RegH1_20100420_omb

Supporting Statement for the
Reports Related to Securities of State Member Banks
as Required by Regulation H
(Reg H-1; OMB No. 7100-0091)
Summary
The Board of Governors of the Federal Reserve System, under delegated authority from
the Office of Management and Budget (OMB), proposes to extend for three years, without
revision, the Reports Related to Securities of State Member Banks as Required by Regulation H
(Reg H-1; OMB No. 7100-0091). Regulation H requires certain state member banks (SMBs) to
submit information relating to their securities to the Federal Reserve on the same reporting forms
that bank holding companies (BHCs) and nonbank entities use to submit similar information to
the Securities and Exchange Commission (SEC). Because most publicly held banking
organizations are BHCs, only 14 SMBs, which are generally small, currently submit these data to
the Board. The information is primarily used for disclosure to a SMB’s shareholders, public
investors and is available to the public upon request. The reporting frequency varies, depending
on the SEC reporting form being submitted. The attached Reg H-1 Appendix lists and describes
the SEC reporting forms that are specified by the securities disclosure and reporting
requirements embodied in Regulation H (208.36).1 The annual reporting burden for this
information collection is estimated to be 1,230 hours.
Background and Justification
Section 12(i) of the Securities Exchange Act of 1934 (1934 Act) requires SMBs with 500 or
more shareholders and more than $10 million in total assets or those having a class of securities
listed on a national exchange to make certain public disclosures to the Federal Reserve Board
under regulations that are substantially similar to those of the SEC. In order to comply with the
substantially similar requirement of the 1934 Act and to avoid having to amend its rules
whenever SEC rules are changed, the Federal Reserve in 1987 amended its rules to provide that
SMBs subject to the 1934 Act must file those reporting forms set forth in the SEC's rules for
entities subject to SEC regulation. The disclosures required by the 1934 Act provide the public
with material financial information about the securities of reporting companies, alert the public
to ownership changes in and tender offers for those securities, and provide shareholders with
information relevant to the solicitation of proxies.
In May 2003, the SEC amended its rules to implement electronic filing requirements imposed
by the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) for Forms 3, 4, and 5. Regulation H
requires SMBs registered under section 12(g) of the 1934 Act to comply with the rules,
regulations, and reporting forms adopted by the SEC. When the SEC amended its rules to
require electronic filing of Forms 3, 4, and 5, those requirements became applicable to SMBs
registered under Section 12(g) of the 1934 Act. Because the Federal Reserve does not have a
1

Since the last reauthorization of these reporting forms, the SEC has eliminated several reporting forms applicable to small
businesses. They (10-SB, 10-KSB, and 10-QSB) have been eliminated from the attached Reg H-1 Appendix. SMBs previously
registering or reporting on the eliminated forms will now register on Form 10 and file reports on Forms 10-Q and 10-K (73 FR
934).

capacity for receiving these reporting forms electronically, the Federal Reserve, and other bank
regulators, provided written guidance to the affected banks requesting that they submit their
Forms 3, 4, and 5 data electronically through FDICconnect,2 an electronic filing system operated
by the Federal Deposit Insurance Corporation (FDIC).
Description of Information Collection
Under section 208.36 of Regulation H, SMBs are subject to the reporting requirements of the
1934 Act and must file the same reporting forms that the SEC, pursuant to the 1934 Act, requires
of BHCs and nonbank entities. Therefore, SMBs are required to review the various SEC rules,
regulations, releases, and reporting forms to determine appropriate filing requirements. The use
of SEC reporting forms has a three-fold affect on respondent banks. First, respondents are
required to submit audited financial statements. Second, respondents are required to include a
management's discussion and analysis of financial condition and results of operations, as
required by the SEC's Part 229 Standard Instructions For Filing Forms Under Securities Act of
1933, Securities Exchange Act of 1934, and Energy Policy and Conversation Act of 1975
(Regulation S-K). Third, by submitting data based on SEC rules, respondent’s filings are
consistent with those of other public companies, thus reducing burden and improving usefulness
to users.
Small SMBs may reduce their reporting burden by electing to substitute the quarterly
financial statements they submit as part of their Consolidated Reports of Condition and Income
(Call Report; FFIEC 041; OMB No. 7100-0036) in lieu of the financial statements the SEC
requires in its Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (10-Q; OMB No. 3235-0070). This election is available to any SMB that has no foreign
offices and that controls total assets of less than $150 million. Unlike entities subject to the
SEC's requirements, small banks electing this option do not need to include any interim
statements of cash flow or comparative balance sheets and income statements from prior fiscal
years. However, these banks shall include earnings per share or net loss per share prepared in
accordance with generally accepted accounting principles and shall disclose any material
contingencies. Of the seventeen SMBs subject to these reporting requirements, none currently
submit copies of their Call Reports as part of the Form 10-Q.
Time Schedule for Information Collection
SMBs that are subject to section 208.36 of Regulation H must file securities reporting forms
at the times indicated below.


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Form 10-Q quarterly reports for the first three fiscal quarters (for the quarters ending
March 31, June 30, and September 30) are due by May 15, August 15, and November
15, respectively. Due dates for accelerated and large accelerated filers are May 10,
August 10, and November 10.3

https://www2.fdicconnect.gov/

3

Accelerated filers are companies that have a public float of at least $75 million but less than $700 million. Large accelerated
filers include reporting companies with a public float of $700 million or more.

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Form 10-K annual report is due by March 31 (for the year ending December 31). The
due date for accelerated filers is March 15 and for large accelerated filers is February
28.
Form 8-K (Current Report) is required when certain material events occur, generally
within four days of the event. It would contain more current information than Forms
10-K and 10-Q.
A proxy (Schedule 14A) is generally filed annually, prior to the bank's shareholder's
meeting.
Form 3 (Initial Statement of Beneficial Ownership of Securities) must be filed by every
director or officer, upon initial appointment, or by every shareholder when his or her
equity position reaches 10 percent or more of the bank.
Any person who has previously filed Form 3 must file Form 4 (Statement of Changes
of Beneficial Ownership of Securities) for any month in which his or her ownership
position changes. (Taken together, on average, eleven of Form 3 and Form 4 are filed
by each bank per year).
Form 5 is the Annual Statement of Beneficial Ownership of Securities and must be
filed on or before the 45th day after the end of the issuer’s fiscal year in accordance
with Rule 16a-3(f).
All other reporting forms are event generated and are filed infrequently.

Registered SMBs file Forms 3, 4, and 5 electronically through FDICconnect. The SMB’s filings
are monitored by its Federal Reserve Bank via the Beneficial Ownership Filings System
(BOFS).4 Data from the filings are not published by the Federal Reserve; however, they are
made available to the public no later than the end of the business day following the filing via
BOFS.
Legal Status
The Board's Legal Division has determined that 15 U.S.C. § §78l (i) and 78w (a)(l) and
Regulation H, (12 C.F.R. § 208.36) authorizes the Board to require these reports. The obligation
of state member banks to file these reports, with the Board, is mandatory. The information
collected is not considered confidential. However, a state member bank may request that a
report or document not be disclosed to the public and be held confidential by the Board. Should
a state member bank request confidential treatment of such information, the question of whether
the information is entitled to confidential treatment must be determined on an ad hoc basis in
connection with such request.
Consultation Outside the Agency
On January 29, 2010, the Federal Reserve published a notice in the Federal Register (75
FR 4819) requesting public comment for 60 days on the extension, without revision, on Notice
of Branch Closure. The comment period for this notice expired on March 30, 2010. The Federal
Reserve did not receive any comments. On April 9, 2010, the Federal Reserve published a final
notice in the Federal Register (75 FR 18208).
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http://www2.fdic.gov/efr/

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Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Respondent Burden
The annual reporting burden for this information collection is estimated to be 1,230 hours.
The number of respondents is estimated based on actual 2009 submissions. On average, each
SMB submits 17 reports a year, including the required quarterly and annual reports and eventgenerated reports. This represents less than 1 percent of total annual Federal Reserve System
reporting burden.

Reg H-1

Number
of
respondents

Average
annual
frequency

Estimated
average hours
per response

Estimated
annual
burden hours

14

17

5.17

1,230

The total cost to the public is estimated to be $75,830.5
Estimated Cost to the Federal Reserve System
The annual cost to the Federal Reserve System for collecting this information is negligible.

5.

Total cost to the public was estimated using the following formula. Percent of staff time, multiplied by annual burden hours,
multiplied by hourly rate: 30% - Clerical @ $25, 45% - Managerial or Technical @ $55, 15% - Senior Management @ $100,
and 10% - Legal Counsel @ $144. Hourly rate estimates for each occupational group are averages using data from the Bureau of
Labor and Statistics, Occupational Employment and Wages, news release.

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Reg H-1 Appendix
SEC Forms Specified by the Securities and Exchange Commission
Reporting Requirements Embodied in Regulation H (208.36)
SEC Form

Authorizing Regulation & Description

Form 10

17 CFR 249.210
This is the general reporting form for registration of securities pursuant to section 12(b) or (g) of the 1934 Act of
classes of securities of issuers for which no other reporting form is prescribed. It requires certain business and
financial information about the issuer.

Form 10-K

17 CFR 249.310
This is the annual report that most reporting companies file. It provides a comprehensive overview of the
registrant's business, and includes audited annual financial statements. Depending on the reporting company’s size,
the report must be filed within 60, 75, or 90 days after the end of the company's fiscal year.

Form 8-K

17 CFR 249.308
This is the current report that is used to report the occurrence of any material events or corporate changes which are
of importance to investors or security holders and previously have not been reported by the registrant. It provides
more current information on certain specified events than would Forms 10-Q or 10-K.

Form 10-Q

17 CFR 249.308(a)
The Form 10-Q is a report filed quarterly by most reporting companies. It includes unaudited financial statements
and provides a continuing overview of major changes in the company's financial position during the year, as
compared to the prior corresponding period. The report must be filed for each of the first three fiscal quarters of
the company's fiscal year and is due within 40 or 45 days of the close of the quarter, depending on the size of the
reporting company.

Schedule 14A
(proxy
statement)

17 CFR 240.14a-2.14a-10
State law governs the circumstances under which shareholders are entitled to vote. When a shareholder vote is
required and any person solicits proxies with respect to securities registered under Section 12 of the 1934 Act, that
person generally is required to furnish a proxy statement containing the information specified by Schedule 14A.
The proxy statement is intended to provide shareholders with the information necessary to enable them to vote in
an informed manner on matters intended to be acted upon at shareholders' meetings, whether the traditional annual
meeting or a special meeting. Typically, a shareholder is also provided with a proxy card to authorize designated
persons to vote his or her securities on the shareholder's behalf in the event the holder does not vote in person at
the meeting. Copies of definitive (final) proxy statements and proxy card are filed at the time they are sent to
shareholders. Certain preliminary proxy filings relating to mergers, consolidations, acquisitions and similar
matters are non-public upon filing; all other proxy filings are publicly available.

Forms 3, 4,
and 5

17 CFR 249.103 (Form 3), 249.104 (Form 4), and 249.105 (Form 5)
Every director, officer or owner of more than ten percent of a class of equity securities registered under Section 12
of the 1934 Act must file with the Commission a statement of ownership regarding such security. The initial filing
is on Form 3 and changes are reported on Form 4. The Annual Statement of beneficial ownership of securities is
on Form 5. The forms contain information on the reporting person's relationship to the company and on purchases
and sales of such equity securities.

Form 8B

17 CFR 249.208b
This specialized registration form may be used by certain issuers with no securities registered under the 1934 Act
that succeed to another issuer which had securities so registered at the time of succession.

Reg H-1 Appendix (continued)
SEC Forms Specified by the Securities and Exchange Commission
Reporting Requirements Embodied in Regulation H (208.36)
SEC Form

Authorizing Regulation & Description

Schedule 13D

17 CFR 240.13d-101
This Schedule discloses beneficial ownership of certain registered equity securities. Any person or group of
persons who acquire a beneficial ownership of more than 5 percent of a class of registered equity securities of
certain issuers must file a Schedule 13D reporting such acquisition together with certain other information within
ten days after such acquisition. Moreover, any material changes in the facts set forth in the Schedule generally
precipitates a duty to promptly file an amendment on Schedule 13D. The Commission's rules define the term
beneficial owner to be any person who directly or indirectly shares voting power or investment power (the power
to sell the security).

Schedule 13G

17 CFR 240.13d-102
Schedule 13G is a much abbreviated version of Schedule 13D that is only available for use by a limited category
of persons (such as banks, broker/dealers, and insurance companies) and even then only when the securities were
acquired in the ordinary course of business and not with the purpose or effect of changing or influencing the
control of the issuer.

Schedule 14D-9

17 CFR 240.101
This schedule must be filed when an interested party, such as an issuer, a beneficial owner of securities, or a
representative of either, makes a solicitation or recommendation to the shareholders with respect to a tender offer
which is subject to Regulation 14D.

Schedule 14D-1

17 CFR 240.14d-100
Any person, other than the issuer itself, making a tender offer for certain equity securities registered pursuant to
Section 12 of the 1934 Act, is required to file this schedule if acceptance of the offer would cause that person to
own over 5 percent of that class of the securities. This schedule must be filed and sent to various parties, such as
the issuer and any competing bidders. In addition, Regulation 14D sets forth certain requirements that must be
complied with in connection with a tender offer.

Form 10-C

17 CFR 249.310c
This form is filed by any issuer of securities which are registered under section 12(g) of the 1934 Act or which are
subject to 15(d) of the Act, after (1) such issuer has been notified that any class of its securities is to be quoted on
the NASDAQ interdealer quotation system, reporting thereon any aggregate increase or decrease in the amount of
its securities whose change exceeds 5 percent of the amount of the class outstanding as last reported; and (2) any
change in the name of the corporation. This report shall be filed not later than 10 days after the first date on
which such change in outstanding securities or corporate name has occurred.

Form 15

17 CFR 249.323
This form shall be filed by each issuer to certify that the number of holders of record of a class of security
registered under section 12(g) of the 1934 Act is reduced to less than 300 persons, or that the number of holders of
record of a class of security registered under section 12(g) of the 1934 Act is reduced to less than 500 persons and
the total assets of the issuer have not exceeded $10 million on the last day of each of the issuer's most recent three
fiscal years. Registration terminates 90 days after the filing of the certificate or within such shorter time as the
Commission may direct.

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