Citizens First Bank | Many Individual Impairments
The Challenge: Many Individual Impairments
Citizens First Bank was using internal spreadsheets and separate impairment analysis worksheets for each loan in its ALLL. Upon completion of the institution’s most recent exam, Jason McCray, Vice President and Commercial Lending Manager, noted a higher level of examiner scrutiny than usual.
McCray states, “We consistently had 6-7 examiners looking at our loan portfolio. It’s our standard exam, but this year there was such a strong focus on ALLL that I was really surprised.” As part of the focus on the allowance, examiners began asking for significantly more granular documentation. “We would have to do 70-80 individual impairment analyses, as the examiners were focusing not just on total ALLL, but specifically on each loan,” he mentions.
Citizens First Bank adopted Sageworks ALLL to streamline its processes and justify its ALLL methodology. McCray notes, “With Sageworks, [the exam] went so much smoother than it would have without the program. I actually shudder to think of what the experience would have been like if I was still using our internal spreadsheets.”
Using Sageworks ALLL, Citizens First Bank was able to properly justify assumptions within the calculation and provide the documentation examiners demanded in much less time than before. For instance, McCray states that in the past, examiners would request a Net Present Value calculation in addition to Fair Market Value of ollateral. Previously, he would have to do the calculation, send to the examiner for review, then send a copy to loan operations to image it before finalizing. “That’s three different people touching it, but with Sageworks ALLL, it’s the Lead Asset Examiner going into the system, a couple clicks, and it’s done. He/she can also do the work outside of our premises, so it speeds up the process considerably.”
He goes on to state “Sageworks made it so easy for me to transition between different methods with just a click, and we gave the examiner access to the read-only reports, and he utilized it extensively. He even asked how much we paid for it and commented that we got our money’s worth while they [FDIC examiners] were at our bank.”