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, 12/13/2006) | 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 2001-37, 07/20/2001) | 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

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