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MST 2018 Annual Lender Survey Tracks Progress as Institutions Prepare for CECL Accounting Standard
[June 14, 2018]

MST 2018 Annual Lender Survey Tracks Progress as Institutions Prepare for CECL Accounting Standard


ATLANTA, 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.

MST

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:

  • Around 80% noted they have representatives from accounting and credit involved in CECL preparations
    • Few have included someone from the Board of Directors (21%) or audit (27%)
  • 28% are evaluating prospective third-party partners to help with the transition while 31% have already engaged third-party support
  • 32% feel they have sufficient data compared to only 19% in 2017
    • 70% are still compiling data and 15% have determined they will need more data
  • 38% are going back 5-7 years to gather data, while 39% are going back 8+ years
    • In 2017, only 28% reported they will gather data from 8+ years back
  • 59% reported CECL will cause them to change how they pool or segment their loans
  • Only 45% feel CECL will increase their reserves, an optimistic turnaround from 93% who felt the same way in 2016
  • 76% feel the data they collect for CECL will be useful for other applications

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
MST, a Banker's Toolbox company, empowers financial institutions with confidence in their allowance estimations through innovative software solutions, advisory services, and education. Financial institutions across the U.S. employ MST to address their allowance requirements, including the software and subject matter expertise to achieve and maintain compliance with U.S. GAAP and the impending CECL accounting standard. MST solutions are tailored for the institution, integrate with core and other lender systems, and exponentially improve efficiencies. Contact MST at 877-910-9789 or visit the MST website: www.mainstreet-tech.com.

 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/mst-2018-annual-lender-survey-tracks-progress-as-institutions-prepare-for-cecl-accounting-standard-300666754.html

SOURCE MST


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