AICPA Conference on Credit Unions 2020

COVID-19 has had unprecedented impact on the economy, consumer behavior, and the financial services industry.  From record decline in GDP in the second quarter of 2020, to historic jumps in unemployment, to catastrophic closures of small business, the implications have been profound.  The impact on the financial services industry has also been profound, and it will continue into 2021 as the industry deals with an historically low rate environment and growing loan losses. While we have already begun to see signs of emergence and economic growth, many sectors of the economy will feel the impact of COVID-19 for an extended period of time, and some are likely to never recover. 

We anticipate significant and permanent changes in many aspects of consumer and small business behavior, both financial and otherwise, and these changes present real opportunity for financial service providers. These changes are in reality an acceleration of trends that were already underway, and impact a broad range of areas, including financial product design, branch distribution and branch design, technology deployment, staffing, and the credit union business model. In this session we will examine these trends with the intent to understand how the financial services industry is changing and what credit unions can do to survive and thrive in this new environment.

2020 was the first year of CECL adoption for many public financial institutions.  With the first few quarters of reporting behind us, what are some major takeaways that will make a 2023 adoption of CECL less stressful for Credit Unions.

Understanding the implications of COVID 19, government stimulus, and economic volatility under the incurred loss accounting model.

After many years of “quiet times” in the commercial loan area, this year presents many challenges for Credit Unions as well as auditors entering the fourth quarter of 2020. In this year’s presentation we will address the 2020 current events and remind everyone the proper accounting for impaired loans. Finally, we will suggest some operational considerations given today’s environment. The following is a summary of the topics covered in this year’s presentation:

• Regulatory findings in recent exams
• COVID-19 modifications (“non-TDRs”)
• Impairment accounting for non-homogeneous loans
• Risk rating/ALLL methodology considerations
• Internal loan reviews expectations

For this session, we will present a condensed risk management session for the mortgage, auto and commercial real estate portfolios. We will briefly outline some of the challenges that lenders face in today’s market when originating loans, pricing loans, and monitoring performance over time. The session will also touch briefly on the coming CECL FASB standard and its impact on lending and pricing loans. For a deeper dive into this topic, please register and attend the post conference optional workshop on October 26th, where we further outline some of the tools available to bring further safety and soundness to the balance sheet.

While annual budgeting is time-consuming and seems to come earlier every year, budgeting and planning aren’t a once-and-done endeavor. You need to be nimble to deal with a rapidly changing landscape, and part of that preparation is learning what works for other credit unions. Join finance experts from Syntellis Performance Solutions, CommunityAmerica Credit Union, and Valley Strong Credit Union for their perspectives on how to maximize the effectiveness, efficiency, and value of the budgeting, planning, and forecasting processes at your credit union. Our panelists will share their experiences, best practices, and lessons learned around key planning topics, with plenty of time for interactive discussion with the audience.

3 tangible benefits to attendees:

• Validate your current processes against your peers
• Look for ways to improve your budgeting and planning cycle―before you’re in the thick of it
• Take practical strategies back to your credit union to streamline and enhance your processes

The effects of COVID 19 are being felt worldwide and the financial institutions industry is feeling it acutely. Credit unions are evaluating their ALLL reserves and lending policies and practices. The financial downturn also affects impairment accounting. In this session, we will discuss the assets other than loans affected including goodwill, fixed income securities, fixed assets, and mortgage servicing rights. Dean Rohne will provide guidance on the required accounting – the what – Douglas Winn will provide insights on the calculations – the how.

Participants will come away from the session with an overall understanding of the assets affected by impairment accounting, the specific GAAP that applies to each type of asset, and techniques that can be used to assess impairment.

In this session, Steve Williams will present a strategic overview of industry shifts in the Post-COVID world and discuss the financial professional’s role in managing a changing business model and new technology challenges. Williams will share how Smarter Banks are leveraging digital, process automation and analytics in ways that will literally change the economics of the business. Listen to best practices among credit unions making the technological shift and learn what this means for the balance sheet and income statement in the years ahead.

The economic uncertainty ushered in by the COVID-19 pandemic presents new challenges for credit unions, particularly as many prepare for potential impacts to bottom-line performance in 2021. However, today’s market still has numerous opportunities for cooperatives looking to push their strategic objectives forward. In this session, our team of experts will share the latest updates, share best practices and discuss key market trends we’re seeing. We’ll also discuss how your credit union can potentially adjust the composition of its balance sheet and protect profitability through whole loan sales and participations.

This session focuses on identifying, assessing and accounting for lease agreements under ASU 2016-02, “Leases (Topic 842). It will include examples for implementation, best practices, and lessons learned from those that have already adopted.

Regulatory compliance risk is increasing due to a myriad of factors, some obvious and others not so. We also see a concerted push for more intense compliance exams.  During this session, we explore what credit unions must understand and do in order to thrive in this environment.  We discuss how the current administration and regulatory agency actions impact credit unions.  We also examine specific regulatory compliance requirements that are the focus of examiners, including FCRA, EFTA, BSA, UDAAP and advertising compliance.  

This session will introduce the basic requirements of both cash flow and fair value hedge accounting by exploring common strategies employed by Credit Unions. We will explore how the current low rate environment is impacting these hedge strategies, talk about rate fluctuations and how that impacts not only the derivatives, but just as importantly the hedged items and look at what's on the horizon including LIBOR's end. Background information will include a cheat sheet of commonly used terms as well as descriptions of the two most common hedge instruments.

How has the Covid-19 pandemic changed the credit union operating model?  

The panelists in this session will provide their insights on how the pandemic is impacting credit unions, and importantly the opportunities that lie ahead. They’ll discuss topics such as the remote workplace, new directions in strategy, coping with interest rate volatility, budgeting in an uncertain environment and capital deployment. Recognized industry experts, Julie, Rob, Steve and Mike will draw on their vast experience and share insights gained from both their CFO and consulting perspectives. This session will challenge your thinking to not just survive the current challenges, but to find ways to thrive in this new operating environment.

Machine learning is transforming credit underwriting by using advanced math and large data sets to quantify risk with more nuance and precision. More credit unions are using ML to expand their footprint and drive higher levels of automation in their lending, especially as more members seek to transact through online channels. This session will assess the use cases, benefits, regulatory concerns, and challenges of using ML, especially in the underwriting process.

This session is designed by two well-seasoned auditors to discuss those areas of accounting that keep you up at night. We’ll cover those accounting areas that can present difficulties for both the client and the auditor. Areas covered include pension plans, troubled debt restructured loans, other real estate owned, alternative investments, and COVID-19 issues. Please join us for this session.