Bank on Wipfli - Blog and Podcast

 

CECL Easy Button

Jan 27, 2019
By: Craig Gugliemetti
Financial Institutions

It’s around this time each year, as the NFL playoffs inch closer to the Super Bowl, that I begin thinking about one of the other annual traditions associated with the “Big Game” — watching Super Bowl commercials! Over the course of many years, advertisers have pulled on our heartstrings, left us laughing and sometimes stunned or confused us with their ever-growing unique, catchy or inspiring messages. For me, some of the more memorable commercials include the various skits involving the Budweiser Clydesdale horses, the Pepsi and Coca-Cola delivery men’s strife and the legendary Betty White in the Snickers ad with the catch tagline, “You’re not you when you’re hungry.” There’s one commercial, however, that debuted during the 2005 Super Bowl which resonates with an idea that when faced with various challenging tasks that appear to have no easy solution, we could find the answer by pushing the red “easy button.” Yes, this was Staples’ creative approach to their solution of making buying office products easy.

In the financial services industry, I think many of us at times wish there really was an “easy button” to push when faced with those difficult or uncertain business challenges. These might include tasks like implementing new technology, developing and marketing new products, replacing skilled employees or learning and applying solutions to changes in regulatory guidelines or accounting standards. Whatever the challenging situation might entail, a key component in finding a solution often is the appropriate upfront planning and consideration that there might be various alternative solutions to the challenge at hand.

This approach really is an essential starting point for those of us who are responsible for implementing the FASB’s Current Expected Credit Loss (CECL) standard. Since this new standard incorporates various methodologies that can be chosen and allows for flexibility in applying different methodologies to loan pools identified by the institution, many smaller to midsized institutions are left wondering what some viable solutions are that are manageable and practical based on the size and complexity of their loan portfolios. If your institution’s staff is feeling this way and is looking for guidance and assistance in evaluating which methodology (or methodologies) you might consider using, Wipfli can help. We offer a CECL Readiness Snapshot, a proactive approach that will help your institution evaluate where it currently stands with planning and implementation, along with providing direction on the next steps. While there is, unfortunately, no red “easy button” to push that can instantly take care of all the required efforts in implementing the new CECL standard, Wipfli’s commitment to educating and helping with evaluating the underlying methodologies through our readiness snapshot visit can help sort out the uncertainties and keep your institution on track.

Author(s)

Craig Gugliemetti, CPA
Senior Manager
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