Keys to Implementing The CECL Accounting Standard
Active Professional Experience:
- President/CEO/Founder, Lawrence Advisory Services, Des Moines, Iowa
- Owner and Co-Founder Platinum Risk Advisors, an outsourced CECL solution provider. Des Moines, Iowa
- Former senior partner/owner in two of the country’s largest CPA and consulting firms; RSM USA and CliftonLarsonAllen
30+ Years’ experience serving banks and credit unions, including:
- Forming 30 de novo (start-up) banks and credit unions
- Serving as the lead in over 45 merger and acquisition transactions
- Providing loan review services to over 125 different financial institutions evaluating the risk of both individual loans and the loan portfolios as a whole. In conjunction with these engagements also advised or authored the clients on their lending policies and procedures and risk management functions
- Served as a consultant to the FDIC both during the “S&L Crisis” of the late 80’s early 90’s and the most recent economic crisis of 2009 through 2012
- Served as a consultant to the Federal Finance Housing Agency that serves as the supervisory party for the Federal Home Loan Bank system, Freddie Mac, and Freddie Mae during the recent economic crisis
- Provided expert witness testimony in various legal liability and criminal cases involving banking related matters
- Well, known speaker on banking related matters on both the state and national level
The original founder of a start-up bank that was later sold
A former member of the Board of Director of two community banks
In this webinar, Toby Lawrence who has 30+ years of experience and has been a senior partner in two national certified public accounting firms, the President and CEO of a community bank, and was the co-founder of Platinum Risk Advisors, the ultimate outsourced CECL solution (see https://cecladvisors.com/) will discuss the following topics:
- Overview of the CECL calculation under three widely recognized methods:
o The probability of Default / Severity of Loss
o Migration Analysis
- How will the accounting change for classified loans considered impaired under FAS #114 or for troubled debt restructured loans?
- What data is needed to implement CECL?
- How is this data gathered, how should an institution track it, and when should an institution start to gather the data?
- What are the typical subjective adjustments used in the CECL calculation and what data and other information will be needed to support an institution’s adjustments
- What other information will be needed to justify your subjective adjustments and where can you obtain this information?
- Best practices and/or lessons learned from larger institutions that have already taken the steps to calculate CECL
- What are the regulator's expectations for banks and credit unions both before you are required to implement CECL and after?
The Current Estimated Credit Loss Model (CECL) is considered the biggest change to hit the banking and credit union industries.
Although the standard has been delayed to the first quarter of 2020 for public business entities that file with the Securities and Exchange Commission, 2021 for all other public business entities as this term is defined under the accounting standards, and 2022 for all remaining banks and credit unions this is a standard that you need to understand now and start the process for implementation.
Why implement now? CECL is going to require your institution to gather data that you currently don’t track in your data processing system. For you to be able to properly adapt the standard you need to start inputting this data into your system now. Secondly, to the extent, you are originating loans prior to the required implementation you need to know the effect CECL will have on your allowance for loan losses calculation so that you can build that additional cost into your loan pricing models. Lastly, you should understand the effect that CECL will have on your capital position so that you adjust your growth and dividend plans over the next couple of years if necessary.
Course Level - Basic to Intermediate. Even if you are not an accountant or responsible for implementing CECL in your institution you will gain valuable information for your institution and how this new standard could affect your future earnings, capital, and pricing of loans.
Who Should Attend
- President and CEOs
- Chief Financial Officers
- Chief Credit Officers
- Senior Lending Officers
- Loan Officers
- and Board of Director Members of Banks and Credit Unions
Why Should Attend
This webinar is designed for President and CEOs, Chief Financial Officers, Chief Credit and Senior Lending Officers, and even members of the Board of Directors for banks and credit unions who want to understand how CECL is really calculated and how it will change the way you price and account for the allowance for loan losses under CECL, considered by many to be the biggest change to hit the banking and credit union industries in 40 years.
In this session you will see example calculations for the three most popular methods for calculating CECL; the vintage, probability of default severity of loss, and migration analysis methods. We will also explain how the accounting treatment will change for classified loans that you now assign a specific reserve to under FAS #114 and for troubled debt restructuring loans.
Lastly, we will provide you a list of the data you need to start entering into your data processing system and go over the questions you should be asking of software vendors and outsourced solutions that assist banks and credit unions in the implementation of CECL.