Insights

CECL Results and Their Interpretation: What’s Next?

As banks and other financial institutions are crossing the finish line to comply with the CECL accounting standard, many companies are finding it difficult to interpret their results. Even for companies with robust data, models, processes and controls, they are challenged to determine how these new reserve estimates are comparable to the incurred loss model results.

In this video, we discuss key considerations when comparing CECL results to current Allowance for Loan and Leases Losses (ALLL) reserves and share illustrative analytical approaches that are proven to be very useful when helping our clients implement the new accounting standard.

This video covers the following:

  • Review the changes in accounting standards - What are the key changes between ALLL and CECL, plus how should you think about these across your business.
  • Understand model inputs, key drivers and assumptions - A thought process that helps navigate through ALLL and CECL reserve estimations and identify key drivers behind the differences.
  • Decompose the difference in modeled allowances - How best to illustrate changes between ALLL and CECL with an example attribution analysis.
  • Dynamic reporting and analytics tools - An example of data visualization tool Power BI that would be useful for a go-forward CECL environment.

 

 

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