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1998-05-21T10:43:10
2018-05-15T14:52:23-04:00
2018-05-15T14:52:23-04:00
Acrobat Distiller 3.0 for Windows
u Gain-on-Sale Accounting Can Result in Unstable Capital
Ratios and Volatile Earnings—The accounting for transferring and servicing
financial assets causes asset sellers, particularly high-growth lenders, to recognize
significant noncash income related to retained economic interests in the sold
assets. This is true whether a company securitizes its own assets or sells its assets as
a conduit to another securitizer. Values are often driven by management assumptions
about future performance of the sold assets. Major writedowns of gain-on-sale
assets by some finance and mortgage companies underscore the importance of careful
scrutiny of these assumptions by banks and their supervisors. See page 3.
By Allen Puwalski
u How Will the Expansion End?—Analysts are now focusing on when
and how the current expansion will end. Although no one can accurately predict
when a recession will begin, two possible scenarios have emerged. Each scenario has
important implications for lenders as they prepare for the possibility of slower economic
growth or recession. See page 7.
By Paul C. Bishop
u Trends Affecting the Allowance for Loan and Lease Losses—
In today’s environment, in which loan availability is abundant, growth is strong, and
competition is fierce, some industry leaders and regulators have expressed concern
about the loosening of underwriting standards and greater risk in bank loan portfolios.
At the same time, the allowance for loan and lease losses (ALLL) relative to
total loans at many insured institutions is declining. As the economic expansion
reaches an advanced age, an important question for insured institutions is whether
their ALLLs adequately reflect the risks associated with changing industry practices.
application/pdf
Regional Outlook - Dallas Region Second Quarter 1998
Outlook
Puwalski, Alan
Bishop, Paul
Bazemore, Andrea
u Gain-on-Sale Accounting Can Result in Unstable Capital
Ratios and Volatile Earnings—The accounting for transferring and servicing
financial assets causes asset sellers
particularly high-growth lenders
to recognize
significant noncash income related to retained economic interests in the sold
assets. This is true whether a company securitizes its own assets or sells its assets as
a conduit to another securitizer. Values are often driven by management assumptions
about future performance of the sold assets. Major writedowns of gain-on-sale
assets by some finance and mortgage companies underscore the importance of careful
scrutiny of these assumptions by banks and their supervisors. See page 3.
By Allen Puwalski
u How Will the Expansion End?—Analysts are now focusing on when
and how the current expansion will end. Although no one can accurately predict
when a recession will begin
two possible scenarios have emerged. Each scenario has
important implications for lenders as they prepare for the possibility of slower economic
growth or recession. See page 7.
By Paul C. Bishop
u Trends Affecting the Allowance for Loan and Lease Losses—
In today’s environment
in which loan availability is abundant
growth is strong
and
competition is fierce
some industry leaders and regulators have expressed concern
about the loosening of underwriting standards and greater risk in bank loan portfolios.
At the same time
the allowance for loan and lease losses (ALLL) relative to
total loans at many insured institutions is declining. As the economic expansion
reaches an advanced age
an important question for insured institutions is whether
their ALLLs adequately reflect the risks associated with changing industry practices.
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