The allowance for loan and lease losses (ALLL) is one of the largest estimated items on the balance sheet. Implications for overfunding or underfunding the allowance can either impact shareholder value or expose the institution to additional risk or bring about additional regulatory scrutiny. Arriving at an appropriate ALLL requires significant management judgment to meet the current and anticipated risk of loss in the loan portfolio. This process should include sound documentation of both internal and external issues that may impact losses in the loan portfolio.
To learn more about our ALLL Validation services, please read, download or print our ALLL-Validation service sheet.