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F E D E R A L R E S E R V E BA N K O F N EW YORK February 27, 1976 Reports of Income and Condition to be Fully Consolidated 7o fAe CA:e/ExecMftve O/jficers o/zl// Jlate Mew&er Iw ^/:e JccowJ Federal D/^fnc? w;7A o/ JJOO MI/I/ow o r M ore. Our Circular No. 7790, dated January 6, 1976, announced changes in the "universal" reports of income and condition, together with new large-bank supplements to those reports, effective March 31, 1976. Filing of the universal reports will be (a) quarterly for the Report of Condition for all banks, (b) quarterly for the Report of Income for banks with $300 million or more in total domestic and foreign assets, and (c) semiannually for the Report of Income for smaller banks. The explanation accompanying Circular No. 7790 did not require a change in the level of consolidation with respect to domestic and foreign offices from previous requirements. The revised statements were to be basically "domestic" office consolidations (with "foreign" offices reflected only in single net entries). Fully consolidated foreign and domestic reports were to be required only in the "publisher's copy," i.e., the face of the Report of Condition. TAe FeJera/ AanA rega/atoiy agencies Aave wow agreed to sAi/t in 7976 to /b//y conso/i'JateJ /oreignJomestic statements as tAe main reporting ancf Jisc/osare i7ocaments. As part of such a shift, the agencies will also require subsidiary reports and schedules to provide those breakdowns between domestic and foreign offices and/or operations that are needed to meet the agencies' regulatory and supervisory needs. Report o/Tncome A number of banks with "foreign" offices have asked the agencies to make the fully consolidated basis for the Report of Income effective for the first Report of Income due in 1976. Since this change would also serve the needs of the regulatory agencies, they have modified the previously announced reporting requirements to require the Report of Income on a fully consolidated, line-by-line, basis beginning with the first reports due for 1976 — that is, the Report of Income covering the first quarter of the year for banks with assets of $300 million or more. In this fully consolidated format, each individual item of income and expense would reflect not only the operations of "domestic" offices and subsidiaries (as defined in the Instructions) but also the operations of "foreign" offices, which are defined to include Edge and Agreement corporations, foreign branches, foreign subsidiaries, and branches in Puerto Rico and U.S. territories and possessions. This shift to a fully consolidated basis has required minor modifications in the format of the income statement previously sent to you, but the "bottom line" net income figure is identical in the two formats. Banks with no foreign offices will also use the new format for reporting domestic office income. A copy of the new format will be forwarded to you soon. T^yoar ban A Aas^rei'gn ojf^ces nn</ if sabmi'ssion of tAefb77y conso/icfotecf Report o f Tncomeybr tAe first quarter of 7976 woa/cf pose specia/ prob/em sfor your banA, p7ease bring tAis promptly to tAe attention of PatricA AiA/oy/e, Econowilyt, of oar Panning 5tn<7ies Department (Pe/. No. 272-797-5904/. (Over) R e p o r t o f C on efP /on The R eport of Condition to be subm itted by all banks for M arch 31, 1976 will be as described previously for dom estic offices only. The form ats for the fully consolidated foreign and dom estic condition report with appropriate schedules will not be introduced until later in the year. Until then, the "publisher's copy" of the R eport of Condition will continue to be a fully consolidated statem ent and will serve as a com panion report to the fully consolidated R eport of Income. * * * T here will also be introduced later in the year supplem ental reports to the income and the condition report providing those breakdow ns by foreign and dom estic offices a n d /o r foreign and domestic operations th a t are appropriate for the needs of the agencies. PAUL A. VOLCKER, PrasM/cMf.
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