RALEIGH, NC (June 30, 2016) — Sageworks, a financial information company that provides loan portfolio and risk management solutions to banks and credits unions, conducted a poll during the CECL Workshop Series webinar in early June asking in what area do bankers feel they will see the largest impact, given what they know about the FASB’s CECL model.
According to responses from 595 individual bankers across the nation, 41 percent feel CECL will have the largest impact on capital, potentially increasing reserve levels. Of the total participants, 35 percent indicated they feel there will be greater involvement in the calculation across departments.
Nearly 30 percent think the largest impact will be on financial reporting and disclosures. Not surprisingly, only 4.5 percent said that they don’t feel that CECL will have a significant impact on their banks.
Now that the final version of the FASB’s CECL standard has been released, experts have a better idea of how the portfolio may be affected. Sageworks’ Executive Risk Management Consultant Tim McPeak says, “Institutions will now need to identify variables that impact the performance of their loan portfolios, such as changes in employment levels, and assess the impact of their anticipated changes.”
“Many bankers have told us that they were waiting for the standard to be finalized before starting preparations,” notes McPeak. “Now that the accounting change is finalized, the time to start creating roadmaps to implementation has come. We still feel the best place for financial institutions to start is to focus on collecting the loan-level data that will likely drive their allowance calculations under CECL.”
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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