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Reinventing Retail Lending Through Advanced Analytical Models

  • FOR IMMEDIATE RELEASE (2020-01-11)

    Minnesota Credit Union Network and
    Deep Future Analytics
    Announce Their Partnership

    FOR IMMEDIATE RELEASE: 11 January 2020

    Minnesota Credit Union Network and Deep Future Analytics Announce Their Partnership

    11 January 2020

    St. Paul, MN (January 11, 2020) – Minnesota Credit Union Network (MnCUN) and Deep Future Analytics (DFA) announced their partnership today. MnCUN will make available DFA’s Prescient Manager™ software to its membership. Prescient Manager™ is an easy-to-use, web-based credit risk forecasting and stress testing solution for credit unions and community banks. The software’s functionality includes:
    • Accurate, scenario-based, account-level FAS 5 ALLL and CECL forecasts including discounted cash flow functionality.
    • New loan pricing optimization leveraging the same cash flow model as for CECL.
    • Scenario-based loan valuations for purchases and sales of loan participations.

    Joseph Breeden, founder and CEO of Deep Future Analytics said, “We are excited to be partnering with MnCUN. We share a common vision that our accurate, scenario-based, account level cash flow models can create value across many functions in the FI. These solutions are integrated and coordinated in a way that a collection of independent models cannot be. MnCUN will be a great partner for bringing this capability to Minnesota credit unions.”

    “Deep Future Analytics will help best position Minnesota credit unions to manage and anticipate risk. The all-in-one software calculates the necessary lifetime loss forecasts for CECL, but also provides accurate and actionable information for portfolio management, account management, and loan pricing,” said John Ferstl, Chief Operations Officer for MnCUN.

    ABOUT DEEP FUTURE ANALYTICS
    Deep Future Analytics is a joint operational venture of Prescient Models, LLC and Nuvision CUSO Holdings, LLC, a CUSO operated by Nuvision FCU. Dr. Joe Breeden, founder of Prescient Models, brings more than 20 years of experience leading financial institutions through predictive financial modeling, allowing clients to achieve a real understanding of portfolio dynamics for retail lending. Nuvision FCU was founded nearly a century ago as the credit union of Douglas Aircraft, its values were forged in the factories and plants that made the region prosper. Now with assets well-over $2B, Nuvision is a multi-state Credit Union, with branches in Southern California, Arizona, Wyoming, Alaska and Washington.


    About the Minnesota Credit Union Network

    The Minnesota Credit Union Network is the statewide trade association that works to ensure the success, growth and vitality of Minnesota credit unions. With approximately $25 billion in assets, Minnesota credit unions are local, trusted financial cooperatives that serve more than 1.8 million members at nearly 400 branch locations around the state. As not-for-profit institutions, credit unions give back to the communities they serve. For more information, visit www.mncun.org.

    ###

    Media Contact:
    Charles Hoy, Director of Business Development
    Deep Future Analytics LLC
    [email protected]
    (505) 690-7195

Best in Class Loan Forecasting Solutions

With the advent of new regulatory credit risk requirements, the nation's largest financial institutions are leveraging their resources to go beyond "checking a box," and are gaining market share by deploying new, impactful credit risk modeling strategies.

At Deep Future Analytics (DFA), we feel smaller community banks and credit unions shouldn't have to lose opportunities because their overwhelmed, overworked loan managers lack the resources and time to best utilize loan modeling tools.

We've made it our mission to guide our partners in using our best in class Loan Portfolio Strategy Software to optimize loan pricing, collections, risk, and more. Take a look at what sets up apart…

All-In-One Software

Our All-In-One solution eliminates the need to purchase separate loan modules, while our Shared Data Repository helps fill in the gaps when your history is thin.

  • CECL / Risk Forecast
  • Price Optimization
  • Collections
  • Valuations
  • Scenario Driven Stress Tests

Credit Risk Forecasting

DFA's Model Architect is, Dr. Joesph Breeden, inventor of Vintage Modeling and author of over 50 trade publications and books on credit risk modeling.

  • Product-Level Lifecycle Events
  • Score at Origination
  • Economic Environment
  • Vintage Modeling
  • Probability of Attrition / Default

Actionable Outputs

DFA's software was developed to deliver Actionable Outputs, many years prior to CECL. With the right model already in place, we became the first CECL compliant provider.

  • Ranked Collections Watchlist
  • Account Payoff Predictor
  • Pockets of Opportunity (Price & Risk)
  • Lifetime Loss Rate
  • Custom Stress Scenarios

Proud Partner of ProfitStars®,
a division of Jack Henry & Associates®

ProfitStars chose Deep Future to serve their client's CECL and Loan Modeling needs. Together we provide a strong solution with consultative & educational guidance.

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Video: Model Alternatives for CECL

DFA conducted a study of eight different CECL models using publicly available data from Fannie Mae and Freddie Mac. Viewers will get a better understanding of Modeling, CECL requirements, and how to choose a model that is the right for your institution.

Check out our own Dr. Joe's latest ABA Article:

Dear Congress: Don’t toss CECL out,
work with FASB to amend it

"With some adjustments, the loan-loss accounting standard can be more secure and workable for banks and credit unions … " - Dr. Joseph Breeden, CEO of Deep Future Analytics (DFA)

Helping our Clients Succeed!

At DFA we are Reinventing Lending and helping our clients Succeed in many ways.
Here is what they're telling us:

"We've gained peace of mind now that we manage our loans with the most accurate information achievable"
"We're making confident decisions since maximizing internal/external loan model inputs"
"Stress testing all the economic scenarios helps us prepare for the next recession"
"Knowing the REAL value of our Participations brings the greatest diversification benefit and offer price"
"We're making smarter pricing and risk decisions by introducing the best decisioning intelligence possible"

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New! Loan Participation Analytics™

Know the REAL value of your loans and IMPROVE EARNINGS through smarter diversification, more informed pricing, and reduced or eliminated broker fees.

Recent Publications

All publications below were authored by DFA's own, Dr. Joseph Breeden

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    Reserves: All Loans vs. RE Loans

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    CECL (Current Expected Credit Loss) is the new accounting standard for estimating loss reserves on loan portfolios. The CECL guidance provides a great amount of flexibility in which models are used and a range of other choices that may impact the calculations. This book provides details of a study on how to apply CECL to US mortgage data. It seeks to disclose as many modeling details, results, and validation tests as possible so as to provide a reference for comparison and best practices. Because CECL is so similar to IFRS 9 Stage 2, this can also serve as a benchmark for implementing the new international account standards. The book is organized into three parts. Part I: Study Summary provides an overview of CECL, the design of the mortgage study, and the key comparative results across the models tested. Part II: Model Details provides in-depth discussions of how the models were designed and estimated, the coefficients, and the validation. Part III: Background provides additional conceptual material. Chapters 11 and 12 may be particularly useful to those new to modeling, and Chapter 13 puts CECL modeling in the context of lending analytics overall.

    • Date // May 2018
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    Vintage Performance

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    Building on the solid foundation of the previous bestselling first impression, this extended updated impression walks through the various issues of retail lending and develops approaches to address the interaction between economic cycles and retail lending. The complexity of time is extensively explored: vintages, current time and maturity. Reinventing Retail Lending Analytics, Second Impression covers complex issues such as scenario based forecasting, stress testing, volatility analysis, economic capital and portfolio optimisation, credit scoring and last, but not least, model risk.

    The book ends by providing examples of the application of nonlinear decomposition. These examples will provide you with rich data sets for exploring portfolio dynamics and improving portfolio management using nonlinear decomposition techniques.

    • Date // March 2019
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    Sample Page

    Preface

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    The new loan loss accounting rules for CECL and IFRS 9 require thousands of organizations to learn about modeling. Likewise, accountants and others in finance are now required to learn about statistical modeling concepts. This book is intended to define terms in a manner consistent with decades of academic literature on statistical modeling and hopefully reduce some of the noise and confusion just around definition of terms. It may also serve as a useful guide to analysts new to the field tasked with IFRS 9 compliance, the international loss accounting rules, and credit risk modeling in general.

    Each chapter of this book is a term that one might encounter when discussing creating lifetime loss forecasting models for CECL or IFRS 9. Not every term is a model, and some models listed are being mentioned only to explain why they are not likely to be used for loss forecasting. The CECL guidelines and subsequent FAQs have given examples of modeling techniques. Some people new to loss forecasting have assumed that those are all the available or applicable methods. This book is meant in
    part to dispel that misconception.

    The definitions and descriptions provided here are meant to provide an intuitive understanding across a range of modeling techniques. Mathematical derivations are kept to a minimum. The references listed will provide all the necessary details for an eager analyst.

    • Date // June 2018
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    Sample Blog

    Blog

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    Which CECL model should we use? 23 Jul 2018
    If you're a top 20 bank, this will almost certainly be a modified version of your CCAR model. For everyone else, we tested the alternatives.

    This is an expansion of our previously released studies. In a sincere effort to assist small lenders in implementing CECL, several "spreadsheet methods" have been proposed.

    • Date // Nov. 2018

Credit Union Owned,
World-Renowned Loan Modeling Team

NuVision Credit Union combined forces with the one of the top Credit Risk Research Groups in world to form Deep Future Analytics (DFA.) Since then, Deep Future Analytics had created a Best In Class loan modeling software tool with all-in-one functionality for all of your major loan modeling needs.

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