How is the CECL standard affecting bank financial statements? How should banks respond going forward? Crowe specialists explain.
Now that virtually all banks have made the transition to the current expected credit loss (CECL) standard for estimating their expected credit losses, many bank boards and management teams are wondering what’s next. How will the new CECL standard affect their allowance calculations? What impacts can they expect to see on their financial statements and related ratios? And what steps should they be taking now that their initial CECL implementation is complete?
The experiences of prior CECL adopters can help answer such questions, especially in view of the exceptional circumstances of the COVID-19 pandemic that coincided with many banks’ transition to the CECL standard. Board members – and audit committee members in particular – can apply some of the lessons learned by prior adopters as they move through their banks’ CECL implementation and fine-tune their models.