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What is CECL?

CECL (Current Expected Credit Losses) represents an accounting standard that will replace the current Allowance for Loan and Lease Losses (ALLL) standard.  It is a new accounting model in which lenders evaluate their historic and current losses at different levels of loan types. This enables banks and credit unions to predict future losses and to calculate what to set aside today, by loan type, to cover future losses.  CECL helps financial institutions to estimate future credit losses and decide how much to set aside based on what was historically lost based on various account types.  Unlike ALLL, CECL obligates lenders to estimate at origination for expected credit losses over the life of each loan.

About the Author

Rob Daley Rob co-founded IBS in 1989, after spending six years as a lead developer for a core banking system, and three years as the SVP, MIS at St Mary’s Bank. Rob’s focus remains growing IBS staff, so we provide world class collection and recovery solutions to banks and credit unions, while expanding our partner channels beyond all main core system providers and primary ancillary product relationship partners.