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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.

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.
Jason McCray, Citizens First Bank

The Solution:

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.”

The Result: Less Stress and Examiner Time

“The final report was positive,” states McCray. In the past, examiners would state a timeline of three weeks for an exam, but it was never the case. The previous exam lasted four weeks, and the one before that was five weeks. Because Sageworks ALLL made the calculation more transparent and defensible, examiners could finish on time. McCray mentions, “This was the first exam where they said they’d be here for three weeks…and they were only here for three weeks.”

“This allowed me to get back to work,” he adds. “Whenever the examiners are there, you’re catering to them. With the time savings, I was able to go out to new customers, look over new loans, and save weeks’ worth of time and stress.”

By automating its processes with Sageworks ALLL, Citizens First Bank saved weeks of time in its exam and was equipped with all of the resources it needed to not only satisfy, but exceed, examiner expectations.

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.
Jason McRay, Citizens First Bank
Transition to the CECL Standard with Confidence
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