NCUA is accepting comments until 10/19 on its proposal to
phase-in the day-one adverse effects on regulatory capital that may result from
adoption of CECL. Consistent with regulations issued by the other federal
banking agencies, the proposed rule would temporarily mitigate the adverse PCA
consequences of the day-one capital adjustments, while requiring that FICUs
account for CECL for other purposes, such as Call Reports.
The proposed rule would also provide that FICUs with less
than $10 million in assets are no longer required to determine their charges
for loan losses in accordance with GAAP. These credit unions would instead be
able to use any reasonable reserve methodology (incurred loss), provided that
it adequately covers known and probable loan losses. Some states have statutory
or regulatory provisions that require all FISCUs to comply with GAAP. FISCUs
under $10 million in those states would not benefit from the proposed relief. Here is a list of GAAP
requirements by state. Some states clearly require GAAP and others clearly do
not. However, for a number of states it is unclear whether FISCUs are currently
required to follow GAAP. We are still revising the list, so please share
any info you have regarding application of GAAP (to credit unions under $10
million) in any of the “unclear” states. Thank you.
Here
is CUNA’s summary of the proposal.