Friday, April 26, 2019

What is Enterprise Risk Management?

Posted by Amit Govil October 5, 2012 4:26pm
Sample Image Photo Credit: Idea go

Look up in the it a bird? is it a plane? No! Duh, it’s ERM! Yes, ERM: the new mantra in community banking. And it’s confusing as heck. “What is ERM?” “How do you know if you see it?” These are two questions that have been making bankers scratch their heads lately.

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Risk management - Smaller institutions and the benefits of ERM

Posted by Amit September 11, 2012 5:30pm
Sample Image Photo Credit: 123rf

Smaller institutions with simple business models may be somewhat skeptical about the benefits to be derived from implementing a broad-scale, and possibly costly, enterprise risk management program.
Nonetheless, the regulatory mandates on ERM seem to be “trickling down,” affecting ever-smaller institutions as regulators push hard for it’s implementation - even though the Dodd-Frank mandate is directed at institutions with more than $10 billion in assets.

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Banking Solutions: ALLL and GAAP in Agreement

Posted by Amit November 30, 2011 3:17pm
Sample Image Photo Credit: BankSolu11

I wanted to share an article that I wrote for a recent publication of the Banking Solutions 2011 Magazine, an annual Bankers' information guide that features special technology and services relative to the world of banking.

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For many community banks, they have been significantly impacted by the current economic environment. The low interest rates, coupled with lower lending demand, has already lowered the earning base for many. But what is impacting them the most, and affecting their profitability, is their ability to meet the evolving and increased regulatory emphasis and regulations.

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Sample Image Photo Credit: 123RF

Over the past few years, the banking industry has been entrenched in a very volatile economic and regulatory environment. The number of regulatory enforcements and bank closings over the past three years have been astronomical. These actions have resulted in a very demanding regulatory environment that places a significant amount of pressure on banks, especially community banks.

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Regulatory Burden – Managing the Pain

Posted by Amit July 12, 2011 5:21pm
Sample Image Photo Credit: throbi

“If you have ever played the game of Jenga -- where you pull blocks from a tower and add them to the top -- you know that eventually the structure falls down. It can’t handle the twin pressures of lost foundational support and additional weight,” ABA Chairman-elect, Albert Kelly declared in one of his past posts in the ABA’s Washington Perspective. Personally, I love Jenga, even though my daughter beats me every time. Albert Kelly’s reference to Jenga when comparing the burden of new regulations and the onslaught of over reaching regulatory exams is perhaps an excellent analogy to describe the current landscape at the community banking level.

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TDR or Not to TDR …Much Ado about Nothing?

Posted by Amit June 13, 2011 3:20pm
Sample Image Photo Credit: shuttermon

I hear from a “few” people that tackling and managing Troubled Debt Restructuring (commonly known as “TDR”) is becoming confusing based on new accounting pronouncements and ever changing regulatory emphasis. We can argue all day whether we are labeling a loan a TDR properly or not, but perhaps we’re missing the main objective of the renewed attention to this area by regulators and accountants. At the end of the day, the issue really becomes the Allowance for Loan Loss Reserve. I don’t want to come off as a one trick pony who keeps talking about the ALLL all the time, but it’s true.

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Sample Image Photo Credit: aduhai

We all know that a glass containing some water can be described as either “half-full” or “half-empty”. Until recently, I chose to describe the Dodd-Frank bill as half empty. In fact, I was pretty vocal about the impact of regulatory burden on community banks. It wasn’t until last Wednesday afternoon when I converted.

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A Culture of Whatever: On the Path to Proper Governance

Posted by Amit February 15, 2011 10:26am
Sample Image Photo Credit: jscreationzs

We knew it would happen eventually. The FDIC is now seeking to get aggressive in seeking money from the “bad” guys. Its 2011 budget in fact shows a significant increase in staffing to handle the planned increased litigation. While we don’t know for sure, it is estimated that the FDIC will spend in excess of $50 billion in the closing of failed banks. This is in addition to the approximately $57 billion it has already spent during this crisis. That’s a hefty number.

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Sample Image Photo Credit: Leonardo da Vinci

Now that we’ve mastered the art of calculating an appropriate ASC 450 (FAS 5) Reserve balance, it is time to take on a bigger challenge. And what could be a bigger challenge than developing a systematic and objective methodology to calculate the ASC 310 (FAS 114) reserve balance for your institution? Well, getting your kids to stop texting while eating dinner … probably. If you can do that, then ASC 310 will be child’s play for you.

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Part of the In Crowd: Thoughts on the Dodd-Frank Act

Posted by Amit January 25, 2011 1:40pm
Sample Image Photo Credit: Robert Linder

In my attempt to master the business of social media, I recently posted a poll to several hundred (may actually be thousands) of banking professionals that are probably much better at this than I am. The question that was the focus of the poll was: Is the Dodd Frank Bill adequate to control the systemic risk of financial institutions both large and small?

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Welcome to OnCourse

Posted by Amit January 14, 2011 4:01pm
Sample Image Photo Credit: Megan Hunter

Welcome one and all to OnCourse, a blog dedicated to providing you, the reader, a timely, informative and pertinent look at stories affecting the financial industry.

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Painting a Masterpiece: The Art of the ALLL Reserve

Posted by Amit January 10, 2011 10:26am
Sample Image Photo Credit: Johnny Berg

How do we define an adequate level of ALLL reserve? Alas, that is the new $64 question in the banking industry. The ALLL Reserve is apparently like a priceless art piece, which is subject to significant scrutiny and different interpretations.

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