Baker Tilly provides you with summaries and insights on some of the more significant matters related to the financial services industries. The volume of regulatory, legislative, and operational matters warranting attention has been high. We provide updates on issues and some insights on how various topics may impact your organization.
Enterprise risk managemnet continues to evolve within the banking and financial services industries. In this issue, we begin a series of articles focused on the critical components of a practical solution to effective enterprise risk management. Future issues will provide insights into business process risk, risk relationships, and understanding the risks associated with current developments.
Featured risk article:
Managing risk appetite and tolerance in a dynamic banking environment >
Today’s banking environment presents unprecedented challenges to successfully managing risk and establishing a platform for achieving predictable and sustainable earnings. With the exception of the recent banking crisis, even during stressed economies, bankers had been able to effectively sense and respond to the risks inherent in their business. Certainly, there have been notable instances in which banking organizations did not sufficiently identify or effectively respond to the risks at hand. The results were unfavorable for those institutions and, as we have recently experienced, for the industry as a whole. Even the most sophisticated of organizations found themselves searching for answers in response to increasing risks and limited effectiveness in managing those risks. Given the current state of the banking industry and the emergence of a "new economy," one in which traditional risk-reward relationships will become irrelevant, managing risk is not likely to become any less challenging in the foreseeable future.
Junior liens interagency guidance >
On January 31, 2012, four federal financial regulatory agencies issued Interagency "Supervisory Guidance on Allowance for Loan and Lease Losses Estimation Practices for Loans and Lines of Credit Secured by Junior Liens on 1-4 Family Residential Properties" (the guidance). The guidance is directed at federally regulated financial institutions as a reminder to monitor all credit quality indicators relevant to credit portfolios, including junior liens, which primarily includes second mortgages and home equity lines of credit (HELOC).
Loan sale accounting considerations >
Investors have been increasing their level of interest in non-performing or other distressed loans currently on the balance sheets of banks and other financial services companies. This investment interest has broadened the opportunities for holders to dispose of these assets through individual or bulk loan sales. These transactions, usually at some discounted level, create accounting questions that require appropriate attention prior to recording the results on your financial statements.
Contact our banking industry team >
