Judgement Day
Name the most widely used allowance estimation methodology by System institutions.
PD/LGD Method
True or False? TDRs must be reported on the call report under CECL.
False
CECL requires institutions to analyze current lending conditions and forecasts that are reasonable and what?
Supportable
Estimates of losses should consider all significant quantitative and what other factors?
Qualitative
Looking forward from origination date to maturity requires an institution to estimate an asset’s losses over what period?
Lifetime
Under CECL, which term will be going away, General Reserve or Specific Reserve?
Both general and specific
True or false? A 2-3 year forecast horizon is too short and not considered reasonable and supportable.
False
Examples of qualitative factors likely to cause losses that are different from historical loss experience include what?
General economy metrics, Commodity prices, weather, lending practices, ICR findings, experience of staff
When a loan no longer shares similar risk characteristics with other loans in the pool, it is evaluated how?
Evaluated individually
Under the incurred loss method, when a loan was considered impaired, what did management calculate to measure impairment?
Specific Reserve
True or false? The length of the forecast period is an accounting policy election.
False
Appropriate overall ACL levels requires accurate risk identification and accurate what?
Collateral Values
When loans share similar risk characteristics they are evaluated collectively as what?
Segmentation or Pools
Under CECL, when a loan no longer shares similar risk characteristics with other loans, instead of a specific reserve, what is calculated?
Loans Evaluated Individually for Expected Losses
True or false? Institutions may apply multiple macroeconomic scenarios to produce weighted-average expected credit losses.
True
System institutions ran WHAT, in addition to determining quarterly allowance levels under the incurred loss method during 2022?
Parallel Runs
True or False? An institution may use a different allowance estimation method for it’s rural home loan pool than for it’s capital markets pool.
True
Under the incurred loss method, loans risk-rated 12, 13, 14, TDRs and OPO were considered Impaired. Under CECL loans RR 12-14 may be considered as a what?
Pool or Segmentation
True or False? An institution should apply weights of 50% and 50% if they apply two different macroeconomic scenarios to produce weighted-average expected credit losses.
False
All associations must roll up their loans into HOW MANY pools for System reporting purposes?
Nine