ATLANTA-Level 5 has introduced a diagnostic tool to assist financials in making strategic decision about geographic expansion, new business lines and whether or not to make loans in certain markets.
Called Financial Institution Tool" or "FIT," it specifically addresses the commercial real estate (CRE) market but can also be used in forecasting residential real estate.
Brian Abner, director of market strategies for Level 5, said FIT gathers data from hundreds of local and national data points, and combines that with trends to interpret that data and make recommendations.
"You want to make good decisions when you go into an MSA, new or existing," Abner told Credit Union Journal. "This gives them the opportunity to look down to the specific market and gain insights into how that product would do in the market today and where to put the loan dollars." In the case of credit unions that buy loan participations in commercial loans and CREs, Abner observed, "A lot of credit unions do participations, but they don't know what they are participating in, whether its residential, multifamily or construction."
Abner said FIT also allows a credit union to show regulators why it made a loan in what may be a strong slice of an otherwise weak market. "You can show why you did the deal you did," he said, noting FIT indicates whether a market is growing, has plateaued or is declining.
He added a credit union does not need to capture any additional data; FIT already does so. "It projects forward so you can plan strategy around it. You can ask yourself then how much volume do you want to put into that market." Abner said.
