[Federal Register Volume 81, Number 157 (Monday, August 15, 2016)]
[Notices]
[Pages 54190-54216]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19268]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
FEDERAL RESERVE SYSTEM
FEDERAL DEPOSIT INSURANCE CORPORATION
Proposed Agency Information Collection Activities; Comment
Request
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).
[[Page 54191]]
ACTION: Joint notice and request for comment.
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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 [email protected]. 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:
Agency Web site: http://www.federalreserve.gov. Follow the
instructions for submitting comments at: http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Email: [email protected]. Include the
reporting form numbers in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Robert DeV. Frierson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue NW.,
Washington, DC 20551.
All public comments are available from the Board's Web site at
www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons. Accordingly, your comments will
not be edited to remove any identifying or contact information. Public
comments may also be viewed electronically or in paper in Room MP-500
of the Board's Martin Building (20th and C Streets NW.) between 9:00
a.m. and 5:00 p.m. on weekdays.
FDIC: You may submit comments, which should refer to ``FFIEC 031,
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: [email protected]. 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
[email protected].
FOR FURTHER INFORMATION CONTACT: For further information about the
proposed revisions to the Call Report discussed in this notice, please
contact any of the agency staff whose names appear below. In addition,
copies of the Call Report forms and the proposed FFIEC 051 can be
obtained at the FFIEC's Web site (https://www.ffiec.gov/ffiec_report_forms.htm).
[[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.
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
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data items are not readily available through other means.
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\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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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.
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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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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.
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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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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
[[Page 54194]]
information 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.
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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.
\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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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\
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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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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
[[Page 54195]]
with 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:
[cir] Does the institution have any derivative contracts? (If yes,
complete the following items.)
[cir] Total gross notional amount of interest rate derivatives held
for trading
[cir] Total gross notional amount of all other derivatives held for
trading
[cir] Total gross notional amount of interest rate derivatives not
held for trading
[cir] 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:
[cir] 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.)
[cir] Principal amount of 1-4 family residential mortgage loans
sold during the quarter
[cir] 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:
[cir] Does the institution use the fair value option to measure any
of its assets or liabilities? (If yes, complete the following items.)
[cir] Aggregate amount of fair value option assets
[cir] Aggregate amount of fair value option liabilities
[cir] Year-to-date net gains (losses) recognized in earnings on
fair value option assets
[cir] 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:
[cir] 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.)
[cir] 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
[cir] 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.)
[cir] 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
[cir] 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.)
[cir] 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:
[cir] Does the institution have any consolidated variable interest
entities? (If yes, complete the following items.)
[cir] Total assets of consolidated variable interest entities
[cir] 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:
[cir] 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.)
[cir] Outstanding credit card fees and finance charges included in
credit cards to individuals for household, family, and other personal
expenditures (retail credit cards)
[cir] Separate valuation allowance for uncollectible retail credit
card fees and finance charges
[cir] Amount of allowance for loan and lease losses attributable to
retail credit card fees and finance charges
[cir] Uncollectible retail credit card fees and finance charges
reversed against year-to-date income
[cir] 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:
[cir] Does the institution have assets covered by FDIC loss-sharing
agreements? (If yes, complete the following items.)
[cir] Loans and leases covered by FDIC loss-sharing agreements
[cir] 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
[cir] 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
[cir] Other real estate owned covered by FDIC loss-sharing
agreements
[[Page 54196]]
[cir] 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\
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\7\ See 81 FR 323186-32188 and 32208 (May 20, 2016).
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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 Items
[[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.
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\8\ See 74 FR 41973 (August 19, 2009).
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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.
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\9\ See FR 2018; OMB No. 7100-0058.
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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.
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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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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,
[[Page 54198]]
FFIEC 041 form posted on the FFIEC's Web site): \11\
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\11\ https://www.ffiec.gov/ffiec_report_forms.htm.
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.
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P
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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.
[FR Doc. 2016-19268 Filed 8-12-16; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-C