ALLL Calculation Solutions for Community Banks

The calculation of a Bank's Allowance for Loan and Lease Losses (ALLL ) is a critical bank function, yet the secure archiving of the information for review, recall and back testing is difficult in standard spreadsheet formats like Excel.  The creation of these spreadsheets are time-consuming, and worse yet, can result in inadvertent mistakes from copied calculations and manually entered numbers.  
 
Furthermore, the spreadsheets are difficult to audit and prove out to third-parties and regulators, and the new changes to quantitative loss calculations proposed by the FASB would make it very difficult to create loss information via a spreadsheet model.  
 
Ardmore’s myCreditInsight platform feeds loan and loan loss data directly to the ALLL calculation process from your source files, ensuring that the data used in the calculations is correct, and the results are accurate, all while taking a fraction of the time that manual input would.
 
Features & Functions 
 
Quantitative Loss Factors
  • Average Losses by Pool Based on Specified Number of Years
  • Average Loss by Pool Based on Risk Migration 

In the future, we will be implementing the new Expected Loss by Pool (ELC) formula, with full justification and explanation text stored with selected method by pool.  Calculations will be saved by Pool, As of Date, and Scenario, with high and low ranges for each factor. Users will have the ability to set Adjustment Factors and Weighting by Pool, and full justification and explanation text will be stored with selected Factor by pool.  Factors will be saved by Pool, As of Date, and Scenario

Loan Pool Management

The module's Custom Pool Selection Criteria Allows Creation of Loan Pool Categories by 14 Elements, Including:  
  • Products
  • Risk Ratings
  • Credit Scores
  • Delinquency
  • Region
  • Loan Size
  • Relationship
  • Vintage

Each pool can be set with specific quantitative loss method and qualitativefactor ranges and factors, and pools can be modified by loan or by line entries.  Pools are prioritized in the scenario definition, ensuring that appropriate loan categories are selected before others.  The full explanation text is stored with selected pool and calc, and pool definitions are saved by As of Date, and Scenario.

Additional Features & Functions
  • Justification Text Stored and Reportable at Each Level
  • “Red Flag” Report Highlights Changes in Definitions, Factors, Calculations
  • Ability to Copy Forward/Reuse Pool Definitions, Quantitative Method Selections, Qualitative Factors and Scenarios
  • Ability to Lock Scenarios by Date
  • Security controls what roles can change factors, methods, adjustments
  • Corporate set up to Pool Definitions, Qualitative Ranges, Quantitative Methods
  • Reporting at each level (Pool, Quantitative Calc, Qualitative Calc, Scenario and Summary)

 

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