Fortner Bayens, P.C. Banking Letter - February 2019 Edition

FDIC Proposal Loosens Residential Appraisal Requirements 

Daniel R. McDonald

In April 2018, the FDIC amended the appraisal guidelines that required appraisals for commercial real estate transactions over $250,000. The proposal was presented in July 2017 and was finally approved in 2018. The new guidelines raise the threshold from $250,000 to $500,000. Therefore, for any commercial real estate transactions below the new threshold, the guidelines require financial institutions to obtain a property evaluation that is consistent with safe and sound banking practices.

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IRS Issues Bonus Depreciation Safe-Harbor Rules for Passenger Autos

Joseph M. Press, CPA

The Tax Cuts and Jobs Act (TCJA) increased the amount of first-year bonus depreciation on qualified property, including passenger autos, to 100%.  Sound too good to be true?

Of course it’s too good to be true!  The amount of a depreciation deduction on passenger autos is still subject to the Luxury Auto limitations.  (As a practical matter, most every auto is a luxury auto.)  The good news is that the TCJA increased the first-year limitation to $18,000.  The bad news is that if the depreciable basis of the passenger auto exceeds the first-year limitation, the excess amount is deductible in the first year after the recovery period, subject to the Luxury Auto limitations.  

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Data Compliance and Protection Challenges

Keith A. Ferguson, CISA, CISSP, CRISC

Some of the biggest challenges for financial institutions are the ongoing changes to data privacy laws.  Some of the critical challenges are associated with storing customers’ personal data and ensuring the confidentiality, integrity, and accessibility of the data. When data privacy laws change so do the requirements for demonstrating acceptable levels of due-diligence when institutions adopt new technology to serve their customers better. Also, there are requirements to continuously monitor and audit controls to ensure the controls are functioning according to accepted standards and best practices.

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Problem Loan Reports

Val Stark

One of the main topics of conversations with bankers these days is documenting credit files with problem loan reports. Often loan officers discuss problem credits at weekly/monthly meetings; however, comments from those meetings are not always documented in the respective credit files. We believe it is extremely important to ensure that those comments are placed in the loan files or in a centralized binder for reviewers’ access.

Some institutions prepare problem loan reports for classified loans within a certain threshold only. Others also include criticized loans within the same threshold. Some institutions update problem loan reports monthly. Other institutions update the reports every quarter. 

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