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CECL Update - Some Clarity Forming on Investment Rules

With the required CECL adoption date for some closing in on one year, we are starting to see more attention placed on the impact tothe bond portfolio. The AICPA has issued two working drafts on CECL implementation issues, including one that specifically addresses the need to reserve for Treasury or Agency securities in Held-to-Maturity (HTM). We have also learned that the FASB may not view the CECL adoption as a “safe harbor” event that would allow bonds to be transferred out of HTM without the risk of tainting other HTM holdings.

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