What is Static Pool Analysis

Static Pool Analysis is the analysis of a "pool" of loans that share similar characteristics and that were originated during a similar time period. For example, first mortgage loans originated during the 1st quarter of 2010 might be considered one pool, while first mortgages originated in the 2nd quarter of 2010 might be considered a second pool.

What are the differences between static pool analysis and other types of analysis?

One key differentiation between static pool analysis and other type of analysis is that the "pool" is isolated from the influence of new (or old) loans. For example, stratifying a HELOC portfolio by a specific loan type and looking at delinquency ratios is a beneficial exercise, especially if delinquency rates are trended over time. However, you might gain new and meaningful insight if you broke out the HELOC portfolio into pools of loans, such as HELOCS originated in 2007, 2008, 2009, 2010, 2011, and 2012. You might find that the 2007 HELOC Pool is significantly underperforming the other HELOC pools and skewing the overall results of the portfolio.

You could then draw inferences as to the potential causes of the pools' performance, such as whether there was significant market deterioration since the loans were originated or perhaps you made some internal policy and procedure changes that have improved or worsened performance.

Another key differentiation between static pool analysis and other types of analysis is that a pool's performance can be tracked from start to end. In other words, there is a clear start and end point, instead of a continual flow of new loans being added to the portfolio and old loans leaving the portfolio. This analysis will help determine if the pool is performing as expected and if the pool's performance has changed over time. Are loans paying off faster than contemplated? Are charge-offs lower than expected? Did the first half of the pool's life perform better than the last half? Are conditions within the pool improving or deteriorating?

What are some common types of static pool reports?

We group static pool reports into two categories; single pool analysis and pool comparisons. Single pool analysis reports can be point in time reports, such as reports related to concentrations/distributions, delinquency, profitability, etc. all as of a certain date. For example,

Static Pool Analysis Table Delinquency

Or single pool analysis reports can be trending reports that show how the pool has trended on key metrics from the pool cut-off date to current. For example,

Static Pool Analysis Table by Dealer

Single pool analysis also includes pool formation type reports and forecasting reports, such as forecasting prepayment speeds. Pool comparison reports include comparing pools at a point in time or as of a similar time period after pool cut-off. For example, a pool point in time report might compare different pools 1-Yr. Charge-off Ratio as of a certain date, whereas a similar time period report might compare the net cumulative charge off ratio as of the same time period after cut off.

Static Pool Analysis Comparison Side by Side

Static Pool analysis in general, and being able to analyze both single pools and pool comparisons in particular, are key loan portfolio management tools to help you make better informed, data driven decisions.