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FASB Issues Statement on Prudential Regulator Guidance Concerning Troubled Debt Restructurings

FASB Issues Statement on Prudential Regulator Guidance Concerning Troubled Debt Restructurings. On Sunday, March 22, 2020, the FASB has issued the following relating to a statement by Federal and state prudential regulators banking regulators: 

“Earlier today, the Federal and state prudential banking regulators issued a joint statement that included guidance on their approach to the accounting for loan modifications in light of the economic impact of the coronavirus pandemic. This guidance was developed in consultation with the staff of the FASB who concur with this approach and stand ready to assist stakeholders with any questions they may have during this time.” 
The agencies involved include Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), the Consumer Financial Protection Bureau (CFPB), and the State Banking Regulators. 
The Statement by the agencies provides additional information to financial institutions who are working with borrowers affected by the Coronavirus Disease 2019. The Statement includes guidance on the following: 
  • Working with customers. Working prudently with borrowers who are or may be unable to meet their contractual payment obligations because of the effects of COVID-19, considering loan modification programs are positive actions that can mitigate adverse effects on borrowers, the agencies will not automatically categorize such loan modifications as troubled debt restructurings (TDRs). 
  • Accounting for loan modifications.Modifications of loan terms do not automatically result in TDRs. The agencies have confirmed in working with the staff of FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. 
  • Past due reporting.For loans not otherwise reportable as past due, financial institutions are not expected to designate loans with deferrals granted due to COVID-19 as past due because of the deferral. 
  • Nonaccrual status and charge-offs.Each financial institution is directed to refer to the applicable regulatory reporting instructions, as well as its internal accounting policies, to determine if loans to stressed borrowers should be reported as nonaccrual assets in regulatory reports. 
  • Discount window eligibility. The Statement reminds institutions that loans that have been restructured as described under this statement will continue to be eligible as collateral at the FRB’s discount window based on the usual criteria. 


The Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus is available at:

CCH Financial Reporting Brief | Provided by Accounting Research Manager
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Published in COVID-19

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