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4 steps to effective stress testing for community bank loan portfolios

You don’t have to stress over stress tests

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Regulators are pushing community banks to improve stress testing of their commercial real estate and subprime loan portfolios. The good news is that community banks don’t have to follow the stricter stress testing processes mapped out for larger banks in section 165 of the Dodd-Frank law. The bad news? That leaves them without a specific regulatory road map to follow.

4 steps to effective stress testing for community bank loan portfolios offers a common-sense, four-step process for developing a stress testing regime that will both satisfy regulators and help banks better manage their credit risk:

  • Understand your portfolio and its risk factors
  • Ensure your have sufficient, up-to-date data
  • Test for risk
  • Take appropriate actions to control your risk going forward

This step-by-step guide will help community banks better understand and effectively respond to mounting stress testing pressure from regulators. It will also help position them to better understand and control their credit risks.

Read 4 steps to effective stress testing for community bank loan portfolios today, and stop stressing over stress testing.

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