FDIC Eliminates Certain Annual Disclosure Statement Requirements

On March 18, 2019, the Federal Register published the FDIC’s final rule rescinding and removing its regulations in 12 C.F.R. Part 350, entitled Disclosure of Financial and Other Information by FDIC-Insured State Nonmember Banks, as part of the FDIC’s general efforts to eliminate unnecessary or redundant regulations.  The final rule takes effect on April 17, 2019. 

Upon the removal of the regulations, FDIC-insured state nonmember banks and insured state-licensed branches of foreign banks will no longer be subject to the annual disclosure statement requirements set out in the existing regulations.  The current regulations, which originally took effect in 1988, require such banks to prepare, and make available to the public, annual disclosure statements consisting of: (i) required financial data comparable to specified schedules in the call reports filed for the previous two years; (ii) information that the FDIC may request, such as enforcement actions; and (iii) other information the bank chooses to disclose.  The annual disclosure statement for a particular year must be prepared as of December 31 of that year, and made available to the public by the earlier of March 31 of the following year or the fifth day after an organization’s annual report covering the year is sent to shareholders.  Such banks also are required to announce the availability of the disclosure statements in notices in the lobby of each of their main and branch offices and in annual meeting notices sent to shareholders, if applicable. 

According to the preamble of final rule, the FDIC has determined that the regulations are outdated and no longer necessary due to significant advancements in information technology since Part 350 was adopted, which allows even more extensive and timely information about the financial condition of such banks to be reliably and directly offered to the public through the FDIC’s and the FFIEC’s websites.  In connection with the final rule, the FDIC has issued a Financial Institutions Letter (FIL-14-2019) stating that, although the final rule rescinding and removing Part 350 will not take effect until April 17, 2019, the impacted entities do not need to prepare, and make available to the public, disclosure statements containing financial data for 2017 and 2018.