December 19, 2016
December 19, 2016
Printable Format:FIL-79-2016 - PDF (PDF Help)
Statement of Applicability to Institutions under $1 Billion in Total Assets: This Financial Institution Letter applies to all FDIC-supervised banks and savings associations, including community institutions.
- CECL applies to all financial assets carried at amortized cost, including loans held for investment and held-to-maturity debt securities, and certain off-balance-sheet credit exposures such as loan commitments and standby letters of credit. Although CECL does not apply to available-for-sale debt securities, the new accounting standard modifies the existing accounting for impairment on such securities.
- The FAQs address such topics as changes the new accounting standard makes to existing U.S. generally accepted accounting principles, the standard's effective dates, the application of the standard upon initial adoption, acceptable allowance estimation methods under CECL, and portfolio segmentation for credit loss estimation on a collective basis.
- The FAQs reiterate that CECL is scalable to institutions of all sizes; community institutions are not expected to need to adopt complex modeling techniques to implement the new accounting standard; and institutions are not required to engage third-party service providers to assist management in estimating credit loss allowances under CECL.
- Institutions are encouraged to plan and prepare for the transition to and implementation of the new accounting standard, including its potential impact on regulatory capital. The FAQs provide examples of initial implementation activities. The agencies expect institutions to make good faith efforts to implement the new accounting standard in a sound and reasonable manner.
- Institutions with specific questions about the new accounting standard and the FAQs may submit them by e-mail to CECL@fdic.gov.