New CF Guidance for Smaller Financial Institutions

The SEC's Division of Corporation Finance has issued CF Disclosure Guidance: Topic 5. This CF Guidance contains staff observations on the MD&A and accounting policy disclosures of smaller financial institutions. The guidance cautions these companies that while staff observations may help them to draft better disclosure, the guidance is not a substitute for the Commission's rules or the Accounting Standards Codification.

Topics addressed in the guidance are separated into three categories. The section covering asset quality and loan accounting issues discusses the following: allowance for loan losses, charge-off and nonaccrual policies, commercial real estate, loans measured for impairment based on collateral value, credit risk concentrations, troubled debt restructurings and modifications, and other real estate owned. The guidance also addresses deferred taxes and FDIC-assisted transactions.

Previously issued CF Guidance addresses:

Topic No. 1: Staff Observations in the Review of Forms 8-K Filed to Report Reverse Mergers and Similar Transactions.

Topic No. 2: Cybersecurity.

Topic No. 3: Staff Observations in the Review of Promotional and Sales Material Submitted Pursuant to Securities Act Industry Guide 5.

Topic No. 4: European Sovereign Debt Exposures.