The latest life-of-loan – or Weighted Average Remaining Maturity (WARM) – factors are included in the updated simplified tool for credit unions released Friday to measure credit losses, their federal regulator said.
The National Credit Union Administration (NCUA) said for credit unions using the agency’s Simplified Current Expected Credit Loss (CECL) tool, the latest release facilitates calculating the credit loss expense – or provision for credit losses – for the period that ends Dec. 31, 2024.
The agency typically updates the CECL tool quarterly to assist credit unions in preparing call reports and for their own accounting needs. The tool was developed in 2023, the agency said, primarily for small and non-complex credit unions as an option for estimating the allowance for credit losses on loans and leases. Credit unions with assets of less than $10 million may also consider using the Simplified CECL Tool, as it could provide a more accurate measure of credit losses and serve as an additional tool for loan portfolio management, it said.