Webinar: Challenges in the Estimation of ALLL
Time: 11:00 am Eastern | 10:00 am Central | 9:00 am Mountain | 8:00 am Pacific
Length: 60 Minutes
Can your bank's Allowable Loan and Lease Losses (ALLL) hold up to the examination of outside auditors and regulators? In today's banking environment you need to have a careful understanding of the challenges associated with ALLL estimation. This session will also examine new techniques and solutions for ALLL management.
This webinar will cover:
- Introduction: Why is ALLL estimation important?
- Regulatory perspective
- Internal auditor and BOD perspective
- The direct impact of ALLL estimation on a community bank's earnings and capital
- The inherent difficulties involved with ALLL calculation/estimation.
- Identifying the key challenges of ALLL estimation
- The manual, time-intensive nature of the process
- Keeping up with changing regulatory guidance, FASB accounting standards, and internal guidelines
- Additional FASB disclosure/reporting requirements
- Increased scrutiny on FAS 5 assumptions
- Increased scrutiny regarding FAS 114 reserves
- Steps to evaluating a FAS 5 methodology
- Avoiding broadly segmented risk pools
- Determining a historical loss factor within each risk pool
- The historical loss rate approach
- The migration analysis approach
- Making qualitative adjustments
- The Interagency Guidelines on the ALLL approach
- The correlation analysis approach
- Challenges and improvements in FAS 114 Calculation
- Determining which loans need to be evaluated under FAS 114
- Distinguishing between loans evaluated under FAS 114 and Pooled Loans
- Ensuring loans aren't being double counted for reserves under both FAS 5 and FAS 114
- When to evaluate using the "fair market value of collateral" vs. "present value of future cash flows."
- Using the appropriate and updated values for impairment analysis under either method.
- Using the "fair market value of collateral" method
- Using the "present value of future cash flows" method
- Reassigning loans to their respective pools
- Other Potential Topics
- Making proper qualitative factor adjustments
- Implementing migration analysis and overcoming challenges
Speaker Bio: Mike Lubansky is a director of consulting services at Sageworks, where he oversees product development, market research, and implementation in the financial institutions market. He serves as the in-house ALLL expert for Sageworks, and has led the implementation of an automated ALLL solution more than 70 financial institutions ranging in size from $37 million to $15 billion in assets. Mike has spoken for several different audiences, including several regulatory agencies, on matters pertaining to the community banking industry.
1 CPE Credit
Program Level: Basic-Intermediate
For more information, call 800-422-7285.