UPDATE: On 3/20/19, the FDIC released FIL-14-2019 which provides the following statement regarding disclosure statements that are due before the April 17, 2019 effective date of the new rule: “Although the FDIC’s final rule rescinding and removing Part 350 will not take effect until April 17, 2019, state nonmember banks and insured state-licensed branches of foreign banks need not prepare, and make available to the public, disclosure statements containing financial data for 2018 and 2017.” The FDIC FIL-14-2019 can be found here.
On 3/18/19, the FDIC finally rescinded their annual disclosure statement requirement. This rule comes a few months after the October 25, 2018 proposal, and over twenty years after two other agencies rescinded similar guidance due to the internet and availability of such data. This new final rule rescinds and removes the FDIC’s regulations entitled Disclosure of Financial and Other Information By FDIC-Insured State Nonmember Banks. Once the regulations are removed, state nonmember banks and insured state-licensed branches of foreign banks will no longer be subject to the annual disclosure statement as the information required to be disclosed by this rule is also available publicly through the FDIC’s website.
It should be noted that this rule will become effective on April 17, 2019 - meaning that applicable banks must ensure that the disclosure statement requirements are met for 2019 as the deadline is (at least) March 31 of each year.
History of the FDIC Disclosure Statement Requirement
The FDIC disclosure statement requirements first went into effect on February 1, 1988 when the FDIC adopted part 350 of their rules. Shortly after the FDIC implemented their requirements, both the Federal Reserve and the OCC implemented similar disclosure regulations that were substantially uniform. At this same time, the OTS had a similar, but not identical disclosure regulation.
In 1995, the OTS repealed their disclosure regulation as being unnecessary when they conducted a review of their regulations pursuant to a requirement to evaluate the necessity of applicable regulations. In 1998, the Federal Reserve also eliminated its disclosure regulation on the basis that Call Report information for banks had become available through the internet. As the OCC removed their disclosure statement regulations in 2017, the FDIC is the last regulator to have such rules.
As it currently stands, FDIC insured banks must prepare an annual disclosure statement for a particular year and make such disclosure available to the public by March 31 of the following year, or the fifth day after an organization’s annual report covering the year is sent to shareholders, whichever comes first. Banks are required to announce the availability of the disclosure statements in lobby notices in each of their officer and in notices of annual meetings sent to shareholders.
Expected Effects of the Final Rule
In their release, the FDIC explains that this new rule will lessen the burden of 3,493 banks regulated by the FDIC (though savings associations are not currently subject to the rule). In calculating the reduction of burden, the FDIC assumes that 15 percent of institutions provide “a management discussion and analysis in their annual disclosure statement,” which the FDIC assumes takes each institution approximately 1.5 hours to prepare. Based on salary estimates, the FDIC believes this change will save each financial institution $157.82 per year and $82,695 industry wide - which is approximately 0.0001 percent of noninterest expenses for covered institutions.
The full final rule can be found here.