The formulas
- Weighted loss rate = sum of cumulative net charge-offs / sum of original balances
- Base allowance = current pool x weighted loss rate
- Allowance = base allowance x (1 + qualitative adjustment)
How it works
A vintage analysis groups loans by the year they were originated and tracks cumulative losses over the life of each group. Matching vintages at the same age lets you see how a newer group is behaving relative to older groups.
This tool pools the vintages you enter into one weighted rate and applies it to the current pool. Use vintages that have reached the same age or full maturity, and then adjust for current conditions and reasonable forecasts through the qualitative adjustment. The result is a mechanical starting point, not a finished estimate.
Illustrative figures only. Check the result against your firm's methodology before relying on it.
Common questions
Should vintages be the same age?
Yes. Compare cumulative losses at the same loan age, or use fully matured vintages.
Does the pool need to be similar?
Yes. Group loans by shared risk characteristics before applying the rate.
What goes in the adjustment?
Support for current conditions and forecasts, documented by management. Enter it as a percent uplift or reduction.
Formulas on this page are the standard definitions.
Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.