Regulatory guidance recommends transactional stress testing for practically all types of commercial lending transactions. The SQ1 Stress Test supports your institution’s overall loan portfolio and credit risk management practices. Quickly and easily promote stronger credit risk underwriting requirements to protect the capital and earnings of your institution. Test how changes in variables impact your borrower’s ability to repay.

Features of Stress Test

Transactional Stress Testing supports your institution’s credit risk management program. Quickly and easily identify changing economic variables and their impact on loan risk factors including debt service coverage (DSC) capacity and loan to value (LTV) coverage. Supports multiple scenarios including pre-closing and post-closing stress testing. Analysis is presented as part of the overall credit presentation to the loan committee and the Board of Directors. Protect the asset quality, earnings and capital of your institution.

Stress Test the following variables:

• Interest rates
• Cap rates
• Vacancy
• Revenue
• Operation expense

Regulatory Emphasis

Meet increasing regulatory demands for transaction stress testing. Loan data imported from your core accounting system is the basis for performing the stress tests and eliminates needing to manually calculate balances or weighted average interest rates. Collateral data and Income information are incorporated from information already entered for that customer within your Square 1 Credit Suite.

Analysis

Commercial Real Estate (CRE) loans can be stressed for changes in occupancy and cap rates and the impact on Loan-to-Value and Debt Service Coverage. Sensitivity analysis is provided. A customer’s total loans can be stressed overall for changes in annual payment and interest rates.

Documented

Generate reports of your stress tests to include in your presentation to loan committee or include in your annual review. Separate stress tests can be maintained so that varying scenarios can be created and stored.