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Navigating 4 Key CECL Challenges for Credit Unions

December 4, 2017
Read Time: 0 min

In a recent CUES article, Terry Katzur, CCE, EVP/Chief Lending Officer of ELGA CU in Burton, MI, wrote about how their credit union plans to prepare for the current expected credit loss (CECL) transition.

“Like many credit unions, we at ELGA Credit Union—with assets of $543 million in Burton, Mich.—currently do not have sufficient historical loan data at our fingertips to meet the demands that CECL will put on us, and that lack of data put us in the market for a solution,” said Katzur. “Before CECL, we were reviewing portfolio analytics software options to help us better monitor our loan portfolio. With CECL looming, our need for better analytics was heightened.”

As credit unions begin to plan their CECL model, several are faced with the same challenges.

Unclear regulations
CECL is a change in the FASB’s Accounting Standards, and all credit unions will have to comply. Most credit unions will be required to transition by the end of 2021.

Multiple data warehouses
It’s common for credit unions to use multiple data warehouses for different portfolios. Partner with a trusted vendor that serves hundreds of institutions and can help you identify, capture, archive, and incorporate loan level data required for CECL.

Overly complex models
Flexibility to choose the right methodology coupled with a practical approach to CECL allows you to comply without unnecessary complexity.

Hodgepodge of software tools and spreadsheets
By moving to a centralized ALLL solution, your credit union cuts vendor due diligence costs and improves reportability.

Deploying a trusted software solution can successfully alleviate these challenges and allows credit unions to navigate the CECL regulation and change management with ease.

“Since launching Sageworks [ALLL], we have been able to recreate our current ALLL process and automate it, saving our accounting manager several hours each month,” said Katzur. “In 2018, we should have enough data in the solution to begin running parallel CECL calculations that we can refine over the next few years, so that by the CECL live date we will have the best model for our institution.”

To read the full article, please click here.

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

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