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How can an automated ALLL solution help with the FAS 5 process?

January 27, 2014
Read Time: 0 min

During a recent webinar, How to Calculate Your FAS 5 Reserves, Sageworks consultants discussed how automated ALLL solutions can help banks and credit unions calculate their FAS 5 (ASC 450-20) reserves.

From the video

Let’s review the bullet points. It saves time in data aggregation. People say, “I spend so much time aggregating my data and trying to get it from the different sources that I have little time to actually do something with it.” Obviously if you can create or bridge the gap between an institution’s core system, and integrate that automatically, you essentially eliminate the data gathering process. As a result, you’re afforded more opportunity to do something with the data instead of gathering it.

It also reduces manual error in calculations. A lot of times automated solutions are coded to make you do things you should and prevent you from doing things you shouldn’t. When you’re having to transcribe data from one source to the next it also helps. Most people that are not using an automated solution are using a spreadsheet. Any of those manual errors in spreadsheets, because it’s all interconnected, often times are not isolated to one spreadsheet or one tab. They carry across, so you end up having this waterfall effect that could potentially cause a significant downside, if you have just one small manual error.

Also it can generate documentation. So instead of doing your analysis and having to produce the documentation, a lot of times automated solutions will basically generate the documentation behind the scenes for you. When you’re done with your analyses, it has captured all of that and put it into a nice, clean, transparent format.

Fourth, it reduces examiner criticism. So what we mean here is that basically is every institution is so different in their methodology that when you can use an automated solution that’s respected by regulators, it goes a long way to gain credibility right from the start. So maybe they don’t look so in depth as they otherwise would.

How to Calculate FAS 5 Reserves

Finally, it enables you to create customized reports. An example, automated solutions can help you create your disclosure reports, ASU 2010-20 disclosures. These are your financial footnotes for your 10-K and 10-Q. On a recent webinar, 80 percent of the attendees said that it takes them anywhere between a few days to a few weeks to complete those. There are automated solutions out there that can reduce that down to about five or ten minutes, and obviously time is money, so the automated solution basically says, “Hey, here’s your money back. Go spend it on a good vacation.” Basically, those are some of the highlighted areas of how an automated solution can help you.

For more information on best practices for calculating FAS 5 reserves, download the whitepaper: How to Calculate Your FAS 5 Reserves.

About the Author


Raleigh, N.C.-based Sageworks, a leading provider of lending, credit risk, and portfolio risk software that enables banks and credit unions to efficiently grow and improve the borrower experience, was founded in 1998. Using its platform, Sageworks analyzed over 11.5 million loans, aggregated the corresponding loan data, and created the largest

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