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Data and CECL

December 9, 2016
Read Time: 0 min

To comply with CECL, banks and credit unions will need to access much more data, in terms of both volume and type, than for calculating their reserves under the current incurred loss model. Crowe Horwath’s Dave Keever helps lenders get a handle on their current data stockpiles and what they’ll need to forecast losses into the future, addressing such issues as capturing loan vintages and identifying loan concentrations and the associated risks.

Key Takeaways for CECL and Data

  1. Get all of your data in one system so you can aggregate. All those types of data are not in financial institutions’ systems. After gathering the data, ensure it’s clean.
  2. Get finance and credit together – and treasury, because they understand these issues. Under CECL, Q factors will be a tool people use to get a reasonable provision.
  3.  Financial institutions must have policies, procedures and controls along with data. You will be moving toward DFAST and this is the same information you’ll need for Dodd-Frank; also most will move in coming years to Basel 3 and you’ll need this same information. So consider what’s coming down the road, and gather the data today that you’ll need tomorrow.

Dave also suggests lenders compare their loss rates against other peer institutions to get a comparable to peer loss rates for an idea on future projections.

Need help with data review or possible CECL methodoligies? Contact MST Advisory.

View the MST Talk with Dave Keever filmed at the 2016 National ALLL Conference.

About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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