Late last year, the federal bank regulatory agencies issued an interagency policy statement on allowances for loan an lease Losses. The statement clarifies that it is the "allowance for likely loan and lease losses" rather than an "allowance for possible loan and lease losses," as interpreted by many examiners.

The 1979 joint statement on classification of bank assets and appraisal of securities in bank examinations gained increasing importance and relevance as a result of the recent adoption of the allowance statement.

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