[Federal Register Volume 80, Number 38 (Thursday, February 26, 2015)]
[Notices]
[Pages 10483-10486]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-03973]


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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.

SUMMARY: 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 Paperwork Reduction Act Submission, 
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: Federal Reserve Board Acting Clearance 
Officer, Mark Tokarski, Office of the Chief Data Officer, 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: \1\
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    \1\ The family of FR Y-9 reporting forms also contains three 
other mandatory reports, which are not being revised at this time: 
The Parent Company Only Financial Statements for Large Holding 
Companies (FR Y-9LP), The Financial Statements for Employee Stock 
Ownership Plan Holding Companies (FR Y-9ES), and The Supplement to 
the Consolidated Financial Statements for Holding Companies (FR Y-
9CS).
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    1. Report title: Consolidated Financial Statements for Holding 
Companies.
    Agency form number: FR Y-9C.
    OMB Control number: 7100-0128.
    Frequency: Quarterly.
    Reporters: Bank holding companies (BHCs), savings and loan holding 
companies (SLHCs), and securities holding companies (SHCs) 
(collectively, ``holding companies'' (HCs)).
    Estimated annual reporting hours: 133,464 hours.
    Estimated average hours per response: Non-advanced approaches HCs: 
50.84 hours, and advanced approaches HCs: 52.09 hours.
    Number of respondents: Non-advanced approaches HCs: 644, and 
advanced approaches HCs: 12.
    General description of report: This information collection is 
mandatory for BHCs (12 U.S.C. 12 U.S.C. 1844(c)(1)(A)). Additionally, 
12 U.S.C. 1467a(b)(2)(A) and 1850a(c)(1)(A), respectively, authorize 
the Federal Reserve to require that SLHCs and supervised SHCs file the 
FR Y-9C with the Federal Reserve. Confidential treatment is not 
routinely given to the financial 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), or (b)(8) of FOIA (5 U.S.C. 
522(b)(4), (b)(6), and (b)(8)).
    Abstract: 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. It 
collects consolidated data from HCs and is filed quarterly by top-tier 
HCs with total consolidated assets of $1 billion or more. (Under 
certain circumstances defined in the General Instructions, BHCs under 
$1 billion may be required to file the FR Y-9C.)
    Current Actions: On August 6, 2014, the Federal Reserve published a 
notice in the Federal Register (79 FR 45808) requesting public comment 
for 60 days on the revision, without extension, of the FR Y-9C. The 
comment period for this notice expired on October 6, 2014. The Federal 
Reserve received three comment letters regarding proposed revisions to 
the FR Y-9C from two banking organizations and one bankers' 
association. In addition, three commenters submitted comments on the 
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. Because these changes to the Call 
Report parallel the proposed revisions to the FR Y-9C, the Federal 
Reserve also considered the comments on the Call Report in developing 
the final notice. In summary, the commenters asked that the Federal 
Reserve (1) clarify the applicability of the proposed reporting 
requirements, (2) add additional items, (3) combine two items, (4) 
provide additional risk-weight categories for some items, and (5) 
clarify the instructions for certain line items.\2\
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    \2\ In addition, one of the commenters on the proposal requested 
the collection of new information unrelated to the scope of this 
proposal.
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Detailed Discussion of Public Comments and Recommended Responses

1. Proposed FR Y-9C, Schedule HC-R, Part II

    In the March 2015 proposal, Schedule HC-R, Part II--the portion of 
the Y-9C that risk-weighted assets (RWAs)--would be modified to ensure 
that all banking organizations are reporting RWAs consistent with the 
standardized approach outlined in the 2013 revisions to the regulatory 
capital rules. All HCs that are subject to FR-Y9C filing requirements 
would submit this revised Schedule HC-R, Part II. Compared to

[[Page 10484]]

the current schedule, the proposed Schedule HC-R, Part II, would 
provide a more detailed breakdown of on-balance sheet asset and off-
balance sheet item categories, remove the ratings-based approach from 
the calculation of risk-weighted assets, reflect reporting of 
alternative risk-weighting approaches not reliant on credit ratings, 
and include an expanded number of risk-weight categories, consistent 
with the revised regulatory capital rules.
    The final version of Schedule HC-R, Part II, would be divided into 
the following sections: (A) Balance sheet asset categories; (B) on- and 
off-balance-sheet securitization exposures; (C) total balance sheet 
assets; (D) derivatives, off-balance sheet, and other items subject to 
risk weighting; (E) totals; and (F) memoranda. These distinct category 
headings would-be added in order to enhance the clarity of the 
reporting form and do not affect the number of line items banking 
organizations would be required to complete.
    One commenter noted that the proposed reporting instructions refer 
the reader to the Federal Reserve's regulatory capital rules for 
additional information and requested that the Federal Reserve 
incorporate the information from the regulatory capital rules into the 
reporting instructions. The Federal Reserve will clarify the cross-
references to the regulatory capital rules in the final reporting 
instructions. However, the Federal Reserve believes that incorporating 
the additional information from the Board's regulatory capital rules 
into the reporting instructions would unduly add significant length to 
the instructions, and condensing the information would likely omit 
significant details.
    One commenter requested the addition of a separate line item for 
total equity exposures, while another commenter requested the addition 
of a three-way breakout of equity exposures to investment funds similar 
to that found in the Regulatory Capital Reporting for Institutions 
Subject to the Advanced Capital Adequacy Framework (FFIEC 101).\3\ The 
FFIEC 101 requires institutions to report equity exposures to 
investment funds by the methodology used to risk weight these 
exposures. The Federal Reserve believes that importing the equity 
exposure reporting template found in the FFIEC 101 into the FR Y-9C 
Schedule HC-R, Part II, would add complexity and undue burden for 
smaller institutions required to complete the FR Y-9C. However, because 
of the approaches available for risk weighting investments in 
investment funds (including mutual funds), the Federal Reserve will add 
data items for reporting the exposure and risk-weighted asset amount of 
such investments to the appropriate balance sheet asset categories. The 
Federal Reserve will add detailed guidance related to equity exposure 
reporting in the final instructions for Schedule HC-R, Part II.
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    \3\ FFIEC 101--Regulatory Capital Reporting for Institutions 
Subject to the Advanced Capital Adequacy Framework: for the OCC, OMB 
No. 1557-0239; for the Board, OMB No. 7100-0319; and for the FDIC, 
OMB No. 3064-0159.
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    A brief description of the proposed revisions and the comments 
received on specific line items in Schedule HC-R, Part II, is provided 
below.
A. Proposed Schedule HC-R, Part II, Items 1-11: Balance Sheet Asset 
Categories
    Proposed line items 1 through 8 reflect balance sheet asset 
categories (excluding those assets within each category that meet the 
definition of a securitization exposure), similar to the asset 
categories included in the current version of Schedule HC-R, Part II. 
However, the proposed data items would capture greater detail. The 
number of risk-weight categories to which the individual assets in each 
asset category would be allocated would be expanded consistent with the 
revised regulatory capital rules. On-balance sheet assets and off-
balance sheet items that meet the definition of a securitization 
exposure would be reported in items 9 and 10, respectively.
    Two commenters noted that several risk-weight categories for item 
8, ``Other assets,'' on the proposed reporting form are not available 
for data input (i.e., the categories are shaded out). However, the 
commenters stated the categories may be applicable, particularly to 
address the exposures underlying separate account bank-owned life 
insurance (BOLI) assets. In response to these comments, the Federal 
Reserve will add data items to collect the exposure amount and risk-
weighted asset amount of these BOLI assets, which would be reported 
separately from the other risk weightings within item 8, ``Other 
assets.'' In addition, the Federal Reserve will clarify the 
instructions to allow for the reporting of 150 percent and 300 percent 
risk-weight categories for item 8, ``Other assets.''
    One commenter requested clarification of the reporting of default 
fund contributions (DFCs) made by the reporting banking organization to 
qualifying central counterparties (QCCPs) in item 8, ``Other assets.'' 
The commenter noted that the proposed reporting instructions for item 8 
stated that such contributions should be allocated to the risk-weight 
categories defined for column B through column Q. However, the 
commenter observed that DFCs to QCCPs are subject to two alternative 
methodologies (Methods 1 and 2) for calculating risk-weighted assets, 
one of which may result in risk-weightings not captured in column B 
through column Q. In response to this comment, the Federal Reserve will 
add data items to collect the exposure amount and risk-weighted asset 
amount of DFCs to QCCPs, which would be reported separately from the 
risk weightings otherwise captured in item 8. The Federal Reserve will 
clarify the instructions to describe how respondents should report DFCs 
under Method 1 as well as Method 2.
    One commenter noted that items 2 through 8 could include 
securitization exposures, and when added with item 9, ``On-balance 
sheet securitization exposures,'' it would double count such exposures 
in reporting item 11, ``Total assets.'' The Federal Reserve notes that 
the reporting instructions for each proposed balance sheet asset 
category (items 1 through 8) explicitly state that the reporting 
banking organization must exclude securitization exposures. The Federal 
Reserve will clarify the proposed reporting form to explicitly state 
that these data items should exclude securitization exposures from 
items 2 through 8 and be reported in item 9.\4\
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    \4\ The Federal Reserve also will add a similar clarification to 
the proposed reporting form regarding derivatives and off-balance 
sheet items that are securitization exposures by explicitly stating 
that institutions should exclude them from items 12 through 21 and 
report them in item 10.
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    The Federal Reserve notes that, although the proposed reporting 
form and instructions addressed the reporting of an institution's 
securitization exposures and the treatment of financial collateral, a 
subsequent review found the proposal did not clearly articulate the 
risk weighting and reporting of assets and certain other items secured 
by financial collateral in the form of securitization exposures or 
mutual funds. In addition, the proposed reporting form and instructions 
did not fully address the two approaches for recognizing the effects of 
qualifying financial collateral. The approaches for risk weighting 
securitization exposures and investments in mutual funds also are 
applicable to such exposures when they serve as financial collateral. 
To account for the possible risk weight outcomes when exposures are 
secured by these types of collateral, the Federal Reserve will add data 
items to columns R and S for reporting the exposure amount and risk-
weighted asset amount

[[Page 10485]]

of these collateralized exposures separately from the other risk 
weightings within appropriate balance sheet asset categories (and 
derivative and off-balance sheet item categories).
B. Schedule HC-R, Part II, Items 12 Through 22: Derivatives, Off-
Balance Sheet, and Other Items Subject to Risk Weighting
    Proposed line items 12 through 22 pertain to the reporting of 
derivatives, off-balance sheet, and other items subject to risk 
weighting, excluding those that meet the definition of a securitization 
exposure (which are reported in item 10).
    One commenter noted that in accordance with section 37 of the 
Federal Reserve's revised regulatory capital rules, banking 
organizations must calculate the exposure amount and risk-weighted 
assets for repo-style transactions on a netting set basis. A netting 
set may contain transactions that are reported as assets, liabilities, 
and off-balance sheet items (as long as they are executed under the 
same master netting agreement), and the basis for the risk-weighted 
assets calculation is the net exposure, adjusted for volatility and 
foreign exchange haircuts. As proposed, Schedule HC-R, Part II, would 
have split the reporting of repo-style transactions between assets 
(reported in item 3, ``Federal funds sold and securities purchased 
under agreements to resell,'' i.e., reverse repos) and liabilities and 
off-balance sheet items (reported in item 16, ``Repo-style transactions 
(excluding reverse repos)''). However, since risk-weighted assets for 
repo-style transactions are based on the net exposure at a netting set 
level (inclusive of volatility and foreign exchange haircuts), the 
method proposed for allocating repo-style transaction exposures between 
two reporting items and across the risk-weight categories in a way that 
would tie back to the amounts required to be reported in column A of 
Schedule RC-R, Part II (i.e., for item 3, the balance sheet carrying 
amount, and for item 16, the notional value), does not align with the 
treatment of repo-style transactions under the revised regulatory 
capital rules. The commenter recommended that the Federal Reserve amend 
the reporting form to collect all repo-style transactions in a single 
item, and amounts attributed to risk-weighting categories for this item 
would tie to an ``exposure'' amount reported in Column A.
    In response to this comment, the Federal Reserve will revise 
proposed item 16 of Schedule HC-R, Part II, to include all repo-style 
transactions in item 16, re-titled as ``Repo-style transactions,'' 
which would also include securities purchased under agreements to 
resell (reverse repos) in order for banking organizations to calculate 
their exposure based on master netting set agreements. In addition, the 
Federal Reserve will split proposed item 3 of Schedule HC-R, Part II, 
into item 3(a), ``Federal funds sold (in domestic offices),'' and item 
3(b), ``Securities purchased under agreements to resell.'' However, 
after an institution reports the balance sheet carrying amount of its 
reverse repos in column A of item 3(b), it would report this same 
amount as an adjustment in column B of item 3(b), resulting in no 
allocation of the balance sheet carrying amount of reverse repos across 
the risk-weight categories in item 3. This reporting methodology would 
ensure that the sum of the balance sheet asset amounts reported in 
items 1 through 9, column A, of Schedule HC-R, Part II, that an 
institution would report in item 11 of Schedule HC-R, Part II, 
continues to equal the ``Total assets'' reported in item 12 of the FR 
Y-9C balance sheet (Schedule HC).
    Another commenter noted that, under the Federal Reserve's revised 
regulatory capital rules, a banking organization is required to hold 
risk-based capital against all repo-style transactions, regardless of 
whether the transactions generate on-balance sheet exposures. The 
commenter also noted that the proposed reporting instructions for 
Schedule HC-R, Part II, state that ``Although securities sold under 
agreements to repurchase are reported on the balance sheet (Schedule 
HC) as liabilities, they are treated as off-balance sheet items under 
the regulatory capital rules.'' The commenter then questioned the 
intent of the Federal Reserve's proposed reporting form that would 
require an institution to calculate a capital charge for these ``off-
balance sheet items'' despite the fact that the security pledged by the 
institution as collateral for the repo remains on the balance sheet for 
accounting purposes and would therefore require a separate on-balance 
sheet risk-weighting. The Federal Reserve adopted this reporting 
approach for consistency with the revised regulatory capital rules, 
which recognize that institutions face counterparty credit risk when 
engaging in repo-style transactions. However, under certain conditions, 
the Federal Reserve's revised regulatory capital rules also allow 
banking organizations to recognize the risk mitigating effects of 
financial collateral when risk weighting their repo-style exposures. 
The final reporting form and instructions for Schedule HC-R, Part II, 
will implement this treatment of repo-style transactions, which is set 
forth in the revised regulatory capital rules.
    Although the proposed reporting form and instructions addressed the 
reporting of a banking organization's unsettled transactions as part of 
item 8, ``All other assets,'' the Federal Reserve notes that during a 
subsequent review of the proposal it did not clearly address the fact 
that a banking organization's unsettled transactions could potentially 
be composed of both on- and off-balance sheet exposures. In order to 
more clearly assess risk-based capital against delayed trades where the 
counterparty has failed to deliver an instrument or make a payment in a 
timely manner, the Federal Reserve will modify Schedule HC-R, Part II, 
by adding line item 22, ``Unsettled transactions (failed trades).''
C. Schedule HC-R, Part II, Items 23 Through 31: Totals
    Proposed items 23 through 31 would apply the risk-weight factors to 
the exposure amounts reported for assets, derivatives, and off-balance 
sheet items in items 11 through 23 to calculate a banking 
organization's total risk-weighted assets. The Federal Reserve did not 
receive any comments on these line items and will implement as 
proposed.
D. Schedule HC-R, Part II, Memoranda Items 1 Through 4: Memoranda
    In proposed memoranda items 1 through 3, a banking organization 
would report the current credit exposure and notional principal amounts 
of its derivative contracts. Memorandum item 4 would require those 
banking organizations subject to the Market Risk Rule to report the 
portion of their standardized market risk weighted assets (as reported 
in Schedule HC-R, item 27) that is attributable to specific risk.
    Memorandum item 1 would continue to collect the ``Current credit 
exposure across all derivative contracts covered by the risk-based 
capital standards.'' One commenter noted that, prior to the proposed 
revisions, the instructions for Memorandum item 1 stated that all 
written option contracts (except those that are, in substance, 
financial guarantees) are not covered by the risk-based capital 
standards. The commenter asked if this was an explicit change in the 
reporting of written option contracts. The Federal Reserve notes that 
this exclusion was inadvertently omitted from the proposed instructions 
for Memorandum item 1 and will clarify the instructions to note that 
written option contracts will continue to be

[[Page 10486]]

excluded from reporting in Memorandum item 1, consistent with the 
revised regulatory capital rules.
    The Federal Reserve did not receive any comments on memoranda items 
2, 3 or 4, and will implement as proposed.

2. Proposed FR Y-9C, Schedule HC-L

    FR Y-9C, Schedule HC-L collects regulatory data on derivatives and 
off-balance sheet items. The Federal Reserve proposed to revise the 
reporting requirements for off-balance sheet exposures related to 
securities lent and borrowed, consistent with the revised regulatory 
capital rules. Compared to the current schedule, the proposed changes 
to Schedule HC-L would require all banking organizations to report the 
amount of securities borrowed. At present, banking organizations 
include the amount of securities borrowed in the total amount of all 
other off-balance sheet liabilities reported in item 9 of Schedule HC-L 
if the amount of securities borrowed is more than 10 percent of total 
holding company equity capital and they disclose the amount of 
securities borrowed if that amount is more than 25 percent of total 
holding company equity capital. In addition, the proposed changes to 
Schedule HC-L would require institutions to report securities borrowed 
in a new item 6.b immediately after the line item for securities lent, 
which would be renumbered from item 6 to item 6.a.
    One commenter noted that the current instructions for item 9 state 
to ``report all securities borrowed against collateral (other than 
cash)'' for such purposes as serving ``as a pledge against deposit 
liabilities or delivery against short sales,'' whereas the current 
instructions for item 6 state to report all securities owned that are 
``lent against collateral or on an uncollateralized basis.'' The 
commenter characterizes current item 9 as inclusive of only certain 
types of securities borrowings such as those collateralized by ``other 
than cash'' and those ``for purposes as a pledge against deposit 
liabilities or short sales,'' whereas current item 6 covers all types 
of securities lending regardless of the type of collateral. The 
commenter suggested clarifying the scope of these two items.
    The Federal Reserve will clarify the instructions for new item 6(b) 
to state that institutions should report all types of securities 
borrowing, regardless of collateral type or purpose. The phrases 
``other than cash'' and ``for such purpose as a pledge against deposit 
liabilities or delivery against short sales'' will be deleted from the 
final instructions for new item 6(b).

3. Initial Reporting

    For the March 31, 2015, report date, institutions may provide 
reasonable estimates for any new or revised FR Y-9C items initially 
required to be reported as of that date for which the requested 
information is not readily available.
    2. Report Title: Parent Company Only Financial Statements for Small 
Holding Companies.
    Agency form number: FR Y-9SP.
    OMB control number: 7100-0128.
    Frequency: Semiannually, as of the last calendar day of June and 
December.
    Reporters: BHCs, SLHCs and SHCs with total consolidated assets of 
less than $1 billion (small BHCs, small SLHCs and small SHCs).
    Estimated average hours per response: 5.40 hours.
    Estimated annual reporting hours: 47,412.
    Number of respondents: 4,390.
    General description of report: This information collection is 
mandatory for BHCs [12 U.S.C. 1844(c)(1)(A).] Additionally, 12 U.S.C. 
1467a(b)(2)(A) and 1850a(c)(1)(A), respectively, authorize the Federal 
Reserve to require that SLHCs and supervised SHCs file the FR Y-9SP 
with the Federal Reserve. Confidential treatment is not routinely given 
to the financial 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), or (b)(8) of the Freedom of Information Act (5 U.S.C. 
552(b)(4), (b)(6), and (b)(8)).
    Abstract: The FR Y-9SP is a parent company only financial statement 
filed semiannually by smaller HCs. Respondents include HCs with total 
consolidated assets of less than $1 billion. This form is a simplified 
or abbreviated version of the FR Y-9LP. This report is designed to 
obtain basic parent company balance sheet and income data, data on 
intangible assets, and data on intercompany transactions.
    Current Actions: On August 6, 2014, the Federal Reserve published a 
notice in the Federal Register (79 FR 45808) requesting public comment 
for 60 days on the revision, without extension, of the FR Y-9SP. The 
comment period for this notice expired on October 6, 2014. The Federal 
Reserve did not receive any comments. However, in light of the 
legislation adopted by Congress on December 11, 2014, the Federal 
Reserve will not finalize the proposed revisions to FR Y-9SP Schedule 
SC-R, Part II, for SLHCs that otherwise would have been subject to the 
Small BHC Policy Statement in effect as of the filing date for the FR 
Y-9SP.

Discussion of Recent Legislation and Rulemaking Affecting Proposed 
Revisions to the FR Y-9SP

    In December 2014, Congress enacted and the President signed into 
law Public Law 113-250. Public Law 113-250 directs the Board to publish 
in the Federal Register proposed revisions to the Small Bank Holding 
Company Policy Statement to, in part, exempt small SLHCs from the 
minimum capital requirements mandated by section 171 of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act as if they were BHCs 
subject to the Small BHC Policy Statement.
    On January 29, 2015, the Board issued an interim final rule that 
would exclude SLHCs that have total consolidated assets of less than 
$500 million and that meet other qualitative requirements from the 
Board's regulatory capital requirements (Regulation Q). In light of 
Public Law 113-250 and the rulemaking, the Federal Reserve will not 
finalize the proposed revisions to the FR Y-9SP, Part II, for SLHCs 
with total consolidated assets of less than $500 million that meet the 
qualitative requirements of the Policy Statement.

    Board of Governors of the Federal Reserve System, February 23, 
2015.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2015-03973 Filed 2-25-15; 8:45 am]
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