Level1Analytics has been hard at work to make CECL easy for you. Our model allows for either of the following methods in calculating your Allowance for Credit Losses (ACL):

Loss Rate (WARM method):

Based on historical losses adjusted for expected changes in credit quality over the Weighted Average Remaining Maturity (WARM) of the loans.

PD/LGD/EAD (Roll-Rate method):

L1A's proprietary migration model calculates:

• The Probability of each loan defaulting (PD)
• The Loss Given such a Default (LD) at the Expected Time of Default (EAD)
• The product of PD x LGD is the expected loss on each loan

All loss estimates are done at the loan level and are based on monthly cash flows. Start now for your 1/1/23 implementation of ASC-326.