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Arkansas State Bank Department

The mission of ASBD is to maintain a legal and regulatory structure for Arkansas's financial industry. This structure provides the public with convenient, safe and competitive banking, which fosters economic development within this State. Our mission is accomplished through efficient allocation of available human and other resources existing in our Examination, Information Technology and Administrative Services Divisions.

General Ledger, Cash Receipts & Disbursements Journal, and Financial Statements


Recommendation is made for the maintenance of a general ledger, general journal, cash receipts and disbursements journal, and checkbook for the holding company.  If financial records are maintained by the organization’s accountant for the purpose of preparing Federal Reserve System reports, documentation for financial statements must be made available to examiners during a scheduled examination.  Knowledge of entries made to the corporation’s financial statements is the responsibility of parent company’s management (Board of Directors and executive officers).

If a general ledger’s chart of accounts is established to correspond with the format of FR Y-9 reports, this will expedite the preparation of the Federal Reserve System reports.  Complete documentation of all entries to the general ledger or subsidiary ledgers is essential for the establishment of audit trails and determination of an account’s validity.  Posting of entries as transactions occur is recommended in order to avoid omissions at the time of regulatory report preparation. 

The financial statements of the bank holding company must accurately reflect the financial condition and operating results.  Segregation of the following accounts for each bank subsidiary in a multi-bank organization is recommended:

  • Investment in equity capital
  • Goodwill  (appropriately documented with impairment testing)
  • Amortization of goodwill, when appropriate, based upon impairment testing
  • Dividend income
  • Interest income
  • Credit life income
  • Management fee income
  • Equity in undistributed earnings

The production of informative financial statements provides an effective decision making tool for directors and shareholders.

Management is reminded that nontraditional expenses incurred by the holding company must be thoroughly documented as to their eventual benefit to the bank subsidiary.  Nontraditional expenses include, but are not limited to, home burglar/surveillance equipment, car phones, excessive travel and entertainment (football games); country club and health club memberships, cable TV service, and commission expenses for paintings.  Consideration for payment of such expenses must be given to the ultimate impact on the bank subsidiary.  Will the holding company’s payment of certain expenses result in higher dividends being required from a bank subsidiary?  How will the payment of higher dividends effect the bank’s capital augmentation?  In the event that a bank subsidiary’s financial condition deteriorates to the point that dividend payments are prohibited, what are the parent company’s secondary sources of funds?

The Great Seal of Arkansas

The State Bank Department was created by Act 113 of 1913. The Department is charged with regulating commercial banks with main offices in Arkansas. These 74 banks hold assets of over $147.1 billion as of June 30, 2022. The Department also is charged with supervising the bank holding companies of Arkansas state-chartered banks; state-chartered trust companies; regional and county industrial development corporations; industrial loan institutions; and capital development companies. The Department operates to ensure the safety and soundness of, and public confidence in, these institutions and organizations.

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