CECL scheduled to take effect January 1, 2023

Published 9.7.21

There is significant concern that CECL will negatively impact and limit the ability for financial institutions to lend due to requirements to retain more capital, and HCUA has worked on your behalf with regulators to delay and with lawmakers in support of legislation addressing these concerns with CECL. U.S. Representative Blaine Luetkemeyer (R-MO District 3) has been a strong proponent of delaying, studying, and reversing CECL, with two previous bills introduced.

We’ve had success in delaying implementation - FASB adopted a 2019 adjustment proposal changing the CECL requirement for credit unions from January 2021 to the current January 1, 2023.  However, there is no CECL-related legislation moving forward at this time in Congress. While HCUA will continue efforts to delay and/or reverse CECL for credit unions, there is no guarantee Congress will take further action before the end of 2022.

Preparing for CECL implementation

If your credit union has not already begun this process, it is recommended your credit union prepare for CECL implementation before the effective start date. Three things to keep in mind:

Lifetime loss approach.

The annual loss rate cannot be used for calculating historical loss experience under CECL. Instead, it must be based on some form of lifetime loss approach, and the method for calculating the lifetime loss rate isn’t narrowly defined.

Three elements to CECL.

The allowance calculation under CECL equals:
Historical Loss rate +/- Current Economic Conditions/Qualitative Factors +/- Reasonable Forecasted Economic Conditions

Historical data. 

While historical loan data may be difficult or limited, one option may be using monthly board reports with references to loan information for that month, to help calculate the historical loss rate.

CECL resources

Below are resources available to help your credit union prepare in advance of the January 1, 2023 implementation date. Without any additional delays or change in standard, the required regulatory reporting for credit unions begins with the March 31, 2023 Call Report.


For questions about CECL, please email [email protected].