Year End Checklist
Printer-friendly VersionThe following is intended to help get you started on your list. It is not intended to be exclusive or to fit all situations. Many of the reports listed require use of year-end data. Therefore, they will necessarily be prepared in January.
Annual report. This is prepared from year-end call report data and should be available to your shareholders as well as the general public no later than March 31, or 5 days after it is provided to shareholders, whichever is earlier.
Proxy statement and notice of annual shareholders meeting. Many banks have their annual shareholders meeting in January. If so, you need to prepare your proxy statement, proxies, and notice of shareholders meeting for mailing in December.
Identifying executive officers. Under Regulation O certain officers are automatically considered executive officers unless the officer is excluded by a resolution of the board of directors from participation in major policy making functions. Do this at the last meeting of the year or no later than the first meeting of the next year.
Year-end reports to IRS and customers. There are a wide number of reports filed on forms 1099 and 1098 reflecting interest earned and interest paid, and W-2s for employees, as well as other reports such as property taken in satisfaction of indebtedness, discharged debt, and the like. The customers must receive their reports by January 31 with the IRS receiving its report by February 28. Thus, the bank’s data processing system must be prepared to generate these reports at the beginning of the year. Even though Congress has provided tax relief to consumers for forgiven mortgages, it did not suspend the reporting by creditors!
Billing error resolution notices. Both Regulation E and Regulation Z require annual billing error resolution notices or an alternative summary statement with each periodic statement.
Update and review appraisals where appropriate.
Review contingency plan, including electronic data processing arrangements. Be sure that it includes pandemics like the avian flu. The board should make sure that this plan is current and meets the needs of the institution as well as the requirements of the pertinent regulations.
Review security devices and compliance with Bank Protection Act. The board should consider the adequacy of the written security policy. FIRREA eliminated the reporting requirement to the regulators and substituted a biennial report to the board of directors. Be sure you are in compliance with the multi-factor authentication requirements for online banking and IVRs.
Annual audit. Under the FDIC Improvement Act of 1991, banks with $500 million or more in total assets are required to have an annual independent audit. An independent audit committee of outside directors should select the auditor. Smaller banks may also desire an outside audit and should select their auditor.
Review correspondent relationships. Review your exposure to correspondent banks; obtain copies of correspondent banks’ financial statements and evaluate capital condition; set exposure limits.
Record disposal/retention. Using an appropriate record retention schedule in line with federal requirements, the bank should properly store records required to be maintained and destroy records which have expired. Remember that FIRREA has a 10-year statute of limitations on most crimes affecting banking. Thus, some records will need to be retained for a 10-year period. Also, the Customer Identification Program Regulations have some specific (mostly five year) record retention requirements. However, most records can immediately be put on microfilm, microfiche, or optical disk to reduce storage needs. Update your program to handle e-mail as part of your bank’s records.
Set dividend to shareholders. The bank board of directors should review its dividend policy and its financial condition to determine whether a dividend can legally be paid under appropriate guidelines. If so, then the dividend should be set aside for the year with arrangements made for payment to shareholders. This would also be a good time to review, and, if necessary, change your capital adequacy policy.
Review schedule of fees and charges. While this is not required by law, it is a good idea to periodically review bank pricing.
Annual personnel evaluations. Again, this is not required by law. However, it is a good idea to perform annual evaluations of employees and officers.
Review insurance coverages for adequacy. This includes not only the directors and officers liability policy but also casualty policies, trust errors and omissions, workers’ compensation, and the entire range of appropriate insurance coverages for the institution.
Review pension plan and take appropriate actions for the year. If your bank has a pension plan, the plan committee should meet and review investments as well as other reporting requirements for the year.
Holidays. National banks have the ability under federal law to either abide by or ignore state holidays. State banks have the same flexibility. The board of directors should set the holidays by resolution. The best time to do this is at the December meeting for the next calendar year. You may wish to use the Federal Reserve holiday calendar. Be sure to decide whether Saturdays and Sundays will be holidays, limited banking days, or full service days. Following is a list of the 2009 Federal Reserve holidays.
January 1, New Year’s DayJanuary 19, Martin Luther King, Jr. DayFebruary 16, Presidents DayMay 25, Memorial DaySeptember 7, Labor DayOctober 12, Columbus DayNovember 11, Veterans DayNovember 26, Thanksgiving DayDecember 25, Christmas Day
The Federal Reserve standard holiday schedule mandates that if January 1, July 4, November 11, or December 25 falls on a Sunday, the following Monday will be observed as a holiday. If January 1, July 4, November 11, or December 25 occurs on a Saturday, the preceding Friday will not be observed as a holiday. For the year 2009, July 4 falls on a Saturday.
Privacy Notices. Don’t forget your annual notice to consumer customers regarding your privacy practices. You have likely sent this earlier in the year. However, make sure it is on your “to do” list every year! Be sure your opt out notice complies with the FACT Act affiliate sharing rule.
Year-end is a time to look back on the successes—as well as problems—of the preceding year. Use this time, and the reports required, to plan ahead for an even better 2009.
Annual Board Meeting Checklist
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□ Prepare statement of bank policy with regard to civil rights and consumer compliance.
□ Review and approve security policy. Appoint security officer.
□ Review and approve emergency preparedness plan.
□ Review and approve Affirmative Action Plan for EEOC (written plan is necessary if 50 or more employees).
□ Review insurance coverage, including:
□ automobile (company cars, hired and nonowned or repossessed)
□ workers compensation
□ bankers blanket bond
□ comprehensive general liability
□ excess liability (umbrella)
□ directors and officers liability
□ group creditor
□ errors and omissions
□ directors
□ officers
□ trust
□ mortgagee
□ safe deposit
□ data processing equipment
□ hazard insurance for bank premises (including ATMs, motor banks, etc.)
□ employee benefits (e.g. group term life)
□ valuable papers and records
□ company reimbursement policy
□ Review audit
□ Review regulatory exam(s)
□ Approve appraisers, auditors
□ Review and approve policies and procedures
□ Appoint compliance officer and BSA/AML officer
□ Organize board committee structure and fee structure
□ Elect officers and approve salaries
□ Update strategic plan
□ Set correspondent bank exposure limits
□ Review vendor relationship and updated due diligence
□ Review vendor relationship and updated due diligence
□ Complete ACH rule compliance audit by December 1
Comments & Questions
If you would like to comment on legal topics or if you have questions please Shannon Phillips at (800) 749-4228 or e-mail sphillips@ibat.org.