As the business cycle evolves, how do you determine adequate provisions for credit losses in the performing portfolio? How accurate was your provision allocation through the last cycle? How prepared are you for the ultimate adoption of the CECL model? Providing defensible ALLL calculations will require financial institutions to implement a comprehensive process to calculate the reserve as well as the current and projected forecast driving the estimate.
Today’s best practice relies on expanding your vision of economic and portfolio events with external data and analytics on your borrowers and markets.
PayNet’s default forecast for local industry sectors provides insight into the expected level of risk over the next two years for each of your commercial borrowers.
Top-down expected loss forecast does not provide sufficient granularity for differential analysis. PayNet’s data allows you to evaluate granular segments of your portfolio performance against the experience found in our database of millions of borrowers.
PayNet’s AbsolutePD® Stress Test Simulator is an industry-proven method for evaluating the impact of stressed economic scenarios on your portfolio’s expected default experience. It provides the most granular bottom-up loss forecast available and allows any method of aggregation and differential analysis.
First, start archiving the key borrower and loan data today. Second, start testing your estimate of lifetime losses against your actual experience today. PayNet has learned which data is most predictive of commercial defaults and losses; we act as your trusted advisor providing short cuts for both of these tasks.