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Financial Institution Letter
Technical Corrections to the Revised Transition of the Current Expected Credit Losses Methodology for Allowances


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.


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.

Suggested Distribution:

FDIC-Supervised Institutions

Suggested Routing:

Chief Executive Officer
Chief Financial Officer
Chief Risk Officer

Paper copies of FDIC FILs may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703-562-2200).

Last Updated: April 22, 2020