May 5, 2020
The coronavirus chaos and its cascading impact on the financial markets and small and medium-sized business has made credit stress testing a vital tool for every community bank. Adam Mustafa, CEO and co-founder of the Invictus Group, joins host, Michael Delucchi to collectively share their thoughts on stress testing in the COVID-19 environment, how PPP loans and loan modifications can be incorporated into test scenarios, and loan loss reserve considerations during these unprecedented times.
With a long history in strategic analytics and stress testing, Adam discusses the importance of identifying the segments of the portfolio that are most vulnerable and how stress testing can assist bank executives to fully grasp the bank’s capital situation to determine if contingency plans such as deleveraging, cost-cutting, or changes to the dividend policy need to be pursued. Adam reveals how banks can use COVID-19 stress testing results to augment their qualitative factors for loan loss reserve accounting purposes.
This episode is ideal for any CEO, CCO, CFO, or bank executive to learn why proper stress tests, not the check-the-box stress tests that most banks use, can help banks to plan for the worst, develop timely strategic and contingent initiatives, while positioning them to take advantage of opportunities when the crisis is over.