OPTIMIZE


CECL Credit Risk Solutions

The Financial Accounting Standards Board’s (FASB) Current Expected Credit Loss (CECL) impairment standard (ASU 2016-13, Topic 326) requires that financial institutions recognize lifetime expected losses. An independent provider of credit and model risk management tools across various asset classes, Situs offers financial institutions an effective solution to meeting CECL challenges.

Situs’ team of senior banking leadership, PhDs and CPAs with 60+ years of combined expertise, paired with a strong background in due diligence dating back to the mid-eighties, delivers an integrated framework that empowers clients to optimize their data, enhance their modeling expertise, and ensure policies and procedures supporting model governance are regulatory compliant.

 

DATA OPTIMIZATION

To effectively model for CECL, financial institutions have to evaluate data quality, assess data availability and perform enhanced data analysis. Situs views data through the lens of a modeler and focuses on delivering data management and optimization to help institutions achieve CECL readiness, standardize CECL modeling methodologies, and leverage data for multiple purposes beyond loss estimation including Business as Usual (BAU), Asset and Liability Management (ALM), stress testing, capital planning, and more.

MODELING FOR SUCCESS

When it comes to CECL, it’s not enough to just get the data right. Applying the right methodology based on your unique data and business requirements will ensure that you not only meet the FASB requirement, but achieve a consistent and repeatable modeling process. Situs’ team of quantitative modeling experts recognizes the nuances of each financial institution, portfolio and loan to identify the most appropriate methodology specific to the institution’s needs, and includes the documentation and training necessary to own and understand the model.

POLISHING THE PROCESS

Assess, evaluate, and implement — this is the how Situs experts help clients achieve CECL success. Situs’ comprehensive and collaborative approach provides clients the infrastructure, knowledge, documentation, and support to efficiently integrate CECL processes into the day-to-day risk management processes.

VALIDATION FOR GREATER CONFIDENCE

Built from more than two decades of independently validating financial models — from credit and liquidity to stress testing, asset liability, and profitability — Situs’ CECL Credit Risk Solutions extend beyond data, model development and implementation. Situs helps financial institution clients validate and verify their CECL models to meet supervisory guidance governing model risk by delivering model validation solutions that challenge development, use, governance and control structures of custom-built, custom-configured, or third-party CECL models.

Validate more than 150 models annually

Deep industry knowledge of regulations impacting financial models and model risk management

Senior Leadership, PhDs and CPAs with over 60+ years of combined related experience

Performed data remediation on 10 million data points with 99.998% accuracy

Extensive underwriting and analytics experience across various asset classes

Implemented data validation and Aggregation on 500,000 loan files

solutions

CECL Data Optimization

CECL Data Optimization

• Best Practices review, evaluation and implementation support
• Key Data Elements playbook creation
• Implements quality control processes to achieve data accuracy

CECL Model Development

CECL Model Development

• Builds customized CECL models with a myriad of techniques using institution data and incorporating macro data
• Improves ALM, Credit, and Stress Testing model efficiencies, simplifies reporting, and minimizes model inventory and costs by reducing model redundancies

Model Documentation

Model Documentation

• Prepares detailed model documentation to meet best practice model risk requirements.

Staff Augmentation

Staff Augmentation

• Provides additional staff to quickly ramp up modeling capabilities

Model Risk Management Training

Model Risk Management Training

• Provides professional training and education to create or assess the client’s Model Risk Management program

Model Process Consulting

Model Process Consulting

• Evaluates and documents existing allowance for loan and lease (ALLL) and charge-off policies
• Supports CECL model’s implementation into various dependent BAU processes such as capital planning, ALM and stress testing

Policy Consulting

Policy Consulting

• Assesses policies and procedures for comprehensiveness, adequacy of documentation, and consistency across an institution’s loan portfolios
• Coordinates with institution to create policies and procedures that are compliant with industry best practices

CECL Model Validation

CECL Model Validation

• Independent, objective and expert review of client’s custom-built, custom-configured, or third-party-developed CECL models
• Identifies limitation of a model or model framework used to forecast losses, balances, income, expense, capital and liquidity
• Reviews CECL model for conceptual soundness, technical elements, model performance, forecasting accuracy and model governance

CECL Data Validation

CECL Data Validation

• Examines primary and secondary sources of truth, create template for Data aggregation and validation.
• Extracts and validates key data elements from imaged loan
• Provides data lineage and remediation

News & Insights

Thought Leadership

CECL: PREPARING FOR FASB’S NEW CURRENT EXPECTED CREDIT LOSS STANDARD

In June 2016, when FASB issued a new accounting standard to calculate credit losses, it ushered in a major shift in the methodology of how financial institutions record impaired loans on their books. Currently, banks mark their loans as healthy up until the point of impairment – that is, only once actual losses have been incurred.

Articles

CECL Data: Don’t Wait, Start Collecting Key Data Elements Now

In June 2016, the Financial Accounting Standards Board (FASB) issued a new accounting standard to calculate credit losses. CECL, or Current Expected Credit Loss, will require financial institutions to calculate credit losses over the life of a loan rather than through incurred loss.

Articles

CECL Implementation Progress Survey

If you’re part of a CECL project team at a bank or credit union, take our survey.

CONTACT US

Stenwyn A Joseph

Managing Director

sjoseph@mviewfs.com

U.S. TEAM