FASB Statement 166 and Commercial Loan Participations

Meeting Complex Accounting and Disclosure Standards for Lead and Participating Lenders

Recording of a 110-minute CPE webinar with Q&A

Conducted on Wednesday, March 24, 2010

Recorded event now available

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Program Materials

This webinar will prepare accounting advisors and corporate finance professionals to make accurate decisions about accounting for loan participations under FAS 166, and to make required disclosures in financial statements.


In the months since FASB Statement of Accounting Standards No. 166 (FAS 166) took effect for annual reporting periods starting after Nov. 15, 2009, financial institutions involved in loan participations have struggled to master new accounting and disclosure standards for such structures.

FAS 166 imposes a detailed set of conditions for meeting the definition of "participating interest." Financial institutions that sell loan participations must meet standards for both participating interest and surrender of control, before they can report the sale and remove it from their books.

Certain provisions in loan participation agreements will not qualify for accounting sales treatment, meaning they must be treated as secured borrowings. The ramifications for financial companies' financial statements are significant, so advisors must steep themselves in the implications of FAS 166.

Listen as our panel of experienced advisors sifts through the complexities of FAS 166 and gives you the bottom line on actions that must be taken to comply with the new standards in time for the next financial reports.



  1. Changes in FAS 166 relevant to loan participations
    1. Addresses concerns that many financial assets no longer recognized should continue to be reported in transferor’s financial statements
    2. New standard for “participating interest” as specific conditions for reporting transfer of portion of financial asset as sale rather than borrowing
      1. Institutions selling loan participations must meet “participating interest” definition and FAS 140 surrender of control
      2. Which provisions of loan participation agreements that previously qualified as sales don’t qualify as participating interests
    3. Removes concept of qualifying special-purpose entity from FAS 140 and removes FAS 46 exception for those entities
      1. Formerly qualifying special-purpose entities must be re-evaluated for consolidation
  2. New disclosures required in financial statements
    1. Greater transparency about transfers of financial assets
    2. Greater transparency about transferor’s continuing involvement with asset transfers accounted for as sales
  3. Practical FAS 166 accounting considerations affecting all entities involved in loan participations


The panel will help you make sense of these and other key aspects of FASB's new standard affecting loan participations:

  • Meeting the new standard for "participating interest": What structures will pass the twin tests of meeting conditions for both participating interest and surrender of control?
  • Handling special-purpose entities: Will previously independent SPEs now need to consolidate?
  • Producing required disclosures: How should financial institutions report transfers of financial assets and any continuing involvement with transfers accounted for as sales?


Bill McGaughey
Bill McGaughey
Executive Vice President and Director of Capital Markets
Excel National Bank

He has been a frequent speaker on FAS 166 challenges and serves on the Secondary Market Committee for the National...  |  Read More

Brett Schwantes
Brett Schwantes
Senior Manager and Technical Issues Committee Chair

His particular industry focus is the financial services sector, and he has nearly 15 years of experience working with...  |  Read More

Melissa Beck
Melissa Beck

Morrison & Foerster

Her work is primarily for the insurance industry but she also has broad capital markets experience, and she has written...  |  Read More

Ken Kohler
Ken Kohler

Morrison & Foerster

His practice covers a broad range of corporate and capital matters, including public offerings and private placements....  |  Read More

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