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Notice

Proposed Agency Information Collection Activities; 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).

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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 for a new Consolidated Reports of Condition and Income for Eligible Small Institutions (FFIEC 051). The proposed FFIEC 051 is a streamlined version of the existing Consolidated Reports of Condition and Income for a Bank with Domestic Offices Only (FFIEC 041), which has been created by removing certain existing schedules and data items that would be replaced by a limited number of data items that would be collected in a new supplemental schedule, eliminating certain other existing data items, and reducing the reporting frequency of certain data items. The FFIEC 051 generally would be applicable to institutions with domestic offices only and assets of less than $1 billion. The FFIEC 041 would be applicable to institutions with domestic offices only that do not file the FFIEC 051. When compared to the existing FFIEC 041, the proposed FFIEC 051 shows a reduction in the number of pages from 85 to 61. This decrease is the result of the removal of approximately 950 or about 40 percent of the nearly 2,400 data items in the FFIEC 041.

In addition, the FFIEC and the agencies are seeking public comment on proposed revisions to the FFIEC 041 and the Consolidated Reports of Condition and Income for a Bank with Domestic and Foreign Offices (FFIEC 031), which are currently approved collections of information. The Consolidated Reports of Condition and Income are commonly referred to as the Call Report.

The proposed FFIEC 051 and the revisions to the FFIEC 041 and FFIEC 031 would take effect as of the March 31, 2017, report date. At the end of the comment period for this notice, the comments and recommendations received will be analyzed to determine the extent to which the FFIEC and the agencies should modify the proposal for the FFIEC 051 and the revisions to the FFIEC 041 and FFIEC 031 prior to giving final approval. As required by the PRA, the agencies will then publish a second Federal Register notice for a 30-day comment period and submit the final FFIEC 051, FFIEC 041, and FFIEC 031 to OMB for review and approval.

DATES:

Comments must be submitted on or before October 14, 2016.

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, to prainfo@occ.treas.gov. Comments may be sent to: Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, Attention: “1557-0081, FFIEC 031, 041, and 051,” 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. 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 or, for persons who are deaf or hard of hearing, 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 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, FFIEC 041, and FFIEC 051,” by any of the following methods:

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, FFIEC 041, and FFIEC 051,” by any of the following methods:

  • Agency Web site: https://www.fdic.gov/​regulations/​laws/​federal/​. Follow the instructions for submitting comments on the FDIC's Web site.
  • Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments.
  • Email: comments@FDIC.gov. Include “FFIEC 031, FFIEC 041, and FFIEC 051” in the subject line of the message.
  • Mail: Manuel E. Cabeza, Counsel, Attn: Comments, Room MB-3105, 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 by 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 oira_submission@omb.eop.gov.

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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 and the proposed FFIEC 051 can be obtained at the FFIEC's Web site (https://www.ffiec.gov/​ffiec_​report_​forms.htm).Start Printed Page 54192

OCC: Kevin Korzeniewski, Senior Attorney, (202) 649-5490, or 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: Nuha Elmaghrabi, Federal Reserve Board Clearance Officer, (202) 452-3884, 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: Manuel E. Cabeza, Counsel, (202) 898-3767, Legal Division, Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 20429.

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SUPPLEMENTARY INFORMATION:

The agencies are proposing to create a new Call Report for eligible small institutions, the foundation for which is a currently approved collection of information for each agency. In addition, the agencies are proposing revisions to data items reported on the FFIEC 041 and FFIEC 031 Call Reports.

Report Title: Consolidated Reports of Condition and Income (Call Report).

Form Numbers: FFIEC 051 (proposed for eligible small institutions), FFIEC 041 (for banks and savings associations with domestic offices only), and FFIEC 031 (for banks and savings associations with domestic and foreign offices).

Frequency of Response: Quarterly.

Affected Public: Business or other for-profit.

OCC

OMB Control No.: 1557-0081.

Estimated Number of Respondents: 1,412 national banks and federal savings associations.

Estimated Average Burden per Response: 58.70 burden hours per quarter to file.

Estimated Total Annual Burden: 331,538 burden hours to file.

Board

OMB Control No.: 7100-0036.

Estimated Number of Respondents: 839 state member banks.

Estimated Average Burden per Response: 59.23 burden hours per quarter to file.

Estimated Total Annual Burden: 198,776 burden hours to file.

FDIC

OMB Control No.: 3064-0052.

Estimated Number of Respondents: 3,891 insured state nonmember banks

and state savings associations.

Estimated Average Burden per Response: 43.89 burden hours per quarter to file.

Estimated Total Annual Burden: 683,104 burden hours to file.

The estimated burden 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 agencies' burden estimates for the Call Report include the estimated time for gathering and maintaining data in the required form and completing those Call Report data items for which an institution has a reportable (nonzero) amount. However, with respect to the time for reviewing instructions, the burden estimates generally include review time associated with those schedules and data items for which the institution has reportable amounts and do not include review time applicable to data items for which the institution determines, upon instructional review, that it does not have reportable amounts. As provided in the PRA, burden estimates exclude the time for compiling and maintaining business records in the normal course of an institution's activities.

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 and text, 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 10 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

As the result of a formal initiative launched by the FFIEC in December 2014 to identify potential opportunities to reduce burden associated with Call Report requirements for community banks, the agencies are proposing a new streamlined Call Report (FFIEC 051) for eligible small institutions and revisions to the existing versions of the Call Report (FFIEC 041 and FFIEC 031). In embarking on this effort, the FFIEC is responding to industry concerns about the cost and burden associated with the Call Report. The FFIEC's formal initiative includes actions in five areas,[1] three of which have served as the foundation for the proposed FFIEC 051. These three actions, discussed below, include community bank outreach, surveys of agency Call Report data users, and consideration of a more streamlined Call Report for eligible small institutions. In addition, as a framework for the actions it is undertaking, the FFIEC 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, data items collected in the Call Report must meet three guiding principles: (1) The data items serve a long-term regulatory or public policy purpose by assisting the FFIEC 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 agency-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 Start Printed Page 54193data items are not readily available through other means.

II. FFIEC's Community Bank Call Report Burden-Reduction Initiative

A. Community Bank Outreach

As one of the actions under the FFIEC's community bank Call Report burden-reduction initiative, the agencies conducted and participated in several outreach efforts to better understand, through industry dialogue, the aspects of reporting institutions' Call Report 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 improving this understanding, representatives from the FFIEC member entities visited nine community institutions during the third quarter of 2015. In the first quarter of 2016, two bank trade groups, the Independent Community Bankers of America and the American Bankers Association, each organized a number of conference call meetings with small groups of community bankers in which representatives from the FFIEC member entities participated. During the visits to banks and the conference call meetings, the community bankers explained how they prepare their Call Reports, identified which schedules or data items take a significant amount of time and/or manual processes to complete, and described the reasons for this. The bankers also offered suggestions for streamlining the Call Report.

The agencies note that during the banker outreach calls, as well as in comment letters submitted under a review of agency regulations required by the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA),[2] they received many comments about the burden of reporting in accordance with the revised regulatory capital rules in Call Report Schedule RC-R—Regulatory Capital. The agencies revised this schedule in March 2015 to include the data items that would be necessary for an institution to calculate its regulatory capital ratios under the revised capital rules. The greater detail of those rules requires a degree of categorization, recordkeeping, and reporting that is greater than under the prior applicable capital rules. The FFIEC, through its Task Force on Reports (task force), is monitoring the banking agencies' response to the concerns about the revised regulatory capital rules raised during the EGRPRA comment process and the associated reporting burden of Schedule RC-R arising from the implementation of those rules by community banks.

The agencies also note that during the banker outreach calls and visits, they received many comments addressing the substantive burden arising from reviewing the Call Report instructions on a quarterly or other periodic basis even for those data items applicable to an institution for which the institution determines that there is no information for it to report. As noted previously, the agencies' burden estimates for the Call Report include estimated time for reviewing instructions, gathering and maintaining data in the required form, and completing those Call Report data items for which an institution has a reportable (nonzero) amount. Consistent with past practice, the agencies' burden estimates do not reflect burden associated with an institution's time for reviewing the instructions for applicable data items for which an institution does not have reportable amounts. Therefore, the agencies' burden estimates do not reflect the burden reduction associated with an institution no longer having to review the instructions for those applicable data items without reportable amounts that the agencies are proposing to remove from the Call Report. Further, as noted previously, the estimated burden per response is an average estimate for all filers of the Call Report. This estimate does not separately distinguish between the FFIEC 031, FFIEC 041, and the proposed FFIEC 051 versions of the Call Report. The agencies will consider revising the methodology for estimating burden hours and preparing separate burden estimates for the FFIEC 031, FFIEC 041, and FFIEC 051 reports.

B. Acceleration of the Statutorily Mandated Review of the Call Report

As a second action, the agencies accelerated the start of the next statutorily mandated review of the existing Call Report data items (Full Review),[3] which otherwise would have commenced in 2017. Users of Call Report data items at the FFIEC member entities are participating in a series of nine surveys conducted over a 19-month period that began in mid-July 2015. As an integral part of these surveys, users are asked to fully explain the need for each Call Report data item they deem essential, how the data item 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 nine groups and prioritized for review, generally based on level of burden cited by banking industry representatives. Based on the results of the surveys, the agencies are identifying data items that are being considered for elimination, less frequent collection, or new or upwardly revised reporting thresholds. The results of the first three surveys have been incorporated into this proposal. Burden-reducing reporting changes from the remaining six surveys will be proposed in future Federal Register notices with an anticipated March 31, 2018, implementation date.

C. Consideration of a More Streamlined Call Report for Eligible Small Institutions

As a third action, the agencies considered the feasibility and merits of creating a less burdensome version of the quarterly Call Report for institutions that meet certain criteria. Together with the outcomes of the preceding two actions to date, the results of this action are the subject of this proposal, i.e., the FFIEC 051 Call Report for eligible small institutions, which is summarized in Section III, Overview of the Current Proposal, below.

III. Overview of the Current Proposal

Under the auspices of the FFIEC and its task force, the agencies collectively reviewed the feedback from the previously mentioned banker outreach efforts completed in 2015 and 2016 as one of the inputs for developing a proposal to address industry concerns about the regulatory reporting burden imposed on institutions by the Call Report. In addressing these concerns, the agencies aimed to balance institutions' requests for a less burdensome regulatory reporting process with FFIEC member entities' need for sufficient data to monitor the condition and performance of, and ensure the safety and soundness of, institutions and carry out agency-specific missions. With these two goals in mind, the task force developed, and the FFIEC and the agencies agreed to propose, a separate, more streamlined, and noticeably shorter Call Report to be completed by eligible small institutions as well as certain burden-reducing revisions to the current FFIEC 041 and FFIEC 031 versions of the Call Report. The agencies recognize that institutions operate under widely varying business models, which affects the nature and extent of their activities and translates into differences in the amount of Start Printed Page 54194information to be reported in their Call Reports.

For purposes of the FFIEC 051 Call Report, the agencies propose to define “eligible small institutions” as institutions with total assets less than $1 billion and domestic offices only.[4] These institutions currently file the FFIEC 041 Call Report. Eligible small institutions would have the option to file the FFIEC 041 Call Report rather than the FFIEC 051. In addition, for a small institution otherwise eligible to file the FFIEC 051, the institution's primary federal regulatory agency, jointly with the state chartering authority, if applicable, may require the institution to file the FFIEC 041 instead based on supervisory needs. In determining whether an institution with less than $1 billion in total assets should be required to file the FFIEC 041 rather than the FFIEC 051, the appropriate agency will consider criteria including, but not limited to, whether the eligible institution is significantly engaged in complex, specialized, or other high-risk activities.[5] It is anticipated that such determinations would be made in a limited number of cases.

The existing Call Report instructions generally provide that shifts in an institution's reporting status are to begin with the March Call Report based on the institution's consolidated total assets as reported in the Call Report for June of the previous calendar year. Applying this principle to the FFIEC 051, an institution with domestic offices only would be eligible to file the FFIEC 051 Call Report beginning as of its proposed effective date of March 31, 2017, if it reported consolidated total assets of less than $1 billion in its Call Report for June 30, 2016.

Thereafter, if the total assets of an institution with domestic offices only that files the FFIEC 051 Call Report increase to $1 billion or more as of a June 30 report date, it would no longer be eligible to file the FFIEC 051 Call Report beginning as of the March 31 report date the following year. The institution would instead begin to file the FFIEC 041 report.[6]

In developing the proposed FFIEC 051 for eligible small institutions, the data items currently collected in the FFIEC 041, including individual schedules, were reviewed to determine how the existing reporting requirements could be modified to make the information in the Call Report more applicable to and less burdensome for smaller, noncomplex institutions without adversely affecting FFIEC member entities' data needs. As a result of this interagency review, the following changes were made to the FFIEC 041 report form to create the proposed FFIEC 051 and are discussed in detail in Sections IV.A through IV.D below and in Appendix A:

  • The addition of a Supplemental Schedule to collect indicator questions and indicator data items on certain complex and specialized activities, as discussed in section IV.A below, as a basis for removing partial or entire schedules (and other related items) which are currently included in the FFIEC 041;
  • The elimination of data items identified as no longer necessary for collection from institutions with less than $1 billion in total assets and domestic offices only during the completed portions of the Full Review or during a separate interagency review that focused on data items infrequently reported by institutions of this size;
  • Changes to the frequency of data collection for certain items identified as needed less often than quarterly from institutions with less than $1 billion in total assets and domestic offices only; and
  • Removal of all data items for which a $1 billion asset-size reporting threshold currently exists.

In addition, the agencies plan to prepare a separate, shorter set of Instructions for Preparation of Consolidated Reports of Condition and Income for users of the FFIEC 051, which would be published by the beginning of the quarterly reporting period in which the FFIEC 051 takes effect.

In designing the proposed FFIEC 051 Call Report, the agencies have sought to maintain, to the extent possible, the existing structure of the FFIEC 041 Call Report, including the numbering and sequencing of data items within Call Report schedules. Institutions and their staff members involved in the preparation of the Call Report are familiar with how the FFIEC 041 Call Report is currently organized. Feedback from banker outreach activities indicated that they did not favor the rearranging of existing data items that would be retained in a streamlined Call Report for small institutions because the need to adapt to these structural changes would itself be burdensome.

As noted above, the statutorily mandated review of the existing Call Report data items is an ongoing process. The agencies have included certain proposed revisions to the existing FFIEC 031 and FFIEC 041 Call Reports based on the task force's evaluation of the results of the first three surveys of Call Report users at FFIEC member entities are included in this notice (see Section V below). Additional changes to the FFIEC 031, the FFIEC 041, and the FFIEC 051 will be proposed in future Federal Register notices after the conclusion of the remaining user surveys.

The agencies invite comment on any difficulties that institutions would expect to encounter in implementing the systems and process changes necessary to accommodate the proposed FFIEC 051 and the proposed revisions to the FFIEC 041 and FFIEC 031.

In addition, the agencies invite comment on the estimated lead time necessary for institutions to be properly prepared for reporting on the proposed FFIEC 051 Call Report, and the revised FFIEC 041 and FFIEC 031 Call Reports, and whether the proposed March 31, 2017, implementation date for these reporting changes provides sufficient time.

The specific wording of the captions for the new or revised Call Report data items and schedule titles discussed in this proposal and the numbering of these data items should be regarded as preliminary.

IV. Discussion of Proposed Call Report Revisions To Create the FFIEC 051

A. Replacement of Partial or Entire Schedules With a Supplemental Schedule

The FFIEC 041 Call Report schedules requiring the reporting of data on activities considered complex or specialized were identified and reviewed to determine which schedules (or portions of schedules) could be eliminated from the FFIEC 051 and replaced with questions asking whether the institution engages in any of these complex or specialized activities along Start Printed Page 54195with corresponding indicator data items that would be completed for those activities in which the institution engages. The indicator data items would provide aggregate data specific to the identified complex or specialized activity, allowing users of the Call Report at FFIEC member entities to ascertain the degree to which an institution engages in such activity. The following is a list of the identified schedules and activities along with the related proposed indicator questions and data items that would be included in a new Schedule SU in the FFIEC 051 Call Report:

  • Derivatives data currently collected on Schedule RC-L—Derivatives and Off-Balance Sheet Items and in certain other schedules would be eliminated from the FFIEC 051 (except from Schedule RC-R—Regulatory Capital) and replaced with the following indicator question and data items:

○ Does the institution have any derivative contracts? (If yes, complete the following items.)

○ Total gross notional amount of interest rate derivatives held for trading

○ Total gross notional amount of all other derivatives held for trading

○ Total gross notional amount of interest rate derivatives not held for trading

○ Total gross notional amount of all other derivatives not held for trading

  • Schedule RC-D—Trading Assets and Liabilities would be eliminated from the FFIEC 051. Indicator questions and data items are not necessary because total trading assets and total trading liabilities are reported on Schedule RC—Balance Sheet.
  • Schedule RC-P—1-4 Family Residential Mortgage Banking Activities would be eliminated from the FFIEC 051 and replaced with the following indicator question and data items:

○ For the two calendar quarters preceding the current calendar quarter, have either the institution's sales of 1-4 family residential mortgage loans during the quarter or its 1-4 family residential mortgage loans held for sale or trading as of quarter-end exceeded $10 million? (If yes, complete the following items.)

○ Principal amount of 1-4 family residential mortgage loans sold during the quarter

○ Quarter-end amount of 1-4 family residential mortgage loans held for sale or trading

  • Schedule RC-Q—Assets and Liabilities Measured at Fair Value on a Recurring Basis would be eliminated from the FFIEC 051 and replaced with the following indicator question and data items:

○ Does the institution use the fair value option to measure any of its assets or liabilities? (If yes, complete the following items.)

○ Aggregate amount of fair value option assets

○ Aggregate amount of fair value option liabilities

○ Year-to-date net gains (losses) recognized in earnings on fair value option assets

○ Year-to-date net gains (losses) recognized in earnings on fair value option liabilities

  • Schedule RC-S—Servicing, Securitization, and Asset Sale Activities would be eliminated from the FFIEC 051 and replaced with the following indicator questions and data items:

○ Does the institution have any assets it has sold and securitized with servicing retained or with recourse or other seller-provided credit enhancements? (If yes, complete the following item.)

○ Total outstanding principal balance of assets sold and securitized by the reporting institution with servicing retained or with recourse or other seller-provided credit enhancements

○ Does the institution have any assets it has sold with recourse or other seller-provided credit enhancements but has not securitized? (If yes, complete the following item.)

○ Total outstanding principal balance of assets sold by the reporting institution with recourse or other seller-provided credit enhancements, but not securitized by the reporting institution

○ Does the institution service any closed-end 1-4 family residential mortgage loans for others or does it service more than $10 million of other financial assets for others? (If yes, complete the following item.)

○ Total outstanding principal balance of closed-end 1-4 family residential mortgage loans serviced for others plus the total outstanding principal balance of other financial assets serviced for others if more than $10 million

To note, the item related to the credit card fees and finance charges will be addressed in the Credit Card Lending Specialized Items section, below.

  • Schedule RC-V—Variable Interest Entities would be eliminated from the FFIEC 051 and replaced with the following indicator question and data items:

○ Does the institution have any consolidated variable interest entities? (If yes, complete the following items.)

○ Total assets of consolidated variable interest entities

○ Total liabilities of consolidated variable interest entities

  • Credit Card Lending Specialized Items included in Schedule RI-B—Charge-offs and Recoveries on Loans and Leases and Changes in Allowance for Loan and Lease Losses; Schedule RC-C—Loans and Lease Financing Receivables; and Schedule RC-S—Servicing, Securitization, and Asset Sale Activities would be replaced with the following indicator question and data items:

○ Does the institution, together with affiliated institutions, have outstanding credit card receivables that exceed $500 million as of the report date or is the institution a credit card specialty bank as defined for Uniform Bank Performance Report (UBPR) purposes? (If yes, complete the following items.)

○ Outstanding credit card fees and finance charges included in credit cards to individuals for household, family, and other personal expenditures (retail credit cards)

○ Separate valuation allowance for uncollectible retail credit card fees and finance charges

○ Amount of allowance for loan and lease losses attributable to retail credit card fees and finance charges

○ Uncollectible retail credit card fees and finance charges reversed against year-to-date income

○ Outstanding credit card fees and finance charges included in retail credit card receivables sold and securitized with servicing retained or with recourse or other seller-provided credit enhancements

  • FDIC Loss-Sharing Agreement data items included in Schedule RC-M—Memoranda, and Schedule RC-N—Past Due and Nonaccrual Loans, Leases, and Other Assets would be eliminated from the FFIEC 051 and replaced with the following indicator question and data items:

○ Does the institution have assets covered by FDIC loss-sharing agreements? (If yes, complete the following items.)

○ Loans and leases covered by FDIC loss-sharing agreements

○ Past due and nonaccrual loans and leases covered by FDIC loss-sharing agreements, with separate reporting of loans and leases past due 30-89 days and still accruing, loans and leases past due 90 days or more and still accruing, and nonaccrual loans and leases

○ Portion of past due and nonaccrual covered loans and leases protected by FDIC loss-sharing agreements, with separate reporting of loans and leases past due 30-89 days and still accruing, loans and leases past due 90 days or more and still accruing, and nonaccrual loans and leases

○ Other real estate owned covered by FDIC loss-sharing agreementsStart Printed Page 54196

○ Portion of covered other real estate owned that is protected by FDIC loss-sharing agreements

B. Elimination of Data Items Identified During the Statutorily Mandated Full Review of the Call Report and the Review of Infrequently Reported Items

As discussed above, several of the existing Call Report schedules have been reviewed as part of the Full Review of the Call Report. The resulting burden-reducing changes relevant to institutions with less than $1 billion in total assets and domestic offices only have been incorporated into the proposed FFIEC 051. The schedules reviewed to date include:

  • Schedule RI—Income Statement
  • Schedule RC—Balance Sheet
  • Schedule RC-C—Loans and Lease Financing Receivables
  • Schedule RI-B—Charge-offs and Recoveries on Loans and Leases and Changes in Allowance for Loan and Lease Losses
  • Schedule RC-N—Past Due and Nonaccrual Loans, Leases, and Other Assets
  • Schedule RC-E—Deposit Liabilities
  • Schedule RC-O—Other Data for Deposit Insurance and FICO Assessments

This proposal also includes revisions to some of these schedules in the FFIEC 041 and FFIEC 031 Call Reports as a result of the Full Review (see Section V). Going forward, the data items in all other Call Report schedules will continue to be evaluated as part of the Full Review.

As another component of this initiative, data items infrequently reported in the FFIEC 041 Call Report by banks with total assets less than $1 billion and domestic offices only were reviewed by the FFIEC member entities to determine which of these items remain necessary for monitoring the safety and soundness of, and meeting agency mission-specific needs with respect to, such smaller, less complex institutions. Of these data items, those deemed no longer essential were excluded from the FFIEC 051.

In the proposed FFIEC 051 Call Report, the following schedules would have data items removed as a result of the completed portions of the statutorily mandated Full Review or the review of infrequently reported items (see Appendix A for complete listing of all data items removed on the March 31, 2016, FFIEC 041 Call Report):

  • Schedule RI—Income Statement
  • Schedule RI-B—Charge-offs and Recoveries on Loans and Leases and Changes in Allowance for Loan and Lease Losses
  • Schedule RC-C—Loans and Lease Financing Receivables
  • Schedule RC-E—Deposit Liabilities
  • Schedule RC-L—Derivatives and Off-Balance Sheet Items
  • Schedule RC-N—Past Due and Nonaccrual Loans, Leases, and Other Assets

The agencies note that during the previously mentioned banker outreach efforts, some community banks specifically cited Schedule RC-C, Part I—Loans and Leases, as a particularly burdensome schedule to complete. Many of these banks also indicated that completing this schedule requires a significant degree of manual intervention.

As discussed above, Call Report data serve a regulatory or public policy purpose by assisting the FFIEC 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 agency-specific missions. These agency needs are particularly evident for data collected on Schedule RC-C, Part I.

Loan and lease data are critical inputs to assessing the safety and soundness of financial institutions through analysis of the institutions' management of credit risk, interest rate risk, and liquidity risk, including the analysis of lending concentrations and earnings. Further, standardization of loan categories across the schedules within the Call Report is essential for peer group analysis and industry analysis. Loan and lease information is also an important component of agency statistical models that assess the risk profile of an institution, including its risk of failure.

Finally, loan and lease information assists the agencies in fulfilling their specific missions. The Federal Reserve, as part of its monetary policy mission, relies on institution-specific Call Report data to provide information on credit availability and lending conditions not available elsewhere. Loan and lease detail at all sizes of institutions are necessary for policymaking purposes addressing the overall health of the economy.

In general, monetary policy initiatives function most effectively when implemented early during a period of credit constraint, with the responses tailored to the types of institutions affected, using standardized loan information only available from Call Reports. Reducing loan detail or data frequency for smaller institutions could potentially derail these efforts by delaying the identification of the start of an economic downturn as well as determinations of the effectiveness of any monetary policy changes. Furthermore, Schedule RC-C, Part I, data are used to benchmark weekly loan data collected from a sample of both small and large institutions that are the source for estimating weekly loan aggregates that serve as a more timely and critical input for monetary policymaking purposes.

The FDIC's deposit insurance assessment system for “established small banks” relies on information reported by individual institutions for the Schedule RC-C, Part I, standardized loan categories in the determination of the loan mix index in the financial ratios method, as recently amended, which is used to determine assessment rates for such institutions.[7]

Notwithstanding the above discussion of the agencies overall needs for information collected on Schedule RC-C, Part I, the agencies have identified 23 data items as having lesser utility for these purposes. The specific data items proposed to be removed from the FFIEC 041 report in creating the FFIEC 051 report are listed in Appendix A.

C. Changes to the Frequency of Data Collection

The FFIEC member entities have reviewed existing data items in the FFIEC 041 Call Report that would be retained in the FFIEC 051 to determine whether some of these data items could be collected less frequently than quarterly from eligible small institutions without adversely affecting the agencies' data needs. Data items would be collected in the FFIEC 051 on a less than quarterly basis if they are deemed not necessary for quarterly collection for a supervisory, surveillance, monitoring, or agency mission-specific purpose relevant to institutions with total assets of less than $1 billion and domestic offices only.

The following Call Report schedules in the proposed FFIEC 051 would have data items that have had a change in the frequency of data collection from quarterly to semiannually or annually (see Appendix A for a list of the affected data items):

  • Schedule RI—Income Statement
  • Schedule RC-B—Securities
  • Schedule RC-A—Cash and Balances Due from Depository Institutions
  • Schedule RC-C—Loans and Lease Financing Receivables
  • Schedule RC-F—Other Assets
  • Schedule RC-G—Other Liabilities
  • Schedule RC-L—Derivatives and Off-Balance Sheet ItemsStart Printed Page 54197
  • Schedule RC-M—Memoranda
  • Schedule RC-N—Past Due and Nonaccrual Loans, Leases, and Other Assets

The agencies note that during the previously mentioned banker outreach efforts, some community banks specifically cited Schedule RC-C, Part II—Loans to Small Businesses and Small Farms, as a particularly burdensome schedule to complete. Many of these banks also indicated that their reported values on this schedule did not vary significantly from quarter to quarter, and inquired whether the reporting frequency could be reduced to annual or semiannual.

In 2010, the FFIEC changed the reporting frequency for Schedule RC-C, Part II, from annually to quarterly. Call Report small business and small farm lending data are an invaluable resource for understanding credit conditions facing small businesses. More frequent 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. In 2009, the U.S. Department of the Treasury, also identified a particular need for these data as they worked to develop policies to ensure that more small businesses and small farms would have access to credit.[8] In addition, the Board finds these data very valuable for monetary policymaking purposes.

The institution-level Call Report data provide information that cannot be obtained from other indicators of small business and small farm credit conditions. The agencies' other indicators of small business credit conditions—including the Board's Senior Loan Officer Opinion Survey [9] and its Flow of Funds—do not provide the same level of detail that is available from Call Reports, and therefore cannot be used to answer many questions that naturally arise during the policy development process. For example, during a period of credit contraction, these other data sources cannot be used to identify which types of institutions are reducing the volume of their loans to small businesses and small farms. This is a significant constraint for the Board, as having detailed information about the characteristics of affected institutions is crucial to designing well-targeted and effective policy responses. Moreover, there is evidence that small business lending by small institutions does not correlate with lending by larger institutions.

Monetary policymaking benefits importantly from more timely information on small business credit conditions and flows. To determine how best to adjust the federal funds rates over time, the Board must continuously assess the prospects for real 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 and other sources. In trying to understand the implications of aggregate credit data for the macroeconomic outlook, it is helpful 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.[10] 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 channels, including the corporate bond market and the commercial paper market. In contrast, small businesses and small farms rely more heavily on credit provided through the depository institution lending channel. The dependence of small businesses and small farms on bank lending—particularly from smaller institutions—magnifies the importance of Call Report data, which provide the most comprehensive data on depository institution lending to small businesses and small farms, and emphasizes the importance of collecting quarterly data from institutions of all sizes.

In response to feedback received from banker outreach efforts conducted by the FFIEC member entities, where a sample of community banks indicated that data reported on Call Report Schedule RC-C, Part II, does not vary significantly from quarter to quarter, the Board examined the quarter-to-quarter variation in the Call Report data on small loans to businesses and small loans to farms since 2010. Although some individual banks may see little variation over time in these Call Report items, the aggregate data for community banks do vary enough from quarter to quarter to make a difference in the Board's sense of what is happening with regard to aggregate credit availability to small businesses, which is a very important sector of the economy. During a downturn, this variability is likely to increase. However, the Board recognizes that the very smallest institutions—those with less than $50 million in total assets—did not contribute significantly to the quarterly variation. Therefore, the agencies propose to change the frequency of reporting Schedule RC-C, Part II, in the FFIEC 051 from quarterly to semiannually for banks with less than $50 million in total assets.

Some proponents of reduced reporting frequency for Schedule RC-C, Part II, have suggested that the agencies could tie the frequency of reporting to the business cycle, with lower frequency (annually or semiannually) during normal or expansionary times, and quarterly frequency during a downturn. The agencies do not consider this approach to be feasible because they generally cannot anticipate a downturn before it starts, and once it has been determined that a downturn is under way, there would be an inevitable lag in implementing the quarterly reporting requirement. Furthermore, declines in small business and small farm lending may precede a downturn in economic activity and serve as a leading indicator of such a downturn, providing useful information to the agencies for policymaking purposes.

D. Removal of Data Items for Which a Reporting Threshold Currently Exists

The proposed FFIEC 051 would not include those FFIEC 041 Call Report data items for which a reporting threshold currently exists that creates an exemption from reporting for banks with total assets less than $1 billion. The following schedules were affected by the removal of these data items (as shown on the marked March 31, 2016, Start Printed Page 54198FFIEC 041 form posted on the FFIEC's Web site): [11]

  • Schedule RI—Income Statement
  • Schedule RI-C—Disaggregated Data on the Allowance for Loan and Lease Losses
  • Schedule RC-B—Securities
  • Schedule RC-E—Deposit Liabilities
  • Schedule RC-L—Derivatives and Off-Balance Sheet Items
  • Schedule RC-O—Other Data for Deposit Insurance and FICO Assessments

E. Preparation of Separate Instructions for the FFIEC 051

As noted in Section III, the FFIEC and the agencies will be creating a separate set of Instructions for Preparation of Consolidated Reports of Condition and Income (FFIEC 051). A combined set of instructions for the FFIEC 031 and the FFIEC 041 Call Reports will still be maintained. Instructions for identical data items in the FFIEC 051 and the FFIEC 041 generally would reflect the same text in both sets of instructions. Instructions for those FFIEC 041 data items that are not included in the FFIEC 051 would be excluded from the instructions for the FFIEC 051. Glossary entries in the instructions for the FFIEC 041 that are not relevant to the FFIEC 051 also would be excluded from the FFIEC 051 instructions. Instructions would be added to the FFIEC 051 instructions for the indicator questions and data items in the proposed Supplemental Schedule.

F. Shifts in Reporting Status

The Call Report instructions presently provide that once an institution reaches or exceeds a specified total asset or other reporting threshold that requires the reporting of additional information in the Call Report, the institution must continue to report the additional information in subsequent years without regard to whether it later falls below reporting threshold. To reduce reporting burden, the agencies are proposing to revise these instructions on reporting thresholds. Accordingly, if an institution's consolidated total assets or activity level subsequently fall to less than the applicable asset or activity threshold for four consecutive quarters, the institution may cease reporting the data items to which the threshold applies for all reporting thresholds in the FFIEC 031 and FFIEC 041 (and proposed FFIEC 051) Call Reports unless the institution exceeds the threshold as of a subsequent June 30 report date.

V. Proposed Changes to the FFIEC 031 and FFIEC 041

In addition to the creation of the FFIEC 051, this proposal also includes proposed revisions to some of the schedules in the FFIEC 041 and FFIEC 031 Call Reports as a result of the first three agency user surveys conducted under the Full Review. Going forward, the data items in all other Call Report schedules will continue to be evaluated as part of the Full Review.

The following schedules in the FFIEC 041 and FFIEC 031 versions of the Call Report would have data items removed or subject to new or higher reporting thresholds as a result of the statutorily mandated Full Review (see Appendices B and C for a complete listing of the affected data items on the March 31, 2016, FFIEC 041 and FFIEC 031 Call Reports):

  • Schedule RI—Income Statement
  • Schedule RI-B—Charge-offs and Recoveries on Loans and Leases and Changes in Allowance for Loan and Lease Losses
  • Schedule RC-C—Loans and Lease Financing Receivables
  • Schedule RC-E—Deposit Liabilities
  • Schedule RC-M—Memoranda
  • Schedule RC-N—Past Due and Nonaccrual Loans, Leases, and Other Assets

In addition, the proposed change governing shifts in reporting status outlined in Section IV.F would also be applicable to institutions that file the FFIEC 031 and FFIEC 041 Call Reports.

VI. Request for Comment

Public comment is requested on all aspects of this joint notice. Comment is specifically invited on:

(a) What is the appropriate amount of lead time eligible small institutions would need to change their systems and processes from reporting using the FFIEC 041 to reporting using the proposed FFIEC 051 and whether the agencies should delay the proposed initial implementation date of March 31, 2017;

(b) Whether or not institutions prefer the agencies' staggered approach to streamlining the Call Report for eligible small institutions that will introduce proposed changes in multiple steps during the course of the community bank Call Report burden-reduction initiative rather than waiting to incorporate all the proposed changes into a streamlined Call Report at once after the conclusion of the Full Review of the Call Report data items in 2017;

(c) Whether, as proposed, small institutions should have the option to complete the FFIEC 041 rather than being required to file the FFIEC 051 if eligible;

Comments also are invited on:

(d) 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;

(e) 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;

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

(g) 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

(h) 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.

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Start Signature

Dated: August 5, 2016.

Stuart Feldstein,

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

Board of Governors of the Federal Reserve System, August 8, 2016.

Robert deV. Frierson,

Secretary of the Board.

Dated at Washington, DC, this 5th day of August 2016.

Federal Deposit Insurance Corporation.

Ralph E. Frable,

Assistant Executive Secretary.

End Signature End Supplemental Information

Footnotes

1.  See 80 FR 56539 (September 18, 2015) and 81 FR 45357 (July 13, 2016) for information on other actions taken under this initiative.

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2.  EGRPRA requires the federal banking agencies to conduct a decennial joint review of their regulations to identify those that are outdated, unnecessary, or unduly burdensome.

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3.  This review is mandated by section 604 of the Financial Services Regulatory Relief Act of 2006 (12 U.S.C. 1817(a)(11)).

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4.  As part of this initiative, the agencies are committed to exploring alternatives to the $1 billion asset-size threshold that could extend the eligibility to file the FFIEC 051 to additional institutions.

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5.  This proposed reservation of authority is consistent with the reservation of authority applicable to a holding company with consolidated total assets of less than $1 billion that would otherwise file the Board's FR Y-9SP, Parent Company Only Financial Statements for Small Holding Companies (OMB Control No. 7100-0128). See page GEN-1 of the instructions for the FR Y-9SP.

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6.  Consistent with the existing Call Report instructions, if an institution reaches $1 billion or more in consolidated total assets due to a business combination, a transaction between entities under common control, or a branch acquisition that is not a business combination, then the institution must file the FFIEC 041 Call Report beginning with the first quarter-end report date following the effective date of the transaction.

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7.  See 81 FR 323186-32188 and 32208 (May 20, 2016).

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8.  See 74 FR 41973 (August 19, 2009).

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9.  See FR 2018; OMB No. 7100-0058.

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10.  Based on statistics tabulated early in the decade, roughly one quarter of all nonfinancial business assets were outside the corporate sector, and such firms tend to be partnerships and proprietorships, which tend to be small businesses.

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

[FR Doc. 2016-19268 Filed 8-12-16; 8:45 am]

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