In This Article
- The Commercial Product Edit Screen
- Product Configuration & Defaults
- Credit Configuration & Assumptions
- Financial Configurations & Assumptions
- Other
- History
The Commercial Product Edit Screen
Edit
- The "Edit" button will allow you to change the settings of the product.
Save
- After you click the "Edit" button, the "Save" button is how you save any changes you have made to the product.
- If you leave the screen without saving, any changes you have made since the last save will be lost.
- The "Print" button allows you to print off the settings of this product.
- The "Print" button is not visible while editing.
Close
- The "Close" button will leave the product and take you back to the Administration Section.
- Make sure that you save your work before closing if you would like to keep the changes you have made.
Name
- The name at the top of the header will be the name of the product and how it is referenced throughout PrecisionLender.
- This can be edited to match the name of the product at the financial institution.
Shortcuts
- The links below the product name can be used to jump directly to sections on the screen.
The tabs below the header represent different regions or groups of regions that have different assumption sets for the product.
Product Configurations & Defaults
General
Product Enabled
When checked, this product will be available to lenders for pricing.
Default Amount
If you need to change the default amount for a loan product it is really simple to do in PrecisionLender for any user with the requisite rights and privileges.
FFIEC / HMDA Lien Status
- Not Applicable
- Secured by a First Lien - 1.5% Spread Limit
- Secured by a First Lien and Eligible for Small Creditor Exemption - 3.5% Spread Limit
- Secured by a Junior Lien - 3.5% Spread Limit
Base Target ROE
In PrecisionLender the Target ROE is one of the main ways to guide lenders. Technically speaking, PrecisionLender calculates a risk adjusted return on risk adjusted capital (RAROC), however, for simplicity we refer to it as ROE.
Adjusted Target ROE
Target Return that takes into account adjustments made at the product level, typically based on risk ratings.
Available Regions
- Regions for which these settings are active are signified with a check next to the region name.
- See Customizing Products by Region
- Split Out Region
- Allows you to choose regions to separate from this group of regions so they can have separate assumptions.
- Collapse Into Region
- Allows you to collapse this group of regions into another group of regions that you select.
- Only available if the Full Regionality and Advanced Funding module has been licensed.
Enable Conversion Products
Conversion products allow you to price a shorter term product, like a Construction Loan, and then have it later convert into the permanent structure.
Policies & Defaults
Funding Package Override
- Check this box if you want to override the funding package set at the regional level for the particular product. All funding packages are available for selection. Only one funding package can be selected.
Override Fixed Rate Spread Lock Funding Curve Family
- Check this box if you want to override the regional setting for the Funding Curve Family that is used to calculate the Spread Lock on a fixed rate loan for the product type that you are setting up.
Maximum Allowed Rate Lock Duration
- The maximum duration allowed for rate locks for loans of this type.
User can specify Expected Life
- Check this box if you want users to be able to specify an Expected Life shorter than the Maturity of the loan being priced.
Funding Package
- The funding package that has been selected to override the funding package set at the regional level.
Default Maturity
- The maturity that will be originally set when a new loan of this type is created.
Fixed Rate Spread Lock Funding Curve Family
- The Fixed Rate Spread Lock Funding Curve Family that will be used when a new loan of this type with the "Override Fixed Rate Spread Lock Funding Curve Family" option checked is created.
Fixed Rate Custom Funding Curve Family
- The Custom funding curve that will be used to price fixed rate spread locks if Custom has been selected for the Fixed Rate Spread Lock Funding Curve Family.
Default Fixed Rate Lock
- The fixed rate lock that will be originally set when a new loan of this type is created.
Default Expected Life
- The expected life that will be originally set when a new loan of this type is created.
- This field will only show up if the "User can specify Expected Life" box is checked in the General section.
Allowable Payment Types
- Amortizing
- Amortizing / Level Principal
- Single Pay / Interest Only
- LOC
- Letter of Credit
- Scheduled Draws
- Scheduled Repays
- Scheduled Draws and Repays
For more information: Payment Type Options
Default Payment Types
- The payment type that will be originally set when a new loan of this type is created.
- Payment Type Options
Default Payment Frequency
- The payment frequency that will be originally set when a new loan of this type is created.
- Payment Frequency Options
Default Amortization
- The amortization that will be originally set when a new loan of this type is created.
- The utilization that will be originally set when a new loan of this type is created and the Payment Type is LOC.
Enable LOC Scheduled Availability
- If LOC is selected as an available payment type, then this option will appear. If enabled, lenders will be able to define the portion of the create scheduled commitment that is expected to be available to the borrower for LOC payment types.
Enable LOC Offset Account
- If LOC is selected as an available payment type, then this option will appear. If enabled, admins will be able to define the Offset Account Type as Balance, Percent of Average Balance, or Percent of Commitment.
Is Cancelable LOC
- If selected, then a 0% Credit Conversion Factor will be applied to the committed but unfunded amount for minimum regulatory capital requirements. This is for unconditionally cancelable lines of credit
Allowable Letter of Credit Types
- This section will appear if Letter of Credit is selected as an Allowable Payment Type.
- Setting Up a Letter of Credit
Default Letter of Credit Type
- The Letter of Credit Type selected here will appear as the default letter of credit type in an opportunity.
Letter of Credit Expected Renewal Retention
- It represents the probability that the Letter of Credit will be renewed. When pricing an opportunity, this value is used to apply factored renewals to the Income Statement for these products.
- Setting Up Expected Renewal Retention
Allowable Rate Types
- Checking the box will make that rate type available for this product.
- Available Rate Types
- Fixed
- Floating
- Adjustable
- Swap
Enabled Scheduled Structures For
- Checking this box will allow lenders to create an interest rate schedule for the rate type(s) that you select.
Default Rate Type
- The rate type that will be originally set when a new loan using this product is created.
Default Floor
- The floor that will be originally set when a new loan of this type is created and the rate type is adjustable or floating.
Allowable Float Index Families
- Checked indices will be available for the lender.
- Options:
- Prime
- Treasury
- Funding Curve
- Federal Funds
- SOFR
- SONIA
- All Custom Indices
- Individual Custom Indices
Lock Index to 1-Month
- If unchecked, users will be able to select any allowable index and duration on the opportunity screen for a floating rate loan.
- If checked, any index used to price a floating a rate loan will default to the 1-Month maturity point on the curve. Users will not be able to change this point in the opportunity screen.
Default Float Index
- The index that will be originally set when a new loan of this type is created and the rate type is floating.
Allowable Adjustable Index Families
- Checked indices will be available for the lender.
- Options:
- Prime
- Treasury
- Funding Curve
- Federal Funds
- SOFR
- SONIA
- All Custom Indices
- Individual Custom Indices
Lock Index to Adjustment Frequency
- If unchecked, users will be able to select any allowable index and duration on the opportunity screen regardless of the adjustment frequency entered for an adjustable rate loan.
- If checked, any index used to price an adjustable rate loan will default to the closest maturity point on the curve based on the adjustment frequency entered. Users will not be able to change this point in the opportunity screen.
Default Adjustable Index
- The index that will be originally set when a new loan of this type is created and the rate type is adjustable.
Default Adjustment Frequency
- The adjustment frequency that will be originally set when a new loan of this type is created and the rate type is adjustable.
- Adjustment Frequency
Disable Fixed Period?
- This option is disabled by default. If enabled, lenders will be able to price an adjustable structure at an index plus a spread instead of an adjustable rate structure with a fixed period and initial rate.
Default Fixed Period
- The fixed period that will be originally set when a new loan of this type is created and the rate type is adjustable.
Allowable Swap Index Families
- Checked swap indices will be available for the lender.
- Options:
- Prime
- Federal Funds
- SOFR
Default Swap Index
- The swap index that will be originally set when a new loan of this type is selected and the rate type is swap.
Default Swap Profit
- The swap profit percentage that will be originally set when a new loan of this type is selected and the rate type is swap.
- Using Interest Rate Swaps
Note
The Federal Funds index family is available to you if you do not have a Swap Rate provider set up, or your Swap Rate provider is Chatham.
Default Annual Fee
- The annual fee that will be originally set when a new loan using this product is created.
Default Origination Percent
- Percentage of the loan amount or commitment that will be added to the fees when a new loan of this type is created.
- This is a one-time fee charged at origination.
Default Origination Dollars
- Dollar amount that will be added to the fees when a new loan of this type is created.
- This is a one-time fee charged at origination.
Unused LOC Annual Percent
- Percentage of the unused amount of commitment that will be added to the fees when a new loan of this type is created and the payment type is LOC.
- This is an annual fee.
Allowable Interest Calculations
- Checking these boxes will allow that interest calculation to be available for this product.
- Interest Calculations
- Actual/360
- Actual/365
- Actual/Actual
- 30/360
- 30/365
Default Interest Calculation
- The interest calculation that will be originally set when a new loan of this type is created.
Allowable Tax Exemption Types
- Checking any box here allows that tax exemption type to be available for this product.
- Tax Exemption Types
- Not Tax Exempt
- Fully Tax Exempt
- Bank Qualified
- Non Bank Qualified
- Custom Non-Bank Qualified
Default Tax Exemption
- The tax exemption that will be originally set when a new loan of this type is created.
Scaling Factor Enabled
Default Scaling of
- The default selection of what the Scaling Factor will be applied to when a new loan of this type is created and index scaling factor is enabled. Options:
- Index Only
- Index And Spread
Default Scaling Factor
- The default index scaling factor that will be originally set when a new loan of this type is created and index scaling factor is enabled.
Credit Configurations & Assumptions
Loss Given Default Calculation Method
Allows you to set the LGD Calculation Method used for this product.
- Options:
- Facility Ratings
- Collateral
Facility Ratings
Facility Ratings allow you to enter specific tiers of LGD for your lenders or RMs to choose from, instead of allowing PrecisionLender to calculate your LGD from your collateral and guarantees.
Collateral Types
Guarantee Types
To account for the economic impact of guarantees, PrecisionLender allows the bank to set up specific Guarantee Types to reflect the different kinds of guarantees that are commonly part of commercial loan opportunities.
Risk Ratings
PrecisionLender allows for borrower risk rating categories to be mirrored after your internal risk rating scale with as few or as many required.
Financial Configurations & Assumptions
Capital / Annual Loss
Typically the Credit Capital and Annual Loss assumptions are based on the output of the credit migration analysis performed in consultation with PrecisionLender.
Operational & Market Risk Capital Allocation
- Represents the capital necessary to hold against operational and market risk that exists regardless of borrower creditworthiness.
- Entered as a percentage of the loan balance plus a percentage of revenue.
Use Net Interest Income as Revenue in Operational Risk Capital Calculations
- If you do not include capital in funding, you may use Net Interest Income as revenue, instead of Gross Revenue, in Operational Risk Capital Calculations.
- This option is enabled by default when creating new Commercial Loan products.
Absolute Minimum Capital Allocation
- Can also be set by Risk Rating within the Risk Ratings area.
- If set at Product and Risk Rating levels, the maximum of the two minimums will be used in computations by the math engine.
Absolute Minimum Annual Loss
- Can also be set by Risk Rating within the Risk Ratings area.
- If set at the Product and Risk Rating levels, the maximum of the two minimums will be used in computations by the math engine.
Allowable Exposure Types (Risk Weight)
- "Unspecified Risk Weight (100%)" is the default exposure type for products in PrecisionLender.
- If you have anything other than "Unspecified Risk Weight (100%)" selected on a product, users will begin seeing a new section within the Opportunity called "Exposure". Here the user will be able to select the exposure type per loan. See Loan Products with Special Regulatory Capital Requirements.
- If the exposure type is a Foreign type, the user will be allowed to select a country type. The risk weight that is returned per country is based on Basel standards.
- Default Exposure Type is the option that will be originally set when a new loan of this type is created.
Note
If a product already has a Minimum Capital Allocation, the minimum would be multiplied by the risk weighting. Minimum Capital Allocation is set in Risk Ratings
Origination and Servicing Channels
Prepayment Options
Prepayment Strategy
- Amortize (default option) - amortizes the loan using the typical mortgage approach.
- Re-Amortize - dynamically recalculates payment and remaining balance amortization after each prepayment.
Prepayment Calculation Method:
- Constant Prepayment Rate (default option) - divides Constant Prepayment Rate by 12 to get the monthly prepayment rate.
- Single Mortality - calculated as 1-(1-Constant Prepayment Rate)^(1/12).
Other
Relationship Awareness Defaults
Minimum Functional Maturity - FTP
- When a loan is approaching maturity, some values can be overstated or understated due to the short term of the calculations.
- Any value entered here will override the 1-month default.
Minimum Function Maturity - Strategic
- When a loan is approaching maturity shorter than a typical maturity for this product type, a functional maturity value will be assigned in order to calculate the loan as a newly originated loan.
- Any value entered here will override the defaults of:
- 12 months for LOCs and Draws
- Minimum (original loan maturity, 36 months) for Amortizing and Single Pay
Origination Fees
- This is used to set different origination fee defaults for loans coming through Relationship Awareness than the defaults for loans being priced. If this box is unchecked, RA will use the defaults for loans being priced, configured in the Origination section above.
- By checking the "Enable Origination Fees" box you can enter a new Relationship Awareness-only default value.
RA Loss Given Default Calculation Method
- This selection will only be visible if your organization has enabled the Facility Ratings loss given default (LGD) calculation method. It allows you to set the LGD calculation method for loans coming through Relationship Awareness.
- Options:
- Collateral and Guarantees (default)
- Facility Ratings
History
The History section at the bottom list all of the dates that changes were made to the product. You can see how the product was configured on a specific period by selecting its date.