Accounting for Purchased Loans
Accounting for Purchased Loans Comply with complex ALLL regulations
Institutions with purchased loan portfolios are required to perform more complex accounting for those acquisitions as part of their total allowance for loan and lease losses (ALLL). Sageworks ALLL increases transparency in this part of the reserve and quickly accounts for purchased loans within the ALLL. « Editable loan schedules
allow bankers to modify cash flows to see impact on the allowance and make “what if” project ions
CHALLENGES COMPLEX ACCOUNTING GUIDANCE • Interpreting expectations for loans acquired by the institution • Handling complex ASC 310-30 loans • Determining potential reserves for the ASC 310-20 portfolio
BENEFITS Automate evaluation of loans utilizing the expected cash flow, collateral or cost-recovery methods Pool ASC 310-30 loans utilizing the expected cash flow method Easily generate and review expected cash flow to calculate the initial accretion rate and schedule for the life of the loan Leverage ASC 450-20 loss history and qualitative adjustments to accurately determine reserves necessary for ASC 310-20 pools
P OT E N T I A L F O R M A N UA L E R R O R • Likelihood of manual error that stems from difficult-to-troubleshoot spreadsheet formula errors • Difficulty capturing data necessary for historical trends or future projections • Generating comparison scenarios or projections
Automate the reserve calculation and data collection, to minimize room for data entry or formula errors Data carries forward period-to-period, eliminating re-entry Flexibly change expected cash flow projections on ASC 310-30 Create and save multiple scenarios for strategic and contingency planning
S AT I S F Y I N G R E G U L AT O R Y E X P E C TAT I O N S • Satisfying disclosure requirements (ASC 310-20 and ASC 310-30)
Use Sageworks Analytics & Reporting to identify necessary general ledger adjustments, as required by guidance
866.603.7029 sageworksanalyst.com
5565 Centerview Drive Raleigh, NC 27606
Institutions with purchased loan portfolios are required to perform more complex accounting for those acquisitions as part of their total allowance for loan and lease losses (ALLL). Sageworks ALLL increases transparency in this part of the reserve and quickly accounts for purchased loans within the ALLL. « Editable loan schedules
allow bankers to modify cash flows to see impact on the allowance and make “what if” project ions
CHALLENGES COMPLEX ACCOUNTING GUIDANCE • Interpreting expectations for loans acquired by the institution • Handling complex ASC 310-30 loans • Determining potential reserves for the ASC 310-20 portfolio
BENEFITS Automate evaluation of loans utilizing the expected cash flow, collateral or cost-recovery methods Pool ASC 310-30 loans utilizing the expected cash flow method Easily generate and review expected cash flow to calculate the initial accretion rate and schedule for the life of the loan Leverage ASC 450-20 loss history and qualitative adjustments to accurately determine reserves necessary for ASC 310-20 pools
P OT E N T I A L F O R M A N UA L E R R O R • Likelihood of manual error that stems from difficult-to-troubleshoot spreadsheet formula errors • Difficulty capturing data necessary for historical trends or future projections • Generating comparison scenarios or projections
Automate the reserve calculation and data collection, to minimize room for data entry or formula errors Data carries forward period-to-period, eliminating re-entry Flexibly change expected cash flow projections on ASC 310-30 Create and save multiple scenarios for strategic and contingency planning
S AT I S F Y I N G R E G U L AT O R Y E X P E C TAT I O N S • Satisfying disclosure requirements (ASC 310-20 and ASC 310-30)
Use Sageworks Analytics & Reporting to identify necessary general ledger adjustments, as required by guidance
866.603.7029 sageworksanalyst.com
5565 Centerview Drive Raleigh, NC 27606
