The “latest life-of-loan,” or “Weighted Average Remaining Maturity,” and other enhancements are included in the updated tool to help credit unions comply with accounting rules designed to improve recognition of credit losses on loans and debt securities, the federal regulator said Thursday.
The National Credit Union Administration (NCUA) said its Simplified Current Expected Credit Losses (CECL) tool is an option for credit unions to use in estimating the allowance for credit losses on loans and leases. The agency said it issues, and uses, quarterly updates of the tool to enable a credit union to use it before its books are closed and submits its it makes its quarterly call report.
The CECL accounting standard took effect about a year ago (Jan. 1, 2023) for most credit unions. The agency said that, for those credit unions now using the CECL tool, it provides the September 2023 release to determine the credit loss expense, or provision for credit losses, for the quarter that ends Dec. 31.
“For credit unions that adopted CECL in the fourth quarter of 2023, the December 2023 Call Report will include the day-one adjustment to undivided earnings and the credit loss expense since the date of CECL adoption,” NCUA said in a release.