Episode Details

This episode reviews an article from Bank Director titled “CECL update eases the math for M&A.” One of the problems with M&A transactions is called the CECL double count. This is where an acquiring bank must make additional provisions for non-purchased credit-deteriorated loans (loans that have not experienced credit loss). A buyer must set aside EXTRA capital to cover expected losses on loans, in addition to the credit loss expectations that have already been allocated, thus the double count. With FASB removing this requirement, depending on the size of the deal, and your bank’s capital position, this change could really help M&A transactions. A link to the article is included below.  

Link: CECL Update Eases the Math for M&A | Bank Director