year-end income games

Posted By: Anonymous

year-end income games - 01/15/05 02:06 PM

Management has made their budget by December and decides to hold back origination and secondary market fee income till next year.

To me this is a reportable item since income recognition is being changed from the normal practice of recording on the date of the loan closing.

The question then arises as to if this is a material amount that it should be recommended that bank management make the necssary adjusting items? I have discussed with management and need to determine what other actions are necessary.

Any thoughts on how others have handled these situations.
Posted By: Kathleen O. Blanchard

Re: year-end income games - 01/15/05 04:12 PM

I hope it's not a publicly held bank. This would be a SOX issue.

Haven't they read the articles on Fannie Mae? They are doing the same thing...playing with the numbers to smooth income. It is an unacceptable practice.
Posted By: rlcarey

Re: year-end income games - 01/16/05 02:47 PM

Don't forget about the possibility of management facing charges for tax fraud also.
Posted By: Jokerman

Re: year-end income games - 01/17/05 04:38 PM

Why aren't they hiding it with excess reserves, like everyone else???

Posted By: Jokerman

Re: year-end income games - 01/18/05 10:48 PM

Tough crowd...
Posted By: rainman

Re: year-end income games - 01/18/05 11:29 PM

I laughed, Jokerman . . . of course I can't relate . . . but I laughed!
Posted By: river girl

Re: year-end income games - 01/19/05 06:02 PM

What about this game. Our bonus is tied to lots of numbers, one being we meet budget for loan growth and others being our ROA and ROE. We had two small mergers and mgmt won't allow the merged loans to count towards our loan growth(which we didn't meet with the merger $ taken out) but they are including all the expenses incurred with the merger and the branch budget for expenses since the merger to calculate whether we meet ROA,ROE bonus criteria.
Does this seem wrong?
Posted By: Jokerman

Re: year-end income games - 01/19/05 06:12 PM

It certainly seems unfair. Has ownership changed as a result of the merger?
Posted By: Jokerman

Re: year-end income games - 01/19/05 06:15 PM

To clarify - it seems reasonable to not count the loans toward your target. However, I would think that expenses that are distinguishable as attributable to the merger should not have an impact on employee bonuses.