions will separately report (a) gross deposits as 
defined in Section 3(l) of the Federal Deposit Insurance Act (FDI Act) 
(12 U.S.C. 1813(l)) before any allowable exclusions and (b) allowable 
exclusions;
     The same data items will be reported for both quarter-end 
and daily average deposits;
     All institutions will report using quarter-end deposits 
and allowable exclusions; and
     All institutions with $300 million or more in assets, and 
other institutions that meet specified criteria, will also report daily 
averages for deposits and allowable exclusions in addition to quarter-
end amounts.
    The proposal would provide an interim period covering the March 31, 
2007, through December 31, 2007, report dates during which institutions 
can submit Call Reports and TFRs using either the current or revised 
formats for reporting data for measuring their assessment base. An 
institution that chooses to begin reporting under the revised format in 
any quarter during the interim period must continue to report under the 
revised format through the rest of the interim period and may not 
revert back to the current reporting format. The revised reporting 
format will take effect for all institutions on March 31, 2008, at 
which time the current format will be eliminated. Although no 
institution that chooses to

[[Page 63851]]

report under the revised format during the 2007 interim period would be 
required to report daily averages during this period, any institution 
may elect to report daily averages as of any quarter-end report date in 
2007. However, once an institution begins to report daily averages 
(even during the interim period), it must continue to report daily 
averages each quarter thereafter in its Call Report or TFR.
    Currently, the assessment base definition as detailed in 12 CFR 
327.5 of the FDIC's regulations has been driven by the agencies' 
regulatory reporting requirements. Therefore, as the reporting 
requirements for deposits in the Call Report and TFR changed over time, 
the regulatory definition of the assessment base required periodic 
updates. As a result of the Federal Deposit Insurance Reform Act, the 
FDIC has proposed to revise the definition of the assessment base 
within its regulations to be consistent with Section 3(l) of the FDI 
Act. This will eliminate the need for periodic updates to the FDIC's 
assessment regulations in response to outside factors and allow a 
simplification of the associated reporting requirements. In addition, 
to address timing issues with quarter-end reporting, the FDIC will use 
daily average deposits and exclusions over the quarter instead of 
quarter-end totals for deposits and exclusions to compute the 
assessment base for institutions with $300 million or more in assets 
and other institutions who meet specified criteria, which are discussed 
below. Any institution that reports less than $300 million in assets 
and does not meet the other specified criteria may opt permanently to 
determine its assessment base using daily averages.
    At present, 23 items are required in the Call Report to determine a 
bank's assessment base and eight items are required in the TFR to 
determine a savings association's assessment base. The agencies are 
proposing changes to the way the assessment base is reported that would 
effectively reduce the number of reported items to as few as two for 
certain small institutions (without foreign offices) and no more than 
six for other institutions. Specifically, the banking agencies are 
proposing to replace items 1 through 12 (including their subitems) on 
Schedule RC-O, ``Other Data for Deposit Insurance and FICO 
Assessments,'' and OTS is proposing to replace the eight items in the 
section of Schedule DI, ``Consolidated Deposit Information,'' for 
``Deposit and Escrow Data for Deposit Insurance Premium Assessments'' 
with the following six items:
     Total Deposit Liabilities as Defined in Section 3(l) of 
the FDI Act before Exclusions;
     Total Allowable Exclusions (including Foreign Deposits);
     Total Foreign Deposits (included in Total Allowable 
Exclusions);
     Total Daily Average of Deposit Liabilities as Defined in 
Section 3(l) of the FDI Act before Exclusions;
     Total Daily Average Allowable Exclusions (including 
Foreign Deposits);
     Total Daily Average Foreign Deposits (included in Total 
Daily Average Allowable Exclusions).
    Thus, instead of starting with deposits as reported on the balance 
sheet of the Call Report and TFR and making adjustments to these 
reported deposits for purposes of measuring an institution's assessment 
base, which is the present method, the computation of the institution's 
assessment base under the proposed amendments to the FDIC's assessment 
regulations and these proposed regulatory reporting revisions will 
start with the gross total deposit liabilities that meet the statutory 
definition of deposits in Section 3(l) of the FDI Act before any 
allowable exclusions from the definition. The allowable exclusions, 
which are set forth in Section 3(l)(5) and other sections of the FDI 
Act and in the FDIC's regulations, include foreign deposits (including 
International Banking Facility deposits) and other deposits described 
below. As the next step in the assessment base calculation, an 
institution would report the total amount of all allowable exclusions 
from the statutory definition of deposits (with separate disclosure of 
foreign deposits, if any). Total Deposit Liabilities as Defined in 
Section 3(l) of the FDI Act before Exclusions minus Total Allowable 
Exclusions would be the institution's Assessment Base. As previously 
stated, the computation will use either quarter-end balances or daily 
averages.
    The net amount of unposted debits and credits will now not be 
considered within the definition of the assessment base. For 
institutions that report daily averages, these debits and credits are 
captured in the next day's deposits and thus are reflected in the 
averages. For consistency and because they should not materially affect 
assessment bases, unposted debits and credits will also not be 
considered for institutions that only report quarter-end balances.
    The agencies believe that the amount of gross total deposit 
liabilities that meet the statutory definition of deposits is typically 
found in and supported by the control totals in an institution's 
deposit systems that provide the detail sufficient to track, control, 
and handle inquiries from depositors about their specific individual 
accounts.
    These deposit systems can be automated or manual. In any case, 
control totals for deposit liabilities should be readily available, 
which should ease an institution's transition to the revised regulatory 
reporting requirements. Compared to the amount of information that an 
institution currently reports in order to determine its assessment 
base, the proposed changes to the reporting requirements should also 
facilitate the reporting of daily averages for deposits and allowable 
exclusions since many of the presently reported adjustments will not 
need to be tracked and averaged separately.

    Section 3(1) of the FDI Act states that the term ``deposit'' 
means
    (1) The unpaid balance of money or its equivalent received or 
held by a bank or savings association in the usual course of 
business and for which it has given or is obligated to give credit, 
either conditionally or unconditionally, to a commercial, checking, 
savings, time, or thrift account, or which is evidenced by its 
certificate of deposit, thrift certificate, investment certificate, 
certificate of indebtedness, or other similar name, or a check or 
draft drawn against a deposit account and certified by the bank or 
savings association, or a letter of credit or a traveler's check on 
which the bank or savings association is primarily liable: Provided, 
That, without limiting the generality of the term ``money or its 
equivalent'', any such account or instrument must be regarded as 
evidencing the receipt of the equivalent of money when credited or 
issued in exchange for checks or drafts or for a promissory note 
upon which the person obtaining any such credit or instrument is 
primarily or secondarily liable, or for a charge against a deposit 
account, or in settlement of checks, drafts, or other instruments 
forwarded to such bank or savings association for collection,
    (2) Trust funds as defined in this Act received or held by such 
bank or savings association, whether held in the trust department or 
held or deposited in any other department of such bank or savings 
association,
    (3) Money received or held by a bank or savings association, or 
the credit given for money or its equivalent received or held by a 
bank or savings association, in the usual course of business for a 
special or specific purpose, regardless of the legal relationship 
thereby established, including without being limited to, escrow 
funds, funds held as security for an obligation due to the bank or 
savings association or others (including funds held as dealers 
reserves) or for securities loaned by the bank or savings 
association, funds deposited by a debtor to meet maturing 
obligations, funds deposited as advance payment on subscriptions to 
United States Government securities, funds held for distribution or 
purchase of securities, funds held to meet its acceptances

[[Page 63852]]

or letters of credit, and withheld taxes: Provided, That there shall 
not be included funds which are received by the bank or savings 
association for immediate application to the reduction of an 
indebtedness to the receiving bank or savings association, or under 
condition that the receipt thereof immediately reduces or 
extinguishes such an indebtedness,
    (4) Outstanding draft (including advice or authorization to 
charge a bank's or a savings association's balance in another bank 
or savings association), cashier's check, money order, or other 
officer's check issued in the usual course of business for any 
purpose, including without being limited to those issued in payment 
for services, dividends, or purchases, and
    (5) Such other obligations of a bank or savings association as 
the Board of Directors, after consultation with the Comptroller of 
the Currency, Director of the Office of Thrift Supervision, and the 
Board of Governors of the Federal Reserve System, shall find and 
prescribe by regulation to be deposit liabilities by general usage, 
except that the following shall not be a deposit for any of the 
purposes of this Act or be included as part of the total deposits or 
of an insured deposit:
    (A) Any obligation of a depository institution which is carried 
on the books and records of an office of such bank or savings 
association located outside of any State, unless--
    (i) Such obligation would be a deposit if it were carried on the 
books and records of the depository institution, and would be 
payable at, an office located in any State; and
    (ii) The contract evidencing the obligation provides by express 
terms, and not by implication, for payment at an office of the 
depository institution located in any State;
    (B) Any international banking facility deposit, including an 
international banking facility time deposit, as such term is from 
time to time defined by the Board of Governors of the Federal 
Reserve System in regulation D or any successor regulation issued by 
the Board of Governors of the Federal Reserve System; and
    (C) Any liability of an insured depository institution that 
arises under an annuity contract, the income of which is tax 
deferred under section 72 of the Internal Revenue Code of 1986.
    The total amount of allowable exclusions from the assessment 
base will be reported separately for any institution that maintains 
such records as will readily permit verification of the correctness 
of its assessment base. These exclusions include:
    Foreign deposits: The obligations described in subparagraphs (A) 
and (B) of section 3(l)(5) of the FDI Act, quoted above, which 
generally relate to foreign deposits.
    Reciprocal balances: Any demand deposit due from or cash item in 
the process of collection due from any depository institution (not 
including a foreign bank or foreign office of another U.S. 
depository institution) up to the total of the amount of deposit 
balances due to cash and cash items in the process of collection due 
such depository institution.
    Drafts drawn on other depository institutions: Any outstanding 
drafts (including advices and authorization to charge the depository 
institution's balance in another bank) drawn in the regular course 
of business by the reporting depository institution.
    Pass-through reserve balances: Reserve balances passed through 
to the Federal Reserve by the reporting institution that are also 
reflected as deposit liabilities of the reporting institution. This 
is not applicable to an institution that does not act as a 
correspondent institution in any pass-through reserve balance 
relationship. An institution that is not a member of the Federal 
Reserve System generally cannot act as a pass-through correspondent 
unless it maintains an account for its own reserve balances directly 
with the Federal Reserve.
    Depository institution investment contracts: Liabilities arising 
from depository institution investment contracts that are not 
treated as insured deposits under section 11(a)(5) of the Federal 
Deposit Insurance Act (12 U.S.C. 1821(a)(5)). A Depository 
Institution Investment Contract is a separately negotiated 
depository agreement between an employee benefit plan and an insured 
depository institution that guarantees a specified rate for all 
deposits made over a prescribed period and expressly permits 
benefit-responsive withdrawals or transfers.

    In addition to quarter-end balance reporting, institutions that 
meet certain criteria would be required to report average daily deposit 
liabilities and average daily allowable exclusions to determine their 
assessment base effective March 30, 2008. The amounts to be reported 
would be averages of the balances as of the close of business for each 
day for the calendar quarter. For days that an office of the reporting 
institution (or any of its subsidiaries or branches) is closed (e.g., 
Saturdays, Sundays, or holidays), the amounts outstanding from the 
previous business day would be used. An office is considered closed if 
there are no transactions posted to the general ledger as of that date.
    The requirement for an institution to report daily averages would 
apply to any institution that:
    (1) Reports $300 million or more in total assets in its March 31, 
2007, Call Report or TFR. The institution would be required to report 
daily averages beginning in its March 31, 2008, Call Report or TFR.
    (2) Reports $300 million or more in total assets in two consecutive 
Call Reports or TFRs beginning with its June 30, 2007, report. The 
institution would be required to report daily averages in its Call 
Report or TFR beginning March 31, 2008, or on the report date six 
months after the second consecutive quarter in which it reported $300 
million or more in total assets, whichever is later. For example, if an 
institution reported $300 million or more in total assets in its 
reports for June 30 and September 30, 2007, it would begin to report 
daily averages in its report for March 31, 2008. If the institution 
reported $300 million or more in total assets in its reports for 
December 31, 2007, and March 31, 2008, it would begin to report daily 
averages in its report for September 30, 2008.
    (3) Becomes newly insured after March 31, 2007. The institution 
would be required to report daily averages in its Call Report or TFR 
beginning March 31, 2008, or on the first report date after becoming 
insured, whichever is later. If daily averages are reported in the 
first Call Report or TFR the institution files after becoming insured, 
the daily averages would include only the dollar amounts for the days 
since the institution began operations.
    After an institution has begun to report daily averages for its 
total deposits and allowable exclusions, either voluntarily or because 
it is required to do so, the institution cannot switch back to 
reporting only quarter-end balances.
    An insured depository institution reporting less than $300 million 
in total assets in its March 31, 2007, Call Report or TFR may continue 
to determine its assessment base using quarter-end balances until it 
meets one of the requirements for reporting daily averages described 
above. Alternatively, the institution may opt permanently to determine 
its assessment base using daily averages.
B. Revision of Certain Time Deposit Information on the Call Report and 
TFR
    The Federal Reserve uses data from Call Report Schedule RC-E, 
Deposit Liabilities, and from TFR Schedule DI, Consolidated Deposit 
Information, to ensure accurate construction of the monetary aggregates 
for monetary policy purposes.\1\ In order to more accurately calculate 
the monetary aggregates, the banking agencies propose to revise two 
Schedule RC-E items, Memorandum items 2.b, ``Total time deposits of 
less than $100,000,'' and 2.c, ``Total time deposits of $100,000 or 
more,'' and add a new Memorandum item 2.c.(1) to this schedule.
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    \1\ In order to calculate the money stock measure M2, the 
Federal Reserve takes M1 (which consists of currency held by the 
public, traveler's checks, demand deposits, and other checkable 
deposits) and adds (1) savings deposits, (2) small-denomination time 
deposits (time deposits in amounts of less than $100,000) less 
Individual Retirement Account (IRA) and Keogh balances at depository 
institutions, and (3) balances in retail money market mutual funds, 
less IRA and Keogh balances at money market mutual funds.
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    In Schedule RC-E, Memorandum item 2.b would be revised to include

[[Page 63853]]

brokered time deposits issued in denominations of $100,000 or more that 
are participated out by the broker in shares of less than $100,000 as 
well as brokered certificates of deposit issued in $1,000 amounts under 
a master certificate of deposit. Memorandum item 2.c would be revised 
to exclude such brokered time deposits. In addition, as a result of the 
increase in the deposit insurance limit for certain retirement plan 
deposit accounts from $100,000 to $250,000 earlier this year, a new 
Memorandum item 2.c.(1) would be added to Schedule RC-E to separately 
identify the portion of the total time deposits of $100,000 or more 
reported in Memorandum item 2.c that represents IRA and Keogh Plan 
accounts.
    For the same reasons, OTS proposes to add two new items to Schedule 
DI of the TFR. These data items would be (1) Time Deposits of $100,000 
or More (excluding brokered time deposits participated out by the 
broker in shares of less than $100,000 and brokered certificates of 
deposit issued in $1,000 amounts under a master certificate of deposit) 
and (2) IRA/Keogh Accounts included in Time Deposits of $100,000 or 
More.
C. Reporting of Certain Fair Value Measurements and the Use of the Fair 
Value Option in the Call Report
    On September 15, 2006, the Financial Accounting Standards Board 
(FASB) issued Statement No. 157, Fair Value Measurements (FAS 157), 
which is effective for banks and other entities for fiscal years 
beginning after November 15, 2007. Earlier adoption of FAS 157 is 
permitted as of the beginning of an earlier fiscal year, provided the 
bank has not yet issued a financial statement or filed a Call Report 
for any period of that fiscal year. Thus, a bank with a calendar year 
fiscal year may voluntarily adopt FAS 157 as of January 1, 2007. The 
fair value measurements standard provides guidance on how to measure 
fair value and would require banks and other entities to disclose the 
inputs used to measure fair value based on a three-level hierarchy for 
all assets and liabilities that are remeasured at fair value on a 
recurring basis.\2\
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    \2\ The FASB's three-level fair value hierarchy gives the 
highest priority to quoted prices in active markets for identical 
assets or liabilities (Level 1) and the lowest priority to 
unobservable inputs (Level 3). Level 1 inputs are quoted prices in 
active markets for identical assets or liabilities that the 
reporting bank has the ability to access at the measurement date 
(e.g., the Call Report date). Level 2 inputs are inputs other than 
quoted prices included within Level 1 that are observable for the 
asset or liability, either directly or indirectly. Level 3 inputs 
are unobservable inputs for the asset or liability.
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    The FASB plans to issue a final standard, The Fair Value Option for 
Financial Assets and Financial Liabilities, before year-end 2006, which 
would be effective for banks and other entities for fiscal years 
beginning after December 15, 2006. The FASB's Fair Value Option 
standard would allow banks and other entities to report certain 
financial assets and liabilities at fair value with the changes in fair 
value included in earnings. The banking agencies anticipate that 
relatively few banks will elect to use the fair value option for a 
significant portion of their financial assets and liabilities.
    The banking agencies plan to clarify the Call Report instructions 
to explain where financial assets and liabilities measured under the 
fair value option should be reported in the existing line items of the 
Call Report. The banking agencies are also proposing to add a new 
Schedule RC-Q to the Call Report to collect data, by major asset and 
liability category, on the amount of assets and liabilities to which 
the fair value option has been applied along with separate disclosure 
of the amount of such assets and liabilities whose fair values were 
estimated under level two and under level three of the FASB's fair 
value hiearchy. The categories are:
     Securities held for purposes other than trading with 
changes in fair value reported in current earnings;
     Loans and leases;
     All other financial assets and servicing assets;
     Deposit liabilities;
     All other financial liabilities and servicing liabilities; 
and
     Loan commitments (not accounted for as derivatives).
    In addition, the banking agencies propose to collect data on 
trading assets and trading liabilities in the new schedule from those 
banks that complete Schedule RC-D, Trading Assets and Liabilities, 
i.e., banks that reported average trading assets of $2 million or more 
for any quarter of the preceding calendar year. In the proposed new 
schedule, such banks would report the carrying amount of trading assets 
and trading liabilities whose fair values were estimated under level 
two and under level three of the FASB's fair value hierarchy. Trading 
assets and trading liabilities are required to be reported at fair 
value and, thus, are not covered under the fair value option.
    The banking agencies anticipate using this fair value information 
to make appropriate risk assessments for on-site examinations and off-
site surveillance. The addition of these data items should result in 
minimal additional reporting burden for banks because FAS 157 requires 
disclosure of amounts under all three levels of the fair value 
hierarchy on a quarterly and annual basis in financial statements.
    The FASB's fair value measurements standard requires banks and 
other entities to consider the effect of a change in their own 
creditworthiness when determining the fair value of a financial 
liability. The banking agencies are proposing to add one new item to 
Schedule RC-R, Regulatory Capital, for the cumulative change in the 
fair value of all financial liabilities accounted for under the fair 
value option that is attributable to changes in the bank's own 
creditworthiness.\3\ This amount would be excluded from the bank's 
retained earnings for purposes of determining Tier 1 capital under the 
banking agencies' regulatory capital standards.
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    \3\ The banking agencies also are planning to issue further 
guidance on the regulatory capital treatment of this cumulative 
change, and are considering possible regulatory changes.
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    The banking agencies plan to clarify the instructions to Schedule 
RI for the treatment of interest income on financial assets and 
interest expense on financial liabilities measured under a fair value 
option. The instructions would be modified to instruct banks to 
separate the contractual year-to-date amount of interest earned on 
financial assets and interest incurred on financial liabilities that 
are reported under a fair value option from the overall year-to-date 
fair value adjustment and report these contractual amounts in the 
appropriate interest income or interest expense items on Schedule RI.
D. Reporting of Certain Data in the Call Report on 1-4 Family 
Residential Mortgage Loans With Terms That Allow for Negative 
Amortization
    Recently, the volume of 1-4 family residential mortgage loan 
products whose terms allow for negative amortization and the number of 
institutions providing borrowers with such loans has increased 
significantly. Loans with this feature are structured in a manner that 
may result in an increase in the loan's principal balance even when the 
borrower's payments are technically current. When loans with negative 
amortization are not prudently underwritten and not properly monitored, 
they raise safety and soundness concerns. However, due to the 
classification of these loans with all other 1-4 family residential 
mortgage loans in the Call Report, the banking

[[Page 63854]]

agencies have no readily available means of identifying the industry's 
exposure to such loans. Therefore, the banking agencies propose to 
collect some Call Report items to monitor the extent of use of 
negatively amortizing residential mortgage loans in the industry.
    The banking agencies propose to collect one memorandum item from 
all banks on Schedule RC-C, Part I, Loans and Leases, for the total 
amount of closed-end loans with negative amortization features secured 
by 1-4 family residential properties. In addition, the banking agencies 
propose to collect two memorandum items on Schedule RC-C and one 
memorandum item on Schedule RI, Income Statement, from banks with a 
significant volume of negatively amortizing 1-4 family residential 
mortgage loans. The banking agencies' determination of the threshold 
for significant volume would be based on the aggregate carrying amount 
of negatively amortizing loans being in excess of a certain dollar 
amount, e.g., $100 million or $250 million, or in excess of a certain 
percentage of the total loans and leases (in domestic offices) reported 
on Schedule RC-C, e.g., five percent or ten percent. For reporting 
during 2007, a bank with negatively amortizing loans would determine 
whether it met the size threshold for reporting the three additional 
memorandum items using data reported in its December 31, 2006, Call 
Report. For reporting in 2008 and subsequent years, the determination 
would be based on data from the previous year-end Call Report. The 
banking agencies request comment on the specific dollar amount and 
percentage of loans that should be used in setting the size threshold 
for additional reporting on negatively amortizing loans.
    The two additional Schedule RC-C memorandum items are (1) the total 
maximum remaining amount of negative amortization contractually 
permitted on closed-end loans secured by 1-4 family residential 
properties and (2) the total amount of negative amortization on closed-
end loans secured by 1-4 family residential properties that is included 
in the carrying amount of these loans. The Schedule RI memorandum item 
is year-to-date noncash income on closed-end loans with a negative 
amortization feature secured by 1-4 family residential properties. 
Banks with negatively amortizing 1-4 family residential loans in excess 
of the reporting threshold for these items would report these three 
items for the entire calendar year following the end of any calendar 
year when this threshold was exceeded.
    For the same reasons, OTS proposed on July 31, 2006, to add two new 
items to Schedule LD of the TFR (71 FR 43286). These items would be the 
total amount of (1) 1-4 dwelling adjustable rate mortgage loans with 
negative amortization and (2) total capitalized negative amortization 
on 1-4 dwelling adjustable rate mortgage loans.
E. Call Report Instructional Clarification for Servicing of Loan 
Participations
    Banks report the outstanding principal balance of assets serviced 
for others in Memorandum item 2 of Schedule RC-S, ``Servicing, 
Securitization, and Asset Sale Activities.'' In Memorandum items 2.a 
and 2.b, banks disclose the amounts of 1-4 family residential mortgages 
serviced with recourse and without recourse, respectively. Memorandum 
item 2.c covers all other loans and financial assets serviced for 
others, but banks are required to disclose the amount of such servicing 
only if the servicing volume is more than $10 million. The instructions 
for Memorandum item 2 do not explicitly state whether a bank that has 
sold a participation in a 1-4 family residential mortgage or other loan 
or financial asset, which it continues to service, should include the 
servicing in Memorandum item 2.a, 2.b, or 2.c, as appropriate. The 
absence of clear instructional guidance has resulted in questions from 
bankers and has produced diversity in practice among banks.
    Subject to the reporting threshold that applies to Memorandum data 
item 2.c, Memorandum data item 2 was intended to cover the entire 
volume of loans and other financial assets for which banks perform the 
servicing function, regardless of whether the servicing involves whole 
loans and other financial assets or only portions thereof, as is 
typically the case with loan participations. The risks and 
responsibilities inherent in servicing are present whether all or part 
of a loan or financial asset is serviced for the benefit of another 
party. Accordingly, the banking agencies propose to clarify the 
instructions to Memorandum item 2 of Schedule RC-S to explicitly state 
that the amount of loan participations serviced for others should be 
included in this item.

III. Request for Comment

    Public comment is requested on all aspects of this joint notice. 
Comments are invited on:
    (a) Whether the proposed revisions to the Call Report and TFR 
collections of information are necessary for the proper performance of 
the agencies' functions, including whether the information has 
practical utility;
    (b) The accuracy of the agencies' estimates of the burden of the 
information collections as they are proposed to be revised, including 
the validity of the methodology and assumptions used;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (d) Ways to minimize the burden of information collections on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    (e) Estimates of capital or start up costs and costs of operation, 
maintenance, and purchase of services to provide information.
    Comments submitted in response to this joint notice will be shared 
among the agencies and will be summarized or included in the agencies' 
requests for OMB approval. All comments will become a matter of public 
record. 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: September 25, 2006.
Stuart E. Feldstein,
Assistant Director, Legislative and Regulatory Activities Division, 
Office of the Comptroller of the Currency.

    Board of Governors of the Federal Reserve System, October 23, 
2006.
Jennifer J. Johnson,
Secretary of the Board.

    Dated at Washington, DC, this 24th day of October, 2006.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.

    Dated: October 20, 2006.
Deborah Dakin,
Senior Deputy Chief Counsel, Regulations and Legislation Division, 
Office of Thrift Supervision.
[FR Doc. 06-8982 Filed 10-30-06; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P; 6720-01-P