Agricultural Lending

Allowance for Loan and Lease Losses

For purposes of maintaining an adequate Allowance for Loan and Lease Losses (ALLL), the OCC encourages banks to segment their portfolios into as many components as practical. Agricultural loans that share similar characteristics should be segmented into pools and analyzed separately. For example, the market conditions and factors that affect crop loans will differ somewhat from those that affect livestock. Both of these portfolios lend themselves to treatment as separate pools in the ALLL analysis. In addition, the ALLL analysis should consider the level and risk associated with any carryover debt. Further guidance is contained in the “Allowance for Loan and Lease Losses” booklet of the Comptroller’s Handbook.

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