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Hybarger & Associates

Serving Small to Mid-Size Community Banks for over Thirty Years

  • Who We Are
    • Firm's Founder and History
    • Officers
  • Who We Serve
    • Who Are Our Clients
  • What We Do
    • Asset / Liability Management >
      • Budgeting
      • Performance Analysis
      • Forecasting
      • Quality Control
      • ALM Board Reporting >
        • The Directors' Financial Digest
        • The Executive Management Series
        • The Account Level Forecasting Series
      • Alternative Planning Scenarios
    • Interest Rate Risk >
      • Reporting for Interest Rate Risk
      • Assumptions & Back-Testing
    • Portfolio Management & Accounting >
      • The InvestWise Reporting Series >
        • Portfolio Management Series
        • Financial Management Series
        • Econometric Series
      • "Total Return" Investment Strategy
    • Liquidity Risk Management
    • Capital Adequacy & Analysis
    • Dynamic Strategic Planning
    • Comprehensive Funds Management Policy
    • CECL Overview >
      • Historical Analysis
      • "Currently" Identifiable Risks
      • "Specific" Potential Risks
      • Potential "Future" Risks
      • Traditional Reserves vs CECL
    • General Consultation >
      • Holding Company Systems
      • Balance Sheet Pricing Strategies
      • Regulatory Reporting
  • What Our Clients Say
  • How We Interface
    • What happens when we become a Client?
    • How are Fees Determined?

CECL:
Current Expected
Credit Losses

("Cliff Notes")

Assessment of
"Currently" Identifiable Risks


Primary Objective of CECL:

To have a sufficiently precise level of reserves so as not to need replacement provisions at time of loss.
Picture
  • CECL Overview
  • Comprehensive Historical Assessment & Analysis
  • Assessment of "Specific" Potential Risks
  • Assessment of Reasonably Identifiable and Potentially Probable "Future" Risks
  • Traditional Reserves vs CECL Reserves

The CECL Literature
neither
Prescribes nor Endorses
any particular
Reserve Calculation Methodologies

Rather:

Methodologies are left to each
individual bank to adopt or to develop
based upon clearly defined
CECL
Principles & Guidelines

Picture

"Contemporary Assessment"
"Current" Loss Exposure

Picture

"Forward Looking"

Comprehensive Exposure
     Current Exposure Levels extended to

Total Period of Potential Credit Exposure in Years
(Remaining Contractual Life)

Reserve Calculation Methodology

Initially & Continuously on every Loan / Risk Asset

Must be computed “on the fly”

~ Therefore, accurate download data is essential ~

Picture

Continue Reading:

  • CECL Overview
  • Comprehensive Historical Assessment & Analysis
  • Assessment of "Specific" Potential Risks
  • Assessment of Reasonably Identifiable and Potentially Probable "Future" Risks
  • Traditional Reserves vs CECL Reserves

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  • Who We Are
    • Firm's Founder and History
    • Officers
  • Who We Serve
    • Who Are Our Clients
  • What We Do
    • Asset / Liability Management >
      • Budgeting
      • Performance Analysis
      • Forecasting
      • Quality Control
      • ALM Board Reporting >
        • The Directors' Financial Digest
        • The Executive Management Series
        • The Account Level Forecasting Series
      • Alternative Planning Scenarios
    • Interest Rate Risk >
      • Reporting for Interest Rate Risk
      • Assumptions & Back-Testing
    • Portfolio Management & Accounting >
      • The InvestWise Reporting Series >
        • Portfolio Management Series
        • Financial Management Series
        • Econometric Series
      • "Total Return" Investment Strategy
    • Liquidity Risk Management
    • Capital Adequacy & Analysis
    • Dynamic Strategic Planning
    • Comprehensive Funds Management Policy
    • CECL Overview >
      • Historical Analysis
      • "Currently" Identifiable Risks
      • "Specific" Potential Risks
      • Potential "Future" Risks
      • Traditional Reserves vs CECL
    • General Consultation >
      • Holding Company Systems
      • Balance Sheet Pricing Strategies
      • Regulatory Reporting
  • What Our Clients Say
  • How We Interface
    • What happens when we become a Client?
    • How are Fees Determined?