Independent Banker - August 2021 - 44

CFO ROUNDTABLE
risk assessment areas. One area
of diffi culty has been the human
capital portion of planning, given
employee fatigue and lack of
qualifi ed applicants to fi ll positions in
particular skilled positions.
Q: If community banks had been
subject to CECL, or current
expected credit losses, how would
your bank have been aff ected
given that large banks that used
CECL significantly overestimated
their loan losses?
XStandard: I don't know for
certain. However, even under CECL
requirements, should we have been
subject to those, there would not
have been any signifi cant impact
that would have required a sharp
increase for ALLL [allowance for
loan and lease losses] provisions.
We simply did not ever see a great
deal of stress or increased past dues
from our borrowers last year. The
PPP may have helped in that regard,
but virtually all of our consumer
borrowers maintained their payments
and had few, if any, losses because
of that.
XDrake: Implementation of CECL
would not have had a signifi cant
impact based on our loss history as a
guide for future losses. We have only
had loan losses of about [0.1 basis
points] annually for the past 22 years.
By our calculations, we would have
more than enough in the ALLL and
The ICBA CFO Forum is almost here
The expansion of community banks and new technology
such as big data, technology systems and more has led
the role of the chief financial off icer to change drastically.
The ICBA CFO Forum will run Aug. 16-17 and bring CFOs
from across the nation together virtually to address both
traditional and rising issues in the industry.
Online for the second year in a row, this year's seminar
will tackle numerous issues including:
femerging tax and accounting strategies
fcurrent expected credit losses (CECL) implementation
fdeposit funding sources
frisk management
fcybersecurity and more.
CFO Forum attendees will have the opportunity to
network and collaborate with each other during the event.
Visit icba.org/education to learn more about Community
Banker University (CBU) and ICBA's other educational and
professional development opportunities.
could have had excess reserves that
might cause a negative provision.
XNutt: I feel like we did a pretty good
job of taking a measured approach
in an unprecedented situation. CECL
worked how it was supposed to with
the large banks, and that was based
on future expected credit issues.
Then, when the factors improved,
they reduced reserves. For community
banks, that fl uctuation might have
been larger than needed in the short
run, but, in the long run, [it] would
have ended up about where we are
now. So, [CECL would've had a]
minimal overall impact, but 2020
would have seen a bigger impact. 
Cheryl Winokur Munk is a writer in
New Jersey.
" The PPP has been the most significant
concentration of our loan activity. It forced us
to automate portions of our loan processes. We
have now committed to reworking our entire loan
origination process. "
-BRETT DEMILLIANO, FIRST AMERICAN BANK
deMilliano
44 Q ICBA Independent Banker Q August 2021
http://www.icba.org/education
Independent Banker - August 2021

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