The Daily Dividend

News, notes and insights from around the industry

DECEMBER 9, 2019
FMS Research: Shouldering the Regulatory Burden
By Hilary Collins, Assistant Editor, Financial Managers Society

FMS Research: Shouldering the Regulatory BurdenOver three years of surveying leaders at community institutions about their regulatory burden, a clear trend has emerged – while regulatory burden has remained a consistent challenge and concern since 2017, banks and credit unions seem to have found a way to shoulder that burden without losing a step.

For more insight into how your peers at community institutions are handling CECL challenges and other regulatory concerns, check out our latest FMS research piece: Shouldering the Regulatory Burden.
 

DECEMBER 6, 2019
Prepping for 2020
By Mark Loehrke, Editor, Financial Managers Society

Prepping for 2020It’s that time of year again – time to find out what the good folks at Deloitte see coming for financial institutions in the year ahead in their annual Banking and Capital Markets Outlook.

While noting that the industry overall is on fairly solid ground for the time being, Deloitte nevertheless takes notice of exactly what everyone else in and around banking has understood for some time now – disruption is underway, and only figures to intensify in 2020. And that means banks and credit unions need to be thinking big – envisioning bold moves, new alliances and a renewed dedication to social responsibility. A few key takeaways from this year’s report include:

The next wave of disruption coming over the next decade figures to be more forceful and more pervasive than what has been seen in recent years. With this disruption, though, comes endless opportunity for well-positioned institutions.

The combined effects of technological disruption, sweeping changes to the nature of work, demographic shifts and climate change could hold serious implications for the banking industry.

The above forces will also likely figure into the changing nature of how banking is done. Namely, banking is likely to become more open, transparent, real-time, intelligent, tailored, secure, seamless and deeply integrated into consumers’ lives.

Even as the way banking is done might change, however, the role of banks and credit unions will likely not. Regardless of what happens, institutions should remain true to their core identity as financial intermediaries – matching demand with supply of capital.

Entering the new decade, institutions should focus on fortifying their core foundation on multiple levels, including technology infrastructure, data management, talent and risk management.

As always, the report supplements the above topics with a wealth of timely information regarding payments technology, M&A trends, the growing threat of climate change and much more. For all of the data and detail, however, Deloitte’s advice to the industry heading into 2020 is a fairly simple one – keep doing what you do best but find ways to do it even better.
 

DECEMBER 5, 2019
FMS Virtual Education: Avoiding Common CECL Mistakes
By Hilary Collins, Assistant Editor, Financial Managers Society

FMS Webinar: Strategic Implications of CECLFMS research in 2019 found that while more than half of the leaders from community institutions surveyed had CECL preparations that were proceeding smoothly and on time, 45% had processes that were anywhere from somewhat disjointed to problematic. On top of that, 24% had not yet decided how to model for CECL.

If any of that sounds familiar, join us on December 11-12 for the two-part virtual education session CECL Update: Insights and Lessons Learned from the Field. FMS Chairman Mike Guglielmo of Darling Consulting Group and Ryan Abdoo of Plante Moran will be discussing the most common challenges institutions have encountered and how you can learn from their mistakes for a smoother implementation. 

And remember, FMS members enjoy a discounted rate for this great educational opportunity. (Not a member? Join today!)
 

DECEMBER 4, 2019
ICYMI: CECL Updates
By Mark Loehrke, Editor, Financial Managers Society

Just as most of us were looking for the card table in the garage and double-checking the basting schedule for the bird in anticipation of a Thanksgiving feast last week, FASB was busy rolling out a few pre-holiday updates to its highly anticipated CECL standard. 

Responding to common questions from accountants and others related to confusing areas in its guidance on the standard, the board issued a new Accounting Standards Update (ASU) to address several narrow-scope improvements, including: 

Clarification around how to report expected recoveries, or scenarios in which an organization recognizes a full or partial write-off of the amortized cost basis of a financial asset, but then later determines that all or a portion of the amount written off will actually be recovered. While applying CECL, some stakeholders questioned whether expected recoveries were permitted on assets that had already shown credit deterioration at the time of purchase (also known as PCD assets). In response to this question, the ASU permits organizations to record expected recoveries on PCD assets.

Reinforcement of existing guidance prohibiting organizations from recording negative allowances for available-for-sale debt securities.

While these updates might not seem as groundbreaking as that dream you expressed when you wound up with the bigger piece of the wishbone (“I hope CECL disappears”), they are nevertheless worth noting as your bank or credit union continues its ongoing CECL preparations. 

For more on CECL, including recent updates and implementation tales from the field, be sure to join FMS on December 11-12 for our latest virtual education seminar.
 

DECEMBER 3, 2019
Looking back at forward
By Hilary Collins, Assistant Editor, Financial Managers Society

The next issue of FMS forward won’t be here until January, but we’ve rounded up some holiday reading for you. As we wrap up the fourth quarter, here are some interesting pieces from around the industry press that follow up on some of the topics covered in the November-December issue of our member magazine.

In Revisiting M&A, Rick Childs of Crowe LLP talked about what was driving reduced deal volume and values in 2019. If you want more on how 2019 bank M&A panned out, here’s an overview of the major deals of this year, as well as a look at one of the biggest trends on the acquisition front – credit unions buying banks.

If you enjoyed The Pace of Change, you may be interested in this discussion of how middle management can either accelerate or stagnate growth and transformation. Middle management often takes the blame when change stalls, but research shows that projects initiated by middle management are actually more successful than those spearheaded by senior leaders.

And for those interested in The Future of AI, here’s another way that artificial intelligence could change the way we do business: AI-driven talent management. Using AI to assess candidates could help organizations find the right candidate quickly, but recruitment by algorithm raises serious ethical concerns that will have to be addressed before it can be fully embraced.
 

DECEMBER 2, 2019
FMS Perspectives: The Economic Realities of Retail Checking
By Mark Loehrke, Editor, Financial Managers Society

Smart institutions understand the value of undertaking a keenly insightful and objective analysis of their retail checking programs, letting the numbers tell the story of the economic realities to formulate and implement high-performing product and pricing decisions.

In his new FMS Perspectives piece, The Economic Realities of Retail Checking in Today’s Marketplace, Mike Branton of StrategyCorps Dives into his firm’s data on the state of retail checking to explain where the potential profitability truly lies for community banks and credit unions – and what they need to do to tap into it.
 

NOVEMBER 29, 2019
FMS Webinar: Managing a Dynamic ALCO
By Hilary Collins, Assistant Editor, Financial Managers Society

FMS Webinar: Strategic Implications of CECLToday’s economic environment demands that asset-liability management (ALM) teams identify and act on opportunities quickly. In inverted or negative yield environments, ALCOs must have a robust process for measuring and managing relationships between risk and return. 

Join us on Wednesday, December 4, for Managing a Dynamic ALCO: Strategic Decisions, as Dave Koch of Abrigo explains what it means to be a dynamic ALM-oriented institution today and how to make informed strategic decisions in different rate environments. 

This webinar is complimentary for FMS members. (Not a member? Join today!)
 



Contributors


Mark Loehrke
Editor and Director, Publications and Research
Email: mloehrke@FMSinc.org




Hilary Collins
Assistant Editor and Publications Manager
Email: hcollins@FMSinc.org