How to Better Evaluate Borrower Performance

Gaining an understanding of the specific accounting methods borrowers use can help lenders better evaluate their borrowers’ financial status and whether they’re generating sufficient revenues over time. This article discusses the percentage of completion method and provides a brief example to illustrate how it works in the context of industries that enter into long-term contracts, such as homebuilders, commercial developers, architects, creative agencies and engineering firms.

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Is Bigger Better? Helping Borrowers Evaluate the Pros and Cons of a Roll-Up

Management is constantly maneuvering and shifting to stabilize their business and find the best position in the market. One maneuver potentially available to a company is to purchase, or merge with, one or more similar businesses in the same industry — thus decreasing operating inefficiencies and increasing economies of scale. This article looks at the benefits and drawbacks of roll-ups, showing how lenders can help companies determine whether they’ll gain advantages from a roll-up, or take on further problems.

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Federal Reserve Publishes FAQs for New CECL Accounting Standard

FASB issued a new accounting standard, which introduced the current expected credit losses methodology (CECL) for estimating allowances for credit losses. The new accounting standard allows a financial institution to leverage its current internal credit risk systems as a framework for estimating expected credit losses. This article sheds light on who the new accounting standard applies to and provides an initial set of FAQs to assist institutions and examiners.

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Big Depositors Get Higher Interest; Gains Don’t Trickle Down

Though the Federal Reserve has nudged the prime rate up gradually, with three small hikes since December, average holders of interest-bearing accounts shouldn’t expect to reap higher returns anytime soon, observers say. This article addresses and provides insight into the recent rise of interest rates.

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