RALEIGH, NC (November 28, 2017) — During a webinar earlier this month, Sageworks, a financial information company that provides lending, credit risk and portfolio risk solutions, surveyed professionals from banks and credit unions about the current status of their CECL implementation committees. The results show most institutions have already formed a committee, though responses varied widely as to what that committee had accomplished thus far.
Sageworks conducted the poll during the November 8 webinar on CECL – The Relationship Between Credit and Finance.
According to 172 responses from financial institution chief credit officers, chief financial officers, VPs of finance, controllers and senior credit staff, 32 percent of institutions have a CECL implementation committee that has met a few times but has not finalized a project plan. Another 22 percent reported their committee has a project plan that the institution is executing. Eighteen percent reported having named participants to the implementation committee but having taken no action. Only 23 percent of respondents reported they have not formed a CECL implementation committee, and another 5 percent did not know or are not involved.
Sageworks Executive Risk Management Consultant Tim McPeak noted that the financial institutions’ responses may be correlated to their size. “Broadly speaking, our experience to date has been that the larger institutions have been a little bit further ahead in the CECL planning process,” McPeak explained. “SEC-filing banks, in particular, probably have some degree of extra pressure from a timing standpoint,” he added.
McPeak said he was not entirely surprised that a majority of poll respondents reported that their implementation committees have met a few times but have not finalized a project plan. “They are still figuring things out,” he said. “I don’t think that’s a bad place to be in 2017. Though time is definitely ticking away, there is still some time, and in thinking about this, the size and complexity of your institution does matter in determining what steps need to be taken when.”
“Not having every detail of your project plan does not mean you are behind at this point,” he added. “However, now is the time to move into thinking through these things.”
During the webinar, Sageworks discussed the required collaboration between credit and finance staff in the prep work financial institutions must undertake ahead of CECL, and offered advice on how the two functional areas can work together efficiently. Sageworks covered topics including how to evaluate the allowance calculation process from different points of view, define standard roles that departments play within the allowance calculation and set out discussion points that credit and finance team liaisons should review as part of the transition to the expected loss model. In the webinar, McPeak also discussed how CECL implementation committees should likely include senior staff from several departments, including finance, credit, risk management, IT and audit, as many areas within the institution will be affected by adoption of the new model.
The on-demand webinar is available to view here: Part 2: CECL – The Relationship Between Credit and Finance. For more information on upcoming webinars, visit https://www.sageworks.com/banking/resources/bank-webinars/ or email research@sageworks.com.
Sageworks offers banks and credit unions lending, credit risk and portfolio risk software to efficiently grow and improve the borrower experience. By automating the life of the loan with Sageworks, bankers book commercial loans faster and reduce risk. Sageworks uniquely provides integrated solutions and industry expertise to more than 1,400 financial institutions that achieve an average 38% higher loan growth than peers. Visit www.sageworks.com to learn more.
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