The experience method of accounting for future loan loss reserves allows a bank to deduct from their income statement up to 0.6 percent of their eligible loans.

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The experience method of accounting for future loan loss reserves does not specify a fixed percentage such as 0.6 percent for deductions from income related to loan loss reserves. Instead, it requires banks to estimate losses based on historical loss experience, adjusted for current conditions and reasonable and supportable forecasts.

The Experience Method of Accounting for Future Loan Loss Reserves