Farm Credit Ditches 'Troubled Debt' Label in Boring Update
Published Date: 12/5/2025
Proposed Rule
Summary
The Farm Credit Administration wants to update how it labels risky loans by removing the category called 'Formally restructured loans' because accounting rules changed in 2022. They’re also asking for feedback on keeping or changing other loan reporting rules. If you’re involved with farm loans, these changes could affect your reports, and you have until February 3, 2026, to share your thoughts.
Analyzed Economic Effects
3 provisions identified: 1 benefits, 0 costs, 2 mixed.
Keeping 90-Day Past-Due Reporting
FCA proposes to retain the "loans 90 days past due and still accruing interest" high-risk loan performance category and is asking for comments (with empirical evidence) on whether keeping it is unduly burdensome; comments are due February 3, 2026. FCA said this category can be a leading indicator of increased credit risk and is useful for risk weights and credit review.
GAAP Loan-Modification and Vintage Disclosures
FCA is not proposing regulatory changes for the ASU 2022-02 enhanced disclosures for loan modifications (type, magnitude, financial effect, 12-month post-modification performance) or the amended vintage-year gross write-off disclosures; institutions should make the GAAP-required disclosures and place them using existing provisions (e.g., Sec. 620.5, 620.11, 630.20, 630.40, and 655.10). FCA also expects a short core qualitative MD&A disclosure and may issue separate guidance on GAAP and Farm Credit Act interactions soon.
Removal of 'TDR' High-Risk Category
The Farm Credit Administration proposes to remove the regulatory high-risk loan category called "Formally restructured loans (TDR)" to reflect Accounting Standards Update (ASU) No. 2022-02 and GAAP changes that took effect January 1, 2023. The proposal would delete Sec. 621.6(b), renumber subsequent paragraphs, and seeks comments through February 3, 2026.
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