Allowance for Loan and Lease Losses (ALLL)
Allowance for Loan and Lease Losses (ALLL), originally referred to as the reserve for bad debts, is a valuation reserve established and maintained by charges against a bank's operating income. It is an estimate of uncollectible amounts used to reduce the book value of loans and leases to the amount that a bank expects to collect.
Allowance for Loan and Lease Losses (Comptroller's Handbook, May 1998)
See also Accounting
Interagency Policy Statement on the Allowance for Loan and Lease Losses (OCC 2006-47, December 2006), Statement, FAQ
Policy Statement on ALLL Methodologies and Documentation for Banks and Savings Institutions (OCC 2001-37, July 2001), Guidance (Federal Register, July 6, 2001)
Joint Interagency Letter to Financial Institutions (July 12, 1999)
Joint Interagency Statement (November 24, 1998)