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Category Archives: Lending
Final Rules on Loan Originator Compensation
Some important changes recently went into effect impacting how bank mortgage loan originators and mortgage brokers can be compensated.
Effective with mortgage loan applications received on or after April 1, 2011, loan originators and mortgage brokers can no longer receive compensation incentives based on the pricing of the loan (e.g., the APR or loan origination charges). Instead, compensation must be based either on a fixed percentage of the loan amount or a flat dollar amount per loan. Continue reading
Troubled Debt Restructures – What You Should Know About TDRs
In the current post-financial crisis lending environment, financial regulators are taking an especially close look at restructured small business loans. Most banks are working with at least some of their small business and commercial real estate borrowers to rehabilitate troubled loans by modifying loan terms and granting certain concessions. Continue reading
Commercial Lending…More Lessons: Equity and Contingent Liabilities
In addition to those detailed in our article, Commercial Lending…After The Crisis: Back To Basics,
here are two more hard lessons learned from the financial crisis: Continue reading
Commercial Lending…After The Crisis: Back To Basics
Now that we have digested the fact that most banks’ loan portfolios are weaker today than they were two years ago, it’s a good time to review a few of the basics of commercial lending.
Grant Thorton Addresses Bank Capital Requirements in Letter to Regulators
On May 6, 2009 public accounting firm, Grant Thorton sent a letter to Timothy Geithner, Ben Bernanke and Sheila Bair addressing bank capital requirements and the allowance for loan losses. I believe that this letter completely explains the auditor’s viewpoint on these two issues and offers the regulators a solution to protecting banks from future losses. Continue reading
Posted in Accounting & Auditing, Community Banking, Lending, Regulatory Issues
Tagged ALLL, Capital, Community Banking, Regulatory Issues
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Bank Lending Terms Keep Squeeze on Consumers
Banks tightened lending standards further in the three months to April, adding to the credit squeeze on households and businesses, the Federal Reserve’s senior loan officers survey said on Monday.
The Next Accounting Controversy
Standard-setters have moved on from fixing fair-value rules and have set their sights on off-balance-sheet accounting and loan-loss provisioning.
Revisions to how companies account for off-balance-sheet items and loan-loss provisions will knock fair-value accounting off the front page with respect to financial reporting, according to James Kroeker, acting chief accountant at Securities and Exchange Commission.
Posted in Accounting & Auditing, Community Banking, Lending
Tagged Accounting Standards, ALLL
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Accounting for Loan Losses-GAAP vs. RAP…Not Again!
This issue is a lot like the Rocky movies. Just when you think it’s over they make another movie! Last week U.S. Comptroller of the Currency, John Dugan said that the accounting rules need to be changed to allow banks to reserve for future losses in the loan portfolio so that earnings would be less volatile. Didn’t we just spend the last 14 years hashing out this issue and finally eliminating any differences? Continue reading
Posted in Community Banking, Lending, Regulatory Issues
Tagged Community Banking, Lending, Regulatory Issues
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Options For Distressed Debt
One result at the credit crisis that has rocked this nation’s financial system over the past year has been an abundance of distressed debt for sale in the commercial marketplace. Well, one man’s trash may indeed be another man’s treasure, since a growing number of firms are interested in purchasing this debt. Continue reading
Hiring Lenders in Today’s Environment
Hiring and retaining qualified commercial lenders remains one of the biggest challenges for many community banks. In the past, large commercial banks served as the “farm system” for training and developing new lenders, and community banks were often able to recruit well-trained lenders from them. But with fewer big banks now providing this kind of training, there are fewer qualified lenders – who possess both sales/relationship and technical credit and underwriting skills – for community banks to choose from. Continue reading
