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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...

The task of processing Paycheck Protection Program (PPP) loans is a high priority for financial institutions right now. Following are some items to consider when accounting for these loans. Loan Disbursement and Receipt of Fees At the time funds are disbursed to the borrower, the financial institution should record the loan to the borrower, as well as a receivable from the Small Business Administration for the processing fee. The legally-binding PPP loan receivable will be repaid either by the borrower or through the SBA via loan forgiveness...

Published in COVID-19
Tuesday, 21 April 2020

Financial Services: A Closer Look at Loan and Lease Losses

Written by Liz Ziesmer, CPA, CBA

As the global pandemic continues to significantly affect businesses’ bottom lines and individuals’ pocketbooks, financial institutions are grappling with the impacts on accounting and financial reporting – specifically, what the devastation wrought by COVID-19 means for their first quarter allowance. Here’s what banks, credit unions, investment companies, brokerage firms, insurance companies, mortgage companies and other financial institutions should keep in mind during these tumultuous times. Incurred- vs. Expected-Loss Models Under the incurred-loss model, the estimation of credit losses refers to an estimate of the amount of loans an institution will not be able to collect under certain circumstances...

Published in COVID-19
Wednesday, 15 April 2020

CARES Act Regulatory Capital Interim Final Rule

Written by Liz Ziesmer, CPA, CBA

The Coronavirus Aid, Relief and Economic Security (CARES) Act, signed into law on April 7, 2020, includes the Paycheck Protection Program (PPP) to provide more than $349 billion to small businesses to help them maintain payrolls at the same amount as prior to the COVID-19 pandemic. Any lending institution approved to participate in the existing SBA 7(a) lending program, as well as additional lenders approved by the Department of Treasury, is accepting applications for a PPP loan. Also on April 7, 2020, the Board of Governors of the Federal Reserve System (Board), with approval of the Secretary of the Treasury, authorized Federal Reserve Banks to extend credit under the Paycheck Protection Program Lending Facility (PPPL Facility) in the form of non-recourse loans to institutions that are eligible to make PPP covered loans. The OCC, Board and FDIC then issued an interim final rule and request for comment on their subsequent action to allow banks to neutralize the regulatory capital effects of participating in the PPP...

Published in COVID-19

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
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