SAB 109 or SAB Topic 5.DD (codified in ASC 815-10-S99-1)

On November 5, 2007, the SEC staff issued SAB 109, Written Loan Commitments Recorded at Fair Value Through Earnings. SAB 109 superseded SAB 105, Application of Accounting Principles to Loan Commitments, and is effective for all written loan commitments recorded at fair value through earnings. This includes loan commitments that meet the definition of a derivative under ASC 815, and loan commitments accounted for at fair value, with changes in fair value recorded in earnings as allowed under the fair value option within ASC 820. SAB 109 provides that, when measuring loan commitments at fair value, the expected net future cash flows related to the associated servicing of the loan must be incorporated into the fair value measurement. This guidance, which is a change from SAB 105, aligns the determination of fair value for loan commitments guidance within ASC 820, whereby servicing is considered an attribute of the financial asset and a component of the contractually specified interest payment on the loan. Consistent with SAB 105, the guidance states that no other internally-developed intangible assets, such as customer relationship intangible assets, should be included in the measurement of the estimated fair value of the loan-commitment derivative.

CF Disclosure Guidance: Topic No. 5

In 2012, the staff of the SEC's Division of Corporation Finance released the fifth in its CF Disclosure Guidance series. Topic No. 5, Staff Observations Regarding Disclosures of Smaller Financial Institutions ("CF5"), summarizes the staff's observations on Management’s Discussion and Analysis (MD&A) and accounting policy disclosures of smaller financial institutions. The staff had previously communicated most of these observations through various speeches and presentations.

Although the guidance is focused on disclosures by smaller financial institutions, similar considerations may be applicable to other financial and nonfinancial institutions with finance receivable portfolios. The guidance in the SEC release focuses on observations in three broad areas:

In 2001, the SEC staff released the SEC Staff Accounting Bulletin 102 (SAB 102) which addresses the development, documentation, and application of a systematic methodology for determining the ALLL. Specifically, the guidance focuses on the documentation expected to be prepared and maintained in support of an entities ALLL.