Tag: Stress Testing

Stress Testing The Severity of Coronavirus

The Corona Credit Shock

The Coronavirus is simultaneously disrupting supply and demand in the world economy.  The shock to the economy will have a profound effect on the US economy, and community banks will not be immune from this disruption.   It appears that a global recession is inevitable, but the full extent of damage to the banking industry is unclear.  However, there are some troubling signs that many banks may be unprepared for the severity and length of this recession and the exten

Here Is the Probability of One of Your CRE Loans Getting A Special Mention

Monitoring Bank Credit

Banks put loans on “Watch” in order to better monitor the changes with the borrower, tenant, and property. Whereas a “Special Mention” loan has a potential weakness that deserves management’s close attention, a “Watch” loan may be thought of as a pre-Special Mention and may just require management’s loose attention. While the “Special Mention” classification as a very clear regulatory definition, “Watch” can be more of an economic category.

Bank Best Practices To Handle Real Estate Loan Concentrations

Managing CRE Concentrations

This past December, the regulatory community telegraphed their intentions of focusing bank examinations on commercial real estate (CRE) concentrations in 2016: “During 2016, supervisors from the banking agencies will continue to pay particular attention to potential risks associated with CRE lending” (SR 15 17, Dec 2015).

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