Recordkeeping FR Y-9C

Board of Governors of the Federal Reserve System

Instructions for Preparation of

Reporting Form FR Y-9C
Effective March 2023

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December
2024

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Consolidated Financial Statements for
Holding Companies

Schedule HC-C
Loan Modifications to Borrowers
Experiencing Financial Difficulty

Exclude all intracompany (i.e., between subsidiaries of
the consolidated holding company) transactions and all
loans and leases held for trading purposes.

Exclude, for purposes of this schedule, the following:
(1) Federal funds sold (in domestic offices), i.e., all loans
of immediately available funds (in domestic offices)
that mature in one business day or roll over under a
continuing contract, excluding funds lent in the form
of securities purchased under agreements to resell.
Report federal funds sold (in domestic offices) in
Schedule HC, item 3(a). However, report overnight
lending for commercial and industrial purposes as
loans in this schedule. Also report lending transactions in foreign offices involving immediately available funds with an original maturity of one business
day or under a continuing contract that are not
securities resale agreements as loans in this schedule.

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All loans are classified according to security, borrower, or
purpose. All loans satisfying the criteria in the Glossary
entry for “Loans secured by real estate” (except those to
states and political subdivisions in the U.S.) should be
categorized as “Loans secured by real estate” in Schedule
HC-C. Loans secured by other collateral, such as securities, inventory, or automobiles would require further
examination on both purpose and borrower to properly
categorize the loans in Schedule HC-C. For loan categories in Schedule HC-C that include certain loans to
individuals, the term “individual” may include a trust or
other entity that acts of behalf of (or in place of) an
individual or a group of individuals for purposes of
obtaining the loan. Loans covering two or more classifications are sometimes difficult to classify. In such
instances, classify the entire loan according to the major
criterion.

accounting, it should normally report the loan participation or participating interest in Schedule HC, item 4(b),
“Loans and leases, held for investment.” The holding
company also should report the loan participation or
participating interest in Schedule HC-C, in the loan
category appropriate to the underlying loan, e.g., as a
“commercial and industrial loan”’ in item 4 or as a “loan
secured by real estate” in item 1. See the Glossary entry
for “transfers of financial assets” for further information.

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sale. If and when individual loans later meet delinquency
criteria specified by GNMA, the loans are eligible for
repurchase, the holding company is deemed to have
regained effective control over these loans, and the
delinquent loans must be brought back onto the holding
company’s books as loan assets.

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Report in this schedule all loans that the reporting
holding company or its consolidated subsidiaries have
sold under repurchase agreements. Also report all loans
and leases on the books of the reporting holding company
even if on the report date they are past due and collection
is doubtful. Exclude any loans or leases the holding
company has sold or charged off. Also exclude the fair
value of any assets received in full or partial satisfaction
of a loan or lease (unless the asset received is itself
reportable as a loan or lease) and any loans for which the
holding company has obtained physical possession of the
underlying collateral regardless of whether formal foreclosure or repossession proceedings have been instituted
against the borrower. Refer to the Glossary entries for
“troubled debt restructurings” and “foreclosed assets” for
further discussions of these topics.
When a holding company acquires either (1) a portion of
an entire loan that does not meet the definition of a
participating interest (i.e., a nonqualifying loan participation) or (2) a qualifying participating interest in a transfer
that does not does not meet all of the conditions for sale
FR Y-9C
Schedule HC-C

(2) Lending transactions in the form of securities purchased under agreements to resell (report in Schedule
HC, item 3(b), “Securities purchased under agreements to resell”).
(3) Contracts of sale or other loans indirectly representing other real estate (report in Schedule HC, item 7,
“Other real estate owned”).
(4) Undisbursed loan funds, sometimes referred to as
incomplete loans or loans in process, unless the
borrower is liable for and pays the interest thereon. If
interest is being paid by the borrower on the undisbursed proceeds, the amounts of such undisbursed
funds should be included in both loans and deposits.
(Do not include loan commitments that have not yet
been taken down, even if fees have been paid; see
Schedule HC-L, item 1).
(5) All holdings of commercial paper (report in Schedule
HC, item 5, if held for trading; report in Schedule
HC-B, item 4(b), “Other mortgage-backed securities,” item 5, “Asset-backed securities,” or item 6,
“Other debt securities,” as appropriate, if held for
purposes other than trading).
Foreclosed Assets

March 2018

December
2024

HC-C-3

Schedule HC-C
See Insert A

such as a reduction of the loan’s stated interest rate,
principal, or accrued interest or an extension of the loan’s
maturity date at a stated interest rate lower than the
current market rate for new debt with similar risk,
regardless of whether the loan is secured or unsecured
and regardless of whether the loan is guaranteed by the
government or by others.

If an institution reports each loan item in this schedule
net of both unearned income and net unamortized loan
fees and has no unallocated portfolio layer FVHBAs
applicable to loans, enter a zero in this item. If the
amount to be reported in this item represents an addition
to the amounts reported in Schedule HC-C, Part I, items 1
through 10, because of unallocated portfolio layer FVHBAs, report the amount with a minus (-) sign.

Once an obligation has been restructured in a troubled
debt restructuring, it continues to be considered a troubled
debt restructuring until paid in full or otherwise settled,
sold, or charged off. However, if a restructured obligation
is in compliance with its modified terms and the restructuring agreement specifies an interest rate that at the time
of the restructuring is greater than or equal to the rate that
the holding company was willing to accept for a new
extension of credit with comparable risk, the loan need
not continue to be reported as a troubled debt restructurA
ing in this Memorandum item in calendar years after the
year in which the restructuring took place. A loan
extended or renewed at a stated interest rate equal to the
current interest rate for new debt with similar risk is not
considered a troubled debt restructuring. Also, a loan to a
third party purchaser of ‘‘other real estate owned’’ by the
reporting holding company for the purpose of facilitating
the disposal of such real estate is not considered a
modified
troubled debt restructuring. For further information, see
the Glossary entry for ‘‘troubled debt restructurings.’’

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on the closed portfolio basis. As such, an institution that
applies the portfolio method to a closed portfolio of loans
should not allocate the portfolio layer fair value hedge
basis adjustments (FVHBAs) to a more granular level
and should include these unallocated amounts in this
item 11.

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Do not include net unamortized direct loan origination
costs in this item; such costs must be added to the related
loan balances reported in Schedule HC-C, items 1
through 9. In addition, do not include unearned income
on lease financing receivables in this item. Leases should
be reported net of unearned income in Schedule HC-C,
modifications to borrowers experiencing
item 10.
financial difficulty
Line Item 12 Total loans and leases, held for
investment and held for sale.

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Report in columns A and B, as appropriate, the sum of
items 1 through 10 less the amount reported in item 11.
The total of column A must equal Schedule HC, sum of
items 4(a) and 4(b).

Memoranda

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Line Item M1 Loans restructured in troubled
debt restructurings that are in compliance with
their modified terms.

Report in the appropriate subitem loans that have been
restructured in troubled debt restructurings and are in
compliance with their modified terms. As set forth in
ASC Subtopic 310-40, Receivables – Troubled Debt
Restructurings by Creditors (formerly FASB Statement
No. 15, Accounting by Debtors and Creditors for Troubled
Debt Restructurings,’’ as amended by FASB Statement
No. 114, Accounting by Creditors for Impairment of a
Loan), a troubled debt restructuring is a restructuring of a
loan in which a holding company, for economic or legal
reasons related to a borrower’s financial difficulties,
grants a concession to the borrower that it would not
otherwise consider. For purposes of this Memorandum
item, the concession consists of a modification of terms,

modified HC-C-20
to borrowers experiencing
financial difficulty

Include in the appropriate subitem all loans restructured
in troubled debt restructurings as defined above that are
in compliance with their modified terms, that is, restructured loans (1) on which all contractual payments of
principal or interest scheduled that are due under the
modified repayment terms have been paid or (2) on
which contractual payments of both principal and interest
scheduled under the modified repayment terms are less
than 30 days past due.
Exclude from this item (1) those loans restructured in
troubled debt restructurings on which under their modified repayment terms either principal or interest is 30
days or more past due and (2) those loans restructured in
troubled debt restructurings that are in nonaccrual status
under their modified repayment terms. Report such loans
restructured in troubled debt restructurings in the category and column appropriate to the loan in Schedule
HC-N, items 1 through 8, column A, B, or C, and in
Schedule HC-N, Memoranda items 1(a) through 1(f),
column A, B, or C.
Schedule HC-C

FR Y-9C
September 2022

December
2024

Insert A
Holding companies are required for financial reporting purposes to disclose modifications to borrowers
experiencing financial difficulty if such modifications include principal forgiveness, an interest rate
reduction, an other-than-insignificant payment delay, or a term extension (or a combination thereof).

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Report all loan modifications to borrowers experiencing financial difficulty as described in ASU 2022-02,
which includes only those modifications which occurred in the previous 12 months, that are performing in
accordance with their modified terms, unless the loan meets the conditions that would require it to be
reported in Schedule HC-N, Memorandum item 1. For further information, see Glossary entry for "Loan
Modification to Borrowers Experiencing Financial Difficulty."

Schedule HC-C

Loan amounts should be reported net of unearned income
to the extent that they are reported net of unearned
income in Schedule HC-C.

Line Item M1(a) Construction, land development,
and other land loans (in domestic offices):
Line Item M1(a)(1)

1-4 family construction loans.

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Report all loans secured by real estate for the purpose of
constructing 1-4 family residential properties (as defined
for Schedule HC-C, item 1(a)(1), column B) that have
been restructured in troubled debt restructurings and are
in compliance with their modified terms. Exclude from
this item 1-4 family construction loans restructured in
troubled debt restructurings that, under their modified
repayment terms, are past due 30 days or more or are in
nonaccrual status (report in Schedule HC-N, item 1(a)(1)
and Memorandum item 1(a)(1)).

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Note: HC-C memo items 1(a)(1) through 1(d)(2) and
1(e)(3) through 1(f)(3)(c) are to be completed semiannually in June and December
by HCs
with less than $5
modified
to borrowers
billion total assets.
experiencing financial difficulty

nonaccrual status (report in Schedule HC-N, item 1(c)
and Memorandum item 1(b)). Also exclude from this
item all 1-4 family construction loans that have been
restructured in troubled debt restructurings and are in
compliance with their modified terms (report in Schedule
modified to
HC-C, Memorandum item 1(a)(1), above).
borrowers
experiencing
Line Item M1(c) Loans secured by multifamily
(5
or more) residential properties (in domesticfinancial
offices).
difficulty
Report all loans secured by multifamily (5 or more)
residential properties (in domestic offices) (as defined for
Schedule HC-C, item 1(d), column B) that have been
restructured in troubled debt restructurings and are in
compliance with their modified terms. Exclude from this
item loans secured by multifamily residential properties
restructured in troubled debt restructurings that, under
their modified repayment terms, are past due 30 days or
more or are in nonaccrual status (report in Schedule
HC-N, item 1(d) and Memorandum item 1(c)).
Line Item M1(d) Secured by
nonfarm
modified
to borrowers
nonresidential properties (in experiencing
domestic offices):
financial difficulty

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Line Item M1(d)(1)) Loans secured by
modified to borrowers
Line Item M1(a)(2) Other construction
loans and
owner-occupied nonfarm nonresidential properties.
experiencing
financial difficulty
all land development and other
land loans.
Report all loans secured by owner-occupied nonfarm
Report all construction loans for purposes other than
nonresidential properties (as defined for Schedule HC-C,
constructing 1-4 family residential properties, all land
item 1(e)(1), column B) that have been restructured in
development loans, and all other land loans (as defined
troubled debt restructurings and are in compliance with
for Schedule HC-C, item 1(a)(2), column B) that have
their modified terms. Exclude from this item loans
been restructured in troubled debt restructurings and are
secured by owner-occupied nonfarm nonresidential propin compliance with their modified terms. Exclude from
erties restructured in troubled debt restructurings that,
this item other construction loans and all land developunder their modified repayment terms, are past due 30
ment and other land loans restructured in troubled debt
days or more or are in nonaccrual status (report in
restructurings that, under their modified repayment terms,
Schedule HC-N, item 1(e)(1) and Memorandum item
are past due 30 days or more or are in nonaccrual status
1(d)(1)).
(report in Schedule HC-N, item 1(a)(2) and Memoranmodified to borrowers
Line Item M1(d)(2) Loans secured
by other
dum item 1(a)(2)). modified to borrowers
experiencing
financial difficulty
nonfarm nonresidential properties.
experiencing financial difficulty
Line Item M1(b) Loans secured by 1-4 family
Report all loans secured by other nonfarm nonresidential
residential properties (in domestic offices).
properties (as defined for Schedule HC-C, item 1(e)(2),
column B) that have been restructured in troubled debt
Report all loans secured by 1-4 family residential properrestructurings and are in compliance with their modified
ties (in domestic offices) (as defined for Schedule HC-C,
terms. Exclude from this item loans secured by other
item 1(c), column B) that have been restructured in
nonfarm nonresidential properties restructured in troubled
troubled debt restructurings and are in compliance with
debt restructurings that, under their modified repayment
their modified terms. Exclude from this item loans
terms, are past due 30 days or more or are in nonaccrual
secured by 1-4 family residential properties restructured
status (report in Schedule HC-N, item 1(e)(2) and Memoin troubled debt restructurings that, under their modified
randum item 1(d)(2)).
repayment terms, are past due 30 days or more or are in
FR Y-9C
Schedule HC-C

December 2019

December
2024

HC-C-21

Schedule HC-C
modified to borrowers
experiencing financial difficulty

Note: Items M1(e)(1) and M1(e)(2) are to be completed
by holding companies with $5 billion or more in total
assets. Item M1(e)(3) is to be reported by holding
companies with less than $5 billion in total assets.
modified

Line Item M1(e)

and industrial loans restructured in troubled debt restructurings that, under their modified terms, are past due
30 days or more or are in nonaccrual status.
Line Item M1(f)

All other loans.

Commercial and industrial loans.

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Report all other loans that cannot properly be reported in
Memorandum items 1(a) through 1(e) above that have
Report all commercial and industrial loans (as defined for
been restructured in troubled debt restructurings and are
Schedule HC-C, item 4) that have been restructured in
in compliance with their modified terms. Exclude from
troubled debt restructurings and are in compliance with
this item all other loans restructured in troubled debt
their modified terms. Report a breakdown of these
restructurings that, under their modified repayment terms,
restructured loans between those to U.S. and non-U.S.
are past due 30 days or more or are in nonaccrual status
addressees for the fully consolidated bank in Memoran(report in Schedule HC-N).
dum items 1(e)(1) and (2). Exclude commercial and
industrial loans restructured in troubled debt restructurInclude in this item loans in the following categories that
ings that, under their modified repayment terms, are past
have been restructured in troubled debt restructurings and
due 30 days or more or are in nonaccrual status (report in
are in compliance with their modified terms:
Schedule HC-N, item 4 and Memorandum item 1(e)).
modified to borrowers(1) Loans secured by farmland (in domestic offices) (as
Line Item M1(e)(1) To U.S. addressees
(domicile).financial difficulty
defined for Schedule HC-C, item 1.b, column B);
experiencing
Report all commercial and industrial loans to U.S.
(2) Loans to depository institutions and acceptances of
addressees (as defined for Schedule HC-C, item 4(a)) that
other banks (as defined for Schedule HC-C, item 2);
have been restructured in troubled debt restructurings and
(3) Loans to finance agricultural production and other
are in compliance with their modified terms. Exclude
loans to farmers (as defined for Schedule HC-C,
from this item commercial and industrial loans to U.S.
item 3);
addressees restructured in troubled debt restructurings
that, under their modified repayment terms, are past due
(4) Loans to individuals for household, family, and other
30 days or more or are in nonaccrual status (report in
personal expenditures (as defined for Schedule HC-C
Schedule HC-N, item 4(a) and Memorandum item
item 6);
1(e)(1)).
modified to borrowers
(5) Loans to foreign governments and official instituexperiencing financial difficulty
tions (as defined for Schedule HC-C, item 7);
Line Item M1(e)(2) To non-U.S. addressees
(domicile).
(6) Obligations (other than securities and leases) of
Report all commercial and industrial loans to non-U.S.
addressees (as defined for Schedule HC-C, item 4(b))
that have been restructured in troubled debt restructurings and are in compliance with their modified terms.
Exclude from this item commercial and industrial loans
to non-U.S. addressees restructured in troubled debt
restructurings that, under their modified repayment terms,
are past due 30 days or more or are in nonaccrual status.
Line Items M1(e)(3) To U.S. addresses and
non-U.S. addresses (domicile).
Holding companies with less than $5 billion should
report all commercial and industrial loans to U.S. addresses
and non-U.S. addresses that have been restructured in
troubled debt restructuring and are in compliance with
their modified terms. Exclude from this item commercial

HC-C-22

states and political subdivisions in the U.S. (included
in Schedule HC-C, item 9(b)(2));
(7) Loans to nondepository financial institutions and
other loans (as defined for Schedule HC-C, item 9);
and
(8) Loans secured by real estate in foreign offices (as
defined for Schedule HC-C, item 1, column A).
Report in Schedule HC-C, Memorandum items 1(f)(1)
through 1(f)(3), each category of loans within ‘‘All other
loans’’ that have been restructured in troubled debt
restructurings and are in compliance with their modified
terms, and the dollar amount of loans in such category,
that exceeds 10 percent of total loans restructured in
troubled debt restructurings that are in compliance with
their modified terms (i.e., 10 percent of the sum of
Schedule HC-C

FR Y-9C
December 2019

December
2024

Schedule HC-C
modifications to
borrowers experiencing
financial difficulty

Schedule HC-C, Memorandum items 1(a) through 1(f)).
Preprinted captions have been provided in Memorandum
items 1(f)(1) through 1(f)(3) for reporting the amount of
such restructured loans for the following loan categories
if the amount for a loan category exceeds the 10 percent
reporting threshold: Loans secured by farmland (in
domestic offices); Loans to finance agricultural production and other loans to farmers; (Consumer) Credit cards;
Automobile loans: and Other consumer loans.
Line Item M1(g) Total loans restructured in
troubled debt restructurings that are in compliance
with their modified terms.
Report the sum of Memorandum items 1.a.(1) through
(1.f.).

Line Item M4 Outstanding credit card fees and
finance charges.
This item is to be completed by (1) holding companies
that, together with affıliated institutions, have outstanding credit card receivables that exceed $500 million as of
the report date or (2) holding companies that on a
consolidated basis are credit card specialty holding
companies.
Outstanding credit card receivables are the sum of:
(a) Schedule HC-C, item 6(a), column A;
(b) Schedule HC-S, item 1, column C; and

(c) Schedule HC-S, item 6(a), column C.
Credit card specialty holding companies are defined as
those holding companies that on a consolidated basis
exceed 50 percent for the following two criteria:

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Line Item M2 Loans to finance commercial
real estate, construction, and land development
activities (not secured by real estate) included
in Schedule HC-C, items 4 and 9 above.
Report in this item loans to finance commercial and
residential real estate activities, e.g., acquiring, developing and renovating commercial and residential real
estate, that are reported in Schedule HC-C, item 4,
“Commercial and industrial loans,” and item 9, “Other
loans,” column A.
Such loans generally may include:
(1) loans made for the express purpose of financing real
estate ventures as evidenced by loan documentation
or other circumstances connected with the loan; or
(2) loans made to organizations or individuals 80 percent
of whose revenue or assets are derived from or
consist of real estate ventures or holdings.
Exclude from this item all loans secured by real estate
that are reported in Schedule HC-C, item 1, above. Also
exclude loans to commercial and industrial firms where
the sole purpose for the loan is to construct a factory or
office building to house the company’s operations or
employees.
Note: Line items M3 and M4 are to be reported only by
holding companies with $5 billion or more in total
assets.

For a detailed discussion of U.S. and non-U.S. addressees, see the Glossary entry for ‘‘domicile.’’

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modified

Line Item M3 Loans secured by real estate
to non-U.S. addressees (domicile) (included
in Schedule HC-C, item 1, column A)
Report the amount of loans secured by real estate to
non-U.S. addressees included in Schedule HC-C, item 1.
FR Y-9C
Schedule HC-C

December 2019

December
2024

(a) the sum of credit card loans (Schedule HC-C,
item 6(a), column A) plus securitized and sold
credit card receivables (Schedule HC-S, item 1,
column C) divided by the sum of total loans
(Schedule HC-C, item 12, column A) plus securitized and sold credit card receivables (Schedule
HC-S, item 1, column C); and

(b) the sum of total loans (Schedule HC-C, item 12,
column A) plus securitized and sold credit card
receivables (Schedule HC-S, item 1, column C)
divided by the sum of total assets (Schedule HC,
item 12) plus securitized and sold credit card
receivables (Schedule HC-S, item 1, column C).
Report the amount of fees and finance charges included
in the amount of credit card receivables reported in
Schedule HC-C, item 6(a), column A.
Note: Memorandum items 5(a) and 5(b) are to be completed only by holding companies that have not adopted
ASU 2016-13 and are to be reported semiannually in the
June and December reports only. Holding companies
that have adopted ASU 2016-13 should leave these two
items blank.
Line Item M5 Purchased credit-impaired loans
held for investment accounted for in accordance
with ASC Subtopic 310-30.
Report in the appropriate subitem the outstanding balance and amount of ‘‘purchased credit-impaired loans’’
HC-C-23

Purchased credit card relationships shall be carried at
amortized cost. Management of the institution shall
review the carrying amount at least quarterly, adequately
document this review, and adjust the carrying amount as
necessary. This review should determine whether unanticipated acceleration or deceleration of cardholder payments, account attrition, changes in fees or finance
charges, or other events or changes in circumstances
indicate that the carrying amount of the purchased credit
card relationships may not be recoverable. If this review
indicates that the carrying amount may not be recoverable, the intangible asset should be tested for recoverability, and any impairment loss should be recognized, as
described in the instruction for Schedule HC-M, item 2.

holding company has received physical possession and
the conditions specified in ASC Subtopic 310-40,
Receivables—Troubled Debt Restructurings by Creditors (formerly FASB Statement No. 15, ″Accounting by
Debtors and Creditors for Troubled Debt Restructurings″), were met upon foreclosure. In such a situation,
rather than recognizing other real estate owned upon
foreclosure, the holding company must recognize a separate “other receivable,” which should be measured based
on the amount of the loan balance (principal and interest)
expected to be recovered from the guarantor. Report such
a receivable in Schedule HC-F, item 6, “All other assets.”
For further information, see the Glossary entry for “Foreclosed assets.” Do not deduct mortgages or other liens on
such property (report mortgages or other liens in Schedule HC, item 16, ‘‘Other borrowed money’’). Amounts
should be reported net of any applicable valuation allowances.

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Nonmortgage servicing assets are contracts to service
financial assets, other than loans secured by real estate (as
defined for Schedule HC-C, item 1) under which the
estimated future revenues from contractually specified
servicing fees, late charges, and other ancillary revenues
are expected to more than adequately compensate the
servicer for performing the servicing. A nonmortgage
servicing contract is either (a) undertaken in conjunction
with selling or securitizing the nonmortgage financial
assets being serviced or (b) purchased or assumed separately. For nonmortgage servicing assets accounted for
under the amortization method, the carrying amount is
the unamortized cost of acquiring the nonmortgage servicing contracts, net of any related valuation allowances.
For nonmortgage servicing assets accounted for under
the fair value method, the carrying amount is the fair
value of the nonmortgage servicing contracts. For further
information, see the Glossary entry for “servicing assets
and liabilities.”

20, "ReceivablesNonrefundable Fees
and Other Costs",

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Schedule HC-M

Line Item 12(d) Total.

Report the sum of items 12(a), 12(b) and 12(c). This
amount must equal Schedule HC, item 10, “Intangible
assets.”
Line Item 13 Other real estate owned.
Report the net book value of all real estate other than (1)
holding company premises owned or controlled by the
holding company and its consolidated subsidiaries (which
should be reported in Schedule HC, item 6) and (2) direct
and indirect investments in real estate ventures (which
should be reported in Schedule HC, item 9). Also exclude
real estate property collateralizing a fully or partially
government-guaranteed mortgage loan for which the
FR Y-9C
Schedule HC-M

June 2018

December
2024

Include as all other real estate owned:
(1) Foreclosed real estate, i.e.,

(a) Real estate acquired in any manner for debts previously contracted (including, but not limited to, real estate
acquired through foreclosure and real estate acquired by
deed in lieu of foreclosure), even if the holding company
has not yet received title to the property.
(b) Real estate collateral underlying a loan when the
holding company has obtained physical possession of
the collateral. (For further information see Glossary
entries for ‘‘foreclosed assets’’ and ‘‘troubled debtrestructurings.’’)
Foreclosed real estate received in full or partial satisfaction of a loan should be recorded at the fair value less
cost to sell of the property at the time of foreclosure. This
amount becomes the ‘‘cost’’ of the foreclosed real estate.
When foreclosed real estate is received in full satisfaction
of a loan, the amount, if any, by which the recorded
amount of the loan exceeds the fair value less cost to sell
of the property is a loss which must be charged to the
allowance for loan and lease losses at the time of
foreclosure. The amount of any senior debt (principal and
accrued interest) to which foreclosed real estate is subject
at the time of foreclosure must be reported as a liability in
Schedule HC, item 16, “Other borrowed money.”
After foreclosure, each foreclosed real estate asset must
be carried at the lower of (1) the fair value of the asset
minus the estimated costs to sell the asset or (2) the cost
HC-M-7

Schedule HC-N

is required or has elected to carry a PCD asset in
nonaccrual status, the asset must be reported as a
nonaccrual asset at its amortized cost basis (fair
value for a PCD available-for-sale debt security) in
Schedule HC-N, column C. (For PCD assets for
which the holding company has made a policy
election to maintain previously existing pools of PCI
loans upon adoption of ASU 2016-13, the determination of nonaccrual or accrual status should be made
at the pool level, not the individual asset level.) For
further information, see the Glossary entry for “purchased credit-deteriorated assets.”

interest or an extension of the loan’s maturity date at a
stated interest rate lower than the current market rate for
new debt with similar risk, regardless of whether the loan
is secured or unsecured and regardless of whether the
loan is guaranteed by the government or by others.

(1) The asset has been formally restructured and qualifies for accrual status,

For further information, see the Glossary entry for
‘‘troubled debt restructurings.’’

As a general rule, a nonaccrual asset may be restored to
accrual status when:

AF

(1) None of its principal and interest is due and unpaid,
and the holding company expects repayment of the
remaining contractual principal and interest, or

T

For purposes of meeting the first test for restoration to
accrual status, the holding company must have received
repayment of the past due principal and interest unless, as
discussed in the Glossary entry for ‘‘nonaccrual status,’’

Once an obligation has been restructured in a troubled
debt restructuring, it continues to be considered a troubled
debt restructuring until paid in full or otherwise settled,
sold, or charged off. However, if a restructured obligation
is in compliance with its modified terms and the restructuring agreement specifies an interest rate that at the time
of the restructuring is greater than or equal to the rate that
the holding company was willing to accept for a new
extension of credit with comparable risk, the loan need
not continue to be reported as a troubled debt restructuring in calendar years after the year in which the restructuring took place. A loan extended or renewed at a stated
interest rate equal to the current interest rate for new debt
with similar risk is not considered a troubled debt
restructuring. Also, a loan to a third party purchaser of
‘‘other real estate owned’’ by the reporting holding
company for the purpose of facilitating the disposal of
such real estate is not considered a troubled debt restructuring.

R

(2) When it otherwise becomes well secured and in the
process of collection.

D

(2) The asset is a purchased credit-impaired loan, pool of
loans, or debt security accounted for in accordance
with ASC Subtopic 310-30 and it meets the criteria
for accrual of income under the interest method
specified
in that Subtopic,
modified
to a borrower
experiencing financial difficulty
(3) The borrower has resumed paying the full amount of
the scheduled contractual interest and principal payments on a loan that is past due and in nonaccrual
status, even though the loan has not been brought
fully current, and certain repayment criteria are met.
For further information, see the Glossary entry for “nonaccrual status.”
Restructured in Troubled Debt Restructurings—A
troubled debt restructuring is a restructuring of a loan in
which a holding company, for economic or legal reasons
related to a borrower’s financial difficulties, grants a
concession to the borrower that it would not otherwise
consider. For purposes of this schedule, the concession
consists of a modification of terms, such as a reduction of
the loan’s stated interest rate, principal, or accrued
HC-N-4

See Insert B

Column Instructions
Holding companies that have adopted ASU 2016-13,
report in columns A, B and C of Schedule HC-N asset
amounts without any deduction for allowances for credit
losses.
The columns of Schedule HC-N are mutually exclusive.
Any given loan, lease, debt security, or other asset should
be reported in only one of columns A, B, and C.
Information reported for any given off-balance sheet
contract should be reported in only column A or column B.
Report in columns A and B of Schedule HC-N (except for
Memorandum item 6) the balance sheet amounts (not just
delinquent payments) of loans, leases, debt securities,
and other assets that are past due and upon which the
bank continues to accrue interest, as follows:
(1) In column A, report closed-end monthly installment
loans, amortizing loans secured by real estate, lease
financing receivables, and open-end credit in arrears
Schedule HC-N

FR Y-9C
March 2021

December
2024

Insert B
Loan Modifications to Borrowers Experiencing Financial Difficulty – Holding companies are required for financial reporting
purposes to disclose modifications to borrowers experiencing financial difficulty if such modifications include principal
forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension (or a combination
thereof).

D

R

AF

T

Modified loans reported in this schedule should meet the definition of loan modifications to borrowers experiencing
financial difficulty, as described in ASU 2022-02, which includes only those modifications which occurred in the previous 12
months. The amounts reported should include modifications that were accounted for as new loans in addition to
modifications that were accounted for as a continuation of existing loans. For further information, see Glossary entry for
"Loan Modification to Borrowers Experiencing Financial Difficulty."

Schedule HC-N

Line Item 12(a)(5) Secured by nonfarm
nonresidential properties:

(7) Loans to nondepository financial institutions and
other loans included in Schedule HC-N, item 7; and

Line Item 12(a)(5)(a) Loans secured by
owner-occupied nonfarm nonresidential properties.

(8) Loans secured by real estate in foreign offices
included in Schedule HC-N, item 1(f).

Report in the appropriate column the amount of all
covered loans secured by owner-occupied nonfarm nonresidential properties reported in Schedule HC-M, item
6(a)(1)(e)(1), that are included in Schedule HC-N, item
1(e)(1), above because they are past due 30 days or more
or are in nonaccrual status as of the report date.

Also include in the appropriate column all covered lease
financing receivables included in Schedule HC-N, item 8,
above that are past due 30 days or more or are in
nonaccrual status as of the report date.

Report the maximum amount recoverable from the FDIC
under loss-sharing agreements covering the past due and
nonaccrual loans and leases reported in Schedule HC-N,
items 12(a)(1)(a) through 12(e), above beyond the amount
that has already been reflected in the measurement of the
reporting holding company’s indemnification asset, which
represents the right to receive payments from the FDIC
under the loss-sharing agreement.

AF

Report in the appropriate column the amount of all
covered loans secured by other nonfarm nonresidential
properties reported in Schedule HC-M, item 6(a)(1)(e)(2),
that are included in Schedule HC-N, item 1(e)(2), above
because they are past due 30 days or more or are in
nonaccrual status as of the report date.

T

Line Item 12(a)(5)(b) Loans secured by other
nonfarm nonresidential properties.

Line Item 12(f) Portion of covered loans and
leases included in items 12.a through 12.e above
that is protected by FDIC loss-sharing agreements.

Line Item 12(b) through 12(d) Not applicable.
Line Item 12(e) All other loans and all leases.

D

R

Report in the appropriate column the amount of covered
loans and leases reported in Schedule HC-M, item
6(a)(5), ‘‘All other loans and all leases,’’ that are past due
30 days or more or are in nonaccrual status as of the
report date. Include in the appropriate column of this item
covered loans in the following categories that are past
due 30 days or more or are in nonaccrual status as of the
report date:

(1) Loans to depository institutions and acceptances of
other banks included in Schedule HC-N, item 2;
(2) Loans to finance agricultural production and other
loans to farmers included in Schedule HC-N, item 3;
(3) Commercial and industrial loans included in HC-N,
item 4;
(4) Loans to individuals for household, family, and other
personal expenditures included in Schedule HC-N
item 5(a), 5(b) and 5(c);
(5) Loans to foreign governments and official institutions included in Schedule HC-N, item 6;
(6) Obligations (other than securities and leases) of
states and political subdivisions in the U.S. included
in Schedule HC-N, item 7;

HC-N-10

In general, the maximum amount recoverable from the
FDIC on covered past due and nonaccrual loans and
leases is the recorded amount of these loans and leases, as
reported in Schedule HC-N, items 12(a)(1)(a) through
12(e), multiplied by the currently applicable loss coverage rate (e.g., 80 percent or 95 percent). This product will
normally be the maximum amount recoverable because
reimbursements from the FDIC for covered losses related
to the amount by which the ‘‘book value’’ of a covered
asset on the failed institution’s books (which is the
amount upon which payments under an FDIC losssharing agreement are based) exceeds the amount at
which the reporting holding company reports the covered
asset on Schedule HC, Balance Sheet, should already
have been taken into account in measuring the carrying
modification
borrowers
amount
of thetoreporting
holding company’s loss-sharing
experiencing financial
indemnification
asset, difficulty
which is reported in Schedule
HC-F, item 6, “Other” assets.

Memoranda
Line Item M1 Loans restructured in troubled debt
restructurings included in Schedule HC-N, items 1
through 7, above.
Note: HC-N items memo 1(a)(1) through 1(d)(2) and
1(e)(3) through 1(f)(3)(c) are to be completed semiannually in June and December by HCs with less than
$5 billion total assets.
Schedule HC-N

FR Y-9C
June 2013

December
2024

Schedule HC-N

,under their modified
repayment terms,
modified to borrowers experiencing
financial difficulty

modified to borrowers experiencing
financial difficulty

1-4 family construction loans.

Line Item M1(d) Secured by nonfarm
nonresidential properties (in domestic offices)
Line Item M1(d)(1)) Loans secured by
owner-occupied nonfarm nonresidential properties.
Report in the appropriate column all loans secured by
owner-occupied nonfarm nonresidential properties
included in item 1(e)(1) of this schedule that have been
restructured in troubled debt restructurings and, under
their modified repayment terms, are past due 30 days or
more or are in nonaccrual status as of the report date.

AF

Line Item M1(a)(1)

tic offices) included in item 1(d) of this schedule that
have been restructured in troubled debt restructurings
and, under their modified repayment terms, are past due
30 days or more or are in nonaccrual status as of the
report date.

T

Report in the appropriate subitem and column loans that
have been restructured in troubled debt restructurings (as
described in ‘‘Definitions’’ above) and are past due 30
days or more or are in nonaccrual status as of the report
date. Such loans will have been included in one or more
of the loan categories in items 1 through 7 of this
schedule. Exclude all loans restructured in troubled debt
restructurings that are in compliance with their modified
terms (report
Part I, in Schedule HC-C, Memorandum item 1).
modification
to
For further information, see the loan
Glossary
entry for
borrowers
‘‘troubled debt restructurings.’’
experiencing
financial
difficulty
Line Item M1(a) Construction, land
development,
and other land loans (in domestic offices):
Report in the appropriate column all loans secured by
real estate for the purpose of constructing 1-4 family
residential properties included in item 1(a)(1) of this
schedule that have been restructured in troubled debt
restructurings and, under their modified repayment terms,
are past due 30 days or more or are in nonaccrual status
as of the report date.

D

R

Line Item M1(a)(2) Other construction loans and
to borrowers
experiencing
all land developmentmodified
and other
land loans.
financial difficulty
Report in the appropriate column all construction loans
for purposes other than constructing 1-4 family residential properties, all land development loans, and all other
land loans included in item 1(a)(2) of this schedule that
have been restructured in troubled debt restructurings
and, under their modified repayment terms, are past due
30 days or more or are in nonaccrual status as of the
report date.
Line Item M1(b) Loans secured by 1-4 family
residential properties (in domestic offices).
Report in the appropriate column all loans secured by 1-4
family residential properties (in domestic offices) included
in item 1(c) of this schedule that have been restructured
in troubled debt restructurings and, under their modified
repayment terms, are past due 30 days or more or are in
nonaccrual status as of the report date.
Line Item M1(c) Loans secured by multifamily (5
or more) residential properties (in domestic offices).
Report in the appropriate column all loans secured by
multifamily (5 or more) residential properties (in domesFR Y-9C
Schedule HC-N

December 2019

December
2024

Line Item M1(d)(2) Loans secured by other
nonfarm nonresidential properties.
Report in the appropriate column all nonfarm nonresidential real estate loans not secured by owner-occupied
nonfarm nonresidential properties included in item 1(e)(2)
of this schedule that have been restructured in troubled
debt restructurings and, under their modified repayment
terms, are past due 30 days or more or are in nonaccrual
status as of the report date.
Line Item M1(e) Commercial and industrial loans.
Report all commercial and industrial loans included in
item 4 of this schedule that have been restructured in
troubled debt restructurings and, under their modified
repayment terms, are past due 30 days or more or are in
nonaccrual status as of the report date. Report a breakdown of these restructured loans between those to U.S.
and non-U.S. addressees for the fully consolidated holding company in Memorandum items 1(e)(1) and (2). modified
Line Item M1(e)(1)

To U.S. addressees (domicile).

Note: Items M1(e)(1) and M1(e)(2) are to be completed
by holding companies with $5 billion or more in total
assets. Item M1(e)(3) is to be reported by holding
companies with less than $5 billion in total assets.
Report in the appropriate column all commercial and
industrial loans to U.S. addressees included in item 4 of
this schedule that have been restructured in troubled debt
restructurings and, under their modified repayment terms,
HC-N-11

Schedule HC-N
modified to borrowers experiencing
financial difficulty

Line Item M1(e)(2)
(domicile).

To non-U.S. addressees

Report in the appropriate column all commercial and
industrial loans to non-U.S. addressees included in item 4
of this schedule that have been restructured in troubled
debt restructurings and, under their modified repayment
terms, are past due 30 days or more or are in nonaccrual
status as of the report date.
Line Item M1(e)(3) To U.S. addresses and non-U.S.
addresses (domicile).

Line Item M1(f)

(7) Loans to foreign governments and official institutions included in Schedule HC-N, item 6;
(8) Obligations (other than securities and leases) of
states and political subdivisions in the U.S. included
in Schedule HC-N, item 7;
(9) Loans to nondepository financial institutions and
other loans included in Schedule HC-N, item 7; and
(10) Loans secured by real estate in foreign offices
included in Schedule HC-N, item 1(f).

Report in Schedule HC-N, Memorandum items 1(f)(1)
through 1(f)(3), each category of loans within ‘‘All other
loans’’ that have been restructured in troubled debt
restructurings and, under their modified repayment terms,
are past due 30 days or more or are in nonaccrual status
as of the report date, and the dollar amount of loans in
such category, that exceeds 10 percent of total loans
restructured in troubled debt restructurings that are past
due 30 days or more or are in nonaccrual status as of the
report date (i.e., 10 percent of the sum of Schedule
HC-N, Memorandum items 1(a) through 1(e) plus Memorandum item 1(f), columns A through C). Preprinted
captions have been provided in Memorandum items
1(f)(1) through 1(f)(3) for reporting the amount of such
restructured loans for the following loan categories if the
amount for a loan category exceeds this 10 percent
reporting threshold: Loans secured by farmland (in
domestic offices); Loans to finance agricultural producmodifications
to credit
borrowers
tion and other loans to farmers;
(Consumer)
cards
experiencing
financial
difficulty
and (Consumer) automobile loans; and Other consumer
loans.

AF

Report in the appropriate column all commercial and
industrial loans to U.S. addresses and non U.S. addresses
included in item 4 of this schedule that have been
restructured in troubled debt restructurings and, under
their modified repayment terms, are past due 30 days or
more or are in nonaccrual status as of the report date.

(6) Other consumer loans included in Schedule HC-N,
items 5(c);

T

are past due 30 days or more or are in nonaccrual status
as of the report date.

modified to borrowers experiencing
financial difficulty that are not in
compliance with their modified
terms

All other loans.

D

R

Report in the appropriate column all other loans that
cannot properly be reported in Memorandum items 1(a)
through 1(e) above that have been restructured in troubled
debt restructurings and, under their modified repayment
terms, are past due 30 days or more or are in nonaccrual
status as of the report date. Include in the appropriate
column of this item all loans in the following categories
that have been restructured in troubled debt restructurings and, under their modified repayment terms, are past
due 30 days or more or are in nonaccrual status as of the
report date:
(1) Loans secured by farmland (in domestic offices)
included in Schedule HC-N, item 1.b;
(2) Loans to depository institutions and acceptances of
other banks included in Schedule HC-N, item 2;
(3) Loans to finance agricultural production and other
loans to farmers included in Schedule HC-N,
item 3;

Line Item M1(g) Total loans restructured in
troubled debt restructurings inluded in Schedule
HC-N, items 1 through 7 above.
Exclude amounts reported in Memorandum item 1.f(1)
through 1.f(3) when calculating the total in Memorandum item 1.g.

(4) Consumer credit cards included in Schedule HC-N,
item 5(a);

Line Item M2 Loans to finance commercial real
estate, construction, and land development activities
included (not secured by real estate) in
Schedule HC-N, items 4 and 7, above.

(5) Consumer automobile loans included in Schedule
HC-N, item 5(b);

Report the amount of loans to finance commercial real
estate, construction, and land development activities not

HC-N-12

modified to borrowers experiencing
financial difficulty

Schedule HC-N

FR Y-9C
December 2019

December
2024

Glossary

For further guidance, holding companies should refer to
the Interagency Advisory on the Accounting Treatment
of Accrued Interest Receivable Related to Credit Card
Securitizations dated December 4, 2002. See also the
Glossary entry for ‘‘Transfers of Financial Assets.’’

Agreement Corporation: See ‘‘Edge and Agreement
corporation.’’
Allowance for Credit Losses: This entry applies to
holding companies that have adopted ASC Topic 326
(introduced by Accounting Standards Update No. 201613, Financial Instruments—Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments
(ASU 2016-13). Holding companies that have not adopted
ASC Topic 326 should continue to refer to the Glossary
entry for “allowance for loan and lease losses.” For more
information on the allowance for credit losses (ACL),
institutions should also refer to the Interagency Policy
Statement on Allowances for Credit Losses issued in
May 2020.

R

AF

Acquisition, Development, or Construction (ADC)
Arrangements: An ADC arrangement is an arrangement
in which a holding company or its consolidated subsidiaries provide financing for real estate acquisition, development, or construction purposes and participates in the
expected residual profit resulting from the ultimate sale
or other use of the property. ADC arrangements should
be reported as loans, real estate joint ventures, or direct
investments in real estate in accordance with ASC Subtopic 310-10, Receivables – Overall (formerly AICPA
Practice Bulletin 1, Appendix, Exhibit I, ADC Arrangements).

though it does not provide for the holding company to
participate in the property’s expected residual profit.

T

860, because the AIR asset cannot be contractually
prepaid or settled in such a way that the holder would not
recover substantially all of its recorded investment.
Rather, institutions should follow existing applicable
accounting standards, including ASC Subtopic 450-20,
Contingencies–Loss Contingencies, in subsequent
accounting for the AIR asset. ASC Subtopic 450-20
addresses the accounting for various loss contingencies,
including the collectibility of receivables.

D

Under the Board’s regulatory capital rules, the term high
volatility commercial real estate (HVCRE) exposure is
defined, in part, to mean a credit facility that, prior to
conversion to permanent financing, finances or has
financed the acquisition, development, or construction of
real property. (See §.2 of the regulatory capital rules and
the instructions for Schedule HC-R, Part II, item 4.b.)
Holding companies should note that the meaning of the
term ADC as used in the definition of HVCRE exposure
in the regulatory capital rules differs from the meaning of
ADC arrangement for accounting purposes in ASC Subtopic 310-10 as described above in this Glossary entry.
For example, a holding companies participation in the
expected residual profit from a property is part of the
accounting definition of an ADC arrangement, but whether
the holding company participates in the expected residual
profit is not a consideration for purposes of determining
whether a credit facility is an HVCRE exposure for
regulatory capital purposes. Thus, a loan can be treated as
an HVCRE exposure for regulatory capital purposes even
FR Y-9C
Glossary September 2020

Standards for accounting for an ACL for financial assets
measured at amortized cost and net investments in leases
(hereafter referred to collectively as financial assets
measured at amortized cost), as well as certain offbalance sheet credit exposures, are set forth in ASC
Subtopic 326-20, Financial Instruments—Credit Losses—
Measured at Amortized Cost. For financial assets measured at amortized cost, the ACL is a valuation account
that is deducted from, or added to, the amortized cost
basis of financial assets to present the net amount
expected to be collected over the contractual term of the
financial assets.
For holding companies that have adopted ASC Topic 326,
standards for measuring credit losses on available-forsale (AFS) debt securities are set forth in ASC Subtopic 326-30, Financial Instruments—Credit Losses—
Available-for-Sale Debt Securities. See the Glossary
entry for “securities activities” for guidance on allowances for credit losses on AFS debt securities.
The following sections of this Glossary entry apply to
financial assets measured at amortized cost and also to
off-balance sheet credit exposures within the scope of
ASC Subtopic 326-20.
Measurement—An ACL shall be established upon the
origination or acquisition of a financial asset(s) measured
at amortized cost. A separate ACL shall be reported for
each type of financial asset measured at amortized cost
(e.g., loans and leases held for investment, held-tomaturity (HTM) debt securities, and receivables that
GL-5

Glossary

As of the end of each quarter, or more frequently if
warranted, each holding company must evaluate the
collectability of its financial assets measured at amortized
cost, including, if applicable, any recorded accrued interest receivable (i.e., not already reversed or charged off, as
applicable), and make adjusting entries to maintain the
balance of each of the separate ACLs reported on the
balance sheet at an appropriate level.

Expected recoveries, prior to collection, are a component
of management’s estimate of the net amount expected to
be collected for a financial asset. Expected recoveries of
amounts previously charged off or expected to be charged
off that are included in ACLs may not exceed the
aggregate amounts previously charged off or expected to
be charged off. All assumptions related to expected
recoveries should be appropriately documented and supported. When estimating expected recoveries, management may conclude that amounts previously charged off
are not collectible.

AF

A holding company shall measure expected credit losses
on a collective or pool basis when financial assets share
similar risk characteristics. If a financial asset does not
share similar risk characteristics with other assets,
expected credit losses for that asset should be evaluated
individually. Individually evaluated assets should not be
included in a collective assessment of expected credit
losses. If a financial asset ceases to share similar risk
characteristics with other assets
in its pool, it should be
generally
moved to a different pool with assets sharing similar risk
characteristics, if such a pool exists.

company should consider the effects of past events,
current conditions, and reasonable and supportable forecasts on the collectibility of the holding company’s
financial assets. Under ASC Subtopic 326-20, a holding
company is required to use relevant forward-looking
information and expectations drawn from reasonable and
supportable forecasts when estimating expected credit
losses.

T

relate to repurchase agreements and securities lending
agreements) as of the end of each reporting period.

D

R

ASC Subtopic 326-20 does not require the use of a
specific loss estimation method for purposes of determining ACLs. Various methods may be used to estimate the
expected collectibility of financial assets measured at
amortized cost, with those methods generally applied
consistently over time. The same loss estimation method
does not need to be applied to all financial assets. A
holding company is not precluded from selecting a
different method when it determines the method will
result in a better estimate of ACLs.

ASC Subtopic 326-20 requires a holding company to
measure estimated expected credit losses over the contractual term of its financial assets, considering expected
prepayments. Renewals, extensions, and modifications
are excluded from the contractual term of a financial
asset for purposes of estimating the ACL unless there is a
reasonable expectation of executing a troubled debt
restructuring or the renewal and extension options are
part of the original or modified contract and are not
unconditionally cancellable by the holding company. If
such renewal or extension options are present, a holding
company must evaluate the likelihood of a borrower
exercising those options when determining the contractual term.
In estimating the net amount expected to be collected on
financial assets measured at amortized cost, a holding

GL-6

Changes in the ACL —Additions to, or reductions of, the
ACL to adjust its level to management’s current estimate
of expected credit losses are to be made through charges
or credits to the “provision for credit losses on financial
assets” (provision) in item 4 of Schedule HI, Income
Statement, except for changes to adjust the level of the
ACL for off-balance-sheet credit exposures. When available information confirms that specific financial assets
measured at amortized cost, or portions thereof, are
uncollectible, these amounts should be promptly charged
off against the related ACL in the period in which the
financial assets are deemed uncollectible. Under no circumstances can expected credit losses on financial assets
measured at amortized cost be charged directly to
“Retained earnings” after the initial adoption of ASC
Topic 326, for which the change from the incurred loss to
the current expected credit losses methodology is required
to be recorded through a cumulative-effect adjustment to
retained earnings. This cumulative-effect adjustment is
reported in Schedule HI-A, item 2, “Cumulative effect of
changes in accounting principles and corrections of material accounting errors,” and disclosed in Notes to the
Income Statement (Other), item 3, “Effect of adoption of
current expected credit losses methodology on allowances for credit losses on loans and leases held for
investment and held-to-maturity debt securities.”
Recoveries on financial assets measured at amortized
cost represent collections on amounts that were previously charged off against the related ACL. Recoveries
Glossary

FR Y-9C
March 2021

December
2024

Glossary

When estimating the ACL for a collateral-dependent
loan, the fair value of collateral should be adjusted to
consider estimated costs to sell if repayment or satisfaction of the loan depends on the sale of the collateral. ACL
adjustments for estimated costs to sell are not appropriate
when the repayment of a collateral-dependent loan is
expected from the operation of the collateral.

Charge-Offs and Establishment of a New Amortized Cost
Basis—When a holding company makes a full or partial
charge-off of a financial asset measured at amortized cost
that is deemed uncollectible, the holding company establishes a new cost basis for that financial asset. Consequently, once a new cost basis has been established for a
financial asset through a charge-off, this amortized cost
basis may not be directly “written up” at a later date.
Reversing the previous charge-off and “re-booking” the
charged-off asset after the holding company concludes
that the prospects for recovering the charge-off have
improved, regardless of whether the holding company
assigns a new account number to the asset or the borrower signs a new note, is not an acceptable accounting
practice. Nevertheless, as stated above, management’s
estimate of the net amount expected to be collected for a
financial asset, as reflected in the related ACL, considers
expected recoveries.

The fair value of collateral securing a collateraldependent loan may change over time. If the fair value of
the collateral as of the ACL evaluation date has decreased
since the previous ACL evaluation date, the ACL should
be increased to reflect the additional decrease in the fair
value of the collateral. Likewise, if the fair value of the
collateral has increased as of the ACL evaluation date,
the increase in the fair value of the collateral is reflected
through a reduction in the ACL. Any negative ACL that
results is capped at the amount previously charged off. In
general, any portion of the amortized cost basis in excess
of the fair value of collateral less estimated costs to sell,
if applicable, that can be identified as uncollectible
should be promptly charged off against the ACL.

R

AF

T

shall be credited to the ACL, provided that the total
amount credited to the ACL as recoveries on a financial
asset (which may include amounts representing principal,
interest, and fees) is limited to the amount previously
charged off against the ACL on that financial asset. Any
amounts collected in excess of this limit should generally
be recognized as noninterest income upon collection.

D

If losses charged off against an ACL exceed the amount
of the ACL, a provision expense sufficient to restore the
ACL to an appropriate level must be charged to a
provision for credit losses on the income statement
during the reporting period in which the charge-off is
recorded. A holding company shall not increase an ACL
by transferring an amount from retained earnings or any
segregation thereof to the ACL.
Collateral-Dependent Financial Assets—A collateraldependent financial asset is a financial asset for which
repayment is expected to be provided substantially
through the operation or sale of the collateral when the
borrower, based on management’s assessment, is experiencing financial difficulty as of the reporting date.
For purposes of these reports, the ACL for a collateraldependent loan is measured using the fair value of
collateral, regardless of whether foreclosure is probable.
This application of this requirement for purposes of these
reports is limited to collateral-dependent loans; it does
not apply to other financial assets such as held-tomaturity debt securities that are collateral dependent.
FR Y-9C
Glossary March 2020

Financial Assets with Collateral Maintenance
Agreements—Holding companies may have financial
assets that are secured by collateral (such as debt securities) and are subject to collateral maintenance agreements
requiring the borrower to continuously replenish the
amount of collateral securing the asset. If the fair value of
the collateral declines, the borrower is required to provide additional collateral as specified by the agreement.
ASC Topic 326 includes a practical expedient for financial assets with collateral maintenance agreements where
the borrower is required to provide collateral greater than
or equal to the amortized cost basis of the asset and is
expected to continuously replenish the collateral. In those
cases, the holding company may elect the collateral
maintenance practical expedient and measure expected
credit losses for these qualifying assets based on the fair
value of the collateral. If the fair value of the collateral is
greater than the amortized cost basis of the financial asset
and the holding company expects the borrower to replenish collateral as needed, the holding company may record
an ACL of zero for the financial asset when the collateral
maintenance practical expedient is applied. Similarly, if
the fair value of the collateral is less than the amortized
cost basis of the financial asset and the holding company
expects the borrower to replenish collateral as needed,
the ACL is limited to the difference between the fair
GL-7

Glossary
See Insert C

See also the Glossary entries for “accrued interest receivable,” “amortized cost basis,” “business combinations,”
“foreclosed assets,” “loan,” “loan fees,” “nonaccrual
status,” “purchased credit-deteriorated assets,” “securities activities,” “transfers of financial assets,” and
“troubled debt restructurings.”
Allowance for Loan and Lease Losses: This Glossary
entry applies to holding companies that have not adopted
ASC Topic 326, Financial Instruments—Credit Losses.
Holding companies that have adopted ASC Topic 326
should refer to the Glossary entry for “allowance for
credit losses.” Each holding company must maintain an
allowance for loan and lease losses (allowance) at a level
that is appropriate to cover estimated credit losses associated with its loan and lease portfolio, i.e., loans and
leases that the holding company has intent and ability to
hold for the foreseeable future or until maturity or payoff.
Each holding company should also maintain, as a separate liability account, an allowance at a level that is
appropriate to cover estimated credit losses associated
with off-balance sheet credit instruments such as offbalance sheet loan commitments, standby letters of credit,
and guarantees. This separate allowance should be
reported in Schedule HC-G, item 3, ‘‘Allowance for
credit losses on off-balance sheet credit exposures,’’ not
as part of the ‘‘Allowance for loan and lease losses’’ in
Schedule HC, item 4(c).

R

AF

Off-Balance-Sheet Credit Exposures—Each holding company should also estimate, as a separate liability account,
expected credit losses for off-balance-sheet credit exposures not accounted for as insurance, over the contractual
period during which the holding company is exposed to
credit risk. The estimate of expected credit losses should
take into consideration the likelihood that funding will
occur as well as the amount expected to be funded over
the estimated remaining contractual term of the offbalance-sheet credit exposures. Off-balance sheet credit
exposures include loan commitments, financial standby
letters of credit, and financial guarantees not accounted
for as insurance, and other similar instruments except for
those within the scope of ASC Topic 815 on derivatives
and hedging. This separate allowance should be reported
in Schedule HC-G, item 3, “″llowance for credit losses
on off-balance-sheet credit exposures,” not as part of the
“Allowance for credit losses on loans and leases” in
Schedule HC, item 4.c. Additions to, or reductions of, the
allowance for credit losses on off-balance sheet credit
exposures to adjust the balance of the allowance to an
appropriate level are reported in net income.

for credit losses on off-balance sheet credit exposures.
Recourse liability accounts should be reported in Schedule HC-G, item 4, “All other liabilities.”

T

Loan Modification to
Borrowers
Experiencing Financial
Difficulty
value of the collateral and the amortized cost basis of the
asset as of the reporting date when applying the collateral
maintenance practical expedient.

D

Holding companies should not record an estimate of
expected credit losses for off-balance-sheet credit exposures that are unconditionally cancellable by the issuer.
For example, for a holding company that has unfunded
commitments (i.e., available credit) on credit cards, the
holding company should not record an allowance for
expected credit losses for unfunded commitments for
which the holding company has the ability to unconditionally cancel the available line of credit. In contrast,
home equity lines of credit may be deemed unconditionally cancellable for regulatory capital purposes. However, unfunded commitments under home equity lines of
credit are not considered unconditionally cancellable by
the issuer for purposes of estimating expected credit
losses under ASC Topic 326, because the lender may not
unilaterally refuse to extend credit under the commitment.

Recourse Liability Accounts—Recourse liability accounts
that arise from recourse obligations for any transfers of
financial assets that are reported as sales should not be
included in an ACL. These accounts are considered
separate and distinct from ACLs and from the allowance
GL-8

With respect to the loan and lease portfolio, the term
‘‘estimated credit losses’’ means an estimate of the
current amount of loans and leases that it is probable the
holding company will be unable to collect given facts and
circumstances as of the evaluation date. Thus, estimated
credit losses represent net charge-offs that are likely to be
realized for a loan or pool of loans. These estimated
credit losses should meet the criteria for accrual of a loss
contingency (i.e., through a provision to the allowance)
set forth in generally accepted accounting principles
(GAAP).
As of the end of each quarter, or more frequently if
warranted, the management of each holding company
must evaluate, subject to examiner review, the collectibility of the loan and lease portfolio, including any recorded
accrued and unpaid interest (i.e., not already reversed or
charged off), and make entries to maintain the balance of
Glossary

FR Y-9C
March 2020

December
2024

Insert C

Loan Modifications
A holding company should measure any expected credit losses on loans whose terms have been modified in
accordance with ASC Topic 326. ASC Topic 326 allows a holding company to use any appropriate loss estimation
method to estimate allowances for credit losses. However, there are circumstances when specific measurement
methods are required.
For reporting purposes, the ACL of a collateral dependent loan must be estimated using the fair value of collateral,
less cost to sell, as appropriate. A holding company measuring the allowance using the present value of expected
future cash flow method (i.e., discounted cash flow method should use the post-modification effective interest rate
as the discount rate.)

D

R

AF

T

If a holding company adopted ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326): Troubled Debt
Restructurings and Vintage Disclosures,” using the prospective method (versus the modified retrospective method),
loans previously identified as troubled debt restructurings should retain the existing method for measurement
purposes. As such, unless the loan is collateral-dependent, an institution should continue to apply a discounted
cash flow method, discounted at the loan’s original effective interest to estimate expected credit losses until the
loan is subsequently modified or settled.

Glossary
20, Nonrefundable
Fees and Other Costs

(2) Purchases (sales) of financial assets (other than securities) under agreements to resell (repurchase) that
have original maturities of one business day (or are
under continuing contracts) and are in immediately
available funds.

T

Any borrowing or lending of immediately available
funds in domestic offices that has an original maturity of
more than one business day, other than security repurchase or resale agreements, is to be treated as a borrowing or as a loan, not as federal funds. Such transactions
are sometimes referred to as ‘‘term federal funds.’’
Federally-Sponsored Lending Agency: A federallysponsored lending agency is an agency or corporation
that has been chartered, authorized, or organized as a
result of federal legislation for the purpose of providing
credit services to a designated sector of the economy.
These agencies include Banks for Cooperatives, Federal
Home Loan Banks, the Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Federal
Land Banks, the Federal National Mortgage Association,
and the Student Loan Marketing Association.

AF

Federal Funds Transactions: For purposes of the FR Y9C, federal funds transactions involve the lending (federal funds sold) or borrowing (federal funds purchased)
in domestic offices of immediately available funds under
agreements or contracts that have an original maturity of
one business day or roll over under a continuing contract. However, funds lent or borrowed in the form of
securities resale or repurchase agreements, due bills,
borrowings from the Discount and Credit Department of
a Federal Reserve Bank, deposits with and advances
from a Federal Home Loan Bank, and overnight loans for
commercial and industrial purposes are excluded from
federal funds. Transactions that are to be reported as
federal funds transactions may be secured or unsecured
or may involve an agreement to resell loans or other
instruments that are not securities.
Immediately available funds are funds that the purchasing holding company can either use or dispose of on the
same business day that the transaction giving rise to the
receipt or disposal of the funds is executed.

D

R

The borrowing and lending of immediately available
funds have an original maturity of one business day if the
funds borrowed on one business day are to be repaid or
the transaction reversed on the next business day, that is,
if immediately available funds borrowed today are to be
repaid tomorrow (in tomorrow’s immediately available
funds). Such transactions include those made on a Friday
to mature or be reversed the following Monday and those
made on the last business day prior to a holiday (for
either or both of the parties to the transaction) to mature
or be reversed on the first business day following the
holiday.
A continuing contract is a contract or agreement that
remains in effect for more than one business day but has
no specified maturity and does not require advance notice
of either party to terminate. Such contracts may also be
known as rollovers or as open-ended agreements.

Federal funds may take the form of the following two
types of transactions in domestic offices provided that the
transactions meet the above criteria (i.e., immediately
available funds with an original maturity of one business
day or under a continuing contract):
(1) Unsecured loans (federal funds sold) or borrowings
(federal funds purchased). (In some market usage,
the term “fed funds” or “pure fed funds” is confined
to unsecured loans of immediately available balances.)
GL-44

Fees, Loan: See “Loan fees.”
Foreclosed Assets: The accounting and reporting standards for foreclosed assets are set forth in ASC Subtopic
310-40, Receivables – Troubled Debt Restructurings by
Creditors, and ASC Topic 360, Property, Plant, and
Equipment. Subsequent to the issuance of FASB Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (the predecessor of ASC
Topic 360), AICPA Statement of Position (SOP) No. 92-3,
Accounting for Foreclosed Assets was rescinded. Certain
provisions of SOP 92-3 are not present in FASB Statement No. 144, but the application of these provisions
represents prevalent practice in the banking industry and
is consistent with safe and sound banking practices.
These provisions of SOP 92-3 have been incorporated
into this Glossary entry, which holding companies must
follow for purposes of preparing their FR Y-9C reports.
A holding company that receives from a borrower in full
satisfaction of a loan either receivables from a third party,
an equity interest in the borrower, or another type of asset
(except a long-lived asset that will be sold) shall initially
measure the asset received at its fair value at the time of
the restructuring. When a holding company receives a
long-lived asset, such as real estate, from a borrower in
Glossary

FR Y-9C
March 2015

December
2024

Glossary

in accordance with other applicable generally accepted
accounting principles and regulatory reporting instructions for such assets.

T

For purposes of this report, foreclosed assets (other than
real estate property collateralizing a consumer mortgage
loan) include loans where the holding company, as
creditor, has received physical possession of a borrower’s
assets, regardless of whether formal foreclosure proceedings take place. A holding company, as creditor, is
considered to have received physical possession of residential real estate property collateralizing a consumer
mortgage loan only upon the occurrence of either of the
following:
a. The holding company obtains legal title to the
residential real estate property upon completion of a
foreclosure even if the borrower has redemption
rights whereby they have a legal right for a period
of time after a foreclosure to reclaim the real estate
property by paying certain amounts specified by
law.

AF

full satisfaction of a loan, the long-lived asset is rebuttably presumed to be held for sale and the holding company shall initially measure this asset at its fair value less
cost to sell. The fair value (less cost to sell, if applicable)
of the asset received in full satisfaction of the loan
becomes the ‘‘cost’’ of the asset. The amount, if any, by
which the recorded investment in the loan (or the amortized cost basis of the loan, if the holding company has
adopted ASC Topic 326, Financial Instruments—Credit
Losses)12 exceeds the fair value (less cost to sell, if
applicable) of the asset is a loss which must be charged to
the allowance for loan and lease losses (or allowance for
credit losses, if the institution has adopted ASC Topic 326)
at the time of restructuring, foreclosure, or repossession.
In those cases where property is received in full satisfaction of an asset other than a loan (e.g., a debt security),
the loss should be reported on the income statement in a
manner consistent with the balance sheet classification of
the asset satisfied.

R

If an asset is sold shortly after it is received in a
restructuring, foreclosure, or repossession, it would generally be appropriate to substitute the value received in
the sale (net of the cost to sell for a long- lived asset, such
as real estate, that has been sold) for the fair value (less
cost to sell for a long-lived asset, such as real estate, that
will be sold) that had been estimated at the time of
restructuring, foreclosure, or repossession. Any adjustments should be made to the loss charged against the
allowance.

b. The borrower conveys all interest in the residential
real estate property to the bank to satisfy the loan
through completion of a deed in lieu of foreclosure
or through a similar legal agreement. The deed in
lieu of foreclosure or similar legal agreement is
completed when agreed-upon terms and conditions
have been satisfied by both the borrower and the
creditor.13

In such situations, the secured loan should be recategorized on the balance sheet in the asset category appropriate to the underlying collateral (e.g., as other real estate
owned for real estate collateral) and accounted for as
described above.

The measurement and accounting subsequent to acquisition for real estate received in full or partial satisfaction
of a loan, including through foreclosure or repossession,
is discussed below in this Glossary entry. For other types
of assets that a holding company receives in full or partial
satisfaction of a loan, the holding company generally
should subsequently measure and account for such assets

The amount of any senior debt (principal and accrued
interest) to which foreclosed real estate is subject at the
time of foreclosure must be reported as a liability in
Schedule HC, items 16, “Other borrowed money.”

D

An asset received in partial satisfaction of a loan should
be initially measured as described above and the recorded
investment in the loan should be reduced by the fair value
(less cost to sell, if applicable) of the asset at the time of
restructuring, foreclosure, or repossession.

12. The recorded investment in the loan is the loan balance adjusted for
any unamortized premium or discount and unamortized loan fees or costs,
less any amount previously charged off, plus recorded accrued interest. For
holding companies that have adopted ASC Topic 326, the term “amortized
cost basis” is used in place of “recorded investment.” See the Glossary
entry for “amortized cost basis.”
FR Y-9C
Glossary December 2016

13. Refer to FASB’s ASU No. 2014-04, “Reclassification of Residential
Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure”
for transition guidance. The ASU must be applied by public business
entities with a fiscal calendar year in their March 2015 FR Y-9C Reports
and by private entities with a fiscal calendar year in their March 2016
FR Y-9C Reports. Early adoption is permitted. Entities can elect either a
prospective or modified retrospective approach. Under the modified retrospective approach, entities should apply a cumulative-effect adjustment to
residential consumer mortgage loans and OREO existing as of the beginning of the annual period for which the amendments are effective.

GL-45

Glossary

This guidance is applicable to fully and partially
government-guaranteed mortgage loans provided the
three conditions identified above have been met. In such
situations, upon foreclosure, the separate other receivable
should be measured based on the amount of the loan
balance (principal and interest) expected to be recovered
from the guarantor. This other receivable should be
reported in Schedule HC-F, item 6, “All other assets.”
Any interest income earned on the other receivable
should be reported in Schedule HI, item 1(g), “Other
interest income.”

R

AF

If a foreclosed real estate asset is held for more than a
short period of time, any declines in value after foreclosure and any gain or loss from the sale or disposition of
the asset shall not be reported as a loan or lease loss or
recovery and shall not be debited or credited to the
allowance for loan and lease losses (or allowance for
credit losses, if the holding company has adopted ASC
Topic 326). Such additional declines in value and the
gain or loss from the sale or disposition shall be reported
net on the income statement in Schedule HI, item 5(J)
“Net gains (losses) on sales of other real estate owned.”

estate is fixed (that is, the real estate property has been
appraised for purposes of the claim and thus the
holding company is not exposed to changes in the fair
value of the property).

T

After foreclosure, each foreclosed real estate asset (including any real estate for which the holding company
receives physical possession,) must be carried at the
lower of (1) the fair value of the asset minus the
estimated costs to sell the asset or (2) the cost of the asset
(as defined in the preceding paragraphs). This determination must be made on an asset-by-asset basis. If the fair
value of a foreclosed real estate asset minus the estimated
costs to sell the asset is less than the asset’s cost, the
deficiency must be recognized as a valuation allowance
against the asset which is created through a charge to
expense. The valuation allowance should thereafter be
increased or decreased (but not below zero) through
charges or credits to expense for changes in the asset’s
fair value or estimated selling costs.

D

Reporting Certain Government-Guaranteed Mortgage
Loans upon Foreclosure—ASC Subtopic 310-40 clarifies
the conditions under which a creditor must derecognize a
government-guaranteed mortgage loan and recognize a
separate “other receivable” upon foreclosure (that is,
when a creditor receives physical possession of
20 real
estate property collateralizing a mortgage loan). When
these conditions are met, other real estate owned should
not be recognized by a holding company. A holding
company should derecognize a mortgage loan and record
a separate other receivable upon foreclosure of the real
estate collateral if all of the following conditions are met:
• The loan has a government guarantee that is not
separable from the loan before foreclosure.
• At the time of foreclosure, the holding company has
the intent to convey the property to the guarantor and
make a claim on the guarantee and it has the ability to
recover under that claim.
• At the time of foreclosure, any amount of the claim that
is determined on the basis of the fair value of the real
GL-46

Accounting under ASC Subtopic 610-20 (and ASC
Topic 606). Under ASC Subtopic 610-20, if the buyer of
the OREO is a legal entity, a holding company should
first assess whether it has a controlling financial interest
in the legal entity buying the OREO by applying the
guidance in ASC Topic 810, Consolidation. If holding
company determines that it has a controlling financial
interest in the buying legal entity, it should not derecognize the OREO and should apply the guidance in ASC
Subtopic 810-10. When a holding company does not
have a controlling financial interest in the buying legal
entity or the OREO buyer is not a legal entity, which is
expected to be the case for most sales of OREO, the
holding company will recognize the entire gain or loss, if
any, and derecognize the OREO at the time of sale if the
transaction meets certain requirements of ASC Topic
606. Otherwise, the holding company generally will
continue reporting the OREO as an asset, with any cash
payments or other consideration received from the individual or entity acquiring the OREO (i.e., any down
payment and any subsequent payments of principal or
interest) reported as a liability in Schedule HC-G, item 4,
“All other liabilities,” until it becomes appropriate to
recognize the revenue and the sale of the OREO in
accordance with ASC Subtopic 610-20 and ASC
Topic 606.14

14. Although ASC Topic 606 describes the consideration received
(including any cash payments) using such terms as “liability,” “deposit,”
and “deposit liability,” for regulatory reporting purposes these amounts
should be reported in Schedule HC-G, item 4, and not as a deposit in
Schedule HC, item 13.

Glossary

FR Y-9C
December 2021

December
2024

Glossary

(7) factored accounts receivable;
(8) loans arising out of the purchase of assets (other than
securities) under resale agreements with a maturity of
more than one business day if the agreement requires
the holding company to resell the identical asset
purchased; or
(9) participations (acquired or held) in a single loan or
in a pool of loans or receivables (see discussion in the
Glossary entry for “Transfers of Financial Assets”).

(1) Loan origination fees should be deferred and recognized over the life of the related loan as an adjustment of yield (interest income). Once a holding
company adopts ASC Subtopic 310-20, recognizing
a portion of loan fees as revenue to offset all or part
of origination costs in the reporting period in which a
loan is originated is no longer acceptable.
(2) Certain direct loan origination costs specified in the
ASC Subtopic 310-20 should be deferred and recognized over the life of the related loan as a reduction
of the loan’s yield. Loan origination fees and related
direct loan origination costs for a given loan should
be offset and only the net amount deferred and
amortized.

AF

Loan acceptances and commercial paper, held in a trading account are to be reported in Schedule HC, item 5,
“Trading assets.”

recognized on an individual loan-by-loan basis. In general, the ASC Subtopic 310-20 specifies that:

T

one business day), other than those involving security resale agreements;

See also “Loan secured by real estate,” “Overdraft,” and
“Sale of assets.”

R

Loan Fees: The accounting standards for nonrefundable
fees and costs associated with lending, committing to
lend, and purchasing a loan or group of loans are set forth
in ASC Subtopic 310-20, Receivables – Nonrefundable
Fees and Other Costs, a summary of which follows. The
statement applies to all types of loans as well as to debt
securities (but not to loans or debt securities carried at
fair value if the changes in fair value are included in
earnings) and to all types of lenders. For further information, see ASC Subtopic 310-20.

D

A holding company may acquire a loan by originating the
loan (lending) or by acquiring a loan from a party other
than the borrower (purchasing). Lending, committing to
lend, refinancing or restructuring loans, arranging standby
letters of credit, syndicating loans, and leasing activities
are all considered ‘‘lending activities.’’ Nonrefundable
loan fees paid by the borrower to the lender may have
many different names, such as origination fees, points,
placement fees, commitment fees, application fees, management fees, restructuring fees, and syndication fees,
but in this Glossary entry, they are referred to as loan
origination fees, commitment fees, or syndication fees.
ASC Subtopic 310-20 applies to both a lender and a
purchaser, and should be applied to individual loan
contracts. Aggregation of similar loans for purposes of
recognizing net fees or costs and purchase premiums or
discounts is permitted under certain circumstances specified in ASC Subtopic 310-20 or if the result does not
differ materially from the amount that would have been

FR Y-9C
Glossary September 2020

(3) Direct loan origination costs should be offset against
related commitment fees and the net amounts deferred
except for: (a) commitment fees (net of costs) where
the likelihood of exercise of the commitment is
remote, which generally should be recognized as
service fee income on a straight line basis over the
loan commitment period, and (b) retrospectively
determined fees, which are recognized as service fee
income on the date as of which the amount of the fee
is determined. All other commitment fees (net of
costs) shall be deferred over the entire commitment
period and recognized as an adjustment of yield over
the related loan’s life or, if the commitment expires
unexercised, recognized in income upon expiration
of the commitment.
(4) Loan syndication fees should be recognized by the
institution managing a loan syndication (the syndicator) when the syndication is complete unless a portion of the syndication loan is retained. If the yield on
the portion of the loan retained by the syndicator is
less than the average yield to the other syndication
participants after considering the fees passed through
by the syndicator, the syndicator should defer a
portion of the syndication fee to produce a yield on
the portion of the loan retained that is not less than
the average yield on the loans held by the other
syndication participants.
(5) Loan fees, certain direct loan origination costs, and
purchase premiums and discounts on loans shall be
recognized as an adjustment of yield generally by the
GL-71

Glossary
including loan
modifications to
borrowers experiencing
financial difficulty

D

R

AF

(6) A refinanced or restructured loan, other than a
troubled debt restructuring, should be accounted for
as a new loan if the terms of the new loan are at least
as favorable to the lender as the terms for comparable
loans to other customers with similar collection risks
who are not refinancing or restructuring a loan. Any
unamortized net fees or costs and any prepayment
penalties from the original loan should be recognized
in interest income when the new loan is granted. If
the refinancing or restructuring does not meet these
following exists 1): the
conditions or if only minor modifications are made to
the original loan contract, the unamortized net fees or
costs from the original loan and any prepayment
penalties should be carried forward as a part of the
net investment in the new loan (or the amortized cost
basis of the new loan if the holding company has
adopted ASC Topic 326, Financial Instruments—
Credit Losses). The net investment in, or the amortized cost basis of, the new loan, as applicable,
should consist of the remaining net investment in the
original loan, any additional amounts loaned, any
fees received, and direct loan origination costs associated with the transaction. In a troubled debt restructuring involving a modification of terms, fees received
should be applied as a reduction of the recorded
investment in, or the amortized cost basis of, the
loan, as applicable; the loan, and all related costs,
including direct loan origination costs, should be
charged to expense as incurred. (See the Glossary
entry for ‘‘troubled debt restructurings’’ for further
guidance.)

loan origination incurred in transactions with independent third parties for that particular loan and (b) certain
costs directly related to specified activities performed by
the lender for that particular loan.25 Incremental direct
costs are costs to originate a loan that (a) result directly
from and are essential to the lending transaction and (b)
would not have been incurred by the lender had that
lending transaction not occurred. The specified activities
performed by the lender are evaluating the prospective
borrower’s financial condition; evaluating and recording
guarantees, collateral, and other security arrangements;
negotiating loan terms; preparing and processing loan
documents; and closing the transaction. The costs directly
related to those activities include only that portion of the
employees’ total compensation and payroll-related fringe
benefits directly related to time spent performing those
activities for that particular loan and other costs related to
those activities that would not have been incurred but for
that particular loan.

T

interest method based on the contractual term of the
loan. However, if the holding company holds a large
number of similar loans for which prepayments are
probable and the timing and amount of prepayments
can be reasonably estimated, the holding company
may consider estimates of future principal prepayments in the calculation of the constant effective
yield necessary to apply the interest method. Once a
holding company adopts ASC Subtopic 310-20, the
practice of recognizing fees over the estimated average life of a group of loans is no longer acceptable.

(7) Deferred net fees or costs shall not be amortized
during periods in which interest income on a loan is
not being recognized because of concerns about
realization of loan principal or interest.
Direct loan origination costs of a completed loan are
defined to include only (a) incremental direct costs of
GL-72

See also “Loan Modifications to Borrowers
Experiencing Financial Difficulty.”

All other lending-related costs, whether or not incremental, should be charged to expense as incurred, including
costs related to activities performed by the lender for
andadvertising,
2) the change
in
identifying
potential borrowers, soliciting
cash
flows
is
more
thanservicing existing loans, and other
potential borrowers,
minor.
ancillary activities related to establishing and monitoring
credit policies, supervision, and administration. Employees’ compensation and fringe benefits related to these
activities, unsuccessful loan origination efforts, and idle
time should be charged to expense as incurred. Administrative costs, rent, depreciation, and all other occupancy
and equipment costs are considered indirect costs and
should be charged to expense as incurred.
Net unamortized loan fees represent an adjustment of the
loan yield, and shall be reported in the same manner as
unearned income on loans, i.e., deducted from the related
loan balances (to the extent possible) or deducted from
total loans in ‘‘Any unearned income on loans reflected in
items 1-9 above’’ in Schedule HC-C. Net unamortized
direct loan origination costs shall be added to the related
loan balances in Schedule HC-C. Amounts of loan
origination, commitment, and other fees and costs recognized as an adjustment of yield should be reported under
the appropriate subitem of item 1, ‘‘Interest income,’’ in
25. For purposes of this report, a holding company which deems its
costsfor these lending activities not to be material and which need not
maintain records on a loan-by-loan basis for other purposes may expense
such costs as incurred.

Glossary

FR Y-9C
March 2020

December
2024

Glossary

T

A loan satisfying the criteria above, except a loan to a
state or political subdivision in the U.S., is to be reported
as a loan secured by real estate in Schedule HC-C, item 1,
and related items in the report, (1) regardless of whether
the loan is secured by a first or a junior lien; (2) regardless of whether the loan was originated by the reporting
holding company or purchased from others and, if originated by the reporting holding company, regardless of the
department or subsidiary within the holding company or
subsidiary that made the loan; (3) regardless of how the
loan is categorized in the holding company’s records; (4)
and regardless of the purpose of the financing. Only in a
transaction where a lien or liens on real property (with an
estimated collateral value greater than 50 percent of the
loan’s principal amount at origination) have been taken
as collateral solely through an abundance of caution and
where the loan terms as a consequence have not been
made more favorable than they would have been in the
absence of the lien or liens, would the loan not be
considered a loan secured by real estate for purposes of
the FR Y-9C. In addition, when a loan is partially secured
by a lien or liens on real property, but the estimated value
of the real estate collateral at origination (after deducting
any more senior liens held by others) is 50 percent or less
of the principal amount of the loan at origination, the loan
should not be categorized as a loan secured by real estate.
Instead, the loan should be reported in one of the other
loan categories used in these reports based on the purpose
of the loan.

D

R

AF

As with all other loans, all impaired loans should be
reported as past due or nonaccrual loans in Schedule
HC-N in accordance with the schedule’s instructions. A
loan identified as impaired is one for which it is probable
that the institution will be unable to collect all principal
and interest amounts due according to the contractual
terms of the original loan agreement. Therefore, a loan
that is not already in nonaccrual status when it is first
identified as impaired will normally meet the criteria for
placement in nonaccrual status at that time. Exceptions
may arise when a loan not previously in nonaccrual status
is identified as impaired because its terms have been
modified in a troubled debt restructuring, but the borrower’s sustained historical repayment performance for a
reasonable time prior to the restructuring is consistent
with the modified terms of the loan and the loan is
reasonably assured of repayment (of principal and interest) and of performance in accordance with its modified
terms. This determination must be supported by a current, well documented credit evaluation of the borrower’s
financial condition and prospects for repayment under the
revised terms. Exceptions may also arise for those purchased impaired loans for which the criteria for accrual
of income under the interest method are met as specified
in ASC Subtopic 310-30, Receivables—Loans and Debt
Securities Acquired with Deteriorated Credit Quality.
Any cash payments received on impaired loans in nonaccrual status should be reported in accordance with the
criteria for the cash basis recognition of income in the
Glossary entry for “nonaccrual status.” For further guidance, see the Glossary entries for ‘‘nonaccrual status’’
and ‘‘purchased impaired loans and debt securities.’’

Loan Secured by Real Estate: For purposes of this
report, a loan secured by real estate is a loan that, at
origination, is secured wholly or substantially by a lien or
liens on real property for which the lien or liens are
central to the extension of the credit–that is, the borrower
would not have been extended credit in the same amount
or on terms as favorable without the lien or liens on real
property. To be considered wholly or substantially secured
by a lien or liens on real property, the estimated value of
the real estate collateral at origination (after deducting
any more senior liens) must be greater than 50 percent of
the principal amount of the loan at origination.26

26. Bank holding companies should apply this revised definition of
“loan secured by real estate” prospectively beginning April 1, 2009. Loans
reported on or before March 31, 2009, as loans secured by real estate need

See insert D
GL-74

The following are examples of the application of the
preceding guidance:
(1) A subsidiary loans $700,000 to construct and equip a
building that will be used as a dental office. The loan
will be secured by both the real estate and the dental
equipment. At origination, the estimated values of
the building, upon completion, and the equipment are
$400,000 and $350,000, respectively. The loan should
be reported as a loan secured by real estate in
Schedule HC-C, item 1.a.(2), ‘‘Other construction
loans and all land development and other land loans.’’
In contrast, if the estimated values of the building
and equipment at origination were $340,000 and
$410,000, respectively, the loan should not be reported
as a loan secured by real estate. Instead, the loan
not be reevaluated and, if apporpriate, recategorized into other loan categories on Schedule HC-C, Loans and Lease Financing Receivables.

Glossary

FR Y-9C
September 2020

December
2024

Insert D

Loan Modifications to Borrowers Experiencing Financial Difficulty: The accounting standards for loan modifications
to borrowers experiencing financial difficulty are set forth in ASC Topic 326, Financial Instruments – Credit Losses and
ASC Topic 310, Receivables. ASC Subtopic 310-10 requires modifications of receivables to borrowers experiencing
financial difficulty where the modification results in the form of principal forgiveness, an interest rate reduction, an otherthan-insignificant payment delay, or a term extension (or a combination thereof) to be disclosed for financial reporting
purposes. These disclosures only include loan modifications to borrowers experiencing financial difficulty, regardless of
whether the modifications result in new loans or the continuation of existing loans. Loan modifications to borrowers who are
not experiencing financial difficulty or do not meet the definition above would not be disclosed.
For reporting purposes, loans modified to borrowers experiencing financial difficulty must be included in the amounts
reported in the appropriate loan category in Schedule HC-C, Loans and Leases, items 1 through 9. Additionally, if the loan
is in compliance with its modified terms, these modifications are reported in the appropriate loan category in Schedule HCC, Memorandum item 1. For loans that are not in compliance with their modified terms, the loans must be included in the
amounts reported in the appropriate loan category in Schedule HC-N, items 1 through 7, and reported in Schedule HC-N,
Memorandum item 1.

AF

T

See the Glossary entry for “Nonaccrual Status” for a discussion of the conditions under which a loan on nonaccrual that
has undergone a modification to a borrower experiencing financial difficulty (including those that involve a multiple note
structure) may be returned to accrual status. Other Considerations - A modification of a loan in which an institution receives
physical possession of the borrower's assets, whether in full or partial satisfaction of the debt, should be accounted for in
accordance with ASC Subtopic 310-20. In such situations, the loan should be treated as if assets have been received in
satisfaction of the loan and reported as described in the Glossary entry for "Foreclosed Assets."
In addition, if a modification of a loan includes both a modification of terms and the acceptance of property in partial
satisfaction of the loan, the accounting for such a modification is a two-step process. First, the amortized cost basis of the
loan is reduced by the fair value (less cost to sell, if appropriate) of the property received, and second, the holding
company is expected to measure any expected credit losses on the remaining recorded balance, or amortized cost basis,
as applicable, of the modified loan in accordance with ASC Subtopic 326-20, Financial Instruments – Credit Losses –
Measured at Amortized Cost, and record any related allowance. If the modification of terms meets the definition of the loan
modification to a borrower experiencing financial difficulty, then include the loan in the amounts reported on Schedule HCC or Schedule HC-N, as appropriate.

D

R

A modification may also involve the substitution or addition of a new debtor for the original borrower. The treatment of
these situations depends upon their substance. Modifications in which the substitute or additional debtor controls, is
controlled by, or is under common control with the original borrower, or performs the custodial function of collecting certain
of the original borrower's funds, should be accounted for as modifications of terms. Modifications in which the substitute or
additional debtor does not have a control or custodial relationship with the original borrower should be accounted for as a
receipt of a “new” loan in full or partial satisfaction of the original borrower's loan. The "new" loan should be recorded at its
fair value. If the modification of terms meets the definition of the loan modification to a borrower experiencing financial
difficulty, then include the loan in the amounts reported on Schedule HC-C or Schedule HC-N, as appropriate.

Glossary

Mergers: See “Business combinations.”
Money Market Deposit Account (MMDA): See
“Deposits.”
Mortgages, Residential, Participations in Pools of: See
“Transfers of financial assets.”

(1) The asset upon which principal or interest is due and
unpaid for 90 days or more is a consumer loan (as
defined for Schedule HC-C, item 6, “Loans to individuals for household, family, and other personal
expenditures”) or a loan secured by a 1-to-4 family
residential property (as defined for Schedule HC-C,
item 1(c), Loans “Secured by 1-4 family residential
properties”). Nevertheless, such loans should be subject to other alternative methods of evaluation to
assure that the holding company’s net income is not
materially overstated. However, to the extent that the
holding company has elected to carry such a loan in
nonaccrual status on its books, the loan must be
reported as nonaccrual in Schedule HC-N, column C.

AF

NOW Account: See “Deposits.”

Exceptions to the general rule—In the following situations, an asset need not be placed in nonaccrual status:

T

data are available may be valued at cost adjusted for
amortization of premium or accretion of discount unless
credit problems of the obligor or upward movements in
the level of interest rates warrant a lower estimate of
current value. Securities that are not marketable such as,
Federal Reserve stock or equity securities in closely held
businesses, should be valued at book or par value, as
appropriate.

Nonaccrual Status: General rule—Holding companies
on an accrual basis of reporting shall not accrue interest
or discount on (1) any asset which is maintained on a
cash basis because of deterioration in the financial position of the borrower, (2) any asset for which payment in
full of interest or principal is not expected, or (3) any
asset upon which principal or interest has been in default
for a period of 90 days or more unless it is both well
secured and in the process of collection.

D

R

An asset is ‘‘well secured’’ if it is secured (1) by
collateral in the form of liens on or pledges of real or
personal property, including securities, that have a realizable value sufficient to discharge the debt (including
accrued interest) in full, or (2) by the guaranty of a
financially responsible party. An asset is ‘‘in the process
of collection’’ if collection of the asset is proceeding in
due course either (1) through legal action, including
judgment enforcement procedures, or, (2) in appropriate
circumstances, through collection efforts not involving
legal action which are reasonably expected to result in
repayment of the debt or in its restoration to a current
status in the near future.

For purposes of applying the third test for the nonaccrual
of interest listed above, the date on which an asset
reaches nonaccrual status is determined by its contractual
terms. If the principal or interest on an asset becomes due
and unpaid for 90 days or more on a date that falls
between report dates, the asset should be placed in
nonaccrual status as of the date it becomes 90 days past
due and it should remain in nonaccrual status until it
meets the criteria for restoration to accrual status described
below.
GL-76

(2) For a holding company that has not adopted FASB
Accounting Standards Update No. 2016-13
(ASU 2016-13), which governs the accounting for
credit losses, the criteria for accrual of income under
the interest method specified in ASC Subtopic 31030, Receivables—Loans and Debt Securities Acquired
with Deteriorated Credit Quality, are met for a purchased credit-impaired (PCI) loan, pool of loans, or
debt security accounted for in accordance with that
Subtopic, regardless of whether the loan, the loans in
the pool, or debt security had been maintained in
nonaccrual status by its seller. (For PCI loans with
common risk characteristics that are aggregated and
accounted for as a pool, the determination of nonaccrual or accrual status should be made at the pool
level, not at the individual loan level.) For further
information, see the Glossary entry for “purchased
credit-impaired loans and debt securities.”
(3) For a holding company that has adopted ASU 201613, the following criteria are met for a PCD asset,
including a PCD asset that was previously a PCI
asset or part of a pool of PCI loans, that would
otherwise be required to be placed in nonaccrual
status under the general rule:
(a) The holding company reasonably estimates the
timing and amounts of cash flows expected to be
collected, and
(b) The holding company did not acquire the asset
primarily for the rewards of ownership of the
underlying collateral, such as use of collateral in
Glossary

FR Y-9C
March 2021

Glossary

While an asset is in nonaccrual status, some or all of the
cash interest payments received may be treated as interest
income on a cash basis as long as the remaining recorded
investment in, or the amortized cost basis of, the asset, as
applicable, (i.e., after charge-off of identified losses, if
any) is deemed to be fully collectible.27 A holding
company’s determination as to the ultimate collectibility
of the asset’s remaining recorded investment, or the
amortized cost basis, as applicable, must be supported by
a current, well documented credit evaluation of the
borrower’s financial condition and prospects for repayment, including consideration of the borrower’s historical repayment performance and other relevant factors.

AF

When a PCD asset that meets the criteria above is not
placed in nonaccrual status, the asset should be subject to
other alternative methods of evaluation to ensure that the
institution’s net income is not materially overstated. If an
institution is required or has elected to carry a PCD asset
in nonaccrual status, the asset must be reported as a
nonaccrual asset at its amortized cost basis in Schedule HC-N, column C. (For PCD loans for which the
institution has made a policy election to maintain previously existing pools of PCI loans upon adoption of
ASU 2016-13, the determination of nonaccrual or accrual
status should be made at the pool level, not the individual
asset level.) For further information, see the Glossary
entry for “purchased credit-deteriorated assets.“

Treatment of cash payments and criteria for the cash basis
recognition of income—When doubt exists as to the
collectibility of the remaining recorded investment in a
nonaccrual asset (or the amortized cost basis of a nonaccrual asset, if the holding company has adopted ASC
Topic 326), any payments received must be applied to
reduce the recorded investment, or the amortized cost
basis of, the asset, as applicable, to the extent necessary to
eliminate such doubt. Placing an asset in nonaccrual status
does not, in and of itself, require a charge-off, in whole or
in part, of the asset’s recorded investment or the amortized
cost basis, as applicable. However, any identified losses
must be charged off.

T

operations of the institution or improving the
collateral for resale.

R

Treatment of previously accrued interest—The reversal
of previously accrued but uncollected interest applicable
to any asset placed in nonaccrual status and the treatment
of subsequent payments as either principal or interest
should be handled in accordance with generally accepted
accounting principles. Acceptable accounting treatment
includes a reversal of all previously accrued but uncollected interest applicable to assets placed in a nonaccrual
status against appropriate income and balance sheet
accounts.

D

For example, for holding companies that have not adopted
ASC Topic 326, one acceptable method of accounting for
such uncollected interest on a loan placed in nonaccrual
status is (1) to reverse all of the unpaid interest by
crediting the ‘‘income earned, not collected on loans’’
account on the balance sheet, (2) to reverse the uncollected
interest that has been accrued during the calendar year-todate by debiting the appropriate ‘‘interest and fee income
on loans’’ account on the income statement, and (3) to
reverse any uncollected interest that had been accrued
during previous calendar years by debiting the ‘‘allowance
for loan and lease losses’’ account on the balance sheet.
The use of this method presumes that holding company
management’s additions to the allowance through charges
to the ‘‘provision for loan and lease losses’’ on the income
statement have been based on an evaluation of the collectability of the loan and lease portfolios and the “income
earned, not collected on loans” account. Holding companies that have adopted ASC Topic 326 should refer to the
Glossary entry for “accrued interest receivable” for information on the treatment of previously accrued interest.
FR Y-9C
Glossary March 2021

When recognition of interest income on a cash basis is
appropriate, it should be handled in accordance with
generally accepted accounting principles. One acceptable
practice involves allocating contractual interest payments
among interest income, reduction of the recorded investment, or the amortized cost basis of, the asset, as
applicable, and recovery of prior charge-offs. If this
method is used, the amount of income that is recognized
would be equal to that which would have been accrued
on the asset’s remaining recorded investment at the
contractual rate. A holding company may also choose to
account for the contractual interest in its entirety either as
income, reduction of the recorded investment, or the
amortized cost basis of, the asset, as applicable, or
27. An asset subject to the cost recovery method required by ASC
Subtopic 325-40, Investments—Other—Beneficial Interests in Securitized
Financial Assets, should follow that method for reporting purposes. In
addition, when a PCI, pool of loans, or debt security that is accounted for
in accordance with ASC Subtopic 310-30 (or when a PCD asset that is
accounted for in accordance with ASC Subtopic 326-20, if the holding
company has adopted ASC Topic 326) has been placed on nonaccrual
status, the cost recovery method should be used, when appropriated.

GL-77

Glossary
modified

AF

Restoration to accrual status—As a general rule, a
nonaccrual asset may be restored to accrual status when
(1) none of its principal and interest is due and unpaid,
and the holding company expects repayment of the
remaining contractual principal and interest, or (2) when
it otherwise becomes well secured and in the process of
collection. If any interest payments received while the
asset was in nonaccrual status were applied to reduce the
recorded investment in, or the amortized cost basis of, the
asset, as applicable, as discussed in the preceding section
modification
of a loan to the
of this entry, the application
of these payments
borrower
asset’s recorded investment to
orathe
amortized cost basis,
experiencing
financial
as applicable, should not be reversed
(and interest
income
difficulty
should not be credited) when
the asset is returned to
accrual status.
modified to a borrower
experiencing
financial of
difficulty
For purposes
meeting the first test, the holding company must have received repayment of the past due
principal and interest unless:

disclosed as past due in Schedule HC-N until it has
been brought fully current or until it later must be
placed in nonaccrual status.
A loan or other debt instrument that has been formally
restructured in a troubled debt restructuring, so as to be
reasonably assured of repayment (of principal and interest) and of performance according to its modified terms
need not be maintained in nonaccrual status, provided the
restructuring is supported by a current, well documented
credit evaluation of the borrower’s financial condition
and prospects for repayment under the revised terms.
Otherwise, the restructured asset must remain in nonaccrual status. The evaluation must include consideration
of the borrower’s sustained historical repayment performance for a reasonable period prior to the date on which
the loan or other debt instrument is returned to accrual
status. (In returning the asset to accrual status, sustained
historical payment performance for a reasonable time
prior to the restructuring may be taken into account.)
Such a restructuring must improve the collectibility of
the loan or other debt instrument in accordance with a
reasonable repayment schedule and does not relieve the
holding company from the responsibility to promptly
charge off all identified losses.
A troubled debt restructuring may involve a multiple note
structure in which, for example, a troubled loan is
restructured into two notes. The first or “A” note represents the portion of the original loan principal amount
that is expected to be fully collected along with contractual interest. The second or “B” note represents the
portion of the original loan that has been charged off and,
because it is not reflected as an asset and is unlikely to be
collected, could be viewed as a contingent receivable.
For a troubled debt restructuring of a collateral-dependent
loan involving a multiple note structure, the amount of
the “A” note should be determined using the fair value of
the collateral. The “A” note may be returned to accrual
status provided the conditions in the preceding paragraph
are met and: (1) there is economic substance to the
restructuring and it qualifies as a troubled debt restructuring under generally accepted accounting principles,
(2) the portion of the original loan represented by the
‘‘B’’ note has been charged off before or at the time of the
restructuring, and (3) the ‘‘A’’ note is reasonably assured
of repayment and of performance in accordance with the
modified terms.
Until the restructured asset is restored to accrual status, if
ever, cash payments received must be treated in accordance with the criteria stated above in the preceding

T

recovery of prior charge-offs, depending on the condition
of the loan, consistent with its accounting policies for
other financial reporting purposes.
modified

(1) The asset has been formally restructured and qualifies for accrual status, as discussed below;

D

R

(2) For a holding company that has adopted ASU
2016-13, the asset is a purchased impaired loan or
debt security accounted for in accordance with ASC
Subtopic 310-30 and it meets the criteria for accrual
of income under the interest method specified therein;
modification
(3) For a holding company that has adopted ASU
2016-13, the asset is a PCD asset and it meets the two
criteria specified in the third exception to the general
rule discussed above; or

(4) The borrower has resumed paying the full amount of
the scheduled contractual interest and principal payments on a loan that is past due and in nonaccrual
status, even though the loan has not been brought
fully current, and the following two criteria are met.
These criteria are, first, that all principal and interest
amounts contractually due (including arrearages) are
reasonably assured of repayment within a reasonable
period and, second, that there is a sustained period of
repayment performance (generally a minimum of six
months) by the borrower in accordance with the
In conjunction
with the reporting
requirements
onof
Schedule
HCcontractual
terms involving
payments
cash or cash
C, and Schedule
HC-N
for
loan
modifications
to
borrowers
equivalents. A loan that meets these two criteria may
experiencingbe
financial
thestatus
institution
should
consider
restoreddifficulty,
to accrual
but must
continue
to be
both the "A" and "B" notes in its analysis of whether the
modification results in principal forgiveness, an interest rate
GL-78
reduction, or a deferral of payment(s).

modified

Glossary

FR Y-9C
March 2020

December
2024

Glossary
"Loan Modifications to
Borrower Experiencing
Financial Difficulty."

According to ASC Subtopic 210-20, for forward, interest
rate swap, currency swap, option, and other conditional
and exchange contracts, a master netting arrangement
exists if the reporting holding company has multiple
contracts, whether for the same type of conditional or
exchange contract or for different types of contracts, with
a single counterparty that are subject to a contractual
agreement that provides for the net settlement of all
contracts through a single payment in a single currency in
the event of default or termination of any one contract.

AF

Treatment of multiple extensions of credit to one
borrower—As a general principle, nonaccrual status for
an asset should be determined based on an assessment of
the individual asset’s collectibility and payment ability
and performance. Thus, when one loan to a borrower is
placed in nonaccrual status, a holding company or its
subsidiaries do not automatically have to place all other
extensions of credit to that borrower in nonaccrual status.
When a depository institution has multiple loans or other
extensions of credit outstanding to a single borrower, and
one loan meets criteria for nonaccrual status, the depository institution should evaluate its other extensions of
credit to that borrower to determine whether one or more
of these other assets should also be placed in nonaccrual
status.

the right of setoff is enforceable. Accordingly, the
right of setoff should be upheld in bankruptcy (or
receivership). Offsetting is appropriate only if the
available evidence, both positive and negative,
indicates that there is reasonable assurance that the
right of setoff would be upheld in bankruptcy (or
receivership).

T

section of this entry. In addition, after a formal restructuring, if a restructured asset that has been returned to
accrual status later meets the criteria for placement in
nonaccrual status as a result of past due status based on
its modified terms or for other reasons, the asset must be
placed in nonaccrual status. For further information on
formally restructured assets, see the Glossary entry for
‘‘Troubled Debt Restructuring.’’

Noninterest-Bearing Account: See ‘‘Deposits.’’

R

Nontransaction Account: See ‘‘Deposits.’’

Notes and Debentures Subordinated to Deposits: See
‘‘Subordinated notes and debentures.’’

D

Offsetting: Offsetting is the reporting of assets and
liabilities on a net basis in the balance sheet. Holding
companies are permitted to offset assets and liabilities
recognized in the balance sheet when a “right of setoff”
exists. Under ASC Subtopic 210-20, Balance Sheet –
Offsetting, a right of setoff exists when all of the following conditions are met:
(1) Each party owes the other determinable amounts.
Thus, only bilateral netting is permitted.
(2) The reporting party has the right to set off the amount
owed with the amount owed by the other party.
(3) The reporting party intends to set off. This condition
does not have to be met for fair value amounts
recognized for conditional or exchange contracts that
have been executed with the same counterparty under
a master netting arrangement.
(4) The right of setoff is enforceable at law. Legal
constraints should be considered to determine whether
FR Y-9C
Glossary September 2020

December
2024

Offsetting the assets and liabilities recognized for conditional or exchange contracts outstanding with a single
counterparty results in the net position between the two
counterparties being reported as an asset or a liability on
the balance sheet. The reporting entity’s choice to offset
or not to offset assets and liabilities recognized for conditional or exchange contracts must be applied
consistently.
Offsetting of assets and liabilities is also permitted by
other pronouncements identified in ASC Subtopic 210-20.
These pronouncements apply to such items as leverage
leases, pension plan and other postretirement benefit plan
assets and liabilities, and deferred tax assets and liabilities. In addition, ASC Subtopic 210-20, Balance Sheet –
Offsetting, describes the circumstances in which amounts
recognized as payables under repurchase agreements
may be offset against amounts recognized as receivables
under reverse repurchase agreements and reported as a
net amount in the balance sheet. The reporting entity’s
choice to offset or not to offset payables and receivables
under ASC Subtopic 210-20 must be applied consistently.
According to the AICPA Audit and Accounting Guide for
Depository and Lending Institutions, ASC Subtopic
210-20 does not apply to securities borrowing or lending
transactions. Therefore, for purposes of filing holding
company reports, holding companies should not offset
securities borrowing and lending transactions in the
balance sheet unless all the conditions set forth in ASC
Subtopic 210-20 are met.
GL-79

Glossary

For further information, refer to ASC Subtopic 310-30.
Put Option: See ‘‘Futures, forward, and standby
contracts.’’

Renegotiated “Troubled” Debt: See “Troubled debt
restructuring.”
Repurchase Agreements to Maturity and Long-Term
Repurchase Agreements: See “Repurchase/resale
agreements.”
Repurchase/Resale Agreements: A repurchase agreement is a transaction involving the ‘‘sale’’ of financial
assets by one party to another, subject to an agreement by
the ‘‘seller’’ to repurchase the assets at a specified date
or in specified circumstances. A resale agreement (also
known as a reverse repurchase agreement) is a transaction involving the ‘‘purchase’’ of financial assets by
one party from another, subject to an agreement by the
‘‘purchaser’’ to resell the assets at a specified date or in
specified circumstances.

AF

Real Estate, Loan Secured By: See ‘‘Loans secured by
real estate.’’

icy benefits. Reinsurance recoverables do not include
insurance payments expected by the holding company as
a result of policy claims filed by the company with
insurance underwriters.

T

Schedule HC-C. An institution also should report the
outstanding balance and amount of those held-forinvestment purchased credit-impaired loans reported in
Schedule HC-C, part I, Memorandum items 5.a and 5.b,
that are past due 30 through 89 days and still accruing,
past due 90 days or more and still accruing, or in
nonaccrual status as of the report date in Schedule HC-N,
Memorandum items 9.a and 9.b, column A, B, or C,
respectively, in accordance with the past due and nonaccrual guidance provided above in this Glossary entry.

R

Reciprocal Balances: Reciprocal balances arise when
two depository institutions maintain deposit accounts
with each other, that is, when a subsidiary bank of the
consolidated holding company has both a due to and a
due from balance with another depository institution. For
purposes of the FR Y-9C, reciprocal balances between
subsidiaries of the reporting holding company and other
depository institutions may be reported on a net basis in
accordance with generally accepted accounting principles.
GAAP permits financial institutions to net reciprocal
balances where right of offset exists.
For a definition of “Commercial banks in the U.S.,” see
the Glossary entry for “Banks, U.S. and foreign.”

D

Reinsurance: Reinsurance is the transfer, with indemnification, of all or part of the underwriting risk from one
insurer to another for a portion of the premium or other
consideration. Reinsurance contacts may be on an excessof-loss or quota-share basis, the latter being when the
primary underwriter and the reinsurer proportionately
share all insured losses from the first dollar. Reinsurance
includes insurance coverage arranged by a holding company affiliate such as a mortgage reinsurance company,
underwritten by another underwriter and then returned or
ceded in part or whole back to the mortgage reinsurance
affiliate.
Reinsurance Recoverables: Reinsurance recoverables
represent reimbursements expected by insurance underwriters, under reinsurance contracts governing underwriting coverage ceded to another insurer, for paid and
unpaid claims, claim settlement expenses and other polFR Y-9C
Glossary September 2020

December
2024

As stated in the AICPA’s Audit and Accounting Guide for
Banks and Savings Institutions, dollar repurchase agreements (also called dollar rolls) are agreements to sell and
repurchase similar but not identical securities. The dollar
roll market consists primarily of agreements that involve
mortgage-backed securities (MBS). Dollar rolls differ
from regular repurchase agreements in that the securities
sold and repurchased, which are usually of the same
issuer, are represented by different certificates, are collateralized by different but similar mortgage pools (for
example, single-family residential mortgages) and generally have different principal amounts.
General rule—Consistent with ASC Topic 860, Transfers and Servicing, repurchase and resale agreements
involving financial assets (e.g., securities and loans),
including dollar repurchase agreements, are either reported
as (a) secured borrowings and loans or (b) sales and
forward repurchase commitments based on whether the
transferring (‘‘selling’’) institution maintains control over
the transferred assets. (See Glossary entry for ‘‘transfers
of financial assets’’ for further discussion of control
criteria).
If a repurchase agreement both entitles and obligates the
‘‘selling’’ institution to repurchase or redeem the transferred assets from the transferee (‘‘purchaser’’) the ‘‘selling’’ institution should report the transaction as a secured
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Glossary

For further information, see ASC Subtopic 505-30,
Equity – Treasury Stock.

See the Glossary entry for ‘‘nonaccrual status’’ for a
discussion of the conditions under which a nonaccrual
asset which has undergone a troubled debt restructuring
(including those that involve a multiple note structure)
may be returned to accrual status.
A TDR in which a holding company receives physical
possession of the borrower’s assets, should be accounted
for in accordance with ASC Subtopic 310-40. Thus, in
such situations, the loan should be treated as if assets
have been received in satisfaction of the loan and reported
as described in the Glossary entry for ‘‘foreclosed
assets.’’
A TDR may include both a modification of terms and the
acceptance of property in partial satisfaction of the loan.
The accounting for such a restructuring is a two-step
process: (i) the recorded amount (or amortized cost basis
if the holding company has adopted ASC Topic 326) of
the loan is reduced by the fair value (less cost to sell, if
appropriate) of the property received, and (ii) the holding
company should measure any impairment (or expected
credit losses if the holding company has adopted ASC
Topic 326) on the remaining recorded balance, or amortized cost basis, as applicable, of the restructured loan in
accordance with ASC Topic 310 (or ASC Subtopic
326-20 if the holding company has adopted ASC Topic
326) and record any related allowance.

AF

Troubled Debt Restructuring: The accounting standards for troubled debt restructurings are set forth in ASC
Subtopic 310-40, Receivables – Troubled Debt Restructurings by Creditors (formerly FASB Statement No. 15,
Accounting by Debtors and Creditors for Troubled Debt
Restructurings, as amended by FASB Statement No. 114,
Accounting by Creditors for Impairment of a Loan) and,
for holding companies that have adopted ASC Topic 326,
Financial Instruments -Credit Losses, in ASC Topic 326.
Holding companies should refer to the Glossary entries
for “allowance for loan and lease losses” and “allowance
for credit losses,” as applicable, when considering measurement of the allowance for loan losses or allowance
for credit losses (allowance, when used interchangeably)
for TDRs.

compensates for a concession made by the holding
company.

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Schedule HI, Income Statement, but should be reflected
in Schedule HI-A, items 7 and 8, “Sale of treasury stock,”
and “Purchase of treasury stock.” Such gains and losses,
as well as the excess of the cost over the par value of
treasury stock carried at par, are generally to be treated as
adjustments to Schedule HC, item 25, “Surplus.”

D

R

A troubled debt restructuring (TDR) is a restructuring in
which a holding company, for economic or legal reasons
related to a borrower’s financial difficulties, grants a
concession to the borrower that it would not otherwise
consider. The restructuring of a loan or other debt
instrument (hereafter referred to collectively as a ‘‘loan’’)
may include, but is not necessarily limited to: (1) the
transfer from the borrower to the institution of real estate,
receivables from third parties, other assets, or an equity
interest in the borrower in full or partial satisfaction of
the loan (see the Glossary entry for ‘‘foreclosed assets’’
for further information), (2) a modification of the loan
terms, such as a reduction of the stated interest rate,
principal, or accrued interest or an extension of the
maturity date at a stated interest rate lower than the
current market rate for new debt with similar risk, or (3) a
combination of the above. A loan extended or renewed at
a stated interest rate equal to the current interest rate for
new debt with similar risk is not to be reported as a
restructured troubled loan. Modifications of loans should
be evaluated to determine if a TDR exists in totality. In
some instances a borrower may have been able to add
additional collateral or a guarantor to a loan which fully
FR Y-9C
Glossary September 2020

December
2024

A TDR may involve the substitution or addition of a new
debtor for the original borrower. The treatment of these
situations depends upon their substance. Restructurings
in which the substitute or additional debtor controls, is
controlled by, or is under common control with the
original borrower, or performs the custodial function of
collecting certain of the original borrower’s funds, should
be accounted for as modifications of terms. Restructurings in which the substitute or additional debtor does not
have a control or custodial relationship with the original
borrower should be accounted for as a receipt of a ″new″
loan in full or partial satisfaction of the original borrower’s loan. The ″new″ loan should be recorded at its
fair value.
A credit analysis should be performed for a TDR in
conjunction with its restructuring to determine its collectibility and estimated allowance. When available information confirms that a specific TDR, or a portion thereof, is
uncollectible, the uncollectible amount should be charged
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Glossary

AF

Once an obligation has been restructured in a TDR, it
continues to be considered a TDR until paid in full or
otherwise settled, sold, or charged off (or meets the
conditions discussed below under “Accounting for a
Subsequent Restructuring of a Troubled Debt Restructuring”). The loan must be reported in the appropriate loan
category in Schedule HC-C, items 1 through 9, and in the
appropriate loan category in:

not to report for the subsequently restructured loan as a
TDR. The Federal Reserve will not object to an institution no longer treating such a loan as a TDR if at the time
of the subsequent restructuring the borrower is not
experiencing financial difficulties and, under the terms of
the subsequent restructuring agreement, no concession
has been granted by the institution to the borrower. To
meet these conditions for removing the TDR designation,
the subsequent restructuring agreement must specify
market terms, including a contractual interest rate not
less than a market interest rate for new debt with similar
credit risk characteristics and other terms no less favorable to the institution than those it would offer for such
new debt. When determining whether the borrower is
experiencing financial difficulties, the institution’s assessment of the borrower’s financial condition and prospects
for repayment after the restructuring should be supported
by a recurrent, well-documented credit evaluation performed at the time of the restructuring. When assessing
whether a concession has been granted by the institution,
the agencies consider any principal forgiveness on a
cumulative basis to be a continuing concession. Accordingly, a TDR loan with any principal forgiveness would
retain the TDR designation after subsequent restructurings.

T

off against the allowance at the time of the restructuring.
As is the case for all loans, the credit quality of restructured loans should be regularly reviewed. The holding
company should periodically evaluate the collectibility of
the TDR so as to determine whether any additional
amounts should be charged to the allowance, or, if the
restructuring involved a financial asset other than a loan,
to another appropriate account.

• Schedule HC-C, Memorandum item 1, if it is in
compliance with its modified terms, or

• Schedule HC-N, items 1 through 7, and Memorandum
item 1, if it is not in compliance with its modified
terms.

D

R

However, for a loan that is a TDR for which the
concession did not include a reduction of principal, if the
restructuring agreement specifies a contractual interest
rate that is a market interest at the time of the restructuring and the loan is in compliance with its modified terms,
the loan need not continue to be reported as a troubled
debt restructuring in Schedule HC-C, Memorandum item
1, in calendar years after the year in which the restructuring took place. A market interest rate is a contractual
interest rate that at the time of the restructuring is greater
than or equal to the rate that the institution was willing to
accept for a new loan with comparable risk. To be
considered in compliance with its modified terms, a loan
that is a TDR must be in accrual status and must be
current or less than 30 days past due on its contractual
principal and interest payments under the modified repayment terms.
Accounting for a Subsequent Restructuring of a TDR:
When a loan has previously been modified in a TDR, the
lending institution and the borrower may subsequently
enter into another restructuring agreement. The facts and
circumstances of each subsequent restructuring of a TDR
loan should be carefully evaluated to determine the
appropriate accounting by the institution under U.S.
GAAP. Under certain circumstances it may be acceptable

GL-110

If at the time of the subsequent restructuring the institution appropriately demonstrates that a loan meets the
conditions discussed above the loan need no longer be
disclosed as a TDR in the FR Y-9C. The recorded
investment or amortized cost basis, as applicable, should
not change at the time of the subsequent restructuring
(unless cash is advanced or received). When there have
been charge-offs prior to the subsequent restructuring,
consistent with FR Y-9C instructions, any expected
recoveries of amounts previously charged off are not
added to the recorded investment in, or the amortized
cost basis of, the TDR, as applicable. For holding companies that have not adopted ASC Topic 326, no recoveries should be recognized until collections on amounts
previously charged off have been received. For holding
companies that have adopted ASC Topic 326, expected
recoveries of amounts previously charged off should be
considered as part of the allowance estimate but are not
included in the amortized cost basis of the TDR. Similarly, if interest payments were applied to the recorded
investment in the TDR loan prior to the subsequent
restructuring, the application of these payments to the
recorded investment should not be reversed nor reported
Glossary

FR Y-9C
March 2020

December
2024

Glossary

If the TDR designation is removed from a loan that meets
the conditions discussed above and the loan is later
modified in a TDR, the loans should be reported as a
TDR.
Measurement of Impairment on a TDR when ASC Topic
326 Has Not Been Adopted – This section of this
Glossary entry applies to holding companies that have
not adopted ASC Topic 326. Holding companies that
have adopted ASC Topic 326 should refer to the “Measurement of Expected Credit Losses on a TDR when
ASC Topic 326 Has Been Adopted” section below.

Measurement of Expected Credit Losses on a TDR when
ASC Topic 326 Has Been Adopted – This section of this
Glossary entry applies to holding companies that have
adopted ASC Topic 326. Holding companies that have
not adopted ASC Topic 326 should continue to refer to
the “Measurement of Impairment on a TDR when ASC
Topic 326 Has Not Been Adopted” section above.
A holding company should measure any expected credit
losses on loans whose terms have been modified in a
TDR in accordance with ASC Topic 326 as set forth in
the Glossary entry for ″allowance for credit losses.″ ASC
Topic 326 allows a holding company to use any appropriate loss estimation method to estimate ACLs for TDRs.
However, there are circumstances when specific measurement methods are required. For purposes of the Consolidated Reports of Condition and Income, if a TDR, or a
loan for which a TDR is reasonably expected, is collateraldependent, the ACL must be estimated using the fair
value of collateral.

AF

All loans whose terms have been modified in a TDR,
including both commercial and retail loans, are impaired
loans. Therefore, a holding company should measure any
impairment on the restructured loan in accordance with
ASC Topic 310, Receivables, and should refer to the
Glossary entry for “loan impairment.”

For a subsequently restructured TDR on which there was
principal forgiveness and therefore does not meet the
conditions discussed above, the impairment on the TDR
should continue to be measured as a TDR (i.e., as an
impaired loan) in accordance with ASC Topic 310.

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as interest income at the time of the subsequent restructuring.

D

R

A holding company measuring the allowance on a TDR
that is not collateral dependent using the present value of
expected future cash flows method (i.e., discounted cash
flow method) should discount the cash flows using the
effective interest rate of the original or modified loan
prior to the restructuring that resulted in the TDR classification. For a residential mortgage loan with a “teaser”
or starter rate that is less than the loan’s fully indexed
rate, the starter rate is not the original effective interest
rate. ASC Topic 310 also permits a holding company to
aggregate impaired loans that have risk characteristics in
common with other impaired loans, such as modified
residential mortgage loans that represent TDRs, and use
historical statistics along with a composite effective
interest rate as a means of measuring the impairment of
these loans.
For a subsequently restructured TDR, if at the time of the
subsequent restructuring the holding company appropriately determines that the loan no longer meets the
conditions discussed above, the impairment on the loan
need no longer be measured as a TDR (i.e., as an
impaired loan) in accordance with ASC Topic 310 and
the Glossary entry for “loan impairment.” Accordingly,
going forward, the loan’s allowance should be measured
under ASC Subtopic 450-20, Contingencies – Loss Contingencies.
FR Y-9C
Glossary March 2020

December
2024

A holding company measuring the allowance on a TDR,
or a pool of TDRs with shared risk characteristics, using
the present value of expected future cash flow method
(i.e., discounted cash flow method) should discount the
cash flows using the effective interest rate of the original
or modified loan prior to the restructuring that resulted in
the TDR classification. For a residential mortgage loan
with a “teaser” or starter rate that is less than the loan’s
fully indexed rate, the starter rate is not the original
effective interest rate.
When there is a reasonable expectation of executing a
TDR or if a TDR has been executed, the expected effect
of the modification (e.g., a term extension or an interest
rate concession) is included in the estimate of the allowance.
If the TDR designation is removed from a loan balance
when it is appropriate for the loan to no longer be
reported as a TDR, given the change in the loan’s risk
characteristics, the holding company should determine
whether the loan should be included in a pool of loans
with similar risk characteristics for allowance measurement purposes or evaluated for expected credit losses on
an individual basis.
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Glossary

reported in Schedule HC-B, item 5(b), “Structure financial products,” and in the appropriate subitem of Schedule HC-B, Memorandum item 6, “Structured financial
products by underlying collateral or reference assets.”

Trust Preferred Securities as Investments: As holding
company investments, trust preferred securities are hybrid
instruments possessing characteristics typically associated with debt obligations. Although each issue of these
securities may involve minor differences in terms, under
the basic structure of trust preferred securities a corporate
issuer, such as a holding company, first organizes a
business trust or other special purpose entity. This trust
issues two classes of securities: common securities, all of
which are purchased and held by the corporate issuer, and
trust preferred securities, which are sold to investors. The
business trust’s only assets are deeply subordinated
debentures of the corporate issuer, which the trust purchases with the proceeds from the sale of its common and
preferred securities. The corporate issuer makes periodic
interest payments on the subordinated debentures to the
business trust, which uses these payments to pay periodic
dividends on the trust preferred securities to the investors. The subordinated debentures have a stated maturity
and may also be redeemed under other circumstances.
Most trust preferred securities are subject to mandatory
redemption upon the repayment of the debentures.

Trust Preferred Securities Issued: Trust preferred securities are marketed under a variety of names including
MIPS (‘‘Monthly Income Preferred Securities’’), QUIPS
(‘‘Quarterly Income Preferred Securities’’) and TOPrS
(‘‘Trust Originated Preferred Securities’’). These securities are generally issued out of special purpose entities
whose voting common stock is wholly owned by the
parent holding company. The proceeds from the issuance
of these securities are lent to the holding company in the
form of a very long term, deeply subordinated note.
Under GAAP, the special purpose entity may either be a
consolidated subsidiary of the holding company or a
deconsolidated entity that qualifies as an unconsolidated
subsidiary of the holding company for regulatory reporting and other regulatory purposes.

R

AF

T

See also the Glossary entries for “allowance for credit
losses” or “allowance for loan and lease losses,” as
applicable, “amortized cost basis,” and “foreclosed
assets.”

D

Trust preferred securities meet the definition of a security
in ASC Topic 320, Investments-Debt Securities, and in
ASC Topic 321, Investments-Equity Securities. Because
of the mandatory redemption provision in the typical
trust preferred security, investments in trust preferred
securities would normally be considered debt securities
for financial accounting purposes. Accordingly, regardless of the authority under which a holding company is
permitted to invest in trust preferred securities, holding
companies should report these investments as debt securities for purposes of these reports (unless, based on the
specific facts and circumstances of a particular issue of
trust preferred securities, the securities would be considered equity under ASC Topic 321, rather than debt
securities under ASC Topic 320). If not held for trading
purposes, trust preferred securities issued by U.S. business trusts should be reported in Schedule HC-B,
item 6(a), “Other domestic debt securities.” If not held
for trading purposes, an investment in a structured financial product, such as a collateralized debt obligation, for
which the underlying collateral is a pool of trust preferred
securities issued by U.S. business trusts should be

GL-112

Holding companies seeking to issue such securities
should consult with their Federal Reserve Bank. Under
the revised regulatory capital rule, TruPS are generally
considered non-qualifying capital instruments that must
be phased-out of tier 1 capital (see instructions for HC-R,
Part I, items 20, 21, 27, and 28). Note that the rule
permanently grandfathers non-qualifying capital instruments in the tier 1 capital of depository institution
holding companies with total consolidated assets of less
than $15 billion as of December 31, 2009, and 2010
Mutual Holding Companies (subject to limits and additional requirements in case of mergers and acquisitions).
Nonqualifying capital instruments under the rule include
TruPS and cumulative perpetual preferred stock issued
before May 19, 2010, that BHCs included in tier 1 capital
under the limitations for restricted capital elements in the
general risk-based capital rules.
For purposes of reporting on the FR Y-9C, trust preferred
securities issued by a consolidated subsidiary should be
reported in Schedule HC, item 19(b).
For special purpose entities that issue trust preferred
securities and the entity is not consolidated, report the
amount of subordinated notes payable by the holding
company to the unconsolidated special purpose entity in
Schedule HC, item 19(b).
U.S. Banks: See ‘‘Banks, U.S. and foreign.’’
Glossary

FR Y-9C
September 2020

December
2024