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ALLL – Historical loss calculation

ALLL historical lossAn exploration of the methods of calculating historical loss experience for the purposes of estimating the allowance for loan and lease losses.

The allowance for loan and lease losses (ALLL) for a lender typically has several components. The primary components consist of loans collectively evaluated for impairment (or the FAS 5 component), loans individually evaluated for impairment (or the FAS 114 component), and loans acquired with deteriorated credit quality (or the SOP 03-3 component). This paper focuses on the FAS 5 component of the allowance.

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