We're still looking at it, so I don't really know at this point specifically how we are going to deal with it. We're not only looking at our securities portfolio, but our loan portfolio as well. You have to look a the maturities of different assets when you decide which category to put them in.
We're doing the evaluation ourselves mostly, but we're also having our outside accountant look at it. I don't want to comment on whether [the rule] is good or bad. It's just a matter of becoming familiar with the rules and how they apply and how the regulators are going to treat your decisions.
It's certainly not a new tool, it's a pain in the posterior. The securities that we've always held to maturity are municipal bonds, and we'll stick with that. The other bonds we have we'll just throw into "held for sale."
It's the KISS method: Keep it simple, stupid. I don't plan on spending any more money than I have to to deal with this new regulatory burden. I'm not going to spend any money on fancy investment advice or computer models, though the accountants would love me to. My job is to keep costs down. Our capital will increase 3% after we adopt the rule, but that will fluctuate, obviously.
At the same time regulatory agencies are talking of relieving the burden, the Financial Accounting Standards Board is picking up the pace of mandating additional reporting requirements. While "mark to market" may make sense for major banks whose trading activities are substantial, FASB 115 is an expensive reporting and monitoring requirement for the vast majority of independent banks.
Also, bank flexibility in adjusting to changing conditions will be restricted as bank regulators are forced to second-guess management's "for sale/hold" designations. It creates the appearance of volatility in the capital of smaller banks.
