If you’ve taken a look at the landscape, there’s a variety of CECL solution options. Some of the solutions seem mundane and straightforward, only to get into rocky ground later. That rocky ground usually comes in the form of unforeseen costs.

Let’s take a look at three solutions, two of which you’ve probably been pitched.

One of the major solutions on the market is a call report-based model. What isn’t always communicated or appreciated about this option is that it comes with an annual cost. So, that’s buying into a CECL solution that will be with you like a ball and chain for the future.

Next is the software solution. These are getting pushed hard on community bankers, but is often an over-engineered and very expensive solution. On top of the large sticker price, you have to hope someone on your team can run the software. Implementation isn’t always as easy as it would seem either. The software is one-size-fits-all, and how often does that work out perfectly?

Community Bank Advisors has a third solution. We believe in a model that leaves you with a tailored, customized solution that your bank owns. Our CECL regression model is easy to understand and will help you make sense out of these new requirements. No Harvard degree is needed to navigate our user-friendly solution. We do all the heavy lifting for you.

CECL created a headache for bankers across the nation. We want to resolve that and have you looking like a hero in front of your board. There’s no reason you shouldn’t have a robust, cost-effective CECL solution at your fingertips.

Of course, our team of experts will be there with you up to and through the CECL deadlines. We’re happy to help your bank overcome talent and time gaps to take care of this hurdle.

Let’s talk about the right CECL solution for your bank. Give us a call at (918) 791-0699 or send me a message at dmatthews@communitybankadvisors.com.

 

Sincerely,

Dustin Matthews, President

 

On to the Bottom Lines Up Front (BLUFs) for February 28, 2019:

Banks Hit Record Profit of $237 Billion in 2018 (source)

  • The FDIC reported on Feb. 21 that U.S. banks earned a record profit in 2018 benefiting from lower taxes and improved revenue.
  • Only 6.5 percent of banks were unprofitable.
  • Interest income rose 8.1 percent in the quarter compared with a year earlier. Loan and lease balances were up 2.1 percent since the previous quarter.

 

Get Ready for Negative Interest Rates when Next Recession Hits (source)

  • The Fed has historically slashed rates by as much as 4 or 5 full percentage points in response to recession. It will clearly lack the room to do so next time around.
  • That’s why policymakers have made clear the unusual, but also remarkably powerful tool of asset purchases, known as quantitative easing and used extensively during and after the financial crisis of 2008, will remain on the table for future slumps.
  • Also, under potential consideration: negative interest rates.
  • A recent San Francisco Fed Letter finds negative rates could have made the Great Recession of 2007-2009 less shallow and less lengthy, potentially saving millions of jobs in the process.