Current Expected Credit Losses (CECL)
On June 16, 2016, the Financial Accounting Standards Board (FASB)
issued Accounting Standards Update (ASU) No. 2016-13, Topic 326,
Financial Instruments — Credit Losses (also known as the CECL
methodology) which applies to all banks, savings associations, and
financial institution holding companies. Early application of the
is permitted for fiscal years beginning after December 15, 2018,
including interim periods within those fiscal years. Until the new
standard becomes effective, institutions should follow current U.S.
generally accepted accounting principles (GAAP) along with the related supervisory guidance on the allowance
for loan and lease losses (ALLL).
Allowance for Loan and Lease Losses (ALLL)
The ALLL is a valuation allowance against total loans held for
investment and lease financing receivables. It represents an amount
considered to be appropriate to cover estimated credit losses in the
current loan portfolio and its purpose is to absorb net charge-offs
likely to be realized.
Consolidated Reports of Condition and Income (Call Reports)
Each quarter, institutions submit Call Report data to the bank
regulatory agencies for use in monitoring the condition,
performance, and risk profile of individual institutions and the
industry as a whole.
Some FDIC-supervised banks have equity securities that are registered with the FDIC under the Securities Exchange Act of 1934 (Exchange Act) and Part 335 of the FDIC’s regulations. Such registered banks are responsible for filing periodic reports, such as Forms 10-K, 10-Q, and 8-K, all other Exchange Act reports, and proxy solicitation materials (preliminary and final).
Other Accounting Related Topics
Income Tax Allocation
- Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure provides useful information on the payment of taxes among a holding company and its subsidiaries
Loans Held for Sale
- Interagency Guidance on Certain Loans Held for Sale provides instruction to institutions and examiners about the appropriate accounting treatment for loans that are sold directly from the loan portfolio or transferred to a held-for-sale account
- FDIC's Supervisory Insights — Winter 2008 article, “Accounting News: Accounting for Business Combinations”
- FDIC's Supervisory Insights — Summer 2007 article, “Accounting News: Recent Developments Affecting the Accounting for Split-Dollar Life Insurance Arrangements”
- Internal and External Audit Programs