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4 Cards in this Set

  • Front
  • Back

Purpose of earnings

Absorb losses & augment capital

Subchapter S adjustment
  • Pass-through entities and are not subject to income taxes at the corporate level.
  • Adjustment is to compare between banks that are taxed & those that aren't

FAS 91 - Accounting for nonrefundable fees and costs associated with lending

Origination fees and direct costs should be recognized over the life of the loan as an adjustment of yield, generally by the interest method

Management's analysis of earnings should include:
  • Compare trends to historical & peers
  • Evaluate adequacy of earnings
  • Assess source, volatility, and sustainability of earnings
  • Ensuring earnings are sufficient to maintain adequate capital and ALLL considering growth rate and AQ
  • Periodic reports to the Board