The agencies regulating financial institutions operating in the US have jointly issued two important new statements respecting 1) reporting of anticipated losses on Accounting Statements and 2) Loan-to-Deposit Ratios for cross state border branches.

New Accounting Standards on Financial Instruments—

The new statement is based upon the Financial Accounting Standards Board’s new standard, which introduces the current expected credit losses methodology (CECL) for estimating allowances for credit losses. The joint statement also provides initial supervisory views regarding the implementation of the new accounting standard.

This Financial Institution Letter applies to all FDIC-supervised banks and savings associations, including community institutions.

The Letter containing the statement is available at:

Host State Loan-to-Deposit Ratios—

From the FDIC’s press release under date of June 17, 2016:

“The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency today issued the host state loan-to-deposit ratios that they will use to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. These ratios replace the prior year’s ratios, which were released on June 29, 2015.

In general, section 109 prohibits a bank from establishing or acquiring a branch or branches outside of its home state primarily for the purpose of deposit production. Section 109 also prohibits branches of banks controlled by out-of-state bank holding companies from operating primarily for the purpose of deposit production.”

The deposit ratios are listed here: Section 109 Host State Loan-to-Deposit Ratios (32 KB PDF)

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