As Q2 call report data becomes available, analysts are looking for indications of how the pandemic may be impacting allowances and delinquencies in community bank balance sheets. However, considering COVID-19’s severe economic impacts didn’t begin until mid-March, what may be more telling at this juncture may be what is occurring off balance sheet.Continue reading “Q2 Community Bank Data: A Closer Look at What You’ll Find Outside of the Balance Sheet”
During the Great Recession, commercial real estate (CRE) lending practices were heavily scrutinized and considered to be a leading factor of economic downturn. As a result, bank concentrations in CRE are assumed to be a strong predictor of bank failures.
Over a decade later, rising bank CRE lending concentration levels accompanied by historically high CRE prices have many economists convinced that regulations need to be revisited so history doesn’t repeat itself. As they debate whether or not current CRE lending practices are an accurate prognosticator, recent Qaravan data tells a far more nuanced story. Continue reading “Are CRE Concentrations Still a Financial Crisis Prognosticator?”
In late December, an interagency body of regulators closed the comment period for a set of proposed changes to the ever-evolving CECL standard. Regulators have recently come back with their responses to industry comments in the form of the “Final Policy Statement for FASB ASC Topic 326” found here: https://www.fdic.gov/news/board/2020/2020-02-20-notational-fr.pdf Continue reading “Key Takeaways From Regulators’ Recent CECL Final Policy Statement”
In November, the federal banking agencies jointly issued a final rule that provides for an optional, simplified measure of capital adequacy, known as the community bank leverage ratio framework (CBLR), for qualifying community banking organizations. The final became effective on January 1, 2020.
With the most sweeping re-casting of credit risk management in decades looming on the horizon, regulators, bank executives and the markets are bracing for the potential disruptive ramifications of this new set of credit loss accounting standards. In response to calls for a more cautious rollout, regulators have agreed to an implementation extension for most community banks. Continue reading “CECL is Coming: Here’s How Bank Stakeholders Can Anticipate Its Impact While Making Their Voices Heard”
The banking industry is unique in the amount of regulatory scrutiny it is subject to, much of which is in the form of self-reporting. Since legislation was passed in 1975 in response to the failure of two federally chartered institutions (United States National Bank and Franklin National Bank), every national bank, state bank, federal savings bank, federal savings association, and credit union is mandated by law to report highly standardized and detailed information about its operations to a central authority, the Federal Financial Institutions Examination Council (FFIEC).
Advanced Data Analysis Helps Connect the Dots to Highlight the Nation’s Top Performing Community Banks
The Genesis/Birth of CECL
After the 2008 financial crisis, much of the focus on the regulation of financial institutions shifted to mitigating systemic risk. This included an increased focus on stress testing and the recapitalization of institutions—both intended to help ensure solvency and insulate the global economy from further erosion. Continue reading “CECL: Unpaved Road Ahead”