Salt Lake City-based Zions Bancorp. NA projects up to a 15% decrease to a 5% increase in its reserve levels following the implementation of the current expected credit loss standard on Jan. 1, 2020.
There is less than one quarter until CECL will require large banks to estimate the potential losses over their loans' lifetimes and record those losses at origination. During Zions Bancorp.'s third-quarter earnings conference call, CFO Paul Burdiss gave some insight into how the new accounting standard will impact the bank's loan loss reserves.
Zions Bancorp could see up to a 15% decrease or up to a 5% increase in its reserves upon adopting CECL. This is in contrast with many other banks that have also provided estimates ahead of the upcoming implementation date. Wells Fargo & Co. is the only other bank to report a release of reserves from CECL.
Zions Bancorp ran a parallel allowance for credit losses during the third quarter to compare the current incurred loss accounting standard and CECL, Burdiss said. However, the estimate is based on current economic conditions and is "likely to change between now and adoption," he said.