History shows that commercial real estate loan portfolios can be very profitable for banks during good economic times and they can also generate significant loan losses during economic downturns. Managing the balance of risks and rewards at the portfolio level can be a challenge. The regulators require holding enough capital consistent with a bank’s ability to control portfolio risks. That means if a CRE portfolio includes concentrations of risky loans, there must be enough capital to offset potential losses. Alternatively, the bank must demonstrate that it has internal procedures to closely watch CRE portfolios and a track record of working with borrowers to mitigate risks.
There is not a one size fits all approach when overseeing a portfolio of CRE loans. For instance, an institution with concentrations in ADC loans will require more oversight to evaluate the impact of changes in market and economic conditions than an institution that lends to owner-occupied CRE borrowers. Identifying, analyzing and reporting on risks specific to an institutions CRE concentrations is critical to helping management make decisions about when to modify underwriting standards for CRE loans. If the results of the ongoing risk analysis process of the CRE portfolio advises management to tighten underwriting standards, profitable loan opportunities may be missed if the analysis was incomplete or possibly flawed. Alternatively, if management is not seeking well-reasoned recommendations from the CRE portfolio manager, then the institution may miss market and economic signals that would have prevented losses.
To make CRE portfolio decisions, institutions need good data and analyses. They also need the results of the analyses to be presented in a manner that helps all stakeholders to weigh the risks and rewards so decisions can be made when to take on more CRE loans, what types of loans to approve and what markets can be served without accepting too much risk.
During this important webinar, our expert, Gary Deutsch, CPA MBA, will discuss methods to analyze CRE portfolio risks in a rising rate environment to assist loan portfolio managers, senior management and the board with making timely portfolio profitability decisions.
WHAT YOU’LL LEARN
This webinar will cover:
- Identifying the triggers that affect CRE portfolio profitability
- Methods to connect CRE loan stress testing to the financial metrics that could impact portfolio profits
- Conducting a review of the decision-making process to determine what information and analyses best serves all stakeholders
- Examples of CRE portfolio analysis metrics and presentation best practices to assist with the decision-making process
- Policies and procedures that can improve the CRE portfolio decision-making process
- AND MUCH MORE!
YOUR CONFERENCE LEADER
Your conference leader for "CRE Portfolio Risks: Methods for Identifying, Assessing and Reporting” is Gary Deutsch, president, BRT Publications LLC. Mr. Deutsch is a licensed CPA in Maryland and has a B.A. in accounting and an MBA in finance from Loyola University Maryland. He has also achieved the Certified Management Accountant, Certified Internal Auditor and Certified Bank Auditor designations. Mr. Deutsch is the founder and president of BRT Publications LLC.
Mr. Deutsch has trained thousands of financial institution professionals in all aspects of risk management and has written numerous books in the U.S. and Europe on topics such as credit risk, internal audit and compliance with Generally Accepted Accounting Principles. Mr. Deutsch has extensive risk management and internal audit experience through his association with financial institutions of all sizes as well as through his role leading the KPMG financial institution consulting practice in the Mid-Atlantic region.