[Federal Register Volume 84, Number 147 (Wednesday, July 31, 2019)]
[Notices]
[Pages 37285-37292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-16341]


=======================================================================
-----------------------------------------------------------------------

FEDERAL RESERVE SYSTEM


Proposed Agency Information Collection Activities; Comment 
Request

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notice; request for comment.

-----------------------------------------------------------------------

SUMMARY: The Board of Governors of the Federal Reserve System (Board) 
invites comment on a proposal to extend for three years, with revision, 
the Capital Assessments and Stress Testing Reports (FR Y-14A/Q/M; OMB 
No. 7100-0341). Please note that the Board is publishing a separate 
notice for comment focusing on incorporating non-Current Expected 
Credit Loss (CECL) methodology revisions into the FR Y-14A/Q/M reports.

DATES: Comments must be submitted on or before September 30, 2019.

ADDRESSES: You may submit comments, identified by FR Y-14A, FR Y-14Q, 
or FR Y-14M, by any of the following methods:
     Agency website: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at http://www.federalreserve.gov/apps/foia/proposedregs.aspx.
     Email: [email protected]. Include OMB 
number in the subject line of the message.
     FAX: (202) 452-3819 or (202) 452-3102.
     Mail: Ann E. Misback, Secretary, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue NW, 
Washington, DC 20551.
    All public comments are available from the Board's website at 
http://www.federalreserve.gov/apps/foia/proposedregs.aspx as submitted, 
unless modified for technical reasons. Accordingly, your comments will 
not be edited to remove any identifying or contact information. Public 
comments may also be viewed electronically or in paper form in Room 
3515, 1801 K Street NW, Washington, DC 20006 between 9:00 a.m. and 5:00 
p.m. on weekdays.
    Additionally, commenters may send a copy of their comments to the 
OMB Desk Officer--Shagufta Ahmed--Office of Information and Regulatory 
Affairs, Office of Management and Budget, New Executive Office 
Building, Room 10235, 725 17th Street NW, Washington, DC 20503 or by 
fax to (202) 395-6974.

FOR FURTHER INFORMATION CONTACT: A copy of the Paperwork Reduction Act 
(PRA) OMB submission, including the reporting form and instructions, 
supporting statement, and other documentation will be placed into OMB's 
public docket files, if approved. These documents will also be made 
available on the Board's public website at https://www.federalreserve.gov/apps/reportforms/review.aspx or may be requested 
from the agency clearance officer, whose name appears below.
    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.

SUPPLEMENTARY INFORMATION: On June 15, 1984, the Office of Management 
and Budget (OMB) delegated to the Board

[[Page 37286]]

authority under the Paperwork Reduction Act (PRA) to approve and assign 
OMB control numbers to collection of information requests and 
requirements conducted or sponsored by the Board. In exercising this 
delegated authority, the Board is directed to take every reasonable 
step to solicit comment. In determining whether to approve a collection 
of information, the Board will consider all comments received from the 
public and other agencies.

Request for Comment on Information Collection Proposal

    The Board invites public comment on the following information 
collection, which is being reviewed under authority delegated by the 
OMB under the PRA. Comments are invited on the following:
    a. Whether the proposed collection of information is necessary for 
the proper performance of the Federal Reserve's functions, including 
whether the information has practical utility;
    b. The accuracy of the Federal Reserve's estimate of the burden of 
the proposed information collection, including the validity of the 
methodology and assumptions used;
    c. Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    d. Ways to minimize the burden of information collection on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    e. Estimates of capital or startup costs and costs of operation, 
maintenance, and purchase of services to provide information.
    At the end of the comment period, the comments and recommendations 
received will be analyzed to determine the extent to which the Federal 
Reserve should modify the proposal.
    Proposal under OMB Delegated Authority to Extend for Three Years, 
With Revision, the Following Information Collection:
    Report title: Capital Assessments and Stress Testing Reports.
    Agency form number: FR Y-14A/Q/M.
    OMB control number: 7100-0341.
    Frequency: Annually, semi-annually, quarterly, and monthly.
    Estimated number of respondents: 36.
    Estimated average hours per response: \1\ FR Y-14A: 1,027 hours; FR 
Y-14Q: 1,923 hours; FR Y-14M: 1,086 hours; FR Y-14 On-going Automation 
Revisions: 480 hours. One-time Current Expected Credit Loss (CECL) 
Implementation: 60 hours; FR Y-14 Attestation On-going Audit and 
Review: 2,560 hours.
---------------------------------------------------------------------------

    \1\ The burden hours presented in this notice include the 
changes proposed in a notice for comment regarding the FR Y-14 
reports concurrently published with this notice.
---------------------------------------------------------------------------

    Estimated annual burden hours: FR Y-14A: 73,944 hours; FR Y-14Q: 
276,912 hours; FR Y-14M: 443,088 hours; FR Y-14 On-going Automation 
Revisions, 17,280 hours. One-time CECL Implementation, 2,160 hours; FR 
Y-14 Attestation On-going Audit and Review, 33,280 hours.
    General description of report: These collections of information are 
applicable to top-tier bank holding companies with total consolidated 
assets of $100 billion \2\ or more and U.S. intermediate holding 
companies with $50 billion or more in assets that are subsidiaries of 
foreign banking organizations.\3\ This family of information 
collections is composed of the following three reports:
---------------------------------------------------------------------------

    \2\ On July 6, 2018, the Board issued a public statement 
regarding the impact of the Economic Growth, Regulatory Relief, and 
Consumer Protection Act. See https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20180706b1.pdf. The Board 
announced that it will not take action to require bank holding 
companies (BHCs) with greater than or equal to $50 billion but less 
than $100 billion in total consolidated assets to file the FR Y-14 
reports.
    \3\ The Board has separately proposed to revise the respondent 
panel for the FR Y-14 reports in connection with the Board's 
proposed rule regarding Prudential Standards for Large Bank Holding 
Companies and Savings and Loan Holding Companies (the ``Tailoring 
Proposal''). See 83 FR 61408 (November 29, 2018). Under the 
Tailoring Proposal, the respondent panel for the FR Y-14 reports 
would be BHCs with total consolidated assets of $100 billion or 
more, U.S. intermediate holding companies of foreign banking 
organizations (IHCs) with total consolidated assets of $50 billion 
or more that are subsidiaries of an FBO, and covered savings and 
loan holding companies (SLHCs) with $100 billion or more in total 
consolidated assets. See 12 CFR 217.2 (defining ``covered savings 
and loan holding company''). If the Tailoring Proposal is finalized 
before this proposal, the respondent panel for the FR Y-14 reports 
would be updated to reflect the respondent panel adopted in the 
Tailoring Proposal.
---------------------------------------------------------------------------

     The semi-annual FR Y-14A collects quantitative projections 
of balance sheet, income, losses, and capital across a range of 
macroeconomic scenarios and qualitative information on methodologies 
used to develop internal projections of capital across scenarios.
     The quarterly FR Y-14Q collects granular data on various 
asset classes, including loans, securities, trading assets, and PPNR 
for the reporting period.
     The monthly FR Y-14M is comprised of three retail 
portfolio- and loan-level schedules, and one detailed address-matching 
schedule to supplement two of the portfolio and loan-level schedules.
    The data collected through the FR Y-14A/Q/M reports provide the 
Board with the information needed to help ensure that large firms have 
strong, firm-wide risk measurement and management processes supporting 
their internal assessments of capital adequacy and that their capital 
resources are sufficient given their business focus, activities, and 
resulting risk exposures. The reports are used to support the Board's 
annual Comprehensive Capital Analysis and Review (CCAR) exercise, which 
complements other Board supervisory efforts aimed at enhancing the 
continued viability of large firms, including continuous monitoring of 
firms' planning and management of liquidity and funding resources, as 
well as regular assessments of credit, market and operational risks, 
and associated risk management practices. Information gathered in this 
data collection is also used in the supervision and regulation of 
respondent financial institutions. Respondent firms are currently 
required to complete and submit up to 18 filings each year: Two semi-
annual FR Y-14A filings, four quarterly FR Y-14Q filings, and 12 
monthly FR Y-14M filings. Compliance with the information collection is 
mandatory.
    Proposed revisions: The Board is proposing to address the revised 
accounting for credit losses under the Financial Accounting Standards 
Board's (FASB) Accounting Standards Update (ASU) No. 2016-13, 
``Financial Instruments--Credit Losses (Topic 326): Measurement of 
Credit Losses on Financial Instruments'' (ASU 2016-13) and implement 
the current expected credit loss (CECL) accounting methodology across 
all of the FR Y-14 reports. The proposed changes to the FR Y-14 reports 
mirror the related changes to the Consolidated Financial Statements for 
Holding Companies (FR Y-9C) for CECL, as appropriate.\4\ The proposed 
reporting changes related to CECL also are consistent with the 
revisions indicated in the final CECL rule.\5\
---------------------------------------------------------------------------

    \4\ See 84 FR 11783 (March 28, 2019).
    \5\ See 84 FR 4222 (February 14, 2019).
---------------------------------------------------------------------------

    In June 2016, the FASB issued ASU 2016-13, which introduced the 
CECL methodology for estimating allowances for credit losses and added 
Topic 326, Credit Losses, to the Accounting Standards Codification 
(ASC). The new credit losses standard changed several aspects of 
existing U.S. generally accepted accounting principles (U.S. GAAP), 
such as by introducing a new credit loss methodology, reducing the 
number of credit impairment models, replacing the concept of purchased

[[Page 37287]]

credit-impaired (PCI) assets with that of purchased credit-deteriorated 
(PCD) financial assets, and changing the period over which firms should 
estimate expected credit losses on off-balance sheet exposures. CECL 
will be 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 
proposed reporting of additional allowances, related charge-off and 
recovery data, and proposed 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 proposes to 
change the allowance nomenclature to consistently use ``allowance for 
credit losses'' followed by the relevant specific asset type, 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 not be relevant and information on OTTI would 
no longer be captured.
    The new accounting standard also eliminates the separate impairment 
model for PCI loans and debt securities. Under CECL, credit losses on 
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 would 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.
    In December 2018, the Federal Reserve amended its stress testing 
rules to require a banking organization that has adopted CECL to 
incorporate CECL in its stress testing methodologies, data, and 
disclosure beginning in the cycle coinciding with its first full year 
of CECL adoption. For example, as stated in the final CECL rule, firms 
that have adopted CECL in or before 2020, are required to reflect their 
CECL provision for credit losses beginning in the 2020 stress test 
cycle. The effective date for adopting CECL varies depending on whether 
a firm is a public business entity (PBE), a Securities and Exchange 
Commission (SEC) report filer, or an early adopter.\6\ Due to the 
different effective dates for ASU 2016-13, the period over which 
institutions may be implementing this ASU ranges from 2019 through 
2022.\7\
---------------------------------------------------------------------------

    \6\ 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. 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, 2021, including interim periods within 
those fiscal years.
    \7\ It is expected that the majority of FR Y-14 filing 
institutions will implement the standard by the first or fourth 
quarter of 2021.
---------------------------------------------------------------------------

    The Board is proposing revisions to the FR Y-14 reports in response 
to ASU 2016-13 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 would 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 elimination of the existing model for PCI assets.
    Generally, institutions subject to filing the FR Y-14 reports would 
reflect the standard in data reported on the FR Y-14A, FR Y-14Q, and FR 
Y-14M, with as-of dates following the start of the firm's fiscal year 
and the adoption of the standard, beginning with the FR Y-14 reports 
as-of December 31, 2019. Certain items, as described in the Collection 
of Supplemental CECL Information section, may require balances to be 
reported as of December 31 prior to CECL adoption. Firms should refer 
to the final CECL rule for specifics surrounding inclusion of credit 
losses in a given stress test cycle.
    The proposed changes to the FR Y-14 are designed to accommodate 
differences in implementation dates for different firms. Specifically, 
although new items would be added to the report form and instructions, 
the proposed revisions to schedule titles or specific data item 
captions resulting from the change in nomenclature upon the adoption of 
CECL would not be reflected in the FR Y-14 report forms until full 
adoption by all FR Y-14 filers, or March 31, 2022, at the latest. With 
the reports as-of March 31, 2022, the FR Y-14 reporting forms and 
instructions for each impacted schedule title or data item would be 
updated to fully incorporate CECL nomenclature and reporting. This 
would include, unless otherwise indicated, revising the schedule titles 
or specific data item captions referencing the ``provision for loan and 
lease losses'' and the ``allowance for loan and lease losses'' to be 
changed to the ``provision for credit losses'' and the ``allowance for 
credit losses,'' respectively. For these items, to address the period 
from December 31, 2019, to March 31, 2022, the reporting form and 
instructions for each schedule title or data item impacted by the 
change in nomenclature would include guidance stating how institutions 
that have adopted the standard would report the data items related to 
the ``provision for credit losses'' and ``allowance for credit 
losses,'' as applicable.
    Items where the FR Y-14 instructions state, ``to report as defined 
in the FR Y-9C'' (i.e., there is no deviation from the FR Y-9C item 
definition), should always conform with the reporting as defined on the 
FR Y-9C unless otherwise noted. This includes as it pertains to 
reporting under ASU 2016-13 on the FR Y-14 after the proposed 
implementation date in December 31, 2019.
    The revisions for the FR Y-14 reports are described below in 
detail, mostly on a schedule-by-schedule basis.

[[Page 37288]]

FR Y-14A, Schedule A (Summary)

Schedule A.1.a (Income Statement)
    To address the broader scope of financial assets for which a 
provision will be calculated under ASU 2016-13, the Board proposes to 
revise Schedule A.1.a (Income Statement) to capture changes in 
allowances for credit losses on loans and leases (ALLL), HTM, and AFS 
debt securities. This change would be comparable to the breakout on the 
FR Y-9C, Schedule HI-B, Part II (Charge-Offs and Recoveries on Loans 
and Leases and Changes in Allowance).
    Specifically, to accommodate the collection of the additional 
financial assets, item 68, ``ALLL, prior quarter''; item 91, 
``Provisions for loan and lease losses during the quarter''; item 114, 
``Net Charge-offs during the quarter''; item 115, ``Other ALLL 
Changes''; and item 116, ``ALLL, current quarter,'' would be updated. 
First, as-of December 31, 2019, the existing items, would be re-
numbered to items 68a, 91a, 114a, 115a, and 116a, and would continue to 
capture allowances, provisions, or charge-offs for loan and lease 
losses for institutions that have not yet adopted ASU 2016-13. Guidance 
would be added to the FR Y-14A, Schedule A.1.a (Income Statement) forms 
and instructions indicating that institutions that have adopted ASU 
2016-13 should report allowances for credit losses on loans and leases, 
provisions for loans and leases, or net charge-offs on loans and leases 
in items 68a, 91a, 114a, 115a, and 116a. In addition, the title of item 
114a would be revised to ``Net charge-offs during the quarter on loans 
and leases.'' Second, as-of December 31, 2019, two additional items 
(noted as b. and c.) would be added to items 68, 91, 114, 115, and 116 
to capture amounts associated with HTM and AFS debt securities. A 
footnote would indicate that these items are only to be reported by 
institutions that have adopted ASU 2016-13. Third, a total item would 
be added to derive the sum of the components of item 68, ``Total ALLL 
prior quarter''; item 91, ``Total provisions for loan and lease losses 
during the quarter''; item 114, ``Total Net Charge-offs during the 
quarter''; item 115, '' Other ALLL Changes''; and item 116, ``Total 
Allowances, current quarter.'' For institutions that have not adopted 
ASU 2016-13, this total line item would represent the allowance for 
loan and lease losses.
    As previously noted, as-of December 31, 2019, the Board would add 
guidance to all other references in the FR Y-14A, Schedule A.1.a 
(Income Statement) to ``provision for loan and lease losses'' and the 
``allowance for loan and lease losses'' to indicate that institutions 
that have adopted ASU 2016-13 should report the ``provision for credit 
losses'' and the ``allowance for credit losses.'' Upon full adoption, 
all applicable captions and descriptions would be updated to reflect 
adoption of the new credit loss terminology and footnoted guidance 
would be eliminated.
    To address the elimination of the concept of OTTI by ASU 2016-13, 
upon full adoption or as-of March 31, 2022, at the latest, the Board 
proposes eliminating references to OTTI from item 126, ``Realized Gains 
(Losses) on available-for-sale securities, including OTTI,'' and item 
127, ``Realized Gains (Losses) on held to maturity securities, 
including OTTI.'' From December 31, 2019, through March 31, 2022, a 
footnote would indicate that the inclusion of OTTI in these items does 
not apply to institutions that have adopted ASU 2016-13.
Schedule A.1.b (Balance Sheet)
    To address the broader scope of financial assets for which 
allowances will be estimated under ASU 2016-13, the Board proposes 
revisions to the FR Y-14A report form and instructions to specify which 
assets should be reported net of an allowance for credit losses. As-of 
December 31, 2019, the Board proposes adding a footnote to item 1, 
``Held to Maturity''; item 120, ``Securities Purchased Under Agreements 
to Resell''; and item 129, ``Other Assets'', on Schedule A.1.b. 
(Balance Sheet) to note that, in line with reporting on Schedule HC 
(Balance Sheet) of the FR Y-9C, institutions that have adopted ASU 
2016-13 would report these amounts net of any applicable allowance for 
credit losses.
    The Board proposes to keep the derivation of allowances on the FR 
Y-14A, Schedule A.1.b (Balance Sheet) specific to loans and leases. 
Therefore, as-of December 31, 2019, footnotes would be added to item 
110, ``Allowance for Loan and Lease Losses'', and item 111, ``Net of 
Unearned Income and Allowance for Loan and Leases Losses'', indicating 
that for institutions that have adopted ASU 2016-13, the value would 
reflect allowance for credit losses on loans and leases in these items, 
and the item references would be updated. Upon full adoption, with the 
reports as-of March 31, 2022, at the latest, the caption would be 
updated to reflect the new credit loss terminology.
Schedule A.1.d (Capital)
    The proposed reporting changes to Schedule A.1.d (Capital) align 
with the revisions described in the final CECL rule and the FR Y-9C.
    Specifically, the Board is proposing to revise the instructions for 
Schedule A.1.d to indicate that institutions that have adopted CECL 
should use the adjusted allowances for credit losses instead of 
allowance for loan and lease losses in calculating regulatory capital. 
Language would be added as-of December 31, 2019, indicating this 
guidance on Schedule A.1.d., item 54, ``Allowance for loan and lease 
losses includable in tier 2 capital.'' Upon full adoption, with the 
reports as-of March 31, 2022, at the latest, the caption would be 
updated to reflect the new credit loss terminology.
    To address the potential election of the CECL transition provision 
as described in the final CECL rule, the Board also proposes to add 
guidance to the FR Y-14A, Schedule A.1.d, item 20, ``Retained 
earnings,'' item 39, ``DTAs arising from temporary differences that 
could not be realized through net operating loss carrybacks, net of 
related valuation allowances and net of DTLs, that exceed the 10 
percent common equity tier 1 capital deduction threshold,'' item 54, 
``Allowance for loan and lease losses includable in tier 2 capital,'' 
item 77, ``DTAs arising from temporary differences that could not be 
realized through net operating loss carrybacks, net of related 
valuation allowances and net of DTLs,'' and item 85, ``Average total 
consolidated assets,'' indicating that institutions that have adopted 
ASU 2016-13 and have elected to apply the transition provision should 
include or exclude, as outlined in the FR Y-9C, the applicable portion 
of the CECL transitional amount.
Schedule A.2.a (Retail Balance and Loss Projections)
    To address the elimination of PCI assets under ASU 2016-13, the 
Board proposes to revise the instructions to indicate that institutions 
that have adopted ASU 2016-13 would not need to file item 7, 
``Cumulative Interim Loan Losses--Non-PCI,'' or item 8, ``Cumulative 
Interim Loan Losses, PCI.'' Upon full adoption of ASU 2016-13, or as of 
March 31, 2022, at the latest, the Board proposes to eliminate items 7 
and 8. Finally, since the projected fields are not currently reported 
for items 7 and 8, the Board proposes to move these fields to FR Y-14Q, 
Schedule M (Balances), effective December 31, 2019. These items would 
continue to be reported for each applicable mortgage type.
Schedule A.3 (AFS/HTM Securities)
    Currently, three sub-schedules on the FR Y-14A, Schedule A.3 (AFS/
HTM Securities) collect detailed information on projected OTTI by 
individual

[[Page 37289]]

security (A.3.a), high level OTTI methodology and assumptions by 
portfolio (A.3.b), and projected OTTI by portfolio (A.3.c). 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 credit loss standard eliminates the existing 
OTTI model for such securities. Subsequent to an institution's adoption 
of ASU 2016-13, the concept of OTTI will no longer be relevant and 
information on OTTI would no longer be captured. Therefore as-of 
December 31, 2019, the Board proposes that institutions that have 
adopted ASU 2016-13 would not report sub-schedules A.3.a, A.3.b, and 
A.3.c. Furthermore, sub-schedule A.3.a would also be eliminated as-of 
December 31, 2019, as this information is of limited value and use. A 
footnote and instructions would indicate that institutions that have 
adopted ASU 2016-13 do not need to file sub-schedules A.3.b and A.3.c 
starting as-of December 31, 2019, and the sub-schedules would be 
eliminated upon full adoption, as-of March 31, 2022, at the latest.
    With the proposed removal of FR Y-14A, Schedule A.3 sub-schedules 
related to OTTI, the Board proposes replacing the three sub-schedules 
with two new sub-schedules, A.3.f (Expected Credit Loss and Provision 
for Credit Loss--HTM securities) and A.3.g (Expected Credit Loss and 
Provision for Credit Loss--AFS securities) to be filed by all 
institutions that have adopted ASU 2016-13 beginning as December 31, 
2019. These sub-schedules would provide another source of information 
regarding impairment of securities. The new sub-schedules, A.3.f and 
A.3.g, would aim to collect basic credit loss and reserve information 
on HTM, and AFS securities, respectively, that is crucial to assess 
whether institutions properly estimate credit risk exposures and set 
aside adequate reserves to cover expected losses from their securities 
portfolios under CECL. The collected information would include the 
security asset class, accounting intent, amortized cost, total 
allowance for credit losses, and cumulative expected lifetime loss and 
provision for credit loss across the projection horizon.
    In line with the above changes, the Board also proposes modifying 
the supporting documentation associated with AFS/HTM securities 
outlined in Appendix A.5 of the FR Y-14A as-of December 31, 2019. A 
statement would be added to the instructions indicating that 
institutions that have adopted ASU 2016-13 should submit supporting 
documentation on their other comprehensive income, expected credit 
loss, and provision projections as outlined in the instructions. Upon 
full adoption of CECL by all FR Y-14 filers, references to OTTI in the 
instructions for Appendix A would be eliminated.
    Finally, given the changes in methodology for HTM securities under 
ASU 2016-13, the Board also proposes changing the scope of the FR Y-
14A, sub-schedules A.3.d and A.3.e to include data related to only AFS 
and Equity securities. Institutions reporting under CECL methodology 
would no longer report impaired HTM securities in these sub-schedules 
beginning with the reports as-of December 31, 2019. Guidance would be 
added to the instructions indicating this. Upon full adoption of ASU 
2016-13, the title and description of the sub-schedules would be 
updated.
Schedule A.7 (Pre-Provision Net Revenue (PPNR))
    Currently, the instructions for the FR Y-14A, Schedule A.7 (PPNR), 
specify that gains and losses on AFS and HTM securities, including OTTI 
estimates, should not be reported as a component of PPNR. To reflect 
the elimination of the existing OTTI model under CECL, the Board 
proposes that the instructions for the FR Y-14A, sub-schedules A.7.a, 
A.7.b, and A.7.c be updated to indicate that institutions that have 
adopted ASU 2016-13 should not report gains and losses on AFS and HTM 
securities, including changes in credit loss provisioning, as a 
component of PPNR. A footnote would be added throughout the FR Y-14A, 
Schedule A.7 (PPNR) sub-schedules (including, but not limited to, items 
11 and 24) as-of December 31, 2019, and would be incorporated in line 
with the instructions upon full adoption of CECL by all institutions.
    In addition, references to PCI in the FR Y-14A, Schedule A.7.c, 
would not be applicable for institutions that have adopted ASU 2016-13 
and would be eliminated upon full adoption of ASU 2016-13 by all 
institutions, or as-of March 31, 2022, at the latest. Specifically, as-
of December 31, 2019, the Board proposes to add a footnote to item 50, 
``Carrying Value of Purchased Credit Impaired Loans,'' to indicate that 
institutions that have adopted ASU 2016-13 should report the carrying 
value of PCD loans in this item. Upon full adoption, the item caption 
and instructions would be updated. Because the net accretion of 
discount on loans is still necessary for modeling purposes, the Board 
proposes to add a footnote to item 51 indicating that institutions that 
have adopted ASU 2016-13 should report the net accretion of discount on 
loans included in interest revenues on item 51. The caption would be 
updated and the footnote removed upon full adoption of CECL by all 
institutions.

FR Y-14A, Schedule F (Business Plan Changes)

    The FR Y-14A, Schedule F (Business Plan Changes) mirrors the 
structure of the FR Y-14A, Schedule A (Summary) schedule. Therefore, 
reporting guidance related to the adoption of ASU 2016-13 provided for 
the FR Y-14A, Schedule A, applies to comparable items reported on the 
FR Y-14A, Schedule F. Certain items that are derived on the FR Y-14A, 
Schedule A may need to be reported on the FR Y-14A, Schedule F and 
would be listed in the instructions and technical documentation, as 
necessary.

Collection of Supplemental CECL Information

    As indicated in the final CECL rule and as outlined in the 
effective date description above, institutions would first reflect 
proposed amendments related to the adoption of ASU 2016-13 in the 2020 
stress test cycle. For institutions that adopt ASU 2016-13, the CECL 
methodology may be reflected in the projection horizon of the FR Y-14A 
reports as-of December 31. However, actual data reported as-of December 
31 may not reflect the adoption of CECL. Reporting in this manner would 
not allow for comparability of data across the actual and projected 
data for the annual cycle used in producing Dodd-Frank Act Stress Tests 
(DFAST) results and for the CCAR qualitative review. Furthermore, the 
Board needs to be able to identify the effect and timing of the 
adoption of CECL and the associated transition provision. Therefore, 
the Board proposes to add items to be reported by institutions that 
adopt ASU 2016-13 to capture the timing and impact of CECL adoption as 
of December 31. Upon full CECL adoption, or with the reports as-of 
March 31, 2022, at the latest, these items would be deleted from the 
report. This would include items related to:
     The first quarter in which a firm expects to incorporate 
CECL;
     The impact of the CECL transition provision on certain 
regulatory capital components;
     The cumulative-effect adjustment for changes in the 
allowance for credit losses;
     Allowances for credit losses recognized upon the 
acquisition of PCD assets;
     Initial effect of CECL methodology on loans and leases and 
HTM debt securities;

[[Page 37290]]

     Total allowance for credit losses;
     Allowance for credit losses on loans and leases held for 
investment; and
     Allowance for credit losses on debt securities.
    The reporting form and instructions would note that, unless 
otherwise specified, these items are to be completed only by holding 
companies that have adopted ASU 2016-13 in the stress test cycle year 
of adoption.

FR Y-14Q, Schedule B (Securities)

    Under CECL, certain concepts will no longer apply, including but 
not limited to PCI, OTTI, ASC 310-10, and ASC 310-30. The Board 
proposes eliminating or replacing references to these concepts 
throughout the FR Y-14Q, Schedule B.1 (Securities--Main Schedule). As-
of December 31, 2019, a footnote would be added to the general 
instructions for this schedule indicating that these concepts do not 
apply to institutions that have adopted ASU 2016-13. Upon full adoption 
of CECL by all institutions, the references would be eliminated or 
updated with CECL terminology.
    Similarly, the instructions for book yield and purchase date on the 
FR Y-14Q, Schedule B.1, include references to OTTI and ASC Topics that 
do not apply to institutions that have adopted ASU 2016-13. As-of 
December 31, 2019, a footnote would be added to those two items 
indicating that institutions that have adopted ASU 2016-13 should 
report based on the new credit loss methodology and in accordance with 
ASC Topic 326. Upon full adoption of CECL by all institutions, the item 
definitions would be updated in accordance with the footnote and the 
footnotes would be eliminated.
    To further address the elimination of the concept of OTTI by ASU 
2016-13, the Board proposes to remove the ``OTTI Taken'' item from the 
FR Y-14Q, Schedule B upon full adoption of CECL by all institutions. 
As-of December 31, 2019, the report form and instructions for this 
field would include guidance stating that it is to be completed only by 
institutions that have not adopted ASU 2016-13.
    Due to the expanded scope of credit losses under CECL, the Board 
proposes collecting additional information on the FR Y-14Q, Schedule 
B.1 from institutions that have adopted ASU 2016-13, to properly assess 
the allowance established and maintained on applicable securities. To 
facilitate the collection of these data, as-of December 31, 2019, the 
Board proposes adding two items to the FR Y-14Q, Schedule B.1 that 
would be filed by institutions that have adopted ASU 2016-13: (1) 
``Amount of Allowance for Credit Losses'' and (2) ``Writeoffs.'' A 
footnote would be added indicating that only institutions that have 
adopted ASU 2016-13 would report these items. The footnote would be 
removed upon full adoption of CECL by all institutions.

FR Y-14Q, Schedule D (Regulatory Capital Transitions) \8\
---------------------------------------------------------------------------

    \8\ Additional revisions to Schedule D are being proposed in a 
separate notice.
---------------------------------------------------------------------------

    The FR Y-14Q, Schedule D (Regulatory Capital Transitions) reflects 
the revised regulatory capital and supplementary leverage ratio rules 
on a fully phased-in basis for the reporting quarter. In consideration 
of the final CECL rule, the Board proposes adding guidance to the 
General Instructions of the FR Y-14Q, Schedule D, to indicate that this 
schedule should not reflect any election of the CECL transition 
provision. Where applicable, institutions would continue to reference 
the methodology descriptions outlined within the FR Y-9C, Schedule HC-R 
(Regulatory Capital). However, the numbers would not necessarily tie to 
the FR Y-9C reports, given that the FR Y-14Q, Schedule D requires 
calculations on a fully phased-in basis.
    Consistent with the final CECL rule, institutions that have adopted 
ASU 2016-13 would report adjusted allowances for credit losses instead 
of allowance for loan and lease losses in calculating regulatory 
capital. Therefore, as-of December 31, 2019, the Board proposes to add 
guidance in FR Y-14Q, Schedule D.4, indicating the reporting of 
adjusted allowances for credit losses by institutions that have adopted 
ASU 2016-13 in item 23, ``RWA for purposes of calculating the allowance 
for loan and lease losses (ALLL) 1.25 percent threshold,'' and item 38, 
``Excess allowance for loan and lease losses.'' Upon full adoption of 
CECL by all institutions, the data item captions for both items would 
be updated to reflect adjusted allowance for credit loss methodology.

FR Y-14Q, Schedule G (PPNR)

    The Board proposes changes to the FR Y-14Q, Schedule G (PPNR) that 
would mirror those outlined for the FR Y-14A, Schedule A.7 (Summary--
PPNR), as applicable.

FR Y-14Q, Schedule H (Wholesale)

    Since ASU 2016-13 supersedes ASC 310-30 and ASC 310-10, the Board 
proposes to revise Schedules H.1 and H.2 (Wholesale) to indicate that 
references and items related to ASC 310-30 and ASC 310-30 do not apply 
to institutions that have adopted ASU 2016-13, and to add items to 
accommodate reporting under ASU 2016-13. The changes are detailed 
below. The Board is proposing the changes to the FR Y-14Q, Schedules 
H.1 and H.2, with the intent that FR Y-9C and FR Y-14 reporting of the 
affected items by CECL and non-CECL filers align across the reports. 
The proposed revisions also aim to simplify the instructions for line 
items affected or eliminated by the change in credit loss methodology 
and to reduce necessary changes to the schedule over the CECL adoption 
period.
    First, as-of December 31, 2019, the Board proposes updating the 
instructions for Committed Exposure Global (H.1, item 24, and H.2, item 
5), Utilized Exposure Global (H.1, item 25), and Outstanding Balance 
(H.2, item 3) by eliminating references in the instructions to ASC 310-
30 and ASC 310-10, and clarifying that all institutions should report 
these items consistent with the guidance in the FR Y-9C instructions, 
whether or not they have adopted ASU 2016-13.
    Second, the existing items on Schedule H (Wholesale) that collect 
information on the reserve or adjustment applied to the credit facility 
according to ASC 310-10 (H.1, item 30 and H.2, item 46) or ASC 310-30 
(H.1, item 31, and H.2, item 47) would no longer be filed by 
institutions that have adopted ASU 2016-13 given those impairment 
models are replaced by CECL. To accommodate reporting under ASU 2016-
13, as-of December 31, 2019, the Board proposes adding two items to 
each of Schedule H.1 and H.2 for the reporting of applicable allowances 
for credit losses under ASC 326-20 (H.1, item 102, and H.2, item 63) 
and applicable purchased credit deteriorated noncredit discount (or 
premium) (H.1, item 103 and H.2, item 64). As-of December 31, 2019, 
guidance would also be added to the instructions for existing items 30 
and 31 on Schedule H.1 and items 46 and 47 on Schedule H.2, indicating 
that these items would be reported as ``0'' by institutions that have 
adopted ASU 2016-13. The guidance would direct firms to report under 
the proposed new items (H.1, items 102 and 103, and H.2, items 63 and 
64). Upon full adoption of ASU 2016-13 by all institutions, the Board 
proposes to eliminate all four items related to ASC 310-10 (H.1, item 
30 and H.2, item 46) and ASU 310-30 (H.1, item 31 and H.2, item 47).
    Third, to calculate the expected life of a loan, a field for 
current maturity date would be added to both the FR Y-14Q, Schedules 
H.1 and H.2 (items 104 and 65, respectively) as-of December 31,

[[Page 37291]]

2019. Under ASU 2016-13, the maturity date used in calculating lifetime 
losses does not allow for the inclusion of extension options (extension 
options are currently included in the existing maturity date field). A 
footnote would indicate that only institutions that have adopted ASU 
2016-13 would report this field.
    Finally, consistent with the above changes, as-of December 31, 
2019, the Board is proposing to simplify the instructions in the 
``Reporting Specifications'' section of both Schedules H.1 and H.2 to 
indicate that institutions should report all loan and lease financing 
receivables consistent with the FR Y-9C instructions and to remove 
certain references to ASC 310-10 and ASC 310-30. For the remaining 
references to ASC 310-10 and ASC 310-30, a footnote would be added as-
of December 31, 2019, indicating that institutions that have adopted 
ASU 2016-13 should report charge-offs, fair value adjustments, ASC 326-
20 allowance for credit losses, and PCD noncredit discount (or premium) 
separately in the designated fields. Upon full adoption of CECL by all 
institutions, the remaining references to ASC 310-10, ASC 310-30, and 
Statement of Position (SOP) 03-3 would be eliminated or replaced with 
footnoted language and updated ASC references applicable under CECL.

FR Y-14Q, Schedule K (Supplemental)

    Due to the elimination of PCI assets under ASU 2016-13, as-of 
December 31, 2019, the Board proposes adding a footnote to the FR Y-
14Q, Schedule K (Supplemental) instructions and report form, indicating 
that institutions that have adopted ASU 2016-13 do not need to report 
information for Column C, ``Cumulative Lifetime Purchase Impairments 
and Fair Value Adjustments.'' The Board determined this information 
would no longer be needed following the implementation of CECL, and 
Column C would be eliminated upon full adoption by all institutions.

FR Y-14Q, Schedule M (Balances)

    Currently, Schedule M.3, Unpaid Principal Balance of Retail Loans 
in Domestic Offices Held for Investment at Amortized Cost by Purchased 
Credit Impairment, collects the book value and unpaid principal balance 
(UPB) of all retail loans and leases held for investment at amortized 
cost (HFI at AC) in domestic offices by purchased credit impairment 
status. To capture comparable information under ASU 2016-13 and retain 
the ability to determine the book value and UPB of loans by impairment 
status for modeling purposes, the Board proposes to modify Schedule M.3 
to collect the book value and UPB of loans by purchased credit 
deterioration from institutions that have adopted ASU 2016-13.
    As-of December 31, 2019, the Board proposes adding guidance to the 
instructions for Schedule M.3 indicating that institutions that have 
adopted ASU 2016-13 should report the book value of non-PCD loans in 
column A, the UPB of non-PCD loans in column B, the book value of PCD 
loans in column C and the UPB of PCD loans in column D. A similar 
footnote would be added to the report form.
    In addition, to allow for reporting of cumulative interim loan 
losses (previously captured in items 7 and 8 of FR Y-14A, Schedule 
A.2.a) by institutions that have adopted ASU 2016-13, the Board 
proposes, as-of December 31, 2019, to require institutions that have 
adopted ASU 2016-13 to report the cumulative interim loan losses in a 
new item, ``Cumulative Interim Loan Losses'' in Schedule M.3, reported 
for each applicable mortgage type. This new item would be included in a 
new section of Schedule M.3 that would also include the Cumulative 
Interim Loan Losses--Non-PCI,'' and ``Cumulative Interim Loan Losses, 
PCI,'' items that the Board is proposing to move from FR Y-14A, 
Schedule A.2.a.
    Upon full adoption of CECL by all institutions, the existing 
guidance, schedule title, and column titles, would be updated to 
reflect PCD and non-PCD terminology and references to PCI would be 
eliminated.

FR Y-14M, Schedule A (First Lien), Schedule B (Home Equity), Schedule D 
(Credit Card)

    Effective as-of December 31, 2019, unless otherwise indicated in 
the draft forms and instructions, the Board proposes adding guidance to 
the FR Y-14M data item captions and instructions for Schedules A (First 
Lien), B (Home Equity), and D (Credit Card) that reference the 
``provision for loan and lease losses'' or the ``allowance for loan and 
lease losses'' to indicate that institutions that have adopted ASU 
2016-13 should report the ``provision for credit losses'' and the 
``allowance for credit losses,'' respectively. Upon full adoption of 
CECL by all institutions, the data item captions and instructions would 
be updated to reflect the CECL terminology. This update would result in 
modifications to the following items:

 Schedule A.1, item 96, ``Troubled Debt Restructure Flag,'' and 
Schedule A.1, item 119 ``Loss/Write-down Amount,'' and Schedule A.2, 
item 3 ``Loss/Write-down Amount''
 Schedule B.1, item 93 ``Loss/Write-down Amount,'' and Schedule 
B.2, item 3 ``Loss/Write-down Amount''
 Schedule D.1, item 107 ``Principal Charge-off Amount--Current 
Month,'' Schedule D.2, item 9, ``ALLL Managed Balance,'' item 10 ``ALLL 
Booked Balance,'' item 18 ``Booked Recoveries,'' item 23 ``Interest and 
Fees Charge-off/Reversal Amount,'' item 26 ``Loan Loss Provision 
Build,'' item 35 ``Interest Income,'' and item 36 ``Fee Income''

    In addition, CECL introduces the concept of PCD financial assets, 
which replaces PCI assets under existing U.S. GAAP. To continue to 
differentiate PCD from non-PCD loans, references and items in the FR Y-
14M to PCI or non-PCI would be modified to refer to PCD or non-PCD for 
institutions that have adopted ASU 2016-13.
    Specifically, as-of December 31, 2019, the Board proposes adding 
guidance to the SOP 03-3 Status/Flag field (Schedule A.1, item 92; 
Schedule B.1, item 60; and Schedule D.1, item 14) indicating that 
institutions that have adopted ASU 2016-13 would report in this field 
whether loans are accounted for as purchased credit deteriorated. Upon 
full adoption, the existing PCI and SOP 03-3 terminology would be 
eliminated and the item captions would change to ``Purchased Credit 
Deteriorated (PCD) Status''.
    Currently, institutions segment portfolio level data in Schedules A 
(First Lien) and B (Home Equity) based on certain characteristics, 
including a segment for portfolio loans that are held for investment 
and purchased impaired. Consistent with other changes to the FR Y-14M 
report, as-of December 31, 2019, the Board proposes indicating in the 
FR Y-14M instructions that institutions that have adopted ASU 2016-13 
should report PCD Loans in the existing ``HFI Purchased Credit 
Impaired'' segment. Upon full adoption, the name of the segment would 
be updated to ``HFI Purchased Credit Deteriorated.'' The allowable 
values for the corresponding Portfolio Segment ID field (Schedule A.2, 
item 1 and Schedule B.2, item 1) would contain the same guidance and, 
upon full adoption of ASU 2016-13, would be updated accordingly.
    Finally, the Board proposes updating the instructions for Unpaid 
Principal Balance (Net) (item 95) on Schedule B.1, to indicate that 
references to PCI in the definition for this item do not apply to 
institutions that have adopted ASU 2016-13. The Board would remove 
these references in the definition upon full adoption.

[[Page 37292]]

    Legal authorization and confidentiality: The Board has the 
authority to require BHCs to file the FR Y-14 reports pursuant to 
section 5 of the Bank Holding Company Act (``BHC Act'') (12 U.S.C. 
1844), and to require the U.S. intermediate holding companies of 
foreign banking organizations to file the FR Y-14 reports pursuant to 
section 5 of the BHC Act, in conjunction with section 8 of the 
International Banking Act (12 U.S.C. 3106). The Board also has the 
authority to require BHCs and the U.S. IHCs of FBOs to file the FR Y-14 
reports pursuant to section 165(i) of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (12 U.S.C. 5365(i)). The FR Y-14 reports 
are mandatory.
    The information collected in these reports is collected as part of 
the Board's supervisory process, and therefore is afforded confidential 
treatment pursuant to exemption 8 of the Freedom of Information Act 
(``FOIA'') (5 U.S.C. 552(b)(8)). In addition, 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)). Determinations of confidentiality based on exemption 
4 of FOIA would be made on a case-by-case basis.
    Consultation outside the agency: There has been no consultation 
outside the agency.

    Board of Governors of the Federal Reserve System, July 26, 2019.
Michele Taylor Fennell,
Assistant Secretary of the Board.
[FR Doc. 2019-16341 Filed 7-30-19; 8:45 am]
 BILLING CODE 6210-01-P