CECL disclosures

What does an allowance rollforward look like?

The rollforward is presented by portfolio segment, such as commercial, real estate and consumer, and explains the reasons for significant changes, for example a worsening forecast or loan growth.

What do CECL disclosures require?

• Methodology: how the allowance was developed, the methods and inputs, the reasonable and supportable forecast period, the reversion method and the factors that changed the estimate.
• Rollforward of the allowance by portfolio segment, including write-offs and recoveries.
• Credit quality indicators by class of financing receivable, such as internal risk ratings or credit scores, disaggregated by year of origination for public business entities.
• Gross write-offs by year of origination, for public business entities, added by ASU 2022-02.
• Past due aging and nonaccrual status, including interest income recognized on nonaccrual assets.
• Collateral-dependent assets: the type of collateral and how much of the asset it covers.
• Purchased financial assets with credit deterioration, where relevant.

Charge-offs and recoveries should agree to the amounts reported elsewhere, such as in regulatory filings, so preparers reconcile them before publishing.

What is the vintage disclosure?

A table showing the amortized cost of each class of loans by credit quality indicator, split by the year the loans were originated, for the last five years and earlier years together. It lets readers see whether recent lending is weaker than older lending, and how each cohort is performing. Revolving loans are shown separately.

What did ASU 2022-02 change?

It eliminated troubled debt restructuring accounting for entities that have adopted CECL and replaced the TDR disclosures with disclosures about modifications made to borrowers experiencing financial difficulty: the types of modification, the amounts, and how the modified loans performed afterwards. It also added the gross write-offs by vintage requirement for public business entities.

What credit quality indicators are used?

Whatever the company uses to manage credit risk: internal risk ratings such as pass, special mention, substandard and doubtful for commercial loans; credit scores and loan-to-value ratios for consumer and mortgage lending; or delinquency status. The indicators should be the same ones management actually monitors, not ones chosen only for the disclosure.

Are CECL disclosures required in interim reports?

Public companies include the main CECL disclosures, such as the allowance rollforward and the vintage table, in their quarterly reports, updated for the quarter. Significant changes in methodology or assumptions during the year should be explained when they happen.

What do SEC comments on CECL disclosures focus on?

How the economic forecast and qualitative adjustments affected the allowance in each period, why the allowance moved differently from charge-offs or loan growth, and how the reasonable and supportable period and reversion were chosen. Specific, quantified explanations of changes are expected rather than general statements.

What do companies with only trade receivables disclose?

Much less: the method used, the factors considered, and a rollforward of the allowance. The vintage disclosure applies to financing receivables such as loans, not to trade receivables with terms of a year or less. Under ASU 2025-05, companies also disclose whether they use the practical expedient for current receivables. See CECL for trade receivables.

How do these compare with IFRS 7?

IFRS 7 requires a reconciliation of the allowance by stage, rather than by vintage, and information on how significant increases in credit risk are identified. See ECL disclosures under IFRS 7, CECL forecasts and reversion and CECL explained.

This guide is general information. It is not tax or legal advice for your situation.