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CECL implementation for consumer-based receivables - your questions answered

During our latest CECL Tuesday talk-through we answered submitted questions on CECL implementation for consumer-based receivables. This informative article reviews the questions we answered in our session.

Key takeaways:

  • Duration of the receivable is a key factor in methodology selection
  • Segmentation is based on a group of assets with similar risk characteristics (by category, by age, by credit rating, etc.)
  • Typically higher percentage of losses come from this segment, so documentation surrounding calculation and elections are important


  • Often on the “simpler” side of the acceptable method scale
  • Requires less historical data then longer-term counterparts
  • Loss history is more readily available as more losses have typically occurred in these buckets


  • Variety of products that have different risk levels
  • Typically low balance categories thus calculation is often time consuming
  • Challenge to incorporate forecasting into more basic models (aging, roll-rate, etc.)

Key takeaways:

  • It is appropriate to group assets in a small pool with those in a larger pool if they still share similar risk characteristics
  • Could they be assessed individually if they do not share any similar risk characteristics?

Key takeaways:

  • Segmentation is key. Identify differentiating characteristics of credit cards: revolving vs transactors, new vs existing, credit score, etc.
  • Hard to model term as no stated maturity date and expected renewals typically aren’t considered as agreement can be unconditionally cancellable by lender
  • Look at historical data to determine balance attrition and timing of average life

Watch our webinar recording

Ivan Cilik
Matt J. Nitka
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