trending Market Intelligence /marketintelligence/en/news-insights/trending/8A6y93mMIvMfjSWjV9xzkA2 content
Log in to other products

Login to Market Intelligence Platform


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

Fifth Third projects up to 55% increase in reserves due to CECL

StreetTalk – Episode 70: Banks' Liquidity Conundrum Could Fuel M&A Activity

Street Talk Episode 70 - Banks' Liquidity Conundrum Could Fuel M&A Activity

StreetTalk – Episode 69: Banks left with pockets full of cash and few places to go

Street Talk – Episode 69: Banks left with pockets full of cash and few places to go

Fifth Third projects up to 55% increase in reserves due to CECL

Fifth Third Bancorp executives said the bank will need a significant build in total reserves to comply with the current expected credit loss accounting standard.

CFO Tayfun Tuzun said during the Oct. 22 third-quarter earnings call that the bank expects to build its reserves by 40% to 55% when CECL becomes effective on Jan. 1, 2020. He said the reserve build was made more dramatic due to the "double-count" issue from its acquisition of MB Financial Inc. For the legacy portfolio, Fifth Third expects a reserve build of 30% to 40%. Tuzun said the difference is driven by the fact that the bank cannot convert the discount on non-credit-impaired loans into loan reserves.

During the call's question-and-answer session, an analyst asked for Fifth Third's "Day 2" guidance for CECL — an estimate of how much the new standard will increase provisioning on a go-forward basis. Tuzun said it is difficult to provide a precise number as the company is still finalizing its models and it is largely determined by the economic scenario. Still, he said there is "a decent chance" that provisioning will need to increase relative to today's run rate.

But Tuzun did provide some guidance on CECL regarding Fifth Third's total reserves as a portion of its overall loan book. He said the Day 1 ratio will be on the high end considering the bank does not have plans to grow residential mortgages, home equity lines of credit or consumer loans. Since those three loan types tend to require greater reserve builds under CECL, Tuzun said, the Day 1 ratio might start to decline assuming the bank's commercial loan growth returns to historical norms.