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MST 2018 Annual Lender Survey Tracks Progress as Institutions Prepare for CECL Accounting StandardATLANTA, June 14, 2018 /PRNewswire/ -- Financial institutions are not nearly as prepared for CECL as they should be. MST, the pioneer and leading provider of allowance solutions to America's financial institutions, released today the results of its 2018 annual lender survey which focuses on the new accounting standard, CECL (current expected credit losses). According to the survey, almost all institutions have started preparing for CECL, though almost none have finished. Few, especially smaller institutions, are as far along as they should be, note CECL experts. Fifty-five percent of respondents indicated they were "having internal discussions/meetings" on their plans to implement CECL, while 27% are testing potential CECL-compliant methods. A meager 2% claim to have completed their transition process. "That's not far enough along for many institutions," MST Senior Advisor Paula King said. "If you are an SEC filer you will be estimating under CECL on March 31, 2020. You'll want to start testing your models by the first quarter of 2019, which gives you less than a year to secure external help if you need it, budget for your transition and draft your roadmap, which will include gathering and assessing your data and re-segmenting your pools." The annual survey tallied responses from a wide range of institutions covering all 50 states. Half the respondents are in institutions of under $1 billion in assets, another 31 percent in institutions of between $1and $5 billion in assets, and 18 percent over $5 billion in assets. Other key takeaways from the survey include:
The implementation of CECL is a great time for financial institutions to reevaluate different aspects of their allowance estimate model, including methodologies, pooling, and Q factors. "This is an opportunity to not only meet current needs but prepare for future growth and product changes," pointed out MST Senior Advisor Shane Williams. To see the entire whitepaper and full survey results, visit https://info.mainstreet-tech.com/cecl-survey-financial-institutions-results-2018. About MST
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