Pub. 8 2017 Issue 3

Fall 2017 19 West Virginia Banker Jim is primarily responsible for developingmodels whichmonitor interest rate risk, establish value andmonitor investment holdings. McQueen’s asset liability management, investment portfolio, merger and valuation models are used by clients across the country. With over 20 years of industry experience, Jim uses technology to extract, manage and analyze complex data and create useful action-oriented reports. His valuation experience includes bank and credit union mergers, mortgage servicing rights, goodwill impairment testing, closely held company stock and illiquid securities. Jim is a frequent conference speaker on a wide variety of industry topics. In addition, Jim consults with clients on interest rate riskmitigation strategies, valuations, policy development, ALM validations and regulatory topics. Prior to joining McQueen Financial Advisors, Jim worked at Fifth Third Securities and JPMorgan. At JPMorgan, he was a Director and member of the Bank Strategies Group, where he provided analytics,fixed incomeadvice,derivativesandstructuredfinancing tools for community banks, credit unions, insurance companies and investment advisors. Jim is a graduate of Eastern Michigan University. the information is stored in a single file or location. A complete data set will enable predictive-type default analytics. Effectively, these data points will be helpful as we analyze the factors leading up to a loss. 3. Economic Conditions: Estimating future losses will require a forecast of future economic conditions. It will also be important to consider economic conditions that existed when past losses occurred and when loans were written. Key indicators include the unemployment rate, interest rate environment, housing values, median income, commercial occupancy rates or other factors that may be unique to you. The trends will be important as we relate economic conditions to losses. In addition, expected economic conditions will be used to support estimated future losses. Although there is quite a bit of time before implementation, we think that it is important to consider several key points: • Keep your management team and Board informed about CECL • Discuss CECL data needs with your core processor • Ensure that you are saving loan-level data now • Begin tracking and saving more loan data points related to delinquency, performance and losses • Establish sources for past and forecasted economic conditions • Consider that data needs may differ by loan type We have seen a handful of companies selling solutions. This seems premature to us because the new standard is subject to interpretation, and implementation is a few years away. Additionally, many financial institutions likely already have most of the data needed for analysis. However, the current format may be difficult or impossible to retrieve later. The delayed implementation gives financial institutions time to collect the necessary data and make sure that it is in an appropriate format. These steps should ease transition upon implementation. 