Modelling How PPP - Cash Flow – Modification – Increased Loan Loss Projections Have Blown Up Your 2020 Budget – Recasting Forecasts Through 2021 for your Board
Banking has gotten tougher in the last few months; working from home, modifications, PPP, controls compromises. Further, remember that budget you passed in January or February? Safe to say it’s “toast”? In Marc Cohn’s “Live out the String”, a lyric line seems apropos to the moment: “It's a random interruption in the middle of your groove”.
Questions abound. When will the SBA fee income arrive? How quickly will borrowers ask for forgiveness? How long will it take for the SBA to process all the forgiveness requests and get us our cash back? What has happened to our balance sheet as we bloat it with PPP with or without a Fed off-set? FDIC has accommodated an alternative capital ratio calculation, but what about your strategic or capital plan – are we going under the threshold we ourselves established?
What are the cash flow implications of modifications? Full payment forbearance or interest only? Are modifications helping or merely masking the impending loan defaults we all sense coming?
How are you explaining all of this to your Board? The Navis Group has worked with a handful of banks already with an eye toward recasting the budget/forecast through 2021, theorizing that loan losses really start to surface in Q4 and percolate throughout 2021. The 18-month window seems appropriate at this moment. By June or July, reaction should be turning to response and action.
We have built an Excel-based model to show you how we have approached this, and we’ll highlight the key elements to consider as you recast and proactively lasso our new, or at least near-term normal.
- The pains (reaction)
- Loan modification strategies
- PPP’s balance sheet impact
- PPP’s SBA cash flow vagaries
- Loan loss projections
- Funding gluts or shortages
- A blown budget
- Looking Forward (pro-action)
- Modelling (Excel or other tools)
- The educated guesses we need underlying the model
- "Eureka" ideas (we hope)
- Affirmation that you’re not in this alone
This is a practical workshop designed for CEOs, CFOs, Controllers, COOs and CROs of banks of any size.
David B. Sidon, CPA
President, Navis Partners, LLC d/b/a The Navis Group
Mr. Sidon founded The Navis Group in 2003, providing consulting services to financial institutions for strategic planning, capital planning, and organizational and operational efficiencies, structures and problem resolution. A former community bank CEO, his forty-five years of business experience include public accounting and all facets of financial institution management.
The Navis Group specializes in COSO / FDICIA / SOX compliance, having assisted 40+ banks with implementations and updates over the past ten years.
Mr. Sidon is a regular contributor to various banking association publications, and has facilitated day-long seminars for Mass. Bankers, CT Bankers, NH Bankers, NY Bankers, Kentucky Bankers and Maryland Bankers, as well as serving as a faculty member for CT Bankers’ School for Financial Management and the New England School for Financial Studies at Babson College.
Kevin W. Nunes
Senior Consultant, Navis Partners, LLC d/b/a The Navis Group
Mr. Nunes joined The Navis Group in 2014 as a consulting associate with a primary emphasis on the firm’s FDICIA/SOX financial reporting controls engagements, which has become a mainstay of the firm’s practice. Additional areas of Kevin’s focus include strategic planning, balance sheet modeling, spreadsheet/model risk and policy writing.
Formerly, Mr. Nunes served as CFO for Gloucester Bank & Trust for eight years and was directly responsible for asset/liability management and liquidity planning, management of the bank’s investment portfolio, and development of financial models for strategic planning.
His eclectic career also includes highly-specialized expert witness damage calculations, working with over 80 Native American tribes in their law suits against the United States for the government’s breach of trust in re: its trust obligations over Native American financial and natural resource assets.
Registration to the live session includes:
- One online connection
- CPE credit for registrant
- Permission to reproduce the handouts and other written material for additional attendees at your location
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|| Earn up to 1 hours of CPE credit.
- Level: Basic
- Prerequisites: None
- Advance preparation: None
- Field of Study:Business Management & Organization – Non-technical
- Instructional Method: Group Internet Based
- Length: 60 minutes
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