1 / 25

Analysis of Loan Quality and Losses for Direct Auto-Marine and Direct Real Estate Loans

Analysis of Loan Quality and Losses for Direct Auto-Marine and Direct Real Estate Loans. Prepared for Hibernia National Bank Management . May 2 nd , 2000. Presented by: Soad Abuhawas Fabiana Cardetti Susan Russell Scott Sorrell. Contents :.

sarah
Download Presentation

Analysis of Loan Quality and Losses for Direct Auto-Marine and Direct Real Estate Loans

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Analysis of Loan Quality and Losses for Direct Auto-Marine and Direct Real Estate Loans • Prepared for Hibernia National Bank Management . May 2nd, 2000. • Presented by: • Soad Abuhawas • Fabiana Cardetti • Susan Russell • Scott Sorrell

  2. Contents: • Identification of Loan Originations and Loan Prepayments • Static Pool Analysis with illustrations • Revenue and Charge-off Activity by Tier for each month • Summary

  3. Direct Auto-Marine Loans

  4. Direct Auto-Marine Loan Originations • A and B tiers have the highest percentage of originations. • Each quarter originates more B customers than A customers.

  5. Direct Auto-Marine Loan Prepayments • B tier has the highest prepayment percentage in each quarter. • B tier prepayments increase remarkably with time. • A tier prepayments are somewhat stable.

  6. Static Pool Analysis of Auto-Marine Loans

  7. B and C tiers demonstrate a quick and consistent increase • of charge-offs since origination. • B Tier’s most rapid increase of charge-off percentage occurred • typically in Quarter 3 or 4 . • C Tier experiences steady increases over loan life.

  8. SINCE M23 • C Tier decreased from 3.8% to 3.2% over first 7 • quarters since origination • B Tier increased from 1% to 1.6% over first 7 • quarters since origination

  9. SINCE M26 • C Tier decreased from 3.2% to 2.6% over first 7 • quarters since origination. • B Tier remains about 1.6% over first 7 • quarters since origination.

  10. SINCE M30 : • C Tier losses have decreased from 2.6% to about 1.8% • B Tier losses have decreased from 1.6% to less than (1/3)%

  11. Static Pool Conclusions : • C Tier’s Static Pool tends to improve in time, thus • relative loss over the life of the loan for C Tier • loan types decreases. • B Tier’s Static Pool, over same months, worsened, • and then improved . • The overall trend is the Static Pools of B and C Tier • suggest that the bank’s corrective measures have • proven to be successful.

  12. C tier has a higher cumulative loss than B tier when comparing the • loss as a percentage of originations within the tier.

  13. Analysis of Bank’s Revenue from Direct Auto-MarineLoans

  14. B Tier has the highest rate of increase of Net Profit. • C Tier has a lower rate of increase, but C Tier still contributes to bank’s earnings. • A Tier has most consistent rate of increase of Net Profit.

  15. The total losses of all tiers by month increases • only slightly. • The total combined profit is growing at a higher • rate. • The continuation of this trend ensures success.

  16. Direct Real Estate Loans

  17. Direct Real Estate Loan Originations • A high percentage of loan originations occur in A and B. • After the 6th quarter the origination percentage of unscored loans seem to decrease; while it increases for A & B.

  18. Direct Real Estate Loan Prepayments • A & B tiers has the highest prepayment percentage. • The growth of both tiers volume seem to be almost the same in most quarters. • The volume of both tiers increases from quarter to quarter.

  19. Static Pool Analysis of Real Estate Loans

  20. In general there are very few charge-offs. They primarily occur in either B or C tier. • B tier seem to mostly start to charge-off in the 4th quarter since origination.

  21. C tier has the highest cumulative losses followed by B tier.

  22. Analysis of Bank’s Revenue from Direct Real EstateLoans

  23. Summary • C Tier contributes heavily to bank’s losses, but still earns money for the bank in both loan types • A Tier is well-behaved as expected • B Tier contributes the most to bank’s revenue • D Tier loans are so infrequent that the data support no conclusions. Based on delinquency and charge-off ratios, however, we do not recommend that the bank increase originations of D tier loans. • The Bank’s corrective measures have proven to be successful.

More Related