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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 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  NR 2012-15, Agencies Issue Guidance on Junior Lien Loan Loss Allowances
11/24/1998  NR 1998-116, Joint Press Release
06/19/1996  NR 1996-75, Guidance on Loan Loss Reserves Released by OCC