Federal Reserve – Current Expected Credit Losses

Posted on June 8, 2022Comments Off on Federal Reserve – Current Expected Credit Losses

Federal Reserve announced it would soon release a second tool to help community financial institutions implement the Current Expected Credit Losses (CECL) accounting standard.

(STL.News) The Federal Reserve announced on Tuesday it will soon release a second tool to help community financial institutions implement the Current Expected Credit Losses, or CECL, accounting standard.

Known as the Expected Losses Estimator, or ELE, the spreadsheet-based tool utilizes a financial institution’s loan-level data and management assumptions to aid community financial institutions in calculating their CECL allowances.

“The Fed’s unique approach in providing CECL compliance tools for small banks, through SCALE and today’s introduction of the ELE tool for more complex small banks, continue our work to tailor supervisory approaches to fit the size, risk, and business model of financial institutions.  I am confident these tools will assist our smaller banks enabling them to prioritize serving the financial needs of their communities and customers,” said Governor Miki Bowman.

The ELE tool will be launched during an “Ask the Fed” webinar on June 16, 2022.  The session is intended for community financial institutions.  Registration information is available at www.askthefed.org.  In addition, the ELE tool will be available via www.supervisionoutreach.org/cecl.

The launch of the ELE tool builds on the Federal Reserve’s previous release of the Scaled CECL Allowance for Losses Estimator, or SCALE, tool to also help community financial institutions implement the CECL accounting standard.  Together, the ELE and SCALE tools provide two simplified approaches to CECL calculations for smaller community financial institutions.

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