CECL Data Prep Guide

The FASB issued the final CECL guidance on June 16, 2016, and gathering data is one of the key first steps in preparing for the change. This CECL data prep guide outlines the basics for bank and credit union executives to consider when evaluating the institution's data and includes two handy checklists: ensuring data adequacy, and evaluating third-party vendors for data archiving.

Whitepaper: The basics of PD/LGD

Probability of default/loss given default (PD/LGD) is widely recognized as a robust type of analysis for determining portfolio loss estimates. Download this whitepaper to learn what PD/LGD is and why it is gaining popularity, how to calculate PD/LGD and the benefits and challenges of using the methodology.

Present Value of Future Cash Flows Whitepaper

Loans identified as impaired must be evaluated individually using one of three methods: present value of cash flows, fair value of collateral or observable market price. This whitepaper outlines when and how to calculate the present value of future cash flows and includes visual examples.

Q Factors: Data, Drivers & Documentation

Qualitative and environmental factors are often regarded as the most subjective, and in turn, highly scrutinized components of the allowance for loan and lease losses (ALLL) calculation. This whitepaper covers how effectively using data, drivers and documentation can provide objectivity to this otherwise subjective task and help bankers avoid examiner criticism. Learn which data points can be used to justify assumptions, how to use drivers to ensure directional consistency and best practices for Q factors in general.

TDR 101: “ALLL” About Troubled Debt Restructurings

Troubled Debt Restructurings (TDRs) are often a source of confusion for bankers. Many questions stem from identifying, accounting for, reporting and removing TDRs. Download this whitepaper to learn about the evolution of regulatory and accounting guidance on TDRs, how to identify TDRs, their ALLL implications and other common questions surrounding these loans, such as "Once a TDR, always a TDR?"

Backtesting: Measuring the Effectiveness of Your ALLL Methodology

Backtesting your ALLL is one way to show the accuracy of your estimates and to add defensibility when dealing with examiners and auditors. It consists of comparing forecasted losses with actual losses and examining the variance. This whitepaper addresses questions financial institutions should ask to assess model accuracy, at both the portfolio and concentration level.

The Auditor vs. Regulator Dilemma

Regulators and external auditors have very different motivations. Regulators are charged with safety and soundness of the financial system while auditors represent the board of directors and shareholders. Therefore, it is not uncommon for each party to offer seemingly conflicting feedback as it relates to the ALLL. This whitepaper covers the inherent interests of both parties and how to balance the demands of both regulators and external auditors.

OCC-Risk Management Guidance on Third Party Relationships

This whitepaper focuses on the OCC risk management guidance on third party relationships; however, the content of planning, due diligence, contract negotiation, monitoring, etc. is applicable for all institutions regardless of governing body. The whitepaper outlines best practices for evaluating third party relationships and offers advice on how to properly manage your regulatory body's expectations in this area.

ALLL Qualitative Factors: Justifying in Periods of Low Loss

The appropriate determination of adjustments for Q factors may be the largest obstacle bankers face in arriving at a defensible and justifiable calculation, particularly in periods of low loss. These factors are inherently subjective and have long been an area of examiner scrutiny if not approached correctly. This whitepaper details items to be aware of in periods of low loss, and offers suggestions to help financial institutions add objectivity and structure in their processes.

4 Advantages of ALLL Scenario Building

Though it may be an often overlooked device for managing the ALLL, scenario planning enables bankers and auditors to assess the outcome of the ALLL calculation under various assumptions or “scenarios.” This whitepaper examines the benefits of being able to build scenarios in four distinct areas of the ALLL: the quarterly (or monthly) calculation, when exploring the impact of altering look-back periods, when considering a change in loss methodologies and when capital planning for CECL.

Updated on May 04, 2016.
http://www.alll.com/resource-center/scenario-building-advantages-whitepaper/

Benefits of Segmentation in the ALLL & Risk Management

Sufficient segmentation is paramount in understanding an institution's portfolio performance. Properly segmenting the portfolio allows bankers to quickly identify underlying risk behaviors and make decisions based upon performance of segmented pools within the allowance calculation. What's more, as the ALLL evolves to an expected loss model, additional segmentation may be required. This whitepaper discusses why institutions segment the portfolio, gives an overview of best practices and highlights the benefits of proper segmentation.

Examiner Concerns with Spreadsheets

This white paper addresses the various concerns that examiners and auditors have with spreadsheets. From version control to the effect of cascading errors, spreadsheets are largely considered to contribute to model risk in the calculation of the allowance for loan and lease losses.
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