RALEIGH, NC (December 31, 2013) -- There are thousands of financial institutions of varying sizes and with varying portfolio complexities in the United States, each facing unprecedented scrutiny from regulators, customers and shareholders. One high priority issue for institutions is the calculation of the allowance for loan and lease losses (ALLL). Consequently, it can be helpful to gain insight into other institutions’ processes for the allowance, and other bankers’ expectations regarding proposed FASB changes. Sageworks recently released a report containing a collection of data from polls conducted during multiple webinars hosted during 2013.
Sageworks, a financial information company and provider of risk management solutions, assists financial institutions across the country with the calculation of their ALLL and hosts financial webinars that feature in-house consultants as well as former regulators and industry experts. In addition to offering bankers the most up-to-date, actionable interpretations of federal guidance and risk management expectations, these webinars provide opportunities to assess and share information about challenges facing financial institutions and about best practices for addressing those challenges.
Attendees of the webinars, and therefore respondents to the polls, included a variety of banking job titles but were people involved with the allowance. Participating institutions ranged in size from $50 million in assets to more than $80 billion.
These poll results provide insight into other institutions’ processes for the allowance as well as other bankers’ expectations regarding possible changes related to the FASB’s CECL model. Financial executives and decision makers can use this report to help evaluate their current procedures and to better understand the challenges institutions struggle with most. Armed with this peer data, bankers may be better equipped to face these challenges or remedy inefficiencies.
The report, available for download on the Sageworks website, is grouped according to themes within the ALLL:
- ALLL Processes covers the technologies that banks employ alongside benchmarks for process durations, including disclosures.
- FAS 5 or General Reserves details specific questions asked in regards to pooled loan analysis.
- FAS 114 or Specific Reserves identifies common obstacles within impairment analysis.
- Expectations for the Future outlines the impact banks are expecting through the FASB’s proposed changes and how they are preparing today.
About Sageworks
Sageworks is a financial information company that provides risk management and financial analysis solutions to accounting firms and financial institutions. Financial professionals looking for an allowance for loan and lease losses solution that banks and credit unions use to streamline reserve estimation with a consistent and defensible methodology, proven to satisfy auditors, examiners, should consider Sageworks’ ALLL Methodology Solution.