GREENSBORO, N.C./MIDDLETOWN, Penn.–Vizo Financial said it has partnered with ARCSys Technologies to help credit unions take on the complexities of the new current expected credit loss (CECL) ruling set forth by the Financial Accounting Standards Board (FASB).
Vizo Financial’s said its CECL solution, powered by ARCSys, is a two-fold service. Credit unions will have access to a dynamic software program that processes their loan data and produces calculations that accurately reflect their allowance for lease and loan loss (ALLL), as well as assistance in gathering data and walking through the new CECL model, Vizo Financial said.
According to FASB’s ruling, the new CECL model will require financial institutions to use current and historical data to perform advanced forecasting that will produce a more accurate ALLL picture.
“What credit unions might not realize about CECL is that it’s a huge change from the ALLL process they’ve grown accustomed to,” said Mark Brown, chief financial officer for Vizo Financial. “It means collecting many years’ worth of loan data, analyzing and balancing all of that data, entering it into the ACRSys system to be calculated and planning their models. It’s definitely going to be an increase in effort on the credit union’s part.”
Vizo Financial said its CECL solution will include ARCSys’ ACL Calculator, which is a one-stop solution that will ensure credit unions are in compliance with the CECL standard and give them the flexibility to control their allowance using their own historical data. The system boasts the following features: data warehouse, loan collateral dependent calculations, loan accounting and reporting, dashboard reconciliation to GL, life of loan calculation, roll forward loss calculation, loan level charge off and recoveries, regression modeling, supportable forecasts, and more.
To meet the new standard’s requirements, credit unions could be looking at a minimum of 12 to 24 months just to implement the CECL model. To put that into perspective, all financial institutions need to have the CECL model in place by 2021.