On March 25, 2024, the National Credit Union Administration (NCUA) released an update of its simplified CECL tool. The update includes the average loan loss rates for 2021-2023 and the latest life-of-loan, or weighted average remaining maturity factors.

Last year, the CECL accounting standard took effect for credit unions with assets of $10 million or more. The tool has proven helpful for credit unions using it and has also served as a helpful benchmark for the industry. Credit unions currently leveraging the existing tool will find the updated version helps determine the credit loss expense, or provision for credit losses, for the quarter ending March 31, 2024. It’s important to note, while the tool uses a three-year look back, it could possibly result in a delayed reaction of the current rising loss rate environment without management making appropriate adjustments. 

If your credit union is less than $10 million in assets, you may consider using the tool to provide a more accurate measure of credit losses to allow for added feedback for loan portfolio management. 

Have additional questions regarding the updated tool or need a complete CECL model validation performed? Doeren Mayhew's credit union pros are here to help.