Magazine article American Banker

Software Eases Banks' Loan Loss Allowance Calculations

Magazine article American Banker

Software Eases Banks' Loan Loss Allowance Calculations

Article excerpt

Byline: Jeff Horwitz

Web Equity, a Nebraska company offering back office technology for small- and mid-sized banks, is pitching the industry on a faster and cleaner way to calculate allowances for loan and lease losses.

According to WebEquity chief executive Doug McGregor, the vast majority of banks his firm surveyed still calculate ALLL, which is supposed to account for all estimated inherent losses in an existing portfolio, by bringing together loan-level data, credit information, and economic assumptions into a spreadsheet. The company's ALLL cloud software produces the same result, but with a standardized format that McGregor says quickens the process and reduces the possibility of errors.

"What would take three or four days would be a matter of hours," says Marty Updahl, chief credit officer at the $860 million-asset American Bank Center of North Dakota and a beta user of the system for the last two quarters. "Examiners can easily look at the information generated by this, and that's what we want them looking at - not our process."

WebEquity's product also allows a bank to readily compare its ALLL numbers with those of regional peers, using data drawn from the Federal Deposit Insurance Corporation.

The ALLL analysis software is the second product McGregor's company has released in recent months aimed at the back-office technology market. Part of the company's pitch is that being able to plug in data to a specially designed ALLL program will take less time than calculating losses independently. …

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