Federal banking agencies adopt final rule to provide banking organizations a 3 year phase in of CECL

Mike Meserve, Audit Manager
January 4, 2019

On December 21, 2018, the federal banking agencies adopted a final rule to address changes resulting from implementation of the current expected credit losses (CECL) methodology of the allowance for loan losses. The final rule provides banking organizations the option to phase in the day-one adverse effects on regulatory capital, over a three-year period, that may result from the adoption of the new accounting standard. Further, the final rule revises the agencies’ regulatory capital rule, stress testing rules, and regulatory disclosure requirements to reflect CECL, so that all regulations that reference the allowance for loan losses now conform to the new standard. The final rule is effective April 1, 2019 and banking organizations that elect to early adopt CECL may elect to adopt the rule as of the first quarter 2019.

If you would like to discuss these matters further, contact Mike Meserve or your BNN advisor at 800.244.7444.

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