Independent Banker - May 2019 - 54

COMMUNITY BANK CFO OUTLOOK 2019
As accounting and capital reporting standards
have become more complex, how has your
interaction with the CEO and other executive
off icers changed?
0.81%
34.15%
Same level of
interest in the impact
of accounting and
capital changes
Slightly less inquisitive about
the impact of accounting and
capital changes
3.25%
Does not inquire
about the impact
of accounting and
capital changes
sense, everyday language that they can understand and
know exactly how it impacts the bank. "
Mills believes fi nancials have grown more transparent
with the introduction of Basel III, CECL and S.2155.
" Those have changed the landscape, " he says. " You have
to interact, plan and discuss the impacts both positive and
negative. It's the new norm. "
One frustration that Thom shares with management is
the " busywork " that the new rules create. " The time needed
to prepare the board and forecasting feels like a lot more
time and money spent for really no material benefi t to the
bank in terms of the way we operate, our risk profi le or our
safety and soundness, " he says.
29.27%
Slightly more
inquisitive about the
impact of accounting
and capital changes
32.52%
Much more
inquisitive about
the impact of
accounting and
capital changes
Third-party support
The increase in workload and complex calculations has
led about half of community bank CFO respondents to
increase their reliance on outside advisors for fi nancial
reporting. A third report a small increase, while 20 percent
report using many more third parties or using them much
more frequently.
Standard depends on the accounting and audit fi rm
Bank-the management team consists of him, the CEO and
the chief lender-means he has a lot of independence.
" My CEO leaves me alone for the most part and trusts
me to make decisions, " he says of his role of the past
eight years. " The board and CEO both depend on me to
understand and translate regulatory speak into common
that's been with the bank since before he joined to keep
him updated on upcoming changes. He also has an
automated tool for interest-rate modeling and forecasting,
plus reports from his core.
" We're a small bank, and I'm not a CPA, so I don't claim
to have all accounting expertise, " he says, adding that he
also looks to peers and conferences for advice.
Mills describes it as an " all-hands-on-deck situation, "
" I think there will be more
transparency. I think [we'll see]
continued expansion of disclosure
requirements as related to loan
reporting and footnotes. "
-Brett Mills,
First American Bank
CFO forecasting
We asked CFOs what they expect
for financial reporting over the
next 10 years as it relates to
discussion of and disclosures on
lending activities. Here's what
they said:
" There's more and more reliance
on forecasting, which can be a
double-edged sword. Forecasts
are only as good as the person
making them. "
-Nick Thom,
First Northern Bank of Wyoming
" I expect the accounting industry
to push for us to take the level
of past-dues and then drill down
on that group to see how risky
the assets really are based on
potential for default calculations
as well as loss-upon default
calculations. This would give a
more granular look at the past
dues. I do hope I'm wrong as
there are way too many factors
that would potentially distort
the output. "
-Quentin Leighty,
First National Bank
54 Q ICBA Independent Banker Q May 2019
Independent Banker - May 2019

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