During our recent COVID-19 stress testing webinar, I discussed how one of the primary goals of stress testing is to rank your loans based on their capital at risk as measured by the stress test.  Community banks can then use these lists to focus their precious credit resources (people and time) to do a deep dive on those loans and start to prepare workout strategies. The earlier you start this planning process, the more options you will have to help the borrower and limit loan losses.

Many community banks have been laser-focused on working with borrowers to provide modifications on existing loans and PPP loans. So now what?

Plante Moran, a highly reputable accounting firm with deep expertise in financial services, has provided an excellent roadmap in Brave New World: Credit Quality During COVID-19. I strongly recommend that bankers read this article to learn more about what actions they should be taking with individual borrowers, which in addition to stress testing, include getting updated financial statements, tax returns, and collateral data.