On June 16, the Financial Accounting Standards Board (FASB) issued a final accounting rule that provides for different financial reporting of loan losses. The new rule will require banks to record all losses they project over the life of their loans when these loans are initially booked. This is in sharp contrast to the current rule, which requires banks to record losses only when there is evidence that a loss has actually occurred. As a result of this change, banks are likely to be forced to increase their loan loss reserves by increasing their allowance for loan losses. In doing so, banks' profits could be adversely affected upon the implementation of the rule. Banks which have acquired impaired loan portfolios in an acquisition, or otherwise, have taken on the task of predicting future losses expected to be incurred to maturity but generally without impacting the loan loss reserve.
For public companies that are SEC filers, the new final rule will be effective for fiscal years beginning after December 15, 2019 (and interim periods within those fiscal years). For other public companies that do not meet the definition of an SEC filer, they will need to comply with the new final rule for fiscal years beginning after December 15, 2020 (and interim periods within those fiscal years). FASB provided an additional year for implementation to non-SEC filers because they are generally more resource constrained than SEC filers. We believe that other public companies that are non-SEC filers refer to banks whose securities are registered with bank regulatory agencies (such as the OCC or the FDIC) or banks whose securities are traded in the over-the-counter market and not registered with the SEC. For privately held companies, the new final rule becomes effective for annual periods beginning after December 15, 2020, and interim periods within fiscal years beginning after December 31, 2021. Early adoption is permitted for any entity for fiscal years beginning after December 15, 2018 (and interim periods within those fiscal years).
Community banks, especially smaller community banks, have argued that compliance with the new methodology for calculating loan losses could prove costly and burdensome as they may have to invest in expensive and complex computer models in order to project future loan losses. To alleviate these banks' concerns, the FASB has stated that community banks can rely on methodologies already at their disposal to make projections of future loan losses.
On January 27, Michael Rave will be speaking on "Public & Private Capital Raising: How To Fund Your Bank for Growth and/or Change" at Bank Director's annual conference, Acquire or Be Acquired, in Phoenix, AZ.
On January 18, Michael Rave and Michael Dunne participated in the 2019 Economic Leadership Forum, presented by the New Jersey Bankers Association.
On October 5, partner Ellen Knarr served as a panelist at the St. John's University School of Law Women's Leadership Boot Camp, presented by the Women's Law Society.
Joy Harmon Sperling will be speaking at a mentorship workshop and moderating a GC roundtable at “Women Leaders in Financial Services Law and Compliance,” a conference being presented by the American Conference Institute (ACI) and held in New York, NY from May 9 – 11.
As part of its ongoing Family Office Investing Series, Day Pitney LLP hosted a private, invitation-only program at The Cornell Club of New York, themed “Real Estate Investing: Challenges and Opportunities in a Rapidly Changing Landscape.”
Mike Rave was quoted in an analysis article, "Reg Rollbacks Seen As Bit Player In $28B BB&T-SunTrust Deal," published by Law360.
Day Pitney Press Release
Tom Goldberg and Scott Beach were quoted in an article, "Day Pitney Lawyers Bullish About Stamford Move," published by the Stamford Advocate.
Day Pitney Press Release
Michael Rave was quoted in an article, "Big Deals Fuel Value Rebound in NJ-Based M&A Market," published by the New Jersey Law Journal.