Skip to main content

Looking for Valuant? You are in the right place!

Valuant is now Abrigo, giving you a single source to Manage Risk and Drive Growth

Make yourself at home – we hope you enjoy your new web experience.

Looking for DiCOM? You are in the right place!

DiCOM Software is now part of Abrigo, giving you a single source to Manage Risk and Drive Growth. Make yourself at home – we hope you enjoy your new web experience.

More Banks Predict Larger Impact from CECL Model

June 30, 2015
Read Time: 0 min
**The FASB issued the final CECL standard on June 16, 2016. For up-to-date information and resources, access the updated CECL Prep Kit.
The attention on the FASB’s current expected credit loss (CECL) model has only increased in recent months, as the industry braces for the release of final guidance before the end of 2015. The CECL model will require banks and credit unions to consider expected losses rather than incurred losses. As a result, ALLL levels are expected to rise and institutions will face a one-time capital adjustment once guidance is effective.

The OCC’s Thomas Curry has gone on record stating he expects a 30 to 50 percent increase in banks’ ALLL as a result of the CECL model. But how is the CECL model being perceived by banks and credit unions? What level of increase are they expecting?

Over the past three years, Sageworks hosted a series of webinars on the FASB’s CECL model and asked attendees how the CECL model will impact their institution’s ALLL during each. The most recent poll, conducted in June 2015 during a webinar on scenario building for the ALLL, found that more bankers are expecting a 10 to 50 percent increase in their ALLL than ever before. Fifty-seven percent of respondents indicated that they expected their ALLL to increase by more than 10 percent following CECL implementation. Compared to polls conducted in February 2014 and February 2013, the percentage of bankers expecting a 10 to 50 percent increase has steadily risen, while the percentage expecting an increase of less than 10 percent has decreased. Each poll conducted had more than 250 responses.

CECL Impact Poll of Financial Institutions

Interestingly, the number of bankers expecting the CECL model to have no impact on their ALLL has risen substantially since 2013. Institutions that are proactively preparing for the changes are likely to see less a substantial impact, since they’ll be better equipped to defend their ALLL. Proactive preparation for CECL includes:

  • Capturing, archiving and incorporating loan-level data into the ALLL
  • Reducing dependency on spreadsheets
  • Moving toward a more robust calculation – i.e., migration analysis
  • Utilizing scenario building

Bankers interested in learning more about the FASB’s CECL model and potential impacts can access the complimentary FASB CECL Prep Kit.

For more on CECL or the ALLL in general, visit

About the Author


Raleigh, N.C.-based Sageworks, a leading provider of lending, credit risk, and portfolio risk software that enables banks and credit unions to efficiently grow and improve the borrower experience, was founded in 1998. Using its platform, Sageworks analyzed over 11.5 million loans, aggregated the corresponding loan data, and created the largest

Full Bio

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.

Make Big Things Happen.