[Federal Register Volume 78, Number 12 (Thursday, January 17, 2013)]
[Notices]
[Pages 3895-3897]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-00928]


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FEDERAL RESERVE SYSTEM


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

SUMMARY: Background. Notice is hereby given of the final approval of a 
proposed information collection 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 Paperwork Reduction Act Submission, 
supporting statements and approved collection of information 
instruments 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: Federal Reserve Board Clearance 
Officer--Cynthia Ayouch--Division of Research and Statistics, Board of 
Governors of the Federal Reserve System, Washington, DC 20551 (202-452-
3829).
    Telecommunications Device for the Deaf (TDD) users may contact 
(202-263-4869), Board of Governors of the Federal Reserve System, 
Washington, DC 20551.
    OMB Desk Officer--Shagufta Ahmed--Office of Information and 
Regulatory Affairs, Office of Management and Budget, New Executive 
Office Building, Room 10235, 725 17th Street, NW., Washington, DC 
20503.
    Final approval under OMB delegated authority of the revision, 
without extension, of the following reports:
    Report title: Consolidated Financial Statements for Bank Holding 
Companies.
    Agency form number: FR Y-9C.
    OMB control number: 7100-0128.
    Frequency: Quarterly.
    Effective Date: March 31, 2013
    Reporters: Bank holding companies (BHCs).
    Estimated annual reporting hours: 210,808 hours.
    Estimated average hours per response: 45.59 hours.
    Number of respondents: 1,156.
    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 this report. However, confidential treatment for 
the reporting information, in whole or in part, can be requested in 
accordance with the instructions to the form, pursuant to sections 
(b)(4), (b)(6) and (b)(8) of the Freedom of Information Act (5 U.S.C. 
552(b)(4), (b)(6) and (b)(8)).
    Abstract: The FR Y-9 family of reports historically has been, and 
continues to be, the primary source of financial information on BHCs 
between on-site inspections. Financial information from these reports 
is used to detect emerging financial problems, to review performance 
and conduct pre-inspection analysis, to monitor and evaluate capital 
adequacy, to evaluate BHC mergers and acquisitions, and to analyze a 
BHC's overall financial condition to ensure safe and sound operations.
    The FR Y-9C consists of standardized 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) filed by commercial banks. The FR Y-9C 
collects consolidated data from top-tier BHCs with total consolidated 
assets of $500 million or more. (Under certain circumstances defined in 
the General Instructions, BHCs under $500 million may be required to 
file the FR Y-9C.)
    Current Actions: On November 21, 2011, the Federal Reserve 
published a notice in the Federal Register (77 FR 71968) requesting 
public comment for 60 days on the proposed changes to the FR Y-9C. The 
comment period expired on January 20, 2012.
    The Federal Reserve received comment letters from six entities on 
proposed revisions to the FR Y-9C: two banking organizations, two 
bankers' associations, a commercial lending software company, and a 
news organization. In addition, the Federal Reserve, FDIC, and OCC (the 
banking agencies) received these six comment letters and two additional 
comment letters from banking organizations on proposed revisions to the 
Consolidated Reports of Condition and Income (Call Reports) (FFIEC 031 
& 041; OMB No. 7100-0036), which parallel proposed revisions to the FR 
Y-9C and were taken into consideration for this proposal.
    On March 16, 2012, the Federal Reserve published a final notice in 
the Federal Register (77 FR 15755) announcing the implementation of 
reporting changes and instructional revisions, effective as of March 
31, 2012. The Federal Reserve also announced the implementation of 
revisions to two existing schedules proposed for implementation as of 
June 30, 2012. The Federal Reserve further announced the deferred 
implementation of Schedule HC-U, Loan Origination Activity (in Domestic 
Offices), and new Schedule HI-C, Disaggregated Data on the Allowance 
for Loan and Lease Losses (ALLL), both of which were originally 
proposed to be added to the FR Y-9C report effective June 30, 2012. 
Three banking organizations and the two bankers' associations addressed 
proposed Schedule HI-C, and all eight commenters addressed proposed 
Schedule HC-U. The Federal Reserve announced they were continuing to 
evaluate these proposed new schedules in light of the comments 
received. The

[[Page 3896]]

Federal Reserve now has completed the evaluation of proposed Schedules 
HI-C and HC-U.

Detailed Discussion of Public Comments

A. Proposed Schedule HI-C

    As proposed, new Schedule HI-C, Disaggregated Data on the Allowance 
for Loan and Lease Losses, filed by institutions with total assets of 
$1 billion or more, would collect a breakdown by key loan category of 
the end-of-period ALLL disaggregated on the basis of impairment method 
and the end-of-period recorded investment in held-for-investment loans 
and leases related to each ALLL balance. Commenters expressed the 
general concern that the proposed disaggregated ALLL data in Schedule 
HI-C are not aligned with the manner in which institutions estimate and 
maintain their ALLL. Although Financial Accounting Standards Board 
(FASB) Accounting Standards Update No. 2010-20, Disclosures about the 
Credit Quality of Financing Receivables and the Allowance for Credit 
Losses (ASU 2010-20), requires entities to disclose the ALLL at the 
portfolio segment level, institutions define segments differently than 
proposed for Schedule HI-C. According to the commenters, modifying 
systems to report ALLL information categorized as proposed would be 
costly and necessitate significant lead time, up to nine months, to 
implement. One commenter also recommended increasing the asset size 
threshold for institutions to report this schedule, proposed to be 
collected from institutions with $1 billion or more in total assets, to 
$5 billion or $10 billion in total assets.
    Two commenters recommended a more streamlined approach requiring 
disclosure of fewer loan categories, thereby allowing the banking 
agencies to achieve their stated objective and permit institutions to 
report data consistently with the business models and methodologies 
used to estimate their ALLL. One of these commenters recommended 
collapsing the proposed nine loan categories and collecting ALLL and 
the related recorded investment amounts by impairment measurement 
method for only three segments: consumer credit cards, all other 
consumer loans, and commercial loans. The second commenter recommended 
reporting ALLL and the related recorded investment amounts by 
impairment measurement method for five loan categories: commercial real 
estate, residential real estate, commercial, credit cards, and other 
consumer. The second commenter also favored retaining the reporting of 
any unallocated portion of the ALLL as had been proposed. Implicit in 
both of these commenters' recommendations is the concept that the 
definitions for the loan categories in Schedule HI-C should be those 
the reporting institution uses in its ALLL methodology rather than 
those specified in Schedule HC-C, Loans and Lease Financing 
Receivables.
    After consideration of the comments received on the proposed 
disaggregation of ALLL information, the Federal Reserve will modify the 
proposed Schedule HI-C to collect ALLL and the related recorded 
investment amounts by impairment measurement method for the loan 
categories (and any unallocated portion of the ALLL) based on the 
second approach described in the preceding paragraph, but with the 
addition of a loan category for real estate construction loans. The 
Federal Reserve considers it appropriate to segregate construction 
loans from other commercial real estate loans because the risk 
characteristics of the former differ significantly from those of the 
latter. The Federal Reserve believes this more streamlined approach to 
proposed Schedule HI-C, including its use of general loan categories 
rather than specifically defined categories, would be more consistent 
with the methodologies institutions currently employ in determining the 
appropriate level for their overall ALLL and meeting the disclosure 
requirements of ASU 2010-20. At the same time, the data that would be 
reported in Schedule HI-C, as modified, should be sufficient to enable 
the Federal Reserve to more finely focus their analyses related to the 
composition of an institution's ALLL and the changes therein over time. 
In this regard, to aid in evaluating the appropriateness of the 
reported level of an institution's ALLL (for example, in periods 
between examinations and when planning for examinations), the 
disaggregated ALLL data by loan category could be reviewed in 
conjunction with the past due and nonaccrual loan data used in general 
assessments of the credit quality of an institution's loan portfolio. 
These credit quality data are currently reported for broadly similar, 
but not identical, loan categories in Schedule HC-N, Past Due and 
Nonaccrual Loans, Leases, and Other Assets.
    The Federal Reserve will retain the proposed $1 billion total asset 
threshold for Schedule HI-C, which exempts 51 percent of all FR Y-9C 
respondents from this reporting requirement. Given that institutions 
with $1 billion or more in total assets hold 97 percent of the ALLL 
balances held by all FR Y-9C respondents as of June 30, 2012, retaining 
this reporting threshold as proposed will enable the Federal Reserve to 
perform a more comprehensive and decision-useful analysis of the 
depository institution system, particularly in providing a better 
understanding of how institutions' ALLL practices and allocations 
differ for particular loan categories as economic conditions change. 
Furthermore, all institutions with $1 billion or more in total assets 
are subject to regulations requiring them to prepare annual financial 
statements in accordance with U.S. generally accepted accounting 
principles. Accordingly, such institutions should have processes in 
place to develop the disaggregated ALLL data required to be disclosed 
by ASU 2010-20, which are comparable to the data specified by Schedule 
HI-C as modified in response to comments.
    The Federal Reserve will implement new Schedule HI-C as-of the 
March 31, 2013, report date. Consistent with longstanding practice, for 
the March 31, 2013, report date, the Federal Reserve will allow 
institutions to provide reasonable estimates for any Schedule HI-C item 
for which the requested information is not readily available.

B. Proposed Schedule HC-U

    As proposed, new Schedule HC-U, Loan Origination Activity (in 
Domestic Offices), for institutions with total assets of $500 million 
or more, would collect, separately for several loan categories, the 
quarter-end amount of loans (in domestic offices) reported in Schedule 
HC-C, Loans and Lease Financing Receivables, that was originated during 
the quarter, and for institutions with total assets of $1 billion or 
more would also collect for these loan categories the portions of the 
quarter-end amount of loans originated during the quarter that were (a) 
originated under a newly established loan commitment and (b) not 
originated under a loan commitment. As highlighted by the recent 
financial crisis and its aftermath, the ability to assess credit 
availability is a key consideration for monetary policy, financial 
stability, and the supervision and regulation of the banking system. 
The Federal Reserve proposed to collect this information to more 
accurately monitor the extent to which depository institutions are 
providing credit to households and businesses.
    Commenters expressed a general concern that their loan reporting 
systems were not designed to classify gross loan originations in the 
manner that was proposed, and that it would be extremely burdensome to 
modify

[[Page 3897]]

systems to produce this information. Some commenters also questioned 
whether the Federal Reserve's Capital Assessments and Stress Testing 
reports (FR Y-14A, FR Y-14Q, FR Y-14M; collectively the FR Y-14 
reports; OMB No. 7100-0341) could be utilized to collect this 
information. In light of these comments, the Federal Reserve has 
determined not to pursue implementation of this proposed schedule at 
this time.

    Board of Governors of the Federal Reserve System January 14, 
2013.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2013-00928 Filed 1-16-13; 8:45 am]
BILLING CODE 6210-01-P