CECL Overview

Primary Objective of CECL:

To have a sufficiently precise level of reserves so as not to need replacement provisions at time of loss.

• Comprehensive Historical Assessment & Analysis
• Assessment of "Currently" Identifiable Risks
  
• Assessment of "Specific" Potential Risks (pending)
• Assessment of "Future" Reasonably Foreseeable Risks (pending)
• Pending Issues Requiring Resolution (pending)

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"Experience Based" Reporting

All Analyses & Assessments
are Based Upon "Historically Verifiable Experience"

This is not merely a "mirror image" of Historical Results
Rather, it is a "product" of Historical Experience

Experience Based rather than Anecdotally Based

To be based upon:

• Average Annual Charge-Off Factor
       for each individual "Risk Pool"
• Assessing the Current
       "Principal at Risk" for each
       individual Loan / Risk Element
  
• Remaining "Effective Life"
       of each Loan in Years
  
• "Risk Profile" for each Individual
       Loan / Risk Element
  
• Originations of Loans
• Current & Past Loan Volumes
• Charge-Offs
• Recoveries of Charge-Offs

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Forward Looking

• Assessing Future Risk of Loss based upon Historical Evidence
• Contemporary & Consistent
• Computed anew each Reporting Period (Monthly) 
• Computational Methodology is Consistent throughout the Analyses
  

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Major Elements of the Reserve Computation & Reporting