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NCUA Releases Simplified CECL Tool for Small Credit Unions

Authored By: Lewis Wood on 9/14/2022

The National Credit Union Administration is providing a tool to assist small credit unions with determining their allowance for credit losses (ACL) on loans and leases as required under Accounting Standards Codification Topic 326, Financial Instruments – Credit Losses, commonly referred to as Current Expected Credit Loss (CECL). The Simplified CECL Tool (CECL Tool) is designed for credit unions with less than $100 million in assets. The CECL Tool and its supporting documentation are available on the CECL Resources page at NCUA.gov.

The CECL Tool is one of many options available to calculate the ACL for loans and leases under the requirements of the CECL accounting standard. While credit unions may choose from a variety of credit loss models under CECL (for example, expected loss, discounted cash flow, roll-rate, probability of default), the CECL Tool uses the Weighted Average Remaining Maturity (WARM) methodology.

Read the Letter to Credit Unions

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