FRH6_20201228_omb

Supporting Statement for the
Notifications Related to Community Development and Public Welfare Investments by
State Member Banks Pursuant to Section 208.22 of Regulation H
(FR H-6; OMB No. 7100-0278)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has extend for three years, with
revision, the Notifications Related to Community Development and Public Welfare Investments
by State Member Banks Pursuant to Section 208.22 of Regulation H (FR H-6; OMB No.
7100-0278). Regulation H - Membership of State Banking Institutions in the Federal Reserve
System (12 CFR Part 208) requires state member banks (SMBs) planning to make community
development or public welfare investments to comply with the following Regulation H
notification requirements:
 If the investment does not require prior Board approval per 12 CFR 208.22(b), a written
notice must be sent to the appropriate Federal Reserve Bank in accordance with 12 CFR
208.22(c).
 If the investment does require prior Board approval per 12 CFR 208.22(d), a request for
approval must be sent to the appropriate Federal Reserve Bank in accordance with 12
CFR 208.22(d).
The Board revised the FR H-6 by removing the notification requirement to submit the
request for extension of the divestiture period when the bank cannot divest within the established
time limit. This requirement has been listed on the form and in the supporting statement for a
number of years, but is not contained in the regulations.
The current estimated total annual burden for the FR H-6 is 639 hours, and would
decrease to 634 hours. The revisions would result in a decrease of 5 hours. No form is required
for these notification requirements, although the Board supplies a model form that banks may
use to notify the appropriate Federal Reserve Bank of investments that do not require prior
approval per 12 CFR 208.22(b). The model form is available on the Board’s public website at
https://www.federalreserve.gov/apps/reportforms/default.aspx.
Background and Justification
On December 7, 1994, the Board added to Regulation H a new section entitled
Community Development and Public Welfare Investments to implement a provision of the
Depository Institutions Disaster Relief Act of 1992. The statutory provision authorizes SMBs to
make investments designed primarily to promote the public welfare to the extent permissible
under state law and subject to regulation by the Board. Regulation H permits SMBs to make
certain public welfare investments without prior approval and to make other public welfare
investments with specific Board approval.

An SMB may make a public welfare investment without prior approval so long as the
aggregate of such investments does not exceed five percent of the capital stock and surplus of the
SMB and:
 the investment (a) previously has been determined to be a public welfare investment by
the Board or the Office of the Comptroller of the Currency (OCC), (b) is in a community
development financial institution (CDFI) as defined in the Community Development
Banking and Financial Institutions Act of 1994, or (c) is in an entity established solely to
engage in one or more of the following activities: developing low- and moderate-income
residential housing, developing nonresidential real estate in a low- or moderate-income
area that is targeted towards low- and moderate-income persons, developing small
business opportunities in a low- or moderate-income area, job training or placement for
low- and moderate-income persons, creating employment opportunities in a low- or
moderate-income area for low- and moderate-income persons, and providing technical
assistance and credit counseling to benefit community development,1
 the investment is permitted by state law,
 the investment is in a corporation, limited partnership, or other entity,
 the investment does not expose the SMB to liability beyond the amount of the
investment,
 the bank is at least adequately capitalized and rated a composite CAMELS 1 or 2 and at
least, 1 or 2 in its last consumer compliance examination, and
 the SMB is not subject to any written agreement, cease and desist order, capital directive,
prompt corrective action directive, or memorandum of understanding issued by the Board
or a Reserve Bank acting under delegated authority.
If these conditions are not met, an SMB must receive Board approval before making an
investment. In no event may aggregate public welfare investments exceed five percent of the
SMB’s capital stock and surplus (12 U.S.C. § 338a).
If a public welfare investment ceases to meet the statutory requirements or certain
regulatory requirements, the SMB must divest itself of the investment to the extent that the
investment ceases to meet those requirements. Divestiture is not required if the investment ceases
to meet the non-statutory requirements concerning capital, examination ratings, and enforcement
actions. This divestiture is governed by the same requirements as divestitures of interests
acquired by a lending subsidiary of a bank holding company or a bank holding company itself in
satisfaction of a debt previously contracted (12 CFR 225.140). The Board will monitor the
efforts of the company to effect an orderly divestiture and may order divestiture if supervisory
concerns warrant such action. Information about the identity and amount of public welfare
investments that Regulation H requires the Board to collect is used for supervisory compliance
and informs the Community Affairs function of the Federal Reserve System. The mission of the
Federal Reserve’s Community Affairs Office (CAO) is to support the Federal Reserve System’s
economic growth objectives by promoting community development and fair and impartial access
to credit. Toward this end, the CAO of each Reserve Bank develops specific projects and

1

Regulation H uses the U.S. Department of Housing and Urban Development’s Chapter 69 Community
Development definition of low- and moderate-income persons and the U.S. Small Business Administration’s
definition of a small business.

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services to meet its regional market’s needs for information relating to community development
activities. This information is not available from other sources.
Description of Information Collection
There are two types of notification requirements in 12 CFR 208.22: (1) the public welfare
investment notice and (2) the request for prior approval. When a public welfare investment is
made without prior approval, the SMB must notify its Federal Reserve Bank within 30 calendar
days of the investment, including the amount of the investment and the identity of the entity in
which the investment is made.
Regulation H requires SMBs engaging in certain public welfare and community
development investments to provide notice of such investments to the Federal Reserve Bank of
which it is a member. The regulation specifies that the notice, which may be submitted on bank
letterhead or on the optional FR H-6 model form, provide the amount of the investment and
identity of the entity in which the investment was made. In addition to this information, banks
typically describe the mission and service area of the entity in which the investment was made
and how the investment meets the definition of public welfare and community development.
Even though this information is not required by Regulation H, Reserve Bank staff contact the
investing bank to obtain such information to evaluate the permissibility of the investment,
imposing additional burden for both Reserve Bank staff and bank management.
In 2002, a model form was adopted that banks may use, at their option, to report the
information required by Regulation H for investments that do not require prior Board approval.
When a public welfare investment requires prior Board approval, the SMB must submit a
request for approval to the appropriate Federal Reserve Bank. The request should include, at a
minimum:
 the amount of the proposed investment,
 a description of the entity in which the investment is to be made,
 an explanation of how the investment meets the statutory definition of a public welfare
investment,
 a description of the SMB’s potential liability under the proposed investment,
 the amount of the SMB’s aggregate outstanding public welfare investments,
 the amount of the SMB’s capital stock and surplus, and
 the reason(s) why the investment is ineligible to be made without prior approval.
Respondent Panel
The FR H-6 panel is comprised of SMBs.
Revisions to the FR H-6
The Board revised the FR H-6 to remove the notification requirement for SMB to file a
request for extension if they fail to accomplish a required divestiture.

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Time Schedule for Information Collection
The two notifications (public welfare investment notice and request for approval) are
event generated. An SMB must file a notice with the appropriate Reserve Bank within 30
calendar days of making an investment that does not require prior approval. For investments
requiring prior approval, the Board must act on the request within 60 calendar days of receipt or
notify the requesting SMB that a longer period of time will be required.
Public Availability of Data
There is no data related to this information collection available to the public.
Legal Status
The FR H-6 is authorized by section 9(23) of the Federal Reserve Act which authorizes
the Board to prescribe regulations with regard to state member banks making investments
primarily devoted to public welfare endeavors (12 U.S.C. § 338a). The Board also has the
authority to require reports from state member banks (12 U.S.C. §§ 248(a) and 324). The
obligation to respond is mandatory.
Individual respondents may request that information submitted to the Board through the
FR H-6 be kept confidential. If a respondent requests confidential treatment, the Board will
determine whether the information is entitled to confidential treatment on a case-by-case basis.
Information collected through the FR H-6 may be kept confidential under exemption 4 of the
Freedom of Information Act (FOIA), which protects privileged or confidential commercial or
financial information (5 U.S.C. § 552(b)(4)). Additionally, to the extent the FR H-6 contains
information used in examination reports, it may be withheld from disclosure under FOIA
exemption 8, which protects information “related to examination, operating, or condition
reports” (5 U.S.C. § 552(b)(8)).
Consultation Outside the Agency
There has been no consultation outside the Federal Reserve System.
Public Comments
On September 17, 2020, the Board published an initial notice in the Federal Register
(85 FR 58052) requesting public comment for 60 days on the extension, with revision, of the
FR H-6. The comment period for this notice expired on November 16, 2020. The Board did not
receive any comments. The Board adopted the extension, with revision, of the FR H-6 as
originally proposed. On December 23, 2020, the Board published a final notice in the Federal
Register (85 FR 83954).

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Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR H-6 is 639
hours, and would decrease to 634 hours with the revisions. The estimated number of respondents
listed is based on the number of notices and requests received by the Federal Reserve in 2019.
These reporting requirements represent less than 1 percent of the Board’s total paperwork
burden.
Estimated
number of
respondents2

FR H-6

Estimated
Estimated
Annual
average hours annual burden
frequency
per response
hours

Current
Public welfare investment notice
Request for prior approval
Extension of divestiture period
Current Total

132
74
1

1
1
1

2
5
5

264
370
5
639

Proposed
Public welfare investment notice
Request for prior approval
Proposed Total

132
74

1
1

2
5

264
370
634

Change

( 5)

The current estimated total annual cost to the public for this information collection is
$36,902, and would decrease to $36,614 with the revisions.3
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 estimated cost to the Federal Reserve System for collecting and processing this
information collection is negligible.

2

Of these respondents, none are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $600 million in total assets), https://www.sba.gov/document/support--table-size-standards.
There are no special accommodations given to mitigate the burden on small institutions.
3
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 $20, 45% Financial Managers at
$71, 15% Lawyers at $70, and 10% Chief Executives at $93). 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 2019, published March 31, 2020, http://www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined
using the BLS Standard Occupational Classification System, http://www.bls.gov/soc/.

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