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First & Farmers Found Cost-Effective Expertise with Abrigo’s CECL Solution



Building CECL allowance calculations with Abrigo

As financial institutions across the country build and test CECL models before the January 2023 CECL implementation date, many are working with third-party loss allowance calculation vendors for the first time. CECL requires more inputs, assumptions, analysis, and documentation than the old standard, meaning some institutions have decided that they need outside help to determine their allowance levels efficiently and accurately.

When First & Farmers National Bank began searching for a CECL solution in 2020, the top priorities for a good fit were cost and integration support. They needed affordable software that worked well with their core system. They needed a vendor that knew the business of building models and could be available to answer their questions. They also wanted software that worked with their core system to pull data automatically without manual updates. And with a 2023 deadline fast approaching, they wanted stability, knowledgeable staff, and peace of mind that their vendor wouldn’t be bought or sold during the implementation process.

First & Farmers had previously used Sageworks for cash flow analysis, and they decided to revisit Abrigo during their CECL search. They selected Abrigo's CECL software, the only ABA-endorsed CECL solution, after identifying three key benefits it offered: 

  • Experience in loss allowance calculations
  • Affordable client-led implementation option
  •  Data integration specialists on standby
"It was clear to us that loss modeling is what Abrigo is in business to do. Knowing that Abrigo understands the business and has a team of industry experts made it an easy fit."
Andrew Cooper, VP and Chief Credit Officer, First & Farmers National Bank

Abrigo: Loss-model leader long before CECL

According to the First & Farmers team, it was easy to tell that other companies didn’t have Abrigo’s manpower when it came to providing an all-encompassing CECL solution.

“It was clear to us that loss modeling is what Abrigo is in business to do. Other companies popped up and grabbed available market share when the new standard was announced, but Abrigo had been doing incurred loss models before CECL was thought of,” said Andrew Cooper, Vice President and Chief Credit Officer at First & Farmers. “Knowing that Abrigo understands the business and has a team of industry experts made it an easy fit.”

Affordable, client-led integration process

Confident in Abrigo’s reliability and expertise, First & Farmers addressed their next priority—cost. Initially, there was some debate over whether to invest in a CECL software solution at all. First & Farmers was happy with their working incurred loss model and just wanted a reasonable CECL model that was supportable and followed the new requirements.

But taking on the challenge of building a model internally would have required significant time and costly personnel changes. Ultimately, they chose the self-led integration process to fit their budget. It was an affordable solution to their model problem, and Cooper believed the bank had enough in-house expertise about their data to implement it independently. The first step to creating the new model was providing data to their Abrigo data integration engineer.

“Our integration engineer was very easy to work with,” said Fern Sewell, Vice President and Chief of Loan Operations at First & Farmers. “He always responded promptly to our questions no matter how small.” Despite working with a new report-writing program, Fern felt that the integration went smoothly. Overall, their data was balanced and reconciled easily, the process was quick, and the back and forth with their data integration specialist was seamless.

"Our integration officer was easy to work with. He always responded promptly to our questions, no matter how small. Abrigo was patient and helpful throughout the process."

Fern Sewell, VP and Chief of Loan Operations, First & Farmers National Bank

Implementation at a comfortable pace

Self-implementation allowed First & Farmers to control the speed of their switch to CECL. “I never felt pressured  to have things done by a certain time," said Sewell. “We had a timeline, of course, but I wasn’t pushed when working with our data integration engineer to process information. They were patient and helpful throughout the process.”

Self-implementation works best when staff already understand their institution’s core system and what fields and data it works with. Integration takes a thorough knowledge of a bank’s procedures, so a new staff member might not be familiar enough with their own system to easily integrate new software on their own.

Ahead of the curve

The experience of the First & Farmers staff combined with the knowledgeable team at Abrigo resulted in a completed CECL model before the 2023 deadline. That's given the bank time to run parallels before presenting its new model to the board. “So far we're very happy with our choice," Cooper said. "With Abrigo, we have the opportunity to integrate, test, and present our final model the way we are accustomed to as a bank, all while knowing that support is there when we need it.”

First & Farmers' careful search for a CECL solution vendor paid off—they now have confidence in their model, peace of mind knowing that they made the best financial decision for their bank, and a thorough knowledge of their allowance calculation that gives them more confidence ahead of regulators’ questions in 2023.

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