New ABA Discussion Papers Suggest Significant CECL Challenges for Community Banks

Community banks may need to consider implementing the Financial Accounting Standards Board’s Current Expected Credit Loss accounting standard earlier than initially expected, ABA concluded in several new discussion papers now available for download on The standard, which goes into effect in 2020 for SEC registrants and 2021 for other banks, requires an estimate of expected credit losses over the life of the portfolio to be effectively recorded upon origination.

Based on discussions with bankers, regulators, auditors, investors and FASB members, ABA’s papers question the prevailing assumption that CECL will necessitate few changes at community financial institutions, noting that bankers will need to contract data warehousing services to manage the related loan performance data, examine loan characteristics in whole new ways and acquire third-party peer data.

In addition to accessing the discussion papers, ABA member banks are also invited to join the ABA CECL Network. With more than 850 members, the CECL Network provides an opportunity for bankers to share questions, ideas or opinions on a range of issues related to CECL implementation. The network features a library of resources, online forums and periodic conference calls allowing members a chance to properly evaluate the path forward.


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