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Lending & Credit Risk

Monthly vs. quarterly calculations for your ALLL reserve

Sageworks
May 18, 2013
Read Time: 0 min

The regulatory guidance tells us that at a minimum we have to perform a quarterly calculation. However, the advantage of doing monthly calculations is that you can accurately project how your reserve will change over a month and the quarter. These projections are coming from the work on the FAS 114 as a new appraisal may occur, risk rating may change or a re-negotiated debt may happen. These can be updated monthly. 

However, it is not feasible to do any projection for your FAS 5 calculations as these will involve the historical loss rates which are usually done on quarterly charge off rates and the qualitative factors which are based on data that is released by the FRED or another national provider every quarter. But on the FAS 114 side

About the Author

Sageworks

Raleigh, N.C.-based Sageworks, a leading provider of lending, credit risk, and portfolio risk software that enables banks and credit unions to efficiently grow and improve the borrower experience, was founded in 1998. Using its platform, Sageworks analyzed over 11.5 million loans, aggregated the corresponding loan data, and created the largest

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