Summary of Significant Accounting Policies

Business. Anchor BanCorp Wisconsin Inc. (the “Company”) is a savings and loan holding company incorporated under the laws of the state of Delaware and headquartered in Madison, Wisconsin. Through its wholly owned subsidiary, AnchorBank, fsb (the “Bank”), it provides a full range of retail and commercial banking services to customers through its branch locations in Wisconsin. The Bank is subject to competition from other financial institutions, other financial service providers and non-banks. The Company and its subsidiary also are subject to the regulations of certain federal and state agencies and undergo periodic examinations by those regulatory authorities.

Change in Year End

On December 18, 2013, the Board of Directors (the “Board”) approved the change of the year end from March 31 to December 31, beginning with December 31, 2013. This report on Form 10-K covers the years ended December 31, 2015 and 2014 and the nine months ended December 31, 2013. The following table presents certain comparative transition period condensed financial information for the periods ended December 31, 2015, 2014 and 2013.



	Year Ended December 31,									Nine Months Ended December 31,
	2015			2014			2013			2013
							(Unaudited)
	(In thousands)
Interest income	$	73,210		$	75,580		$	84,939		$	62,223
Interest expense	4,429			4,344			22,013			14,117
Net interest income	68,781			71,236			62,926			48,106
Provision for loan losses	(29,496		)	(4,585		)	950			275
Net interest income after provision for loan losses	98,277			75,821			61,976			47,831
Non-interest income	34,971			30,519			167,036			159,533
Non-interest expense	84,937			91,708			131,400			95,732
Income before income taxes	48,311			14,632			97,612			111,632
Income tax expense (benefit)	(89,447		)	10			9			9
Net income	137,758			14,622			97,603			111,623
Preferred stock dividends in arrears	—			—			(4,200		)	(2,538		)
Preferred stock discount accretion	—			—			(8,010		)	(6,167		)
Retirement of preferred shares	—			—			104,000			104,000
Net income available to common equity	$	137,758		$	14,622		$	189,393		$	206,918

Basis of Financial Statement Presentation. The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include the accounts and operations of the Company and its wholly owned subsidiaries, the Bank and Investment Directions, Inc. The Bank has one subsidiary ADPC Corporation. Significant intercompany accounts and transactions have been eliminated.

The unaudited consolidated financial statements included herein have been prepared in accordance with U.S. GAAP. In the opinion of management, all adjustments, including normal recurring accruals, necessary for a fair presentation of the unaudited consolidated financial statements have been included.

In preparing the consolidated financial statements, management is required to make estimates, assumptions and judgments when assets and liabilities are required to be recorded at, or adjusted to reflect, fair value under Generally Accepted Accounting Principles (“GAAP”). Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant changes in the near term relate to the allowance for loan losses, the valuation of OREO, the net carrying value of MSRs, the valuation of deferred tax assets and the fair value of investment securities, interest rate lock commitments, forward contracts to sell mortgage loans, interest rate swap contracts and loans held for sale.

The Company has three distinct operating segments; the Bank, IDI and the holding company and produces discreet financial information for each which is available to management. However, operating revenues and related assets of IDI fall below the required reporting thresholds and therefore are not separately disclosed in the consolidated financial statements.

Subsequent Events. The Company has evaluated all subsequent events through the date of this filing. On January 12, 2016, Evansville, Indiana based Old National Bancorp (NASDAQ: ONB) ("Old National") and the Company jointly announced the execution of a definitive agreement under which Old National will acquire the Company through a stock and cash merger.

Under the terms of the agreement, the Company's stockholders may elect to receive either 3.5505 shares of Old National common stock or $48.50 in cash for each share of the Company they hold, subject to the restriction that no more than 40% of the outstanding shares of the Company may receive cash. Based on Old National’s 10-day average closing share price through January 8, 2016 of $13.34, this represents a total transaction value of approximately $461 million. The transaction value is likely to change until closing due to fluctuations in the price of Old National common stock and is also subject to adjustment under certain limited circumstances as provided in the merger agreement. The definitive merger agreement has been unanimously approved by the Board of both Old National and the Company. The transaction remains subject to regulatory approval and the vote of the Company's stockholders. The transaction is anticipated to close in the second quarter of 2016.

Old National was advised by Stephens, Inc. and the law firm of Krieg DeVault LLP. The Company was advised by J.P. Morgan Securities LLC and the law firm of Skadden, Arps, Slate, Meagher & Flom LLP.

Cash and Cash Equivalents. The Company considers interest-earning deposits that have an original maturity of three months or less to be cash equivalents.

Investment Securities. Debt securities that the Company has the intent and ability to hold to maturity may be classified as held to maturity and stated at amortized cost as adjusted for premium amortization and discount accretion. Securities would be classified as trading if the Company intends to actively buy and sell securities in order to make a profit. Trading securities are carried at fair value, with unrealized holding gains and losses included in earnings. There were no securities designated as trading during the years ended December 31, 2015 and 2014 and the nine months ended December 31, 2013. Securities not classified as held to maturity or trading are classified as available for sale. Available for sale securities are stated at fair value with unrealized gains and losses, reported as a separate component of accumulated other comprehensive income (loss), net of tax (if any), in stockholders’ equity.

Realized gains and losses are included in net gain (loss) on sale of investment securities in the consolidated statements of operations as a component of non-interest income. The cost of securities sold is based on the specific identification method.

Declines in the fair value of investment securities below amortized cost basis that are deemed to be an other-than-temporary impairment (“OTTI”), are reflected as impairment losses. To determine if an other-than-temporary impairment exists on a debt security, the Company first determines if (a) it intends to sell the security or (b) it is more likely than not that it will be required to sell the security before its anticipated recovery. If either of the conditions is met, the Company will recognize an other-than-temporary impairment in earnings equal to the difference between the fair value of the security and its amortized cost basis. If either of the conditions is met, the Company determines (a) the amount of the impairment related to credit loss and (b) the amount of the impairment due to all other factors. The difference between the present values of the cash flows expected to be collected discounted at the purchase yield or current accounting yield and the amortized cost basis is the credit loss. The amount of the credit loss is included in the consolidated statements of operations as an other-than-temporary impairment on securities and is a reduction in the cost basis of the security. The portion of the total impairment that is related to all other factors is included in other comprehensive income (loss).

Loans Held for Sale. Loans held for sale generally consist of the current origination of certain fixed- and adjustable-rate mortgage loans. Effective for loans originated on or after April 1, 2013, residential mortgage loans held for sale are carried at fair value and upfront costs and fees related to these loans are recognized in earnings as incurred. Prior to April 1, 2013, loans held for sale were recorded at the lower of cost or fair value with fees received from the borrower and direct costs to originate the loan deferred and included as a basis adjustment of the loan.

Loans Held for Investment, net. Loans held for investment, net, are stated at the amount of the gross principal, reduced by unamortized loan fees, net and an allowance for loan losses. Certain loan origination, commitment and other loan fees and associated direct loan origination costs are deferred and amortized as an adjustment to the related loan’s yield. These amounts, as well as discounts or premiums on purchased loans, are amortized using a method that approximates level yield, adjusted for prepayments, over the life of the related loans. Interest on loans is accrued into income on the gross loans as earned. Loans are placed on non-accrual status when they become 90 days past due or, when in the judgment of management, the probability of collection of principal and interest is deemed to be insufficient to warrant further accrual. Past due status is based on the contractual terms of the loan. Factors that management considers when assessing the collectability of principal and interest include early stage delinquencies and financial difficulties of the borrower. When a loan is placed on non-accrual status, previously accrued but unpaid interest is deducted from interest income. Payments received on non-accrual loans are generally credited to the loan balance and no interest income is recognized on those loans until the principal balance is current. In cases in which the unpaid contractual principal balance of the loan, is deemed to be fully collectible, interest payments received may be recognized in income on a cash basis. Loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Loans held for investment are summarized into four different segments: residential loans, commercial and industrial loans, commercial real estate loans and consumer loans.

Residential Loans

Residential loans, substantially all of which finance the purchase of 1-to-4 family dwellings, are generally considered homogeneous as they exhibit similar product and risk characteristics. Residential loans are charged off to the fair value of collateral at the time:


•	of an approved short sale with funds received;


•	information is received indicating an insufficient value and the borrower is 180 days past due;


•	a foreclosure sale is complete and the loan is being moved to other real estate owned; or


•	the loan is otherwise deemed uncollectible.

Commercial and Industrial Loans

Commercial and industrial loans are funded for business purposes, including issuing letters of credit. The commercial and industrial loan portfolio is comprised of loans for a variety of purposes which are generally secured by equipment, owner occupied real estate and other working capital assets, such as accounts receivable and inventory. Commercial business loans typically have terms of five years or less and are divided between interest rates that float in accordance with a designated published index and fixed rates. Most loans are secured and backed by the personal guarantees of the owners of the business. Commercial and industrial loans are charged off to the fair value of collateral when information confirms that any portion of the recorded investment in a collateral dependent loan is a confirmed loss.

Commercial Real Estate Loans

Commercial real estate loans are primarily secured by apartment buildings, office and industrial buildings, land, warehouses, small retail shopping centers and various special purpose properties, including community-based residential facilities and senior housing. Although terms vary, commercial real estate loans generally have amortization periods of 15 to 30 years, as well as balloon payments of two to seven years. Commercial real estate loans are charged off to the fair value of the collateral when information confirms that any portion of the recorded investment in a collateral dependent loan is a confirmed loss.

Consumer Loans

Consumer loans generally have higher interest rates than residential loans. The risk involved in consumer loans is based on the type and nature of the collateral and, in certain cases, the absence of collateral. Consumer loans include first and second mortgage and home equity loans, consisting primarily of the Express Refinance Loan product which is the Bank’s expedited first mortgage refinance and home equity loan product. In addition, consumer loans include education loans, vehicle loans and other secured and unsecured loans that have been made for a variety of consumer purposes. Consumer loans are charged off to the fair value of collateral, upon repossession or sale of the collateral and deficiency is realized, upon reaching 120 days past due if unsecured or 180 days past due if secured, or when the loan is otherwise deemed uncollectible.

Allowance for Loan Losses. The allowance for loan losses is maintained at a level believed appropriate by management to absorb probable and estimable losses inherent in the held for investment loan portfolio and is based on the size and current risk characteristics of the held for investment loan portfolio; an assessment of individual impaired loans; actual and anticipated loss experience; and current economic events in specific industries and geographical areas. These economic events include unemployment levels, regulatory guidance and general economic conditions. Determination of the allowance is inherently subjective as it requires significant estimates, including the amounts and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience and consideration of current economic trends, all of which may be susceptible to significant change. Therefore, the allowance for loan losses accounts for elements of imprecision and estimation risk inherent in the calculation.

Loan losses are charged off against the allowance, while recoveries of amounts previously charged off are credited to the allowance. A provision for loan losses is recorded in the statement of income based on management’s periodic evaluation of the factors previously mentioned as well as other pertinent factors. The provision for loan losses may increase or decline should credit metrics such as net charge offs and the amount of non-performing loans worsen or improve in the future.

The allowance for loan losses consists of specific and general components. Specific allowance allocations are established for probable losses resulting from analysis of impaired loans. A loan is considered impaired when it is probable that the Company will be unable to collect all contractual principal and interest due according to the terms of the loan agreement. Impaired loans include all nonaccrual loans and troubled debt restructurings ("TDRs"). TDRs are loans that have been modified, due to financial difficulties of the borrower, where the terms of the modified loan are more favorable for the borrower than what the Company would normally offer. Impairment is determined when the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the underlying collateral less costs to sell, if the loan is collateral dependent, is less than the carrying value of the loan. Cash collections on nonaccrual loans are generally credited to the loan balance and no interest income is recognized on those loans until the principal balance is current and collection of principal and interest becomes probable.

The general allowance component is based on historical net loss experience adjusted for qualitative factors. In determining the general allowance, the Company has defined the following segments within its loan portfolio: residential, commercial and industrial, commercial real estate and consumer. The Company has disaggregated those segments into the following classes based on risk characteristics: residential; commercial and industrial; land and construction, multi-family, retail/office and other commercial real estate within the commercial real estate segment; and education and other consumer within the consumer segment. Consistent with the Bank’s allowance for loan losses policy, the appropriateness of the segmentation is periodically reviewed. This additional detail allows management to better identify trends in borrower behavior and loss severity within the segments and classes of the loan portfolio. A historical loss factor is computed for each class of loan and is used as the major determinate of the general allowance for loan losses. In determining the appropriate period of activity to use in computing the historical loss factor, management considers trends in quarterly net charge-off ratios. It is management’s intention to utilize a period of activity that it believes to be most reflective of current experience. Changes in the historical period are made when there is a distinct change in the trend of net charge-off experience. Management reviews each class’ historical losses by quarter for any trends that indicate the most representative look-back period.

On a quarterly basis, the Company analyzes its general allowance methodology and has determined it is necessary to increase the historical loss period by an additional quarter. For the quarter ended December 31, 2015, the Bank utilized a fifteen quarter look-back period compared to a fourteen quarter look-back period for the quarter ended September 30, 2015. The modification is being done to reflect a more stable economic environment and to capture additional loss statistics considered reflective of the current portfolio. The impact to the allowance for loan losses at December 31, 2015 after implementing the modification was an increase of $536,000 in the required reserve as compared to the previous methodology. Management will continue to analyze the historical loss period utilized on a quarterly basis.

Management adjusts historical loss factors based on the following qualitative factors:


•	Changes in lending policies and procedures, including changes in underwriting standards and collection and charge-off and recovery practices not considered elsewhere in estimating credit losses;


•	Changes in national, regional and local economic and business conditions and developments that affect the collectability of the portfolio including the condition of various market segments;


•	Changes in the nature and volume of the portfolio and in the terms of loans;


•	Changes in the experience, ability and depth of lending management and other relevant staff;


•	Changes in the volume and severity of past due loans, the volume of nonaccrual loans and the volume and severity of adversely classified or graded loans;


•	Changes in the quality of the Bank’s loan review system;


•	Changes in the value of underlying collateral for collateral-dependent loans;


•	The existence and effect of any concentrations of credit and changes in the level of such concentrations; and


•	The effect of other external factors, such as competition and legal and regulatory requirements on the level of estimated credit losses in the Bank’s current portfolio.

In determining the impact, if any, of an individual qualitative factor, management compares the current underlying facts and circumstances surrounding a particular factor with those in the historical periods, adjusting the historical loss factor based on changes in the qualitative factor. Management will continue to analyze the qualitative factors on a quarterly basis, adjusting the historical loss factor as necessary, to a factor believed to be appropriate for the probable and inherent risk of loss in the portfolio.

Other Real Estate Owned, net. Real estate acquired by foreclosure or by deed in lieu of foreclosure as well as other repossessed assets (“OREO”) are held for sale and are initially recorded at fair value less a discount for estimated selling costs at the date of foreclosure. Any write down to fair value less estimated selling costs is charged to the allowance for loan losses. If the discounted fair value exceeds the net carrying value of the loans, recoveries to the allowance for loan losses are recorded to the extent of previous charge-offs, with any excess, which is infrequent, recognized as a gain in non-interest income. Subsequent to foreclosure, valuations are periodically performed and a valuation allowance is established if the carrying value exceeds the fair value less estimated selling costs. Costs relating to the development and improvement of the property may be capitalized; generally those greater than $10,000; holding period costs and subsequent changes to the valuation allowance are charged to OREO expense, net included in non-interest expense. Incremental valuation adjustments may be recognized in the Statement of Operations if, in the opinion of management, additional losses are deemed probable.

Premises and Equipment, net. Premises and equipment are recorded at cost and include expenditures for new facilities and items that substantially increase the estimated useful lives of existing buildings and equipment. Expenditures for normal repairs and maintenance are charged to operations as incurred. When properties are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any resulting gain or loss is recorded in income. The cost of office properties and equipment is being depreciated principally by the straight-line method over the estimated useful lives (3 years to 40 years) of the assets. The cost of capitalized leasehold improvements is depreciated on the straight-line method over the lesser of the term of the respective lease or estimated economic life.

Federal Home Loan Bank Stock. The Bank is a member of the Federal Home Loan Bank (“FHLB”) system which is organized as a member owned cooperative. As a result of membership in the FHLB system, the Bank is required to maintain a minimum investment in FHLB stock. The stock is redeemable at par and is, therefore, carried at cost and periodically evaluated for impairment. Ownership in the FHLB provides a potential dividend and allows access to member privileges including loans, advances, letters of credit and mortgage purchases. The stock is not transferable and cannot be used as collateral. The Bank has concluded that its investment in the stock of FHLB Chicago was not impaired at December 31, 2015.

Mortgage Servicing Rights, net. Mortgage servicing rights are recorded as an asset when loans are sold to third parties with servicing rights retained. The amount allocated to the mortgage servicing rights retained has been recognized as a separate asset and is initially recorded at fair value and subsequently amortized in proportion to, and over the period of, estimated net servicing revenues. The carrying value of these assets is periodically reviewed for impairment using a lower of amortized cost or fair value methodology. Mortgage servicing rights are valued monthly by an independent third party valuation service with income adjustments recorded monthly. On an annual basis the valuation is validated by a separate third party valuation service. The fair value of the servicing rights is determined by estimating the present value of future net cash flows, taking into consideration market loan prepayment speeds, discount rates, servicing costs and other economic factors. For purposes of measuring fair value and impairment, the rights are stratified based on predominant risk characteristics of the underlying loans which include product type (i.e., fixed or adjustable) and interest rate. The amount of impairment recognized is the amount by which the amortized cost of the capitalized mortgage servicing rights on a product and interest rate strata basis exceed their fair value.

Transfers of Financial Assets. Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrains it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Income Taxes. The Company’s deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Income tax expense (benefit) is the tax payable or refundable for the period adjusted for the change during the period in deferred tax assets and liabilities and associated valuation allowance. The Company and its subsidiaries file a consolidated federal income tax return and combined state income tax returns. An intercompany settlement of taxes paid is determined based on tax sharing agreements which generally provide for allocation of taxes to each entity on a separate return basis.

The Company is subject to the income tax laws of the U.S., its states and municipalities. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. Accounting guidance related to uncertainty in income taxes provides a comprehensive model for how companies should recognize, measure, present and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under the guidance, tax positions shall initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions shall initially and subsequently be measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and all relevant facts. The guidance also revised disclosure requirements to include an annual tabular roll forward of unrecognized tax benefits. In establishing a provision for income tax expense (benefit), the Company must make judgments and interpretations about the application of these inherently complex tax laws within the framework of existing U.S. GAAP. The Company recognizes interest and penalties related to uncertain tax positions in other non-interest expense if any were incurred.

Earnings Per Share. Basic earnings per share (“EPS”) is computed by dividing net income available to common equity of the Company by the weighted average number of common shares outstanding for the period. The basic EPS computation excludes the dilutive effect of all common stock equivalents, if any. Diluted EPS is computed by dividing net income available to common equity by the weighted average number of common shares outstanding plus all potentially dilutive common shares which could be issued if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock (“common stock equivalents”). The Company’s common stock equivalents represent shares issuable under a stock compensation plan. Such common stock equivalents were computed based on the treasury stock method using the average market price for the period.

Comprehensive Income (Loss). Comprehensive income or loss is the total of reported net income or loss and all other revenues, expenses, gains and losses that under U.S. GAAP are not reported as net income (loss). As such, the Company includes unrealized gains or losses on securities available for sale in other comprehensive income (loss).

New Accounting Pronouncements. Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)." ASU 2016-02 requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. ASU 2016-02 requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, the Financial Accounting Standards Board (“FASB”) retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Classification will be based on criteria that are largely similar to those applied in current lease accounting. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. This amendment is effective for fiscal years beginning after December 15, 2018 and early adoption is permitted. ASU 2016-02 must be adopted using a modified retrospective transition, and provides for certain practical expedients. The Company currently intends to adopt the accounting standard during the first quarter of 2019 and is currently evaluating the impact on its consolidated financial position.

ASU No. 2016-01, "Financial Instruments–Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." ASU 2016-01 requires equity investments to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. This amendment is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company currently intends to adopt the accounting standard during the first quarter of 2018 and is currently evaluating the impact on its consolidated financial position.

ASU No. 2015-15, "Interest–Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements." ASU 2015-15 requires entities to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability. Given the absence of authoritative guidance within ASU 2015-03, "Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs", for debt issuance costs related to line-of-credit arrangements, the Securities and Exchange Commission ("SEC") staff stated they would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. ASU 2015-15 adds these SEC comments to the "S" section of the Codification. The Company intends to adopt the accounting standard during the first quarter of 2016, as required, with no material impact.

ASU No. 2015-03 "Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." ASU 2015-03 simplifies the presentation of debt issuance costs, requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. This amendment is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. Entities should apply the new guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. The Company intends to adopt the accounting standard during the first quarter of 2016, as required, with no material impact.

ASU No. 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis." ASU 2015-02 is an amendment to the consolidation process and addresses the current accounting for consolidation of certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The new standard reduces the number of consolidation models from four to two, simplifying consolidation by placing more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity and changing consolidation conclusions in several industries that typically make use of limited partnerships or VIEs. This amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Entities may apply the amendment prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the year of adoption. The Company intends to adopt the accounting standard during the first quarter of 2016, as required, with no material impact.

ASU No. 2015-01, “Income Statement-Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” ASU 2015-01 addresses the elimination from U.S. GAAP the concept of extraordinary items. Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. If an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. This amended guidance will prohibit separate disclosure of extraordinary items in the income statement. This amendment is effective for years, and interim periods within those years, beginning after December 15, 2015. Entities may apply the amendment prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the year of adoption. The Company intends to adopt the accounting standard during the first quarter of 2016, as required, with no material impact.

ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” In May 2014, FASB issued an amendment to clarify the principles for recognizing revenue and to develop a common revenue standard. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” In applying the revenue model to contracts within its scope, an entity should apply the following steps: (1) Identify the contract(s) with a customer, (2) Identify the performance obligations in the contract, (3) Determine the transaction price, (4) Allocate the transaction price to the performance obligations in the contract, and (5) Recognize revenue when (or as) the entity satisfies a performance obligation. The standard applies to all contracts with customers except those that are within the scope of other topics in the FASB Codification. The standard also requires significantly expanded disclosures about revenue recognition. On August 12, 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date", which deferred the effective date by one year. The standard will be effective for annual periods beginning after December 15, 2017 but early adoption as of December 15, 2016 is permitted. The Company currently intends to adopt the accounting standard during the first quarter of 2018 and is currently evaluating the impact on its results of operations, financial position and liquidity.

ASU 2014-04, “Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40) – Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.” These amendments are intended to clarify when a creditor should be considered to have received physical possession of residential real estate property when collateralizing a consumer mortgage loan such that the loan should be derecognized and the real estate recognized. Further, this amendment clarifies that an in-substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either: (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure, or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. ASU 2014-04 was effective for public companies for annual periods and interim periods within those annual periods beginning after December 15, 2014. The Company is in compliance with these requirements and adoption did not have an impact on the consolidated financial statements.

Reclassifications. Prior period amounts have been reclassified as needed to conform to the current period presentations. There was no impact on earnings or stockholders’ equity as a result of the reclassifications.