Stress testing: Are the results guiding your CECL decision-making?

first_img ShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr continue reading » According to economists, a recession is looming. In a recent survey by the National Association for Business Economics, 74% of economists who responded expect a recession by the end of 2021.Historically low levels of losses have allowed reserve levels to go below pre-financial crisis levels. Charge offs were close to zero for most banks since 2013, according to call report data from S&P Market Intelligence. So the question remains: would they hold up against a recession? Stress testing gives an institution a serious look into their capital and reserves, and if they possess enough of each to remain viable, should a recession hit. It also provides guidance for the impact of the new accounting standard, Current Expected Credit Losses (CECL), on the portfolio. The impending implementation of CECL is forcing institutions to perform economic forecasts, as opposed to the current allowance for loan and lease losses (ALLL) model which focuses on previously incurred losses, to have a more holistic and accurate depiction of risk. It takes into account the entire life of a loan instead of just looking a few years down the road.Both CECL and stress testing take top-down and bottom-up approaches to test the capital adequacy of a financial institution. However, it is important to determine which method is right for your institution. In a recent Abrigo webinar, CEIS Review’s Dean Giglio and David Vest and Abrigo’s Tim McPeak discussed the pros and cons of each approach in both CECL implementation and stress testing.last_img read more

Traore out for ‘weeks not months’

first_img The Ivory Coast international reported a problem during the warm-up ahead of Saturday’s defeat at Chelsea and was immediately withdrawn from the starting line-up. “Obviously with this sort of injury it is normally weeks rather than months,” Martinez told City Talk 105.9. Everton’s on-loan striker Lacina Traore is expected to be sidelined for a number of weeks with a hamstring injury, manager Roberto Martinez has confirmed. “The type of player Lacina is, a sprinter, means these sort of injuries need to be well recovered.” The 6ft 8in forward arrived from Monaco, having not played since November because of the winter break in the Russian season while at previous side Anzhi Makhachkala, on January 24 with an existing hamstring injury to his other leg. That delayed his involvement until he scored on his debut in the FA Cup victory over Swansea on February 15, which remains his only appearance. He now looks like missing possibly the majority of March, so the return to fitness of Everton’s other on-loan striker Romelu Lukaku is timely. The Belgium international injured an ankle in the Merseyside derby defeat at Anfield a month ago but would have been fit to play last weekend had the match not been against parent club Chelsea. “Romelu has been working really well and been looking fresh and ready. It has been such a demanding season for him,” Martinez told evertontv. “You need to refresh a little bit and get back even stronger and that is where we will see the benefit. “He watches every single game and has been keeping an eye on what we have been doing.” Everton have appealed to fans attending Saturday’s match at home to West Ham to bring donations for a food bank to help less fortunate people in the city. Staff from the club’s community department will be collecting food and toiletries to be distributed at a ‘People’s Picnic’ at Goodison Park after the match with any leftover items donated to a local food bank and various Merseyside charities. center_img Press Associationlast_img read more