Twenty Twenty Analytics is a dedicated group of financial consulting professionals and certified public accountants with extensive experience related to credit unions, consumer and business lending as well as loan quality and concentration risk analysis. Our multi dimensional portfolio risk models allow us to measure collateral, grade loans, validate your allowance and stress test your portfolio. Each of our specialized products will help you better understand how minor changes in the economic conditions could affect your bottom line so you can be more responsive when conditions change and mitigate your regulatory risk.
Click here to see a Sample Loan Portfolio Analysis Report for a Credit Union.
Collateral Confirmation for Real Estate (AVM)
Collateral Confirmation for Real Estate is a tool that allows us to provide a current market value of the real estate securing your portfolio loans based on current changes in market conditions. Our model has been effective in providing values on 100% of the properties by using current data provided by the National Association of Realtors; which is based on changes in the sale price of comparable properties in the local area. This model can be used on 1st or 2nd mortgage positions.
Collateral Confirmation for Consumer Loans and Commercial Machinery (KBB/NADA)
Collateral Confirmation for Consumer Loans and Commercial Machinery is a tool that allows us to apply current collateral value for each of your consumer or commercial loans based on the current value of the vehicles or commercial equipment. This tool can be used to provide values for cars, motorcycles, RVs, boats, ATV, watercrafts, heavy trucks, machinery and other collateral based on your specific needs.
Collateral Confirmation for Commercial Properties
Collateral Confirmation for Commercial Properties is a customized model specific to your Credit Union that allows us to provide a reasonable updated value for most commercial properties. This model uses the current borrower income information that you already have and considers with changes in the current interest rate environment to calculate a collateral value using an income approach. This model allows you to quickly assess if there has been a change in the real value of your commercial loan portfolio and to understand how minor economic changes could impact your overall commercial portfolio.
Portfolio Stress Analysis
The Portfolio Stress Analysis model allows us to look at how changes in the current market could impact a portfolio and change the level of exposure. This model provides flexibility because we examine how changes (up or down) in the collateral values or other economic factors could impact future performance by measuring how the change impacts the individual loans in the portfolio and aggregating that data in an easy to understand snapshot. This tool helps management better understand how small economic changes could have a big impact on the performance of their loan portfolio.
Loan Paper Risk Analysis (Specific Loan Grading)
Loan Paper Grading is a tool that provides a "Credit Quality Grade" to each loan in the portfolio based on the current characteristics of the borrower and their collateral. This tool provides management with an understanding of individual loans by using information that is currently embedded in the system or can be easily obtained. Our Paper Quality Risk Analysis tool grades each loan by using a multi-faceted approach generally considering the current LTV, FICO score, FICO Migration, Past-Due Performance, Direction of Credit Risk, Co-Borrowers and Other Risk Characteristics to determine the likelihood of future performance and potential losses. This risk-based approach is widely accepted by the NCUA in their review of a credit union's loan portfolio.
Specific Loan Default Probability Analysis
The Specific Loan Default Probability Analysis is a model that incorporates all of the known characteristics that could impact you member's desire or ability to repay a specific loan. This model incorporates the Specific Credit Grading (FICO / FICO Migration Analysis) as well as other known attributes such as current loan-to-value, payment history, co-borrower (guarantor) information, loan age and other attributes to calculate an overall default probability score. By including all of these attributes you are better able to understand the risk in your portfolio and clearly see new performance trends as they develop.
Residual Reserve – Leases
The Residual Reserve model for closed end leases allows you a means of validating your current residual reserve for your lease portfolio. This modeling combines the probability default modeling with your specific history and industry guidelines to help you better assess the current estimate for the residual reserve. By predicting short-term default probabilities with long-term reserve requirements you are better prepared for changes in your lease portfolio.
Specific Loss Probability Analysis (Risk of Loss)
As part of every portfolio analysis we consider the risk of loss by reviewing loans based on their likelihood of default and their potential for actual losses given current collateral values.
A High Risk of Loss is measured by considering the loans that are at the highest probability of default. For these loans we consider the loan balance in excess of the current collateral value, when there is no collateral measured or no collateral assigned the entire balance is categorized as a High Risk of Loss.
A Medium Risk of Loss is measured by considering those loans that have a moderate probability of default or high probability of default when the LTV is less than 100%. For these loans, the model classifies the balance as medium risk of loss to the extent the LTV exceeds 80% or when there is no collateral measured or no collateral assigned the entire balance is categorized as Medium Risk of Loss.
Low Risk of Loss is determined when the combined default risk is assessed at Low or the loan has been classified as Med or High and the remaining LTV is below 80%, the remaining balance is categorized as Low Risk of Loss.
Loan Allowance Validation
Loan Allowance Validation is a tool that combines the results of the Collateral Confirmation and Loan Paper Risk Analysis to measure the potential losses to be compared with your Allowance Account. This model looks at the overall collateral position of the loans and estimates the losses based on the under collateralized or unsecured portion to estimate future losses. We also use this model in conjunction with our Stress Analysis so that management can see how changes in economic events not only impact the quality of the loans but how those changes could translate to the bottom line.
Customized Loan Modeling
In some cases you may find that our current inventory of existing models and tools do not meet your specialized needs. In these situations we have a team of highly qualified analysts who can work with your management team to develop models that meet your specialized needs. Generally this type of modeling has a low development cost and can be useful in assessing and validating current interest rates, evaluating commercial loan portfolios, internal pricing strategies, concentration risk, potential merger solutions or any number of other needs. Just let us know what your needs are and we will find or create a tool that exceeds your expectations.