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Allowances for Loan and Lease Losses (ALLL)

The allowance for loan and lease losses, originally referred to as the reserve for bad debts, is a valuation reserve established and maintained by charges against a bank's operating income. It is an estimate of uncollectible amounts used to reduce the book value of loans and leases to the amount a bank can expect to collect.


Allowance for Loan and Lease Losses (ALLL) (OCC Bulletin 2006-47) | Interagency Statement (PDF) | NR 2006-134 | Questions and Answers (PDF)
Covers key concepts and requirements included under ALLL supervisory guidance and generally accepted accounting principles

Allowance for Loan and Lease Losses Methodologies and Documentation (OCC  Bulletin 2001-37) | Interagency Statement (PDF)
Covers FFIEC policy regarding ALLL methodologies and documentation for banks and savings institutions

Loan Loss Allowance Practices (SEC/Banking Agencies Joint Letter to Financial Institutions) |NR 1998-116 | Joint Interagency Statement (PDF)
Describes efforts to provide guidance for methodologies, disclosures, and supporting documentation for loan loss allowances

Related News and Issuances

10/17/2019 NR 2019-120 Federal Financial Regulatory Agencies Seek Comment on Proposed Interagency Policy Statement on Allowances for Credit Losses and Proposed Interagency Guidance on Credit Risk Review Systems
01/31/2012 NR 2012-15 Agencies Issue Guidance on Junior Lien Loan Loss Allowances
11/24/1998 NR 1998-116 Joint Press Release