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CRE Stress Testing for Banks: A Crucial Tool in a Post-COVID World

By Jerry Sutherin, CEO at Young & Associates

Despite having limited requirements as defined by interagency guidance, the case can be made for requiring community financial institutions to have regular stress tests performed on their commercial real estate loan portfolios.

Emerging Challenges in Commercial Real Estate Lending

Recent post-COVID events have resulted in a heightened concern with regulators as it relates to commercial real estate. Most notably, interest rates have increased 525 bps from March 2022 through July 2023 and this correlates with the level of commercial loan delinquencies over that same period as noted in the chart below. This is further exacerbated the “work from home culture” and office vacancies increasing over the same period.

The ultimate impact on the commercial real estate sector is weaker NOIs, coverage ratios that are insufficient to meet loan covenants, higher Cap Rates, and lower valuations. For those loans locked into a lower rate, the issue now becomes; what happens when loans mature or reset? That is occurring now.

CRE Composition and Delinquency at US Banks Chart - S&P Global

Regulatory Expectations for Bank Stress Testing

Regulatory expectations for community bank stress testing initiatives have been set in both formal regulatory guidance and through more informal publications and statements. An interagency statement was released in May 2012 to provide clarification of supervisory expectations for stress testing by community banks.[1]

The issuance specifically stated that community banks are not required or expected to conduct the types of enterprise stress tests specifically articulated for larger institutions in rules implementing Dodd-Frank stress testing requirements, the agencies’ capital plan for larger institutions, or as described in interagency stress testing guidance for organizations with more than $10 billion in total consolidated assets.

OCC Guidance on Stress Testing Practices

However, in October 2012, the OCC provided additional guidance to banks on using stress testing to identify and quantify risk in the loan portfolio and to help establish effective strategic and capital planning processes.[2] The guidance reiterated that complex, enterprise-wide stress testing is not required of community banks, but also states that some stress testing of loan portfolios by community banks is considered to be an important part of sound risk management.

In the guidance, the OCC does not endorse a particular stress testing method for community banks; however, the guidance also discusses common elements that a community bank should consider, including asking plausible “what if” questions about key vulnerabilities; making a reasonable determination of how much impact the stress event or factor might have on earnings and capital; and incorporating the resulting analysis into the bank’s overall risk management process, asset/liability strategies, and strategic and capital planning processes.

The OCC bulletin also provides a simple example of a stress testing framework for community banks. In the summer of 2012, the FDIC also provided further guidance related to community bank stress testing in the Supervisory Insights Summer Edition.[3]

Interagency Guidance on Commercial Real Estate Risk

Perhaps the most significant piece of guidance related to loan portfolio stress testing for community banks is the 2006 interagency Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices.[4] The continuing importance of and regulatory emphasis on this guidance was made clear in December 2015 when the interagency Statement on Prudent Risk Management for Commercial Real Estate Lending[5] was released, which reiterated the importance of the principles described in the 2006 CRE Guidance.

The 2006 CRE Guidance describes several important practices for effectively managing the risks associated with CRE lending, especially concentration risk. Portfolio stress testing of the CRE portfolio is described as a critical risk management tool for institutions with CRE concentrations.

Examiner Expectations for Portfolio-Level Stress Testing

While community banks have not been pushed to perform the enterprise-wide stress testing that the above guidance specifically states is not expected of them, examiner expectations for portfolio-level loan stress tests have continued to increase over time and are becoming more prevalent during a bank’s recurring exams. These expectations are centered on portfolios that represent significant concentrations and, given the perceived level of risk and the existence of the 2006 CRE Guidance, are therefore most focused on CRE portfolios.

A reasonable and well-documented approach to CRE portfolio stress testing, undertaken at appropriately frequent intervals such as on an annual basis, is the most effective way for community banks to meet examiner expectations and to contribute toward effective risk management of CRE concentrations.

Regulatory Criteria for CRE Concentration Risk

The guidance also states that strong risk management practices (with stress testing being one of the most important) and appropriate levels of capital are important elements of a sound CRE lending program, particularly when an institution has a concentration in CRE loans. The guidance then lays out the criteria regulatory agencies utilize as a preliminary means of identifying institutions that are potentially exposed to significant CRE concentration risk:

  1. Total reported loans for construction, land development, and other land represent 100% percent or more of total capital, or
  2. Total commercial real estate loans (as described above) represent 300% or more of the institution’s total capital, and the outstanding balance has increased by 50% or more during the prior 36 months.

Concentration Levels Chart

The guidance is clear that these thresholds do not constitute limits on an institution’s lending activity and are instead intended to function as a high-level indicator of institutions potentially exposed to CRE concentration risk. Conversely, being below these thresholds also does not constitute a “safe harbor” for institutions if other risk indicators are present such as poor underwriting or poor performance metrics such as deteriorating risk rating migration and delinquency.

Case Study: Loan Portfolio Concentration Levels

As noted in the example above, the figures indicate that the bank does not have a high level of construction, and land development loans as the balances do not exceed the 100% threshold level as a percentage of total capital. However, the Bank has exceeded the 300% threshold of non-owner-occupied real estate loans as calculated under the 2006 CRE Guidance.  Additionally, the Bank’s three-year growth rate in this category was 72.7%, which is greater than the 50% reference level that constitutes the second part of the two-part regulatory test for a heightened concentration in this category.

Impact of Loan Acquisitions

It should also be noted that regulatory guidance does not differentiate between organic growth and commercial real estate growth via acquisition. Therefore, all such loans acquired does impact the ratios noted in the concentration chart above.

Loss Estimation in Bank Stress Testing

The basic premise for any stress test modeling is to identify moderate / high loss estimates and the impact to capital on a loan-level basis as well as portfolio-wide. While some community banks provide some stress testing on a transactional basis at origination, the output is typically limited to scenarios that focus primarily on future interest rate fluctuations.

CRE stress test modeling, on the other hand, allows for an organization to gauge potential losses of the CRE portfolio using internal core loan-level data as well as call report data while factoring in other variables that could influence the ultimate collectability of commercial real estate loans.

Loan-Level or Bottom-Up Stress Testing

The bottom-up or loan-level portion of the stress test estimates losses under the stress scenarios on a loan-by-loan basis. The loan selection is typically a function of the desired penetration identified by the organization and is comprised mostly of larger transactions with a sampling of newer originations and adversely risk rated transactions.

In this portion of the analysis, various stress factors are applied to the NOI, collateral value, and interest rate for each loan identified by the Bank. This information, coupled with the transaction’s debt service coverage, liquidation costs and Cap Rates help form a possible loan-level loss for each loan in moderate and in moderate and high-risk scenarios.

Top-Down Stress Testing

To ensure that the entire CRE portfolio is stressed, a useful model would use a top-down loss estimation method to “fill in” losses on the remaining portfolio for which loan-level information was not provided. This is accomplished by comparing the total balances for which loan-level data was provided in each of the various categories (construction and land development, multifamily, and all other non-owner occupied CRE) to the Bank’s call report. Losses are estimated on the amount of exposure for which loan-level information was not provided by applying a top-down loss rate.

The Moderate and High Stress Scenarios below are determined by applying the loss rates included in the stress test example in the 2012 OCC guidance on community bank stress testing. These loss rates represent two-year loss rates, consistent with the OCC’s stress testing guidance.

Top-Down Loss Rates Chart

Enhancing Portfolio Oversight and Credit Risk Management

Collectively, the “bottom-up (loan level)” and “top-down” moderate and high stress scenarios provide a global overview of a bank’s CRE portfolio and its potential impact to capital. Knowing that this is not a replacement for an enterprise-wide stress test, it allows a bank to provide its management, Board of Directors, and regulators with some context of the estimated losses in this segment of their loan portfolio while also serving as an effective supplement to their internal or third-party loan review.

Historically speaking, any situation in which significant weakness is experienced in critical market and economic factors will result in credit losses that are elevated above those that a bank experiences in “normal” times if unprepared. There is no replacement for appropriate credit administration, however all banks should always utilize tools such as stress testing to enhance their oversight of the metrics behind their CRE portfolio.

The performance of any financial institution and ultimately their ongoing safety and soundness are dependent on the performance of the Bank’s CRE portfolio. It is critical that management and the board of directors ensure that the Bank emphasizes effective implementation of the risk management elements discussed in the 2006 CRE Guidance. These elements include:

  • Continued effective board and management oversight,
  • Effective portfolio management,
  • Ensuring that management information systems are able to provide the information necessary for effective risk management,
  • Performing periodic market analysis and stress testing,
  • Regularly evaluating the appropriateness of credit underwriting standards, and
  • Maintaining an effective credit risk review function

If a financial institution is successful in these endeavors, their CRE loan portfolio should continue to contribute positively to their performance. Accordingly, I am a proponent of all community financial institutions having a stress test performed regularly to ensure the performance of that segment of their loan portfolio as well as the entire organization.

Partner with Young & Associates for Expert CRE Stress Testing

Navigating the complexities of commercial real estate stress testing can be challenging, especially with evolving regulatory expectations and economic uncertainties. At Young & Associates, we offer specialized CRE and Ag portfolio stress testing services designed to address these very challenges. With over 45 years of experience, our team understands the intricacies of regulatory guidance and can provide your community bank with the insights needed to enhance strategic and capital planning.

Our proven stress testing model assesses the potential impacts of adverse economic conditions, helping you manage risk effectively and comply with regulatory expectations. We provide actionable insights to guide your loan product design and underwriting standards, easing the burden of stress testing and supporting your institution’s resilience.

Choose Young & Associates for a partnership that combines deep industry knowledge with a commitment to excellence. Let us help you stay ahead of regulatory demands and strengthen your CRE portfolio management. Reach out to us now to schedule a consultation.

 


[1]              FDIC, PR 54-2012, Statement to Clarify Supervisory Expectations for Stress Testing by Community Banks. May 14, 2012.

[2]              OCC Bulletin 2012-33, Community Bank Stress Testing: Supervisory Guidance. October 18, 2012.

[3]              FDIC Supervisory Insights, 9(1).” Summer 2012.

[4]              FDIC FIL-104-2006, OCC Bulletin 2006-46, FRB SR 07-1, Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices. December 12, 2006.

[5]              FDIC FIL-62-2015, OCC Bulletin 2015-51, FRB SR 15-17, Statement on Prudent Risk Management for Commercial Real Estate Lending. December 18, 2015.

 

CDs Maturing in Q2: Impact on Interest Rate Risk Management

By: Michael Gerbick, President at Young & Associates

Interest rate risk (IRR) is the exposure of a bank or credit union’s current or future earnings and capital to adverse changes in market rates. Management of that risk is critical to community financial institutions and since the pandemic and rates went to zero, due to the rapid pace of change, effective management of that risk has been difficult due to the rapid increase in interest rates.

Navigating Market Volatility: The Role of ALM Models 

Most banks and credit unions utilize asset liability management (ALM) models to assist in the modeling of interest rate increases and decreases, typically +/- 400 bp shock scenarios. Similar to the parallel rate shock scenarios of the ALM models designed to identify risk exposure in a rapidly changing rate environment, the Fed raised rates between March 2022 and July 2023 from 0% to 5.25–5.50%.  

The yield curve shape changed significantly, putting additional stress on the Asset Liability Committees (ALCO) responsible for managing the ALM function of financial institutions, and has not let up. Yes, the inverted yield curve has flattened from 12 months ago, however in March this year, the Treasury yield curve for the two-year and ten-year yields hit a consecutive day record for being inverted 625 days, besting the previous record set in 1978.  

The chart shown below1 illustrates the difference between the higher yield 2-year and the lower yield 10-year. 

Strategies Amidst Rising Rates: Insights for Community Banks and Credit Unions 

Amongst many of the strategies employed during the rising rate environment of 2022 and 2023 was offering certificates of deposit (CDs) to maintain and grow deposits on the balance sheet. However, the funding mix began to shift as consumers migrated towards the higher interest-bearing accounts or the Bank increased Federal Home Loan borrowing which caused the cost of funds to increase.  

Industry research for the last two years shows interest-bearing deposits up 5.1% and non-interest-bearing deposits down 28%2. Rates have not risen since July 2023, however many of the CDs offered in 2023 are due to mature in 2024 in a different rate environment than when they were issued. Financial institutions are monitoring this closely.  

Strategic Considerations for ALCOs: Addressing Interest Rate Risk 

ALCOs are tasked with predicting the interest rate exposure in the elevated rate environment. Currently, we are in a unique environment and banks and credit unions should be cautious about using historical data only to predict future activity. In addition to non-bank competitors competing for deposits, community financial institutions need to continue improving their approach to cost of funds, net interest margin compression, and how the institution will effectively manage their exposure to interest rate risk. A few strategies and actions financial institutions can employ related to deposits are: 

Optimizing Interest Rate Exposure

Increase the frequency in which ALCO meets to review the interest rate environment. This may currently be semi-annual or quarterly at your institution. The financial institution may consider meeting monthly to stay abreast of any changes in the environment or new products the Bank is releasing. 

Policy Revision

Review your policy limits approved by the Board. Your policy may only have -100 bp or -200 bp scenarios listed given the previous low-rate environment. Not only review the existing policy limits with the Board but increase the stress range to account for -300 bp and -400 bp. 

Trigger Points

In addition to the policy limits, consider thresholds for the rate of change of the risk measures that consider risks associated with liquidity, interest rate risk, and capital. These rate of change thresholds are designed to commence action or additional investigation into the source of the significant movement ahead of falling outside of policy limits. 

Stress Your Assumptions

ALM models have built-in assumptions and are likely based on historical industry averages supplemented by data supplied by your institution. Common key assumptions outlined by the FDIC3: 

  • Asset Prepayment – represents the change in cash flows from an asset’s contractual repayment schedule. The severity of prepayments fluctuates with various interest rate scenarios. Mortgage loans are a prime example of assets subject to prepayment fluctuations.
  • Non-Maturity Deposits
    • Sensitivity or Beta Factor – describes the magnitude of change in deposit rates compared to a driver rate.
    • Decay Rate – estimates the amount of existing non-maturity deposits that will run off over time.
    • Weighted Average Life – estimates the average effective maturity of the deposits.
  • Driver Rate – represents the rate, or rates, which drive the re-pricing characteristics of assets and liabilities. Examples include Fed funds rate, LIBOR, U.S. Treasury yields, and the WSJ Prime rate.

Have discussions with your team and understand what is going on broadly in the economic environment as well as items specific to your bank or credit union. Address changes or concerns in your modeling assumptions or at the very least, be aware of their potential impact. Spend time to learn the assumptions. Do not accept the defaults as correct, make sure your team understands them.

In addition to your base case, stress the assumptions – double or triple the decay rates, assume a high sensitivity to driver rates in the change in deposit rates, and cut the prepayment speeds in half. The alternate scenarios with severe assumptions will assist ALCO in understanding potential value creation and risks.  

Interest Rate Risk Review

Regulatory guidance indicates that every bank should have an annual third-party assessment of the interest rate risk system. Similar to other audits, this review should be delivered to the Board of Directors or the Board’s audit committee and is a critical component of the Board’s responsibility for bank oversight. 

Educate the Board on Interest Rate Risk

There are educational videos available through the FDIC website. In addition, there are IRR modeling vendors that will attend meetings to provide perspective to your institution on the current economic environment and your modeling results. Leverage them. 

Managing Interest Rate Risk in 2024 and Beyond 

There is always an opportunity for significant value creation in any environment. The rapidly increasing rate environment experienced in 2022-2023 brought forth significant risks and opportunities. The 2024 environment possesses new challenges, and I am excited to see our community banks and credit unions adjust their balance sheets, act on the highest value opportunities, and limit their interest rate exposure.  

Assess Your Interest Rate Risk 

Ready to proactively manage your institution’s interest rate risk? Young & Associates offers comprehensive interest rate risk reviews tailored to your needs. Ensure your bank or credit union is prepared to navigate market volatility with confidence. Reach out to us now to schedule your consultation!

 

 


1Federal Reserve Economic Data (FRED) 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
2S&P Global US Bank Market Report 2024
3FDIC Developing Key Assumptions for Analysis of Interest Rate Risk

Managing CRE Credit Risk Amid Market Shifts

By: Jerry Sutherin, President & CEO of Young & Associates

The landscape of commercial real estate (CRE) lending is shifting due to current economic events, presenting both challenges and opportunities for community financial institutions deeply entrenched in this sector. The challenges range from the profound impact of remote work trends and the uncertain future of office spaces to growing concerns about inflation and higher interest rates bringing CRE risk into the spotlight. This volatility has garnered increased attention from internal and external stakeholders, as well as regulatory authorities. Consequently, identifying the most pressing threats among these challenges and proactively mitigating risk has become a top priority for financial institutions with CRE exposure.

In the face of rising interest rates and delinquencies, many financial institutions are preparing to confront these economic stressors. In fact, some were already scaling back lending before the recent collapses of Silicon Valley Bank and Signature Bank. We have all witnessed the tightening of lending standards resulting from that event, and many analysts anticipate further tightening among all community financial institutions. This constriction is also impacted by limited deposits and liquidity forcing financial institutions to be selective in how they deploy their capital. These facts leave many analysts predicting when credit problems will emerge in the CRE sector.

The evidence speaks for itself. According to S&P Global Market Intelligence, the delinquency rate for all CRE loans held in U.S. banks has increased by five basis points year over year. Moreover, within a single quarter earlier this year, the delinquency rate for nonowner-occupied nonresidential property loans spiked by a significant 24 basis points. This has led to tighter lending standards at origination, reflecting the concerns of institutions. Further, financial institutions are taking proactive measures to mitigate CRE risk after origination. Some have set aside high-single-digit percentage allowances for office loans. Others have reduced exposure through portfolio sales. Overall, loan originations have fallen, CRE sales have slumped, and forecasts indicate a drop in CRE prices.

The tightening of lending standards, the slowdown in the growth of CRE loans, and the impact on loan originations have emerged as central concerns in the financial sector. What unifies these factors is their inherent risk and whether they act as warning signals or responses. Managing CRE credit risk is undeniably intricate, but leveraging available strategies and tools empowers community banks, credit unions, and financial institutions to effectively navigate the ever-changing CRE lending sector. This enables them to proactively assess and plan for risk mitigation, rather than merely react to these changes.

Understanding Commercial Real Estate Risk

As CRE loans represent a substantial part of many banks’ loan portfolios and higher yielding assets, especially within community financial institutions, understanding the significance of CRE credit risk is paramount. Community banks and credit unions often operate in areas experiencing job and population growth, leading to a high demand for CRE lending and, in turn, a high concentration of CRE loans. This growth and its corresponding effects on loan portfolio concentration pose new challenges for banks in terms of risk monitoring and control.

While larger financial institutions commonly maintain experienced staff and even entire departments to manage these risks, it is generally not cost effective for smaller financial institutions to hire and maintain qualified resources to help mitigate the inherent risks. In the absence of an internal CRE risk management team, it is imperative for financial institutions to rely on independent third-party resources to assist in this crucial process.

Historical Context and Lessons from Past Experiences

A retrospective examination underscores the importance of proactive risk management. Many significant historical banking failures were largely attributed to overinvestment in CRE loans and the lack of an effective risk management process. Weak underwriting standards and poor portfolio management led to an oversupply of CRE properties and borrower defaults. Over time, regulatory improvements, such as stricter underwriting and risk management requirements, have been implemented. Nevertheless, predicting the future remains uncertain. We can only analyze past patterns and the shortcomings to properly assess future risks.

In 2023, community and regional financial institutions comprise approximately 72% of the CRE loan market, taking on an above-average amount of CRE credit exposure. Recognizing such circumstances is vital, as you should be alert to potential red flags. Identifying and managing CRE credit risk is critical.

Identifying Emerging CRE Risk

A comprehensive understanding of CRE credit risk highlights the increasing complexity of its landscape. CRE credit risk is multifaceted, with numerous risk categories affecting CRE lending, including market risk, asset risk, liquidity risk, and credit risk, among others. To construct a robust risk management strategy, all these variables must be explored and considered.

To assess your financial institution’s CRE loan segment’s health, a systematic approach is needed. When determining if your CRE portfolio exceeds your institution’s risk appetite and how to quantify that risk and respond effectively, the answers lie in developing a comprehensive, tailored framework for assessing and analyzing your CRE loan market. The most recent regulatory interagency Statement on Prudent Risk Management for Commercial Real Estate Lending notes that institutions that successfully monitored risk have:

  • Established appropriate loan policies, underwriting standards, and concentration limits.
  • Conducted cash flow analyses based on realistic rates and expenses to ensure repayment ability and assessed borrowers’ ability to repay during interest rate fluctuations and loan structure changes.
  • Analyzed the impact of economic changes on the loan portfolio’s quality, earnings, and capital.
  • Provided boards and management with information to adapt lending strategies in changing market conditions.
  • Maintained information systems to manage concentration risk effectively.
  • Implemented appropriate appraisal review and collateral valuation processes.

With the many challenges faced by community financial institutions, the need to effectively identify, measure, and manage these risks has become paramount. While established best practices exist to address these risks, financial institutions must transition from assessing each risk in isolation to recognizing the interconnectedness and synergy between them. A more holistic approach to risk management is required, allowing institutions to confidently inform their capital planning, risk tolerance, and overarching strategy.

Strengthening CRE Risk Management in Community Financial Institutions

A comprehensive risk management strategy empowers financial institutions to adapt to market dynamics, instilling confidence among stakeholders and regulators. Alongside the factors discussed in the previous section, regulatory guidelines highlight two critical facets of CRE risk management: stress testing and portfolio reviews. While community financial institutions can execute these internally, outsourcing can offer efficiency and effectiveness.

CRE Portfolio Stress Testing

Stress testing and sensitivity analyses are indispensable tools for evaluating CRE risk and gauging the impact of economic fluctuations on asset quality, earnings, and capital. These assessments should align with the portfolio’s size and risk profile. CRE stress tests inform strategic and capital planning, credit concentration limits, policy, and underwriting. Integrating stress testing into risk management and strategic planning is essential to anticipate and mitigate risks, especially given current market uncertainties.

Although loan-level stress testing serves a purpose on a transactional level at origination, financial institutions should also regularly perform portfolio-level stress testing that encompasses a bottoms-up and a top-down approach. The bottom-up approach allows financial institutions to gauge the risks of individual, seasoned loans by stressing each transaction through interest rate changes, collateral values, and other market factors. Implying moderate and high stress scenarios to each transaction allows for early identification of potential losses and their impact on the capital of your organization. The top-down approach takes the remaining portfolio not identified on a loan-level analysis and uses the same stressors to further identify any possible impact to capital.

Independent Loan Reviews for CRE Risk Mitigation

Thorough loan reviews are pivotal for identifying and mitigating potential CRE portfolio risks. They enable banks to assess loan quality, maintain compliance with regulations, and make necessary adjustments on a loan and portfolio level. An effective loan review function is crucial for assessing asset quality, evaluating underwriting and ongoing monitoring, and identifying exceptions to policies. Proactive issue resolution ensures risk mitigation before regulatory scrutiny or asset quality deterioration.

To further safeguard against future losses, it is critical that a loan review be independent. If maintained internally at the organization, it should report directly to the audit committee of the board of directors or the full board of directors. If a third-party firm is contracted to perform this work, it too should report all findings to the board of directors or a committee thereof.

Tactical Approaches to Limit CRE Risk in an Unpredictable Market

To minimize exposure to CRE credit risk, institutions should enhance communication with borrowers, allocate additional resources for portfolio management, understand collateral, and manage interest rate risk. Effective market area monitoring, adaptable to the institution’s unique risk exposure and appetite, is essential. Clear communication of risk tolerance from the board down to lending staff fosters alignment and clarity.

Community financial institutions must not become complacent in their approach to risk management. It is critical to remain agile and continually adapt to changing environments and emerging risks, especially in the currently volatile realm of CRE lending. By staying proactive and employing a comprehensive risk assessment and management approach, banks and credit unions can successfully address CRE credit risk, safeguard their portfolios, and maintain their success.

Optimize Your Risk Management Strategies with Young & Associates

With over four decades of experience, Y&A specializes in helping community financial institutions manage risk. Our enduring presence in the industry reflects our ability to adapt to evolving financial landscapes. Our seasoned consultants, who have backgrounds in banking, bring firsthand experience of market fluctuations.

Outsourcing CRE Stress Testing

Young & Associates offers a CRE portfolio stress testing service that efficiently and insightfully assesses your portfolio. Using data specific to your bank, we stress your CRE portfolio across various factors. Our report quantifies potential impacts on earnings and capital resulting from collateral value decreases, changes in property net operating incomes, or increases in interest rates. What sets us apart is our ability to handle the stress testing process efficiently, allowing your institution’s management to focus on other important initiatives.

Outsourcing Loan Review

For most community financial institutions, outsourced loan review is the best choice due to size and the need for an independent party. Our loan review service, applied to your CRE portfolio, not only uncovers individual credit assessments but also evaluates the alignment of your credit standards, analysis, and continuous credit monitoring with the specific characteristics of your CRE portfolio. Our findings not only inform you about existing portfolio risks but also provide recommendations for effective risk management.

Contact us to explore how we can support your journey in addressing CRE credit risk effectively.

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