North Hollywood, Calif.-based Banker's Toolbox Inc. has released the newest edition of Crest, a tool that enables banks to stress-test commercial real estate (CRE) loan portfolios to determine risk exposure.
The new edition of Crest is streamlined to provide more accurate stress-test results with less data requirements, Banker's Toolbox says. The program uses a proprietary model that allows for unified stress testing of all types of CRE loans.
The system enables banks to segment their CRE loan portfolio based on a variety of factors, including geography, property type or industry. Its stress factors help bankers to run multi-variable scenarios that incorporate hypothetical changes to income, property valuation and interest rate, without sacrificing flexibility and control for unique loan segments, the company adds.
"As commercial holdings face higher rates of delinquency and depressed property values become more prevalent, it is important to accurately evaluate our holdings so we can make more informed lending decisions and manage risk exposure," says Cliff Nielsen, vice president and chief technology officer at Pacific Commerce Bank. "Crest gives us the ability to run multiple stress tests that analyze both collateral types and specific geographic areas, ultimately defining potentially problematic loan niches."
The Crest solution also includes assistance from Banker's Toolbox risk management consultants, who lend guidance through data cleanup and initial stress testing. Quarterly or annual management reports can be outsourced to Banker's Toolbox or a third-party consultant or auditor.
SOURCE: Banker's Toolbox Inc.