Description
When FASB finalizes their long-awaited ASU titled Financial Instruments—Credit Losses later this year, many institutions will have to increase their ALLL estimates. With 2015 planning already underway, we are offering this important webinar to keep you ahead of the game. Don’t wait until the ASU is issued. Keep your management and Board informed about this significant accounting change so they can manage their financial objectives for 2015 and beyond.
Background
Has your institution been reducing the allowance for loan and lease losses (ALLL) estimate? Many institutions have because the economy is improving. In fact, lowering the ALLL is the way some institutions have improved profits while interest margins remain tight. So how would you react if you knew that the accounting profession was about to require that your institution increase the ALLL estimate? What if that increase was substantial? What would happen to your institution’s profits and capital if that happened?
When the Financial Accounting Standards Board (FASB) finalizes their long-awaited Accounting Standards Update (ASU) titled Financial Instruments—Credit Losses later this year, it is likely many institutions will have to increase their ALLL estimates. Here’s why:
• You will no longer wait until a loan is considered to be “impaired” to include a loss estimate in the ALLL. Instead, a life-of-the-loan loss estimate will be needed when the loan is underwritten.
• The ALLL will include loss estimates for loan commitments to borrowers when you fund a new loan. Now, those loss estimates are included in a contingent liability on the institution’s balance sheet that often goes unnoticed.
• Currently, you don’t look to the future when making loss estimates. Under the new ASU, you will need to rely on economic forecasts and a more in-depth analysis of your institution’s loss history to estimate future losses.
The FASB’s new ASU on Financial Instruments—Credit Losses will be issued this year. All of the major provisions are already defined. Since most institutions are planning for 2015 now, we are offering this important webinar so that you can consider a possible increase in your ALLL estimate. Also, you may encounter additional costs related to gathering data for the new ALLL estimation procedures. Don’t wait until the ASU is issued. Keep your management and Board informed about this significant accounting change so they can manage their financial objectives for 2015 and beyond.
Agenda
• Understand the implications of the FASB’s proposed CECL model
• Identify what is changing from current GAAP
• Discuss methods that could be used to comply
• Determine how an allowance for expected credit losses estimate could increase from current levels
• Recognize what data and documentation you will need to begin collecting now
• Identify changes needed to your ALLL estimation process
Benefits
Participate so you can:
• Understand the key accounting changes so that data analysis can begin in enough time to impact 2015 plans
• Bring all involved with the ALLL estimation process in one room so that everyone can learn together and ask questions for everyone’s benefit
Who Should Attend
• CFOs
• Controllers
• Financial officers
• Loan review
• Loan administration
• Internal auditors