Instructions for Preparation of Annual Financial ...

Board of Governors of the Federal Reserve System

Instructions for Preparation of

Annual Financial Statements of Nonbank Subsidiariesof Bank Holding Companies

Reporting Form FR Y–11I

Reissued December 2001

Instructions for Preparation of theAnnual Financial Statements ofNonbank Subsidiaries ofBank Holding CompaniesFR Y-11I

General Instructions

Who Must ReportThe Annual Financial Statements of Nonbank Subsidi-aries of Bank Holding Companies (FR Y-11I) must befiled annually as of the close of business on December 31by the top tier bank holding company for each individualnonbank subsidiary that satisfies one of the followingrequirements:

(1) the nonbank subsidiary is owned or controlled1 by abank holding company with total consolidated assetsof less than $150 million or

(2) the nonbank subsidiary is owned or controlled by abank holding company with total consolidated assetsequal to or greater than $150 million and

(a) the total assets of the nonbank subsidiary are lessthan five percent of the top tier bank holdingcompany’s consolidated Tier 1 capital and

(b) the total operating revenue of the nonbanksubsidiary is less than five percent of the top tierbank holding company’s consolidated totaloperating revenue

Operating revenue is defined as the sum of total interestincome and total noninterest income (before deduction ofexpenses and extraordinary items).

Exception: A nonbank subsidiary satisfying the criteriato file the Quarterly Financial Statements of NonbankSubsidiaries of Bank Holding Companies (FR Y-11Q)for any quarter during the calendar year should continueto file the FR Y-11Q for the remainder of the calendaryear even if it no longer satisfies the requirement forfiling the FR Y-11Q, and is, therefore, not required to filethe FR Y-11I in December.

Each bank holding company must submit a separateFR Y–11I for each of its nonbank subsidiaries satisfyingthe above criteria whether directly or indirectly owned.

A subsidiary, for purposes of this report, is defined bySection 225.2 of Federal Reserve Regulation Y, whichgenerally includes companies 25 percent or more ownedor controlled by another company. Also for purposesof this report, a subsidiary includes any organization inwhich shares have been acquired, directly or indirectly,by a financial holding company under Section 4(k)(4)of the Bank Holding Company Act, as amended bythe Gramm–Leach–Bliley Act, domiciled in the UnitedStates. However, any broker–dealer subsidiary thatengages in underwriting, dealing, or market-making pur-suant to Section 4(k)4(E) of the Bank Holding CompanyAct is exempt from filing this report. Refer to theFR Y-9C Glossary entry for ‘‘Domicile’’ for guidance indetermining domicile. (Any such organization domiciledoutside the United States should file either the Reportof Condition for Foreign Subsidiaries of U.S. BankingOrganizations (FR 2314a or FR 2314b) or the FinancialInformation for Foreign Subsidiaries of U.S. BankingOrganizations (FR 2314c) pursuant to the reportingthreshold requirements for these reports.)

The FR Y-11I report for a nonbank subsidiary owned bymore than one bank holding company should besubmitted in its entirety by the bank holding companywith the majority ownership. The FR Y-11I report for anonbank subsidiary equally owned by two or more bankholding companies should be submitted in its entiretyby the largest bank holding company based on totalconsolidated assets. Reports must only be filed forsubsidiaries that are part of the bank holding company’sorganizational structure as of the close of business onDecember 31 of the calendar year for which the report isbeing filed. The FR Y-11I should not be filed forsubsidiaries that were divested or liquidated during theyear.1. As defined under Regulation Y.

Instructions for Preparation of Reporting Form FR Y-11I GEN-1General Instructions December 2001

Each bank holding company must submit a FR Y-11I foreach individual nonbank subsidiary satisfying the report-ing criteria. Each bank holding company must submit areport on a parent-only basis for each parent nonbanksubsidiary meeting the criteria and submit individualreports for each lower level nonbank subsidiary requiredto file the report. The FR Y-11I must be completed on anonconsolidated basis.

Inactive companies should only be reported if thecompany has engaged in a business activity within thecurrent calendar year and is still open (i.e., temporarilyinactive or in the process of liquidation). Companies suchas namesavers or newly organized companies whichhave never conducted any business activity should not bereported on the FR Y-11I. Additionally, companies thatare newly incorporated are required to report upon thecommencement of a business activity if they meet thereporting criteria.

For purposes of this report, nonbank subsidiaries include,but are not limited to, commercial finance companies,leasing companies, mortgage banking companies, otherdepository institutions, consumer finance companies,insurance agencies or brokerages, securities brokerageand underwriting firms, venture capital corporations,small business investment companies, data processingand information services companies, and insuranceunderwriting companies.

Exemptions from Reporting the AnnualFinancial Statements of NonbankSubsidiaries of Bank Holding CompaniesThe following subsidiaries are exempt from submittingthe Annual Financial Statements of Nonbank Subsidi-aries of Bank Holding Companies:

(1) any subsidiary of a ‘‘qualified foreign bankingorganization’’ as defined by Section 211.23(a) ofRegulation K (12 CFR 211.23(a)) except for subsidi-aries of a U.S. bank holding company, which isthe direct subsidiary of a qualified foreign bankingorganization;

(2) any federally-insured company which is a subsidiaryof a bank holding company;

(3) any subsidiary of a bank or federally-insuredcompany that is a subsidiary of a bank holdingcompany;

(4) any subsidiary of a Small Business InvestmentCompany (SBIC controlled investment);

(5) any subsidiary that is required to file a Report ofCondition for Edge or Agreement Corporations(FR 2886b);

(6) any subsidiary, joint venture, or portfolio investmentthat is required to file the Reports of Condition forForeign Subsidiaries of U.S. Banking Organizationsand the Financial Information for Foreign Subsidi-aries of U.S. Banking Organizations (FR 2314);

(7) any subsidiary that is required to file the FinancialStatements for a Bank Holding Company SubsidiaryEngaged in Bank-Ineligible Securities Underwritingand Dealing (FR Y-20);

(8) any broker–dealer subsidiary that engages in under-writing, dealing, or market-making pursuant toSection 4(k)4(E) of the Bank Holding Act; and

(9) any nondepository trust company that is a member ofthe Federal Reserve System and required to file theConsolidated Reports of Condition and Income.

Frequency of ReportingThis report is to be submitted annually as of Decem-ber 31.

Preparation of the ReportsBank holding companies are required to prepare theAnnual Financial Statements of Nonbank Subsidiaries ofBank Holding Companies in accordance with generallyaccepted accounting principles (GAAP) and with theseinstructions. All reports shall be reported in a consistentmanner.

Bank holding companies should refer to the instruc-tions for the preparation of the Consolidated FinancialStatements for Bank Holding Companies (FR Y-9C)or the Parent Company Only Financial Statements(FR Y-9SP) for additional information on the itemsrequested on this report. Copies of the FR Y-11I,FR Y-9C, and FR Y-9SP may be found on theFederal Reserve Board’s public website(www.federalreserve.gov).


GEN-2 Instructions for Preparation of Reporting Form FR Y-11IGeneral Instructions December 2001

Cover PageThe cover page of the report must include the legal nameof the bank holding company filing the FR Y-11I and themailing address. The name and telephone number of acontact at the holding company to whom questions aboutthe report(s) may be directed must be indicated.

Legal Name of Nonbank SubsidiariesWhen specifying the name of the nonbank subsidiary forwhich the FR Y-11I is being filed, use the legal name ofthe subsidiary as it appears on the papers of incorporationor formation documents. The legal name must be thesame name that is specified on the Report of Changes inOrganizational Structure (FR Y-10).

SignaturesThe Annual Financial Statements of Nonbank Subsidi-aries of Bank Holding Companies shall be signed at theplaces and in the manner indicated on the cover sheet bya duly authorized officer of the bank holding company.

When the top-tier bank holding company is domiciledoutside the United States, the holding company mayauthorize an officer of the respondent nonbank subsidiaryto sign the report.

Submission of ReportsThe reports are to be submitted for each report date onthe report forms provided by the Federal Reserve Bank.No caption on the report form shall be changed in anyway. No item is to be left blank. An entry must be madefor each item, i.e., an amount, a zero, or an ‘‘N/A.’’

All items will not be applicable to each nonbanksubsidiary required to file the report. An ‘‘N/A’’ shouldbe entered if the nonbank subsidiary cannot be involvedin a transaction because of the nature of the organization.For example, if the subsidiary cannot have depositsbecause it is a nondepository institution, an ‘‘N/A’’should be entered in line item 13. A zero should beentered whenever a nonbank subsidiary can participate inan activity, but may not, on the report date, have anyoutstanding balances.

Where to Submit the Reports

The original report and the number of copies specifiedshould be submitted to the Reserve Bank where the bankholding company’s Consolidated Financial Statements(FR Y-9C) or Parent Company Only Financial State-ments (FR Y-9SP) are submitted.

All reports shall be made out clearly and legibly bytypewriter or in ink. Reports completed in pencil will notbe accepted.

Holding companies may submit computer printouts in aformat identical to that of the report form, including allitem and column captions and other identifying numbers.Although the top tier of the bank holding company isresponsible for submitting the FR Y-11I on behalf ofits nonbank subsidiaries, a nonbank subsidiary maycomplete its own report and forward it to the top tierholding company for submission.

Electronic submission of report form. Any bank holdingcompany interested in submitting the FR Y-11I electroni-cally should contact the Federal Reserve Bank in thedistrict where the bank holding company’s ConsolidatedFinancial Statements (FR Y-9C) or Parent CompanyOnly Financial Statements (FR Y-9SP) are submitted.Bank holding companies choosing to submit thesereports electronically must maintain in their files amanually signed and attested printout of the datasubmitted. The cover page of the Reserve Bank suppliedreport forms received for that report date should be usedto fulfill the signature requirement and this page shouldbe attached to the printout placed in the bank holdingcompany’s files.

Submission DateA bank holding company must file this report for itsnonbank subsidiaries no later than 60 calendar days afterthe report date. The filing of a completed report will beconsidered timely, regardless of when the reports arereceived by the appropriate Federal Reserve Bank, ifthese reports are mailed first class and postmarkedno later than the third calendar day preceding thesubmission deadline. In the absence of a postmark, acompany whose completed FR Y-11I is received latemay be called upon to provide proof of timely mailing.A ‘‘Certificate of Mailing’’ (U.S. Postal Serviceform 3817) may be used to provide such proof. If anovernight delivery service is used, entry of the completed


Instructions for Preparation of Reporting Form FR Y-11I GEN-3General Instructions December 2001

original reports into the delivery system on the daybefore the submission deadline will constitute timelysubmission. In addition, the hand delivery of thecompleted original reports on or before the submissiondeadline to the location to which the reports wouldotherwise be mailed is an acceptable alternative tomailing such reports. Companies that are unable to obtainthe required officers’ signatures on their completedoriginal reports in sufficient time to file these reports sothat they are received by the submission deadline maycontact the Federal Reserve Bank to which they mailtheir original reports to arrange for the timely submissionof their report data and the subsequent filing of theirsigned reports.

If the submission deadline falls on a weekend or holiday,the report must be received by 5:00 P.M. on the firstbusiness day after the Saturday, Sunday, or holiday. Anyreport received after 5:00 P.M. on the first business dayafter the Saturday, Sunday, or holiday deadline will beconsidered late unless it has been postmarked threecalendar days prior to the original Saturday, Sunday, orholiday submission deadline (original deadline), or theinstitution has a record of sending the report by overnightservice one day prior to the original deadline.

NOTE: A bank holding company must submit anindividual report for all of its nonbank subsidiaries on orbefore the submission deadline to be considered timely.

ConfidentialityThe submissions of this report are available to thepublic upon request on an individual basis. However, areporting bank holding company may request confiden-tial treatment for one or more of the nonbank subsidiariesfor which it submits the Annual Financial Statements forNonbank Subsidiaries of Bank Holding Companies if itis of the opinion that disclosure of certain commercial orfinancial information in the report would likely result insubstantial harm to its (or its subsidiaries’) competitiveposition or that disclosure of the submitted personalinformation would result in unwarranted invasion ofpersonal privacy.

A request for confidential treatment must be submitted inwriting concurrently with the submission of the report.The request must discuss in writing the justification forwhich confidentiality is requested, demonstrating the

specific nature of the harm that would result from publicrelease of the information; merely stating that competi-tive harm would result or that information is personal isnot sufficient.

INFORMATION FOR WHICH CONFIDENTIALTREATMENT IS REQUESTED SHOULD BEREPORTED SEPARATELY BOUND WITH ASEPARATE FR Y-11I COVER SHEET LABELED‘‘CONFIDENTIAL.’’ THIS INFORMATIONSHOULD BE SPECIFICALLY IDENTIFIED ASBEING CONFIDENTIAL.

In regard to information for which confidential treatmenthas been requested, the Board will advise the bankholding company, through the Reserve Bank, of anydecision to make any of the information available to thepublic.

Additional InformationThe Federal Reserve System reserves the right to requireadditional information from nonbank subsidiaries if theFR Y–11I report is not sufficient to appraise the financialsoundness of the nonbank subsidiary or to determine itscompliance with applicable laws and regulations.

DefinitionsFor purposes of this report, related organizations includeany organization that directly or indirectly controls thereporting nonbank subsidiary, or any organization thatis controlled, directly or indirectly, by the reportingnonbank subsidiary or by the reporter’s bank holdingcompany parent(s). Related organizations include parentcompanies, subsidiary banks and other nonbanksubsidiaries.

Nonrelated organizations include all organizations thatdo not meet the definition of ‘‘related organizations.’’Nonrelated organizations include all organizations out-side of the bank holding company structure and refer tothird party entities.

RoundingAll dollar amounts must be reported in thousands ofdollars, with the figures rounded to the nearest thousand.Items less than $500 should be reported as zero.


GEN-4 Instructions for Preparation of Reporting Form FR Y-11IGeneral Instructions December 2001

LINE ITEM INSTRUCTIONS FOR THE

Income Statement

General InstructionsReport all income and expense of the nonbank subsidiaryfor the calendar year-to-date. Include adjustments ofaccruals and other accounting estimates made shortlyafter the end of a reporting period which relate to theincome and expense of the reporting period.

A nonbank subsidiary that began operating during thereporting period should report all income earned andexpense incurred since it commenced operations and allpre-opening income earned and expenses incurred frominception until that date.

All income from the bank holding company (parentcompanies only), from subsidiary banks directly orindirectly owned or controlled by the bank holdingcompany (or its subsidiary bank holding companies) andfrom other nonbank subsidiaries of the bank holdingcompany, should be reported in item 8 ‘‘Intercompanyincome.’’

All expense relating to transactions with the bankholding company (parent companies only), with subsid-iary banks directly or indirectly owned or controlled bythe bank holding company (or its subsidiary bankholding companies), and with other nonbank subsidiariesshould be reported in item 9, ‘‘Intercompany expense.’’

Line Item 1 Total interest income.

Report in this item all interest, fees and similar incomereceived by the nonbank subsidiary from nonrelatedorganizations. Include income resulting from interestearned on loans and leases (including related fees),income on balances due from depository institutions,interest and dividends on securities, interest from assetsheld in trading accounts, interest on federal funds soldand securities purchased under agreements to resell, andany other interest income received by the nonbank sub-sidiary other than intercompany interest income. Report

interest income on balances due from related organiza-tion in item 8 below.

Deduct interest rebated to customers on loans paid beforematurity from gross interest earned on loans; do notreport as an expense. Exclude from this item:

(1) fees for servicing real estate mortgage or other loanswhich are not assets of the nonbank subsidiary(report in item 5 below);

(2) net gains or losses from the sale of assets (report initem 5 or 7, as appropriate); and

(3) charges to merchants for handling credit card orcharge sales when the nonbank subsidiary does notcarry the related loan accounts on their books (reportin item 5 below).

Line Item 2 Total interest expense.

Report the total amount of interest expense of thenonbank subsidiary pertaining to nonrelated organiza-tions. Include expenses on deposits, on federal fundspurchased and securities sold under agreements torepurchase, on short- and long-term borrowings, onsubordinated notes and debentures, on mandatory secu-rities, on mortgage indebtedness and obligations undercapitalized leases, and all other interest expense, otherthan intercompany interest expense.

Line Item 3 Net interest income.

Report the difference between item 1, ‘‘Total interestincome,’’ and item 2, ‘‘Total interest expense.’’ Enclosethe amount in parentheses if it is negative.

Line Item 4 Provision for credit losses.

Report the amount needed to make the allowance for loanand lease losses, as reported in Balance Sheet, item 4(b),adequate to absorb expected loan and lease losses, based

Instructions for Preparation of Reporting Form FR Y-11I IS-1Income Statement December 2001

upon management’s evaluation of the nonbank subsid-iary’s current loan and lease portfolio.

Exclude provision for credit losses on off-balance sheetcredit exposures and provision for allocated transfer risk,both of which should be reported in item 7, ‘‘Othernoninterest expense.’’

The amount reported here may differ from the bad debtexpense deduction taken for federal income tax purposes.

Item 5 Total noninterest income.

Report all other income not properly reported in item 1,‘‘Total interest income’’ that is derived from activitiesin which the nonbank subsidiary is engaged. Includeincome from fiduciary activities, service charges ondeposit accounts, trading revenue, investment banking,advisory, brokerage, and underwriting fees, and com-missions, venture capital revenue, net servicing fees, netsecuritization income, insurance commissions and fees,and all other noninterest income. Exclude intercompanynoninterest income.

Also, a nonbank subsidiary may include as othernoninterest income net gains (losses) from the sale ofloans and certain other assets as long as the nonbanksubsidiary reports such transactions on a consistent basis.

Line Item 6 Realized gains (losses) onheld-to-maturity securities and available-for-salesecurities.

Report the net gain or loss realized during the calendaryear-to-date from the sale, exchange, redemption, orretirement of Balance sheet, item 2, ‘‘Held-to-maturityand available-for-sale securities.’’ The realized gain orloss is the difference between the sales price (excludinginterest at the coupon rate accrued since the last interestpayment date, if any) and the amortized cost. Alsoinclude in this item the write-downs of the cost basis ofindividual held-to-maturity and available-for-sale securi-ties for other-than-temporary impairments. If the amountto be reported in this item is a net loss, enclose it inparentheses.

Do not adjust for applicable income taxes (income taxesapplicable to gains (losses) on held-to-maturity andavailable-for-sale securities are to be included in theapplicable income taxes reported in item 11 below).

Line Item 7 Total noninterest expense.

Report all other expenses not properly reported in item 2,‘‘Total interest expense’’ that is incurred from activitiesin which the nonbank subsidiary is engaged. Includesalaries and employee benefits, expenses on premises andfixed assets, premises, or other real estate owned, feespaid to directors and advisory directors, federal depositinsurance premium, data processing services, officesupplies, minority interest in the net income or loss of thenonbank subsidiary, and all other noninterest expenses.

Also report in this item any amount provided for creditlosses related to off-balance-sheet credit exposures,based upon management’s evaluation of the nonbanksubsidiaries current off-balance-sheet credit exposures.Enclose negative amounts in parentheses.

Also, a nonbank subsidiary may include as othernoninterest expense net losses (gains) from the sale ofloans and certain other assets as long as the nonbanksubsidiary reports such transactions on a consistent basisover time.

Exclude intercompany noninterest expenses.

Line Item 8 Intercompany income.

Report in this item all income derived from transactionsbetween the nonbank subsidiary on this report and theparent bank holding companies, between the nonbanksubsidiary and banks that are direct or indirect subsidi-aries of the parent bank holding companies, and betweenthe nonbank subsidiary and the other nonbank subsidi-aries of the bank holding company. Exclude the parent’sequity in undistributed income of nonbank subsidiariesfrom this item and report in item 13 below.

Line Item 9 Intercompany expense.

Report in this item all expenses relating to transactionswith the nonbank subsidiary on this report and the parentbank holding companies, between the nonbank subsidi-ary and banks that are direct or indirect subsidiaries ofthe parent bank holding companies, and between thenonbank subsidiary and the other nonbank subsidiaries ofthe bank holding company.

Line Item 10 Income before taxes, extraordinaryitems, and other adjustments.

Report the sum of items 3, 5, 6, and 8 minus the sum of

Income Statement

IS-2 Instructions for Preparation of Reporting Form FR Y-11IIncome Statement December 2001

items 4, 7, and 9. If the result is negative, enclose theamount in parentheses.

Line Item 11 Applicable income taxes (benefits)(estimated).

Report the total estimated federal, state and local, andforeign income tax expense applicable to item 10,‘‘Income before taxes, extraordinary items, and otheradjustments,’’ including the tax effects of gains (losses)on securities not held in trading accounts (i.e., available-for-sale securities and held-to-maturity securities). Includeboth the current and deferred portions of these incometaxes. If the amount is a tax benefit rather than a taxexpense, enclose it in parentheses. Include as applicableincome taxes all taxes based on a net amount of taxablerevenue less deductible expenses. Exclude from applica-ble income taxes all taxes based on gross revenues orgross receipts.

Line Item 12 Extraordinary items, net of incometaxes.

Report the total of extraordinary items and otheradjustments, net of income taxes. Include in this item

the material effects of any extraordinary items and thecumulative effect of all changes in accounting principlesexcept those required to be reported as a change in equitycapital in accordance with GAAP.

Line Item 13 Equity in undistributed income (loss)of subsidiary(s).

Report the amount of the parent nonbank subsidiary’sproportionate interest in the nonbank subsidiary’s(s’) netincome (loss) less any dividends declared by the nonbanksubsidiary(s) for the calendar year-to-date.

Line Item 14 Net income (loss).

Report the sum of items 10, 12, and 13 minus item 11. Ifthis amount is a net loss, enclose it in parentheses. Thisitem must equal Changes in Equity Capital, item 2, ‘‘NetIncome.’’

Income Statement

Instructions for Preparation of Reporting Form FR Y-11I IS-3Income Statement December 2001

LINE ITEM INSTRUCTIONS FOR

Changes in Equity Capital

General InstructionsTotal equity capital includes perpetual preferred stock,common stock, capital surplus, retained earnings, accu-mulated other comprehensive income and other equitycapital components such as treasury stock and unearnedEmployee Stock Ownership Plan Shares. All amounts,other than the amount reported in item 1, shouldrepresent net aggregate changes for the calendar year-to-date. Enclose all net decreases and losses (net reductionsof equity capital) in parentheses.

Line Item 1 Equity capital most recently reportedfor the end of the previous calendar year.

Report the nonbank subsidiary’s total equity capital bal-ance most recently reported for the previous calen-dar year-end after the filing of the amended report(s).Include in this item, the cumulative effect, net of applic-able income taxes, of those changes in any accountingprinciples adopted during the calendar year-to-datereporting period that were retroactively applied and forwhich prior years’ financial statements were restated.Also, include the sum of all corrections, net of applicableincome taxes, resulting from material accounting errorswhich were made in prior years and not corrected by thefiling of an amended report for the period in which theerror was made.

Line Item 2 Net income (loss).

Report the net income (loss) for the calendar year-to-dateas reported on the Income Statement, item 14, ‘‘Netincome (loss).’’

Line Item 3 Sale, conversion, acquisition, orretirement of common stock and perpetualpreferred stock.

Report the changes in the subsidiary’s total equity capi-tal resulting from the sale, conversion, acquisition, or

retirement of the subsidiary’s capital stock. Limited-lifepreferred stock is not included in equity capital.

Report in this item the total amount of new capital stockissued, net of any expenses associated with the issuanceof the stock.

Report in this item the changes in the subsidiary’s totalequity capital resulting from:

(1) Sale of the subsidiary’s perpetual preferred stock orcommon stock.

(2) Exercise of stock options, including:

(a) Any income tax benefits to the subsidiaryresulting from the sale of the subsidiary’s ownstock acquired under a qualified stock optionwithin three years of its purchase by theemployee who had been granted the option.

(b) Any tax benefits to the subsidiary resulting fromthe exercise (or granting) of nonqualified stockoptions (on the subsidiary’s stock) based on thedifference between the option price and the fairmarket value of the stock at the date of exercise(or grant).

(3) The conversion of convertible debt, limited-life pre-ferred stock, or perpetual preferred stock into per-petual preferred or common stock.

(4) Redemption of perpetual preferred stock or commonstock.

(5) Retirement of perpetual preferred stock or commonstock including:

(a) The net decrease in equity capital which occurswhen cash is distributed in lieu of fractionalshares in a stock dividend.

(b) The net increase in equity capital when astockholder who receives a fractional share from

Instructions for Preparation of Reporting Form FR Y-11I EQ-1Changes in Equity Capital December 2001

a stock dividend purchases the additional frac-tion necessary to make a whole share.

(6) Capital-related transactions involving the subsid-iary’s Employee Stock Option Plan (ESOP).

Line Item 4 LESS: Cash dividends declared.

Report in item 4(a), cash dividends declared on preferredstock, and in item 4(b), cash dividends declared oncommon stock.

Cash dividends are payments of cash to stockholders inproportion to the number of shares they own. Cashdividends on preferred and common stock are to bereported on the date they are declared by the nonbanksubsidiary’s board of directors (the declaration date) bydebiting ‘‘ retained earnings’’ and crediting ‘‘ dividendsdeclared not yet payable,’’ which is to be reported inother liabilities. Upon payment of the dividend, ‘‘ divi-dends declared not yet payable’’ is debited for theamount of the cash dividend with an offsetting credit,normally in an equal amount, to ‘‘ dividend checksoutstanding.’’

A liability for dividends payable may not be accrued inadvance of the formal declaration of a dividend by theboard of directors. However, the nonbank subsidiary maysegregate a portion of retained earnings in the form ofa capital reserve in anticipation of the declaration of adividend.

Line Item 4(a) Preferred.

Report all cash dividend declared on limited-life andperpetual preferred stock by the nonbank subsidiaryduring the calendar year-to-date, including dividends notpayable until after the report date.

Do not include dividends declared during the previouscalendar year but paid in the current period.

Line Item 4(b) Common.

Report all cash dividends declared on common stock bythe nonbank subsidiary during the calendar year-to-date,including dividends not payable until after the reportdate.

Do not include dividends declared during the previouscalendar year but paid in the current period.

Line Item 5 Accumulated other comprehensiveincome.

Report in this item the amount of other comprehensiveincome for the calendar year-to-date. Other compre-hensive income includes changes during the calendaryear-to-date in net unrealized holding gains (losses) onavailable-for-sale securities, accumulated net gains (losses)on cash hedges, foreign currency translation adjustments,and minimum pension liability adjustments. Please referto the FR Y-9C instructions and FASB StatementNo. 130 for additional information on reporting this item.

Line Item 6 Other adjustments.

Report in this item all adjustments to equity capital thatare not properly reported in items 1 through 5 above.This item should include the following:

(1) changes incident to business combinations.

(2) sales of treasury stock.

(3) LESS: Purchases of treasury stock.

(4) changes in offsetting debit to the liability forEmployee Stock Ownership Plan (ESOP) debtguaranteed by the subsidiary.

Line Item 7 Equity capital at end of currentperiod.

Report the sum of items 1, 2, 3, 5, and 6, less items 4(a)and 4(b). This item must equal Balance Sheet, item 20,‘‘ Total equity capital.’’

EQ-2 Instructions for Preparation of Reporting Form FR Y-11IChanges in Equity Capital December 2001


Balance Sheet and Off-Balance Sheet

AssetsItems 1 through 7 and 9 and 10 should exclude balanceswith related institutions. Balances with related institu-tions should be reported in item 11 below.

Line Item 1 Cash and balances due fromdepository institutions.

Report the total of both noninterest-bearing and interest-bearing balances due from depository institutions, cur-rency and coin, cash items in process of collection andunposted debits.

Depository institutions, as a customer of the reportingnonbank subsidiary, consist of commercial banks in theUnited States, credit unions, mutual and stock savingsbanks, savings or building and loan associations, coop-erative banks, industrial banks that accept deposits,U.S. branches and agencies of foreign banks, andbanking organizations in foreign countries.

Balances due from depository institutions include:

(1) noninterest-bearing funds on deposit at depositoryinstitutions for which the reporting company havealready received credit; and

(2) interest-bearing balances due from depository insti-tutions, whether in the form of savings or timebalances, including certificates of deposit.

Exclude balances with closed or liquidating banks orother depository institutions and all loans. Also excludebalances due from subsidiary banks of the reporting bankholding company (report in item 11(b) below).

Line Item 2 Held-to-maturity andavailable-for-sale securities.

Report in this item U.S. Treasury securities, U.S. gov-ernment agency and corporation obligations, securities

issued by states and political subdivisions in the U.S.,and all other debt and equity securities with readilydeterminable fair values. Also, include as debt securi-ties all holdings of commercial paper. Report held-to-maturity securities at amortized cost and available-for-sale securities at fair value. Exclude equity securities thatdo not have readily determinable fair values, which are tobe reported in item 10 below.

Line Item 3 Federal funds sold and securitiespurchased under agreements to resell.

Report the dollar amount outstanding of federal fundssold and securities purchased under agreement to resellin the form of:

(1) immediately available funds under agreements orcontracts that mature in one business day or roll overunder a continuing contract, regardless of the natureof the transaction or the collateral involved (i.e.,whether unsecured, secured, or involving a resaleagreement in securities, loans, or any other instru-ments), excluding overnight lending for commercialand industrial purposes;

(2) other security resale agreements that mature in morethan one business day if the agreement requires thesubsidiary to resell the identical security purchasedor a security that meets the definition of substantiallythe same in the case of the dollar roll.

(3) purchases of participations in pools of securities thatmature in more than one business day.

Exclude from this item:

(1) Sales of so-called ‘‘term federal funds’’ (i.e., federalfunds with a maturity of more than one business day)(report in item 4(a) ‘‘Loans and lease financingreceivables, net of unearned income’’).

(2) Due bills representing purchases of securities orother assets by the nonbank subsidiary that have

Instructions for Preparation of Reporting Form FR Y-11I BS-1Balance Sheet December 2001

not yet been delivered and similar instruments,whether collateralized or uncollateralized (reportin item 4(a)).

(3) Resale agreements involving assets other thansecurities that mature in more than one business dayor are not in immediately available funds (report initem 4(a)).

(4) Yield maintenance dollar repurchase agreements.

(5) All federal funds sold and securities purchased underagreements to resell with any related institution,which are to be reported in item 11 as appropriate.

Line Item 4 Loans and lease financing receivables.

Line Item 4(a) Loans and lease financingreceivables, net of unearned income.

Report the aggregate book value of all loans and leases ofthe nonbank subsidiary, net of unearned income, beforethe deduction of the ‘‘Allowance for loan and leaselosses,’’ (reported in item 4(b) below).

Loans and lease financing receivables are extensions ofcredit resulting from either direct negotiation betweenthe nonbank subsidiary and their customers or thepurchase of such assets from others.

Loans may take the form of promissory notes, acknowl-edgments of advance, due bills, invoices, overdrafts,acceptances held, factoring account receivables, custom-ers’ liability on trade acceptances, and similar written ororal obligations.

Exclude:

(1) all loans and leases with related institutions, whichare to be reported in item 11 as appropriate;

(2) all transactions reportable as federal funds sold andsecurities purchased under agreements to resell initem 3 above;

(3) any loans or leases that the subsidiaries have sold orcharged off; and

(4) the fair value of any assets received in full or partialsatisfaction of a loan or lease (unless the assetreceived is itself reportable as a loan or lease) andany loans for which the nonbank subsidiary hasobtained physical possession of the underlyingcollateral regardless of whether formal foreclosure or

repossession procedures have been instituted againstthe borrower; and

(5) Commercial paper.

Line Item 4(b) Less: Allowance for loan and leaselosses.

Report the allowance for loan and lease losses as deter-mined in accordance with generally accepted accountingprinciples (GAAP) for the nonbank subsidiary. This itemshould exclude any allowance for loan and lease losses onloans and leases with related institutions.

Line Item 4(c) Loan and lease financingreceivables, net of unearned income and allowancefor loan and lease losses.

Report the amount derived by subtracting item 4(b) fromitem 4(a).

Line Item 5 Trading assets.

Report the fair value of all assets held in the nonbanksubsidiaries’ trading accounts. Assets held in tradingaccounts include, but are not limited to, the following:

(1) U.S. Treasury securities;

(2) U.S. government agency and corporation obligations;

(3) securities issued by states and political subdivisionsin the U.S.;

(4) other bonds, notes, and debentures;

(5) certificates of deposit;

(6) commercial paper;

(7) bankers acceptances; and

(8) revaluation gains from derivative contracts.

Line Item 6 Premises and fixed assets (includingcapitalized leases).

Report the book value, less accumulated depreciation oramortization, of all premises, equipment, furniture, andfixtures purchased directly or acquired by means of acapital lease. The method of depreciation or amortiza-tion should conform to generally accepted accountingprinciples.

Include the following as premises and fixed assets:

Balance Sheet

BS-2 Instructions for Preparation of Reporting Form FR Y-11IBalance Sheet December 2001

(1) Premises that are actually owned and occupied (or tobe occupied, if under construction) by the subsidiary.

(2) Leasehold improvements, vaults, and fixed machin-ery and equipment.

(3) Remodeling costs to existing premises.

(4) Real estate acquired and intended to be used forfuture expansion.

(5) Parking lots that are used by customers or employeesof the subsidiary.

(6) Furniture, fixtures, and movable equipment of thesubsidiary.

(7) Automobiles, airplanes, and other vehicles owned bythe subsidiary and used in the conduct of its business.

(8) The amount of capital lease property (with thesubsidiary as lessee)—premises, furniture, fixtures,and equipment.

(9) Stocks and bonds issued by nonmajority-ownedcorporations whose principal activity is the ownershipof land, buildings, equipment, furniture, or fixturesoccupied or used (or to be occupied or used) by thesubsidiary.

Property formerly but no longer used for nonbankingactivities may be reported in this item as ‘‘Premises andfixed assets’’ or in item 7, ‘‘Other real estate owned.’’

Exclude from premises and fixed assets:

(1) Original paintings, antiques, and similar valuableobjects (report in item 10, ‘‘All other assets’’);

(2) Favorable leasehold rights (report in item 9, ‘‘Intan-gible assets’’); and

(3) Loans and advances, whether secured or unsecured,to individuals, partnerships, and nonmajority-ownedcorporations for the purpose of purchasing orholding land, buildings, or fixtures occupied or used(or to be occupied or used) by the subsidiary (reportin item 4(a) ‘‘Loans and lease financing receivables,net of unearned income’’).

Line Item 7 Other real estate owned.

Report the book value (not to exceed the fair value), lessaccumulated depreciation, if any, of all real estate otherthan premises actually owned by the subsidiary. Includein this item the following:

(a) real estate acquired in satisfaction of debts previ-ously contracted and

(b) real estate acquired and held for investment andproperty originally acquired for future expansionbut no longer intended to be used for that purpose.Property formerly but no longer used for nonbankingactivities may be reported in this item as ‘‘Other realestate owned’’ or in item 6, as ‘‘Premises and fixedassets.’’

Line Item 8 Investments in other companies.

Report the amount of the nonbank subsidiary’s invest-ments in the stock of subsidiaries, associated companies,and those joint ventures over which the respondentexercises significant influence (collectively referred to as‘‘investees’’). Also include loans and advances to invest-ees and holdings of their bonds, notes, and debentures.

Investments in the common stock of investees shall bereported using the equity method of accounting. Underthe equity method, the carrying value of the nonbanksubsidiary’s investment in the common stock of aninvestee is originally recorded at cost but is adjustedperiodically to record as income the nonbank subsidi-ary’s proportionate share of the investee’s earnings orlosses and decreased by the amount of any cash divi-dends received from the investee and by the amount ofamortized goodwill.

Line Item 9 Intangible assets.

Report in this item the unamortized cost of intangibleassets. Such intangibles may arise from the following:

(1) business combinations accounted for under thepurchase method in accordance with AccountingPrinciples Board Opinion No. 16, and

(2) acquisitions of portions or segments of anotherinstitution’s business, such as branch offices, mort-gage servicing portfolios, and credit card portfolios.

For purposes of reporting on this schedule, intangibleassets should be amortized over their useful life inaccordance with the provisions stated in GAAP. Bankholding companies that are registered with the Securitiesand Exchange Commission (SEC) should amortize theirintangible assets in accordance with SEC Staff Account-ing Bulletin Number 42A.

Balance Sheet


Report the amount (book value) of unamortized good-will. Goodwill represents the excess of the cost of a com-pany over the sum of the fair values of the tangible assetsand identifiable intangible assets acquired less the fairvalue of liabilities assumed in a business combinationaccounted for as a purchase. The amount of goodwillreported in this item should not be reduced by anynegative goodwill. Any negative goodwill arising from abusiness combination accounted for as a purchase mustbe reported in item 17, ‘‘All other liabilities.’’

Report the carrying value of mortgage servicing assets,i.e., the unamortized cost of acquiring contracts toservice loans secured by real estate that have beensecuritized or are owned by another party, net of anyrelated valuation allowances.

Also report in this item the unamortized amount of otherspecifically identifiable intangible assets such as pur-chased credit card relationships (PCCRs), core depositintangibles, and favorable leasehold rights. Also, includeservicing assets other than mortgage servicing assets.

Line Item 10 All other assets.

Report all other assets held by the respondent nonbanksubsidiary. Include assets not associated with invest-ments in other companies reported in items 8 or 9 above.Report in this item income earned but not collected,prepaid expenses, accounts receivable, and any otherassets not properly reported in items 1 through 9 above.

Also, report the positive fair value of all derivativesheld for purposes other than trading in this item asappropriate.

Report all deferred tax assets in this item and deferred taxliabilities in item 17, ‘‘All other liabilities.’’

Exclude all balances due from related institutions. Suchtransactions should be reported in item 11(a), 11(b), or11(c) below.

Line Item 11 Balances with related institutions,gross.

Report all balances due from the bank holding company(parent companies only) in item 11(a); all balances duefrom subsidiary banks of the bank holding company initem 11(b); and all balances due from other nonbanksubsidiaries of the bank holding company in item 11(c),gross.

Line Item 11(a) Balances due from bank holdingcompany (parent companies only), gross.

Include in this item all balances (including loans andlease financing receivables) held by the nonbank sub-sidiary due from the bank holding company (parentcompanies only) on a gross basis.

If the respondent bank holding company is a multi-tieredbank holding company, this item should include balancesdue from the direct and indirect parent companies at anylevel in the organization.

Also, a special purpose subsidiary should report in thisitem the loan made to the parent bank holding companywith the proceeds from the issuance of trust preferredsecurities.

All such balances due to the bank holding company(parent companies only) should be excluded from thisitem and included in item 18(a).

Line Item 11(b) Balances due from subsidiarybanks of the bank holding company, gross.

Include in this item all balances, on a gross basis, heldby the nonbank subsidiary due from direct or indirectbanking subsidiaries of the respondent’s bank holdingcompany.

All balances due to subsidiary banks of the respondent’sbank holding company should be excluded from this itemand included in item 18(b).

Line Item 11(c) Balances due from other nonbanksubsidiaries of the bank holding company, gross.

Include in this item all balances, on a gross basis, held bythe nonbank subsidiary due from other nonbank subsid-iaries of the respondent’s bank holding company.

All balances due to other nonbank subsidiaries of therespondent’s bank holding company should be excludedfrom this item and included in item 18(c).

Line Item 12 Total assets.

Report in this item the sum of items 1, 2, 3, and 4(c).through 11(c).

Liabilities and Equity CapitalItems 13 through 17 should exclude balances with related

Balance Sheet


institutions. Balances with related institutions should bereported in item 18 below.

Line Item 13 Deposits.

Report the total amount of deposits held by the nonbanksubsidiary. Both noninterest-bearing and interest-bearingdeposits are to be included. Such deposits may take theform of passbook accounts, certificates of deposit, NOWaccounts, money market deposit accounts, time deposits,open accounts, or similar deposits. Include all depositsregardless of customer or form.

Exclude all deposits due to related institutions from thisitem. Such deposits should be reported in item 18(a),18(b), or 18(c) below.

Line Item 14 Trading liabilities.

Report the amount of liabilities from the reportingnonbank subsidiary’s trading activities. Include liabilitiesresulting from the sales of assets that the reportingnonbank subsidiary does not own (short position) andrevaluation losses from ‘‘marking to market’’ (or thelower of cost or market’’) of interest rate, foreignexchange rate, and other commodity and equity contractsinto which the reporting nonbank subisidiary has enteredfor trading, dealer, customer accommodation, and similarpurposes.

Line Item 15 Borrowings with a remainingmaturity of one year or less (including federal fundspurchased).

Report the total amount of money borrowed by thenonbank subsidiary with a remaining maturity of oneyear or less, including federal funds purchased, securitiessold under agreements to repurchase, and commercialpaper.

For purposes of this item, remaining maturity is theamount of time remaining from the report date until finalcontractual maturity of a borrowing without regard to theborrowing’s repayment schedule, if any.

Borrowings may take the form of:

(1) demand notes issued to the U.S. Treasury;

(2) promissory notes;

(3) notes and bills rediscounted (including commoditydrafts rediscounted);

(4) loans sold under repurchase agreements and salesof participations in pools of loans that mature inmore than one business day;

(5) due bills issued representing the nonbank subsidi-ary’s receipt of payment and similar instruments,whether collateralized or uncollateralized;

(6) federal funds purchased;

(7) ‘‘term federal funds’’ purchased;

(8) securities sold under agreements to repurchase;

(9) commercial paper;

(10) mortgage indebtedness and obligations under capi-talized leases with a remaining maturity of one yearor less; or

(11) any other obligation for the purpose of borrowingmoney that has a remaining maturity of one year orless and is not reported elsewhere.

Exclude all borrowings with related institutions from thisitem. Such borrowings should be reported in item 18(a),18(b), or 18(c). as appropriate.

Line Item 16 Borrowings with a remainingmaturity of more than one year (includingsubordinated debt and limited-life preferred stockand related surplus)

Report the total amount of all borrowings of the nonbanksubsidiary with a remaining maturity of more than oneyear, including subordinated debt and limited-life pre-ferred stock and related surplus.

For purposes of this item, remaining maturity is theamount of time remaining from the report date until finalcontractual maturity of a borrowing without regard to theborrowing’s repayment schedule, if any.

Borrowings may take the form of:

(1) promissory notes;

(2) perpetual debt securities that are unsecured and notsubordinated;

(3) notes and bills rediscounted (including commoditydrafts rediscounted);

(4) loans sold under repurchase agreements and salesof participations in pools of loans that mature inmore than one business day;

Balance Sheet


(5) due bills issued representing the nonbank subsid-iary’s receipt of payment and similar instruments,whether collateralized or uncollateralized;

(6) ‘‘term federal funds’’ purchased;

(7) securities sold under agreements to repurchase;

(8) notes and debentures issued by the respondentsubsidiary;

(9) mortgage indebtedness and obligations under capi-talized leases with a remaining maturity of morethan one year; or

(10) any other obligation for the purpose of borrowingmoney with a remaining maturity of more than oneyear and not reported elsewhere.

Limited-life preferred stock is preferred stock that has astated maturity date or that can be redeemed at the optionof the holder. It excludes those issues of preferred stockthat automatically convert into perpetual preferred stockat a stated date.

Exclude all borrowings with related institutions from thisitem. Such borrowings should be reported in item 18(a),18(b), or 18(c) below, as appropriate.

Line Item 17 All other liabilities.

Report the total amount of all other liabilities that cannotbe properly be reported in item 13 through 16.

Include in this item liabilities such as liability on accep-tances outstanding, expenses accrued and unpaid, deferredincome taxes (if credit balance), negative goodwill,minority interest in the subsidiary, dividends declaredbut not yet payable, accounts payable (other thanexpenses accrued and unpaid), liability on deferredpayment letters of credit, deferred gains from sale-leaseback transactions, and unamortized loan fees (otherthan those that represent an adjustment of the interestyield, if material).

Also, report all derivatives with negative fair value heldfor purposes other than trading in this item.

Exclude all liabilities with related institutions from thisitem. Such liabilities should be reported in item 18(a),18(b), or 18(c) below, as appropriate.

Line Item 18 Balances due to related institutions,gross.

Report all balances due to the bank holding company

(parent companies only) in item 18(a); all balances due tosubsidiary banks of the bank holding company initem 18(b); and all balances due to other nonbanksubsidiaries of the bank holding company in item 18(c),gross.

Line Item 18(a) Balances due to the bank holdingcompany (parent companies only), gross.

Report in this item all intercompany balances held by thenonbank subsidiary due to the bank holding company(parent companies only) on a gross basis.

If the respondent bank holding company is a multi-tieredbank holding company, this item should include balancesdue to the direct and indirect parent companies at anylevel in the organization.

All such intercompany balances due from the bankholding company (parent companies only) should beexcluded from this item and included in item 11(a)above.

Line Item 18(b) Balances due to subsidiary banksof the bank holding company, gross.

Include in this item all intercompany balances, on a grossbasis, held by the nonbank subsidiary due to banks thatare controlled, directly or indirectly, by the respondent’sbank holding company.

All balances due from subsidiary banks of the respon-dent’s bank holding company should be excluded fromthis item and included in item 11(b) above.

Line Item 18(c) Balances due to other nonbanksubsidiaries of the bank holding company, gross.

Include in this item all intercompany balances, on a grossbasis, held by the nonbank subsidiary due to othernonbank subsidiaries of the respondent’s bank holdingcompany.

All balances due from other nonbank subsidiaries of therespondent’s bank holding company should be excludedfrom this item and included in item 11(c), above.

Line Item 19 Total liabilities.

Report the sum of items 13 through 18(c).

Line Item 20 Total equity capital.

Report the total amount of equity capital of the nonbank

Balance Sheet


subsidiary. Equity capital should equal the sum ofperpetual preferred stock issued (including relatedsurplus), common stock (par or stated value), capitalsurplus, (excluding all surplus related to preferred stock)retained earnings, accumulated other comprehensiveincome and other equity components.

Accumulated other comprehensive income includes netunrealized holding gains (losses) on available-for-salesecurities, accumulated net gains (losses) on cash flowhedges, foreign currency translation adjustments, andminimum pension liability adjustments. Other equitycapital components include the total carrying value (atcost) of treasury stock and unearned Employee StockOwnership Plan (ESOP) shares as of the report date.

Also, include in this item trust preferred securities suchas MIPS and TOPRS.

This item must equal Changes in Equity Capital, item 7,‘‘Equity capital at end of period.’’ Refer to the FR Y-9Cinstructions for additional information on reporting thisitem.

Line Item 21 Total liabilities and equity capital.

Report the sum of items 19 and 20. This item must equalitem 12, ‘‘Total assets.’’

Off-Balance-Sheet ItemsReport the following selected commitments, contingen-cies, and other off-balance sheet items. Exclude fromthis schedule contingencies arising in connection withlitigation.

Line Item 22 Unused commitments on securitiesunderwriting.

Report the unsold portion of the nonbank subsidiary’sown takedown in securities underwriting transactions.

Report the unused portion of commitments for which thenonbank subsidiary has charged a commitment fee orother consideration, or otherwise has a legally bindingcommitment.

Such commitments are to be reported regardless ofwhether they contain ‘‘material adverse change’’ clausesor other provisions that are intended to relieve the issuerof its funding obligations under certain conditions and

regardless of whether they are unconditionally cancel-able at any time.

Include revolving underwriting facilities (RUFs), noteissuance facilities (NIFs), and other similar arrangementsin this item. These are facilities under which a borrowercan issue on a revolving basis short-term paper in its ownname, but for which the underwriting banks have alegally binding commitment either to purchase any notesthe borrower is unable to sell by the roll-over date or toadvance funds to the borrower.

Line Item 23 Unused commitments on loans andall other unused commitments.

Report the unused portions of commitments that obligatethe reporting nonbank subsidiary to extend credit in theform of loans or participations in loans, lease financingreceivables, or similar transactions. Report the unusedportion of commitments for which the nonbank subsidi-ary has charged a commitment fee or other consideration,or otherwise has a legally binding commitment. Suchcommitments are to be reported regardless of whetherthey contain ‘‘material adverse change’’ clauses or otherprovisions that are intended to relieve the issuer of itsfunding obligations under certain conditions and regard-less of whether they are unconditionally cancelable atany time. In the case of commitments for syndicatedloans, report only the nonbank subsidiary’s proportionalshare of the commitments. Unused commitments are tobe reported gross, that is, including any commitmentsacquired from others and any portions of commitmentsconveyed to others.

Include loan proceeds that the nonbank subsidiary isobligated to advance, such as loan draws, constructionprogress payments, seasonal or living advances tofarmers under prearranged lines of credit, rotating orrevolving credit arrangements, including retail creditcard, check credit, and related plans, or similar transac-tions. Forward agreements and commitments to issue acommitment at some point in the future are to be reportedin this item.

Report the unused portion of commitments to extendcredit for the following loans:

(1) Revolving, open-end loans secured by 1–4 familyresidential properties, e.g., home equity lines.

(2) Commercial real estate, construction, and landdevelopment.

Balance Sheet


(3) Commitments to fund loans secured by real estate.

(4) Commitments to fund loans not secured by realestate.

(5) Credit card lines.

(6) Overdraft facilities.

(7) Commercial lines of credit.

(8) Retail check credit and related plans.

Line Item 24 Standby letters of credit and foreignoffice guarantees.

Report the amount outstanding and unused as of thereport date of all standby letters of credit (and all legallybinding commitments to issue standby letters of credit)issued by the nonbank subsidiary.

The originating nonbank subsidiary must report the fulloutstanding and unused amount of standby letters ofcredit in which participations have been conveyed toothers where (a) the originating and issuing nonbanksubsidiary is obligated to pay the full amount of any draftdrawn under the terms of the standby letter of credit and(b) the participating companies have an obligation topartially or wholly reimburse the originating nonbanksubsidiary, either directly in cash or through a partici-pation in a loan to the account party. The originatingnonbank subsidiary also must report the amount ofstandby letters of credit conveyed to others throughparticipations. The nonbank subsidiary participating insuch arrangements must report the full amount of theircontingent liabilities to participate in such standby lettersof credit without deducting any amounts that it mayhave reparticipated to others. Participating nonbanksubsidiaries also must report the amount of interest intransactions that they have reparticipated to others, ifany. Also include those standby letters of credit that arecollateralized by cash on deposit.

Line Item 25 Commercial and similar letters ofcredit.

Report the amount outstanding and unused as of thereport date of issued or confirmed commercial letters ofcredit, travelers’ letters of credit not issued for money orits equivalent, and all similar letters of credit, butexcluding standby letters of credit (which are to bereported in item 24 above). Legally binding commit-

ments to issue commercial letters of credit are to bereported in this item.

Line Item 26 Commitments to purchase foreigncurrencies and U.S. dollar exchange (spot, forward,and futures).

Report the gross amount (stated in U.S. dollars) of allfutures contracts, forward and spot contracts to purchaseforeign (non-U.S.) currencies, and U.S. dollar exchangethat are outstanding as of the report date.

A purchase of U.S. dollar exchange is equivalent to a saleof foreign currency. Only one side of a foreign currencytransaction is to be reported. In those transactions whereforeign (non-U.S.) currencies are bought or sold againstU.S. dollars, report only that side of the transaction thatinvolves the foreign (non-U.S.) currency.

A currency futures contract is a standardized agreementfor delayed delivery of a foreign (non-U.S.) currency inwhich the buyer agrees to purchase and the seller agreesto deliver, at a specified future date, a specified amount ata specified exchange rate. Future contracts are traded onorganized exchanges that act as the counterparty to eachcontract.

A forward foreign exchange contract is an agreement fordelayed delivery of a foreign (non-U.S.) currency inwhich the buyer agrees to purchase and the seller agreesto deliver, at a specified future date, a specified amountat a specified exchange rate. These contracts are notstandardized and are traded in an over-the-countermarket.

A spot contract is an agreement for the immediatedelivery, usually within two days, of a foreign currencyat the prevailing spot rate.

Contracts are outstanding (i.e., open) until they havebeen canceled by acquisition or delivery of the under-lying currencies or, for futures contracts, by offset.(‘‘Offset’’ is the purchase and sale of an equal number ofcontracts on the same underlying currencies for the samedelivery month, executed through the same clearingmember on the same exchange.)

Line Item 27 All other futures and forwardcontracts (excluding contracts involving foreignexchange).

Report in this item all other futures and forward contracts

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not included in item 26. Include in this item futuresand forward interest rate contracts (e.g., U.S. Treasurysecurities futures, forward rate agreements, and forwardagreements on U.S. government securities) and futuresand forward contracts on other commodities (e.g., stockindex and commodity contracts).

Report the aggregate par value of all futures and for-ward contracts that are related to an interest-bearingfinancial instrument or whose cash flows are determinedby referencing interest rates or another interest ratecontract.

Report futures and forward contracts that commit thenonbank subsidiary to purchase or sell agriculturalproducts (e.g., wheat or coffee), precious metals (e.g.,gold or platinum), non-ferrous metals (e.g., copper orzinc), or any other commodity.

Futures and forward contracts are agreements for delayeddelivery of financial instruments or other commodities inwhich the buyer agrees to purchase and the seller agreesto deliver, at a specified future date, a specified instru-ment or commodity at a specified price.

Futures contracts are standardized, transferable agree-ments traded on organized exchanges that act as thecounterparty to each contract. Forward contracts are notstandardized and are not traded on organized exchanges.

The contract amount to be reported for futures andforward contracts on commodities is the quantity (i.e.,number of units) of the commodity or product contractedfor purchase or sale multiplied by the contract price of aunit.

Line Item 28 Option contracts.

An option contract conveys either the right or theobligation, depending upon whether the reporting non-bank subsidiary is the purchaser or the writer, respec-tively, to (1) buy or sell a financial instrument or aninterest rate futures contract on a financial instrument ata specified price by a specified future date, (2) exchangetwo different currencies at a specified exchange rate,or (3) buy or sell stock options, stock index options, orother commodities. Options can be traded on organizedexchanges. In addition, options can be written to meetthe specialized needs of the counterparties to the trans-action. These customized option contracts are known asover the counter (OTC) options and are not generallytraded.

In reporting items 28(a) and 28(b), do not net thefollowing:

(1) obligations of the nonbank subsidiary to buy againstthe nonbank subsidiary’s obligations to sell, or

(2) written options against purchased options.

Line Item 28(a) Written option contracts.

Report in this item the amount of all financial instru-ments (aggregate par value), foreign currencies, andother commodities that the reporting nonbank subsidiaryhas obligated itself, for compensation (such as a fee orpremium), to either purchase or sell under option con-tracts that are outstanding as of the report date.

Line Item 28(b) Purchased option contracts.

Report in this item the amount of all financial instru-ments (aggregate par value), foreign currencies, andother commodities that the reporting nonbank subsid-iary has purchased, for compensation (such as a fee orpremium), the right to either purchase or sell underoption contracts that are outstanding as of the report date.In the case of option contracts giving the reportingnonbank subsidiary the right to either purchase or sell afutures contract, report the amount of the financialinstrument, foreign currency or other commodity under-lying the futures contract.

Line Item 29 Notional value of interest rate swaps.

Report the notional value of all outstanding interest rateand basis swaps. In those cases where the nonbanksubsidiary is acting as an intermediary, both sides of thetransaction are to be reported. Include in this itemcross-currency interest rate swaps that do not involve theexchange of principal amounts between the counterparties.

An interest rate swap is a transaction in which two partiesagree to exchange the interest payment streams on aspecified principal amount of assets or liabilities for acertain number of years. The notional value of an interestrate swap is the underlying principal amount upon whichthe exchange of interest income or expense is based.

Line Item 30 Notional value of exchange swaps.

Report the notional principal value (stated in U.S.dollars) of all outstanding cross-currency interest rateswaps. In those cases where the nonbank subsidiary is

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acting as an intermediary, both sides of the transactionare to be reported.

A cross-currency interest rate swap is a transaction inwhich two parties agree to exchange principal amountsof different currencies, usually at the prevailing spot rate,at the inception of the agreement, which lasts for acertain number of years. Over the life of the swap,the counterparties exchange payments in the differentcurrencies based on fixed rates of interest. When theagreement matures, the principal amounts will bere-exchanged at the same spot rate. The notional value ofa cross-currency interest rate swap is the underlyingprincipal amount upon which the exchange is based.

Line Item 31 Notional value of other swaps.

Report the notional principal value of all other swapagreements that are not reportable as either interest orforeign exchange rate contracts in items 29 or 30, above.

Line Item 32 Assets sold with recourse

Report in this item the principal balance outstanding andthe amount of recourse exposure of all financial assetsthat have been transfered with recourse in transactionsreported as sales in accordance with generally acceptedaccounting principles.

Report the outstanding principal balance as of the reportdate for residential mortgage loans that have been pooledand that (1) have been transferred with recourse intransactions reported as sales in accordance with gen-erally accepted accounting principles or (2) have beenswapped with recourse with FNMA or FHLMC inexchange for participation certificates that the nonbanksubsidiary has either sold or carries as assets in BalanceSheet, item 2, ‘‘Securities’’ or Balance Sheet item 5,‘‘Assets held in trading accounts.’’

Also report in this item the principal balance outstanding,as of the report date, of any sales of assets and loans(other than mortgages) that were sold with recourse butwere reported as ‘‘sales’’ of assets on the nonbanksubsidiary’s balance sheet in accordance with generallyaccepted accounting principles and the guidelines above.

Line Item 33 All other off-balance-sheet liabilities.

With the exceptions listed below, report all types ofoff-balance-sheet items not covered in other items of thisschedule.

Other off-balance-sheet liabilities include, but are notlimited to, the following items:

(1) Securities borrowed against collateral (other thancash) or on an uncollateralized basis.

(2) Securities lent against collateral or on an uncollater-alized basis.

(3) Commitments to purchase and to sell securities thathave not been issued (when-issued securities) andare excluded from the requirements of FASB State-ment No. 133 and not reported in item 27.

(4) Credit card derivatives.

(5) Participations in acceptances conveyed to others bythe reporting nonbank subsidiary or acquired by thenonbank subsidiary.

(6) Financial guarantee insurance that insures the timelypayment of principal and interest on bond issues.

(7) Letters of indemnity other than those issued inconnection with the replacement of lost or stolenofficial checks.

(8) Shipside or dockside guarantees or similar guar-antees relating to missing bills of lading or titledocuments and other document guarantees thatfacilitate the replacement of lost or destroyeddocuments and negotiable instruments.

Exclude the following from other off-balance-sheetitems:

(1) All items that are required to be reported on thebalance sheet, such as repurchase and resaleagreements.

(2) Commitments to purchase property being acquiredfor lease to others (reported in item 23).

(3) Contingent liabilities arising in connection withlitigation in which the nonbank subsidiary isinvolved.

(4) Signature or endorsement guarantees of the typeassociated with the regular clearing of negotiableinstruments or securities in the normal course ofbusiness.

Balance Sheet



Loans and Lease Financing ReceivablesSchedule A

General InstructionsThis schedule is to be completed only by nonbanksubsidiaries engaged in credit extending activities. Alltransactions with related institutions are excluded fromthis report.

Loans and lease financing receivables are extensions ofcredit resulting from either direct negotiations betweenthe nonbank subsidiary and its customers or the purchaseof such assets from others.

Report the aggregate book value of all loans and leasesbefore deduction of the allowance for loan and leaselosses. Each item in this schedule should be reported netof (1) unearned income (to the extent possible), (2) anyapplicable allocated transfer risk reserve, and (3) depositsaccumulated for the payment of personal loans (hypoth-ecated deposits).

All loans are classified according to security, borrower,or purpose. Loans covering two or more classificationsare sometimes difficult to classify. In such instances,classify the entire loan according to the major criterion.

Items 1 through 7 should include all loans and leases onthe books of the nonbank subsidiary even if on the reportdate they are past due and collection is doubtful. Excludeany loans or leases the subsidiary has sold or charged offand report in item 8 below.

Exclude, for purposes of this schedule, the following:

(1) all loans of immediately available funds that maturein one business day or roll over under a continuingcontract, i.e., federal funds sold that are held indomestic offices of the nonbank subsidiary (report inBalance Sheet, item 3, ‘‘Federal funds sold’’);

(2) contracts of sale or other loans indirectly represent-ing nonbank subsidiary premises or other real estate(report in Balance Sheet, item 6, ‘‘Premises and

fixed assets,’’ or item 7, ‘‘Other real estate owned,’’as appropriate); and

(3) undisbursed loan funds, sometimes referred to asincomplete loans or loans in process, unless theborrower is liable for and pays the interest thereon.If interest is being paid by the borrower on theundisbursed proceeds, the amounts of such undis-bursed funds should be included in both loans anddeposits. Do not include loan commitments that havenot yet been taken down, even if fees have been paid.

Line Item 1 Loans secured by real estate.

Report all loans (other than those to states and politicalsubdivisions in the U.S.), regardless of purpose andregardless of whether originated by the nonbank subsid-iary or purchased from others, that are secured by realestate as evidenced by mortgages, deeds of trust, landcontracts, or other instruments, whether first or juniorliens (e.g., equity loans or second mortgages) on realestate.

Line Item 2 Commercial and industrial loans.

Report in this item loans for commercial and industrialpurposes to sole proprietorships, partnerships, corpora-tions, and other business enterprises, whether secured(other than by real estate) or unsecured, single-paymentor installment. These loans may take the form of direct orpurchased loans.

Exclude:

(1) loans secured by real estate (report in item 1 above);

(2) loans for the purpose of financing agriculturalproduction, whether made to farmers or to nonagri-cultural businesses (report in item 5 below);

(3) loans to finance companies and insurance companies(report in item 5 below);

Instructions for Preparation of Reporting Form FR Y-11I SCH-A-1Schedule A December 2001

(4) loans to broker and dealers in securities, investmentcompanies, and mutual funds (report in item 5below);

(5) loans to depository institutions (report in item 3below);

(6) loans to nonprofit organizations (report in item 5below);

(7) loans to nondepository financial institutions (reportin item 5 below); and

(8) commercial paper.

Line Item 3 Loans to depository institutions.

Report in this item all loans (other than those secured byreal estate), including overdrafts, to banks, other deposi-tory institutions, and other associations, companies, andfinancial intermediaries whose primary business is toaccept deposits and to extend credit for business or forpersonal expenditure purposes.

Report in this item the nonbank subsidiary’s holdings ofall bankers acceptances accepted by unrelated banks (i.e.,banks that are not direct or indirect subsidiaries of therespondent’s bank holding company).

Exclude acceptances accepted by related banks (i.e.,banks that are direct or indirect subsidiaries of therespondent’s bank holding company).

Line Item 4 Loans to individuals for personal,household, and other personal expenditures.

Report in this item credit card and related plans and otherloans to individuals for household, family, and otherpersonal expenditures. Include all loans to individuals forhousehold, family, and other personal expenditures thatare not secured by real estate whether direct loans orpurchased paper.

Exclude loans secured by real estate (report in item 1)above and loans to individuals for the purpose ofpurchasing or carrying securities (report in item 5below).

Line Item 5 All other loans and lease financingreceivables.

Report in this item all other loans held by the nonbanksubsidiary that are not properly included in items 1through 4 above and all lease financing receivables.

Report all outstanding receivable balances relating todirect financing and leveraged leases on propertyacquired by the nonbank subsidiary for leasing purposes.These balances should include the estimated residualvalue of leased property and must be net of unearnedincome.

Include all lease financing receivables of states andpolitical subdivisions in the U.S.

Line Item 6 Loans and lease financing receivables.

Report loans and lease financing receivables (includedin items 1 through 5 above), net of unearned income toU.S. addressees in item 6(a) and to non-U.S. addresseesin item 6(b). The sum of items 6(a) and 6(b) should equalthe sum of items 1 through 5 above.

Domicile is determined by the principal residentialaddress of an individual or the principal business addressof a corporation, partnership, or sole proprietorship. Ifother addresses are used for correspondence or otherpurposes, only the principal address, insofar as it isknown to the reporting institution, should be used indetermining whether a customer is regarded as U.S. ornon-U.S. addressee.

Line Item 6(a) To U.S. addressees.

U.S. addressees (domicile) include residents of the50 states of the United States, the District of Columbia,Puerto Rico, and U.S. territories and possessions.

Line Item 6(b) To non-U.S. addressees.

Non-U.S. addressees (domicile) include residents of anyforeign country.

Line Item 7 Past due and nonaccrual loans andleases.

Report the nonbank subsidiary loans and lease financingreceivables that are past due 30 through 89 days and stillaccruing in item 7(a), past due 90 days or more and stillaccruing in item 7(b), in nonaccrual status in item 7(c),restructured loans and leases included in past due andnonaccrual loans in item 7(d), and loans and leasesrestructured and in compliance with modified terms initem 7(e). Loan amounts should be reported net ofunearned income. Report the full outstanding balances ofthe past due loans and lease financing receivables, notsimply the delinquent payments.

Schedule A

SCH-A-2 Instructions for Preparation of Reporting Form FR Y-11ISchedule A December 2001

Line Item 7(a) Loans and leases past due30 through 89 days.

Report loans and lease financing receivables that arecontractually past due 30 through 89 days as to principalor interest payments, and still accruing. This item shouldinclude restructured loans and leases past due 30 through89 days and still accruing.

Line Item 7(b) Loans and leases past due 90 daysor more.

Report loans and lease financing receivables that arecontractually past due 90 days or more as to principal orinterest payments, and still accruing. This item shouldinclude restructured loans and leases past due 90 days ormore and still accruing.

Line Item 7(c) Nonaccrual loans and leases.

Report loans and leases accounted for on a nonaccrualstatus. This item should include restructured loans andleases that are in nonaccrual status. For purposes of thisreport, assets are to be reported as being in nonaccrualstatus if: (a) they are maintained on a cash basis becauseof deterioration in the financial position of the borrower,(b) payment in full of interest or principal is notexpected, or (c) principal or interest has been in defaultfor a period of 90 days or more unless the obligation isboth well-secured and in the process of collection.

A debt is ‘‘well-secured’’ if it is secured (1) by collateralin the form of liens on or pledges of real or personalproperty, including securities, that have a realizablevalue sufficient to discharge the debt (including accruedinterest) in full, or (2) by the guaranty of a financiallyresponsible party. A debt is ‘‘in the process of col-lection’’ if collection of the debt is proceeding in duecourse either through legal action, including judgmentenforcement procedures, or, in appropriate circum-stances, through collection efforts not involving legalaction which are reasonably expected to result in repay-ment of the debt or in its restoration to a current status.

NOTE: Loans to individuals for household, family, andother personal expenditures and loans secured by1–4 family residential properties on which principal orinterest is due and unpaid for 90 days or more are notrequired to be reported as nonaccrual loans. Neverthe-less, such loans should be subject to other alternativemethods of evaluation to assure that the nonbank sub-

sidiary’s net income is not materially overstated. To theextent that the nonbank subsidiary has elected to carryany loans in nonaccrual status on its books, such loansmust be reported as nonaccrual in this item.

Line Item 7(d) Loans and leases restructured andincluded in past due and nonaccrual loans.

Report in this item loans and leases that, under theirmodified terms, are past due 30 days or more and stillaccruing or are in nonaccrual status as of the report date.Such loans and leases should be included in item 7(a),7(b), or 7(c), above.

Restructured debt includes those loans and lease financ-ing receivables that have been restructured or renegoti-ated to provide a reduction of either interest or principalbecause of a deterioration in the financial position of theborrower. A loan extended or renewed at a stated interestrate equal to the current interest rate for new debt withsimilar risk is not considered restructured debt.

Exclude from this item all loans to individuals forhousehold, family, and other personal expenditures, andall loans secured by 1–4 family residential properties.(However, restructured loans of these two types thatsubsequently become past due 90 days or more or areplaced in nonaccrual status should be reportedaccordingly.)

Line Item 7(e) Loans and leases restructured andin compliance with modified terms.

Report in this item loans and leases not included initem 7(d) that are in compliance with their modifiedterms, that is, restructured loans and leases (1) on whichno contractual payments of principal or interest sched-uled under the modified terms are due and unpaid or(2) on which contractual payments of both principal andinterest scheduled under the modified repayment termsare less than 30 days past due.

Line Item 8 Loan and lease losses.

Line Item 8(a) Charge-offs.

Report the total dollar amounts of all loans and leasescharged against the allowance for loan and lease lossesduring the calendar year-to-date. Also, include in thisitem write downs arising from the transfer of loans to theheld-for-sale account.

Schedule A

Instructions for Preparation of Reporting Form FR Y-11I SCH-A-3Schedule A December 2001

Line Item 8(b) Recoveries.

Report the total dollar amounts credited to the allowancefor loan and lease losses for recoveries during thecalendar year-to-date on amounts previously chargedagainst the allowance.

Line Item 9 Loan servicing portfolio.

Line Item 9(a) Number of loans in servicingportfolio.

Report the number of loans in the subsidiary’s servicingportfolio (report the actual number).

Line Item 9(b) Dollar amount of loans in servicingportfolio.

Report the outstanding principal balance of all loans

serviced for others, rounded to the nearest thousand.Include those loans for which the reporting subsidiaryhas purchased the servicing rights and those which thereporting subsidiary has originated and sold, but forwhich it has retained servicing.

Line Item 10 Loans that have been securitized andsold without recourse with servicing retained(year-to-date).

Report the total amount outstanding of loans includedin packages of asset-backed securities which the non-bank subsidiary has transferred in transactions thatqualify as sales without recourse for which the ser-vicing of the loans has been retained. The amountsreported should include loans securitized and soldyear-to-date.

Schedule A

SCH-A-4 Instructions for Preparation of Reporting Form FR Y-11ISchedule A December 2001

Notes to the Annual Financial Statements ofNonbank Subsidiaries of Bank HoldingCompanies—FR Y-11I

This section has been provided to allow bank holding companies theopportunity to provide additional explanations of the content of specific itemsin the nonbank subsidiary’s financial statements. The reporting bank holdingcompany should include any transactions reported on the nonbank subsidiary’sfinancial statements that it wishes to explain that are material in amount andcannot be disclosed separately in the existing line items.

Report in the space provided the financial statement and line item for whichthe holding company is specifying additional information, a description of thetransaction and, in the column provided, the dollar amount associated with thetransaction being disclosed.

Instructions for Preparation of Reporting Form FR Y-11I FR Y-11I Notes-1Notes to the Annual Financial Statements of Nonbank Subisidiaries December 2001

DECEMBER 2001 FR Y-11I: CHK-1

FR Y-11I CHECKLISTEach edit in the checklist must balance,

rounding errors are not allowed

FRSEDCK Income Statement040 1. Item 1 minus item 2 equals item 3070 2. Sum of items 3, 5, 6, and 8 minus items 4, 7, and 9 equals item 10080 3. Sum of items 10, 12, and 13 minus item 11 equals item 14FRSEDCK Changes in Equity Capital130 1. Item 2 equals Income Statement item 14140 2. Sum of items 1, 2, 3, 5, and 6 minus items 4.a and 4.b equals item 7145 3. Item 7 equals Balance Sheet item 20FRSEDCK Balance Sheet200 1. Item 4.a minus item 4.b equals item 4.c230 2. Sum of items 1 through 3, 4.c through 11.c equals item 12250 3. Sum of items 13 through 18.c equals item 19270 4. Sum of items 19 and 20 equals item 21275 5. Item 21 equals item 12

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