1. Presented by:
Mike Lubansky, Sageworks, Inc.
Tom Danielson, CliftonLarsonAllen
Todd Sprang, CliftonLarsonAllen
Moderated by:
Ed Bayer, Sageworks, Inc.
2.
Financial information company that provides
credit and risk management solutions to
financial institutions
Data and applications used by thousands of
financial institutions and accounting firms
across North America
Awards
◦ Named to Inc. 500 list of fastest growing privately
held companies in the U.S.
◦ Named to Deloitte’s Technology Fast 500
3.
Top 10 accounting firm
Serve over 1,200 financial institutions in the
country
200 professionals, including 25 partners, who
focus exclusively on financial institutions
Concentrate on community banks, thrifts and
credit unions
4.
Opinions expressed today represent personal
views of Todd and Tom. Our personal
opinions are still rapidly evolving as we
continue to evaluate the exposure draft.
CliftonLarsonAllen is in the process of writing
a formal comment letter for the Exposure
Draft which will then express the official
views of our firm.
5.
Mike Lubansky
◦ Mike Lubansky is a director of consulting services at
Sageworks and serves as the in-house ALLL expert. He has led
the implementation of an automated ALLL solution for more
than 70 financial institutions ranging in size from $37 million
to $20 billion in assets.
Tom Danielson
◦ Tom is a partner with 30 years experience providing audit, tax,
loan review and consulting services to community banks.
Todd Sprang
◦ Todd, also a partner, has 20 years of auditing and consulting
experience in the financial institutions industry. He serves as a
member of the AICPA Depository Institutions Expert Panel.
6.
Currently using ‘Incurred Loss Model’
Backward looking
Must pass “probable” threshold
Credit deterioration not recognized in a
timely manner
Five different methods for measuring
impairment
8.
We don’t yet know how it will impact
allowance levels
Some are speculating that it may increase 10
to 50 percent
Be skeptical of such statements
◦ Still working on the math
◦ Depends on the type of lending that you do
◦ Our first impression that it will most impact longterm non-revolving loans (HELOC’s and RLOC)
9.
ALLL should be more volatile—especially
upwardly
Climb more quickly during economic
downturn
In theory, it will also drop more quickly as the
economy improves
Concerns over regulatory scrutiny may
dampen management’s willingness to lower
ALLL
10.
Even more judgment is required
Greater regulatory scrutiny
More challenging math
Lack of data, especially for small to mid-size
banks
11.
Attempting to predict the future
Need to know where we are in the economic
cycle
Implies we can identify when a
downturn/recovery starts
Implies we can predict the severity of a
downturn
Discourages longer-term lending that
customers may desire
12.
13.
Comment period ends April 30
Talk to auditors, accounting firms,
examiners, etc.
Submit formal feedback: What you like, don’t
like, etc.
There are good parts to the Exposure Draft
We are not trying to imply that no changes
are needed
Draft a comment letter to FASB
14.
Exposure Draft contains questions from FASB
to address
Don’t need to comment on everything in the
Exposure Draft
◦ (ex – implementation timeframe)
Form letters aren’t effective
Read comment letters from others
15.
Industry analysts suggest late 2015 – early
2017
Typically standards are applied first to public
companies. Privately-held companies often
get an extra year to comply
