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PCD Assets: Have you considered the benefits?

Under the new CECL standard, Purchased Credit Deteriorated (PCD) assets replace what was previously classified as Purchased Credit Impaired (PCI) assets. Although this new guidance is complex, it may work in the Bank’s favor as compared to accounting guidance for non-PCD assets. PCD assets are not subject to the infamous “double-count” that Non-PCD assets are subject to. However, Banks must be aware of the regulatory capital implications for both PCD and non-PCD assets under CECL.

In the M&A in a CECL Environment Whitepaper, Valuant provides detailed guidance for how to handle your next acquisition in a CECL world. The whitepaper covers technical guidance from the FASB, key differences in PCI versus PCD assets, an explanation of the PCD Gross-Up process, and considerations for both due diligence and post-acquisition accounting.

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As part of an annual study that began in 2020, Valuant conducts analysis on ASC 326, commonly referred to as “CECL”. The study contains key data statistics and insights around the US Regional and Community Banking sectors and the impact CECL has on their Allowance for Credit Loss (ACL) Coverage Ratios.

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