Through experience CEIS has concluded that most community banks’ core IT loan systems do not contain the financial data required to perform a valuable bottom up commercial real estate (CRE) portfolio stress testing exercise. If this holds true for your Institution, CEIS’ has developed a strategic approach to “bottom up” stress testing by gathering and using the pertinent transactional data during a Loan Review or data gathering engagement for the CRE stress test exercise.
If your Institution can potentially provide CEIS the data elements necessary for the Stress Testing exercise, we can also utilize the supplied data to perform the Stress Test exercise for an Institution.
Additionally, reviewing regulatory examinations and discussions with clients has consistently shown that regulatory expectations around CRE-related stress testing are focused on the development of a stress-testing process and framework on a granular loan level.
As a result of coinciding a commercial real estate portfolio stress testing program with a loan review engagement, a client is able to keep the process economical and manageable with little disruption to normal internal processes.
Conducting both the Bottom Up and Top Down stress testing approach is beneficial to stress testing results. By pairing the results from the CRE stress testing with the Top Down approach, we ensure more consistent results for the total portfolio concentration.
Contact us today to learn more about our “Bottom Up” commercial real estate portfolio stress testing program.