Banking Advisory and CECL

Banking Advisory Services

The Banking Advisory practice, within Modeling & Analytics, is staffed with seasoned banking professionals with deep experience in the front and back office – Chief Financial Officers and Accounting Policy experts who provide banks with strategic and tactical support, as well as Modelers and Data Analytics gurus who can extract information from banks’ core systems and provide actionable business intelligence.

Some of the advisory services that our experienced Banking Advisory professionals at Oakleaf can provide include:

  • Asset Liability Management    
  • Compensation Programs
  • Funds Management    
  • IPO Readiness Assessment
  • Investments – Analysis & Accounting    
  • Budgeting and Forecasting
  • SEC and Regulatory Reporting    
  • Profitability Analysis
  • Capital and Strategic Planning    
  • Accounting Policy
  • Vendor Selection and Management  
  • Infrastructure Development
  • Design of SOX Controls 
  • Board Governance
  • Treasury    
  • Stakeholder Communications
  • Core System Selection    
  • Regulatory & Investor Reporting
  • HMDA Compliance

 

Current Expected Credit Loss (CECL) Capabilities

Oakleaf is at the forefront of delivering best practices and pathways to help its banking clients prepare for CECL.  The new Financial Accounting Standards Board (FASB) Accounting Standards Update on Financial Instruments – Credit Losses (Topic 326) requires revolutionary changes to the way banks determine appropriate levels of balance sheet reserves for credit losses. 

 

The calculation of the expected credit loss must now be computed over the life of the loan, as opposed to the previous model, in which banks recognized losses when they reached a probable threshold of loss, which may have under-represented impairments as well as potential future losses.

 

Challenges with CECL

How Oakleaf Can Help

Little to no data

→ Develop proxy sources

Data in multiple systems

→ Consolidation into single database

Can’t find the data

→ Forensic search

Not sure how to model CECL reserve

→ Simple yet robust modeling

Leveraging current reserve methodology

→ Our solutions build on current practice

Lack expertise/staff/budget/need for complex model

→ Leverage Oakleaf resources

CEO and Board don’t understand CECL

→ Workshops for CEO and Board

Planning on going public – how CECL affects capital

→ IPO readiness assessment

Limiting the financial impact of CECL

→ Product design and pricing

Staying up to date on CECL

→ Oakleaf CECL User Group

Identifying CECL timeline and priorities

→ Set the course, implement the framework

 

CECL Implementation Roadmap

CECL Advisory Services

Oakleaf Group’s senior management and consultants all have expertise in financial accounting, financial modeling, and regulatory compliance.  We work with our clients to solve a full range of CECL challenges – designing a project management framework, data analysis and collection, modeling the CECL reserve, refining controls, policies and procedures and developing governance around CECL processes.

We can also help banks leverage their current stress testing processes and systems. Please click here for our white paper.

Our advisory services include the following:  

  • CECL Project Management
  • Data collection, data scrubbing and database design
  • Development of Credit Loss Models
  • Strategic analysis of CECL impact on:
    • Financial Performance
    • Capital
    • Product Pricing
    • M&A
  • Accounting support
  • Documentation of processes and policies
  • Development of disclosures

 

Modeling and Analytics

Oakleaf can model the Allowance for Loan and Lease Losses (ALLL) including helping banks achieve compliance with the new CECL standard. We also model the impact of the ALLL on earnings and capital.

 

Mortgage Banking

Oakleaf can assist banks with improving the efficiency of their mortgage operations, including pre-closing Quality Control (to reduce buybacks), process improvement and improvements to secondary marketing.

 

Information Security

Oakleaf can run a cyber-security health check to assess the gaps in a bank’s cyber-security defenses and controls, followed by concrete action steps to remediate the deficiencies, bringing the bank into compliance with FFIEC standards.