Presenting ALLL Results to Examiners
In presenting ALLL results to examiners, documentation is key. Because the ALLL calculation is comprised of many individual calculations and assumptions, it is imperative that examiners are able to see the logic and rationale used in order to arrive at an institution’s overall allowance number.
According to the 2006 Interagency Policy Statement on the ALLL, “Allowance estimates should be based on a comprehensive, well-documented and consistently applied analysis of the loan portfolio.” In order to uphold this expectation, institutions should be prepared with defensible answers and supporting documentation at the time of the exam. They should comment on any areas that are not overtly subjective in order to show transparency of all assumptions in the calculation, and should incorporate knowledge of where the portfolio has been, where it is today and where it is going in the future.
Related Asset - Whitepaper:
Documenting the ALLL: What Examiners Expect
Documenting the ALLL: What Examiners Expect - Download the PDF
Related Asset - Blog
What are examiners’ most frequent concerns?
Excerpt Pulled From Blog:
"In the most recent issue of Supervisory Insights, the FDIC included an article highlighting evolving risks in banking. The findings from this report are derived from of a culmination of FDIC exams, in which repeated Matters Requiring Board Attention (MRBAs) have surfaced. "
Read More: https://www.alll.com/resource-center/examiners-frequent-concerns/
Related Asset - Whitepaper:
Examiner Concerns with Spreadsheets
Examiner Concerns with Spreadsheets - Download the PDF