Source: https://regulations.justia.com/regulations/fedreg/2018/08/30/2018-18756.html
Timestamp: 2020-08-06 16:59:27
Document Index: 608330509

Matched Legal Cases: ['§ 1489', '§ 1489', '§ 1489', 'art 1489', '§ 1489', '§ 1489', 'art 200', '§ 1489', 'art 200', 'art 200', '§ 1489', 'arts 217', 'art 225', '§ 217', '§ 217', '§ 225', 'art 225', '§ 225', '§ 225', '§ 225', '§ 225', '§ 225', '§ 225', '§ 225', 'art 225', 'art 217', 'ART 217', 'art 217', '§ 217', 'art 225', 'ART 225', 'art 225', '§ 225', '§ 225', 'art 225', '§ 217', '§ 225', '§ 225', '§ 225', '§ 225', '§ 225', '§ 225', '§ 225', '§ 225', 'art 225', 'art 39', 'art 225', 'art 225', 'art 225', 'art 225']

Small Bank Holding Company and Savings and Loan Holding Company Policy Statement and Related Regulations; Changes to Reporting Requirements, 44195-44199 [2018-18756] :: Federal Reserve System :: Agencies And Commissions :: Regulation Tracker :: Justia
Justia Regulation Tracker Agencies And Commissions Federal Reserve System Small Bank Holding Company and Savings and Loan Holding Company Policy Statement and Related Regulations; Changes to Reporting Requirements, 44195-44199 [2018-18756]
Small Bank Holding Company and Savings and Loan Holding Company Policy Statement and Related Regulations; Changes to Reporting Requirements, 44195-44199 [2018-18756]
Download as PDF Federal Register / Vol. 83, No. 169 / Thursday, August 30, 2018 / Rules and Regulations provided to them by the ATP Participant. (e) An ATP Participant may undertake ATP promotional activities directly or through a domestic or foreign third party. However, the ATP Participant shall remain responsible and accountable to the CCC for all ATP promotional activities and related expenditures undertaken by such third party and shall be responsible for reimbursing CCC for any funds that CCC determines should be refunded to the CCC in relation to such third party’s promotional activities and expenditures. § 1489.29 Property standards. The ATP Participant shall insure all ATP-funded property and equipment acquired in furtherance of program activities and safeguard such against theft, damage and unauthorized use. The Participant shall promptly report any loss, theft, or damage of property to the insurance company. amozie on DSK3GDR082PROD with RULES § 1489.30 Anti-fraud requirements. (a) All ATP Participants. (1) All ATP Participants shall submit to the CCC for approval a detailed fraud prevention program. The CCC will notify all new and existing ATP Participants in writing in each Participant’s approval letter and through the FAS website as to applicable submission dates for and dates for approvals of fraud prevention programs. ATP Participants should review their fraud prevention programs annually. The fraud prevention program shall, at a minimum, include an annual review of physical controls and weaknesses, a standard process for investigating and remediation of suspected fraud cases, and training in risk management and fraud detection for all current and future employees. The ATP Participant shall not conduct or permit any ATP promotion activities to occur unless and until the CCC has communicated in writing approval of the ATP Participant’s fraud prevention program. (2) The ATP Participant, within five business days of receiving an allegation or information giving rise to a reasonable suspicion of misrepresentation or fraud that could give rise to a claim by CCC, shall report such allegation or information in writing to such USDA personnel as specified in the Participant’s ATP program agreement and/or approval letter. The ATP Participant shall cooperate fully in any USDA investigation of such allegation or occurrence of misrepresentation or fraud and shall comply with any directives given by the CCC or USDA to the ATP Participant for the prompt VerDate Sep<11>2014 16:35 Aug 29, 2018 Jkt 244001 investigation of such allegation or occurrence. (b) ATP Participants with brand programs. (1) The ATP Participant may charge a fee to brand participants to cover the cost of the fraud prevention program. (2) The ATP Participant shall repay to the CCC funds paid to a brand participant through the ATP Participant on claims that the ATP Participant or the CCC subsequently determines are unauthorized or otherwise nonreimbursable expenses within 30 days of the ATP Participant’s determination or CCC’s disallowance. The ATP Participant shall repay CCC by submitting a check to CCC or by offsetting the ATP Participant’s next reimbursement claim. The ATP Participant shall make such payment in U.S. dollars, unless otherwise approved in advance by CCC. An ATP Participant operating a brand program in strict accordance with an approved fraud prevention program, however, will not be liable to reimburse CCC for ATP funds paid on such claims if the claims were based on misrepresentations or fraud of the brand participant, its employees or agents, unless the CCC determines that the ATP Participant was grossly negligent in the operation of the brand program regarding such claims. The CCC shall communicate any such determination to the ATP Participant in writing. § 1489.31 Program income. Any revenue or refunds generated from an activity, e.g., participation fees, proceeds of sales, refunds of value added taxes (VAT), the expenditures for which have been wholly or partially reimbursed with ATP funds, shall be used by the ATP Participant in furtherance of its approved ATP activities in the program period during which the ATP funds are available for obligation by the ATP Participant. The use of such revenue or refunds shall be governed by 7 CFR part 1489. Interest earned on funds advanced by the CCC is not program income. § 1489.32 § 1489.33 Noncompliance with an agreement. If an ATP Participant fails to comply with any term in its program agreement or approval letter, the CCC may take one or more of the enforcement actions in 2 CFR part 200 and, if, appropriate, initiate a claim against the ATP Participant, following the procedures set PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 forth in this subpart. The CCC may also initiate a claim against an ATP Participant if program income or CCCprovided funds are lost due to an action or omission of the ATP Participant. § 1489.34 Suspension, termination, and closeout of agreements. A program agreement may be suspended or terminated in accordance with the suspension and termination procedures in 2 CFR part 200. If an agreement is terminated, the applicable regulations in 2 CFR part 200 will apply to the closeout of the agreement. § 1489.35 Paperwork reduction requirements. The paperwork and record keeping requirements imposed by this subpart have been submitted for review by OMB under the Paperwork Reduction Act of 1980. OMB has not yet assigned a control number for this information collection. Dated: August 27, 2018. Robert Stephenson, Executive Vice President, Commodity Credit Corporation. Dated: August 27, 2018. Kenneth Isley, Administrator, Foreign Agricultural Service. [FR Doc. 2018–18870 Filed 8–28–18; 8:45 am] BILLING CODE 3410–10–P FEDERAL RESERVE SYSTEM 12 CFR Parts 217 and 225 [Regulations Q and Y; Docket No. R–1619] RIN 7100–AF 13 Small Bank Holding Company and Savings and Loan Holding Company Policy Statement and Related Regulations; Changes to Reporting Requirements Board of Governors of the Federal Reserve System (Board). ACTION: Interim final rule with request for comment; changes to reporting requirements. AGENCY: The Board invites comment on an interim final rule that raises the asset size threshold for determining applicability of the Board’s Small Bank Holding Company and Savings and Loan Holding Company Policy Statement (Regulation Y, appendix C) (Policy Statement) to $3 billion from $1 billion of total consolidated assets. The interim final rule also makes related and conforming revisions to the Board’s regulatory capital rule (Regulation Q) and requirements for bank holding companies (Regulation Y). In SUMMARY: Amendment. A program agreement may be amended in writing with the consent of the CCC and the ATP Participant. 44195 E:\FR\FM\30AUR1.SGM 30AUR1 amozie on DSK3GDR082PROD with RULES 44196 Federal Register / Vol. 83, No. 169 / Thursday, August 30, 2018 / Rules and Regulations connection with these changes, the Board is modifying the respondent panel for certain holding company financial reports. DATES: The interim final rule is effective August 30, 2018. Comments on the interim final rule must be received no later than October 29, 2018. ADDRESSES: You may submit comments, identified by Docket No. R–1619 and RIN No 7100 AF 13, by any of the following methods: • Agency website: http:// www.federalreserve.gov. Follow the instructions for submitting comments at http://www.federalreserve.gov/apps/ foia/proposedregs.aspx. • Email: regs.comments@ federalreserve.gov. Include the docket 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 will be made available on the Board’s website at http://www.federalreserve.gov/ generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons or to remove personally identifiable information at the commenter’s request. Accordingly, comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper in Room 3515, 1801 K Street NW (between 18th and 19th Streets NW), between 9:00 a.m. and 5:00 p.m. on weekdays. FOR FURTHER INFORMATION CONTACT: Constance M. Horsley, Deputy Associate Director, (202) 452–5239, Cynthia Ayouch, Manager, (202) 452–2204, Douglas Carpenter, Senior Supervisory Financial Analyst, (202) 452–2205, Vanessa Davis, Supervisory Financial Analyst, (202) 475–6647, or Kevin Tran, Supervisory Financial Analyst, (202) 452–2309, Division of Supervision and Regulation; Laurie Schaffer, Associate General Counsel, (202) 452–2272; Benjamin McDonough, Assistant General Counsel, (202) 452–2036, or Mark Buresh, (202) 452–5270, Senior Attorney, Legal Division; Board of Governors of the Federal Reserve System, 20th and C Streets NW, Washington, DC 20551. SUPPLEMENTARY INFORMATION: Table of Contents I. Background II. The Interim Final Rule III. Administrative Law Matters VerDate Sep<11>2014 16:35 Aug 29, 2018 Jkt 244001 A. Regulatory Flexibility Act B. Paperwork Reduction Act C. Solicitation of Comments on Use of Plain Language I. Background The Board issued the Small Bank Holding Company and Savings and Loan Holding Company Policy Statement (Regulation Y, appendix C) (Policy Statement) in 1980 to facilitate the transfer of ownership of small community-based banks in a manner consistent with bank safety and soundness.1 In general, the Board has discouraged the use of debt by bank holding companies and savings and loan holding companies (collectively, depository institution holding companies) to finance acquisitions because high levels of debt can impair the ability of a depository institution holding company to serve as a source of strength to its subsidiary depository institutions. However, the Board has recognized that small depository institution holding companies have less access to equity financing than larger depository institution holding companies and that, therefore, an acquisition by a small depository institution holding company often requires the use of debt. The Board originally adopted the Policy Statement to permit the formation and expansion of small bank holding companies with debt levels that are higher than typically permitted for larger bank holding companies. The Policy Statement contains several conditions and restrictions designed to ensure that a small depository institution holding company that operates with the heightened level of debt permitted under the Policy Statement does not present an undue risk to the safety and soundness of its subsidiary depository institutions. Currently, the Policy Statement applies to bank holding companies with pro forma consolidated assets of less than $1 billion that: (i) Are not engaged in significant nonbanking activities either directly or through a nonbank subsidiary; (ii) do not conduct significant off-balance sheet activities (including securitization and asset management or administration) either directly or through a nonbank subsidiary; 2 and (iii) do not have a material amount of debt or equity securities outstanding (other than trust 1 12 CFR part 225, app. C. examples provided in the Policy Statement are not exhaustive and simply highlight off-balance sheet activities that may involve substantial risk. Other activities than securitization and asset management or administration may present similar concerns. See also 71 FR 9897, 9899, fn. 2 (February 28, 2006) (2006 Final Rule). 2 The PO 00000 Frm 00024 Fmt 4700 Sfmt 4700 preferred securities) that are registered with the Securities and Exchange Commission (the foregoing enumerated items referred to hereafter as qualitative requirements). The Policy Statement also applies to small savings and loan holding companies as if they were bank holding companies.3 The Policy Statement provides that bank holding companies that meet the qualitative requirements (qualifying small holding companies) may use debt to finance up to 75 percent of the purchase price of an acquisition (that is, they may have a debt-to-equity ratio of up to 3:1). However, a qualifying small holding company must satisfy additional ongoing requirements, including that it: (i) Reduce its debt such that all debt is retired within 25 years of the debt being incurred; (ii) reduce its debt-to equity ratio to .30:1 or less within 12 years of the debt being incurred; (iii) ensure that each of its subsidiary insured depository institutions is well capitalized; and (iv) refrain from paying dividends until such time as it reduces its debt-to-equity ratio to 1.0:1 or less. The Policy Statement also provides that a qualifying small holding company may not use the expedited applications procedures or obtain a waiver of the stock redemption filing requirements applicable to bank holding companies under the Board’s Regulation Y unless the bank holding company has a pro forma debt-to-equity ratio of 1.0:1 or less.4 II. The Interim Final Rule New Asset Threshold of $3 Billion On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) was enacted.5 Section 207 of EGRRCPA directs the Board to revise the Policy Statement to raise the consolidated assets threshold from $1 billion to $3 billion within 180 days of the enactment of EGRRCPA. The Board last raised the asset limit in 2015 when it increased it from $500 million to $1 billion.6 The Board is issuing this interim final rule to increase the asset threshold to $3 billion consistent with EGRRCPA. The Board is not making any additional modifications to the Policy Statement at this time. The final rule applies to small savings and loan holding companies to 3 12 CFR 238.9. CFR 225.4(b), 225.14, and 225.23. 5 Public Law 115–174 (May 24, 2018). 6 See 80 FR 20153 (April 15, 2015). In this final rule, the Board also applied the Policy Statement to small savings and loan holding companies as if they were bank holding companies. 80 FR 20153 (April 15, 2015). 4 12 E:\FR\FM\30AUR1.SGM 30AUR1 Federal Register / Vol. 83, No. 169 / Thursday, August 30, 2018 / Rules and Regulations the same extent as small bank holding companies, by operation of Regulation LL. The Board believes it is appropriate to issue an interim final rule revising the Policy Statement and making conforming revisions to Regulation Q and Regulation Y to apply the statutorily mandated threshold of $3 billion to qualifying holding companies consistent with EGRRCPA. Without such action, qualifying holding companies that cross $1 billion during the pendency of the proposal would be required to incur costs to implement regulatory capital and financial reporting systems that would cease to be necessary upon issuance of the final rule. In addition, the Board believes that it is appropriate to allow holding companies with total consolidated assets of $1 billion or more but less than $3 billion to immediately become subject to reduced regulatory and reporting requirements, consistent with the congressionally-mandated increase in the threshold, so that such firms are not obligated to incur significant compliance costs in the interim until the traditional rulemaking process is completed. Conforming Regulation Q Change For the reasons described previously, the Board is revising Regulation Q to conform the language in § 217.1 to reflect the heightened threshold of the Policy Statement resulting from the interim final rule. Specifically, § 217.1(c)(1)(iii) is revised to remove the reference to the $1 billion threshold. amozie on DSK3GDR082PROD with RULES Other Conforming Amendments A number of reporting, filing, and other provisions in Regulation Y are triggered by the consolidated asset threshold established by the Policy Statement. In connection with revising the threshold under the Policy Statement, the Board is making technical and conforming amendments to these provisions to provide that qualifying small holding companies may take advantage of the streamlined informational, notice, and other requirements embodied in these rules. These technical and conforming amendments will provide regulatory burden relief to most holding companies with less than $3 billion of consolidated total assets. The final rule makes the following changes: • In § 225.2(r), footnote 2, the footnote describing the application of the definition of ‘‘well-capitalized’’ in the Board’s Regulation Y (12 CFR part 225) to entities subject to the Policy Statement is revised to remove the VerDate Sep<11>2014 16:35 Aug 29, 2018 Jkt 244001 reference to the threshold of $1 billion under the Policy Statement. • In § 225.4(b)(2)(iii), the thresholds for the different pro forma financial information required of smaller bank holding companies compared to larger bank holding companies under § 225.4(b)(1) of the Board’s Regulation Y is revised to refer to total assets of less than $3 billion rather than total assets of less than $1 billion. • In § 225.14(a)(1)(v), the thresholds for the different pro forma financial information required of smaller bank holding companies compared to larger bank holding companies under § 225.14 of the Board’s Regulation Y is revised to refer to total assets of less than $3 billion rather than total assets of less than $1 billion. • In § 225.17(a)(6), footnote 6, the total asset threshold for application of the footnote related to demonstrating that debt incurred will not unduly burden the bank holding company is revised to refer to total assets of less than $3 billion rather than total assets of less than $1 billion. • In § 225.23(a)(1)(iii), the threshold for the different pro forma financial information required of smaller bank holding companies compared to larger bank holding companies under § 225.23 of the Board’s Regulation Y is revised to refer to total assets of less than $3 billion rather than total assets of less than $1 billion. Regulatory Reporting Changes The Board requires all depository institution holding companies to file certain reports with the Federal Reserve to monitor the financial condition and operations of depository institution holding companies. Those reports include the Financial Statements for Holding Companies (FR Y–9 series of reports; OMB No. 7100–0128). Depository institution holding companies with consolidated assets of less than $1 billion that also meet qualitative requirements submit summary parent-only financial data semiannually on the FR Y–9SP. Bank holding companies and savings and loan holding companies with consolidated assets of $1 billion or more—or that are otherwise not subject to the Policy Statement—submit consolidated financial data on the FR Y–9C and parent-only financial data on the FR Y–9LP, both quarterly. The Board is modifying, effective immediately, the respondent panel for the FR Y–9SP, FR Y–9C, and FR Y–9LP for bank holding companies and savings and loan holding companies with $1 billion or more but less than $3 billion in total consolidated assets to align the PO 00000 Frm 00025 Fmt 4700 Sfmt 4700 44197 threshold in the Policy Statement. If these institutions meet the qualitative requirements, they will not be required to file the FR Y–9C and the FR Y–9LP (including regulatory capital information) and would instead file the FR Y–9SP. These changes would be consistent with the final rule’s changes to the Policy Statement and will reduce the regulatory reporting burden for these smaller institutions. Since most bank holding companies and savings and loan holding companies with less than $3 billion in total consolidated assets have limited activities outside of their subsidiary banks, the Board believes relying on summary parent-only financials from the FR Y–9SP and detailed depository institution financials from the Consolidated Reports of Condition and Income (FFIEC 031, FFIEC 041, FFIEC 051; OMB No. 7100–0036) is sufficient for supervisory purposes. Comments The Board invites comments on all aspects of this interim final rule. Interested parties are encouraged to provide comments on the $3 billion asset size threshold adjustment, the revision to Regulation Q, and the related and conforming amendments to Regulations Y. Effective Date/Request for Comments The Board is issuing this interim final rule without prior notice and the opportunity for public comment and the 30-day delayed effective date ordinarily prescribed by the Administrative Procedure Act (APA). Pursuant to the Administrative Procedure Act (APA), at 5 U.S.C. 553(b)(B), notice and comment are not required prior to the issuance of a final rule if an agency, for good cause, finds that ‘‘notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.’’ 7 The interim final rule implements the provisions in section 207 of EGRRCPA, which was enacted on May 24, 2018. EGRRCPA includes a directive that the Board revise appendix C to part 225 of title 12 of the Code of Federal Regulations within 180 days to raise the consolidated asset threshold under that appendix from $1 billion to $3 billion.8 This section of EGRRCPA was effective upon enactment. The Board believes that the public interest is best served by implementing the statutorily amended thresholds as soon as possible. Delaying the revisions to the Policy Statement, Regulation Q, 75 U.S.C. 553(b)(B). Law 115–174 (May 24, 2018), section 207(b). 8 Public E:\FR\FM\30AUR1.SGM 30AUR1 44198 Federal Register / Vol. 83, No. 169 / Thursday, August 30, 2018 / Rules and Regulations and Regulation Y to complete a traditional notice and comment rulemaking process would cause holding companies with total consolidated assets of $1 billion or more and less than $3 billion to expend significant resources to continue to comply with Regulation Q and would subject these firms to heightened requirements under Regulation Y for the time necessary for the Board to go through the notice and comment rulemaking process. In addition, any holding companies that qualified under the Policy Statement and that came to have $1 billion or more in total consolidated assets while the rulemaking process was ongoing would be required to expend significant resources to comply with Regulation Q. The Board believes that providing a notice and comment period prior to issuance of the interim final rules is unnecessary because the Board does not expect public objection to the interim final rule being promulgated, as the rule merely provides the relief that Congress intended. The APA also requires a 30-day delayed effective date, except for (1) substantive rules which grant or recognize an exemption or relieve a restriction; (2) interpretative rules and statements of policy; or (3) as otherwise provided by the agency for good cause.9 The Board has concluded that, because the rule recognizes an exemption, the interim final rule is exempt from the APA’s delayed effective date requirement.10 Additionally, the Board finds good cause to publish the interim final rule with an immediate effective date for the same reasons set forth above under the discussion of section 553(b)(B) of the APA. While the Board believes there is good cause to issue the rules without advance notice and comment and with an immediate effective date, the Board is interested in the views of the public and request comment on all aspects of the interim final rule. III. Administrative Law Matters amozie on DSK3GDR082PROD with RULES A. Regulatory Flexibility Act Analysis The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., applies only to rules for which an agency publishes a general notice of proposed rulemaking. Because the Board has determined for good cause that a notice of proposed rulemaking for this rule is unnecessary, the Regulatory Flexibility Act does not apply to this final rule. 95 U.S.C. 553(d). U.S.C. 553(d)(1). 10 5 VerDate Sep<11>2014 16:35 Aug 29, 2018 Jkt 244001 B. Paperwork Reduction Act The Board has revised the respondent panel for each of the FR Y–9SP, FR Y– 9C, and FR Y–9LP in connection with this final rule. Specifically, the minimum total consolidated asset threshold for filing the FR Y–9C and FR Y–9LP has been increased to $3 billion, and the FR Y–9SP has been updated to apply to holding companies with less than $3 billion in total consolidated assets. Though the number of total respondents is not affected, the result of this modification is to reduce the aggregate burden for the FR Y–9C, FR Y–9LP, and FR Y–9SP by 75,233 hours because more firms will file the less complex FR Y–9SP. C. Plain Language Section 722 of the Gramm-LeachBliley Act requires the Federal banking agencies to use ‘‘plain language’’ in all proposed and final rules published after January 1, 2000. In light of this requirement, the Board has sought to present the interim final rule in a simple and straightforward manner. The Board invites comments on whether there are additional steps it could take to make the rule easier to understand. List of Subjects 12 CFR Part 217 Administrative practice and procedure, Banks, Banking, Federal Reserve System, Holding companies, Reporting and recordkeeping requirements. Administrative practice and procedure, Banks, Banking, Federal Reserve System, Holding companies, Reporting and recordkeeping requirements. Federal Reserve System 12 CFR Chapter II Authority and Issuance For the reasons set forth in the preamble, chapter II of title 12 of the Code of Federal Regulations is amended as set forth below: PART 217—CAPITAL ADEQUACY OF BANK HOLDING COMPANIES, SAVINGS AND LOAN HOLDING COMPANIES, AND STATE MEMBER BANKS (REGULATION Q) 1. The authority citation for part 217 continues to read as follows: ■ Authority: 12 U.S.C. 248(a), 321–338a, 481–486, 1462a, 1467a, 1818, 1828, 1831n, 1831o, 1831p–l, 1831w, 1835, 1844(b), 1851, 3904, 3906–3909, 4808, 5365, 5368, 5371. Frm 00026 Fmt 4700 § 217.1 Purpose, applicability, reservations of authority, and timing. * * * * * (c) * * * (1) * * * (iii) A covered savings and loan holding company domiciled in the United States, other than a savings and loan holding company that meets the requirements of 12 CFR part 225, appendix C, as if the savings and loan holding company were a bank holding company and the savings association were a bank. For purposes of compliance with the capital adequacy requirements and calculations in this part, savings and loan holding companies that do not file the FR Y–9C should follow the instructions to the FR Y–9C. * * * * * PART 225—BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL (REGULATION Y) 3. The authority citation for part 225 continues to read as follows: ■ Authority: 12 U.S.C. 1817(j)(13), 1818, 1828(o), 1831i, 1831p–1, 1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310, 3331–3351, 3906, 3907, and 3909; 15 U.S.C. 1681s, 1681w, 6801 and 6805. 4. In § 225.2(r), revise footnote 2 to read as follows: ■ § 225.2 Definitions. * 12 CFR Part 225 PO 00000 2. In § 217.1, revise paragraph (c)(1)(iii) to read as follows: ■ Sfmt 4700 * * * * (r) * * * 2 For purposes of this subpart and subparts B and C of this part, a bank holding company that is subject to the Small Bank Holding Company and Savings and Loan Holding Company Policy Statement in appendix C of this part will be deemed to be ‘‘wellcapitalized’’ if the bank holding company meets the requirements for expedited/waived processing in appendix C. * * * * * ■ 5. In § 225.4, revise paragraph (b)(2)(iii) to read as follows: § 225.4 Corporate practices. * * * * * (b) * * * (2) * * * (iii)(A) If the bank holding company has consolidated assets of $3 billion or more, consolidated pro forma risk-based capital and leverage ratio calculations for the bank holding company as of the most recent quarter, and, if the redemption is to be debt funded, a E:\FR\FM\30AUR1.SGM 30AUR1 Federal Register / Vol. 83, No. 169 / Thursday, August 30, 2018 / Rules and Regulations parent-only pro forma balance sheet as of the most recent quarter; or (B) If the bank holding company has consolidated assets of less than $3 billion, a pro forma parent-only balance sheet as of the most recent quarter, and, if the redemption is to be debt funded, one-year income statement and cash flow projections. * * * * * ■ 6. In § 225.14, revise paragraph (a)(1)(v) to read as follows: § 225.14 Expedited action for certain bank acquisitions by well-run bank holding companies. (a) * * * (1) * * * (v)(A) If the bank holding company has consolidated assets of $3 billion or more, an abbreviated consolidated pro forma balance sheet as of the most recent quarter showing credit and debit adjustments that reflect the proposed transaction, consolidated pro forma risk-based capital ratios for the acquiring bank holding company as of the most recent quarter, and a description of the purchase price and the terms and sources of funding for the transaction; or (B) If the bank holding company has consolidated assets of less than $3 billion, a pro forma parent-only balance sheet as of the most recent quarter showing credit and debit adjustments that reflect the proposed transaction, and a description of the purchase price, the terms and sources of funding for the transaction, and the sources and schedule for retiring any debt incurred in the transaction; * * * * * ■ 7. In § 225.17(a)(6), revise footnote 6 to read as follows: amozie on DSK3GDR082PROD with RULES § 225.17 Notice procedure for one-bank holding company formations. (a) * * * (6) * * * 6 For a banking organization with consolidated assets, on a pro forma basis, of less than $3 billion (other than a banking organization that will control a de novo bank), this requirement is satisfied if the proposal complies with the Board’s Small Bank Holding Company and Savings and Loan Holding Company Policy Statement (appendix C of this part). * * * * * ■ 8. In § 225.23, revise paragraph (a)(1)(iii) to read as follows: § 225.23 Expedited action for certain nonbanking proposals by well-run bank holding companies. (a) * * * (1) * * * VerDate Sep<11>2014 16:35 Aug 29, 2018 Jkt 244001 (iii) If the proposal involves an acquisition of a going concern: (A) If the bank holding company has consolidated assets of $3 billion or more, an abbreviated consolidated pro forma balance sheet for the acquiring bank holding company as of the most recent quarter showing credit and debit adjustments that reflect the proposed transaction, consolidated pro forma risk-based capital ratios for the acquiring bank holding company as of the most recent quarter, a description of the purchase price and the terms and sources of funding for the transaction, and the total revenue and net income of the company to be acquired; (B) If the bank holding company has consolidated assets of less than $3 billion, a pro forma parent-only balance sheet as of the most recent quarter showing credit and debit adjustments that reflect the proposed transaction, a description of the purchase price and the terms and sources of funding for the transaction and the sources and schedule for retiring any debt incurred in the transaction, and the total assets, off-balance sheet items, revenue and net income of the company to be acquired; or (C) For each insured depository institution whose Tier 1 capital, total capital, total assets or risk-weighted assets change as a result of the transaction, the total risk-weighted assets, total assets, Tier 1 capital and total capital of the institution on a pro forma basis; * * * * * ■ 9. In appendix C, under the header ‘‘1. Applicability of Policy Statement,’’ revise the first undesignated paragraph to read as follows: Appendix C to Part 225—Small Bank Holding Company and Savings and Loan Holding Company Policy Statement * * * * * 1. Applicability of Policy Statement This policy statement applies only to bank holding companies with pro forma consolidated assets of less than $3 billion that (i) are not engaged in significant nonbanking activities either directly or through a nonbank subsidiary; (ii) do not conduct significant off-balance sheet activities (including securitization and asset management or administration) either directly or through a nonbank subsidiary; and (iii) do not have a material amount of debt or equity securities outstanding (other than trust preferred securities) that are registered with the Securities and Exchange Commission. The Board may in its discretion exclude any bank holding company, regardless of asset size, from the policy statement if such action is warranted for PO 00000 Frm 00027 Fmt 4700 Sfmt 4700 44199 supervisory purposes.1 With the exception of section 4 (Additional Application Requirements for Expedited/Waived Processing), the policy statement applies to savings and loan holding companies as if they were bank holding companies. * * * * * By order of the Board of Governors of the Federal Reserve System, April 24, 2018. Ann Misback, Secretary of the Board. Editorial note: This document was received for publication by the Office of the Federal Register on August 24, 2018. [FR Doc. 2018–18756 Filed 8–29–18; 8:45 am] BILLING CODE 6210–01–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2018–0272; Product Identifier 2018–NM–005–AD; Amendment 39–19377; AD 2018–17–23] RIN 2120–AA64 Airworthiness Directives; The Boeing Company Airplanes Federal Aviation Administration (FAA), DOT. ACTION: Final rule. AGENCY: We are adopting a new airworthiness directive (AD) for all The Boeing Company Model 737–100, –200, –200C, –300, –400, and –500 series airplanes. This AD was prompted by a report indicating that during a fleet survey on a retired Model 737 airplane, cracking was found common to the number 3 windshield assembly, aft sill web. This AD requires, at certain locations, repetitive high frequency eddy current (HFEC) inspections of the number 3 windshield assembly, aft sill web; and applicable on-condition actions. We are issuing this AD to address the unsafe condition on these products. DATES: This AD is effective October 4, 2018. The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of October 4, 2018. ADDRESSES: For service information identified in this final rule, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd., MC 110–SK57, Seal Beach, CA 90740–5600; telephone 562–797–1717; internet https://www.myboeingfleet.com. You SUMMARY: 1 [RESERVED]. E:\FR\FM\30AUR1.SGM 30AUR1
[Pages 44195-44199]
[FR Doc No: 2018-18756]
[Regulations Q and Y; Docket No. R-1619]
RIN 7100-AF 13
Small Bank Holding Company and Savings and Loan Holding Company
Policy Statement and Related Regulations; Changes to Reporting
ACTION: Interim final rule with request for comment; changes to
SUMMARY: The Board invites comment on an interim final rule that raises
the asset size threshold for determining applicability of the Board's
Small Bank Holding Company and Savings and Loan Holding Company Policy
Statement (Regulation Y, appendix C) (Policy Statement) to $3 billion
from $1 billion of total consolidated assets. The interim final rule
also makes related and conforming revisions to the Board's regulatory
capital rule (Regulation Q) and requirements for bank holding companies
(Regulation Y). In
connection with these changes, the Board is modifying the respondent
panel for certain holding company financial reports.
DATES: The interim final rule is effective August 30, 2018. Comments on
the interim final rule must be received no later than October 29, 2018.
ADDRESSES: You may submit comments, identified by Docket No. R-1619 and
RIN No 7100 AF 13, by any of the following methods:
or in paper in Room 3515, 1801 K Street NW (between 18th and 19th
Streets NW), between 9:00 a.m. and 5:00 p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT: Constance M. Horsley, Deputy Associate
Douglas Carpenter, Senior Supervisory Financial Analyst, (202) 452-
2205, Vanessa Davis, Supervisory Financial Analyst, (202) 475-6647, or
Kevin Tran, Supervisory Financial Analyst, (202) 452-2309, Division of
Supervision and Regulation; Laurie Schaffer, Associate General Counsel,
(202) 452-2272; Benjamin McDonough, Assistant General Counsel, (202)
452-2036, or Mark Buresh, (202) 452-5270, Senior Attorney, Legal
Division; Board of Governors of the Federal Reserve System, 20th and C
The Board issued the Small Bank Holding Company and Savings and
Loan Holding Company Policy Statement (Regulation Y, appendix C)
(Policy Statement) in 1980 to facilitate the transfer of ownership of
small community-based banks in a manner consistent with bank safety and
soundness.\1\ In general, the Board has discouraged the use of debt by
(collectively, depository institution holding companies) to finance
acquisitions because high levels of debt can impair the ability of a
depository institution holding company to serve as a source of strength
to its subsidiary depository institutions. However, the Board has
recognized that small depository institution holding companies have
less access to equity financing than larger depository institution
holding companies and that, therefore, an acquisition by a small
depository institution holding company often requires the use of debt.
\1\ 12 CFR part 225, app. C.
The Board originally adopted the Policy Statement to permit the
formation and expansion of small bank holding companies with debt
levels that are higher than typically permitted for larger bank holding
companies. The Policy Statement contains several conditions and
restrictions designed to ensure that a small depository institution
holding company that operates with the heightened level of debt
permitted under the Policy Statement does not present an undue risk to
the safety and soundness of its subsidiary depository institutions.
Currently, the Policy Statement applies to bank holding companies
with pro forma consolidated assets of less than $1 billion that: (i)
Are not engaged in significant nonbanking activities either directly or
through a nonbank subsidiary; (ii) do not conduct significant off-
balance sheet activities (including securitization and asset management
or administration) either directly or through a nonbank subsidiary; \2\
and (iii) do not have a material amount of debt or equity securities
with the Securities and Exchange Commission (the foregoing enumerated
items referred to hereafter as qualitative requirements). The Policy
Statement also applies to small savings and loan holding companies as
if they were bank holding companies.\3\
\2\ The examples provided in the Policy Statement are not
exhaustive and simply highlight off-balance sheet activities that
may involve substantial risk. Other activities than securitization
and asset management or administration may present similar concerns.
See also 71 FR 9897, 9899, fn. 2 (February 28, 2006) (2006 Final
\3\ 12 CFR 238.9.
The Policy Statement provides that bank holding companies that meet
the qualitative requirements (qualifying small holding companies) may
use debt to finance up to 75 percent of the purchase price of an
acquisition (that is, they may have a debt-to-equity ratio of up to
3:1). However, a qualifying small holding company must satisfy
additional ongoing requirements, including that it: (i) Reduce its debt
such that all debt is retired within 25 years of the debt being
incurred; (ii) reduce its debt-to equity ratio to .30:1 or less within
12 years of the debt being incurred; (iii) ensure that each of its
subsidiary insured depository institutions is well capitalized; and
(iv) refrain from paying dividends until such time as it reduces its
debt-to-equity ratio to 1.0:1 or less. The Policy Statement also
provides that a qualifying small holding company may not use the
expedited applications procedures or obtain a waiver of the stock
redemption filing requirements applicable to bank holding companies
under the Board's Regulation Y unless the bank holding company has a
pro forma debt-to-equity ratio of 1.0:1 or less.\4\
\4\ 12 CFR 225.4(b), 225.14, and 225.23.
New Asset Threshold of $3 Billion
On May 24, 2018, the Economic Growth, Regulatory Relief, and
Consumer Protection Act (EGRRCPA) was enacted.\5\ Section 207 of
EGRRCPA directs the Board to revise the Policy Statement to raise the
consolidated assets threshold from $1 billion to $3 billion within 180
days of the enactment of EGRRCPA. The Board last raised the asset limit
in 2015 when it increased it from $500 million to $1 billion.\6\ The
Board is issuing this interim final rule to increase the asset
threshold to $3 billion consistent with EGRRCPA. The Board is not
making any additional modifications to the Policy Statement at this
time. The final rule applies to small savings and loan holding
the same extent as small bank holding companies, by operation of
Regulation LL.
\5\ Public Law 115-174 (May 24, 2018).
\6\ See 80 FR 20153 (April 15, 2015). In this final rule, the
Board also applied the Policy Statement to small savings and loan
holding companies as if they were bank holding companies. 80 FR
20153 (April 15, 2015).
The Board believes it is appropriate to issue an interim final rule
revising the Policy Statement and making conforming revisions to
Regulation Q and Regulation Y to apply the statutorily mandated
threshold of $3 billion to qualifying holding companies consistent with
EGRRCPA. Without such action, qualifying holding companies that cross
$1 billion during the pendency of the proposal would be required to
incur costs to implement regulatory capital and financial reporting
systems that would cease to be necessary upon issuance of the final
rule. In addition, the Board believes that it is appropriate to allow
holding companies with total consolidated assets of $1 billion or more
but less than $3 billion to immediately become subject to reduced
regulatory and reporting requirements, consistent with the
congressionally-mandated increase in the threshold, so that such firms
are not obligated to incur significant compliance costs in the interim
until the traditional rulemaking process is completed.
Conforming Regulation Q Change
For the reasons described previously, the Board is revising
Regulation Q to conform the language in Sec.  217.1 to reflect the
heightened threshold of the Policy Statement resulting from the interim
final rule. Specifically, Sec.  217.1(c)(1)(iii) is revised to remove
the reference to the $1 billion threshold.
A number of reporting, filing, and other provisions in Regulation Y
are triggered by the consolidated asset threshold established by the
Policy Statement. In connection with revising the threshold under the
Policy Statement, the Board is making technical and conforming
amendments to these provisions to provide that qualifying small holding
companies may take advantage of the streamlined informational, notice,
and other requirements embodied in these rules. These technical and
conforming amendments will provide regulatory burden relief to most
holding companies with less than $3 billion of consolidated total
assets. The final rule makes the following changes:
In Sec.  225.2(r), footnote 2, the footnote describing the
application of the definition of ``well-capitalized'' in the Board's
Regulation Y (12 CFR part 225) to entities subject to the Policy
Statement is revised to remove the reference to the threshold of $1
billion under the Policy Statement.
In Sec.  225.4(b)(2)(iii), the thresholds for the
different pro forma financial information required of smaller bank
holding companies compared to larger bank holding companies under Sec.
225.4(b)(1) of the Board's Regulation Y is revised to refer to total
assets of less than $3 billion rather than total assets of less than $1
In Sec.  225.14(a)(1)(v), the thresholds for the different
pro forma financial information required of smaller bank holding
companies compared to larger bank holding companies under Sec.  225.14
of the Board's Regulation Y is revised to refer to total assets of less
than $3 billion rather than total assets of less than $1 billion.
In Sec.  225.17(a)(6), footnote 6, the total asset
threshold for application of the footnote related to demonstrating that
debt incurred will not unduly burden the bank holding company is
revised to refer to total assets of less than $3 billion rather than
total assets of less than $1 billion.
In Sec.  225.23(a)(1)(iii), the threshold for the
225.23 of the Board's Regulation Y is revised to refer to total assets
of less than $3 billion rather than total assets of less than $1
The Board requires all depository institution holding companies to
file certain reports with the Federal Reserve to monitor the financial
condition and operations of depository institution holding companies.
Those reports include the Financial Statements for Holding Companies
(FR Y-9 series of reports; OMB No. 7100-0128). Depository institution
holding companies with consolidated assets of less than $1 billion that
also meet qualitative requirements submit summary parent-only financial
data semiannually on the FR Y-9SP. Bank holding companies and savings
and loan holding companies with consolidated assets of $1 billion or
more--or that are otherwise not subject to the Policy Statement--submit
consolidated financial data on the FR Y-9C and parent-only financial
data on the FR Y-9LP, both quarterly.
The Board is modifying, effective immediately, the respondent panel
for the FR Y-9SP, FR Y-9C, and FR Y-9LP for bank holding companies and
savings and loan holding companies with $1 billion or more but less
than $3 billion in total consolidated assets to align the threshold in
the Policy Statement. If these institutions meet the qualitative
requirements, they will not be required to file the FR Y-9C and the FR
Y-9LP (including regulatory capital information) and would instead file
the FR Y-9SP. These changes would be consistent with the final rule's
changes to the Policy Statement and will reduce the regulatory
reporting burden for these smaller institutions. Since most bank
holding companies and savings and loan holding companies with less than
$3 billion in total consolidated assets have limited activities outside
of their subsidiary banks, the Board believes relying on summary
parent-only financials from the FR Y-9SP and detailed depository
institution financials from the Consolidated Reports of Condition and
Income (FFIEC 031, FFIEC 041, FFIEC 051; OMB No. 7100-0036) is
sufficient for supervisory purposes.
The Board invites comments on all aspects of this interim final
rule. Interested parties are encouraged to provide comments on the $3
billion asset size threshold adjustment, the revision to Regulation Q,
and the related and conforming amendments to Regulations Y.
Effective Date/Request for Comments
The Board is issuing this interim final rule without prior notice
and the opportunity for public comment and the 30-day delayed effective
date ordinarily prescribed by the Administrative Procedure Act (APA).
Pursuant to the Administrative Procedure Act (APA), at 5 U.S.C.
553(b)(B), notice and comment are not required prior to the issuance of
a final rule if an agency, for good cause, finds that ``notice and
the public interest.'' \7\ The interim final rule implements the
provisions in section 207 of EGRRCPA, which was enacted on May 24,
2018. EGRRCPA includes a directive that the Board revise appendix C to
part 225 of title 12 of the Code of Federal Regulations within 180 days
to raise the consolidated asset threshold under that appendix from $1
billion to $3 billion.\8\ This section of EGRRCPA was effective upon
\7\ 5 U.S.C. 553(b)(B).
\8\ Public Law 115-174 (May 24, 2018), section 207(b).
implementing the statutorily amended thresholds as soon as possible.
Delaying the revisions to the Policy Statement, Regulation Q,
and Regulation Y to complete a traditional notice and comment
rulemaking process would cause holding companies with total
consolidated assets of $1 billion or more and less than $3 billion to
expend significant resources to continue to comply with Regulation Q
and would subject these firms to heightened requirements under
Regulation Y for the time necessary for the Board to go through the
notice and comment rulemaking process. In addition, any holding
companies that qualified under the Policy Statement and that came to
have $1 billion or more in total consolidated assets while the
rulemaking process was ongoing would be required to expend significant
resources to comply with Regulation Q. The Board believes that
providing a notice and comment period prior to issuance of the interim
final rules is unnecessary because the Board does not expect public
objection to the interim final rule being promulgated, as the rule
merely provides the relief that Congress intended.
(3) as otherwise provided by the agency for good cause.\9\ The Board
has concluded that, because the rule recognizes an exemption, the
interim final rule is exempt from the APA's delayed effective date
requirement.\10\ Additionally, the Board finds good cause to publish
the interim final rule with an immediate effective date for the same
reasons set forth above under the discussion of section 553(b)(B) of
\9\ 5 U.S.C. 553(d).
\10\ 5 U.S.C. 553(d)(1).
While the Board believes there is good cause to issue the rules
date, the Board is interested in the views of the public and request
The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., applies only
to rules for which an agency publishes a general notice of proposed
rulemaking. Because the Board has determined for good cause that a
notice of proposed rulemaking for this rule is unnecessary, the
Regulatory Flexibility Act does not apply to this final rule.
The Board has revised the respondent panel for each of the FR Y-
9SP, FR Y-9C, and FR Y-9LP in connection with this final rule.
Specifically, the minimum total consolidated asset threshold for filing
the FR Y-9C and FR Y-9LP has been increased to $3 billion, and the FR
Y-9SP has been updated to apply to holding companies with less than $3
billion in total consolidated assets. Though the number of total
respondents is not affected, the result of this modification is to
reduce the aggregate burden for the FR Y-9C, FR Y-9LP, and FR Y-9SP by
75,233 hours because more firms will file the less complex FR Y-9SP.
the Board has sought to present the interim final rule in a simple and
straightforward manner. The Board invites comments on whether there are
additional steps it could take to make the rule easier to understand.
United States, other than a savings and loan holding company that meets
the requirements of 12 CFR part 225, appendix C, as if the savings and
loan holding company were a bank holding company and the savings
association were a bank. For purposes of compliance with the capital
adequacy requirements and calculations in this part, savings and loan
holding companies that do not file the FR Y-9C should follow the
instructions to the FR Y-9C.
4. In Sec.  225.2(r), revise footnote 2 to read as follows:
\2\ For purposes of this subpart and subparts B and C of this part,
a bank holding company that is subject to the Small Bank Holding
Company and Savings and Loan Holding Company Policy Statement in
appendix C of this part will be deemed to be ``well-capitalized'' if
the bank holding company meets the requirements for expedited/waived
processing in appendix C.
(iii)(A) If the bank holding company has consolidated assets of $3
quarter, and, if the redemption is to be debt funded, a
parent-only pro forma balance sheet as of the most recent quarter; or
than $3 billion, a pro forma parent-only balance sheet as of the most
(v)(A) If the bank holding company has consolidated assets of $3
and sources of funding for the transaction; or
7. In Sec.  225.17(a)(6), revise footnote 6 to read as follows:
Sec.  225.17   Notice procedure for one-bank holding company
\6\ For a banking organization with consolidated assets, on a pro
forma basis, of less than $3 billion (other than a banking organization
that will control a de novo bank), this requirement is satisfied if the
proposal complies with the Board's Small Bank Holding Company and
Savings and Loan Holding Company Policy Statement (appendix C of this
(A) If the bank holding company has consolidated assets of $3
to be acquired; or
of the transaction, the total risk-weighted assets, total assets, Tier
1 capital and total capital of the institution on a pro forma basis;
9. In appendix C, under the header ``1. Applicability of Policy
Statement,'' revise the first undesignated paragraph to read as
with pro forma consolidated assets of less than $3 billion that (i)
\1\ [RESERVED].
System, April 24, 2018.
the Office of the Federal Register on August 24, 2018.
[FR Doc. 2018-18756 Filed 8-29-18; 8:45 am]