Calculating and Maintaining the Allowance for Loan and Lease Losses/Allowance for Credit Losses

The Allowance for Loan and Lease Losses (“ALLL” or the “Allowance for Credit Losses” as proposed) is a major portion of credit administration and is considered a key factor in maintaining a safe and sound financial institution.

ALLL is a valuation reserve established and maintained by charges against the financial institution’s operating income and is an estimate of loans that may be uncollectable. According to the rules of calculating the ALLL, a provision to the ALLL should only be made if the chance of a financial institution incurring a loss is probable and estimable. The ALLL is used to reduce the book value of loans and leases to the amount that is expected to be collected.

This program is designed to review the elements and thought process in establishing and maintaining an adequate ALLL level under the new guidance. Regulators are just as interested in your financial institution’s methodology in calculating the ALLL in addition to the adequacy. The Allowance is watched not only by the major agencies responsible for supervision of the banking system, but also by the American Institute of Certified Public Accountants, the Internal Revenue Service and the Securities & Exchange Commission. All have similar but yet, conflicting perspectives on how much of an allocation should be contained in the ALLL.


  • Proposed changes as presented by the accounting industry
  • Establishment and Purpose of the ALLL
  • Loan Grading and the impact on the ALLL
  • General Framework required to establish the ALLL
  • Review of Regulators expectations for the ALLL as set forth in:
    • FASB ASC 450-20 Contingencies – Loss Contingencies (formerly FASB 5 – Accounting for Contingencies)
    • FASB ASC 310-10-35-2 through 30, Receivables-Overall-Subsequent Measurement-Impairment (formerly FASB 113 – Accounting by Creditors for Impairment of a Loan)
    • Interagency Policy on the ALLL issued in 2006 which revises the Policy issued in December 1993
    • FFIEC Policy Statement on the ALLL Methodologies & Documentation
    • Reinforce Concepts with Allowance Calculation Cases

After completing this course, the participant will have an enhanced understanding of the importance of creating and maintaining an adequate Allowance that is legally defensible and insures the bank is operating in a safe and sound environment.


CEO’s, Presidents & Board Members, Credit Administrators, Senior Credit Officers, Loan Review Officers, Compliance Officers, Senior Loan Officers, Commercial/Consumer Loan Officers, Loan Operation Officers, Loan Administrators


Jeffery W. Johnson started his career with SunTrust Bank in Atlanta as a Management Trainee and progressed to Vice President and Senior Lender of SouthTrust Bank and Senior Vice President and Commercial Banking Division Manager for Citizens Trust Bank of Atlanta.

Most of his career has been spent in Credit Administration, Lending, Business Development, Loan Review, Management and Training & Development. He has managed loan portfolios representing a cross section of loan types including: Large Corporate, High Net Worth Individual, Middle Market Companies, Small Business, Real Estate and Non-Profit Organizations.

Mr. Johnson is now a training professional in the financial industry by leading various seminars covering important topics relating to issues in financial institutions. He teaches actively for fifteen state banking associations in the United States, Risk Management Association (RMA) and individual financial institutions nationwide. He co-authored a training course entitled “Lending to Service and Other Professional Organizations” for RMA in 2001.

Credit Information

Institute of Certified Bankers: Visit http://www.icbmembers.org/login.aspx for instructions regarding self-reporting. Estimated credits: 2.5 CE Credits; Estimated ICB 2.5 CLBB, 2.5 CPB, 2.5 CRCM credits


Either Live or 6-Month On-Demand Webinar: $255

Both Live and 6-Month On-Demand Webinar: $355


Online: Click here.

Phone: Call Total Training Solutions at (800) 831-0678

Register online up to day of event. Earlier registration allows time to check your computer for an optimal experience.