What is the typical number of pools you see for FAS 5 segmentation in $500M banks?
Content Type: Question
What is the typical number of pools you see for FAS 5 segmentation in $500M banks?
How much should you segment your ASC 450-20 (FAS 5) pools?
Content Type: Resource Center
The benefits of segmentation within the allowance for loan and lease loss calculation are many. Institutions can gain more insight into sub-segmented performance, conduct more sophisticated loss methodologies such as migration analysis and can make better-informed lending decisions over time. However, institutions must not risk over-segmenting to the point of losing statistical relevance. Thus, institutions must be cognizant of how much segmentation they should apply to their portfolios and arrive at a point that both they and their examiners are comfortable with.
How to Calculate Your ASC 450-20 (FAS 5) Reserves
Content Type: Resource Center
Historical loss rates, migration analysis, and peer groups. Which historical methodology should your bank or credit union adopt? This webinar provides an overview of the ASC 450-20 (FAS 5) portion of the ALLL calculation, and gets into the three ways to calculate your quantitative factors, how to evaluate and make adjustments to qualitative factors and best practices for assembling appropriate pools.
How Much Should You Segment Your ASC 450-20 (FAS 5) Pools?
Content Type: Resource Center
Proper segmentation of an institution's portfolio will yield many benefits. For one, institutions can gain more insight into sub-segmented performance when they have a granular view of their portfolio. In addition, more sophisticated loss methodologies such as migration analysis require segmentation of the portfolio and can strengthen an institution's overall ALLL. Overall, institutions should examine the size of their portfolio and arrive at a degree of segmentation that both provides a granular view of their pools while maintaining statistical relevance in the size of their pools.
Assembling Appropriate ASC 450-20 (FAS 5) Pools
Content Type: Resource Center
This brief video touches on the topic of segmentation within the ASC 450-20 (FAS 5) portion of the ALLL calculation. While generally the more granular an institution gets, the more defensible the calculation is in the eyes of examiners, there certainly is a tipping point. Institutions must maintain statistical relevancy and ensure that they do not over-segment their pools. Finding a good balance can help institutions to gain more insight into their portfolio, have a more concise calculation and be better equipped to defend their methodology to auditors and examiners.
What Is the Difference between ASC 450-20 (FAS 5) and ASC 310-10-35 (FAS 114) Reserve Loans?
Content Type: Resource Center
This video covers the differences between the two underlying accounting guidances factoring into the ALLL calculation. While there are some gray areas, typically the existence of an impairment, or the knowledge that the loan will not be paid back in full, including both principle and interest, is the determining factor as to whether a loan will be deemed as an ASC 310-10-35 versus an ASC 450-20. The video goes into more detail.
How to Calculate Your ASC 450-20 (FAS 5) Reserves
Content Type: Resource Center
This whitepaper covers the ASC 450-20 (FAS 5) portion of the ALLL calculation. It starts by defining what ASC 450-20 (FAS 5) is, then delves into the differences between ASC 450-20 and ASC 310-10-35 (FAS 114), specific challenges related to creating ASC 450-20 pools, historic loss rates, qualitative and environmental factors, and understanding different historical loss rate methodologies.
Assembling Appropriate ASC 450-20 (FAS 5) Pools
Content Type: Resource Center
This brief video touches on the topic of segmentation within the ASC 450-20 (FAS 5) portion of the ALLL calculation. While generally the more granular an institution gets, the more defensible the calculation is in the eyes of examiners, there certainly is a tipping point. Institutions must maintain statistical relevancy and ensure that they do not over-segment their pools. Finding a good balance can help institutions to gain more insight into their portfolio, have a more concise calculation and be better equipped to defend their methodology to auditors and examiners.
ASC 450-20 (FAS 5)
Content Type: Methodology
ASC 450-20 (FAS 5) loans are deemed as “performing” loans, and are pooled as opposed to being examined individually. Various measures of loss can be used to determine the expected loss from ASC 450-20 (FAS 5) pools. Institutions who are diligent about segmenting these pools can gather insight into the performance of each pool.
Common Questions Surrounding the ASC 310-10-35 (FAS 114) Calculation
Content Type: Resource Center
This webinar examines the key characteristics of ASC 310-10-35 loans. This includes: differences between ASC 450-20 (FAS 5) & ASC 310-10-35 loans, and when an ASC 310-10-35 can be moved back to ASC 450-20 status, the three valuation methods for calculating ASC 310-10-35s and best practices for each and how to overcome common challenges in calculating the ASC 310-10-35 reserve.