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FAQ 3: Optimal CECL Approach
The Optimal CECL Approach for Financial Institutions

CECL FAQ 3
PCBB’s CECL accounting solution, CECL FIT™, calculates all 7 CECL methods simultaneously. Our expert advisors will assist you through the entire process. Call us today!

PCBB provides an end-to-end SaaS solution to financial institutions. This eliminates the need for time-consuming software installation, training and ongoing operations. Additionally, PCBB’s CECL FIT solution provides simultaneous results for multiple methods, allowing financial institutions to move seamlessly to alternative methods when conditions warrant. PCBB built its solution based on decades of risk management expertise in the areas of ALLL, ALM (life of loan) as well as lessons learned assisting banks in their navigation through the last financial crisis.

From the start, PCBB collaborates with financial institutions to guide them through CECL integration. As a bank, PCBB understands the important nuances of CECL from a financial institution’s perspective, including proper portfolio segmentation to match loss methods utilized, development and application of optionality assumptions that affect the determination of the life of loan, as well as the ongoing evaluation of portfolio segmentation, which will likely change over time.

PCBB provides institutions with the ability to move their data and information to a flexible platform that is independent from the core system. This platform permits the calculation of time series analysis necessary for both loss rate under the multiple methods as well as historical prepayment rates, which are necessary to determine life of asset. Additionally, this platform supports other complex analyses needed for both qualitative factors and the forward look.

Yes. PCBB has a Statement of Controls (SOC) for our existing data center and has an additional SOC for our proprietary applications, of which CECL is included. These address the controls for all of our production environments, including access and data.

As financial institutions prepare to be CECL-compliant, they will need to navigate through the process of inventorying and collecting the appropriate data. This includes: analyzing the information to determine proper portfolio segmentations; testing various CECL methods to determine which methods best match each portfolio?s segmentation; testing assumptions robustly; generating results and determining financial impact, if any; and then vetting findings with management, board, auditor, and examiners, along with creating comprehensive documentation.

PCBB’s advisory team of financial service professionals works with institutions to help them through these processes to determine the optimal roadmap for CECL implementation.

PCBB’s CECL solution is the only offering to run all methods simultaneously -

  • closed pool,
  • vintage analysis,
  • average charge-off,
  • roll-rate (migration),
  • probability of default/loss given default (PD/LGD),
  • discounted cash flow and
  • regression analysis.
This allows financial organizations, with PCBB’s assistance, to mix and match these different methods for various portfolio segments to determine the optimal result. Additionally, this flexibility permits a seamless transition from one method to another as economic conditions warrant.

An end-to-end SaaS CECL solution eliminates the need for time-consuming software installation, training and ongoing support and maintenance, while providing business continuity as well as maintaining required documentation to support model governance and validation. Additionally, PCBB’s CECL FIT solution provides simultaneous results for multiple methods, allowing financial institutions to move seamlessly to alternative methods when market conditions warrant.

Along with our team of PCBB experts, we deliver a seamless solution, migrating from ICL to CECL that provides benefits, including:

  • Peace of mind to achieve CECL compliance with expert guidance combined with interactive, SaaS technology
  • Ease and efficiency with an interactive, SaaS solution with multiple user online access
  • Instantly see the impact of adjustments on a customizable executive dashboard.
  • Flexibility to easily create custom loan groups and test with any of the 7 methods simultaneously
  • Maximum versatility to run ?What if? scenarios and select specific loans
  • Quickly identify loan portfolio trends in our intuitive graphical display
PCBB’s CECL Solution provides board-level, CFO, CCO and management insights. Also, all reports support an open and transparent audit trail of all calculations and results. These reports quickly and efficiently provide documentation on the nature of the loan, performance, cash flow, views, loss calculation and peer comparison. Additionally, information can be extracted to support any one-off request from auditors and examiners.

Additional CECL FAQs

  1. The What, When and Whys of CECL Implementation
  2. The Impact of CECL for Financial Institutions

Additional CECL Resources