NU 2025 Conference Test: Life with CECL

Friday, June 20, 2025

Life with CECL

Nikole John, Consultant V, Analytics Incubation, TruStage

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CECL requires an estimate of expected credit losses over the contractual life of a loan.

Regression methodologies look at individual loan characteristics to determine expected losses.

One example of a loan pooling consideration is collateral positioning.

Data requirements are the same for each CECL methodology.

Volatility is one component that is measured to evaluate methodology performance over time.

One reason to individually review loans is to reduce the overall reserve amount.