CECL compliance poses challenges for CUs.

The central tenet of the current expected credit loss model (CECL) is the requirement that financial institutions account for expected losses over the entire life of the loan and do so up front, rather than on the current, incurred basis. It is for this reason that many observers have speculated that allowances for loan and leases losses could, in general, be higher under the new accounting standard.

However, loan loss reserves in the second quarter were 1.22% of total loans among all U.S. banks, according to FFIEC data on the Federal Reserve Economic Data website, a continuation of a downward trend from the peak of 3.7% in 2010. If favorable economic conditions persist, allowances – even under the new CECL model – could be relatively stable or perhaps even lower, which has some bankers worried about how examiners would react.

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.


Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2023 ALM Global, LLC. All Rights Reserved.