CECL Solution 

CECL, which stands for Current Expected Credit Loss, is a new accounting standard issued by the Financial Accounting Standards Board (FASB) for estimating loan losses. CECL replaces the current standards for loss accounting, commonly known as FAS-5 and FAS-114. For most credit unions, compliance with the new standard begins January 1, 2023.

CECL will change how credit unions account for expected credit losses. Instead of calculating bad debt reserve based on years past, CECL will require credit unions to calculate bad debt using forward-looking, predictive information. Credit unions will have to evaluate their potential credit losses and make an allowance for the total expected credit losses over the life of their loans.

Catalyst Strategic Solutions is prepared to help credit unions plan and implement their CECL compliance strategies through its credit union-based CECLution platform.

Features & Benefits:

  • An economic-based model that uses Weighted Average Remaining Maturity (WARM) methodology
  • Aggregation and storage of historical data, eliminating the need to extract and forward data with every report
  • Automatic upload of new data to CECLution platform each time a new quarterly call report is filed
  • Clarity of forecasted loan losses relative to historical loan losses
  • A cost-effective model, specifically built for credit unions' unique compliance needs

Because of the significance of this accounting change, credit unions should assess the economic impact on their balance sheets as soon as possible. Catalyst Strategic Solutions can partner with your credit union to assist in a successful transition to the new CECL accounting standard.