Commercial Real Estate (CRE) Loan Portfolio Stress Testing
for Community and Regional Banks
Banker's Toolbox

  | Program Benefits | How It Works | Program Contacts |

The Crest™ program from Banker's Toolbox provides community and regional banks with a powerful yet easy-to-use tool to stress test their commercial real estate (CRE) loan portfolio. Crest™ embodies the next generation in loan risk management by providing the ability to project hypothetical scenarios and potential impact of economic changes on a bank's future earnings, asset quality, and capital.

PROGRAM BENEFITS

Crest™ gives the community banker the ability to control CRE concentration risk by identifying and segmenting loans with common risk characteristics. Bankers can define and perform multivariable stress tests using factors unique to their institution and marketplace resulting in comprehensive reports for the board of directors and federal examiners.  Crest™ will help the bank decide if the concentration presents undue risk to the institution or if the concentration can be effectively managed.

HOW IT WORKS

Crest™ makes loan portfolio stress testing practical for community banks by eliminating the 4 Keys Barriers to stress testing.

1. Analytical Limitations
   Manual stress testing (e.g. spreadsheets) is difficult and time consuming to perform at a portfolio level and on an ongoing basis. A manual method also does not make it easy for an institution to track concentrations within the portfolio nor does it help identify concentrations that may have developed within the portfolio and gone undetected thus far. Crest™ automates portfolio level stress testing and concentration analysis within an institution. Crest has the capability to apply a different set of user-defined multi-variable stress factors to an unlimited number of loan segments within the portfolio and aggregates the results at a portfolio level.
2. Costly Integration
   Crest™ uses the standard regulatory loan data file (ALERT or NCT) that is generated from all banking core systems to prepare for Safety and Soundness examinations.  This makes integration with core banking applications seamless.  The data file contains all loan information including: new loans recently booked on the banks ledger; loans that have had recent advances or pay downs; updated appraisal information; and loan maturities.
   Each time the bank wishes to run a stress test with updated data, the user would simply import the most current electronic loan file available from the bank's core processing system into Crest.
3. IT Support and Cost
   Crest™ is offered as a hosted solution.  This removes the IT issues that may pose a challenge to community banks.  Crest™ is priced as a fraction of a bank's actual CRE portfolio size, without the costs of installing or maintaining expensive in-house systems.  By being affordable, Crest™ enables community bankers to manage their risk more effectively.
4. Collecting and Storing Financial Data
   Traditional stress testing models require extensive financial information be obtained for each loan in the portfolio.  Best practice dictates that this information be updated prior to every stress test that is run to ensure the portfolio data is current. This requirement is not practical for many community banks.

Crest™ overcomes this cumbersome data management challenge through the patent-pending innovation of using market data to estimate valuations for loans that do not have updated real income and expenses. For loans with current financial information, Crest™ will utilize the actual amounts.

PROGRAM CONTACTS

Banker's Toolbox
10431 Morado Circle, Suite 300
Austin, Texas 78759
Main Number:  888-201-2231
Contact: Bob Kim; Tel: 213-384-8184
Web Site: http://www.bankerstoolbox.com/crest

CAB CONTACT PERSON

Kimberly Smith  (202) 663-7516
E-mail: ksmith@aba.com