Description
Measure and communicate the impact of higher interest rates, lower income and lower values on a bank’s commercial loan portfolio. As interest rates, income, and values fluctuate, a bank’s commercial real estate loan portfolio can be negatively impacted. This stress testing model allows the bank to segment the composition of their loan portfolio by debt service coverage and loan-to-value, and then stress the portfolio at the loan level to identify the impact of changing market conditions on each loan as well as the overall composition of the CRE portfolio. Bank sets stress testing scenarios (interest rate increase, income decline, and/or value declines), and the model stratifies the portfolio over various time frames determined by the bank. Requires basic loan information uploaded each quarter, as well as cash flow and property values (which can be entered and maintained directly in the model).
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