FRY16_20160317_omb

Supporting Statement for the
Annual Company-Run Stress Test Report for State Member Banks, Bank Holding
Companies, and Savings and Loan Holding Companies with Total Consolidated Assets
Greater Than $10 Billion and Less Than $50 Billion (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 revise and extend for
three years the mandatory Annual Company-Run Stress Test Report for State Member Banks
(SMBs), Bank Holding Companies (BHCs), and Savings and Loan Holding Companies (SLHCs)
with Total Consolidated Assets Greater Than $10 Billion and Less Than $50 Billion (FR Y-16,
OMB No. 7100-0356). The annual FR Y-16 report collects quantitative projections of revenues,
losses, assets, liabilities, and capital across three scenarios provided by the Board (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 BHC or
SLHC1 with average total consolidated assets of greater than $10 billion but less than $50 billion,
and any affiliated or unaffiliated 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 revisions to the FR Y-16 would be effective for the 2016 stress test cycle and would
(1) change the report as-of date from September 30 to December 31, (2) change the reporting
submission or due date from March to July, and (3) modify the reporting instructions to make
corresponding changes to the dates, reflect technical changes related to final implementation of
BASEL III requirements, and to clarify certain instructions in coordination with the other federal
regulatory agencies. None of the changes impose additional information collection
requirements.
The total current annual paperwork burden for the FR Y-16 is estimated to be 39,561
hours. The proposed revisions would not change the current paperwork burden estimate.
Background and Justification
On October 27, 2014, the Board published a final rule (Regulation YY) in the Federal
Register (79 FR 64026) revising its $10-50 billion company stress test requirements to shift the
start of the stress test cycle by one calendar quarter and the related deadline for submission of
results by four months. Beginning with the 2016 stress test cycle, the annual company-run
Dodd-Frank Act stress tests will cover a nine-quarter planning horizon beginning on the first day
of a stress test cycle (on January 1) and will use position information as of December 31 of the
preceding calendar year, while the report submission date for institutions will be the close of
1

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) annual company-run stress
testing requirements do not apply to SLHCs until 2017, and will only apply to an SLHC that is subject to minimum
regulatory capital requirements. See 12 C.F.R. 252.13(b)(2)(iii).
2
“Covered company” is defined in 12 C.F.R. 252(g) as a BHC (other than a foreign banking organization (FBO))
with average total consolidated assets of $50 billion or more; a U.S. intermediate holding company (IHC) subject to
12 C.F.R. 252.153, and a nonbank financial company supervised by the Board.

business July 31 of each calendar year. The revisions to the FR Y-16 incorporate these revised
dates into the reporting form and instructions.
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 in the FR Y-16 report provides Reserve Bank examiners with an important tool 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 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 its 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. 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.
7100-0128), Schedule HI – Consolidated Income Statement, and the Consolidated Report of
Condition and Income (FFIEC 031 and FFIEC 041; OMB No. 7100-0036) (Call Report),
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,
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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 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 scenarios 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
As a result of the Regulation YY 2014 final rule, beginning with the 2016 stress test
cycle, the annual company-run Dodd-Frank stress tests will cover a nine-quarter planning
horizon beginning on the first day of a stress test cycle (on January 1) and will use position
information as of December 31 of the preceding calendar year, while the report submission date
for institutions will be the close of business July 31 of each calendar year. The revisions to the
FR Y-16 incorporate these revised dates into the reporting form and instructions.
The revisions to the FR Y-16 would be effective for the 2016 stress test cycle and would
(1) change the report as-of date from September 30 to December 31, (2) change the reporting
submission or due date from March to July, and (3) modify the reporting instructions to make
corresponding changes to the dates and to reflect changes related to final implementation of
BASEL III requirements.
Respondent Panel
The respondent panel includes any BHC or 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 are 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. A BHC or SMB that exceeds the asset threshold for
the first time on or before March 31 of a given year must comply with the company-run stress
test requirements beginning on January 1 of the following year, unless that time is extended by
the Board in writing. Similarly, a BHC or SMB that exceeds the asset threshold for the first time
after March 31 of a given year must comply with the company-run stress test requirements

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beginning on January 1 of the second year following that given year, unless that time is extended
by the Board in writing. The FR Y-16 report does not apply to FBOs. However, the report does
apply to U.S. domiciled BHC subsidiaries or SMB subsidiaries of an FBO that meet the asset
threshold.3
Time Schedule for Information Collection
Respondents would be required to submit data annually, no later than July 31 each year
based on financial data as of December 31 of the prior year.
Legal Status
The Board’s Legal Division has determined that this information collection is authorized
pursuant section 165(i)(2) of the Dodd-Frank Act, which 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 BHCs, section 5(c) of
the Bank Holding Company Act (12 U.S.C. § 1844(c)) authorizes the Board to require a BHC
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 SMBs 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 SLHCs, under section 312 of the Dodd-Frank Act (12 U.S.C. § 5412), the Board
succeeded to all powers and authorities of the Office of Thrift Supervision, U.S. Department of
the Treasury, 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)).
The 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)).
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

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U.S. domiciled BHC subsidiaries of FBOs that meet the asset threshold and are currently relying on SR Letter 0101 are not required to report until the stress-test cycle that commences on January 1, 2016.

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result in substantial competitive harm to the submitting institution, under National Parks &
Conservation Association v. Morton, 498 F.2d 765 (D.C. Cir. 1974).
Consultation Outside the Agency
Board staff has consulted with the Office of the Comptroller of the Currency, U.S.
Department of the Treasury, and with the Federal Deposit Insurance Corporation 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 use of a uniform electronic collection process for all companies (the Federal
Reserve’s Reporting Central application). Reporting Central is a central point of entry for the
Federal Reserve, FFIEC, and U.S. Department of the Treasury for certain electronic reports
submission and file uploads, and is a system many institutions already use for other regulatory
reports. Each primary federal regulator has access to its respective institutions’ submissions.
On July 8, 2015, the Federal Reserve published a notice in the Federal Register
(80 FR 39117) requesting public comment for 60 days on the extension, with revision, of the
FR Y-16. The comment period for this notice expired on September 8, 2015. The Federal
Reserve did not receive any comments. On January 13, 2016, the Federal Reserve published a
final notice in the Federal Register (81 FR 1630).
Estimate of Respondent Burden
The annual burden for the reporting requirements of this information collection is
estimated to be 469 hours per respondent, for a total of 32,361 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 less than 1 percent of the total
Federal Reserve System paperwork burden.
Number of
respondents4

FR Y-16
BHCs

52

SLHCs

7

SMBs
One-Time Implementation

10
2

Estimated
Estimated
Annual
average hours annual burden
frequency
per response
hours
1
469
24,388
1
469
3,283
1
1

Total

4

469
3,600

4,690
7,200
39,561

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.

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The total annual cost to the public is estimated to be $2,047,282.5
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.

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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 at $17, 45% Financial Managers at
$63, 15% Lawyers at $64, and 10% Chief Executives at $87). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2014, published March 25, 2015, 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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