Appendix A-Balance Sheet. Appendix D-Reconciliation of Reserve for Possible Loan Losses (Valuation Reserve). AUTHORITY: R.S. 324 et seq., as amended; (12 U.S.C. 1 et seq). SOURCE: 41 FR 53978, Dec. 10, 1976, unless otherwise noted. § 18.1 Scope and application. This Part is issued by the Comptroller of the Currency under the general authority of the National Banking Laws, R.S. 324 et seq. as amended, 12 U.S.C. 1 et seq., and contains rules applicable to the issuance of annual reports by national banks. (a) Every national bank shall mail an annual report to each of its shareholders, to the Comptroller of the Currency and the appropriate Regional Administrator, containing, as a minimum, the information required by this Part. This Part shall not apply to the following: (1) Banks which are furnishing Annual Reports to Shareholders in accordance with § 11.5 (c) of Part 11 of the Comptroller's Regulations; or (2) Banks which, except for directors' qualifying shares, are wholly-owned subsidiaries of bank holding companies. (b) Every bank subject to this Part shall mail an annual report to each of its shareholders at least 10 days prior to its annual meeting but in no event later than 60 days after the close of the bank's fiscal year. § 18.2 Financial statements. The following financial statements must be included in the Annual Report to Shareholders: (a) Comparative Balance Sheets as of the end of the two most recent fiscal years (See Appendix A); (b) Comparative Statements of Earnings for the two latest fiscal years (See Appendix B); (c) Comparative Reconciliation of Equity Capital Accounts for the two latest fiscal years (See Appendix C); (d) Comparative Reconciliation of Reserve for Possible Loan Losses (Valuation Reserve) for the two latest fiscal years (See Appendix D). § 18.3 General rules. (a) The financial statements called for by this Part should be prepared in accordance with the applicable instructions and definitions set forth by the Office of the Comptroller of the Currency in the publication entitled, "Instructions for Preparation of Consolidated Reports of Condition and Reports of Income by National Banking Associations" and in any other releases amending or interpreting this publication. (b) The following information should be disclosed, when applicable, in footnotes to the financial statements: (1) A summary of significant accounting policies, such as whether the bank is on the cash or accrual basis of accounting; (2) Any changes in accounting principles or practices or in the method of applying any accounting principles or practices made during any period for which financial statements are filed which affect comparability of such financial statements with those of prior or future annual periods, and the effect thereof upon the net income for each period for which financial statements are filed: (3) Retroactive adjustment made during any period for which financial statements are filed, and the effect thereof upon net income of prior periods; (4) A brief description of any restrictions, other than statutory, on the payment of dividends; (5) The components of income tax expense, including taxes currently payable and deferred income taxes; (6) A breakdown of the loan portfolio similar to the major loan categories of Schedule A of the Consolidated Report of Condition; and (7) The amount of outstanding standby letters of credit. (c) The statements and footnotes called for by this part are minimum requirements. Additional information as may be necessary to make the financial statements not misleading shall included. be (d) The requirements of this Part may be met by providing each shareholder with a copy of the Balance Sheet of the Consolidated Report of Condition and Section A of the Consolidated Report of Income, and the following information, 11. Bank premises, furniture and fixtures, and other assets representing bank premises.. 12. Real estate owned other than bank premises.. 13. Investments in uncomsolidated subsidiaries and associated companies.. 14. Customers' liability to this bank on acceptances outstanding.. 24. Total domestic deposits.. (a) Total demand deposits. (b) Total time and savings deposits.. (c) Deposits in foreign offices.. (d) Total domestic and foreign deposits... 25. Federal funds purchased and securities sold under agreements to repurchase.. 26. Liabilities for borrowed money. 27. Mortgage indebtedness__ 28. Acceptances executed by or for account of this bank and outstanding.. 29. Minority interest in consolidated subsidiaries. 30. Other liabilities.... 19. 19. NOTE.-Banks may combine various lines as follows if the particular line figure is less than 3 percent of total assets Line 14 into line 15; Line 7 into lines 2, 3, 4, and 5, as appropriate; line 23 into line 30. Lines for which banks have no entry may be omitted. APPENDIX B.-Statement of Earnings (consolidated) [In thousand fof dollars] 1. Operating income: (a) Interest and fees on loans. (b) Interest on balances with banks.. (c) Income on Federal funds sold and securities purchased under agreements to resell in domestic offices. (d) Interest on U.S. Treasury securities. (e) Interest on obligations of other U.S. Government agencies and corporations.... Interest on obligations of States and political subdivisions of the U.S.. (g) Interest on other bonds, notes and debentures. 2. Operating expenses: (a) Salaries and employee benefits. (b) Interest on time certificates of deposit of $100,000 or more issued by domestic offices.. (c) Interest on deposits in foreign offices. (d) Interest on other deposits.. (e) Expense of Federal funds purchased and securities sold under agreement to repurchase in domestic offices. f) Interest on borrowed money Interest on subordianted notes and debentures. (g(h) 1. Occupancy expense of bank premises, gross. (i) 2. Less: Rental income.. 3. Occupancy expense of bank premises, net.. (j) Provision for possible loan losses (or actual net loan losses). (k) Minority interest in consolidated subsidiaries.. (1) Other expenses.. 3. Income before income taxes and securities gains or losses (Item 1-n minus 2-m). 4. Applicable income taxes (domestic and foreign). 5. Income before securities gains or losses (item 3 minus 4). 6. (a) Securities gains (losses), gross.. (b) Applicable income taxes (domestic and foreign) (e) Securities gains (losses), net.. 7. Income before extraordinary items.. 8. Extraordinary items, net of tax effect. 9. Net income. Earnings per common share: Income before securities gains (losses). Net income.. NOTE.-Banks may combine any line item 1-a through 1-1 into line 1-m, and any line item 2-a through 2-i into line 2-1, provided the particular line figure to be combined is less than 3 percent of total operating income. Lines for which banks have no entry may be omitted. NOTE.-This schedule is identical to sec. B of the consolidated report of income, and should be prepared for each of the latest 2 years. 90-051-77-23 APPENDIX D.-Reconciliation of Reserve for Possible Loan Losses (Valuation Reserve) 1. Balance beginning of period.. 2. Recoveries credited to reserve.. 3. Changes incident to mergers and absorption.. 4. Provision for possible loan losses (must equal Item 2j on statement of earnings). 5. Losses charged to reserve... 6. Balance end of period.... NOTE.-Every bank subject to this part must provide this schedule as part of its report to shareholders. Banks with total resources of less than $25,000,000 as of the end of the previous year which have no reserve for possible loan losses (valuation reserve) must, nevertheless, provide this schedule as part of their report to shareholders. These banks will show a beginning balance of zero, gross recoveries on line 2, gross losses on line 5, and net losses or recoveries on line 4, which will result in an ending balance of zero or a District bank to cease and desist from practices and violations described in section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), as amended, and enumerated in § 19.2. The procedures for issuing such orders prescribed in section 8 of such Act will be followed and hearings required thereunder will be conducted in accordance with the rules and procedures set forth in this part. § 19.2 Grounds for cease-and-desist orders. If, in the opinion of the Comptroller of the Currency, any national bank or District bank is engaging in or has engaged, or the Comptroller of the Currency has reasonable cause to believe that the bank is about to engage, in an unsafe or unsound practice in conducting the business of such bank, or is violating or has violated, or the Comptroller has reasonable cause to believe that the bank is about to violate, a law, rule, or regulation, or any condition imposed in writing by the Comptroller in connection with the granting of an application or other request by the bank, or any written agreement entered into with the Comptroller, the Comptroller may issue and serve upon the bank a notice of charges in respect thereof. bank. Such hearing shall be set for a date not earlier than 30 days nor later than 60 days after service of such notice unless an earlier or a later date is set by the Comptroller at the request of the bank. Unless the bank appears at the hearing by a duly authorized representative, it shall be deemed to have consented to the issuance of the cease-and-desist order. § 19.4 Issuance of order. In the event of the consent described in § 19.3, or if upon the record made at any such hearing, the Comptroller finds that any violation or unsafe or unsound practice specified in the notice of charges has been established, the Comptroller may issue and serve upon the bank an order to cease and desist from any such violation or practice. Such order may, by provisions which may be mandatory or otherwise, require the bank and its directors, officers, employees, and agents to cease and desist from the same and to take affirmative action to correct the conditions resulting from any such violation or practice. A cease-and-desist order shall become effective at the expiration of 30 days after the service of such order upon the bank (except in the case of a cease-anddesist order issued upon consent, which shall become effective at the time specified therein), and shall remain effective and enforceable as provided therein, except to such extent as it is stayed, modifiled, terminated, or set aside by action of the Comptroller or a reviewing court. § 19.6 Temporary cease-and-desist orders. Whenever the Comptroller determines that the violation or threatened violation or the unsafe or unsound practice or practices, specified in the notice of charges served upon the bank and referred to in § 19.3, or the continuation thereof, is likely to cause insolvency or substantial dissipation of assets or earnings of the bank, or is likely to otherwise seriously prejudice the interests of its depositors, the Comptroller may issue a temporary order requiring the bank to cease and desist from any such violation or practice. § 19.7 Effective date of temporary order. Such order referred to in § 19.6 shall become effective upon service upon the bank and, unless set aside, limited, or suspended by a court in proceedings authorized under section 8 of the Federal Deposit Insurance Act, as amended, shall remain effective and enforceable pending the completion of the administrative proceedings held pursuant to such notice and until such time as the Comptroller shall dismiss the charges specified in such notice, or if a cease-and-desist order is issued against the bank pursuant to § 19.4, until the effective date of any such order. § 19.8 Representation and suspension. (a) Appearance before a hearing examiner. Any person who is a member in good standing of the bar of the highest court of any State, possession, territory, Commonwealth, or the District of Columbia, may represent others with respect to a cease-and-desist proceeding upon filing with the Administrative Assistant to the Comptroller a written declaration that he is currently qualified as provided by this paragraph and is authorized to represent the particular party on whose behalf he acts. Any other person desiring to represent others before a hearing examiner may be required to file with the Administrative Assistant a power of attorney showing his authority to act in such capacity, and he may be required to show to the satisfaction of such examiner that he has the requisite qualifications. Attorneys or other representatives of parties to any proceeding provided for in this part shall file a written notice of appearance with the Administrative Assistant. (b) Summary suspension. Contemptuous conduct at any hearing before the Comptroller or a hearing examiner shall be grounds for exclusion from any such hearing and suspension for the duration thereof. § 19.9 Notice of hearing. Whenever a hearing is ordered by the Comptroller pursuant to section 8 of the Federal Deposit Insurance Act, a notice of hearing shall be given by the designated officer acting for the Comptroller to the party afforded the hearing. Such notice shall state the time, place, and nature of the hearing, the hearing ex |