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OCC Bulletin 2020-85 | October 1, 2020

Current Expected Credit Losses: Final Rule


Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties


The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (collectively, the agencies) published a rule finalizing the interim final rule1 to delay the estimated impact on regulatory capital stemming from the implementation of Accounting Standards Update No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (CECL2) by banks.3

This bulletin replaces and rescinds OCC Bulletin 2020-27, "Current Expected Credit Losses: Interim Final Rule," and OCC Bulletin 2020-42, "Current Expected Credit Losses: Final Rule With Technical Changes to Interim Final Rule."

Note for Community Banks

The final rule applies to community banks that adopt CECL in 2020 under U.S. generally accepted accounting principles (GAAP). Most community banks are not required to adopt CECL until 2023.


In March 2020, the agencies issued an interim final rule (2020 CECL IFR) that provides banking organizations that were required under U.S. GAAP (as of January 2020) to implement CECL before the end of 2020 the option to delay for two years an estimate of CECL's effect on regulatory capital, relative to the incurred loss methodology's effect on regulatory capital, followed by a three-year transition period (five-year transition option).

The final rule

  • adopts all provisions of the 2020 CECL IFR.
  • permits all banking organizations that adopt CECL in 2020 the option to use the new transition in the 2020 CECL IFR, even if not required to adopt CECL under U.S. GAAP in 2020.
  • clarifies that a banking organization is not required to use the transition in quarters in which it would not generate a regulatory capital benefit.

Further Information

Please contact Mark Ginsberg, Senior Risk Expert, Regulatory Policy, Bank Supervision Policy, at (202) 649-6370; Jung Sup Kim, Risk Specialist, Capital Policy, Bank Supervision Policy, at (202) 649-6370; Ashley Rangel, Professional Accounting Fellow, Office of the Chief Accountant, Bank Supervision Policy, at (202) 649-6550; or Kevin Korzeniewski, Counsel, Chief Counsel's Office, at (202) 649-5490.


Jonathan V. Gould
Senior Deputy Comptroller and Chief Counsel

Related Link

1 85 Fed. Reg. 17723 (March 31, 2020), as corrected by 85 Fed. Reg. 29839 (May 19, 2020).

2 CECL stands for current expected credit losses.

3 The term "banks" refers collectively to national banks and federal savings associations.