The Financial Accounting Standards Board yesterday voted to eliminate the CECL “double count” that is often recorded in bank mergers and acquisitions. The double counting of credit risk from acquired loans under the CECL standard has often increased “goodwill”, which is written off for regulatory capital purposes. The accounting has also caused confusion among bank investors trying to understand bank interest income. Eliminating the CECL double count has long been advocated by the American Bankers Association as well as investors.
FASB expects to issue a final standard later this year, with an effective date after fiscal years beginning after Dec. 15, 2026, including interim periods.