HomeStreet Bank | CECL Transition Pains
The Challenge: An Accounting Standard Change of Momentus Proportions
The allowance accounting standard change from an incurred loss model to a current expected credit loss model essentially involves changing from estimating based on losses already experienced to estimating based on losses throughout the life of loans, including what is reasonable and supportable to expect in the future. That’s a whole new ballgame.
Not only is CECL a game changer, but where do you start? If one does know where to begin, do they have the bandwidth to take on this sizable project?
The Solution: Abrigo Advisory Services to the Rescue
HomeStreet Bank and the Abrigo CECL advisory team worked together to develop a full CECL Blueprint. The blueprint started with a data gap analysis of the bank's current data including breadth and depth. During the engagement they also designed pooling structures for the loan portfolio, methodologies that made sense with their specific loans, and adjustment factors that matter to the bank.