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On June 16th, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-13, which finalized the Current Expected Credit Loss (CECL) model. A formal joint statement from the federal financial regulators followed. Both documents reiterate that the CECL approach represents a fundamental change in what the ALLL is to represent. However, the documents also continue to emphasize FASB’s and financial regulators’ desire for CECL to be implemented in a manageable way that is not overly costly or complex for community banks.
It is possible for smaller community-based financial institutions to implement CECL’s requirements in a manageable way. Implementation cannot be effortless or without cost, but with a proper preparation plan, the transition can be relatively smooth. This webinar will provide a brief overview of the final CECL standard and recent regulatory statement and focus on practical ways to prepare for the transition. This preparation will involve putting together a project plan, evaluating and enhancing the quality and depth of credit risk data, and possible methodologies for estimating the allowance under CECL.
HIGHLIGHTS
Key takeaways from the final CECL standard and the interagency joint statement
Important aspects of a project plan and recommended timeframes
High-level overview of methodologies to meet CECL’s requirement of estimating expected losses over the life of loans and leases
Data challenges associated with the transition to CECL, including:
How data needs differ from the current ALLL rules
Data necessary for implementing various methodologies, including collection and storage
When might external data be of value to a smaller financial institution? When might it be of little or no value?
Tracking and identifying key drivers of credit risk within an institution’s portfolio to ensure the methodology for estimating expected credit losses is sensitive to changes
What data may be useful in achieving a manageable implementation of CECL’s requirement of considering “reasonable and supportable forecasts” of the future?
How to evaluate whether third-party software is appropriate, even though FASB and regulators have said that such a solution is not necessary for CECL compliance
TAKE-AWAY TOOLKIT
Outline of high-level preparation steps to assist in the development of a project plan
Employee training log
Quiz you can administer to measure staff learning and a separate answer key
DON’T MISS THIS RELATED ARCHIVED WEBINAR!
What Directors Should Know About CECL, ALLL & New Credit Impairment Standards
Held on Tuesday, March 8, 2016.
You can order an archive of the live webinar, complete with handout materials.
Attendance verification for CE credits provided upon request.
WHO SHOULD ATTEND? CEOs, presidents, CFOs, chief risk officers, CCOs, senior lenders, credit and risk staff, and all involved in the ALLL process or in analyzing and measuring credit risk. Directors may also benefit from understanding the preparation management should be undertaking.
ABOUT THE PRESENTER – Tommy Troyer, Young & Associates, Inc. is the Executive Vice President and manages the company’s lending division. In addition to presenting webinars and seminars, he contributes to capital planning, strategic planning, and other management consulting services. He also focuses on topics related to credit risk management, and assists clients with loan reviews, ALLL reviews, credit process reviews, and other lending-related services. Tommy joined Young & Associates, Inc. from the Bank Supervision Group at the Federal Reserve Bank of New York, where he focused on credit risk management practices at supervised institutions. His work focused on the ALLL, stress testing, and risk monitoring and reporting practices. Prior to his time in bank supervision, Tommy worked in the Federal Reserve Bank of New York’s Research Group. Tommy holds a Bachelor’s in Economics from Wittenberg University.
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