In its ALLL policy, Insights Bank and Trust states that it
will review the loans that appear on its watch list for impairment. If you were provided this report as
part of the supporting material for the total loan and lease loss estimate, you would have more comfort
in the FAS 114 component and perhaps would be able to make better decisions about the total Allowance
for Loan and Lease Loss. If you are not provided with a report like this at your bank, and you feel like
it would be helpful, feel free to ask for one.
As you review Insights' FAS 114 analysis, consider whether you can answer the following:
- Based on what you know about the ALLL and how it is calculated, does this table make sense to you?
- Do you understand how the required reserve was determined for each loan, and how the total for the FAS 114 component was generated?
- Do you recognize the classifications and understand what they mean?
- Are you able to identify how this data fits into the Insights ALLL calculation?
If you cannot answer these questions when reviewing the FAS 114 analysis, you might want
to review the "Join the Meeting" section of this topic.
Above all, remember that if you don't understand what something means when the ALLL is discussed at your bank, ask a question.
Move your mouse pointer over the chart below for more information about a FAS 114 report. |
