A tool credit unions may use in addressing current expected credit losses (CECL) accounting standards has been updated to provide “life-of-loan” factors, the federal regulator said Monday.
The Simplified CECL Tool, the National Credit Union Administration (NCUA) said, also includes “refinements on the factors for unsecured credit cards loans, payday alternative loans, and leases receivable.”
The NCUA, in a release, said “life-of-loan” factors are also referred to as weighted average remaining maturity. The latest release of the tool is provided to determine the credit loss expense — or provision for credit losses — for the period that ends Sept. 30, the agency said.
Small and “non-complex credit unions” are the targets for use of the tool, the NCUA said, as an option for estimating the allowance for credit losses on loans and leases. “Credit unions with assets of less than $10 million in assets may also consider using tool as it could provide a more accurate measure of credit losses and enable stronger feedback for loan portfolio management,” the NCUA said.