FIL-48-2020
April 22, 2020
Technical Corrections to the Revised Transition of the Current Expected Credit Losses Methodology for Allowances
Printable Format:
Summary:
The Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and Board of Governors of the Federal Reserve System (the agencies) published a technical correction, final rule in the Federal Register that corrects errors in and clarifies the March 31, 2020 interim final rule (IFR) that provides a five-year transition period for the impact of the current expected credit loss methodology (CECL) on regulatory capital.
Statement of Applicability to Institutions with Total Assets Under $1 Billion: This Financial Institution Letter is applicable to banks that were required (as of January 1, 2020) to adopt CECL under U.S. generally accepted accounting principles.
Highlights:
The final rule:
- Corrects the unintentional omission of “Category III” banking organizations from the supplementary leverage ratio provision in paragraph (c)(2) of section 301 of the capital rules;
- Clarifies that changes to the calculation of the supplementary leverage ratio apply to all banking organizations that must comply with the supplementary leverage ratio requirement;
- Clarifies that to the extent there is a day-one change for retained earnings, temporary difference deferred tax assets and credit loss allowances, an electing banking organization would calculate each transitional amount as a positive or negative number; and
- Includes certain other minor technical corrections to the IFR.