[Federal Register Volume 84, Number 201 (Thursday, October 17, 2019)]
[Notices]
[Pages 55687-55690]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22568]



[[Page 55687]]

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DEPARTMENT OF TREASURY

Office of the Comptroller of the Currency

[Docket ID OCC-2019-0021]

FEDERAL RESERVE SYSTEM

FEDERAL DEPOSIT INSURANCE CORPORATION


Reporting of Data on Loans to Small Businesses and Small Farms

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

ACTION: Request for comment.

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SUMMARY: The OCC, the Board, and the FDIC (collectively, the agencies) 
are requesting comment on ways to modify the current requirements for 
reporting data on loans to small businesses and small farms in the 
Consolidated Reports of Condition and Income (Call Report) so that the 
reported data better reflect lending to these sectors of the U.S. 
economy.

DATES: Comments must be received by the agencies no later than December 
16, 2019.

ADDRESSES: Interested parties are invited to submit written comments to 
any or all of the agencies. All comments, which should refer to ``Loans 
to Small Businesses and Small Farms,'' will be shared among the 
agencies.
    OCC: Commenters are encouraged to submit comments through the 
Federal eRulemaking Portal or email, if possible. You may submit 
comments by any of the following methods:
     Federal eRulemaking Portal--Regulations.gov Classic or 
Regulations.gov Beta
    Regulations.gov Classic: Go to https://www.regulations.gov/. Enter 
``Docket ID OCC-2019-0021'' in the Search Box and click ``Search.'' 
Click on ``Comment Now'' to submit public comments. For help with 
submitting effective comments please click on ``View Commenter's 
Checklist.'' Click on the ``Help'' tab on the Regulations.gov home page 
to get information on using Regulations.gov, including instructions for 
submitting public comments.
    Regulations.gov Beta: Go to https://beta.regulations.gov/ or click 
``Visit New Regulations.gov Site'' from the Regulations.gov classic 
homepage. Enter ``Docket ID OCC-2019-0021'' in the Search Box and click 
``Search.'' Public comments can be submitted via the ``Comment'' box 
below the displayed document information or click on the document title 
and click the ``Comment'' box on the top-left side of the screen. For 
help with submitting effective comments please click on ``Commenter's 
Checklist.'' For assistance with the Regulations.gov Beta site please 
call (877) 378-5457 (toll free) or (703) 454-9859 Monday-Friday, 9 
a.m.-5 p.m. ET or email to [email protected].
     Email: [email protected].
     Mail: Chief Counsel's Office, Attention: Comment 
Processing, Office of the Comptroller of the Currency, 400 7th Street 
SW, Suite 3E-218, Washington, DC 20219.
     Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218, 
Washington, DC 20219.
    Instructions: You must include ``OCC'' as the agency name and 
``Docket ID OCC-2019-0021'' in your comment. In general, the OCC will 
enter all comments received into the docket and publish the comments on 
the Regulations.gov website without change, including any business or 
personal information provided such as name and address information, 
email addresses, or phone numbers. 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.
    You may review comments and other related materials that pertain to 
this request for comment by any of the following methods:
     Viewing Comments Electronically--Regulations.gov Classic 
or Regulations.gov Beta
    Regulations.gov Classic: Go to https://www.regulations.gov/. Enter 
``Docket ID OCC-2019-0021'' in the Search box and click ``Search.'' 
Click on ``Open Docket Folder'' on the right side of the screen. 
Comments and supporting materials can be viewed and filtered by 
clicking on ``View all documents and comments in this docket'' and then 
using the filtering tools on the left side of the screen. Click on the 
``Help'' tab on the Regulations.gov home page to get information on 
using Regulations.gov. The docket may be viewed after the close of the 
comment period in the same manner as during the comment period.
    Regulations.gov Beta: Go to https://beta.regulations.gov/ or click 
``Visit New Regulations.gov Site'' from the Regulations.gov classic 
homepage. Enter ``Docket ID OCC-2019-0021'' in the Search Box and click 
``Search.'' Click on the ``Comments'' tab. Comments can be viewed and 
filtered by clicking on the ``Sort By'' drop-down on the right side of 
the screen or the ``Refine Results'' options on the left side of the 
screen. Supporting Materials can be viewed by clicking on the 
``Documents'' tab and filtered by clicking on the ``Sort By'' drop-down 
on the right side of the screen or the ``Refine Results'' options on 
the left side of the screen.'' For assistance with the Regulations.gov 
Beta site please call (877) 378-5457 (toll free) or (703) 454-9859 
Monday-Friday, 9 a.m.-5 p.m. ET or email to 
[email protected].
    The docket may be viewed after the close of the comment period in 
the same manner as during the comment period.
     Viewing Comments Personally: You may personally inspect 
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 or, for 
persons who are deaf or hearing impaired, TTY, (202) 649-5597. Upon 
arrival, visitors will be required to present valid government-issued 
photo identification and submit to security screening in order to 
inspect comments.
    Board: You may submit comments, which should refer to ``Loans to 
Small Businesses and Small Farms,'' by any of the following methods:
     Agency Website: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at: http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Email: [email protected]. Include ``Loans 
to Small Businesses and Small Farms'' in the subject line of the 
message.
     Fax: (202) 452-3819 or (202) 452-3102.
     Mail: Ann E. Misback, Secretary, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue NW, 
Washington, DC 20551.
    All public comments are available on the Board's website at https://www.federalreserve.gov/apps/foia/proposedregs.aspx 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 146, 
1709 New York Avenue NW, Washington, DC 20006, between 9:00 a.m. and 
5:00 p.m. on weekdays. For security reasons, the Board requires that 
visitors make an appointment to inspect comments. You may do so by 
calling (202) 452-3684. Upon arrival, visitors will be required to

[[Page 55688]]

present valid government-issued photo identification and to submit to 
security screening in order to inspect and photocopy comments.
    FDIC: You may submit comments, which should refer to ``Loans to 
Small Businesses and Small Farms,'' by any of the following methods:
     Agency Website: https://www.fdic.gov/regulations/laws/federal/. Follow the instructions for submitting comments on the FDIC's 
website.
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: [email protected]. Include ``Loans to Small 
Businesses and Small Farms'' in the subject line of the message.
     Mail: Manuel E. Cabeza, Counsel, Attn: Comments, Room MB-
3128, 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 https://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, 3501 North Fairfax 
Drive, Arlington, VA 22226, or by telephone at (877) 275-3342 or (703) 
562-2200.

FOR FURTHER INFORMATION CONTACT: 
    OCC: Cady Codding, Senior Policy Accountant, Office of the Chief 
Accountant, (202) 649-5764; Kevin Korzeniewski, Counsel, Chief 
Counsel's Office, (202) 649-5490; or for persons who are deaf or 
hearing impaired, TTY, (202) 649-5597.
    Board: Douglas Carpenter, Senior Supervisory Financial Analyst, 
Division of Supervision and Regulation, (202) 452-2205, Board of 
Governors of the Federal Reserve System, 20th and C Streets NW, 
Washington, DC 20551.
    FDIC: Shannon Beattie, Chief, Accounting and Securities Disclosure 
Section, Division of Risk Management Supervision, (202) 898-3952, 
[email protected]; or Michelle Haslett, Examination Specialist, 
Division of Risk Management Supervision, (202) 898-6923, 
[email protected].

SUPPLEMENTARY INFORMATION: 

I. Background, Existing Collection, and Use of Data

A. History of the Data Collection

    Section 122 of the Federal Deposit Insurance Corporation 
Improvement Act of 1991 \1\ required the agencies to establish an 
annual data collection from insured depository institutions on lending 
to small businesses and small farms. The agencies implemented the 
statute by introducing Schedule RC-C, Part II, to the Call Report \2\ 
effective June 30, 1993.\3\ Initially, this schedule was completed 
annually as of every June 30. However, to improve the agencies' ability 
to assess the availability of credit to small businesses and small 
farms in the aftermath of the financial crisis, the agencies changed 
the reporting frequency for Schedule RC-C, Part II, from annually to 
quarterly beginning with the March 31, 2010, Call Report.\4\ In 2017, 
as part of the Federal Financial Institutions Examination Council's 
Call Report burden reduction initiative, the agencies reduced the 
reporting frequency of Schedule RC-C, Part II, from quarterly to 
semiannually for institutions that file the FFIEC 051 Call Report.\5\ 
The reporting frequency of Schedule RC-C, Part II, remains quarterly 
for institutions that file the FFIEC 031 and the FFIEC 041 Call 
Report.\6\
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    \1\ 12 U.S.C. 1817 note.
    \2\ The ``Call Report'' consists of the Consolidated Reports of 
Condition and Income for a Bank with Domestic and Foreign Offices 
(FFIEC 031), the Consolidated Reports of Condition and Income for a 
Bank with Domestic Offices Only (FFIEC 041), and the Consolidated 
Reports of Condition and Income for a Bank with Domestic Offices 
Only and Total Assets Less than $5 Billion (FFIEC 051). U.S. 
branches and agencies of foreign banks file the Report of Assets and 
Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 
002). The FFIEC 002 includes Schedule C, Part II, Loans to Small 
Businesses and Small Farms, which is collected only from insured 
U.S. branches of foreign banks and parallels Call Report Schedule 
RC-C, Part II.
    \3\ 57 FR 54235 (November 17, 1992).
    \4\ 74 FR 68322 (December 23, 2009).
    \5\ 82 FR 2444 (January 9, 2017).
    \6\ In the FFIEC 002, Schedule C, Part II, is collected annually 
as of June 30 from insured U.S. branches of foreign banks.
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B. Data Currently Collected

    The current data collection in Schedule RC-C, Part II, generally 
requests information on (i) loans to small businesses, which are 
defined as loans with original amounts of $1 million or less that are 
reported as ``Loans secured by nonfarm nonresidential properties'' or 
``Commercial and industrial loans'' (in domestic offices) in Call 
Report Schedule RC-C, Part I, items 1.e and 4; and (ii) loans to small 
farms, which are defined as loans with original amounts of $500,000 or 
less that are reported as ``Loans secured by farmland (including farm 
residential and other improvements)'' and ``Loans to finance 
agricultural production and other loans to farmers'' (in domestic 
offices) in Call Report Schedule RC-C, Part I, items 1.b and 3. The 
agencies currently request the total number and total amount 
outstanding for each of these four categories of loans, which are 
stratified into three segments based on the original amounts of the 
loans. For loans to small businesses, the stratifications are original 
amounts of $100,000 or less, original amounts of more than $100,000 
through $250,000, and original amounts of more than $250,000 through $1 
million. For loans to small farms, the stratifications are original 
amounts of less than $100,000, original amounts of more than $100,000 
through $250,000, and original amounts of more than $250,000 through 
$500,000.
    Institutions that do not hold loans that meet the definition of 
small business or small farm loans do not need to provide data in 
Schedule RC-C, Part II, for that particular type of loan. Institutions 
that file the FFIEC 041 or the FFIEC 051 Call Report and hold small 
business or small farm loans predominantly in original amounts of 
$100,000 or less report only the total number of the loans in each loan 
category within that particular type of loan, and do not need to 
provide the full stratification. Further details about the collection 
of loans to small businesses and small farms are provided in the 
applicable Call Report instructions (FFIEC 031, FFIEC 041, or FFIEC 
051).\7\
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    \7\ https://www.ffiec.gov/ffiec_report_forms.htm.
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C. Uses of the Data

    Among the agencies, the Board is the primary user of the data 
collected on loans to small businesses and small farms.\8\ Collection 
of these data improves the Board's ability to monitor credit conditions 
facing small businesses and small farms and significantly contributes 
to its ability to develop policies intended to address any problems 
that arise in credit markets. The institution-level Call Report data 
provide information that cannot be obtained from other indicators of 
small business and small farm credit conditions. For example, during a 
period of credit contraction, the Call Report data can be used to 
identify which types of institutions are reducing the volume of their 
loans to small businesses and small farms. Having detailed data on the 
characteristics of affected institutions is crucial to building a 
sufficiently informative picture of the strength of economic activity.
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    \8\ See 82 FR 2444, 2454 (January 9, 2017).
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    Monetary policymaking benefits importantly from timely information 
on

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small business credit conditions and flows. To determine how best to 
adjust the federal funds rate over time, the Board must continuously 
assess the prospects for real economic activity and inflation in coming 
quarters. Credit conditions have an important bearing on the evolution 
of those prospects over time, and so the Board pays close attention to 
data from Call Reports. In trying to understand the implications of 
aggregate credit data for the macroeconomic outlook, it is helpful for 
the Board to be able to distinguish between conditions facing small 
firms and those affecting other businesses for several reasons. First, 
small businesses comprise a substantial portion of the nonfinancial 
business sector, and so their hiring and investment decisions have an 
important influence on overall real activity. Second, because small 
businesses tend to depend more heavily on depository institutions for 
external financing, they likely experience material swings in their 
ability to obtain credit relative to larger firms. Third, the relative 
opacity of small businesses and their consequent need to provide 
collateral for loans is thought to create a ``credit'' channel for 
monetary policy to influence real activity. Specifically, changes in 
monetary policy may alter the value of assets used as collateral for 
loans, thereby affecting the ability of small businesses to obtain 
credit, abstracting from the effects of any changes in loan rates. 
Finally, the credit conditions facing small businesses and small farms 
differ substantially from those facing large businesses, making it 
necessary to collect indicators that are specific to these borrowers. 
Large businesses may access credit from a number of different sources, 
including the corporate bond market and the commercial paper market. In 
contrast, small businesses and small farms rely more heavily on credit 
provided through depository institutions. The dependence of small 
businesses and small farms on lending by depository institutions--
particularly from smaller institutions--highlights the importance of 
the Call Report data reported in Schedule RC-C, Part II.

II. Current Actions

A. GAO Report

    The U.S. Government Accountability Office (GAO) reviewed the data 
collected on Call Report Schedule RC-C, Part II, Loans to Small 
Businesses and Small Farms, as part of a study of the effect of 
regulations on small business lending.\9\ In summarizing its findings 
with respect to the Call Report data on loans to small businesses, the 
GAO stated that
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    \9\ See Community Banks: Effect of Regulations on Small Business 
Lending and Institutions Appears Modest, but Lending Data Could Be 
Improved (GAO-18-312).

    [t]he data community banks report to regulators do not 
accurately capture lending to small businesses because the data 
exclude some loans to small businesses. Specifically, the definition 
of small business loans used for banks' reporting excludes loans 
greater than $1 million and has not been adjusted for inflation 
since 1992. In addition, the data capture loans by their size rather 
than the size of the borrowing entity, and therefore could include 
small loans to large businesses. These limitations hamper 
regulators' and policymakers' ability to assess actual changes in 
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banks' small business lending, including any effect of regulation.

    At the conclusion of this study, which was published in August 
2018, the GAO recommended that the agencies should collaborate to 
reevaluate, and modify as needed, the requirements for the data banks 
report in the Call Report to better reflect lending to small 
businesses.
    In response to this recommendation, the agencies are reviewing the 
data currently collected on small business and small farm loans on 
Schedule RC-C, Part II, in the Call Report to identify options for 
improving the usefulness of the data reported on these loans so that 
the data will better reflect lending to small businesses and small 
farms.
    The agencies also recognize that institutions already have 
processes in place that enable them to report their small business and 
small farm lending data in the Call Report in accordance with the 
reporting instructions for Schedule RC-C, Part II, which generally have 
not been revised since the implementation of Schedule RC-C, Part II, in 
1993. Thus, introducing revisions to the reporting requirements and the 
instructions for Schedule RC-C, Part II, could affect the burden of the 
collection of small business and small farm lending data on 
institutions. Certain options for revisions may change burden in 
differing ways, particularly if the options are not aligned with how 
institutions currently identify loans to small businesses and small 
farms and then collect and report data on these loans to their 
managements or internal purposes. The agencies are interested in 
learning what data institutions collect and maintain on small business 
and small farm loans in their loan systems and other automated systems 
for internal purposes in addition to the data required to be reported 
on these loans in Call Report Schedule RC-C, Part II, and how 
institutions are using these data internally, to identify which options 
may improve the usefulness of the Call Report data collection while 
considering the burden impact of any adjustments to the current 
reporting requirements for Schedule RC-C, Part II. The agencies will 
use the feedback received in response to this request for comment to 
assess what steps they should take in response to the recommendation 
from the GAO. After considering the feedback, if the agencies determine 
that a change to the existing collection of small business and small 
farm lending data in Schedule RC-C, Part II, is warranted, the agencies 
would seek further comment on a specific proposal to revise this Call 
Report schedule in accordance with the Paperwork Reduction Act.\10\
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    \10\ 44 U.S.C. chapter 35.
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B. Request for Comment

General Questions on Data
    1. How do institutions internally report on their small business 
and small farm loan portfolios? What key indicator(s) do institutions 
use to define and monitor small business and small farm loan 
originations each quarter? Do institutions further subcategorize these 
loan portfolios based on initial loan size or other factors (such as 
the borrower's gross annual revenue or the borrower's number of 
employees)? In responding to these questions, commenters from banks and 
savings associations are encouraged to describe the internal reporting 
practices, key indicator(s), and any subcategorization at their 
individual institution.
    2. What data do institutions regularly collect from small 
businesses and small farms related to outstanding loans or commitments 
(such as gross annual revenues or asset size)? In responding to this 
question, commenters from banks and savings associations are encouraged 
to identify the data their institution regularly collects.
Questions Related to the Current Collection
    3. As described in Section I.B. above, the agencies' collection 
classifies and stratifies loans as small business or small farm loans 
based on the original amounts of the loans. The maximum original 
amounts used to determine this classification have not changed since 
Schedule RC-C, Part II, took effect in 1993.
    a. Should the agencies consider increasing the maximum original 
loan amounts for the reporting of loans to small businesses and small 
farms

[[Page 55690]]

(currently $1 million and $500,000, respectively)? If so, what would be 
appropriate maximum original amounts for each type of loan?
    b. Should the agencies continue to require loan stratification by 
original loan amount or just collect total amounts for small business 
and small farm loans without stratification? If the former and the 
maximum original loan amounts were increased, what would be appropriate 
original loan amounts for stratification?
    c. Should the agencies incorporate an automatic or periodic 
adjustment for inflation for the maximum original loan amounts going 
forward?
    4. Should the agencies raise the original amount threshold 
(currently $100,000) for identifying institutions that hold small 
business or small farm loans with original amounts predominantly below 
that threshold that would not need to complete the full stratification 
in Schedule RC-C, Part II?
    5. Should the agencies exempt institutions that hold less than a 
certain number or total amount of small business or small farm loans 
from reporting data on these loans in Schedule RC-C, Part II? If so, 
what would be an appropriate threshold for exemption and why?
Questions on Alternate Approaches
    6. Should the agencies consider using other business and farm size 
indicators to identify or stratify loans, e.g., the borrower's gross 
annual revenues or asset size, or should the agencies combine original 
loan amounts with one or more of these other indicators to identify or 
stratify loans?
    a. Would other indicators provide a better measure to identify 
small business and small farm loans than the original loan amount? If 
so, which indicators?
    b. Are such indicator data available back to the origination dates 
of existing loans? If so, are the data available in your institution's 
automated loan systems or in manual form, e.g., in individual 
borrowers' loan files?
    c. If only current indicator data are available, would the current 
data generally be representative of what the indicator data would have 
been at origination? Are the current indicator data available in your 
institution's automated loan systems or in manual form?
    7. Should the agencies consider referencing other recognized 
standards for small business classification, such as the U.S. Small 
Business Administration's size thresholds for small businesses, as a 
way to identify or stratify loans? \11\
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    \11\ See 13 CFR 121.201.
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    8. Should the agencies consider collecting data only on new loans 
made during the reporting period (i.e., originations) instead of data 
on total loans outstanding as of the end of the reporting period 
regardless of when originated?
    9. Are there other approaches the agencies should consider for the 
identification of, and the collection of information on, small business 
or small farm loans?
Questions on Potential Challenges and Burden
    10. What provisions of the existing Schedule RC-C, Part II, 
instructions, including the definitions of loans to small businesses 
and loans to small farms, create difficulties for your institution in 
reporting in this schedule today? How might the agencies address these 
issues to reduce reporting burden?
    11. What challenges or burden would your institution experience 
under each of the various options to revise the collection of small 
business and small farm loan data (i.e., raise existing original amount 
thresholds; use new indicators to identify small business and small 
farm loans outstanding as of the end of the reporting period regardless 
of when the loans were acquired (originated or purchased); use a 
combination of existing or higher original amount thresholds and new 
indicators for identifying and stratifying loans outstanding as of the 
end of the reporting period; collect data only on loan originations 
during the reporting period rather than total loans outstanding as of 
the end of the reporting period)?
    a. How would burden be affected if a revised method for identifying 
and reporting small business and small farm loans applies only to loans 
acquired after the date the revised method takes effect and the 
collection of data excludes loans held when the revised method takes 
effect?
    b. How would burden be affected if loans acquired after the date 
the revised method takes effect are reported under a revised method 
while loans held when the revised method takes effect continue to be 
reported under the existing Schedule RC-C, Part II, framework, i.e., 
only by original loan amount?
    c. If a revised method were to be used for identifying loans to be 
reported in Schedule RC-C, Part II, how much lead time would your 
institution need before you would be prepared to begin reporting under 
this revised method? How would lead times differ for the various 
options referenced above in this question?

    Dated: October 10, 2019.
Morris R. Morgan,
First Deputy Comptroller, Comptroller of the Currency.
    Board of Governors of the Federal Reserve System, October 7, 
2019.
Ann Misback,
Secretary of the Board.
Federal Deposit Insurance Corporation.

    Dated at Washington, DC, on October 8, 2019.
Annmarie H. Boyd,
Assistant Executive Secretary.
[FR Doc. 2019-22568 Filed 10-16-19; 8:45 am]
 BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P