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Financial Institution Letter

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

April 22, 2020  |  FIL-48-2020


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

Related Topics:

Risk-Based Capital Rules, 12 CFR Part 324


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).