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Apr 9, 2014 12:06:00 PM

The Allowance for Loan Losses and 5 Benefits of Enhanced Documentation

The Allowance for Loan and Lease Losses (ALLL) has long been considered one of the most, if not the most critical estimate in the banking industry. Significant time and energy is invested each month adjusting the allowance for changes in the volume, mix and credit quality of banks’ loan portfolios.

The accounting standards for the ALLL are rigorous and complex, and the methodology for calculating the ALLL continues to be a source of contention. In the second quarter of 2014, the FASB is scheduled, once again, to change the standards and issue a new methodology.

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Topics: Bank Trends, FASB, Loan Loss