Setting Up and Managing Regions

Overview

In PrecisionLender, regions contain a group of products and users that operate under a certain set of "assumptions", or rules. By grouping all of your products and users that use these same assumptions into a Region, you can control the settings for the Region as a whole, or select each product or user individually. Reporting Regions are managed in the Regions & Users section of Administration for administrators with the "Manage Regions" permission in their security profile. Within an Opportunity, regional assumptions can be viewed in the General Tab of the Assumptions Screen.

 

In this Article

 

Create a Region

From the Regions & Users section, in Reporting Regions, click the (The copy icon is to the right of the region name) icon next to the existing region that you'd like to create the new region under. The existing region will be the parent region, and the new region will be the child region.

This will bring up the Region Edit Screen, which will be pre-populated with the assumptions currently assigned to the parent region. You can modify these assumptions and update the name for your new region.

 

Once the assumptions are set, click "Save", in the upper left hand corner. Then, click "Close" to return to the Regions & Users screen.

Note

You can view our reporting region recommendations here.

 

Edit a Region

The Region Edit Screen allows you to make changes to a Region's assumptions and push that change to that Region and all Child Regions nested inside it.

From the Regions & Users section, in Reporting Regions, click on the name of the region you wish to edit. Then click the "Edit" button in the upper left hand corner.

 

General

Visible Return on Capital Types
Selected metrics will display as options in the metric dropdown found in the Relationship Impact Summary footer and Scenario Builder screen (see The Opportunity Screen).
Default Return on Capital Type
This default metric will be pre-selected in metric dropdown found in the Relationship Impact Summary footer and Scenario Builder screen (see The Opportunity Screen). This metric will also appear on the Opportunity printouts.
Federal Tax Rate
State Tax Rate
Effective Tax Rate
Combined Federal and State Tax Rate.
Effective Tax Rate = Federal Tax Rate + State Tax Rate - (Federal Tax Rate x State Tax Rate)

 

Tax Effective Yield Calculations

Non Bank Qualified Interest Disallowance Factor

Bank Qualified Interest Disallowance Factor

This disallowance will be 100% of the interest expense unless the obligation is deemed to be "Bank Qualified".  That factor is reduced to 20% for all Bank Qualified obligations.
Generally, financial institutions can deduct all interest paid or accrued on indebtedness within a taxable year; however, such a deduction is disallowed for interest on indebtedness to purchase or carry tax exempt obligations by the Tax Equity and Fiscal Responsibility Act (TEFRA).
Custom Non-Bank Qualified Interest Disallowance Factor
This allows you to set a custom interest disallowance factor for Non-Bank Qualified loans. This allows you to use different Non-Bank Qualified disallowance factors for different products within the same region.
Tax Exempt Options for Loan Accounts

 

Tax Exempt Cost of Funds

Marginal Loan Cost of Funds
Point on Funding Curve
If chosen, additional fields will appear allowing you to specify Duration and Adjustment Factor.
Average Cost of Funds
If chosen, an additional field will appear allowing you to specify the Cost of Funds Rate.

 

Funding Package Assumptions

Funding Curve Family for Fixed Rate Spread Lock
This will be the Funding Curve Family used in calculating the Spread Lock on a fixed rate loan
Available Funding Curve Families:
  • Treasury, LIBOR, Prime, FHLB-Boston
  • Funding Curve: the funding curve that you set up in Funding Packages. If multiple funding packages have been enabled, this will be the funding source selected in the Opportunity.
  • Funding Curve (Cost of Funds): the cost of funds for the loan that is being priced. Cost of Funds is calculated as interest expense divided by average balance. If multiple funding packages have been enabled, this will be the funding source selected in the Opportunity.
  • Funding Curve (Pre-LP Cost of Funds): the cost of funds for the loan that is being priced before liquidity premiums (if you've configured liquidity adjustments in your assumptions) have been applied. If multiple funding packages have been enabled, this will be the funding source selected in the Opportunity.
  • Custom: if selected for the Funding Curve Family, then you can select the Funding Curve Family for one of your Custom Indices.
You can set a different Fixed Rate Spread Lock Funding Curve Family at the product level by editing the Policies & Defaults in the Commercial Loan Product setup, if needed for certain product types.
Funding Cost Option
Allows you to either include or exclude capital in funding.
This option will only appear if you have the Funding Cost Options setting enabled by PrecisionLender. If you do not see this option but would like to use it, please reach out to Support.
Funding Packages
The set of funding assumptions that will be used to price a loan.
You can view the default settings for the Funding Packages associated with the region that you're editing by clicking the chevron icon (Chevron icon) next to the Funding Package name.

 

Unused Line Opportunity Cost

Allows for assumptions to be set to create a charge against the undrawn portion of a Line of Credit via one of two options:

Point on Funding Curve
This method allows banks to provide inputs (transfer duration and liquidity factor) that are used to calculate the unused line cost rate.
Transfer Duration: The approximation of expected average life, in months, that will be matched for funding purposes to a like point on the fully adjusted funding curve.
Liquidity Factor (percentage): Allows for the appropriate factor to be applied to the Line of Credit based on the nature and typical duration of the Line of Credit.
Unused Line Cost Rate
This method allows banks to enter the specific percentage to be applied to the undrawn portion of a Line of Credit.

The value will appear as the Unfunded Liquidity Premium in the Interest Expense of the Financial Statement.

 

Earnings on Capital

Earnings Factor
The ability to apply an earnings factor for earnings on capital will only be available if the funding cost option of ‘Do Not Include Capital in Funding’ is selected. If a factor of greater than 0% is entered, ‘Earnings on Capital’ will appear as a line item on an Opportunity’s Financial Statement.
Capital
Provides the ability to select which type of capital will be used for calculating earnings on capital

Note

If ‘Include Capital in Funding’ is selected as the Funding Cost Option, the ‘Earnings on Capital’ section will not be available. The default earnings factor will be 0% and ‘Earnings on Capital’ will not appear as a line item on an Opportunity’s Financial Statement.

 

Cap & Floor Options

See Setting Up Caps and Floors for details on configuring these options.

 

Fee Options

We offer three Fee Amortization Methods: Amortized Fees, Leveled Fees, or Amortized Fees Over Expected Legal Tenor. The latter option allows a "multiplier" to be configured depending on the maturity duration.

 

Servicing Channel Assumptions

This will appear in Regional Assumptions if you configure your Servicing Channels to be setup at the Product and Regional level. This can be done in the Universal Assumptions tab within Administration. Please reach out to Support if you have any questions on if this option is right for your bank. 

 

Saving Changes

Shows the toolbar with options to save or Save and Propagte to Child regions

 

Once you are done editing you have three options.

  • If you click "Save", your changes will be saved, to this region only.  Any regions that are descendants of this region will not be affected.
  • If you click "Save and Propagate to Child Regions", your changes will be saved to this region, and all of the Region's configurations will become the settings of any regions listed as Descendant Regions, at the bottom of the page.
  • If you click "Close", none of your changes will be saved.

 

Move a Region

You can move a child region to a different parent region. The Root Region that is named after your institution, cannot be moved.

When a region is moved, all of its users and settings are moved with it.

From the Regions & Users section, in Reporting Regions, click on the move region icon next to the region you would like to move.

The following menu will open giving you the available regions that your selected region can be moved under:

Shows move region pop-up window

 

Select the region that you would like to be the new parent.

Then, click the Finish button.

 

Delete a Region

If a region is no longer needed, you can delete the region. Please be mindful of the following:

  • If there is a loan, deposit, and/or other product that was split out and made available in the region that needs to be disabled, disable the associated product(s) first. This can be done via the "Product Enabled" checkbox at the top of the product edit screen for the region being deleted.
  • For products that remain enabled, any product assumptions that were assigned to the deleted region will be deleted and the products will use the assumptions of the parent region.
  • All Users from the deleted region will be assigned to that region's parent. 
  • For any existing Opportunity tied to a pricing region that has been deleted, the pricing region will not be updated to the home region of the lender assigned to the Opportunity. Here are some things to keep in mind prior to making the update:
    • To update an opportunity's pricing region to the owner's home region, one of the following will need to occur:
    • If a user's visibility into other regions are limited, when a region is deleted, it may prevent users in the same region as the opportunity owner from being able to open the opportunity until the pricing region is updated.
  • If the region you are deleting has sub-regions, these will not be deleted. They will be moved under the parent region.

From the Regions & Users section, in Reporting Regions, click the trashcan icon icon next to the Region you wish to delete.

This dialog box will confirm what region that is and give the option to proceed or cancel.

Shows delete region pop-up window

 

Once you click "Delete & Save" your selected region will be deleted and all sub-regions and users will be moved to the parent region.