Budget Simulation

alt_moon Budget Simulation

The annual budgeting process has changed significantly under CECL. When budgeting, an institution must consider the impact that loan growth and forecasts have on the provision and expected charge-offs. At ARCSys, we understand the intricate complexities and uncertainties that accompany the budgeting process. The ARCSys Software allows your institutions to forecast external factors, such as GDP and PCE, as well as loan growth as part of the forecasted allowance process. These factors, along with forecasted prepayment speeds, can cause the forecasted budgets to fluctuate over time.

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The best CECL analytics are built with

AVM

Our Budget Forecast Simulation Analysis Includes:

  • A forecast of loan growth over the budget cycle
  • A forecast of economic changes based on the institution's expectations and current forecast modeling over the budget cycle
  • An estimate of allowance changes by quarter over the budget cycle and quarterly provision
  • Documentation of results and conclusions
  • The ability to update the budget at a later time to account for changing conditions

Since we utilize your forecasted charge-offs and prepayment rates, the ARCSys Budgeting Analysis can improve your forecast and allow you to view multiple variations based on changes in variables and economic cycles.

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