CECL and Buzzer-Beaters!

April 21, 2016 by William (Bill) Bossong, Shareholder

In basketball, buzzer-beaters are always so much fun — that is of course, if you are the winning team. There are those times, however, when buzzer beating is never a good thing.

Recently I gave a presentation on preparing for CECL to the Bankers Affinity Group. The main theme of the presentation was around gathering, storing and being prepared to manipulate data under the new CECL standard. As part of the presentation, my team and I put together a comprehensive template of data needs for banks and credit unions of all sizes irrespective of the approach that they choose to take for modeling losses under the CECL standard. This template prioritizes and identifies the different data points needed from your core system as well as other ancillary systems you may be using for core processing. To use another basketball metaphor, the template will prevent you from getting boxed in by any service provider to a specific loss modeling approach whether it be a PD/LGD, provision matrix or the much talked about discounted cash flow model.

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The punch line is this: Don’t let your data gathering be a buzzer-beater. Prepare for CECL now and synergize the data collection process with other areas of your Bank such as ALCO modeling and pricing. If you would like to have a copy of the template, please reach out to Bill.Bossong@elliottdavis.com or contact your Elliott Davis Decosimo advisor.

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