The document discusses the challenges of integrating and reporting data from loss-sharing agreements between acquiring banks and the FDIC after failed bank acquisitions. It outlines key requirements for loss-sharing agreements, including monthly and quarterly loan loss reporting. Acquiring banks face complications integrating loan data from multiple legacy systems, ensuring data quality, and adapting to changing FDIC requirements over time. A strategic, coordinated approach is needed to effectively manage loan portfolio data integration for FDIC reporting and future acquisitions.
IFRS9 is a new international accounting standard that will affect debt owners, including mortgage lenders and Special Purpose Vehicles, from January 2018. It will replace IAS39.
At present under IAS39, lenders need to calculate an expected loss value for just those accounts that are impaired. Under IFRS9, a lender must reassess the probability of any of their customers defaulting and the resulting expected losses for all exposures - and this will need to be carried out each reporting period.
This white paper explains the challenges IFRS9 presents and how HML’s can help lenders and SPVs with accurate provisioning.
Continuing with our updates on the key aspects of IFRS 9 Implementation, our current post (attached) talks about “Impairment Modelling in Retail ” where, key challenges are highlighted through questions and different solutions are proposed to address the same. The post attempts to address some key implementation challenges such as; Which approach to follow for analysis of retail portfolios?, What timeframe to consider for estimating lifetime of retail products?, How to link forward looking information with PDs? How to carry out Stage Allocation? And, what are the methods for calculation of ECL for Retail Portfolios?
ALLL Data Management - 2015 Risk Management SummitLibby Bierman
This presentation was conducted at the 2015 Risk Management Summit, the premier ALLL and stress testing conference. The session reviewed the key data elements for the ALLL and stress testing, how to access and store the data and how to prepare for the FASB's CECL model.
The blog provide some key insights on the subject – as to how to compute EIR for fixed or floating rate instruments, how to compute EIR for products which involves both interest income and fee income, what are the challenges which banks might face while computing EIR, what are the operational simplifications which banks might consider while computing EIR.
IFRS9 is a new international accounting standard that will affect debt owners, including mortgage lenders and Special Purpose Vehicles, from January 2018. It will replace IAS39.
At present under IAS39, lenders need to calculate an expected loss value for just those accounts that are impaired. Under IFRS9, a lender must reassess the probability of any of their customers defaulting and the resulting expected losses for all exposures - and this will need to be carried out each reporting period.
This white paper explains the challenges IFRS9 presents and how HML’s can help lenders and SPVs with accurate provisioning.
Continuing with our updates on the key aspects of IFRS 9 Implementation, our current post (attached) talks about “Impairment Modelling in Retail ” where, key challenges are highlighted through questions and different solutions are proposed to address the same. The post attempts to address some key implementation challenges such as; Which approach to follow for analysis of retail portfolios?, What timeframe to consider for estimating lifetime of retail products?, How to link forward looking information with PDs? How to carry out Stage Allocation? And, what are the methods for calculation of ECL for Retail Portfolios?
ALLL Data Management - 2015 Risk Management SummitLibby Bierman
This presentation was conducted at the 2015 Risk Management Summit, the premier ALLL and stress testing conference. The session reviewed the key data elements for the ALLL and stress testing, how to access and store the data and how to prepare for the FASB's CECL model.
The blog provide some key insights on the subject – as to how to compute EIR for fixed or floating rate instruments, how to compute EIR for products which involves both interest income and fee income, what are the challenges which banks might face while computing EIR, what are the operational simplifications which banks might consider while computing EIR.
IFRS9; the challenges mortgage portfolio owners faceHML Ltd
IFRS9 is a new accounting standard that will affect European and UK mortgage lenders and Special Purpose Vehicles (SPVs) from January 2018. It will replace IAS39.
The challenge for lenders and SPVs
• Historic data will be required to carry out the new calculations
• New systems, scorecards and processes will need to be developed
• There could be a 50% increase in impairment charges as a result of IFRS9 – and potentially more (Deloitte survey, 2014)
• IFRS9 requires constant monitoring and reporting
• Your people may need to be upskilled
In the backdrop of the buzz that Interest Rate Risk in the Banking Book (IRRBB) has generated in the banking industry, Aptivaa is pleased to launch a series of articles providing our perspective on various issues highlighted by our esteemed clients during interactions in the recent months. This post gives an overview of the revised guidelines on IRRBB which has been issued by the Basel Committee, the approaches and the associated challenges in the implementation of IRRBB framework for all internationally active banks.We look forward to your valuable feedback on the current article or the challenges faced by you in IRRBB implementation.
FATCA Compliance: Riding a Roller Coaster of Regulatory ChangeBroadridge
FATCA will impose new due diligence, withholding, and reporting requirements on financial institutions. This paper outlines the significant regulatory change FATCA brings to provide the IRS with an increased ability to detect U.S. tax evaders—specifically, those among U.S. “persons” (individuals or entities) who maintain foreign accounts and investments either directly or indirectly, through their ownership in foreign entities.
Winston & Strawn presented “Recent Legislation Impacting Dodd-Frank Requirements: What Financial Institution Directors Need to Know.” This webinar included a discussion of recent legislative changes to Dodd-Frank, what the FRB and OCC are focused on, other bank regulatory developments, and how these affect directors.
This is the second post in the series of articles we have launched on various topics in the area of Asset Liability Management. Our prior post covered the recently issued Basel guidelines on Interest Rate Risk in the Banking Book (IRRBB).
A key aspect of the guidelines is the requirement for modeling of interest rate behavior of various balance sheet products. In this post we explore the nature of balance sheet cash flows, their key characteristics and sensitivity to market liquidity and interest rate movements. We also highlight how a deeper understanding of cash flow behavior is required to effectively manage the liquidity of the bank and also price balance sheet products. We focus particularly on the non-maturing deposits which form the single largest source of non-contractual cash flows of any bank.
rest rate modeling assumptions.
his is the second post in the series of articles we have launched on various topics in the area of Asset Liability Management. Our prior post covered the recently issued Basel guidelines on Interest Rate Risk in the Banking Book (IRRBB).
A key aspect of the guidelines is the requirement for modeling of interest rate behavior of various balance sheet products. In this post we explore the nature of balance sheet cash flows, their key characteristics and sensitivity to market liquidity and interest rate movements. We also highlight how a deeper understanding of cash flow behavior is required to effectively manage the liquidity of the bank and also price balance sheet products. We focus particularly on the non-maturing deposits which form the single largest source of non-contractual cash flows of any bank.
We look forward to your valuable feedback on the current article. We are also keen on hearing about any challenges faced by you in developing balance sheet liquidity and interest rate modeling assumptions.
IFRS9; the challenges mortgage portfolio owners faceHML Ltd
IFRS9 is a new accounting standard that will affect European and UK mortgage lenders and Special Purpose Vehicles (SPVs) from January 2018. It will replace IAS39.
The challenge for lenders and SPVs
• Historic data will be required to carry out the new calculations
• New systems, scorecards and processes will need to be developed
• There could be a 50% increase in impairment charges as a result of IFRS9 – and potentially more (Deloitte survey, 2014)
• IFRS9 requires constant monitoring and reporting
• Your people may need to be upskilled
In the backdrop of the buzz that Interest Rate Risk in the Banking Book (IRRBB) has generated in the banking industry, Aptivaa is pleased to launch a series of articles providing our perspective on various issues highlighted by our esteemed clients during interactions in the recent months. This post gives an overview of the revised guidelines on IRRBB which has been issued by the Basel Committee, the approaches and the associated challenges in the implementation of IRRBB framework for all internationally active banks.We look forward to your valuable feedback on the current article or the challenges faced by you in IRRBB implementation.
FATCA Compliance: Riding a Roller Coaster of Regulatory ChangeBroadridge
FATCA will impose new due diligence, withholding, and reporting requirements on financial institutions. This paper outlines the significant regulatory change FATCA brings to provide the IRS with an increased ability to detect U.S. tax evaders—specifically, those among U.S. “persons” (individuals or entities) who maintain foreign accounts and investments either directly or indirectly, through their ownership in foreign entities.
Winston & Strawn presented “Recent Legislation Impacting Dodd-Frank Requirements: What Financial Institution Directors Need to Know.” This webinar included a discussion of recent legislative changes to Dodd-Frank, what the FRB and OCC are focused on, other bank regulatory developments, and how these affect directors.
This is the second post in the series of articles we have launched on various topics in the area of Asset Liability Management. Our prior post covered the recently issued Basel guidelines on Interest Rate Risk in the Banking Book (IRRBB).
A key aspect of the guidelines is the requirement for modeling of interest rate behavior of various balance sheet products. In this post we explore the nature of balance sheet cash flows, their key characteristics and sensitivity to market liquidity and interest rate movements. We also highlight how a deeper understanding of cash flow behavior is required to effectively manage the liquidity of the bank and also price balance sheet products. We focus particularly on the non-maturing deposits which form the single largest source of non-contractual cash flows of any bank.
rest rate modeling assumptions.
his is the second post in the series of articles we have launched on various topics in the area of Asset Liability Management. Our prior post covered the recently issued Basel guidelines on Interest Rate Risk in the Banking Book (IRRBB).
A key aspect of the guidelines is the requirement for modeling of interest rate behavior of various balance sheet products. In this post we explore the nature of balance sheet cash flows, their key characteristics and sensitivity to market liquidity and interest rate movements. We also highlight how a deeper understanding of cash flow behavior is required to effectively manage the liquidity of the bank and also price balance sheet products. We focus particularly on the non-maturing deposits which form the single largest source of non-contractual cash flows of any bank.
We look forward to your valuable feedback on the current article. We are also keen on hearing about any challenges faced by you in developing balance sheet liquidity and interest rate modeling assumptions.
7 observations from the September 2020 ATOL renewalsTTC
We helped 71 business of different sizes to go through the ATOL renewal process. In preparation for the March renewals we have put together some observations to be aware of.
Visionet’s Repurchase Portal improves the effectiveness of decisions by increasing the number of successful appeals, and increasing the efficiency of the department by automating routine operations, leveraging skills, enforcing rules and reducing costs for the department. Visionet’s Repurchase Portal brings efficiency, value, and ease of information exchange within various departments in a uniform and a centralized manner.
Collateral Management and Market Developments - WhitepaperNIIT Technologies
The paper provides a broader view on how technology bridges the gap and also enumerates the best practices that financial institutions must follow to improve collateral management process.
Remaking IT for New U.S. Mortgage Rule ComplianceCognizant
To benefit from the improved housing market, lenders need to play offense by finding new ways to efficiently comply with regulations, tighten controls over the lending process and better engage with customers.
The implementation of the MAR in 2010 will
provide a valuable opportunity for insurers
to assess the effectiveness of their internal
controls and the accuracy of their financial
reporting. Insurers must promptly develop a
strategy for compliance with the MAR if they
have not done so already. A set of corporate
norms for complying with the new MAR
has yet to develop, but actuaries have the
knowledge and skills to assist in many aspects
of the process and can help determine the set
of best practices moving forward.
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
1. June 2011
Integrating and Reporting Loss-
Sharing Data: A Critical Challenge
in FDIC-Assisted Acquisitions
By David W. Keever and Tapan P. Shah, PMP
After a record-setting 157 bank failures in 2010, the
1
Federal Deposit Insurance Corporation (FDIC) reports
a bit of a slowdown in this trend, with 43 bank closures
through May 20, 2011. For healthier banks, such closures
2
often present an attractive opportunity to expand their
business through a transaction in which the FDIC
agrees to absorb a significant portion of the risk.
Unfortunately, it is easy to underestimate
the data integration challenges involved
in a bank acquisition, even if both
institutions are sound. It is even easier
to underestimate the accounting and
reporting challenges presented by the
loss-sharing agreements the FDIC uses to
encourage the purchase of troubled banks.
The picture is complicated further by the
continuing evolution of FDIC and other
regulatory requirements, both as a result of
new legislative actions and as a response
to the changing economic environment.
Partly because of these complications, a number of financial institutions are choosing
not to pursue an FDIC loss-sharing agreement when bidding on failed banks. Some
have stated that, in exchange for a more favorable purchase price, they would prefer to
take on all of the risk associated with the portfolio rather than undergo the additional
accounting, reporting, and compliance requirements a loss-sharing agreement imposes
on their already overburdened staff.
Fortunately, there is a better alternative – an approach that allows acquiring institutions
to take advantage of the risk-mitigation benefits offered by a loss-sharing agreement
without incurring an unacceptable administrative burden in order to comply with
FDIC accounting and reporting requirements. By employing a systematic, methodical
approach to the data integration and reporting challenges, the complexity of an
FDIC-assisted transaction can be greatly reduced.
www.crowehorwath.com 1
2. Crowe Horwath LLP
Loss-Sharing Agreement Data
and Reporting Requirements
When one financial institution acquires the assets of another as part of an FDIC-
assisted transaction, the FDIC requires regular reports – either monthly or quarterly
– on the status of the acquired assets. These reports must be submitted in the form
of loss-share certificates, which contain summary data on the acquired assets, and
FDIC download files, which contain more details.
Typically, a loss-sharing agreement requires:
■ Monthly reporting of single-family loan-loss certificates (sometimes called 415a), with
details on each loan for which the bank is submitting a loss claim during the month; and
■ Quarterly reporting of commercial loan-loss certificates (sometimes called 415b), detail-
ing commercial loan charge-offs, recoveries, and net charge-offs during the quarter.
After the initial purchase, the FDIC provides
the acquiring bank with an initial listing Loss-Sharing Agreements: Key Facts
of all the loans covered under the loss-
■ Under a loss-sharing agreement, the FDIC absorbs a portion of the loss on a
sharing agreement. In general, the agency
specified pool of assets. This arrangement offers healthier banks an incentive to
requires the bank to send back a test file to
acquire troubled institutions, which minimizes the FDIC’s losses when a bank fails.
demonstrate its ability to fulfill the reporting
requirements. The first certificates typically ■ For commercial assets, loss-sharing agreements typically cover a five-year
are due three months after the purchase date. period, during which the FDIC will reimburse 80 percent of losses incurred by the
acquirer on covered assets up to a stated threshold amount, with the acquiring
Loans acquired as part of an FDIC- bank absorbing 20 percent.
assisted transaction are subject to various ■ For single-family mortgages, loss-sharing agreements usually run 10 years and
additional recordkeeping and reporting have the same 80/20 split as the commercial assets. The FDIC also provides
requirements, including: coverage on some second-lien loans for certain types of losses.
■ Internal loan accounting. To effectively ■ Since the inception of loss-sharing agreements in 1991, the basis for sharing
manage the portfolio, each loan must be losses has undergone some changes. At one time, the FDIC shared losses with
accounted for, rated for risk, and tracked an acquirer on an 80/20 basis until the losses exceeded an established threshold,
for regular servicing and transactions. after which the loss-sharing basis shifted to a 95/5 basis. This 95/5 split was
Although the acquiring institution will eliminated in March 2010.
have its own systems for handling these ■ From 2008 through September 2010, the FDIC entered into 200 loss-sharing
tasks, the historical loan accounting data agreements, with $159.2 billion in assets under loss sharing.3
must be left intact in order to support
■ As part of its oversight of loss-sharing agreements, the FDIC requires acquiring
loss recognition and accurate reporting.
banks to provide quarterly reports to verify compliance with the program and to
■ GAAP accounting. For regular report- monitor the performance of the assets. It also conducts periodic on-site reviews
ing to shareholders and other interested of the records of covered losses and overall compliance.
parties, loan data must be structured in
accordance with U.S. generally accepted
accounting principles (GAAP), as spelled out in the Financial Accounting Standards
Board’s Accounting Standards Codification. Verifying the fair valuation of loans and
other assets often entails significant data requirements and complex cash flow esti-
mates, which might not be included with the original loan contract and documentation.
2
3. Integrating and Reporting Loss-
Sharing Data: A Critical Challenge
in FDIC-Assisted Acquisitions
■ Tax accounting. There are important differences in the way acquired loans are
handled for tax purposes and the way they are handled for GAAP accounting.
Examples include accounting for charge-offs, other real estate owned (OREO),
appraisals, expenses, and taxes. Despite the differences, however, the two
accounting approaches must rely on standardized and consistent data to satisfy
auditors’ and regulators’ tracking and accounting requirements.
Complicating Factors – What
Acquiring Banks Need to Address
Institutions also face a number of broader data integration and reporting issues when
acquiring a failing bank’s loan portfolio. Following are some of the most common
concerns they encounter.
The data used for managing ■ As banks have grown, so has the number of information systems they rely on to
manage their assets. Even before an acquisition, most institutions already are
customer interactions must
struggling with loan data being stored in several different systems that do not talk
be accurate and timely to to each other adequately. Integrating the systems from the acquired institution only
demonstrate strong customer adds to the challenge.
■ The acquiring bank also needs to understand the failed bank’s credit and risk
service and establish acquired
review rating structure and identify where that information is kept. It then needs
customers’ confidence with to incorporate the acquired loan portfolio into its own internal reporting systems
the new bank. for credit risk and financial and operational reporting. This step requires gathering
data from new systems and transforming the data into a normalized form that the
organization can use.
■ If the actual servicing of the loans was handled by an external servicing
organization, the acquiring bank also must coordinate its data acquisition efforts
with this servicer in order to incorporate into the bank’s reporting systems the
information stored by the servicer.
■ In the case of older loans, some important data elements might be stored in paper
files and not reflected in any electronic storage systems. Often banks attempt
to retrieve this information manually and store it in a spreadsheet format, only to
encounter even more demands on their resources as they attempt to integrate this
information with the rest of the data. In some instances, data also might be stored
on outsourced systems.
■ Loss-sharing agreements generally allow the acquiring bank to expense direct
external acquisition and restructuring costs including professional fees for appraisals,
legal and accounting services, and real estate maintenance. This creates additional
data integration, tracking, and reporting requirements to confirm these costs are
aligned with existing accounting systems and allocated to the appropriate loans.
■ Customer retention is always a critical concern since it is one of the factors that
drove the acquisition in the first place. As such, the data used for managing
customer interactions must be accurate and timely to demonstrate strong customer
service and establish acquired customers’ confidence with the new bank.
www.crowehorwath.com 3