According to research released last month by the highly respected Fitch Ratings, loan loss reserves for the U.S. banking industry are expected to increase between $50 to $100 billion under CECL.

That’s an increase of 38 to 77% above current reserve levels. Fitch’s report on CECL went on to outline that as a result of this increase in loan loss reserves, capital ratios could reduce by 25 to 50 basis points.

After letting this sink in, this is when community bankers reach for the headache medicine.

On Dec. 21, 2018, regulators approved a rule giving banks the option to phase in the “Day 1 Adverse Effects of CECL” on regulatory capital over a three-year period. They are telling bankers three years in advance of the implementation deadline there will be a three-year phase-in period. That’s six years for most community banks to deal with the potentially severe impact that CECL will have on your bank’s capital levels.

Armed with this critical information, it’s time to think about ACTION. Next week, we’ll look at the different ways you can take action on CECL, and why we like our approach.

If you don’t want to wait, give us a call today to schedule an appointment to discuss our simple plan for implementing CECL.  You won’t believe how easy it is.  Don’t end up like Tom…

Give us a call at (918) 791-0699 or send me an email at

We’d be happy to help!


Dustin Matthews, President


On to the Bottom Lines Up Front (BLUFs) for February 21, 2019:

Congressman David Scott Introduces Legislation to Strengthen Underbanked Communities (source)

  • Georgia Congressman David Scott (introduced legislation to better address the needs of under-banked communities in America.
  • The Improving Access to Traditional Banking Act of 2019 will direct the Consumer Financial Protection Bureau (CFPB) to investigate and report to Congress recommendations on how to lessen Americans’ reliance on non-traditional banking products like payday loans.
  • Fully-banked, as defined by the FDIC, means an individual has both a checking/savings account, and has not relied on “alternative financial services”, such as payday loans, within the past 12 months.
  • This new legislation would require the CFPB to establish an office specifically for the underserved.


US industrial production falls in January for the first time in 8 months (source)

  • Industrial production sank 0.6% in January, the first drop in eight months, the Federal Reserve reported February 15.
  • In January, all categories except mining and utility production declined.
  • “Manufacturing is under real pressure from the slowdown in China and the trade war, and we expect output to drift down over the first half of the year, putting the sector into a mild recession. This won’t kill the rest of the economy, but it won’t look good, either, and until the sector bottoms out in the late spring it will make the Fed’s recent dovish turn look like the right move,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.