Allowance For Loan and Lease Losses (ALLL)
The ALLL is a valuation allowance against total loans held for investment and lease financing receivables. It represents an amount considered to be appropriate to cover estimated credit losses in the current loan portfolio and its purpose is to absorb net charge-offs likely to be realized.
Frequently asked questions, advisories, statements of policy, and other information issued by the FDIC alone, or on an interagency basis, provided to promote safe-and-sound operations.
- Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) describes the agencies' interpretation of how current GAAP applies to certain COVID-19-related loan modifications
- Interagency Examiner Guidance for Assessing Safety and Soundness Considering the Effect of the COVID-19 Pandemic on Financial Institutions provides guidance for examiners outlining the supervisory principles for assessing the safety and soundness of institutions given the ongoing impact of the COVID-19 pandemic and instructs examiners to consider the unique, evolving, and potentially long-term nature of the issues confronting institutions and to exercise appropriate flexibility in areas including, but not limited to, credit (loan) modifications, nonaccrual status, allowance for loan and leases losses (ALLL) or allowances for credit losses (ACLs), and independent risk management and internal audit
- Frequently Asked Questions for Financial Institutions Affected by the Coronavirus addresses several COVID-19-related topics including, but not limited to, loan modifications and troubled debt restructurings, delinquency and nonaccrual status, allowance for loan and leases losses (ALLL) and allowance for credit losses (ACL), sales of held-to-maturity securities, and alternative signature processes for Part 363
- Interagency Supervisory Guidance on ALLL Estimation Practices for Loans and Lines of Credit Secured by Junior Liens on 1-4 Family Residential Properties
discusses the responsibilities of institution management with regard to home equity lending and the ALLL
Allowances for Loan and Lease Losses in the Current Economic Environment: Loans Secured by Junior Liens on 1-4 Family Residential Properties
provides useful information for loans secured by junior liens on 1-4 family residential properties, both closed-end and open-end, in areas where there have been declines in the value of such properties
Interagency Policy Statement on the ALLL
reiterates key concepts, GAAP, and ALLL considerations
Account Management and Loss Allowance Guidance for Credit Card Lending
outlines prudent risk management, income recognition, and loss allowance practices for credit card lending activities
Policy Statement on ALLL Methodologies and Documentation for Banks and Savings Institutions
provides information on the design and implementation of ALLL methodologies and supporting documentation practices