Agency Information Collection Activities; Proposals, Submissions, and Approvals:
Federal Register: October 5, 2010 (Volume 75, Number 192)
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
Proposed Agency Information Collection Activities; Comment
Request--Thrift Financial Report: Schedules SC, SO, VA, PD, LD, CC, CF,
DI, SI, FS, CCR, and VIE
AGENCY: Office of Thrift Supervision (OTS), Treasury.
ACTION: Notice and request for comment.
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 comment on proposed and continuing information collections, as required by the Paperwork Reduction Act of 1995, 44 U.S.C. 3507. Today, the Office of Thrift Supervision within the Department of the Treasury solicits comments on proposed changes to the Thrift Financial Report (TFR), Schedule SC--Consolidated Statement of Condition, Schedule SO--Consolidated Statement of Operations,
Schedule VA--Consolidated Valuation Allowances and Related Data,
Schedule PD--Consolidated Past Due and Nonaccrual, Schedule LD--Loan
Data, Schedule CC--Consolidated Commitments and Contingencies, Schedule
CF--Consolidated Cash Flow Information, Schedule DI--Consolidated
Deposit Information, Schedule SI--Consolidated Supplemental
Information, Schedule FS--Fiduciary and Related Services, and Schedule
CCR--Consolidated Capital Requirement, and on a proposed new Schedule
VIE--Variable Interest Entities. The changes are proposed to become effective in March 2011.
At the end of the comment period, OTS will analyze the comments and recommendations received to determine if it should modify the proposed revisions prior to giving its final approval. OTS will then submit the revisions to the Office of Management and Budget (OMB) for review and approval.
DATES: Submit written comments on or before December 6, 2010.
ADDRESSES: Send comments to Information Collection Comments, Chief
Counsel's Office, Office of Thrift Supervision, 1700 G Street, NW.,
Washington, DC 20552; send facsimile transmissions to FAX number (202) 906-6518; send e-mails to firstname.lastname@example.org; or hand deliver comments to the Guard's Desk, east lobby entrance, 1700 G
Street, NW., on business days between 9 a.m. and 4 p.m. All comments should refer to ``TFR Revisions--2011, OMB No. 1550-0023.'' OTS will post comments and the related index on the OTS Internet Site at http:// www.ots.treas.gov. In addition, interested persons may inspect comments at the Public Reading Room, 1700 G Street, NW., by appointment. To make an appointment, call (202) 906-5922, send an e-mail to email@example.com, or send a facsimile transmission to (202) 906-7755.
FOR FURTHER INFORMATION: You can access sample copies of the proposed 2011 TFR forms on OTS's Web site at http://www.ots.treas.gov or you may request them by electronic mail from firstname.lastname@example.org.
You can request additional information about this proposed information collection from James Caton, Acting Managing Director, Economic Policy and Financial Monitoring and Analysis Division, (202) 906-5680, Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552.
Title: Thrift Financial Report.
OMB Number: 1550-0023.
Form Number: OTS 1313.
OTS is proposing to revise and extend for three years the TFR, which is currently an approved collection of information.
All OTS-regulated savings associations must comply with the information collections described in this notice. OTS collects this information each calendar quarter or less frequently if so stated. OTS uses this information to monitor the condition, performance, and risk profile of individual institutions and systemic risk among groups of institutions and the industry as a whole. Except for selected items, these information collections are not given confidential treatment.
OTS last revised the form and content of the TFR in a manner that significantly affected a substantial percentage of institutions in
March 2010. Since the beginning of 2010 OTS has evaluated its ongoing information needs. OTS recognizes that the TFR imposes reporting requirements, which are a component of the regulatory burden facing institutions. Another contributor to this regulatory burden is the examination process, particularly on-site examinations during which institution staff spends time and effort responding to inquiries and requests for information designed to assist examiners in evaluating the condition and risk profile of the institution. The amount of attention that examiners direct to risk areas of the institution under examination is, in large part, determined from TFR data. These data, and analytical reports, including the Uniform Thrift Performance
Report, assist examiners in scoping and making their preliminary assessments of risks during the planning phase of the examination.
A risk-focused review of the information from an institution's TFR allows examiners to make preliminary risk assessments prior to onsite work. The degree of perceived risk determines the extent of the examination procedures that examiners initially plan for each risk area. If the outcome of these procedures reveals a different level of risk in a particular area, the examiner adjusts the examination scope and procedures accordingly.
TFR data are also a vital source of information for the monitoring and regulatory activities of OTS. Among their benefits, these activities aid in determining whether the frequency of an institution's examination cycle should remain at maximum allowed time intervals, thereby lessening overall regulatory burden. More risk-focused TFR data enhance the ability of OTS to assess whether an institution is experiencing changes in its risk profile that warrant immediate follow- up, which may include accelerating the timing of an on-site examination.
In developing this proposal, OTS considered a range of potential information needs, particularly in the areas of credit risk, liquidity, and liabilities, and identified those additions to the TFR that are most critical and relevant to OTS in fulfilling its supervisory responsibilities. OTS recognizes that increased reporting burden will result from the addition to the TFR of the new items discussed in this proposal. Nevertheless, when viewing these proposed revisions to the
TFR within a larger context, they help to enhance the on- and off-site supervision capabilities of OTS, which assist with controlling the overall regulatory burden on institutions.
OTS also considered the potential impacts from the enactment of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (``the Dodd-
Frank Act'') that the President signed into law on July 21. The Dodd-
Frank Act provides for the combination of the OTS into the Office of the Comptroller of the Currency 12 to 18 months after the enactment date. Employees of the OTS on the transfer date will transfer to the
OCC, the FDIC, or a new Consumer Financial Protection Bureau. At this point, no decision about a possible conversion, if any, from the TFR to the Call Report has been made. Nevertheless, effort was made to avoid increasing differences between the two reports. For this reason, the majority of the proposed changes mirror changes proposed for the Call
Report. However, proposed are some changes that will further and enhance off-site monitoring and on-site examination efficiency.
Thus, OTS is requesting comment on the following proposed revisions to the TFR that would take effect as of March 31, 2011, unless otherwise noted. These revisions would change the reporting frequency for the number and market value of collective investment funds and common trust funds data reported in Memorandum Item 3 of Schedule FS from annually to quarterly, revise several existing lines, add new lines to the TFR, and add a new Schedule VIE, Variable Interest
For each of the proposed revisions or new items, OTS is particularly interested in comments from institutions on whether the information proposed to be collected is readily available from existing institution records. OTS also invites comment on whether there are particular proposed revisions for which the new data would be of limited relevance for purposes of assessing risks in a specific segment of the savings association industry. In such cases, OTS requests comments on what criteria, e.g., an asset size threshold or some other measure, we should establish for identifying the specific segment of the savings association industry that we should require to report the proposed information. Finally, OTS seeks comment on whether, for a particular proposed revision, there is an alternative information set that could satisfy OTS data needs and be less burdensome for institutions to report than the new or revised items that OTS has proposed. OTS will consider all of the comments it receives as it formulates a final set of revisions to the TFR for implementation in 2011. The proposed revisions include:
A breakdown by loan category of the existing troubled debt restructurings for amounts added in the current quarter and amounts included in Schedule SC in compliance with modified terms in Schedule
VA, and for troubled debt restructurings that are past due 30 to 89 days, 90 days or more, or in nonaccrual status in Schedule PD;
Additional data for automobile loans, including securities backed by automobile loans in Schedule SC, interest income from automobile loans in Schedule SO, automobile loans closed, purchased, or sold during the quarter in Schedule CF, and the average daily balance for automobile loans during the quarter in Schedule SI;
A breakdown in Schedule SC of the existing items for mortgage-backed securities between residential and commercial securities issued or guaranteed by U.S. Government agencies and sponsored enterprises and those that are not;
New items for the amount and average daily deposits of nonbrokered deposits obtained through the use of deposit listing service companies in Schedule DI;
A breakdown of the existing items for deposits of individuals, partnerships, and corporations between deposits of individuals and deposits of partnerships and corporations in Schedule
A new Schedule VIE, Variable Interest Entities, for reporting the categories of assets of consolidated variable interest entities (VIEs) that can be used only to settle the VIEs' obligations, the categories of liabilities of consolidated VIEs without recourse to the savings association's general credit, and the total assets and total liabilities of other consolidated VIEs included in the savings association's total assets and total liabilities, with these data reported separately for securitization trusts,
asset-backed commercial paper conduits, and other VIEs;
Breakdowns of loans and repossessed assets covered by FDIC loss-sharing agreements by loan and repossessed asset category in
Schedule SI, new line in Schedule SI for income received from or accrued on assets covered by the FDIC under loss-sharing agreements, and a breakdown in Schedule PD of loans past due 30 to 89 days, 90 days or more, or in nonaccrual status covered by FDIC loss-sharing agreements;
A breakdown of the existing items for key person life insurance in Schedule SC into items for general account and separate account life insurance assets;
New items for the total assets of captive insurance and reinsurance subsidiaries in Schedule SI;
A change in reporting frequency from annual to quarterly for the data reported in Schedule FS on collective investment funds and common trust funds for those savings associations that currently report fiduciary assets and income annually, i.e., banks with fiduciary assets greater than $250 million or gross fiduciary income greater than 10 percent of bank revenue;
A new item in Schedule SO for service charges on deposit accounts;
A new item in Schedule CCR for qualifying noncontrolling
(minority) interests in consolidated subsidiaries;
Two new items in Schedule SC for trust preferred securities;
A more detailed breakdown by loan type in Schedule VA of general, specific, and total valuation allowances;
A breakdown by loan type in Schedule VA of classified assets;
A new line in Schedule DI for time deposits of $100,000 or more with a remaining maturity of one year or less;
A new line in Schedule DI for deposits in foreign offices,
Edge and Agreement subsidiaries, and IBFs;
A breakdown in Schedule SI of the amortized cost of held- to-maturity securities and the fair value of available-for-sale securities;
Two new lines in Schedule SI for farmland loans secured by real estate, and loans to finance agricultural production and other loans to farmers;
Two new lines in Schedule SI for Federal Home Loan Bank advances with a remaining maturity of one year or less, and other borrowings with a remaining maturity of one year or less; and
A new line in Schedule SI for the amount of liabilities from a savings association's trading activities.
The specific wording of the captions for the new or revised TFR data items discussed in this proposal and the numbering of these data items should be regarded as preliminary.
II. Discussion of Revisions Proposed for March 2011
Troubled Debt Restructurings
OTS is proposing that savings associations report additional detail on loans that have undergone troubled debt restructurings in TFR
Schedules VA and PD. More specifically, new items are proposed for
Schedule VA under two columns for the amount of troubled debt restructured during the current quarter (odd-numbered lines) and the amount of troubled debt restructured that is included in Schedule SC in compliance with the modified terms (even-numbered lines):
VA211, VA212 Construction Loans (Total of VA213-VA218):
VA213, VA214 1-4 Dwelling Units;
VA215, VA216 Multifamily (5 or more) Dwelling Units;
VA217, VA218 Nonresidential Property.
Permanent Loans, Secured by:
VA221, VA222 1-4 Dwelling Units;
VA223, VA224 Multifamily (5 or more) Dwelling Units;
VA 225, VA226 Nonresidential Property (Except Land);
VA227, VA228 Owner-Occupied Nonresidential Property;
VA231, VA232 Other Nonresidential Property;
VA233, VA234 Land;
VA241, VA242 Nonmortgage Loans--Total;
V243, VA244 Commercial Loans--Total;
VA245, VA246 Secured;
VA247, VA248 Unsecured;
VA251, VA252 Credit Card Loans Outstanding--Business;
VA253, VA254 Consumer Loans--Total.
New items are proposed in Schedule PD to add detail to troubled debt restructuring amounts past due and still accruing, 30-89 days
(500-series lines), past due and still accruing, 90 days or more (600- series lines), and nonaccrual (700-series lines):
PD516, PD616, PD716 1-4 Dwelling Units;
PD517, PD617, PD717 Multifamily (5 or more) Dwelling Units;
PD518, PD618, PD718 Nonresidential Property.
Permanent Loans, Secured by:
PD519, PD619, PD719 1-4 Dwelling Units;
PD525, PD625, PD725 Multifamily (5 or more) Dwelling Units;
PD535, PD635, PD735 Nonresidential Property (Except Land);
PD536, PD636, PD736 Owner-Occupied Nonresidential Property;
PD537, PD637, PD737 Other Nonresidential Property;
PD538, PD638, PD738 Land;
PD539, PD639, PD739 Nonmortgage Loans--Total;
PD540, PD640, PD740 Commercial Loans--Total;
PD541, PD641, PD741 Secured;
PD542, PD642, PD742 Unsecured;
PD545, PD645, PD745 Credit Card Loans Outstanding--Business;
PD560, PD660, PD760 Consumer Loans--Total.
In the aggregate, troubled debt restructurings for all insured institutions have grown from $6.9 billion at year-end 2007, to $24.0 billion at year-end 2008, to $58.1 billion at year-end 2009, with a further increase to $64.0 billion as of March 31, 2010. The proposed additional detail on troubled debt restructurings in Schedules VA and
PD would enable OTS to better understand the level of restructuring activity at savings associations, the categories of loans involved in this activity, and, therefore, whether savings associations are working with their borrowers to modify and restructure loans. In particular, to encourage banks and savings associations to work constructively with their commercial borrowers, the federal banking agencies recently issued guidance on commercial real estate loan workouts and small business lending. While this guidance has explained the agencies' expectations for prudent workouts, the agencies do not have adequate and reliable data outside of the examination process to assess restructuring activity for commercial real estate loans and commercial and industrial loans. Further, it is important to separately identify commercial real estate loan restructurings from commercial and industrial loan restructurings given that the value of the real estate collateral is a consideration in an institution's decision to modify the terms of a commercial real estate loan in a troubled debt restructuring, but such collateral protection would normally be absent from commercial and industrial loans for which a loan modification is being explored because of borrowers' financial difficulties.
It is also anticipated that other loan categories will experience continued workout activity in the coming months given that every asset class has been impacted by the recent recession (as evidenced by the increase in past due and nonaccrual assets across all asset
classes). In addition, because credit availability has substantially decreased, borrowers experiencing financial difficulties are left with few alternatives for funding and their creditor institutions will need to evaluate whether to work with them by granting a concession when modifying the terms of their existing loans.
The new data would provide the OTS with the level of information necessary to assess savings associations' troubled debt restructurings to the same extent that other loan quality and performance indicators can be assessed. However, the OTS notes that, under generally accepted accounting principles, troubled debt restructurings do not include changes in lease agreements \1\ and we therefore propose to exclude leases from the new items proposed.
\1\ Accounting Standards Codification paragraph 470-60-15-11.
OTS is proposing to collect additional information on automobile loans. More specifically, the following new lines are proposed:
SC183 Securities Backed by Auto Loans;
SO173 Auto Loans--Interest Income;
CF401 Auto Loans Closed or Purchased During Quarter;
CF402 Auto Loans Sold During Quarter;
SI886 Auto Loans--Average Daily Balance During Quarter.
Automobile loans are a significant consumer business for many large savings associations. The proposed additional lines will enhance supervisory evaluation and oversight of automobile lending performance and risks.
Commercial Mortgage-Backed Securities Issued or Guaranteed by U.S.
Government Agencies and Sponsored Agencies
OTS is proposing to split the existing items on mortgage-backed securities (MBS) in Schedule SC to distinguish between residential and commercial MBS issued or guaranteed by U.S. Government agencies and sponsored agencies (collectively, U.S. Government agencies) and residential and commercial MBS issued by others. OTS proposes to revise the following existing lines to report data for residential MBS:
SC210 Insured or Guaranteed by an Agency or Sponsored Enterprise of the
SC215 Other Pass-Through.
Other Residential Mortgage-Backed Securities (Excluding Bonds):
SC217 Issued or Guaranteed by FNMA, FHLMC, or GNMA;
SC219 Collateralized by Mortgage-Backed Securities Issued or Guaranteed by FNMA, FHLMC, or GNMA;
OTS proposes the following new lines to report data for commercial
SC211 Insured or Guaranteed by an Agency or Sponsored Enterprise of the
SC213 Other Pass-Through.
Other Commercial Mortgage-Backed Securities (Excluding Bonds):
SC223 Issued or Guaranteed by FNMA, FHLMC, or GNMA;
SC224 Collateralized by Mortgage-Backed Securities Issued or Guaranteed by FNMA, FHLMC, or GNMA;
Nonbrokered Deposits Obtained Through the Use of Deposit Listing
Savings associations currently report information on their funding in the form of brokered deposits in Schedule DI. These data are an integral component of the regulatory analysis of individual institutions' liquidity and funding, including their reliance on non- core sources to fund their activities.
Deposit brokers have traditionally provided intermediary services for financial institutions and investors. However, the Internet, deposit listing services, and other automated services now enable investors who focus on yield to easily identify high-yielding deposit sources. Such customers are highly rate sensitive and can be a less stable source of funding than typical relationship deposit customers.
Because they often have no other relationship with the financial institution, these customers may rapidly transfer funds to other institutions if more attractive returns become available.
OTS expects each institution to establish and adhere to a sound liquidity and funds management policy. The institution's board of directors, or a committee of the board, should also ensure that senior management takes the necessary steps to monitor and control liquidity risk. This process includes establishing procedures, guidelines, internal controls, and limits for managing and monitoring liquidity and reviewing the institution's liquidity position, including its deposit structure, on a regular basis. A necessary prerequisite to sound liquidity and funds management decisions is a sound management information system, which provides certain basic information including data on non-relationship funding programs, such as brokered deposits, deposits obtained through the Internet or other types of advertising, and other similar rate sensitive deposits. Thus, an institution's management should be aware of the number and magnitude of such deposits.
To improve its ability to monitor potentially volatile funding sources, OTS is proposing two lines to Schedule DI in which savings associations would report the amount of deposits and average daily deposits obtained through the use of deposit listing services that are not brokered deposits:
DI117 Total Amount of Deposits Obtained Through Deposit Listing
Services That Are Not Brokered Deposits;
DI547 Average Daily Deposits Totals: Deposits Obtained Through Deposit
Listing Services That Are Not Brokered Deposits.
A deposit listing service is a company that compiles information about the interest rates offered on deposits, such as certificates of deposit, by insured depository institutions. A particular company could be a deposit listing service (compiling information about certificates of deposits) as well as a deposit broker (facilitating the placement of certificates of deposit). A deposit listing service is not a deposit broker if all of the following four criteria are met:
(1) The person or entity providing the listing service is compensated solely by means of subscription fees (i.e., the fees paid by subscribers as payment for their opportunity to see the rates gathered by the listing service) and/or listing fees (i.e., the fees paid by depository institutions as payment for their opportunity to list or ``post'' their rates). The listing service does not require a depository institution to pay for other services offered by the listing service or its affiliates as a condition precedent to being listed.
(2) The fees paid by depository institutions are flat fees: They are not calculated on the basis of the number or dollar amount of deposits accepted by the depository institution as a result of the listing or ``posting'' of the depository institution's rates.
(3) In exchange for these fees, the listing service performs no services except (A) the gathering and transmission of information concerning the availability of deposits; and/or (B) the transmission of messages between depositors and depository institutions (including purchase orders and trade confirmations). In publishing or
displaying information about depository institutions, the listing service must not attempt to steer funds toward particular institutions
(except that the listing service may rank institutions according to interest rates and also may exclude institutions that do not pay the listing fee). Similarly, in any communications with depositors or potential depositors, the listing service must not attempt to steer funds toward particular institutions.
(4) The listing service is not involved in placing deposits. Any funds to be invested in deposit accounts are remitted directly by the depositor to the insured depository institution and not, directly or indirectly, by or through the listing service.
Deposits of Individuals, Partnerships, and Corporations
Savings associations currently do not report separate breakdowns of their deposit accounts in the TFR by category of depositor. The recent crisis has demonstrated that business depositors' behavioral characteristics are significantly different than the behavioral characteristics of individuals. Thus, separate reporting of deposits of individuals versus deposits of partnerships and corporations would enable the federal banking agencies to better assess the liquidity risk profile of institutions given differences in the relative stability of deposits from these two sources.
OTS is proposing that the following two lines be added to Schedule
DI196 Deposits of Individuals;
DI197 Deposits of Partnerships and Corporations.
Under this proposal, accounts for which the depositor's taxpayer identification number, as maintained on the account in the savings association's records, is a Social Security Number (or an Individual
Taxpayer Identification Number \2\) should be treated as deposits of individuals. In general, all other accounts should be treated as deposits of partnerships and corporations. However, line SC710 currently includes all certified and official checks. To limit the reporting burden of this proposed change, official checks in the form of money orders and travelers checks would be reported as deposits of individuals. Certified checks and all other official checks would be reported as deposits of partnerships and corporations. OTS is requesting comment on this approach to reporting certified and official checks.
\2\ An Individual Taxpayer Identification Number is a tax processing number only available for certain nonresident and resident aliens, their spouses, and dependents who cannot get a
Social Security Number. It is a 9-digit number, beginning with the number ``9,'' formatted like a Social Security Number.
Variable Interest Entities
In June 2009, the Financial Accounting Standards Board (FASB) issued accounting standards that have changed the way entities account for securitizations and special purpose entities. ASU No. 2009-16
(formerly FAS 166) revised ASC Topic 860, Transfers and Servicing, by eliminating the concept of a ``qualifying special-purpose entity''
(QSPE) and changing the requirements for derecognizing financial assets. ASU No. 2009-17 (formerly FAS 167) revised ASC Topic 810,
Consolidations, by changing how a financial institution or other company determines when an entity that is insufficiently capitalized or is not controlled through voting or similar rights, i.e., a ``variable interest entity'' (VIE), should be consolidated. For most financial institutions, ASU Nos. 2009-16 and 2009-17 took effect January 1, 2010.
Under ASC Topic 810, as amended, determining whether a financial institution is required to consolidate a VIE depends on a qualitative analysis of whether that institution has a ``controlling financial interest'' in the VIE and is therefore the primary beneficiary of the
VIE. The analysis focuses on the institution's power over and interest in the VIE. With the removal of the QSPE concept from generally accepted accounting principles that was brought about in amended ASC
Topic 860, an institution that transferred financial assets to an SPE that met the definition of a QSPE before the effective date of these amended accounting standards was required to evaluate whether, pursuant to amended ASC Topic 810, it must begin to consolidate the assets, liabilities, and equity of the SPE as of that effective date. Thus, when implementing amended ASC Topics 860 and 810 at the beginning of 2010, financial institutions began to consolidate certain previously off-balance securitization vehicles, asset-backed commercial paper conduits, and other structures. Going forward, financial institutions with variable interests in new VIEs must evaluate whether they have a controlling financial interest in these entities and, if so, consolidate them. In addition, institutions must continually reassess whether they are the primary beneficiary of VIEs in which they have variable interests.
For those VIEs that savings associations must consolidate, guidance advises institutions to report the assets and liabilities of these VIEs on Schedule SC in the balance sheet category appropriate to the asset or liability. However, ASC paragraph 810-10-45-25 \3\ requires a reporting entity to present ``separately on the face of the statement of financial position: a. Assets of a consolidated variable interest entity (VIE) that can be used only to settle obligations of the consolidated VIE [and] b. Liabilities of a consolidated VIE for which creditors (or beneficial interest holders) do not have recourse to the general credit of the primary beneficiary.'' This requirement has been interpreted to mean that ``each line item of the consolidated balance sheet should differentiate which portion of those amounts meet the separate presentation conditions.'' \4\ In requiring separate presentation for these assets and liabilities, the FASB agreed with commenters on its proposed accounting standard on consolidation that
``separate presentation * * * would provide transparent and useful information about an enterprise's involvement and associated risks in a variable interest entity.'' \5\ The federal banking agencies concur that separate presentation would provide similar benefits to them and other Call Report and TFR users.
\3\ Formerly paragraph 22A of FIN 46(R), as amended by FAS 167.
\4\ Deloitte & Touche LLP, ``Back on-balance sheet: Observations from the adoption of FAS 167,'' May 2010, page 4 (http:// www.deloitte.com/view/en_US/us/Services/audit-enterprise-risk- services/Financial-Accounting-Reporting/ f3a70ca28d9f8210VgnVCM200000bb42f00aRCRD.htm).
\5\ See paragraphs A80 and A81 of FAS 167.
Consistent with the presentation requirements discussed above, the banking agencies are proposing to add a new Schedule RC-V, Variable
Interest Entities, to the Call Report, and OTS is proposing to add a new Schedule VIE, Variable Interest Entities, to the TFR. Financial institutions would use the proposed new schedules to report a breakdown of the assets of consolidated VIEs that can be used only to settle obligations of the consolidated VIEs and liabilities of consolidated
VIEs for which creditors do not have recourse to the general credit of the financial institution. The following proposed categories of assets and liabilities would include some of the same categories presented on the Call Report and TFR balance sheet schedules: Cash and balances due from depository institutions, Held-to-maturity securities; Available- for-sale securities; Securities purchased under agreements to resell,
Loans and leases held for sale; Loans
and leases, net of unearned income; Allowance for loan and lease losses; Trading assets (other than derivatives); Derivative trading assets; Other real estate owned; Other assets; Securities sold under agreements to repurchase; Derivative trading liabilities; Other borrowed money (other than commercial paper); Commercial paper; and
Other liabilities. These assets and liabilities would be presented separately for securitization trusts, asset-backed commercial paper conduits, and other VIEs.
In addition, the federal banking agencies propose to include separate items in the new schedules in which financial institutions would report the total assets and the total liabilities of consolidated
VIEs (for which the breakdown of assets and liabilities described above is not reported) to help the agencies understand the magnitude of any
VIE assets that are not dedicated solely to settling obligations of the
VIE and any VIE liabilities for which creditors may have recourse to the general credit of the bank. These consolidated VIEs' total assets and total liabilities, which would be reported after eliminating intercompany transactions, would also be reported separately for securitization trusts, asset-backed commercial paper conduits, and other VIEs.
Assets Covered by FDIC Loss-Sharing Agreements
In March 2010, the federal banking agencies added a four-way breakdown of assets covered by loss-sharing agreements with the FDIC to the Call Report and the TFR. In a January 22, 2010, comment letter to the banking agencies on the agencies' submission for OMB review of proposed Call Report revisions for implementation in 2010, the American
Bankers Association (ABA) stated that while the addition of the covered asset items to Schedule RC-M was a step in the right direction, ABA believes it would be beneficial to regulators, reporting banks, investors, and the public to have additional, more granular information about the various categories of assets subject to the FDIC loss-sharing agreements. While we recognize that this would result in additional reporting burden on banks, on balance our members feel strongly that the benefit of additional disclosure of loss-sharing data would outweigh the burden of providing these detailed data. Thus, we urge the Agencies and the
FFIEC to further revise the collection of data from banks on assets covered by FDIC loss-sharing agreements on the Call Report to include the several changes suggested below. * * * We believe these changes would provide a more precise and accurate picture of a bank's asset quality.
OTS is proposing to revise the TFR along the lines suggested by the
ABA by adding the following new lines:
Breakdown of line SI770, Loans and Leases:
SI771 Construction Loans--Total
SI717 1-4 Dwelling Units
SI718 Multifamily (5 or More) Dwelling Units
SI775 Nonresidential Property
SI777 Permanent Loans--Total
SI779 1-4 Dwelling Units--Total
SI780 Revolving Open-End Loans
SI781 All Other--First Liens
SI782 All Other--Junior Liens
SI783 Multifamily (5 or More) Dwelling Units
SI784 Nonresidential Property--Total
SI785 Owner-Occupied Nonfarm Nonresidential Property
SI786 Other Nonfarm Nonresidential Property
SI788 Commercial Loans--Total
SI791 Credit Card Loans Outstanding--Business
SI792 Lease Receivables
SI793 Consumer Loans--Total
SI794 Loans on Deposits
SI795 Home Improvement Loans (Not Secured by Real Estate)
SI796 Education Loans
SI797 Auto Loans
SI798 Mobile Home Loans
SI799 Credit Cards
SI800 Other, Including Lease Receivables
SI801 Repossessed Assets--Total
SI802 Real Estate--Total
SI805 1-4 Dwelling Units
SI806 Multifamily (5 or More) Dwelling Units
SI807 Nonresidential (Except Land)
SI809 Other Repossessed Assets
SI810 Guaranteed amount of total amount of covered real estate owned
SI811 Total Income Included on Schedule SO Received From or Accrued on
Assets Covered by the FDIC Under Loss-Sharing Agreements
Breakdown of Covered Past Due and Nonaccrual Loans and Leases (3 amounts for each line--30-89 days past due and still accruing, 90 days or more past due and still accruing, and nonaccrual):
PD515, PD615, PD715 Construction Loans--Total
PD SUBxxx, PD SUBxxx, PD SUBxxx Residential--Total
PD516, PD616, PD716 1-4 Dwelling Units
PD517, PD617, PD717 Multifamily (5 or More) Dwelling Units
PD518, PD618, PD718 Nonresidential Property
PD SUBxxx, PD SUBxxx, PD SUBxxx Permanent Loans--Total
PD SUBxxx, PD SUBxxx, PD SUBxxx Residential--Total
PD SUBxxx, PD SUBxxx, PD SUBxxx 1-4 Dwelling Units--Total
PD521, PD621, PD721 Revolving Open-End Loans
PD523, PD623, PD723 All Other--First Liens
PD524, PD624, PD724 All Other--Junior Liens
PD525, PD625, PD725 Multifamily (5 or More) Dwelling Units
PD535, PD635, PD735 Nonresidential Property--Total
PD536, PD636, PD736 Owner-Occupied Nonresidential Property
PD537, PD637, PD737 Other Nonresidential Property
PD538, PD638, PD738 Land
PD540, PD640, PD740 Commercial Loans--Total
PD541, PD641, PD741 Secured
PD542, PD642, PD742 Unsecured
PD540, PD643, PD743 Credit Card Loans Outstanding--Business
PD545, PD645, PD745 Lease Receivables
PD SUBxxx, PD SUBxxx, PD SUBxxx Consumer Loans--Total
PD561, PD661, PD761 Loans on Deposits
PD563, PD663, PD763 Home Improvement Loans (Not Secured by Real Estate)
PD565, PD665, PD765 Education Loans
PD567, PD667, PD767 Auto Loans
PD569, PD669, PD769 Mobile Home Loans
PD571, PD671, PD771 Credit Cards
PD580, PD680, PD780 Other, Including Lease Receivables
PD596, PD696, PD796 Guaranteed Amount of Total Amount of Covered Past
Due and Nonaccrual Loans and Leases
Life Insurance Assets
Financial institutions purchase and hold bank-owned life insurance
(BOLI) policies as assets, the premiums for which may be used to acquire general account or separate account life insurance policies.
Savings associations currently report the aggregate amount of their life insurance assets in Schedule SC without regard to whether their holdings are general account or separate account policies.
Many financial institutions have BOLI assets, and the distinction between those life insurance policies that represent general account products and
those that represent separate account products has meaning with respect to the degree of credit risk involved as well as performance measures for the life insurance assets in a volatile market environment. In a general account policy, the general assets of the insurance company issuing the policy support the policy's cash surrender value. In a separate account policy, the policyholder's cash surrender value is supported by assets segregated from the general assets of the insurance carrier. Under such an arrangement, the policyholder neither owns the underlying separate account created by the insurance carrier on its behalf nor controls investment decisions in the account. Nevertheless, the policyholder assumes all investment and price risk.
A number of financial institutions holding separate account life insurance policies have recorded significant losses in recent years due to the volatility in the markets and the vulnerability to market fluctuations of the instruments that are investment options in separate account life insurance policies. Information distinguishing between the cash surrender values of general account and separate account life insurance policies would allow the OTS to track savings associations' holdings of both types of life insurance policies with their differing risk characteristics and changes in their carrying amounts resulting from their performance over time. Accordingly, the OTS is proposing to add the following new items:
Key Person Life Insurance:
SC617 General Account Life Insurance Assets;
SC619 Separate Account Life Insurance Assets.
Other BOLI Not Considered Key Person Life Insurance:
SC627 General Account Life Insurance Assets;
SC629 Separate Account Life Insurance Assets.
I. Captive Insurance and Reinsurance Subsidiaries
Captive insurance companies are utilized by banking organizations to ``self insure'' or reinsure their own risks pursuant to incidental activities authority. A captive insurance company is a limited purpose insurer that may be licensed as a direct writer of insurance or as a reinsurer. Insurance premiums paid by an institution to its captive insurer, and claims paid back to the institution by the captive, are transacted on an intercompany basis, so there is no evidence of this type of self-insurance activity when an institution prepares consolidated financial statements, including its TFR. The cash flows for a captive reinsurer's transactions also are not transparent in an institution's consolidated financial statements.
A number of financial institutions own captive insurers or reinsurers, several of which were authorized to operate more than ten years ago. Some of the most common lines of business underwritten by financial institution captive insurers are credit life, accident, and health; disability insurance; and employee benefits coverage.
Additionally, financial institution captive reinsurance subsidiaries may underwrite private mortgage guaranty reinsurance and terrorism risk reinsurance.
As part of their supervisory processes, the federal banking agencies have been following the proliferation of financial institution captive insurers and reinsurers and the performance trends of these captives for the past several years. Collection of financial information regarding the total assets of captive insurance and reinsurance subsidiaries would assist the agencies in monitoring the insurance activities of banking organizations as well as any safety and soundness risks posed to the parent institution from the activities of these subsidiaries.
OTS is proposing to collect two new items in Schedule SI:
SI762 Total assets of captive insurance subsidiaries;
SI763 Total assets of captive reinsurance subsidiaries.
These new items are not expected to be applicable to the vast majority of savings associations. When reporting the total assets of these captive subsidiaries in the proposed new items, savings associations should measure the subsidiaries' total assets before eliminating intercompany transactions between the consolidated subsidiary and other offices or subsidiaries of the consolidated institution.
Quarterly Reporting for Collective Investment Funds
For financial institutions that provide fiduciary and related services, the volume of assets under management is an important metric for understanding risk at these institutions and in the banking system.
A savings association's assets under management may include such pooled investment vehicles as collective investment funds and common trust funds (hereafter, collectively, CIFs) that it offers to investors. When considering how and where to place funds in pooled investment vehicles, which also include registered investment funds (mutual funds), investors' decisions are highly influenced by risk and return factors.
While registered investment funds regularly disclose an array of fund- related data to the U.S. Securities and Exchange Commission and the investing public, the OTS's collection and public disclosure of summary data on CIFs is limited to annual data reported in lines FS610 through
FS675 of TFR Schedule FS, Fiduciary and Related Services, as of each
Like other investment vehicles, CIFs were affected by market disruptions during the recent financial crisis. To detect changes in investor behavior and bank investment management strategies at an early stage in this $2.5 trillion line of business, the banking agencies believe it would be beneficial to change the reporting frequency for the Schedule FS data on collective investment funds and common trust funds from annually to quarterly for those institutions that currently report their fiduciary assets and fiduciary income quarterly. Quarterly filing of these Schedule FS data is required of institutions with total fiduciary assets greater than $250 million (as of the preceding
December 31) or with gross fiduciary and related income greater than 10 percent of revenue for the preceding calendar year.
Service Charges on Deposit Accounts
Savings associations currently do not report separate detail on service charges on deposit accounts. There has been growing interest in the amount of deposit account service fees charged by financial institutions. Banks currently report this data as a separate component of noninterest income in Call Report Schedule RI. In reporting this item, banks include amounts charged depositors (in domestic offices):
(1) For the maintenance of their deposit accounts with the bank, so-called ``maintenance charges,''
(2) For their failure to maintain specified minimum deposit balances,
(3) Based on the number of checks drawn on and deposits made in their deposit accounts,
(4) For checks drawn on so-called ``no minimum balance'' deposit accounts,
(5) For withdrawals from nontransaction deposit accounts,
(6) For the closing of savings accounts before a specified minimum period of time has elapsed,
(7) For accounts which have remained inactive for extended periods of time or which have become dormant,
(8) For deposits to or withdrawals from deposit accounts through the use of automated teller machines or remote service units,
(9) For the processing of checks drawn against insufficient funds, so-called ``NSF check charges,'' that the bank assesses regardless of whether it decides to pay, return, or hold the check. Exclude subsequent charges levied against overdrawn accounts based on the length of time the account has been overdrawn, the magnitude of the overdrawn balance, or which are otherwise equivalent to interest
(report in the appropriate subitem of Schedule RI, item 1.a, ``Interest and fee income on loans (in domestic offices)''),
(10) For issuing stop payment orders,
(11) For certifying checks, and
(12) For the accumulation or disbursement of funds deposited to
Individual Retirement Accounts (IRAs) or Keogh Plan accounts when not handled by the bank's trust department. Report such commissions and fees received for accounts handled by the bank's trust department in
Schedule RI, item 5.a, ``Income from fiduciary activities.'' Exclude penalties paid by depositors for the early withdrawal of time deposits
(report as ``Other noninterest income'' in Schedule RI, item 5.l, or deduct from the interest expense of the related category of time deposits, as appropriate).
OTS is proposing to add the following line to Schedule SO as a detail item of other fees and charges within the noninterest income section:
SO422 Service Charges on Deposit Accounts
L. Qualifying Noncontrolling (Minority) Interests in Consolidated
Only qualifying noncontrolling (minority) interests in consolidated subsidiaries are allowable in Tier 1 capital. Those that are non- qualifying are not. The existing Schedule CCR computes Tier 1 Capital using Total Equity Capital (Line SC 84), which includes all noncontrolling (minority) interests from Line SC 800. This can be interpreted as permitting all noncontrolling (minority) interests (Line
SC 800), whether qualifying or not, to be included in the calculation of Tier 1 Capital. Therefore to clarify the treatment of noncontrolling
(minority) interests, OTS is proposing to use Total Savings Association
Equity Capital (Line SC 80), which is net of noncontrolling (minority) interests, as the starting point for computation of Tier 1 capital for
Schedule CCR. Non-controlling (minority) interests are then added to
Tier 1, per the new line CCR187 described below, only to the extent they are qualifying noncontrolling (minority) interests. This approach is consistent with the approach used on the Call Report. Thus, OTS is proposing to revise one line and add a new line on Schedule CCR to address the treatment of noncontrolling (minority) interests in Tier 1
Revise line CCR100 Total Equity Capital (SC84) to CCR100 Total
Savings Association Equity Capital (SC80)
Add new line CCR187 Qualifying Noncontrolling (Minority) Interests in Consolidated Subsidiaries.
Trust Preferred Securities
As financial institution investments, trust preferred securities are hybrid instruments possessing characteristics typically associated with debt obligations. Although each issue of these securities may involve minor differences in terms, under the basic structure of trust preferred securities a corporate issuer, such as a financial institution holding company, first organizes a business trust or other special purpose entity. This trust issues two classes of securities: common securities, all of which are purchased and held by the corporate issuer, and trust preferred securities, which are sold to investors.
The business trust's only assets are deeply subordinated debentures of the corporate issuer, which the trust purchases with the proceeds from the sale of its common and preferred securities. The corporate issuer makes periodic interest payments on the subordinated debentures to the business trust, which uses these payments to pay periodic dividends on the trust preferred securities to the investors. The subordinated debentures have a stated maturity and may also be redeemed under other circumstances. Most trust preferred securities are subject to mandatory redemption upon the repayment of the debentures.
Trust preferred securities meet the definition of a security in
FASB Statement No. 115, ``Accounting for Certain Investments in Debt and Equity Securities.'' Because of the mandatory redemption provision in the typical trust preferred security, investments in trust preferred securities would normally be considered debt securities for financial accounting purposes. Accordingly, regardless of the authority under which a financial institution is permitted to invest in trust preferred securities, savings associations should report these investments as debt securities for purposes of these reports (unless, based on the specific facts and circumstances of a particular issue of trust preferred securities, the securities would be considered equity rather than debt securities under Statement No. 115. To better gauge the level of investment in trust preferred securities by savings associations, the OTS is proposing to add the following two lines as detail to other investment securities reported in Schedule SC:
SC187 Trust Preferred Securities Issues By FDIC-Insured Depository
Institutions or Their Holding Companies;
SC188 Other Trust Preferred Securities.
General, Specific, and Total Valuation Allowances by Major Loan Type
OTS is proposing that savings associations report additional detail on loans for general and specific valuation allowances. The proposed additional detail on valuation allowances in Schedules VA would enable
OTS to better understand reserves activity within loan categories at savings associations.
More specifically, new items are proposed for Schedule VA under three columns for the amount of general valuation allowances at the end of the current quarter (1100 series of lines), the amount of specific valuation allowances at the end of the current quarter (1200 series of lines), and the total of valuation allowances at the end of the current quarter (1300 series of lines):
VA1115, VA1215, VA1315 Construction Loans--Total
VA SUBxxx, VA SUBxxx,VA SUBxxx Residential--Total
VA1120, VA1220, VA1320 1-4 Dwelling Units
VA1122, VA1222, VA1322 Multifamily (5 or More) Dwelling Units
VA1130, VA1230, VA1330 Nonresidential Property
VA SUBxxx, VA SUBxxx,VA SUBxxx Permanent Loans--Total
VA SUBxxx, VA SUBxxx,VA SUBxxx Residential--Total
VA SUBxxx, VA SUBxxx,VA SUBxxx 1-4 Dwelling Units--Total
VA1140, VA1240, VA1340 Revolving Open-End Loans
VA1145, VA1245, VA1345 All Other--First Liens
VA1147, VA1247, VA1347 All Other--Junior Liens
VA1150, VA1250, VA1350 Multifamily (5 or More) Dwelling Units
VA1160, VA1260, VA1360 Nonresidential Property--Total
VA1162, VA1262, VA1362 Owner-Occupied Nonresidential Property
VA1163, VA1263, VA1363 Other Nonresidential Property
VA1165, VA1265, VA1365 Land
VA1170, VA1270, VA1370 Commercial Loans--Total
VA1172, VA1272, VA1372 Secured
VA1173, VA1273, VA1373 Unsecured
VA1174, VA1274, VA1374 Credit Card Loans Outstanding--Business
VA1176, VA1276, VA1376 Lease Receivables
VA SUBxxx, VA SUBxxx,VA SUBxxx Consumer Loans--Total
VA1182, VA1282, VA1382 Loans on Deposits
VA1183, VA1283, VA1383 Home Improvement Loans (Not Secured by Real
VA1184, VA1284, VA1384 Education Loans
VA1185, VA1285, VA1385 Auto Loans
VA1186, VA1286, VA1386 Mobile Home Loans
VA1187, VA1287, VA1387 Credit Cards
VA1188, VA1288, VA1388 Other, Including Lease Receivables
Classified Assets by Major Loan Type
OTS is proposing that savings associations report additional detail on classified assets by major loan type. The proposed additional detail on classified assets in Schedules VA would enable OTS to better understand asset quality within loan categories at savings associations.
More specifically, new items are proposed for Schedule VA under four columns for the amount of special mention assets at the end of the current quarter (1400 series of lines), the amount of substandard assets at the end of the current quarter (1500 series of lines), the amount of doubtful assets at the end of the current quarter (1600 series of lines), and the amount of loss assets at the end of the current quarter (1700 series of lines):
VA1415, VA1515, VA1615, VA1715 Construction Loans--Total
VA SUBxxx, VA SUBxxx, VA SUBxxx, VA SUBxxx Residential--Total
VA1420, VA1520, VA1620, VA1720 1-4 Dwelling Units
VA1422, VA1522, VA1622, VA1722 Multifamily (5 or More) Dwelling Units
VA1430, VA1530, VA1630, VA1730 Nonresidential Property
VA SUBxxx, VA SUBxxx, VA SUBxxx, VA SUBxxx Permanent Loans--Total
VA SUBxxx, VA SUBxxx, VA SUBxxx, VA SUBxxx Residential--Total
VA SUBxxx, VA SUBxxx, VA SUBxxx, VA SUBxxx 1-4 Dwelling Units--Total
VA1440, VA1540, VA1640, VA1740 Revolving Open-End Loans
VA1445, VA1545, VA1645, VA1745 All Other--First Liens
VA1447, VA1547, VA1647, VA1747 All Other--Junior Liens
VA1450, VA1550, VA1650, VA1750 Multifamily (5 or More) Dwelling Units
VA1460, VA1560, VA1660, VA1760 Nonresidential Property--Total
VA1462, VA1562, VA1662, VA1762 Owner-Occupied Nonresidential Property
VA1463, VA1563, VA1663, VA1763 Other Nonresidential Property
VA1465, VA1565, VA1665, VA1765 Land
VA1470, VA1570, VA1670, VA1770 Commercial Loans--Total
VA1472, VA152, VA1672, VA1772 Secured
VA1473, VA1573, VA1673, VA1773 Unsecured
VA1475, VA1575, VA1675, VA1775 Credit Card Loans Outstanding--Business
VA1476, VA1576, VA1676, VA1776 Lease Receivables
VASUBxxx, VASUBxxx, VASUBxxx, VASUBxxx Consumer Loans--Total
VA1482, VA1582, VA1682, VA1782 Loans on Deposits
VA1483, VA1583, VA1683, VA1783 Home Improvement Loans (Not Secured by
VA1484, VA1584, VA1684, VA1784 Education Loans
VA1485, VA1585, VA1685, VA1785 Auto Loans
VA1486, VA1586, VA1686, VA1786 Mobile Home Loans
VA1487, VA1587, VA1687, VA1787 Credit Cards
VA1488, VA1588, VA1688, VA1788 Other, Including Lease Receivables
Request for Comments: OTS may not conduct or sponsor an information collection, and respondents are not required to respond to an information collection, unless the information collection displays a currently valid OMB control number.
In this notice, OTS is soliciting comments concerning the following information collection.
Statutory Requirement: 12 U.S.C. 1464(v) imposes reporting requirements for savings associations.
Type of Review: Revision of currently approved collections.
Frequency of Response: Quarterly; Annually.
Affected Public: Business or other for-profit.
Estimated Number of Respondents: 753 savings associations.
Estimated Burden Hours per Respondent: 60.0 hours average for quarterly schedules and 2.0 hours average for schedules required only annually plus recordkeeping of an average of one hour per quarter.
Estimated Total Annual Burden: 188,712 burden hours.
OTS is proposing to revise the TFR, which is currently an approved collection of information, in March 2011. The effect on reporting burden of the proposed revisions to the TFR requirements will vary from institution to institution depending on the institution's asset size and its involvement with the types of activities or transactions to which the proposed changes apply.
The proposed TFR changes that would take effect as of March 31, 2011 would change the reporting frequency for the number and market value of collective investment funds and common trust funds data reported in Memorandum Item 3 of Schedule FS, revise several existing lines, add new lines to the TFR, and add a new Schedule VIE, Variable
OTS estimates that the implementation of these reporting revisions will result in an increase in the current reporting burden imposed by the TFR on all savings associations.
As part of the approval process, we invite comments addressing one or more of the following points: a. Whether the proposed revisions to the TFR collections of information are necessary for the proper performance of the agency's functions, including whether the information has practical utility; b. The accuracy of the agency's estimate of the burden of the collection of information; 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, the Internet, 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.
OTS will summarize the comments received and include them in the request for OMB approval. All comments will become a matter of public record.
Clearance Officer: Ira L. Mills, (202) 906-6531, Office of Thrift
Supervision, 1700 G Street, NW., Washington, DC 20552.
OMB Reviewer: Desk Officer for OTS, FAX: (202) 395-6974, U.S.
Office of Management and Budget, 725--17th Street, NW., Room 10235,
Washington, DC 20503.
Dated: September 29, 2010.
Ira L. Mills,
Paperwork Clearance Officer, Office of Chief Counsel, Office of Thrift
FR Doc. 2010-24883 Filed 10-4-10; 8:45 am
BILLING CODE 6720-01-P