Pub. 5 2010-2011 Issue 2

July/August 2010 15 Extraordinary Service for Extraordinary Members. H OWEVER, RECENT CHANGES to accounting standards have impacted existing par- ticipation programs and created compliance uncertainties for both lead lenders and their par- ticipants. Following is a summary of those changes and what they mean to financial institutions. Summary of FAS 166 On June 12, 2009, the Financial Accounting Standards Board (FASB) issued Statement No. 166 (FAS 166), Accounting for Transfers of Finan- cial Assets, an amendment of FASB Statement No. 140 (FAS 140). FAS 166 responded to concerns regarding certain transfers of financial assets and their qualification for sales treatment under FAS 140. For institutions with a calendar-year fiscal year, FAS 166 was effective as of Jan. 1, 2010. Many community banks and their holding companies rely on loan participations as an important source of liquidity for their lending operations. Traditionally, these programs have allowed lenders to diversify assets, comply with lending limits, and spread credit risk by getting participated assets off their balance sheets. Recent Changes to Accounting Standards and Their Impact on Loan Participations Aaron Johnson , Husch Blackwell Sanders LLP COUNSELOR’S CORNER Q Accounting Standards — continued on page 16