stress testing

Ag lenders have faced a whirlwind of events over the past few years. From government stimulus programs to sky-rocketing land values to record inflation, many financial institutions are struggling to get a handle on it all. However, with an eye on credit risk and an increase in loan demand expected on the horizon, profitability and growth are possible for institutions.

In this episode, Rob Newberry, former dairy farmer and Senior Advisor at Abrigo breaks down the overall agricultural lending landscape and provides practical advice on what ag-focused institutions should be doing to navigate rising rates, inflation, and more. 

In this podcast, we discuss: 

• The state of the agricultural lending landscape
• How the 1980s ag crisis compares to today and what lenders should being keeping an eye on
• Strategies to mitigate credit risk and how to identify problem loans early
• Opportunities ag-focused banks can use to stand out from the competition

Financial institutions continue to face a rapidly changing geopolitical landscape and volatile economic environment. These top-of-mind concerns underscore the need for banks and credit unions to ensure they have enough capital to withstand a wide range of shocks. How can institutions make sure they have a comprehensive view of their risk? How do they plan for managing those risks should they emerge?

In this podcast we discuss:

• How to identify key vulnerabilities to market forces through stress testing
• How stress testing results can influence strategic and capital planning
• Key takeaways from regulatory guidance and recent stress testing scenarios

The construct of stress-testing originated in the 1990’s, implemented by financial institutions as a way of determining their ability to respond to market events. Given our road to recovery is likely a rocky one, Gab Lab Hast was eager to talk with Neil Jones, Senior Vice President of Financial Recovery Services, BDO, to uncover the process he uses to financially stress-test a business, and the steps he recommends we take to mitigate our risk in the weeks and months to come. 

PART 1 // SCENARIO ANALYSIS
If Covid taught us anything, it’s to expect the unexpected. What if… you lost a key customer, supplier or employee? What if a lender called their loan? What if you had to adjust your price? In this segment, Neil walks us through tools and techniques that help turn uncertainly into preparedness.

PART 2 // CALCULATING KEY RATIOS
Ratios are all the rage, especially amongst lenders and analysist. They’re quick calculations that speak volumes when it comes to determining the overall health of a business. Tune in to uncover which ratios Neil considers vital and the benchmarks we should strive to hit. And hey, if you need a good laugh, you’ll howl when he shares with us the common techniques we Founders use to hide from the ugly truth of our numbers.

PART 3 // REINVENTION AND REACHING OUT
It’s never too early to reach out. If the numbers aren’t adding up, the sooner you ask for help, the more options you have. In this segment, Neil helps us catch our breath, take a pause and review the choices available to us. Change is inevitable. It’s how we deal with it that counts. 

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CONNECT //
Nail the Numbers // www.nailthenumbers.com

The Gab Lab // www.nailthenumbers.com/thegablab 

GAB LAB CHAMP // Community Futures Saskatchewan // www.cfsask.ca

GAB LAB HOST // Taunya Woods Richardson // www.epifany.ca

NTN PRO // Neil Jones // www.bdo.ca

ABOUT THE GAB LAB // The Gab Lab is a conversation-changing, profit-shifting series built for Founders. With a thru-line focusing on profitability, we curate financially fierce intel that has the power to blow your mind and build your bottom line. Visit us at https://www.nailthenumbers.com/thegablab