Scaled CECL Allowance for Losses Estimator (SCALE) Method and ToolSCALE

On July 15, 2021, staff from the Federal Reserve hosted an Ask the Fed webinar on the SCALE method and tool for determining expected credit losses under CECL. The Financial Accounting Standards Board (FASB) and the Conference of State Bank Supervisors (CSBS) also participated in the webinar. A recording of the webinar can be accessed by clicking here.

The SCALE method is a simple, spreadsheet-based method developed by the Federal Reserve to assist smaller community banks in calculating their CECL compliant allowances for credit losses (ACLs) using proxy expected lifetime loss rates. 

The SCALE tool, also developed by the Federal Reserve, is a template that smaller community banks with total assets of less than $1 billion can use if they wish to use the SCALE method. This tool uses publicly available data from Schedule RI-C of the Call Report to derive the initial proxy expected lifetime loss rates. If a bank uses the SCALE tool, bank management must use judgment to further adjust the proxy expected lifetime loss rates to reflect bank-specific facts and circumstances to arrive at their final ACLs estimate that adequately reflects their loss history and the credit risk in their portfolio. 

Resources:

• Ask the Fed Webinar - CECL: Scaled CECL Allowance for Losses Estimator (SCALE) Method (July 15, 2021)
• SCALE Tool
• SCALE Tool Instructions
• SCALE Tool Frequently Asked Questions (October 18, 2021)
• RI-C Data Spreadsheets 

Have a SCALE method question? Please contact your regulator.