February 1, 2011
Authored by: Jonathan Hightower
Regulation 80-1-6-.03 of the Georgia Department of Banking and Finance requires each director of a Georgia state bank to maintain an annual financial statement in the files of the bank for which he or she serves as a director. The regulation requires that the financial statement be revised annually and that the financial statement not be more than 18 months old.
In the past, bank examiners have carefully reviewed these financial statements to ensure that estimates of asset values, particularly estimates of the values of bank stock, are reasonable. Given the volatility of bank stock valuations over the recent years, directors should ensure that their estimates of the value of bank stock in their portfolios are reasonable. For banks and bank holding companies that have thinly traded securities, estimates should reflect current market conditions as well as the financial condition of the institution. The latest price at which the securities were sold may or may not reflect those factors.