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Optimal Loan Pricing

We offer optimal loan pricing to help financial institutions better understand interest rate and credit risk at the loan level, resulting in more effective loan pricing and increased profitability.

Why Choose Us

We believe that modeling interest rate and credit risk in a holistic way under varying macroeconomic conditions leads to more effective loan pricing and increased profitability. We utilize discounted cash flow models, which we run at a granular level under multiple macroeconomic forecasts. Our credit loss estimates are in full accordance with the current expected credit losses (CECL) model.

We often find that financial institutions underprice for the interest rate and credit risk they take, particularly in the lower credit bands, and that the total return, considering interest income earned and credit losses incurred, is negative.

Our Approach

Our optimal loan pricing is performed in connection with our capital stress testing and concentration risk analyses. Informed by the results of this work, we obtain loan pricing sheets and tailor our work to our client’s existing risk tiers and pricing bands.

We model expected prepayments and credit losses iteratively under multiple macroeconomic conditions to provide our clients with deep insights regarding potential loan pricing and help them identify the credit bands with the highest return.

FEATURED

Making the Business Case for the CECL Approach – Part III [White Paper]
Released June, 2017, this white paper is the third in a three-part series that presents the business benefits resulting from incorporating lifetime credit losses required under the CECL accounting standard into analyses designed to optimize the risk/return tradeoffs for a financial institution.
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WHAT OUR CLIENTS SAY

“Wilary Winn’s expertise is a critical component in our risk assessment balance of maintaining current income coupled with appropriate and realistic evaluations […]”

– Michael Harden, Executive Vice President & CIO, F&A Federal Credit Union – Monterey Park, CA