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Accurate and auditable FAS91 costs.
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Boost current earning per share (EPS).
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A listing of the many banks and credit unions that have benefited from CorePROFIT’s FAS91 cost development, as well as a set of solution deliverables can be provided upon request.
Please contact CorePROFIT to receive additional information about this solution.
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FAS91, officially known as Financial Accounting Standards No. 91, Accounting for non-refundable Loan Fees and Costs, began with fiscal years ending after December 15, 1987. This Statement changed forever the accounting practice of recognizing non-refundable loan fees at or prior to the inception of the loan. To offset this loss of current income, FAS91 requires that lenders defer certain costs associated with the origination of loans.
In fact, according to FAS91, even in the absence of a loan fee, costs associated with the origination of loans, are to be deferred. In short, FAS91 requires that loan origination fees be recognized over the life of the related loan as an adjustment of yield while certain direct loan origination costs shall be recognized over the life of the related loan as a reduction of the loan’s yield. The challenge to most banks is identification of the amount of the initial direct costs of origination that must and should be deferred.
It is true that while over the life of the loan all fees are recognized and all costs expensed. However, it is very important to know that most banks’ net income is negatively impacted in each current accounting period since the correct amount of costs associated with loan originations have not been deferred. In other words, most banks have understated current period earnings because they have not developed accurate FAS91 costs.
CorePROFIT properly develops an auditable set of FAS91 costs that will boost the bank’s current earning per share (EPS) without increasing loan underwriting production, without re-pricing loans, without adding staff and without the need to modify non-refundable fee structures.
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