[Federal Register Volume 68, Number 62 (Tuesday, April 1, 2003)]
[Notices]
[Pages 15725-15727]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-7728]



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FEDERAL RESERVE SYSTEM


Agency Information Collection Activities: Announcement of Board 
Approval Under Delegated Authority and Submission to OMB

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). Board-approved collections of information are incorporated 
into the official OMB inventory of currently approved collections of 
information. Copies of the OMB 83-I's and supporting statements and 
approved collection of information instrument(s) are placed into OMB's 
public docket files. 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.

FOR FURTHER INFORMATION CONTACT: Wanda Dreslin, Supervisory Financial 
Analyst (202-452-3515) 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:
    Federal Reserve Board Clearance Officer - Cindy Ayouch -Division of 
Research and Statistics, Board of Governors of the Federal Reserve 
System, Washington, DC 20551 (202-452-3829).
    OMB Desk Officer-Joseph Lackey--Office of Information and 
Regulatory Affairs, Office of Management and Budget, New Executive 
Office Building, Room 10235, Washington, DC 20503.

SUPPLEMENTARY INFORMATION:

Final approval under OMB delegated authority the revision, without 
extension, of the following reports:

    Report title: Financial Statements for Bank Holding Companies
    Agency form numbers: FR Y-9C, FR Y-9LP, FR Y-9SP, FR Y-9CS, and FR 
Y-9ES
    OMB control number: 7100-0128.
    Frequency: Quarterly, semiannually, and annually
    Reporters: Bank holding companies (BHCs).
    Annual reporting hours: 346,439.
    Estimated average hours per response: FR Y-9C: 34.73 hours, FR Y-
9LP: 4.75 hours, FR Y-9SP: 4.09 hours, FR Y-9CS: 30 minutes, FR Y-9ES: 
30 minutes
    Number of respondents: FR Y-9C: 1,959, FR Y-9LP: 2,320, FR Y-9SP: 
3,541, FR Y-9CS: 600; FR Y-9ES: 100
    Small businesses are affected.
    General description of report: This information collection is 
mandatory (12 U.S.C. 1844(c)). 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.
    Abstract: The FR Y-9C consists of standardized consolidated 
financial statements similar to the Federal Financial Institutions 
Examination Council (FFIEC) Consolidated Reports of Condition and 
Income (Call Reports) (FFIEC 031 & 041; OMB No.7100-0036). The FR Y-9C 
is filed quarterly by top-tier BHCs that have total assets of $150 
million or more and by lower-tier BHCs that have 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 FR Y-9LP includes standardized financial statements filed 
quarterly on a parent company only basis from each BHC that files the 
FR Y-9C. In addition, for tiered BHCs, a separate FR Y-9LP must be 
filed for each lower tier BHC.
    The FR Y-9SP is a parent company only financial statement filed 
semiannually 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 
intangible assets, and information on intercompany transactions.
    The FR Y-9CS is a free form supplement that may be utilized to 
collect any additional information deemed to be critical and needed in 
an expedited manner. It is intended to supplement the FR Y-9C and FR Y-
9SP reports.
    The FR Y-9ES is filed annually by BHCs that are Employee Stock 
Ownership Plans (ESOPs).
    Current Actions: Many of the proposed reporting revisions that 
pertain to the FR Y-9 reports are being requested to parallel revisions 
to the Federal Financial Institutions Examination Council (FFIEC) 
Commercial bank Consolidated Reports of Condition and Income (Call 
Reports) (FFIEC 031 & 041; OMB No.7100-0036). However, there are other 
revisions not directly related to the Call Report.
    Also addressed in this notice is the requirement that BHCs 
electronically submit all FR Y-9 reports effective with the June 30, 
2003, report date for FR Y-9C and FR Y-9 LP filers and December 31, 
2003, report date for FR Y-9SP and FR Y-9ES filers. The Federal Reserve 
will no longer accept paper copy reports from BHCs as of these 
reporting dates.

March 2003 revisions

    On December 24, 2002, the Board issued for public comment proposed 
revisions to bank holding company reports (67 FR 78467). The comment 
period expired on February 24, 2003. The Federal Reserve received 
comment letters from one bank holding company (BHC) trade association 
and four large BHCs. The comments received are addressed in detail 
below.

Accelerated Filing Deadline

    The Federal Reserve originally proposed to require the filing of FR 
Y-9C, FR Y-9LP and FR Y-9SP reports within 35 days after the period 
end, consistent with the Securities and Exchange Commission's (SEC's) 
final rule to accelerate the filing of SEC quarterly reports to 35 
days. However, the Federal Reserve proposed to implement the 35-day 
deadline in June 2004 whereas the SEC's phased-in rule accelerates the 
filing deadline to 40 days in March 2004 and 35 days in March 2005. All 
five commenters expressed concerns about their ability to meet the 
accelerated deadline as well as the burden of imposing the accelerated 
deadline on all FR Y-9 reporters, not just those filers with market 
exposure.
    Commenters suggested several alternatives to the original proposal: 
(1) a phased-in approach consistent with the SEC's implementation of a 
40-day deadline for 2004 and 35-day deadline for 2005; (2) a 40-day 
deadline; (3) an accelerated 35-day deadline for top-tier BHCs only, 
with lower-tier holding companies' deadline remaining at the current 45 
days; (4) parent company only reports' (FR Y-9LP and FR Y-9SP) deadline 
remaining at the current 45 days; (5) a 35-day deadline for balance 
sheet and income statements with a 45-day deadline for all other 
supporting schedules; and (6) an extended 45-day deadline for year-end 
FR Y-9 reports. In addition, two commenters suggested

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extending other regulatory filings if the Federal Reserve implemented 
the accelerated deadline as proposed.
    In order to provide sufficient time for the BHCs to make changes to 
their software and internal programs, the Federal Reserve will follow 
the SEC's phased-in approach by delaying implementation until June 2004 
for the 40-day deadline and June 2005 for the 35-day deadline. Also, 
the new filing deadlines will only apply to top-tier FR Y-9C filers for 
March, June, and September report dates. The December filing deadline 
for top-tier FR Y-9C filers will remain at 45 days after the report 
date. In addition, the filing deadline for FR Y-9LP, FR Y-9SP and all 
lower-tier BHCs that file the FR Y-9C will remain at 45 days after the 
report date.
    The Federal Reserve also proposes that the 35-day deadline be 
defined as ``5 business days after the 30th day after the report date'' 
to allow time for integration of bank data in the event that the 30th 
day falls on a weekend. The Federal Reserve believes that the primary 
purpose of the accelerated deadline, market discipline, will be 
fulfilled by restricting the accelerated deadlines to top-tier BHCs 
since these entities are generally of more interest to users of 
financial information. The Federal Reserve will assess reporting under 
this definition of 35 days after implementation and may revise the 
deadline dates to conform precisely to the SEC deadline. Any 
modification would be addressed in a separate proposal.

Allocated Transfer Risk Reserves

    The Federal Reserve proposed modifying the reporting instructions 
to the FR Y-9C regarding allocated transfer risk reserves (ATRR) to 
parallel March 2003 Call Report changes. As proposed, these provisions 
would be included in the provision for loan and lease losses rather 
than in other noninterest expense, with the amount of any provision for 
allocated transfer risk included in the provision for loan and lease 
losses separately disclosed. Two commenters supported this change as 
being more consistent with generally accepted accounting principles 
(GAAP), but recommended that the Federal Reserve also make a comparable 
change to the way in which the ATRR is reported on the FR Y-9C balance 
sheet.
    The Federal Reserve agrees with these comments and will revise the 
FR Y-9C instructions to include any ATRR related to loans and leases in 
the allowance for loan and lease losses. With this change, instructions 
for reporting loan charge-offs and recoveries, the reconcilement of the 
loan loss allowance, and Tier 2 risk-based capital treatment will also 
be changed to reflect this revised method for treating ATRR.
    In addition, one commenter suggested adding a memorandum item to 
collect the ATRR balance related to loans and leases included in the 
allowance for loan and lease losses, consistent with the March 2003 
Call Report. The Federal Reserve decided to add this item to the FR Y-
9C Schedule HI-B, part II.

Instructional Clarification for Use of Trading Account Designation for 
Loans

    Because of questions concerning the categorization of certain loans 
as trading assets and to parallel the March 2003 Call Report changes, 
the Federal Reserve originally proposed to revise the Glossary 
definition of ``Trading Account'' and establish a rebuttable 
presumption that loans should not be reported as trading assets. Three 
commenters addressed this proposed instructional change and recommended 
that the Federal Reserve avoid creating a ``rebuttable presumption'' 
that does not exist in the accounting literature. They believe that it 
is appropriate to classify loans as trading assets under GAAP when they 
have been acquired as part of trading functions. Two commenters 
disagreed with including loans acquired from third parties and held for 
securitization in the held-for-sale category.
    In considering these comments, the Federal Reserve will update the 
General Instructions section of the FR Y-9C loan schedule for 
situations where loans reported as trading assets should have been 
reported as held-for-sale or held-for-investment (rather than in the 
``Trading Account'' Glossary entry). In so doing, the rebuttable 
presumption language will be removed. Furthermore, the Federal Reserve 
will retain the instructional language that explains that loans 
acquired (originated or purchased) and held for securitization purposes 
should be reported as loans held-for-sale.

Schedule HC-N - Past Due and Nonaccrual Loans, Leases, and Other Assets

    The Federal Reserve proposed adding two items, additions to 
nonaccrual assets and the portion of nonaccrual assets that have been 
sold during the quarter, to collect data on the inflows and outflows of 
nonaccrual loans to enhance the Federal Reserve System's ability to 
assess portfolio credit quality, credit cycle trends, and approaches to 
problem asset resolution. Commenters stated that this information 
should be obtained through the examination process, but if the data 
were required, defer collection until December 31, 2003, to allow time 
to develop software for capturing the requested information. They 
further stated that the data would be of limited value and lack 
comparability across institutions due to differences in portfolio 
composition.
    After reviewing the comments, the Federal Reserve will collect the 
two items on nonaccrual assets, as proposed. Data provided through the 
examination or inspection process are collected at staggered, 
infrequent intervals, are institution-specific with respect to formats, 
and are therefore unsuitable for comparative analysis. The information 
to be collected will be sufficient in tracking changes in the general 
or underlying credit quality trends of BHCs in aggregate and will 
provide specific information on an increasingly important aspect of 
risk management - asset sales.
    The Federal Reserve acknowledges that the data collection could 
pose significant burden to large global banking organizations. As a 
result, the Federal Reserve will postpone the initial collection of 
nonaccrual information until December 31, 2003, to allow these 
organizations time to create the necessary data systems.

Selected Information of Large Predecessor or Acquired Companies

    The Federal Reserve proposed collecting thirty items on the 
companies acquired by a BHC during any quarter in which such 
significant acquisitions were made. The items would only be collected 
for each firm with consolidated assets of $150 million or more. These 
profitability data would not otherwise be included in the consolidated 
financial statements of the combined entity under the purchase 
accounting method. Three comment letters addressed this proposed 
revision.
    Commenters stated that seller financial statements submitted by the 
BHC during the application process are sufficient to satisfy the 
request for data collection. The Federal Reserve believes the 
``applications'' financial statements often are stale and lack year-to-
date information immediately prior to the merger date. Three commenters 
commenters expressed concern regarding the confidentiality of data 
solicited on the FR-Y9C. Specifically, these commenters wanted to 
insure the confidentiality of data not previously disclosed to the 
public. One commenter suggested all data on individual transactions be 
treated as confidential; another referred generally to ``any 
proprietary information that may not

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have a GAAP disclosure requirement.'' The Board recognizes the concern 
expressed by these commenters but has concluded there is no reason to 
depart from its current practice of permitting the FR-Y9C filers to 
request confidential treatment in individual cases, which requests may 
be granted if properly supported.
    Furthermore, commenters suggested a materiality threshold based on 
a percentage of assets or Tier 1 capital. As a result, the Federal 
Reserve has reconsidered its position and recommends a significantly 
higher reporting criterion of $10 billion in aggregate assets of all 
acquired entities during the quarter or 5 percent of the respondent's 
consolidated assets as of the previous quarter-end, whichever is lower. 
Another commenter questioned whether separate schedules or a single, 
combined schedule for each transaction would be required. The Federal 
Reserve will modify the FR Y-9C instructions to clarify that only a 
single schedule will need to be completed with aggregated information 
for all entities acquired during the quarter.
    Commenters also stated unique or discreet information may no longer 
be available, particularly for nonbanking organizations acquired by the 
respondent, may be misleading, and may reflect institutional 
differences in areas such as accounting principles. The Federal Reserve 
believes excluding information that involves a significant acquirer may 
substantially distort aggregate data for broad segments of the 
industry. When a BHC acquires a nonbanking organization, the number of 
items the proposal requires is dramatically reduced. For example, for 
an insurance company without investment securities gains or losses, the 
pretax items to be collected would be limited to noninterest income, 
noninterest expense, and personnel expenses. While the Federal Reserve 
concurs that institutional differences may exist, they should not 
detract from the substance of financial statements prepared according 
to GAAP.
    The Federal Reserve believes that most firms have accounting 
systems in place, which are maintained up to the date before a business 
entity ceases to be a going concern. However, one commenter provided 
additional information on rare situations that could emerge when only a 
portion of a firm may be purchased and actual financial statements may 
not be readily available for the acquirer. As a result, the Federal 
Reserve will accept estimates in lieu of actual data in these difficult 
circumstances.
    One banking organization cited that merger-related adjustments to 
data might not be disclosed in the proposed items. In response, the 
Federal Reserve will modify the instructions to give BHCs the 
flexibility to provide merger-adjusted data.

Revised Filing Method

    On September 16, 2002, the Federal Reserve issued for public 
comment revision to the filing method for bank holding company reports 
(67 FR 58425). The comment period expired on November 15, 2002. The 
comments received are addressed in detail below.
    The Federal Reserve received comment letters from two bank holding 
company (BHC) trade associations, one large BHC, five small BHCs, and 
two accounting firms. The large BHC and one BHC association expressed 
support of the proposal to require electronic submission of the FR Y-9 
series of reports. However, they expressed some specific concerns 
regarding the statement that the Federal Reserve anticipates in the 
future requiring that electronic submission software include data 
editing capabilities. The Federal Reserve appreciates the comments 
received regarding potential data editing capabilities of computer 
software, and will take these comments into consideration when this 
issue is formally addressed in a separate proposal for public comment 
at a later date.
    Several small BHCs and one BHC association cited the cost to 
purchase software to submit the FR Y-9SP report electronically as 
prohibitive, and requested that small BHCs either be exempted from the 
electronic filing requirement, or that the Federal Reserve provide the 
means to file the report over the Internet. As referenced in the 
initial notice, the Federal Reserve provided the option to file the FR 
Y-9SP via the Internet in 2001 by means of data entry or file 
submission, referred to as the Internet Electronic Submission (IESUB) 
application. Bank holding companies interested in learning more about 
IESUB submission options should contact their district Federal Reserve 
Bank or go to www.reportingandreserves.org. for additional information.
    One accounting firm requested that report submission software allow 
for the attachment of a compilation report for financial statements 
that they prepare for a third party. Submission of such a compilation 
report to the Federal Reserve is not a reporting requirement for BHC 
reports. Accounting firms may choose to have BHC clients maintain a 
hard copy of their compilation reports in the files of the BHC. Another 
accounting firm requested that reporting software allow for submission 
of Excel spreadsheets for the FR Y-9SP report and possibly other FR-Y 
series reports. FR Y-9SP and FR Y-9ES filers currently have the ability 
to submit text files created by Excel spreadsheets through IESUB, and 
they should contact their district Federal Reserve Bank or go to 
www.reportingandreserves.org for procedures for submitting such 
spreadsheets and information on other submission options.
    One small BHC requested that the Federal Reserve provide an email 
notification to remind the institution that the report date is 
approaching. Reserve Banks will continue to provide notification in the 
same manner currently provided to respondents of reporting deadlines, 
changes to reporting requirements, and any pertinent supplemental 
instructions prior to each report date.
    Another small BHC indicated that it does not own a computer and 
wishes to continue to submit paper reports. As indicated above, the 
Federal Reserve provides respondents the option to file the FR Y-9SP 
via the Internet by means of data entry. Information may be submitted 
through public Internet access, or respondents may choose to make 
arrangements for data submission through a private software vendor. 
Also one small BHC asked if software could allow for electronic 
signatures; however, current Federal Reserve and vendor software do not 
possess this feature. The BHC is only required to keep a signed copy in 
its files to meet the signature requirement.
    In considering these comments, the Federal Reserve will implement 
the revised filing method as proposed. BHCs will be required to 
electronically submit all FR Y-9 reports effective with the June 30, 
2003, report date for FR Y-9C and FR Y-9 LP filers and December 31, 
2003, report date for FR Y-9SP and FR Y-9ES filers. The Federal Reserve 
will no longer accept paper copy reports from BHCs as of these 
reporting dates.


    Board of Governors of the Federal Reserve System, March 26, 
2003.
Robert deV. Frierson
Deputy Secretary of the Board.
[FR Doc. 03-7728 Filed 3-31-03; 8:45 am]
BILLING CODE 6210-01-S