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FASB Issues Statement on Prudential Regulator Guidance Concerning Troubled Debt Restructurings. On Sunday, March 22, 2020, the FASB has issued the following relating to a statement by Federal and state prudential regulators banking regulators:  “Earlier today, the Federal and state prudential banking regulators issued a joint statement that included guidance on their approach to the accounting for loan modifications in light of the economic impact of the coronavirus pandemic. This guidance was developed in consultation with the staff of the FASB who concur with this approach and stand ready to assist stakeholders with any questions they may have during this time.”  The agencies involved include Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), the Consumer Financial Protection Bureau (CFPB), and the State Banking Regulators...

Published in COVID-19
Tuesday, 11 February 2020

SEC Bulletin Offers CECL Guidance

Written by The Rehmann Team

The SEC recently published Staff Accounting Bulletin 119 to provide guidance for CECL documentation expectations. Although the FASB delayed the CECL effective date for smaller reporting companies, private companies and not-for-profit entities to fiscal years beginning after December 15, 2022, planning ahead will be key to compliance.   Below are highlights from the Bulletin:   Q: What are some of the factors to consider when developing or performing an assessment of methodology for determining allowance for credit losses under GAAP?   A: Assessments of internal and third party methodologies should:   Incorporate management’s current judgments about credit losses expected from the existing loan portfolio, including reasonable and supportable forecasts about changes in credit quality on a disciplined and consistently-applied basis Take into account the organization’s size, structure, access to information, business environment and strategy, management’s risk assessment, complexity of the loan portfolio, loan administration procedures and management information systems   Q: What internal accounting controls should be addressed in written policies and procedures?..

Tuesday, 11 February 2020

2019 Bank M&A Activity

Written by The Rehmann Team

Bank stocks came under pressure in mid-2019, erasing many of the gains from the first half of the year. The Fed responded to recession fears by cutting interest rates. Bank stocks enjoyed a rally in late 2019, jumping close to 30%, and the potential for long-term rate increases going forward may lift these stocks in 2020 as well.  Anton Schutz, a senior portfolio manager at Mendon Capital Advisors, believes there is investor support for smartly priced bank M&A transactions...

Tuesday, 11 February 2020

Is the FASB New Lease Accounting Standard Impacting Banks?

Written by The Rehmann Team

In February 2016, the Financial Accounting Standards Board (FASB) issued new lease accounting standards that moves most operating and capital leases (now called finance leases) onto a company’s balance sheet. Operating leases with terms under one year are exempt.  Under the previous standard, capital leases, which transfer ownership of assets to the lessee, are reported on the balance sheet, including a liability reflecting the obligation to make lease payments, and an asset reflecting the legal right to use (ROU asset) the leased property.  Both are based on the present value of minimum payments under the lease, with adjustments to the ROU asset for certain prepayments, incentives and costs...

Tuesday, 11 February 2020

How Are “Pays” Doing?

Written by The Rehmann Team

Payment systems professionals at banks keeping a watchful eye on mobile pay and digital wallet apps - the “Pays” such as ApplePay, SamsungPay and GooglePay - as well as competition from other alternative payment options, such as the Apple Card, the Google checking account and Facebook’s Libra cryptocurrency that will be held in a digital wallet called Calibra. Mercator Advisory Group’s most recent consumer survey report, Mobile Payments: Making a Comeback, reports that U.S. consumer use of digital wallets, including universal and retailer-specific options, has been uneven but trending upward...

Wednesday, 06 November 2019

Cannabis Banking

Written by The Rehmann Team

Thirty-three states, the District of Columbia, Guam and Puerto Rico have legalized marijuana in some form while possession, distribution or sale of marijuana remains illegal under federal law. This means any contact with money that can be traced back to marijuana operations could potentially be considered money laundering and heighten exposure to legal, operational and regulatory risks. Nonetheless, legitimate cannabis businesses experienced a 62 percent year-over-year jump in banking options, with 715 banks and credit unions actively serving the industry. While these financial institutions have been mindful of following stringent procedures to identify and report “red flags,” most of the nearly 30,000 marijuana-related SARs filed between June 30, 2018, and June 30, 2019, were considered “routine...

Wednesday, 06 November 2019

Anticipated CECL Impact on Public Filers

Written by The Rehmann Team

The impact of CECL on anticipated loan loss allowances must now be reported in quarterly 10-Q SEC filings. Banks that are expecting the largest allowance increases have a more heavily weighted consumer portfolio because commercial loans typically have shorter expected lives whereas mortgages and consumer loans have longer terms. Moreover, the largest impact will likely be on retail portfolios heavily weighted with credit cards, which typically have larger estimated losses, especially portfolios with a concentration of lower credit quality. CECL will extend credit card estimated losses to a longer period of time, from the current year to two years...

Wednesday, 06 November 2019

LIBOR Phase Out: Looking to 2021 and Beyond

Written by The Rehmann Team

The London Interbank Offered Rate (LIBOR) is a global benchmark interest rate investors and banks use in credit agreements. It is calculated daily by a British regulator, using the average interest rate at which large, international banks around the world report they borrow unsecured funds from one another, and expressed in five different currencies. Since the mid-1980s, LIBOR has been used for nearly all commercial, consumer and mortgage loan products. The problem is that LIBOR is not set by the cost of funds that banks actually pay because the rates are collected through a self-reported survey of participating banks...

Wednesday, 06 November 2019

SEC Proposes Updates to Registrant Disclosures

Written by The Rehmann team

The SEC has proposed changes to Industry Guide 3, Statistical Disclosure by Bank Holding Companies. First published in 1976, the changes update required disclosures financial institution registrants provide to investors and eliminate disclosures that overlap with Commission rules, U.S. GAAP or IFRS...

As seen in our BWDe Flash in July  The FASB is standing by CECL and its decision to require all publicly traded firms to proactively report and set aside reserves for credit losses, saying the move would make the financial system safer and is worth the cost. As part of its ongoing review of the contentious standard and ongoing controversy, the FASB recently voted to extend the deadline for CECL implementation until January 2023 for small reporting companies, all non-SEC public filing lenders and private and nonprofit lenders. SEC reporting companies who are not considered small reporting companies still must comply by January 2020. FASB plans to publish the proposed changes in mid-August, followed by 30-day public comment period...

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