This webinar covers the upcoming changes to the accounting for troubled debt restructurings (TDRs) under the new ASU 2022-02. It provides an overview of the key provisions of the standard, including the removal of TDR accounting and the addition of new disclosure requirements for loan modifications. The speakers discuss the operational impacts for banks and credit unions to implement the new standard.
Presenters
- Mandi Simpson, Partner, Accounting Advisory & Finance Transformation Leader, Crowe
- Sydney Garmong, Partner, National Office, Crowe
- Terry McEvoy, Managing Director, Equity Research, Stephens
Webinar topics
- TDR accounting has been eliminated and replaced with new disclosure requirements. This changes the process for evaluating loan modifications.
- The new process focuses on whether the modification directly impacts cash flows and if the borrower is experiencing financial distress. Concession testing is no longer required.
- More rigor and tracking are needed to gather information for the detailed disclosure requirements. Institutions may need to enhance systems or processes.
- Disclosure is based on activity during the reporting period, not life-to-date. Comparative TDR disclosures are not required.
- Determining whether a modification results in a new loan or continuation of an existing loan is important for income statement impacts.
- Additional vintage table disclosures related to gross charge-offs are required for public business entities.
- While the guidance has been around for decades, many institutions do not have strong processes today for evaluating new loans. More focus is needed in this area.
- Policies, procedures, and checklists likely need to be updated to align with the new guidance and to ensure accurate information is captured.
- The regulatory agencies are still evaluating if additional guidance is needed but have provided instructions for call report disclosures.
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Additional CPE information