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  • CECL for non-banks: What to expect

    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?

    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…
  • CECL paralysis: How to avoid common implementation hurdles

    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

    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

    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?

    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

    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

    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

    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…
  • How are your peers preparing for CECL?

    As financial institutions lay the groundwork for transitioning to the current expected credit loss model, or CECL, many are curious about how peers are preparing for CECL and where they are in tackling what’s considered the biggest accounting change in banking history. After all, the FASB’s guidance on CECL is…
  • Regulatory agencies approve new CECL proposal

    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

    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…
  • With or without external advisors, CECL transition is achievable

    During the transition to the FASB’s current expected credit loss (CECL) model, some financial institutions are developing their own needs-based approaches to methodology, segmentation and other elections. Others are partnering with service providers to help develop the framework for a CECL transition rather than managing the effort solo. Many of…
  • CECL Progress: Poll shows many financial institutions have implementation committees

    As 2017 comes to a close, it is a good time for financial institutions to assess where they are in the process of implementing the Financial Accounting Standards Board’s new current expected credit loss (CECL) model. Based on a poll conducted recently by Sageworks, most financial institutions at a minimum…
  • CECL preparations yet to begin in earnest at many banks, credit unions

    Many financial institutions have yet to begin in earnest their preparations for transitioning to the current expected credit model (CECL), a recent poll by Sageworks suggests. More than half of financial professionals attending a webinar this summer, “CECL Transition Planning and Execution,” said their financial institutions have completed none of…
  • CECL model: Build or buy?

    Compared to existing ALLL requirements, Accounting Standards Update 2016-13 (CECL) will require more inputs, assumptions, analysis and documentation, making the option to automate the process significantly more attractive for many institutions. Regardless of an institution’s approach, key consideration areas for a CECL-ready model include data management, contractual life, segmentation, methodologies,…
  • A year since CECL: Capital expected to be most impacted

    In the 13 months since the Financial Accounting Standards Board (FASB) finalized its new standard on accounting for credit losses, ASU 326, financial institutions have been preparing to implement what has been labeled by some industry figures as the biggest change ever to bank accounting. Although institutions will not be…
  • CECL: The role of risk ratings

    The importance of a sound risk rating process continues and possibly grows in the coming years as financial institutions grapple with the increased emphasis on estimating credit losses. With Basel III focusing more attention on credit risk management, and the more granular review of loans required by the FASB’s current…
  • CECL Q&A - PD/LGD & discounted cash flow

    The FASBs Current Expected Credit Loss (CECL) model presents unique challenges for banking professionals. To help institutions prepare, Sageworks launched a CECL webinar series covering data, segmentation, methodology and forecasting requirements broken down by loan type. A key component of the series is allowing participants to ask their CECL-related questions…
  • CECL Q&A - Segmentation

    The FASBs Current Expected Credit Loss (CECL) model presents unique challenges for banking professionals. Even though the full effects of the guidance are still years away from being felt, industry experts have been adamant that financial institutions better have begun preparing before now. To help institutions prepare, Sageworks has launched…
  • Sageworks user groups: Why attend?

    Sageworks User Groups provide an increasingly rare opportunity to be in a room full of peers, industry experts and staff from a critical vendor. The intersection of these groups allows for three distinct and valuable learning experiences. The quality of these face-to-face interactions at User Groups is impossible to replicate…
  • CECL Q&A - Contractual life

    The FASBs Current Expected Credit Loss (CECL) model presents unique challenges for banking professionals. Even though the full effects of the guidance are still years away from being felt, industry experts have been adamant that financial institutions begin their preparations today.  To help institutions prepare, Sageworks has launched a CECL…
  • CECL methodology - introduction to vintage analysis

    Under the Current Expected Credit Loss (CECL) model, there will be no triggers, thresholds or smoothing mechanisms allowed in loss calculations; the shift here is a movement to recording losses as they become expected. If a loss is expected, it should be recorded when that loss becomes known, even if this…
  • The ALLL Today - pooled impaired challenges

    With the 2016 release of the Financial Accounting Standards Board’s (FASB) guidance on the CECL model, banking professionals and consultants have been theorizing about the impact the standard will have on current bank processes. While it is important for these banking professionals to be prepared, consultants are stressing the importance of…
  • 2016 Risk Management Summit agenda addresses CECL concerns

    In early June, Sageworks hosted a Current Expected Credit Loss (CECL) Workshop Series webinar and asked the attendees “Given what we know about CECL, what area do you feel will see the largest impact?” Greater than 81% of the 595 bankers who replied said that they expect the largest impact…
  • FASB issues CECL – new standard for credit-loss recognition

    After years in the works, the Financial Accounting Standards Board (FASB) issued its final guidance on a new current expected credit loss (CECL) model, starting the clock for banks, credit unions, other entities and their preparers to implement the new requirements over the next few years.  “The CECL model will…
  • How your bank or credit union should get ready for CECL

    **The FASB Issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. The Financial Accounting Standards Board’s (FASB) long-awaited final guidance on its new standard for measuring expected credit losses is expected to be released in June, a step that…
  • Early-bird registration now open for 2016 Risk Management Summit

    Sageworks recently announced the dates and location for the 2016 Risk Management Summit. Set for September 14-16 at the AT&T Executive Education and Conference Center in Austin, TX, the Summit is the premier banking conference covering the ALLL and stress testing, and it will feature presentations from industry leaders, panels,…
  • Want answers on CECL? Fed webinar aimed at non-bankers

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. The Federal Reserve announced it will hold a special information session later this month for accountants, consultants, auditors and others to learn more about the FASB’s forthcoming current expected…
  • How to forecast future expected credit losses

    A central difference between the existing incurred-loss model for estimating credit losses and the FASB’s proposal utilizing a current expected credit loss, or CECL, model is that financial institutions will need to estimate credit losses on loans over the life of the loan. Shifting from estimating only losses already incurred…
  • CECL preparation: Do this, not that

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. Understandably, financial institutions of all sizes have numerous questions about how they will implement the FASB’s proposed current expected credit loss model, or CECL, once the standard is finalized.…
  • Final CECL guidance expected by year end despite 2 board members' opposition

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. Despite a report that two FASB board members will vote against the final version of the current expected credit loss (CECL) model, a spokeswoman told Sageworks Friday that the…
  • 4 Reasons to attend the 2015 Risk Management Summit

    The 2015 Risk Management Summit is less than a month away. Executives from more than 100 banks and credit unions representing 39 states have already registered to join their peers, industry experts and Sageworks in Chicago for the premier ALLL and stress testing conference. Registration is still open, but very…
  • 3 Do’s and 4 don’ts ahead of CECL

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. Banking industry experts expect the FASB’s long-discussed move to the Current Expected Credit Loss (CECL) model will be finalized by the end of the year, but many bank and…
  • More banks predict larger impact from CECL model

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. The attention on the FASB’s current expected credit loss (CECL) model has only increased in recent months, as the industry braces for the release of final guidance before the…
  • What Basel says about expected credit loss

    The phrase “expected credit loss” (ECL) is one that bankers will be hearing a lot more of in the coming months. Currently, financial institutions adhere to the incurred loss model for their allowance for loan and lease losses (ALLL). However, final guidance on the FASB's Current Expected Credit Loss (CECL)…
  • Top benefits of ALLL scenario building

    Though it may be often overlooked, scenario planning allows bankers to assess the outcome of the ALLL calculation under various assumptions or “scenarios.” Bankers can then estimate the impact that ALLL-calculation variables may have on the final reserve without having to perform a completely new calculation. The process can be…
  • Are regulatory management offices within banks needed in 2015?

    Some of the biggest banking stories in 2014 centered on massive data breaches at top retailers, M&A activities, and regulatory changes like the IASB’s IFRS 9 Financial Instruments. And, as is the case with every year’s end, the media has speculated on what could make headlines in 2015. American Banker…
  • What interested bankers most in 2014?

    Now that 2014 has come and (almost) gone, it’s appropriate to take a step back and review the year’s trends and hot topics. Banks and credit unions continued loan growth after the lows of the economic downtown, as recently highlighted by the FDIC and OCC. The merger and acquisition market…
  • FDIC: Community banks outperform industry in third quarter

    To provide a report card on industry status and performance, the FDIC publishes a Quarterly Banking Profile. Results from the third quarter were just released, and while overall results were positive, community banks in particular excelled. They performed better than a year ago and also outperformed the industry as a…
  • Why it's time you give up spreadsheets in the ALLL calculation

    It’s time for a foundational shift in the resources bankers use to calculate the ALLL. Years ago, using spreadsheets was by far and away the preferred option – primarily because it was the only option. To those in the early 20th century, the typewriter was the most efficient way to…
  • You aren't prepared for 2015 if your ALLL lacks these traits

    In preparing for the allowance for loan and lease losses (ALLL) calculation in 2015, bankers have a lot on their plates. The ALLL has received significantly more attention in the past few years, and the trend of examiner scrutiny does not appear to be letting up. If anything, regulatory bodies…
  • What is the FASB’s process for issuing standards?

    The Financial Accounting Standards Board (FASB) continues to receive attention surrounding their proposed current expected credit loss (CECL) model, as final guidance is expected to be released late 2014 or early 2015. Under the proposed changes, banks would need to use historical information, current conditions and forecasts to estimate expected…
  • 3rd annual Risk Management Summit proves “valuable” and “insightful”

    More than 140 bankers and industry experts from over 30 states gathered in Nashville, Tennessee last month for the 3rd annual Risk Management Summit hosted by Sageworks. Building on the success of the 2nd annual Summit, this year’s event featured new topics, new speakers and additional networking opportunities. Maintaining a…
  • Is your ALLL prepared for the future?

    Given all the attention the allowance for loan and lease losses (ALLL) is receiving from regulators and FASB, it is important to understand how banks and credit unions will be impacted in the short, mid and long-term by regulatory changes. It is also critical for bankers to understand what they…
  • 3 Common ALLL model validation questions

    Scrutiny around the allowance for loan and lease losses (ALLL) by regulators has grown in recent years since many banks and credit unions did not properly increase their reserve to reflect increases in charge-offs and deterioration in loan portfolios leading up to the economic crisis. Since then, banks and credit…
  • Not Doomsday, but significant changes coming

    Perhaps you’ve seen the television series “Doomsday Preppers” on the National Geographic Channel. The docu-series follows otherwise ordinary families who are preparing for the end of the world (as they believe it will happen). It’s a fascinating look at a common idea that many of us face every day – preparation.…
  • Why yesterday was huge for banking: IFRS 9

    Despite much deliberation and an initial desire to converge ideologies, the International Accounting Standards Board (IASB) and its American counterpart, the Financial Accounting Standards Board (FASB) were unable to draft uniform revisions to the current incurred loss model for the ALLL. Due to fundamental disagreements on how impairments should be…
  • Why banks should use migration analysis

    While the implementation of migration analysis can be a tough hurdle for many institutions, those that deploy the technique can obtain a more comprehensive and accurate measure of their reserve. By evaluating their pooled loan segments at the risk rating level, for example, and tracking the migration of those loans…
  • Backtesting the ALLL - what is backtesting?

    Given the increased regulatory scrutiny over the allowance for loan and lease losses (ALLL) in the past several years, regulators, auditors and senior management are all looking for additional ways to measure the effectiveness of the bank or credit union’s ALLL methodology. The OCC’s 2011 Supervisory Guidance on Model Risk…
  • Sageworks announces topics for 3rd annual Risk Management Summit

    Sageworks just released the topics for the upcoming 3rd annual Risk Management Summit, which will be held September 24-26 in Nashville, Tennessee. Maintaining a focus on the ALLL and stress testing, the Summit will bring bank and credit union executives together with banking’s top consultants for a variety of presentations,…
  • ABA: The FASB’s CECL requires sophisticated models

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. The Financial Accounting Standards Board (FASB) is in the latter stages of finalizing the Current Expected Credit Loss (CECL) model for loans and debt securities. With the new guidelines…
  • The pros and cons of using spreadsheets – abiding by regulatory parameters

    Banks and credit unions have utilized spreadsheets as a primary tool in risk management for decades. Unfortunately, over-reliance on these spreadsheets has become an area of serious regulatory concern, as many of the benefits offered by spreadsheets are often shadowed by potentially significant risks. Compliance with regulatory parameters is one…
  • FASB to issue final guidance on CECL model

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. During a recent Financial Accounting Standards Board (FASB) meeting, two key decisions were announced related to the Current Expected Credit Loss (CECL) model. The FASB is currently discussing the…
  • 2013 vs. 2014 Polls: How much will the CECL model impact allowance levels?

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. During a webinar last week on the FASB’s CECL model, Sageworks consulting staff and CliftonLarsonAllen’s Todd Sprang discussed why waiting for the changes may cost banks and credit unions.…
  • More data required for Expected Loss Model

    It has been well documented that the FASB’s Current Expected Credit Loss (CECL) model, as it is presently proposed, will require banks of all sizes to recognize an immediate allowance for credit losses that represents all future expected losses to be incurred, as opposed to only those losses that are…
  • Report: Current lending challenges similar to those in 2011

    Credit Union Times recently highlighted a new Aite Group report, Top U.S. Lenders Tackle Risk and IT Challenges: Not Their First Rodeo. The report was comprised of two surveys conducted in 2011 and 2013, that covered lenders’ most pressing concerns in the current environment. The 2013 survey was a follow-up to…
  • FASB’s plan to boost reserves supported by OCC’s Curry

    Comptroller of the Currency Thomas Curry has strongly endorsed an accounting proposal that may force banks to increase reserves, calling industry concerns that the plan will boost allowances by as much as 300 percent “exaggerated.” In a speech to a banking conference hosted by the American Institute of Certified Public…
  • How to prepare now for FASB CECL model: Part II

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. With the changes that could occur as a result of the FASB’s CECL model, many financial institutions are uncertain as to what they can be doing now to prepare.…
  • How to prepare now for FASB’s CECL model: Part I

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. The December 2012 issuance of the Financial Accounting Standard Board’s (FASB) latest proposal brought about the Current Expected Credit Loss (CECL) model. With it came a number of changes…
  • Friday is deadline to comment on FASB's CECL model

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. Looking for a quick review of FASB’s proposed credit loss model (Subtopic 525-15)?  As the May 31 deadline nears for commenting on the CECL (current expected credit losses) model,…
  • About the IASB’s credit deterioration model

    On March 7, 2013, the International Accounting Standards Board (IASB) released a new exposure draft, Financial Instruments—Expected Credit Losses, wherein they proposed that entities should recognize and measure a credit loss allowance or provision based on either a 12-month expected credit loss or, if the credit risk has increased significantly…
  • FDIC officials: CECL implementation timeline unclear

    FDIC officials this week encouraged financial institutions to provide feedback by May 31 to the Financial Accounting Standards Board (FASB) on the board’s proposed new model for accounting for credit losses. During a teleconference on Thursday, officials in the FDIC’s Division of Risk Management Supervision described some key differences between…
  • FASB & IASB history: First convergence, then divergence

    When the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) announced the Norwalk Agreement in 2002, it marked a significant step toward formalizing their commitment to the convergence of U.S. and international accounting standards. Since then, joint initiatives have been launched and joint proposals have been…
  • FDIC to discuss CECL model

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. With only a few weeks left to comment on FASB’s proposed new model for accounting for credit losses (commonly known as the CECL model), the FDIC is holding an…
  • What are financial institutions saying about FASB’s CECL model?

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. FASB recently extended to May 31 the comment period on its proposed new model (commonly known as the CECL model) for accounting for credit losses, but some financial industry…
  • FASB issues FAQs on CECL model

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. Responding to uncertainty about the proposed new model (commonly known as the CECL model) for accounting for credit losses, the Financial Accounting Standards Board (FASB) this week issued answers…
  • How the CECL model could affect allowance levels

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. With the FASB CECL Model proposal and the changes that impact financial institutions, it would appear that allowance levels as whole would likely rise if implemented. How much could…
  • FASB proposal: How to draft a comment letter

    Many institutions are concerned that allowance levels as a whole would likely rise with the implementation of FASB’s latest proposal, which outlines a new Current Expected Credit Losses (CECL) model. To allow for feedback on the proposal, the FASB allows for individuals and organizations to draft comment letters. With a…
  • FASB’s CECL Model: Changes that impact financial institutions

    **The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit. Responding to criticisms that the current allowance model does not adequately estimate losses until it is too late, the Financial Accounting Standards Board (FASB) issued a new version of…