CECL Methodology Series Consumer Credit...About the Webinar •We will address as many questions as...
Transcript of CECL Methodology Series Consumer Credit...About the Webinar •We will address as many questions as...
April 18, 2017
CECL Methodology SeriesDisclosures
About the Webinar
• We will address as many questions as we can throughout the presentation or through direct communication via follow-up email
• Ask questions throughout the session using the GoToWebinar control panel
Disclaimer
This presentation may include statements that constitute “forward-looking statements” relative to publicly available industry data. Forward-looking statements often contain words such as “believe,” “expect,” “plans,” “project,” “target,” “anticipate,” “will,” “should,” “see,” “guidance,” “confident” and similar terms. There can be no assurance that any of the future events discussed will occur as anticipated, if at all, or that actual results on the industry will be as expected. Sageworks is not responsible for the accuracy or validity of this publicly available industry data, or the outcome of the use of this data relative to business or investment decisions made by the recipients of this data. Sageworks disclaims all representations and warranties, express or implied. Risks and uncertainties include risks related to the effect of economic conditions and financial market conditions; fluctuation in commodity prices, interest rates and foreign currency exchange rates. No Sageworks employee is authorized to make recommendations or give advice as to any course of action that should be made as an outcome of this data. The forward-looking statements and data speak only as of the date of this presentation and we undertake no obligation to update or revise this information as of a later date.
Dan MorrillMember of the Firm with Wolf and Co.
Professional Practice Group
About Today’s Presenter
Neekis HammondPrincipal Consultant with Sageworks
Advisory Service Group
Agenda
• Series Overview
• Overarching disclosure principles
• Disclosures• Credit quality information
• Allowance for credit losses
• Past-due status
• Nonaccrual status
• Purchased financial assets with credit deterioration
• Off-balance sheet credit exposures
• Q&A
Series Overview
Tuesday, April 18, 2017, 2-3 p.m. - Disclosures
Poll Question
Agenda
• Series Overview
• Overarching disclosure principles
• Disclosures• Credit quality information
• Allowance for credit losses
• Past-due status
• Nonaccrual status
• Purchased financial assets with credit deterioration
• Collateral-dependent financial assets
• Off-balance sheet credit exposures
• Q&A
CECL Disclosure Principles
The new CECL disclosures should allow a user of the financial statements to understand the following:
• Credit risk inherent in portfolio and how management monitors it
• Management’s estimate of expected credit losses
• Changes to the estimate of expected credit losses that have taken place during the period
Agenda
• Series Overview
• Disclosure Changes Breakdown
• Disclosures• Credit quality information
• Allowance for credit losses
• Past-due status
• Nonaccrual status
• Purchased financial assets with credit deterioration
• Collateral-dependent financial assets
• Off-balance sheet credit exposures
• Q&A
Credit Quality Information
• Description of credit quality indicators
• Amortized cost basis, by credit quality indicator
• For each credit quality indicator, date or range of dates information was last updated
Public business entities - amortized cost basis within each credit quality indicator by vintage, 5 years and thereafter. For purchased loans, use initial date of issuance, not date of acquisition.
No Change
Allowance for Credit Losses• Description of how expected loss elements are developed
• Description of accounting policies and methodologies to estimate ALLL• Past events
• Current conditions
• Reasonable and supportable forecasts
• Risk characteristics relevant to each portfolio segment
• Changes in factors that influenced current estimate
• Changes to policies, method and quantitative effect
• Discussion of reversion method applied for periods beyond reasonable and supportable forecast period
Allowance for Credit Losses• Rollforward of the allowance for credit losses by portfolio segment
• Beginning balance
• Provision
• Initial allowance recognized on purchased loans with credit deterioration
• Write-offs
• Recoveries
• Ending balance
• Allowance is required to be shown on the balance sheet
Past-due Disclosures• Aging analysis of amortized cost basis of past-due loans as of the
reporting date, disaggregated by class
Non-accrual Disclosures
• Policy disclosures• Nonaccrual policy, including discontinuing accrual of interest, recording
payments and resuming accrual
• Past-due status or delinquency status
• Recognizing write-offs
• Quantitative disclosures for non-accrual loans by class• Amortized cost basis as of beginning and end of period
• Interest income recognized during period
• Amortized cost basis for non-accrual loans with no related allowance
Purchased Financial Assets with Credit Deterioration• For loans purchased during the period, provide a reconciliation of
the difference between the purchase price and the par value, including the following:• Purchase price
• Allowance at acquisition date
• Discount/premium attributable to other factors
• Par value
Off-Balance Sheet Credit Exposures
Description of accounting policies and methodology used to estimate its liability for off-balance sheet credit exposure.
• Historical losses
• Existing economic conditions
• Reasonable and supportable forecasts
Question & Answer
Resources
• ALLL.com – join to network, discuss and learn about the ALLL
• SageworksAnalyst.com – access whitepapers and the webinar archive
• Risk Management Summit 2017 – September 25-27 in Denver, CO
• Q&A
Dan MorrillWolf and Co.
Contact Us:
Neekis HammondPrincipal - Advisory Services
David KistlerMarketing Manager
Poll Question
2017 Risk Management SummitThe premier conference for lending and risk
• Learn: » Sessions dedicated to lending, credit risk
and portfolio risk» Led by industry experts to address your
challenges around growth and risk• Network:
» More than 200 bankers from 130 institutions attend
• Apply:» 98% of attendees recommend the RMS to
community bankers» Offers actionable insights to help banks
grow profitably and mitigate risk
Denver, Colorado | September 25-27