[Federal Register Volume 63, Number 71 (Tuesday, April 14, 1998)]
[Notices]
[Pages 18198-18201]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-9847]


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FEDERAL RESERVE SYSTEM


Agency Information Collection Activities: Submission to OMB Under 
Delegated Authority

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notice.

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SUMMARY: Background. Notice is hereby given of the final approval of 
proposed information collections by the Board of Governors of the 
Federal Reserve System (Board) under OMB delegated authority, as per 5 
CFR 1320.16 (OMB Regulations on Controlling Paperwork Burdens on the 
Public). The Federal Reserve may not conduct or sponsor, and the 
respondent is not required to respond to, an information collection 
that has been extended, revised, or implemented on or after October 1, 
1995, unless it displays a currently valid OMB control number. Board-
approved collections of information are incorporated into the official 
OMB inventory of currently approved collections of information. A copy 
of the OMB 83-I and supporting statement and the approved collection of 
information instrument is being placed into OMB's public docket files.

FOR FURTHER INFORMATION CONTACT: Robert T. Maahs, Supervisory Financial 
Analyst (202/872-4935) or Tina Robertson, Supervisory Financial Analyst 
(202/452-2949) for information concerning the specific bank holding 
company reporting requirements. The following may also be contacted 
regarding the information collection:
    1. Chief, Financial Reports Section--Mary M. McLaughlin--Division 
of Research and Statistics, Board of Governors of the Federal Reserve 
System, Washington, DC 20551 (202-452-3829)
    2. OMB Desk Officer--Alexander T. Hunt--Office of Information and 
Regulatory Affairs, Office of Management and Budget, New Executive 
Office Building, Room 3208, Washington, DC 20503 (202-395-7860)

SUPPLEMENTARY INFORMATION:

General Information

    On January 29, 1998, the Board issued for public comment proposed 
revisions to certain bank holding company reports (63 FR 4450). The 
comment period expired on March 30, 1998. The Board of Governors 
received two comment letters pertaining to the Y-9C; neither letter 
addressed proposed revisions to the reports.
    One bank holding company requested that the Federal Reserve raise 
the reporting threshold for filing

[[Page 18199]]

consolidated financial statements from $150 million to $200 million in 
consolidated assets. The Federal Reserve currently collects 
consolidated financial statements from approximately 1,450 bank holding 
companies with consolidated assets of $150 million or more. It also 
collects abbreviated, parent-only financial statements from more than 
4,100 bank holding companies. The Federal Reserve reviews the reporting 
thresholds of its regulatory reports on a regular basis and has found 
that the current reporting requirements for bank holding companies are 
appropriate and provide the Federal Reserve with information necessary 
to meet its supervisory responsibilities.
    Another bank holding company questioned why they were required to 
file detailed information pertaining to risk-based capital on the FR Y-
9C report when they were not required to file such detailed information 
about risk-based capital on the commercial bank Report of Condition and 
Income (Call Report)(FFIEC 031-034; OMB No. 7100-0036) 1. 
The Federal Reserve's risk-based capital guidelines apply on a 
consolidated basis to bank holding companies with consolidated assets 
of $150 million or more. Standardized data from all bank holding 
companies subject to the capital guidelines provide consistency in 
reporting and are necessary for analytical purposes. Furthermore, the 
risk-based capital information not separately reported by some banks on 
the Call Report must still be calculated by all banks in order to 
complete other mandatory regulatory capital items on the Call Report.
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    \1\ A bank with total assets under $1 billion is not required to 
complete certain regulatory capital items if the bank has total 
capital greater than or equal to 8 percent of adjusted total assets.
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    Under the Bank Holding Company Act of 1956, as amended, the Board 
is responsible for the supervision and regulation of all bank holding 
companies. The FR Y-9 and FR Y-11 series of reports historically have 
been, and continue to be, the primary sources of financial information 
on bank holding companies and their nonbanking activities between on-
site inspections. Financial information, as well as ratios developed 
from these reports, are used to detect emerging financial problems, to 
review performance for pre-inspection analysis, to evaluate bank 
holding company mergers and acquisitions, and to analyze a holding 
company's overall financial condition and performance as part of the 
Federal Reserve System's overall supervisory responsibilities.

Final Approval Under OMB Delegated Authority of the Revision of the 
Following Reports

1. Report title: Consolidated Financial Statements for Bank Holding 
Companies

    Agency form number: FR Y-9C.
    OMB control number: 7100-0128.
    Frequency: Quarterly.
    Reporters: Bank holding companies.
    Annual reporting hours: 196,578.
    Estimated average hours per response: Ranges from 5 to 1,250 hours.
    Number of respondents: 1,457.
    Small businesses are affected.
    General description of report: The information collection is 
mandatory 12 U.S.C. 1844(b) and (c) and 12 CFR 225.5(b). Confidential 
treatment is not routinely given to the data in these reports. However, 
confidential treatment for the reporting information, in whole or in 
part, can be requested in accordance with the instructions to the form. 
Data reported on the FR Y-9C, Schedule HC-H, Column A, requiring 
information on ``assets past due 30 through 89 days and still 
accruing'' and memoranda item 2 are confidential pursuant to Section 
(b)(8) of the Freedom of Information Act 5 U.S.C. 552(b)(8).
    The FR Y-9C consists of standardized financial statements similar 
to the Call Report. The FR Y-9C is filed quarterly by top-tier bank 
holding companies with total consolidated assets of $150 million or 
more and by lower-tier bank holding companies with total consolidated 
assets of $1 billion or more. In addition, multibank holding companies 
with total consolidated assets of less than $150 million with debt 
outstanding to the general public or engaged in certain nonbank 
activities must file the FR Y-9C.
    The Board approved the following changes to the FR Y-9C effective 
with the March 31, 1998, reporting date to parallel changes to the Call 
Report.
    Schedule HC-B, Part II--Trading Assets and Liabilities. Eliminate 
the separate reporting of item 6, ``Certificates of deposit in domestic 
offices,'' item 7, ``Commercial paper in domestic offices,'' and item 
8, ``Bankers acceptances in domestic offices.'' Instead, existing items 
6 and 8 will be included in existing item 9, ``Other trading assets in 
domestic offices.'' Commercial paper held for trading will begin to be 
reported as part of the bank holding company's trading account 
securities, in existing item 5, ``Other debt securities in domestic 
offices,'' consistent with the change in balance sheet classification 
of commercial paper not held for trading and the elimination of the 
loan schedule memorandum item for commercial paper, both of which took 
effect as of March 31, 1997.
    Schedule HC-I--Risk-Based Capital. (1) Add an item for the 
reporting of the ``Maximum contractual dollar amount of recourse 
exposure in low level recourse transactions'' to allow respondents to 
report low level recourse for capital purposes under the ``direct 
reduction method.'' Currently, bank holding companies can only report 
their low level recourse transactions using the ``gross-up'' method. In 
general, the gross-up method requires the bank holding company to 
multiply the maximum amount of their recourse exposure by the 
reciprocal of the full effective minimum risk-based capital requirement 
for the assets transferred and to report the resulting dollar amount as 
an off-balance sheet credit equivalent amount in the risk weight 
category appropriate to the assets transferred. However, the greater 
the volume of a bank holding company's low level recourse transactions 
and the higher the bank holding company's risk-based capital in 
relation to the minimum requirement, the more the bank holding 
company's calculated risk-based capital ratios become distorted as a 
result of applying the gross-up method. In these situations, another 
method of handling the bank holding company's low level recourse 
transactions, the so-called direct reduction method, results in a more 
accurate measure of the bank holding company's risk-based capital 
ratios.
    (2) Add two items to incorporate new capital requirements for the 
measurement of market risk. These items are: ``Market risk equivalent 
assets'' and ``Tier 3 Capital.'' In addition, include an item to report 
the amount of ``Tier 2 Capital.''
    (3) Revise the caption of Item 3 of Part III to read ``Net risk-
weighted assets (gross risk-weighted assets less excess allowance 
(amount that exceeds 1.25% of gross risk-weighted assets) and all other 
deductions).''
    Allowance for Credit Losses. The American Institute of Certified 
Public Accountants' (AICPA) Industry Audit Guide for Banks and Savings 
Institutions, issued as of April 1, 1996, requires the allocation on 
the balance sheet of the allowance for credit losses between on-balance 
sheet financial instruments and off-balance sheet credit exposures. 
Previously, these allowance components often were reported in the 
aggregate in the allowance for loan and lease losses (ALLL).
    Bank holding companies have been advised to allocate the allowance 
for credit losses on Schedule HC--Balance

[[Page 18200]]

Sheet consistent with their allocation methodology for other financial 
reporting purposes. For example, portions of the allowance for credit 
losses related to off-balance sheet exposures that are reported as 
liabilities are to be included in Schedule HC, item 23, ``Other 
liabilities.'' Bank holding companies have also been advised to 
aggregate these components of the allowance for credit losses when 
completing Schedule HI-B, Part II,--Allowance for Loan and Lease 
Losses. In addition, bank holding companies were advised to disclose 
the amounts of these components in the ``Notes to the Balance Sheet.''
    The Federal Reserve will retain this methodology of reporting the 
allowance for credit losses. In doing so, Schedule HI-B, Part II will 
be retitled ``Allowance for Credit Losses,'' and item 4.a, of Schedule 
HI--Income Statement will be recaptioned ``Provision for credit 
losses.'' However, Schedule HI-B, Part I--Charge Offs and Recoveries on 
Loans and Leases will not be changed, that is, bank holding companies 
will continue to disclose their loan and lease charge-offs and 
recoveries only.
    Schedule HI--Income Statement. Add a memorandum item to determine 
whether the bank holding company has made a Subchapter S selection for 
the purposes of the current tax year.
    Instructions. Instructional revisions and clarifications will be 
made as necessary, particularly with respect to implementing certain 
deferred provisions of Financial Accounting Standards Board Statement 
No. 125, ``Accounting for Transfers and Servicing of Financial Assets 
and Extinguishments of Liabilities,'' that become effective in 1998. 
Instructional revisions and clarifications will be done in accordance 
with changes made to the Call Report instructions and revisions, if 
any, to the Capital Guidelines.

2. Report title: Parent Company Only Financial Statements for Large 
Bank Holding Companies

    Agency form number: FR Y-9LP.
    OMB control number: 7100-0128.
    Frequency: Quarterly.
    Reporters: Bank holding companies.
    Annual reporting hours: The changes are estimated to increase the 
annual reporting burden from 32,454 hours to 33,032 hours.
    Estimated average hours per response: Range from 2.0 to 13.5 hours.
    Number of respondents: 1,807.
    Small businesses are affected.
    General description of report: The information collection is 
mandatory 12 U.S.C. 1844(b) and (c) and 12 CFR 225.5(b). Confidential 
treatment is not routinely given to the information in these reports. 
However, confidential treatment for the report information, in whole or 
in part, can be requested in accordance with the instructions to the 
form.
    The FR Y-9LP includes standardized financial statements filed 
quarterly on a parent company only basis from each bank holding company 
that files the FR Y-9C. In addition, for tiered bank holding companies, 
a separate FR Y-9LP must be filed for each lower tier bank holding 
company.
    The Board approved the following revisions to the FR Y-9LP 
effective with the March 31, 1998, reporting date.
    Schedule PC-B--Memoranda. Revise item 9, ``Total combined nonbank 
assets of nonbank subsidiaries,'' and expand the information reported 
about nonbank subsidiaries. In addition, instructional clarifications 
will be made to the existing item related to combined nonbank assets of 
nonbank subsidiaries. Existing item 9 will be moved to a new item (item 
15), and additional reporting items will be included.
    However, all of these items will only be reported by the top-tier 
bank holding company in a multi-tier bank holding company. In addition 
to reporting the total combined nonbank assets of nonbank subsidiaries, 
the top-tier bank holding company will report separately the amount of 
combined thrift assets and the combined foreign subsidiary assets that 
are included in the total combined nonbank assets of nonbank 
subsidiaries. The top-tier bank holding company will also report the 
total number of nonbank subsidiaries that are included in the combined 
total assets, combined thrift, and combined foreign nonbank asset 
balances.
    Schedule PI--Income Statement. Change item 2(c)(1), ``Provision for 
possible loan and lease losses'' to the ``Provision for credit losses'' 
to parallel the revision made to Schedule HI--Income Statement of the 
FR Y-9C.
    Instructions. Instructional revisions and clarifications will be 
made as necessary, particularly with respect to the reporting of 
goodwill, negative goodwill, and other identifiable intangible assets 
on Schedule PC and Schedule PC-A.

3. Report title: Parent Company Only Financial Statements for Small 
Bank Holding Companies

    Agency form number: FR Y-9SP.
    OMB control number: 7100-0128.
    Frequency: Semiannual.
    Reporters: Bank holding companies.
    Annual reporting hours: The changes are estimated to increase the 
annual reporting burden from 31,245 hours to 31,912 hours.
    Estimated average hours per response: Range from 1.5 to 6.0 hours.
    Number of respondents: 4,166.
    Small businesses are affected.
    General description of report: The information collection is 
mandatory 12 U.S.C. 1844 (b) and (c) and 12 CFR 225.5(b).
    Confidential treatment is not routinely given to the information in 
these reports. However, confidential treatment for the report 
information, in whole or in part, can be requested in accordance with 
the instructions to the form.
    The FR Y-9SP is a parent company only financial statement filed on 
a semiannual basis by one-bank holding companies with total 
consolidated assets of less than $150 million, and multibank holding 
companies with total consolidated assets of less than $150 million that 
meet certain other criteria. This report, an abbreviated version of the 
more extensive FR Y-9LP, is designed to obtain basic balance sheet and 
income statement information for the parent company, information on 
intercompany transactions, and data for capital adequacy evaluation.
    The Board approved the following revisions to the FR Y-9SP 
effective with the June 30, 1998, reporting date.
    Balance Sheet. Expand memorandum item 8 for the reporting of 
additional information about nonbank subsidiaries. Specifically, 
existing memorandum item 8 will be moved to memorandum item 16, and 
this item will be completed only by the top-tier bank holding company 
in a multi-tiered bank holding company. In addition, the top-tier bank 
holding company will disclose the combined thrift assets included in 
total combined nonbank assets, as well as the total number of nonbank 
entities (and separately the number of thrifts) that are included in 
the amount of total combined nonbank assets reported. Instructional 
clarifications will also be made to the existing item related to 
combined nonbank assets of nonbank subsidiaries.
    Income Statement. Add a memorandum item to ask whether the bank 
holding company has made a Subchapter S selection for the purposes of 
the current tax year.
    Instructions. Instructional revisions and clarifications will be 
made as necessary, particularly with respect to the reporting of 
goodwill, negative goodwill, and other identifiable intangible assets 
on the balance sheet.

[[Page 18201]]

Final Approval Under OMB Delegated Authority to the Extension for 
Three Years, With Revision, of the Following Reports:

1. Report title: Quarterly Financial Statements of Nonbank Subsidiaries 
of Bank Holding Companies

    Agency form number: FR Y-11Q.
    OMB control number: 7100-0244.
    Frequency: Quarterly.
    Reporters: Bank holding companies.
    Annual reporting hours: 7,589.
    Estimated average hours per response: Range from 3.0 to 8.0 hours.
    Number of respondents: 306.
    Small businesses are affected.
    General description of report: The information collection is 
mandatory 12 U.S.C. 1844(b) and (c) and 12 CFR 225.5(b). Confidential 
treatment is not routinely given to most of the data in these reports. 
However, confidential treatment for the report information, in whole or 
in part, can be requested in accordance with the instructions to the 
form. FR Y-11Q, memorandum item 7.a, ``loans and leases past due 30 
through 89 days'' and FR Y-11Q, memorandum item 7.d, ``loans and leases 
restructured and included in past due and nonaccrual loans'' are 
confidential pursuant to Section (b)(8) of the Freedom of Information 
Act 5 U.S.C. 552(b)(8).
    The FR Y-11Q is filed quarterly by the top tier bank holding 
companies for each nonbank subsidiary of a bank holding company with 
total consolidated assets of $150 million or more in which the nonbank 
subsidiary has total assets of 5 percent or more of the top-tier bank 
holding company's consolidated Tier 1 capital, or where the nonbank 
subsidiary's total operating revenue equals 5 percent or more of the 
top-tier bank holding company's consolidated total operating revenue. 
The report consists of a balance sheet, income statement, off-balance-
sheet items, information on changes in equity capital, and a memoranda 
section.
    The Board approved the following minor revision to the FR Y-11Q 
effective with the March 31, 1998, reporting date.
    Income Statement. Item 4, ``Provision for loan and lease losses'' 
will be changed to ``Provision for credit losses.'' This revision, 
which will parallel a proposed change to the FR Y-9C, will conform with 
the requirements of the American Institute of Certified Public 
Accountants' (AICPA) Industry Audit Guide for Banks and Savings 
Institutions that was issued as of April 1, 1996.

2. Report title: Annual Financial Statements of Nonbank Subsidiaries

    Agency form number: FR Y-11I.
    OMB control number: 7100-0244.
    Frequency: Annual.
    Reporters: Bank holding companies.
    Annual reporting hours: 6,720.
    Estimated average hours per response: Range from .4 to 8.0 hours.
    Number of respondents: 2,100.
    Small businesses are affected.
    General description of report: The information collection is 
mandatory 12 U.S.C. 1844(b) and (c) and 12 CFR 225.5(b). Confidential 
treatment is not routinely given to the data in these reports. However, 
confidential treatment for the report information, in whole or in part, 
can be requested in accordance with the instructions to the form. FR Y-
11I, Schedule A, item 7.a, ``loans and leases past due 30 through 89 
days'' and FR Y-11I, Schedule A, item 7.d, ``loans and leases 
restructured and included in past due and nonaccrual loans'' are 
confidential pursuant to Section (b)(8) of the Freedom of Information 
Act 5 U.S.C. 552(b)(8).
    The FR Y-11I is filed annually by the top tier bank holding 
companies for each of their nonbank subsidiaries that are not required 
to file a quarterly FR Y-11Q. The FR Y-11I report consists of similar 
balance sheet, income statement, off-balance-sheet, and change in 
equity capital information that is included on the FR Y-11Q. In 
addition, the FR Y-11I also includes a loan schedule to be submitted 
only by respondents engaged in credit extending activities.
    The Board approved the following minor revision to the FR Y-11I 
effective with the December 31, 1998, reporting date.
    Income Statement. Item 4, ``Provision for loan and lease losses'' 
will be changed to ``Provision for credit losses.'' This revision, 
which will parallel a proposed change to the FR Y-9C, will conform with 
the requirements of the American Institute of Certified Public 
Accountants' (AICPA) Industry Audit Guide for Banks and Savings 
Institutions that was issued as of April 1, 1996.

Administrative Procedure Act

    Because the data collections referred to herein are contained in a 
substantive rule, the Board has chosen to follow the more detailed 
notice and comment procedures of substantive rulemaking that are 
contained in the Administrative Procedure Act and the Paperwork 
Reduction Act. The Administrative Procedure Act (5 U.S.C. 553(d)) 
provides that the required publication or service of a substantive rule 
shall be made not less that 30 days before its effective date, except 
as otherwise provided by the agency for good cause found and published 
with the rule. The substantive changes to these reports are proposed to 
keep the reporting requirements consistent with those changes being 
incorporated in the Call Report to be filed by commercial banks as of 
March 31, 1998. In the past, bank holding companies have commented that 
the reporting burden is minimized by keeping the Call Report and the 
bank holding company reports consistent and by implementing the changes 
on the same date. Furthermore, the effective date of the revisions was 
published in the initial notice and no comments were received 
addressing the effective date. For these reasons, in accordance with 5 
U.S.C. 553(d)(3), the Board finds there is good cause not to follow the 
30-day notice requirements of 5 U.S.C. 553(d) and to make the 
implementation date for the revised FR Y-9C, FR Y-9LP, and FR Y-11Q 
reports effective for March 31, 1998.

Regulatory Flexibility Act Analysis

    The Board certifies that the above bank holding company reporting 
requirements are not expected to have a significant economic impact on 
small entities within the meaning of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.). The reporting requirements for the small companies 
require significantly fewer items of data to be submitted than the 
amount of information required of large bank holding companies.
    The information that is collected on the reports is essential for 
the detection of emerging financial problems, the assessment of a 
holding company's financial condition and capital adequacy, the 
performance of pre-inspection reviews, and the evaluation of expansion 
activities through mergers and acquisitions. The imposition of the 
reporting requirements is essential for the Board's supervision of bank 
holding companies under the Bank Holding Company Act.

    Board of Governors of the Federal Reserve System, April 9, 1998.
William W. Wiles,
Secretary of the Board.
[FR Doc. 98-9847 Filed 4-13-98; 8:45 am]
BILLING CODE 6210-01-P