[Federal Register Volume 84, Number 60 (Thursday, March 28, 2019)]
[Notices]
[Pages 11783-11798]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-05933]


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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: The Board of Governors of the Federal Reserve System (Board) 
is adopting a proposal to extend for three years, with revision, the 
Financial Statements for Holding Companies (FR Y-9 family of reports) 
(OMB No. 7100-0128), the Financial Statements of U.S. Nonbank 
Subsidiaries Held by Foreign Banking Organizations (FR Y-7N family of 
reports) (OMB No. 7100-0125), the Bank Holding Company Report of 
Insured Depository Institutions' Section 23A Transactions with 
Affiliates (FR Y-8) (OMB No. 7100-0126), the Financial Statements of 
U.S. Nonbank Subsidiaries of U.S. Holding Companies (FR Y-11 family of 
reports) (OMB No. 7100-0244), the Domestic Finance Company Report of 
Consolidated Assets and Liabilities (FR 2248) (OMB No. 7100-0005), the 
Financial Statements of Foreign Subsidiaries of U.S. Banking 
Organizations (FR 2314 family of reports) (OMB No. 7100-0073), the 
Quarterly Savings and Loan Holding Company Report (FR 2320) (OMB No. 
7100-0345), the Weekly Report of Selected Assets and Liabilities of 
Domestically Chartered Commercial Banks and U.S. Branches and Agencies 
of Foreign Banks (FR 2644) (OMB No. 7100-0075), and the Consolidated 
Report of Condition and Income for Edge and Agreement Corporations (FR 
2886b) (OMB No. 7100-0086).

DATES: The revisions are applicable as of March 31, 2019.

FOR FURTHER INFORMATION CONTACT: Federal Reserve Board Clearance 
Officer--Nuha Elmaghrabi--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.

SUPPLEMENTARY INFORMATION: On June 15, 1984, OMB delegated to the Board 
authority under the Paperwork

[[Page 11784]]

Reduction Act (PRA) to approve and assign OMB control numbers to 
collection of information requests and requirements conducted or 
sponsored by the Board. Board-approved collections of information are 
incorporated into the official OMB inventory of currently approved 
collections of information. Copies of the PRA Submission, supporting 
statements and approved collection of information instrument(s) are 
placed into OMB's public docket files. The Board 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.

Final Approval Under OMB Delegated Authority of the Extension for Three 
Years, With Revision, the Following Information Collections

    1. Report title: Financial Statements for Holding Companies.
    Agency form number: FR Y-9C, FR Y-9LP, FR Y-9SP, FR Y-9ES, and FR 
Y-9CS.
    OMB control number: 7100-0128.
    Frequency: Quarterly, semiannually, and annually.
    Respondents: Bank holding companies (BHCs), savings and loan 
holding companies (SLHCs), securities holding companies (SHCs), and 
U.S. intermediate holding companies (IHCs) (collectively, holding 
companies (HCs)).
    Estimated number of respondents: FR Y-9C (non-advanced approaches 
HCs): 292; FR Y-9C (advanced approached HCs): 18; FR Y-9LP: 338; FR Y-
9SP: 4,238; FR Y-9ES: 82; FR Y-9CS: 236.
    Estimated average hours per response: FR Y-9C (non-advanced 
approaches HCs): 46.34 hours; FR Y-9C (advanced approached HCs): 47.59 
hours; FR Y-9LP: 5.27 hours; FR Y-9SP: 5.40 hours; FR Y-9ES: 0.50 
hours; FR Y-9CS: 0.50 hours.
    Estimated annual burden hours: FR Y-9C (non-advanced approaches 
HCs): 54,125 hours; FR Y-9C (advanced approached HCs): 3,426 hours; FR 
Y-9LP: 7,125 hours; FR Y-9SP: 45,770 hours; FR Y-9ES: 41 hours; FR Y-
9CS: 472 hours.
    General description of report: The FR Y-9 family of reporting forms 
continues to be the primary source of financial data on HCs that 
examiners rely on between on-site inspections. Financial data from 
these reporting forms is used to detect emerging financial problems, 
review performance, conduct pre-inspection analysis, monitor and 
evaluate capital adequacy, evaluate HC mergers and acquisitions, and 
analyze an HC's overall financial condition to ensure the safety and 
soundness of its operations. The Board requires HCs to provide 
standardized financial statements to fulfill the Board's statutory 
obligation to supervise these organizations. HCs file the FRY-9C on a 
quarterly basis, FR Y-9LP quarterly, the FR Y-9SP semiannually, the FR 
Y-9ES annually, and the FR Y-9CS on a schedule that is determined when 
this supplement is used.
    2. Report title: The Financial Statements of U.S. Nonbank 
Subsidiaries Held by Foreign Banking Organizations, Abbreviated 
Financial Statements of U.S. Nonbank Subsidiaries Held by Foreign 
Banking Organizations, and the Capital and Asset Report of Foreign 
Banking Organizations.
    Agency form number: FR Y-7N, FR Y-7NS, and FR Y-7Q.
    OMB control number: 7100-0125.
    Frequency: Quarterly and annually.
    Respondents: Foreign banking organizations (FBOs).
    Estimated number of respondents: FR Y-7N (quarterly): 35; FR Y-7N 
(annually): 19; FR Y-7NS: 22; FR Y-7Q (quarterly): 130; FR Y-7Q 
(annually): 29.
    Estimated average hours per response: FR Y-7N (quarterly): 7.6 
hours; FR Y-7N (annually): 7.6 hours; FR Y-7NS: 1 hour; FR Y-7Q 
(quarterly): 3 hours; FR Y-7Q (annually): 1.5 hours.
    Estimated annual reporting hours: FR Y-7N (quarterly): 1,064 hours; 
FR Y-7N (annually): 144 hours; FR Y-7NS: 22 hours; FR Y-7Q (quarterly): 
1,560 hours; FR Y-7Q (annually): 44 hours.
    General Description of Report: The FR Y-7N and the FR Y-7NS are 
used to assess an FBO's ability to be a continuing source of strength 
to its U.S. operations and to determine compliance with U.S. laws and 
regulations. FBOs file the FR Y-7N quarterly or annually or the FR Y-
7NS annually predominantly based on asset size thresholds. The FR Y-7Q 
is used to assess consolidated regulatory capital and asset information 
from all FBOs. The FR Y-7Q is filed quarterly by FBOs that have 
effectively elected to become or be treated as a U.S. financial holding 
company (FHC) and by FBOs that have total consolidated assets of $50 
billion or more, regardless of FHC status. All other FBOs file the FR 
Y-7Q annually.
    3. Report title: Bank Holding Company Report of Insured Depository 
Institutions' Section 23A Transactions with Affiliates.
    Agency form number: FR Y-8.
    OMB control number: 7100-0126.
    Frequency: Quarterly.
    Respondents: BHCs, SLHCs, and FBOs.
    Estimated number of respondents: 933.
    Estimated average hours per response: 7.8 hours.
    Estimated annual burden hours: 29,110 hours.
    General description of report: The FR Y-8 collects information on 
covered transactions between an insured depository institution and its 
affiliates that are subject to the quantitative limits and requirements 
of section 23A of the Federal Reserve Act and the Board's Regulation W 
(12 CFR 223). The FR Y-8 is filed quarterly by all U.S. top-tier BHCs 
and SLHCs, and by FBOs that directly own or control a U.S. subsidiary 
insured depository institution. If an FBO indirectly controls a U.S. 
insured depository institution through a U.S. holding company, the U.S. 
holding company must file the FR Y-8. A respondent must file a separate 
report for each U.S. insured depository institution it controls. The 
primary purpose of the data is to enhance the Board's ability to 
monitor the credit exposure of insured depository institutions to their 
affiliates and to ensure that insured depository institutions are in 
compliance with section 23A of the Federal Reserve Act and Regulation 
W. Section 23A of the Federal Reserve Act limits an insured depository 
institution's exposure to affiliated entities and helps to protect 
against the expansion of the federal safety net to uninsured entities.
    4. Report title: Financial Statements of U.S. Nonbank Subsidiaries 
of U.S. Holding Companies and the Abbreviated Financial Statements of 
U.S. Nonbank Subsidiaries of U.S. Holding Companies.
    Agency form number: FR Y-11 and FR Y-11S.
    OMB control number: 7100-0244.
    Frequency: Quarterly and annually.
    Respondents: Domestic bank holding companies, SLHCs, SHCs, and IHCs 
(collectively, holding companies (HCs)).
    Estimated number of respondents: FR Y-11 (quarterly): 445; FR Y-11 
(annually): 189; FR Y-11S: 273.
    Estimated average hours per response: FR Y-11 (quarterly): 7.6; FR 
Y-11 (annually): 7.6; FR Y-11S: 1.
    Estimated annual reporting hours: FR Y-11 (quarterly): 13,528 
hours; FR Y-11 (annually): 1,436 hours; FR Y-11S: 273 hours.
    General Description of Report: The FR Y-11 family of reports 
collects financial information for individual U.S. nonbank subsidiaries 
of domestic HCs, which is essential for monitoring the subsidiaries' 
potential impact on the condition of the HC or its subsidiary banks. 
HCs file the FR Y-11 on a

[[Page 11785]]

quarterly or annual basis or the FR Y-11S on an annual basis, 
predominantly based on whether the organization meets certain asset 
size thresholds.
    5. Report title: Domestic Finance Company Report of Consolidated 
Assets and Liabilities.
    Agency form number: FR 2248.
    OMB control number: 7100-0005.
    Frequency: Monthly, quarterly and semi-annually.
    Respondents: Domestic finance companies and mortgage companies.
    Estimated number of respondents: 150.
    Estimated average hours per response: Monthly: 0.33 hours; 
quarterly: 0.50 hours; semi-annual addendum: 0.17 hours.
    Estimated annual burden hours: Monthly, 400 hours; quarterly, 300 
hours; semi-annual addendum: 50 hours.
    General description of report: The FR 2248 collects information on 
amounts outstanding in major categories of consumer and business credit 
held by finance companies and on major short-term liabilities of the 
finance companies. For quarter-end months (March, June, September, and 
December), the report also collects information on other assets and 
liabilities outstanding as well as information on capital accounts in 
order to provide a full balance sheet. In addition, a supplemental 
section collects data about assets that have been pooled by finance 
companies and sold to third parties that issue securities based on 
those assets. The supplemental section is organized in the same four 
categories of credit (consumer, real estate, business, and lease-
related). The special addendum section may be used if the need arises 
for the collection of timely information on questions of immediate 
concern to the Board. When necessary, respondents would be asked no 
more than twice a year to provide answers to a limited number of 
relevant questions, which would be distributed in advance to ease 
burden and which would take, on average, ten minutes to complete. This 
addendum provides the Board a valuable source of information regarding 
timely topics and events in financial markets.
    6. Report title: Financial Statements of Foreign Subsidiaries of 
U.S. Banking Organizations and the Abbreviated Financial Statements of 
Foreign Subsidiaries of U.S. Banking Organizations.
    Agency form number: FR 2314 and FR 2314S.
    OMB control number: 7100-0073.
    Frequency: Quarterly and annually.
    Respondents: U.S. state member banks (SMBs), BHCs, SLHCs, IHCs, and 
Edge or agreement corporations.
    Estimated number of respondents: FR 2314 (quarterly): 439; FR 2314 
(annually): 239; FR 2314S: 300.
    Estimated average hours per response: FR 2314 (quarterly): 7.2 
hours; FR 2314 (annually): 7.2 hours; FR 2314S: 1 hour.
    Estimated annual reporting hours: FR 2314 (quarterly): 12,643 
hours; FR 2314 (annually): 1,768 hours; FR 2314S: 300 hours.
    General description of report: The FR 2314 family of reports is the 
only source of comprehensive and systematic data on the assets, 
liabilities, and earnings of the foreign nonbank subsidiaries of U.S. 
banking organizations, and the data are used to monitor the growth, 
profitability, and activities of these foreign companies. The data help 
the Board identify present and potential problems of these companies, 
monitor their activities in specific countries, and develop a better 
understanding of activities within the industry and within specific 
institutions. Parent organizations (SMBs, Edge and agreement 
corporations, or HCs) file the FR 2314 on a quarterly or annual basis, 
or the FR 2314S on an annual basis, predominantly based on whether the 
organization meets certain asset size thresholds.
    7. Report Title: Quarterly Savings and Loan Holding Company Report.
    Agency form number: FR 2320.
    OMB control number: 7100-0345.
    Frequency: Quarterly.
    Respondents: SLHCs that are currently exempt from filing other 
Board regulatory reports.
    Estimated number of respondents: 13.
    Estimated average hours per response: 2.5 hours.
    Estimated annual burden hours: 130 hours.
    General Description of Report: The FR 2320 collects select parent 
only and consolidated balance sheet and income statement financial data 
and organizational structure data from
    SLHCs that are currently exempt from filing other Board regulatory 
reports (exempt SLHCs). The FR 2320 is used by the Board to analyze the 
overall financial condition of exempt
    SLHCs to ensure safe and sound operations. These data assist the 
Board in the evaluation of a diversified HC and in determining whether 
an institution is in compliance with applicable laws and regulations.
    8. Report title: Weekly Report of Selected Assets and Liabilities 
of Domestically Chartered
    Commercial Banks and U.S. Branches and Agencies of Foreign Banks.
    Agency form number: FR 2644.
    OMB control number: 7100-0075.
    Frequency: Weekly.
    Respondents: Domestically chartered commercial banks and U.S. 
branches and agencies of foreign banks.
    Estimated number of respondents: 875.
    Estimated average hours per response: 2.35 hours.
    Estimated annual burden hours: 106,925 hours.
    General description of report: The FR 2644 is a balance sheet 
report that is collected as of each Wednesday from an authorized 
stratified sample of 875 domestically chartered commercial banks and 
U.S. branches and agencies of foreign banks. The FR 2644 is the only 
source of high-frequency data used in the analysis of current banking 
developments. The FR 2644 collects sample data that are used to 
estimate universe levels using data from the quarterly commercial bank 
Consolidated Reports of Condition and Income (FFIEC 031, FFIEC 041, and 
FFIEC 051; OMB No. 7100-0036) and the Report of Assets and Liabilities 
of U.S. Branches and Agencies of Foreign Banks (FFIEC 002; OMB No. 
7100-0032) (Call Reports). Data from the FR 2644, together with data 
from other sources, are used to construct weekly estimates of bank 
credit, balance sheet data for the U.S. banking industry, and sources 
and uses of banks' funds and to analyze current banking and monetary 
developments. The Board publishes the data in aggregate form in the 
weekly H.8 statistical release, Assets and Liabilities of Commercial 
Banks in the United States, which is followed closely by other 
government agencies, the banking industry, the financial press, and 
other users. The H.8 release provides a balance sheet for the banking 
industry as a whole and data disaggregated by its large domestic, small 
domestic, and foreign-related bank components.
    9. Report title: Consolidated Report of Condition and Income for 
Edge and Agreement Corporations.
    Agency form number: FR 2886b.
    OMB control number: 7100-0086.
    Frequency: Quarterly and annually.
    Respondents: Banking Edge and agreement corporations and investment 
Edge and agreement corporations.
    Estimated number of respondents: Banking Edge and agreement 
corporations (quarterly): 9; banking Edge and agreement corporations 
(annually): 1; investment Edge and agreement corporations (quarterly): 
21; investment Edge and agreement corporations (annually): 7.
    Estimated average hours per response: Banking Edge and agreement

[[Page 11786]]

corporations (quarterly): 15.77; banking Edge and agreement 
corporations (annually): 15.87; investment Edge and agreement 
corporations (quarterly): 11.81; investment Edge and agreement 
corporations (annually): 10.82.
    Estimated annual reporting hours: Banking Edge and agreement 
corporations (quarterly): 568; banking Edge and agreement corporations 
(annually): 16; investment Edge and agreement corporations (quarterly): 
922; investment Edge and agreement corporations (annually): 76.
    General description of report: The FR 2886b reporting form is filed 
quarterly and annually by banking Edge and agreement corporations and 
investment (nonbanking) Edge and agreement corporations. The mandatory 
FR 2886b comprises an income statement with two schedules reconciling 
changes in capital and reserve accounts and a balance sheet with 11 
supporting schedules. Other than examination reports, it provides the 
only financial data available for these corporations. The Board is 
solely responsible for authorizing, supervising, and assigning ratings 
to Edge and agreement corporations. The Board uses the data collected 
on the FR 2886b to identify present and potential problems and monitor 
and develop a better understanding of activities within the industry.

Adopted Revisions

    The Board adopted revisions to (1) implement changes to address the 
revised accounting standards for the adoption of the current expected 
credit loss (CECL) methodology across all of the reports, (2) extend 
for three years through the normal delegated review process certain 
revisions to the FR Y-9C that the Board previously approved on a 
temporary basis \1\ in order to implement changes consistent with 
Section 214 and Section 202 of the Economic Growth, Regulatory Relief, 
and Consumer Protection Act (EGRRCPA) pertaining to the risk-weighting 
of high volatility commercial real estate (HVCRE) exposures and the 
treatment of reciprocal deposits, (3) clarify reporting of unrealized 
holding gains and losses on equity securities on the FR Y-9C report, 
and (4) make several revisions to the FR 2886b report, including 
updating references to applicable capital requirements, revising the 
eligibility criteria for reporting the trading schedule and implement 
changes pertaining to the accounting treatment of equity securities.
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    \1\ See 83 FR 48990 (September 28, 2018).
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    The reporting changes related to CECL are tied to the approved 
regulatory capital rules related to the implementation and capital 
transition for CECL (CECL Rule) \2\ by the Board, the Federal Deposit 
Insurance Corporation (FDIC), and the Office of the Comptroller of the 
Currency (OCC) (collectively, the agencies), and to the corresponding 
CECL revisions to the Consolidated Reports of Condition and Income 
(Call Reports) (FFIEC 031, FFIEC 041, and FFIEC 051; OMB No. 7100-
0036).\3\
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    \2\ See https://www.federalreserve.gov/newsevents/pressreleases/bcreg20181221a.htm.
    \3\ See 84 FR 4131 (February 14, 2019).
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    The effective dates for adopting CECL vary depending on whether a 
firm is a public business entity (PBE), a Securities and Exchange 
Commission (SEC) report filer, or an early adopter. For institutions 
that are PBEs and also are SEC filers, as both terms are defined in 
U.S. Generally Accepted Accounting Principles (GAAP), the new credit 
losses standard is effective for fiscal years beginning after December 
15, 2019, including interim periods within those fiscal years. For a 
PBE that is not an SEC filer, the credit losses standard is effective 
for fiscal years beginning after December 15, 2020, including interim 
periods within those fiscal years. For an institution that is not a 
PBE, the credit losses standard is effective for fiscal years beginning 
after December 15, 2020, and for interim period financial statements 
for fiscal years beginning after December 15, 2021. For regulatory 
reporting purposes, early application of the new credit losses standard 
will be permitted for all institutions for fiscal years beginning after 
December 15, 2018, including interim periods within those fiscal years. 
See Appendix A for more details surrounding CECL adoption by entity 
type, as well as the table summarizing the possible effective dates.\4\
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    \4\ See CECL FAQs, question 36, for examples of how and when 
institutions with non-calendar fiscal years must incorporate the new 
credit losses standard into their regulatory reports. The CECL FAQs 
and a related link to the joint statement can be found on the 
Board's website: https://www.federalreserve.gov/supervisionreg/srletters/sr1708a1.pdf.
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    Due to the different effective dates for Accounting Standards 
Update (ASU) 2016-13, the period over which institutions may be 
implementing this ASU ranges from the first quarter of 2019 through the 
fourth quarter of 2022. December 31, 2022, will be the first quarter-
end of which all institutions would be required to prepare their 
reports in accordance with ASU 2016-13. It is expected that the 
majority of institutions will implement the standard in the first or 
fourth quarter of 2021. Schedule titles or specific data item captions 
resulting from the change in nomenclature upon the adoption of CECL 
generally would not be reflected in the reporting forms until March 31, 
2021, as outlined in the following schedule-by-schedule descriptions of 
the changes to the affected reporting schedules.
    Because of the staggered adoption dates, the Board is implementing 
the CECL revisions in stages. First, the Board revised the reporting 
form and instructions and added data items and schedules for certain 
impacted reports effective for March 31, 2019. The changes included 
guidance stating how institutions that have adopted ASU-2016-13 should 
report the data items related to the ``provision for credit losses'' 
and ``allowance for credit losses, as applicable. Next, for the 
transition period from March 31, 2021, through December 31, 2022, the 
reporting form and instructions for each impacted schedule title or 
data item will be updated to include guidance stating how institutions 
that have not adopted ASU 2016-13 should report the ``provision for 
loan and lease losses'' or the ``allowance for loan and lease losses 
(ALLL),'' as applicable.
    The table below summarizes the effective dates for the 2019 and 
2021 CECL revisions.

------------------------------------------------------------------------
                                                Add items,
                                                   add,
                                                 footnotes   Revise item
                    Report                        and or       captions
                                                  revise
                                               instructions
------------------------------------------------------------------------
FR 2644......................................    03/27/2019   01/06/2021
FR 2248......................................    03/31/2019   01/31/2021
FR 2320......................................    03/31/2019  ...........
FR Y-8.......................................    03/31/2019  ...........
FR Y-9C......................................    03/31/2019   03/31/2021
FR Y-9LP.....................................    03/31/2019   03/31/2021
FR 2314/S....................................    03/31/2019   03/31/2021
FR Y-11/S....................................    03/31/2019   03/31/2021
FR 2886b.....................................    03/31/2019   03/31/2021
FR Y-7N/NS...................................    03/31/2019   03/31/2021
FR Y-9SP.....................................    06/30/2019   06/30/2021
------------------------------------------------------------------------

CECL Revisions

    The Board is adopting revisions to all regulatory reports listed in 
the Summary section in response to ASU 2016-13 in order to align the 
information reported with the new standard as it relates to the credit 
losses for loans and leases, including off-balance sheet credit 
exposures. These revisions address the broadening of the scope of 
financial assets for which an allowance for credit losses assessment 
must be established and maintained, along with the

[[Page 11787]]

elimination of the existing model for purchased credit-impaired (PCI) 
assets. The revisions for the FR Y-9C are described in detail, mostly 
on a schedule-by-schedule basis. The CECL revisions to all the other 
reports mirror the revisions to the FR Y-9C, where applicable.
    CECL is applicable to all financial instruments carried at 
amortized cost (including loans held for investment (HFI) and held-to-
maturity (HTM) debt securities, as well as trade and reinsurance 
receivables and receivables that relate to repurchase agreements and 
securities lending agreements), net investments in leases, and off-
balance-sheet credit exposures not accounted for as insurance, 
including loan commitments, standby letters of credit, and financial 
guarantees. Under ASU 2016-13, institutions will record credit losses 
through an allowance for credit losses for available-for-sale (AFS) 
debt securities rather than as a write-down through earnings for other-
than-temporary impairment (OTTI). The broader scope of financial assets 
for which allowances must be estimated under ASU 2016-13 results in the 
reporting of additional allowances, and related charge-off and recovery 
data and changes to the terminology used to describe allowances for 
credit losses. To address the broader scope of assets that will have 
allowances under ASU 2016-13, the Board changed the allowance 
nomenclature to consistently use ``allowance for credit losses'' 
followed by the specific asset type as relevant, e.g., ``allowance for 
credit losses on loans and leases'' and ``allowance for credit losses 
on HTM debt securities.
    By broadening the scope of financial assets for which the need for 
allowances for credit losses must be assessed to include HTM and AFS 
debt securities, the new standard eliminates the existing OTTI model 
for such securities. Subsequent to a firm's adoption of ASU 2016-13, 
the concept of OTTI will no longer be relevant and information on OTTI 
will no longer be captured.
    The new standard also eliminates the separate impairment model for 
PCI loans and debt securities. Under CECL, credit losses on purchased 
credit deteriorated (PCD) financial assets are subject to the same 
credit loss measurement standard as all other financial assets carried 
at amortized cost. Subsequent to an institution's adoption of ASU 2016-
13, information on PCI loans will no longer be captured.
    While the standard generally does not change the scope of off-
balance sheet credit exposures subject to an allowance for credit loss 
assessment, the standard does change the period over which the firm 
should estimate expected credit losses. For off-balance sheet credit 
exposures, a firm will estimate expected credit losses over the 
contractual period in which they are exposed to credit risk. For the 
period of exposure, the estimate of expected credit losses should 
consider both the likelihood that funding will occur and the amount 
expected to be funded over the estimated remaining life of the 
commitment or other off-balance sheet exposure. In contrast to the 
existing practices, the FASB decided that no credit losses should be 
recognized for off-balance sheet credit exposures that are 
unconditionally cancellable by the issuer. The exclusion of 
unconditionally cancellable commitments from the allowance for credit 
losses assessment on off-balance sheet credit exposures requires 
clarification to applicable reporting instructions.
    As of the new accounting standard's effective date, institutions 
will apply the standard based on the characteristics of financial 
assets as follows:

     Financial assets carried at amortized cost (that are not 
PCD assets) and net investments in leases: A cumulative-effect 
adjustment for the changes in the allowances for credit losses will be 
recognized in retained earnings, net of applicable taxes, as of the 
beginning of the first reporting period in which the new standard is 
adopted. The cumulative-effect adjustment to retained earnings should 
be reported in FR Y-9C Schedule HI-A, item 2, ``Cumulative effect of 
changes in accounting principles and corrections of material accounting 
errors,'' and explained in Notes to the Income Statement for which a 
preprinted caption, ``Adoption of Current Expected Credit Losses 
Methodology--ASC Topic 326,'' will be provided in the text field for 
this item.
     PCD financial assets: Financial assets classified as PCI 
assets prior to the effective date of the new standard will be 
classified as PCD assets as of the effective date. For all financial 
assets designated as PCD assets as of the effective date, an 
institution will be required to gross up the balance sheet amount of 
the financial asset by the amount of its allowance for expected credit 
losses as of the effective date, resulting in an adjustment to the 
amortized cost basis of the asset to reflect the addition of the 
allowance for credit losses as of that date. For loans held for 
investment and HTM debt securities, this allowance gross-up as of the 
effective date of ASU 2016-13 should be reported in the appropriate 
columns of Schedule HI-B, Part II, item 6, ``Adjustments,'' and should 
be explained in the Notes to the Income Statement for which a 
preprinted caption, ``Effect of adoption of current expected credit 
losses methodology on allowances for credit losses on loans and leases 
held for investment and held-to-maturity debt securities,'' will be 
provided in the text field for this item. Subsequent changes in the 
allowance for credit losses on PCD financial assets will be recognized 
by charges or credits to earnings through the provision for credit 
losses. The institution will continue to accrete the noncredit discount 
or premium to interest income based on the effective interest rate on 
the PCD financial assets determined after the gross-up for the CECL 
allowance as of the effective date of adoption, except for PCD 
financial assists in nonaccrual status.
     AFS and HTM debt securities: A debt security on which OTTI 
had been recognized prior to the effective date of the new standard 
will transition to the new guidance prospectively (i.e., with no change 
in the amortized cost basis of the security). The effective interest 
rate on such a debt security before the adoption date will be retained 
and locked in. Amounts previously recognized in accumulated other 
comprehensive income (AOCI) related to cash flow improvements will 
continue to be accreted to interest income over the remaining life of 
the debt security on a level-yield basis. Recoveries of amounts 
previously written off relating to improvements in cash flows after the 
date of adoption will be recognized in income in the period received.
Schedule HI
    To address the broader scope of financial assets for which a 
provision will be calculated under ASU 2016-13, the Board revised 
Schedule HI, item 4, from ``Provision for loan and lease losses'' to 
``Provision for Credit losses on financial assets,'' effective March 
31, 2021. To address the elimination of the concept of OTTI by ASU 
2016-13, effective December 31, 2022, the Board removed Schedule HI, 
Memorandum item 17, ``Other-than-temporary impairment losses on held-
to-maturity and available-for-sale debt securities recognized in 
earnings.'' Under the new standard, institutions will recognize credit 
losses on HTM and AFS debt securities through an allowance for credit 
losses, and the Board will collect information on the allowance for 
credit losses on these two categories of debt securities in Schedule 
HI-B as discussed below. From March 31, 2019, through September 30, 
2022, the report

[[Page 11788]]

form and instructions for Memorandum item 17 include guidance stating 
that Memorandum item 17 is to be completed only by institutions that 
have not adopted ASU 2016-13.
Schedule HI-B
    To address the broader scope of financial assets for which 
allowances will be calculated under ASU 2016-13 and for which charge-
offs and recoveries will be applicable, the Board changed the title of 
Schedule HI-B effective March 31, 2021, from ``Charge-offs and 
Recoveries on Loans and Leases and Changes in Allowance for Loan and 
Lease Losses'' to ``Charge-offs and Recoveries on Loans and Leases and 
Changes in Allowance for Credit Losses.''
    In addition, effective March 31, 2021, to address the change in 
allowance nomenclature arising from the broader scope of allowances 
under ASU 2016-13, the Board revised Schedule HI-B, Part I, Memorandum 
item 4, from ``Uncollectible retail credit card fees and finance 
charges reversed against income (i.e., not included in charge-offs 
against the allowance for loan and lease losses)'' to ``Uncollectible 
retail credit card fees and finance charges reversed against income 
(i.e., not included in charge-offs against the allowance for credit 
losses on loans and leases).''
    To further address the broader scope of financial assets for which 
allowances will be calculated under ASU 2016-13, the Board revised 
Schedule HI-B, Part II, to also include changes in the allowances for 
credit losses on HTM and AFS debt securities. Effective March 31, 2019, 
the Board changed the title of Schedule HI-B, Part II, from ``Changes 
in Allowance for Loan and Lease Losses'' to ``Changes in Allowances for 
Credit Losses.''
    In addition, effective March 31, 2019, Schedule HI-B, Part II, was 
expanded from one column to a table with three columns titled:

 Column A: Loans and leases held for investment
 Column B: Held-to-maturity debt securities
 Column C: Available-for-sale debt securities

    From March 31, 2019, through September 30, 2022, the reporting form 
and the instructions for Schedule HI-B, Part II, include guidance 
stating that Columns B and C are to be completed only by institutions 
that have adopted ASU 2016-13.
    In addition, effective March 31, 2019, Schedule HI-B, Part II, item 
4, was revised from ``Less: Write-downs arising from transfers of loans 
to a held-for-sale account'' to ``Less: Write-downs arising from 
transfers of financial assets'' to capture changes in allowances from 
transfers of loans from held-to-investment to held-for-sale and from 
transfers of securities between categories, e.g., from the AFS to the 
HTM category. Further, effective March 31, 2019, Schedule HI-B, Part 
II, item 5, was revised from ``Provision for loan and lease losses'' to 
``Provision for credit losses'' to capture the broader scope of 
financial assets included in the schedule.
    Effective March 31, 2019, or the first quarter in which an HC 
reports its adoption of ASU 2016-13, whichever is later, Schedule HI-B, 
Part II, item 6, ``Adjustments,'' will be used to capture the initial 
impact of applying ASU 2016-13 as of the effective date in the period 
of adoption as well as the initial allowance gross-up for PCD assets as 
of the effective date. Item 6 also will be used to report the allowance 
gross-up upon the acquisition of PCD assets on or after the effective 
date.
    In the memorandum section of Schedule HI-B, Part II, to address the 
change in allowance nomenclature arising from the broader scope of 
allowances under ASU 2016-13 the Board revised the caption for 
Memorandum item 3, effective March 31, 2021, from ``Amount of allowance 
for loan and lease losses attributable to retail credit card fees and 
finance charges'' to ``Amount of allowance for credit losses on loans 
and leases attributable to retail credit card fees and finance 
charges.'' Also, in the memorandum section of Schedule HI-B, Part II, 
effective December 31, 2022, the Board has removed existing Memorandum 
item 4, ``Amount of allowance for post-acquisition credit losses on 
purchased credit impaired loans accounted for in accordance with the 
American Institute of Certified Public Accountants (AICPA) Statement of 
Position 03-3'' as ASU 2016-13 eliminates the concept of PCI loans and 
the separate credit impairment model for such loans. From March 31, 
2019, through September 30, 2022, the reporting form and instructions 
for Schedule HI-B, Part II, Memorandum item 4, specify that this item 
should be completed only by institutions that have not yet adopted ASU 
2016-13.
    Given that the scope of ASU 2016-13 is broader than the three 
financial asset types to be included in the table in Schedule HI-B, 
Part II, effective March 31, 2019, the Board added new Memorandum item 
5, ``Provisions for credit losses on other financial assets carried at 
amortized cost,'' and Memorandum item 6, ``Allowance for credit losses 
on other financial assets carried at amortized cost,'' to Schedule HI-
B, Part II, at the same time. For purposes of Memorandum items 5 and 6, 
other financial assets include all financial assets measured at 
amortized cost other than loans and leases held for investment and HTM 
debt securities. From March 31, 2019, through September 30, 2022, the 
reporting form and instructions for Schedule HI-B, Part II, include 
guidance stating that Memorandum items 5 and 6 are to be completed only 
by institutions that have adopted ASU 2016-13.
Schedule HI-C
    Schedule HI-C currently requests allowance information for specific 
categories of loans held for investment that is disaggregated on the 
basis of three separate credit impairment models, and the amounts of 
the related recorded investments, from institutions with $1 billion or 
more in total assets. ASU 2016-13 eliminates these separate credit 
impairment models and replaces them with CECL for all financial assets 
measured at amortized cost. As a result of this change, effective March 
31, 2021, the Board changed the title of Schedule HI-C from 
``Disaggregated Data on the Allowance for Loan and Lease Losses'' to 
``Disaggregated Data on Allowances for Credit Losses.''
    To capture disaggregated data on allowances for credit losses from 
institutions that have adopted ASU 2016-13, the Board created Schedule 
HI-C, Part II, ``Disaggregated Data on Allowances for Credit Losses,'' 
effective March 31, 2019. The existing table in Schedule HI-C, which 
includes items 1 through 6 and columns A through F, would be renamed 
``Part I. Disaggregated Data on the Allowance for Loan and Lease 
Losses.'' From March 31, 2019 through September 30, 2022, the reporting 
form and instructions for Schedule HI-C, Part I, will include guidance 
stating that only those institutions that have not adopted ASU 2016-13 
should complete Schedule HI-C, Part I.
    Part II of this schedule contains six loan portfolio categories and 
the unallocated category for which data are currently collected in 
existing Schedule HI-C along with the following portfolio categories 
for which allowance information will begin to be reported for HTM debt 
securities.
    The Board reevaluated the proposed portfolio categories for which 
disaggregated allowance information would begin to be reported by 
institutions after adoption of ASU 2016-13 for HTM debt securities on 
Schedule HI-C, Part II, on the FR Y-9C. The

[[Page 11789]]

Board determined that separate reporting of allowances on HTM mortgage-
backed securities issued or guaranteed by U.S. government agencies or 
sponsored agencies and other HTM mortgage-backed securities is not 
needed because, at present, the former category of mortgage-backed 
securities would likely have zero expected credit losses. As a result, 
the Board will combine these portfolio categories and collect only one 
data item, rather than two data items, for the total allowances on an 
institution's HTM mortgage-backed securities:
    1. Securities issued by states and political subdivisions in the 
U.S;
    2. Mortgage-backed securities (MBS) (including CMOs, REMICs, and 
stripped MBS);
    3. Asset-backed securities and structured financial products;
    4. Other debt securities;
    5. Total.
    For each category of loans in Part II of Schedule HI-C, 
institutions report the amortized cost and the allowance balance in 
Columns A and B, respectively. The amortized cost amounts to be 
reported would exclude the accrued interest receivable that is reported 
in ``Other assets'' on the balance sheet. For each category of HTM debt 
securities in Part II of Schedule HI-C, institutions would report the 
allowance balance. The amortized cost and allowance information on 
loans and the allowance information on HTM debt securities would be 
reported quarterly and would be completed only by institutions with $1 
billion or more in total assets, as is currently done with existing 
Part I of Schedule HI-C.
    The Board will use the securities-related information gathered in 
Part II of the schedule to monitor the allowance levels for the 
categories of HTM debt securities specified above. Further, with the 
removal of FR Y-9C item for OTTI losses recognized in earnings 
(Schedule HI, Memorandum item 17), Schedule HI-C, Part II, will become 
another source of information regarding credit losses of HTM debt 
securities, in addition to data reported in Schedule HI-B, Part II. 
From March 31, 2019, through September 30, 2022, the reporting form and 
instructions for Schedule HI-C, Part II, include guidance stating that 
only those institutions with $1 billion or more in total assets that 
have adopted ASU 2016-13 should complete Schedule HI-C, Part II.
    In addition, effective December 31, 2022, the Board will remove the 
existing Schedule HI-C, Part I. Schedule HI-C, Part II, would then be 
the only table remaining within this schedule and the ``Part II'' 
designation would be removed.
Notes to the Income Statement--Predecessor Financial Items
    Effective March 31, 2021, the Board will address the broader scope 
of financial assets for which a provision will be calculated under ASU 
2016-13. From March 31, 2019, through September 30, 2022, the reporting 
form and instructions for line item 4, ``Provision for loan and lease 
losses,'' includes guidance that only institutions that have adopted 
ASU 2016-13 should report the provision for credit losses in this item. 
Effective March 31, 2021, the Board will revise line item 4 from 
``Provision for Loan and Lease losses'' to ``Provision for Credit 
Losses.''
Notes to the Income Statement
    Effective March 31, 2019, the Board added a preprinted caption to 
the text field that would be titled ``Adoption of Current Expected 
Credit Losses Methodology--ASC Topic 326.'' Institutions will use this 
item to report the cumulative-effect adjustment (net of applicable 
income taxes) recognized in retained earnings for the changes in the 
allowances for credit losses on financial assets and off-balance sheet 
credit exposures as of the beginning of the fiscal year in which the 
institution adopts ASU 2016-13. Providing a preprinted caption for this 
data item, rather than allowing each HC to enter its own description 
for this cumulative-effect adjustment, will enhance the Board's ability 
to compare the impact of the adoption of ASU 2016-13 across 
institutions. From March 31, 2019 through December 31, 2022, the 
reporting form and instructions for Notes to the Income Statement, 
specify that this item is to be completed only in the quarter-end FR Y-
9C for the remainder of the calendar year in which an HC adopts ASU 
2016-13. The Board anticipates that this preprinted caption would be 
removed after all HCs have adopted ASU 2016-13.
    To address the broader scope of financial assets for which an 
allowance will be maintained under ASU 2016-13, effective March 31, 
2019, the Board added two preprinted captions to the text field that 
would be titled ``Initial allowances for credit losses recognized upon 
the acquisition of purchased deteriorated assets on or after the 
effective date of ASU 2016-13'' and ``Effect of adoption of current 
expected credit losses methodology on allowances for credit losses on 
loans and leases held for investment and held-to-maturity debt 
securities.'' The latter of these preprinted captions is used to 
capture the change in the amount of allowances from initially applying 
ASU 2016-13 on these two categories of assets as of the effective date 
of the accounting standard in the period of adoption, including the 
initial gross-up for any PCD assets held as of the effective date. From 
March 31, 2019, through September 30, 2022, the reporting form and 
instructions specify that these items are to be completed only by HCs 
that have adopted ASU 2016-13 and, for the latter preprinted caption, 
only in the quarter-end FR Y-9C report for the remainder of the 
calendar year in which an institution adopts ASU 2016-13. The Board 
anticipates the latter preprinted caption would be removed after all 
institutions have adopted ASU 2016-13.
Schedule HC
    To address the broader scope of financial assets for which 
allowances will be estimated under ASU 2016-13, the Board revised the 
reporting form and instructions to specify which assets should be 
reported net of an allowance for credit losses on the balance sheet and 
which asset categories should be reported gross of such an allowance. 
The Board determined that the only financial asset category for which 
separate (i.e., gross) reporting of the amortized cost \5\ and the 
allowance is needed on Schedule HC continues to be item 4.b, ``Loans 
and leases held for investment,'' because of the large relative size 
and importance of these assets and their related allowances to the 
overall balance sheet for most institutions. For other financial assets 
within the scope of CECL, the Board instructed HCs to report these 
assets at amortized cost \6\ net of the related allowance for credit 
losses on Schedule HC.
---------------------------------------------------------------------------

    \5\ Amortized cost amounts to be reported by asset category 
would exclude any accrued interest receivable on assets in that 
category that is reported in ``Other assets'' on the balance sheet.
    \6\ See footnote 10.
---------------------------------------------------------------------------

    Effective March 31, 2021, the Board revised Schedule HC, item 2.a, 
from ``Held-to-maturity securities'' to ``Held-to-maturity securities, 
net of allowance for credit losses.'' From March 31, 2019, through 
December 31, 2020, the Board added a footnote to Schedule HC, item 2.a, 
specifying that HCs should ``report this amount net of any applicable 
allowance for credit losses.'' Additionally, for Schedule HC, item 3.b, 
``Securities purchased under agreements to resell,'' and Schedule HC, 
item 11, ``Other assets,'' effective March 31, 2019, the Board added a 
footnote to these items specifying that HCs should ``report this amount 
net of any

[[Page 11790]]

applicable allowance for credit losses.'' From March 31, 2019, through 
September 30, 2022, the reporting form and the instructions for 
Schedule HC, items 2.a, 3.b, and 11, specify that reporting such items 
net of any related allowances for credit losses is applicable only to 
those institutions that have adopted ASU 2016-13. Given that AFS debt 
securities are carried on Schedule HC at fair value, the Board did not 
propose any changes to Schedule HC, item 2.b, ``Available-for-sale 
securities,'' and instead institutions will report allowances for 
credit losses on AFS debt securities only in Schedule HI-B, Part II.
    In addition, to address the change in allowance nomenclature 
arising from the broader scope of allowances under ASU 2016-13, the 
Board revised Schedule HC, item 4.c, from ``LESS: Allowance for loan 
and lease losses'' to ``LESS: Allowance for credit losses on loans and 
leases'' effective March 31, 2021. Effective March 31, 2019, the Board 
added a footnote to this item specifying that institutions who have 
adopted ASU 2016-13 should report the allowance for credit losses on 
loans and leases in this item.
Schedule HC-B
    Effective March 31, 2019, the Board revised the instructions to 
Schedule HC-B to clarify that for institutions that have adopted ASU 
2016-13, allowances for credit losses should not be deducted from the 
amortized cost amounts reported in columns A and C of this schedule.\7\ 
In other words, institutions should continue reporting the amortized 
cost of HTM and AFS debt securities in these two columns of Schedule 
HC-B gross of their related allowances for credit losses.
---------------------------------------------------------------------------

    \7\ Amortized cost amounts to be reported by securities category 
in Schedule HC-B would exclude any accrued interest receivable on 
the securities in that category that is reported in ``Other assets'' 
on the balance sheet.
---------------------------------------------------------------------------

Schedule HC-C
    Effective March 31, 2021, to address the change in allowance 
nomenclature, the Board will revise the reporting form and the 
instructions for Schedule HC-C by replacing references to the allowance 
for loan and lease losses in statements indicating that the allowance 
should not be deducted from loans and leases in this schedule with 
references to the allowance for credit losses. Thus, loans and leases 
will continue to be reported gross of any allowances or allocated 
transfer risk reserve in Schedule HC-C.
    In addition, to address the elimination of PCI assets by ASU 2016-
13, the Board will remove Schedule HC-C, Part I, Memorandum items 5.a 
and 5.b, in which institutions report the outstanding balance and 
balance sheet amount, respectively, of PCI loans held for investment 
effective December 31, 2022. The agencies determined that these items 
were not needed after the transition to PCD loans under ASU 2016-13 
because the ASU eliminates the separate credit impairment model for PCI 
loans and applies CECL to all loans held for investment measured at 
amortized cost. From March 31, 2019, through September 30, 2022, the 
reporting form and the instructions for Schedule HC-C, Memorandum items 
5.a and 5.b, specify that these items should be completed only by 
institutions that have not yet adopted ASU 2016-13.
    Additionally, since ASU 2016-13 supersedes ASC 310-30, the Board 
will revise Schedule HC-C, Memorandum item 12, ``Loans (not subject to 
the requirements of AICPA Statement of Position 03-3) and leases held 
for investment that were acquired in business combinations with 
acquisition dates in the current calendar year,'' effective December 
31, 2022. As revised, the loans held for investment reported in 
Memorandum item 12 will be those not considered purchased credit 
deteriorated per ASC 326. From March 31, 2019, through September 30, 
2022, the Board revised the reporting form and the instructions for 
Schedule HC-C, by adding a statement explaining that, subsequent to 
adoption of ASU 2016-13, an HC should report only loans held for 
investment not considered purchased credit deteriorated per ASC 326 in 
Schedule HC-C, Memorandum item 12.
Schedule HC-F
    To address the broader scope of financial assets for which an 
allowance will be applicable under ASU 2016-13, the Board specified 
that assets within the scope of the ASU that are included in Schedule 
HC-F should be reported net of any applicable allowances for credit 
losses. Effective March 31, 2019, the Board revised the reporting form 
and the instructions for Schedule HC-F by adding a statement explaining 
that, subsequent to adoption of ASU 2016-13, an HC should report asset 
amounts in Schedule HC-F net of any applicable allowances for credit 
losses.
    In addition, effective March 31, 2019, the Board added a footnote 
to item 1, ``Accrued interest receivable,'' on the reporting form and a 
statement to the instructions for item 1 that specifies that HCs should 
exclude from this item any accrued interest receivables that is 
reported elsewhere on the balance sheet as part of the related 
financial asset's amortized cost.
Schedule HC-G
    To address ASU 2016-13's exclusion of off-balance sheet credit 
exposures that are unconditionally cancellable from the scope of off-
balance sheet credit exposures for which allowances for credit losses 
should be measured, the Board revised the reporting form and 
instructions for Schedule HC-G, item 3, ``Allowance for credit losses 
on off-balance-sheet credit exposures,'' effective March 31, 2019. As 
revised, the reporting form and instructions would state that HCs that 
have adopted ASU 2016-13 should report in item 3 the allowance for 
credit losses on those off-balance sheet credit exposures that are not 
unconditionally cancellable.
Schedule HC-K
    Effective March 31, 2019, the Board revised the instructions to 
Schedule HC-K to clarify that, for institutions that have adopted ASU 
2016-13, allowances for credit losses should not be deducted from the 
related amortized cost amounts when calculating the quarterly averages 
for all debt securities.
Schedule HC-N
    To address the elimination of PCI assets by ASU 2016-13, the Board 
will remove Schedule HC-N, Memorandum items 9.a and 9.b, in which 
institutions report the outstanding balance and balance sheet amount, 
respectively, of past due and nonaccrual PCI loans effective December 
31, 2022. The Board determined that these items were not needed for PCD 
loans under ASU 2016-13 given that the ASU eliminates the separate 
credit impairment model for PCI loans and applies CECL to PCD loans and 
all other loans held for investment measured at amortized cost. From 
March 31, 2019, through September 30, 2022, the reporting form and the 
instructions for Schedule HC-N, Memorandum items 9.a and 9.b, specify 
that these items should be completed only by HCs that have not yet 
adopted ASU 2016-13.
Schedule HC-R
    In December 2018, the agencies approved a final rule amending their 
capital rule to address CECL.\8\ The final rule included revised 
terminology for the allowance balance eligible for inclusion in 
regulatory capital.\9\ The

[[Page 11791]]

Board has made a conforming terminology revision for the reporting of 
regulatory capital on Schedule HC-R.
---------------------------------------------------------------------------

    \8\ See https://www.federalreserve.gov/newsevents/pressreleases/bcreg20181221a.htm.
    \9\ The agencies' final rule uses the term ``adjusted allowances 
for credit losses'' for regulatory capital purposes to distinguish 
such allowances from allowances for credit losses for accounting 
purposes.
---------------------------------------------------------------------------

    In connection with the CECL Rule, the Board is adopting a number of 
revisions to Schedule HC-R to incorporate new terminology and the 
approved optional regulatory capital transition. Unless otherwise 
indicated, the revisions to Schedule HC-R discussed below would take 
effect March 31, 2019 (or the first quarter-end report date thereafter 
following the effective date on any final rule) and would apply to 
those institutions that have adopted CECL.
    The CECL Rule introduces newly-defined regulatory capital term, 
allowance for credit losses (ACL), which replaces the ALLL, as defined 
under the capital rules for HCs that adopt CECL. The CECL Rule also 
provides that credit loss allowances for PCD assets held by these HCs 
should be netted when determining the carrying value, as defined in the 
CECL Rule, and, therefore, only the resulting net amount is be subject 
to risk-weighting. In addition, in the CECL Rule, the agencies have 
provided each institution the option to phase in the day-one regulatory 
capital effects that may result from the adoption of ASU 2016-13 over 
the three-year period beginning with the institution's CECL effective 
date.\10\
---------------------------------------------------------------------------

    \10\ A non-PBE with a calendar year fiscal year that does not 
early adopt CECL would first report under CECL as of December 31, 
2021, even though the non-PBE's CECL effective date is January 1, 
2021. Thus, under the CECL Rule, such a non-PBE should use the 
phase-in percentage applicable to the first year of the three-year 
transition period only for the December 31, 2021, report date (i.e., 
one quarter), not the four quarters that begin with the first report 
under CECL. The non-PBE may use the applicable phase-in percentages 
for all four quarters of the second and third years after the CECL 
effective date (i.e., 2022 and 2023). The same principle would apply 
to the optional phase-in by a non-PBE with a non-calendar fiscal 
year.
---------------------------------------------------------------------------

Allowances for Credit Losses Definition and Treatment of Purchase 
Credit Deteriorated Assets
    In general, under the CECL Rule, HCs that have adopted CECL will be 
required to report ACL amounts instead of ALLL amounts that are 
currently reported. Effective December 31, 2022, the Board removed 
references to ALLL and replaced them with references to ACL on the 
reporting form for Schedule HC-R. From March 31, 2019 through September 
30, 2022, the Board revised the instructions to Schedule HC-R to direct 
institutions that have adopted CECL to use ACL instead of ALLL in 
calculating regulatory capital. The revisions to the instructions would 
affect Schedule HC-R, Part I. Regulatory Capital Components and Ratios, 
item 30.a, ``Allowance for loan and lease losses includable in tier 2 
capital,'' and Schedule HC-R, Part II. Risk-Weighted Assets, items 6, 
``LESS: Allowance for loan and lease losses,'' 26, ``Risk-weighted 
assets for purposes of calculating the allowance for loan and lease 
losses 1.25 percent threshold,'' 28, ``Risk-weighted assets before 
deductions for excess allowance of loan and lease losses and allocated 
risk transfer risk reserve,'' and 29, ``LESS: Excess allowance for loan 
and lease losses.''
    In addition, consistent with the CECL Rule, assets and off-balance 
sheet credit exposures for which any related credit loss allowances are 
eligible for inclusion in regulatory capital would be calculated and 
reported in Schedule HC-R Part II. Risk-Weighted Assets on a gross 
basis. Therefore, the Board revised the instructions for Schedule HC-R, 
Part II. Risk-Weighted Assets, items 2.a, ``Held-to-maturity 
securities''; 3.b., ``Securities purchased under agreements to 
resell''; 5.a., ``Residential mortgage exposures'' held for investment; 
5.b, ``High volatility commercial real estate exposures'' held for 
investment; 5.c, Held-for-investment ``Exposures past 90 days or more 
or on nonaccrual''; 5.d, ``All other exposures'' held for investment; 
8, ``All other assets,'' and 9.a, ``On-balance sheet securitization 
exposures: Held-to-maturity securities''; to explain that HCs that have 
adopted CECL should report and risk-weight their loans and leases held 
for investment, HTM securities, and other financial assets measured at 
amortized cost gross of their credit loss allowances, but net of the 
associated allowances on PCD assets.\11\
---------------------------------------------------------------------------

    \11\ Amortized cost amounts to be reported by asset category in 
Schedule HC-R, Part II, would exclude any accrued interest 
receivable on assets in that category that is reported in ``Other 
assets'' on the Call Report balance sheet.
---------------------------------------------------------------------------

    In addition, effective March 31, 2019, the Board added a new 
Memorandum item 5 to, Schedule HC-R, Part II that would collect data by 
asset category on the ``Amount of allowances for credit losses on 
purchased credit-deteriorated assets.'' The amount of such allowances 
for credit losses are reported separately for ``Loans and leases held 
for investment'' in Memorandum item 5.a, Held-to-maturity debt 
securities'' in Memorandum item 5.b, and ``Other financial assets 
measured at amortized cost'' in Memorandum item 5.c. The instructions 
for Schedule HC-R, Part II, Memorandum item 5, specify that these items 
should be completed only by HCs that have adopted ASU 2016-13.
    The Board included footnotes for the affected items on the forms to 
highlight the revised treatment of those items for institutions that 
have adopted CECL.
CECL Transition Provision
    Under the CECL Rule, an HC that experiences a reduction in retained 
earnings as of the effective date of CECL for the HC as a result of the 
HC's adoption of CECL may elect to phase in the regulatory capital 
impact of adopting CECL (electing institution). As described in the 
CECL Rule, an electing HC should indicate in its FR Y-9C report whether 
it has elected to use the CECL transition provision beginning in the 
quarter that it first reports its credit loss allowances as measured 
under CECL. To identify which HCs are electing HCs, the Board revised 
Schedule HC-R, Part I, Regulatory Capital Components and Ratios, by 
adding a new item 2.a in which a HC that has adopted CECL would report 
whether it has or does not have a CECL transition election in effect as 
of the quarter-end report date. Each institution will complete item 2.a 
beginning in the FR Y-9C for its first reporting under CECL and in each 
subsequent FR Y-9C report thereafter until item 2.a is removed from the 
report. Until an institution has adopted CECL, it will leave item 2.a 
blank. Effective March 31, 2025, the Board will remove item 2.a from 
Schedule HC-R, Part I, because the optional three-year phase-in period 
will have ended for all electing institutions by the end of the prior 
calendar year. If an individual electing institution's three-year 
phase-in period ends before item 2.a is removed (e.g., its phase-in 
period ends December 31, 2022), the institution would change its 
response to item 2.a and report that it does not have a CECL transition 
election in effect as of the quarter-end report date.
    During the CECL transition period, an electing HC would need to 
make adjustments to its retained earnings, temporary difference 
deferred tax assets, adjusted allowances for credit losses, and average 
total consolidated assets for regulatory capital purposes. An advanced 
approaches institution also would need to make an adjustment to its 
total leverage exposure. These adjustments are described in detail in 
the CECL Rule.
    The Board revised the instructions to Schedule HC-R, Part I, 
Regulatory Capital Components and Ratios, items 2, ``Retained 
earnings,'' 30.a, ``Allowance for loan and lease losses includable in 
tier 2 capital,'' item 36, ``Average total consolidated assets,'' as 
well as Schedule HC-R, Part II, Risk-Weighted Assets, item 8, ``All 
other assets,'' consistent with the adjustments to these items for the 
applicable transitional

[[Page 11792]]

amounts as described in the CECL Rule for reporting by electing HCs to 
report the adjusted amounts. The Board has included footnotes on the 
reporting forms to highlight the changes to these items for electing 
institutions.

Schedule HC-V

    The Board clarified in the instructions effective March 31, 2019, 
that all assets of consolidated variable interest entities should be 
reported net of applicable allowances for credit losses by HCs that 
have adopted ASU 2016-13. Net reporting on Schedule HC-V by such HCs is 
consistent with the changes to Schedules HC and HC-F. Similarly, 
effective March 31, 2019, the reporting form for Schedule HC-V 
specifies that HCs that have adopted ASU 2016-13 should report assets 
net of applicable allowances.
FR 2248, FR 2314/S, FR 2320, FR 2644, FR 2886b, FR Y-7N/NS, FR Y-8, FR 
Y-9LP, FR Y-9SP, and FR Y-11/S
    The Board has made changes to the FR 2248, FR 2314/S, FR 2320, FR 
2644, FR 2886b, FR Y-7N/NS, FR Y-8, FR Y-9LP, FR Y-9SP, and the FR Y-
11/S report to mirror the FR Y-9C and Call report reporting revisions 
related to ASU 2016-13. The report forms and instructions were revised 
to clearly indicate that HTM securities, securities purchased under 
agreements to resell, and other assets should be reported net of 
applicable allowance for credit losses for those institutions that have 
adopted the standard. Additionally, the Board indicated on the report 
form and instructions that institutions that have adopted the ASU 2016-
13 should report ``Allowance for credit losses on loans and leases'' 
and ``Provisions for credit losses for all applicable financial 
assets.''
    To further address the broader scope of financial assets for which 
allowances will be calculated under ASU 2016-13, the Board revised the 
FR 2314/S, FR 2886b, FR Y-7N/NS, and the FR Y-11/S report to change the 
title caption from Changes in Allowance for Loan and Lease Losses'' to 
``Changes in Allowances for Credit Losses'' and added three columns 
titled:
     Column A: Loans and leases;
     Column B: Held-to-maturity debt securities;
     Column C: Available-for-sale debt securities.

EGRRCPA Adopted FR Y-9C Report Revisions

    On September 28, 2018, the Board, pursuant to its delegated 
authority,\12\ temporarily approved certain revisions to the FR Y-9C 
relating to statutory amendments enacted by EGRRCPA.\13\ Pursuant to 
the requirements of the Board's delegated authority, the Board is now 
extending these revisions for three years through the normal delegated 
clearance process.\14\
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    \12\ 5 CFR Pt. 1320, Appx. A(a)(3)(i)(A).
    \13\ See 83 FR 48990 (September 28, 2018).
    \14\ See 5 CFR Pt. 1320, Appx. A(a)(3)(i)(B).
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    Section 214 of EGRRCPA, which was enacted on May 24, 2018, modified 
the Federal Deposit Insurance Act (FDI Act) to add a new section 51 
governing the risk-based capital requirements for certain acquisition, 
development, or construction (ADC) loans. EGRRCPA provides that, 
effective upon enactment, the federal banking agencies may only require 
a depository institution to assign a heightened risk weight to an HVCRE 
exposure if such exposure is an ``HVCRE ADC Loan,'' as defined in this 
new law.
    Section 202 of EGRRCPA amended section 29 of the FDI Act to exclude 
a capped amount of reciprocal deposits from treatment as brokered 
deposits for qualifying institutions, effective upon enactment. The 
instructions for the FR Y-9C and the Call Report, consistent with the 
law prior to the enactment of EGRRCPA, previously treated all 
reciprocal deposits as brokered deposits. In amending section 29 of the 
FDI Act to exclude a capped amount of reciprocal deposits from 
treatment as brokered deposits for qualifying institutions, section 202 
defines ``reciprocal deposits'' to mean ``deposits received by an agent 
institution through a deposit placement network with the same maturity 
(if any) and in the same aggregate amount as covered deposits placed by 
the agent institution in other network member banks.'' The terms 
``agent institution,'' ``deposit placement network,'' ``covered 
deposit,'' and ``network member bank,'' all of which are used in the 
definition of ``reciprocal deposit,'' also are defined in section 202.
    In particular, an ``agent institution'' is an FDIC-insured 
depository institution that meets at least one of the following 
criteria:
     The institution is well-capitalized and has a composite 
condition of ``outstanding'' or ``good'' when most recently examined 
under section 10(d) of the FDI Act (12 U.S.C. 1820(d));
     The institution has obtained a waiver from the FDIC to 
accept, renew, or roll over brokered deposits pursuant to section 29(c) 
of the FDI Act (12 U.S.C. 1831f(c)); or
     The institution does not receive reciprocal deposits in an 
amount that is greater than a ``special cap'' (discussed below).
    Under the ``general cap'' set forth in section 202, an agent 
institution may classify reciprocal deposits up to the lesser of the 
following amounts as non-brokered reciprocal deposits:
     $5 billion, or
     An amount equal to 20 percent of the agent institution's 
total liabilities.
    Any amount of reciprocal deposits in excess of the ``general cap'' 
would be treated as, and should be reported as, brokered deposits.
    A ``special cap'' applies if an agent institution is either not 
``well-rated'' or not well-capitalized. In this situation, the 
institution may classify reciprocal deposits as non-brokered in an 
amount up to the lesser of the ``general cap'' or the average amount of 
reciprocal deposits held at quarter-end during the last four quarters 
the institution was well-capitalized and in ``outstanding'' or ``good'' 
condition.
    To address the change in the treatment of HVCRE loans and certain 
reciprocal deposits under EGRRCPA, the agencies made a number of 
revisions to the September 2018 Call instructions. In order to avoid 
the regulatory burden associated with applying different definitions 
for HVCRE exposures and reciprocal deposits within a single 
organization, the Board temporarily revised the FR Y-9C instructions so 
that they that are consistent with those changes to the Call Report. To 
assist HCs in preparing the FR Y-9C for that report date, the revised 
FR Y-9C Supplemental Instructions include information regarding the 
reporting of HVCRE exposures and reciprocal deposits.
    Specifically, the revisions to the FR Y-9C report provided that (i) 
respondents are permitted to report brokered deposits (in Schedule HC-E 
Memorandum items 1 and 2) in a manner consistent with the provisions of 
EGRRCPA,\15\ but also may choose to continue to report brokered 
deposits in a manner consistent with the current instructions to the FR 
Y-9C and (ii) respondents are permitted to apply a heightened risk 
weight only to those HVCRE exposures (in Schedule HC-R, Part II, items 
4.b, 5.b and 7) they believe meet the definition of HVCRE ADC Loan, but 
also may choose to continue to report and risk weight HVCRE exposures 
in a manner consistent with

[[Page 11793]]

the previous instructions to the FR Y-9C.
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    \15\ Although the EGRRCPA provision relating to reciprocal 
deposits and the risk-weighting of HVCRE applies only to depository 
institutions, the Board revised the FR Y-9C to permit HCs to report 
HVCRE in a manner consistent with their subsidiary depository 
institutions.
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Other Adopted Revisions

Revisions to the FR Y-9C
    On the Notes to the Income Statement--Predecessor Financial Items, 
the Board added footnote to line item 6, Realized gains (losses) on HTM 
and AFS securities to instruct HCs to include realized and unrealized 
holding gains and losses in this item in order to implement the 
accounting change pertaining to equity securities under ASU No. 2016-
01, ``Recognition and Measurement of Financial Assets and Financial 
Liabilities''). This change is consistent with the changes to the Call 
Report \16\ and the FR Y-9C \17\ report that became effective March 31, 
2018. This change is effective March 31, 2019.
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    \16\ See 83 FR 939 (February 7, 2018).
    \17\ See 83 FR 12395 (March 21, 2018).
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Revisions to the FR 2886b
    Effective March 31, 2019, the Board adopted a number of revisions 
to the FR 2886b reporting requirements, most of which align with 
changes implemented on the Call Report. The changes include:
     Revisions to Schedule RC-R, Regulatory Capital, for 
banking Edge Corporations;
     Revisions to the eligibility criteria for reporting 
Schedule RC-D, Trading Assets and Liabilities;
     Revisions to address changes in accounting for equity 
investments not held for trading; and
     Revisions to the reporting of equity investments accounted 
for under the equity method of accounting.
Schedule RC-R, Regulatory Capital (for banking Edge Corporations)
    Effective January 1, 1993, banking Edge Corporations became subject 
to capital adequacy guidelines under section 211.12(c) of Regulation K, 
International Banking Operations (12 CFR 211). According to Regulation 
K, banking Edge Corporations must maintain a minimum total capital to 
total risk-weighted assets ratio of at least 10 percent, of which at 
least 50 percent must consist of Tier 1 capital. In order to assess 
compliance with the capital requirements of Regulation K, banking Edge 
Corporations file FR 2886b Schedule RC-R, which currently consists of 
six items:
     Tier 1 capital allowable under the risk-based capital 
guidelines;
     Tier 2 capital allowable under the risk-based capital 
guidelines;
     Subordinated debt allowable as Tier 2;
     Total qualifying capital allowable under risk-based 
capital guidelines;
     Total risk-weighted assets and credit equivalent amounts 
of off-balance sheet items; and
     Credit equivalent amounts of off-balance-sheet items.
    In October of 2013, the Board and the OCC published the revised 
capital rules in the Federal Register \18\ (The FDIC published its own 
identical rules). The revised capital rules updated Regulation Q--
Capital Adequacy of Bank Holding Companies, Savings and Loan Holding 
Companies, and State Member Banks (12 CFR 217). As a result of this 
update, the concept of risk-based capital rules in Regulation Q 
replaced the concept of capital adequacy guidelines. Since banking Edge 
corporations are subject to capital adequacy guidelines under 
Regulation K, and the concept of capital adequacy guidelines in 
Regulation K was replaced by the concept of risk-based capital rules in 
Regulation Q, banking Edge Corporations were now subject to risk-based 
capital rules under Regulation Q.
---------------------------------------------------------------------------

    \18\ See 78 FR 62018 (October 11, 2013).
---------------------------------------------------------------------------

    From August of 2013 to February of 2015, the Board, in conjunction 
with the OCC and the FDIC, published initial and final notices in the 
Federal Register to revise Call Report Schedule RC-R, Regulatory 
Capital, to align with the revised capital rules under Regulation 
Q.\19\ As a result, Call Report Schedule RC-R, Part I, Regulatory 
Capital Components and Ratios, and Part II, Risk-Weighted Assets, were 
revised as of March 2014 and March 2015, respectively. The FR 2886b 
Schedule RC-R was not updated at this time to reflect the revised 
capital rules.
---------------------------------------------------------------------------

    \19\ See 78 FR 48934 (August 12, 2013), 79 FR 2527 (January 14, 
2014), 79 FR 35634 (June 23, 2014), and 80 FR 5618 (February 2, 
2015).
---------------------------------------------------------------------------

    The Board removed all six existing items on FR 2886b Schedule RC-R, 
and replaced them with four items that correspond to the risk-based 
capital rules under Regulation Q. The revisions are similar to the 
revisions made on Call Report Schedule RC-R, albeit concerning fewer 
items. The Board believes these four items sufficiently assess risk-
based capital adequacy for banking Edge Corporations, and better align 
with the risk-based capital rules under Regulation Q. Specifically, the 
Board added the following items to FR 2886b Schedule RC-R:
     Tier 1 Capital allowable under Regulation Q;
     Tier 2 Capital allowable under Regulation Q;
     Total Capital allowable under Regulation Q; and
     Total risk-weighted assets.
Schedule RC-D, Trading Assets and Liabilities
    The Board changed the reporting threshold for filing Schedule RC-D 
to Edges with total trading assets of $10 million or more in any of the 
four preceding calendar quarters, from the current threshold of $2 
million. The Board no longer needs the information reported in this 
schedule from Edges with a lesser amount of trading assets.
Changes in accounting for equity investments not held for trading
    In January 2016, the FASB issued ASU No. 2016-01, ``Recognition and 
Measurement of Financial Assets and Financial Liabilities.'' The Board 
revised the FR 2886b report form and instructions to account for the 
changes to U.S. GAAP set forth in ASU 2016-01 that are consistent with 
the changes made to the Call Report.\20\ These revised reporting 
requirements are effective for different sets of respondents as those 
respondents become subject to the ASU. Institutions that are public 
business entities, as defined in U.S. GAAP, are subject to ASU 2016-01 
for fiscal years beginning after December 15, 2017, including interim 
periods within those fiscal years. ASU 2016-01is effective for fiscal 
years beginning after December 15, 2018, and interim periods within 
fiscal years beginning after December 15, 2019. The period over which 
institutions will be implementing this ASU ranges from the first 
quarter of 2019 through the fourth quarter of 2020. December 31, 2020, 
will be the first quarter-end FR 2886b report date as of which all 
institutions would be required to prepare their FR 2886b in accordance 
with ASU 2016-01 and the revised reporting requirements.
---------------------------------------------------------------------------

    \20\ See 83 FR 939 (January 8, 2018).
---------------------------------------------------------------------------

    The changes to the accounting for equity investments under ASU 
2016-01 will affect several existing data items in the FR 2886b. One 
outcome of the change in accounting for equity investments under ASU 
2016-01 is the elimination of the concept of AFS equity securities, 
which are measured at fair value on the balance sheet with changes in 
fair value recognized through other comprehensive income. At present, 
the historical cost and fair value of AFS equity securities, i.e., 
investments in mutual funds and other equity securities with readily 
determinable fair values that are not held for trading, are reported in 
FR 2886b Schedule RC-B (Securities), item 3, columns C and D, 
respectively. The total fair value of AFS securities, which

[[Page 11794]]

includes both debt and equity securities, is then carried forward to 
the FR 2886b balance sheet and reported in Schedule RC, item 2.
    At present, the accumulated balance of the unrealized gains 
(losses) on AFS equity securities, net of applicable income taxes, that 
have been recognized through other comprehensive income is included in 
AOCI, which is reported in the equity capital section of the FR 2886b 
balance sheet in Schedule RC, item 24. With the elimination of AFS 
equity securities on the effective date of ASU 2016-01, the net 
unrealized gains (losses) on these securities that had been included in 
AOCI will be reclassified (transferred) from AOCI into the retained 
earnings component of equity capital, which is reported on the FR 2886b 
balance sheet in Schedule RC, item 23. After the effective date, 
changes in the fair value of (i.e., the unrealized gains and losses on) 
an institution's equity securities that would have been classified as 
AFS had the previously applicable accounting standards remained in 
effect will be recognized through net income rather than other 
comprehensive income.
    The effect of the elimination of AFS equity securities as a 
distinct asset category upon institutions' implementation of ASU 2016-
01 carries over to the agencies' regulatory capital rules. Under these 
rules, institutions that are eligible to and have elected to make the 
AOCI opt-out election deduct net unrealized losses on AFS equity 
securities from common equity tier 1 capital and include 45 percent of 
pretax net unrealized gains on AFS equity securities in tier 2 capital. 
When ASU 2016-01 takes effect and the classification of equity 
securities as AFS is eliminated for accounting and reporting purposes 
under U.S. GAAP, the concept of unrealized gains and losses on AFS 
equity securities will likewise cease to exist.
    Another outcome of the change in accounting for equity investments 
under ASU 2016-01 is that equity securities and other equity 
investments without readily determinable fair values that are within 
the scope of ASU 2016-01 and are not held for trading must be measured 
at fair value through net income, rather than at cost (less impairment, 
if any), unless the measurement election described above is applied to 
individual equity investments. In general, institutions currently 
report their holdings of such equity securities without readily 
determinable fair values as a category of other assets in FR 2886b 
Schedule RC, item 8 (item 8 is the total amount of an institution's 
other assets).
    At present, AFS equity securities and equity investments without 
readily determinable fair values are included in the quarterly averages 
reported in Schedule RC-K. Institutions report the quarterly average of 
its total securities in item 7 of this schedule and this average 
reflects AFS equity securities at fair value and equity investments 
without readily determinable fair values at historical cost (item 7 is 
total assets; there is no breakout for securities on Schedule RC-K on 
the FR 2886b).
    The Board has considered the changes to the accounting for equity 
investments under ASU 2016-01 and the effect of these changes on the 
manner in which data on equity securities and other equity investments 
are currently reported in the FR 2886b, which has been described above. 
Accordingly, the revisions to the FR 2886b report form and instructions 
to address the equity securities accounting changes are as follows:
Schedule RI
    To provide transparency to the effect of unrealized gains and 
losses on equity securities not held for trading on an institution's 
net income during the year-to-date reporting period in Schedule RI, 
Income Statement, and to clearly distinguish these gains and losses 
from the rest of an institution's income (loss) from its continuing 
operations, Schedule RI, item 8, was revised effective March 31, 2019, 
by creating new items 8.a, ``Income (loss) before unrealized holding 
gains (losses) on equity securities not held for trading, applicable 
income taxes, and discontinued operations,'' and 8.b, ``Unrealized 
holding gains (losses) on equity securities not held for trading.'' In 
addition to unrealized holding gains (losses) during the year-to-date 
reporting period on such equity securities with readily determinable 
fair values, institutions will also report in new item 8.b the year-to-
date changes in the carrying amounts of equity investments without 
readily determinable fair values not held for trading (i.e., unrealized 
holding gains (losses) for those measured at fair value through 
earnings; impairment, if any, plus or minus changes resulting from 
observable price changes for those equity investments for which this 
measurement election is made). Existing Schedule RI, item 8, ``Income 
(loss) before applicable income taxes and discontinued operations,'' 
has been renumbered as item 8.c, and is equal to the sum of items 8.a 
and 8.b. From March 31, 2019, through September 30, 2020, the 
instructions for item 8.b and the reporting form for Schedule RI 
include guidance stating that item 8.b is to be completed only by 
institutions that have adopted ASU 2016-01. Institutions that have not 
adopted ASU 2016-01 would leave item 8.b blank when completing Schedule 
RI. Finally, from March 31, 2019, through September 30, 2020, the 
instructions for Schedule RI, item 6, ``Realized gains (losses) on 
securities not held in trading accounts,'' and the reporting form for 
Schedule RI include guidance stating that, for institutions that have 
adopted ASU 2016-01, item 6 includes realized gains (losses) only on 
AFS debt securities. Effective December 31, 2020, the caption for item 
6 would be revised to ``Realized gains (losses) on available-for-sale 
debt securities.''
Schedule RC
    In Schedule RC, Balance Sheet, item 2, ``Securities,'' has been 
split into three items: Item 2.a: ``Held-to-maturity securities, net of 
allowance for credit losses,'' item 2.b: ``Available-for-sale 
securities not held for trading,'' and 2.c: ``Equity securities with 
readily determinable fair values not held for trading,'' effective 
March 31, 2019. From March 31, 2019, through September 30, 2020, the 
instructions for item 2.c and the reporting form for Schedule RC 
include guidance stating that item 2.c is to be completed only by 
institutions that have adopted ASU 2016-01. Institutions that have not 
adopted ASU 2016-01 would leave item 2.c blank. During this period, the 
instructions for items 2.a and 2.b explain that institutions that have 
adopted ASU 2016-01 should include only debt securities in these items. 
Effective December 30, 2020, the caption for item 2.a will be revised 
to ``Held-to-maturity debt securities, net of allowance for credit 
losses,'' and the caption for item 2.b will be revised to ``Available-
for-sale debt securities not held for trading.'' All institutions would 
report their holdings of equity securities with readily determinable 
fair values not held for trading in item 2.c.
    In Schedule RC, item 8, Other Assets, the instructions were revised 
to add language stating institutions that have adopted ASU 2016-01 
should report ``equity investments without readily determinable fair 
values'' at fair value, effective March 31, 2019. Institutions that 
have not adopted ASU 2016-01 will continue to report ``equity 
securities that do not have readily determinable fair values'' at 
historical cost. The types of equity securities and other equity 
investments currently reported in item 8 continue to be reported in 
this item. However, after the effective date of ASU 2016-01, the 
securities the institution reports in item

[[Page 11795]]

8 is measured in accordance with the ASU.
Schedule RC-B
    In Schedule RC-B, item 3, ``Equity interest in nonrelated 
organizations,'' will be removed effective December 30, 2020. From 
March 31, 2019, through September 30, 2020, the instructions for item 3 
and the reporting form for Schedule RC-B include guidance stating that 
item 3 is to be completed only by institutions that have not adopted 
ASU 2016-01. Institutions that have adopted ASU 2016-01 will leave item 
3 blank.
Investments Accounted for Under the Equity Method of Accounting
    The instructions for Schedule RC-B, item 3, ``Equity interest in 
nonrelated organizations,'' currently state to include investments that 
represent 20 percent to 50 percent of the voting shares of an 
organization accounted for under the equity method of accounting, and 
these investments are reported as either held-to-maturity or available-
for-sale. Upon review, it was determined this treatment is not in 
compliance with U.S. GAAP, as investments accounted for under the 
equity method of accounting should not be classified as either held-to-
maturity or available-for-sale. Guidance on securities accounted for 
under the equity method is provided in ASC Subtopic 323-10, 
Investments--Equity Method and Joint Ventures--Overall. To become U.S. 
GAAP compliant and to align with the reporting on the Call Report, the 
Board revised the instructions to indicate investments that represent 
20 percent to 50 percent of the voting shares of an organization 
accounted for under the equity method of accounting should no longer be 
included in Schedule RC-B, item 3, but rather included in Schedule RC, 
item 8, ``Other assets.''
    In addition, Schedule RC-B, item 3, columns A and B, Amortized Cost 
and Fair Value of Held-to-maturity equity interest in nonrelated 
organizations, respectively, would be discontinued effective March 31, 
2019, as these items are no longer needed by the Board. Columns C and 
D, Amortized Cost and Fair value of Available-for-sale securities, 
would remain on the form and continue to be collected until December 
31, 2020, when all institutions must comply with ASU 2016-01 (see 
description of revisions due to ASU 2016-01 for more information).
    Legal authorization and confidentiality (FR Y-9 family of reports): 
The FR Y-9 family of reports is authorized by section 5(c) of the Bank 
Holding Company Act (BHC Act) (12 U.S.C. 1844(c)), section 10 of Home 
Owners' Loan Act (12 U.S.C. 1467a(b)) and section 618 of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) (12 
U.S.C. 1850a(c)(1)), and section 165 of the Dodd-Frank Act (12 U.S.C. 
5365). These reports are mandatory.
    With respect to the FR Y-9LP, FR Y-9SP, FR Y-9ES, FR Y-9CS, as well 
as most items on the FR Y-9C, the information collected would generally 
not be accorded confidential treatment. If confidential treatment is 
requested by a respondent, the Board will review the request to 
determine if confidential treatment is appropriate.
    With respect to the FR Y-9C, Schedule HI's item 7(g) ``FDIC deposit 
insurance assessments,'' Schedule HC-P's item 7(a) ``Representation and 
warranty reserves for 1-4 family residential mortgage loans sold to 
U.S. government agencies and government sponsored agencies,'' and 
Schedule HC-P's item 7(b) ``Representation and warranty reserves for 1-
4 family residential mortgage loans sold to other parties'' are 
considered confidential. Such treatment is appropriate because the data 
is not publicly available and could cause substantial harm to the 
competitive position of the respondent. The public release of this 
confidential data may impair the Board's future ability to collect 
similarly confidential data. Thus, this information may be kept 
confidential under exemptions (b)(4) of the Freedom of Information Act 
(FOIA), which exempts from disclosure ``trade secrets and commercial or 
financial information obtained from a person and privileged or 
confidential'' (5 U.S.C. 552(b)(4)), and (b)(8) of FOIA, which exempts 
from disclosure information related to examination, operating, or 
condition reports prepared by, on behalf of, or for the use of an 
agency responsible for the regulation or supervision of financial 
institutions (5 U.S.C. 552(b)(8)). If confidential treatment is 
requested by a respondent for other items in the FR Y-9C, the Board 
will review the request to determine if confidential treatment is 
appropriate.
    Legal authorization and confidentiality (FR Y-7N family of 
reports). With respect to FBOs and their subsidiary IHCs, section 5(c) 
of the BHC Act, in conjunction with section 8 of the International 
Banking Act (12 U.S.C. 3106), authorizes the board to require FBOs and 
any subsidiary thereof to file the FR Y-7N reports, and the FR Y-7Q.
    Information collected in these reports generally is not considered 
confidential. However, because the information is collected as part of 
the Board's supervisory process, certain information may be afforded 
confidential treatment pursuant to exemption 8 of FOIA (5 U.S.C. 
552(b)(8)). Individual respondents may request that certain data be 
afforded confidential treatment pursuant to exemption 4 of FOIA if the 
data has not previously been publically disclosed and the release of 
the data would likely cause substantial harm to the competitive 
position of the respondent (5 U.S.C. 552(b)(4)). Additionally, 
individual respondents may request that personally identifiable 
information be afforded confidential treatment pursuant to exemption 6 
of FOIA if the release of the information would constitute a clearly 
unwarranted invasion of personal privacy (5 U.S.C. 552(b)(6)). The 
applicability of FOIA exemptions 4 and 6 would be determined on a case-
by-case basis.
    Legal authorization and confidentiality (FR Y-8). The FR Y-8 is 
mandatory for respondents that control an insured depository 
institution that has engaged in covered transactions with an affiliate 
during the reporting period. Section 5(c) of the BHC Act authorizes the 
Board to require BHCs to file the FR Y-8 reporting form with the Board 
(12 U.S.C. 1844(c)). Section 10(b)(2) of the Home Owners' Loan Act 
authorizes the Board to require SLHCs to file the FR Y-8 reporting form 
with the Board (12 U.S.C. 1467a(b)(2)). The release of data collected 
on this form includes financial information that is not normally 
disclosed by respondents, the release of which would likely cause 
substantial harm to the competitive position of the respondent if made 
publicly available. The data collected on this form, therefore, would 
be kept confidential under exemption 4 of FOIA which protects from 
disclosure trade secrets and commercial or financial information (5 
U.S.C. 552(b)(4)).
    Legal authorization and confidentiality (FR Y-11 family of 
reports). The Board has the authority to require BHCs and any 
subsidiary thereof, SLHCs and any subsidiary thereof, and SHCs and any 
affiliate thereof to file the FR Y-11 pursuant to, respectively, 
section 5(c) of the BHC Act (12 U.S.C. 1844(c)), section 10(b) of the 
Homeowners' Loan Act (12 U.S.C. 1467a(b)), and section 618 of the Dodd-
Frank Act (12 U.S.C. 1850a). With respect to FBOs and their subsidiary 
IHCs, section 5(c) of the BHC Act, in conjunction with section 8 of the 
International Banking Act (12 U.S.C. 3106), authorizes the board to 
require FBOs and any subsidiary thereof to file the FR Y-11 reports. 
These reports are mandatory.

[[Page 11796]]

    Information collected in these reports generally is not considered 
confidential. However, because the information is collected as part of 
the Board's supervisory process, certain information may be afforded 
confidential treatment pursuant to exemption 8 of FOIA (5 U.S.C. 
552(b)(8)). Individual respondents may request that certain data be 
afforded confidential treatment pursuant to exemption 4 of FOIA if the 
data has not previously been publically disclosed and the release of 
the data would likely cause substantial harm to the competitive 
position of the respondent (5 U.S.C. 552(b)(4)). Additionally, 
individual respondents may request that personally identifiable 
information be afforded confidential treatment pursuant to exemption 6 
of FOIA if the release of the information would constitute a clearly 
unwarranted invasion of personal privacy (5 U.S.C. 552(b)(6)). The 
applicability of FOIA exemptions 4 and 6 would be determined on a case-
by-case basis.
    Legal authorization and confidentiality (FR 2248). The Board has 
determined that the FR 2248 is authorized by law pursuant to section 2A 
of the Federal Reserve Act (12 U.S.C. 225a). The obligation to respond 
is voluntary. Individual respondent data are confidential under section 
(b)(4) of FOIA (5 U.S.C. 552).
    Legal authorization and confidentiality (FR 2314 family of 
reports). The Board has the authority to require BHCs and any 
subsidiary thereof, SLHCs and any subsidiary thereof, and SHCs and any 
affiliate thereof to file the FR 2314 pursuant to, respectively, 
section 5(c) of the BHC Act (12 U.S.C. 1844(c)), section 10(b) of the 
Homeowners' Loan Act (12 U.S.C. 1467a(b)), and section 618 of the Dodd-
Frank Act (12 U.S.C. 1850a). The Board has the authority to require 
SMBs, agreement corporations, and Edge corporations to file the FR 2314 
pursuant to, respectively, sections 9(6), 25(7), and 25A(17) of the 
Federal Reserve Act (12 U.S.C. 324, 602, and 625). With respect to FBOs 
and their subsidiary IHCs, section 5(c) of the BHC Act, in conjunction 
with section 8 of the International Banking Act (12 U.S.C. 3106), 
authorizes the board to require FBOs and any subsidiary thereof to file 
the FR 2314 reports. These reports are mandatory.
    Information collected in these reports generally is not considered 
confidential. However, because the information is collected as part of 
the Board's supervisory process, certain information may be afforded 
confidential treatment pursuant to exemption 8 of FOIA (5 U.S.C. 
552(b)(8)). Individual respondents may request that certain data be 
afforded confidential treatment pursuant to exemption 4 of FOIA if the 
data has not previously been publically disclosed and the release of 
the data would likely cause substantial harm to the competitive 
position of the respondent (5 U.S.C. 552(b)(4)). Additionally, 
individual respondents may request that personally identifiable 
information be afforded confidential treatment pursuant to exemption 6 
of FOIA if the release of the information would constitute a clearly 
unwarranted invasion of personal privacy (5 U.S.C. 552(b)(6)). The 
applicability of FOIA exemptions 4 and 6 would be determined on a case-
by-case basis.
    Legal authorization and confidentiality (FR 2320). The Board has 
the authority to require SLHCs to file the FR 2320 pursuant to the Home 
Owners' Loan Act (12 U.S.C. 1467a(b)(2)). The FR 2320 is mandatory for 
exempt SLHCs. In some cases, lower-tier SLHCs may voluntarily file the 
FR 2320. In other cases lower-tier SLHCs may be required to file (in 
addition to the top-tier SLHC) for safety and soundness purposes at the 
discretion of the appropriate Federal Reserve Bank.
    The Board also has determined that data items C572, C573, and C574 
(line items 24, 25, and 26) may be protected from disclosure under 
exemption 4 of FOIA. Commercial or financial information may be 
protected from disclosure under exemption 4 if disclosure of such 
information is likely to cause substantial competitive harm to the 
provider of the information (5 U.S.C. 552(b)(4)). The data items listed 
above pertain to new or changed pledges, or capital stock of any 
subsidiary savings association that secures short-term or long-term 
debt or other borrowings of the SLHC; changes to any class of 
securities of the SLHC or any of its subsidiaries that would negatively 
impact investors; and defaults of the SLHC or any of its subsidiaries 
during the quarter. Disclosure of this type of information is likely to 
cause substantial competitive harm to the SLHC providing the 
information and thus this information may be protected from disclosure 
under FOIA exemption 4.
    With regard to the remaining data items on the FR 2320, the Board 
has determined that institutions may request confidential treatment for 
any FR 2320 data item or for all FR 2320 data items, and that 
confidential treatment will be reviewed on a case-by-case basis.
    Legal authorization and confidentiality (FR 2644). The FR 2644 is 
authorized by section 2A and 11(a)(2) of the Federal Reserve Act (12 
U.S.C. 225(a) and 248(a)(2)) and by section 7(c)(2) of the 
International Banking Act (12 U.S.C. 3105(c)(2)) and is voluntary. 
Individual respondent data are regarded as confidential under FOIA (5 
U.S.C. 552(b)(4)).
    Legal authorization and confidentiality (FR 2886b). Sections 25 and 
25A of the Federal Reserve Act authorize the Board to collect the FR 
2886b (12 U.S.C. 602, 625). The FR 2886b is mandatory. The information 
collected on this report is generally not considered confidential. 
However, information provided on Schedule RC-M (with the exception for 
item 3) and on Schedule RC-V, both of which pertain to claims on and 
liabilities to related organizations, may be exempt from disclosure 
pursuant to exemption (b)(4) of FOIA (5 U.S.C. 552(b)(4)). The 
information provided in the Patriot Act Contact Information section of 
the reporting form may be exempt from disclosure pursuant to exemption 
(b)(7)(C) of FOIA (5 U.S.C. 552(b)(7)(C)).
    Current Actions: On December 12, 2018, the Board published a notice 
in the Federal Register (83 FR 63870) requesting public comment for 60 
days on the extension, with revision, of the FR Y-9C, FR Y-9LP, FR Y-
9SP, FR Y-9ES, FR Y-9CS, FR Y-7N, FR Y-7NS, FR Y-7Q, FR Y-8, FR Y-11, 
FR Y-11S, FR 2248, FR 2314, FR 2314S, FR 2320, FR 2644, and FR 2886b. 
The comment period for this notice expired on February 11, 2019. The 
Board did not receive any comments. The revisions will be implemented 
as proposed.

    Board of Governors of the Federal Reserve System, March 22, 
2019.
Michele Taylor Fennell,
Assistant Secretary of the Board.

Appendix A

                     Effective Dates for ASU 2016-13
------------------------------------------------------------------------
                                                           Regulatory
                                  U.S. GAAP effective   report effective
                                         date                date *
------------------------------------------------------------------------
PBEs That Are SEC Filers......  Fiscal years beginning  03/31/2020.
                                 after 12/15/2019,
                                 including interim
                                 periods within those
                                 fiscal years.

[[Page 11797]]

 
Other PBEs (Non-SEC Filers)...  Fiscal years beginning  03/31/2021.
                                 after 12/15/2020,
                                 including interim
                                 periods within those
                                 fiscal years.
Non-PBEs......................  Fiscal years beginning  12/31/2021.\22\
                                 after 12/15/2020, and
                                 interim periods for
                                 fiscal years
                                 beginning after 12/15/
                                 2021\21\.
Early Application.............  Early application       First calendar
                                 permitted for fiscal    quarter-end
                                 years beginning after   after effective
                                 12/15/2018, including   date of early
                                 interim periods         application of
                                 within those fiscal     the ASU.
                                 years.
------------------------------------------------------------------------
* For institutions with calendar fiscal year-ends and reports with
  quarterly report dates.

    For additional information on key elements of the new accounting 
standard and initial supervisory views with respect to measurement 
methods, use of vendors, portfolio segmentation, data needs, 
qualitative adjustments, and allowance processes, refer to the 
agencies' Joint Statement on the New Accounting Standard on 
Financial Instruments--Credit Losses issued on June 17, 2016, and 
Frequently Asked Questions on the New Accounting Standard on 
Financial Instruments--Credit Losses (CECL FAQs), which were last 
updated on September 6, 2017.\23\
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    \21\ See Footnote 23.
    \22\ See Footnote 24.
    \23\ The CECL FAQs and a related link to the joint statement can 
be found on the Board's website: https://www.federalreserve.gov/supervisionreg/srletters/sr1708a1.pdf;.
---------------------------------------------------------------------------

    For institutions that are PBEs and also are SEC filers, as both 
terms are defined in U.S. GAAP, the new credit losses standard is 
effective for fiscal years beginning after December 15, 2019, 
including interim periods within those fiscal years. Thus, for an 
SEC filer that has a calendar year fiscal year, the standard is 
effective January 1, 2020, and institutions must first apply the new 
credit losses standard in its FR 2314, FR 2320, FR 2886b, FR Y-7N, 
FR Y-8, FR Y-9C, FR Y-9LP and the FR Y-11 report for the quarter 
ended March 31, 2020. For the FR 2248, FR 2644 and the FR Y-9SP 
reporters must first apply the new credit losses standard January 
31, 2020, January 1, 2020 and June 30, 2020, respectively.
    For a PBE that is not an SEC filer, the credit losses standard 
is effective for fiscal years beginning after December 15, 2020, 
including interim periods within those fiscal years. Thus, for a PBE 
that is not an SEC filer and has a calendar year fiscal year, the 
standard is effective January 1, 2021, and the institution must 
first apply the new credit losses standard in its FR 2314, FR 2320, 
FR 2886b, FR Y-7N, FR Y-8, FR Y-9C, FR Y-9LP and the FR Y-11 for the 
quarter ended March 31, 2021. For the FR 2248, FR 2644 and the FR Y-
9SP reporters must first apply the new credit losses standard, 
January 31, 2021, January 6, 2021, and June 30, 2021, respectively.
    For an institution that is not a PBE, the credit losses standard 
is effective for fiscal years beginning after December 15, 2020, and 
for interim period financial statements for fiscal years beginning 
after December 15, 2021.\24\ Thus, an institution with a calendar 
year fiscal year that is not a PBE must first apply the new credit 
losses standard in its FR 2248, FR 2314, FR 2320, FR 2886b, FR Y-7N, 
FR Y-8, FR Y-9C, FR Y-9LP, FR Y-9SP, and FR Y-11 for December 31, 
2021, if the institution is required to file such form.\25\ The FR 
2644 reporters must first apply the new credit losses standard 
January 5, 2022. However, where applicable, institutions would 
include the CECL provision for expected credit losses for the entire 
year ended December 31, 2021, in the income statement in its report 
for year-end 2021. The institution would also recognize in its year-
end 2021 report a cumulative-effect adjustment to the beginning 
balance of retained earnings as of January 1, 2021, resulting from 
the adoption of the new standard as of the beginning of the 2021 
fiscal year.
---------------------------------------------------------------------------

    \24\ On August 20, 2018, FASB issued a proposed ASU that would 
amend the transition and effective date provisions in ASU 2016-13 
for entities that are not PBEs (non-PBEs) so that the credit losses 
standard would be effective for non-PBEs for fiscal years beginning 
after December 15, 2021, including interim periods within those 
fiscal years.
    \25\ If the FASB issues a final Accounting Standards Update 
amending the transition and effective date provisions in ASU 2016-13 
as described in footnote 23, a non-PBE with a calendar year fiscal 
year would first apply the new credit losses standard in its reports 
for March 31, 2022, if an institution is required to file these 
report forms.
---------------------------------------------------------------------------

    For regulatory reporting purposes, early application of the new 
credit losses standard will be permitted for all institutions for 
fiscal years beginning after December 15, 2018, including interim 
periods within those fiscal years.

Appendix B--U.S. GAAP Changes as a Result of CECL

Introduction of a New Credit Loss Methodology

    The new accounting standard developed by the FASB has been 
designed to replace the existing incurred loss methodology in U.S. 
GAAP. Under CECL, the allowance for credit losses is an estimate of 
the expected credit losses on financial assets measured at amortized 
cost, which is measured using relevant information about past 
events, including historical credit loss experience on financial 
assets with similar risk characteristics, current conditions, and 
reasonable and supportable forecasts that affect the collectability 
of the remaining cash flows over the contractual term of the 
financial assets. In concept, an allowance will be created upon the 
origination or acquisition of a financial asset measured at 
amortized cost. At subsequent reporting dates, the allowance will be 
reassessed for a level that is appropriate as determined in 
accordance with CECL. The allowance for credit losses under CECL is 
a valuation account, measured as the difference between the 
financial assets' amortized cost basis and the amount expected to be 
collected on the financial assets, i.e., lifetime expected credit 
losses.

Reduction in the Number of Credit Impairment Models

    Impairment measurement under existing U.S. GAAP has often been 
considered complex because it encompasses five credit impairment 
models for different financial assets.\26\ In contrast, CECL 
introduces a single measurement objective to be applied to all 
financial assets carried at amortized cost, including loans held-
for-investment (HFI) and held-to-maturity (HTM) debt securities. 
That said, CECL does not specify a single method for measuring 
expected credit losses; rather, it allows any reasonable approach, 
as long as the estimate of expected credit losses achieves the 
objective of the FASB's new accounting standard. Under the existing 
incurred loss methodology, institutions use various methods, 
including historical loss rate methods, roll-rate methods, and 
discounted cash flow methods, to estimate credit losses. CECL allows 
the continued use of these methods; however, certain changes to 
these methods will need to be made in order to estimate lifetime 
expected credit losses.
---------------------------------------------------------------------------

    \26\ Current U.S. GAAP includes five different credit impairment 
models for instruments within the scope of CECL: ASC Subtopic 310-
10, Receivables-Overall; ASC Subtopic 450-20, Contingencies-Loss 
Contingencies; ASC Subtopic 310-30, Receivables-Loans and Debt 
Securities Acquired with Deteriorated Credit Quality; ASC Subtopic 
320-10, Investments--Debt and Equity Securities--Overall; and ASC 
Subtopic 325-40, Investments-Other-Beneficial Interests in 
Securitized Financial Assets.
---------------------------------------------------------------------------

Purchased Credit-Deteriorated (PCD) Financial Assets

    CECL introduces the concept of PCD financial assets, which 
replaces purchased credit-impaired (PCI) assets under existing U.S. 
GAAP. The differences in the PCD criteria compared to the existing 
PCI criteria will result in more purchased loans HFI, HTM debt 
securities, and available-for-sale (AFS) debt securities being 
accounted for as PCD financial assets. In contrast to the existing 
accounting for PCI assets, the new standard requires the estimate of 
expected

[[Page 11798]]

credit losses embedded in the purchase price of PCD assets to be 
estimated and separately recognized as an allowance as of the date 
of acquisition. This is accomplished by grossing up the purchase 
price by the amount of expected credit losses at acquisition, rather 
than being reported as a credit loss expense. As a result, as of 
acquisition date, the amortized cost basis of a PCD financial asset 
is equal to the principal balance of the asset less the non-credit 
discount, rather than equal to the purchase price as is currently 
recorded for PCI loans.

AFS Debt Securities

    The new accounting standard also modifies the existing 
accounting practices for impairment on AFS debt securities. Under 
this new standard, institutions will recognize a credit loss on an 
AFS debt security through an allowance for credit losses, rather 
than a direct write-down as is required by current U.S. GAAP. The 
recognized credit loss is limited to the amount by which the 
amortized cost of the security exceeds fair value. A write-down of 
an AFS debt security's amortized cost basis to fair value, with any 
incremental impairment reported in earnings, would be required only 
if the fair value of an AFS debt security is less than its amortized 
cost basis and either (1) the institution intends to sell the debt 
security, or (2) it is more likely than not that the institution 
will be required to sell the security before recovery of its 
amortized cost basis.
    Although the measurement of credit loss allowances is changing 
under CECL, the FASB's new accounting standard does not address when 
a financial asset should be placed in nonaccrual status. Therefore, 
institutions should continue to apply the agencies' nonaccrual 
policies that are currently in place. In addition, the FASB retained 
the existing write-off guidance in U.S. GAAP, which requires an 
institution to write off a financial asset in the period the asset 
is deemed uncollectible.

[FR Doc. 2019-05933 Filed 3-27-19; 8:45 am]
 BILLING CODE 6210-01-P