Maintaining Capital Adequacy: Stress Testing and CECL During Economic Downturns
Institutions that identify, measure, and manage risk most effectively will outperform their peers in terms of financial performance while also maintaining safety and soundness. This is especially true during economic downturns, e.g. from the ongoing coronavirus pandemic, as institutions will likely confront increasing credit losses in their customer base. Coupled with an uncertain liquidity and rate environment, maintaining a well-capitalized status is not a foregone conclusion.
If done successfully, risk models can be re-used for greater efficiency. Economic stress testing estimates can inform CECL calculations, which can and should inform and be informed by portfolio valuation activities. CECL model strength is bolstered by the ability to run, test, and compare the results of calculations under different formats and interpretations, using a mix of internal and external data.
Join to learn:
- How to take advantage of the intersection between valuation, CECL, and stress testing
- Why back-testing can help strengthen CECL modeling results
- How the attribution of changes can turn an accounting compliance exercise into an intelligence-generating activity
Garver Moore brings a decade of enterprise software, analytic, and advisory experience to Abrigo’s advisory team. Prior to joining Abrigo, Garver was a Technical Consultant with Accenture, and he later worked with C-suite executives on technology strategy and delivery as a Managing Partner of the Orange Advisory Group. Today, as the Managing Director of the Advisory Services Group, Garver collaborates with internal product specialists on our market offerings and helps clients develop strategies to better navigate federal regulations and optimize their institutions for growth. Garver earned his bachelor’s degree in electrical and computer engineering from Duke University.
Neekis Hammond, CPA
Neekis Hammond has amassed a wealth of knowledge on ALLL, CECL preparation and methodologies, and various portfolio analysis and risk topics. Prior to his consulting work, he worked on acquisitions up to $2 billion in size at a multi-billion-dollar financial institution. Neekis has also served as an auditor with a regional CPA firm and as a provider of valuation, accounting, and loan analysis services within Elliott Davis Decosimo's FIG Consulting division. Today, as Abrigo’s Managing Director of Advisory Services, Neekis utilizes his unique expertise to provide thoughtful feedback to product development on compliance and accuracy, and he helps our community bank and credit union clients develop strategies that better navigate regulations without undue portfolio risk. Neekis earned his bachelor’s degree in accounting from Brigham Young University - Idaho.