Deputy Seminar, Denver, CO

Purchased Assets with Credit Deterioration

 Same approach as originated assets

 Initial allowance for credit losses will be added to the purchase price rather than being recorded as a credit loss expense in the income statement

 Subsequent changes in the allowance for credit losses for PCD assets will be recorded through provision in the income statement

 Non-PCD purchased loans are not in this scope (see example)

ASU 2016-13 Implementation Dates

Effective Date (for Entities with Calendar Year-Ends)

ASU 2016-13 Impairment (CECL)*

Type

2020

2021

2022

PBE – SEC filers Interim & annual

PBE – small

Interim & annual

All others

Annual

Interim

*Early adoption permitted for all entities for periods beginning after December 15, 2018