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Subject: Accrued Interest Receivable
Date: December 4, 2002
To: Chief Executive Officers of National Banks, Department and Division Heads, Licensing Managers, and All Examining Personnel
Description: Accounting for the Accrued Interest Receivable Asset
The guidance attached to this bulletin continues to apply to federal savings associations.
The attached Interagency Advisory issued by the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of Thrift Supervision clarifies the appropriate accounting treatment for banking organizations that securitize credit card receivables and record an asset commonly referred to as an Accrued Interest Receivable (AIR). The AIR consists of fees and finance charges that have been accrued on receivables that the banking organization has securitized and sold to other investors. In general, the AIR represents a subordinated retained interest in cash flows that are initially allocated to the investors' portion of a credit card securitization. This guidance is consistent with OCC Bulletin 2002-17, which specifies the risk-based capital treatment for these assets.
The agencies expect institutions to follow the accounting guidance specified in this advisory with the next regulatory report that is filed. Institutions that have been properly accounting for the AIR asset as a retained subordinated interest are expected to continue to do so.
If you have questions about the appropriate accounting for the AIR, please contact Thomas Rees, Office of the Chief Accountant at (202) 874-5411.
Mark L. O'Dell
Zane D. Blackburn