Catalyst News

Pressing the Easy Button on the New CECL Accounting Standard

by Catalyst Corporate | Nov 19, 2021

Thanksgiving is almost here and the rest of the holiday season will be on its heels. After that comes the roll of the calendar to a new year…2022.

Many of us will be excited and thankful to enter 2022, as it will be one more calendar year removed from the COVID craziness of 2020 and 2021. However, it will also be the last year to ensure your credit union is ready to embrace the Current Expected Credit Losses (CECL) accounting standard update.

With years of information disseminated on the subject and opportunities to prepare, we now know more and are hopefully a little less concerned about adoption of this standard. We have learned that there are multiple CECL methodologies credit unions can adopt, even within their own loan portfolios – a good thing. What hasn’t changed is that years of data are still required to determine historical trends for building relationships into economic models. And with each passing day, the need – as well as the cost – to compile this data rises exponentially.

Unfortunately, no further postponements or exemptions for credit unions appear likely on the horizon, so it’s time to prepare for this new rule…like it or not. The good news is that FASB, NCUA and state credit union examiners seek compliance and, therefore, want credit unions to find models and methodologies that make sense based on their balance sheet composition and complexity.

Many credit unions with limited complexity on their balance sheets have a broad spectrum of CECL options from which to choose, including Catalyst Strategic Solutions’ robust, self-directed online platform. Called CECLution, this platform uses the Weighted Average Remaining Maturity (WARM) model to help credit unions create a customized forecast of credit losses.

CECLution offers several key benefits:

  • Captures and maintains credit union historical data
  • Automatically integrates economic data
  • Displays credit union and peer data
  • Enables fully customizable Q-factors and carve-outs
  • Preserves core assumptions for easy updates
  • Saves and stores forecasts

All in all, CECLution is designed to help make life easier for credit unions, and having an “easy button” to press is always a welcome option.

To see how Catalyst can help your credit union press the easy button, gain compliance, and lighten the burden of CECL preparations, contact us or schedule a demo today.