FRy3y3ny4_201412_omb

Supporting Statement for
Bank Holding Company Applications and Notifications
(FR Y-3, FR Y-3N, and FR Y-4; OMB No. 7100-0121)
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 Bank Holding Company Application and Notification Forms (OMB No. 71000121):
• the Application for Prior Approval to Become a Bank Holding Company or for a Bank
Holding Company to Acquire an Additional Bank or Bank Holding Company (FR Y-3),
• the Notification for Prior Approval to Become a Bank Holding Company or for a Bank
Holding Company to Acquire an Additional Bank or Bank Holding Company (FR Y-3N) and
• the Notification for Prior Approval to Engage Directly or Indirectly in Certain Nonbanking
Activities (FR Y-4).
The Federal Reserve requires the submission of these filings for regulatory and
supervisory purposes and to allow the Federal Reserve to fulfill its statutory obligations under
the Bank Holding Company Act of 1956 (the BHC Act). These filings collect information on
proposals by BHCs involving formations, acquisitions, mergers, and nonbanking activities. The
Federal Reserve must obtain this information to evaluate each individual transaction with respect
to financial and managerial factors, permissibility, competitive effects, net public benefits, and
the impact on the convenience and needs of affected communities. The current combined annual
burden for the application and notifications is estimated to be 11,924 hours.
Background and Justification
The FR Y-3 was created in July 1994 as a replacement for the Application for Prior
Approval to Become a Bank Holding Company (FR Y-1; OMB No. 7100-0119) and the
Application for Prior Approval for a Bank Holding Company to Acquire an Additional Bank or
Bank Holding Company (FR Y-2; OMB No. 7100-0171). The FR Y-1 and FR Y-2 applications
had been in existence since the implementation of the BHC Act.
The FR Y-3N was created in April 1999 to accommodate certain changes to
Regulation Y (approved by the Board on February 19, 1997) that established streamlined review
processes for certain applications and notifications. These revisions reduced the burden and
delay associated with the review process for proposals filed under section 3 of the BHC Act by
well-run BHCs (those institutions that meet objective and verifiable measures for each of the
criteria set forth in the BHC Act and Regulation Y). These procedures (which became effective
April 21, 1997) reduced the amount of information required to be provided by a filer and
permitted the Federal Reserve System to take expedited action on proposals meeting the
qualifying criteria set forth in the regulation.
The FR Y-4 was created in June 1971 as a result of amendments to the BHC Act in 1970
permitting BHCs to engage in certain nonbanking activities. The notification form was
significantly revised in April 1999 to accommodate other 1997 revisions to Regulation Y that
established streamlined procedures for certain nonbanking proposals. These new procedures

were intended to reduce significantly the regulatory burden associated with the review process
for proposals filed under section 4 of the BHC Act by well-run BHCs.
In 1999, minor additions and substitutions to the FR Y-3 and the FR Y-3N and deletions
to the FR Y-4 were necessary after passage of the Gramm-Leach-Bliley Act (the GLB Act). The
revisions reflected that a filing organization could seek to become, or already had become, a
financial holding company (FHC), as well as other related modifications. The 2004 and 2007
reviews of these application and notifications continued to focus on modifications that clarify the
information needed for specific types of proposals, as more detailed initial filings (that fully
explain the particular type of proposal) have proven to be the best means for reducing the time
and burden associated with the review of these applications.
The Federal Reserve has the sole authority to act on the transactions contemplated under
the application and notification forms. The information requested for each type of filing is
necessary for the Board to fulfill its responsibilities under the BHC Act. The completed filings
are the primary source of comprehensive data on the structure of the proposal, the pro forma
financial condition of the filer and of its subsidiary(ies), the competitive position of the filer and
entities being acquired, the effect that the proposal would have on the public interest, and the
nonbanking activities in which the filer proposes to engage. This information is not available
from any other source, and the information is critical to the Federal Reserve being able to
determine whether a proposed transaction is financially sound, competitively acceptable, and
consistent with the public interest.
Description of Information Collection
The FR Y-3, FR Y-3N, and FR Y-4 are event generated. The application and notification
forms collect information concerning proposed BHC formations, acquisitions, mergers, and
proposed nonbanking activities. The acquisitions may involve bank, nonbank, and BHC targets.
Generally these applications and notifications are submitted to the appropriate Federal Reserve
Bank by existing or proposed BHCs. A Reserve Bank participates in the review of every
application and notification filed by a BHC for which it is responsible. Certain proposals are
approved by a Reserve Bank under delegated authority, while certain other proposals are
forwarded to the Board or the Secretary of the Board for action. 1
The financial information required for bank and BHC acquisitions is generally
collected at both the holding company and bank level. The competitive data for such banking
proposals generally involve only the affected local banking markets, with collection normally at
the branch level and occasionally at the bank level. Financial information for nonbank
applications is collected on the BHC and the particular company(ies) involved in the transaction.
Nonbank competitive information is collected on a local, regional, or national basis, depending
on the product or activity involved.
FR Y-3

1

In an emergency situation (such as to avert the failure of a bank or savings association), the Director of the
Division of Banking Supervision and Regulation may take the actions permitted of a Reserve Bank.
2

•
•

The FR Y-3 application form is completed by an:
organization seeking prior approval to become a BHC through the acquisition of one or more
banks; and
existing BHC seeking prior approval to (i) acquire 5 percent or more of the shares of an
additional bank, (ii) acquire additional shares of any bank in which a BHC already has an
ownership position of 5 percent or more, but less than 50 percent, 2 (iii) merge or consolidate
with another BHC, or (iv) otherwise acquire all or a portion of the assets of a bank.

These applications are reviewed under the procedures described in section 225.15 of
Regulation Y and are filed in the event the institution does not meet the requirements for filing
the FR Y-3N (discussed below). Each of the applications requires information on the proposed
transaction, information on competition, convenience and needs, and financial and managerial
information. The FR Y-3 instructions describe the publication requirements for each application.
FR Y-3N
•
•

The FR Y-3N notification form is completed:
for certain BHC formations, using the abbreviated notice procedures described in section
225.17 of Regulation Y; and
to acquire shares, assets, or control of a bank, or a merger or consolidation between BHCs
using the streamlined procedures described in section 225.14 of Regulation Y.

Formation notifications filed under section 225.17 of Regulation Y must be provided in
writing and contain a certification that the requirements of 12 U.S.C. 1842(a)(C) and section
225.17(a) of Regulation Y are met. The notification also must contain shareholder information
prior to and following the reorganization, management information, and financial information.
Acquisition and merger notifications filed under section 225.14 of Regulation Y must be
provided in writing and contain a certification that all of the criteria listed in section 225.14(c)
are satisfied. Among other criteria, only well-capitalized and well-managed organizations may
use the expedited procedure. Each notification also must contain a description of the transaction,
the effect on the convenience and needs of the communities to be served, evidence of publication
of the proposed transaction, financial information based on the size of the BHC, managerial and
capital information that is dependent on the type of proposal, and competitive information. 3
Although the FR Y-3N requests the same type of information as the FR Y-3, significantly
less detail is generally required. The FR Y-3N instructions describe the publication requirements

2

Under the BHC Act, a subsidiary is defined as any bank or nonbank company in which a BHC directly or
indirectly owns or controls 25 percent or more of any class of the outstanding voting shares or which is otherwise
controlled by the BHC. Once a BHC owns 50 percent of a bank, the BHC Act provides that generally no further
regulatory approval is required to acquire additional shares of the bank.
3

In some cases, an acquisition or merger proposal may result in a person or group of persons acquiring control of a
BHC for purposes of the Change in Bank Control Act (CIBC Act). The requirements of the CIBC Act may be
fulfilled if the notification filed under section 225.14 of Regulation Y contains certain information required under
the CIBC Act and under section 225.43 of Regulation Y.
3

for notifications filed under section 225.14 of Regulation Y. Notifications filed under section
225.17 do not require public notice.
FR Y-4
•
•

The FR Y-4 notification form is completed by a BHC in order to:
acquire the assets or shares of a nonbank company (including a nonbank insured depository
institution) and engage in nonbanking activities under section 4(c)(8) of the BHC Act; and
engage de novo in nonbank activities under section 4(c)(8) of the BHC Act.

These notifications generally require information on the proposed transaction,
information on competition and public benefits, and financial and managerial information. For
notifications to engage de novo in nonbanking activities permissible under Regulation Y, only
the name and location of the applicant, the name and location of the company that will perform
the activity, the activity to be conducted, and the geographic area to be served must be submitted.
The instructions to the FR Y-4 provide substantial information about two expedited
procedures for certain nonbanking proposals, one of which does not require use of the
notification form. Both streamlined procedures were implemented in 1995 as replacements for
other expedited procedures implemented in 1984, and both improve the ability of qualifying
BHCs to respond quickly to market events. The first expedited procedure allows well-run BHCs
to file post-consummation notices for proposals to engage de novo in nonbanking activities that
have been permitted by regulation. 4 The second allows well-run BHCs (that also meet certain
additional criteria in section 225.23(c) of Regulation Y) to seek prior Federal Reserve approval
on a substantially shorter timeframe than usually occurs in the notification review process. 5 To
use the second procedure, a BHC must file, at the appropriate Reserve Bank and at least 12
business days before effecting the proposed transaction, the FR Y-4 that contains the information
required in section 225.23(a) of Regulation Y. During the 12-day review period, the Reserve
Bank or the Board may indicate that a non-expedited notification is required under section
225.24 of Regulation Y.
Proposals that do not qualify for the two streamlined procedures are subject to the nonexpedited procedures outlined in section 225.24 of Regulation Y. The information requirements
for such a notification depend on the type of transaction and are contained in sections 225.24
(a)(1) and (2) of Regulation Y. To engage de novo in permissible nonbanking activities listed in
section 225.28 of Regulation Y (listed activities), the BHC must file a notification containing a
description of the activities to be conducted, with appropriate authorizations cited, and the
identity of the company that will conduct the activity. To engage de novo in nonbanking
activities not listed in section 225.28 of Regulation Y but previously approved by the Board
4
As indicated above, the notifying BHC does not use the FR Y-4 form to satisfy this requirement. Instead, within
10 business days after commencing the activity, the BHC submits in writing to its appropriate Reserve Bank the
information and certifications specified in section 225.22(a)(3) of Regulation Y.
5
The nonbanking proposals that may qualify for this expedited procedure involve a filing (i) to engage de novo in
any nonbanking activity that the Board has permitted by order or regulation, or (ii) to acquire voting shares or assets
of a going concern engaged in any nonbanking activity that the Board has permitted by order or regulation (except
operating a nonbank insured depository institution). This procedure is generally shorter than other non-expedited
procedures because it has no publication requirement.

4

(unlisted activities), or to acquire a company engaged in listed or unlisted activities, the
notification must include a description of the proposal, the identity of any entity involved in the
proposal, a statement of public benefits, certain financial information, a description of
management expertise, internal controls, and risk-management systems to be utilized, and a copy
of any purchase agreement(s). The FR Y-4 instructions describe the publication requirements for
each relevant transaction.
Time Schedule for Information Collection
The application and notifications submitted with these forms are event generated and the
data are not part of any published reporting series. All timeframes are generally dependent upon
when the filer chooses to enter into a transaction that requires an individual submission. The
filing may be processed under various schedules. Final action may ultimately be taken by the
appropriate Reserve Bank under delegated authority, by the Secretary of the Board under
delegated authority, or by the Board directly.
The Board follows the retention requirements for reports set forth by an agreement with
the National Archives and Records Administration on March 28, 2001. Accordingly, Reserve
Bank staff should not destroy these applications and notifications.
FR Y-3
The FR Y-3 applications filed under section 225.15 of Regulation Y must satisfy
established criteria to be processed under delegated authority. If the delegation criteria are
satisfied, the Reserve Bank or the Secretary of the Board, as appropriate, will act on the
application within five business days after the close of the public comment period (which
generally is about thirty days after receipt of a final filing). If it is determined that an application
does not meet the criteria for processing under delegated authority, the application will be
forwarded to the Board for action. These applications will be acted on within sixty calendar days
of receipt, unless the Board notifies the applicant that the processing period is being extended
and discloses the reasons for the extension.

5

FR Y-3N
Proposals to form a BHC that would control a single bank and that satisfy all the criteria
in section 225.17 of Regulation Y may be consummated within thirty calendar days after the
BHC has provided the appropriate Reserve Bank with a notification that contains all the required
information.
Proposals by existing BHCs to acquire additional banks or BHCs and that meet all the
criteria in section 225.14 of Regulation Y must be acted on by the Reserve Bank or the Secretary
of the Board (as appropriate) under delegated authority within five business days after the close
of the public comment period.
FR Y-4
Nonbanking proposals by well-run BHCs that meet all of the criteria in section 225.23(c)
of Regulation Y must be acted upon by the Reserve Bank, the Secretary of the Board, or the
Board (as appropriate) within twelve business days of a substantially complete filing being
submitted at the appropriate Reserve Bank. 6
Non-expedited notifications filed under section 225.24 of Regulation Y must satisfy
established criteria to be processed under delegated authority. If the delegation criteria are
satisfied, the Reserve Bank or the Secretary of the Board, as appropriate, will act on the
notification within five business days after the close of the public comment period (which is
generally about thirty days after receipt of the filing). If it is determined that the notification
does not meet the criteria for processing under delegated authority, the application will be
transferred to the Board for action generally within sixty calendar days of receipt. Under the
BHC Act, the Federal Reserve System must act on nonbanking proposals within sixty days of
receipt of a “complete notice,” which generally is a date sometime after the initial date of receipt.
In the case of all nonbank proposals, the Board may extend the statutory sixty-day processing
period for an additional thirty calendar days, if necessary, and for proposals involving unlisted
activities, may extend the thirty-day processing period for an additional ninety calendar days.
For nonbanking proposals initiated under the post-consummation procedures of section
225.22(a)(3) of Regulation Y, a well-run BHC must notify the appropriate Reserve Bank within
ten business days after commencing the activity.
Legal Status
The Board's Legal Division has determined that the FR Y-3 application and FR Y-3N
notification are mandatory pursuant to sections 3(a) and 5(b) of the BHC Act, as amended (12
U.S.C. §§ 1842(a), 1844(b)). The FR Y-4 notification is mandatory pursuant to section 4(j) of
the BHC Act, as amended (12 U.S.C. § 1843(j)).

6

The Board generally acts only on those 12-day notifications that involve certain unlisted activities for which no
delegated authority exists.
6

The information submitted in the FR Y-3, FR Y-3N, and FR Y-4 is considered to be public
unless an institution requests confidential treatment for portions of the particular application or
notification. Applicants may rely on any Freedom of Information Act (FOIA) exemption, but
such requests for confidentiality must contain detailed justifications corresponding to the claimed
FOIA exemption. Requests for confidentiality must be evaluated on a case-by-case basis.
Consultation Outside the Agency
On September 24, 2014, the Federal Reserve published a notice in the Federal Register
(79 FR 57101) requesting public comment for 60 days on the extension, without revision, of the
FR Y-3, FR Y-3N, and FR Y-4. The comment period for this notice expired on November
24, 2014. The Federal Reserve did not receive any comments. On December 15, 2014, the
Federal Reserve published a final notice in the Federal Register (79 FR 74088).
Sensitive Questions
These collections of information contain no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Respondent Burden
The annual burden for the FR Y-3, FR Y-3N, and FR Y-4 is estimated to be 11,924 hours
as shown in the following table. The current burden estimates are based on the number of
applications and notifications, including post-consummation notices, received in 2012 and 2013.
The reporting requirement of these applications and notifications represents less than 1 percent
of total Federal Reserve System paperwork burden.

FR Y-3
Section 3(a)(1)
Section 3(a)(3) and 3(a)(5)
FR Y-3N
Section 3(a)(1), 3(a)(3), and
3(a)(5)
FR Y-4
Complete notification
Expedited notification
Post-consummation

Number
of
respondents

Estimated
annual
frequency

Estimated
average
hours per
response

Estimated
annual
burden hours

100
107

1
1

49.0
59.5

4,900
6,367

10

1

5.0

50

45
13
4

1
1
1

12.0
5.0
.5

Total

540
65
2
11,924

The total annual cost to the public for these reports is estimated to be $606,932. 7
7

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
7

Estimate of Cost to the Federal Reserve System
The information submitted in the application and notifications is not automated. The
Federal Reserve System's costs for printing and mailing the application and notifications are
minimal.

$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/
8