Credit Migration & ALLL
Puts a detailed analysis of your portfolio risk at your finger tips.
The TCT Credit Migration/Risk Based ALLL (Allowance for Loan & Lease Loss) tool monitors and measures the changes or migration in the individual member credit scores and their fluctuations over time. The tool then applies that movement into the calculation of an ALLL that is compliant with the proposed ACS changes to Generally Accepted Accounting Practices (GAAP) including compliance with the Current Expected Credit Loss (CECL) model.
Statistically developed and validated algorithms are employed to identify probability coefficients applied to specially identified loans in order to complete a statistically valid and FASBE compliant ALLL calculation process.
Get an early warning system for problem credit, so you can take early action & minimize losses.
The migration model delivers a matrix which tracks changes in consumer credit scores over the life of their loans, and presents the information to client management teams in a robust and highly useful format. The tool is based on the constructs of risk based pricing breaking everything into tiers, monitoring changes in scores by product and credit grade.
The model also includes both an impaired loan analysis and an improved loan analysis providing clients specific loan information for analysis and decision making in underwriting and risk mitigation. This product is highly versatile for credit unions and can be applied to any financial institution at any asset level.
Clients report reducing their delinquency & charge-off ratios by as much as half.
The ALLL model partitions common groups or pools by loan type, or collateral code then further divides all loans within each group or pool into risk grades using the most recent credit score. A statistically valid loss rate is then calculated for each grade within each pool using information derived directly from the institutions portfolio. Within each loan pool the current balances of loans in each risk grade are then multiplied by the corresponding loss factor for each grade to identify the amount of required provision. At regular intervals credit unions will acquire updated FICO scores for all loans with outstanding balances assigning an accurate grade for their current status.