Proposed Agency Information Collection Activities; Comment Request, 63870-63885 [2018-26818]

Agencies

• FEDERAL RESERVE SYSTEM

[Federal Register Volume 83, Number 238 (Wednesday, December 12, 2018)]
[Notices]
[Pages 63870-63885]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-26818]


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FEDERAL RESERVE SYSTEM


Proposed Agency Information Collection Activities; Comment 
Request

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notice, request for comment.

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

DATES: Comments must be submitted on or before February 11, 2019.

ADDRESSES: You may submit comments, identified by FR Y-9C, FR Y-9LP, FR 
Y-9SP, FR Y-9ES, FR Y-9CS, FR Y-7, FR Y-7N, FR Y-7Q, FR Y-8, FR Y-11, 
FR Y-11S, FR 2248, FR 2314, FR 2320, FR 2644, or FR 2886b by any of the 
following methods:
     Agency Website: https://www.federalreserve.gov. Follow the 
instructions for submitting comments at https://www.federalreserve.gov/apps/foia/proposedregs.aspx.
     Email: [email protected]. Include OMB 
number in the subject line of the message.
     Fax: (202) 452-3819 or (202) 452-3102.
     Mail: Ann Misback, Secretary, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue NW, 
Washington, DC 20551.
    All public comments are available from the Board's website at 
https://www.federalreserve.gov/apps/foia/proposedregs.aspx as submitted, 
unless modified for technical reasons. Accordingly, your comments will 
not be edited to remove any identifying or contact information. Public 
comments may also be viewed electronically or in paper form in Room 
3515, 1801 K Street (between 18th and 19th Streets NW), Washington, DC 
20006, between 9:00 a.m. and 5:00 p.m. on weekdays. For security 
reasons, the Board requires that visitors make an appointment to 
inspect comments. You may do so by calling (202) 452-3684. Upon 
arrival, visitors will be required to present valid government-issued 
photo identification and to submit to security screening in order to 
inspect and photocopy comments. Additionally, commenters may send a 
copy of their comments to the OMB Desk Officer--Shagufta Ahmed--Office 
of Information and Regulatory Affairs, Office of Management and Budget, 
New Executive Office Building, Room 10235, 725 17th Street NW, 
Washington, DC 20503, or by fax to (202) 395-6974.

FOR FURTHER INFORMATION CONTACT: A copy of the PRA OMB submission, 
including the proposed reporting form and instructions, supporting 
statement, and other documentation will be placed into OMB's public 
docket files, if approved. These documents will also be made available 
on the 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 below.
    Federal Reserve Board Clearance Officer--Nuha Elmaghrabi--Office of 
the Chief Data Officer, Board of Governors of the Federal Reserve 
System, Washington, DC 20551, (202) 452-3829. Telecommunications Device 
for the Deaf (TDD) users may contact (202) 263-4869, Board of Governors 
of the Federal Reserve System, Washington, DC 20551.

SUPPLEMENTARY INFORMATION: On June 15, 1984, the Office of Management 
and Budget (OMB) delegated to the Board authority under the Paperwork 
Reduction Act (PRA) to approve and assign OMB control numbers to 
collection of information requests and requirements conducted or 
sponsored by the Board. In exercising this delegated authority, the 
Board is directed to take every reasonable step to solicit comment. In 
determining whether to approve a collection of information, the Board 
will consider all comments received from the public and other agencies.

Request for Comment on Information Collection Proposal

    The Board invites public comment on the following information 
collection, which is being reviewed under authority delegated by the 
OMB under the PRA. Comments are invited on the following:
    a. Whether the proposed collection of information is necessary for 
the proper performance of the Board's functions; including whether the 
information has practical utility;
    b. The accuracy of the Board's estimate of the burden of the 
proposed information collection, including the validity of the 
methodology and assumptions used;
    c. Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    d. Ways to minimize the burden of information collection on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    e. Estimates of capital or startup costs and costs of operation, 
maintenance, and purchase of services to provide information.
    At the end of the comment period, the comments and recommendations 
received will be analyzed to determine the extent to which the Board 
should modify the proposal.

Proposal To Approve Under OMB Delegated Authority the Extension for 
Three Years, With Revision, of the Following Reports

    1. Report title: Financial Statements for Holding Companies.
    Agency form number: FR Y-9C, FR Y-9LP, FR Y-9SP, FR Y-9ES, and FR 
Y-9CS.
    OMB control number: 7100-0128.
    Frequency: Quarterly, semiannually, and annually.
    Reporters: Bank holding companies, savings and loan holding 
companies, securities holding companies, and U.S.

[[Page 63871]]

Intermediate Holding Companies (collectively, holding companies (HCs)).
    Estimated number of respondents: FR Y-9C (non-advanced approaches 
holding companies): 292; FR Y-9C (advanced approached holding 
companies): 18; FR Y-9LP: 338; FR Y-9SP: 4,238; FR Y-9ES: 82; FR Y-9CS: 
236.
    Estimated average hours per response: FR Y-9C (non-advanced 
approaches holding companies): 46.34 hours; FR Y-9C (advanced 
approached holding companies HCs): 47.59 hours; FR Y-9LP: 5.27 hours; 
FR Y-9SP: 5.40 hours; FR Y-9ES: 0.50 hours; FR Y-9CS: 0.50 hours.
    Estimated annual burden hours: FR Y-9C (non-advanced approaches 
holding companies): 54,125 hours; FR Y-9C (advanced approached holding 
companies): 3,426 hours; FR Y-9LP: 7,125 hours; FR Y-9SP: 45,770; FR Y-
9ES: 41 hours; FR Y-9CS: 472 hours.
    General description of report: The FR Y-9C serves as standardized 
financial statements for the consolidated holding company. The FR Y-9 
family of reporting forms continues to be the primary source of 
financial data on HCs that examiners rely on between on-site 
inspections. Financial data from these reporting forms is used to 
detect emerging financial problems, review performance, conduct pre-
inspection analysis, monitor and evaluate capital adequacy, evaluate HC 
mergers and acquisitions, and analyze an HC's overall financial 
condition to ensure the safety and soundness of its operations. The 
Board requires HCs to provide standardized financial statements to 
fulfill the Board's statutory obligation to supervise these 
organizations. HCs file the FRY-9C on a quarterly basis, FR Y-9LP 
quarterly, and the FR Y-9SP semiannually, the FR Y-9ES annually, and 
the FR Y-9CS on a schedule that is determined when this supplement is 
used.
    2. Report title: The Financial Statements of U.S. Nonbank 
Subsidiaries Held by Foreign Banking Organizations, Abbreviated 
Financial Statements of U.S. Nonbank Subsidiaries Held by Foreign 
Banking Organizations, and the Capital and Asset Report of Foreign 
Banking Organizations.
    Agency form number: FR Y-7N, FR Y-7NS, and FR Y-7Q.
    OMB control number: 7100-0125.
    Frequency: Quarterly and annually.
    Reporters: Foreign banking organizations (FBOs).
    Number of respondents: FR Y-7N (quarterly): 35; FR Y-7N (annual): 
19; FR Y-7NS: 22; FR Y-7Q (quarterly): 130; FR Y-7Q (annual): 29.
    Estimated average hours per response: FR Y-7N (quarterly): 7.6 
hours; FR Y-7N (annual): 7.6 hours; FR Y-7NS: 1 hour; FR Y-7Q 
(quarterly): 3 hours; FR Y-7Q (annual): 1.5 hours.
    Estimated annual reporting hours: FR Y-7N (quarterly): 1,064 hours; 
FR Y-7N (annual): 144 hours; FR Y-7NS: 22 hours; FR Y-7Q (quarterly): 
1,560 hours; FR Y-7Q (annual): 44 hours.
    General description of report: The FR Y-7N and the FR Y-7NS are 
used to assess an FBO's ability to be a continuing source of strength 
to its U.S. operations and to determine compliance with U.S. laws and 
regulations. FBOs file the FR Y-7N quarterly or annually or the FR Y-
7NS annually predominantly based on asset size thresholds. The FR Y-7Q 
is used to assess consolidated regulatory capital and asset information 
from all FBOs. The FR Y-7Q is filed quarterly by FBOs that have 
effectively elected to become or be treated as a U.S. financial holding 
company (FHC) and by FBOs that have total consolidated assets of $50 
billion or more, regardless of FHC status. All other FBOs file the FR 
Y-7Q annually.
    3. Report title: Holding Company Report of Insured Depository 
Institutions' Section 23A Transactions with Affiliates.
    Agency form number: FR Y-8.
    OMB control number: 7100-0126.
    Frequency: Quarterly.
    Estimated number of respondents: 933.
    Estimated average hours per response: 7.8 hours.
    Estimated annual burden hours: 29,110 hours.
    General description of report: The FR Y-8 collects information on 
covered transactions between an insured depository institution and its 
affiliates that are subject to the quantitative limits and requirements 
of section 23A of the Federal Reserve Act and the Board's Regulation W 
(12 CFR Pt. 223). The FR Y-8 is filed quarterly by all U.S. top-tier 
bank holding companies (BHCs) and savings and loan holding companies 
(SLHCs), and by FBOs that directly own or control a U.S. subsidiary 
insured depository institution. If an FBO indirectly controls a U.S. 
insured depository institution through a U.S. holding company, the U.S. 
holding company must file the FR Y-8. A respondent must file a separate 
report for each U.S. insured depository institution it controls. The 
primary purpose of the data is to enhance the Board's ability to 
monitor the credit exposure of insured depository institutions to their 
affiliates and to ensure that insured depository institutions are in 
compliance with section 23A of the Federal Reserve Act and Regulation 
W. Section 23A of the Federal Reserve Act limits an insured depository 
institution's exposure to affiliated entities and helps to protect 
against the expansion of the federal safety net to uninsured entities.
    4. Report title: Financial Statements of U.S. Nonbank Subsidiaries 
of U.S. Holding Companies and the Abbreviated Financial Statements of 
U.S. Nonbank Subsidiaries of U.S. Holding Companies.
    Agency form number: FR Y-11 and FR Y-11S.
    OMB control number: 7100-0244.
    Frequency: Quarterly and annually.
    Reporters: Domestic bank holding companies, savings and loan 
holding companies, securities holding companies, and intermediate 
holding companies (collectively, ``holding companies'').
    Number of respondents: FR Y-11 (quarterly): 445; FR Y-11 (annual): 
189; FR Y-11S: 273.
    Estimated average hours per response: FR Y-11 (quarterly): 7.6; FR 
Y-11 (annual): 7.6; FR Y-11S: 1.
    Estimated annual reporting hours: FR Y-11 (quarterly): 13,528 
hours; FR Y-11 (annual): 1,436 hours; FR Y-11S: 273 hours.
    General description of report: The FR Y-11 family of reports 
collects financial information for individual U.S. nonbank subsidiaries 
of domestic holding companies, which is essential for monitoring the 
subsidiaries' potential impact on the condition of the holding company 
or its subsidiary banks. Holding companies file the FR Y-11 on a 
quarterly or annual basis or the FR Y-11S on an annual basis, 
predominantly based on whether the organization meets certain asset 
size thresholds.
    5. Report title: Domestic Finance Company Report of Consolidated 
Assets and Liabilities.
    Agency form number: FR 2248.
    OMB control number. 7100-0005.
    Frequency: Monthly, Quarterly and Semi-annually.
    Reporters: Domestic finance companies and mortgage companies.
    Estimated number of respondents: 150.
    Estimated average hours per response: Monthly: .33 hours; 
Quarterly: .50 hours; Addendum: 17 hours.
    Estimated annual burden hours: Monthly, 400 hours; Quarterly, 300 
hours; Addendum, 50 hours.
    General description of report: The FR 2248 collects information on 
amounts outstanding in major categories of consumer and business credit 
held by finance companies and on major short-term liabilities of the 
finance

[[Page 63872]]

companies. For quarter-end months (March, June, September, and 
December) the report also collects information on other assets and 
liabilities outstanding as well as information on capital accounts in 
order to provide a full balance sheet. In addition, a supplemental 
section collects data about assets that have been pooled by finance 
companies and sold to third parties that issue securities based on 
those assets. The supplemental section is organized in the same four 
categories of credit (consumer, real estate, business, and lease-
related). The special addendum section may be used if the need arises 
for the collection of timely information on questions of immediate 
concern to the Board. When necessary, respondents would be asked no 
more than twice a year to provide answers to a limited number of 
relevant questions, which would be distributed in advance to ease 
burden and which would take, on average, ten minutes to complete. This 
addendum provides the Board a valuable source of information regarding 
timely topics and events in financial markets.
    6. Report title: Financial Statements of Foreign Subsidiaries of 
U.S. Banking Organizations and the Abbreviated Financial Statements of 
Foreign Subsidiaries of U.S. Banking Organizations.
    Agency form number: FR 2314 and FR 2314S.
    OMB control number: 7100-0073.
    Frequency: Quarterly and annually.
    Reporters: U.S. state member banks, BHCs, SLHCs, intermediate 
holding companies (IHCs), and Edge or agreement corporations.
    Number of respondents: FR 2314 (quarterly): 439; FR 2314 (annual): 
239; FR 2314S: 300.
    Estimated average hours per response: FR 2314 (quarterly): 7.2 
hours; FR 2314 (annual): 7.2 hours; FR 2314S: 1 hour.
    Estimated annual reporting hours: FR 2314 (quarterly): 12,643 
hours; FR 2314 (annual): 1,768 hours; FR 2314S: 300 hours.
    General description of report: The FR 2314 family of reports is the 
only source of comprehensive and systematic data on the assets, 
liabilities, and earnings of the foreign nonbank subsidiaries of U.S. 
banking organizations, and the data are used to monitor the growth, 
profitability, and activities of these foreign companies. The data help 
the Board identify present and potential problems of these companies, 
monitor their activities in specific countries, and develop a better 
understanding of activities within the industry and within specific 
institutions. Parent organizations (state member banks (SMBs), Edge and 
agreement corporations, or holding companies) file the FR 2314 on a 
quarterly or annual basis, or the FR 2314S on an annual basis, 
predominantly based on whether the organization meets certain asset 
size thresholds.
    7. Agency form number: FR 2320.
    OMB control number: 7100-0345.
    Frequency: Quarterly.
    Reporters: SLHCs that are currently exempt from filing other Board 
regulatory reports.
    Estimated number of respondents: 13.
    Estimated average hours per response: 2.5 hours.
    Estimated annual burden hours: 130 hours.
    General description of report: The FR 2320 collects select parent 
only and consolidated balance sheet and income statement financial data 
and organizational structure data from SLHCs that are currently exempt 
from filing other Board regulatory reports (exempt SLHCs). The FR 2320 
is used by the Board to analyze the overall financial condition of 
exempt SLHCs to ensure safe and sound operations. These data assist the 
Board in the evaluation of a diversified holding company and in 
determining whether an institution is in compliance with applicable 
laws and regulations.
    8. Report title: Weekly Report of Selected Assets and Liabilities 
of Domestically Chartered Commercial Banks and U.S. Branches and 
Agencies of Foreign Banks.
    Agency form number: FR 2644.
    OMB control number: 7100-0075.
    Respondents: Domestically chartered commercial banks and U.S. 
branches and agencies of foreign banks.
    Estimated number of respondents: 875.
    Estimated average hours per response: 2.35 hours.
    Estimated annual burden hours: 106,925 hours.
    General description of report: The FR 2644 is a balance sheet 
report that is collected as of each Wednesday from an authorized 
stratified sample of 875 domestically chartered commercial banks and 
U.S. branches and agencies of foreign banks. The FR 2644 is the only 
source of high-frequency data used in the analysis of current banking 
developments. The FR 2644 collects sample data that are used to 
estimate universe levels using data from the quarterly commercial bank 
Consolidated Reports of Condition and Income (FFIEC 031, FFIEC 041, and 
FFIEC 051; OMB No. 7100-0036) and the Report of Assets and Liabilities 
of U.S. Branches and Agencies of Foreign Banks (FFIEC 002; OMB No. 
7100-0032) (Call Reports). Data from the FR 2644, together with data 
from other sources, are used to construct weekly estimates of bank 
credit, balance sheet data for the U.S. banking industry, sources and 
uses of banks' funds, and to analyze current banking and monetary 
developments. The Board publishes the data in aggregate form in the 
weekly H.8 statistical release, Assets and Liabilities of Commercial 
Banks in the United States, which is followed closely by other 
government agencies, the banking industry, the financial press, and 
other users. The H.8 release provides a balance sheet for the banking 
industry as a whole and data disaggregated by its large domestic, small 
domestic, and foreign-related bank components.
    9. Report title: Consolidated Report of Condition and Income for 
Edge and Agreement Corporations.
    Agency form number: FR 2886b.
    OMB control number: 7100-0086.
    Frequency: Quarterly.
    Reporters: Edge and agreement corporations and investment 
(nonbanking) Edge and agreement corporations.
    Number of respondents: Banking: Edge and agreement corporations 
(quarterly): 9; Banking: Edge and agreement corporations (annually): 1; 
Investment: Edge and agreement corporations (quarterly): 21; 
Investment: Edge and agreement corporations (annually): 7.
    Estimated average hours per response: Banking: Edge and agreement 
corporations (quarterly): 15.77; Banking: Edge and agreement 
corporations (annually): 15.87; Investment: Edge and agreement 
corporations (quarterly): 11.81; Investment: Edge and agreement 
corporations (annually): 10.82
    Estimated annual reporting hours: Banking: Edge and agreement 
corporations (quarterly): 568; Banking: Edge and agreement corporations 
(annually): 16; Investment: Edge and agreement corporations 
(quarterly): 922; Investment: Edge and agreement corporations 
(annually): 76.
    General description of report: The FR 2886b reporting form is filed 
quarterly and annually by banking Edge and agreement corporations and 
investment (nonbanking) Edge and agreement corporations (collectively, 
``Edges or Edge corporations''). The mandatory FR 2886b comprises an 
income statement with two schedules reconciling changes in capital and 
reserve accounts and a balance sheet with 11 supporting schedules. 
Other than examination reports, it provides the only financial data 
available for these corporations. The Board is solely responsible for 
authorizing, supervising, and assigning

[[Page 63873]]

ratings to Edges. The Board uses the data collected on the FR 2886b to 
identify present and potential problems and monitor and develop a 
better understanding of activities within the industry.
    Proposed Revisions:
    The Board proposes to (1) implement changes to address the revised 
accounting standards for the adoption of the current expected credit 
loss (CECL) methodology across all of the reports, (2) extend for three 
years through the normal delegated review process certain revisions to 
the FR Y-9C that the Board previously approved on a temporary basis \1\ 
in order to implement changes consistent with Section 214 and Section 
202 of the Economic Growth, Regulatory Relief, and Consumer Protection 
Act (EGRRCPA) pertaining to the risk-weighting of HVCRE exposures and 
the treatment of reciprocal deposits, (3) clarify reporting of 
unrealized holding gains and losses on equity securities on the FR Y-9C 
report, and (4) make several revisions to the FR 2886b report, 
including updating references to applicable capital requirements, 
revising the eligibility criteria for reporting the trading schedule 
and implement changes pertaining to the accounting treatment of equity 
securities.
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    \1\ See 83 FR 48990 (September 28, 2018).
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    The proposed reporting changes related to CECL are tied to the 
revisions proposed in the CECL notice of proposed rulemaking (the CECL 
NPR) \2\ by the Board, the Federal Deposit Insurance Corporation 
(FDIC), and the Office of the Comptroller of the Currency (OCC) 
(collectively, the agencies) to revise their regulatory capital rules 
related to the implementation and capital transition for CECL and to 
the corresponding proposed CECL revisions to the Consolidated Reports 
of Condition and Income (Call Reports) (FFIEC 031, FFIEC 041, and FFIEC 
051; OMB No. 7100-0036).\3\ To the extent the agencies alter proposed 
elements of the CECL NPR or the Call Report CECL proposal, the Board 
would make any necessary corresponding adjustments to the proposed CECL 
reporting revisions for the reports outlined in this notice prior to 
final approval of this proposal.
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    \2\ See 83 FR 22312 (May 14, 2018).
    \3\ See 83 FR 49160 (September 28, 2018).
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    The effective dates for adopting CECL vary depending on whether a 
firm is a public business entity (PBE), a Securities and Exchange 
Commission (SEC) report filer, or an early adopter. For institutions 
that are PBEs and also are SEC filers, as both terms are defined in 
U.S. generally accepted accounting principles (U.S. GAAP), the new 
credit losses standard is effective for fiscal years beginning after 
December 15, 2019, including interim periods within those fiscal years. 
For a PBE that is not an SEC filer, the credit losses standard is 
effective for fiscal years beginning after December 15, 2020, including 
interim periods within those fiscal years. For an institution that is 
not a PBE, the credit losses standard is effective for fiscal years 
beginning after December 15, 2020, and for interim period financial 
statements for fiscal years beginning after December 15, 2021. For 
regulatory reporting purposes, early application of the new credit 
losses standard will be permitted for all institutions for fiscal years 
beginning after December 15, 2018, including interim periods within 
those fiscal years. See Appendix A for more details surrounding CECL 
adoption by entity type, as well as the table summarizing the possible 
effective dates.\4\
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    \4\ See CECL FAQs, question 36, for examples of how and when 
institutions with non-calendar fiscal years must incorporate the new 
credit losses standard into their regulatory reports. The CECL FAQs 
and a related link to the joint statement can be found on the 
Board's website: https://www.federalreserve.gov/supervisionreg/srletters/sr1708a1.pdf.
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    Due to the different effective dates for ASU 2016-13, the period 
over which institutions may be implementing this ASU ranges from the 
first quarter of 2019 through the fourth quarter of 2022. December 31, 
2022, will be the first quarter-end of which all institutions would be 
required to prepare their reports in accordance with ASU 2016-13. It is 
expected that the majority of institutions will implement the standard 
in the first or fourth quarter of 2021. Schedule titles or specific 
data item captions resulting from the change in nomenclature upon the 
adoption of CECL generally would not be reflected in the reporting 
forms until March 31, 2021, as outlined in the following schedule-by-
schedule descriptions of the proposed changes to the affected reporting 
schedules.
    Because of the staggered adoption dates, the Board proposes to 
implement the CECL revisions in stages. First, the Board would revise 
the reporting form and instructions, add data items and schedules for 
certain impacted reports effective for March 31, 2019. The changes 
would include guidance stating how institutions that have adopted ASU-
2016-13 would report the data items related to the ``provision for 
credit losses'' and ``allowance for credit losses, as applicable. Next, 
for the transition period from March 31, 2021, through December 31, 
2022, the reporting form and instructions for each impacted schedule 
title or data item would be updated to include guidance stating how 
institutions that have not adopted ASU 2016-13 would report the 
``provision for loan and lease losses'' or the ``allowance for loan and 
lease losses,'' as applicable. The table below summarizes the effective 
dates for the 2019 and 2021 proposed CECL revisions.

------------------------------------------------------------------------
                                            Add items,
                                          add, footnotes    Revise item
                 Report                    and or revise     captions
                                           instructions
------------------------------------------------------------------------
FR 2644.................................      03/27/2019      01/06/2021
FR 2248.................................      03/31/2019      01/31/2021
FR 2320.................................      03/31/2019  ..............
FR Y-8..................................      03/31/2019  ..............
FR Y-9C.................................      03/31/2019      03/31/2021
FR Y-9LP................................      03/31/2019      03/31/2021
FR 2314/S...............................      03/31/2019      03/31/2021
FR Y-11/S...............................      03/31/2019      03/31/2021
FR 2886b................................      03/31/2019      03/31/2021
FR Y-7N/NS..............................      03/31/2019      03/31/2021
FR Y-9SP................................      06/30/2019      06/30/2021
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[[Page 63874]]

    The proposed non-CECL related revisions to the FR Y-9C and FR 2886b 
reports would be effective for the March 31, 2019, report date.

1. Proposed CECL Revisions--ASU 2016-13

    In June 2016, the Financial Accounting Standard Board (FASB) issued 
ASU 2016-13, which introduced the CECL methodology for estimating 
allowances for credit losses and added Topic 326, Credit Losses, to the 
Accounting Standards Codification (ASC). The new credit losses standard 
changes several aspects of existing U.S. GAAP, such as introducing a 
new credit loss methodology, reducing the number of credit impairment 
models, replacing the concept of purchased credit-impaired (PCI) assets 
with that of purchased credit-deteriorated (PCD) financial assets, and 
changing the impairment treatment for available-for-sale (AFS) 
securities. See Appendix B for more details on each of these U.S. GAAP 
changes as a result of ASU 2016-13.
    The Board is proposing revisions to all regulatory reports listed 
in this document in response to ASU 2016-13 in order to align the 
information reported with the new standard as it relates to the credit 
losses for loans and leases, including off-balance sheet credit 
exposures. These revisions address the broadening of the scope of 
financial assets for which an allowance for credit losses assessment 
must be established and maintained, along with the elimination of the 
existing model for PCI assets. The revisions for the FR Y-9C are 
described in detail, mostly on a schedule-by-schedule basis in the 
Detailed discussion of Proposed Revisions. The CECL revisions to all 
the other reports will mirror the revisions to the FR Y-9C, where 
applicable.
    CECL is applicable to all financial instruments carried at 
amortized cost (including loans held for investment (HFI) and held to 
maturity (HTM) debt securities as well as trade and reinsurance 
receivables and receivables that relate to repurchase agreements and 
securities lending agreements), net investments in leases, and off-
balance-sheet credit exposures not accounted for as insurance, 
including loan commitments, standby letters of credit, and financial 
guarantees. Under ASU 2016-13, institutions will record credit losses 
through an allowance for credit losses for AFS debt securities rather 
than as a write-down through earnings for other-than-temporary 
impairment (OTTI). The broader scope of financial assets for which 
allowances must be estimated under ASU 2016-13 results in the proposed 
reporting of additional allowances, and related charge-off and recovery 
data and proposed changes to the terminology used to describe 
allowances for credit losses. To address the broader scope of assets 
that will have allowances under ASU 2016-13, the Board proposes to 
change the allowance nomenclature to consistently use ``allowance for 
credit losses'' followed by the specific asset type as relevant, e.g., 
``allowance for credit losses on loans and leases'' and ``allowance for 
credit losses on HTM debt securities.
    By broadening the scope of financial assets for which the need for 
allowances for credit losses must be assessed to include HTM and AFS 
debt securities, the new standard eliminates the existing OTTI model 
for such securities. Subsequent to a firm's adoption of ASU 2016-13, 
the concept of OTTI will no longer be relevant and information on OTTI 
will no longer be captured.
    The new standard also eliminates the separate impairment model for 
PCI loans and debt securities. Under CECL, credit losses on PCD 
financial assets are subject to the same credit loss measurement 
standard as all other financial assets carried at amortized cost. 
Subsequent to an institution's adoption of ASU 2016-13, information on 
PCI loans will no longer be captured.
    While the standard generally does not change the scope of off-
balance sheet credit exposures subject to an allowance for credit loss 
assessment, the standard does change the period over which the firm 
should estimate expected credit losses. For off-balance sheet credit 
exposures, a firm will estimate expected credit losses over the 
contractual period in which they are exposed to credit risk. For the 
period of exposure, the estimate of expected credit losses should 
consider both the likelihood that funding will occur and the amount 
expected to be funded over the estimated remaining life of the 
commitment or other off-balance sheet exposure. In contrast to the 
existing practices, the FASB decided that no credit losses should be 
recognized for off-balance sheet credit exposures that are 
unconditionally cancellable by the issuer. The exclusion of 
unconditionally cancellable commitments from the allowance for credit 
losses assessment on off-balance sheet credit exposures requires 
clarification to applicable reporting instructions.
    As of the new accounting standard's effective date, institutions 
will apply the standard based on the characteristics of financial 
assets as follows:
     Financial assets carried at amortized cost (that are not 
PCD assets) and net investments in leases: A cumulative-effect 
adjustment for the changes in the allowances for credit losses will be 
recognized in retained earnings, net of applicable taxes, as of the 
beginning of the first reporting period in which the new standard is 
adopted. The cumulative-effect adjustment to retained earnings should 
be reported in FR Y-9C Schedule HI-A, item 2, ``Cumulative effect of 
changes in accounting principles and corrections of material accounting 
errors,'' and explained in Notes to the Income Statement for which a 
preprinted caption, ``Adoption of Current Expected Credit Losses 
Methodology--ASC Topic 326,'' will be provided in the text field for 
this item.
     Purchased credit-deteriorated financial assets: Financial 
assets classified as PCI assets prior to the effective date of the new 
standard will be classified as PCD assets as of the effective date. For 
all financial assets designated as PCD assets as of the effective date, 
an institution will be required to gross up the balance sheet amount of 
the financial asset by the amount of its allowance for expected credit 
losses as of the effective date, resulting in an adjustment to the 
amortized cost basis of the asset to reflect the addition of the 
allowance for credit losses as of that date. For loans held for 
investment and HTM debt securities, this allowance gross-up as of the 
effective date of ASU 2016-13 should be reported in the appropriate 
columns of Schedule HI-B, Part II, item 6, ``Adjustments,'' and should 
be explained in the Notes to the Income Statement for which a 
preprinted caption, ``Effect of adoption of current expected credit 
losses methodology on allowances for credit losses on loans and leases 
held for investment and held-to-maturity debt securities,'' will be 
provided in the text field for this item. Subsequent changes in the 
allowance for credit losses on PCD financial assets will be recognized 
by charges or credits to earnings through the provision for credit 
losses. The institution will continue to accrete the noncredit discount 
or premium to interest income based on the effective interest rate on 
the PCD financial assets determined after the gross-up for the CECL 
allowance as of the effective date of adoption, except for PCD 
financial assists in nonaccrual status.
     AFS and HTM debt securities: A debt security on which OTTI 
had been recognized prior to the effective date of the new standard 
will transition to the new guidance prospectively (i.e., with no change 
in the amortized cost basis of the security). The effective interest 
rate

[[Page 63875]]

on such a debt security before the adoption date will be retained and 
locked in. Amounts previously recognized in accumulated other 
comprehensive income related to cash flow improvements will continue to 
be accreted to interest income over the remaining life of the debt 
security on a level-yield basis. Recoveries of amounts previously 
written off relating to improvements in cash flows after the date of 
adoption will be recognized in income in the period received.
Schedule HI
    To address the broader scope of financial assets for which a 
provision will be calculated under ASU 2016-13, the Board proposes to 
revise Schedule HI, item 4, from ``Provision for loan and lease 
losses'' to ``Provision for Credit losses on financial assets,'' 
effective March 31, 2021. To address the elimination of the concept of 
OTTI by ASU 2016-13, effective December 31, 2022, the Board proposes to 
remove Schedule HI, Memorandum item 17, ``Other-than-temporary 
impairment losses on held-to-maturity and available-for-sale debt 
securities recognized in earnings.'' Under the new standard, 
institutions will recognize credit losses on HTM and AFS debt 
securities through an allowance for credit losses, and the Board 
proposes to collect information on the allowance for credit losses on 
these two categories of debt securities in Schedule HI-B as discussed 
below. From March 31, 2019, through September 30, 2022, the report form 
and instructions for Memorandum item 17 will include guidance stating 
that Memorandum item 17 is to be completed only by institutions that 
have not adopted ASU 2016-13.
Schedule HI-B
    To address the broader scope of financial assets for which 
allowances will be calculated under ASU 2016-13 and for which charge-
offs and recoveries will be applicable, the Board proposes to change 
the title of Schedule HI-B effective March 31, 2021, from ``Charge-offs 
and Recoveries on Loans and Leases and Changes in Allowance for Loan 
and Lease Losses'' to ``Charge-offs and Recoveries on Loans and Leases 
and Changes in Allowance for Credit Losses.''
    In addition, effective March 31, 2021, to address the change in 
allowance nomenclature arising from the broader scope of allowances 
under ASU 2016-13, the Board proposes to revise Schedule HI-B, Part I, 
Memorandum item 4, from ``Uncollectible retail credit card fees and 
finance charges reversed against income (i.e., not included in charge-
offs against the allowance for loan and lease losses)'' to 
``Uncollectible retail credit card fees and finance charges reversed 
against income (i.e., not included in charge-offs against the allowance 
for credit losses on loans and leases).''
    To further address the broader scope of financial assets for which 
allowances will be calculated under ASU 2016-13, the Board proposes to 
revise Schedule HI-B, Part II, to also include changes in the 
allowances for credit losses on HTM and AFS debt securities. Effective 
March 31, 2019, the Board proposes to change the title of Schedule HI-
B, Part II, from ``Changes in Allowance for Loan and Lease Losses'' to 
``Changes in Allowances for Credit Losses.''
    In addition, effective March 31, 2019, Schedule HI-B, Part II, 
would be expanded from one column to a table with three columns titled:

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

    From March 31, 2019, through September 30, 2022, the reporting form 
and the instructions for Schedule HI-B, Part II, would include guidance 
stating that Columns B and C are to be completed only by institutions 
that have adopted ASU 2016-13.
    In addition, effective March 31, 2019, Schedule HI-B, Part II, item 
4, will be revised from ``Less: Write-downs arising from transfers of 
loans to a held-for-sale account'' to ``Less: Write-downs arising from 
transfers of financial assets'' to capture changes in allowances from 
transfers of loans from held-to-investment to held-for-sale and from 
transfers of securities between categories, e.g., from the AFS to the 
HTM category. Further, effective March 31, 2019, Schedule HI-B, Part 
II, item 5, will be revised from ``Provision for loan and lease 
losses'' to ``Provision for credit losses'' to capture the broader 
scope of financial assets included in the schedule.
    Effective March 31, 2019, or the first quarter in which a holding 
company reports its adoption of ASU 2016-13, whichever is later, 
Schedule HI-B, Part II, item 6, ``Adjustments,'' would be used to 
capture the initial impact of applying ASU 2016-13 as of the effective 
date in the period of adoption as well as the initial allowance gross-
up for PCD assets as of the effective date. Item 6 also would be used 
to report the allowance gross-up upon the acquisition of PCD assets on 
or after the effective date. These adjustments would be explained in 
items for which preprinted captions would be provided in the text 
fields on the Notes to the Income Statement, as proposed below.
    In the memorandum section of Schedule HI-B, Part II, to address the 
change in allowance nomenclature arising from the broader scope of 
allowances under ASU 2016-13 the Board proposes to revise the caption 
for Memorandum item 3, effective March 31, 2021, from ``Amount of 
allowance for loan and lease losses attributable to retail credit card 
fees and finance charges'' to ``Amount of allowance for credit losses 
on loans and leases attributable to retail credit card fees and finance 
charges.'' Also, in the memorandum section of Schedule HI-B, Part II, 
effective December 31, 2022, the Board proposes to remove existing 
Memorandum item 4, ``Amount of allowance for post-acquisition credit 
losses on purchased credit impaired loans accounted for in accordance 
with AICPA Statement of Position 03-3'' as ASU 2016-13 eliminates the 
concept of PCI loans and the separate credit impairment model for such 
loans. From March 31, 2019, through September 30, 2022, the reporting 
form and instructions for Schedule HI-B, Part II, Memorandum item 4, 
would specify that this item should be completed only by institutions 
that have not yet adopted ASU 2016-13.
    Given that the scope of ASU 2016-13 is broader than the three 
financial asset types proposed to be included in the table in Schedule 
HI-B, Part II, effective March 31, 2019, the Board proposes to also add 
new Memorandum item 5, ``Provisions for credit losses on other 
financial assets carried at amortized cost,'' and Memorandum item 6, 
``Allowance for credit losses on other financial assets carried at 
amortized cost,'' to Schedule HI-B, Part II, at the same time. For 
purposes of Memorandum items 5 and 6, other financial assets would 
include all financial assets measured at amortized cost other than 
loans and leases held for investment and HTM debt securities. From 
March 31, 2019, through September 30, 2022, the reporting form and 
instructions for Schedule HI-B, Part II, would include guidance stating 
that Memorandum items 5 and 6 are to be completed only by institutions 
that have adopted ASU 2016-13.
Schedule HI-C
    Schedule HI-C currently requests allowance information for specific 
categories of loans held for investment that is disaggregated on the 
basis of three separate credit impairment models, and the amounts of 
the related

[[Page 63876]]

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

[[Page 63877]]

reporting of the amortized cost \5\ and the allowance is needed on 
Schedule HC continues to be item 4.b, ``Loans and leases held for 
investment,'' because of the large relative size and importance of 
these assets and their related allowances to the overall balance sheet 
for most institutions. For other financial assets within the scope of 
CECL, the Board proposes that holding companies report these assets at 
amortized cost \6\ net of the related allowance for credit losses on 
Schedule HC.
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    \5\ Amortized cost amounts to be reported by asset category 
would exclude any accrued interest receivable on assets in that 
category that is reported in ``Other assets'' on the balance sheet.
    \6\ See footnote 2.
---------------------------------------------------------------------------

    Effective March 31, 2021, the Board proposes to revise Schedule HC, 
item 2.a, from ``Held-to-maturity securities'' to ``Held-to-maturity 
securities, net of allowance for credit losses.'' From March 31, 2019, 
through December 31, 2020, the Board proposes to add a footnote to 
Schedule HC, item 2.a, specifying that holding companies should 
``report this amount net of any applicable allowance for credit 
losses.'' Additionally, for Schedule HC, item 3.b, ``Securities 
purchased under agreements to resell,'' and Schedule HC, item 11, 
``Other assets,'' effective March 31, 2019, the Board proposes to add a 
footnote to these items specifying that holding companies should 
``report this amount net of any applicable allowance for credit 
losses.'' From March 31, 2019, through September 30, 2022, the 
reporting form and the instructions for Schedule HC, items 2.a, 3.b, 
and 11, would specify that reporting such items net of any related 
allowances for credit losses is applicable only to those institutions 
that have adopted ASU 2016-13. Given that AFS debt securities are 
carried on Schedule HC at fair value, the Board is not proposing any 
changes to Schedule HC, item 2.b, ``Available-for-sale securities,'' 
and instead propose reporting allowances for credit losses on AFS debt 
securities only in Schedule HI-B, Part II.
    In addition, to address the change in allowance nomenclature 
arising from the broader scope of allowances under ASU 2016-13, the 
Board proposes to revise Schedule HC, item 4.c, from ``LESS: Allowance 
for loan and lease losses'' to ``LESS: Allowance for credit losses on 
loans and leases'' effective March 31, 2021. Effective March 31, 2019, 
the Board proposes to add a footnote to this item specifying that 
institutions who have adopted ASU 2016-13 should report the allowance 
for credit losses on loans and leases in this item.
Schedule HC-B
    Effective March 31, 2019, the Board proposes to revise the 
instructions to Schedule HC-B to clarify that for institutions that 
have adopted ASU 2016-13, allowances for credit losses should not be 
deducted from the amortized cost amounts reported in columns A and C of 
this schedule.\7\ In other words, institutions should continue 
reporting the amortized cost of HTM and AFS debt securities in these 
two columns of Schedule HC-B gross of their related allowances for 
credit losses.
---------------------------------------------------------------------------

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

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

[[Page 63878]]

Schedule HC-K
    Effective March 31, 2019, the Board proposes to revise the 
instructions to Schedule HC-K to clarify that, for institutions that 
have adopted ASU 2016-13, allowances for credit losses should not be 
deducted from the related amortized cost amounts when calculating the 
quarterly averages for all debt securities.
Schedule HC-N
    To address the elimination of PCI assets by ASU 2016-13, the Board 
proposes to remove Schedule HC-N, Memorandum items 9.a and 9.b, in 
which institutions report the outstanding balance and balance sheet 
amount, respectively, of past due and nonaccrual PCI loans effective 
December 31, 2022. The Board determined that these items were not 
needed for PCD loans under ASU 2016-13 given that the ASU eliminates 
the separate credit impairment model for PCI loans and applies CECL to 
PCD loans and all other loans held for investment measured at amortized 
cost. From March 31, 2019, through September 30, 2022, the reporting 
form and the instructions for Schedule HC-N, Memorandum items 9.a and 
9.b, would specify that these items should be completed only by holding 
companies that have not yet adopted ASU 2016-13.
Schedule HC-R
    In connection with the agencies' recently issued proposed rule on 
implementation of CECL and related transition for regulatory capital 
(CECL NPR),\8\ the Board is proposing a number of revisions to Schedule 
HC-R to incorporate new terminology and the proposed optional 
regulatory capital transition. The proposed reporting changes to 
Schedule HC-R are tied to the revisions proposed in the CECL NPR. To 
the extent the Agencies revise the proposed elements of the CECL NPR 
when issuing a final rule, the Board would make any necessary 
corresponding adjustments to the proposed reporting revisions. Unless 
otherwise indicated, the proposed revisions to Schedule HC-R discussed 
below would take effect March 31, 2019, (or the first quarter-end 
report date thereafter following the effective date on any final rule) 
and would apply to those institutions that have adopted CECL.
---------------------------------------------------------------------------

    \8\ See 83 FR 22313 (May 14, 2018).
---------------------------------------------------------------------------

    The CECL NPR would introduce a newly defined regulatory capital 
term, allowance for credit losses (ACL), which would replace allowance 
for loan and lease losses (ALLL), as defined under the capital rules, 
for holding companies that adopt CECL. The CECL NPR also proposes that 
credit loss allowances for PCD assets held by these holding companies 
would be netted when determining the carrying value, as defined in the 
CECL NPR, and, therefore, only the resulting net amount would be 
subject to risk-weighting. In addition, under the CECL NPR, the 
agencies are proposing to provide institutions the option to phase in 
over a three-year period beginning with the institution's CECL 
effective date the day-one regulatory capital effects that may result 
from the adoption of ASU 2016-13.\9\
---------------------------------------------------------------------------

    \9\ A non-PBE with a calendar year fiscal year that does not 
early adopt CECL would first report under CECL as of December 31, 
2021, even though the non-PBE's CECL effective date is January 1, 
2021. Thus, under the CECL NPR, such a non-PBE would use the phase-
in percentage applicable to the first year of the three-year 
transition period only for the December 31, 2021, report date (i.e., 
one quarter), not the four quarters that begin with the first report 
under CECL. The non-PBE may use the applicable phase-in percentages 
for all four quarters of the second and third years after the CECL 
effective date (i.e., 2022 and 2023). The same principle would apply 
to the optional phase-in by a non-PBE with a non-calendar fiscal 
year.
---------------------------------------------------------------------------

Allowances for Credit Losses Definition and Treatment of Purchase 
Credit Deteriorated Assets
    In general, under the CECL NPR, holding companies that have adopted 
CECL would report ACL amounts in Schedule HC-R items instead of ALLL 
amounts that are currently reported. Effective December 31, 2022, the 
Board is proposing to remove references to ALLL and replace them with 
references to ACL on the reporting form for Schedule HC-R. From March 
31, 2019, through September 30, 2022, the Board is proposing to revise 
the instructions to Schedule HC-R to direct institutions that have 
adopted CECL to use ACL instead of ALLL in calculating regulatory 
capital. The instructional revisions would affect Schedule HC-R, Part 
I. Regulatory Capital Components and Ratios, item 30.a, ``Allowance for 
loan and lease losses includable in tier 2 capital,'' and Schedule HC-
R, Part II. Risk-Weighted Assets, items 6, ``LESS: Allowance for loan 
and lease losses,'' 26, ``Risk-weighted assets for purposes of 
calculating the allowance for loan and lease losses 1.25 percent 
threshold,'' 28, ``Risk-weighted assets before deductions for excess 
allowance of loan and lease losses and allocated risk transfer risk 
reserve,'' and 29, ``LESS: Excess allowance for loan and lease 
losses.''
    In addition, under the CECL NPR, assets and off-balance sheet 
credit exposures for which any related credit loss allowances are 
eligible for inclusion in regulatory capital would be calculated and 
reported in Schedule HC-R Part II. Risk-Weighted Assets on a gross 
basis. Therefore, the Board is proposing to revise the instructions for 
Schedule HC-R, Part II. Risk-Weighted Assets, items 2.a, ``Held-to-
maturity securities''; 3.b., ``Securities purchased under agreements to 
resell''; 5.a., ``Residential mortgage exposures'' held for investment; 
5.b, ``High volatility commercial real estate exposures'' held for 
investment; 5.c, Held-for-investment ``Exposures past 90 days or more 
or on nonaccrual''; 5.d, ``All other exposures'' held for investment; 
8, ``All other assets,'' and 9.a, ``On-balance sheet securitization 
exposures: Held-to-maturity securities''; to explain that holding 
companies that have adopted CECL should report and risk-weight their 
loans and leases held for investment, HTM securities, and other 
financial assets measured at amortized cost gross of their credit loss 
allowances, but net of the associated allowances on PCD assets.\10\
---------------------------------------------------------------------------

    \10\ Amortized cost amounts to be reported by asset category in 
Schedule RC-R, Part II, would exclude any accrued interest 
receivable on assets in that category that is reported in ``Other 
assets'' on the Call Report balance sheet.
---------------------------------------------------------------------------

    In addition, effective March 31, 2019, the Board proposes to add a 
new Memorandum item 5 to, Schedule HC-R, Part II that would collect 
data by asset category on the ``Amount of allowances for credit losses 
on purchased credit-deteriorated assets.'' The amount of such 
allowances for credit losses would be reported separately for ``Loans 
and leases held for investment'' in Memorandum item 5.a, ``Held-to-
maturity debt securities'' in Memorandum item 5.b, and, ``Other 
financial assets measured at amortized cost'' in Memorandum item 5.c. 
The instructions for Schedule HC-R, Part II, Memorandum item 5, would 
specify that these items should be completed only by holding companies 
that have adopted ASU 2016-13.
    The Board also would include footnotes for the affected items on 
the forms to highlight the revised treatment of those items for 
institutions that have adopted CECL.
CECL Transition Provision
    Under the CECL NPR, a holding company that experiences a reduction 
in retained earnings as of the effective date of CECL for the holding 
company as a result of the holding company's adoption of CECL may elect 
to phase in the regulatory capital impact of adopting CECL (electing 
institution). As described in the CECL NPR, an electing

[[Page 63879]]

holding company would indicate in its FR Y-9C report whether it has 
elected to use the CECL transition provision beginning in the quarter 
that it first reports its credit loss allowances as measured under 
CECL. To identify which holding companies are electing holding 
companies, the Board is proposing to revise Schedule HC-R, Part I, 
Regulatory Capital Components and Ratios, by adding a new item 2.a in 
which a holding company that has adopted CECL would report whether it 
has or does not have a CECL transition election in effect as of the 
quarter-end report date. Each institution would complete item 2.a 
beginning in the FR Y-9C for its first reporting under CECL and in each 
subsequent FR Y-9C report thereafter until item 2.a is removed from the 
report. Until an institution has adopted CECL, it would leave item 2.a 
blank. Effective March 31, 2025, the Board proposes to remove item 2.a 
from Schedule HC-R, Part I, because the optional three-year phase-in 
period will have ended for all electing institutions by the end of the 
prior calendar year. If an individual electing institution's three-year 
phase-in period ends before item 2.a is removed (e.g., its phase-in 
period ends December 31, 2022), the institution would change its 
response to item 2.a and report that it does not have a CECL transition 
election in effect as of the quarter-end report date.
    During the CECL transition period, an electing institution would 
need to make adjustments to its retained earnings, temporary difference 
deferred tax assets (DTAs), ACL, and average total consolidated assets 
for regulatory capital purposes. An advanced approaches institution 
also would need to make an adjustment to its total leverage exposure. 
These adjustments are described in detail in the CECL NPR.
    The Board is proposing to revise the instructions to Schedule HC-R, 
Part I, Regulatory Capital Components and Ratios, items 2, ``Retained 
earnings''; 30.a, ``Allowance for loan and lease losses includable in 
tier 2 capital''; and item 36, ``Average total consolidated assets,''; 
as well as Schedule HC-R, Part II, Risk-Weighted Assets, item 8, ``All 
other assets,'' consistent with the adjustments to these items for the 
applicable transitional amounts as described in the CECL NPR for 
electing institutions to report the adjusted amounts. The Board also 
propose to include footnotes on the reporting forms to highlight the 
proposed changes to these items for electing institutions.
Schedule HC-V
    The Board proposes to clarify in the instructions effective March 
31, 2019, that all assets of consolidated variable interest entities 
should be reported net of applicable allowances for credit losses by 
holding companies that have adopted ASU 2016-13. Net reporting on 
Schedule HC-V by such holding companies is consistent with the proposed 
changes to Schedules HC and HC-F. Similarly, effective March 31, 2019, 
the reporting form for Schedule HC-V will also specify that holding 
companies that have adopted ASU 2016-13 should report assets net of 
applicable allowances.
FR 2248, FR 2314/S, FR 2320, FR 2644, FR 2886b, FR Y-7N/NS, FR Y-8, FR 
Y-9LP, FR Y-9SP, and FR Y-11/S
    The Board proposes to make changes to the FR 2248, FR 2314/S, FR 
2320, FR 2644, FR 2886b, FR Y-7N/NS, FR Y-8, FR Y-9LP, FR Y-9SP, and 
the FR Y-11/S report to mirror the FR Y-9C and Call report reporting 
revisions related to ASU 2016-13. The report forms and instructions 
will be revised to clearly indicate that HTM securities, Securities 
purchased under agreements to resell, and Other assets should be 
reported net of applicable allowance for credit losses for those 
institutions that have adopted the standard. Additionally, the Board 
proposes to indicate on the report form and instructions that 
institutions that have adopted the ASU 2016-13 should report 
``Allowance for credit losses on loans and leases'' and ``Provisions 
for credit losses for all applicable financial assets.''
    To further address the broader scope of financial assets for which 
allowances will be calculated under ASU 2016-13, the Board proposes to 
revise the FR 2314/S, FR 2886b, FR Y-7N/NS, and the FR Y-11/S report to 
change the title caption from Changes in Allowance for Loan and Lease 
Losses'' to ``Changes in Allowances for Credit Losses'' and add three 
columns titled:

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

2. EGRRCPA Proposed FR Y-9C Report Revisions

    On September 28, 2018, the Board, pursuant to its delegated 
authority,\11\ temporarily approved certain revisions to the FR Y-9C 
relating to statutory amendments enacted by EGRRCPA.\12\ Pursuant to 
the requirements of the Board's delegated authority, the Board now 
proposes to extend these revisions for three years through the normal 
delegated clearance process.\13\
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    \11\ 5 CFR Pt. 1320, Appx. A(a)(3)(i)(A).
    \12\ See 83 FR 48990 (September 28, 2018).
    \13\ See 5 CFR Pt. 1320, Appx. A(a)(3)(i)(B).
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    Section 214 of EGRRCPA, which was enacted on May 24, 2018, added a 
new section 51 to the Federal Deposit Insurance Act (FDI Act) governing 
the risk-based capital requirements for certain acquisition, 
development, or construction (ADC) loans. EGRRCPA provides that, 
effective upon enactment, the federal banking agencies may only require 
a depository institution to assign a heightened risk weight to an HVCRE 
exposure if such exposure is an ``HVCRE ADC Loan,'' as defined in this 
new law.
    Section 202 of EGRRCPA amended section 29 of the FDI Act to exclude 
a capped amount of reciprocal deposits from treatment as brokered 
deposits for qualifying institutions, effective upon enactment. The 
instructions for the FR Y-9C and the Call Report, consistent with the 
law prior to the enactment of EGRRCPA, previously treated all 
reciprocal deposits as brokered deposits. In amending section 29 of the 
FDI Act to exclude a capped amount of reciprocal deposits from 
treatment as brokered deposits for qualifying institutions, section 202 
defines ``reciprocal deposits'' to mean ``deposits received by an agent 
institution through a deposit placement network with the same maturity 
(if any) and in the same aggregate amount as covered deposits placed by 
the agent institution in other network member banks.'' The terms 
``agent institution,'' ``deposit placement network,'' ``covered 
deposit,'' and ``network member bank,'' all of which are used in the 
definition of ``reciprocal deposit,'' also are defined in section 202.
    In particular, an ``agent institution'' is an FDIC-insured 
depository institution that meets at least one of the following 
criteria:
     The institution is well-capitalized and has a composite 
condition of ``outstanding'' or ``good'' when most recently examined 
under section 10(d) of the FDI Act (12 U.S.C. 1820(d));
     The institution has obtained a waiver from the FDIC to 
accept, renew, or roll over brokered deposits pursuant to section 29(c) 
of the FDI Act (12 U.S.C. 1831f(c)); or
     The institution does not receive reciprocal deposits in an 
amount that is greater than a ``special cap'' (discussed below).
    Under the ``general cap'' set forth in section 202, an agent 
institution may classify reciprocal deposits up to the lesser of the 
following amounts as non-brokered reciprocal deposits:

[[Page 63880]]

     $5 billion or
     An amount equal to 20 percent of the agent institution's 
total liabilities.
    Any amount of reciprocal deposits in excess of the ``general cap'' 
would be treated as, and should be reported as, brokered deposits.
    A ``special cap'' applies if an agent institution is either not 
``well-rated'' or not well-capitalized. In this situation, the 
institution may classify reciprocal deposits as non-brokered in an 
amount up to the lesser of the ``general cap'' or the average amount of 
reciprocal deposits held at quarter-end during the last four quarters 
the institution was well-capitalized and in ``outstanding'' or ``good'' 
condition.
    To address the change in the treatment of HVCRE loans and certain 
reciprocal deposits under EGRRCPA, the agencies have made a number of 
revisions to the September 2018 Call instructions. In order to avoid 
the regulatory burden associated with applying different definitions 
for HVCRE exposures and reciprocal deposits within a single 
organization, the Board temporarily revised the FR Y-9C instructions so 
that they that are consistent with those changes to the Call Report. To 
assist holding companies in preparing the FR Y-9C for that report date, 
the revised FR Y-9C Supplemental Instructions include information 
regarding the reporting of HVCRE exposures and reciprocal deposits.
    Specifically, the temporary revisions to the FR Y-9C report provide 
that (i) respondents are permitted to report brokered deposits (in 
Schedule HC-E Memorandum items 1 and 2) in a manner consistent with the 
provisions of EGRRCPA,\14\ but also may choose to continue to report 
brokered deposits in a manner consistent with the current instructions 
to the FR Y-9C and (ii) respondents are permitted to apply a heightened 
risk weight only to those HVCRE exposures (in Schedule HC-R, Part II, 
items 4.b, 5.b and 7) they believe meet the definition of HVCRE ADC 
Loan, but also may choose to continue to report and risk weight HVCRE 
exposures in a manner consistent with the previous instructions to the 
FR Y-9C.
---------------------------------------------------------------------------

    \14\ Although the EGRRCPA provision relating to reciprocal 
deposits and the risk-weighting of HVCRE applies only to depository 
institutions, the Board proposes that the FR Y-9C be revised to 
permit holding companies to report HVCRE in a manner consistent with 
their subsidiary depository institutions.
---------------------------------------------------------------------------

3. Other Proposed Revisions

Proposed Revisions To the FR Y-9C
    On the Notes to the Income Statement--Predecessor Financial Items, 
the Board is proposing to add a footnote to line item 6, Realized gains 
(losses) on held-to-maturity and available-for-sale securities to 
instruct holding companies to include realized and unrealized holding 
gains and losses in this item in order to implement the accounting 
change pertaining to equity securities under Accounting Standards 
Update (ASU No. 2016-01, ``Recognition and Measurement of Financial 
Assets and Financial Liabilities''). This change is consistent with the 
changes to the Call Report\15\ and the FR Y-9C\16\ report that became 
effective March 31, 2018. This change is effective March 31, 2019.
---------------------------------------------------------------------------

    \15\ See 83 FR 939 (February 7, 2018).
    \16\ See 83 FR 12395 (March 21, 2018).
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Proposed Revisions To the FR 2886b
    Effective March 31, 2019, the Board proposes to implement a number 
of revisions to the FR 2886b reporting requirements, most of which are 
proposed to align with changes implemented on the Call Report. The 
proposed changes include:
     Revisions to Schedule RC-R, Regulatory Capital, for 
banking Edge corporations,
     Revisions to the eligibility criteria for reporting 
Schedule RC-D, Trading Assets and Liabilities,
     Revisions to address changes in accounting for equity 
investments not held for trading, and
     Revisions to the reporting of equity investments accounted 
for under the equity method of accounting.
Schedule RC-R, Regulatory Capital (for Banking Edge Corporations)
    Effective January 1, 1993, banking Edge corporations became subject 
to capital adequacy guidelines under section 211.12(c) of Regulation K, 
International Banking Operations (12 CFR 211). According to Regulation 
K, banking Edge corporations must maintain a minimum total capital to 
total risk-weighted assets ratio of at least 10 percent, of which at 
least 50 percent must consist of Tier 1 capital. In order to assess 
compliance with the capital requirements of Regulation K, banking Edge 
corporations file FR 2886b Schedule RC-R, which currently consists of 
six items:
     Tier 1 capital allowable under the risk-based capital 
guidelines,
     Tier 2 capital allowable under the risk-based capital 
guidelines,
     Subordinated debt allowable as Tier 2,
     Total qualifying capital allowable under risk-based 
capital guidelines,
     Total risk-weighted assets and credit equivalent amounts 
of off-balance sheet items and
     Credit equivalent amounts of off-balance-sheet items.
    In October of 2013, the Board and the OCC published the revised 
capital rules in the Federal Register.\17\ (The FDIC published its own 
identical rules). The revised capital rules updated Regulation Q--
Capital Adequacy of Bank Holding Companies, Savings and Loan Holding 
Companies, and State Member Banks (12 CFR 217). As a result of this 
update, the concept of risk-based capital rules in Regulation Q 
replaced the concept of capital adequacy guidelines. Since banking Edge 
corporations are subject to capital adequacy guidelines under 
Regulation K, and the concept of capital adequacy guidelines in 
Regulation K was replaced by the concept of risk-based capital rules in 
Regulation Q, banking Edge corporations were now subject to risk-based 
capital rules under Regulation Q.
---------------------------------------------------------------------------

    \17\ See 78 FR 62018 (October 11, 2013).
---------------------------------------------------------------------------

    From August of 2013 to February of 2015, the Board, in conjunction 
with the OCC and the FDIC, published initial and final notices in the 
Federal Register to revise Call Report Schedule RC-R, Regulatory 
Capital, to align with the revised capital rules under Regulation 
Q.\18\ As a result, Call Report Schedule RC-R, Part I, Regulatory 
Capital Components and Ratios, and Part II, Risk-Weighted Assets, were 
revised as of March 2014 and March 2015, respectively. The FR 2886b 
Schedule RC-R was not updated at this time to reflect the revised 
capital rules.
---------------------------------------------------------------------------

    \18\ See 78 FR 48934 (August 12, 2013), 79 FR 2527 (January 14, 
2014), 79 FR 35634 (June 23, 2014), and 80 FR 5618 (February 2, 
2015).
---------------------------------------------------------------------------

    The Board proposes to remove all six existing items on FR 2886b 
Schedule RC-R, and replace them with four items that correspond to the 
risk-based capital rules under Regulation Q. The proposed revisions are 
similar to the revisions made on Call Report Schedule RC-R, albeit 
concerning fewer items. The Board believes these four items 
sufficiently assess risk-based capital adequacy for banking Edge 
corporations, and better align with the risk-based capital rules under 
Regulation Q. Specifically, the Board proposes to add the following 
items to FR 2886b Schedule RC-R:
     Tier 1 Capital allowable under Regulation Q,
     Tier 2 Capital allowable under Regulation Q,

[[Page 63881]]

     Total Capital allowable under Regulation Q and
     Total risk-weighted assets.
Schedule RC-D, Trading Assets and Liabilities
    The Board proposes to change the reporting threshold for filing 
Schedule RC-D to Edges with total trading assets of $10 million or more 
in any of the four preceding calendar quarters, from the current 
threshold of $2 million. The Board no longer needs the information 
reported in this schedule from Edges with a lesser amount of trading 
assets.
Changes in Accounting for Equity Investments Not Held for Trading
    In January 2016, the FASB issued ASU No. 2016-01, ``Recognition and 
Measurement of Financial Assets and Financial Liabilities.'' The Board 
proposes to revise the FR 2886b report form and instructions to account 
for the changes to U.S. GAAP set forth in ASU 2016-01 that are 
consistent with the changes made to the Call Report.\19\ These proposed 
revised reporting requirements would become effective for different 
sets of respondents as those respondents become subject to the ASU. 
Institutions that are public business entities, as defined in U.S. 
GAAP, are subject to ASU 2016-01 for fiscal years beginning after 
December 15, 2017, including interim periods within those fiscal years. 
As discussed below, interim guidance has been provided for purposes of 
reporting by such an institution in accordance with the ASU in its FR 
2886b beginning with the March 31, 2018, report date. For all other 
institutions, the ASU is effective for fiscal years beginning after 
December 15, 2018, and interim periods within fiscal years beginning 
after December 15, 2019. The period over which institutions will be 
implementing this ASU ranges from the first quarter of 2019 through the 
fourth quarter of 2020. December 31, 2020, will be the first quarter-
end FR 2886b report date as of which all institutions would be required 
to prepare their FR 2886b in accordance with ASU 2016-01 and the 
proposed revised reporting requirements.
---------------------------------------------------------------------------

    \19\ See 83 FR 939 (January 8, 2018).
---------------------------------------------------------------------------

    The changes to the accounting for equity investments under ASU 
2016-01 will affect several existing data items in the FR 2886b. One 
outcome of the change in accounting for equity investments under ASU 
2016-01 is the elimination of the concept of available-for-sale (AFS) 
equity securities, which are measured at fair value on the balance 
sheet with changes in fair value recognized through other comprehensive 
income. At present, the historical cost and fair value of AFS equity 
securities, i.e., investments in mutual funds and other equity 
securities with readily determinable fair values that are not held for 
trading, are reported in FR 2886b Schedule RC-B (Securities), item 3, 
columns C and D, respectively. The total fair value of AFS securities, 
which includes both debt and equity securities, is then carried forward 
to the FR 2886b balance sheet and reported in Schedule RC, item 2.
    At present, the accumulated balance of the unrealized gains 
(losses) on AFS equity securities, net of applicable income taxes, that 
have been recognized through other comprehensive income is included in 
accumulated other comprehensive income (AOCI), which is reported in the 
equity capital section of the FR 2886b balance sheet in Schedule RC, 
item 24. With the elimination of AFS equity securities on the effective 
date of ASU 2016-01, the net unrealized gains (losses) on these 
securities that had been included in AOCI will be reclassified 
(transferred) from AOCI into the retained earnings component of equity 
capital, which is reported on the FR 2886b balance sheet in Schedule 
RC, item 23. After the effective date, changes in the fair value of 
(i.e., the unrealized gains and losses on) an institution's equity 
securities that would have been classified as AFS had the previously 
applicable accounting standards remained in effect will be recognized 
through net income rather than other comprehensive income.
    The effect of the elimination of AFS equity securities as a 
distinct asset category upon institutions' implementation of ASU 2016-
01 carries over to the agencies' regulatory capital rules. Under these 
rules, institutions that are eligible to and have elected to make the 
AOCI opt-out election deduct net unrealized losses on AFS equity 
securities from common equity tier 1 capital and include 45 percent of 
pretax net unrealized gains on AFS equity securities in tier 2 capital. 
When ASU 2016-01 takes effect and the classification of equity 
securities as AFS is eliminated for accounting and reporting purposes 
under U.S. GAAP, the concept of unrealized gains and losses on AFS 
equity securities will likewise cease to exist.
    Another outcome of the change in accounting for equity investments 
under ASU 2016-01 is that equity securities and other equity 
investments without readily determinable fair values that are within 
the scope of ASU 2016-01 and are not held for trading must be measured 
at fair value through net income, rather than at cost (less impairment, 
if any), unless the measurement election described above is applied to 
individual equity investments. In general, institutions currently 
report their holdings of such equity securities without readily 
determinable fair values as a category of other assets in FR 2886b 
Schedule RC, item 8 (item 8 is the total amount of an institution's 
other assets).
    At present, AFS equity securities and equity investments without 
readily determinable fair values are included in the quarterly averages 
reported in Schedule RC-K. Institutions report the quarterly average of 
its total securities in item 7 of this schedule and this average 
reflects AFS equity securities at fair value and equity investments 
without readily determinable fair values at historical cost (item 7 is 
total assets; there is no breakout for securities on Schedule RC-K on 
the FR 2886b).
    The Board has considered the changes to the accounting for equity 
investments under ASU 2016-01 and the effect of these changes on the 
manner in which data on equity securities and other equity investments 
are currently reported in the FR 2886b, which has been described above. 
Accordingly, the proposed revisions to the FR 2886b report form and 
instructions to address the equity securities accounting changes are as 
follows:
Schedule RI
    To provide transparency to the effect of unrealized gains and 
losses on equity securities not held for trading on an institution's 
net income during the year-to-date reporting period in Schedule RI, 
Income Statement, and to clearly distinguish these gains and losses 
from the rest of an institution's income (loss) from its continuing 
operations, Schedule RI, item 8, would be revised effective March 31, 
2019, by creating new items 8.a, ``Income (loss) before unrealized 
holding gains (losses) on equity securities not held for trading, 
applicable income taxes, and discontinued operations,'' and 8.b, 
``Unrealized holding gains (losses) on equity securities not held for 
trading.'' In addition to unrealized holding gains (losses) during the 
year-to-date reporting period on such equity securities with readily 
determinable fair values, institutions would also report in proposed 
new item 8.b the year-to-date changes in the carrying amounts of equity 
investments without readily determinable fair values not held for 
trading (i.e., unrealized holding gains (losses) for those measured at 
fair value through earnings; impairment, if any, plus or minus changes 
resulting from observable price changes for those

[[Page 63882]]

equity investments for which this measurement election is made). 
Existing Schedule RI, item 8, ``Income (loss) before applicable income 
taxes and discontinued operations,'' would be renumbered as item 8.c, 
and would be the sum of items 8.a and 8.b. From March 31, 2019, through 
September 30, 2020, the instructions for item 8.b and the reporting 
form for Schedule RI would include guidance stating that item 8.b is to 
be completed only by institutions that have adopted ASU 2016-01. 
Institutions that have not adopted ASU 2016-01 would leave item 8.b 
blank when completing Schedule RI. Finally, from March 31, 2019, 
through September 30, 2020, the instructions for Schedule RI, item 6, 
``Realized gains (losses) on securities not held in trading accounts,'' 
and the reporting form for Schedule RI would include guidance stating 
that, for institutions that have adopted ASU 2016-01, item 6 includes 
realized gains (losses) only on AFS debt securities. Effective December 
31, 2020, the caption for item 6 would be revised to ``Realized gains 
(losses) on available-for-sale debt securities.''
Schedule RC
    In Schedule RC, Balance Sheet, item 2, ``Securities,'' would be 
split into three items: Item 2.a: ``Held-to-maturity securities, net of 
allowance for credit losses,'' item 2.b: ``Available-for-sale 
securities not held for trading,'' and 2.c: ``Equity securities with 
readily determinable fair values not held for trading,'' effective 
March 31, 2019. From March 31, 2019, through September 30, 2020, the 
instructions for item 2.c and the reporting form for Schedule RC would 
include guidance stating that item 2.c is to be completed only by 
institutions that have adopted ASU 2016-01. Institutions that have not 
adopted ASU 2016-01 would leave item 2.c blank. During this period, the 
instructions for items 2.a and 2.b would explain that institutions that 
have adopted ASU 2016-01 should include only debt securities in these 
items. Effective December 30, 2020, the caption for item 2.a would be 
revised to ``Held-to-maturity debt securities, net of allowance for 
credit losses,'' and the caption for item 2.b would be revised to 
``Available-for-sale debt securities not held for trading.'' All 
institutions would report their holdings of equity securities with 
readily determinable fair values not held for trading in item 2.c.
    In Schedule RC, item 8, Other Assets, the instructions would be 
revised to add language stating institutions that have adopted ASU 
2016-01 should report ``equity investments without readily determinable 
fair values'' at fair value, effective March 31, 2019. Institutions 
that have not adopted ASU 2016-01 would continue to report ``equity 
securities that do not have readily determinable fair values'' at 
historical cost. The types of equity securities and other equity 
investments currently reported in item 8 would continue to be reported 
in this item. However, after the effective date of ASU 2016-01 for an 
institution, the securities the institution reports in item 8 would be 
measured in accordance with the ASU.
Schedule RC-B
    In Schedule RC-B, item 3, ``Equity interest in nonrelated 
organizations,'' would be removed effective December 30, 2020. From 
March 31, 2019, through September 30, 2020, the instructions for item 3 
and the reporting form for Schedule RC-B would include guidance stating 
that item 3 is to be completed only by institutions that have not 
adopted ASU 2016-01. Institutions that have adopted ASU 2016-01 would 
leave item 3 blank.
Interim Guidance
    Institutions that applied ASU 2016-01 in the first quarter of 2018 
will need to report their holdings of equity securities and other 
equity investments in accordance with this accounting standard within 
the existing structure of the FR 2886b beginning with the March 31, 
2018, report date. As a result, the Board provided interim guidance for 
the March 31, 2018, report date advising institutions that have adopted 
ASU 2016-01 to (1) report realized and unrealized holding gains 
(losses) on equity securities not held for trading in the appropriate 
subitem of either item 5 (noninterest income) or item 7 (noninterest 
expense) of Schedule RI (Income Statement), as applicable. In addition 
to realized and unrealized holding gains (losses) during the year-to-
date reporting period on such equity investments with readily 
determinable fair values, institutions should also report in Schedule 
RI, item 5 or 7, as applicable, the year-to-date carrying amounts of 
equity investments without readily determinable fair values not held 
for trading (i.e., unrealized holding gains (losses) for those measured 
at fair value through earnings, impairment, if any, plus or minus 
changes resulting from observable price changes for those equity 
investments for which this measurement election is made). For 
institutions that have adopted ASU 2016-01, Schedule RI, item 6 
(realized gains (losses) on securities not held in trading accounts) 
would only include realized gains (losses) on available-for-sale debt 
securities, (2) measure their holdings of equity securities and other 
equity investments without readily determinable fair values not held 
for trading in accordance with the ASU and continue to report them in 
Schedule RC (Balance Sheet), item 8 (Other assets), and (3) continue to 
report the historical cost and fair value of their holdings of equity 
securities with readily determinable fair values not held for trading 
(which were reportable as available-for-sale equity securities prior to 
the adoption of ASU 2016-01) in Schedule RC-B, item 3 (Equity interest 
in nonrelated organizations), columns C and D, respectively.
Investments Accounted for Uunder the Equity Method of Accounting
    The instructions for Schedule RC-B, item 3, ``Equity interest in 
nonrelated organizations,'' currently state to include investments that 
represent 20 percent to 50 percent of the voting shares of an 
organization accounted for under the equity method of accounting, and 
these investments are reported as either held-to-maturity or available-
for-sale. Upon review, it was determined this treatment is not in 
compliance with U.S. GAAP, as investments accounted for under the 
equity method of accounting should not be classified as either held-to-
maturity or available-for-sale. Guidance on securities accounted for 
under the equity method is provided in ASC Subtopic 323-10, 
Investments--Equity Method and Joint Ventures- Overall. To become U.S. 
GAAP compliant and to align with the reporting on the Call Report, the 
Board proposes to revise the instructions to indicate investments that 
represent 20 percent to 50 percent of the voting shares of an 
organization accounted for under the equity method of accounting should 
no longer be included in Schedule RC-B, item 3, but rather included in 
Schedule RC, item 8, ``Other assets.''
    In addition, Schedule RC-B, item 3, columns A and B, Amortized Cost 
and Fair Value of Held-to-maturity equity interest in nonrelated 
organizations, respectively, would be discontinued effective March 31, 
2019, as these items are no longer needed by the Board. Columns C and 
D, Amortized Cost and Fair value of Available-for-sale securities, 
would remain on the form and continue to be collected until December 
31, 2020, when all institutions must comply with ASU 2016-01 (see 
description of proposed revisions due to ASU 2016-01 for more 
information).
    Legal authorization and confidentiality (FR Y-9 family of reports): 
The FR Y-9 family of reports

[[Page 63883]]

is authorized by section 5(c) of the Bank Holding Company Act (BHC Act) 
(12 U.S.C. 1844(c)), section 10 of Home Owners' Loan Act (12 U.S.C. 
1467a(b)) and section 618 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (Dodd-Frank Act) (12 U.S.C. 1850a(c)(1)), and 
section 165 of the Dodd-Frank Act (12 U.S.C. 5365). These reports are 
mandatory.
    With respect to the FR Y-9LP, FR Y-9SP, FR Y-9ES, FR Y-9CS, as well 
as most items on the FR Y-9C, the information collected would generally 
not be accorded confidential treatment. If confidential treatment is 
requested by a respondent, the Board will review the request to 
determine if confidential treatment is appropriate.
    With respect to the FR Y-9C, Schedule HI's item 7(g) ``FDIC deposit 
insurance assessments,'' Schedule HC-P's item 7(a) ``Representation and 
warranty reserves for 1-4 family residential mortgage loans sold to 
U.S. government agencies and government sponsored agencies,'' and 
Schedule HC-P's item 7(b) ``Representation and warranty reserves for 1-
4 family residential mortgage loans sold to other parties'' are 
considered confidential. Such treatment is appropriate because the data 
is not publicly available and could cause substantial harm to the 
competitive position of the respondent. The public release of this 
confidential data may impair the Board's future ability to collect 
similarly confidential data. Thus, this information may be kept 
confidential under exemptions (b)(4) of the Freedom of Information Act 
(FOIA), which exempts from disclosure ``trade secrets and commercial or 
financial information obtained from a person and privileged or 
confidential'' (5 U.S.C. 552(b)(4)), and (b)(8) of the Freedom of 
Information Act, which exempts from disclosure information related to 
examination, operating, or condition reports prepared by, on behalf of, 
or for the use of an agency responsible for the regulation or 
supervision of financial institutions (5 U.S.C. 552(b)(8)). If 
confidential treatment is requested by a respondent for other items in 
the FR Y-9C, the Board will review the request to determine if 
confidential treatment is appropriate.
    Legal authorization and confidentiality (FR Y-7 family of reports). 
With respect to FBOs and their subsidiary IHCs, section 5(c) of the BHC 
Act, in conjunction with section 8 of the International Banking Act (12 
U.S.C. 3106), authorizes the board to require FBOs and any subsidiary 
thereof to file the FR Y-7N reports, and the FR Y-7Q.
    Information collected in these reports generally is not considered 
confidential. However, because the information is collected as part of 
the Board's supervisory process, certain information may be afforded 
confidential treatment pursuant to exemption 8 of FOIA (5 U.S.C. 
552(b)(8)). Individual respondents may request that certain data be 
afforded confidential treatment pursuant to exemption 4 of FOIA if the 
data has not previously been publically disclosed and the release of 
the data would likely cause substantial harm to the competitive 
position of the respondent (5 U.S.C. 552(b)(4)). Additionally, 
individual respondents may request that personally identifiable 
information be afforded confidential treatment pursuant to exemption 6 
of FOIA if the release of the information would constitute a clearly 
unwarranted invasion of personal privacy (5 U.S.C. 552(b)(6)). The 
applicability of FOIA exemptions 4 and 6 would be determined on a case-
by-case basis.
    Legal authorization and confidentiality (FR Y-8). The FR Y-8 is 
mandatory for respondents that control an insured depository 
institution that has engaged in covered transactions with an affiliate 
during the reporting period. Section 5(c) of the BHC Act authorizes the 
Board to require BHCs to file the FR Y-8 reporting form with the Board 
(12 U.S.C. 1844(c)). Section 10(b)(2) of the Home Owners' Loan Act 
authorizes the Board to require SLHCs to file the FR Y-8 reporting form 
with the Board (12 U.S.C. 1467a(b)(2)). The release of data collected 
on this form includes financial information that is not normally 
disclosed by respondents, the release of which would likely cause 
substantial harm to the competitive position of the respondent if made 
publicly available. The data collected on this form, therefore, would 
be kept confidential under exemption 4 of FOIA which protects from 
disclosure trade secrets and commercial or financial information (5 
U.S.C. 552(b)(4)).
    Legal authorization and confidentiality (FR Y-11). The Board has 
the authority to require BHCs and any subsidiary thereof, savings and 
loan holding companies and any subsidiary thereof, and securities 
holding companies and any affiliate thereof to file the FR Y-11 
pursuant to, respectively, section 5(c) of the BHC Act (12 U.S.C. 
1844(c)), section 10(b) of the Homeowners' Loan Act (12 U.S.C. 
1467a(b)), and section 618 of the Dodd-Frank Act (12 U.S.C. 1850a). 
With respect to FBOs and their subsidiary IHCs, section 5(c) of the BHC 
Act, in conjunction with section 8 of the International Banking Act (12 
U.S.C. 3106), authorizes the board to require FBOs and any subsidiary 
thereof to file the FR Y-11 reports. These reports are mandatory.
    Information collected in these reports generally is not considered 
confidential. However, because the information is collected as part of 
the Board's supervisory process, certain information may be afforded 
confidential treatment pursuant to exemption 8 of FOIA (5 U.S.C. 
552(b)(8)). Individual respondents may request that certain data be 
afforded confidential treatment pursuant to exemption 4 of FOIA if the 
data has not previously been publically disclosed and the release of 
the data would likely cause substantial harm to the competitive 
position of the respondent (5 U.S.C. 552(b)(4)). Additionally, 
individual respondents may request that personally identifiable 
information be afforded confidential treatment pursuant to exemption 6 
of FOIA if the release of the information would constitute a clearly 
unwarranted invasion of personal privacy (5 U.S.C. 552(b)(6)). The 
applicability of FOIA exemptions 4 and 6 would be determined on a case-
by-case basis.
    Legal authorization and confidentiality (FR 2248). The Board has 
determined that the FR 2248 is authorized by law pursuant to section 2A 
of the Federal Reserve Act (12 U.S.C. 225a). The obligation to respond 
is voluntary. Individual respondent data are confidential under section 
(b)(4) of FOIA (5 U.S.C. 552).
    Legal authorization and confidentiality (FR 2314). The Board has 
the authority to require BHCs and any subsidiary thereof, savings and 
loan holding companies and any subsidiary thereof, and securities 
holding companies and any affiliate thereof to file the FR 2314 
pursuant to, respectively, section 5(c) of the BHC Act (12 U.S.C. 
1844(c)), section 10(b) of the Homeowners' Loan Act (12 U.S.C. 
1467a(b)), and section 618 of the Dodd-Frank Act (12 U.S.C. 1850a). The 
Board has the authority to require SMBs, agreement corporations, and 
Edge corporations to file the FR 2314 pursuant to, respectively, 
sections 9(6), 25(7), and 25A(17) of the Federal Reserve Act (12 U.S.C. 
324, 602, and 625). With respect to FBOs and their subsidiary IHCs, 
section 5(c) of the BHC Act, in conjunction with section 8 of the 
International Banking Act (12 U.S.C. 3106), authorizes the board to 
require FBOs and any subsidiary thereof to file the FR 2314 reports. 
These reports are mandatory.
    Information collected in these reports generally is not considered 
confidential. However, because the information is collected as part of 
the Board's supervisory process, certain information

[[Page 63884]]

may be afforded confidential treatment pursuant to exemption 8 of FOIA 
(5 U.S.C. 552(b)(8)). Individual respondents may request that certain 
data be afforded confidential treatment pursuant to exemption 4 of FOIA 
if the data has not previously been publically disclosed and the 
release of the data would likely cause substantial harm to the 
competitive position of the respondent (5 U.S.C. 552(b)(4)). 
Additionally, individual respondents may request that personally 
identifiable information be afforded confidential treatment pursuant to 
exemption 6 of FOIA if the release of the information would constitute 
a clearly unwarranted invasion of personal privacy (5 U.S.C. 
552(b)(6)). The applicability of FOIA exemptions 4 and 6 would be 
determined on a case-by-case basis.
    Legal authorization and confidentiality (FR 2320). The Board has 
the authority to require SLHCs to file the FR 2320 pursuant to the Home 
Owners' Loan Act (12 U.S.C. 1467a(b)(2)). The FR 2320 is mandatory for 
exempt SLHCs. In some cases, lower-tier SLHCs may voluntarily file the 
FR 2320. In other cases lower-tier SLHCs may be required to file (in 
addition to the top-tier SLHC) for safety and soundness purposes at the 
discretion of the appropriate Federal Reserve Bank.
    The Board also has determined that data items C572, C573, and C574 
(line items 24, 25, and 26) may be protected from disclosure under 
exemption 4 of FOIA. Commercial or financial information may be 
protected from disclosure under exemption 4 if disclosure of such 
information is likely to cause substantial competitive harm to the 
provider of the information (5 U.S.C. 552(b)(4)). The data items listed 
above pertain to new or changed pledges, or capital stock of any 
subsidiary savings association that secures short-term or long-term 
debt or other borrowings of the SLHC; changes to any class of 
securities of the SLHC or any of its subsidiaries that would negatively 
impact investors; and defaults of the SLHC or any of its subsidiaries 
during the quarter. Disclosure of this type of information is likely to 
cause substantial competitive harm to the SLHC providing the 
information and thus this information may be protected from disclosure 
under FOIA exemption 4.
    With regard to the remaining data items on the FR 2320, the Board 
has determined that institutions may request confidential treatment for 
any FR 2320 data item or for all FR 2320 data items, and that 
confidential treatment will be reviewed on a case-by-case basis.
    Legal authorization and confidentiality (FR 2644). The FR 2644 is 
authorized by section 2A and 11(a)(2) of the Federal Reserve Act (12 
U.S.C. 225(a) and 248(a)(2)) and by section 7(c)(2) of the 
International Banking Act (12 U.S.C. 3105(c)(2)) and is voluntary. 
Individual respondent data are regarded as confidential under FOIA (5 
U.S.C. 552(b)(4)).
    Legal authorization and confidentiality (FR 2886b). Sections 25 and 
25A of the Federal Reserve Act authorize the Board to collect the FR 
2886b (12 U.S.C. 602, 625). The FR 2886b is mandatory. The information 
collected on this report is generally not considered confidential. 
However, information provided on Schedule RC-M (with the exception for 
item 3) and on Schedule RC-V, both of which pertain to claims on and 
liabilities to related organizations, may be exempt from disclosure 
pursuant to exemption (b)(4) of FOIA (5 U.S.C. 552(b)(4)). The 
information provided in the Patriot Act Contact Information section of 
the reporting form may be exempt from disclosure pursuant to exemption 
(b)(7)(C) of FOIA (5 U.S.C. 552(b)(7)(C)).

    Board of Governors of the Federal Reserve System, December 4, 
2018.
Michele Taylor Fennell,
Assistant Secretary of the Board.

Appendix A

                     Effective Dates for ASU 2016-13
------------------------------------------------------------------------
                                                           Regulatory
                                  U.S. GAAP effective   report effective
                                         date                date *
------------------------------------------------------------------------
PBEs That Are SEC Filers......  Fiscal years beginning  03/31/2020.
                                 after 12/15/2019,
                                 including interim
                                 periods within those
                                 fiscal years.
Other PBEs (Non-SEC Filers)...  Fiscal years beginning  03/31/2021.
                                 after 12/15/2020,
                                 including interim
                                 periods within those
                                 fiscal years.
Non-PBEs......................  Fiscal years beginning  12/31/2021.\21\
                                 after 12/15/2020, and
                                 interim periods for
                                 fiscal years
                                 beginning after 12/15/
                                 2021 \20\.
Early Application.............  Early application       First calendar
                                 permitted for fiscal    quarter-end
                                 years beginning after   after effective
                                 12/15/2018, including   date of early
                                 interim periods         application of
                                 within those fiscal     the ASU.
                                 years.
------------------------------------------------------------------------
* For institutions with calendar fiscal year-ends and reports with
  quarterly report dates.

    For additional information on key elements of the new accounting 
standard and initial supervisory views with respect to measurement 
methods, use of vendors, portfolio segmentation, data needs, 
qualitative adjustments, and allowance processes, refer to the 
agencies' Joint Statement on the New Accounting Standard on 
Financial Instruments--Credit Losses issued on June 17, 2016, and 
Frequently Asked Questions on the New Accounting Standard on 
Financial Instruments--Credit Losses (CECL FAQs), which were last 
updated on September 6, 2017.\22\
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    \20\ See Footnote 23.
    \21\ See Footnote 24.
    \22\ The CECL FAQs and a related link to the joint statement can 
be found on the Board's website: https://www.federalreserve.gov/supervisionreg/srletters/sr1708a1.pdf.
---------------------------------------------------------------------------

    For institutions that are PBEs and also are SEC filers, as both 
terms are defined in U.S. GAAP, the new credit losses standard is 
effective for fiscal years beginning after December 15, 2019, 
including interim periods within those fiscal years. Thus, for an 
SEC filer that has a calendar year fiscal year, the standard is 
effective January 1, 2020, and institutions must first apply the new 
credit losses standard in its FR 2314, FR 2320, FR 2886b, FR Y-7N, 
FR Y-8, FR Y-9C, FR Y-9LP and the FR Y-11 report for the quarter 
ended March 31, 2020. For the FR 2248, FR 2644 and the FR Y-9SP 
reporters must first apply the new credit losses standard January 
31, 2020, January 1, 2020 and June 30, 2020, respectively.
    For a PBE that is not an SEC filer, the credit losses standard 
is effective for fiscal years beginning after December 15, 2020, 
including interim periods within those fiscal years. Thus, for a PBE 
that is not an SEC filer and has a calendar year fiscal year, the 
standard is effective January 1, 2021, and the institution must 
first apply the new credit losses standard in its FR 2314, FR 2320, 
FR 2886b, FR Y-7N, FR Y-8, FR Y-9C, FR Y-9LP and the FR Y-11 for the 
quarter ended March 31, 2021. For the FR 2248, FR 2644 and the FR Y-
9SP reporters must first apply the new credit losses standard, 
January 31, 2021, January 6, 2021, and June 30, 2021, respectively.
    For an institution that is not a PBE, the credit losses standard 
is effective for fiscal years beginning after December 15, 2020, and 
for interim period financial statements for

[[Page 63885]]

fiscal years beginning after December 15, 2021.\23\ Thus, an 
institution with a calendar year fiscal year that is not a PBE must 
first apply the new credit losses standard in its FR 2248, FR 2314, 
FR 2320, FR 2886b, FR Y-7N, FR Y-8, FR Y-9C, FR Y-9LP, FR Y-9SP, and 
FR Y-11 for December 31, 2021, if the institution is required to 
file such form.\24\ The FR 2644 reporters must first apply the new 
credit losses standard January 5, 2022. However, where applicable, 
institutions would include the CECL provision for expected credit 
losses for the entire year ended December 31, 2021, in the income 
statement in its report for year-end 2021. The institution would 
also recognize in its year-end 2021 report a cumulative-effect 
adjustment to the beginning balance of retained earnings as of 
January 1, 2021, resulting from the adoption of the new standard as 
of the beginning of the 2021 fiscal year.
---------------------------------------------------------------------------

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

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

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

Introduction of a New Credit Loss Methodology

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

Reduction in the Number of Credit Impairment Models

    Impairment measurement under existing U.S. GAAP has often been 
considered complex because it encompasses five credit impairment 
models for different financial assets.\25\ In contrast, CECL 
introduces a single measurement objective to be applied to all 
financial assets carried at amortized cost, including loans held-
for-investment (HFI) and held-to-maturity (HTM) debt securities. 
That said, CECL does not specify a single method for measuring 
expected credit losses; rather, it allows any reasonable approach, 
as long as the estimate of expected credit losses achieves the 
objective of the FASB's new accounting standard. Under the existing 
incurred loss methodology, institutions use various methods, 
including historical loss rate methods, roll-rate methods, and 
discounted cash flow methods, to estimate credit losses. CECL allows 
the continued use of these methods; however, certain changes to 
these methods will need to be made in order to estimate lifetime 
expected credit losses.
---------------------------------------------------------------------------

    \25\ Current U.S. GAAP includes five different credit impairment 
models for instruments within the scope of CECL: ASC Subtopic 310-
10, Receivables-Overall; ASC Subtopic 450-20, Contingencies-Loss 
Contingencies; ASC Subtopic 310-30, Receivables-Loans and Debt 
Securities Acquired with Deteriorated Credit Quality; ASC Subtopic 
320-10, Investments-Debt and Equity Securities--Overall; and ASC 
Subtopic 325-40, Investments-Other-Beneficial Interests in 
Securitized Financial Assets.
---------------------------------------------------------------------------

Purchased Credit-Deteriorated (PCD) Financial Assets

    CECL introduces the concept of PCD financial assets, which 
replaces purchased credit-impaired (PCI) assets under existing U.S. 
GAAP. The differences in the PCD criteria compared to the existing 
PCI criteria will result in more purchased loans HFI, HTM debt 
securities, and available-for-sale (AFS) debt securities being 
accounted for as PCD financial assets. In contrast to the existing 
accounting for PCI assets, the new standard requires the estimate of 
expected credit losses embedded in the purchase price of PCD assets 
to be estimated and separately recognized as an allowance as of the 
date of acquisition. This is accomplished by grossing up the 
purchase price by the amount of expected credit losses at 
acquisition, rather than being reported as a credit loss expense. As 
a result, as of acquisition date, the amortized cost basis of a PCD 
financial asset is equal to the principal balance of the asset less 
the non-credit discount, rather than equal to the purchase price as 
is currently recorded for PCI loans.

AFS Debt Securities

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

[FR Doc. 2018-26818 Filed 12-11-18; 8:45 am]
 BILLING CODE 6210-01-P