Presenting ALLL Results to Examiners




In presenting ALLL results to examiners, documentation is key. Because the ALLL calculation is comprised of many individual calculations and assumptions, it is imperative that examiners are able to see the logic and rationale used in order to arrive at an institution’s overall allowance number.

According to the 2006 Interagency Policy Statement on the ALLL, “Allowance estimates should be based on a comprehensive, well-documented and consistently applied analysis of the loan portfolio.” In order to uphold this expectation, institutions should be prepared with defensible answers and supporting documentation at the time of the exam. They should comment on any areas that are not overtly subjective in order to show transparency of all assumptions in the calculation, and should incorporate knowledge of where the portfolio has been, where it is today and where it is going in the future.

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