FR4014_20160629_omb

Supporting Statement for the
Investment in Bank Premises Notification
(FR 4014; OMB No. 7100-0139)
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,
without revision, the Investment in Bank Premises Notification (FR 4014; OMB No. 71000139). The Federal Reserve Act (FRA) requires a state member bank to seek prior Board
approval before making an investment in bank premises that exceeds certain thresholds. There is
no formal reporting form (the FR 4014 designation is for internal purposes only) and each
request for prior approval must be filed with the Reserve Bank that has direct supervisory
responsibility for the state member bank. The Board uses the information provided in the notice
to fulfill its statutory obligation to supervise state member banks. The current annual burden for
the FR 4014 is estimated to be five hours.
Background and Justification
Under section 24A of the FRA and section 208.21 of the Membership of State Banking
Institutions in the Federal Reserve System (Regulation H), a state member bank is required under
certain circumstances to obtain prior Board approval of its investment in bank premises.1 A state
member bank that is not well capitalized, or would not be so on a pro forma basis, or does not
have a composite CAMELS rating of 1 or 2 under the Uniform Financial Institutions Rating
System must request prior approval when the bank’s pro forma aggregate of all such
investments, together with any indebtedness of affiliates that is related to bank premises
(aggregate investment level), would exceed 100 percent of the bank’s capital stock and surplus,
as defined in section 208.21(a)(2) and (3) of Regulation H. A state member bank that is well
capitalized, would remain so on a pro forma basis, and has a composite CAMELS ratings of 1 or
2 must request prior approval when its aggregate investment level would exceed 150 percent of
the bank’s capital stock and surplus. The Federal Reserve System uses the information in the
notification to determine if the proposal is financially sound and consistent with the public
interest.
Description of the Information Collection
There is no required format for a notification of a proposed investment in bank premises.
If a state member bank is not exempted from seeking prior approval (under the criteria described
above), the state member bank must send a letter to the appropriate Reserve Bank that contains
information such as the purpose, amount, and funding source of the proposed investment; a
general description of the overall bank premises project; and current and pro forma financial
statements.

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The Board has determined that state member banks may make investments in offsite facilities without regard to
the investment limitation as these investments are nominal and do not include real estate.

Upon receipt of a notification, Reserve Bank staff review the bank’s general financial
condition using examination reports and recent financial data. The percentage of capital and
surplus (as defined in Regulation H) that would be represented by the bank’s total investment in
bank premises is also calculated. The Reserve Bank may approve the notification in writing
under delegated authority if the Reserve Bank is satisfied that approval is warranted. In
instances where significant issues are raised, a Reserve Bank would forward the notification to
the Board for appropriate action. The Board or the Director of the Board’s Division of Banking
Supervision and Regulation would then take action. The Board may deny an investment in bank
premises notification if the bank’s financial condition is unsatisfactory or if the resultant
investment in bank premises would adversely affect the bank’s condition or otherwise represent
an inappropriate level of risk.
Time Schedule for Information Collection
This information collection is event-generated. The notification must be filed prior to a
state member bank making an investment in bank premises that results in its total bank premises
investment exceeding 100 percent of its capital and surplus as defined in Regulation H, or
exceeding 150 percent of its capital and surplus if the bank has a satisfactory CAMELS rating, is
well capitalized, and would continue to be well capitalized on a pro forma basis (section
208.21(a)(3)(i) and (ii) of Regulation H). The Federal Reserve usually completes the processing
of a notification within 15 days of its receipt. If the bank is notified by the end of the 15-day
notice period that further review is necessary, processing would normally be completed within
30 days of receipt of the notice.
Legal Status
The Board’s Legal Division has determined that section 24A(a) of the FRA requires that
state member banks obtain prior Board approval before investing in bank premises that exceed
certain statutory thresholds (12 U.S.C. § 371d(a)). The FR 4014 is required to obtain a benefit
because banks wanting to make an investment in bank premises that exceed a certain threshold
are required to notify the Federal Reserve. The information collected is not considered
confidential. However, individual respondents may request that the data be kept confidential on
a case-by-case basis. If a respondent requests confidential treatment, the Board will determine
whether the information is entitled to confidential treatment on an ad hoc basis in connection
with such request.
Consultation Outside the Agency
On April 7, 2016, the Board published a notice in the Federal Register (81 FR 20384)
requesting public comment for 60 days on the extension, without revision, of the FR 4014. The
comment period for this notice expired on June 6, 2016. The Board did not receive any
comments. On June 29, 2016, the Board published a final notice in the Federal Register
(81 FR 42357).

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Estimate of Respondent Burden
The annual reporting burden for the FR 4014 is estimated to be five hours, based on an
estimated average response time of 30 minutes. Because this information collection is event
generated, it is not possible to predict exactly how many notices would be filed in a particular
year. The average annual number of notices received in the last two years is eight. These
reporting requirements represent less than 1 percent of total Federal Reserve System paperwork
burden.

FR 4014
Investment in bank premises
notification

Estimated
Estimated
Annual
Number of
annual burden
respondents2 frequency average hours
per response
hours
9

1

0.5

5

The total annual cost to the public for this information collection is estimated to be $266.3
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimated Cost to the Federal Reserve System
Annual costs associated with providing the instructions for this notice are negligible.
There are no mailing or printing costs incurred by the Federal Reserve in administering this
notice.

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Of the respondents, seven are small entities as defined by the Small Business Administration (i.e., entities with
less than $550 million in total assets) www.sba.gov/contracting/getting-started-contractor/make-sure-you-meet-sbasize-standards/table-small-business-size-standards.
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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 rates (30% Office & Administrative Support at $17, 45% Financial Managers at
$65, 15% Lawyers at $66, and 10% Chief Executives at $89). 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 2015, published March 30, 2016 www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined using
the BLS Occupational Classification System, www.bls.gov/soc/.

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