CECL and the CFO: Think implications, not just implementation

We’ve been hearing it from all sides: CECL will have an institution-wide impact – greater, it is proposed, than any accounting change in banking history. Considering the breadth and depth of the impact, the transition to, implementation of, and ongoing execution of CECL demand oversight from the institution’s top executives, and in particular, the CFO.

CECL: Where Are We Now

Almost everyone has started, virtually no one has finished, and according to CECL experts, few, especially smaller institutions, are as far along as they should be. That’s the overview of CECL preparedness, as revealed in MST’s 2018 Lender Survey.

Again, this year, the MST survey tallied responses from a wide range of institutions. Participants represent institutions located in, or at least doing business in all 50 states, across mostly all asset sizes.
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A practical CECL transition: Preparing with only one year left

As financial institutions plan for their respective deadlines to implement the current expected credit loss (CECL) model, some are deliberating on what they should do in their final year to get ready. ASU 2016-13 is effective for public entities for fiscal years beginning after Dec. 15, 2019.

Interpreting CECL Modeling Results

Financial institutions across the country are now actively preparing for the ALLL transition from the incurred loss to expected loss models. By now, most banks and credit unions are well aware of the methodology options under CECL. However, many are still having challenges interpreting results from their modeling exercises.

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Video: 5 Steps for CECL implementation planning

The FASB issued the final CECL standard on June 16. In this video, Abrigo' Neekis Hammond details 5 key steps for bank and credit union management teams to consider in planning for a smooth transition to a CECL model for their institution.

Neekis Hammond is a senior risk management consultant at Abrigo. He provides financial institutions with advisory services, leads thought leadership, develops market strategies and consults with product development on solution requirements and accuracy.

When Should You Use a Range for the ALLL?

A Abrigo consultant describes the benefit of using an ALLL range. Namely, he mentions that the range demonstrates the thoroughness of the calculation in that it requires the institution to go through some sort of scenario building. At the end of the day, however, he advocates for a single number as opposed to a range for institutions to rely upon as their ending ALLL figure.
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2018 Lending & Risk Summit: Why Attend?

The 7th annual Lending & Risk Management Summit presented by Abrigo will be held September 24-26 in Chicago, Illinois. Approximately 200 bank and credit union executives have already registered to join their peers, industry experts, and Abrigo. Why should you join the group?

Measuring Credit Risk in Consumer Loans under CECL

A recent poll by Abrigo finds that many financial institutions have work to do when it comes to gathering data to assess credit risk in their consumer loan portfolios under FASB’s new standard for measuring current expected credit losses, known as CECL.
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FASB’s CECL: How to Prepare Now

This slide deck explains myths related to the FASB's CECL model and what institutions can be doing now in preparation. One of the main issues institutions will face in transitioning to an expected loss model is the influx of data requirements that will be necessary under the new model. This document describes what data will be needed, and offers a few recommendations for data governance, segmentation and model selection.

Slides: Scenario Analysis

Download the slides from our recent, on-demand scenario anaysis webinar. The presentation includes key factors to consider, example scenarios, key CECL preparation information and tips for improving or beginning scenario analysis in your institution.
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ASC 310-10-35 (FAS 114) Impairment Worksheet

Proper FAS 114 impairment analysis is critical for a bank evaluating the collectibility of its loans and for determining the proper reserve calculation. Use this downloadable ASC 310-10-35 (FAS 114) loan impairment worksheet for a simplified, collateral-based analysis. This worksheet is formatted to analyze one loan at a time with one piece of collateral.
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