49160 Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices
resources include, but are not limited to
personnel and subject matter experts
(Pilots, Aircraft Dispatchers, etc.),
aircraft equipped with FANS 1/A,
Airline Operations Center/Flight
Operations Center flight planning and
dispatch applications, Electronic Flight
Bags hardware and software
applications, Aircraft Interface Devices,
A/G broadband internet services,
ground automation system applications,
commercial data management services,
and other capabilities that industry may
see beneficial to support the future ATM
environment. The Live Flight
Demonstration will provide a platform
to showcase the benefits of trajectory
sharing and synchronization and begin
to establish the policies and procedures
for their routine usage with the National
Airspace System.
Registration
Space at the FTB facility is limited
and therefore, attendance will be on a
first come first served basis. However, a
webcast will be provided for those that
cannot attend in person. To attend the
Industry Day (in person or via webcast),
participants must register via the
following link: https://
www.eventbrite.com/e/4dt-live-flight-
demonstration-industry-day-tickets-
48876809854.
Issued in Washington, DC, on September
25, 2018.
Paul Fontaine,
Director, Portfolio Management & Technology
Development Office (ANG–C).
[FR Doc. 2018–21205 Filed 9–27–18; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
FEDERAL RESERVE SYSTEM
FEDERAL DEPOSIT INSURANCE
CORPORATION
Proposed Agency Information
Collection Activities; Comment
Request
AGENCY: Office of the Comptroller of the
Currency (OCC), Treasury; Board of
Governors of the Federal Reserve
System (Board); and Federal Deposit
Insurance Corporation (FDIC).
ACTION: Joint notice and request for
comment.
SUMMARY: In accordance with the
requirements of the Paperwork
Reduction Act of 1995 (PRA), the OCC,
the Board, and the FDIC (the agencies)
may not conduct or sponsor, and a
respondent is not required to respond
to, an information collection unless it
displays a currently valid Office of
Management and Budget (OMB) control
number. The Federal Financial
Institutions Examination Council
(FFIEC), of which the agencies are
members, has approved the agencies’
publication for public comment of a
proposal to revise and extend the
Consolidated Reports of Condition and
Income for a Bank with Domestic and
Foreign Offices (FFIEC 031), the
Consolidated Reports of Condition and
Income for a Bank with Domestic
Offices Only (FFIEC 041), and the
Consolidated Reports of Condition and
Income for a Bank with Domestic
Offices Only and Total Assets Less Than
$1 Billion (FFIEC 051), which are
currently approved collections of
information. The Consolidated Reports
of Condition and Income are commonly
referred to as Call Reports. The FFIEC
has also approved the Board’s
publication for public comment, on
behalf of the agencies, of a proposal to
revise and extend the Report of Assets
and Liabilities of U.S. Branches and
Agencies of Foreign Banks (FFIEC 002)
and the Report of Assets and Liabilities
of a Non-U.S. Branch that is Managed or
Controlled by a U.S. Branch or Agency
of a Foreign (Non-U.S.) Bank (FFIEC
002S) as well as the agencies’
publication for public comment of
proposals to revise and extend the
Foreign Branch Report of Condition
(FFIEC 030), the Abbreviated Foreign
Branch Report of Condition (FFIEC
030S), and the Regulatory Capital
Reporting for Institutions Subject to the
Advanced Capital Adequacy Framework
(FFIEC 101), all of which are currently
approved collections of information.
The proposed revisions generally
address the revised accounting for credit
losses under the Financial Accounting
Standards Board’s (FASB) Accounting
Standards Update (ASU) No. 2016–13,
‘‘Financial Instruments—Credit Losses
(Topic 326): Measurement of Credit
Losses on Financial Instruments’’ (ASU
2016–13). This proposal also includes
reporting changes for regulatory capital
related to implementing the agencies’
recent notice of proposed rulemaking on
the implementation and capital
transition for the current expected credit
losses methodology (CECL).
In addition, this notice includes other
revisions to the Call Reports and the
FFIEC 101 resulting from two sections
of the Economic Growth, Regulatory
Relief, and Consumer Protection Act
(EGRRCPA), effective upon enactment
on May 24, 2018, that affect the
information reported in these reports
and for which the agencies submitted
emergency review requests to OMB that
OMB has approved.
The proposed revisions related to
ASU 2016–13 would begin to take effect
March 31, 2019, for reports with
quarterly report dates and December 31,
2019, for reports with an annual report
date, with later effective dates for
certain respondents. At the end of the
comment period for this notice, the
comments received will be reviewed to
determine whether the FFIEC and the
agencies should modify the proposed
revisions to one or more of the
previously identified reports. As
required by the PRA, the agencies will
then publish a second Federal Register
notice for a 30-day comment period and
submit the final Call Reports, FFIEC
002, FFIEC 002S, FFIEC 030, FFIEC
030S, and FFIEC 101 to OMB for review
and approval.
DATES: Comments must be submitted on
or before November 27, 2018.
ADDRESSES: Interested parties are
invited to submit written comments to
any or all of the agencies. All comments,
which should refer to the ‘‘CECL and
EGRRCPA Reporting Revisions,’’ will be
shared among the agencies.
OCC: You may submit comments,
which should refer to ‘‘CECL and
EGRRCPA Reporting Revisions,’’ by any
of the following methods:
• Email: prainfo@occ.treas.gov.
• Mail: Legislative and Regulatory
Activities Division, Office of the
Comptroller of the Currency, 400 7th
Street SW, Suite 3E–218, Washington,
DC 20219.
All comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure. Do not
include any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
You may personally inspect and
photocopy comments at the OCC, 400
7th Street SW, Washington, DC 20219.
For security reasons, the OCC requires
that visitors make an appointment to
inspect comments. You may do so by
calling (202) 649–6700 or, for persons
who are deaf or hearing impaired, TTY,
(202) 649–5597. Upon arrival, visitors
will be required to present valid
government-issued photo identification
and submit to security screening in
order to inspect and photocopy
comments.
Board: You may submit comments,
which should refer to ‘‘CECL and
EGRRCPA Reporting Revisions,’’ by any
of the following methods:
• Agency Website: http://
www.federalreserve.gov. Follow the
VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 E:\FR\FM\28SEN1.SGM 28SEN1
amozie on DSK3GDR082PROD with NOTICES1
resources include, but are not limited to
personnel and subject matter experts
(Pilots, Aircraft Dispatchers, etc.),
aircraft equipped with FANS 1/A,
Airline Operations Center/Flight
Operations Center flight planning and
dispatch applications, Electronic Flight
Bags hardware and software
applications, Aircraft Interface Devices,
A/G broadband internet services,
ground automation system applications,
commercial data management services,
and other capabilities that industry may
see beneficial to support the future ATM
environment. The Live Flight
Demonstration will provide a platform
to showcase the benefits of trajectory
sharing and synchronization and begin
to establish the policies and procedures
for their routine usage with the National
Airspace System.
Registration
Space at the FTB facility is limited
and therefore, attendance will be on a
first come first served basis. However, a
webcast will be provided for those that
cannot attend in person. To attend the
Industry Day (in person or via webcast),
participants must register via the
following link: https://
www.eventbrite.com/e/4dt-live-flight-
demonstration-industry-day-tickets-
48876809854.
Issued in Washington, DC, on September
25, 2018.
Paul Fontaine,
Director, Portfolio Management & Technology
Development Office (ANG–C).
[FR Doc. 2018–21205 Filed 9–27–18; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
FEDERAL RESERVE SYSTEM
FEDERAL DEPOSIT INSURANCE
CORPORATION
Proposed Agency Information
Collection Activities; Comment
Request
AGENCY: Office of the Comptroller of the
Currency (OCC), Treasury; Board of
Governors of the Federal Reserve
System (Board); and Federal Deposit
Insurance Corporation (FDIC).
ACTION: Joint notice and request for
comment.
SUMMARY: In accordance with the
requirements of the Paperwork
Reduction Act of 1995 (PRA), the OCC,
the Board, and the FDIC (the agencies)
may not conduct or sponsor, and a
respondent is not required to respond
to, an information collection unless it
displays a currently valid Office of
Management and Budget (OMB) control
number. The Federal Financial
Institutions Examination Council
(FFIEC), of which the agencies are
members, has approved the agencies’
publication for public comment of a
proposal to revise and extend the
Consolidated Reports of Condition and
Income for a Bank with Domestic and
Foreign Offices (FFIEC 031), the
Consolidated Reports of Condition and
Income for a Bank with Domestic
Offices Only (FFIEC 041), and the
Consolidated Reports of Condition and
Income for a Bank with Domestic
Offices Only and Total Assets Less Than
$1 Billion (FFIEC 051), which are
currently approved collections of
information. The Consolidated Reports
of Condition and Income are commonly
referred to as Call Reports. The FFIEC
has also approved the Board’s
publication for public comment, on
behalf of the agencies, of a proposal to
revise and extend the Report of Assets
and Liabilities of U.S. Branches and
Agencies of Foreign Banks (FFIEC 002)
and the Report of Assets and Liabilities
of a Non-U.S. Branch that is Managed or
Controlled by a U.S. Branch or Agency
of a Foreign (Non-U.S.) Bank (FFIEC
002S) as well as the agencies’
publication for public comment of
proposals to revise and extend the
Foreign Branch Report of Condition
(FFIEC 030), the Abbreviated Foreign
Branch Report of Condition (FFIEC
030S), and the Regulatory Capital
Reporting for Institutions Subject to the
Advanced Capital Adequacy Framework
(FFIEC 101), all of which are currently
approved collections of information.
The proposed revisions generally
address the revised accounting for credit
losses under the Financial Accounting
Standards Board’s (FASB) Accounting
Standards Update (ASU) No. 2016–13,
‘‘Financial Instruments—Credit Losses
(Topic 326): Measurement of Credit
Losses on Financial Instruments’’ (ASU
2016–13). This proposal also includes
reporting changes for regulatory capital
related to implementing the agencies’
recent notice of proposed rulemaking on
the implementation and capital
transition for the current expected credit
losses methodology (CECL).
In addition, this notice includes other
revisions to the Call Reports and the
FFIEC 101 resulting from two sections
of the Economic Growth, Regulatory
Relief, and Consumer Protection Act
(EGRRCPA), effective upon enactment
on May 24, 2018, that affect the
information reported in these reports
and for which the agencies submitted
emergency review requests to OMB that
OMB has approved.
The proposed revisions related to
ASU 2016–13 would begin to take effect
March 31, 2019, for reports with
quarterly report dates and December 31,
2019, for reports with an annual report
date, with later effective dates for
certain respondents. At the end of the
comment period for this notice, the
comments received will be reviewed to
determine whether the FFIEC and the
agencies should modify the proposed
revisions to one or more of the
previously identified reports. As
required by the PRA, the agencies will
then publish a second Federal Register
notice for a 30-day comment period and
submit the final Call Reports, FFIEC
002, FFIEC 002S, FFIEC 030, FFIEC
030S, and FFIEC 101 to OMB for review
and approval.
DATES: Comments must be submitted on
or before November 27, 2018.
ADDRESSES: Interested parties are
invited to submit written comments to
any or all of the agencies. All comments,
which should refer to the ‘‘CECL and
EGRRCPA Reporting Revisions,’’ will be
shared among the agencies.
OCC: You may submit comments,
which should refer to ‘‘CECL and
EGRRCPA Reporting Revisions,’’ by any
of the following methods:
• Email: prainfo@occ.treas.gov.
• Mail: Legislative and Regulatory
Activities Division, Office of the
Comptroller of the Currency, 400 7th
Street SW, Suite 3E–218, Washington,
DC 20219.
All comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure. Do not
include any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
You may personally inspect and
photocopy comments at the OCC, 400
7th Street SW, Washington, DC 20219.
For security reasons, the OCC requires
that visitors make an appointment to
inspect comments. You may do so by
calling (202) 649–6700 or, for persons
who are deaf or hearing impaired, TTY,
(202) 649–5597. Upon arrival, visitors
will be required to present valid
government-issued photo identification
and submit to security screening in
order to inspect and photocopy
comments.
Board: You may submit comments,
which should refer to ‘‘CECL and
EGRRCPA Reporting Revisions,’’ by any
of the following methods:
• Agency Website: http://
www.federalreserve.gov. Follow the
VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 E:\FR\FM\28SEN1.SGM 28SEN1
amozie on DSK3GDR082PROD with NOTICES1
49161Federal Register / Vol. 83, No. 189 / Friday, September 28, 2018 / Notices
1 Current U.S. GAAP includes five different credit
impairment models for instruments within the
scope of CECL: ASC Subtopic 310–10, Receivables-
Overall; ASC Subtopic 450–20, Contingencies-Loss
Contingencies; ASC Subtopic 310–30, Receivables-
Loans and Debt Securities Acquired with
Deteriorated Credit Quality; ASC Subtopic 320–10,
Investments-Debt and Equity Securities—Overall;
and ASC Subtopic 325–40, Investments-Other-
Beneficial Interests in Securitized Financial Assets.
instructions for submitting comments at:
http://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Email: regs.comments@
federalreserve.gov. Include ‘‘CECL
Reporting Revisions’’ in the subject line
of the message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Ann E. Misback, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue NW, Washington,
DC 20551.
All public comments are available
from the Board’s website at
www.federalreserve.gov/generalinfo/
foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons.
Accordingly, your comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper form in Room 3515, 1801 K Street
NW (between 18th and 19th Streets
NW), Washington, DC 20006 between
9:00 a.m. and 5:00 p.m. on weekdays.
FDIC: You may submit comments,
which should refer to ‘‘CECL and
EGRRCPA Reporting Revisions,’’ by any
of the following methods:
• Agency Website: https://
www.fdic.gov/regulations/laws/federal/.
Follow the instructions for submitting
comments on the FDIC’s website.
• Federal eRulemaking Portal:
https://www.regulations.gov. Follow the
instructions for submitting comments.
• Email: comments@FDIC.gov.
Include ‘‘CECL Reporting Revisions’’ in
the subject line of the message.
• Mail: Manuel E. Cabeza, Counsel,
Attn: Comments, Room MB–3007,
Federal Deposit Insurance Corporation,
550 17th Street NW, Washington, DC
20429.
• Hand Delivery: Comments may be
hand delivered to the guard station at
the rear of the 550 17th Street Building
(located on F Street) on business days
between 7:00 a.m. and 5:00 p.m.
Public Inspection: All comments
received will be posted without change
to https://www.fdic.gov/regulations/
laws/federal/ including any personal
information provided. Paper copies of
public comments may be requested from
the FDIC Public Information Center by
telephone at (877) 275–3342 or (703)
562–2200.
Additionally, commenters may send a
copy of their comments to the OMB
desk officer for the agencies by mail to
the Office of Information and Regulatory
Affairs, U.S. Office of Management and
Budget, New Executive Office Building,
Room 10235, 725 17th Street NW,
Washington, DC 20503; by fax to (202)
395–6974; or by email to oira_
submission@omb.eop.gov.
FOR FURTHER INFORMATION CONTACT: For
further information about the proposed
revisions to the information collections
discussed in this notice, please contact
any of the agency staff whose names
appear below. In addition, copies of the
reporting forms for the reports within
the scope of this notice can be obtained
at the FFIEC’s website (https://
www.ffiec.gov/ffiec_report_forms.htm).
OCC: Kevin Korzeniewski, Counsel,
(202) 649–5490, or for persons who are
hearing impaired, TTY, (202) 649–5597,
Legislative and Regulatory Activities
Division, Office of the Comptroller of
the Currency, 400 7th Street SW,
Washington, DC 20219.
Board: Nuha Elmaghrabi, Federal
Reserve Board Clearance Officer, (202)
452–3884, Office of the Chief Data
Officer, Board of Governors of the
Federal Reserve System, 20th and C
Streets NW, Washington, DC 20551.
Telecommunications Device for the Deaf
(TDD) users may call (202) 263–4869.
FDIC: Manuel E. Cabeza, Counsel,
(202) 898–3767, Legal Division, Federal
Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
I. Background
A. ASU 2016–13, ‘‘Financial
Instruments—Credit Losses (Topic 326):
Measurement of Credit Losses on
Financial Instruments’’
In June 2016, the FASB issued ASU
2016–13, which introduced CECL for
estimating allowances for credit losses
and added Topic 326, Credit Losses, to
the Accounting Standards Codification
(ASC). The new credit losses standard
changes several aspects of existing U.S.
generally accepted accounting
principles (U.S. GAAP) as follows:
• Introduction of a new credit loss
methodology.
The new accounting standard
developed by the FASB has been
designed to replace the existing
incurred loss methodology in U.S.
GAAP. Under CECL, the allowance for
credit losses is an estimate of the
expected credit losses on financial
assets measured at amortized cost,
which is measured using relevant
information about past events, including
historical credit loss experience on
financial assets with similar risk
characteristics, current conditions, and
reasonable and supportable forecasts
that affect the collectability of the
remaining cash flows over the
contractual term of the financial assets.
In concept, an allowance will be created
upon the origination or acquisition of a
financial asset measured at amortized
cost. At subsequent reporting dates, the
allowance will be reassessed for a level
that is appropriate as determined in
accordance with CECL. The allowance
for credit losses under CECL is a
valuation account, measured as the
difference between the financial assets’
amortized cost basis and the amount
expected to be collected on the financial
assets, i.e., lifetime expected credit
losses.
• Reduction in the number of credit
impairment models.
Impairment measurement under
existing U.S. GAAP has often been
considered complex because it
encompasses five credit impairment
models for different financial assets.1 In
contrast, CECL introduces a single
measurement objective to be applied to
all financial assets measured at
amortized cost, including loans held-
for-investment (HFI) and held-to-
maturity (HTM) debt securities. CECL
does not, however, specify a single
method for measuring expected credit
losses; rather, it allows any reasonable
approach, as long as the estimate of
expected credit losses achieves the
objective of the FASB’s new accounting
standard. Under the existing incurred
loss methodology, institutions use
various methods, including historical
loss rate methods, roll-rate methods,
and discounted cash flow methods, to
estimate credit losses. CECL allows the
continued use of these methods;
however, certain changes to these
methods will need to be made in order
to estimate lifetime expected credit
losses.
• Purchased credit-deteriorated (PCD)
financial assets.
CECL introduces the concept of PCD
financial assets, which replaces
purchased credit-impaired (PCI) assets
under existing U.S. GAAP. The
differences in the PCD criteria compared
to the existing PCI criteria will result in
more purchased loans HFI, HTM debt
securities, and available-for-sale (AFS)
debt securities being accounted for as
PCD financial assets. In contrast to the
existing accounting for PCI assets, the
new standard requires the estimate of
expected credit losses embedded in the
purchase price of PCD assets to be
estimated and separately recognized as
an allowance as of the date of
VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 E:\FR\FM\28SEN1.SGM 28SEN1
amozie on DSK3GDR082PROD with NOTICES1
1 Current U.S. GAAP includes five different credit
impairment models for instruments within the
scope of CECL: ASC Subtopic 310–10, Receivables-
Overall; ASC Subtopic 450–20, Contingencies-Loss
Contingencies; ASC Subtopic 310–30, Receivables-
Loans and Debt Securities Acquired with
Deteriorated Credit Quality; ASC Subtopic 320–10,
Investments-Debt and Equity Securities—Overall;
and ASC Subtopic 325–40, Investments-Other-
Beneficial Interests in Securitized Financial Assets.
instructions for submitting comments at:
http://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Email: regs.comments@
federalreserve.gov. Include ‘‘CECL
Reporting Revisions’’ in the subject line
of the message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Ann E. Misback, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue NW, Washington,
DC 20551.
All public comments are available
from the Board’s website at
www.federalreserve.gov/generalinfo/
foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons.
Accordingly, your comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper form in Room 3515, 1801 K Street
NW (between 18th and 19th Streets
NW), Washington, DC 20006 between
9:00 a.m. and 5:00 p.m. on weekdays.
FDIC: You may submit comments,
which should refer to ‘‘CECL and
EGRRCPA Reporting Revisions,’’ by any
of the following methods:
• Agency Website: https://
www.fdic.gov/regulations/laws/federal/.
Follow the instructions for submitting
comments on the FDIC’s website.
• Federal eRulemaking Portal:
https://www.regulations.gov. Follow the
instructions for submitting comments.
• Email: comments@FDIC.gov.
Include ‘‘CECL Reporting Revisions’’ in
the subject line of the message.
• Mail: Manuel E. Cabeza, Counsel,
Attn: Comments, Room MB–3007,
Federal Deposit Insurance Corporation,
550 17th Street NW, Washington, DC
20429.
• Hand Delivery: Comments may be
hand delivered to the guard station at
the rear of the 550 17th Street Building
(located on F Street) on business days
between 7:00 a.m. and 5:00 p.m.
Public Inspection: All comments
received will be posted without change
to https://www.fdic.gov/regulations/
laws/federal/ including any personal
information provided. Paper copies of
public comments may be requested from
the FDIC Public Information Center by
telephone at (877) 275–3342 or (703)
562–2200.
Additionally, commenters may send a
copy of their comments to the OMB
desk officer for the agencies by mail to
the Office of Information and Regulatory
Affairs, U.S. Office of Management and
Budget, New Executive Office Building,
Room 10235, 725 17th Street NW,
Washington, DC 20503; by fax to (202)
395–6974; or by email to oira_
submission@omb.eop.gov.
FOR FURTHER INFORMATION CONTACT: For
further information about the proposed
revisions to the information collections
discussed in this notice, please contact
any of the agency staff whose names
appear below. In addition, copies of the
reporting forms for the reports within
the scope of this notice can be obtained
at the FFIEC’s website (https://
www.ffiec.gov/ffiec_report_forms.htm).
OCC: Kevin Korzeniewski, Counsel,
(202) 649–5490, or for persons who are
hearing impaired, TTY, (202) 649–5597,
Legislative and Regulatory Activities
Division, Office of the Comptroller of
the Currency, 400 7th Street SW,
Washington, DC 20219.
Board: Nuha Elmaghrabi, Federal
Reserve Board Clearance Officer, (202)
452–3884, Office of the Chief Data
Officer, Board of Governors of the
Federal Reserve System, 20th and C
Streets NW, Washington, DC 20551.
Telecommunications Device for the Deaf
(TDD) users may call (202) 263–4869.
FDIC: Manuel E. Cabeza, Counsel,
(202) 898–3767, Legal Division, Federal
Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
I. Background
A. ASU 2016–13, ‘‘Financial
Instruments—Credit Losses (Topic 326):
Measurement of Credit Losses on
Financial Instruments’’
In June 2016, the FASB issued ASU
2016–13, which introduced CECL for
estimating allowances for credit losses
and added Topic 326, Credit Losses, to
the Accounting Standards Codification
(ASC). The new credit losses standard
changes several aspects of existing U.S.
generally accepted accounting
principles (U.S. GAAP) as follows:
• Introduction of a new credit loss
methodology.
The new accounting standard
developed by the FASB has been
designed to replace the existing
incurred loss methodology in U.S.
GAAP. Under CECL, the allowance for
credit losses is an estimate of the
expected credit losses on financial
assets measured at amortized cost,
which is measured using relevant
information about past events, including
historical credit loss experience on
financial assets with similar risk
characteristics, current conditions, and
reasonable and supportable forecasts
that affect the collectability of the
remaining cash flows over the
contractual term of the financial assets.
In concept, an allowance will be created
upon the origination or acquisition of a
financial asset measured at amortized
cost. At subsequent reporting dates, the
allowance will be reassessed for a level
that is appropriate as determined in
accordance with CECL. The allowance
for credit losses under CECL is a
valuation account, measured as the
difference between the financial assets’
amortized cost basis and the amount
expected to be collected on the financial
assets, i.e., lifetime expected credit
losses.
• Reduction in the number of credit
impairment models.
Impairment measurement under
existing U.S. GAAP has often been
considered complex because it
encompasses five credit impairment
models for different financial assets.1 In
contrast, CECL introduces a single
measurement objective to be applied to
all financial assets measured at
amortized cost, including loans held-
for-investment (HFI) and held-to-
maturity (HTM) debt securities. CECL
does not, however, specify a single
method for measuring expected credit
losses; rather, it allows any reasonable
approach, as long as the estimate of
expected credit losses achieves the
objective of the FASB’s new accounting
standard. Under the existing incurred
loss methodology, institutions use
various methods, including historical
loss rate methods, roll-rate methods,
and discounted cash flow methods, to
estimate credit losses. CECL allows the
continued use of these methods;
however, certain changes to these
methods will need to be made in order
to estimate lifetime expected credit
losses.
• Purchased credit-deteriorated (PCD)
financial assets.
CECL introduces the concept of PCD
financial assets, which replaces
purchased credit-impaired (PCI) assets
under existing U.S. GAAP. The
differences in the PCD criteria compared
to the existing PCI criteria will result in
more purchased loans HFI, HTM debt
securities, and available-for-sale (AFS)
debt securities being accounted for as
PCD financial assets. In contrast to the
existing accounting for PCI assets, the
new standard requires the estimate of
expected credit losses embedded in the
purchase price of PCD assets to be
estimated and separately recognized as
an allowance as of the date of
VerDate Sep<11>2014 19:22 Sep 27, 2018 Jkt 244001 PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 E:\FR\FM\28SEN1.SGM 28SEN1
amozie on DSK3GDR082PROD with NOTICES1