Expectations for ALLL

As written in the 2006 Interagency Policy Statement on the Allowance for Loan and Lease Losses, “Allowance estimates should be based on a comprehensive, well-documented, and consistently applied analysis of the loan portfolio.”

When calculating the ALLL either quarterly or monthly, methodological consistency is an expectation. Institutions must not vary greatly in their approach for risk of skewing results. Examiners expect a repeatable and accurate calculation, and require directional consistency to ensure the methodology is accurate over time.

The calculation should be objective in nature. Any changes must be well-documented and justified. Any alterations to the calculation should be transparent and readily available for review.


Expectations for ALLL