[Federal Register Volume 87, Number 173 (Thursday, September 8, 2022)]
[Notices]
[Pages 55005-55007]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-19324]
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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 reports; OMB Control
Number 7100-0128).
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.
Office of Management and Budget (OMB) Desk Officer for the Federal
Reserve Board, 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.
SUPPLEMENTARY INFORMATION: On June 15, 1984, OMB delegated to the Board
authority under the Paperwork Reduction Act (PRA) to approve and assign
OMB control numbers to collections of information conducted or
sponsored by the Board. Board-approved collections of information are
incorporated into the official OMB inventory of currently approved
collections of information. The OMB inventory, as well as copies of the
PRA Submission, supporting statements, and approved collection of
information instrument(s) are available at https://www.reginfo.gov/public/do/PRAMain. These documents are also available on the Federal
Reserve 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 above.
Final Approval under OMB Delegated Authority of the Extension for
Three Years, with Revision, of the Following Information Collection:
Collection title: Financial Statements for Holding Companies.
Collection identifier: FR Y-9C, FR Y-9LP, FR Y-9SP, FR Y-9ES, and
FR Y-9CS.
OMB control number: 7100-0128.
Effective Date: September 30, 2022.
Frequency: Quarterly, semiannually, and annually.
Respondents: Bank holding companies (BHCs), savings and loan
holding companies (SLHCs), securities holding companies, and U.S.
intermediate holding companies (IHCs) (collectively, holding
companies).\1\
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\1\ The following depository institution holding companies are
exempt: (1) a unitary savings and loan holding company with
primarily commercial assets that meets the requirements of section
10(c)(9)(c) of the Home Owners' Loan Act, for which thrifts make up
less than 5 percent of its consolidated assets; and (2) a SLHC that
primarily holds insurance-related assets and does not otherwise
submit financial reports with the Securities and Exchange Commission
pursuant to sections 13 or 15(d) of the Securities Exchange Act of
1934.
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Estimated number of respondents:
Reporting
FR Y-9C (non-advanced approaches holding companies with less than
$5 billion in total assets): 119; FR Y-9C (non-advanced approaches
holding companies with $5 billion or more in total assets): 221; FR Y-
9C (advanced approaches holding companies): 9; FR Y-9LP: 412; FR Y-9SP:
3,708; FR Y-9ES: 78; FR Y-9CS: 236.
Recordkeeping
FR Y-9C: 349; FR Y-9LP: 412; FR Y-9SP: 3,708; FR Y-9ES: 78; FR Y-
9CS: 236.
Estimated average hours per response:
Reporting
FR Y-9C (non-advanced approaches holding companies with less than
$5 billion in total assets): 35.74; FR Y-9C (non-advanced approaches
holding companies with $5 billion or more in total assets): 44.94; FR
Y-9C (advanced approaches holding companies): 50.16; FR Y-9LP: 5.27; FR
Y-9SP: 5.45; FR Y-9ES: 0.50; FR Y-9CS: 0.50.
Recordkeeping
FR Y-9C: 1; FR Y-9LP: 1; FR Y-9SP: 0.50; FR Y-9ES: 0.50; FR Y-9CS:
0.50.
Estimated annual burden hours:
Reporting
FR Y-9C (non-advanced approaches holding companies with less than
$5 billion in total assets): 17,012; FR Y-9C (non-advanced approaches
holding companies with $5 billion or more in total assets): 39,727; FR
Y-9C (advanced approaches holding companies): 1,806; FR Y-9LP: 8,685;
FR Y-9SP: 40,417; FR Y-9ES: 39; FR Y-9CS: 472.
Recordkeeping
FR Y-9C: 1,396; FR Y-9LP: 1,648; FR Y-9SP: 3,708; FR Y-9ES: 39; FR
Y-9CS: 472.
General description of collection: The FR Y-9 family of reporting
forms continues to be the primary source of financial data on holding
companies that examiners rely on in the intervals between on-site
inspections. The Board requires holding companies to provide
standardized financial statements to fulfill the Board's statutory
obligation to supervise these organizations. Financial data from these
reporting forms are used to detect emerging financial problems,
[[Page 55006]]
to review performance and conduct pre-inspection analysis, to monitor
and evaluate capital adequacy, to evaluate holding company mergers and
acquisitions, and to analyze a holding company's overall financial
condition to ensure the safety and soundness of its operations. The FR
Y-9C, FR Y-9LP, and FR Y-9SP serve as standardized financial statements
for the holding companies. The FR Y-9ES is a financial statement for
holding companies that are Employee Stock Ownership Plans. The Board
uses the voluntary FR Y-9CS (a free-form supplement) to collect
additional information deemed to be critical and needed in an expedited
manner. Holding companies file the FR Y-9C on a quarterly basis, the 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.
Legal authorization and confidentiality: The reporting and
recordkeeping requirements associated with the Y-9 series of reports
are authorized for BHCs pursuant to section 5 of the Bank Holding
Company Act (BHC Act); \2\ for SLHCs pursuant to section 10(b)(2) and
(3) of the Home Owners' Loan Act; \3\ for IHCs pursuant to section 5 of
the BHC Act, as well as pursuant to sections 102(a)(1) and 165 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank
Act); \4\ and for securities holding companies pursuant to section 618
of the Dodd-Frank Act.\5\
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\2\ 12 U.S.C. 1844.
\3\ 12 U.S.C. 1467a(b)(2) and (3).
\4\ 12 U.S.C. 5311(a)(1) and 5365; Section 165(b)(2) of Title I
of the Dodd-Frank Act, 12 U.S.C. 5365(b)(2), refers to ``foreign-
based bank holding company.'' Section 102(a)(1) of the Dodd-Frank
Act, 12 U.S.C. 5311(a)(1), defines ``bank holding company'' for
purposes of Title I of the Dodd-Frank Act to include foreign banking
organizations that are treated as bank holding companies under
section 8(a) of the International Banking Act, 12 U.S.C. 3106(a).
The Board has required, pursuant to section 165(b)(1)(B)(iv) of the
Dodd-Frank Act, 12 U.S.C. 5365(b)(1)(B)(iv), certain foreign banking
organizations subject to section 165 of the Dodd-Frank Act to form
U.S. intermediate holding companies. Accordingly, the parent
foreign-based organization of a U.S. IHC is treated as a BHC for
purposes of the BHC Act and section 165 of the Dodd-Frank Act.
Because Section 5(c) of the BHC Act authorizes the Board to require
reports from subsidiaries of BHCs, section 5(c) provides additional
authority to require U.S. IHCs to report the information contained
in the FR Y-9 series of reports.
\5\ 12 U.S.C. 1850a(c)(1)(A).
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Except for the FR Y-9CS report, which is collected on a voluntary
basis, the obligation to submit the remaining reports in the FR Y-9
series of reports and to comply with the recordkeeping requirements set
forth in the respective instructions to each of the other reports is
mandatory.
Certain information collected on the FR Y-9C and FR Y-9SP Reports
is kept confidential by the Board. The following items are kept
confidential under exemption 4 of the Freedom of Information Act (FOIA)
because these data items reflect commercial and financial information
that is both customarily and actually treated as private by the
respondent: \6\
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\6\ 12 U.S.C. 552(b)(4).
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FR Y-9C, Schedule HI, memoranda item 7(g), ``FDIC deposit
insurance assessments;''
FR Y-9C, Schedule HC-P, item 7(a) ``Representation and
warranty reserves for 1-4 family residential mortgage loans sold to
U.S. government agencies and government sponsored agencies;''
FR Y-9C, Schedule HC-P, item 7(b) ``Representation and
warranty reserves for 1-4 family residential mortgage loans sold to
other parties;''
FR Y-9C, Schedule HC-C, Part I, Memorandum items 16.a and
16.b, for eligible loan modifications under Section 4013 of the 2020
Coronavirus Aid, Relief, and Economic Security Act; and
FR Y-9C, Schedule HC and FR Y-9SP, Schedule SC, Memoranda
item 2.b., the name and email address of the external auditing firm's
engagement partner.\7\
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\7\ The Board has assured respondents that this information will
be treated as confidential since the collection of this data item
was proposed in 2004, under the assumption that the identity of the
engagement partner is treated as private information by HCs.
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In some circumstances, disclosing these data items may also reveal
confidential examination and supervisory information protected from
disclosure under exemption 8 of the FOIA.\8\ The Board has previously
assured submitters that these data items will be treated as
confidential.
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\8\ 12 U.S.C. 552(b)(8).
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In addition, the Chief Executive Officer Contact Information
section of both the FR Y-9C and FR Y-9SP is kept confidential pursuant
to exemption 6 of the FOIA, which applies to personnel and medical
files the disclosure of which would constitute a clearly unwarranted
invasion of personal privacy,\9\ and exemption 8, which applies to
information contained in or 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.\10\
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\9\ 5 U.S.C. 552(b)(6).
\10\ 5 U.S.C. 552(b)(8).
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Aside from the data items described above, data collected by the FR
Y-9 reports generally are not accorded confidential treatment. As
provided in the Board's Rules Regarding Availability of
Information,\11\ however, a respondent may request confidential
treatment for any data items the respondent believes should be withheld
pursuant to a FOIA exemption. The Board will review any such request to
determine if confidential treatment is appropriate and will inform the
respondent if the request for confidential treatment has been granted
or denied.
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\11\ 12 CFR part 261.
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To the extent that the instructions to the FR Y-9 reports direct
the financial institution to retain the workpapers and related
materials used in preparation of each report, such material would only
be obtained by the Board as part of the examination or supervision of
the financial institution. Accordingly, such information is considered
confidential pursuant to exemption 8 of the FOIA.\12\ In addition, the
workpapers and related materials may also be protected by exemption 4
of the FOIA, to the extent such financial information is customarily
and actually treated as private by the respondent.\13\
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\12\ 5 U.S.C. 552(b)(8).
\13\ 5 U.S.C. 552(b)(4).
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Current actions: On October 8, 2020, the Board published a notice
in the Federal Register (85 FR 63553) requesting public comment for 60
days on the extension, with revision, of the FR Y-9 reports. The
comment period for this notice expired on December 7, 2020. On January
4, 2021, the Board published a final Federal Register (86 FR 92) notice
addressing the public comments received and finalizing all proposed
changes except those related to last-of-layer hedging, discussed below.
There were no comments received on the initial Federal Register notice
(85 FR 63553) on the proposed changes related to last-of-layer hedging.
In accounting standards update (ASU) No. 2017-12, Derivatives and
Hedging (Topic 815)--Targeted Improvements to Accounting for Hedging
Activities, the Financial Standards Accounting Board (FASB) added the
last-of-layer method to its hedge accounting standards to lessen the
difficulties institutions encountered under existing accounting rules
when seeking to enter into a fair value hedge of the interest rate risk
of a closed portfolio of prepayable financial assets or one or more
beneficial interests secured by a portfolio of prepayable financial
instruments. Typically, prepayable financial assets would be loans and
available-for-sale debt securities. Under ASU 2017-12, there are no
limitations on the types of qualifying assets that
[[Page 55007]]
could be grouped together in a last-of-layer hedge other than meeting
the following two criteria: (1) They must be prepayable financial
assets that have a contractual maturity date beyond the period being
hedged and (2) they must be eligible for fair value hedge accounting of
interest rate risk (for example, fixed-rate instruments). For example,
fixed-rate residential mortgages, auto loans, and collateralized
mortgage obligations could all be grouped and hedged together in a
single last-of-layer closed portfolio. For a last-of-layer hedge, ASC
paragraph 815-10-50-5B states that an institution may need to allocate
the related fair value hedge basis adjustment (FVHBA) ``to meet the
objectives of disclosure requirements in other Topics.'' This ASC
paragraph then explains that the institution ``may allocate the basis
adjustment on an individual asset basis or on a portfolio basis using a
systematic and rational method.'' Due to the aggregation of assets in a
last-of-layer closed portfolio, institutions may find it challenging to
allocate the related FVHBA to the individual loan or AFS debt security
level when necessary for financial reporting purposes.
In March 2018, the FASB added a project to its agenda to expand
last-of-layer hedging to multiple layers, thereby providing more
flexibility to entities when applying hedge accounting to a closed
portfolio of prepayable assets. In connection with this project, the
FASB anticipated that there would be diversity in practice if entities
were required to allocate portfolio-level, last-of-layer FVHBAs to more
granular levels, which in turn could potentially hamper data quality
and comparability. In addition, the allocation would increase
operational burden on institutions with little, if any, added value to
risk management or to users of the financial statements. Therefore, for
financial reporting purposes, the FASB tentatively decided that it
would require these FVHBAs to be presented as a reconciling item, i.e.,
in the aggregate for loans and AFS debt securities, in disclosures
required by other areas of United States generally accepted accounting
principles (U.S. GAAP).
As a result, in the October 2020 notice, the Board proposed to
implement changes to the FR Y-9C related to the FASB's expected
expansion of last-of-layer hedging to multiple layers, providing more
flexibility to entities when applying hedge accounting to a closed
portfolio of prepayable assets. Specifically, the Board proposed
changes to FR Y-9C, Schedules HC-C, Loans and Lease Financing
Receivables and HC-B, Securities. Following the FASB's expected
adoption of a final last-of-layer hedge accounting standard, the
instructions for Schedule HC-C, item 11, ``LESS: Any unearned income on
loans reflected in items 1-9 above,'' would have been revised to
explicitly state that last-of-layer FVHBAs associated with the loans
reported in Schedule HC-C, should be included in this item. In
addition, the Board proposed to rename existing item 7 for Schedule HC-
B, ``Investments in mutual funds and other equity securities with
readily determinable fair values,'' to ``Unallocated last-of-layer fair
value hedge basis adjustments.'' Holding companies would have reported
amounts for last-of-layer FVHBAs on AFS debt securities only in item 7,
column C, ``Available-for-sale: Amortized Cost''.
However, the FASB had not adopted the expected expansion of last-
of-layer hedging by January 2021, when the Board approved the other
revisions to the FR Y-9 reports that had been proposed in the October
2020 notice. Therefore, the Board did not adopt the proposed revisions
relating to last-of-layer hedging in the January 2021 notice and
instead noted that it would consider whether to finalize the proposed
revisions when the FASB adopted a final standard.
On March 28, 2022, the FASB issued ASU 2022-01, to implement last-
of-layer hedging.\14\ The ASU is considered to be a modification of
U.S. GAAP. This ASU expands the current single-layer method and allows
for multiple hedged layers of a single closed portfolio, as anticipated
by the October 2020 notice. Additionally, ASU 2022-01:
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\14\ ASU 2022-01--Derivatives and Hedging (Topic 815): Fair
Value Hedging--Portfolio Layer Method (fasb.org).
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Expands the scope of the portfolio layer method from
prepayable assets to also include nonprepayable assets;
Specifies eligible hedging instruments in a single-layer
hedge;
Provides additional guidance on the accounting for and
disclosure of FVHBA under the portfolio layer method; and
Specifies how hedge basis adjustments should be considered
when determining credit losses for the assets included in the closed
portfolio.
The ASU 2022-01 applies to all entities that elect to apply the
portfolio layer method of hedge accounting. For public business
entities, this ASU is effective for fiscal years beginning after
December 15, 2022, and interim periods within those fiscal years. For
all other entities, the ASU is effective for fiscal years beginning
after December 15, 2023, and interim periods within those fiscal years.
Early adoption is permitted.
In light of the issuance of ASU 2022-01 by the FASB, the Board has
adopted the revisions to the FR Y-9C related to the expansion of last-
of-layer hedging proposed in October 2020, with certain modifications
to account for the specific content of ASU 2022-01. Specifically, the
Board has renamed HC-B, line item 7 to ``Unallocated portfolio layer
fair value hedge basis adjustments'' instead of '' Unallocated last-of-
layer fair value hedge basis adjustments'' to align with the scope of
ASU 2022-01. Additionally, the Board is updating the FR Y-9C
instructions for Schedules HC-B, Securities, and HC-C, Loans and
Leases, to fully align with U.S. GAAP as detailed in ASU 2022-01.
Board of Governors of the Federal Reserve System, September 1,
2022.
Michele Taylor Fennell,
Deputy Associate Secretary of the Board.
[FR Doc. 2022-19324 Filed 9-7-22; 8:45 am]
BILLING CODE 6210-01-P