[Federal Register Volume 72, Number 175 (Tuesday, September 11, 2007)]
[Notices]
[Pages 51814-51821]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-4420]


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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 of 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 November 13, 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, 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 may personally inspect and photocopy 
the comments at the OCC's Public Information Room, 250 E Street, SW., 
Washington, DC 20219. For security reasons, the OCC requires that 
visitors make an appointment to inspect comments. You may do so by 
calling (202) 874-5043. Upon arrival, visitors will be required to 
present valid government-issued photo identification and submit to 
security screening in order to inspect and photocopy comments.
    Board: You may submit comments, which should refer to 
``Consolidated Reports of Condition and Income, 7100-0036, March 2008'' 
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

[[Page 51815]]

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: March 2008 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: March 2008 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: March 2008 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, Office of the 
Comptroller of the Currency, 250 E Street, SW., Washington, DC 20219.
    Board: Michelle E. Shore, 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: Ira L. Mills, OTS Clearance Officer, at 
[email protected], (202) 906-6531, 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\
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    \1\ The proposed changes to the Call Report and the TFR that are 
the subject of this notice would take effect March 31, 2008. The 
banking agencies (the OCC, the Board, and the FDIC) are also 
considering a separate proposal to incorporate the FDIC's Summary of 
Deposits report (OMB No. 3064-0061) into the Call Report effective 
June 30, 2008. If the FFIEC and the banking agencies approve the 
proposed inclusion of the Summary of Deposits in the Call Report, 
the banking agencies will publish a request for comment on this 
proposal in accordance with the requirements of the Paperwork 
Reduction Act of 1995.
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    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: 1,750 national banks.
    Estimated Time per Response: 45.42 burden hours.
    Estimated Total Annual Burden: 317,967 burden hours.
    Board:
    OMB Number: 7100-0036.
    Estimated Number of Respondents: 885 state member banks.
    Estimated Time per Response: 52.07 burden hours.
    Estimated Total Annual Burden: 184,328 burden hours.
    FDIC:
    OMB Number: 3064-0052.
    Estimated Number of Respondents: 5,218 insured state nonmember 
banks.
    Estimated Time per Response: 36.16 burden hours.
    Estimated Total Annual Burden: 754,732 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 635 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; Annually.
    Affected Public: Business or other for-profit.
    OTS:
    OMB Number: 1550-0023.

[[Page 51816]]

    Estimated Number of Respondents: 838 savings associations.
    Estimated Time per Response: 36.50 burden hours.
    Estimated Total Annual Burden: 193,881 burden hours.

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 revise the Call Report and TFR 
instructions for reporting daily average deposit data by newly insured 
institutions for deposit insurance assessment purposes to conform the 
instructions with the FDIC's assessment regulations (12 CFR Part 327). 
These revisions are discussed in Section II.A of this notice.
    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, which are discussed in detail in Sections II.B 
through II.F of this notice. The OTS may issue a separate notice and 
request for comment if it determines that the TFR should be revised to 
include some or all of the proposed changes to the Call Report. The 
Call Report changes include several related to 1-4 family residential 
mortgage loans such as reporting interest and fee income on and the 
quarterly average for such mortgages separately from income on and the 
quarterly average for all other real estate loans and the addition of 
new items for restructured troubled mortgages and mortgage loans in 
process of foreclosure. Call Report Schedule RC-P on closed-end 1-4 
family residential mortgage banking activities, which is completed by 
larger banks and smaller banks with a significant level of such 
activities, would be expanded to include originations, purchases, and 
sales of open-end mortgages as well as closed-end and open-end mortgage 
loan repurchases and indemnifications during the quarter. The Call 
Report's trading account definition would be modified in response to 
the creation of a fair value option in generally accepted accounting 
principles (GAAP). Call Report Schedule RC-Q, which collects data on 
fair value measurements for trading assets and liabilities and other 
assets and liabilities accounted for under a fair value option, and 
certain other schedules, including the loan schedule (Schedule RC-C), 
would also be revised to enhance the information available on 
instruments accounted for under this option. Revisions would also be 
made to the schedule on trading assets and liabilities (Schedule RC-D). 
The Call Report instructions would be clarified for reporting credit 
derivative data in the risk-based capital schedule (Schedule RC-R) and 
a corresponding change would be made to the schedule itself. The 
threshold for reporting significant items of other noninterest income 
and expense in the explanations schedule (Schedule RI-E) would also be 
changed. The instructions for reporting fully insured brokered deposits 
in Schedule RC-E, Deposit Liabilities, would be revised to conform to 
the instructions for reporting time deposits in this schedule.
    The preceding 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, 2008. The 
specific wording of the captions for the new or revised Call Report 
data items discussed in this proposal and the numbering of these data 
items should be regarded as preliminary.
    Finally, the banking agencies request comment on a plan to 
discontinue the mailing of paper Call Report forms and instructions to 
banks, which is discussed in Section III of this notice.
    Type of Review: Revision and extension of currently approved 
collections.

II. Discussion of Proposed Revisions

A. Reporting of Data for Deposit Insurance Assessments in the Call 
Report and TFR by Newly Insured Institutions
    Section 327.5(a)(1) of the FDIC's assessment regulations (12 CFR 
327.5(a)(1)) states that ``[a]n institution that becomes newly insured 
after the first report of condition allowing for average daily balances 
shall have its assessment base determined using average daily 
balances.'' For purposes of these regulations, the term ``report of 
condition'' includes the Call Report and the TFR. Both of these reports 
first allowed an institution to report average daily balances for the 
deposit data used to determine its assessment base as of the March 31, 
2007, report date. This change was introduced as of that date in 
conjunction with a revision and reduction in the overall reporting 
requirements related to deposit insurance assessments in Call Report 
Schedule RC-O and TFR Schedule DI that was intended to simplify 
regulatory reporting. As part of these revised overall reporting 
requirements, the agencies provided an interim period covering the 
March 31, 2007, through December 31, 2007, report dates during which 
each institution has the option to submit its Call Reports or TFRs 
using either the current or revised formats for reporting the data used 
to measure their assessment base. The revised reporting format will 
take effect for all institutions on March 31, 2008, at which time the 
current reporting format will be eliminated.
    The instructions issued in March 2007 for the revised reporting 
format state that an institution that becomes newly insured on or after 
April 1, 2008, would be required to report daily average balances 
beginning in the first quarterly Call Report or TFR that it files. 
However, these instructions do not conform to the previously cited 
language in the FDIC's assessments regulations with respect to their 
treatment of institutions that become insured between April 1, 2007, 
and March 31, 2008. Therefore, the agencies are revising the 
instructions to Call Report Schedule RC-O and TFR Schedule DI to 
require an institution that becomes insured after March 31, 2007, but 
on or before March 31, 2008, to begin reporting daily average balances 
in its Call Report or TFR for the March 31, 2008, report date. The 
requirement for an institution that

[[Page 51817]]

becomes insured on or after April 1, 2008, to report daily average 
deposit data beginning in its first quarterly Call Report or TFR would 
remain in effect.
B. Call Report Revisions Related to 1-4 Family Residential Mortgage 
Loans
    Since year-end 2000, commercial bank holdings of 1-4 family 
residential mortgage loans in domestic offices have increased nearly 
108 percent to more than $1.9 trillion. Nearly 98 percent of all banks 
hold such mortgages. 1-4 family residential mortgages now represent the 
single largest category of loans held by commercial banks, surpassing 
commercial and industrial loans as the largest category in 2002. As a 
percentage of total loans and leases at commercial banks, 1-4 family 
residential mortgages have grown from 24 percent at year-end 2000 to 32 
percent at year-end 2006. Similarly, 1-4 family residential mortgages 
have increased from less than 15 percent of total assets to nearly 19 
percent of total assets during this period. During the first quarter of 
2007, bank originations and purchases of closed-end 1-4 family 
residential mortgages for resale exceeded $287 billion. There has been 
a growing use of nontraditional residential mortgage products and an 
increasing number of banks offering such products. In addition, the 
volume of 1-4 family residential mortgage loans extended to subprime 
borrowers has increased. At the same time, home prices have stagnated 
or even declined in many areas of the country. The higher concentration 
of 1-4 family residential mortgages across the industry and the 
changing risk profile of the loans with which banks are associated in 
some capacity has led the banking agencies to evaluate the information 
they collect about such loans in the Call Report. As a result, the 
banking agencies are proposing several Call Report changes that are 
intended to enhance their ability to monitor the nature and extent of 
banks' involvement with 1-4 family residential mortgage loans as 
originators, holders, sellers, and servicers of such loans.
1. Interest and Fee Income and Quarterly Average
    At present, banks report the total amount of interest and fee 
income on their ``Loans secured by real estate'' (in domestic offices) 
in the Call Report income statement (Schedule RI, item 1.a.(1)(a) on 
the FFIEC 031 and item 1.a.(1) on the FFIEC 041) and the quarterly 
average for these loans (in domestic offices) in the quarterly averages 
schedule (Schedule RC-K, item 6.a.(2) on the FFIEC 031 and item 6.b on 
the FFIEC 041). The banking agencies are proposing to split these 
existing income statement and quarterly average items into separate 
items for the interest and fee income on and the quarterly averages of 
``Loans secured by 1-4 family residential properties'' and ``All other 
loans secured by real estate.''
2. Restructured Mortgages
    Banks currently report information on the amount of loans whose 
terms have been modified, because of a deterioration in the financial 
condition of the borrower, to provide for a reduction of either 
interest or principal. When such restructured loans are past due 30 
days or more or are in nonaccrual status in relation to their modified 
terms as of the report date, they are reported in Schedule RC-N, 
Memorandum item 1. In contrast, when such restructured loans are less 
than 30 days past due and are not otherwise in nonaccrual status, that 
is, when they are deemed to be in compliance with their modified terms 
as discussed in the Call Report instructions, banks report the amount 
of these loans in the Call Report loan schedule (Schedule RC-C, part I, 
Memorandum item 1). However, the instructions advise banks to exclude 
restructured loans secured by 1-4 family residential properties from 
these Memorandum items.
    This exclusion was incorporated into the Call Report instructions 
because the original disclosure requirements for troubled debt 
restructurings under GAAP provided that creditors need not disclose 
information on restructured real estate loans secured by 1-4 family 
residential properties.\2\ However, this exemption from disclosure 
under GAAP has since been eliminated.\3\ Accordingly, the banking 
agencies are proposing to add a new Memorandum item to Schedule RC-C, 
part I, for ``Loans secured by 1-4 family residential properties (in 
domestic offices)'' that have been restructured and are in compliance 
with their modified terms and a new Memorandum item to Schedule RC-N, 
for restructured ``Loans secured by 1-4 family residential properties 
(in domestic offices)'' that are past due 30 days or more or in 
nonaccrual status.
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    \2\ See Financial Accounting Standards Board Statement No. 15, 
Accounting by Debtors and Creditors for Troubled Debt 
Restructurings, footnote 25.
    \3\ See Financial Accounting Standards Board Statement No. 114, 
Accounting by Creditors for Impairment of a Loan, paragraph 22(f).
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3. Mortgages in Foreclosure
    The banking agencies currently collect data on the amount of loans 
secured by 1-4 family residential properties that are past due 30 days 
or more or are in nonaccrual status (Schedule RC-N, item 1.c) and on 
the amount of foreclosed 1-4 family residential properties held by the 
bank (Schedule RC-M, item 3.b.(3)). However, regardless of whether the 
bank owns the loans or services the loans for others, banks do not 
report the volume of 1-4 family residential mortgage loans that are in 
process of foreclosure, an indicator of potential additions to the 
bank's ``other real estate owned'' in the near term. The banking 
agencies propose to add two new Memorandum items for the amount of 1-4 
family residential mortgage loans owned by the bank and serviced by the 
bank that are in foreclosure as of the quarter-end report date. 
Mortgage loans in foreclosure would be those for which the legal 
process of foreclosure has been initiated, but for which the 
foreclosure process has not yet been resolved at quarter-end.\4\ These 
Memorandum items would be added to the Call Report loan schedule 
(Schedule RC-C, part I) and the servicing, securitization, and asset 
sale activities schedule (Schedule RC-S), with the carrying amount 
(before any applicable allowance for loan and leases losses) reported 
in the former Memorandum item and the principal amount reported in the 
latter Memorandum item. Reporting mortgage loans as being in process of 
foreclosure will not exempt those loans owned by the bank from being 
reported as past due or nonaccrual, as appropriate, in Call Report 
Schedule RC-N, and will not exempt those loans serviced by the bank 
that are reported in Schedule RC-S, item 1, from being reported as past 
due, as appropriate, in that schedule.
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    \4\ For banks that participate in the Mortgage Bankers 
Association's (MBA) National Delinquency Survey, the time at which 
mortgage loans would become reportable as being in process of 
foreclosure for Call Report purposes would be the same time at which 
mortgage loans become reportable as being in ``foreclosure 
inventory'' for MBA survey purposes (although the dollar amount of 
such loans would be reported in the Call Report while the number of 
such loans are reported for MBA survey purposes).
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4. Open-end 1-4 Family Residential Mortgage Banking Activities
    Banks with $1 billion or more in total assets and smaller banks 
that meet certain criteria currently provide data on originations, 
purchases, and sales of closed-end 1-4 family residential mortgage 
loans during the quarter arising from their mortgage banking activities 
in domestic offices in Call Report Schedule RC-P. These banks also 
report the amount of closed-end 1-4 family residential mortgage loans 
held

[[Page 51818]]

for sale at quarter-end as well as the noninterest income for the 
quarter from the sale, securitization, and servicing of these mortgage 
loans. Data (other than for noninterest income) is provided separately 
for first lien and junior lien mortgages in Schedule RC-P. About 650 
banks complete Schedule RC-P, less than 300 of which have total assets 
of less than $1 billion. However, this information does not provide a 
complete picture of banks' mortgage banking activities since it 
excludes open-end 1-4 family residential mortgages extended under lines 
of credit. From year-end 2001 to year-end 2006, bank holdings of 1-4 
family residential mortgage loans extended under lines of credit more 
than tripled to nearly $470 billion. Accordingly, the banking agencies 
are proposing to expand the scope of Schedule RC-P to include separate 
items for originations, purchases, and sales of open-end 1-4 family 
residential mortgages during the quarter; the amount of such mortgages 
held for sale at quarter-end; and noninterest income for the quarter 
from the sale, securitization, and servicing of open-end residential 
mortgages. When reporting the originations, purchases, sales, and 
mortgages held for sale, banks would report both the total commitment 
under the line of credit and the principal amount funded under the 
line. For banks with less than $1 billion in total assets, the criteria 
used to determine whether Schedule RC-P must be completed would be 
modified to include both closed-end and open-end 1-4 family residential 
mortgage bank activities.
5. Mortgage Repurchases and Indemnifications
    As a result of its 1-4 family residential mortgage banking 
activities, a bank may be obligated to repurchase mortgage loans that 
it has sold or otherwise indemnify the loan purchaser against loss 
because of borrower defaults, loan defects, other breaches of 
representations and warranties, or for other reasons, thereby exposing 
the bank to additional risk. Such information is not currently captured 
in Call Report Schedule RC-P. Therefore, the banking agencies propose 
to add four new items to Schedule RC-P to collect data on mortgage loan 
repurchases and indemnifications during the quarter. For both closed-
end first lien and closed-end junior lien 1-4 family residential 
mortgages, banks would report the principal amount of mortgages 
repurchased or indemnified. For open-end 1-4 family residential 
mortgages, banks would report both the total commitment under the line 
of credit and the principal amount funded under the line for mortgages 
repurchased or indemnified.
C. Call Report Data on Trading Assets and Liabilities and Other Assets 
and Liabilities Accounted for Under a Fair Value Option
1. Reporting of Assets and Liabilities Under the Fair Value Option as 
Trading
    On February 15, 2007, the Financial Accounting Standards Board 
(FASB) issued Statement No. 159, The Fair Value Option for Financial 
Assets and Financial Liabilities (FAS 159), which is effective for 
fiscal years beginning after November 15, 2007. Earlier adoption of FAS 
159 was permitted as of the beginning of an earlier fiscal year, 
provided the bank (i) Also adopts all of the requirements of FASB 
Statement No. 157, Fair Value Measurements (FAS 157) at the early 
adoption date of FAS 159; (ii) has not yet issued a financial statement 
or submitted Call Report data for any period of that fiscal year; and 
(iii) satisfies certain other conditions. Thus, a bank with a calendar 
year fiscal year may have voluntarily adopted FAS 159 as of January 1, 
2007. Changes in the fair value of financial assets and liabilities to 
which the fair value option is applied are reported in current earnings 
as is currently the case for trading assets and liabilities. Since the 
fair value option standard allows a bank to elect fair value 
measurement through earnings for financial assets and financial 
liabilities, the banking agencies understand that some institutions 
would like to reclassify certain loans elected to be accounted for 
under the fair value option as trading assets. The Call Report 
instructions currently do not allow loans held for sale to be reported 
as trading assets.
    Under FAS 159, all securities within the scope of FASB Statement 
No. 115, Accounting for Certain Investments in Debt and Equity 
Securities (FAS 115), that a bank has elected to report at fair value 
under a fair value option should be classified as trading securities. 
Recognizing the provisions of FAS 159, the banking agencies are 
proposing the following clarification to the Call Report instructions, 
including the Call Report Glossary entry for ``Trading Account.'' Banks 
may classify assets (other than securities within the scope of FAS 115 
for which a fair value option is elected) and liabilities as trading if 
the bank applies fair value accounting, with changes in fair value 
reported in current earnings, and manages these assets and liabilities 
as trading positions, subject to the controls and applicable regulatory 
guidance related to trading activities. For example, a bank would 
generally not classify a loan to which it has applied the fair value 
option as a trading asset unless the bank holds the loan, which it 
manages as a trading position, for one of the following purposes: (1) 
For market making activities, including such activities as accumulating 
loans for sale or securitization; (2) to benefit from actual or 
expected price movements; or (3) to lock in arbitrage profits.
2. Revision of Certain Fair Value Measurement and Fair Value Option 
Information in the Call Report
    Effective for the March 31, 2007, report date, the banking agencies 
started collecting information on certain assets and liabilities 
measured at fair value on Call Report Schedule RC-Q, Financial Assets 
and Liabilities Measured at Fair Value. Schedule RC-Q was intended to 
be consistent with the disclosure and other requirements contained in 
FAS 157 and FAS 159. Based on the banking agencies' review of initial 
industry practice and inquiries from banks, the agencies have 
determined that industry practice for preparing and reporting FAS 157 
disclosures has evolved differently than the process for the 
information collected on Schedule RC-Q. This divergence has resulted in 
unnecessary burden and less transparency for the affected banks in two 
material respects.
    First, Schedule RC-Q does not allow banks to separately identify 
each of the three levels of fair value measurements prescribed by FAS 
157. The banking agencies included Level 1 fair value measurements in 
the total fair value amount in column A of Schedule RC-Q as a means of 
minimizing reporting burden. However, the omission of a separate column 
on Schedule RC-Q for Level 1 fair value measurements has increased the 
time bank managements spend preparing and reviewing Schedule RC-Q 
because the fair value disclosures on Schedule RC-Q differ from those 
in the banks' other financial statements. Second, Schedule RC-Q does 
not allow banks to separately identify any amounts by which the gross 
fair values of assets and liabilities reported for Level 2 and 3 fair 
value measurements included in columns B and C have been offset 
(netted) in the determination of the total fair value reported on the 
Call Report balance sheet (Schedule RC), which is disclosed in column A 
of Schedule RC-Q. Based on a review of industry practice, these 
disclosures are commonly made in the banks' other financial statements.
    To reduce confusion related to the differences in industry practice 
and the Call Report, the banking agencies

[[Page 51819]]

propose to add two columns to Schedule RC-Q to allow banks to report 
any netting adjustments and Level 1 fair value measurements separately 
in a manner consistent with industry practice. The new columns would be 
captioned column B, Amounts Netted in the Determination of Total Fair 
Value Reported on Schedule RC, and column C, Level 1 Fair Value 
Measurements. Existing column B, Level 2 Fair Value Measurements, and 
column C, Level 3 Fair Value Measurements, of Schedule RC-Q would be 
recaptioned as columns D and E, respectively. Column A would remain 
unchanged.
    The banking agencies have also given further consideration to the 
information that will be necessary to effectively assess the safety and 
soundness of banks that utilize the fair value option pursuant to FAS 
159. Based on this assessment, the banking agencies propose to amend 
certain other Call Report schedules to improve the agencies' ability to 
make comparisons among entities that elect a fair value option and 
those that do not. The primary focus of these proposed changes is to 
enhance the information provided by banks that elect the fair value 
option for loans. The proposed changes are based on the principal 
objectives for disclosures and the required disclosures in FAS 159, 
which were intended to provide ``information to enable users to 
understand the differences between fair value and contractual cash 
flows''' and to provide information ``that would have been disclosed if 
the fair value option had not been elected.''
    Specifically, the banking agencies propose to add items to Schedule 
RC-C, part I, Loans and Leases, to collect data on the loans reported 
in this schedule that are measured at fair value under a fair value 
option: (1) The fair value of such loans measured by major loan 
category, (2) the unpaid principal balance of such loans by major loan 
category, and (3) the aggregate amount of the difference between the 
fair value and the unpaid principal balance of such loans that is 
attributable (a) to changes in the credit risk of the loan since its 
origination and (b) to all other factors. Comments are invited on: (1) 
The availability of information necessary to separately report the 
aggregate difference between fair value and the unpaid principal that 
is attributable to changes in credit risk since origination, (2) the 
reliability of estimating the amount attributable to changes in credit 
risk since origination, and (3) ways to minimize the burden of 
collecting information regarding the effect of changes in credit risk 
on the carrying amount of loans measured at fair value.
    Because Schedule RC-C, part I, provides data on loans held for 
investment and for sale, the banking agencies propose to add the same 
items to Schedule RC-D, Trading Assets and Liabilities, for loans 
measured at fair value under a fair value option that are designated as 
held for trading. The banking agencies also propose to add a new item 
to Schedule RC-D for ``Other trading liabilities'' in recognition of a 
bank's ability to elect to measure certain liabilities at fair value in 
accordance with FAS 159 and designate them as held for trading.
    The banking agencies propose to add two items to Schedule RC-N, 
Past Due and Nonaccrual Loans, Leases, and Other Assets, to collect 
data on the fair value and unpaid principal balance of loans measured 
at fair value under a fair value option that are past due or in 
nonaccrual status. The items would follow the existing three column 
breakdown on Schedule RC-N that banks utilize to report all other past 
due and nonaccrual loans. Since trading assets are not currently 
reported on Schedule RC-N, the banking agencies propose to add similar 
items to Schedule RC-D to collect the total fair value and unpaid 
principal balance of loans 90 days or more past due that are classified 
as trading. Finally, the banking agencies propose to add items to 
Schedule RI, Income Statement, to collect information on: (1) Net gains 
(losses) recognized in earnings on assets that are reported at fair 
value under a fair value option; (2) estimated net gains (losses) on 
loans attributable to changes in instrument-specific credit risk; (3) 
net gains (losses) recognized in earnings on liabilities that are 
reported at fair value under a fair value option; (4) estimated net 
gains (losses) on liabilities attributable to changes in the 
instrument-specific credit risk.
3. Other Revisions to the Call Report Information on Trading Assets and 
Liabilities
    Since 2000, the total trading assets reported by banks has 
increased approximately 124 percent to $682 billion or 7 percent of 
total industry assets as of March 31, 2007. In terms of concentrations, 
approximately 64 percent of total trading assets now are either 
reported in the category of ``Trading assets held in foreign offices'' 
(approximately 53 percent of total trading assets) or ``Other trading 
assets in domestic offices'' (approximately 11 percent of total trading 
assets). Schedule RC-D, Trading Assets and Liabilities, currently does 
not provide any specific detail on the trading assets held in foreign 
offices or other trading assets in domestic offices. This limits the 
banking agencies' ability to assess bank exposures to market, 
liquidity, credit, operational, and other risks posed by these assets. 
To appropriately assess the safety and soundness of banks with these 
exposures and banks with significant concentrations in trading assets, 
the banking agencies propose three revisions to Schedule RC-D.
    First, the banking agencies propose to eliminate the single line 
item for trading assets in foreign offices on the FFIEC 031 Call Report 
form and revise the schedule to include separate columns for the 
consolidated bank and for domestic offices. This will provide detail on 
the assets in foreign offices in a manner consistent with disclosures 
about trading assets throughout the bank. Second, the banking agencies 
propose to change the reporting threshold for Schedule RC-D. At 
present, a bank must complete Schedule RC-D each quarter during a 
calendar year if the bank reported a quarterly average for trading 
assets of $2 million or more in Schedule RC-K, item 7, for any quarter 
of the preceding calendar year.\5\ As proposed, Schedule RC-D would be 
completed in any quarter when the quarterly average for trading assets 
was $2 million or more in any of the four preceding quarters.\6\ This 
change will enable the banking agencies to more quickly and readily 
monitor the composition and risk exposures of the trading accounts of 
banks that become more significantly involved in trading activities. 
During 2006, 118 banks reported average trading assets of $2 million or 
more in any quarter of the year.
---------------------------------------------------------------------------

    \5\ This same reporting threshold applies to Schedule RI, 
Memorandum item 8, in which banks report a breakdown of trading 
revenue by risk exposure, but the banking agencies are not proposing 
to change the threshold for this Memorandum item.
    \6\ For example, if a bank reported a quarterly average for 
trading assets of $2 million or more for the first time in its March 
31, 2008, Call Report, it would begin to complete Schedule RC-D in 
its June 30, 2008, Call Report. At present, the bank would not begin 
to complete Schedule RC-D until its March 31, 2009, Call Report.
---------------------------------------------------------------------------

    Third, the banking agencies propose to require banks with average 
trading assets of $1 billion or more in any of the four preceding 
quarters to provide additional detail on trading assets and liabilities 
currently included in the ``other'' trading asset and liability 
categories. These banks would provide additional breakouts for asset-
backed securities by major category, collateralized debt obligations 
(both synthetic and non-synthetic), retained

[[Page 51820]]

interests in securitizations, equity securities (both with and without 
readily determinable fair values), and loans held pending 
securitization. In addition, these banks would be required to provide a 
description of and report the fair value of any type of trading asset 
or liability in the ``Other trading assets'' and ``Other trading 
liabilities'' categories that is greater than $25,000 and exceeds 25 
percent of the amount reported in that trading category. This threshold 
is comparable to the threshold that all banks use for providing 
additional detail on other assets and other liabilities reported in 
Schedules RC-F and RC-G, respectively.
D. Reporting Credit Derivative Data for Risk-Based Capital Purposes in 
the Call Report
    Approximately 50 banks report that they have entered into credit 
derivative contracts either as a guarantor or beneficiary. For credit 
derivative contracts that are covered by the banking agencies' risk-
based capital standards, the Call Report instructions require banks to 
report these credit derivatives in item 52, ``All other off-balance 
sheet liabilities,'' of Schedule RC-R, Regulatory Capital, unless the 
credit derivatives represent recourse arrangements or direct credit 
substitutes, which are reported in one of the preceding items in the 
Derivatives and Off-Balance Sheet Items section of the schedule. This 
reporting approach was developed to enable banks that sold credit 
protection and held the credit derivative to apply a 100 percent risk 
weight to the notional amount consistent with the risk-based capital 
treatment of standby letters of credit and guarantees. At present, 
Schedule RC-R, item 54, ``Derivative contracts,'' specifically excludes 
credit derivatives and does not include a 100 percent risk weight 
column because the maximum risk weight on the counterparty credit risk 
charge for other types of derivatives is 50 percent.
    However, this reporting approach does not consider that some credit 
derivative positions are subject to a counterparty credit risk charge, 
which is calculated for other derivative positions in item 54, even if 
the credit derivatives are held by a bank that is subject to the market 
risk capital rules. The banking agencies also understand that credit 
derivatives often are included in bilateral netting arrangements. When 
derivatives are subject to such an arrangement, the instructions to 
Schedule RC-R, item 54, permit a bank to report a net amount 
representing its exposure to a counterparty for all derivative 
transactions under the bilateral netting arrangement with that 
counterparty. However, by instructing a bank not to report its 
counterparty credit risk exposure for credit derivatives in Schedule 
RC-R, item 54, the banking agencies are, in effect, requiring the bank 
to separate its exposures resulting from credit derivatives from its 
net exposure to a counterparty. As a consequence, the bank is unable to 
recognize the netting benefit in its risk-based capital calculation.
    The banking agencies are proposing to modify the Call Report 
instructions for Schedule RC-R to allow the reporting of the credit 
equivalent amount of credit derivatives subject to the counterparty 
credit risk charge in item 54 of the schedule. In addition, the banking 
agencies would extend the existing 100 percent risk weight column in 
Schedule RC-R to item 54, ``Derivative contracts.''
E. Revision of Reporting Threshold for Other Noninterest Income and 
Other Noninterest Expense in the Call Report
    In 2001, the banking agencies changed the threshold for reporting 
detail on the components of ``Other noninterest income,'' included in 
Schedule RI, item 5.l, and ``Other noninterest expense,'' reported in 
Schedule RI, item 7.d, to require banks separately to disclose on 
Schedule RI-E, Explanations, the description and amount of any 
component included in other noninterest income and other noninterest 
expense that exceeded 1 percent of the sum of interest income and 
noninterest income. Since that time, the banking agencies have 
monitored bank disclosures of the types of noninterest income and 
noninterest expenses in excess of this threshold to assess the safety 
and soundness considerations associated with the changing sources of 
these income and expense streams. Based on this review, the banking 
agencies have determined that the current threshold does not provide 
sufficient information on the sources of bank noninterest income and 
noninterest expenses to adequately address their safety and soundness 
concerns. As a result, the banking agencies are proposing to change the 
threshold for reporting detail information on the components of other 
noninterest income and other noninterest expense.
    Prior to 2001, banks were required to separately disclose the 
description and amount of any item included in other noninterest income 
that exceeded 10 percent of other noninterest income and any item 
included in other noninterest expense that exceeded 10 percent of other 
noninterest expense. The banking agencies have determined that 
thresholds based on a percentage of other noninterest income and other 
noninterest expense are more relevant criteria for determining when a 
bank should provide more detail. The banking agencies propose to change 
the threshold to require banks to separately disclose the description 
and amount of any item included in other noninterest income that 
exceeds 3 percent of other noninterest income and any item included in 
other noninterest expense that exceeds 3 percent of other noninterest 
expense. This percentage is intended to initially result in a reporting 
threshold that is comparable to the current 1 percent of interest 
income plus noninterest income threshold. It is also expected to 
provide more relevant disclosures than the current threshold as the 
amounts reported in noninterest income and noninterest expense change 
over time.
    In addition, based on a review of recent bank disclosures of 
components of other noninterest income and other noninterest expense 
reported in Schedule RI-E, the banking agencies plan to add one new 
preprinted caption for other noninterest income and four new preprinted 
captions for other noninterest expense to help banks comply with the 
disclosure requirements. As with the existing preprinted captions for 
other noninterest income and other noninterest expense, banks are only 
required to use these descriptions and provide the amounts for these 
components when the amounts included in other noninterest income or 
other noninterest expense exceed the reporting threshold. The new 
preprinted other noninterest income caption is bank card/credit card 
interchange fees. The new preprinted noninterest expense captions are: 
(1) Accounting and auditing expenses, (2) consulting and advisory 
expenses, (3) automated teller machine (ATM) and interchange expenses, 
and (4) telecommunications expenses.
F. Reporting Brokered Time Deposits Participated Out by the Broker in 
the Call Report
    The banking agencies revised the instructions for Schedule RC-E, 
Memorandum items 2.b, ``Total time deposits of less than $100,000,'' 
and 2.c, ``Total time deposits of $100,000 or more,'' in March 2007. 
This was done so that 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 would be reported in the former rather than the 
latter Memorandum item. However, the

[[Page 51821]]

banking agencies did not make a conforming instructional revision to 
Schedule RC-E, Memorandum items 1.c.(1) and 1.c.(2), on fully insured 
brokered deposits. This means that these participated brokered time 
deposits continue to be reported as brokered deposits of greater than 
$100,000 rather than brokered deposits of less than $100,000. 
Consistent reporting of these brokered time deposits across these 
Schedule RC-E Memorandum items is needed for purposes of measuring a 
bank's non-core liabilities. Therefore, the banking agencies are 
proposing to revise Schedule RC-E, Memorandum items 1.c.(1) and 
1.c.(2), so that 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 are reported in Memorandum item 1.c.(1) as fully 
insured brokered deposits of less than $100,000.

III. Discontinuance of Mailing of Call Report Forms and Instructions

    The banking agencies are planning to discontinue the mailing of 
report forms and instructions for the FFIEC 031 and FFIEC 041. In March 
2006, the banking agencies advised banks that beginning in June 2006 
they would no longer mail sample Call Report forms to banks each 
quarter. At that time, the agencies stated that they planned to mail 
sample forms to banks only in those quarters when significant revisions 
are made to the report forms. The banking agencies have continued to 
mail updates to the Call Report instruction book in those quarters when 
such updates have been issued. Based on their current practice, the 
banking agencies' next mailing would take place in March 2008.
    The Call Report forms and their instructions are available on the 
FFIEC's Web site (http://www.ffiec.gov/ffiec_report_forms.htm) and 
the FDIC's Web site (http://www.fdic.gov/regulations/resources/call/index.html) each quarter before any mailings of the paper forms and 
instructions are completed. A paper copy of the report forms and 
instructions can be printed from the Web sites. In addition, banks that 
use Call Report software generally can print paper copies of blank 
forms from their software. The banking agencies request comment on this 
issue.

IV. 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.

    Dated: September 4, 2007.
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, September 5, 
2007.
Jennifer J. Johnson,
Secretary of the Board.


    Dated at Washington, DC, this 31st day of August, 2007.

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


    Dated: August 30, 2007.
Deborah Dakin,
Senior Deputy Chief Counsel, Regulations and Legislation Division, 
Office of Thrift Supervision.
[FR Doc. 07-4420 Filed 9-10-07; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P; 6720-01-P