Monthly vs. quarterly calculations for your ALLL reserve
The regulatory guidance tells us that at a minimum we have to perform a quarterly calculation. However, the advantage of doing monthly calculations is that you can accurately project how your reserve will change over a month and the quarter. These projections are coming from the work on the FAS 114 as a new appraisal may occur, risk rating may change or a re-negotiated debt may happen. These can be updated monthly.
However, it is not feasible to do any projection for your FAS 5 calculations as these will involve the historical loss rates which are usually done on quarterly charge off rates and the qualitative factors which are based on data that is released by the FRED or another national provider every quarter. But on the FAS 114 side