CECL From Aging Table to Allowance

Estimate the allowance for $800,000 current, $160,000 at 31-60 days, and $40,000 over 60 days, then consider a customer-specific overlay. Expected loss = historical pool rates adjusted for current conditions and supportable forecasts. Using only aging rates can miss a current receivable whose credit risk has already deteriorated. Apply current rate $800,000 x 0.5% = $4,000. Current receivables have lower base risk, but not zero risk. Apply 31-60 rate $160,000 x 4% = $6,400. Older balances receive a higher expected loss rate based on experience. Apply over-60 rate $40,000 x 18% = $7,200. The aging risk gradient captures deterioration already…

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