Why is the Region Edit Screen Important?
- 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.
- 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.
How to Get to the Region Edit Screen
- In the bottom left corner of the dashboard, click "Administration".
- Click on "Regions and Users" at the top left if it is not already selected. This will bring up your Reporting Regions.
- Click on the name of the region you wish to edit.
- This will show you all the current settings for this region.
- To edit the selected region, click "Edit" in the top left hand corner of the page.
- This screen allows you to make and save changes to the settings for the selected regions. You can also click "Save and Propagate to Child Regions" to push any changes you make to this region to its child regions as well.
Edit Screen Options
- 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).
- 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 and 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
- Tax Exempt Cost of Funds Option
- 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 Cost Assumptions
- Funding Curve Family for Fixed Rate Spread Lock
- Example Funding Curve Families: Treasury, LIBOR, Funding Curve, Funding Curve (Cost of Funds)
- Funding Curve: the funding curve that you set up in Funding Packages.
- 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.
- The Funding Curve Family used in calculating the Spread Lock on a fixed rate loan
- 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.
- If 'Custom' is selected for the Funding Curve Family, then you can select the Funding Curve Family for one of your Custom Indices.
- Funding Cost Option
- Allows you to either include or exclude capital in funding
- 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 () 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
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.
- 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.