The Current Expected Credit Loss (CECL) model requires ongoing collection of a significant amount of data, including:

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• Asset type or product

• Collateral type

• Origination and maturity dates

• Renewal and prepayment dates

• Amount at origination

• Interest rate

• Charge-off amounts and dates

• Recovery amounts and dates

• Internal or external credit scores or credit ratings

• Risk ratings and risk rating migrations

• Contractual term loss amounts for loans with similar risk characteristics

• Delinquent and nonaccrual loan volumes and trends

• Past due status (e.g., current, 30 days, 60 days, or 90 days past due)

• If a loan has been granted an extension, deferral, or participation in some kind of payment relief program

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In addition, according to the OCC, “Management may consider using external information from peers, regulatory sources, or other third parties to supplement the bank’s own historical data” including forecasts that incorporate “anticipated changes in the economic environment that may affect credit loss estimates over a time horizon.”

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With such stringent requirements, a third-party confirmation of the allowance for credit loss (ACL) methodology validity can assess the data collected and determine if any gaps in reserve calculations exist. This methodology evaluation process includes the assessment of modeling and adjustments to qualitative risk allocations over time, as well as the computation of quantitative allocations based on portfolio size, composition, and duration. This evaluation process extends to those credits which are evaluated individually. Chaston has aided de novo institutions in their pursuit of a strong ACL method and has also guided large institutions who make use of data collection software, some of which have built environmental/qualitative factors that often need to be challenged.