You might be hearing some buzz about an accounting rule change on credit losses that is going to impact credit unions in the future. CECL (pronounced like the name Cecil) is the Current Expected Credit Loss standard and will replace your credit union’s allowance for loan loss. While the change is not until early 2022, there is a lot of work to be done to make the transition. We thought you might want to know about a few things that are occurring to help with the change.
- Last week, CUNA President/CEO Jim Nussle wrote to NCUA, asking them to start offering some education sessions for credit unions. He noted that “While this (the effective date) may appear to some to be far off, when you consider the amount of work required to adopt necessary changes—even if using a vendor—it is much closer than many credit unions may realize.” The letter also added that “We (CUNA) have heard from credit unions in every asset size category that CECL remains a top concern to them.” Since NCUA noted CECL as a top regulatory concern for 2019, it is clearly on their radar already.
- During our Power Up annual conference in Butte May 15-17, there will be a breakout session with speaker Jeff Rendel (someone we feature on this blog regularly!) titled CECL and a Rising Rate Environment: What Every Director Should Know. Many of your CEOs and CFOs are working with vendors and toward the shift, but you need to be aware of how the change will impact the financials that you see.
- We are working with the company Visible Equity (as are many of the credit unions in Montana) to host a September roundtable discussion on the best practices of implementing and preparing for CECL. As details emerge, we’ll keep you posted. They will also be an exhibitor in Butte in May!
As you maneuver the road ahead on CECL transition, we hope you will look to MCU as a resource to help you in the process.