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Agency Information Collection Activities: Submission for OMB Review; Comment Request

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AGENCIES:

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:

Notice of information collection to be submitted to OMB for review and approval under the Paperwork Reduction Act of 1995.

SUMMARY:

In accordance with the requirements of the Paperwork Reduction Act 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. On October 18, 2001, the OCC, the Board, and the FDIC (the agencies) requested public comment for 60 days on proposed revisions to the Consolidated Reports of Condition and Income (Call Report), which are currently approved collections of information. After considering the comments the agencies received, the Federal Financial Institutions Examination Council (FFIEC), of which the agencies are members, adopted the proposed revisions after making certain modifications to them.

DATES:

Comments must be submitted on or before April 1, 2002.

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: Written comments should be submitted to the Communications Division, Office of the Comptroller of the Currency, 250 E Street, SW., Public Information Room, Mailstop 1-5, Attention: 1557-0081, Washington, DC 20219. Due to recent temporary disruptions in the OCC's mail service, commenters are encouraged to submit comments by fax or electronic mail. Comments may be sent by fax to (202) 874-4448, or by electronic mail to regs.comments@occ.treas.gov. Comments will be available for inspection and photocopying at the OCC's Public Information Room, 250 E Street, SW., Washington, DC 20219. Appointments for inspection of comments may be made by calling (202) 874-5043.

Board: Written comments should be addressed to Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th and C Streets, NW., Washington, DC 20551, submitted by electronic mail to regs.comments@federalreserve.gov, or delivered to the Board's mail room between 8:45 a.m. and 5:15 p.m., and to the security control room outside of those hours. Both the mail room and the security control room are accessible from the courtyard entrance on 20th Street between Constitution Avenue and C Street, NW. Comments received may be inspected in room M-P-500 between 9 a.m. and 5 p.m., except as provided in section 261.12 of the Board's Rules Regarding Availability of Information, 12 CFR 261.12(a).

FDIC: Written comments should be addressed to Robert E. Feldman, Start Printed Page 9356Executive Secretary, Attention: Comments/OES, Federal Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 20429. All comments should refer to “Consolidated Reports of Condition and Income.” Comments may be hand-delivered to the guard station at the rear of the 550 17th Street Building (located on F Street), on business days between 7 a.m. and 5 p.m. [FAX number: (202) 898-3838; Internet address: comments@fdic.gov]. Comments may be inspected and photocopied in the FDIC Public Information Center, Room 100, 801 17th Street, NW., Washington, DC, between 9 a.m. and 4:30 p.m. on business days.

A copy of the comments may also be submitted to the OMB desk officer for the agencies: Alexander T. Hunt, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 3208, Washington, DC 20503.

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FOR FURTHER INFORMATION CONTACT:

Sample copies of the revised Call Report forms for March 31, 2002, can be obtained at the FFIEC's web site (www.ffiec.gov). Sample copies of the revised Call Report forms also may be requested from any of the agency clearance officers whose names appear below.

OCC: Jessie Dunaway, OCC Clearance Officer, or Camille Dixon, (202) 874-5090, Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 250 E Street, SW., Washington, DC 20219.

Board: Mary M. West, Chief, Financial Reports Section, (202) 452-3829, Division of Research and Statistics, Board of Governors of the Federal Reserve System, 20th and C Streets, NW., Washington, DC 20551. Telecommunications Device for the Deaf (TDD) users may contact Diane Jenkins, (202) 452-3544, Board of Governors of the Federal Reserve System, 20th and C Streets, NW., Washington, DC 20551.

FDIC: Tamara R. Manly, Management Analyst (Regulatory Analysis), (202) 898-7453, Office of the Executive Secretary, Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 20429.

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SUPPLEMENTARY INFORMATION:

Request for OMB approval to extend, with revision, the following currently approved collections of information:

Report Title: Consolidated Reports of Condition and Income.

Form Number: FFIEC 031 (for banks with domestic and foreign offices) and FFIEC 041 (for banks with domestic offices only).

Frequency of Response: Quarterly.

Affected Public: Business or other for-profit.

For OCC

OMB Number: 1557-0081.

Estimated Number of Respondents: 2,200 national banks.

Estimated Time per Response: 42.02 burden hours.

Estimated Total Annual Burden: 369,776 burden hours.

For Board

OMB Number: 7100-0036.

Estimated Number of Respondents: 978 state member banks.

Estimated Time per Response: 48.00 burden hours.

Estimated Total Annual Burden: 187,776 burden hours.

For FDIC

OMB Number: 3064-0052.

Estimated Number of Respondents: 5,480 insured state nonmember banks.

Estimated Time per Response: 32.64 burden hours.

Estimated Total Annual Burden: 715,503 burden hours.

The estimated time per response is an average which varies by agency because of differences in the composition of the banks under each agency's supervision (e.g., size distribution of banks, types of activities in which they are engaged, and number of banks with foreign offices). The time per response for a bank is estimated to range from 15 to 550 hours, depending on individual circumstances.

General Description of Report

This information collection is mandatory: 12 U.S.C. 161 (for national banks), 12 U.S.C. 324 (for state member banks), and 12 U.S.C. 1817 (for insured state nonmember commercial and savings banks). Except for selected items, this information collection is not given confidential treatment. Small businesses (i.e., small banks) are affected.

Abstract

Banks file Call Reports with the agencies each quarter for the agencies' use in monitoring the condition, performance, and risk profile of reporting banks and the industry as a whole. In addition, Call Reports provide the most current statistical data available for evaluating bank corporate applications such as mergers, for identifying areas of focus for both on-site and off-site examinations, and for monetary and other public policy purposes. Call Reports are also used to calculate all banks' deposit insurance and Financing Corporation assessments and national banks' semiannual assessment fees.

Current Actions

On October 18, 2001, the OCC, the Board, and the FDIC jointly published a notice soliciting comments for 60 days on proposed revisions to the Call Report (66 FR 52973). The notice described the specific changes that the agencies, with the approval of the FFIEC, were proposing to implement as of March 31, 2002. The proposed revisions included:

  • Separating the existing balance sheet (Schedule RC) items for federal funds sold and securities resale agreements and for federal funds purchased and securities repurchase agreements into two asset and two liability items and adding a new item to Schedule RC-M, Memoranda, for the amount of overnight Federal Home Loan Bank advances included in federal funds purchased;
  • Adding new items for:
  • The fair value of credit derivatives to Schedule RC-L, Derivatives and Off-Balance Sheet Items;
  • Year-to-date merchant credit card sales volume for acquiring banks and for agent banks with risk to Schedule RC-L; and
  • Loans and leases held for sale that are past due 30-89 days, past due 90 days or more, and in nonaccrual status to the past due and nonaccrual schedule (Schedule RC-N);
  • Breaking down the existing items for past due and nonaccrual closed-end 1-4 family residential mortgages in Schedule RC-N and for the charge-offs and recoveries of such mortgages in Schedule RI-B, part I, into separate items for first lien and junior lien mortgages;
  • Revising the manner in which banks report on the estimated amount of their uninsured deposits in the deposit insurance assessments schedule (Schedule RC-O) and, for banks with foreign offices, modifying the scope of the existing items for the number and amount of deposit accounts in domestic offices to include accounts in insured branches in Puerto Rico and U.S. territories and possessions;
  • Inserting a subtotal in the Tier 1 capital computation in Schedule RC-R, Regulatory Capital, to facilitate the calculation of certain disallowed assets and adding a new item to the schedule in which banks with financial subsidiaries would report the adjustment they must make to Tier 1 capital for their investment in these subsidiaries;
  • Splitting the existing income statement (Schedule RI) item for intangible asset amortization expense into separate items for impairment losses on goodwill and for the Start Printed Page 9357amortization expense and impairment losses on other intangible assets on account of a new accounting standard; and
  • Simplifying the disclosure of write-downs arising from transfers of loans to a held-for-sale account in the changes in allowance for loan and lease losses schedule (Schedule RI-B, part II).

After considering the comments the agencies received, the FFIEC and the agencies decided to modify certain aspects of the proposal relating to the reporting of federal funds transactions and securities resale/repurchase agreements and to proceed with all of the other revisions that had been proposed.

In addition, on November 29, 2001, the agencies published a final rule revising the regulatory capital treatment of recourse arrangements and direct credit substitutes, including residual interests and credit-enhancing interest-only strips, as well as asset-backed and mortgage-backed securities (66 FR 59613). This final rule took effect on January 1, 2002. Any transactions settled on or after that date are subject to the rule. However, for transactions settled before January 1, 2002, that result in increased capital requirements under the final rule, banks may delay the application of the final rule to those transactions until December 31, 2002. In response to this final rule, the FFIEC and the agencies are revising the instructions for reporting these types of exposures in Schedule RC-R, Regulatory Capital, so that the capital calculations in this schedule are consistent with the amended regulatory capital standards.

Type of Review: Revisions of currently approved collections.

Comments

In response to their October 18, 2001, notice, the agencies received two comment letters, one from the New York Clearing House (NYCH), an association of 11 major commercial banks, and another from the Federal Home Loan Bank (FHLB) of Atlanta. The agencies and the FFIEC have considered the comments received from these two respondents.

Federal Funds Transactions and Securities Resale/Repurchase Agreements

As indicated above, the agencies originally proposed to separate the existing balance sheet (Schedule RC) items for “Federal funds sold and securities purchased under agreements to resell” and for “Federal funds purchased and securities sold under agreements to repurchase” into two asset and two liability items. As proposed, the reporting of amounts as “Federal funds sold” (the asset item) and “Federal funds purchased” (the liability item) would have been based on the longstanding definition of “federal funds transactions,” i.e., the lending and borrowing of immediately available funds for one business day or under a continuing contract, regardless of the nature of the contract or of the collateral, if any. Under this definition, securities resale/repurchase agreements involving the receipt of immediately available funds that mature in one business day or roll over under a continuing contract are considered federal funds transactions. In addition, because overnight advances that a bank obtains from a Federal Home Loan Bank also met the definition of federal funds purchased, the agencies further proposed to add a new item to Schedule RC-M, Memoranda, in order to identify the amount of these overnight Federal Home Loan Bank advances. All other Federal Home Loan Bank advances are reported as part of “Other borrowed money.”

The NYCH cited several concerns with this aspect of the agencies' proposal. The NYCH noted that the federal funds market, which generally involves transactions that are not collateralized, is different from the securities resale/repurchase markets, which involves collateralized transactions. As a result, its member banks typically manage these two types of transactions separately. Moreover, their member banks' existing data collection systems do not separately identify overnight securities resale/repurchase agreements and reclassify them as federal funds transactions, which the proposed Call Report change would require their systems to do. The NYCH also recommended that federal funds transactions should be limited to transactions in domestic offices, noting that if this were done, conforming changes would need to be made to the related items in Schedule RC-H, Selected Balance Sheet Items for Domestic Offices.

The FHLB of Atlanta supported the agencies' proposal to have banks report federal funds transactions separately from securities resale/repurchase agreements on the balance sheet and to add an item to Schedule RC-M for overnight Federal Home Loan Bank advances. However, the FHLB of Atlanta questioned the treatment of overnight Federal Home Loan Bank advances as federal funds purchased. Because all other Federal Home Loan Bank advances are reported as part of “Other borrowed money” on the Call Report balance sheet, the FHLB of Atlanta suggested that, at present, banks may be including overnight advances in “Other borrowed money” instead of reporting them as federal funds purchased. Therefore, the FHLB of Atlanta urged the agencies to clarify this matter in the Call Report instructions.

After considering these comments, the FFIEC and the agencies have decided to modify their original proposal to address the concerns that were raised. The FFIEC and the agencies will proceed with the separation of the existing asset and liability items on Schedule RC, Balance Sheet, into federal funds items and securities resale/repurchase agreement items. In so doing, however, the definition of “federal funds transactions” in the Call Report instructions will be revised. As revised, federal funds sold and purchased will be limited to transactions in domestic offices only and will not include:

  • Any securities resale/repurchase agreements,
  • Overnight Federal Home Loan Bank advances, or
  • Lending and borrowing transactions in foreign offices involving immediately available funds with an original maturity of one business day or under a continuing contract.

This definitional revision eliminates the need for the proposed item for overnight Federal Home Loan Bank advances because they will be included in “Other borrowed money” on the balance sheet. As a consequence, these advances will also be reported in the existing maturity distribution of “Other borrowed money” in Schedule RC-M as Federal Home Loan Bank advances with a remaining maturity of one year or less.

On the FFIEC 031 report form for banks with foreign offices, lending and borrowing transactions in foreign offices involving immediately available funds with an original maturity of one business day or under a continuing contract that are not securities resale/repurchase agreements will begin to be reported on the Call Report balance sheet in “Loans and leases, net of unearned income” and “Other borrowed money,” respectively. In addition, since federal funds transactions will include only transactions in domestic offices, the scope of two items on Schedule RC-H will be modified so that they exclude federal funds transactions. As a result, revised items 3 and 4 of Schedule RC-H will cover only “Securities purchased under agreements to resell” and “Securities sold under agreements to repurchase” in domestic offices, respectively.Start Printed Page 9358

Merchant Credit Card Sales Volume

The agencies proposed to add new items to the Call Report on year-to-date merchant credit card sales volume. The NYCH indicated that it was uncertain as to how the agencies would use the data on merchant credit sales volume to assess risk, particularly with respect to capital, and urged the agencies “not to jump to conclusions about the risks represented by the data.”

The agencies recognize that the sales data are but one indicator of risk associated with the merchant acquiring business. The sales data are intended to provide information for off-site monitoring of the risk profiles of individual institutions and will enable the agencies to identify and monitor institutions involved in and entering this business. Significant changes in the sales volume at individual institutions would warrant supervisory follow-up to determine whether adequate risk management processes and controls are in place for the higher level of processing activity. Nevertheless, this follow-up activity, as well as assessments of capital adequacy, would consider a variety of factors besides the sales volume data. In addition, any changes to the agencies' regulatory capital standards to address the off-balance sheet risks arising from merchant processing activities would be subject to formal rulemaking.

Reporting Uninsured Deposits

The agencies proposed to revise the approach by which banks report an estimate of their uninsured deposits in Call Report Schedule RC-O, Other Data for Deposit Insurance and FICO Assessments. Under the revised approach, all banks would be required to provide an estimate of these deposits subject to certain reporting criteria that are intended to permit banks to take advantage of automated systems to the extent that they are in place today and as they improve over time. As proposed, the caption for this item would have been changed from “Estimated amount of uninsured deposits of the bank” to “Uninsured deposits.”

The NYCH stated that the amount banks report in the revised item should still be viewed as a “best estimate” and recommended that the current caption be maintained. The FFIEC and the agencies have agreed to retain the words “estimated amount” in the caption.

The NYCH also observed that, although the reporting criteria for the estimation process for the revised item relate to specific types of deposits, “different banks will have varying degrees of success in obtaining the information required and therefore the results may not be as consistently derived as intended.” The NYCH added that this could lead to different levels of performance within an individual bank and across all banks as well as different levels of individual bank performance over time as banks improve their automated systems. The NYCH acknowledged that the proposal recognized that this would be a likely outcome. In this regard, the FDIC is more interested at present in obtaining uninsured deposit estimates from banks that are better than the estimates that are developed under the current reporting approach than about the consistency of the methods banks use to determine the estimate under the revised approach. Accordingly, the instructions for the revised item for estimated uninsured deposits will state that the agencies recognize that a bank may have multiple automated information systems for its deposits and that the capabilities of these systems to provide an estimate of uninsured deposits will differ from bank to bank at any point in time and, within an individual institution, may improve over time.

Request for Comment

Comments are invited on:

(a) Whether the proposed revisions to the Call Report collections of information are necessary for the proper performance of the agencies' functions, including whether the information has practical utility;

(b) The accuracy of the agencies' estimates of the burden of the information collections as they are proposed to be revised, including the validity of the methodology and assumptions used;

(c) Ways to enhance the quality, utility, and clarity of the information to be collected;

(d) Ways to minimize the burden of information collections on respondents, including through the use of automated collection techniques or other forms of information technology; and

(e) Estimates of capital or start up costs and costs of operation, maintenance, and purchase of services to provide information.

Comments submitted in response to this notice will be shared among the agencies. All comments will become a matter of public record. Written comments should address the accuracy of the burden estimates and ways to minimize burden as well as other relevant aspects of the information collection request.

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Dated: February 21, 2002.

Mark J. Tenhundfeld,

Assistant Director, Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency.

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Board of Governors of the Federal Reserve System, February 22, 2002.

Jennifer J. Johnson,

Secretary of the Board.

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Dated at Washington, D.C., this 22nd day of February, 2002.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Executive Secretary.

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[FR Doc. 02-4741 Filed 2-27-02; 8:45 am]

BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P