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ALLL / justify a change


justify a change

  • justify a change

    Justifying a Change

    Though a consistently applied ALLL does not typically result in a drastic change, certain improvements may merit inconsistencies. If an institution moves to a more sophisticated model (e.g. migration analysis over historical loss rates), some inconsistency from the prior period may arise, but should be acceptable in the eyes of examiners if the methodology is transparent and well-documented.

    Poll

    What type of data do you anticipate leveraging for your CECL calculation?

    • 1-5 years of detailed loan level data
    • 5+ years of detailed loan level data
    • 1-5 years of aggregate (pool level) data
    • 5+ years of aggregate (pool level) data
    • I don't know the difference

    Tip Of The Day

    Currently the new CECL standard seeks calculations that make use of an institution’s “reasonably available” data. Starting to collect granular, loan-level data today will provide at least three years’ worth of good and useful data by implementation.

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