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Financial institutions can head off problems with examiners related to the ALLL, by avoiding several common pitfalls and by addressing certain hot-button issues currently in focus. Walter McNairy, managing partner of DHG Financial Services, a national practice of Dixon Hughes Goodman LLP, provides some tips.

Recent OCC guidance answered the question, “How is the effective interest rate determined when measuring impairment of a TDR [troubled debt restructuring] loan?” Here are the details.

In the competitive world of credit unions, as in fantasy football leagues, comparative data can play a role in improving performance and in keeping tabs on peers.

A spokeswoman for FASB said Monday that the board now expects its final version of the long-debated current expected credit loss (CECL) model will be issued in the first quarter of 2016. The board’s staff is using the extra time to incorporate recent feedback on the standard, the FASB spokeswoman told Abrigo.

Commonly asked questions of both the experts and peer bankers revolved around ways to improve their institution’s ALLL process and how to make it more comprehensive. A segmentation strategy is a great place to start to nail down an effective and efficient process to not only serve a substantial purpose for the ALLL, but also as a larger risk management tool.

Documentation of methodology will be especially important for banks and credit unions that shift to the probability of defaul/loss given default, or PD/LGD, method for estimating loss rates in the ALLL, considering the dearth of easy-to-understand regulatory guidance on the method and the scrutiny regulators will provide to financial institutions’ loan-loss estimates.

When calculating the impairment of a loan deemed to be impaired, guidance requires that the loan should be evaluated using one of three valuation methods. Many institutions question how and when to use two of the valuation methods -- present value of cash flows and fair value of collateral -- in order to determine the impairment and potential reserve. There are key distinctions to these methods of calculation.

This post reports on when the FASB expects to issue final guidance on the current expected credit loss model (CECL) and notes two board members will reportedly oppose the final standard.

James Schnurr, chief accountant for the Securities and Exchange Commission, outlined his thoughts on the FASB’s new credit impairment standard (CECL) Thursday during the AICPA’s National Conference on Banks and Savings Institutions.

Yesterday, the NCUA unanimously voted to raise the threshold for small credit unions from $50 million to $100 million in total assets. This change, a part of the Regulatory Flexibility Act (RFA), allowed the NCUA to determine and consider the impact of proposed and final rules on small credit unions, and with it, more CUs will be considered for regulatory relief in future rulings. This marks the first change since the threshold moved from $10 million to $50 million in 2012.

In an August webinar on the do’s and don’ts for CECL preparation with more than 750 banking executives in attendance, Abrigo polled attendees for their thoughts on how the FASB’s current expected credit loss (CECL) model might impact their institution’s (ALLL) reserve allocation.

Some data practices at banks and credit unions may fall short of what's needed to transition to the FASB's new current expected credit loss model, or CECL. Here are four ways that the data currently tracked may be inadequate when it comes to being prepared for CECL.