Insights from the Experts
If CECL were in place prior to the Great Recession, would the standard have helped banks stave off the impact of the Recession? Under the direction of CFO Larry Sorensen, Washington Trust Bank studied the comparative effects of CECL accounting on bank financial performance, from the provision expense all the way through capital.
In this much requested, insightful video filmed at the 2018 MST National CECL Conference, Sorensen shares information gleaned from the in-depth study.
He covers key findings, including:
- How CECL disconnects credit expense from revenue
- How CECL will impact different lending models and customer segments disproportionately
- How CECL will complicate a coherent view of bank and industry performance
- How CECL will likely lead to more volatility in earnings and capital
Note: Many thanks to Mr. Sorensen and Washington Trust for sharing this important information.