This lease accounting presentation is tailored for banks and financial services. It includes an overview of the new FASB lease standards, a list of potential implications for banks, and how external consultants can be leveraged to help implement the major lease accounting changes.

1. Lease Accounting
FASB ASU 2016-02, Leases
Presentation for Banks
August 4th, 2017
Core Catalysts • 10500 Barkley, Ste 225, Overland Park, KS 66212 • 913.762.9400 • www.CoreCatalysts.com

2. Agenda
• Introductions
• Brief survey of participants
• Overview of lease accounting
• Discussion of topics in regards to Banks
• Summary
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3. Brief Survey
• Current knowledge of revenue recognition and
lease accounting
• Expectations for session
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4. Definitions
• FASB – Financial Accounting Standards Board
• ASU – Accounting Standards Update
• GAAP – Generally Accepted Accounting
Principles
• IFRS – International Financial Reporting
Standards
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Introduction
• Lease accounting becomes effective in 2019 for a subset of
companies (all public companies and private companies with
conduit bonds) with potential look backs to 2017 leases.
• Private companies have effective date of 2020.
• This effort is expected to increase transparency for current and
potential stakeholders.
• The effort required to comply with this FASB is expected to be fairly
large and will involve many parts of the company during
implementation and will involve using external consultants.
• The anticipated value to the company by implementing this FASB is
unclear and perceived by many inside various companies to provide
limited to no value.

6. Summary of FASB
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* View in browser at http://www.corecatalysts.com/snapshot-lease-accounting/

7. Company Efforts*
• Cross functional governance (many different
departments can be involved)
• Contract and Lease inventory
• Lease management process documentation
• Software tool investigation, acquisition and
implementation
• Process and policy review and changes
• Financial reporting and controls integration
• External stakeholder communications
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* See Process Flow at http://www.corecatalysts.com/lease-accounting-implementation/

8. Potential Implications To Banks
• Financial reporting from companies will change
and will need to be understood; does new
transparency bring up any causes for concern in
regards to risks?
• Covenants for loans may be broken; need for
changes to loan agreements
• Underwriting criteria may need to be adjusted to
reflect new FASB requirements
• Banks as Lessors to companies may receive
requests for lease term changes
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9. Value Proposition from Core Catalysts to Lessees
Use Core Catalysts to augment implementation efforts in
order to reduce fees to external accounting firms and to
handle a ‘bubble’ or ‘surge’ of work where full time
resources may not be required.
Leverage Core Catalysts repository of proven information
and processes already gathered/developed in order to
reduce company’s time and resources.
Use Core Catalysts inventory of business improvement
strategies during this process in order to distill some
business value from this compliance effort.
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10. How Core Catalysts Can Help Lessees
• Lease inventory and assessments
• Assess current capabilities of existing technology
• Perform lease data gap analysis
• Team with accounting guidance efforts (external accounting firms,
internal efforts)
• Develop implementation roadmap that includes all impacted areas
• Program management of roadmap in conjunction with governance
oversight chosen by company
• Lease management software selection and project management of
integration/implementation efforts
• Lease acquisition and management - process improvement
• Development and integration with existing controls strategy
• Assistance with initial reporting cycles
• Documentation of accounting policies, operating procedures
• Development and implementation of training modules for teams
affected
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11. Learn More About Lease Accounting
• Lease Accounting
Implementation Workflow -
http://www.corecatalysts.com/lease-
accounting-implementation/
• Lease Accounting Insights
White Paper -
http://www.corecatalysts.com/whitepape
rs/lease-accounting-insights/
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12. Contact Info
• Jim Wadella – Managing Member –
jim.Wadella@corecatalysts.com
• Greg Wallman – Senior Manager –
greg.wallman@corecatalysts.com
• General Contact -
http://www.corecatalysts.com/contact/
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