trending Market Intelligence /marketintelligence/en/news-insights/trending/r4uRSPoyduq61ZKL8cXOhQ2 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.

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

  • Enter verification Code here*

* Required

In This List

Banks over $50B refine CECL estimates

Street Talk Episode 56 - Latest bank MOE shows even the strong need scale to thrive

South State CenterState MOE Shows Even The Strong Need Scale To Thrive

Talking Bank Stocks, Playing The M&A Trade With Longtime Investor

Report: Kashkari Says Fed In Holding Pattern But Rate Cut Still Possible


Banks over $50B refine CECL estimates

Every U.S. bank holding company with more than $50 billion in assets has disclosed how a new accounting standard will impact loan loss reserves, a review of regulatory filings shows.

Several of the nation's largest banks have provided multiple disclosures over the last year on the effect of the current expected credit loss, or CECL, accounting standard. The vast majority of banks project a significant increase in loan loss reserves to comply with the standard.

Most of the banks with multiple disclosures have reiterated their initial estimates or narrowed an estimate range in the latest disclosures. Bank of America Corp. was an exception, meaningfully changing its estimate. In the bank's most recent disclosure, executives predicted an increase of "up to approximately 30%" in the bank's allowance for credit losses. Three months earlier, management projected a reserve build of "up to 20%." The bank attributed the jump to refinements in its model and to certain loan sales.

SNL Image

JPMorgan Chase & Co. has stuck to its forecast of a $4 billion to $6 billion build in its allowance. That would represent a 30% to 45% increase from the bank's third-quarter 2019 loan loss reserve total. Citigroup Inc. also stuck to its range of an expected 20% to 30% build in its credit loss reserves.

A handful of banks are projecting decreases to loss allowances rather than increases. Wells Fargo & Co. expects to record a reserve release of $1.4 billion, changed slightly from from an initial projection of a release of $1.5 billion.

Some banks have narrowed their estimate ranges as the implementation date approaches. For example, PNC Financial Services Group Inc. pegged its expected impact as a 20% increase in the bank's most recent disclosure, compared to an earlier range of 15% to 25%. Similarly, Regions Financial Corp. expects CECL adoption will require an increase of $500 million to $600 million in its allowance for credit losses, tightened from a previous disclosure for a $400 million to $600 million increase.

SNL Image