Olson Research Associates, Inc.

Back-Testing Should Be More Than an Audit Letter

In the latest edition of Safety and Soundness Bank Advisor, April 25, 2011, Brad outlines three tests that every bank should run:

1. The Rubber Stamp Test…
2. The Inspection Test…
3. The Comparison Test…[read the entire article]

For more Safety and Soundness articles, visit: http://www.banksoundness.com/

Model Risk and Smaller Banks

Brad speaks out about  OCC Guidance for Small vs. Large banks in the latest edition of Safety and Soundness Bank Advisor, April 18, 2011.

“…Regulators may say that smaller banks should scale down aspects of the guidance, but unless the guidance is clear on just what does and does not apply to smaller institutions, those institutions tend to find themselves in tough situations during exams, Olson says…”[read the entire article] For more Safety and Soundness articles, visit: http://www.banksoundness.com/

Regulators Key in on User Error in Quantitative Models

Brad chimes in regarding Model Validation in the latest edition of Safety and Soundness Bank Advisor, April 18, 2011.

“…Banks can’t continue to treat model validation as a rubber stamp,” he says. “They can’t give the whole process to one person or one vendor. The regulators are saying that this is a process and that more than one individual needs to be involved. This includes not only those running the model, but also those using the model to make decisions about risk, including the board and senior management. They all need to be involved in the process.”[read the entire article] For more Safety and Soundness articles, visit: http://www.banksoundness.com/

Stress Testing Best Practice: For Good Results, Keep It Simple

Our own Brad Olson is quoted again in the latest edition of Safety and Soundness Bank Advisor, December 13, 2010.

”It’s tempting, when you have all these tools and all this technology, to look at your data and say, ‘Hey, look at all the scenarios we could run – We can find out a whole bunch of things,’” says Brad Olson, a stress test consultant and president of Olson Research Associates, Inc, in Columbia, Md. “But at the end of the day, if you’re running multiple scenarios, as many as 20, what you’re left with is a pile of data. That’s a lot of data you’ll have to sift through before making any decisions about your bank.”[read the entire article] For more Safety and Soundness articles, visit: http://www.banksoundness.com/

State Regulators: Stress Testing Needed

Our own Brad Olson is quoted several times in the latest edition of Safety and Soundness Bank Advisor, November 1, 2010.

Community Banks not yet stress testing

…Nearly one-third of the community banks that answered a recent Bank Safety & Soundness Advisor survey were not yet using stress tests at their institutions,
and almost one-half were simply using Excel spreadsheets as their tool of choice.

And that’s not sophisticated enough for a sufficient stress test, argues Brad Olson, president of Olson Research Associates Inc. in Columbia, Md., which does interest-rate risk stress testing for community banks. “It’s more complicated than a spreadsheet. I would definitely say that’s a last resort type of thing.”[read the entire article]

Watch core deposits in rising rate environments

Our own Brad Olson is quoted several times in the latest edition of The Safety and Soundness Report, September 20, 2010.

“…Consumers likely won’t be nearly as sensitive to moving interest rates this time around, says Brad Olson, president of Olson Research Associates. “When interest rates were low several years ago, the issue was the same: How sensitive are those deposits?” he says. “The economy looked great and a lot of people were forecasting loan growth. Funding was at a premium and banks were looking to fund loans. This time around, I’m not so sure we’re in this situation…”
[read the entire report]

Making Sure Stress Tests are Part of the Bank’s Overall Risk Discussions

Our own Brad Olson is quoted several times in the latest edition of Safety and Soundness Bank Advisor, September 6, 2010.

Interest Rate Risk Stress Tests
”The FFIEC’s interest rate risk advisory, released in January, suggested a very long list of tests banks can use to stay on top of interest rate risk. Should banks consider using all or even most of them? Unless you’re a
megabank, then no, suggests Brad Olson, an ALM specialist with Olson Research Associates, Columbia, Md.”[read the entire article]

Why NCUA discounts GAP analysis: A different model emerges

Our own Brad Olson is quoted several times in the latest edition of The Safety and Soundness Report, June 14, 2010.

“…At first blush, the FFIEC guidance may look like a rehash of previous communiqués on interest rate risk, but the guidance includes important clarifications and new information, says Brad Olson, an interest rate risk consultant with Olson Research in Columbia, MD. In particular, the FFIEC “expanded on assumptions behind stress tests and on policy details that need to be in place. Policy is always an afterthought, but regulators don’t want it to be…” [read the entire report]

Interest Rate Risk Models: Theory and Practice, Chapter 20

Our long time Financial Analyst, Kurt Schneckenburger, authored Chapter 20 “Olson Financial Planning Model” for the textbook Interest Rate Risk Models.

Cornyn, Anthony and Elizabeth Mays, eds. Interest Rate Risk Models: Theory and Practice. pp. 353-382.

Viewpoint: No Accounting for Fair-Value Benefit

by Brad Olson, American Banker, August 21, 2009

Our own president explains why fair-value accounting is not good for community banks...Download full article