FEATURE


A significant percentage of most institutions’ revenue will typically end up being ruled out due to the majority of their income being interest-related.


1. Identifying the contract with the customer 2. Identifying the separate performance obligations in the contract


3. Determining the transaction price 4. Allocating the transaction price to the separate performance obligations


5. Recognizing revenue when (or as) performance obligations are satisfied


Review the new disclosure requirements


Beyond the evaluation of revenue streams, there are addi- tional disclosure requirements in the new revenue recognition standard. The stated objective of the new disclosure require- ments is for “an entity to disclosure sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers” (ASU 2014-09). PBEs are required to disclose disaggregation of revenues,


contract balances, performance obligations, significant judgments, and practical expedients (if used). Non-PBEs can elect to not complete the above listed disclosures, but are required to provide alternative disclosures related to disag- gregated revenue and contract balances. In either case, your institution should begin evaluating which disclosures you will be required to present in your financial statements, and then accumulating the necessary information to complete those disclosures.


Acquisition activity complicates income recognition


Based on the complexity of an institution and its contracts with customers, ASC 606 may have a significant or immaterial impact on income recognition. Institutions that have recently gone through acquisition activity may find this task more difficult depending on the number and complexity of contracts that came over with the acquisition. In either case, the five step process will be the same for any revenue stream that does not explicitly fall inside or outside of the standard and described in detail in a TRG staff paper.


How we can help


Even if the revenue recognition standard won’t significantly affect current revenue accounting at your institution, there is still work to be done. CliftonLarsonAllen’s (CLA) financial institution professionals have experience working with more than 1,500 financial institutions across the country. We can provide guidance as you review your revenue streams and tools to analyze contracts, and help you structure your supporting documentation.


What Drives You IT’S NOT JUST ABOUT THE MONEY


Chris Lorence, Group Executive Vice President, Member Engagement & Strategy/Chief Marketing Officer, ICBA


With the recent reductions in business taxes, many community banks, like businesses across the nation, are evaluating the pay scales of their employees. Some have measurably increased hourly rates for non-exempt staff and given salary increases to many exempt staff as a result of the anticipated increase in profitability. The increase in wages will no doubt provide a shot in the arm for employee morale but what else should leaders be doing to motivate their teams? While it’s highly unlikely that anyone would say “no thank


you” to a salary increase, contemporary leaders know that financial compensation is only one component for creating sustainable and meaningful motivation. Individual members of a team need to know they are valued for their contributions while being recognized for the collaborative results of a team. So what drives people to feel valued and give their best? A sense of autonomy, the ability to develop skills leading to mastery and feeling connected to a meaningful purpose are three to consider. People, regardless of title, position or seniority, thrive when they


feel they are in control of their own destiny. How, you might ask, can “team” and “autonomy” coexist without a constant struggle for control? Consider perhaps when team members feel empowered to bring their ideas forward and are encouraged to speak up, they feel more engaged. Leaders who cultivate a culture where both entrepreneurial thinking and collaboration are in balance, will likely see sustainable growth and results. When team members are valued as both as contributors and copilots in the team’s success, self-motivation, ambition and drive ultimately fuel creativity and results. Many are often motivated to have the opportunity to develop


their skills beyond basic understanding. Whether driven by need, a desire to expand one’s career value or are inspired to become a subject matter expert, having the ability to become more educated can be inspirational. For some, the sense of continuously growing their knowledge and their skills is a lifelong pursuit for excellence. Who wouldn’t want a team filled with smart people who are encouraged to keep getting smarter? It is, however, no secret that feeling connected to the mission of


an organization can propel people into a lifetime career. Community banking, for example, is often described as “in the blood” of those who are passionate about what they do within the community. Who doesn’t want to feel good about what they do for a living? The good news is that organizations driven by strong leaders who believe in the mission often act as magnets, drawing in more believers who contribute to delivering powerful results. Consider, however, motivation is highly individualistic and while


a competitive salary is often a deal maker, not fully addressing what else makes people inspired can be a deal breaker. Successful leaders know what motivates themselves and are driven to develop the perfect formula of benefits, recognition and freedom that inspires individuals to be amazing members of the team.


MIB Community BANKING 9


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16