RALEIGH, N.C.–Fifty-two percent of bank and credit union executives say institutions should execute preliminary Current Expected Credit Loss (CECL) calculations by Q4 of 2017.
Another 24%, however, said that institutions should wait to start preliminary calculations after 2017.
The survey was conducted by Sageworks, a financial information company that provides lending, credit risk and portfolio risk solutions to banks and credit unions and took place as part of a webinar on CECL – Initial & Subsequent Measures of Loss.
The poll asked webinar attendees when institutions should execute preliminary CECL calculations. Among the other findings from the survey of 299 individuals, 13% said they should start CECL calculations as of Q4 2016, while another 21% said institutions should begin calculations as early as Q1 2017.
“This poll question was conducted at the end of the webinar, after attendees learned about the different methodologies institutions may use for expected loss calculations and about the importance of data for those calculations,” Sageworks said in a statement. “The same poll question was asked at the beginning of the webinar, and the answers changed after attendees learned more about the potential models. The first time the question was asked, 38% said institutions should execute CECL calculations after 2017. As the results below share, that number dropped to 24%.”
“Having good loan-level data that is comparable is what is important,” said Sageworks Senior Risk Management Consultant Neekis Hammond in a statement. “Once you go back far in the portfolio, you’ve got to look at how many risk rating scales have happened, how many portfolio shifts have happened, what have the underwriting standards been, and then ask - is that data still relevant to the portfolio?”
Hamond added that portfolios that are three to four years old, in cases where a 2017 analysis is being done, will have full reporting capability come implementation in 2020. “