The Press Room serves as the clearing house for all ARCSys reference materials. Within the Press Room, ARCSys includes an array of resources that help institutions understand the challenges posed by the recent Accounting Standards Update 2010-20.

Also, the Press Room contains materials that explain in detail the power of ARCSys' flagship software solution – ACL Calculator – a revolutionary tool that enables financial institutions peace of mind regarding SFAS 5 and 114 requirements and the new ASU 2010-20 disclosure changes.

Whitepapers

Exposure Draft Expected Credit Loss

Static Pool Analysis - Using Cohorts
The exposure draft on Credit Impairment from FASB contained several examples. This whitepaper discusses the use of static pool analysis in determining the allowance estimate and provides examples of ways to utilize this methodology in developing your estimate.

New Disclosure Requirements and Changes - AECL
Our second whitepaper on FASB's Exposure Draft for changes to the Allowance For Credit Losses discusses the new disclosure requirements as part of the expected loss accounting changes. The new disclosures will require even more details about policies, processes and methodologies used in the allowance estimation process.

Allowance for Expected Credit Losses - Exposure Draft Issued
FASB has finally issued the revised standards for the allowance based on the expected credit loss model. This first of a series of whitepapers on the exposure draft focuses on the total rewrite of the existing standards including purchased impaired loans.

FASB Discussing Current Expected Loss Model
Now that FASB has decided to move away from the three-bucket approach, the discussions are focusing on the Current Expected Loss Model (CECL). This model uses the same core concepts to arrive at the allowance loss estimation without having to apply different methods to the same loans after moving between loss buckets.

Other Whitepapers and Regulatory Updates

NCUA Adopts New IRPS on Loan Modifications (TDR's)
The NCUA has modified the credit union regulations on loan modifications to adhere to GAAP as well as providing a more consistent regulation with the other banking regulators. The NCUA removed some difficult reporting requirements, added enhanced non accrual rules and has required some policy and procedural changes for all federally insured credit unions.

New Guidance on TDR's from Regulators
The OCC issued guidance on applying the new TDR standard. While this is specifically for OCC regulated banks, the guidance is very important in how it defines best practices and how TDR's should be treated on an ongoing basis.

ACL Junior Liens
The regulators have issued interagency guidance on junior liens. This whitepaper discuses how institutions need to modify their methodology for junior liens. The regulators have seen additional risk in this are and are requiring institutions to establish consistent risk methodology to evaluate the risk of loss on these loans.

Whitepaper - FASB Drafting Changes to the Allowance for Credit Losses
FASB has been diligently working on a response to the credit crisis by issuing a new standard for the allowance for credit losses. Many changes are in process that will affect they way everyone estimates the losses on loans. This whitepaper give you a peak at the changes FASB is proposing.

Impairment - Just the Facts!
In this whitepaper we try and boil down the facts from FASB and the regulators about impairment issues. Since FASB is in process of rewriting the process for calculating the allowance for loan losses, we thought a little refresher on the facts as they stand now would be good. Our next whitepaper will dissect the new exposures by FASB and the IASB concerning measuring impairment and where its headed.

ASU 2011-02 Resources

TDR's, The New Reality
The Accounting Standard Update 2011-02, A Creditor's Determination of Whether a Restructuring is a Troubled Debt Restructuring, calls for more and more loans to be classified as TDR's. Learn what you'll need to stay in compliance and when the new Standard will effect your organization.

ASU 2010-20 Resources

Best Practices for New Allowance Disclosures, as the PCAOB Begins to Take Aim at Auditing Disclosures
Through numerous examples, we reveal the complexity financial institutions are having with the new allowance disclosures and the time, effort and energy it takes to ensure they are held in compliance with the new standards. We demonstrate and discuss best practices used and the increased audit and evaluation that will be needed under the audit standard revisions being discussed by the PCAOB.

The Accounting Standards Update 2010-20 Overview - New Disclosure Requirements
The new Standard requires companies to use enhanced disclosures in new reporting formats by segmenting the loan portfolio. In addition, the disclosures must include detailed discussions about the policies, methodologies and credit risk assessments used to estimate the Allowance for Credit Losses. This whitepaper will clarify the new Standard's required enhanced disclosures, the new levels of disaggregation, and the effective due dates for both public and non-public entities.

To provide further insight as to how ASU 2010-20 will impact financial institutions, ARCSys provides institutions with 5 whitepapers that offer greater detail regarding the array of disclosure changes required by the new standard:

• Series 1: ASU 2010-20 – Allowance for Credit Loss Disclosures
  Management must ensure that controls are in place to develop, assess, account for and obtain approvals for the policies, methodologies and allowance estimation calculations. These controls not only involve initial policies and processes, but also changes to those policies and processes. Change management is more important because institutions must disclose the changes and the effects on the allowance estimation. This whitepaper provides guidance as to what factors institutions should specifically address regarding accounting and risk management policies.
• Series 2: ASU 2010-20 – Credit Quality Information
  The general purpose of this series of disclosures is to provide an understanding to the users of the financial statements concerning management practices, policies and methodology over credit quality measures by class and to specifically disclose past due/delinquent loans by class.
• Series 3: ASU 2010-20 – Impaired Financing Receivables
  This whitepaper provides users of the financial statements with an understanding of the new disclosure requirements concerning impaired loans. The new disclosures – which must be made at the class level – are a significant change to the standard as they involve the tracking of impaired loans typically included in the pool calculations.
• Series 4: ASU 2010-20 – Nonaccrual Receivables
  Building on the Series 3 whitepaper, this document provides institutions with an overview of the new standard's mandate for nonaccrual loan disclosures. The standard calls for policies and factors for determining nonaccrual status and multiple disclosures about the balances of nonaccrual loans.
• Series 5: ASU 2010-20 – Modifications and Subsequent Defaults
  Even though the TDR modified loan portion of the standard has been postponed till later in 2011. This new requirement will cause management to add new tracking systems to enable companies to have proper disclosures.

Example Disclosures

Sample Bank Disclosure Notes
This document provides banks with a detailed look at what their ACL disclosures will look like under the ASU 2010-20 standard.

ACL Calculator Resources

ACL Calculator Product Demonstration Video
This video provides a short, but informative demonstration of the ACL Calculator. The video demonstrates how financial institutions use ACL Calculator to rapidly calculate Allowance for Loan and Lease Losses (ALLL) in a more intelligent, highly-automated fashion.

ACL Calculator Criteria Tables – Intelligent ALLL Calculation for Financial institutions
Leveraging proprietary Criteria Tables, ACL Calculator delivers real power in applying loss factors to particular segments, classes, or portions of segments or classes. This document provides examples and details how ACL Calculator arms users with a robust tool to effectively and efficiently answer new regulatory requirements with intelligent, automated ALLL calculation.