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Event Name:Asset Quality Ratings Managing Portfolio Credit Risk and Assessing ALLL
Date:Monday, January 30, 2017 1:00pm CST
Presented By:BankersHub
Panelist(s) Info: John Barrickman President New Horizons Financial Group
Credits:1.5 CPE Credits

A critical tool for managing portfolio credit risk is an effective asset quality rating framework (AQR). The AQR plays multiple roles:

  • Defining the institution’s tolerance for risk
  • Measuring portfolio risk
  • Monitoring portfolio performance
  • Pricing loans
  • Determining the adequacy of the Allowance for Loan and Lease Losses
  • Tool for creating competitive advantage

Banks are recognizing that they need more granularity (number of categories) in the bank’s AQR framework. The bank must also provide more guidance and objectivity to assigning asset quality ratings to assure consistency across the organization. Institutions are also recognizing that objective criteria that work for C&I lending do not work well with CRE, A&D/ construction, Ag or specialized lending. Banks are also finding that incentives must be structured to assure lenders timely and accurately assign AQRs.

Specific subjects covered in the webinar include:

  • Alternative approaches to the asset quality rating framework
  • Using AQRs to define risk tolerance
  • Adding granularity to the AQR framework
  • Assuring timely and accurate assignment of AQRs
  • Translating AQRs to risk premiums in pricing
  • Tracking migration of AQRs
  • Using the AQR framework in assessing the adequacy of the ALLL

Participants will be able to benchmark their bank against industry best practices.