FRY16_20141117_omb

OMB Supporting Statement for the
Annual Company-Run Stress Test Report for $10-50 Billion Companies
(FR Y-16; OMB No. 7100-0356)
Summary
The Board of Governors of the Federal Reserve System (Board), under delegated
authority from the Office of Management and Budget (OMB), proposes to extend for three years,
with revision, the mandatory Annual Company-Run Stress Test information collection for $1050 billion companies (FR Y-16, OMB No. 7100-0356). The annual FR Y-16 report collects
quantitative projections of income, losses, assets, liabilities, and capital across three scenarios
provided by the Federal Reserve (baseline, adverse, and severely adverse) and qualitative
supporting information on the methodologies and processes used to develop these internal
projections. The respondent panel includes any bank holding company (BHC) or savings and
loan holding company (SLHC) 1 with average total consolidated assets of greater than $10 billion
but less than $50 billion, and any affiliated or unaffiliated state member bank (SMB) that has
average total consolidated assets of greater than $10 billion but less than $50 billion excluding
SMB subsidiaries of covered companies. 2
The Federal Reserve proposes the following revisions and clarifications to the FR Y-16
report for the report submission due annually beginning on March 31, 2015: (1) add common
equity tier 1 capital as a data item, (2) add common equity tier 1 risk based capital ratio as a data
item, and (3) modify the reporting instructions to clarify a number of items.
The total current annual paperwork burden for the FR Y-16 is estimated to be 38,288
hours and is estimated to increase by 335 hours for a proposed annual paperwork burden of
38,623 hours.
Background and Justification
On October 12, 2012, the Federal Reserve published a final rule in the Federal Register
(77 FR 62396) (12 C.F.R. Part 252, Subpart H) outlining the annual company-run stress testing
requirements for banking organizations with total consolidated assets over $10 billion other than
covered companies. The rule implements the company-run stress testing requirement
promulgated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank
Act), Pub. L. No. 111-203, § 165(i)(2). Under the final rule, a BHC, SLHC, or SMB that meets
the asset threshold is required to conduct an annual stress test using scenarios provided by the
Board.
1

SLHCs are not subject to Dodd-Frank Act annual company-run stress testing requirements until the calendar year
after SLHCs become subject to regulatory capital requirements. All SLHCs except those substantially engaged in
insurance underwriting or commercial activities are subject to capital requirements beginning in 2015. These
“covered SLHCs” are required to report using the FR Y-16 in March 2017 (stress test as-of date September 30,
2016).
2
“Covered companies” are defined as BHCs with at least $50 billion in total consolidated assets and nonbank
systemically important financial institutions, subject to annual supervisory stress tests and semi-annual company-run
stress tests.

Results of the company-run annual stress test must be reported to the Federal Reserve
Board by March 31st of each year. The final rule requires each BHC, SMB, and SLHC to report
the results of the stress tests conducted by the company in the manner and form prescribed by the
Board.
Information received in the FR Y-16 report is used in connection with the Federal
Reserve’s supervision and regulation of these financial institutions to form supervisory
assessments of the quality of a company’s stress testing process and overall results as part of the
broader assessment of a company’s capital adequacy and risk management process. Data
collected on the FR Y-16 report provide the Federal Reserve with one of many tools available to
Reserve Bank examiners to assist in the analysis and assessment of a company’s capital position
and planning process.
It is important to note that $10-50 billion companies subject to the Board’s rule requiring
annual company-run stress tests are not subject to the Board’s Capital Plan Rule, are not
participants in the Board’s Comprehensive Capital Analysis and Review process, and are not
subject to the Board’s supervisory stress testing program. Further, the Board’s rule does not
require the $10-50 billion companies to maintain a minimum post-stress pro-forma capital ratio
over the stress test planning horizon and there is no regulatory approval associated with the
results of these internal company-run stress tests.
Description of Information Collection
The FR Y-16 reporting form collects data through two primary schedules: (1) the Results
Schedule (which includes the quantitative results of the stress tests under the baseline, adverse,
and severely adverse scenarios for each quarter of the planning horizon) and (2) the Scenario
Variables Schedule. In addition, respondents are required to submit a summary of the qualitative
information supporting their quantitative projections. The qualitative supporting information
must include:
• a description of the types of risks included in the stress test;
• a summary description of the methodologies used in the stress test;
• an explanation of the most significant causes for the changes in regulatory capital ratios, and
• the use of the stress test results.
Results Schedule
For each of the three supervisory scenarios (baseline, adverse, and severely adverse), data
are reported on two supporting schedules: (1) the Income Statement Schedule and (2) the
Balance Sheet Schedule. Therefore, two supporting schedules for each scenario (baseline,
adverse, and severely adverse) are completed. In addition, the Results Schedule includes a
Summary Schedule, which summarizes key results from the Income Statement and Balance
Sheet Schedules.
Income statement data are collected on a projected quarterly basis showing both
projections of revenues and losses. These data are organized in a similar fashion to the
mandatory Consolidated Financial Statements for Holding Companies (FR Y-9C; OMB No.
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7100-0128), Schedule HI – Consolidated Income Statement, and the Consolidated Report of
Condition and Income (Call Report FFIEC 031/041; OMB No. 7100-0036), Schedule RI Income Statement. For example, respondents project net charge-offs by loan type (stratified by
twelve specific loan types), gains and losses on securities, pre-provision net revenue, and other
key components of net income (i.e., provision for loan and lease losses, taxes, etc.).
Balance sheet data are collected on a quarterly basis for projections of certain assets,
liabilities, and capital. These data are organized in a similar fashion to the FR Y-9C, Schedule
HC – Consolidated Balance Sheet, and Call Report, Schedule RC - Balance Sheet. For example,
respondents would project loans, allowance for loan and lease losses, securities, funding sources,
and equity capital. Capital data are also collected on a projected quarterly basis and include
components of regulatory capital, including the projections of risk weighted assets and capital
actions such as common stock dividends and share repurchases.
Scenario Variables Schedule
To conduct the stress tests, an institution may choose to project additional economic and
financial variables beyond the mandatory supervisory scenario variables provided to estimate
losses or revenues for some or all of its portfolios. In such cases, the institution would be
required to complete the Scenario Variables Schedule for each scenario where the institution
chooses to use additional variables. The Scenario Variables Schedule collects information on the
additional scenario variables used over the planning horizon for each supervisory scenario.
Proposed Revisions
On July 2, 2013, the Federal Reserve approved revised risk based and leverage capital
requirements for banking organizations that implement the Basel III regulatory capital reforms
and certain changes required by the Dodd-Frank Act (revised capital framework). 3 The revised
capital framework introduces the new common equity tier 1 capital component and a new
common equity tier 1 risk based capital ratio, changes the definition of regulatory capital items,
and changes the calculation of risk-weighted assets. All banking organizations that are not
subject to the advanced approaches rule must begin to comply with the revised capital
framework beginning on January 1, 2015. 4 Under the Federal Reserve’s rules implementing the
stress tests established by the Dodd-Frank Act, 5 banking organizations would be required to
reflect the new capital rules, including the new common equity tier 1 capital component and
ratio, in their company-run stress test planning horizon as the revised capital framework becomes
applicable. However, on September 30, 2013, the Board provided BHCs and SMBs with total
3

See Regulatory Capital Rules: Regulatory Capital, Implementation of Basel III, Capital Adequacy, Transition
Provisions, Prompt Corrective Action, Standardized Approach for Risk-weighted Assets, Market Discipline and
Disclosure Requirements, Advanced Approaches Risk-Based Capital Rule, and Market Risk Capital Rule (July 2,
2013), available at: http://www.federalreserve.gov/newsevents/press/bcreg/20130702a.htm (Revised capital
framework).
4
A banking organization is subject to the advanced approaches rule if it has consolidated assets greater than or
equal to $250 billion, if it has total consolidated on-balance sheet foreign exposures of at least $10 billion, or if it
elects to apply the advanced approaches rule.
5
See 77 FR 62378 (October 12, 2012) (codified at 12 CFR part, 252 subpart H) (stress test rule).

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consolidated assets of more than $10 but less than $50 billion (other than state member banks
that are subsidiaries of BHCs with total consolidated assets of $50 billion or more) with a oneyear transition period to incorporate the revised capital framework into their company-run stress
tests. 6 Therefore, the FR Y-16 did not include the effects of the revised capital framework for
the initial 2014 stress test cycle.
The Federal Reserve proposes to revise the FR Y-16 by adding a common equity tier 1
capital data item to the Balance Sheet Schedule and a common equity tier 1 risk based capital
ratio data item to the Summary Schedule and the Balance Sheet Schedule in order to reflect the
requirements of the revised capital framework. These revisions would be effective for the 2015
stress test cycle (with reporting in March 2015). In addition, the Federal Reserve proposes to
clarify the FR Y-16 instructions to emphasize that companies should transition to the revised
capital framework requirements in its company-run stress test projections in the quarter in which
the requirements become effective. Specifically, companies would be required to transition to
the revised capital framework and begin including the common equity tier 1 capital data item and
common equity tier 1 risk based capital ratio data item in projected quarter two (1st quarter 2015)
through projected quarter nine (4th quarter 2016) for each supervisory scenario for the 2015
stress test cycle.
The Federal Reserve also proposes several clarifications to the FR Y-16 report
instructions, including: indicating that the Scenario Variables Schedule would be collected as a
reporting form in the Reporting Central application (instead of as a file submitted in Adobe
Acrobat PDF format); clarifying that covered SLHCs will begin reporting in March 2017;
clarifying what BHCs and SLHCs should include in line items 32 and 33 (retail and wholesale
funding); and finally clarifying how the supporting qualitative information should be organized.
Respondent Panel
The respondent panel includes any BHC or covered SLHC with average total
consolidated assets of greater than $10 billion but less than $50 billion, and any affiliated or
unaffiliated SMB with average total consolidated assets of more than $10 billion but less than
$50 billion excluding SMB subsidiaries of covered companies. Average total consolidated assets
is based on the average of the total consolidated assets as reported on a BHC’s four most recent
FR Y-9C filings or a SMB’s four most recent Call Reports. An institution must report for the
stress test cycle that commences in the calendar year after the year in which the company meets
the asset threshold.
The FR Y-16 report does not apply to foreign banking organizations. However, the
report does apply to U.S. domiciled BHC subsidiaries or SMB subsidiaries of a foreign banking
organization that meet the asset threshold. 7

6

See 78 FR 59791 (September 30, 2013)
U.S. domiciled BHC subsidiaries of foreign banking organizations that meet the asset threshold that are currently
relying on SR Letter 01-01 are not required to report until the stress test cycle that commences on October 1, 2015.

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Time Schedule for Information Collection and Publication
Respondents are required to submit data annually, no later than March 31st each year
based on financial data as of September 30th of the prior year.
Legal Status
The Board’s Legal Division has determined that this information collection is authorized
pursuant to Section 165(i)(2) of the Dodd-Frank Act that specifically authorizes the Board to
issue regulations implementing the annual stress testing requirements for its supervised
institutions. 12 U.S.C. § 5365(i)(2)(C). More generally, with respect to bank holding
companies, Section 5(c) of the Bank Holding Company Act, 12 U.S.C. § 1844(c), authorizes the
Board to require a bank holding company and any subsidiary “to keep the Board informed as to –
(i) its financial condition, [and] systems for monitoring and controlling financial and operating
risks … .” Section 9(6) of the Federal Reserve Act, 12 U.S.C. § 324, requires state member
banks to make reports of condition to their supervising Reserve Bank in such form and
containing such information as the Board may require. Finally, with respect to savings and loan
holding companies, under Section 312 of the Dodd-Frank Act, 12 U.S.C. § 5412, the Board
succeeded to all powers and authorities of the OTS and its Director, including the authority to
require SLHCs to “file … such reports as may be required … in such form and for such periods
as the [agency] may prescribe.” 12 U.S.C. § 1467a(b)(2).
Obligation to Respond is Mandatory: Section 165(i)(2)(A) provides that “financial
companies that have total consolidated assets [meeting the asset thresholds] … and are regulated
by a primary Federal financial regulatory agency shall conduct annual stress tests.” Section
165(i)(2)(B) provides that a company required to conduct annual stress tests “shall submit a
report to the Board of Governors and to its primary financial regulatory agency at such time, in
such form, and containing such information as the primary financial regulatory agency shall
require.” 12 U.S.C. § 5365(i)(2)(B).
Confidentiality: As noted under Section 165(i)(2)(C)(iv), companies conducting annual
stress tests under these provisions are “require[d] … to publish a summary of the results of the
required stress tests.” 12 U.S.C. § 5365(i)(2)(C)(iv). Regarding the information collected by the
Board, however, as such information will be collected as part of the Board’s supervisory process,
it may be accorded confidential treatment under Exemption 8 of the Freedom of Information Act
(FOIA), 5 U.S.C. § 552(b)(8). This information also is the type of confidential commercial and
financial information that may be withheld under Exemption 4 of FOIA, 5 U.S.C. § 552(b)(4).
As required information, it may be withheld under Exemption 4 only if public disclosure could
result in substantial competitive harm to the submitting institution, under National Parks &
Conservation Ass’n v. Morton, 498 F.2d 765 (D.C. Cir. 1974).
Consultation Outside the Agency
The Federal Reserve has consulted with the OCC and the FDIC, in an effort to coordinate
the stress testing reporting requirements for BHCs and their depository institution subsidiaries.
The agencies’ close collaboration in developing an identical regulatory report has facilitated the

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use of a uniform electronic collection process for all companies (the Federal Reserve’s Reporting
Central application). 8 Reporting Central is a central point of entry for the Federal Reserve,
FFIEC, and Treasury Department for certain electronic reports submission and file uploads, and
is a system many institutions already use for other regulatory reports. Per each agency’s final
rules, each primary federal regulator will have access to their respective institutions’
submissions.
On July 15, 2014, the Federal Reserve published a notice in the Federal Register
(79 FR 41276) requesting public comment for 60 days on the proposed revisions to the FR Y-16.
The comment period for this notice expired on September 15, 2014. The Federal Reserve
received one comment letter on the proposed revisions to the FR Y-16 from a modeling service
provider. The commenter questioned the introduction of the new regulatory capital, riskweighted asset, and regulatory capital ratio calculations in the FR Y-16 for the March 2015
report; asserting that $10-50 billion companies will lack relevant data for the proposed new
capital items and definitions in advance of when these items are required to be reported in the
Consolidated Report of Condition and Income (Call Report: OMB No. 7100-0036) and the
Consolidated Financial Statements for Holding Companies (FR Y-9C: OMB No. 7100-0128),
which will lead to inaccurate and misleading company projections. Details addressing the
comment are included in the final Federal Register notice published October 24, 2014
(79 FR 63626).
Estimate of Respondent Burden
The annual burden for the reporting requirements of this information collection is
estimated to be 464 hours per respondent, for a total of 31,088 hours annually. The estimated
total annual burden per respondent consists of 444 hours of work related to modeling efforts and
20 hours of data input. With the proposed introduction of two new capital components, it is
estimated there will be a slight increase in average hours per response to 469 hours per
respondent, for a total of 31,423 hours annually. The Federal Reserve estimates the automation
burden for each new respondent would vary, but on average, it is estimated to take
approximately 3,600 hours (one-time implementation) per respondent to prepare their systems
for submitting the data. The Federal Reserve estimates on average two new respondents per year
may be required to implement and file this report for a total of 7,200 hours annually. The annual
burden for the FR Y-16 represents approximately 2 percent of total Federal Reserve System
paperwork burden.

8

All companies reported electronically through Reporting Central in 2014.

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FR Y-16
Current
BHCs
SLHCs
SMBs
One-Time Implementation
Total

Number
of
respondents 9

Annual
frequency

Estimated
average
hours
per response

46
11
10
2

1
1
1
1

464
464
464
3,600

Estimated
annual
burden hours
21,344
5,104
4,640
7,200
38,288

Proposed
BHCs
46
1
469
21,574
SLHCs
11
1
469
5,159
SMBs
10
1
469
4,690
One-Time Implementation
2
1
3,600
7,200
Total
38,623
Change
335
With the proposed revisions, the total annual cost to the public is estimated to change from
$1,948,859 to $1,965,911. 10
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The cost to the Federal Reserve System for collecting and processing the FR Y-16 is
estimated to be $324,590.

9

Of these respondents, none are small entities as defined by the Small Business Administration (i.e., entities with
less than $550 million in total assets) www.sba.gov/content/table-small-business-size-standards.
10
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $18, 45% Financial Managers at
$61, 15% Lawyers at $63, and 10% Chief Executives at $86). Hourly rate for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
2013, 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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