Financial Institutions

According to the FDIC, reserves for loan losses at all FDIC-insured banks decreased by $2.6 billion (2.1 percent) in 4Q 2014, primarily because net charge-offs totaled $9.9 billion exceeding the $8...

Tuesday, 30 June 2015

Online mortgage origination key to future success

Written by Rehmann Team

It’s clear that online and mobile banking delivery channels are increasingly in demand and popular with consumers. The appeal stretches beyond the ability to conduct routine banking transactions, such as depositing checks, transferring funds and paying bills, to include mortgage rate comparison, educational research and online applications. According to JD Power & Associates, non-institution lenders that have embraced an online business model are experiencing higher loan growth rates than traditional lenders relying on “pen and paper” applications. In fact, Quicken was recently recognized as the number one online lender, the third largest retail mortgage lender in the US and for the fourth consecutive year received excellent customer satisfaction scores on the JD Power survey...

Tuesday, 30 June 2015

Streamlined call reports for community banks under consideration

Written by Rehmann Team

The industry has experienced a bit of a trend in simplifying reporting regulations for community banks, as shown by the recent Basel III AFS opt-out change. There may be another call report change in the works, designed to ease community banks’ burden to meet strict, one-size-fits-all policies.The quarterly call report has grown from just 18 pages in 1986 to 80 pages, with more than 670 pages of instructions. According to the 2014 ICBA Community Bank Call Report Burden Survey, “the annual cost of preparing the call report has increased for 86 percent of respondents over the past 10 years and the total hours dedicated to preparing the Call Report has increased for 73 percent...

Tuesday, 30 June 2015

Does the recent SEC change rate an “A+”?

Written by Rehmann Team

The Securities Act of 1933 requires that when a company offers or sells securities to potential investors, it must register the offer and sale with the SEC or rely on Regulation A which “permits unregistered public offerings of up to $5 million of securities in any 12-month period, including no more than $1.5 million of securities offered by security-holders of the company.”Specifically, Regulation A, which has been in place for more than two decades: Enables mini-registration with the SEC Allows public solicitation of accredited investors (those who make over $200,000 a year or have a net worth of $1 million) and non-accredited investors Affords the ability to issue freely tradable shares Requires fewer disclosures, limited SEC review, easing of post-offering reporting and the opportunity for small companies to explore interest in their investment opportunity before incurring the significant up-front filing costs While the intent of Regulation A was to make access to capital easier for small companies, thereby encouraging company formation and stimulating jobs growth, it has historically been little used due to high costs relative to the amounts raised and the complications and expenses associated with complying with states’ blue sky laws. Title IV of the Jumpstart Our Business Startups Act of 2012 (the JOBS Act), relating to small company capital formation, was intended to expand Regulation A...

Tuesday, 31 March 2015

Call reports, Basel III and the one-time opt-out AOCI election

Written by Rehmann Team

The start of 2015 means the implementation of the new Basel III capital requirements to financial institutions, including the introduction of the Common Equity Tier 1 (CET1) capital ratio. After much commentary and discussion, the final rule includes a concession to smaller community banks and bank holding companies with less than $250 billion in assets (also known as non-advanced approaches financial institutions): a one-time irrevocable option to continue to exclude AOCI (accumulated other comprehensive income) from regulatory capital calculations. Effective with the March 31, 2015 Call Report, institutions must make the irrevocable selection. It is widely anticipated that most institutions will elect to “opt out” of the new rule and continue to calculate AOCI items according to the terms in effect prior to the new rule...

Tuesday, 31 March 2015

Carbanak: a cyber attack of epic proportions

Written by Rehmann Team

Imagine standing in front of a bank ATM to withdraw some money, and the ATM dispenses cash without a touch of the keypad. That’s just what happened in 2013 in Kiev, much to the surprise and pleasure of people who quickly collected the cash. Little did they know it was just the beginning of a cyberattack of epic proportions, with estimated losses ranging from $500 million to $1 billion. An investigation by Kaspersky Lab, a Russian cybersecurity firm, confirmed that several months prior to the ATM incident, the institution’s internal computers had been breached by malware that tracked and recorded the work of employees who controlled cash transfer systems, including ATMs, online banking and wire transfers...

Tuesday, 31 March 2015

Time for a new approach to non-interest income

Written by Rehmann Team

As financial institution delivery channels continue to evolve, interest rates remain historically low and higher yielding loans are paid off, traditional views on sources of non-interest (fee) income are changing, too. Rather than “wait” for income from ATM charges, low balance fees or check processing fees (which can make clients feel like they are being punished for using the institution’s services), community banks are seeking ways to capture new relationships and deepen existing ones with customers who are willing to pay for services, such as investment services that help them diversify their investments and grow their wealth.  According to the Michael White-Securities America Report: Community Bank Investment Programs™, 1,405 or 22 percent of community banks participated in investment program activities during the first three-quarters of 2014, a slight decrease from the prior year. These programs produced more than $430 million in income over the same time period, with security brokerage revenues contributing significantly more (74 percent) to total investment program income than annuity commission income (26 percent)...

Saturday, 31 January 2015

Transition planning: Front and center for your financial institution

Written by Heidi Bolger, CPA/ABV, CM&AA, CGMA & Mary Van Skiver, CPA, MBA, PHR, CEPA

We are all grateful the dark clouds that hovered over financial institutions have lifted and bright rays of sunshine have made their way through. As leaders in the financial institutions industry survey the current landscape, a key focus should be rebuilding the talent pool and developing successor leaders. That's because the “lean and mean” approach to staffing and training during recent challenging years has directly resulted in the heightened importance of transition planning: In the short term it’s difficult to compete effectively in the financial “relay” race with a lack of talent to pass the baton along the way. In the long term development of successor talent is critical to the survival of any business...

Friday, 02 January 2015

Successful C&I lending requires diligence and expertise

Written by Rehmann Team

Commercial and Industrial, or C&I Lending (also known as working capital, line of credit or asset based lending) provides an open line of credit within pre-set limits.  It is a popular solution for businesses with eligible accounts receivable and inventory that seek access to capital to meet seasonal demands or capture business development opportunities. Recent year-over-year C&I loan growth at community banks increased $18.1 billion, or 10...

Friday, 02 January 2015

Stats, facts and figures: community bank loan portfolios

Written by Rehmann Team

fThe FDIC’s most recent Quarterly Banking Profile reported that community banks continued a strong loan growth trend throughout 2014 as nd compared to the year prior. All loan categories show positive numbers, including residential mortgages and home equity lines of credit, despite declines in these two areas on an industry-wide basis. Specifically, community bank loan balances in 3Q 2014 increased by $25.3 billion (1...

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