I. INTRODUCTION
The purpose of these regulations is to require all banks to prepare an annual financial disclosure statement, and to make this statement available to security holders, depositors, and anyone who requests it. The bank may, at its option, supplement this financial disclosure statement with narrative information management deems important. The availability of this information is expected, by its intent, to promote better public understanding of, and confidence in, individual banks. The annual disclosure statement also serves to complement supervisory efforts to promote bank safety and soundness and public confidence in the banking system.
II. FDIC REGULATION
The Board of Directors of the FDIC adopted a new Part 350 to FDIC regulations that requires FDIC-insured state-chartered banks that are not members of the Federal Reserve System to prepare, and make available on request, annual disclosure statements consisting of (1) required financial data comparable to specified schedules in call reports filed for the previous two year-ends, (2) information that the FDIC may require of particular organizations, and (3) other optional information. The first annual disclosure statement required by Part 350 is for 1987 and it must be prepared by March 31, 1988, or the fifth day after an organization’s annual report covering the year 1987 is sent to shareholders, whichever occurs first. In place of Call Report data, a bank may use audited financial statements or reports prepared pursuant to other regulations by the bank or a parent one-bank holding company.
The regulation requiring that a bank’s disclosure statements include financial reports for the two preceding years allow such data to be photocopied directly from the Reports of Condition and Income filed by banks at year-end with the FDIC. On a case-by-case basis, the FDIC may require that descriptions of enforcement actions be disclosed. The regulation allows banks to include a discussion and analysis of their condition and activities. Banks are required to announce the availability of the disclosure statements in lobby notices and in notices of annual meetings sent to shareholders. Furthermore, each annual disclosure statement must include a legend stating that “The FDIC has not verified or confirmed the accuracy of the information presented.”
The majority of questions received in regard to this regulation have centered on the notice, availability and delivery of disclosure statements. Therefore, the applicable regulations in this regard follow:
§ 350.7 NOTICE AND AVAILABILITY
(a) Shareholders. If the bank provides written notice of the annual meeting of shareholders, the bank shall include with, or as part of, that notice an announcement that the bank’s annual disclosure statement will be sent to the shareholder either automatically or upon request. For disclosure statements available on request, the announcement shall indicate at a minimum an address and telephone number to which requests may be directed. The first copy of the annual disclosure statement shall be provided to a shareholder without charge.
(b) Customers and the general public. In the lobby of its main office and each branch, the bank shall at all times display a notice that the annual disclosure statement may be obtained from the bank. The notice shall include at a minimum an address and telephone number to which requests should be directed. The first copy of the annual disclosure statement shall be provided to a requester free of charge.
§ 350.8 DELIVERY
Each bank shall, after receiving a request for an annual disclosure statement, promptly mail or otherwise furnish a statement to the requester.
III. OCC REGULATION
The OCC adopted amendments to 12 C.F.R. Part 18, effective March 11, 1988, requiring all national banks to prepare and make available an annual disclosure statement to security holders, depositors and other interested persons. The final rule requires a national bank to prepare and make available an annual disclosure statement, beginning with data for calendar year 1987. Under the rule, the bank must display, in the lobby of the main office and in each branch, a notice of the annual disclosure statement’s availability. Stockholders must similarly be notified in the bank’s notice of its annual shareholders’ meeting.
The data required to be disclosed in the annual disclosure statement are the same data that banks currently provide in the Reports of Condition and Income (“Call Reports”). The OCC summary states that “[T]he disclosures required by this rule represent the minimum a bank must make.” National banks are free, and are encouraged, to make more frequent or expanded disclosures. For example, a bank might wish to supplement the required data with a narrative discussion of the financial statements. If the annual disclosure statement is to serve its purpose, such narratives should be written clearly, in terms that can be understood by the reader. Furthermore, each annual disclosure statement must include a legend stating that “The Office of the Comptroller of the Currency has not verified or confirmed the accuracy of the information presented.”
Again, to resolve any questions regarding the notice, availability, and delivery requirements, the regulations are reproduced as follows:
§ 18.7 NOTICE OF AVAILABILITY
(a) Shareholders. In its notice of the annual meeting of shareholders, each national bank shall indicate that any person may obtain the annual disclosure statement from the bank, and shall include the address and telephone number of the person or office to be contacted for a copy. The first copy shall be provided without charge.
(b) Depositors, Other Security Holders and the General Public. In the lobby of its main office and each branch, each national bank shall prominently display, at all times, a notice that any person may obtain the annual disclosure statement from the bank. The notice shall include the address and telephone number of the person or office to be contacted for a copy. The first copy shall be provided without charge.
§ 18.8 DELIVERY
Each national bank shall, after receiving a request for an annual disclosure statement, promptly mail or otherwise furnish the statement to the requestor.
IV. CONTENTS OF LOBBY DISCLOSURE
Neither the FDIC nor the OCC has developed model lobby posters required by the regulations - such remains in the discretion of the bank. At a minimum, the poster which your bank develops should be prominently displayed with the following suggested language:
The Disclosure of Financial and Other Information by this bank as required by Federal Regulations may be obtained from the bank by any person. Requests are to be directed to:
___________________________________ _________________________ ____________
(Person or Office) (Address) (Phone No.)
This Bank
Balance Sheets
December 31, 20_____ and 20_____
20___ 20___
ASSETS
Cash and due from banks $_________ $ _________
Investments _________ _________
Federal funds sold _________ _________
Loans, Less allow. Of $________ and $_________ _________ _________
Buildings and equipment _________ _________
Accrued interest receivable _________ _________
Other assets _________ _________
TOTAL ASSETS $_________$ _________
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Non interest bearing $ _________ $ _________
NOW accounts _________ _________
Savings accounts _________ _________
Certificates of deposit _________ _________
Total deposits
Other liabilities _________ _________
Stockholders’ equity
Common stock _________ _________
Surplus _________ _________
Total stockholders’ equity _________ _________
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $_________$ _________
Statement of Past Due and Nonaccrual Loans
Years Ended December 31, 20___ and 20___
Loans past due 30 through 89 days on
which interest is still being accrued $_________$ _________
Loans past due 90 days or more on
Loan: on which interest accrual has been stopped $_________$ _________
Statements of Income
Interest Income
Loans $_________ $_________
Federal funds _________ _________
Other _________ _________
Interest Expense _________ _________
Net Interest Income _________ _________
Provision for Bad Debts _________ _________
Net Interest after Provision for Bad Debts _________ _________
Noninterest Income _________ _________
Service charges _________ _________
Total Noninterest Income _________ _________
Noninterest Expense _________ _________
Salaries and employee benefits _________ _________
Occupancy expense _________ _________
Other expense _________ _________
Total Noninterest Expense _________ _________
Income Before Income Taxes _________ _________
Provision For Income Taxes ________ _________
Net Income $_________ $_________
Statements of Stockholders’ Equity
Balance, 12-31-20___ $__________ $__________$__________$__________
Net Income __________ __________ __________ __________
Dividends __________ __________ __________ __________
Other Changes __________ __________ __________ __________
Balance, 12-31-20___ __________ __________ __________ __________
New Income __________ __________ __________ __________
Balance, 12-31-20___ $__________$__________$__________$__________
Statements of Changes in the Allowance
For Loan and Lease Losses
Balance, Beginning of Year $_________ $__________
Provision for Loan and Lease Losses _________ __________
Loans Charges Off _________ __________
Recoveries __________ __________
Balance, End of Year $__________$__________
I hereby attest that the information contained in this Disclosure Statement has been prepared in accordance with instructions issued by the (Office of the Comptroller of the Currency) (Federal Deposit Insurance Corporation) and is true and correct to the best of my knowledge and belief.
__________________________________, President
This statement has not been reviewed or confirmed for accuracy or relevance by the (Office of the Comptroller of the Currency) (Federal Deposit Insurance Corporation).