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NCUA alerts CUs of technical CECL correction

NCUA

The NCUA Wednesday issued an alert for credit unions, outlining a technical correction with the calculation of the current expected credit loss (CECL) transition amount in the NCUA’s regulations. Credit unions that adopted the CECL accounting standard in 2023 should use the method described below to calculate and report on the Call Report their CECL transition amount.

The NCUA notes that credit unions should ensure computation alignment with the transition rule’s intent by calculating the CECL transition amount for quarters 4 through 12 as the difference between:

  • the credit union's retained earnings as of the beginning of the fiscal year in which the credit union adopts CECL, adjusted for any restatement of the initial CECL adoption amount; and
  • the credit union's retained earnings as of the closing of the fiscal year immediately before the credit union’s adoption of CECL.

For credit unions that adopted CECL in the first quarter of 2023, any corrected CECL transition amount is reported in Schedule G of the Capital Adequacy Worksheet, as described in the agency’s December 2023 Call Report Instructions. For more information on CECL, please visit the NCUA’s CECL Resources page.

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