You know your borrowers and their individual business risks. But how is your entire portfolio positioned to face the volatility of today’s business environment? PRA creates a database of your borrowers and generates reports that help you see where the stress points are if market conditions change.
Stress test your portfolio
- Stress test individual segments or your entire loan portfolio.
- Segment your portfolio by farm/business type, size, performance, or leverage position.
- Base stress tests on past or projected financial performance.
- Identify borrowers who contribute most to portfolio risk.
- Generate reports to summarize the financial position and performance of portfolio segments.
- Build customer loyalty by providing them benchmarks of their financial performance.
How does it work?
For your ag portfolio, PRA can aggregate and stress test either past performance or projection data on your farm customers. Past performance analysis is based on FINPACK Financial Analysis (FINAN) or Schedule F Cash to Accrual data that has been prepared on your customers. Either monthly or annual types of FINPACK Projections can be analyzed by PRA for forward-looking analysis. For your commercial portfolio, PRA stress tests FINPACK’s C & I Business Analysis data. PRA creates a database of this FINPACK information on your borrowers and then generates reports to help you see where stress points lie, should market conditions change.
PRA can also prepare benchmark reports on your ag customers. These benchmark reports use your customer group to identify financial strengths and weaknesses of your individual borrowers. Here the performance of an individual farm is rated against their peer group from your bank’s portfolio. As with all PRA analysis, benchmark reports can be pared down by farm type, size of farm, profitability level, and solvency position.
Summary
For over three decades, FINPACK has helped lenders make informed loan decisions. It is the choice for lenders who not only want to effectively manage their credit but also care about the success of their customers. From small community banks to the largest lenders, FINPACK will work for you. Contact FINPACK to learn more about how PRA further enhances the FINPACK suite of tools to best manage your credit risk.
Pauline Van Nurden is currently the Associate Director for the FINPACK Team. She has been with the team since 2017 as an Economist.
Prior to joining the FINPACK Team, she worked as a lender. This provides her valuable industry experience and knowledge in her work with FINPACK. Pauline holds a Master’s Degree in Agricultural Education and Bachelor’s Degree in Applied Economics, both from the University of Minnesota.