How to Support a Change in Your ALLL Reserve

Jan 21, 2015

Regulators interpret a bank's reserve as a key barometer of financial health, and as a result, they have been placing more pressure on banks and credit unions to appropriately calculate adequate ALLL provisions. In an effort to comply with regulator and examiner demands while also protecting bank earnings, management at many financial institutions are revisiting the ALLL reserve to see if a change should be made in methodology. This whitepaper describes the criteria a bank should use to evaluate its ALLL as well as recommendations on how to support a change.

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