Whether it has been through M&A, organic growth, or a recent surge due to the Paycheck Protection Program (PPP) loans, many banks find themselves growing rapidly and potentially closer to the $1 billion asset threshold than initially expected. This increase in asset size provides additional opportunities, but also new risks, challenges, and regulatory requirements.If a bank begins its fiscal year with total assets exceeding $1 billion, the bank must then comply with certain requirements under the Federal Deposit Insurance Corporation Improvement Act (FDICIA). Those requirements include:
These management-reporting requirements, as well as the external audit requirements, have similarities to public company reporting under Sarbanes-Oxley 404(b). As a result, preparation for newly required FDICIA reporting is critical due to the significant time and effort required to ensure the bank’s control environment is FDICIA-ready. This preparation, which often begins at least a year in advance of tripping the $1 billion threshold, should include:
In addition to the FDICIA requirements, we know additional complexities arise once a bank crosses the $1 billion threshold, primarily due to regulator expectations. These include, but are not limited to:
The Elliott Davis Financial Services Group regularly assists banks throughout the United States in preparation for the requirements that arise after crossing the $1 billion threshold. If you would like to learn more about how our team can assist you in your preparation, please reach out to a member of our Financial Services Group.
The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information is subject to change as a result of evolving legislative developments and government guidance.