June 9, 2016
  • How the Guidance Indirectly Affects Community Banks | Page 1
    Many community banks have begun to adopt some of the principles of leveraged lending, including the practice of expressing leverage as a multiple of EBITDA instead of in relation to tangible net worth. However, EBITDA does not reflect cash that’s actually available for debt service — it only demonstrates a borrower’s ability to earn its debt service. See our lead article for more on how interagency leveraged lending guidelines are affecting community banks.
  • Test For Rising Rates and Other Adverse Outcomes | Page 2
    Last year’s Federal Reserve interest rate hike reinforced the importance of assessing your current interest rate position and taking steps to insulate your bank from any significant negative effects of rising rates. However, community banks should move stress testing beyond just interest rates to include other potentially adverse factors and outcomes. Our Page 2 article looks at stress testing in more detail.
  • What You Should Know Right Now | Page 3 
    With rates on the rise, interest rate risk will become a growing threat for community banks. In particular, the regulators have intensified their scrutiny on asset liability management (ALM) model validation as it relates to rate risk. Turn to Page 3 for more on ALM model validation.
  • GAO Report Examines Impact of Dodd-Frank Rules | Page 4
    Finally, our Page 4 article looks at a GAO report issued late last year to determine the impact of Dodd-Frank regulations on affected institutions. Not surprisingly, the report concluded that there has been an increase in the compliance burden on these institutions.

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