Check for Credit Loss Factors

As per CECL, institutions must recognize an allowance for credit losses by a charge to earnings for the credit-related computed of the decline in Fair Value. This allowance is subject to a fair value floor. OFS Loan Loss Forecasting and Provisioning have rules configured to check if the decline in fair value is due to credit-related factors. For example, the application has rules to analyze the rating notch movement. A rating downgrade by more than three notches will set the credit loss flag to Yes.