[Federal Register Volume 80, Number 181 (Friday, September 18, 2015)]
[Notices]
[Pages 56539-56549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-23402]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
FEDERAL RESERVE SYSTEM
FEDERAL DEPOSIT INSURANCE CORPORATION
Proposed Agency Information Collection Activities; Comment
Request
AGENCY: Office of the Comptroller of the Currency (OCC), Treasury;
Board of Governors of the Federal Reserve System (Board); Federal
Deposit Insurance Corporation (FDIC).
ACTION: Joint notice and request for comment.
-----------------------------------------------------------------------
SUMMARY: In accordance with the requirements of the Paperwork Reduction
Act (PRA) of 1995 (44 U.S.C. chapter 35), the OCC, the Board, and the
FDIC (the ``agencies'') may not conduct or sponsor, and the respondent
is not required to respond to, an information collection unless it
displays a currently valid Office of Management and Budget (OMB)
control number. 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), which
are currently approved collections of information. The deletions of
certain existing data items, the revisions of certain reporting
thresholds and certain existing data items, the addition of certain new
data items, and certain instructional revisions generally are proposed
to take effect as of the December 31, 2015, or the March 31, 2016,
report date, depending on the nature of the proposed reporting change.
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 17, 2015.
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: Because paper mail in the Washington, DC area and at the OCC
is subject to delay, commenters are encouraged to submit comments by
email, if possible. Comments may be sent to: Legislative and Regulatory
Activities Division, Office of the Comptroller of the Currency,
Attention ``1557-0081, FFIEC 031 and 041,'' 400 7th Street SW., Suite
3E-218, Mail Stop 9W-11, Washington, DC 20219. In addition, comments
may be sent by fax to (571) 465-4326 or by electronic mail to
[email protected].
You may personally inspect and photocopy comments at the OCC, 400
7th 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) 649-6700. 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.
All comments received, including attachments and other supporting
materials, are part of the public record and subject to public
disclosure. Do not include any information in your comment or
supporting materials that you consider confidential or inappropriate
for public disclosure.
Board: You may submit comments, which should refer to ``FFIEC 031
and FFIEC 041,'' by any of the following methods:
Agency Web site: http://www.federalreserve.gov. Follow the
instructions for submitting comments at: http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Email: [email protected]. Include the
reporting form numbers in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Robert DeV. Frierson, 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
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 9:00
a.m. and 5:00 p.m. on weekdays.
FDIC: You may submit comments, which should refer to ``FFIEC 031
and FFIEC 041,'' by any of the following methods:
Agency Web site: http://www.fdic.gov/regulations/laws/federal/ . Follow the instructions for submitting comments on the
FDIC's Web site.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Email: [email protected]. Include ``FFIEC 031 and FFIEC
041'' in the subject line of the message.
Mail: Gary A. Kuiper, Counsel, Attn: Comments, Room MB-
3074, 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 7:00 a.m. and 5:00 p.m.
Public Inspection: All comments received will be posted without
change to http://www.fdic.gov/regulations/laws/federal/ including any
personal information provided. Paper copies of public comments may be
requested from the FDIC Public Information Center by
[[Page 56540]]
telephone at (877) 275-3342 or (703) 562-2200.
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; by fax to (202) 395-6974; or by email to
[email protected].
FOR FURTHER INFORMATION CONTACT: For further information about the
proposed revisions to the Call Report discussed in this notice, please
contact any of the agency staff 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).
OCC: Kevin Korzeniewski, Senior Attorney, (202) 649-5490, for
persons who are deaf or hard of hearing, TTY, (202) 649-5597,
Legislative and Regulatory Activities Division, Office of the
Comptroller of the Currency, 400 7th Street SW., Washington, DC 20219.
Board: Mark Tokarski, Acting Federal Reserve Board Clearance
Officer, (202) 452-3829, Office of the Chief Data Officer, 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: Gary A. Kuiper, Counsel, (202) 898-3877, and John Popeo,
Counsel, (202) 898-6923, Legal Division, Federal Deposit Insurance
Corporation, 550 17th Street NW., Washington, DC 20429.
SUPPLEMENTARY INFORMATION: The agencies are proposing to revise and
extend for three years the Call Report, which is currently an approved
collection of information for each agency.
Report Title: Consolidated Reports of Condition and Income (Call
Report).
Form Number: Call Report: FFIEC 031 (for banks and savings
associations with domestic and foreign offices) and FFIEC 041 (for
banks and savings associations with domestic offices only).
Frequency of Response: Quarterly.
Affected Public: Business or other for-profit.
OCC
OMB Number: 1557-0081.
Estimated Number of Respondents: 1,503 national banks and federal
savings associations.
Estimated Time per Response: 59.41 burden hours per quarter to
file.
Estimated Total Annual Burden: 357,173 burden hours to file.
Board
OMB Number: 7100-0036.
Estimated Number of Respondents: 850 state member banks.
Estimated Time per Response: 59.90 burden hours per quarter to
file.
Estimated Total Annual Burden: 203,660 burden hours to file.
FDIC
OMB Number: 3064-0052.
Estimated Number of Respondents: 4,036 insured state nonmember
banks and state savings associations.
Estimated Time per Response: 44.56 burden hours per quarter to
file.
Estimated Total Annual Burden: 719,377 burden hours to file.
The estimated time per response for the quarterly filings of 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 filing of the Call Report as it is proposed to
be revised is estimated to range from 20 to 775 hours per quarter,
depending on an individual institution's circumstances.
Type of Review: Revision and extension of currently approved
collections.
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 federal and state savings associations). At present,
except for selected data items, these information collections are not
given confidential treatment.
Abstract
Institutions submit Call Report 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 data serve a regulatory or public policy purpose by
assisting the agencies in fulfilling their missions of ensuring the
safety and soundness of financial institutions and the financial system
and the protection of consumer financial rights, as well as agency-
specific missions affecting national and state-chartered institutions,
e.g., monetary policy, financial stability, and deposit insurance. Call
Reports are the source of the most current statistical data available
for identifying areas of focus for on-site and off-site examinations.
The agencies use Call Report data in evaluating institutions' corporate
applications, including, in particular, interstate merger and
acquisition applications for which, as required by law, the agencies
must determine 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 data also are used to
calculate institutions' deposit insurance and Financing Corporation
assessments and national banks' and federal savings associations'
semiannual assessment fees.
Current Actions
I. Introduction
The FFIEC launched a formal initiative in December 2014 to identify
potential opportunities to reduce burden associated with Call Report
requirements for community banks. In embarking on this effort, the
FFIEC was responding to industry concerns about the cost and burden
associated with the Call Report. The FFIEC's formal initiative
comprises actions in five areas, which are discussed below. In
addition, as a foundation for the actions it is undertaking, the FFIEC
has developed a set of guiding principles for use in evaluating
potential additions and deletions of Call Report data items and other
revisions to the Call Report. In general, any Call Report changes must
meet three guiding principles: (1) The data items serve a long-term
regulatory or public policy purpose by assisting the FFIEC's member
entities in fulfilling their missions of ensuring the safety and
soundness of financial institutions and the financial system and the
protection of consumer financial rights, as well as entity-specific
missions affecting national and state-chartered institutions; (2) The
data items to be collected maximize practical utility and minimize, to
the extent practicable and appropriate, burden on financial
institutions; and (3) Equivalent data items are not readily available
through other means.
As a first action under the FFIEC's Call Report burden-reduction
initiative, the agencies are publishing this Federal Register notice
and requesting comment on a number of proposed burden-reducing changes
and certain other proposed Call Report revisions identified during
their most recent statutorily mandated review of the information
collected in the Call Report.\1\ Implementation of the
[[Page 56541]]
revisions identified during that review had been deferred while the
agencies adopted changes to the reporting of regulatory capital
information in the Call Report to implement the revised regulatory
capital rules issued in July 2013 that took effect as of January 1,
2014, and January 1, 2015.\2\
---------------------------------------------------------------------------
\1\ This review is mandated by section 604 of the Financial
Services Regulatory Relief Act of 2006 (12 U.S.C. 1817(a)(11)).
\2\ See 78 FR 48932 (August 12, 2013); 79 FR 2527 (January 14,
2014); 79 FR 35634 (June 23, 2014); and 80 FR 5618 (February 2,
2015).
---------------------------------------------------------------------------
The FFIEC and the agencies also identified and incorporated into
this proposal certain other burden-reducing changes to the Call Report
in addition to those identified in the most recent statutorily mandated
review of the Call Report. The burden-reducing changes included as part
of this first action are not intended to be the only group of Call
Report revisions designed to lessen reporting burden for reporting
institutions and, in particular, for community banks. Additional
burden-reducing changes to the Call Report are expected to result from
the other actions being taken by the agencies under the FFIEC's Call
Report burden-reduction initiative.
As the second action, the agencies have accelerated the start of
the next statutorily mandated review of the existing Call Report data
items, which otherwise would have commenced in 2017. Users of Call
Report data items at the FFIEC's member entities are participating in a
series of surveys being conducted over an 18-month period that began in
mid-July 2015. As an integral part of these surveys, users are being
asked to fully explain the need for each Call Report data item, how it
is used, the frequency with which it is needed, and the population of
institutions from which it is needed. Call Report schedules have been
placed into groups and prioritized for review, generally based on
perceived burden as cited by banking industry representatives. Based on
the results of the surveys, the agencies will identify data items that
will be considered for elimination, less frequent collection, or new or
upwardly revised reporting thresholds. Burden-reducing reporting
changes will be proposed for implementation on a flow basis as they are
identified during the sequential reviews of groups of Call Report
schedules rather than waiting until the completion of the entire
review.
As a third action, the agencies are considering the feasibility and
merits of creating a less burdensome version of the quarterly Call
Report for institutions that meet certain criteria, which may include
an asset-size reporting threshold or activity limitations. For example,
a report for eligible institutions could exclude the Call Report
schedules and items not applicable to institutions below the specified
asset-size threshold. The agencies plan to complete their analysis
regarding the concept of such a Call Report by year-end 2015. Any plan
for a new version of the Call Report would need to be approved by the
FFIEC and implemented by the agencies in compliance with the applicable
requirements under the PRA.
A fourth action for the agencies is to better understand, through
industry dialogue, the aspects of reporting institutions' Call Report
preparation process that are significant sources of reporting burden,
including where manual intervention by an institution's staff is
necessary to report particular information. As an initial step toward
gaining this understanding, representatives from the FFIEC's member
entities plan to visit a limited number of institutions that have
expressed their willingness to host a visit during the third quarter of
2015. Institution staff would be asked to show how they prepare their
Call Reports and explain which schedules or data items take a
significant amount of time or manual processes to complete and the
reasons for this. Findings from on-site visits would help the agencies
determine the nature and form of further banker outreach. The
information obtained from these activities would assist the agencies in
evaluating whether and how it may be possible to reduce reporting
burden by revising or redefining Call Report data items.
As the fifth action, the agencies plan to offer periodic training
to bankers via teleconferences and webinars that would explain upcoming
reporting changes and could also provide guidance on areas of the Call
Report bankers find challenging to complete. These events should
benefit institutions by reducing Call Report preparation training
costs. The first training session was a banker teleconference on
February 25, 2015, that included a presentation on the revised Call
Report Schedule RC-R regulatory capital reporting requirements that
took effect on March 31, 2015, followed by a question-and-answer
session. The slide presentation used during the teleconference, an
audio recording of this presentation, and a transcript of the entire
teleconference have been posted on the FFIEC's Web site.
II. Overview
The agencies are proposing to implement a number of revisions to
the Call Report requirements in December 2015 or March 2016, depending
on the nature of the proposed revision. The proposed changes, which are
discussed in detail in Sections III.A through III.E below and would
take effect in December 2015 unless otherwise indicated, include:
Deletions of certain existing data items pertaining to
other-than-temporary impairments from Schedule RI, Income Statement;
troubled debt restructurings from Schedule RC-C, Part I, Loans and
Leases, and Schedule RC-N, Past Due and Nonaccrual Loans, Leases, and
Other Assets; loans covered by FDIC loss-sharing agreements from
Schedule RC-M, Memoranda, and Schedule RC-N; and unused commitments to
asset-backed commercial paper conduits with an original maturity of one
year or less in Schedule RC-R, Part II, Risk-Weighted Assets;
Increases in existing reporting thresholds for certain
data items in five Call Report schedules \3\ and the establishment of a
reporting threshold for certain data items in Schedule RC-S, Servicing,
Securitization, and Asset Sale Activities;
---------------------------------------------------------------------------
\3\ The data items for which components in excess of specified
reporting thresholds are required to be itemized and described are
included in Schedule RI-E, Explanations; Schedule RC-D, Trading
Assets and Liabilities; Schedule RC-F, Other Assets; Schedule RC-G,
Other Liabilities; and Schedule RC-Q, Assets and Liabilities
Measured at Fair Value on a Recurring Basis.
---------------------------------------------------------------------------
Instructional revisions addressing the reporting of home
equity lines of credit that convert from revolving to non-revolving
status in Schedule RC-C, Part I; securities for which a fair value
option is elected in Schedule RC, Balance Sheet; and net gains (losses)
and other-than-temporary impairments on equity securities that do not
have readily determinable fair values in Schedule RI;
New and revised data items and information of general
applicability, including:
[cir] Increasing the time deposit size threshold used to report
certain deposit information from $100,000 to $250,000 in Schedule RC-E,
Deposit Liabilities; Schedule RI; and Schedule RC-K, Quarterly
Averages; \4\
---------------------------------------------------------------------------
\4\ Effective in March 2016 for the data items for the interest
expense on and quarterly averages of time deposits in Schedules RI
and RC-K, respectively.
---------------------------------------------------------------------------
[cir] Revising the statements used to describe the level of
external auditing work performed for the reporting institution during
the preceding year in Schedule RC (effective in March 2016);
[cir] Adding contact information for the reporting institution's
Chief Executive Officer;
[[Page 56542]]
[cir] Reporting the Legal Entity Identifier for the reporting
institution if it already has one (on the Call Report cover page);
[cir] Creating additional preprinted captions for itemizing and
describing components of certain items that exceed reporting thresholds
in Schedules RC-F and RI-E; and
[cir] Eliminating the concept of extraordinary items and revising
affected data items in Schedule RI (effective in March 2016); and
New and revised data items of limited applicability,
including:
[cir] Revising the reporting of certain securities measured under a
fair value option in Schedule RC-Q and moving the existing Memorandum
items for the fair value and unpaid principal balance of loans (not
held for trading) measured under a fair value option from Schedule RC-
C, Part I, to Schedule RC-Q;
[cir] Revising the information reported in Schedule RI Memorandum
items by institutions with total assets of $100 billion or more on the
impact on trading revenues of changes in credit and debit valuation
adjustments (effective in March 2016);
[cir] Adding a new item on ``dually payable'' deposits in foreign
branches of U.S. banks to Schedule RC-E, Part II, Deposits in Foreign
Offices, on the FFIEC 031 report; and
[cir] Revising the information reported about the supplementary
leverage ratio by advanced approaches institutions in Schedule RC-R,
Part I, Regulatory Capital Components and Ratios (effective in March
2016).
For the Call Report revisions proposed to take effect in December
2015, the agencies invite comment on any difficulties that institutions
would encounter in implementing any of these revisions in their year-
end 2015 Call Reports.
For the December 31, 2015, and March 31, 2016, report dates, as
applicable, institutions may provide reasonable estimates for any new
or revised Call Report data item initially required to be reported as
of that date for which the requested information is not readily
available. 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.
III. Discussion of Proposed Call Report Revisions
A. Deletions of Existing Data Items
Based on the agencies' review of the information that institutions
are required to report in the Call Report, the agencies have determined
that the continued collection of the following items is no longer
necessary and are proposing to eliminate them effective December 31,
2015:
(1) Schedule RI, Memorandum items 14.a and 14.b, on other-than-
temporary impairments \5\
---------------------------------------------------------------------------
\5\ Institutions would continue to complete Schedule RI,
Memorandum item 14.c, on net impairment losses recognized in
earnings.
---------------------------------------------------------------------------
(2) Schedule RC-C, Memorandum items 1.f.(2), 1.f.(5), and 1.f.(6)
(and 1.f.(7) on the FFIEC 031), on troubled debt restructurings in
certain loan categories that are in compliance with their modified
terms;
(3) Schedule RC-N, Memorandum items 1.f.(2), 1.f.(5), and 1.f.(6)
(and 1.f.(7) on the FFIEC 031), on troubled debt restructurings in
certain loan categories that are 30 days or more past due or on
nonaccrual;
(4) Schedule RC-M, items 13.a.(5)(a) through (d) (and (e) on the
FFIEC 031), on loans in certain loan categories that are covered by
FDIC loss-sharing agreements; and
(5) Schedule RC-N, items 11.e.(1) through (4) (and (5) on the FFIEC
031), on loans in certain loan categories that are covered by FDIC
loss-sharing agreements and are 30 days or more past due or on
nonaccrual.
In addition, when Schedule RC-R, Part II, is completed properly,
item 18.b on unused commitments to asset-backed commercial paper
conduits with an original maturity of one year or less is not needed
because such commitments should already have been reported in item 10
as off-balance sheet securitization exposures. The instructions for
item 18.b explain that these unused commitments should be reported in
item 10 and that amounts should not be reported in item 18.b.
Accordingly, the agencies are proposing to delete existing item 18.b
from Schedule RC-R, Part II. Existing item 18.c of Schedule RC-R, Part
II, for unused commitments with an original maturity exceeding one year
would then be renumbered as item 18.b.
B. New Reporting Threshold and Increases in Existing Reporting
Thresholds
In five Call Report schedules, institutions are currently required
to itemize and describe each component of an existing item when the
component exceeds both a specified percentage of the item and a
specified dollar amount.\6\ Based on a preliminary evaluation of the
existing reporting thresholds, the agencies have concluded that the
dollar portion of the thresholds that currently apply to these items
can be increased to provide a reduction in reporting burden without a
loss of data that would be necessary for supervisory or other public
policy purposes. The percentage portion of the existing thresholds
would not be changed. Accordingly, the agencies are proposing to raise
from $25,000 to $100,000 the dollar portion of the threshold for
itemizing and describing components of:
---------------------------------------------------------------------------
\6\ See footnote 3.
---------------------------------------------------------------------------
(1) Schedule RI-E, item 1, ``Other noninterest income;''
(2) Schedule RI-E, item 2, ``Other noninterest expense;''
(3) Schedule RC-F, item 6, ``All other assets;''
(4) Schedule RC-G, item 4, ``All other liabilities;''
(5) Schedule RC-Q, Memorandum item 1, ``All other assets;'' and
(6) Schedule RC-Q, Memorandum item 2, ``All other liabilities.''
The agencies also are proposing to raise from $25,000 to $1,000,000
the dollar portion of the threshold for itemizing and describing
components of ``Other trading assets'' and ``Other trading
liabilities'' in Schedule RC-D, Memorandum items 9 and 10.
In addition, because institutions with less than $1 billion in
total assets typically do not provide support for asset-backed
commercial paper conduits, the agencies are proposing to exempt such
institutions from completing Schedule RC-S, Memorandum items 3.a.(1),
3.a.(2), 3.b.(1), and 3.b.(2), on credit enhancements and unused
liquidity commitments provided to asset-backed commercial paper
conduits.
These proposed threshold changes would take effect December 31,
2015.
C. Instructional Revisions
The following proposed instructional revisions would take effect
December 31, 2015.
1. Reporting Home Equity Lines of Credit that Convert From Revolving to
Non-Revolving Status
Institutions report the amount outstanding under revolving, open-
end lines of credit secured by 1-4 family residential properties
(commonly known as home equity lines of credit or HELOCs) in item
1.c.(1) of Schedule RC-C, Part I, Loans and Leases. Closed-end loans
secured by 1-4 family residential properties are reported in Schedule
RC-C, Part I, item 1.c.(2)(a) or (b), depending on whether the loan is
a first or a junior lien.\7\
---------------------------------------------------------------------------
\7\ Information also is separately reported for open-end and
closed-end loans secured by 1-4 family residential properties in
Schedule RI-B, Part I, Charge-offs and Recoveries on Loans and
Leases; Memorandum items in Schedule RC-C, Part I; Schedule RC-D;
Schedule RC-M; and Schedule RC-N.
---------------------------------------------------------------------------
[[Page 56543]]
A HELOC is a line of credit secured by a lien on a 1-4 family
residential property that generally provides a draw period followed by
a repayment period. During the draw period, a borrower has revolving
access to unused amounts under a specified line of credit. During the
repayment period, the borrower can no longer draw on the line of
credit, and the outstanding principal is either due immediately in a
balloon payment or is repaid over the remaining loan term through
monthly payments. The Call Report instructions do not address the
reporting treatment for a home equity line of credit when it reaches
its end-of-draw period and converts from revolving to nonrevolving
status. Such a loan no longer has the characteristics of a revolving,
open-end line of credit and, instead, becomes a closed-end loan. In the
absence of instructional guidance that specifically addresses this
situation, the agencies have found diversity in how these credits are
reported in Schedule RC-C, Part I. Some institutions continue to report
home equity lines of credit that have converted to non-revolving
closed-end status in item 1.c.(1) of Schedule RC-C, Part I, as if they
were still revolving open-end lines of credit, while other institutions
recategorize such loans and report them as closed-end loans in item
1.c.(2)(a) or (b), as appropriate.
Therefore, to address this absence of instructional guidance and
promote consistency in reporting, the agencies are proposing to clarify
the instructions for reporting loans secured by 1-4 family residential
properties to specify that after a revolving open-end line of credit
has converted to non-revolving closed-end status, the loan should be
reported in Schedule RC-C, Part I, item 1.c.(2)(a) or (b), as
appropriate. In proposing this clarification, the agencies request
comment on whether an instructional requirement to recategorize HELOCs
as closed-end loans for Call Report purposes would create difficulties
for institutions' loan recordkeeping systems. If so, commenters are
encouraged to describe the difficulties this recategorization would
create.
2. Reporting Treatment for Securities for Which a Fair Value Option Is
Elected
The Call Report Glossary entry for ``Trading Account'' currently
states that ``all securities within the scope of the Financial
Accounting Standards Board's (FASB) Accounting Standards Codification
(ASC) Topic 320, Investments-Debt and Equity Securities (formerly FASB
Statement No. 115, ``Accounting for Certain Investments in Debt and
Equity Securities''), that a bank has elected to report at fair value
under a fair value option with changes in fair value reported in
current earnings should be classified as trading securities.'' This
reporting treatment was based on language contained in former FASB
Statement No. 159, ``The Fair Value Option for Financial Assets and
Financial Liabilities,'' but that language was not codified when
Statement No. 159 was superseded by current ASC Topic 825, Financial
Instruments. Thus, under U.S. GAAP as currently in effect, the
classification of all securities within the scope of ASC Topic 320 that
are accounted for under a fair value option as trading securities is no
longer required. Accordingly, to bring the ``Trading Account'' Glossary
entry into conformity with current U.S. GAAP, the agencies are
proposing to revise the statement from the Glossary entry quoted above
by replacing ``should be classified'' with ``may be classified.''
This revision to the ``Trading Account'' Glossary entry means that
an institution that elects the fair value option for securities within
the scope of ASC Topic 320 would be able to classify such securities as
held-to-maturity or available-for-sale in accordance with this topic
based on the institution's intent and ability with respect to the
securities. In addition, an institution could choose to classify
securities for which a fair value option is elected as trading
securities.
Institutions that have been required to classify all securities
within the scope of ASC Topic 320 that are accounted for under a fair
value option as trading securities also should consider the related
proposed changes to Schedule RC-Q, Assets and Liabilities Measured at
Fair Value on a Recurring Basis, which are discussed in Section III.E.1
below.
3. Net Gains (Losses) on Sales of, and Other-Than-Temporary Impairments
on, Equity Securities That Do Not Have Readily Determinable Fair Values
Institutions report investments in equity securities that do not
have readily determinable fair values and are not held for trading (and
to which the equity method of accounting does not apply) in Schedule
RC-F, item 4, and on the Call Report balance sheet in Schedule RC, item
11, ``Other assets.'' If such equity securities are held for trading,
they are reported in Schedule RC, item 5, and in Schedule RC-D, item 9
and Memorandum item 7.b, if applicable. In contrast, investments in
equity securities with readily determinable fair values that are not
held for trading are reported as available-for-sale securities in
Schedule RC, item 2.b, and in Schedule RC-B, item 7, whereas those held
for trading are reported in Schedule RC, item 5, and in Schedule RC-D,
item 9 and Memorandum item 7.a, if applicable.
In general, investments in equity securities that do not have
readily determinable fair values are accounted for in accordance with
ASC Subtopic 325-20, Investments--Other--Cost Method Investments
(formerly Accounting Principles Board Opinion No. 18, ``The Equity
Method of Accounting for Investments in Common Stock''), but are
subject to the impairment guidance in ASC Topic 320, Investments--Debt
and Equity Securities (formerly FASB Staff Position No. FAS 115-2 and
FAS 124-2, ``Recognition and Presentation of Other-Than-Temporary
Impairments'').
The Call Report instructions for Schedule RI, Income Statement,
address the reporting of realized gains (losses), including other-than-
temporary impairments, on held to-maturity and available-for-sale
securities as well as the reporting of realized and unrealized gains
(losses) on trading securities and other assets held for trading.
However, the Schedule RI instructions do not specifically explain where
to report realized gains (losses) on sales or other disposals of, and
other-than-temporary impairments on, equity securities that do not have
readily determinable fair values and are not held for trading (and to
which the equity method of accounting does not apply).
The instructions for Schedule RI, item 5.k, ``Net gains (losses) on
sales of other assets (excluding securities),'' direct institutions to
``[r]eport the amount of net gains (losses) on sales and other
disposals of assets not required to be reported elsewhere in the income
statement (Schedule RI).'' The instructions for item 5.k further advise
institutions to exclude net gains (losses) on sales and other disposals
of securities and trading assets. The intent of this wording was to
cover securities designated as held-to-maturity, available-for-sale,
and trading securities because there are separate specific items
elsewhere in Schedule RI for the reporting of realized gains (losses)
on such securities (items 6.a, 6.b, and 5.c, respectively). Thus, the
agencies are proposing to revise the instructions for Schedule RI, item
5.k, by clarifying that the exclusions from this item of net gains
(losses) on securities and trading
[[Page 56544]]
assets apply to held-to-maturity, available-for-sale, and trading
securities and other assets held for trading. At the same time, the
agencies are proposing to add language to the instructions for Schedule
RI, item 5.k, that explains that net gains (losses) on sales and other
disposals of equity securities that do not have readily determinable
fair values and are not held for trading (and to which the equity
method of accounting does not apply), as well as other-than-temporary
impairments on such securities, should be reported in item 5.k. The
agencies also are proposing to remove the parenthetic ``(excluding
securities)'' from the caption for item 5.k and add in its place a
footnote to this item advising institutions to exclude net gains
(losses) on sales of trading assets and held-to-maturity and available-
for-sale securities.
D. New and Revised Data Items and Information of General Applicability
1. Increase in the Time Deposit Size Threshold
Section 335 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Pub. L. 111-203) permanently increased the standard
maximum deposit insurance amount (SMDIA) from $100,000 to $250,000
effective July 21, 2010. The SMDIA had been increased temporarily from
$100,000 to $250,000 by Section 136 of the Emergency Economic
Stabilization Act of 2008 (Pub. L. 110-343). In response to the
increase in the limit of deposit insurance coverage, the reporting of
the amount of ``Total time deposits of $100,000 or more'' in Memorandum
item 2.c of Schedule RC-E, Deposit Liabilities, was revised as of the
March 31, 2010, report date. As of that date, institutions began to
separately report their ``Total time deposits of $100,000 through
$250,000'' (Memorandum item 2.c) and their ``Total time deposits of
more than $250,000'' (Memorandum item 2.d).
However, the reporting of the quarterly averages, interest expense,
and maturity and repricing data for time deposits of $100,000 or more
in Schedules RC-K, RI, and RC-E, respectively, have not been updated to
reflect the permanent $250,000 deposit insurance limit. In this regard,
in its comment letter to the agencies in response to their first
request for comments under the Economic Growth and Regulatory Paperwork
Reduction Act of 1996,\8\ the American Bankers Association recommended
revising the Schedule RC-E deposit reporting items to reflect the new
FDIC insurance limit of $250,000. Accordingly, the agencies are
proposing to revise the time deposit size threshold that applies to the
reporting of this information to bring it into alignment with the
SMDIA. These proposed changes are illustrated in the following table:
---------------------------------------------------------------------------
\8\ 79 FR 32172, June 4, 2014.
------------------------------------------------------------------------
Proposed revised
Call report schedule Current item item
------------------------------------------------------------------------
Schedule RC-K, Quarterly Item 11.b, ``Time Item 11.b, ``Time
Averages. deposits of deposits of
$100,000 or more''. $250,000 or less''.
Item 11.c, ``Time Item 11.c, ``Time
deposits of less deposits of more
than $100,000''. than $250,000''.
Schedule RI, Income Item 2.a.(2)(b), Item 2.a.(2)(b),
Statement \9\. Interest expense on Interest expense on
``Time deposits of ``Time deposits of
$100,000 or more''. $250,000 or less''.
Item 2.a.(2)(c), Item 2.a.(2)(c),
Interest expense on Interest expense on
``Time deposits of ``Time deposits of
less than more than
$100,000''. $250,000''.
Schedule RC-E, Deposit Memorandum item 3.a, Memorandum item 3.a,
Liabilities. ``Time deposits of ``Time deposits of
less than $100,000 $250,000 or less
with a remaining with a remaining
maturity or next maturity or next
repricing date of''. repricing date
of''.
Memorandum item 3.b, Memorandum item 3.b,
``Time deposits of ``Time deposits of
less than $100,000 $250,000 or less
with a remaining with a remaining
maturity of one maturity of one
year or less''. year or less''.
Memorandum item 4.a, Memorandum item 4.a,
``Time deposits of ``Time deposits of
$100,000 or more more than $250,000
with a remaining with a remaining
maturity or next maturity or next
repricing date of''. repricing date
of''.
Memorandum item 4.b, Memorandum item 4.b,
``Time deposits of ``Time deposits of
$100,000 through more than $250,000
$250,000 with a with a remaining
remaining maturity maturity of one
of one year or year or less''.
less''.
Memorandum item 4.c,
``Time deposits of
more than $250,000
with a remaining
maturity of one
year or less''
------------------------------------------------------------------------
The proposed changes to Schedules RC-K and RI would take effect
March 31, 2016. The agencies are proposing to implement the changes to
Schedule RC-E as of December 31, 2015, but comment is specifically
requested on whether institutions' deposit recordkeeping systems will
be able to support the proposed change in the reporting of maturity and
repricing data in Memorandum items 3 and 4 as of that date.
---------------------------------------------------------------------------
\9\ The item numbers shown for Schedule RI are from the FFIEC
041 report form for institutions with domestic offices only. On the
FFIEC 031 report form for institutions with domestic and foreign
offices, the item numbers are items 2.a.(1)(b)(2) and 2.a.(1)(b)(3).
---------------------------------------------------------------------------
2. Level of External Auditing Work Performed for the Reporting
Institution During the Preceding Year
Each year in the March Call Report, each institution indicates in
Schedule RC, Memorandum item 1, the most comprehensive level of
auditing work performed by independent external auditors during the
preceding calendar year for the institution or its parent holding
company. In completing Memorandum item 1, each institution selects from
nine statements describing a range of levels of auditing work the one
statement that best describes the level of auditing work performed for
it. Certain statements from which an institution must choose do not
reflect current auditing practices performed in accordance with
applicable standards and procedures promulgated by the U.S. auditing
standard setters, namely the Public Company Accounting Oversight Board
(PCAOB) and the Auditing Standards Board (ASB) of the American
[[Page 56545]]
Institute of Certified Public Accountants. The PCAOB establishes
auditing and related professional practice standards to be used in the
performance and reporting of audits of the financial statements of
public companies. The ASB establishes auditing, attestation, and
quality control standards applicable to the performance and issuance of
audit and attestation reports for entities that are not public
companies, e.g. private companies.
The PCAOB's Auditing Standard No. 5 (AS 5), An Audit of Internal
Control Over Financial Reporting That Is Integrated with An Audit of
Financial Statements, became effective for fiscal years ending on or
after November 15, 2007, and provides guidance regarding the
integration of audits of internal control over financial reporting with
audits of financial statements. To further emphasize the integration of
these two audits, the PCAOB revised AS 5 in December 2010 by adding a
statement that ``the auditor cannot audit internal control over
financial reporting without also auditing the financial statements.''
Those public companies not required to undergo an audit of internal
control over financial reporting must have an audit of their financial
statements.
The ASB has separately provided similar guidance in Attestation
Section 501 (AT 501), An Examination of an Entity's Internal Control
over Financial Reporting That Is Integrated with an Audit of Its
Financial Statements, which became effective for integrated audits for
periods ending on or after December 15, 2008. Consistent with the
PCAOB, the ASB states in AT 501 that ``[t]he examination of internal
control should be integrated with an audit of financial statements''
and ``[a]n auditor should not accept an engagement to review an
entity's internal control or a written assertion thereon.'' Under the
ASB's previous attestation standards, an entity could engage an
external auditor to examine and attest to the effectiveness of its
internal control over financial reporting without auditing the entity's
financial statements. Thus, at present, unless a private company is
required to or elects to have an integrated internal control
examination and financial statement audit, the private company may be
required to or can choose to have an external auditor perform an audit
of its financial statements, but it may not engage an external auditor
to perform a standalone internal control examination.
The existing wording of statements 1, 2, and 3 of Schedule RC,
Memorandum item 1, reads as follows:
1 = Independent audit of the bank conducted in accordance with
generally accepted auditing standards by a certified public accounting
firm which submits a report on the bank.
2 = Independent audit of the bank's parent holding company
conducted in accordance with generally accepted auditing standards by a
certified public accounting firm which submits a report on the
consolidated holding company (but not on the bank separately).
3 = Attestation on bank management's assertion on the effectiveness
of the bank's internal control over financial reporting by a certified
public accounting firm.
Because these three statements no longer fully and properly
describe the types of external auditing services performed for
institutions or their parent holding companies under current
professional standards and to enhance the information institutions
provide the agencies annually about the level of auditing external work
performed for them, the agencies are proposing to replace existing
statements 1 and 2 with new statements 1a, 1b, 2a, and 2b and to
eliminate existing statement 3 effective March 31, 2016. The revised
statements would read as follows:
1a = An integrated audit of the reporting institution's financial
statements and internal control over financial reporting conducted in
accordance with the standards of the American Institute of Certified
Public Accountants (AICPA) or the Public Company Accounting Oversight
Board (PCAOB) by an independent public accountant that submits a report
on the institution.
1b = An audit of the reporting institution's financial statements
conducted in accordance with auditing standards of the AICPA or the
PCAOB by an independent public accountant that submits a report on the
institution.
2a = An integrated audit of the reporting institution's parent
holding company's consolidated financial statements and internal
control over financial reporting conducted in accordance with the
standards of the AICPA or the PCAOB by an independent public accountant
that submits a report on the consolidated holding company (but not on
the institution separately).\10\
---------------------------------------------------------------------------
\10\ The instructions for statement 2a would indicate this
statement also applies to a reporting institution with $5 billion or
more in total assets and a rating lower than 2 under the Uniform
Financial Institutions Rating System that is required by Section
36(i)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1831m(i)(1)) to have its internal control over financial reporting
audited at the institution level, but undergoes a financial
statement audit at the consolidated holding company level.
---------------------------------------------------------------------------
2b = An audit of the reporting institution's parent holding
company's consolidated financial statements conducted in accordance
with the auditing standards of the AICPA or the PCAOB by an independent
public accountant that submits a report on the consolidated holding
company (but not on the institution separately).
3. Chief Executive Officer Contact Information
All reporting institutions have been requested to provide
``Emergency Contact Information'' as part of their Call Report
submissions since September 2002. This information request was added to
the Call Report so that the agencies could distribute critical, time-
sensitive information to emergency contacts at institutions should such
a need arise. The primary contact should be a senior official of the
institution who has decision-making authority. The primary contact may
or may not be the institution's Chief Executive Officer (CEO).
Information for a secondary contact also should be provided if such a
person is available at an institution. The emergency contact
information is for the confidential use of the agencies and is not
released to the public.
The agencies periodically need to communicate with the CEOs of
reporting institutions via email, but they currently do not have a
complete list of CEO email addresses that would enable an agency to
communicate directly to institutions' CEOs. The CEO communications are
initiated or approved by persons at the agencies' senior management
levels and would involve topics including new initiatives, policy
notifications, and assessment information. For example, the FDIC
initiates distributions of deposit insurance assessment notifications
addressed to the CEOs of insured depository institutions, which are
posted to each institution's FDICconnect account. However, in the
absence of an up-to-date database of CEO email addresses that can be
used for sending assessment notifications, the FDIC currently sends an
email to each institution's FDICconnect user or users and requests that
they download the notification and any attachments, and provide them to
their CEO.
To streamline the agencies' CEO communication process, the agencies
are proposing to request CEO contact information, including email
addresses, in the Call Report separately from, but in a manner similar
to, the currently
[[Page 56546]]
requested ``Emergency Contact Information'' beginning as of December
31, 2015. As with the ``Emergency Contact Information,'' the proposed
CEO contact information would be for the confidential use of the
agencies and would not be released to the public. The agencies intend
for CEO email addresses to be used judiciously and only for significant
matters requiring CEO-level attention. Having a comprehensive database
of CEO contact information, including email addresses, would allow the
agencies to communicate important and time-sensitive information
directly to CEOs.
4. Reporting the Legal Entity Identifier
The Legal Entity Identifier (LEI) is a 20-digit alpha-numeric code
that uniquely identifies entities that engage in financial
transactions. The recent financial crisis spurred the development of a
Global LEI System (GLEIS). Internationally, regulators and market
participants have recognized the importance of the LEI as a key
improvement in financial data systems. The Group of Twenty (G-20)
nations directed the Financial Stability Board (FSB) to lead the
coordination of international regulatory work and deliver concrete
recommendations on the GLEIS by mid-2012, which in turn were endorsed
by the G-20 later that same year. In January 2013, the LEI Regulatory
Oversight Committee (ROC), including participation by regulators from
around the world, was established to oversee the GLEIS on an interim
basis. With the establishment of the full Global LEI Foundation in
2014, the ROC continues to review and develop broad policy standards
for LEIs. The OCC, the Board, and the FDIC are all members of the ROC.
The LEI system is designed to facilitate several financial
stability objectives, including the provision of higher quality and
more accurate financial data. In the United States, the Financial
Stability Oversight Council (FSOC) has recommended that regulators and
market participants continue to work together to improve the quality
and comprehensiveness of financial data both nationally and globally.
In this regard, the FSOC also has recommended that its member agencies
promote the use of the LEI in reporting requirements and rulemakings,
where appropriate.\11\
---------------------------------------------------------------------------
\11\ Financial Stability Oversight Council 2015 Annual Report,
page 14 at (http://www.treasury.gov/initiatives/fsoc/studies-reports/Documents/2015%20FSOC%20Annual%20Report.pdf).
---------------------------------------------------------------------------
Effective beginning October 31, 2014, the Board started requiring
holding companies to provide their LEI on the cover pages of the FR Y-
6, FR Y-7, and FR Y-10 reports \12\ only if a holding company already
has an LEI. Thus, if a reporting holding company does not have an LEI,
it is not required to obtain one for purposes of these Board reports.
Additionally, on July 2, 2015, the Board published in the Federal
Register notice of final approval of a proposal to expand the
collection of the LEI to all holding company subsidiary banking and
nonbanking legal entities reportable on certain schedules of the FR Y-
10 and in one section of the FR Y-6 and FR Y-7 if an LEI has already
been issued for the reportable entity.\13\ With respect to the Call
Report, the agencies are proposing to have institutions provide their
LEI on the cover page of the report beginning December 31, 2015, only
if an institution already has an LEI. As with the Board reports, an
institution that does not have an LEI would not be required to obtain
one for purposes of reporting it on the Call Report.
---------------------------------------------------------------------------
\12\ FR Y-6, Annual Report of Holding Companies; FR Y-7, Annual
Report of Foreign Banking Organizations; and FR Y-10, Report of
Changes in Organizational Structure (OMB No. 7100-0297).
\13\ 80 FR 38202.
---------------------------------------------------------------------------
5. Additional Preprinted Captions for Itemizing and Describing
Components of Certain Items That Exceed Reporting Thresholds
As mentioned above in Section III.B, institutions are required to
itemize and describe each component of certain items in five Call
Report schedules when the component exceeds both a specified percentage
of the item and a specified dollar amount. To simplify and streamline
the reporting of these components and thereby reduce reporting burden,
preprinted captions have been provided for those components of each of
these items that, based on the agencies' review of the components
previously reported for these items, institutions most frequently
itemize and describe. When a preprinted caption is provided for a
particular component of an item, an institution is not required to
report the amount of that component when the amount falls below the
applicable reporting thresholds.
Based on the most recent review of the component descriptions
manually entered by reporting institutions because preprinted captions
were not available, the agencies plan to add one new preprinted caption
to Schedule RI-E, item 1, ``Other noninterest income,'' two new
preprinted captions to Schedule RI-E, item 2, ``Other noninterest
expense,'' and three new preprinted captions to Schedule RC-F, item 6,
``All other assets,'' effective December 31, 2015.\14\ The introduction
of these new preprinted captions is intended to simplify institutions'
compliance with the requirement to itemize and describe those
components of these items that exceed the applicable reporting
thresholds (which are being proposed to be revised in Section II.B).
The new preprinted caption for ``Other noninterest income'' is ``Income
and fees from wire transfers.'' The two new preprinted captions for
``Other noninterest expense'' are ``Other real estate owned expenses''
and ``Insurance expenses (not included in employee benefits, premises
and fixed assets expenses, and other real estate owned expenses).'' The
three new preprinted captions for ``All other assets'' are ``Computer
software,'' ``Accounts receivable,'' and ``Receivables from foreclosed
government-guaranteed mortgage loans.''
---------------------------------------------------------------------------
\14\ The addition of one of the new preprinted captions to
Schedule RC-F, item 6, is based on the expected usage of a component
resulting from the FASB's issuance of Accounting Standards Update
(ASU) No. 2014-14, ``Classification of Certain Government-Guaranteed
Mortgage Loans upon Foreclosure,'' that is in effect for certain
institutions and will become effective for other institutions later
in 2015 or in 2016 depending, in part, of their fiscal years.
---------------------------------------------------------------------------
6. Extraordinary Items
In January 2015, the FASB issued ASU No. 2015-01, ``Simplifying
Income Statement Presentation by Eliminating the Concept of
Extraordinary Items.'' This ASU eliminates the concept of extraordinary
items from U.S. GAAP. At present, ASC Subtopic 225-20, Income
Statement--Extraordinary and Unusual Items (formerly Accounting
Principles Board Opinion No. 30, ``Reporting the Results of
Operations''), requires an entity to separately classify, present, and
disclose extraordinary events and transactions. An event or transaction
is presumed to be an ordinary and usual activity of the reporting
entity unless evidence clearly supports its classification as an
extraordinary item. For Call Report purposes, if an event or
transaction currently meets the criteria for extraordinary
classification, an institution must segregate the extraordinary item
from the results of its ordinary operations and report the
extraordinary item in its income statement in Schedule RI, item 11,
``Extraordinary items and other adjustments, net of income taxes.''
ASU 2015-01 is effective for fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2015. Thus, for
example, institutions with a calendar year fiscal year must begin to
apply the ASU in their Call
[[Page 56547]]
Reports for March 31, 2016.\15\ After an institution adopts ASU 2015-
01, any event or transaction that would have met the criteria for
extraordinary classification before the adoption of the ASU should be
reported in Schedule RI, item 5.l, ``Other noninterest income,'' or
item 7.d, ``Other noninterest expense,'' as appropriate, unless the
event or transaction would otherwise be reportable in another item of
Schedule RI.
---------------------------------------------------------------------------
\15\ Early adoption of ASU 2015-01 is permitted provided that
the guidance is applied from the beginning of the fiscal year of
adoption.
---------------------------------------------------------------------------
Consistent with the elimination of the concept of extraordinary
items in ASU 2015-01, the agencies plan to revise the instructions for
Schedule RI, item 11, and remove the term ``extraordinary items'' from
and revise the captions for Schedule RI, item 8, ``Income (loss) before
income taxes and extraordinary items and other adjustments,'' item 10,
``Income (loss) before extraordinary items and other adjustments,'' and
item 11, effective March 31, 2016. After the concept of extraordinary
items has been eliminated and such items would no longer be reportable
in Schedule RI, item 11, only the results of discontinued operations
would be reportable in item 11.\16\ Accordingly, effective March 31,
2016, the revised captions for Schedule RI, items 8, 10, and 11, would
become ``Income (loss) before income taxes and discontinued
operations,'' ``Income (loss) before discontinued operations,'' and
``Discontinued operations, net of applicable income taxes,''
respectively. Similarly, the caption for Schedule RI-E, item 3, would
be changed from ``Extraordinary items and other adjustments and
applicable income tax effect'' to ``Discontinued operations and
applicable income tax effect.'' \17\
---------------------------------------------------------------------------
\16\ The outdated reference to the reporting of the cumulative
effect of certain changes in accounting principles in the
instructions for item 11, which is inconsistent with the guidance in
the Call Report Glossary entry for ``Accounting Changes,'' would be
deleted from the instructions.
\17\ Items 3.c.(1) and (2) also would be removed from Schedule
RI-E.
---------------------------------------------------------------------------
E. New and Revised Data Items of Limited Applicability
1. Changes to Schedule RC-Q, Assets and Liabilities Measured at Fair
Value on a Recurring Basis
Schedule RC-Q is completed by institutions that had:
Total assets of $500 million or more as of the beginning
of their fiscal year; or
Total assets of less than $500 million as of the beginning
of their fiscal year and either:
[cir] Have elected to report financial instruments or servicing
assets and liabilities at fair value under a fair value option with
changes in fair value recognized in earnings, or
[cir] Are required to complete Schedule RC-D, Trading Assets and
Liabilities.
Institutions required to complete Schedule RC-Q are currently
required to treat securities they have elected to report at fair value
under a fair value option as part of their trading securities. As a
consequence, institutions must include fair value information for their
fair value option securities, if any, in Schedule RC-Q two times:
First, as part of the fair value information they report for their
``Other trading assets'' in item 5.b of the schedule, and then on a
standalone basis in item 5.b.(1), ``Nontrading securities at fair value
with changes in fair value reported in current earnings.'' This
reporting treatment flows from the existing provision of the Glossary
entry for ``Trading Account'' that, as discussed above, requires an
institution that has elected to report securities at fair value under a
fair value option to classify the securities as trading securities.
However, as further discussed above, the agencies are proposing to
remove this requirement because it is not consistent with current U.S.
GAAP. As a result, an institution's fair value option securities can be
classified as held-to-maturity, available-for-sale, or trading
securities in accordance with the guidance in Topic 320, Investments-
Debt and Equity Securities.
In its current form, Schedule RC-Q contains an item for available-
for-sale securities along with the items identified above for ``Other
trading assets,'' which includes securities designated as trading
securities, and ``Nontrading securities at fair value with changes in
fair value reported in current earnings.'' However, Schedule RC-Q does
not include an item for held-to-maturity securities because, given the
existing instructional requirements for fair value option securities,
the held-to-maturity category includes only securities reported at
amortized cost. By removing the requirement to report all fair value
option securities within the scope of ASC Topic 320 as trading
securities, as proposed earlier in this notice, the agencies are
further proposing to replace item 5.b.(1) of Schedule RC-Q for
nontrading securities accounted for under a fair value option with a
new item for any ``Held-to-maturity securities'' to which a fair value
option is applied. In this regard, existing item 1 for ``Available-for-
sale securities'' would be renumbered as item 1.b and fair value
information for any fair value option securities designated as ``Held-
to-maturity securities'' would be reported in a new item 1.a of
Schedule RC-Q. These changes to Schedule RC-Q would take effect
December 31, 2015.
In addition, at present, institutions that have elected to measure
loans (not held for trading) at fair value under a fair value option
are required to report the fair value and unpaid principal balance of
such loans in Memorandum items 10 and 11 of Schedule RC-C, Part I,
Loans and Leases. Because Schedule RC-C, Part I, must be completed by
all institutions, Memorandum items 10 and 11 also must be completed by
all institutions although only a nominal number of institutions with
less than $500 million in assets have disclosed reportable amounts for
any of the categories of fair value option loans reported in the
subitems of these two Memorandum items. Accordingly, the agencies are
proposing to move Memorandum items 10 and 11 on the fair value and
unpaid principal balance of fair value option loans from Schedule RC-C,
Part I, to Schedule RC-Q effective December 31, 2015, and to designate
them as Memorandum items 3 and 4. With only a limited number of
institutions with less than $500 million in assets meeting the criteria
for completing Schedule RC-Q, moving Memorandum items 10 and 11 from
Schedule RC-C, Part I, to Schedule RC-Q should simplify Schedule RC-C,
Part I, and thereby mitigate some of the reporting burden associated
with Schedule RC-C, Part I.
2. Revisions to the Reporting of the Impact on Trading Revenues of
Changes in Credit and Debit Valuation Adjustments by Institutions With
Total Assets of $100 Billion or More
Institutions that reported average trading assets of $2 million or
more for any quarter of the preceding calendar year must report a
breakdown of their trading revenue (as reported in Schedule RI, item
5.c) by underlying risk exposure in Schedule RI, Memorandum items 8.a
though 8.e. The five types of risk exposure are interest rate, foreign
exchange, equity security and index, credit, and commodity and other.
Institutions required to provide this five-way breakdown of their
trading revenue that have $100 billion or more in total assets must
also report the ``Impact on trading revenue of changes in the
creditworthiness of the bank's derivative counterparties on the bank's
derivative assets'' and the ``Impact on trading revenue of changes in
the creditworthiness of the bank on the bank's derivative liabilities''
in
[[Page 56548]]
Schedule RI, Memorandum items 8.f and 8.g, respectively. Memorandum
items 8.f and 8.g were intended to capture the amounts included in
trading revenue that resulted from calendar year-to-date changes in the
reporting institution's credit valuation adjustments (CVA) and debit
valuation adjustments (DVA).
The agencies have found inconsistent reporting of CVAs and DVAs by
the institutions completing Memorandum items 8.f and 8.g of Schedule
RI, which affects the analysis of reported trading revenues. Some
institutions report CVAs and DVAs in these two items on a gross basis
while other institutions report these adjustments on a net (of hedging)
basis. Furthermore, at present, institutions may report a net CVA and
DVA of hedges under only one of the five types of underlying risk
exposures (e.g., the overall net CVA and DVA amount is reported
entirely with trading revenue from credit exposures) when the net CVA
and net DVA should be properly allocated to each of the five different
underlying types of risk exposures.
Consistent reporting of the impact on trading revenue from year-to-
date changes in CVAs and DVAs is necessary to ensure the accuracy of
the data available to examiners for planning and conducting safety and
soundness examinations of institutions' trading activities and to the
agencies for their analyses of derivatives and trading activities, and
changes therein, at the industry and institution level. Furthermore,
proper allocations of CVAs and DVAs (net of hedging) to the appropriate
type of underlying risk exposure are necessary to avoid overstating the
trading revenue from some types of underlying risk exposure and
understating the trading revenue from other types, which may result in
examiners and agency analysts reaching improper conclusions about the
effectiveness of institutions' trading activities and their management
of CVA and DVA risks.
To enhance the quality of the trading revenue information reported
by the largest institutions in the U.S., promote consistency across
institutions in the reporting of CVAs and DVAs, enable examiners to
make more informed judgments about institutions' effectiveness in
managing CVA and DVA risks, and provide a more complete picture of
reported trading revenue, the agencies are proposing to replace
existing Memorandum items 8.f and 8.g of Schedule RI with a tabular set
of data items effective March 31, 2016. In this proposed table, those
institutions that meet the criteria for completing these two Memorandum
items (i.e., institutions that reported average trading assets of $2
million or more for any quarter of the preceding calendar year and have
$100 billion or more in total assets) would separately present their
gross CVAs and DVAs (Memorandum items 8.f.(1) and 8.g.(1)) and any
related CVA and DVA hedging results (Memorandum items 8.f.(2) and
8.g.(2)) by type of underlying risk exposure. The institutions also
would report its gross trading revenue (Memorandum item 8.h) by type of
underlying risk exposure before including positive or negative net CVAs
and net DVAs (columns A through E). The sum of the amounts reported in
Memorandum item 8.h, ``Gross trading revenue,'' plus the net CVA of
hedges (the sum of columns A through E of Memorandum item 8.f.(1) minus
the sum of columns A through E of Memorandum item 8.f.(2)), and plus
the net DVA of hedges (the sum of the columns A through E of Memorandum
item 8.g.(1) minus the sum of columns A through E of Memorandum item
8.g.(2)) must equal Schedule RI, item 5.c, ``Trading revenue.'' For
purposes of this proposed tabular set of data items, the agencies are
further proposing to require CVA and DVA amounts, as well as their
hedges, to be allocated to the type of underlying risk exposure (e.g.,
interest rates, foreign exchange, and equity) that gives rise to the
CVA and the DVA.
In proposing that the institutions with assets of $100 billion or
more report expanded information on the impact on trading revenues of
changes in CVAs and DVAs, related hedging results, and gross trading
revenues, the agencies request comment on the availability of these
data by type of underlying risk exposure at those institutions that
would be subject to this reporting requirement.
3. Dually Payable Deposits in Foreign Branches of U.S. Banks
Under the Federal Deposit Insurance Act (FDI Act), deposit
obligations carried on the books and records of foreign branches of
U.S. banks are not considered deposits, unless the funds are payable
both in the foreign branch and at an office of the bank in the United
States (that is, they are dually payable). In September 2013, the FDIC
issued a final rule amending its deposit insurance regulations to
clarify that deposits carried on the books and records of a foreign
branch of a U.S. bank are not insured deposits even if they are made
payable both at that branch and at an office of the bank in any state
of the United States.\18\ In addition, the final rule provides an
exception for Overseas Military Banking Facilities operated under
Department of Defense regulations.
---------------------------------------------------------------------------
\18\ See 78 FR 56583 (September 13, 2013).
---------------------------------------------------------------------------
The final rule does not affect the ability of a U.S. bank to make a
foreign deposit dually payable. Should a bank do so, its foreign branch
deposits would be treated as deposit liabilities under the FDI Act's
depositor preference regime in the same way as, and on an equal footing
with, domestic uninsured deposits. In general, ``depositor preference''
refers to a resolution distribution regime in which the claims of
depositors have priority over (that is, are satisfied before) the
claims of general unsecured creditors. Thus, if deposits held in
foreign branches of U.S. banks located outside the United States are
made dually payable, that is, made payable at both the foreign office
and a branch of the bank located in the United States, the holders of
such deposits would receive depositor preference in the event of the
U.S. bank's failure.
To enable the FDIC to monitor the volume and trend of dually
payable deposits in the foreign branches of U.S. banks, the agencies
are proposing to add a new Memorandum item 2 to Schedule RC-E, Part II,
on the FFIEC 031 Call Report effective December 31, 2015. The FFIEC 031
is applicable only to banks with foreign offices. The proposed new
information on the amount of dually payable deposits at foreign
branches of U.S. banks would enable the FDIC to determine, as required
by statute, the least costly method of resolving a particular bank if
it fails and the potential loss to the Deposit Insurance Fund. This
requires the FDIC to plan for the distribution of the proceeds from the
liquidation of the failed bank's assets, including consideration not
only of insured deposits, but also other deposit liabilities for
purposes of depositor preference, such as domestic uninsured deposits
and dually payable deposits in foreign branches of the particular U.S.
bank, which take priority over general unsecured liabilities.
4. Revisions To Implement the Supplementary Leverage Ratio for Advanced
Approaches Institutions
Schedule RC-R, Part I, item 45, applies to the reporting of the
supplementary leverage ratio (SLR) by advanced approaches
institutions.\19\ In
[[Page 56549]]
the sample Call Report forms and the Call Report instruction book for
report dates before March 31, 2015, the caption for item 45 and the
instructions for this item both indicated that, effective for report
dates on or after January 1, 2015, advanced approaches institutions
should begin to report their SLR in the Call Report as calculated for
purposes of Schedule A, item 98, of the FFIEC 101, Regulatory Capital
Reporting for Institutions Subject to the Advanced Capital Adequacy
Framework.\20\ However, the agencies temporarily suspended the
collection of Schedule RC-R, Part I, item 45, before it took effect
March 31, 2015, due to amendments to the SLR rule\21\ and the need for
updates to the associated SLR data collection in the FFIEC 101.
---------------------------------------------------------------------------
\19\ In general, an advanced approaches institution (i) has
consolidated total assets (excluding assets held by an insurance
underwriting subsidiary) on its most recent year-end regulatory
report equal to $250 billion or more; (ii) has consolidated total
on-balance sheet foreign exposure on its most recent year-end
regulatory report equal to $10 billion or more (excluding exposures
held by an insurance underwriting subsidiary); (iii) is a subsidiary
of a depository institution that uses the advanced approaches to
calculate its total risk-weighted assets; (iv) is a subsidiary of a
bank holding company or savings and loan holding company that uses
the advanced approaches to calculate its total risk-weighted assets;
or (v) elects to use the advanced approaches to calculate its total
risk-weighted assets.
\20\ OMB numbers: For the OCC, 1557-0239; for the Board, 7100-
0319; and for the FDIC, 3064-0159.
\21\ See 79 FR 57725 (September 26, 2014). The amendments to the
SLR rule took effect January 1, 2015.
---------------------------------------------------------------------------
The agencies have finalized the most recent revisions to the SLR
rule, which requires all advanced approaches institutions to disclose
three items: the numerator of the SLR (Tier 1 capital, which is already
reported in Call Report Schedule RC-R), the denominator of the SLR
(total leverage exposure), and the ratio itself.\22\ As part of the
revisions to the FFIEC 101, the SLR section of the FFIEC 101 will apply
only to top-tier advanced approaches institutions (generally, bank and
savings and loan holding companies), and not to their subsidiary
depository institutions. Therefore, lower tier advanced approaches
depository institutions generally will not report SLR data in the FFIEC
101, and will need to do so in the Call Report, which would satisfy the
SLR disclosure requirement in the revised SLR rule.\23\
---------------------------------------------------------------------------
\22\ See 80 FR 41409 (July 15, 2015). The disclosure requirement
is set forth in the agencies' regulatory capital rules (12 CFR 3.172
(OCC); 12 CFR 217.172 (Board), and 12 CFR 324.172 (FDIC)).
\23\ Because certain depository institutions are exempt from
filing the FFIEC 101, but must still report their SLR components and
ratio, the agencies are proposing the depository institution-level
collection of SLR data in the Call Report rather than in the FFIEC
101.
---------------------------------------------------------------------------
Thus, the agencies are proposing to add a new item 45.a to Schedule
RC-R, Part I, in which an advanced approaches depository institution
(regardless of parallel run status) would report total leverage
exposure as calculated under the agencies' SLR rule.
The agencies also are proposing to renumber current item 45 of
Schedule RC-R, Part I, as item 45.b, to collect an institution's SLR.
The ratio to be reported in item 45.b would equal Tier 1 capital
reported on Schedule RC-R, Part I, item 26, divided by total leverage
exposure reported in proposed item 45.a. Renumbered item 45.b would no
longer reference the FFIEC 101 because lower tier depository
institutions would no longer be calculating or reporting their SLRs on
the FFIEC 101.
The reporting of the proposed SLR information would take effect
March 31, 2016.
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 collections of
information that are the subject of this notice 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. All comments will become a matter of public record.
Dated: September 8, 2015.
Stuart Feldstein,
Director, Legislative and Regulatory Activities Division, Office of the
Comptroller of the Currency.
Dated: September 11, 2015.
Michael Lewandowski,
Associate Secretary of the Board, Board of Governors of the Federal
Reserve System.
Dated at Washington, DC, this 9th day of September, 2015.
Robert E. Feldman,
Executive Secretary, Federal Deposit Insurance Corporation.
[FR Doc. 2015-23402 Filed 9-17-15; 8:45 am]
BILLING CODE 4810-33P; 6210-01-P; 6714-01-P