Credit Evaluation School Dec 2022

Internal Use Only

Third Paragraph Address major findings. If none identified, then address acceptability of credit and loan administration practices.

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Internal Use Only

Fourth Paragraph The level and trend of the Allowance for Credit Losses (ACL) as well as the methodology associated with it. • This will be a change from the ALLL (Allowance for Loan and Lease Losses). • New accounting standard introduces the current expected credit losses methodology (CECL) for estimating allowances for credit losses. • CECL requires financial institutions and other covered entities to recognize lifetime expected credit losses for a wide range of financial assets based not only on past events and current conditions, but also on reasonable and supportable forecasts. • Large banks have already adopted, for all other entities, CECL will be effective beginning on January 1, 2023.

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