skip to Main Content
FASB: “Weighted-Average” Method Works For CECL

FASB: “Weighted-Average” Method Works for CECL

Jan. 14, 2019

The Financial Accounting Standards Board said the “weighted-average remaining maturity” method of estimating expected credit losses is one of many acceptable methods for complying with the Current Expected Credit Loss standard.

As FASB notes in a new question-and-answer document, the WARM method uses an average annual charge-off rate as a foundation for estimating credit-loss content. FASB’s accounting standard states that there is no preferred method, so bankers will have a wide range of choices.

ICBA has worked for years with FASB and federal regulators on the standard to ensure it is scalable and flexible for community banks.

Regulators have said they don’t expect community banks to need to adopt complex modeling techniques or engage third-party service providers to comply, though ICBA continues working to minimize the effect of the forthcoming standard.

Read FASB’s Q&A


Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top