Recently Issued Accounting Pronouncements

6 Months Ended

Jun. 30, 2020

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Note 4 – Recently issued accounting pronouncements

Financial Accounting Standards Board ("FASB") Standards adopted during 2020

Standard	Summary of guidance		Effects on financial statements
ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments	u	Replaces existing incurred loss impairment guidance and establishes a single allowance framework for financial assets carried at amortized cost, which will reflect management's estimate of credit losses over the full remaining expected life of the financial assets and will consider expected future changes in macroeconomic conditions.	u	Adopted January 1, 2020.
Issued June 2016	u	Eliminates existing guidance for PCI loans, and requires recognition of the accretable difference as an increase to the allowance for expected credit losses on financial assets purchased with more than insignificant credit deterioration since origination, with a corresponding increase in the recorded investment of related loans.	u	The Company adopted ASU 2016-13 using the modified retrospective method for all loans carried at amortized cost. We recorded a $6.8 million cumulative-effect adjustment to the opening retained earnings (net of taxes) in our consolidated statement of equity as of January 1, 2020. The Company's total increase in the allowance for loan losses was $11.1 million, which included a $3.6 million allowance for loan loss balance sheet gross up, relating to purchased credit deteriorated loans.
	u	Requires inclusion of expected recoveries, limited to the cumulative amount of prior write-offs, when estimating the allowance for credit losses for in scope financial assets (including collateral dependent assets).
	u	Requires a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption.
ASU 2017-4, Intangibles — Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment	u	Requires an impairment loss to be recognized when the estimated fair value of a reporting unit falls below its carrying value.	u	Adopted January 1, 2020.
Issued January 2017	u	Eliminates the second condition in the current guidance that requires an impairment loss to be recognized only if the estimated implied fair value of the goodwill is below its carrying value.	u	Based on current impairment test results, the adoption did not have a material effect on the consolidated financial statements.
			u	The guidance may result in more frequent goodwill impairment losses in future periods due to the removal of the second condition.
ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement	u	Provides guidance on increasing the transparency and comparability of the disclosure requirements for fair value measurement.	u	Adopted in the first quarter of 2020.
Issued August 2018			u	The adoption did not have a material impact on our consolidated financial statements.