Apr. 3--Memphis banks may not benefit as much as the Wall Street giants, but the softening of a key accounting rule Thursday will help the entire industry, local bankers and analysts said.

The independent Financial Accounting Standards Board -- the organization that sets U.S. accounting standards -- adopted new mark-to-market accounting guidelines, a controversial rule that requires companies to value assets at prices that reflect current market conditions.

The rule change will give companies more leeway in reporting losses and determining the value of their loans, investments, real estate and other assets.

By pressing mark-to-market accounting and requiring higher capital ratios during bad economic times, "you are just exacerbating a problem," said Frank J. Cianciola, president and CEO of Renasant Bank.

"Especially when you are taking values at a distressed price," Cianciola said. "I think what they did (Thursday) was a pretty good compromise."

The accounting compromise is not going to affect community banks as much as larger banks, said Todd Vanderpool, president of BankTennessee.

"But there will be an indirect impact in the good of the financial system as a whole," he said.

The changes will allow the assets to be valued at what they would go for in an "orderly" sale, as opposed to a forced or distressed sale.

In addition, new guidelines will allow banks to avoid reporting some losses on securities on their financial statements.

The change in how companies record impaired assets they don't currently plan to sell allows them to separate credit losses from noncredit losses due to other factors such as fluctuating interest rates.

Falling rates will not have to be counted toward net income or loss.

The change is more helpful to the Wall Street banks than Memphis and other, smaller "Main Street" institutions across the country, said Jeff Davis, a banking analyst for Howe Barnes Hoefer & Arnett in Nashville.

"It's more helpful for the large and Wall Street banks just for the sheer number of bonds and assets that might be subject to this," Davis said.

But it is a plus for all the Memphis banks, including the largest three, First Horizon, Regions and SunTrust.

First Horizon already has a particularly clean bond portfolio, Davis said.

Regions and SunTrust, have "some issues" that will be helped by the accounting compromise, he said.

"Particularly, Regions has private-label, mortgage-backed securities that this ruling probably helps," Davis said.

Still, Regions and SunTrust don't have a tremendous amount of bonds at stake, he said.