About S&B Municipal Bond Analytics
DUE DILIGENCE For your Municipal Portfolio
Seifried & Brew’s (S&B) proprietary Municipal Bond Ratings emerged in response to the credit uncertainty of the Great Recession of 2008 to 2010. S&B’s ratings are designed to assist community banks to fulfill Dodd Frank Wall Street Reform and Consumer Protection Act, Section 939A regulatory requirements. Under the Dodd-Frank Act, banks must perform greater independent due diligence when purchasing and reviewing securities, either internally or through an outside firm. In response to these requirements, S&B has developed a robust solution that provides the independent, “uniform standards of creditworthiness” needed to assure banks that a security is “investment grade.”
At the core of S&B’s Municipal Bond Ratings analysis is its modeling of financial and economic data. S&B’s analytical team models financial data for both priority and standard rating reports with data provided from the annual financial statements produced by each municipality. This process ensures greater consistency of analysis of credit risk for securities. Economic, pension, and debt data is also weighed into the final rating determination.
S&B continues to be an innovator in the analysis of municipal securities for community banks. Working alongside and meeting the needs of our bank clientele, S&B has also developed an effective management system for updating ratings in a client’s portfolio on a regular basis known as S&B’s Muni Portfolio Surveillance. S&B’s rating scale is designed with bankers in mind and is reminiscent of a bank’s loan credit scale policy. The rating scale reflects different levels of risk for bonds within a portfolio. S&B’s Muni Portfolio Surveillance works best when combined with effective internal policies for managing the acquisition and due diligence of securities.
S&B’s investment-grade due diligence offers your bank the best practice in managing risk in its municipal investment portfolio.
THE S&B RATING ADVANTAGE
- 1. Independent: Ratings are performed using a methodology independent from external rating agencies.
2. Third party: Evaluation of credit risk is not influenced by partiality of the owners of the securities.
3. Cost effective: Hiring an independent firm saves time and resources.
4. Due diligence: Independent rating model is tailored to meet regulatory requirements and expand standards of creditworthiness. Ratings can provide Credit/OTTI impairment due diligence.
5. Consistent: Rating model ensures consistent, objective ratings based on a quantitative model.
6. Up to date: S&B reviews current financial statements as available.
7. Experience: S&B has reviewed thousands of credits and is familiar with a variety of types and in a variety of locations.
8. Economic expertise: S&B incorporates local economic performance into its rating analysis.
9. Mapping technology: S&B geo-zones are analyzed for portfolio concentration risk.
10. Dynamic: Ratings incorporate important factors like pensions and ability to pay debt.