Small Bank Holding Company Policy Statement; Capital Adequacy of Board-Regulated Institutions; Bank Holding Companies; Savings and Loan Holding Companies; Changes to Reporting Requirements, 5694-5699 [2015-02040]
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5694
Proposed Rules
Federal Register
Vol. 80, No. 22
Tuesday, February 3, 2015
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
FEDERAL RESERVE SYSTEM
12 CFR Parts 217, 225, and 238
[Regulations Q, Y, and LL; Docket No. R–
1509]
RIN 1700–AE 30
Small Bank Holding Company Policy
Statement; Capital Adequacy of BoardRegulated Institutions; Bank Holding
Companies; Savings and Loan Holding
Companies; Changes to Reporting
Requirements
Board of Governors of the
Federal Reserve System (Board).
ACTION: Notice of proposed rulemaking;
changes to reporting requirements.
AGENCY:
The Board is proposing to
raise the asset size threshold for
determining applicability of the Board’s
Small Bank Holding Company Policy
Statement (Regulation Y, Appendix C)
(Policy Statement) to $1 billion from
$500 million and to expand the scope of
the Policy Statement to include savings
and loan holding companies that also
meet the Policy Statement’s
requirements. The Board is also
proposing to make related and
conforming revisions to: Regulation Y
and Regulation LL, the Board’s
regulations governing the operations
and activities of bank holding
companies and savings and loan
holding companies, respectively; and
Regulation Q, the Board’s regulatory
capital regulation. Finally, to reduce
burden on small non-complex holding
companies, the Board is proposing to
change the reporting requirements for
bank holding companies and savings
and loan holding companies that meet
the requirements of the Policy
Statement (as proposed).
DATES: Comments on the proposal must
be received on or before March 5, 2015.
Comments on the Paperwork Reduction
Act burden estimates must be received
on or before April 6, 2015.
ADDRESSES: You may submit comments,
identified by Docket No. R–1509 and
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SUMMARY:
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RIN No. 7100–AE 30, by any of the
following methods:
• Agency Web site: https://
www.federalreserve.gov. Follow the
instructions for submitting comments at
https://www.federalreserve.gov/apps/
foia/proposedregs.aspx.
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Email: regs.comments@
federalreserve.gov. Include the docket
number in the subject line of the
message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Robert deV. Frierson,
Secretary, Board of Governors of the
Federal Reserve System, 20th Street and
Constitution Avenue NW., Washington,
DC 20551.
All public comments will be made
available on the Board’s Web site at
https://www.federalreserve.gov/apps/
foia/proposedregs.aspx as submitted,
unless modified for technical reasons.
Accordingly, comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper in Room MP–500 of the Board’s
Martin Building (20th and C Streets
NW., Washington, DC 20551) between
9:00 a.m. and 5:00 p.m. on weekdays.
Table of Contents
I. Background
The Board issued the Policy
Statement in 1980 to facilitate the
transfer of ownership of small
community-based banks in a manner
consistent with bank safety and
soundness. The Board generally has
discouraged the use of debt by bank
holding companies to finance the
acquisition of banks or other companies
because high levels of debt at a bank
holding company can impair the ability
of the bank holding company to serve as
a source of strength to its subsidiary
banks. The Board has recognized,
however, that small bank holding
companies have less access to equity
financing than larger bank holding
companies and that, therefore, the
transfer of ownership of small banks
often requires the use of acquisition
debt. Accordingly, the Board adopted
the Policy Statement to permit the
formation and expansion of small bank
holding companies with debt levels that
are higher than typically permitted for
larger bank holding companies. The
Policy Statement contains several
conditions and restrictions designed to
ensure that small bank holding
companies that operate with the higher
levels of debt permitted by the Policy
Statement do not present an undue risk
to the safety and soundness of their
subsidiary banks.
Currently, the Policy Statement
applies to bank holding companies with
pro forma consolidated assets of less
than $500 million that: (i) Are not
engaged in significant nonbanking
activities either directly or through a
nonbank subsidiary; (ii) do not conduct
significant off-balance sheet activities
(including securitization and asset
management or administration) either
directly or through a nonbank
subsidiary; 1 and (iii) do not have a
material amount of debt or equity
securities outstanding (other than trust
preferred securities) that are registered
with the Securities and Exchange
Commission (the foregoing enumerated
items referred to hereafter as Qualitative
Requirements). Under the Policy
Statement, bank holding companies that
I. Background
II. The Proposal
III. Administrative Law Matters
A. Regulatory Flexibility Act
B. Paperwork Reduction Act
C. Solicitation of Comments on Use of
Plain Language
1 The examples provided in the Policy
Statement—securitization and asset management or
administration—are not exhaustive and simply
highlight off-balance sheet activities that may
involve substantial risk. Other activities may
present similar concerns. See also 71 FR 9897,
9899, fn. 2 (February 28, 2006) (2006 Final Rule).
FOR FURTHER INFORMATION CONTACT:
Constance M. Horsley, Assistant
Director, (202) 452–5239, Cynthia
Ayouch, Manager, (202) 452–2204,
Thomas Boemio, Manager, (202) 452–
2982, Douglas Carpenter, Senior
Supervisory Financial Analyst, (202)
452–2205, or Page Conkling,
Supervisory Financial Analyst, (202)
912–4647, Division of Banking
Supervision and Regulation; Laurie
Schaffer, Associate General Counsel,
(202) 452–2272, or Tate Wilson,
Counsel, (202) 452–3696, Legal
Division; Board of Governors of the
Federal Reserve System, 20th and C
Streets NW., Washington, DC 20551.
SUPPLEMENTARY INFORMATION:
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meet the Qualitative Requirements
(qualifying small bank holding
companies) may use debt to finance up
to 75 percent of the purchase price of an
acquisition (that is, they may have a
debt-to-equity ratio of up to 3:1), but are
subject to a number of ongoing
requirements. The principal ongoing
requirements are that a qualifying small
bank holding company: (i) Reduce its
parent company debt in such a manner
that all debt is retired within 25 years
of being incurred; (ii) reduce its debt-to
equity ratio to .30:1 or less within 12
years of the debt being incurred; (iii)
ensure that each of its subsidiary
insured depository institutions is well
capitalized; and (iv) refrain from paying
dividends until such time as it reduces
its debt-to-equity ratio to 1.0:1 or less.
The Policy Statement also specifically
provides that a qualifying small bank
holding company may not use the
expedited applications procedures or
obtain a waiver of the stock redemption
filing requirements applicable to bank
holding companies under the Board’s
Regulation Y (12 CFR 225.4(b), 225.14,
and 225.23) unless the bank holding
company has a pro forma debt-to-equity
ratio of 1.0:1 or less.
II. The Proposal
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New Asset Threshold of $1 Billion
On December 18, 2014, Public Law
113–250 (the Act) was enacted and
became immediately effective.2 The Act
directs the Board to publish in the
Federal Register proposed revisions to
the Policy Statement that provide that
the Policy Statement shall apply to bank
holding companies and savings and
loan holding companies that have pro
forma consolidated assets of less than
$1 billion. The Board last raised the
asset limit in 2006 when it increased it
from $150 million to $500 million.3 The
Board is proposing to increase the asset
threshold consistent with the Act. The
Board is not proposing any
modifications to the Qualitative
Requirements at this time.
Policy Statement’s Application to
Savings and Loan Holding Companies
The Act also directs the Board to
propose revisions to the Policy
Statement that would extend its
application to certain savings and loan
holding companies. Accordingly, the
Board is proposing that a savings and
loan holding company would be subject
2 To enhance the ability of community financial
institutions to foster economic growth and serve
their communities, boost small businesses, increase
individual savings, and for other purposes, Public
Law 113–250 (December 18, 2014) (Pub. L. 113–
250).
3 See 2006 Final Rule.
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to the Policy Statement if the entity has
less than $1 billion in total consolidated
assets and satisfies each of the
Qualitative Requirements as if the
savings and loan holding company were
a bank holding company.
The Policy Statement currently
applies only to bank holding companies.
The Board proposes to apply the Policy
Statement to savings and loan holding
companies by adding new section 238.9
to Subpart A of Regulation LL. The new
section would apply the Policy
Statement to a savings and loan holding
company with less than $1 billion in
total consolidated assets and that meets
the Qualitative Requirements as if it
were a bank holding company.
This change requires other
modifications to the Policy Statement to
take account of the status of savings
associations under the Bank Holding
Company Act of 1956, as amended (BHC
Act). The first Qualitative Requirement
uses the terms ‘‘nonbanking activities’’
and ‘‘nonbank subsidiary’’ to refer to the
activities of a bank holding company.
Under the BHC Act, however, control of
a savings association by a bank holding
company is considered a nonbanking
activity.4 Because savings and loan
holding companies control savings
associations, all of their activities
including the control of savings
associations would be considered
nonbanking activities under the Policy
Statement.
This outcome would be inconsistent
with Congressional intent to apply the
Policy Statement to savings and loan
holding companies.5 The Board
therefore proposes to treat subsidiary
savings association of savings and loan
holding companies as if they were banks
for purposes of applying the Policy
Statement.
As is the case with bank holding
companies, whether a savings and loan
holding company engages in
‘‘significant’’ nonbanking activities will
depend on the scope of the activities of
the savings and loan holding company,
the nature and level of risk of the
activities, the condition of the savings
and loan holding company, and other
criteria as appropriate.6 Consistent with
the Policy Statement’s provisions for
bank holding companies, the Board also
proposes to retain the right to exclude
any savings and loan holding company,
4 See 12 U.S.C. 1841(c)(2)(B), 1841(j), and
1843(i)(1).
5 See, e.g., Public Law 113–250, sec. 2(b).
6 For purposes of applying the Policy Statement
to savings and loan holding companies, the term
‘‘nonbank subsidiary’’ as used in the Policy
Statement would refer to a subsidiary of a savings
and loan holding company other than a savings
association or a subsidiary of a savings association.
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regardless of size, from the Policy
Statement if the Board determines that
such action is warranted for supervisory
purposes.
Regulation Q Change
The Board proposes to revise
Regulation Q to conform the language in
part 217 to reflect the proposed
additional section to Regulation LL
(section 238.9).
Conforming Amendments
A number of reporting, filing, and
other provisions in Regulations Y and
LL are triggered by the consolidated
asset threshold established by the Policy
Statement. The Board proposes to make
technical and conforming amendments
to these provisions to provide that
qualifying small bank holding
companies and savings and loan
holding companies may take advantage
of the streamlined informational, notice,
and other requirements embodied in
these rules. These technical and
conforming amendments will provide
relief to most bank holding companies
and savings and loan holding
companies with less than $1 billion of
consolidated total assets. The proposed
rule would make the following changes:
• In section 217.1(c)(1)(iii), revise
Regulation Q (12 CFR part 217) to
exclude a savings and loan holding
company that is subject to the proposed
revised Policy Statement through
proposed section 238.9 of the Board
Regulation LL (12 CFR part 238).
• In section 225.2(r), footnote 2,
revise the footnote describing the
application of the definition of ‘‘wellcapitalized’’ in the Board’s Regulation Y
(12 CFR part 225) to entities subject to
the proposed revised Policy Statement
to reflect the proposed revised total
assets threshold of less than $1 billion.
• In section 225.4(b)(2)(iii), increase
the threshold for the different pro forma
financial information required of
smaller bank holding companies
compared to larger bank holding
companies under section 225.4(b)(1) of
the Board’s Regulation Y from total
assets of less than $500 million to total
assets of less than $1 billion.
• In section 225.14(a)(1)(v), increase
the threshold for the different pro forma
financial information required of
smaller bank holding companies
compared to larger bank holding
companies under section 225.14 of the
Board’s Regulation Y from total assets of
less than $500 million to total assets of
less than $1 billion.
• In section 225.17(a)(6), footnote 6,
increase the total asset threshold for
application of the footnote related to
demonstrating that debt incurred will
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not unduly burden the bank holding
company from total assets of less than
$500 million to total assets of less than
$1 billion.
• In section 225.23(a)(1)(iii), increase
the threshold for the different pro forma
financial information required of
smaller bank holding companies
compared to larger bank holding
companies under section 225.23 of the
Board’s Regulation Y from total assets of
less than $500 million to total assets of
less than $1 billion.
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Regulatory Reporting Changes
In order to assist the Federal Reserve
in monitoring the financial health and
operations of bank holding companies,
the Board requires all bank holding
companies and savings and loan
holding companies to file certain reports
with the Federal Reserve. Those reports
include the Financial Statements for
Holding Companies (FR Y–9 series of
reports; OMB No. 7100–0128).
Currently, savings and loan holding
companies with consolidated assets of
less than $500 million and bank holding
companies with consolidated assets of
less than $500 million that also meet
Qualitative Requirements submit
limited summary parent-only financial
data semiannually on the FR Y–9SP.
Currently, savings and loan holding
companies with consolidated assets of
$500 million or more and bank holding
companies with consolidated assets of
$500 million or more that are not
subject to the Policy Statement submit
consolidated financial data on the FR
Y–9C and parent-only financial data on
the FR Y–9LP, both quarterly.
The Board proposes to change the
filing requirements for bank holding
companies and savings and loan
holding companies with $500 million or
more but less than $1 billion in total
consolidated assets.7 These institutions
would not be required to file the FR Y–
9C and the FR Y–9LP (including
regulatory capital information) and
would begin filing the FR Y–9SP if they
also meet the Qualitative Requirements.
These changes are proposed to be
consistent with the changes to law and
the Policy Statement and also to reduce
regulatory reporting burden for these
7 Pursuant to Paperwork Reduction Act’s
emergency review process, 44 U.S.C. 3507(j), the
Board is filing an emergency clearance review to
change these reporting requirements for bank
holding companies and savings and loan holding
companies with $500 million or more but less than
$1 billion in total consolidated assets to reduce
burden on small BHCs and SLHCs immediately.
The change implemented through the emergency
clearance process would be effective immediately
for six months. The Board is now proposing to
make the change permanent and invites public
comment.
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smaller institutions. Since most bank
holding companies with less than $1
billion in total consolidated assets have
limited activities outside of their banks,
the Board believes relying on detailed
quarterly bank data on the Consolidated
Reports of Condition and Income (FFIEC
041; OMB No. 7100–0036) is sufficient
for supervisory purposes.
Comments
The Board invites comments on all
aspects of this proposal. Interested
parties are encouraged to provide
comments on the proposed $1 billion
asset size threshold adjustment, the
Policy Statement’s application to
savings and loan holding companies,
related and conforming amendments to
Regulations Y and LL, the revision to
Regulation Q, and the proposed changes
to regulatory reporting.
III. Administrative Law Matters
A. Regulatory Flexibility Act Analysis
The Board is providing an initial
regulatory flexibility analysis with
respect to this proposal. As discussed
above, the proposal would reduce
regulatory burden on small entities by
excluding many bank holding
companies and savings and loan
holding companies with total
consolidated assets of less than $1
billion that meet the Qualitative
Requirements from the application of
the Board’s Regulation Q. In addition,
the proposal would reduce the burden
of regulatory reporting for bank holding
companies and savings and loan
holding companies with total
consolidated assets of less than $1
billion that meet the Qualitative
Requirements by requiring these entities
to file the semi-annual FR Y–9SP rather
than the quarterly FR Y–9C and FR Y–
9LP.
The Regulatory Flexibility Act, 5
U.S.C. 601 et seq. (RFA), generally
requires that an agency prepare and
make available an initial regulatory
flexibility analysis in connection with a
notice of proposed rulemaking. Under
regulations issued by the Small
Business Administration, a small bank
holding company, bank, or savings and
loan holding company is defined as
having assets of $550 million or less
(collectively, small banking
organizations).8 As of June 30, 2014,
there were approximately 3,719 small
8 See 13 CFR 121.201. Effective July 14, 2014, the
Small Business Administration revised the size
standards for banking organizations to $550 million
in assets from $500 million in assets. 79 FR 33647
(June 12, 2014).
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bank holding companies and 254 small
savings and loan holding companies.
The proposed rule would impact
small bank holding companies with
total consolidated assets of $500 to $550
million that meet the Qualitative
Requirements by providing an exclusion
from Regulation Q and the requirement
to file the FR Y–9C and FR Y–9LP. The
proposed rule would impact all small
savings and loan holding companies
(those with $550 million or less in
assets) that meet the Qualitative
Requirements, are currently subject to
Regulation Q, and are required to file
the FR Y–9C or FR Y–9LP. These small
bank holding companies and small
savings and loan holding companies
would instead be subject to the Policy
Statement and would be required to file
the FR Y–9SP, a significant reduction in
burden. The Board believes that most
affected small banking organizations
already hold more capital than required
under Regulation Q, so the burden
reduction from the exclusion from
Regulation Q is primarily related to
compliance and systems. In addition,
affected small banking organizations
would be able to take advantage of the
applications processing procedures
provided to qualifying companies under
the Policy Statement.
There are no significant alternatives to
the proposed rule that would have less
economic impact on small banking
organizations, and the proposed rule
would significantly reduce burden on
nearly all small banking organizations.
As discussed above, the projected
reporting, recordkeeping, and other
compliance requirements of the
proposed rule are a material reduction
from existing requirements. The Board
does not believe that the proposed rule
duplicates, overlaps, or conflicts with
any other Federal rules. In light of the
foregoing, the Board does not believe
that the proposed rule, if adopted in
final form, would have a significant
economic impact on a substantial
number of small banking organizations.
Nonetheless, the Board seeks comment
on whether the proposed rule would
impose undue burdens on, or have
unintended consequences for, small
banking organizations, and whether
there are ways such potential burdens or
consequences could be minimized in a
manner consistent with the purpose of
the proposed rule. A final regulatory
flexibility analysis will be conducted
after consideration of comments
received during the public comment
period.
B. Paperwork Reduction Act
In accordance with section 3512 of
the Paperwork Reduction Act of 1995
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(44 U.S.C. 3501–3521) (PRA), the Board
may not conduct or sponsor, and a
respondent is not required to respond
to, an information collection unless it
displays a currently valid Office of
Management and Budget (OMB) control
number. The OMB control number is
7100–0128. The Board reviewed the
proposed rulemaking under the
authority delegated to the Board by
OMB. The proposed rulemaking
contains requirements subject to the
PRA. The reporting requirements are
found in sections 211.26(c)(2)(i)(A),
217.1(c)(1)(iii), 225.2(r)(footnote 2),
225.4(b)(2)(iii), 225.14(a)(1)(v),
225.17(a)(6)(footnote 6), and
225.23(a)(1)(iii), 238.9.
Comments are invited on:
(a) Whether the proposed collections
of information are 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 collections,
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
the information collections 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.
All comments will become a matter of
public record. Comments on aspects of
this notice that may affect reporting,
recordkeeping, or disclosure
requirements and burden estimates
should be sent to: Secretary, Board of
Governors of the Federal Reserve
System, 20th and C Streets NW.,
Washington, DC 20551. A copy of the
comments may also be submitted to the
OMB desk officer: By mail to U.S. Office
of Management and Budget, 725 17th
Street NW., #10235, Washington, DC
20503 or by facsimile to 202–395–5806,
Attention, Agency Desk Officer.
Proposed Revisions, With Extension, to
the Following Information Collection
Title of Information Collection:
Consolidated Financial Statements for
Holding Companies; Parent Company
Only Financial Statements for Large
Holding Companies; Parent Company
Only Financial Statements for Small
Holding Companies; Financial
Statements for Employee Stock
Ownership Plan Holding Companies;
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and Supplement to the Consolidated
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 of Response: Quarterly,
semiannually, annually, and on
occasion.
Affected Public: Businesses or other
for-profit.
Respondents: Bank holding
companies, savings and loan holding
companies, and securities holding
companies (collectively, holding
companies).
Abstract: On December 18, 2014,
Public Law 113–250 was signed into
law and became effective immediately,
which directs the Board to propose
revisions to the Policy Statement to
raise the total consolidated asset limit in
the Policy Statement from $500 million
to $1 billion, and expand the scope of
the Policy Statement to include savings
and loan holding companies.
Pursuant to the PRA’s emergency
review process, 44 U.S.C. 3507(j), the
Board is filing an emergency clearance
review to (1) increase the asset size
threshold for filing the FR Y–9C and FR
Y–9LP from $500 million to $1 billion
in total consolidated assets (which also
effectively exempted holding companies
with total consolidated assets of less
than $1 billion from reporting regulatory
capital on Schedule HC–R, Regulatory
Capital, Part I) and (2) and increase the
asset-size threshold for filing the FR Y–
9SP from under $500 million to under
$1 billion in total consolidated assets. In
the emergency submission, the burden
for the FR Y–9C, FR Y–9LP, and FR Y–
9SP related to the threshold changes,
would decrease by 96,619 hours. The
change implemented through the
emergency clearance process would be
effective for six months. The Board is
now proposing to make the change
permanent and welcomes public
comment on any aspect of this
information collection. The burden
estimates below reflect the updated
number from the total emergency
clearance review.
Estimated Paperwork Burden
Estimated Burden per Response:
FR Y–9C (non-Advanced Approaches
bank holding companies)—48.84 hours;
FR Y–9C (Advanced Approaches bank
holding companies)—50.09 hours;
FR Y–9LP—5.25 hours;
FR Y–9SP—5.40 hours;
FR Y–9ES—0.5 hours; and
FR Y–9CS—0.5 hours.
Number of respondents:
FR Y–9C (non-Advanced Approaches
bank holding companies)—644;
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FR Y–9C (Advanced Approaches bank
holding companies)—12;
FR Y–9LP—818;
FR Y–9SP—4,390;
FR Y–9ES—86; and
FR Y–9CS—236.
Total estimated annual burden:
FR Y–9C (non-Advanced Approaches
bank holding companies)—125,812
hours;
FR Y–9C (Advanced Approaches bank
holding companies)—2,404 hours;
FR Y–9LP—17,178 hours;
FR Y–9SP—47,412 hours;
FR Y–9ES—43 hours; and
FR Y–9CS—472 hours. (Total burden
193,321 hours)
C. Plain Language
Section 722 of the Gramm-LeachBliley Act requires the Federal banking
agencies to use ‘‘plain language’’ in all
proposed and final rules published after
January 1, 2000. In light of this
requirement, the Board has sought to
present the proposed rule in a simple
and straightforward manner. The Board
invites comments on whether there are
additional steps it could take to make
the rule easier to understand.
List of Subjects
12 CFR Part 217
Administrative practice and
procedure, Banks, banking, Capital,
Federal Reserve System, Holding
companies, Reporting and
recordkeeping requirements, Securities.
12 CFR Part 225
Administrative practice and
procedure, Banks, banking, Federal
Reserve System, Holding companies,
Reporting and recordkeeping
requirements.
12 CFR Part 238
Administrative practice and
procedure, Banks, banking, Federal
Reserve System, Holding companies,
Reporting and recordkeeping
requirements.
Federal Reserve System
12 CFR Chapter II
Authority and Issuance
For the reasons set forth in the
preamble, chapter II of title 12 of the
Code of Federal Regulations is proposed
to be amended as set forth below:
PART 217—CAPITAL ADEQUACY OF
BANK HOLDING COMPANIES,
SAVINGS AND LOAN HOLDING
COMPANIES, AND STATE MEMBER
BANKS (REGULATION Q)
1. The authority citation for part 217
continues to read as follows:
■
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Authority: 12 U.S.C. 248(a), 321–338a,
481–486, 1462a, 1467a, 1818, 1828, 1831n,
1831o, 1831p–1, 1831w, 1835, 1844(b), 1851,
3904, 3906–3909, 4808, 5365, 5368, 5371.
2. In § 217.1, revise paragraph
(c)(1)(iii) to read as follows:
■
§ 217.1 Purpose, applicability,
reservations of authority, and timing.
*
*
*
*
*
(c) * * *
(1) * * *
(iii) A covered savings and loan
holding company domiciled in the
United States, other than a savings and
loan holding company that has total
consolidated assets of less than $1
billion and meets the requirements of 12
CFR part 225, appendix C, as if the
savings and loan holding company were
a bank holding company and the
savings association were a bank. For
purposes of compliance with the capital
adequacy requirements and calculations
in this part, savings and loan holding
companies that do not file the FR Y–9C
should follow the instructions to the FR
Y–9C.
*
*
*
*
*
PART 225—BANK HOLDING
COMPANIES AND CHANGE IN BANK
CONTROL (REGULATION Y)
3. The authority citation for part 225
continues to read as follows:
■
Authority: 12 U.S.C. 1817(j)(13), 1818,
1828(o), 1831i, 1831p–1, 1843(c)(8), 1844(b),
1972(1), 3106, 3108, 3310, 3331–3351, 3906,
3907, and 3909; 15 U.S.C. 1681s, 1681w,
6801 and 6805.
4. In § 225.2, paragraph (r), revise
footnote 2 to read as follows:
■
§ 225.2
*
Definitions.
*
*
(r) * * *
*
*
2 For purposes of this subpart and subparts
B and C of this part, a bank holding company
with consolidated assets of less than $1
billion that is subject to the Small Bank
Holding Company Policy Statement in
appendix C of this part will be deemed to be
‘‘well-capitalized’’ if the bank holding
company meets the requirements for
expedited/waived processing in appendix C.
*
*
*
*
*
5. In § 225.4, revise paragraph
(b)(2)(iii) to read as follows:
rljohnson on DSK3VPTVN1PROD with PROPOSALS
§ 225.4
Corporate practices.
*
*
*
*
*
(b) * * *
(2) * * *
(iii)(A) If the bank holding company
has consolidated assets of $1 billion or
more, consolidated pro forma risk-based
capital and leverage ratio calculations
for the bank holding company as of the
most recent quarter, and, if the
VerDate Sep<11>2014
13:27 Feb 02, 2015
Jkt 235001
redemption is to be debt funded, a
parent-only pro forma balance sheet as
of the most recent quarter; or
(B) If the bank holding company has
consolidated assets of less than $1
billion, a pro forma parent-only balance
sheet as of the most recent quarter, and,
if the redemption is to be debt funded,
one-year income statement and cash
flow projections.
*
*
*
*
*
■ 6. In § 225.14, revise paragraph
(a)(1)(v) to read as follows:
§ 225.14 Expedited action for certain bank
acquisitions by well-run bank holding
companies.
*
*
*
*
*
(a) * * *
(1) * * *
(v)(A) If the bank holding company
has consolidated assets of $1 billion or
more, an abbreviated consolidated pro
forma balance sheet as of the most
recent quarter showing credit and debit
adjustments that reflect the proposed
transaction, consolidated pro forma
risk-based capital ratios for the
acquiring bank holding company as of
the most recent quarter, and a
description of the purchase price and
the terms and sources of funding for the
transaction;
(B) If the bank holding company has
consolidated assets of less than $1
billion, a pro forma parent-only balance
sheet as of the most recent quarter
showing credit and debit adjustments
that reflect the proposed transaction,
and a description of the purchase price,
the terms and sources of funding for the
transaction, and the sources and
schedule for retiring any debt incurred
in the transaction;
*
*
*
*
*
■ 7. In § 225.17, paragraph (a)(6), revise
footnote 6 to read as follows:
§ 225.17 Notice procedure for one-bank
holding company formations.
(a) * * *
(6) * * *
6 For a banking organization with
consolidated assets, on a pro forma basis, of
less than $1 billion (other than a banking
organization that will control a de novo
bank), this requirement is satisfied if the
proposal complies with the Board’s Small
Bank Holding Company Policy Statement
(appendix C of this part).
*
*
*
*
*
8. In § 225.23, revise paragraph
(a)(1)(iii) to read as follows:
■
§ 225.23 Expedited action for certain
nonbanking proposals by well-run bank
holding companies.
(a) * * *
(1) * * *
PO 00000
Frm 00005
(iii) If the proposal involves an
acquisition of a going concern:
(A) If the bank holding company has
consolidated assets of $1 billion or
more, an abbreviated consolidated pro
forma balance sheet for the acquiring
bank holding company as of the most
recent quarter showing credit and debit
adjustments that reflect the proposed
transaction, consolidated pro forma
risk-based capital ratios for the
acquiring bank holding company as of
the most recent quarter, a description of
the purchase price and the terms and
sources of funding for the transaction,
and the total revenue and net income of
the company to be acquired;
(B) If the bank holding company has
consolidated assets of less than $1
billion, a pro forma parent-only balance
sheet as of the most recent quarter
showing credit and debit adjustments
that reflect the proposed transaction, a
description of the purchase price and
the terms and sources of funding for the
transaction and the sources and
schedule for retiring any debt incurred
in the transaction, and the total assets,
off-balance sheet items, revenue and net
income of the company to be acquired;
(C) For each insured depository
institution whose Tier 1 capital, total
capital, total assets or risk-weighted
assets change as a result of the
transaction, the total risk-weighted
assets, total assets, Tier 1 capital and
total capital of the institution on a pro
forma basis;
*
*
*
*
*
■ 9. In part 225, appendix C, before the
heading ‘‘1. Applicability of Policy
Statement’’, add a paragraph to read as
follows:
Appendix C to Part 225—Small Bank
Holding Company Policy Statement
Policy Statement on Assessment of
Financial and Managerial Factors
*
*
Fmt 4702
Sfmt 4702
*
*
*
*
This policy statement applies only to bank
holding companies with pro forma
consolidated assets of less than $1 billion
that (i) are not engaged in significant
nonbanking activities either directly or
through a nonbank subsidiary; (ii) do not
conduct significant off-balance sheet
activities (including securitization and asset
management or administration) either
directly or through a nonbank subsidiary;
and (iii) do not have a material amount of
debt or equity securities outstanding (other
than trust preferred securities) that are
registered with the Securities and Exchange
Commission. The Board may in its discretion
exclude any bank holding company,
regardless of asset size, from the policy
statement if such action is warranted for
supervisory purposes.
E:\FR\FM\03FEP1.SGM
*
*
03FEP1
*
*
Federal Register / Vol. 80, No. 22 / Tuesday, February 3, 2015 / Proposed Rules
PART 238—SAVINGS AND LOAN
HOLDING COMPANIES (REGULATION
LL)
10. The authority citation for part 238
continues to read as follows:
■
Authority: 5 U.S.C. 552, 559; 12 U.S.C.
1462, 1462a, 1463, 1464, 1467, 1467a, 1468,
1813, 1817, 1829e, 1831i, 1972; 15 U.S.C. 78l.
11. In subpart A, add new § 238.9 to
read as follows:
■
§ 238.9 Small Bank Holding Company
Policy Statement.
(a) The Board’s Small Bank Holding
Company Policy Statement (12 CFR part
225, appendix C) (Policy Statement)
applies to savings and loan holding
companies as if they were bank holding
companies. To qualify or rely on the
Policy Statement, savings and loan
holding companies must meet all
qualifying requirements in the Policy
Statement as if they were a bank holding
company. For purposes of applying the
Policy Statement, the term ‘‘nonbank
subsidiary’’ as used in the Policy
Statement refers to a subsidiary of a
savings and loan holding company other
than a savings association or a
subsidiary of a savings association.
(b) The Board may exclude any
savings and loan holding company,
regardless of asset size, from the Policy
Statement under paragraph (a) of this
section if the Board determines that
such action is warranted for supervisory
purposes.
By order of the Board of Governors of the
Federal Reserve System, January 29, 2015.
Michael Lewandowski,
Associate Secretary of the Board.
[FR Doc. 2015–02040 Filed 1–30–15; 11:15 am]
BILLING CODE 6210–01–P
Sanctuaries Act, as amended, (NMSA),
the Office of National Marine
Sanctuaries (ONMS) of the National
Oceanic and Atmospheric
Administration (NOAA) is initiating a
review of Flower Garden Banks National
Marine Sanctuary (FGBNMS or
Sanctuary) boundaries, based on the
recommendation contained within the
Sanctuary Expansion Action Plan of the
FGBNMS Management Plan (April
2012). The review process, as required
by the NMSA, will be conducted
concurrently with a public process
under the National Environmental
Policy Act (NEPA). This document also
informs the public that NOAA will
coordinate its responsibilities under
section 106 of the National Historic
Preservation Act (NHPA) with its
ongoing NEPA process, including the
use of NEPA documents and public and
stakeholder meetings to also meet the
requirements of section 106. The public
scoping process is intended to solicit
information and comments on the range
and significance of issues related to the
expansion of the FGBNMS boundaries.
The results of this scoping process will
assist NOAA in formulating alternatives
for the draft environmental impact
statement for the proposed revised
sanctuary boundaries.
DATES: Comments must be received by
April 6, 2015. Public hearings will be
held as detailed below:
(1) New Orleans, LA
Date: Tuesday, March 3, 2015
Location: Hilton New Orleans Airport,
Cocodrie Room
Address: 901 Airline Drive, Kenner, LA
70062
Time: 6:00–8:00 p.m.
(2) Houston, TX
Date: Thursday, March 5, 2015
Location: Bayland Community Center
Address: 6400 Bissonnet Street,
Houston, TX 77074
Time: 6:00–8:00 p.m.
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
15 CFR Part 922
(3) Galveston, TX
Revisions of Boundaries for Flower
Garden Banks National Marine
Sanctuary; Intent To Prepare Draft
Environmental Impact Statement
Office of National Marine
Sanctuaries (ONMS), National Ocean
Service (NOS), National Oceanic and
Atmospheric Administration (NOAA),
Department of Commerce (DOC).
ACTION: Notice of intent to revise
boundaries; intent to prepare
environmental impact statement.
rljohnson on DSK3VPTVN1PROD with PROPOSALS
AGENCY:
In accordance with section
304(e) of the National Marine
SUMMARY:
VerDate Sep<11>2014
13:27 Feb 02, 2015
Jkt 235001
Date: Wednesday, March 11, 2015
Location: Flower Garden Banks NMS
Office, NOAA Galveston Laboratory
Address: 4700 Avenue U, Building 216,
Galveston, TX 77551
Time: 6:00–8:00 p.m.
ADDRESSES: Comments may be
submitted by any one of the following
methods:
• Electronic Submissions: Submit all
electronic public comments via the
Federal e-Rulemaking Portal. Go to
www.regulations.gov/
#!docketDetail;D=NOAA-NOS-20140154, click the ‘‘Comment Now!’’ icon,
PO 00000
Frm 00006
Fmt 4702
Sfmt 4702
5699
complete the required fields and enter
or attach your comments.
• Mail: George Schmahl, Sanctuary
Superintendent, Flower Garden Banks
National Marine Sanctuary, 4700
Avenue U, Bldg. 216, Galveston, TX
77551.
Instructions: Comments sent by any
other method, to any other address or
individual, or received after the end of
the comment period, may not be
considered by NOAA. All comments
received are a part of the public record
and will generally be posted for public
viewing on www.regulations.gov
without change. All personal identifying
information (e.g., name, address, etc.),
confidential business information, or
otherwise sensitive information
submitted voluntarily by the sender will
be publicly accessible. ONMS will
accept anonymous comments (enter ‘‘N/
A’’ in the required fields if you wish to
remain anonymous). Attachments to
electronic comments will be accepted in
Microsoft Word, Excel, or Adobe PDF
file formats only.
FOR FURTHER INFORMATION CONTACT:
Kelly Drinnen, 409–621–5151 Ext. 105,
fgbexpansion@noaa.gov.
SUPPLEMENTARY INFORMATION:
Background Information
I. Background
The National Marine Sanctuaries Act
(NMSA) (16 U.S.C. 1431 et seq.)
authorizes the Secretary of Commerce
(Secretary) to designate and protect as a
national marine sanctuaries areas of the
marine environment that are of special
national significance due to their
conservation, recreational, ecological,
historical, scientific, cultural,
archeological, educational, or esthetic
qualities. Day-to-day management of
national marine sanctuaries has been
delegated by the Secretary to the ONMS.
The primary objective of the NMSA is
to protect the biological and cultural
resources of the sanctuary system, such
as coral reefs, marine animals, historical
shipwrecks, historic structures, and
archaeological sites.
Flower Garden Banks National Marine
Sanctuary was designated on January
17, 1992 (Pub. L. 102–251, Title I, Sec.
101). At that time, the sanctuary
consisted of two areas known as East
and West Flower Garden Banks (56 FR
63634). In 1996, Congress added Stetson
Bank to the sanctuary (Pub. L. 104–283).
FGBNMS regulations were first
published on December 5, 1991 (56 FR
63634) and became effective on January
18, 1994 (58 FR 65664). Current
FGBNMS regulations can be found at 15
CFR part 922, subpart L.
E:\FR\FM\03FEP1.SGM
03FEP1
]]>Agencies
[Federal Register Volume 80, Number 22 (Tuesday, February 3, 2015)]
[Proposed Rules]
[Pages 5694-5699]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-02040]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 80, No. 22 / Tuesday, February 3, 2015 /
Proposed Rules
[[Page 5694]]
FEDERAL RESERVE SYSTEM
12 CFR Parts 217, 225, and 238
[Regulations Q, Y, and LL; Docket No. R-1509]
RIN 1700-AE 30
Small Bank Holding Company Policy Statement; Capital Adequacy of
Board-Regulated Institutions; Bank Holding Companies; Savings and Loan
Holding Companies; Changes to Reporting Requirements
AGENCY: Board of Governors of the Federal Reserve System (Board).
ACTION: Notice of proposed rulemaking; changes to reporting
requirements.
-----------------------------------------------------------------------
SUMMARY: The Board is proposing to raise the asset size threshold for
determining applicability of the Board's Small Bank Holding Company
Policy Statement (Regulation Y, Appendix C) (Policy Statement) to $1
billion from $500 million and to expand the scope of the Policy
Statement to include savings and loan holding companies that also meet
the Policy Statement's requirements. The Board is also proposing to
make related and conforming revisions to: Regulation Y and Regulation
LL, the Board's regulations governing the operations and activities of
bank holding companies and savings and loan holding companies,
respectively; and Regulation Q, the Board's regulatory capital
regulation. Finally, to reduce burden on small non-complex holding
companies, the Board is proposing to change the reporting requirements
for bank holding companies and savings and loan holding companies that
meet the requirements of the Policy Statement (as proposed).
DATES: Comments on the proposal must be received on or before March 5,
2015. Comments on the Paperwork Reduction Act burden estimates must be
received on or before April 6, 2015.
ADDRESSES: You may submit comments, identified by Docket No. R-1509 and
RIN No. 7100-AE 30, by any of the following methods:
Agency Web site: https://www.federalreserve.gov. Follow the
instructions for submitting comments at https://www.federalreserve.gov/apps/foia/proposedregs.aspx.
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Email: regs.comments@federalreserve.gov. Include the
docket number in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Robert deV. Frierson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue NW.,
Washington, DC 20551.
All public comments will be made available on the Board's Web site
at https://www.federalreserve.gov/apps/foia/proposedregs.aspx as
submitted, unless modified for technical reasons. Accordingly, comments
will not be edited to remove any identifying or contact information.
Public comments may also be viewed electronically or in paper in Room
MP-500 of the Board's Martin Building (20th and C Streets NW.,
Washington, DC 20551) between 9:00 a.m. and 5:00 p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT: Constance M. Horsley, Assistant
Director, (202) 452-5239, Cynthia Ayouch, Manager, (202) 452-2204,
Thomas Boemio, Manager, (202) 452-2982, Douglas Carpenter, Senior
Supervisory Financial Analyst, (202) 452-2205, or Page Conkling,
Supervisory Financial Analyst, (202) 912-4647, Division of Banking
Supervision and Regulation; Laurie Schaffer, Associate General Counsel,
(202) 452-2272, or Tate Wilson, Counsel, (202) 452-3696, Legal
Division; Board of Governors of the Federal Reserve System, 20th and C
Streets NW., Washington, DC 20551.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. The Proposal
III. Administrative Law Matters
A. Regulatory Flexibility Act
B. Paperwork Reduction Act
C. Solicitation of Comments on Use of Plain Language
I. Background
The Board issued the Policy Statement in 1980 to facilitate the
transfer of ownership of small community-based banks in a manner
consistent with bank safety and soundness. The Board generally has
discouraged the use of debt by bank holding companies to finance the
acquisition of banks or other companies because high levels of debt at
a bank holding company can impair the ability of the bank holding
company to serve as a source of strength to its subsidiary banks. The
Board has recognized, however, that small bank holding companies have
less access to equity financing than larger bank holding companies and
that, therefore, the transfer of ownership of small banks often
requires the use of acquisition debt. Accordingly, the Board adopted
the Policy Statement to permit the formation and expansion of small
bank holding companies with debt levels that are higher than typically
permitted for larger bank holding companies. The Policy Statement
contains several conditions and restrictions designed to ensure that
small bank holding companies that operate with the higher levels of
debt permitted by the Policy Statement do not present an undue risk to
the safety and soundness of their subsidiary banks.
Currently, the Policy Statement applies to bank holding companies
with pro forma consolidated assets of less than $500 million that: (i)
Are not engaged in significant nonbanking activities either directly or
through a nonbank subsidiary; (ii) do not conduct significant off-
balance sheet activities (including securitization and asset management
or administration) either directly or through a nonbank subsidiary; \1\
and (iii) do not have a material amount of debt or equity securities
outstanding (other than trust preferred securities) that are registered
with the Securities and Exchange Commission (the foregoing enumerated
items referred to hereafter as Qualitative Requirements). Under the
Policy Statement, bank holding companies that
[[Page 5695]]
meet the Qualitative Requirements (qualifying small bank holding
companies) may use debt to finance up to 75 percent of the purchase
price of an acquisition (that is, they may have a debt-to-equity ratio
of up to 3:1), but are subject to a number of ongoing requirements. The
principal ongoing requirements are that a qualifying small bank holding
company: (i) Reduce its parent company debt in such a manner that all
debt is retired within 25 years of being incurred; (ii) reduce its
debt-to equity ratio to .30:1 or less within 12 years of the debt being
incurred; (iii) ensure that each of its subsidiary insured depository
institutions is well capitalized; and (iv) refrain from paying
dividends until such time as it reduces its debt-to-equity ratio to
1.0:1 or less. The Policy Statement also specifically provides that a
qualifying small bank holding company may not use the expedited
applications procedures or obtain a waiver of the stock redemption
filing requirements applicable to bank holding companies under the
Board's Regulation Y (12 CFR 225.4(b), 225.14, and 225.23) unless the
bank holding company has a pro forma debt-to-equity ratio of 1.0:1 or
less.
---------------------------------------------------------------------------
\1\ The examples provided in the Policy Statement--
securitization and asset management or administration--are not
exhaustive and simply highlight off-balance sheet activities that
may involve substantial risk. Other activities may present similar
concerns. See also 71 FR 9897, 9899, fn. 2 (February 28, 2006) (2006
Final Rule).
---------------------------------------------------------------------------
II. The Proposal
New Asset Threshold of $1 Billion
On December 18, 2014, Public Law 113-250 (the Act) was enacted and
became immediately effective.\2\ The Act directs the Board to publish
in the Federal Register proposed revisions to the Policy Statement that
provide that the Policy Statement shall apply to bank holding companies
and savings and loan holding companies that have pro forma consolidated
assets of less than $1 billion. The Board last raised the asset limit
in 2006 when it increased it from $150 million to $500 million.\3\ The
Board is proposing to increase the asset threshold consistent with the
Act. The Board is not proposing any modifications to the Qualitative
Requirements at this time.
---------------------------------------------------------------------------
\2\ To enhance the ability of community financial institutions
to foster economic growth and serve their communities, boost small
businesses, increase individual savings, and for other purposes,
Public Law 113-250 (December 18, 2014) (Pub. L. 113-250).
\3\ See 2006 Final Rule.
---------------------------------------------------------------------------
Policy Statement's Application to Savings and Loan Holding Companies
The Act also directs the Board to propose revisions to the Policy
Statement that would extend its application to certain savings and loan
holding companies. Accordingly, the Board is proposing that a savings
and loan holding company would be subject to the Policy Statement if
the entity has less than $1 billion in total consolidated assets and
satisfies each of the Qualitative Requirements as if the savings and
loan holding company were a bank holding company.
The Policy Statement currently applies only to bank holding
companies. The Board proposes to apply the Policy Statement to savings
and loan holding companies by adding new section 238.9 to Subpart A of
Regulation LL. The new section would apply the Policy Statement to a
savings and loan holding company with less than $1 billion in total
consolidated assets and that meets the Qualitative Requirements as if
it were a bank holding company.
This change requires other modifications to the Policy Statement to
take account of the status of savings associations under the Bank
Holding Company Act of 1956, as amended (BHC Act). The first
Qualitative Requirement uses the terms ``nonbanking activities'' and
``nonbank subsidiary'' to refer to the activities of a bank holding
company. Under the BHC Act, however, control of a savings association
by a bank holding company is considered a nonbanking activity.\4\
Because savings and loan holding companies control savings
associations, all of their activities including the control of savings
associations would be considered nonbanking activities under the Policy
Statement.
---------------------------------------------------------------------------
\4\ See 12 U.S.C. 1841(c)(2)(B), 1841(j), and 1843(i)(1).
---------------------------------------------------------------------------
This outcome would be inconsistent with Congressional intent to
apply the Policy Statement to savings and loan holding companies.\5\
The Board therefore proposes to treat subsidiary savings association of
savings and loan holding companies as if they were banks for purposes
of applying the Policy Statement.
---------------------------------------------------------------------------
\5\ See, e.g., Public Law 113-250, sec. 2(b).
---------------------------------------------------------------------------
As is the case with bank holding companies, whether a savings and
loan holding company engages in ``significant'' nonbanking activities
will depend on the scope of the activities of the savings and loan
holding company, the nature and level of risk of the activities, the
condition of the savings and loan holding company, and other criteria
as appropriate.\6\ Consistent with the Policy Statement's provisions
for bank holding companies, the Board also proposes to retain the right
to exclude any savings and loan holding company, regardless of size,
from the Policy Statement if the Board determines that such action is
warranted for supervisory purposes.
---------------------------------------------------------------------------
\6\ For purposes of applying the Policy Statement to savings and
loan holding companies, the term ``nonbank subsidiary'' as used in
the Policy Statement would refer to a subsidiary of a savings and
loan holding company other than a savings association or a
subsidiary of a savings association.
---------------------------------------------------------------------------
Regulation Q Change
The Board proposes to revise Regulation Q to conform the language
in part 217 to reflect the proposed additional section to Regulation LL
(section 238.9).
Conforming Amendments
A number of reporting, filing, and other provisions in Regulations
Y and LL are triggered by the consolidated asset threshold established
by the Policy Statement. The Board proposes to make technical and
conforming amendments to these provisions to provide that qualifying
small bank holding companies and savings and loan holding companies may
take advantage of the streamlined informational, notice, and other
requirements embodied in these rules. These technical and conforming
amendments will provide relief to most bank holding companies and
savings and loan holding companies with less than $1 billion of
consolidated total assets. The proposed rule would make the following
changes:
In section 217.1(c)(1)(iii), revise Regulation Q (12 CFR
part 217) to exclude a savings and loan holding company that is subject
to the proposed revised Policy Statement through proposed section 238.9
of the Board Regulation LL (12 CFR part 238).
In section 225.2(r), footnote 2, revise the footnote
describing the application of the definition of ``well-capitalized'' in
the Board's Regulation Y (12 CFR part 225) to entities subject to the
proposed revised Policy Statement to reflect the proposed revised total
assets threshold of less than $1 billion.
In section 225.4(b)(2)(iii), increase the threshold for
the different pro forma financial information required of smaller bank
holding companies compared to larger bank holding companies under
section 225.4(b)(1) of the Board's Regulation Y from total assets of
less than $500 million to total assets of less than $1 billion.
In section 225.14(a)(1)(v), increase the threshold for the
different pro forma financial information required of smaller bank
holding companies compared to larger bank holding companies under
section 225.14 of the Board's Regulation Y from total assets of less
than $500 million to total assets of less than $1 billion.
In section 225.17(a)(6), footnote 6, increase the total
asset threshold for application of the footnote related to
demonstrating that debt incurred will
[[Page 5696]]
not unduly burden the bank holding company from total assets of less
than $500 million to total assets of less than $1 billion.
In section 225.23(a)(1)(iii), increase the threshold for
the different pro forma financial information required of smaller bank
holding companies compared to larger bank holding companies under
section 225.23 of the Board's Regulation Y from total assets of less
than $500 million to total assets of less than $1 billion.
Regulatory Reporting Changes
In order to assist the Federal Reserve in monitoring the financial
health and operations of bank holding companies, the Board requires all
bank holding companies and savings and loan holding companies to file
certain reports with the Federal Reserve. Those reports include the
Financial Statements for Holding Companies (FR Y-9 series of reports;
OMB No. 7100-0128). Currently, savings and loan holding companies with
consolidated assets of less than $500 million and bank holding
companies with consolidated assets of less than $500 million that also
meet Qualitative Requirements submit limited summary parent-only
financial data semiannually on the FR Y-9SP. Currently, savings and
loan holding companies with consolidated assets of $500 million or more
and bank holding companies with consolidated assets of $500 million or
more that are not subject to the Policy Statement submit consolidated
financial data on the FR Y-9C and parent-only financial data on the FR
Y-9LP, both quarterly.
The Board proposes to change the filing requirements for bank
holding companies and savings and loan holding companies with $500
million or more but less than $1 billion in total consolidated
assets.\7\ These institutions would not be required to file the FR Y-9C
and the FR Y-9LP (including regulatory capital information) and would
begin filing the FR Y-9SP if they also meet the Qualitative
Requirements. These changes are proposed to be consistent with the
changes to law and the Policy Statement and also to reduce regulatory
reporting burden for these smaller institutions. Since most bank
holding companies with less than $1 billion in total consolidated
assets have limited activities outside of their banks, the Board
believes relying on detailed quarterly bank data on the Consolidated
Reports of Condition and Income (FFIEC 041; OMB No. 7100-0036) is
sufficient for supervisory purposes.
---------------------------------------------------------------------------
\7\ Pursuant to Paperwork Reduction Act's emergency review
process, 44 U.S.C. 3507(j), the Board is filing an emergency
clearance review to change these reporting requirements for bank
holding companies and savings and loan holding companies with $500
million or more but less than $1 billion in total consolidated
assets to reduce burden on small BHCs and SLHCs immediately. The
change implemented through the emergency clearance process would be
effective immediately for six months. The Board is now proposing to
make the change permanent and invites public comment.
---------------------------------------------------------------------------
Comments
The Board invites comments on all aspects of this proposal.
Interested parties are encouraged to provide comments on the proposed
$1 billion asset size threshold adjustment, the Policy Statement's
application to savings and loan holding companies, related and
conforming amendments to Regulations Y and LL, the revision to
Regulation Q, and the proposed changes to regulatory reporting.
III. Administrative Law Matters
A. Regulatory Flexibility Act Analysis
The Board is providing an initial regulatory flexibility analysis
with respect to this proposal. As discussed above, the proposal would
reduce regulatory burden on small entities by excluding many bank
holding companies and savings and loan holding companies with total
consolidated assets of less than $1 billion that meet the Qualitative
Requirements from the application of the Board's Regulation Q. In
addition, the proposal would reduce the burden of regulatory reporting
for bank holding companies and savings and loan holding companies with
total consolidated assets of less than $1 billion that meet the
Qualitative Requirements by requiring these entities to file the semi-
annual FR Y-9SP rather than the quarterly FR Y-9C and FR Y-9LP.
The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (RFA),
generally requires that an agency prepare and make available an initial
regulatory flexibility analysis in connection with a notice of proposed
rulemaking. Under regulations issued by the Small Business
Administration, a small bank holding company, bank, or savings and loan
holding company is defined as having assets of $550 million or less
(collectively, small banking organizations).\8\ As of June 30, 2014,
there were approximately 3,719 small bank holding companies and 254
small savings and loan holding companies.
---------------------------------------------------------------------------
\8\ See 13 CFR 121.201. Effective July 14, 2014, the Small
Business Administration revised the size standards for banking
organizations to $550 million in assets from $500 million in assets.
79 FR 33647 (June 12, 2014).
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The proposed rule would impact small bank holding companies with
total consolidated assets of $500 to $550 million that meet the
Qualitative Requirements by providing an exclusion from Regulation Q
and the requirement to file the FR Y-9C and FR Y-9LP. The proposed rule
would impact all small savings and loan holding companies (those with
$550 million or less in assets) that meet the Qualitative Requirements,
are currently subject to Regulation Q, and are required to file the FR
Y-9C or FR Y-9LP. These small bank holding companies and small savings
and loan holding companies would instead be subject to the Policy
Statement and would be required to file the FR Y-9SP, a significant
reduction in burden. The Board believes that most affected small
banking organizations already hold more capital than required under
Regulation Q, so the burden reduction from the exclusion from
Regulation Q is primarily related to compliance and systems. In
addition, affected small banking organizations would be able to take
advantage of the applications processing procedures provided to
qualifying companies under the Policy Statement.
There are no significant alternatives to the proposed rule that
would have less economic impact on small banking organizations, and the
proposed rule would significantly reduce burden on nearly all small
banking organizations. As discussed above, the projected reporting,
recordkeeping, and other compliance requirements of the proposed rule
are a material reduction from existing requirements. The Board does not
believe that the proposed rule duplicates, overlaps, or conflicts with
any other Federal rules. In light of the foregoing, the Board does not
believe that the proposed rule, if adopted in final form, would have a
significant economic impact on a substantial number of small banking
organizations. Nonetheless, the Board seeks comment on whether the
proposed rule would impose undue burdens on, or have unintended
consequences for, small banking organizations, and whether there are
ways such potential burdens or consequences could be minimized in a
manner consistent with the purpose of the proposed rule. A final
regulatory flexibility analysis will be conducted after consideration
of comments received during the public comment period.
B. Paperwork Reduction Act
In accordance with section 3512 of the Paperwork Reduction Act of
1995
[[Page 5697]]
(44 U.S.C. 3501-3521) (PRA), the Board may not conduct or sponsor, and
a respondent is not required to respond to, an information collection
unless it displays a currently valid Office of Management and Budget
(OMB) control number. The OMB control number is 7100-0128. The Board
reviewed the proposed rulemaking under the authority delegated to the
Board by OMB. The proposed rulemaking contains requirements subject to
the PRA. The reporting requirements are found in sections
211.26(c)(2)(i)(A), 217.1(c)(1)(iii), 225.2(r)(footnote 2),
225.4(b)(2)(iii), 225.14(a)(1)(v), 225.17(a)(6)(footnote 6), and
225.23(a)(1)(iii), 238.9.
Comments are invited on:
(a) Whether the proposed collections of information are 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 collections, 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 the information collections 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.
All comments will become a matter of public record. Comments on
aspects of this notice that may affect reporting, recordkeeping, or
disclosure requirements and burden estimates should be sent to:
Secretary, Board of Governors of the Federal Reserve System, 20th and C
Streets NW., Washington, DC 20551. A copy of the comments may also be
submitted to the OMB desk officer: By mail to U.S. Office of Management
and Budget, 725 17th Street NW., #10235, Washington, DC 20503 or by
facsimile to 202-395-5806, Attention, Agency Desk Officer.
Proposed Revisions, With Extension, to the Following Information
Collection
Title of Information Collection: Consolidated Financial Statements
for Holding Companies; Parent Company Only Financial Statements for
Large Holding Companies; Parent Company Only Financial Statements for
Small Holding Companies; Financial Statements for Employee Stock
Ownership Plan Holding Companies; and Supplement to the Consolidated
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 of Response: Quarterly, semiannually, annually, and on
occasion.
Affected Public: Businesses or other for-profit.
Respondents: Bank holding companies, savings and loan holding
companies, and securities holding companies (collectively, holding
companies).
Abstract: On December 18, 2014, Public Law 113-250 was signed into
law and became effective immediately, which directs the Board to
propose revisions to the Policy Statement to raise the total
consolidated asset limit in the Policy Statement from $500 million to
$1 billion, and expand the scope of the Policy Statement to include
savings and loan holding companies.
Pursuant to the PRA's emergency review process, 44 U.S.C. 3507(j),
the Board is filing an emergency clearance review to (1) increase the
asset size threshold for filing the FR Y-9C and FR Y-9LP from $500
million to $1 billion in total consolidated assets (which also
effectively exempted holding companies with total consolidated assets
of less than $1 billion from reporting regulatory capital on Schedule
HC-R, Regulatory Capital, Part I) and (2) and increase the asset-size
threshold for filing the FR Y-9SP from under $500 million to under $1
billion in total consolidated assets. In the emergency submission, the
burden for the FR Y-9C, FR Y-9LP, and FR Y-9SP related to the threshold
changes, would decrease by 96,619 hours. The change implemented through
the emergency clearance process would be effective for six months. The
Board is now proposing to make the change permanent and welcomes public
comment on any aspect of this information collection. The burden
estimates below reflect the updated number from the total emergency
clearance review.
Estimated Paperwork Burden
Estimated Burden per Response:
FR Y-9C (non-Advanced Approaches bank holding companies)--48.84
hours;
FR Y-9C (Advanced Approaches bank holding companies)--50.09 hours;
FR Y-9LP--5.25 hours;
FR Y-9SP--5.40 hours;
FR Y-9ES--0.5 hours; and
FR Y-9CS--0.5 hours.
Number of respondents:
FR Y-9C (non-Advanced Approaches bank holding companies)--644;
FR Y-9C (Advanced Approaches bank holding companies)--12;
FR Y-9LP--818;
FR Y-9SP--4,390;
FR Y-9ES--86; and
FR Y-9CS--236.
Total estimated annual burden:
FR Y-9C (non-Advanced Approaches bank holding companies)--125,812
hours;
FR Y-9C (Advanced Approaches bank holding companies)--2,404 hours;
FR Y-9LP--17,178 hours;
FR Y-9SP--47,412 hours;
FR Y-9ES--43 hours; and
FR Y-9CS--472 hours. (Total burden 193,321 hours)
C. Plain Language
Section 722 of the Gramm-Leach-Bliley Act requires the Federal
banking agencies to use ``plain language'' in all proposed and final
rules published after January 1, 2000. In light of this requirement,
the Board has sought to present the proposed rule in a simple and
straightforward manner. The Board invites comments on whether there are
additional steps it could take to make the rule easier to understand.
List of Subjects
12 CFR Part 217
Administrative practice and procedure, Banks, banking, Capital,
Federal Reserve System, Holding companies, Reporting and recordkeeping
requirements, Securities.
12 CFR Part 225
Administrative practice and procedure, Banks, banking, Federal
Reserve System, Holding companies, Reporting and recordkeeping
requirements.
12 CFR Part 238
Administrative practice and procedure, Banks, banking, Federal
Reserve System, Holding companies, Reporting and recordkeeping
requirements.
Federal Reserve System
12 CFR Chapter II
Authority and Issuance
For the reasons set forth in the preamble, chapter II of title 12
of the Code of Federal Regulations is proposed to be amended as set
forth below:
PART 217--CAPITAL ADEQUACY OF BANK HOLDING COMPANIES, SAVINGS AND
LOAN HOLDING COMPANIES, AND STATE MEMBER BANKS (REGULATION Q)
0
1. The authority citation for part 217 continues to read as follows:
[[Page 5698]]
Authority: 12 U.S.C. 248(a), 321-338a, 481-486, 1462a, 1467a,
1818, 1828, 1831n, 1831o, 1831p-1, 1831w, 1835, 1844(b), 1851, 3904,
3906-3909, 4808, 5365, 5368, 5371.
0
2. In Sec. 217.1, revise paragraph (c)(1)(iii) to read as follows:
Sec. 217.1 Purpose, applicability, reservations of authority, and
timing.
* * * * *
(c) * * *
(1) * * *
(iii) A covered savings and loan holding company domiciled in the
United States, other than a savings and loan holding company that has
total consolidated assets of less than $1 billion and meets the
requirements of 12 CFR part 225, appendix C, as if the savings and loan
holding company were a bank holding company and the savings association
were a bank. For purposes of compliance with the capital adequacy
requirements and calculations in this part, savings and loan holding
companies that do not file the FR Y-9C should follow the instructions
to the FR Y-9C.
* * * * *
PART 225--BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL
(REGULATION Y)
0
3. The authority citation for part 225 continues to read as follows:
Authority: 12 U.S.C. 1817(j)(13), 1818, 1828(o), 1831i, 1831p-1,
1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310, 3331-3351, 3906,
3907, and 3909; 15 U.S.C. 1681s, 1681w, 6801 and 6805.
0
4. In Sec. 225.2, paragraph (r), revise footnote 2 to read as follows:
Sec. 225.2 Definitions.
* * * * *
(r) * * *
\2\ For purposes of this subpart and subparts B and C of this
part, a bank holding company with consolidated assets of less than
$1 billion that is subject to the Small Bank Holding Company Policy
Statement in appendix C of this part will be deemed to be ``well-
capitalized'' if the bank holding company meets the requirements for
expedited/waived processing in appendix C.
* * * * *
5. In Sec. 225.4, revise paragraph (b)(2)(iii) to read as follows:
Sec. 225.4 Corporate practices.
* * * * *
(b) * * *
(2) * * *
(iii)(A) If the bank holding company has consolidated assets of $1
billion or more, consolidated pro forma risk-based capital and leverage
ratio calculations for the bank holding company as of the most recent
quarter, and, if the redemption is to be debt funded, a parent-only pro
forma balance sheet as of the most recent quarter; or
(B) If the bank holding company has consolidated assets of less
than $1 billion, a pro forma parent-only balance sheet as of the most
recent quarter, and, if the redemption is to be debt funded, one-year
income statement and cash flow projections.
* * * * *
0
6. In Sec. 225.14, revise paragraph (a)(1)(v) to read as follows:
Sec. 225.14 Expedited action for certain bank acquisitions by well-
run bank holding companies.
* * * * *
(a) * * *
(1) * * *
(v)(A) If the bank holding company has consolidated assets of $1
billion or more, an abbreviated consolidated pro forma balance sheet as
of the most recent quarter showing credit and debit adjustments that
reflect the proposed transaction, consolidated pro forma risk-based
capital ratios for the acquiring bank holding company as of the most
recent quarter, and a description of the purchase price and the terms
and sources of funding for the transaction;
(B) If the bank holding company has consolidated assets of less
than $1 billion, a pro forma parent-only balance sheet as of the most
recent quarter showing credit and debit adjustments that reflect the
proposed transaction, and a description of the purchase price, the
terms and sources of funding for the transaction, and the sources and
schedule for retiring any debt incurred in the transaction;
* * * * *
0
7. In Sec. 225.17, paragraph (a)(6), revise footnote 6 to read as
follows:
Sec. 225.17 Notice procedure for one-bank holding company formations.
(a) * * *
(6) * * *
\6\ For a banking organization with consolidated assets, on a
pro forma basis, of less than $1 billion (other than a banking
organization that will control a de novo bank), this requirement is
satisfied if the proposal complies with the Board's Small Bank
Holding Company Policy Statement (appendix C of this part).
* * * * *
0
8. In Sec. 225.23, revise paragraph (a)(1)(iii) to read as follows:
Sec. 225.23 Expedited action for certain nonbanking proposals by
well-run bank holding companies.
(a) * * *
(1) * * *
(iii) If the proposal involves an acquisition of a going concern:
(A) If the bank holding company has consolidated assets of $1
billion or more, an abbreviated consolidated pro forma balance sheet
for the acquiring bank holding company as of the most recent quarter
showing credit and debit adjustments that reflect the proposed
transaction, consolidated pro forma risk-based capital ratios for the
acquiring bank holding company as of the most recent quarter, a
description of the purchase price and the terms and sources of funding
for the transaction, and the total revenue and net income of the
company to be acquired;
(B) If the bank holding company has consolidated assets of less
than $1 billion, a pro forma parent-only balance sheet as of the most
recent quarter showing credit and debit adjustments that reflect the
proposed transaction, a description of the purchase price and the terms
and sources of funding for the transaction and the sources and schedule
for retiring any debt incurred in the transaction, and the total
assets, off-balance sheet items, revenue and net income of the company
to be acquired;
(C) For each insured depository institution whose Tier 1 capital,
total capital, total assets or risk-weighted assets change as a result
of the transaction, the total risk-weighted assets, total assets, Tier
1 capital and total capital of the institution on a pro forma basis;
* * * * *
0
9. In part 225, appendix C, before the heading ``1. Applicability of
Policy Statement'', add a paragraph to read as follows:
Appendix C to Part 225--Small Bank Holding Company Policy Statement
Policy Statement on Assessment of Financial and Managerial Factors
* * * * *
This policy statement applies only to bank holding companies
with pro forma consolidated assets of less than $1 billion that (i)
are not engaged in significant nonbanking activities either directly
or through a nonbank subsidiary; (ii) do not conduct significant
off-balance sheet activities (including securitization and asset
management or administration) either directly or through a nonbank
subsidiary; and (iii) do not have a material amount of debt or
equity securities outstanding (other than trust preferred
securities) that are registered with the Securities and Exchange
Commission. The Board may in its discretion exclude any bank holding
company, regardless of asset size, from the policy statement if such
action is warranted for supervisory purposes.
* * * * *
[[Page 5699]]
PART 238--SAVINGS AND LOAN HOLDING COMPANIES (REGULATION LL)
0
10. The authority citation for part 238 continues to read as follows:
Authority: 5 U.S.C. 552, 559; 12 U.S.C. 1462, 1462a, 1463,
1464, 1467, 1467a, 1468, 1813, 1817, 1829e, 1831i, 1972; 15 U.S.C.
78l.
0
11. In subpart A, add new Sec. 238.9 to read as follows:
Sec. 238.9 Small Bank Holding Company Policy Statement.
(a) The Board's Small Bank Holding Company Policy Statement (12 CFR
part 225, appendix C) (Policy Statement) applies to savings and loan
holding companies as if they were bank holding companies. To qualify or
rely on the Policy Statement, savings and loan holding companies must
meet all qualifying requirements in the Policy Statement as if they
were a bank holding company. For purposes of applying the Policy
Statement, the term ``nonbank subsidiary'' as used in the Policy
Statement refers to a subsidiary of a savings and loan holding company
other than a savings association or a subsidiary of a savings
association.
(b) The Board may exclude any savings and loan holding company,
regardless of asset size, from the Policy Statement under paragraph (a)
of this section if the Board determines that such action is warranted
for supervisory purposes.
By order of the Board of Governors of the Federal Reserve
System, January 29, 2015.
Michael Lewandowski,
Associate Secretary of the Board.
[FR Doc. 2015-02040 Filed 1-30-15; 11:15 am]
BILLING CODE 6210-01-P
