Supervisory Policy and Guidance Topics
Allowance for Loan and Lease Losses (ALLL)
The purpose of the ALLL is to reflect estimated credit losses within a bank’s portfolio of loans and leases. Estimated credit losses are estimates of the current amount of loans that are probable that the bank will be unable to collect given the facts and circumstances since the evaluation date (generally the balance sheet date). That is, estimated credit losses represent net charge-offs that are likely to be realized for a loan or group of loans as of the evaluation date. The ALLL is presented on the balance sheet as a contra-asset account that reduces the amount of the loan portfolio reported on the balance sheet.
Policy Letters
Allowance for Loan and Lease Losses (ALLL)Frequently Asked Questions on the Current Expected Credit Losses Methodology (CECL)
Interagency Guidance on Home Equity Lines of Credit Nearing Their End-of-Draw Periods
Uniform Agreement on the Classification and Appraisal of Securities Held by Depository Institutions
Interagency Supervisory Guidance Addressing Certain Issues Related to Troubled Debt Restructurings
Interagency Guidance on Allowance Estimation Practices for Junior Lien Loans and Lines of Credit
Interagency Guidance on Concentrations in Commercial Real Estate
Interagency Policy Statement on the Allowance for Loan and Lease Losses (ALLL)
Interagency Guidance on Nontraditional Mortgage Product Risks
Interagency Credit Risk Management Guidance for Home Equity Lending
Account Management and Loss Allowance Methodology for Credit Card Lending
Final Interagency Policy Statement on Allowance for Loan and Lease Losses (ALLL) Methodologies and Documentation for Banks and Savings Institutions
Guidance on Supervision of Subprime Lending
Allowance for Loan and Lease Losses for U.S. Branches and Agencies of Foreign Banking Organizations
Supervisory Guidance Related to FASB Statement No. 114
Allowance for Loan and Lease Losses for U.S. Branches and Agencies of Foreign Banking Organizations
Notification to State Member Banks on Federal Reserve Confirmations of Charge-offs Declared for Tax Purposes
Interagency Policy Statement on Allowances for Credit Losses
Joint Statement on Interaction of the Regulatory Capital Rule: Revised Transition of the CECL Methodology for Allowances with Section 4014 of the Coronavirus Aid, Relief, and Economic Security Act
Frequently Asked Questions on the Current Expected Credit Losses Methodology (CECL)
Interagency Guidance on the New Accounting Standard on Financial Instruments – Credit Losses
Additional Resources
- Frequently Asked Questions on the New Accounting Standard on Financial Instruments--Credit Losses
- Call Report Instructions
Manual References
- Bank Holding Company Supervision Manual
- Section 2065.2, "Maintaining and Documenting the Allowance for Loan and Lease Losses"
- Section 2065.3, "Allowance for Credit Losses"
- Commercial Bank Examination Manual
- Section 2012.1, "Allowance for Loan and Lease Losses"
- Section 2013.1, "Allowance for Credit Losses"
- Section 2014.1, "ALLL Methodologies and Documentation"
- Section 2015.1, "ALLL Estimation Practices for Loans Secured by Junior Liens"