Your Bank is Going Over $500 Million, What to Know and Plan Now

So, you have weathered the financial obstacles of the last few years, and your bank is on a trajectory to reach $500 million in assets. Here are the basics of how to be prepared and make appropriate plans now. Whitlock is here to help your community bank navigate these rules and regulations.

The Federal Deposit Insurance Corporation Improvement Act (FDICA) came about because of the savings and loan crisis to improve the effectiveness of the FDIC. The act includes specific requirements for organizations with more than $500 million in assets during a full fiscal year. These rules do not apply to the fiscal year in which the bank goes over $500 million.

Audited Financial Statements

Within 120 days of the end of the fiscal year (90 if your bank is publicly traded), your bank needs to submit audited financial statements to a federal bank agency. The financial statements must be comparative.

Financial Statement Auditor Independence

The auditor must comply with the independence standards of the American Institute of Certified Public Accountants (AICPA), the Securities and Exchange Commission (SEC), and the Public Company Accounting Oversight Board (PCAOB). There are some services that are restricted from being provided by your auditor, including individual tax returns for individuals in a financial reporting oversight role and preparation of financial statements. There must be partner rotation every five years for the signing partner and rotation every seven years for partners who do other aspects of the audit.

Auditor Reports

Your auditor will provide reports as part of your financial statement audit that will need to be filed with the relevant Federal Bank Agency within 15 days. These include Governance Communication and Internal Control Communication.

Management Reports

Banks must submit a statement of management’s responsibilities signed by both the CEO and CFO. Responsibilities to report include preparation of the institution’s annual financial statements, establishing and maintaining an internal control structure and method for financial reporting, and compliance with laws and regulations relating to safety and soundness that are designed by the FDIC and the appropriate federal banking agency.

Audit Committee

Banks must have a separate audit committee with the majority of the audit committee being outside directors. These committee members must meet specific requirements to be independent of management.

Banking Experts Helping You Navigate Growth

Our banking experts at Whitlock can help you navigate these rules and regulations. Call us or fill out a consultation request to discuss your needs today.