5 Things to Do Now for CECL

Prep for a Smooth Implementation

1. LEARN.

• Read FASB ’s CECL Accoun t i ng S tanda rds Upda te

• Read FASB Comment Le t t e r s• Rev i ew Ana l y s i s f rom ABA• Rev i ew Ana l y s i s f rom You r Bank Aud i t o r• L i s t en to Fede ra l Rese rve Ca l l s on CECL

Develop your own tactical approach to

CECL.

You won ’ t be ab le to s imp ly copy what

another bank i s do ing.

2. SHARE.

• Wi th Boa rd and Sen io r Management• Ex te rna l Aud i t o r• Regu la to r s

Get everyone on the same page.

Avoid committ ing t ime and expense to a model that proves

ineffect ive.

3. HOARD.

• Data• Loan Ba l ance Da ta• Segmenta t i on In fo rmat i on• R i sk In fo rmat i on• Loan Or i g i na t i on In fo rmat i on• Transac t i on Leve l Da ta• Defau l t s and P re -Payment s

CECL will require more data.

Start gather ing data now.

4. FORECAST.

• Fo rward -Look ing Mode l• Econom ic Da ta P l ays a Ro l e• Use “Reasonab l e and Suppor tab l e ” Fo recas t s

Sources for economic data

The FedConference Board

Congress ional Budget Off ice

5. MODEL.

• Genera te Mode l i ng S t ra teg i e s• Deve lop a samp le CECL Mode l• Tes t , Ad jus t , Reexam ine

Do not book losses according to CECL

before the CECL implementation

date.

“This is not a tweak for any bank.”

-Steven Merr iettCh i e f A c coun t an t , Fede ra l

Re s e r ve Sy s t em , f r om 9 / 2015 A ICPA Na t i o na l Con fe r en ce on Bank s & Sav i ng s I n s t i t u t i o n s

So f twa re So l u t i o n s f o r S t r e am l i n i ng t h e ALLL and

P r epa r i ng f o r CECL

Learn More About MST

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About MSTSince 2005, MST has implemented technology solutions to help financial institutions simultaneously simplify and sophisticate the way they manage the inherent risk in their loan portfolios. MST is the leader and pioneer in ALLL software solutions and education for financial institutions across the U.S. and committed to its leadership role in developing and refining products that address ALLL compliance requirements as they evolve, including the new CECL standard. Our solutions are bank-defined, integrate with core systems, deliver greater adherence to policy, and exponentially improve efficiencies - all of which positively impact profitability.

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