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More resources for national banks

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.

References

Allowance for Loan and Lease Losses (ALLL) (OCC 2006-47, December 2006), Interagency Statement | News Release | Questions and Answers
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 2001-37, July 2001), Interagency Statement
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), Press Release, Joint Interagency Statement
Describes efforts to provide guidance for methodologies, disclosures, and supporting documentation for loan loss allowances


Related News and Issuances
Publish DateIdentifierTitle
01/31/2012  OCC 2012-6, Interagency Guidance on ALLL Estimation Practices for Junior Liens: Guidance on Junior Liens
01/31/2012  NR 2012-15, Agencies Issue Guidance on Junior Lien Loan Loss Allowances
03/02/2009  NR 2009-16, Comptroller Dugan Urges Less Pro-Cyclical Approach to Reserves