Client Alert

Recently, the Georgia Department of Banking and Finance (the “Department”) issued additional examination guidance for evaluation of a financial institution’s Allowance for Loan and Lease Losses (“ALLL”).

In the current credit environment, a bank’s officers and directors should be acutely aware of the process by which the Department determines the adequacy of a bank’s Allowance for Loan and Lease Losses. According to the Department, ALLL is key to determining the accuracy of financial statements and the overall condition of a financial institution being examined. In its recent release the Department notes that, “while there are a number of sources of supervisory accounting guidance in these areas, the purpose of this memo is to provide a summary of the process that Department examiners should use in evaluation of ALLL, a discussion of some of the typical issues and concerns that examiners may encounter in the evaluation process and indication of what our expectations are of bank management and the board of directors in the maintenance of a sound and adequate ALLL.”

Please find a copy of the examination guidance that summarizes the evaluation process here. The document discusses some of the typical issues and concerns that examiners may encounter in the evaluation process and indicates the Department’s expectations for bank management and the board of directors in the maintenance of a sound and adequate ALLL.

As always, if you have any questions about this or another banking matter, please contact a member of the Financial Institutions Team at Womble Carlyle Sandridge & Rice, PLLC. Readers are urged to consult with their regular contacts at Womble Carlyle or Steve Dunlevie at 404-888-7401, Betty Temple at 864-255-5415, Richard Hills at 404-888-7475, David Adams at 404-879-2492, or Robert Ralls at 404-879-2481.