The ASU amended Topic ASC 326 (CECL) to define reporting requirements for TLMs modified during the reporting period.
There’s new call report guidance for reporting loan modifications under CECL.
CECL rules background
As highlighted in CLA’s article, Reporting Loan Modifications with Implementation of CECL, ASU 2022-02 introduced changes to the accounting treatment of loan modifications to borrowers experiencing financial difficulty (a/k/a troubled loan modifications or TLMs and f/k/a troubled debt restructurings or TDRs).
The new call report guidance
The ASU amended Topic ASC 326 (CECL) to define reporting requirements for TLMs modified during the reporting period. However, call report instructions required all TLMs modified after the bank’s CECL adoption date to be reported in RC-C or RC-N but didn’t prescribe a specific duration for reporting such modifications, which was inconsistent with ASC 310-10-50-42.
Additional details on the new guidance
The agencies are now finalizing instructional revisions related to the length of time that loan modifications to borrowers experiencing financial difficulty would be reported in the Call Report and FFIEC 002 forms. Institutions would report applicable loans for a 12-month period after being modified.
These revisions would be effective as of the December 31, 2025, report date. Early implementation of these changes would be permitted for the September 30, 2025, report date.
Redlined versions of the proposed changes are expected to be available through the FFIEC reporting forms after the final comment period ends on August 11, 2025.
How CLA can help banks and credit unions with CECL
CLA’s financial services professionals have significant experience helping banks interpret CECL, loan modification, and call report instructions and other guidelines. Contact us for help with this new guidance or any questions on existing regulations.