Ag Peer Comparison Data Selection Details

This topic contains information about the following Ag Peer Comparison functionality:

• How Financial Statements are Selected
  
• How Metrics are Selected and Aggregate
  
• How Data Refreshes     

How Financial Statements are Selected

An automated process determines which financial statements are used for peer comparison. The automated process ensures consistency in the handling of data across all ag borrowers in Lending Cloud.

The automated process selects a single "best" set of financial statements for each year for each ag borrower. This ensures equal weighting for all borrowers during calculations, whether a borrower has one or 100 sets of financial statements.

The following rules limit financials that qualify for inclusion during a particular year:   

• Only ag type customers are included (no commercial or personal).
  
• No projections are included.
  Projections are spreads with a created date that precedes the statement date by more than 60 days. For a balance sheet, data validation logic refers to the insert date (the date the record is originally added to Lending Cloud) to determine if the balance sheet was created in Lending Cloud more than 60 days prior to the statement date. If inserted more than 60 days prior to the statement date, the system regards the balance sheet as a projection and omits it from calculations.  
  
• Financials from January through July are considered to be from the previous year.
    Note  Only a relatively small number of financials are received during the last three months of this period. The annual August-July window is used because the
            system collects and compiles annual financials as of July 31.

The system handles financials for consolidations in a special manner. When multiple borrowers are consolidated into a separate consolidated borrower, one set of financials from each uniquely identified borrower is included. This inclusion ensures that whether working at the borrower level or consolidated level, comparable data is available. When both individual and consolidated information is stored on the same borrower, one set of financials is selected per the logic below.

Many borrowers have only one set of actual financial statements per year. In such cases, the selection of the "best" financials is simple. When a borrower has multiple financials for a single year, the system selects which set to use in peer comparison based on the following priority order:

1. Linked Balance Sheet and Income/Expense Statement
Linking is a process in Trends Manager that analysts use to tie beginning and/or ending balance sheets to the related income/expense spread.

2. Change in earned equity
Some lenders gauge borrower financials year over year by using the most recent balance sheet compared to the prior balance sheet. In this case, no income/expense statement will exist. The system knows to include this type of financials if a change in earned equity exists (specific to this type of spreading). Only balance sheet metrics will compute from these financials.

3. Stronger audit quality
Audited, reviewed, etc. beats tax returns.

4. Annual or fiscal-year-end (FYE) - per statement description

5. Full-year - per statement date ranges

6. Year-end - per statement date (12/31, etc.)

7. Financials on Trends
   Note  Placing a given financial on Trends improves its chances to be selected for Ag Peer Comparison. However, its selection is not guaranteed, because
            other rules take priority. If you have financials on Trends that were not selected, borrower ratios on Trends and peer comparison will likely not match.       

8. Not term projections

9. Not rolling summary

10. Not consolidations

11. Attached to a credit action with a score

12. Attached to a credit action with a loan amount

13. Attached to a credit action

14. First Income/Expense Statement

15. First Balance Sheet

   Note  If you want to override the automated statement quality logic for specific borrower scenarios, see Selecting Financials for Borrower Metrics.  

How Metrics are Selected and Aggregate

Ag Peer Comparison selects ratios for peer comparisons using the following method:

• Balance Sheet ratios/values
  If a borrower has a Balance Sheet for a given year, non-zero values will appear on peer comparison graphs that require Balance Sheet data.
  
• Income/Expense Statement ratios/values
  If a borrower has an Income/Expense Statement for a given year, non-zero values will appear on peer comparison graphs that require Income/Expense data.
  
• Balance Sheet and Income/Expense ratios/values
  If a borrower has linked a Balance Sheet and an Income/Expense Statement for a given year, non-zero values will appear on all peer comparison graphs.

To maximize available values/ratios, both a best Balance Sheet and best Income/Expense Statement may be selected for a given year, even if not explicitly linked. However, combined metrics will appear only if the user has explicitly linked a Balance Sheet and an Income/Expense Statement. This ensures that Ag Peer Comparison only includes combined metrics where lenders want a Balance Sheet and an Income/Expense Statement to be used in tandem.  

Note   If you do not see combined ratios for a borrower, the reason might be the lack of an explicitly linked Balance Sheet and Income/Expense Statement.

Aggregation of individual borrower metrics into "My Institution" and "All Institutions" aggregates uses the median of all non-zero borrower values. Medians are a robust measurement that allows for tolerance of some data quality issues at the borrower level while still returning quality aggregate results. The quality improves as the number of statements included increases. Counts of statements included in peer segment aggregated metrics are found in reporting.

My Institution Metrics

For the "My Institution" comparison data, the system displays median data regardless of the number of statements. There is no required minimum number of statements.       

Note  In some cases, you might need to reduce the level of specificity for comparisons to return a larger number of statements. For example, if you want to compare a specialty operation, such as ostrich farms, some modification to criteria could be necessary to return a significantly-sized comparison set.   

All Institutions Metrics

For the "All Institutions" comparison data, the system displays median data calculated from all contributing institutions in Lending Cloud.

To insure that no individual borrower can be identified, data will not display for a segment value unless the following criteria is met:

• At least 20 borrowers with non-zero data have contributed data.
  
• At least three institutions have contributed data.

Note  In some cases, you might need to reduce the level of specificity for comparisons to return a robust set of peers. For example, if you want to compare a specialty operation, such as ostrich farms, some modifications to criteria could be necessary to return data.      

The system recalculates "All Institutions" data annually prior to the beginning of the Ag production season. Data from past years may shift as the contributing institutions change (most commonly to include more historical financial statements).

How Data Refreshes

Ag Peer Comparison results that appear in graphs remain constant unless you choose to refresh the data. When you refresh data, the latest borrower, "My Institution", and "All Institutions" information will replace the previous results based on the selections that have been made in Peer Compare Setup. The system does not retain old results.

Ag Peer Comparison adds, updates, and pulls individual borrower data in real time, which makes the most current borrower data available for comparisons.

The system only updates "My Institution" data nightly due to the processing time required. Therefore, borrowers added today are not included in the current "My Institution" data. Borrowers added yesterday are included in the current "My Institution" data.

The system updates "All Institutions" data annually as a release. Borrowers and statements added by July 31 will be included in the "All Institutions" data.  

Note  Because of the timing of updates, it is possible that Borrower and "My Institution" data will exist for the current year and "All Institutions" data will not.