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OCC Bulletin 2023-11 | April 21, 2023

Current Expected Credit Losses: Interagency Policy Statement on Allowances for Credit Losses (Revised April 2023)

To

Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties

Summary

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the National Credit Union Administration today issued a revised “Interagency Policy Statement on Allowances for Credit Losses” with technical changes.

Rescission

This bulletin rescinds OCC Bulletin 2020-49, “Current Expected Credit Losses: Final Interagency Policy Statement on Allowances for Credit Losses,” issued on May 8, 2020.1 OCC Bulletin 2020-49 transmitted the previous version of the interagency statement (original statement).

Note for Community Banks

The revised “Interagency Policy Statement on Allowances for Credit Losses” applies to all community banks,2 consistent with each bank’s current expected credit loss (CECL) methodology effective date.

Highlights

The revised “Interagency Policy Statement on Allowances for Credit Losses”

  • reflects the amendment to U.S. generally accepted accounting principles (GAAP) that eliminates the recognition and measurement of troubled debt restructurings (TDR) by creditors.
  • removes references to TDRs and corrects a citation to a regulation.

Background

On May 8, 2020, the agencies issued the original statement in response to changes to GAAP on accounting for credit losses that included the new CECL methodology (Topic 326).

In March 2022, the Financial Accounting Standards Board further amended Topic 326 with the issuance of Accounting Standards Update (ASU) 2022-02, “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.” ASU 2022-02 eliminates the recognition and measurement accounting guidance for TDRs by creditors upon adoption of Topic 326.

Further Information

Please contact Amanda Freedle, Deputy Comptroller and Chief Accountant, Office of the Chief Accountant, or Ashley Rangel, Deputy Chief Accountant, Office of the Chief Accountant, at (202) 649-6280.

 

Grovetta N. Gardineer
Senior Deputy Comptroller for Bank Supervision Policy

Related Link

1 The “Interagency Policy Statement on Allowance for Credit Losses” issued on May 8, 2020, was also published at 85 Fed. Reg. 32991 (June 1, 2020).

2 The term “banks” refers to national banks and federal savings associations. Federal branches and agencies of foreign banking organizations may choose to, but are not required to, maintain allowances for credit losses on a branch or agency level.

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