CECL Modeling

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Overview

Flexible, compliant credit loss forecasting for credit unions.
ALM360’s CECL (Current Expected Credit Loss) Modeling modules provide credit unions with two powerful methodologies for estimating expected credit losses: PD-LGD (Probability of Default/Loss Given Default) and SCALE (Simplified CECL Allowance Loss Estimator). Both models are fully integrated into the ALM360 platform, leveraging unified data and assumptions for consistent results.

PD-LGD CECL Modeling

Purpose: Provides granular, risk-based credit loss forecasting tailored to loan-level data. Key Features: Segment-level PD/LGD estimation, economic scenario conditioning, vintage and cohort analytics, and concentration risk analysis. Benefits: Precise, risk-based loss forecasting; supports complex portfolios; integrates with ALM and financial simulation tools for holistic risk management.

SCALE CECL Modeling

Portfolio Upload and Management
Upload and manage your investment portfolios for consolidated analysis and reporting.

Performance Analytics
Review security-level and portfolio-level metrics such as duration, yield, convexity, and credit exposure. Use filters to sort by sector, maturity, rating, or issuer.

Comprehensive Reporting
Generate detailed reports for ALCO and board-level presentations, supporting transparency and regulatory compliance.

Performance Attribution
Decompose portfolio returns to understand the drivers of performance, such as interest rate changes, yield curve shifts, and volatility.

Why Two CECL Models?

Credit unions vary in size, portfolio complexity, and data availability. ALM360 offers both PD-LGD and SCALE so every institution can select the model that best fits its operational needs and regulatory requirements. Both models are designed to meet CECL standards, but each offers distinct advantages:

PD-LGD: Granular, risk-sensitive, and tailored for credit unions with diverse or complex loan portfolios.
- Mid-to-Large Credit Unions: PD-LGD is recommended for credit unions with more complex portfolios, diverse loan types, or those seeking granular risk analysis. It provides deeper insights and supports advanced modeling.
SCALE: Streamlined, efficient, and ideal for smaller institutions or those seeking rapid, low-touch implementation.
- Small Credit Unions: SCALE is recommended for smaller credit unions or those with straightforward loan portfolios. It offers rapid onboarding and compliance with minimal data requirements.

How are the Models Similar?

Both comply with CECL accounting standards and regulatory guidance.
Both are integrated with ALM360’s unified modeling engine, ensuring consistency across risk, liquidity, and financial planning modules.
Both support audit-ready reporting, scenario analysis, and examiner reviews.

How are the Models Different?

Feature	PD-LGD Model	SCALE Model
Data Requirements	Detailed, loan-level data	Historical loss rates, call report data
Portfolio Complexity	Best for diverse or complex portfolios	Best for straightforward portfolios
Risk Sensitivity	High—tailored to specific loan types	Moderate—uses pooled data and benchmarks
Implementation Effort	Higher—requires more data and calibration	Lower—quick setup, minimal data needed
Customization	Extensive—segment-level, scenario analysis	Streamlined—efficient, standardized
Regulatory Fit	Ideal for mid-to-large credit unions	Ideal for small credit unions

How ALM360 Keeps Your Options Open

ALM360’s modular design means credit unions can start with SCALE for quick compliance and upgrade to PD-LGD as their needs evolve, without changing platforms or retraining staff. Both models share the same user experience, reporting formats, and integration with ALM360’s broader risk and financial management tools.

ALM360 CECL Modeling FAQs

CECL Modeling helps credit unions estimate future credit losses in their loan portfolios, supporting regulatory compliance and strategic risk management. ALM360 provides two CECL methodologies—PD-LGD and SCALE—so every institution can select the approach that best fits its needs.

ALM360 offers Probability of Default/Loss Given Default (PD-LGD) for granular, risk-sensitive analysis, and Simplified CECL Allowance Loss Estimator (SCALE) for streamlined, efficient compliance. Both models are fully integrated with ALM360’s unified platform.

If your credit union has a diverse or complex loan portfolio and wants deeper risk analysis, PD-LGD is recommended. For smaller credit unions or those seeking quick, low-data compliance, SCALE is the preferred choice. ALM360’s modular design allows you to start with SCALE and upgrade to PD-LGD as your needs evolve.

Yes. ALM360’s platform makes it easy to transition from SCALE to PD-LGD as your credit union grows or your portfolio becomes more complex. Both models share the same user experience and reporting formats.

ALM360’s CECL modules generate comprehensive reports, including CECL Package Reports, account-level analytics, concentration risk dashboards, stress testing outputs, and executive summaries. These reports are designed to support regulatory compliance, strategic planning, and board/examiner reviews.

All CECL outputs are audit-ready, with transparent assumptions and detailed documentation. The platform supports examiner reviews and regulatory submissions, helping credit unions stay ahead of evolving standards.

Yes. ALM360 offers onboarding support, training resources, and ongoing assistance to ensure your credit union can implement and maintain CECL compliance with confidence.

Ready to See ALM360 CECL Modeling in Action?

Discover how ALM360’s flexible CECL Modeling options can help your credit union achieve compliance, streamline reporting, and gain deeper insights into portfolio risk. Whether you need granular analytics or a simplified approach, our platform adapts to your needs and grows with your institution.

Book an ALM360 Demo today to explore both PD-LGD and SCALE modules and see how easy it is to optimize your credit union’s credit loss forecasting.

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