A Tale of Two Vintages
January 2019

December was a great month. Sure, there were some holidays scattered throughout the month that were thoroughly celebrated by Visible Equity (pictured below). I also got married (also pictured below).  

Founding Brothers


But right up there with these events was the release of two new methods within the Visible Equity CECL module: Vintage and Advanced Vintage (the third and final time I will say, “pictured below” in this post).

Vintage Proof

Though Vintage and Advanced Vintage are founded on similar principles and are both CECL compliant, there are some key differences to be considered as you decide which (if either) to use. The differences stem from the fact that Vintage uses original balance as a baseline and Advanced Vintage uses current. The details of this distinction are laid out in the respective white papers of the two methods, but we'd like to offer the main takeaways here:

  1. Vintage is simpler and involves fewer calculations than does Advanced Vintage.
  2. Advanced Vintage allows segmentation by current credit quality, whereas Vintage only allows segmentation by original credit quality.
  3. Both methods require at least one calendar year of charge-off data, but the necessary balance data differs between methods. Vintage requires original balances (including those of closed loans) going back the term of the asset, and Advanced Vintage requires at least one calendar year of month-end active balances.
  4. Advanced Vintage is better equipped to handle revolving loan types.
  5. Advanced Vintage can incorporate charge-off data going back as long as you have it, while Vintage can only utilize charge-off data from vintages for which you have complete origination data.

Hopefully you’re as excited as we are about this release. But don’t get comfortable! There is much much more coming in 2019, so buckle up.

All the Best,

Rachel Miles

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