2018 CECL Resolutions
As we begin a new year, our minds go to the things we want to accomplish in 2018, whether it be personally or professionally. Accordingly, for those faced with the seemingly daunting task of transitioning to the new and impending CECL standard, a few of the advisors of MST Advisory Services have come up with the following resolutions you may consider adopting:
1. I resolve that during our (the financial institution’s) financial audit, for the year ended 12/31/2017, I will be prepared to update the financial auditor on our progress in understanding and adopting the new CECL standard.
-Garry Rank, Senior Advisor
2. I resolve to read the Federal Open Market Committee (FOMC) economic projections that are revised every quarter.
-Tom Cunningham, Senior Advisor- Economics
Tom adds, “It’s just a couple of numbers that show how the FOMC’s thinking about how current economic activity has changed. It will be the most useful two minutes spent each quarter.”
3. I resolve to make 2018 the year for CECL action.
-Paula King, Senior Advisor
Paula says, “With 2018 a few weeks away, the CECL deadline is fast-approaching. While 2017 was the year for planning, 2018 is the year for action. Consider the various models and begin testing a methodology. In considering a model, remember to look for ways to leverage your current processes, recognize the historical data you have readily available, assess the ability of your team to implement the methodology and determine the system you will use to calculate the allowance for credit losses under CECL.
“The quicker you make these decisions, the sooner you can begin running parallel systems and estimate the impact that the CECL methodology will have on earnings and ultimately capital. Because your CECL model will include a future component, look for ways to utilize the data and conclusions derived from your model to strengthen other areas of the institution, including forecasting and strategic planning, credit administration and lender guidelines.”
4. I resolve to fast track CECL and make it a primary priority.
-Regan Camp, Managing Director
Regan agrees, “To those institutions that have yet to begin their formal transition to CECL, I’d strongly encourage you to approach the new year with strong resolution to get started and get started fast. To those that may have started, but haven’t yet generated much momentum, resolve to pick up the pace, increase your focus and generate the momentum necessary to complete or substantially complete both your CECL methodology development and implementation in 2018.”
Need help with your CECL plan? Speak with one of our advisors. Call 877-910-9789 or use the link below to schedule a call.
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