Valuation Allowance

In general, a valuation allowance is an account established against a specific
asset category or to recognize a specific liability, with the intent of absorbing some element of estimated loss. Such allowances are created by charges to expense in the Report of Income and those established against asset accounts are netted from the accounts to which they relate for presentation in the Report of Condition. Provisions establishing or augmenting such allowances are to be reported as “Other noninterest expense” except for the provision for loan and lease losses which is reported in a separate, specifically designated income statement item on Schedule RI.


reference: FFIEC