The Financial Accounting Standards Board’s current expected credit loss standard is among the top issues keeping community bank CEOs up at night, according to an American Banker article published today featuring interviews with several members of ABA’s Community Bankers Council. While the bankers expressed appreciation for FASB’s decision to delay CECL’s implementation for a large number of institutions, they echoed concerns previously raised by ABA about the procyclical nature of the standard.
“When you look at the impact this will have on credit in a downturn, it baffles me as to why we don’t analyze CECL’s quantitative and qualitative impacts,” said CBC Chairman Luanne Cundiff, president and CEO of First State Bank in St. Charles, Mo. “Why don’t we just pause and figure out the direction we want to take as an industry? If accounting standards start to impact capital levels, it’s going to have a very broad impact nationally.”
Bankers said they also worry about keeping up with the accelerated pace of technological advancement and the high stakes that smaller institutions face when choosing fintech partners. “For us, one bad decision can close our bank,” said Andy Anderson, president and CEO of Bank of Anguilla, a $150 million institution in Anguilla, Miss. “We have to be very careful on the technology side and who we partner with.”