So they don't have loss reserve issues that others do.

Loss reserves were $354 million at the end of September.

If that is the case, he said, the bank would be able to put less into the loan loss reserve in the future.

Q. Where does the bank get the money to put in its loan loss reserve?

In that case, the company will have to make additions to its loss reserves.

Great Western said its earnings for the period were reduced by $85 million, which went into a loss reserve.

Financial analysts also saw good news in the company's loan loss reserves, which were lower than expected.

The latest quarter included an $11 million addition to its loan loss reserve.

It says its loan loss reserve will be increased by a substantial amount.

Thus the loss reserve was projected as unchanged from the end of December, at $401 million.

The company said the increase to the loss reserves covered loans outstanding to 18 developing countries.

Currently, banks must reduce their profit by the full amount of any addition to loss reserves.

The company said the latest fourth quarter included a special addition of $80 million to its loan loss reserves.

He noted, however, that Allied's loss reserves and common equity were adequate.

The latest fourth quarter reflects a charge of $44 million for loan loss reserves.

They added that many banks recognized the coming troubles by establishing large loss reserves two years ago.

Insurance companies set loss reserves for claims they have received and those they expect to receive.

"In this weaker economic environment," he added, "we now believe it is prudent to increase our credit loss reserves."

Just last week, Chubb added $625 million to its asbestos-related loss reserves.

The loss reserve has been included in primary capital on the basis of its availability to a bank to absorb losses.

Its action this week raised its loss reserve to 3.7 percent, and its stock went up.

First Republicbank said it would have earned about $12 million from operations in the quarter if not for the addition to the loss reserve.

Other banks that build loss reserves for their foreign loans will be similarly able to take a hard-line approach.

Q. Where are the loan loss reserves held?

Major banks continued to post big losses because of increased loss reserves on third-world loans.