Stress testing allows banks and credit unions to stress the portfolio, concentrations, and specific borrower relationships to identify risk. Institutions can create custom concentrations and apply multi-variable stress scenarios using key factors like interest rate, cash flow, and collateral value. The stress testing software also provides documentation, bridges loan data integrated from the core system and financial data entered in Credit Analysis, and links to FDIC call report data to show effects on capital and earnings.
Understand concentration and portfolio risk
Stress Testing
Benefits of Sageworks Stress Testing
- Stress any loan in the portfolio in one system
- Satisfy examiners with a top down or bottom up portfolio stress test
- Identify potential trouble spots
- Make more informed capital planning and lending strategy decisions based on results
- Create reports to effectively communicate risk to management, the board, and examiners
Impress examiners without the heavy lifting that spreadsheet stress tests require
Find Out How
Sageworks Stress Testing is an efficient way to stress different levels of our portfolio. Since purchasing the solution, examiners have been very happy, making life easier for us.
Kristen Beggs, West Texas National Bank, Midland, TX
Ways to Leverage Stress Testing Results
While megabanks have stringent and detailed portfolio stress testing requirements, many community banks and credit unions have received little prescriptive guidance on how to effectively stress test the loan portfolio. While stress testing is widely accepted and purported by examiners to be a critical component of a “sound risk management framework”, expectations and use cases for stress tests aren’t obvious.
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