ALEXANDRIA, Va.–NCUA has released the March 2023 update of its Simplified CECL Tool.
The agency said the update includes:
- The incorporation of each credit union’s December 2022 net charge-offs values in its average three-year net charge-off rates
- The adjustment of Weighted Average Remaining Maturity (life-of-loan) factors for recent trends
- Minor technical enhancements
For most credit unions, CECL became effective at the start of 2023. The agency noted that for credit unions that started using the Simplified CECL Tool in the first part of 2023, the March 2023 release is used to determine the credit loss expense, or provision for credit losses, from the date of adopting CECL until March 31, 2023.
Day One Adjustments
For credit unions that adopted CECL in the first quarter of 2023, NCUA said the March 2023 Call Report will include the day-one adjustment to undivided earnings and the credit loss expense since the date of CECL adoption.
“With this update and future quarterly updates of the Simplified CECL Tool, a credit union can use the CECL to estimate its allowance for credit losses on loans and leases,” NCUA said. “Quarterly updates will be provided so a credit union can incorporate them before its books are closed and before it submits the NCUA’s Call Report.”
Additional Resources
To obtain the latest version, NCUA is urging credit unions to visit The Simplified CECL Tool page and click on, “Download the Latest Simplified CECL Tool.”
To help a CU determine if the Simplified CECL Tool is right for the CU’s needs, NCUA said credit unions should review Frequently Asked Questions, the User Guide, and the Model Development Document located on the Simplified CECL Tool page.
Additional information is available on the CECL Resources page.