CECL COMPLIANCE BEGINS TODAY, NOT 2021.
Coming off of the 2007-2008 financial crisis, the Financial Accounting Standards Board (FASB) took a hard look at how banks estimate losses in allowance for loan and lease losses (ALLL) calculation. Current Expected Credit Losses (CECL) is a completely shift in how banks look at impaired loans. Under CECL, community banks are required to dig into loan information for historical data, have accurate current conditions, and a model for reliable forecasting to estimate expected losses over the loan period. Besides a change in method, it’s a complete change in the required data points.
Some banks are turning to expensive software models. Others are procrastinating until the December 2021 deadline.
We believe banks should prepare for CECL implementation today. After all, data is needed to understand if you are CECL compliant before the implementation date.
What is your bank’s plan to handle the transition to CECL compliance? Has their been any internal discussion regarding an implementation plan for CECL? Has the topic even been approached?
Regardless of where you are currently, CBA can be a great partner to ease the stress of this required CECL implementation. We will ensure the process is proactive and smooth, so when the regulators come knocking, you’re prepared! Give us a call or contact us to schedule your consultation today.