Risk Management & Analytics: What did 100 banks say in a CECL implementation progress survey?

What did 100 banks say in a CECL implementation progress survey?

Selecting a forecasting methodology is at the core of banks’ loss-estimation process for the Current Expected Credit Loss (CECL) standard and a telling overall snapshot of banks’ CECL implementation progress to date. Among 100 banks surveyed nationwide, 39% have already selected their forecasting methodology, according to a new white paper by MountainView Financial Solutions, a Situs company.

In the white paper, “On Track and On Time: CECL Implementation Progress at Banks,” 64% of banks state that model development is their greatest implementation challenge, while 52% of banks say they are leveraging existing statistical models to develop their CECL model.

A very positive note contained in the white paper, and perhaps a sigh of relief to the industry, is that 70% of banks have data captures in place for all types of assets on their balance sheets. The white paper also ranks the asset classes in which banks have data issues and will need benchmark data.

MountainView’s CECL white paper analyzes the answers to nine survey questions spanning across methodology, modeling, data and assistance from vendors. The online survey was open May 11 to Aug. 21 and targeted CECL committee and project team members at banks nationwide.

The full white paper is available for download. On Oct. 1, MountainView is hosting a webinar in which its presenters will translate survey answers into key takeaways and practical uses for banks of all sizes.


Traders take Fed’s cues, pile on bets on U.S. rate hikes

Bond traders are increasing bets the Federal Reserve will raise US short-term interest rates into 2019 as the jobs market tightens and with inflation seen climbing above its 2 percent goal.

Since the start of September, a number of Fed officials have expressed the view they expect more rate increases in the coming months as massive tax cuts enacted last December have boosted annual growth toward 3 percent this year.

Not only do traders now believe the US central bank will hike the federal funds rate by a quarter point later this month to 2.00 percent-2.25 percent, they appear to have greater conviction the Fed will increase again in December and twice more in 2019.

Read more: Reuters


Why those high-profile bank glitches just won’t stop

The glitch that left SunTrust customers without access to mobile and online banking for two days is just the latest digital snafu to afflict the banking industry. Upgrades by banks or their vendors that went haywire have resulted in multiple outages this past year.

So it begs the question: If there’s such potential for an upgrade to go wrong, why aren’t banks more prepared for the eventuality, instead of scrambling to get service back up and running?

Industry experts bear some bad news about the state of technology in banking: Banks can’t really be proactive enough to prevent the problems.

Working against banks are several factors, they say: Legacy code and infrastructure can create issues, while the increased need to continuously update systems has shortened the time for testing and extra scrutiny. Other factors include the increasing complexity of banking systems, which can include multiple vendors providing different services.

Read more: American Banker


CUNA backs CECL changes, asks FASB to keep eye on future relief

The Credit Union National Association (CUNA) recognized the improvements proposed by the Financial Accounting Standards Board (FASB) in its current expected credit losses (CECL) standard, CUNA wrote to the board Monday. CUNA’s comment letter was sent in response to a FASB proposal that would make several CUNA-backed changes to the standard, a proposal that CUNA understands was at least in part due to a May letter from CUNA raising concerns.

CECL was adopted in June 2016 and uses an “expected loss” measurement for the recognition of credit losses. The proposal would amend the effective date of the standard for non-public business entities (PBEs), changing it to fiscal years beginning after Dec. 15, 2021, and including interim periods within those years.

Both state and federally chartered credit unions are considered non-PBEs.

“We agree with the Board’s proposed change to the effective date for non-PBEs,” CUNA’s letter reads. “We believe this change will not only provide much needed additional time for credit unions to implement system updates but will also reduce confusion, particularly for those entities required to adopt in the fourth quarter.”

Read more: CUInsight


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