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CECL for non-banks: What to expect

Amanda Rousseau
Posted by Amanda Rousseau

With almost a year until some public business entities must begin complying with the current expected credit loss (CECL) standard, banks and credit unions have been fervently beginning transition practices, and their preparations have taken center stage in regulatory and financial news. However, a topic less prevalent amidst current CECL…...

Will a decade of increasing qualitative adjustments come to an end under CECL?

Amanda Rousseau
Posted by Amanda Rousseau

Qualitative adjustments, otherwise known as Q factors, have been steadily increasing in influence on the reserves held for pooled loans since the end of the recession, and their role in estimating the allowance may change yet again under the current expected credit loss model, or CECL. During a recent webinar…...

Economic forecasting for CECL: Still plenty of questions among institutions

Amanda Rousseau
Posted by Amanda Rousseau

Economic forecasting is a major facet and discussion point of the quickly approaching current expected credit loss (CECL) model. Financial institutions will not only have to report incurred losses on their books, but they will also need to project their loss estimates over the entire life of the loan at…...

CECL paralysis: How to avoid common implementation hurdles

Amanda Rousseau
Posted by Amanda Rousseau

Financial institutions across the U.S. are grappling with the many changes that will be required to implement the current expected credit loss, or CECL, model. With the extensive amount of time, resources and staff required to successfully transition from the incurred loss model, even getting started can be daunting. During…...

The different use cases for CECL methodologies

Amanda Rousseau
Posted by Amanda Rousseau

Financial institutions are currently planning and building models for the quickly approaching implementation of the current expected credit loss standard, or CECL. The accounting change brings many concerns surrounding implementation dates, modeling, qualitative factors, economic forecasting and documentation/reporting. More specifically, many bank and credit union managers and executives think that…...

After FASB’s recent changes, CUNA still seeks CECL relief

Amanda Rousseau
Posted by Amanda Rousseau

Credit unions are happy with some changes the Financial Accounting Standards Board (FASB) is making to Topic 326, but they'd still like to see more, according to a letter from the Credit Union National Association (CUNA). In a Sept. 17 letter commenting on the FASB's recent proposals, CUNA's senior director…...

CECL and IFRS 9: How are they different?

Amanda Rousseau
Posted by Amanda Rousseau

Financial institutions around the world are revising how they estimate credit losses, but institutions subject to the International Accounting Standards Board (IASB) standards have gotten a head start on those that will follow the U.S. Financial Accounting Standards Board’s current expected credit loss model, or CECL. Earlier effective dates of…...

FASB proposed CECL extension: The true impact

Amanda Rousseau
Posted by Amanda Rousseau

The Financial Accounting Standards Board (FASB) recently introduced a proposal to allow calendar year-end non-public business entities (PBEs) to report reserve levels in accordance with the new current expected credit loss (CECL) standard on Mar. 31, 2022, instead of the initial reporting date of Dec. 31, 2021. This was initially…...

Why data is such a large concern for credit unions preparing for CECL

Amanda Rousseau
Posted by Amanda Rousseau

As many credit unions begin to brace for the impact that the current expected credit loss (CECL) model may have on their institution, several are faced with key data challenges. CECL is a change in the FASB’s Accounting Standards, and all credit unions will be required to transition by the end…...

How one community bank’s ALLL calculation went from a week to 30 minutes

Amanda Rousseau
Posted by Amanda Rousseau

One question frequently asked about the new current expected credit loss model (CECL) is, “Can we do this on our own?” Potential options are to build a system internally or partner with an outside vendor like Sageworks. For smaller community banks and credit unions, a common consideration is to…...

Why choosing the right loss rate methodologies is the largest CECL concern

Amanda Rousseau
Posted by Amanda Rousseau

In a recent Sageworks webinar focused on loan pool segmentation, bank and credit union managers and executives were asked what their largest concern is in 2018 regarding the accounting standard transition from the incurred loss to the current expected credit loss model (CECL). 60% of respondents said finding the right…...

Regulatory agencies approve new CECL proposal

Amanda Rousseau
Posted by Amanda Rousseau

On Friday, April 13, the federal banking agencies jointly issued a Notice of Proposed Rulemaking to amend their capital rules in response to “the biggest change yet” to bank accounting principles set forth in Accounting Standards Update ASU 2016-13, otherwise known as the current expected credit losses model, or CECL. The notice…...

Top five resources for CECL and navigating the transition in 2018

Amanda Rousseau
Posted by Amanda Rousseau

The Current Expected Credit Loss (CECL) model, otherwise known as the “biggest change to bank accounting yet”, goes into effect in 2020 for banks that file with the Securities and Exchange Commission (SEC) filers and in 2021 for all other financial institutions. The change impacts all financial institutions, including community…...

Loan pool segmentation: Standing pat or making changes for CECL?

Amanda Rousseau
Posted by Amanda Rousseau

Proper loan pool segmentation, already a critical issue in the incurred-loss method of calculating the allowance for loan and leases losses (ALLL), is expected to have even more importance under the current expected credit loss model, or CECL. Various methodologies for forecasting expected credit losses will require specific kinds of…...

CECL for community banks: The practical path recap

Amanda Rousseau
Posted by Amanda Rousseau

Sageworks Senior Consultant Tim McPeak and Implementation Consultant Danny Sharman recently shared practical tips for community banks facing the CECL transition. The session included a good overview of CECL expectations and followed up on points discussed in an earlier regulatory webinar. Approaches All banks, including small, non-complex community banks, will…...

2018: A big year for credit unions

Amanda Rousseau
Posted by Amanda Rousseau

Strong economic conditions combined with an increase in banking distrust could make 2018 one of the most successful years yet for credit unions, regarding both membership and loan growth. Mike Schenk, vice president of research and policy analysis for the Credit Union National Association, said recently that credit unions should…...