Proposed Regulatory Relief of the Day-One Effect of Implementing CECL

April 16, 2018

The upcoming “Current Expected Credit Losses”, or CECL, accounting standard requires a cumulative-effect adjustment for the changes in the allowances for credit losses to be recognized in retained earnings on the balance sheet as of the beginning of the first reporting period in which the new standard is adopted. For regulatory purposes, there may be some relief coming to reduce the burden on capital of the day-one effect of implementing the new standard.

Last Friday, April 13, 2018, the Federal Reserve Board (FRB) announced that it approved a proposal to revise its regulatory capital rules to address and provide an option to phase-in the regulatory capital over three years. The FRB is coordinating this proposed rulemaking with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. Comments on the proposal will be accepted for 60 days after publication in the Federal Register.

The professionals in BNN’s financial institutions practice are dedicated to remaining current on the regulatory and accounting trends impacting our clients, and to keeping our clients informed of those trends and how they might impact their business. Should you have questions about CECL, the implementation systems and procedures in preparation for CECL, or any other areas, please contact your BNN advisor .(JavaScript must be enabled to view this email address) or at 800.244.7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.