Financial Institution Growing Pains

06/15/2020 Mike Ballenger

What if your bank’s assets cross the $500 million and $1 billion thresholds?

During these unprecedented times, you may encounter unusual impacts on your institution’s balance sheet that will alter your compliance requirements. As your bank grows — either organically or through acquisitions — it’s important to prepare for additional requirements that come into effect after you reach $500 million or $1 billion in assets. Under the Federal Deposit Insurance Corporation Improvement Act (FDICIA), banks with assets between $500 million and $1 billion must:

  • Provide audited comparative financial statements to the relevant federal regulator;
  • Comply with more rigorous auditor independence standards;
  • Submit management representations regarding financial statement preparation, internal control over financial reporting (ICFR) and compliance with certain laws and regulations, and;
  • Have an audit committee with a majority of members who are outside directors independent of management.

Banks that cross the $1 billion threshold must also:

  • Submit additional management representations, including an assessment of the effectiveness of ICFR as of the end of the fiscal year;
  • Provide an auditor’s opinion regarding the effectiveness of ICFR, and;
  • Ensure that all audit committee members are outside directors independent of management.

Generally, when a bank crosses one of these thresholds, the new requirements take effect at the beginning of the next fiscal year. For any questions related to asset thresholds, or for any guidance related to your institution’s accounting practices, please contact VonLehman’s specialized Financial Institution Service Group at or 800.887.0437.

Have a Question? Contact Us

Contact Us