Revised loan-loss update more workable for community banks
Washington, D.C. (June 16, 2016)—The Independent Community Bankers of America® (ICBA) today said the Financial Accounting Standards Board (FASB) has made major improvements to its final accounting standards update on credit losses to address community bank concerns. While not perfect, the final Current Expected Credit Loss standard approved today shows FASB has heeded the calls of community bankers for a more workable solution.
“FASB has made important improvements to its Current Expected Credit Loss plan by listening to the concerns of ICBA and the nation’s community bankers,” said ICBA Vice Chairman Timothy K. Zimmerman, president and CEO of Standard Bank in Monroeville, Pa. “Community bankers have effected meaningful changes that will make the standard more flexible and scalable for local financial institutions and the communities they serve. And we’ll continue to work with federal regulators to advance further improvements.”
While there are questions that need to be worked out with banking regulators, the FASB board has addressed many ICBA concerns expressed in a recent letter to FASB Chairman Russell Golden. FASB had already taken steps to allow community banks to continue using their personal understanding of their local markets to determine their loan-loss reserves, but ICBA was concerned with certain disclosure requirements. The changes finalized today will provide relief to many community banks.
ICBA, its affiliated state associations, and community bankers have worked to address problems with FASB’s CECL proposal since it was introduced in 2011, including delivering a petition to FASB with nearly 5,000 signatures. Following years of ICBA advocacy, FASB released a revised draft at an April meeting of the Transition Resource Group, to which Zimmerman was appointed as the sole community bank representative.
ICBA looks forward to continuing its work on the accounting standard with the federal regulators who will write rules to implement it in the coming years.
The Independent Community Bankers of America®, the nation’s voice for more than 6,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services.