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Pacific Commerce Bank Stress Tests Commercial Real Estate Loan Portfolio with CrestTM

Banker’s Toolbox, a provider of comprehensive solutions to help financial institutions improve risk management through commercial real estate portfolio analysis and stress testing, as well as money laundering and fraud detection, announced that Los Angeles-based Pacific Commerce Bank ($180 million in assets) has successfully implemented its Commercial Real Estate Loan Stress Test (Crest™) software to proactively stress test and monitor its Commercial Real Estate (CRE) portfolio.

Crest enables financial institutions to determine risk exposure through stress testing and diagnose areas of potential CRE loan risk that may affect the entire loan portfolio. With no existing stress test software in place, Pacific Commerce Bank decided to proactively implement Crest to analyze its CRE assets and prepare reports needed for regulatory audits and examinations. The bank cited Crest’s vast testing criteria, including vacancy, capitalization rate, and interest rate, as the key factor behind its selection. In the first months of using the new system, bank officials report increased efficiencies in portfolio evaluation and situational planning.

“As commercial holdings face higher rates of foreclosure and depressed property values become more prevalent, it is important to accurately evaluate our holdings so we can make more informed lending decisions and manage risk exposure,” said Cliff Nielsen, vice president and chief technology officer at Pacific Commerce Bank. “Crest gives us the ability to run multiple stress tests that analyze both collateral types and specific geographic areas, ultimately defining potentially problematic loan niches.”

Crest’s stress tests are designed to provide in-depth information and projections for community and regional banks’ CRE portfolios regardless of the existing concentrations. Testing parameters gauge portfolio health through projected future changes, including expenses, interest rates, vacancy rates and potential gross income, and produce reports on loan-to-value ratios (LTV), debt service coverage ratios (DSCR) and net operating income. The information empowers banks to determine hypothetical net collateral shortfall, note hazardous concentration areas or forecast complications with borrowers facing refinancing.

“Today’s financial market is as unpredictable as ever, and it is important for banks to prepare for all potential negative shocks through accurate portfolio risk assessment,” said Daniel Cho, chief executive officer at Banker’s Toolbox. “Crest enables banks of all sizes to proactively address problem areas within their loan bases. The solution offers community and regional financial institutions a cost-effective tool to manage accounts and better prepare for regulatory scrutiny of CRE holdings.”

About Pacific Commerce Bank:

Founded in 2002, Los Angeles-based Pacific Commerce Bank provides a personalized approach to the banking needs of small businesses and professionals. The bank operates two branches and maintains a strong foothold in the Japanese-American business community, servicing the needs of many local businesses and participating in numerous charitable and civic activities neighboring each branch location. For more information, please visit the bank’s Web site at

About Banker’s Toolbox, Inc.

North Hollywood, Calif.-based Banker’s Toolbox, Inc., helps banks manage risk and streamline compliance examinations. The company’s product suite consists of affordable solutions for money laundering detection and reporting, commercial real estate loan portfolio risk assessment, risk management through fraud and kite prevention and secure wire processing automation. The Banker’s Toolbox team is a unique combination of seasoned bankers and information technology consultants who specialize in designing, developing and implementing risk management solutions nationwide while providing unparalleled customer service to regional and community banks. For more information, visit the company’s Web site at

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