Deputy Seminar, Denver, CO

Implementation Lessons  Data will be the first and most significant obstacle  Incomplete or inaccurate data fields (LTV, DSCR, FICO, etc)  Understanding how renewals and extensions are recorded  Unable to access enough historic data  Historic data not available when queried (risk rating, renewal dates, etc.)  Quality education is lacking and there is still a lot of confusion  Lack of resources huge obstacle to getting started  Can be a significant project management obstacle  Confusion on how to transition from incurred loss rate models to CECL loss rate models

REMAINING LIFE METHOD

• Utilizes average annual charge-off rates & remaining life to estimate the allowance for credit losses • For amortizing assets, remaining contractual life is adjusted by the expected scheduled payments & prepayments, i.e., paydowns