The coronavirus chaos and its cascading impact on the financial markets has made stress testing a vital tool for every community and regional bank. CEOs deserve a proper diagnosis of how their bank will handle adverse economic scenarios. The proper stress test will help CEOs identify the segments of the portfolio that are most vulnerable so they can focus the attention of their team on the larger credits within that group. It will also help them 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. We show how banks can use COVID-19 stress testing results to augment their qualitative factors for loan loss reserve accounting purposes. CEOs need a strong stress test that will inform them in real time whether their decisions will keep problems contained. And they will certainly need to use the stress test as a communication vehicle to show the regulators they are able to recognize, quantify and address any problems they find. In this complimentary webinar, Invictus Group CEO Adam Mustafa explained why proper stress tests — not check-the-box stress tests that most banks use — can help banks to plan for the worst, while positioning them to take advantage of opportunities when the crisis is over.
Adam Mustafa is CEO and Co-founder of the Invictus Group. He has been providing strategic analytics, M&A and capital adequacy advisory services to banks, regulators, bank investors, and bank D&O insurers since the beginning of the 2008 financial crisis. Mr. Mustafa has overseen the design and implementation of BankGenome™, the data-driven intelligence network that powers the Invictus Group’s suite of customized pandemic stress testing, capital stress testing, M&A, and strategic planning systems for community banks. He has also been a featured speaker on stress testing, M&A, CECL and risk management at dozens of industry conferences, including those hosted by regulators. Prior to joining Invictus, he had senior-level experience as a banker, financial services consultant and corporate CFO. He has an MBA from Georgetown University and a BA from Syracuse University.
Invictus’s expedited stress tests for community banks can be completed in as little as 3 weeks after receipt of critical loan-level information. Our goal is to help banks quickly but properly diagnose the strength and weaknesses of their balance sheet and capital under the developing pandemic economy.