CECL
Confidence in allowance for loan losses.
Five loss methodologies, qualitative factors you define, and the arithmetic behind every expected loss figure.
CECL Reporting
One page holds the whole allowance. Every segment shows its loan count and historical loss rate, the allowance it calls for, the allowance for unfunded commitments, and expected losses, with the profile total underneath.
Change the process date and everything recalculates for that date. With the Financials module, your actual allowance balances come from the general ledger and sit beside what the calculation expects, along with the difference between them and your current ACL ratio.
- Every segment and the profile total
- Allowance balances from the ledger
- Allowance against expected losses
- Current ACL ratio to gross loans
- Any process date, rebuilt on request
- Print to PDF or export to CSV
Profiles and Segments
A profile makes one decision, product or call code, and the segments underneath it hold the codes that share common characteristics. Each segment has its own methodology, review period, and color, so agricultural loans can be measured one way and commercial real estate another inside the same profile.
Run as many profiles as you want. A second profile with a different methodology or a different set of qualitative factors is a scenario beside the first, not a rebuild.
- Group by product or call code
- A different methodology per segment
- Loans, balance, and term at a glance
- Active adjustments shown on the card
- Multiple profiles for scenarios
- A warning when a code has no segment
Control Over the Calculation
Every segment names its own methodology and the products or call codes it covers, and a code claimed by one segment is closed off to the rest, so nothing is counted twice.
Thresholds decide which historical pools are solid enough to trust. Set the minimum number of loans a pool must hold and the minimum percentage that must have exited it, and the report marks the pools that met both, so you can see which ones held the rate.
- Products or call codes, no overlap
- Monthly, quarterly, or yearly review
- Minimum pool count and exit percent
- Days past due that count as default
- An annual prepayment estimate
- A color that follows the segment
SCALE and Peer Data
SCALE applies a proxy loss rate to the segment balance rather than building pools from your own charge-offs, which makes it the practical route for a segment with too little loss history to stand on its own. No review period, no minimum pool count, no exit percentage.
The rate can be keyed in or pulled from peer data. BNControl retrieves the average for the Call Report field and peer group set on the segment, and the figure can be adjusted before it is saved. Peer groups are the ones you already maintain under Peer Analysis in Financials.
Rates are kept by effective date rather than overwritten, so a report re-run for an earlier date uses the rate that was in effect then. If the quarter matching the effective date has not been published, the most recent published quarter is used and named underneath.
- A proxy loss rate on the balance
- Rates stored by effective date
- Pulled from a Call Report field
- Adjust the peer figure before saving
- The quarter used is named on the report
- A warning when no rate is in effect
Qualitative Factors
Qualitative factors account for the conditions the history does not. One added at the profile level reaches every segment, or it can belong to a single segment on its own.
Each adjustment is a percentage or a flat dollar amount with an effective date range and a comment recording why it is there. Only the factors in effect on the process date are applied, so last year's adjustment does not follow you into this year, and a factor can be copied forward when the same reasoning holds for a new period.
The factor types are yours. Collateral values, loan growth, real estate trends, regional economic conditions, past due trends, underwriting and administration, competition - name and describe whatever your ALLL committee documents. Under PDxLGD an adjustment can be pointed at the probability of default or the loss given default rate instead of the loss amount.
- Profile-wide or one segment
- Percentage or flat dollar amount
- Effective and end dates on each one
- A comment recorded with the reason
- Factor types you define yourself
- Adjust PD or LGD under PDxLGD
- Factor detail printed with the report
Show Your Work
Every segment can show its calculation rather than just its result. Outstanding balance, specific allocations, the loss rate, the percentage and dollar qualitative adjustments, and the unfunded commitment each appears with the operator that applied them, subtotals where they belong, and the expected loss as the final total. A short definition of every line sits beside it.
The history opens the same way. A pool date gives you the loans that were in it, customer and account linked back to their own pages, with a filter for charge-offs only. Vintage rows open into the loss periods behind them with the forecasts marked. PDxLGD and migration rows open into the counts, balances, and rates their numbers came from.
- Every figure shown with its arithmetic
- A definition for each line
- Pool dates open into the loans inside
- Charge-offs only, with the date
- Customer and account linked
- Forecast vintage periods marked
- Export any loan list to CSV
An allowance you can defend, line by line.
Specific Allocations and Unfunded Commitments
Loans evaluated individually are handled as specific allocations. The allocated balance leaves the segment before the loss rate is applied and the allocation amount is added back to the expected loss, so an impaired loan is never counted twice. Each one is listed with its account, product or call code, grade, due date, balance, and allocated amount.
Unfunded commitments are handled per segment. Set the percentage to include, by effective date, and the allowance for unfunded credit losses is reported separately from the funded allowance, with qualitative adjustments applied to both.
- Allocations out before the loss rate
- Each one listed with its loan
- Unfunded percentage set per segment
- A separate allowance for unfunded
- Qualitative adjustments on both
- Both included on the printed report
Five Methodologies
Loss Rate, Vintage, Migration, PDxLGD, and SCALE, chosen segment by segment inside a single profile rather than once for the whole portfolio.
Board and Examiner Ready
Print the summary, the calculation detail, the specific allocations, and the qualitative factors behind them, or send it all to a Meeting Package.
Reproducible
Rates, factors, and allocations are all stored with effective dates, so re-running an earlier process date returns the number that was reported at the time.
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