RegH1_20130410_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 and nonbank entities use to submit similar information to the Securities
and Exchange Commission (SEC). Because most publicly held banking organizations are bank
holding companies, only four SMBs, which are generally small, currently submit these data. The
information is primarily used for disclosure to a SMB’s shareholders and 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). The annual reporting burden for this information collection
is estimated to be 352 hours.
Background and Justification
Section 12(i) of the Securities Exchange Act of 1934 (1934 Act) requires SMBs with 2,000
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
under regulations that are substantially similar to those of the SEC.1 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
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The Jumpstart Our Business Startups Act (JOBS Act) was enacted in April 2012. The JOBS Act amended the SEC
registration obligation for banks under Section 12(g) of the 1934 Act from 500 persons to 2,000 persons. The
holders of record threshold for Section 12(g) deregistration for banks has been increased from 300 persons to 1,200
persons.

registered under Section 12(g) of the 1934 Act. Because the Federal Reserve does not have a
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 bank holding companies 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 effect 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 Conservation
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 four 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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3

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/
Accelerated filers are companies that have a public float of at least $75 million but less than $700 million. Large

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

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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 shareholders
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 sections 12(i) and 23(a)(1) of the Securities
Exchange Act of 1934 (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.

accelerated filers include reporting companies with a public float of $700 million or more.
4
http://www2.fdic.gov/efr/

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Consultation Outside of the Agency
On January 22, 2013, the Federal Reserve published a notice in the Federal Register (78 FR
4410) requesting public comment for 60 days on the extension, without revision, on Reg H-1.
The comment period for this notice expired on March 25, 2013. The Federal Reserve did not
receive any comments. On April 10, 2013, the Federal Reserve published a final notice in the
Federal Register (78 FR 21366).
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 352 hours. The
number of respondents is estimated based on actual 2011 submissions. On average, each state
member bank submits 17 reports a year, including the required quarterly and annual reports and
event-generated reports. This represents less than 1 percent of total annual Federal Reserve
System reporting burden.
Number
of
respondents5

Average
annual
frequency

Estimated
average hours
per response

Reg H-1
4
17
5.17
6
The proposed total cost to the public is estimated to be $15,787.

Estimated
annual
burden hours
352

Estimated Cost to the Federal Reserve System
The annual cost to the Federal Reserve System for collecting this information is negligible.

5.

Of these respondents, two are small entities as defined by the Small Business Administration (i.e., entities with
less than $175 million in total assets) www.sba.gov/content/table-small-business-size-standards. However,
paragraph 208.36(b) of Regulation H provides an election option for bank with total assets of $150 million or less to
submit their Consolidated Reports of Condition and Income (Call Reports) in lieu of financial statements required
by SEC rules. None of the respondents currently submit copies of their Call Reports in lieu of the Form 10-Q.
6.
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% Office & Administrative Support @ $17, 45% Financial Managers @
$52, 15% Legal Counsel @ $55, and 10% Chief Executives @ $81). Hourly rate for each occupational group are
the median hourly wages (rounded up) from the Bureau of Labor and Statistics (BLS), Occupational Employment
and Wages 2011, www.bls.gov/news.release/ocwage.nr0.htm Occupations are defined using the BLS Occupational
Classification System, www.bls.gov/soc/

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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.

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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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