13368 Federal Register / Vol. 66, No. 43 / Monday, March 5, 2001 / Notices

1On the FDIC’s web site, a sample copy of the

FFIEC 031 report form for March 31, 2001, can be

accessed at http://www.fdic.gov/news/news/

financial2001/fi10105d.pdf. A sample copy of the

FFIEC 041 report form for March 31, 2001, can be

accessed at http://www.fdic.gov/new/news/

financial/2001/fi10105e.pdf.

2The FFIEC 031 report form will continue to be

filed by banks with domestic and foreign offices. At

present, the FFIEC 032 report form is filed by banks

with domestic offices only and $300 million or

more in total assets, the FFIEC 033 report form is

filed by banks with domestic offices only and $100

million or more but less than $300 million in total

assets, and the FFIEC 034 report form is filed by

banks with domestic offices only and less than $100

the Surface Transportation Board, Office

of the Secretary, Case Control Unit, 1925

K Street, NW., Washington, DC 20423–

0001. In addition, one copy of each

pleading must be served on John D.

Heffner, Esq., REA, CROSS &

AUCHINCLOSS, Suite 570, 1707 L

Street, NW., Washington, DC 20036

[Attorney for DORA], and Mac Shumate,

Esq., Law Department, Union Pacific

Railroad Company, 101 N. Wacker

Drive, Suite 1920, Chicago, IL 60606

[Attorney for UP].

Board decisions and notices are

available on our website at

‘‘WWW.STB.DOT.GOV.’’

Decided: February 23, 2001.

By the Board, David M. Konschnik,

Director, Office of Proceedings.

Vernon A. Williams,

Secretary.

[FR Doc. 01–5128 Filed 3–2–01; 8:45 am]

BILLING CODE 4915–00–P

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the

Currency

FEDERAL RESERVE SYSTEM

FEDERAL DEPOSIT INSURANCE

CORPORATION

Agency Information Collection

Activities: Submission for OMB

Review; Comment Request

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 May 31,

2000, 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 several modifications

to the revised reporting requirements

initially proposed. However, the

proposed reporting of subprime lending

data remains under study and the

collection of these data will not be

implemented as of March 31, 2001, as

proposed.

DATES: Comments must be submitted on

or before April 4, 2001.

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, Mail Stop 1–5,

Attention: 1557–0081, Washington, DC

20219. In addition, comments may be

sent by facsimile transmission 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 Reference 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,

Executive Secretary, Attention:

Comments/OES, Federal Deposit

Insurance Corporation, 550 17th Street,

NW., Washington, DC 20429. 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.

FOR FURTHER INFORMATION CONTACT:

Sample copies of the two versions of the

Call Report forms (designated forms

FFIEC 031 and FFIEC 041) that will

replace the current four versions of the

Call Report (forms FFIEC 031, 032, 033,

and 034) effective March 31, 2001, can

be obtained at the FFIEC’s web site

(www.ffiec.gov) and at the FDIC’s web

site.1 Sample copies of these 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: Steven F. Hanft, FDIC Clearance

Officer, (202) 898–3907, Office of the

Executive Secretary, Federal Deposit

Insurance Corporation, 550 17th Street

NW., Washington, DC 20429.

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: Current form numbers:

FFIEC 031, 032, 033, and 034. Revised

form numbers: FFIEC 031 and 041.2

Federal Register / Vol. 66, No. 43 / Monday, March 5, 2001 / Notices 13369

million in total assets. The FFIEC 041 report form

will replace the FFIEC 032, 033, and 034 report

forms and will be filed by all banks with domestic

offices only.

3The Annual Report of Trust Assets (FFIEC 001)

and the Annual Report of International Fiduciary

Activities (FFIEC 006): for the OCC, OMB Number

1557–0127; for the Board, OMB Number 7100–

0031; and for the FDIC, OMB Number 3064–0024.

The FDIC does not collect the FFIEC 006.

4Sections 1211(b) and (c) of the American

Homeownership and Economic Opportunity Act of

2000, Pub. L. 106–569, which was signed into law

on December 27, 2000, are identical to Sections

307(b) and (c) of the Riegle Act. As a consequence,

the Call Report revisions that are the subject of this

submission likewise address certain aspects of

Sections 1211(b) and (c) of Pub. L. 106–569.

Frequency of Response: Quarterly.

Affected Public: Business or other forprofit.

For OCC:

OMB Number: 1557–0081.

Estimated Number of Respondents:

2,300 national banks.

Estimated Time per Response: 41.11

burden hours.

Estimated Total Annual Burden:

378,194 burden hours.

For Board:

OMB Number: 7100–0036.

Estimated Number of Respondents:

1,001 state member banks.

Estimated Time per Response: 47.15

burden hours.

Estimated Total Annual Burden:

188,789 burden hours.

For FDIC:

OMB Number: 3064–0052.

Estimated Number of Respondents:

5,640 insured state nonmember banks.

Estimated Time per Response: 31.76

burden hours.

Estimated Total Annual Burden:

716,612 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 14 to

500 hours, depending on individual

circumstances. Moreover, because the

revisions to the Call Report will be

phased in over several quarters rather

than all at once, the time per response

represents an estimate of the reporting

burden when the phase-in has been

completed on March 31, 2002.

In addition, the effect on the time per

response of the changes to the Call

Report that are the subject of this

submission for OMB review will vary

from bank to bank. Except for the onetime additional burden associated with

their initial adjustment to the revisions

to the reporting requirements, many

smaller banks should experience an

overall decrease in time per response,

after considering eliminations of items

and reductions in detail, because they

are not involved in the activities for

which most of the new information will

be collected. In contrast, the time per

response for many large banks is

expected to increase, even after

considering eliminations of items and

reductions in detail, because the

proposed new information will be

applicable to them and because the

reporting of trust activities will be

moved into the Call Report from two

separate trust activities reports.3

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 onsite 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

The agencies requested comment on

proposed revisions to the Call Report

that are intended to make the content of

the report more relevant to the agencies.

The more significant of the proposed

revisions included:

• Streamlining the present reporting

requirements through deletions of items

and reductions in detail that would

produce a decrease of approximately 10

percent in the overall number of

individual data items currently

contained on the four existing versions

of the Call Report forms (excluding

items reported for regulatory capital

purposes), the collection of which is no

longer warranted;

• Adopting a new regulatory capital

reporting approach that uses step-bystep ‘‘building blocks’’ to compute the

key elements of the capital ratios;

• Combining the three separate report

forms for banks of different sizes that

have only domestic offices into a single

form while retaining the separate form

for banks with foreign offices;

• Collecting new information on:

• Nontraditional and higher risk bank

activities, i.e., subprime loans,

securitizations and asset sale activities,

additional categories of noninterest

income, and restructured derivative

contracts, and

• Federal Home Loan Bank advances

and other borrowings;

• Replacing the two separate trust

activities reports with a single,

streamlined trust schedule in the Call

Report;

• Eliminating the confidential

treatment for loans, leases, and other

assets that are past due 30 through 89

days; and

• Eliminating the additional 15-day

period that banks with more than one

foreign office are given for submitting

their Call Reports.

These revised reporting requirements

were also designed to complement the

agencies’ emphasis on risk-focused

supervision. Furthermore, the revisions

address certain aspects of sections

307(b) and (c) of the Riegle Community

Development and Regulatory

Improvement Act of 1994 (the Riegle

Act). These sections direct the federal

banking agencies to work jointly toward

more uniform reporting, review the

information that institutions currently

report, and eliminate existing reporting

requirements that are not warranted for

safety and soundness or other public

policy purposes.4

After considering the comments the

agencies received, the FFIEC approved

several modifications to the initial set of

proposed revisions. However, the

proposed reporting of subprime lending

data remains under study and the

collection of these data will not be

implemented as of March 31, 2001, as

proposed. The comments on the

agencies’ initial Call Report proposal

and the changes made in response to the

comments are discussed below.

Type of Review: Revisions of currently

approved collections.

On May 31, 2000, the agencies jointly

published a notice soliciting comments

for 60 days on proposed revisions to

their currently approved Call Report

information collections (65 FR 34801).

The notice described the specific

changes that the agencies, with the

approval of the FFIEC, were proposing

to implement as of March 31, 2001.

In response to this notice, the

agencies collectively received comments

13370 Federal Register / Vol. 66, No. 43 / Monday, March 5, 2001 / Notices

from 110 respondents: 86 banks and

banking organizations, 15 state and

national banking trade groups and other

bankers’ organizations, 4 community

groups, 2 bank supervisory groups, a

mortgage insurance trade group, a law

firm, and a government-sponsored

enterprise. Of these 110 respondents, 88

commented on the proposed reporting

of subprime lending data and the

majority of these commenters addressed

only this aspect of the proposal. The

agencies and the FFIEC have considered

all of the comments received on the

proposal.

Most of the commenters that

discussed the streamlining of the

information currently collected in the

Call Report supported this portion of the

proposed revisions. However, several

small banks complained that the Call

Report forms they would be receiving in

2001 would be increasing from 29 to 41

pages and some of these institutions

recommended that the agencies

continue to keep a separate form for

small banks. Nevertheless, the agencies

note that the single form for all banks

with domestic offices only, which has

been designated the FFIEC 041, contains

reporting thresholds for certain

schedules and portions of schedules

that will exempt smaller institutions

from having to complete these

schedules or portions thereof. In

addition, because of the specialized

nature of the activities covered in the

new schedule on securitizations and

asset sales, this schedule will not be

applicable to most banks. The Call

Report’s new schedule on trust

activities, which replaces two separate

trust activities reports, will only be

applicable to about 2,300 institutions.

In addition, one national banking

trade group, while urging the FFIEC and

the agencies to move forward with the

proposed deletions and reductions in

detail in March 2001, stated that the

proposed revisions did not achieve the

goal of streamlining the Call Report

burden as required by the Riegle Act.

This trade group indicated that the

agencies’ review of information that

banks report in the Call Report failed to

meet the statute’s mandate to ‘‘eliminate

requirements that are not warranted for

reasons of safety and soundness or other

public purposes.’’ The FFIEC and the

agencies have interpreted ‘‘public

purposes’’ to mean public policy

purposes. The FFIEC and the agencies

therefore believe that the Riegle Act

permits the agencies to retain (and

impose) reporting requirements for

purposes other than safety and

soundness that assist the agencies in

fulfilling their missions.

In contrast, the banking trade group

stated that Congress intended ‘‘that

information required for another public

purpose was intended to be narrowly

construed’’ because ‘‘the conference

report [on the Riegle Act] gives only one

example of a ‘public purpose,’ ’’ i.e.,

information needed to determine an

institution’s deposit insurance

premiums. The agencies believe that, by

using the word ‘‘purposes,’’ which is

plural, Congress clearly intended for the

agencies to read the statutory language

more broadly than the trade group

suggested with respect to the purposes

for which data collection is warranted.

In developing the streamlining

portion of the proposed Call Report

revisions, the agencies carefully

reviewed the purposes for which each

existing Call Report data item is used.

This process involved requesting

feedback from the staffs within the

agencies on the specific uses of each

Call Report item. The trade group’s

comment letter asked the agencies to

‘‘release their compilation of ‘the

purposes for which and extent to which

they use each data item.’ ’’ In this

regard, the results of the agencies’

review of the uses of the Call Report

items were not compiled as a single

statistical report. Rather, each agency

analyzed its use of each Call Report item

in order to determine whether and, if so,

how the item was essential to the

agency’s safety and soundness efforts or

critical for other public policy purposes.

Those items lacking sufficient practical

utility were proposed for elimination or

collection in a more appropriate

aggregate form.

As a result, the agencies believe the

principal reason for collecting virtually

all of the items in the Call Report as it

has been streamlined, aside from those

items used for deposit insurance

assessment calculations, directly relate

to their safety and soundness objectives.

The principal safety and soundness uses

of Call Report data were identified as

examination activities, including preexamination planning and report

preparation; analysis of industry

performance and risk exposures; off-site

surveillance and modeling, e.g., the

Uniform Bank Performance Report, the

FDIC’s SCOR (Statistical CAMELS Offsite Rating), and the Board’s SEER

(System to Estimate Examination

Ratings) models; the evaluation of bank

applications; and assessing compliance

with safety and soundness laws and

regulations such as regulatory capital

requirements. The agencies

acknowledge that Call Report data are

also used for public policy purposes

besides deposit insurance assessments,

such as assessing consumer compliance

issues including the Community

Reinvestment Act, constructing and

benchmarking various financial

aggregate measures, constructing

sources and uses of funds for the

banking sector in the flow of funds

accounts and debt aggregates, and

publishing banking statistics. However,

the agencies believe that items collected

solely for these other public policy

purposes are a small percentage of the

Call Report items when compared to

those collected for safety and soundness

purposes.

More specific information on the

comments received is presented below.

Implementation Timetable for the Call

Report Revisions—With respect to the

proposed information that would be

new to the Call Report, two trade groups

whose members include large banks that

would be subject to these new reporting

requirements and four large banks

addressed the proposed March 31, 2001,

effective date for this new information.

They stated that, considering the

complexity of a number of the proposed

Call Report changes and changes in

generally accepted accounting

principles taking effect at the beginning

of 2001, they would not have time to

put reporting systems in place by March

31. Some of these commenters suggested

that the agencies should phase in the

reporting of the new data (including

trust data) quarter by quarter over the

course of 2001 or delaying it until 2002.

A few smaller banks also commented

that there would be insufficient time to

modify software and reporting systems

by March 31 and to train personnel in

the proposed new reporting

requirements.

The FFIEC and the agencies have

concluded that deferring the starting

dates for reporting certain new

information until the dates

recommended by respondents would be

a reasonable response to bankers’

concerns about the need for lead time to

make necessary systems changes and

train staff. The remainder of the

revisions to the Call Report that the

FFIEC and the agencies have decided to

proceed with will take effect in March

2001 as originally proposed, except as

discussed in the following section.

In this regard, those respondents that

suggested a specific implementation

schedule recommended the

introduction of the proposed

securitization and asset sales activity

schedule in June 2001, the subprime

loan reporting requirements in

September 2001, and the trust activity

reporting in December 2001. As

discussed further below, because the

agencies are continuing to evaluate how

to proceed with the proposed subprime

Federal Register / Vol. 66, No. 43 / Monday, March 5, 2001 / Notices 13371

5For example, for each new loan, a bank could

begin reporting loan information using the

appropriate standard loan category in 2001. For

existing loans, the banks could make reasonable

estimates of the amounts that should be reallocated

from the general loan categories to the various

standard loan categories.

lending reporting requirements, the

collection of subprime lending data will

not be implemented as of March 31,

2001, as proposed.

Reporting Loan Information by Loan

Category Outside the Loan Schedule—

The Call Report currently uses two

different definitional schemes for

reporting information on loan income,

loan averages, past due and nonaccrual

loans, and charge-offs and recoveries by

loan category. The definitional scheme

applicable to a particular bank depends

primarily on its size. Banks that file the

FFIEC 033 and 034 report forms, i.e.,

banks with domestic offices only and

less than $300 million in total assets, are

permitted to report these four types of

loan information using general loan

categories. These banks define for

themselves which of their loans to

include in the general loan categories

based upon their own individual loan

systems. In contrast, banks that

currently file the FFIEC 031 and 032

report forms, i.e., banks with foreign

offices or with $300 million or more in

total assets, must provide these four

types of loan information using the

standard loan category definitions from

the Call Report’s loan schedule

(Schedule RC–C, part I).

To obtain more consistent loan

information, the agencies proposed to

adopt uniform loan categories and

definitions based on the standard loan

categories found in the loan schedule.

These standard loan categories would be

used by all banks for reporting loan

income, loan averages, past due and

nonaccrual loans, and loan charge-offs

and recoveries by loan category.

However, banks with less than $25

million in assets currently are not

required to report a breakdown of their

total loan income or their quarterly

average of total loans by loan category.

The agencies requested comment on the

merits of eliminating this exemption.

In their comment letters, a few small

banks indicated that it would be

difficult to change from reporting

certain loan information using selfdefined general loan categories to

reporting based on the standard loan

category definitions. One bank trade

group also observed that community

banks would have to modify various

general ledger accounts in order to

implement this reporting change, which

would be a significant burden for many

of them. However, other small banks

commented favorably on parts of the

proposal without mentioning the change

in the loan category definitions that they

would have to use. The only bank with

less than $25 million in assets that

commented on the proposed changes to

the existing reporting requirements

urged the agencies to leave the Call

Report unchanged in its entirety.

All banks regardless of size currently

provide a breakdown of the loans in

their loan portfolios as of the Call

Report date each quarter using the

standard loan categories. Therefore, the

definitions for the standard loan

categories should not be entirely foreign

to banks with less than $300 million in

assets. Nevertheless, considering the

concerns expressed by commenters, the

FFIEC and the agencies believe that a

transition rule for banks with domestic

offices only and less than $300 million

in assets (as of June 30, 2000) would

help to address their concerns about this

reporting change. Therefore, these banks

may use their best efforts through yearend 2001 to report information on loan

income, loan averages, past due and

nonaccrual loans, and charge-offs and

recoveries by loan category based on the

standard Call Report loan category

definitions.5 However, banks with less

than $25 million in assets that do not

currently report loan income and

averages by loan category would retain

this reporting exemption during 2001.

This will provide the smallest banks

with one year to plan for and make

whatever changes may be needed in

their records and reporting systems. The

transition period will end in the first

quarter of 2002, at which time all banks

should be reporting loan information

outside the loan schedule based on that

schedule’s standard loan category

definitions.

Regulatory Capital Reporting—The

agencies proposed to adopt a revised

regulatory capital reporting approach

and schedule that uses step-by-step

building blocks to compute the key

elements of the capital ratios for all

banks. More commenters supported this

revised approach than objected to it.

However, one bank trade group pointed

out that the schedule would be

expanded for many banks that are not

required to complete the existing

schedule in its entirety if a capital ratio

test is met. One respondent suggested

that the changes to the schedule should

be deferred until the new capital

framework under development

internationally by the Basel Committee

on Banking Supervision takes effect. In

this regard, the Basel Committee has

proposed that implementation of its

new framework begin in 2004.

Moreover, a number of larger banking

organizations have for some time been

recommending that a more logical

reporting format for regulatory capital

information, such as the format used in

bank holding company reports filed

with the Board on form FR Y–9C, be

incorporated into the Call Report. The

regulatory capital schedule proposed by

the agencies would accomplish this.

After considering all the comments

addressing the proposed new approach,

the FFIEC and the agencies have

concluded that they should proceed

with the capital reporting revisions.

Nevertheless, one banking

organization commented that the

portion of the proposed regulatory

capital schedule in which assets are

allocated to appropriate risk weight

categories was more detailed than

necessary. The bank suggested that the

agencies could reduce the number of

separate asset categories in this part of

the schedule without any real loss of

information because of the typical risk

weights to which these assets would be

assigned. The agencies agreed with this

suggestion and have simplified the

schedule in the manner the bank

recommended. Accordingly, the

proposed separate lines for reporting

interest- and noninterest-bearing

balances due from depository

institutions have been combined as have

six separate lines for such ‘‘other assets’’

as bank premises, other real estate

owned, and intangible assets.

Even with this reduction in the

number of separate asset categories, the

agencies recognize that the revised

regulatory capital schedule may give

some banks that were previously not

required to complete existing Schedule

RC–R in its entirety the impression that

they are now required to go through an

extensive exercise in risk-weighting

their assets and off-balance sheet items.

The agencies’ proposal reminded banks

that they are not required to identify

each on-balance sheet asset and offbalance sheet item that qualifies for a

risk weight of less than 100 percent.

Rather, each bank can decide for itself

how detailed an analysis of its assets

and off-balance sheet items it wishes to

perform and how many of the specific

lower risk-weighted items it wishes to

identify. In other words, a bank can

choose from among its assets and offbalance sheet items that have a risk

weight of less than 100 percent which

ones to risk-weight at an appropriate

lower risk weight, or it can simply riskweight some or all of these items at a

100 percent risk weight. A statement

along these lines has been placed at the

beginning of the risk-weighting section

of Schedule RC–R in the Call Report

forms to ensure that banks are aware of

13372 Federal Register / Vol. 66, No. 43 / Monday, March 5, 2001 / Notices

this. The FFIEC and the agencies also

reiterated this position on riskweighting in materials they issued to all

banks on January 17, 2001, describing

all of the revisions to the Call Report.

For banks that were previously not

required to complete existing Schedule

RC–R in its entirety, these materials also

describe a simplified risk-weighting

process they could follow in the revised

schedule that is similar to the one they

have been using when they perform the

capital ratio test in the existing

schedule.

The proposal also noted that the

agencies are reviewing and

implementing applicable provisions of

the Gramm-Leach-Bliley Act. One area

where the agencies’ review of the Act

indicated the need to modify the Call

Report involves regulatory capital

requirements for banks with financial

subsidiaries. In this regard, the agencies

decided to add six new items to the

regulatory capital schedule. These items

cover the adjustments to regulatory

capital that are necessary to calculate

the capital ratios of banks with financial

subsidiaries, i.e., adjustments to total

risk-based capital, risk-weighted assets,

and average total assets for the leverage

ratio. Over the near term, these financial

subsidiary items are likely to be

applicable to only a small percentage of

banks.

Finally, one bank observed that, in the

version of Schedule RC–R that appeared

in the proposed Call Report forms, the

items for ‘‘Net unrealized gains (losses)

on available-for-sale debt securities’’

and ‘‘Net unrealized gains on availablefor-sale equity securities’’ in the

leverage ratio section of the schedule

appeared to be unnecessary because of

the manner in which average total assets

is calculated. The FFIEC and the

agencies agree with this commenter and

have deleted these two items.

New Data on Subprime Lending

Activities—The agencies proposed to

collect information on subprime lending

to make possible the early detection and

proper supervision of subprime lending

programs through offsite monitoring

procedures. Banks involved in subprime

lending would report quarter-end data

for eight categories of subprime loans as

well as past due and nonaccrual

subprime loans and the year-to-date

charge-offs and recoveries on these

loans for two broader categories of

loans. The proposal acknowledged that

the quality and validity of the proposed

Call Report information on subprime

lending would depend on the agencies’

ability to develop a workable definition

of subprime lending. The agencies also

indicated that subprime loans could be

defined on the basis of either (a) loan

portfolios or programs that possess

certain characteristics or (b) individual

loans with these characteristics. The

proposal included numerous questions

pertaining to the definition and

specifically requested comment on this

issue. The proposed definition was

based on the definition in the agencies’

March 1999 guidelines for subprime

lending and, in part, characterized these

loans as ‘‘extensions of credit to

borrowers who, at the time of the loan’s

origination, exhibit characteristics

indicating a significantly higher risk of

default than traditional bank lending

customers.’’

Virtually every commenter that

addressed the proposed collection of

data on subprime lending had

unfavorable comments on the agencies’

proposed definition of this term. The

commenters observed that, without a

clearer definition of subprime lending,

the proposed reporting requirement

would result in inconsistent information

across banks while imposing a

significant burden on banks.

In light of the comments received on

the proposed collection of subprime

lending data, the agencies are

continuing to evaluate how to proceed

with this part of the proposal. In this

regard, the banking agencies issued

expanded examination guidance for

subprime lending programs on January

31, 2001, which defines subprime

lending. Thus, the agencies are

considering whether this definition

should form the basis for reporting

requirements on banks’ subprime

lending activities. In the meantime,

however, the FFIEC and the agencies are

delaying the effective date for the

reporting of subprime lending data in

the Call Report until after March 31,

2001, the effective date that had been

proposed. Banks will be notified when

the FFIEC and the agencies complete

their deliberations concerning the

introduction of a subprime loan

reporting requirement. At that time, in

accordance with the Paperwork

Reduction Act of 1995, the agencies will

request comment on this reporting

requirement, including the definition of

subprime lending to be used for

reporting purposes, when they submit

this requirement to OMB for review and

approval.

Bank Securitization and Asset Sale

Activities—The agencies proposed to

revise and expand the information

collected in the Call Report on bank

involvement in securitization and asset

sale activities in order to facilitate more

effective analysis of these activities on

bank credit exposures. This revision

would be accomplished by creating a

new Schedule RC–S to comprehensively

capture information related to bank

securitizations and asset sales.

In their proposal, the agencies

requested comment on the reporting of

data on ownership (or seller’s) interests

in securitizations. As proposed, the

agencies would collect data for seller’s

interests carried as securities, but they

asked whether (and, if so, how) these

data should cover seller’s interests

carried as loans. One commenter

pointed out that, for seller’s interests

carried as loans, the delinquency and

charge-off information is already

included in the separate Call Report

schedules for past due and nonaccrual

loans and for loan charge-offs and

recoveries. Thus, this bank observed

that having banks combine this

information in Schedule RC–S with the

delinquency and charge-off information

for loans underlying seller’s interests

carried as securities would create

duplicate reporting in the Call Report.

As a consequence, the FFIEC and the

agencies decided to modify the

Schedule RC–S proposal to add an item

to this new schedule that asks banks to

report seller’s interests carried as loans,

but without any additional disclosures

about delinquencies and charge-offs.

One commenter recommended that

the agencies compare the Call Report’s

new asset securitization disclosures in

proposed Schedule RC–S to those that

were to be promulgated by the Financial

Accounting Standards Board (FASB) in

its amendment to FASB Statement No.

125, Accounting for Transfers and

Servicing of Financial Assets and

Extinguishments of Liabilities (FAS

125). This commenter and one other

added that the agencies should make

every effort to coordinate these Call

Report disclosures with those in the

FAS 125 amendment and with the

agencies’ revisions to the risk-based

capital rules on recourse. The agencies

note that, in designing Schedule RC–S,

their intent was for the content of the

schedule to be consistent with the

direction they were taking in their

proposed amendments to the risk-based

capital treatment of recourse and

securitizations.

The agencies reviewed the

securitization disclosure provisions

contained in the May 2000 preballot

draft of the FASB Statement amending

FAS 125 and the final Statement

amending FAS 125 itself, which was

issued in September 2000 and

designated FASB Statement No. 140

(FAS 140). The disclosure requirements

of FAS 140 covering securitizations

(paragraphs 17(f) and (g)) require

information to be presented for each

major asset type and the standard cites

mortgage loans, credit card receivables,

Federal Register / Vol. 66, No. 43 / Monday, March 5, 2001 / Notices 13373

and automobile loans as examples of

asset types. Similarly, new Schedule

RC–S requires disclosures for seven

major asset types including 1–4 family

residential mortgages, credit card

receivables, and auto loans.

When an institution has securitized

financial assets during any period

presented in its financial statements and

it accounts for the transfer as a sale,

paragraph 17(f) of FAS 140 requires the

institution to describe its ‘‘continuing

involvement with transferred assets,

including, but not limited to, servicing,

recourse, and restrictions on retained

interests.’’ As proposed, Schedule RC–S

required the reporting of information on

securitizations when the continuing

involvement was in the form of recourse

or other seller-provided credit

enhancements, including retained

interest-only strips. The agencies’

proposal, however, did not include

securitizations where the continuing

involvement is limited to servicing. For

this reason, the agencies requested

comment on the manner in which

banks’ internal management reports

capture information on asset

securitization activities, i.e., are these

reports prepared based on whether the

bank provides credit enhancements

(which was how the proposed Schedule

RC–S was structured) or on whether the

bank services the securitized assets. One

bank commented that its internal

reporting for the residential mortgage

loans it sells is based on the retention

of servicing rather than retention of

recourse or other credit enhancements.

After considering this aspect of FAS 140

and the one comment on this issue, the

FFIEC and the agencies agreed to revise

the securitization disclosures in

Schedule RC–S so that they would cover

transactions in which servicing is

retained as well as those in which the

bank retains recourse or provides other

credit enhancements for the assets it

securitizes.

The disclosure requirements of

paragraph 17(g) of FAS 140 also direct

an institution that has retained interests

in securitized financial assets as of the

financial statement date to separately

disclose for each major asset type the

total principal amount outstanding,

including the portion no longer carried

on the balance sheet and the portion

that continues to be carried on the

balance sheet, delinquencies, and credit

losses (net of recoveries) during the

period. Schedule RC–S also collects

data by major asset type on the principal

amount outstanding for the portion of

securitized assets no longer carried on

the balance sheet and on the carrying

amount, rather than the principal

amount, of seller’s interests that

continue to be carried on the balance

sheet. For the off-balance sheet portion

of these securitizations and for the onbalance sheet portion carried as

securities, Schedule RC–S requires

disclosure of delinquencies and of

charge-offs and recoveries during the

year-to-date period. For Schedule RC–S,

as discussed above, a bank must report

this information when it retains

interests that act as credit

enhancements, when it otherwise

provides recourse, and when it retains

servicing. In contrast, this FAS 140

disclosure requirement does not apply

when an institution has provided

recourse or has retained servicing, but

has no retained interest. The agencies

acknowledge that this represents a

difference between Schedule RC–S and

FAS 140. Nevertheless, when a bank is

the servicer of loans and leases it has

sold and securitized, but has no other

continuing involvement, the bank

should have information on the

outstanding principal balance of these

assets as well as the delinquencies,

charge-offs, and recoveries. As servicer,

it would need to report this information

to trustees, investors, and/or other

providers of credit enhancements. If the

bank does not service the loans and

leases it has securitized, but provides

recourse or other credit enhancements,

sound risk management practices would

dictate that the bank should regularly

receive the same type of performance

information so that it can evaluate its

ongoing credit exposure.

One bank noted that reporting past

due and charge-off data may be an issue

when the securitization structure

contains loans sold by multiple banks

because the ongoing reporting of the

loans in the structure is not concerned

with who the original seller of the loans

was. As Schedule RC–S is designed, a

bank that has sold loans to another

institution with recourse or other sellerprovided credit enhancements (but was

not the bank that securitized the loans)

would not have to report delinquency

and charge-off information for these

loans. The FFIEC and the agencies have

attempted to address this concern by

providing appropriate guidance in the

instructions for Schedule RC–S.

Another bank raised general concerns

about the content of some of the

proposed items in Schedule RC–S and

indicated that the agencies’ instructions

for the schedule should be clear and

concise. This bank recommended that

the FFIEC and the agencies circulate

these instructions to the banking

industry prior to the implementation of

the schedule. The FFIEC issued draft

instructions for Schedule RC–S on

January 17, 2001, mailing them to each

bank and making them available on the

Internet on the FFIEC’s and the FDIC’s

Web sites. The FFIEC invited

institutions to submit questions and

comments on these instructions.

Under the existing Call Report

requirements, banks report certain

information related to securitizations,

asset sales, and servicing in Schedules

RC–L—Off-Balance Sheet Items—and

RC–M—Memoranda. To avoid the loss

of this information until the new

Schedule RC–S is implemented on June

30, 2001, these existing items will be

moved and reported in the Memoranda

section of Schedule RC–S for the March

31, 2001, report date. These existing

items cover: the outstanding principal

balance and amount of recourse

exposure on single family residential

mortgage loans, small business

obligations, and other financial assets

that have been sold with recourse; the

amount outstanding of consumer credit

cards and related plans that have been

securitized and sold with servicing

retained; and residential mortgage loan

and other loan servicing volume. To the

extent that some of this information is

currently collected only from banks that

meet certain reporting thresholds, these

thresholds would continue to apply for

purposes of reporting this information

as of the March 31, 2001, report date.

Additional Information on

Components of Noninterest Income—

The agencies proposed to collect a more

detailed breakdown of noninterest

income in the Call Report income

statement (Schedule RI) in order to

identify the principal types of revenuegenerating services in which banks are

involved and the amount of income

earned from them. One commenter

questioned how meaningful the

proposed noninterest income category

for ‘‘loan and other credit-related fees’’

would be and suggested that it be

eliminated as a required income

category. The agencies considered the

merits of this suggestion in light of the

accounting standards that govern the

recognition of fees associated with

lending and other extensions of credit

and decided to eliminate this proposed

item.

Trading Revenue from Cash

Instruments—Banks with $100 million

or more in assets currently report a fourway breakdown of their trading revenue

by risk exposure (interest rate, foreign

exchange, equity, and other including

commodity). Under the proposal, banks

with $5 billion or more in notional

amount of derivatives held for trading

were to begin to also report the amount

of their trading revenue derived from

cash instruments using the same fourway breakdown. Comments from large

13374 Federal Register / Vol. 66, No. 43 / Monday, March 5, 2001 / Notices

6For commercial banks with $1 billion or more

in total assets, income from fiduciary activities has

approximated 30 percent of these banks’ aggregate

net income each year since 1993.

banks opposed the collection of this

additional information on trading

revenue. These banks indicated that

they often manage market risk or use

trading strategies that involve managed

positions in combinations of cash

instruments and derivative contracts.

Because the revenue resulting from

these managed positions is generally not

separated by instrument (cash versus

derivative), significant information

systems modifications would be needed

to capture these data. Even if the data

were available, these banks believe that

evaluating cash instrument revenue

figures in isolation would be misleading

because their linkage to managed

positions would not be seen. After

considering these comments, the

agencies decided against collecting the

proposed cash instrument trading

revenue information.

Federal Home Loan Bank Advances—

To improve their monitoring and

understanding of individual banks’

funding sources, asset-liability

management, and liquidity, the agencies

proposed to have banks report Federal

Home Loan Bank advances separately

from their remaining ‘‘Other borrowed

money,’’ including the existing threeway maturity breakdown on these

borrowings. The only commenter

addressing the segregation of advances

from other borrowings, a national

banking trade group, supported this

proposed reporting change. The FFIEC

and the agencies are implementing this

revision as proposed.

One government-sponsored enterprise

further recommended that a bank’s

‘‘Other borrowings’’ be split so that

secured and unsecured borrowings are

reported separately. This commenter

stated that, given the different treatment

that secured and unsecured borrowings

receive when an institution fails, this

information would be of great value to

regulators, analysts, and all of a bank’s

creditors. The agencies acknowledge

that data on secured and unsecured

borrowings would be of some value to

them, and they may consider proposing

such a reporting change in the future.

Restructured Derivative Contracts—

The agencies proposed to require banks

with foreign offices or with $300 million

or more in assets to report the fair value

of derivative contracts carried as assets

that have been restructured or

renegotiated for reasons related to the

counterparty’s financial difficulties.

This information was intended to

supplement data these banks currently

report on past due derivative contracts.

Comments from large banks questioned

the need for this information because

derivative contracts will be reported at

fair value and this value will reflect any

decline in the counterparty’s credit risk.

They noted that such contracts will

typically be included in a bank’s

derivatives held for trading and these

losses in value will be charged to

earnings. Furthermore, these banks

stated that it would be difficult for them

to identify derivative contracts that were

restructured in prior years for credit

reasons. Based on these comments, the

agencies concluded that the proposed

new item for restructured derivatives

should not be implemented.

Reporting of Trust Data—Currently,

banks that exercise fiduciary powers

and have fiduciary assets or accounts

report information on their trust

activities each December 31 in the

Annual Report of Trust Assets (FFIEC

001). Institutions with trust operations

in foreign offices also complete the

Annual Report of International

Fiduciary Activities (FFIEC 006).

The agencies proposed to change the

manner in which banks report

information on their trust activities by

replacing these separate reports with a

new Call Report schedule on fiduciary

and related services. This new schedule

significantly reduces the amount of

detail reported in the current forms, but

continues to collect information on the

number of accounts and market value of

trust assets for specified categories of

fiduciary activities, fiduciary and

related services income, corporate trust

activities, collective investment funds

and common trust funds, fiduciary

settlements and other losses, and types

of managed assets held in personal trust

and agency accounts.

As originally proposed, institutions

(including all nondeposit trust

companies that file Call Reports) with

total fiduciary assets greater than $100

million or with fiduciary income greater

than 10 percent of their net interest

income plus noninterest income would

be required to report some of the trust

information quarterly and the rest

annually. Other institutions with trust

activities would report only annually,

but would not be required to report

fiduciary income and loss information.

Four commenters questioned the need

for quarterly reporting by larger trust

institutions, indicating that the agencies

should better justify this change in

reporting frequency. The collection of

quarterly data is limited to essential

trust asset and income information. The

agencies believe that this information is

necessary to carry out their respective

supervisory responsibilities, particularly

because the income generated from

fiduciary activities (before expenses) is

a significant contributor to the earnings

of large banks.6 Specifically, quarterly

data will allow the agencies to identify

and monitor in a timely manner those

institutions with significant exposure to

fiduciary-related risks, accurately

monitor and measure fiduciary asset

and income profiles and trends both on

an individual institution basis and on

an industry basis, and respond to

changing risk profiles by allocating

examiner resources toward areas of

increasing or significant risk.

Two banks with trust departments

commented that the $100 million in

fiduciary assets test is too low a

threshold for imposing a quarterly trust

reporting requirement given the limited

amount of revenue and risk arising from

that level of trust department business.

The FFIEC and the agencies reviewed

the proposed fiduciary asset size

threshold for quarterly reporting and

decided to increase this threshold to

$250 million in fiduciary assets. Thus,

under the phased-in implementation

schedule discussed above, annual

reporting of trust data by all trust

institutions will take effect December

31, 2001, and quarterly reporting of trust

data by institutions meeting the

fiduciary assets or income test will

begin in March 2002. Institutions

subject to the quarterly reporting

requirement hold more than 90 percent

of total fiduciary assets.

In their comments opposing the

introduction of quarterly reporting for

larger trust operations, a number of

banks stated that they have not

developed automated systems for

capturing certain trust data. Because of

the significant amount of manual data

gathering and compilation that would

be entailed, these banks regard quarterly

reporting of a trust income statement as

imposing a significant additional

burden. The expense information in the

trust income statement was specifically

cited as one area where data are

developed manually.

The agencies’ primary supervisory

interest in the quarterly trust income

information is in institutions’ fee

income rather than net trust income.

Consequently, the FFIEC and the

agencies concluded that only fee income

data should be reported in March, June,

and September by institutions subject to

quarterly reporting. Thus, institutions

with larger trust operations will

continue to report fiduciary expenses,

losses, and intracompany income

credits only annually as of December 31,

consistent with current reporting

Federal Register / Vol. 66, No. 43 / Monday, March 5, 2001 / Notices 13375

7The FDIC uses the delinquency date in SCOR

(Statistical CAMELS Off-site Rating), a model

designed to identify banks with a relatively high

likelihood of receiving a downgrade to a less than

satisfactory CAMELS rating. The Board uses the 30–

89 day past due loan data in its two SEER (System

to Estimate Examination Ratings) models. The SEER

ratings model estimates a bank’s current CAMELS

using its current Call Report data. The SEER risk

rank model estimates the probability that a bank

will fail or become critically undercapitalized

within the next two years.

requirements. Trust institutions with

more than $100 million but less than

$250 million in fiduciary assets that do

not meet the fiduciary income threshold

will complete the trust income

statement in the Call Report once each

year as of December 31, which is also

consistent with their current reporting

requirements.

After comparing the information

proposed to be reported on corporate

trust and agency accounts in Schedule

RC–T, Memorandum item 2, with the

existing reporting requirements, the

agencies are reducing the amount of

data they will collect on this trust

activity. Institutions with fiduciary

activities will report the number of

issues and principal amount

outstanding for ‘‘Corporate and

municipal trusteeships’’ in

Memorandum item 2.a and only the

number of issues for ‘‘Transfer agent,

registrar, paying agent, and other

corporate agency’’ in Memorandum item

2.b. The agencies are also correcting two

lines in the fiduciary assets section of

the schedule. For corporate trust and

agency accounts (Schedule RC–T, item

6), the proposed forms that the agencies

distributed to banks erroneously

indicated that the two items for the

number of accounts were not to be

reported. However, institutions should

report the number of managed and nonmanaged accounts (columns C and D).

For investment management agency

accounts (Schedule RC–T, item 7),

institutions should report the market

value of managed assets and the number

of managed accounts (columns A and C)

whereas the proposed forms incorrectly

showed that the market value of nonmanaged assets and the number of nonmanaged accounts (columns B and D)

were also to be reported.

Eliminating Confidential Treatment

for Certain Past Due and Nonaccrual

Data—The information that banks report

in the Call Report on the amount of their

loans, leases, and other assets that are

past due 30 through 89 days and still

accruing (and on the amount of

restructured loans and leases that are

past due 90 days or more and still

accruing or in nonaccrual status) has

been accorded confidential treatment on

an individual bank basis since its

collection began 18 years ago. In

contrast, Call Report data on assets that

are 90 days or more past due and still

accruing or that are in nonaccrual status

have been publicly available, after an

initial transition period, for the past 17

years. The agencies proposed to

eliminate the confidential treatment for

the 30–89 days past due (and

restructured) items beginning with the

amounts banks would report as of

March 31, 2001.

The five banks and bank trade groups

that commented on this issue opposed

the public disclosure of the currently

confidential information on past due

(and restructured) assets. The two bank

supervisory groups that commented on

this proposal supported the elimination

of confidential treatment.

In their comments objecting to the

proposal, bankers stated that 30–89 day

delinquencies, particularly those that

are 30–59 days past due, are not highly

correlated with actual losses and a

material percentage of these accounts

return to current status. One large bank

observed that the amount of its 30–89

day past due loans is subject to periodic

volatility due to seasonal factors that

vary with the type of loan. These

bankers therefore believe that the value

of this delinquency information as a

performance indicator is not reliable

and can be misleading. As a result, by

releasing information that is highly

susceptible to misinterpretation, the

agencies will reduce rather than

enhance market discipline.

One trade group also indicated that

the disclosure of this past due

information would put U.S. banks at a

competitive disadvantage with domestic

nonbank financial institutions and

foreign banks that are not subject to a

comparable disclosure requirement.

This group also suggested that this

disclosure may exaggerate the public’s

perception of a bank’s credit risk and

could cause an unjustifiable loss of

funding. The group recommended that

the agencies should await the American

Institute of Certified Public

Accountants’ decisions on additional

public disclosures about the loan loss

allowance and loan quality as part of its

project to provide additional accounting

and disclosure guidance about the

allowance.

Two smaller banks stated that many

of the delinquencies in the 30–89 day

range are due to technicalities and do

not represent additional credit risk. As

an example, they cited matured loans

where the borrower is still making the

normal monthly payment, but the

renewal process has not yet been

completed because the borrower has not

provided all the necessary information

for the bank to approve the renewal. It

was suggested that public disclosure

would cause banks to imprudently

renew loans to avoid having to report

them as past due, which would be an

unsafe and unsound practice. However,

if a bank follows sound loan

administration procedures, the process

for determining whether to renew a loan

should be initiated prior to maturity for

those loans whose repayment schedule

indicates that a renewal request is

expected to be made. As a result, the

delinquency situations these banks

described should occur infrequently.

The FFIEC and the agencies have

considered the comments received on

this issue and have decided to proceed

with the elimination of the confidential

treatment now accorded the 30–89 day

past due (and restructured) assets

effective March 31, 2001. However, for

periods prior to March 31, 2001, data on

loans, leases, and other assets past due

30 through 89 days and still accruing

(and on restructured loans and leases

that are 90 days or more past due and

still accruing or that are in nonaccrual

status) will not be publicly disclosed on

an individual bank basis.

The agencies have consistently found

30–89 day past due information helpful

in identifying potential problem banks

when used in conjunction with other

key measures of financial performance

and condition. Further, they use the 30–

89 day past due information in

econometric surveillance models that

flag weak and potentially weak banks

for review between on-site

examinations.7 These models have

consistently shown data on 30–89 day

past due loans to be among the items

that are statistically significant in

contributing to bank deterioration and

supervisory rating (CAMELS)

downgrades. Therefore, the FFIEC and

the agencies believe that the 30–89 day

delinquency information complements

data currently available publicly and is

useful in the assessment of general asset

quality.

Moreover, when presented in the

Uniform Bank Performance Report, a

publicly available analytical tool created

for bank supervisory, examination, and

bank management purposes, ratios of

30–89 day past due loans to total loans

will be supplemented with the peer

average ratio for banks of similar size.

This will assist the public in evaluating

the significance of a bank’s level of 30–

89 day past due loans. In addition,

banks have the option to include in

their Call Report a brief narrative

statement that provides explanatory

comments about any data disclosure

which they feel may be subject to

13376 Federal Register / Vol. 66, No. 43 / Monday, March 5, 2001 / Notices

misinterpretation, the text of which is

available to the public.

The agencies consider market

discipline an important public policy

issue as it is used to complement

supervisory resources. Market discipline

relies on market participants having

information about the risks and

financial condition of banking

organizations. The agencies believe that

disclosure that increases transparency of

asset quality information should lead to

more accurate market assessments of

risk and value that, in turn, should

result in more effective market

discipline on banking organizations.

Call Report Submission Period for

Banks with Foreign Offices—Banks that

have (or have previously had) more than

one foreign office are given 45 days to

submit their Call Reports rather than the

30 days which applies to all other

banks. Because of technological

advances that have improved the

timeliness with which data from

overseas locations can be gathered and

to put all banks on an equal footing in

terms of the amount of time available to

complete their Call Reports, the

agencies proposed to eliminate the

additional 15 days that these banks with

foreign offices receive for filing their

reports.

Banks with foreign offices strongly

objected to this proposed change. While

some acknowledged that the additional

15 days is not needed from a data

collection perspective, they argued that

this extra time is needed because banks

with foreign offices must report a larger

amount of data in their Call Reports

than other banks are required to report.

These banks also pointed out that they

will be the ones who are most

significantly affected by the new

reporting requirements the agencies

have proposed and by the incorporation

of quarterly trust activity reporting into

the Call Report. Thus, these banks

believe that a 45-day reporting deadline

is necessary to ensure that they report

high quality data given the large number

of departments and entities within their

organizations that are involved in

preparing the detailed data required in

the Call Report. The 45-day filing period

also enables these banks to reconcile

their Call Report data to the comparable

consolidated holding company data

their organizations report to the Board

in the FR Y–9C report and to the

information in the holding company

reports their organizations (if they are

public companies) file with the

Securities and Exchange Commission,

which have 45-day or longer deadlines.

After considering these comments, the

FFIEC and the agencies concluded that

they should retain the existing 45-day

Call Report submission period for banks

with foreign offices.

Subchapter S Bank Dividends—A

bank that has elected Subchapter S

status is treated as a pass-through entity

for federal income tax purposes and

generally is not subject to any federal

income taxes. Instead, the bank’s

shareholders pay federal income taxes

on their proportionate share of the

bank’s taxable income.

The agencies requested comment on

whether they should add an item to the

Call Report in which Subchapter S

banks would report the amount of

dividends distributed to cover

shareholders’ personal tax liabilities.

Adding such an item was considered as

a way to improve the agencies’

comparisons of the dividend rates and

after-tax earnings of Subchapter S banks

and banks that are subject to federal

corporate income taxes, i.e., Subchapter

C banks, in the Uniform Bank

Performance Report (UBPR).

Two Subchapter S banks and one

bank trade group commented on the

proposed dividend item and each

opposed adding it to the Call Report.

These banks considered the item to be

unnecessary and one indicated that it

would be difficult for a bank to

determine the amount to report in the

item. The trade group stated that the

information would most likely be

unavailable and, if available,

inappropriate to report. Based on these

comments, the FFIEC and the agencies

decided against adding an item to the

Call Report for dividends distributed by

Subchapter S banks to their

shareholders to cover their personal tax

liabilities.

Other Comments—The agencies

proposed to modify the Call Report

income statement (Schedule RI) to

segregate the amortization expense of

goodwill from the amortization expense

of other intangible assets. Under this

proposal, banks would report ‘‘Goodwill

charges,’’ i.e., goodwill amortization

expense net of applicable income taxes,

after their ‘‘Income (loss) before

extraordinary items and other

adjustments’’ rather than as part of

noninterest expense. The agencies

proposed this change in response to the

FASB’s proposed accounting standard,

Business Combinations and Intangible

Assets, which would require this

method of financial statement

presentation for goodwill charges. Two

commenters questioned whether this

change in presentation should be

implemented in the Call Report based

on a FASB proposal.

Because the FASB has not yet adopted

a final standard on accounting for

business combinations and intangible

assets, the agencies agree that it would

be premature to implement the

proposed method of presenting goodwill

charges. Accordingly, goodwill

amortization expense will be reported as

part of ‘‘Amortization expense of

intangible assets’’ in the noninterest

expense section of the Call Report

income statement. However, in their

submissions to OMB, the agencies are

requesting approval to revise the Call

Report income statement in the first

calendar quarter of the first calendar

year after the effective date of the final

FASB standard so it will conform

automatically with the method of

presentation ultimately prescribed by

the FASB for goodwill amortization or

impairment losses.

The agencies requested comment on

the current thresholds for itemizing and

describing in Schedule RI–E—

Explanations—significant components

of other noninterest income and

expense. At present, the reporting

threshold is 10 percent of the total

amount reported for other noninterest

income and expense, respectively, in

the Call Report income statement. In

particular, the agencies asked whether it

would be more appropriate to base these

disclosure thresholds on the sum of

‘‘Net interest income’’ plus ‘‘Total

noninterest income.’’ Two banks

recommended that the agencies adopt a

disclosure threshold of 1 percent of total

interest and noninterest income, which

is consistent with the Securities and

Exchange Commission’s threshold for

the disclosure by bank holding

companies of components of other

noninterest income and expense in

Regulation S–X, Section 210.9–04 (17

CFR 210.9–04). The FFIEC and the

agencies agreed with this

recommendation and are revising this

Schedule RI–E disclosure threshold

accordingly.

Another bank suggested that the

agencies should significantly expand

the reporting of noninterest expenses in

Schedule RI–E so that banks can

benchmark expenses against their peers.

This bank proposed several specific

categories of noninterest expenses that

all banks should report in Schedule RI–

E. While the agencies believe that it

would be nice to know the amount of

noninterest expenses in these categories

for all banks, requiring this information

from all banks would trigger the

reporting of amounts that would be

immaterial for some banks. Therefore,

instead of implementing this bank’s

suggestion, the agencies will proceed

with their proposal to add preprinted

captions to Schedule RI–E, item 2 (and

item 1) for the most commonly itemized

and described categories of other

Federal Register / Vol. 66, No. 43 / Monday, March 5, 2001 / Notices 13377

noninterest expense (and other

noninterest income). These disclosures

would be made only if the dollar

amount for a particular category of

expense (or income) exceeded the

revised disclosure threshold discussed

above.

One state banking trade group

recommended that the agencies

combine two items in Schedule RC–A—

Cash and Balances Due From Depository

Institutions—so that the amount of a

bank’s ‘‘Currency and coin’’ is not

separately reported. This trade group

stated that having the amount of a

bank’s currency and coin available to

the public on the Call Report could

facilitate and encourage more people to

commit robberies and burglaries at those

institutions that disclose a large amount

of cash on hand. While the current Call

Report requirements call upon all banks

to report the amount of currency and

coin they have, this commenter may

have overlooked the agencies’ proposal

to eliminate this reporting requirement

for all banks with less than $300 million

in total assets that do not have foreign

offices. Thus, only the largest banks

must continue to disclose the amount of

their ‘‘Currency and coin’’ in the Call

Report, which essentially achieves this

trade group’s objective.

One bank trade group stated that

differences in the information required

for Call Reports versus the information

required by the Board in the quarterly

holding company reports on form FR Y–

9C is a source of frustration for bankers.

The trade group suggested that

differences in these reports should be

minimized. As the agencies noted in

their proposal, some of their proposed

revisions were designed to reduce these

differences. Furthermore, in its notice

requesting comment on revisions to the

FR Y–9C for 2001, which was published

on November 17, 2000 (65 FR 69525),

the Board proposed several reporting

changes that will introduce more

uniformity to certain aspects of

regulatory reporting. These reporting

changes include bringing a number of

items on the FR Y–9C, as well as the

overall reporting format of the FR Y–9C,

into closer alignment with the Call

Report.

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.

Dated: February 26, 2001.

Mark J. Tenhundfeld,

Assistant Director, Legislative and Regulatory

Activities Division, Office of the Comptroller

of the Currency.

Board of Governors of the Federal Reserve

System, February 26, 2001.

Jennifer J. Johnson,

Secretary of the Board.

Dated at Washington, DC., this 27th day of

February, 2001.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Executive Secretary.

[FR Doc. 01–5242 Filed 3–2–01; 8:45 am]

BILLING CODE 4810–33–P, 6210–01–P, 6714–01–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

[INTL–24–94]

Proposed Collection; Comment

Request for Regulation Project

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice and request for

comments.

SUMMARY: The Department of the

Treasury, as part of its continuing effort

to reduce paperwork and respondent

burden, invites the general public and

other Federal agencies to take this

opportunity to comment on proposed

and/or continuing information

collections, as required by the

Paperwork Reduction Act of 1995,

Public Law 104–13(44 U.S.C.

3506(c)(2)(A)). Currently, the IRS is

soliciting comments concerning an

existing final regulation, INTL–24–94

(TD 8671), Taxpayer Identifying

Numbers (TINs) (§ 301.6109–1).

DATES: Written comments should be

received on or before May 4, 2001 to be

assured of consideration.

ADDRESSES: Direct all written comments

to Garrick R. Shear, Internal Revenue

Service, room 5244, 1111 Constitution

Avenue NW., Washington, DC 20224.

FOR FURTHER INFORMATION CONTACT:

Requests for additional information or

copies of the information collection

should be directed to Larnice Mack,

(202) 622–3179, Internal Revenue

Service, room 5244, 1111 Constitution

Avenue NW., Washington, DC 20224.

SUPPLEMENTARY INFORMATION:

Title: Taxpayer Identifying Numbers

(TINs).

OMB Number: 1545–1461.

Regulation Project Number: INTL–24–

94.

Abstract: This regulation relates to

requirements for furnishing a taxpayer

identifying number on returns,

statements, or other documents.

Procedures are provided for requesting

a taxpayer identifying number for

certain alien individuals for whom a

social security number is not available.

The regulation also requires foreign

persons to furnish a taxpayer identifying

number on their tax returns.

Current Actions: There is no change to

this existing regulation.

Type of Review: Extension of a

currently approved collection.

Affected Public: Individuals.

The burden for the collection of

information is reflected in the burden

for Form W–7, Application for IRS

Individual Tax Identification Number

(For Non-U.S. Citizens or Nationals).

The following paragraph applies to all

of the collections of information covered

by this notice:

An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless the collection of information

displays a valid OMB control number.

Books or records relating to a collection

of information must be retained as long

as their contents may become material

in the administration of any internal

revenue law. Generally, tax returns and

tax return information are confidential,

as required by 26 U.S.C. 6103.

Request for Comments: Comments

submitted in response to this notice will

be summarized and/or included in the

request for OMB approval. All

comments will become a matter of

public record. Comments are invited on:

(a) Whether the collection of

information is necessary for the proper

performance of the functions of the

agency, including whether the