Analytics

Confessions of a Data Analyst

The implementation of CECL has been called the biggest change in financial institution accounting . . . ever. Under current U.S. GAAP, financial institutions account for losses based on historical events or incurred losses. Beginning in the first quarter of 2020, financial institutions must look at the past as well as the future over the full lifetime of a loan. […]

Your CECL Committee: Who’s Invited?

For financial institutions, the path to CECL compliance starts with establishing a CECL committee, whose job it is to guide the institution through the process of transition to estimating their allowance in compliance with the new Current Expected Credit Losses accounting standard. Broad committee representation is recommended because CECL will require input from more departments of the institution – that is, more people and positions will participate, at some level, in the CECL allowance process. […]

It’s crunch time.

SEC filers will start estimating their allowances according to CECL as of the first quarter of 2020, just a little more than a year and a half from now. Considering they will want to run parallel incurred loss and CECL methodologies for several quarters – a year is recommended – most lenders, including private companies, are knee-deep in preparations, setting up transition committees, gathering data, studying methodologies. […]

CECL Is a Process Not an Event

CECL should be looked at as a process and not an event. We transition today toward CECL implementation on principles-based guidance. But through time and eventual practice, auditor opinion, and regulatory enforcement, the allowance will evolve to a more intense and sophisticated process, manipulating our assumptions, analyzing our numbers, understanding our trends as we continually refine our models and methods to enhance our knowledge and improve portfolio performance. […]

2018-10-24T11:23:14+00:00April 13th, 2018|Advisory, Analytics, CECL, CECL Education, Model|