What the OCC issued
OCC Bulletin 2026-33, dated July 16, 2026, announces version 2.0 of the Allowances for Credit Losses booklet in the Comptroller’s Handbook. It rescinds version 1.0, the bulletin that introduced it in 2021, and the older Allowance for Loan and Lease Losses booklet. The OCC says the update notes that the CECL adoption date has passed for all banks, reflects the April 2023 revisions to the interagency policy statement, and picks up accounting and regulatory changes since 2021.
The booklet covers banks of all sizes. Examiners choose which of its expanded procedures to apply based on risk, so a smaller bank with a simple loan book should see a lighter review than a larger one.
What examiners will ask
These questions follow the expectations in the interagency policy statement that the booklet is built on.
| Area | The question | What the policy statement expects |
|---|---|---|
| Qualitative adjustments | What risk is not in your model, and how did you size the adjustment? | Historical losses alone generally do not support the right allowance. Qualitative adjustments should be documented and supported, and should not double count what the model already captures. |
| Forecasts | What forecast period do you use, and when did you last reconsider it? | No minimum or maximum length. The period is reassessed each reporting period, and one economic scenario or several are both acceptable. |
| Independent review | Who validated your process, and are they independent of credit approval and the allowance estimate? | Periodic validation by an internal audit function, an independent risk unit or a third party. Using your external auditor for this work may impair the auditor’s independence. |
| Models | Was the model evaluated before use, and is it checked on an ongoing basis? | Models are validated initially and on an ongoing basis, with adjustments and compensating controls documented. |
| Governance | Who approved your allowance policy, and when? | The board or a committee approves written policies annually, oversees significant judgments, and approves audit plans for the allowance. |
| Back testing | How do your estimates compare with actual write-offs? | Management periodically compares estimated losses with actual results. |
What reports say is new in the 2026 booklet
We have not found a public analysis of the booklet itself from a regulator. An industry summary of a vendor webinar, published by the ICBA on September 1, 2026, reports several changes in how examiners work with it. Treat these as one reading of the update, not as the OCC’s own words.
- The booklet drops the CECL background material and adds a standalone objective on data controls.
- Examiners reach explicit if-then conclusions that direct findings and escalation.
- Qualitative factors draw the most scrutiny, because loss history at a small bank is often thin and these factors can be a large share of the reserve. A factor that has not moved in about two years invites the question of why.
- Reconciling core system balances to the model’s output should be part of validation, and should not take days.
- Validation findings should be tracked to closure with evidence, not just acknowledged.
What does not change
The policy statement applies to institutions of all sizes and says policies, procedures and controls should fit the bank’s size, complexity and risk profile. It says the techniques used to analyze the allowance do not have to be complex to be effective, and that examiner review should match the institution’s size and complexity. It also acknowledges that the estimate is inherently imprecise. The goal is a documented, reasoned estimate, not a perfect one.
What to do now
- Read your allowance policy against the table above. For each row, find where in your documents the answer lives. Gaps between policy and practice are the easiest thing for an examiner to find.
- Write down why each qualitative factor is where it is. Record the size and direction of each adjustment, the indicator behind it and the date it was last reviewed. A factor that stays flat should have a sentence saying why.
- Check who validates your process. The reviewer should be independent of credit approval and of the people who prepare the estimate. If your external auditor is doing it, talk to them about independence.
- Track validation findings to closure. Keep a log with an owner, a date and evidence for each finding.
- Put the forecast period and the policy on the board’s calendar. The board or a committee approves written policies annually, and the forecast period should be revisited at least each reporting period.
Our CECL and ACL readiness team helps community banks prepare their allowance documentation and run the independent validation examiners expect. To see where your own process stands first, take our free CECL and ACL readiness assessment. It has eight questions and shows your results right away.