Loan Loss Allowances
March 23, 1999
Circular No. 11143

To the Chief Executive Officers of All State Member Banks and
Bank Holding Companies in the Second Federal Reserve District:

In November 1998, the Securities and Exchange Commission, Federal Deposit Insurance Corporation, Federal Reserve Board, Office of the Comptroller of the Currency, and Office of Thrift Supervision issued a joint statement on the allowance for loan losses of financial institutions, in order to better ensure the consistent application of loan loss accounting policy and to improve the transparency of financial statements (see our Circular No. 11121). However, there is continued uncertainty among financial institutions as to the expectations of the banking and securities regulators on the appropriate amount, disclosure, and documentation of the allowance for credit losses. The enclosed Joint Interagency Letter to Financial Institutions announces additional measures to address this continued uncertainty.

Questions on this matter may be directed, at this Bank, to any member of the portfolio management team responsible for your organization.