Financial Institutions

Tuesday, 09 June 2020

Stafford Act Provides Unique Benefit for Companies, Employees

Written by The Rehmann Team

On March 13, 2020 President Trump determined that the COVID-19 pandemic warranted a nationwide emergency declaration as a qualified disaster under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) and gave employers the opportunity to provide tax-free assistance to employees under Section 139 of the Internal Revenue Code. It has been rarely used since enacted in 2002, when it was added after the September 11 attacks in 2001. Section 139 provides that qualified disaster relief payments from any source that are used to reimburse or pay an individual for eligible expenses in connection with a defined qualified disaster are not subject to income or employment taxes, including Social Security, Medicare and federal unemployment taxes and are generally tax-deductible for the employer...

Tuesday, 09 June 2020

2020 HMDA Reporting Threshold Changes

Written by The Rehmann Team

The Consumer Financial Protection Bureau recently issued a final Home Mortgage Disclosure Act (HMDA) rule that increases the threshold for required reporting of closed-end mortgage loans and dwelling-secured open-end lines of credit. It is applicable to depository and non-depository institutions. Closed-End Mortgage Loans If an institution originated at least 25 closed-end loans in both 2018 and 2019, then as of January 1, 2020 the institution has to collect, record and report HMDA data for calendar year 2020.  However, as of July 1, 2020, if an institution originated fewer than 100 closed-end loans in either 2018 or 2019, then it is a newly excluded institution (NEI) subject to these revised HMDA reporting guidelines: NEI may cease the collection of data for HMDA purposes beginning on July 1, 2020...

Tuesday, 09 June 2020

2020 Reg CC changes

Written by The Rehmann Team

In 2010, the Dodd-Frank Act amended the Expedited Funds Availability (EFA) Act requiring regular inflation adjustments to certain hold thresholds triggered every time there is an adjustment for inflation starting on July 1, 2020. The Consumer Financial Protection Bureau issued a 63-page final rule on June 24, 2019 that amended some parts of Regulation CC relating to check holds and funds availability and included customer notification requirements.  Inflation adjustments for holds and funds availability: $200 increases to $225 – this is the amount used on case-by-case holds (Note: the $200 amount is still referred to as $100 in Reg CC).  $5,000 increases to $5,525 – this is the amount used on certain special exception holds, such as large deposit holds, new account holds and repeatedly overdrawn holds...

Tuesday, 09 June 2020

Interagency Response to CECL Comments

Written by The Rehmann Team

In October 2019, the OCC, Federal Reserve Board, FDIC and NCUA (the agencies) invited public comment on proposed guidance on credit risk review to update the 2006 Interagency Policy Statement. The “Loan Review Systems” document focuses on assessing loan risks under the Allowance for Loan and Lease Losses (ALLL) methodology, which will no longer be applicable under Current Expected Credit Losses (CECL). Trade associations, banks, credit unions and members of the public submitted 19 comments. Most expressed general support for the guidance, while many also raised concerns including: a one-size-fits-all approach that would place a burden on smaller institutions; duplication of efforts due to overlap of responsibilities; the role of credit risk review and its relation to other functions such as internal audit; scope, frequency and internal responsibility; dispute resolution; and the use of technology and data...

Tuesday, 09 June 2020

ALLL Trends Due To CECL Implementation and COVID-19

Written by The Rehmann Team

The largest U.S. banks reported weak first-quarter 2020 earnings, with a median decline of 33%, a trend expected to continue at least into the second quarter and possibly beyond, according to a May 2020 report from S&P Global. This was largely due to buildups in ALLL based on downtrends in economic predictions and adoption of CECL accounting methods, coupled with fewer net charge-offs...

Monday, 08 June 2020

COVID-19 Brings Increases in Phishing and Other Financial Fraud Schemes

Written by The Rehmann Team

The economic uncertainty created by COVID-19 has unfortunately left many people more vulnerable than ever as criminals invent new ways to take advantage of them with a wide range of schemes to defraud others, take their money, steal their identity and more. The FBI Financial Crimes Section reports that criminals are posing as government officials with offers of help for virus-related issues. They are using social media, emails, phone calls and even going door-to-door to convince people they need money to support costs of COVID testing, financial relief or medical equipment, all with the goal of collecting personal and bank account information. Criminals have told people the recent economic impact payment was too high and they need to return part of it, the payment required an “up front” fee and the individual has to provide PayPal account information in order to receive the payment...

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...

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