Implementing CECL: Federal regulators offer guidance

Description

Abstract: The Current Expected Credit Loss (CECL) model was finalized in June 2016 and will take effect beginning in 2020. Nonpublic business entities (non-PBEs), including most community banks, must implement the new model for fiscal years beginning after December 15, 2020, and for interim periods in fiscal years beginning after December 15, 2021. This article explains the steps banks should take to plan and prepare for the transition to, and implementation of, the new standard, according to federal regulators. A sidebar discusses whether banks should consider stress testing their capital.