Notice2023-21132
Proposed Agency Information Collection Activities; Comment Request
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 28, 2023
Issuing agencies
Treasury DepartmentComptroller of the CurrencyFederal Reserve SystemFederal Deposit Insurance Corporation
Abstract
In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA), 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 to revise and extend for three years the Consolidated Reports of Condition and Income (Call Reports) (FFIEC 031, FFIEC 041, and FFIEC 051), which are currently approved collections of information. The FFIEC has also approved the Board's publication for public comment, on behalf of the agencies, of a proposal to revise and extend for three years the Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 002), and the Report of Assets and Liabilities of a Non-U.S. Branch that is Managed or Controlled by a U.S. Branch or Agency of a Foreign (Non-U.S.) Bank (FFIEC 002S), which are also currently approved collections of information. The agencies are requesting comment on proposed revisions related to the Financial Accounting Standards Board's (FASB) Accounting Standards Update (ASU) 2022-02, "Financial Instruments--Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures" (ASU 2022-02); reporting of past due loans; and reporting of internet website addresses of depository institution trade names. The revisions are proposed to take effect with the March 31, 2024, report date.
Full Text
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<title>Federal Register, Volume 88 Issue 187 (Thursday, September 28, 2023)</title>
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[Federal Register Volume 88, Number 187 (Thursday, September 28, 2023)]
[Notices]
[Pages 66933-66939]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-21132]
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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
AGENCY: Office of the Comptroller of the Currency (OCC), Treasury;
Board of Governors of the Federal Reserve System (Board); and Federal
Deposit Insurance Corporation (FDIC).
ACTION: Joint notice and request for comment.
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SUMMARY: In accordance with the requirements of the Paperwork Reduction
Act of 1995 (PRA), 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 to revise and extend for three years the
Consolidated Reports of Condition and Income (Call Reports) (FFIEC 031,
FFIEC 041, and FFIEC 051), which are currently approved collections of
information. The FFIEC has also approved the Board's publication for
public comment, on behalf of the agencies, of a proposal to revise and
extend for three years the Report of Assets and Liabilities of U.S.
Branches and Agencies of Foreign Banks (FFIEC 002), and the Report of
Assets and Liabilities of a Non-U.S. Branch that is Managed or
Controlled by a U.S. Branch or Agency of a Foreign (Non-U.S.) Bank
(FFIEC 002S), which are also currently approved collections of
information. The agencies are requesting comment on proposed revisions
related to the Financial Accounting Standards Board's (FASB) Accounting
Standards Update (ASU) 2022-02, ``Financial Instruments--Credit Losses
(Topic 326): Troubled Debt Restructurings and Vintage Disclosures''
(ASU 2022-02); reporting of past due loans; and reporting of internet
website addresses of depository institution trade names. The revisions
are proposed to take effect with the March 31, 2024, report date.
DATES: Comments must be submitted on or before November 27, 2023.
ADDRESSES: Interested parties are invited to submit written comments to
any or all of the agencies. All comments will be shared among the
agencies.
OCC: You may submit comments, by any of the following methods:
<bullet> Email: <a href="/cdn-cgi/l/email-protection#d3a3a1b2babdb5bc93bcb0b0fda7a1b6b2a0fdb4bca5"><span class="__cf_email__" data-cfemail="522220333b3c343d123d31317c26203733217c353d24">[email protected]</span></a>.
<bullet> Mail: Chief Counsel's Office, Office of the Comptroller of
the Currency, Attention: 1557-0081, 400 7th Street SW, Suite 3E-218,
Washington, DC 20219.
<bullet> Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218,
Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
``1557-0081'' in your comment. In general, the OCC will publish
comments on <a href="http://www.reginfo.gov">www.reginfo.gov</a> without change, including any business or
personal information provided, such as name and address information,
email addresses, or phone numbers. 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.
You may review comments and other related materials that pertain to
this information collection beginning on the date of publication of the
second notice for this collection by the following method:
<bullet> Viewing Comments Electronically: Go to <a href="http://www.reginfo.gov">www.reginfo.gov</a>.
Hover over the ``Information Collection Review'' drop
[[Page 66934]]
down menu and select ``Information Collection Review.'' Underneath the
``Currently under Review'' section heading, from the drop-down menu
select ``Department of Treasury'' and then click ``submit.'' This
information collection can be located by searching by OMB control
number ``1557-0081.'' Upon finding the appropriate information
collection, click on the related ``ICR Reference Number.'' On the next
screen, select ``View Supporting Statement and Other Documents'' and
then click on the link to any comment listed at the bottom of the
screen.
<bullet> For assistance in navigating <a href="http://www.reginfo.gov">www.reginfo.gov</a>, please
contact the Regulatory Information Service Center at (202) 482-7340.
Board: You may submit comments, which should refer to ``Call Report
and FFIEC 002 Revisions,'' by any of the following methods:
<bullet> Agency website: <a href="http://www.federalreserve.gov">http://www.federalreserve.gov</a>. Follow the
instructions for submitting comments at: <a href="http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm">http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm</a>.
<bullet> Email: <a href="/cdn-cgi/l/email-protection#b3c1d6d4c09dd0dcdeded6ddc7c0f3d5d6d7d6c1d2dfc1d6c0d6c1c5d69dd4dcc5"><span class="__cf_email__" data-cfemail="bfcddad8cc91dcd0d2d2dad1cbccffd9dadbdacdded3cddaccdacdc9da91d8d0c9">[email protected]</span></a>. Include ``Call
Report and FFIEC 002 Revisions'' in the subject line of the message.
<bullet> Fax: (202) 395-6974.
<bullet> Mail: Ann E. Misback, Secretary, Board of Governors of the
Federal Reserve System, 20th Street and Constitution Avenue NW,
Washington, DC 20551.
All public comments are available on the Board's website at <a href="https://www.federalreserve.gov/apps/foia/proposedregs.aspx">https://www.federalreserve.gov/apps/foia/proposedregs.aspx</a> as submitted,
unless modified for technical reasons. Accordingly, your comments will
not be edited to remove any identifying or contact information.
FDIC: You may submit comments, which should refer to ``Call Report
and FFIEC 002 Revisions,'' by any of the following methods:
<bullet> Agency website: <a href="https://www.fdic.gov/resources/regulations/federal-register-publications/">https://www.fdic.gov/resources/regulations/federal-register-publications/</a>. Follow the instructions for
submitting comments on the FDIC's website.
<bullet> Email: <a href="/cdn-cgi/l/email-protection#dcbfb3b1b1b9b2a8af9c9a98959ff2bbb3aa"><span class="__cf_email__" data-cfemail="b3d0dcdeded6ddc7c0f3f5f7faf09dd4dcc5">[email protected]</span></a>. Include ``Call Report and FFIEC
002 Revisions'' in the subject line of the message.
<bullet> Mail: Manuel E. Cabeza, Counsel, Attn: Comments, Room MB-
3128, Federal Deposit Insurance Corporation, 550 17th Street NW,
Washington, DC 20429.
<bullet> Hand Delivery: Comments may be hand delivered to the guard
station at the rear of the 550 17th Street NW building (located on F
Street NW) on business days between 7 a.m. and 5 p.m.
<bullet> Public Inspection: All comments received, including any
personal information provided, will be posted without change to <a href="https://www.fdic.gov/resources/regulations/federal-register-publications/">https://www.fdic.gov/resources/regulations/federal-register-publications/</a>.
Commenters should submit only information that the commenter wishes to
make available publicly. The FDIC may review, redact, or refrain from
posting all or any portion of any comment that it may deem to be
inappropriate for publication, such as irrelevant or obscene material.
The FDIC may post only a single representative example of identical or
substantially identical comments, and in such cases will generally
identify the number of identical or substantially identical comments
represented by the posted example. All comments that have been
redacted, as well as those that have not been posted, that contain
comments on the merits of this document will be retained in the public
comment file and will be considered as required under all applicable
laws. All comments may be accessible under the Freedom of Information
Act.
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
<a href="/cdn-cgi/l/email-protection#6a0503180b35191f08070319190305042a050708440f051a440d051c"><span class="__cf_email__" data-cfemail="3f50564d5e604c4a5d52564c4c5650517f50525d115a504f11585049">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: For further information about the
proposed revisions to the information collections discussed in this
notice, please contact any of the agency staff whose names appear
below. In addition, copies of the report forms for the Call Reports can
be obtained at the FFIEC's website (<a href="https://www.ffiec.gov/ffiec_report_forms.htm">https://www.ffiec.gov/ffiec_report_forms.htm</a>).
OCC: Kevin Korzeniewski, Counsel, Chief Counsel's Office, (202)
649-5490. If you are deaf, hard of hearing, or have a speech
disability, please dial 7-1-1 to access telecommunications relay
services.
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:
I. Affected Reports
The proposed changes discussed below affect the Call Reports and
the FFIEC 002.
A. Call Report
The agencies propose to extend for three years, with revision,
their information collections associated with the FFIEC 031, FFIEC 041,
and FFIEC 051 Call Reports.
Report Title: Consolidated Reports of Condition and Income (Call
Report).
Form Number: FFIEC 031 (Consolidated Reports of Condition and
Income for a Bank with Domestic and Foreign Offices), FFIEC 041
(Consolidated Reports of Condition and Income for a Bank with Domestic
Offices Only), and FFIEC 051 (Consolidated Reports of Condition and
Income for a Bank with Domestic Offices Only and Total Assets Less Than
$5 Billion).
Frequency of Response: Quarterly.
Affected Public: Business or other for-profit.
Type of Review: Revision and extension of currently approved
collections.
OCC:
OMB Control No.: 1557-0081.
Estimated Number of Respondents: 1,015 national banks and federal
savings associations.
Estimated Average Burden per Response: 40.76 burden hours per
quarter to file.
Estimated Total Annual Burden: 165,486 burden hours to file.
Board:
OMB Control No.: 7100-0036.
Estimated Number of Respondents: 699 state member banks.
Estimated Average Burden per Response: 44.21 burden hours per
quarter to file.
Estimated Total Annual Burden: 123,611 burden hours to file.
FDIC:
OMB Control No.: 3064-0052.
Estimated Number of Respondents: 2,990 insured state nonmember
banks and state savings associations.
Estimated Average Burden per Response: 38.95 burden hours per
quarter to file.
Estimated Total Annual Burden: 465,842 burden hours to file.
The estimated average burden hours collectively reflect the
estimates for the FFIEC 031, the FFIEC 041, and the FFIEC 051 reports
for each agency. When the estimates are calculated by type of report
across the agencies, the estimated average burden hours per quarter are
84.53 (FFIEC 031), 54.60 (FFIEC 041), and 34.52 (FFIEC 051). The
[[Page 66935]]
changes to the Call Report forms and instructions proposed in this
notice would result in an estimated increase in burden hours per
quarter for the FFIEC 051 of 0.12 hours. This increase in burden
results from the proposed change in frequency for Schedule RC-M,
Memoranda, items 8.a. through 8.c, as discussed in Section II. C,
below. The proposed revisions and clarifications in this notice are not
anticipated to change the estimated burden for the FFIEC 031 and the
FFIEC 041. 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).
Type of Review: Extension and revision of currently approved
collections. In addition to the proposed revisions discussed below,
Call Reports are periodically updated to clarify instructional guidance
and correct grammatical and typographical errors on the forms and
instructions, which are published on the FFIEC website.\1\ These non-
substantive updates may also be commented upon.
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\1\ <a href="http://www.ffiec.gov/forms031.htm">www.ffiec.gov/forms031.htm</a>; <a href="http://www.ffiec.gov/forms041.htm">www.ffiec.gov/forms041.htm</a>;
<a href="http://www.ffiec.gov/forms051.htm">www.ffiec.gov/forms051.htm</a>.
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Legal Basis and Need for Collections
The Call Report information collections are mandatory: 12 U.S.C.
161 (national banks), 12 U.S.C. 324 (state member banks), 12 U.S.C.
1817 (insured state nonmember commercial and savings banks), and 12
U.S.C. 1464 (federal and state savings associations). At present,
except for selected data items and text, these information collections
are not given confidential treatment.
Banks and savings associations 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 shared
missions of ensuring the safety and soundness of financial institutions
and the financial system and protecting consumer financial rights, as
well as agency-specific missions affecting federal and state-chartered
institutions, such as conducting monetary policy, ensuring financial
stability, and administering federal 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. Among
other purposes, the agencies use Call Report data in evaluating
institutions' corporate applications, including interstate merger and
acquisition applications for which the agencies are required by law to
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 the risk-based assessments for insured depository
institutions.
B. FFIEC 002 and 002S
The Board proposes to extend for three years, with revision, the
FFIEC 002 and FFIEC 002S reports.
Report Titles: Report of Assets and Liabilities of U.S. Branches
and Agencies of Foreign Banks; Report of Assets and Liabilities of a
Non-U.S. Branch that is Managed or Controlled by a U.S. Branch or
Agency of a Foreign (Non-U.S.) Bank.
Form Numbers: FFIEC 002; FFIEC 002S.
OMB Control Number: 7100-0032.
Frequency of Response: Quarterly.
Affected Public: Business or other for-profit.
Respondents: All state-chartered or federally-licensed U.S.
branches and agencies of foreign banking organizations, and all non-
U.S. branches managed or controlled by a U.S. branch or agency of a
foreign banking organization.
Estimated Number of Respondents: FFIEC 002--183; FFIEC 002S--18.
Estimated Average Burden per Response: FFIEC 002--24.67 hours;
FFIEC 002S--6.0 hours.
Estimated Total Annual Burden: FFIEC 002--18,058 hours; FFIEC
002S--432 hours.
Type of Review: Extension and revision of currently approved
collections.
The proposed revisions to the FFIEC 002 instructions in this notice
would not have a material impact on the existing burden estimates.
Legal Basis and Need for Collection
On a quarterly basis, all U.S. branches and agencies of foreign
banks are required to file the FFIEC 002, which is a detailed report of
condition with a variety of supporting schedules. This information is
used to fulfill the supervisory and regulatory requirements of the
International Banking Act of 1978. The data also are used to augment
the bank credit, loan, and deposit information needed for monetary
policy and other public policy purposes. In addition, FFIEC 002 data
are used to calculate the risk-based assessments for FDIC-insured U.S.
branches of foreign banks. The FFIEC 002S is a supplement to the FFIEC
002 that collects information on assets and liabilities of any non-U.S.
branch that is managed or controlled by a U.S. branch or agency of the
foreign bank. A non-U.S. branch is managed or controlled by a U.S.
branch or agency if a majority of the responsibility for business
decisions, including but not limited to decisions with regard to
lending or asset management or funding or liability management, or the
responsibility for recordkeeping in respect of assets or liabilities
for that foreign branch resides at the U.S. branch or agency. A
separate FFIEC 002S must be completed for each managed or controlled
non-U.S. branch. The FFIEC 002S must be filed quarterly along with the
U.S. branch or agency's FFIEC 002.
These information collections are mandatory (12 U.S.C. 1817(a)(1)
and (3), 3102(b), and 3105(c)(2)). Except for select sensitive items,
the FFIEC 002 is not given confidential treatment; the FFIEC 002S is
given confidential treatment (5 U.S.C. 552(b)(4) and (8)). The data
from both reports are used for (1) monitoring deposit and credit
transactions of U.S. residents; (2) monitoring the impact of policy
changes; (3) analyzing structural issues concerning foreign bank
activity in U.S. markets; (4) understanding flows of banking funds and
indebtedness of developing countries in connection with data collected
by the International Monetary Fund and the Bank for International
Settlements that are used in economic analysis; and (5) assisting in
the supervision of U.S. offices of foreign banks. The Federal Reserve
System collects and processes these reports on behalf of all three
agencies.
II. Current Actions
A. ASU 2022-02, ``Financial Instruments--Credit Losses (Topic 326):
Troubled Debt Restructurings and Vintage Disclosures''
1. Background
On March 31, 2022, the FASB issued ASU 2022-02 which eliminates the
troubled debt restructuring (TDR) recognition and measurement guidance
for entities that have adopted ASU 2016-13, ``Financial Instruments--
Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments'' (ASU 2016-13). Instead of identifying and accounting for
TDRs separately from other loan modifications, all loans modified from
the beginning of the fiscal year in which
[[Page 66936]]
the new standard is adopted by an institution would be accounted for in
accordance with ASC Section 310-20-35, Receivables--Nonrefundable Fees
and Other Costs--Subsequent Measurement, as amended by ASU 2022-02. In
addition, the new standard enhances financial statement disclosure
requirements for certain loan modifications to borrowers experiencing
financial difficulty. These disclosures include quantitative
information about the modifications and their performance and
qualitative information regarding how initial modifications and
subsequent performance of such modifications impact the allowance for
credit losses.
Upon adoption of ASU 2022-02, an institution would have the option
to use a modified retrospective transition method to account for those
TDRs that existed as of the last day of the fiscal year preceding the
fiscal year in which the standard was implemented. For these TDRs, an
institution would recognize a cumulative-effect adjustment to the
beginning balance of retained earnings as of the first day of the
fiscal year resulting from the adoption of ASU 2022-02. Institutions
that opt to apply ASU 2022-02 prospectively would continue applying the
TDR guidance to the existing TDR loans for allowance for credit losses
purposes until the loans are paid in full or otherwise settled, sold,
charged-off, or subsequently modified.
Regardless of the transition method applied to existing TDRs,
institutions would apply ASU 2022-02 to all modifications made from the
beginning of the fiscal year of adoption and in subsequent reporting
periods. Institutions would only include loans that were modified to
borrowers experiencing financial difficulty from the beginning of the
fiscal year of adoption and in subsequent periods in their disclosures
for financial statement purposes. TDRs or modifications made prior to
the beginning of the fiscal year of adoption would not be included in
these enhanced disclosures in the period of adoption or in any
subsequent periods.
Additionally, per ASU 2022-02, an institution would not be required
to use a discounted cash flow (DCF) approach to measure the allowance
for credit loss on the modified loans. However, if an institution
chooses to use a DCF approach, it would be required to use the post-
modification effective interest rate to discount expected cash flows.
Modified loans for which repayment is expected to be provided
substantially through the operation or sale of the collateral when the
borrower is experiencing financial difficulty would still be considered
to be collateral dependent. For regulatory reporting purposes, the
allowance for credit losses for a collateral dependent loan would
continue to be measured using the fair value of collateral (less cost
to sell, when appropriate), regardless of whether foreclosure is
probable.
ASU 2022-02 is effective for all institutions that have adopted ASU
2016-13 for fiscal years beginning after December 15, 2022, including
interim reporting periods within those fiscal years. For all other
institutions, the effective date for ASU 2022-02 would be the same as
the effective date for ASU 2016-13.
2. Proposed Changes
In response to ASU 2022-02, the agencies are proposing revisions to
the Call Report forms and instructions. In general, these revisions
would align the data collected in the Call Report forms and
instructions with the definition of loan modifications to borrowers
experiencing financial difficulty that is used in U.S. generally
accepted accounting principles (GAAP). The banking agencies are
proposing to replace, as appropriate, references to ``troubled debt
restructurings'' with ``modifications to borrowers experiencing
financial difficulty'' in the Call Report forms and instructions, and
to update the Glossary to reflect the change in accounting for
modifications to borrowers experiencing financial difficulty.
These changes are intended to provide data needed to monitor banks'
safety and soundness and for FDIC deposit insurance assessment
purposes. The proposed revisions would assist the agencies in gaining a
better understanding of banks' credit exposures. Specifically, the loan
modifications to borrowers experiencing financial difficulty reported
in Call Report Schedule RC-C, Part I, Loans and Leases, Memorandum item
1, and Schedule RC-N, Past Due and Nonaccrual Loans, Leases, and Other
Assets, Memorandum item 1 would enable the agencies to better
understand the level of loan modification activity at institutions and
the categories of loans involved in this activity. The agencies would
benefit from continued reliable data outside of on-site examinations to
assess modification activity, particularly given current increased
risks related to commercial real estate loans and commercial and
industrial loans. In addition, the proposed changes are needed to
calculate deposit insurance assessments for large or highly complex
institutions as defined in FDIC regulations.\2\
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\2\ On October 18, 2022, the FDIC Board adopted a final rule to
incorporate ASU 2022-02, available at: <a href="https://www.fdic.gov/news/board-matters/2022/2022-10-18-notice-sum-b-fr.pdf">https://www.fdic.gov/news/board-matters/2022/2022-10-18-notice-sum-b-fr.pdf</a>, in the risk-based
deposit insurance assessment system applicable to all large and
highly complex insured depository institutions as defined in the
FDIC's assessment regulations. See 12 CFR 327.8(f), (g) and 12 CFR
327.16(b).
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Institutions that have fiscal years beginning in the fourth quarter
of 2023, and choose not to early adopt the standard, will not apply the
standard in the Call Report and/or the FFIEC 002 until the December 31,
2023, report date. The proposed revisions to specific data items
resulting from the elimination of the TDR recognition and measurement
guidance would be reflected in the forms as of the March 31, 2024,
report date, as outlined in the following descriptions of the proposed
changes to the affected Call Report and FFIEC 002 schedules.
Through December 31, 2023, the quarterly Supplemental Instructions
for the Call Report will include guidance for institutions that have
adopted ASU 2022-02 on reporting the data items related to loan
modifications to borrowers experiencing financial difficulty.
3. Specific Revisions to the Call Reports
Schedule RC-C and Schedule RC-N
Upon adoption of ASU 2022-02, institutions would continue to report
detail on loan modifications to borrowers experiencing financial
difficulty in Call Report Schedule RC-C, Part I, Loans and Leases,
Memorandum item 1, and Schedule RC-N, Past Due and Nonaccrual Loans,
Leases, and Other Assets, Memorandum item 1. However, the modifications
reported in these Memoranda items would need to meet the definition of
``loan modifications to borrowers experiencing financial difficulty''
as described in ASU 2022-02, rather than the GAAP definition related to
``troubled debt restructurings.'' Loan modifications to borrowers
experiencing financial difficulty include financing receivables that
had been modified in the form of principal forgiveness, an interest
rate reduction, an other-than-insignificant payment delay, or a term
extension (or a combination thereof). The Call Report forms and
instructions would be updated to include in the item descriptions and
instructions references to ``loan modifications to borrowers
experiencing financial difficulty'' and remove references to the TDR
framework.
[[Page 66937]]
The Call Report provides the agencies with data to be used in
monitoring the condition, performance, and risk profile of individual
institutions and the industry as a whole. This data serves a regulatory
or public policy purpose by assisting the agencies in fulfilling their
shared missions of ensuring the safety and soundness of supervised
financial institutions and the stability of the financial system
utilizing statistical data for identifying areas of focus for both on-
site and off-site supervision. The information needed for these
purposes at times may differ from information required by GAAP as
accounting standards are not specifically tailored to the needs of the
financial institution regulators.
ASU 2022-02 requires financial statement disclosures on loan
modifications to borrowers experiencing financial difficulty made
``within the previous 12 months preceding the payment default when the
debtor was experiencing financial difficulty at the time of the
modification.'' \3\ However, as evidenced by the modifications made
during the COVID-19 pandemic in 2020, 2021, and 2022, it may take
longer than 12 months following the modification to assess whether
loans are performing in accordance with their modified terms and if the
borrower is no longer experiencing financial difficulty. Reporting
modifications on the Call Report for a period greater than 12 months
would increase the reporting period beyond that required by the
financial statement disclosure requirements in ASU 2022-02. However,
the ability to monitor modifications made by institutions to borrowers
experiencing financial difficulty provides useful supervisory
information on the borrower's continued performance or lack thereof on
the modified loan. Due to these factors, the agencies are proposing to
require reporting of these modifications for a minimum period of 12
months and until an institution performs a current, well documented
credit evaluation to support that the borrower is no longer
experiencing financial difficulty, unless the loan is paid off,
charged-off, sold, or otherwise settled. Performing a current, well
documented credit evaluation to support that the borrower is no longer
experiencing financial difficulty is consistent with the Interagency
Guidelines Establishing Standards for Safety and Soundness issued by
the Board, FDIC, and OCC,\4\ which articulate safety and soundness
standards for supervised financial institutions to establish and
maintain prudent credit underwriting practices and maintain systems to
identify distressed assets and manage deterioration in those assets.
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\3\ See ASC 310-10-50-44.
\4\ 12 CFR part 30, appendix A (OCC); 12 CFR part 208 Appendix
D-1 (Board); and 12 CFR part 364 appendix A (FDIC).
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The agencies invite comment on this proposal and are particularly
interested in understanding any operational challenges and the nature
of any loan systems changes necessary to accommodate the Call Report
collection of data on loan modifications to borrowers experiencing
financial difficulty for a minimum period of 12 months and until an
institution performs a current, well documented credit evaluation to
support that the borrower is no longer experiencing financial
difficulty, unless the loan is paid off, charged-off, sold, or
otherwise settled.
Question 1: What additional factors, if any, should the agencies
consider when determining the length of time that a loan modification
to a borrower experiencing financial difficulty must be reported in
Schedule RC-C and RC-N memoranda items?
Question 2: What are the advantages or disadvantages of reporting
loan modifications for a period longer than 12 months as required for
financial statement disclosures for applicable institutions under ASU
2022-02?
Schedule RC-M
Upon adoption of ASU 2022-02, institutions would continue to report
detail on other real estate owned in Schedule RC-M, Memoranda, item 3.
However, instructional references to ASC Subtopic 310-40, Receivables-
Troubled Debt Restructurings by Creditors (ASC Subtopic 310-40) would
be updated to ASC Subtopic 310-20, Receivables-Nonrefundable Fees and
Other Costs (ASC Subtopic 310-20). The Call Report instructions would
be updated to include the updated codification references.
Schedule RC-O
Upon adoption of ASU 2022-02, institutions that meet the FDIC's
definition of large institutions or highly complex institutions for
deposit insurance assessment purposes would continue to report loans
that have been modified to borrowers experiencing financial difficulty
in Call Report Schedule RC-O, Other Data for Deposit Insurance
Assessments, renamed Memorandum item 16, ``Portion of loan
modifications to borrowers experiencing financial difficulty that are
in compliance with their modified terms and are guaranteed or insured
by the U.S. government (including the FDIC) (included in Schedule RC-C,
Part I, Memorandum item 1).'' However, the modifications reported in
this Memorandum item would be those that are guaranteed or insured by
the U.S. government (including the FDIC) and meet the definition of
``loan modifications to borrowers experiencing financial difficulty,''
rather than the definition related to ``loans restructured in troubled
debt restructurings.'' Both the FFIEC 031 and FFIEC 041 Call Report
forms and instructions would be updated to include in the item
descriptions and instructions references to ``loan modification to
borrowers experiencing financial difficulty'' as described in ASU 2022-
02 and remove references to the TDR framework.
Glossary
Effective March 31, 2024, to address the elimination of the TDR
recognition and measurement guidance in ASU 2022-02, the agencies
propose to revise or eliminate, as appropriate, the following Glossary
entries to provide additional information for those institutions that
have adopted ASU 2022-02 and to remove redundant entries: (1)
``Allowance for Credit Losses,'' (2) ``Foreclosed Assets,'' (3) ``Loan
Fees,'' (4) ``Nonaccrual Status,'' (5) ``Renegotiated Troubled Debt,''
(6) ``Troubled Debt Restructurings,'' (7) ``Loan Impairment,'' and (8)
``Purchased Credit-Impaired Loans and Debt Securities.'' Additionally,
a new entry for ``Loan Modifications to Borrowers Experiencing
Financial Difficulty'' would be included in the Glossary.
4. Revisions to the FFIEC 002
The Board's proposed revisions to the FFIEC 002 are intended to
align with similar changes proposed to the Call Report and discussed in
the prior section.
Schedule N
Upon adoption of ASU 2022-02, institutions would continue to report
detail on loan modifications to borrowers experiencing financial
difficulty in FFIEC 002 Schedule N, Past Due, Nonaccrual, and
Restructured Loans, Columns C and D. The modifications reported in
these columns would meet the definition of ``modifications to borrowers
experiencing financial difficulty'' as described in ASU 2022-02, rather
than the definition related to ``troubled debt restructurings.'' The
FFIEC 002 instructions would be updated to include references to
``modifications to borrowers experiencing financial
[[Page 66938]]
difficulty'' and remove references to the TDR framework.
The agencies are proposing to align the time period for reporting
applicable items on Schedule N with the Call Report Memorandum items
described above.
B. Past Due Definition
The definition used to report loans as ``past due'' is provided in
the General Instructions to Schedule RC-N, Past Due and Nonaccrual
Loans, Leases, and Other Assets. The agencies have become aware of
questions regarding the classification of loans as past due,
particularly when a past-due loan is in the process of being extended
or refinanced.\5\ To address these questions and improve the
consistency of past due reporting across institutions, the agencies are
proposing three changes to the Schedule RC-N general instructions that
define ``past due''. First, the proposed revisions clarify that
reporting institutions must report as past due any loans that the
reporting institution is in the process of restructuring if the
restructuring process has not concluded (i.e., the restructuring has
not been executed or become effective). Second, the proposed revisions
would clarify that a loan or other asset should be reported as past due
when either an interest payment or principal payment is due and unpaid
for 30 days or longer. Third, the proposed revisions would restructure
the definition to clarify the general rules for reporting past due
loans, the exceptions to those general rules, and nonexclusive examples
of reporting past due loans or other assets consistent with those
instructions.
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\5\ See, e.g., United States v. Harra, 985 F.3d 196 (3d Cir.
2021).
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Question 3: What, if any, other clarifications to the definition of
``past due'' should the agencies consider that would improve usability
by institutions and comparability across the institutions?
Question 4: While the agencies do not intend that these proposed
changes would materially alter the way institutions currently assess
and report past due loans, do institutions view any burden associated
with implementing these proposed changes?
C. Depository Institution Trade Names and Deposit Accepting URLs
Schedule RC-M, Memoranda, items 8.a. through 8.c. request
information on institutions' websites and trade names, particularly
those used to solicit deposits. The agencies added these items to
enable the FDIC to effectively serve as an information resource for
depositors and the public seeking to identify the insured status of a
physical branch office or internet website that uses a trade name
rather than the legal name of the insured institution. However, the
FDIC has observed some institutions reporting internet websites or
trade names of non-bank entities, including third parties that accept
or solicit deposits from the public on behalf of the FDIC-insured
depository institution. As a result, the FDIC cannot effectively use
this information to assist bank customers and the public in determining
the insured status of an institution which is using a website or trade
name to solicit deposits.
In order to improve the effectiveness and usability of reporting
these items, the agencies are proposing to clarify the instructions for
items 8.a through 8.c. For item 8.a, ``Uniform Resource Locator (URL)
of the reporting institution's primary internet website (home page), if
any'' the agencies would clarify that institutions would not report
URLs of affiliates that are not insured depository institutions. For
item 8.b, ``URLs of all other public-facing internet websites that the
reporting institution uses to accept or solicit deposits from the
public, if any'' the agencies would revise the instructions to clarify
that an FDIC-insured depository institution would only reports URLs of
public-facing internet websites operated by the reporting FDIC-insured
depository institution. The agencies would also clarify the
instructions to indicate that an FDIC-insured depository institution
would not report internet websites of any non-bank entity, including
any third parties that accept or solicit deposits from the public on
behalf of the reporting FDIC-insured depository institution. These
third parties, which would not be reported in this item, would include
any person or entity other than the insured institution that is acting
as fiduciary in the placement of deposit funds into an FDIC-insured
depository institution as described under 12 CFR 330.5 and 330.7 that
is commonly referred to as ``pass-through'' deposit insurance coverage.
For item 8.c, ``Trade names other than the reporting institution's
legal title used to identify one or more of the institution's physical
offices at which deposits are accepted or solicited from the public, if
any'' the agencies would clarify the instructions to exclude reporting
of any non-bank affiliates or subsidiaries regardless of whether these
entities solicit deposits.
In addition, the agencies are proposing to increase the frequency
of reporting of these items on the FFIEC 051 from semi-annually to
quarterly. Currently, items 8.a through 8.c are completed on a
quarterly basis by institutions filing the FFIEC 031 and FFIEC 041 Call
Report form and semi-annually by those institutions filing the FFIEC
051 Call Report form. Quarterly reporting by the FFIEC 051 filers would
provide more current information to assist the FDIC with identifying
the insured status of institutions using the websites or trade names to
solicit deposits.
Question 5: The current instructions for item 8 request information
regarding websites ``operated by'' an FDIC-insured depository
institution. Does the phrase ``operated by'' capture the appropriate
population of URLs used by FDIC-insured depository institutions or
would an alternate phrase such as ``owned by'' be more appropriate?
Question 6: Would these proposed instruction revisions clearly
distinguish reporting deposit accepting activities of the institution
under its own websites and trade names while excluding URLs used by
third parties that facilitate pass-through insurance?
Question 7: What additional burden, if any, would result from FFIEC
051 filers reporting items 8.a through 8.c on a quarterly basis?
III. Timing
The proposed revisions to the Call Reports and the FFIEC 002 would
take effect beginning with the March 31, 2024, report date. The
agencies invite comment on any difficulties that institutions would
expect to encounter in implementing the systems changes necessary to
accommodate the proposed revisions to the Call Reports and FFIEC 002
consistent with this effective date.
IV. Request for Comment
Public comment is requested on all aspects of this joint notice
including the questions that were provided in the earlier sections. In
addition to the questions included above, comment is specifically
invited on:
(a) 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;
(b) The accuracy of the agencies' estimates of the burden of the
information collections as they are proposed to be revised, including
the validity of the methodology and assumptions used;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(d) Ways to minimize the burden of information collections on
respondents,
[[Page 66939]]
including through the use of automated collection techniques or other
forms of information technology; and
(e) Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to provide information.
Comments submitted in response to this joint notice will be shared
among the agencies.
Dated at Washington, DC, on August 29, 2023.
Theodore J. Dowd,
Deputy Chief Counsel, Office of the Comptroller of the Currency.
Michele Taylor Fennell,
Deputy Associate Secretary of the Board. Board of Governors of the
Federal Reserve System.
James P. Sheesley,
Assistant Executive Secretary. Federal Deposit Insurance Corporation.
[FR Doc. 2023-21132 Filed 9-27-23; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P
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