Allowance for credit losses (ACL): The allowance for credit losses is the reserve a bank holds against loans it expects to lose, set aside before any loan actually goes bad.
How it is calculated
A contra asset on Schedule RC. It is built by charging a provision through the income statement and drawn down by net charge offs. BankingLens reports it as a share of total loans and leases.
Formula
ACL to loans = allowance for credit losses / total loans and leases
What banks reported in Q2 2026
Across every bank that filed for Q2 2026, the median allowance for credit losses to total loans was 1.19%, with the middle half between 0.98% and 1.44%. The right comparison is almost always the row for the bank’s own size rather than the industry line.
| Bank size (total assets) | Bottom quartile | Median | Top quartile |
|---|---|---|---|
| Under $100M | 0.95% | 1.24% | 1.66% |
| $100M - $300M | 0.98% | 1.18% | 1.48% |
| $300M - $1B | 1.00% | 1.20% | 1.43% |
| $1B - $3B | 0.96% | 1.15% | 1.35% |
| $3B - $10B | 0.95% | 1.14% | 1.34% |
| $10B - $100B | 0.97% | 1.14% | 1.34% |
| Over $100B | 0.62% | 1.44% | 1.74% |
Source: BankingLens, computed from FFIEC call reports for the quarter ending June 30, 2026. Quartiles are calculated across the full population of filing banks in each size band, not sampled. Non-insured non-deposit trust companies are left out of every statistic: they take no deposits and make no loans, so a margin or a funding cost computed for them has no meaning.
How to read it
Since CECL took effect the allowance is a life of loan estimate rather than a record of losses already probable, so it moves with the economic forecast and with the mix of the book. A bank that grows into higher risk paper and a bank that simply took a gloomier view of the economy both report a rising allowance.
The common mistake. Reading coverage without looking at what is being covered. The allowance measured against nonperforming loans, and the loan categories driving it, say far more than a headline percentage of a book whose mix you have not checked.
Go deeper
- Allowance for credit losses benchmarks
- BankingLens pricing and what a subscription adds: percentile rank against the bank’s own FFIEC peer group, fourteen quarters of trend, and the flags an examiner reaches for first.
See also. CECL, Charge-off, Nonaccrual, Nonperforming loans.
Every figure on this page is computed from FFIEC call reports for the quarter ending June 30, 2026 and is not modeled, estimated or sampled. This page is generated by _tools/seo/build_glossary.mjs and carries no figure that was typed in. See our methodology and disclaimer. Definitions are general guidance, not regulatory or investment advice.