Alert February 15, 2011

Agencies Propose Rules to Conform Reporting Requirements of OTS-Regulated Savings Associations and Loan Holding Companies with those of FDIC- and FRB-Regulated Institutions

Savings and Loan Associations to File Call Reports in Lieu of the TFR.  The OCC, FRB, FDIC and OTS (together, the “Agencies”) issued a notice of proposed rulemaking (the “Proposed Rule”) to require savings associations currently filing the Thrift Financial Report (“TFR”) with the OTC to instead file Consolidated Reports of Condition and Income (“Call Reports”) with the OCC and FDIC.  The conversion would take place beginning with the reporting period ending on March 31, 2012; savings associations are to continue to file the TFR through December 31, 2011.  The change is the result of the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) dissolving the OTS and transferring all functions relating to federal savings associations, and rulemaking authority for all savings associations to the OCC, and non rule-making functions related to state-chartered savings associations to the FDIC.  All functions of the OTS relating to Savings and Loan Holding Companies (“SLHCs”) are transferred to the FRB.

Increased Efficiency Anticipated.  The Proposed Rule states that the OTS first explored the conversion to the Call Report in a 2007 Advance Notice of Proposed Rulemaking.  While the majority of the comments received were in support of the conversion, the OTS decided in 2008 not to adopt the rule given its desire to allow savings associations to focus on their economic stability rather than facilitating the conversion.  Given the improvement in the economy, the Proposed Rule states that the Agencies believe that the longer-term benefits of the conversion now outweigh the shorter-term burden associated with the first year of conversion.  For the associations, the benefit is increased efficiency associated with acquiring personnel and infrastructure equipped to prepare the reports in an industry more familiar with the Call Report than the TFR.  For the agencies, the Proposed Rule anticipates that having a single set of financial information for all FDIC-insured banks and savings associations will lead to more efficient evaluation and monitoring.

Estimated Burden Associated with the Conversion.  For Federal savings associations filings with the OCC, The Proposed Rule estimates that the conversion will require 53.25 burden hours per quarter for an association to file, and 188 burden hours in the first year for an association to convert its systems and conduct training.  For state savings associations filing with the FDIC, the Proposed Rule estimates that the conversion will require 40.42 burden hours per quarter for an association to file, and 188 burden hours in the first year for an association to convert its systems and conduct training. 

Efforts to Reduce the Conversion Burden. The Proposed Rule sets forth five ways in which it would reduce the burden of conversion: (i) curtail all proposed changes to the TFR for 2011 that would increase the differences between the TFR and the Call Report; (ii) not require the inclusion of a savings association-only schedule in the Call Report; (iii) provide a “mapping” of TFR items to Call Report items, to be available on the OTS website on or before February 15, 2011; (iv) make the filing of TFR Schedule CMR during 2011 optional for OTS-regulated entities with sufficiently high ratings with the Uniform Financial Institutions Rating System; and (v) propose to cease collection of Schedule CMR beginning March 2012.  The Proposed Rule notes that associations who could and would opt to not file Schedule CMR during 2011 would be required to notify their applicable regional office prior to the Schedule CMR filing deadline.  The Proposed Rule notes that one factor in determining to eliminate Schedule CMR is the Agencies’ belief that a uniform policy regarding interest rate risk management will be efficient.

Significant Differences Between the TFR and the Call Report.  The Proposed Rule notes significant differences between the two reports, including: (i) in the TFR, data are reported for the quarter ending on the report date of several schedules, whereas in the comparable Call Report schedules, data are reported on a calendar year-to date basis; (ii) amendments to Call Reports can be filed for up to five years after the report date, as compared with only 135 days after the end of the quarter for which the amended report is being filed; (iii) in the Call Report Schedule RC-K, institutions must report average balance sheet data computed based on daily or weekly balances, as compared with the TFR Schedule SI, which also permits computation based on balances at month-end; and (iv) savings associations can report specific valuation allowances in TFR Schedule VA, but cannot do so on the Call Report.

SLHCs to Submit the Same Reporting Forms as Bank Holding Companies (“BHCs”).  In a “Notice of Intent to Require Reporting Forms for Savings and Loan Holding Companies” (the “Notice”), the FRB stated that beginning with the March 31, 2012 reporting period, SLHCs will be required to submit the same reports as BHCs.  The change is the result of the provisions of the Dodd-Frank Act dissolving the OTS and transferring all functions of the OTS relating to SLHCs to the FRB.  The relevant report forms are FR Y-6, FR Y-7, FR Y-9C, FR Y-9LP, FR Y-9SP, FR Y-9ES, FR Y-9CS, FR Y-10, FR Y-11/S, FR 2314/S, FR Y-8, and FR Y-12/2A.  The forms are filed either quarterly, semi-annually, annually, or are event-generated.  The FRB intends to produce more information related to these forms, including burden estimates, in a future notice to be published in the Federal Register on July 21, 2011, when the FRB will assume supervision of SLHCs.  The Notice states that SLHCs are to continue to submit required reports according to the current reporting schedule through December 31, 2011.

FDIC and OTC Propose Rule to Require Savings Association to File data through the Summary of Deposits Survey (SOD) with the FDIC.  In a Notice of Proposed Rulemaking, the FDIC and OTS announced their proposal to require savings association currently filing branching and deposit data through the Branch Office Survey System (“BOS”) with the OTS to file through the Summary of Deposits Survey (“SOD”) with the FDIC, starting on June 30, 2011.  The change is being made pursuant to Dodd-Frank, and the FDIC states that it will be more efficient and will lead to more uniform data-collection and comparisons among all FDIC-insured institutions.  Because the FDIC does not require single-office institutions to file the SOD, with the changes, certain institutions who currently report data through the BOS, namely single-office savings associations, will not have to report through the SOD.  A trust-only savings association with more than a single office will need to file through the SOD, whereas no trust-only institutions were required to file through the BOS.  The BOS and SOD collection processes are sufficiently similar that the FDIC does not anticipate an increase in the estimated burden hours per institution. 

Public Comment.  Comments on the Proposed Rules are due no later than April 11, 2011.