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BankUnited projects up to 30% increase in reserves from CECL

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BankUnited projects up to 30% increase in reserves from CECL

With less than one quarter until the implementation of the current expected credit loss model, BankUnited Inc. provided estimates for how much the new accounting standard could increase the bank's loan loss reserves.

On the bank's third-quarter earnings conference call, CFO Leslie Lunak said the bank expects a 15% to 30% increase in its allowance for credit losses due to CECL. Lunak also said the bank expects a $5 million to $7 million increase in its reserves for unfunded commitments.

On Jan. 1, 2020, the new accounting standard will require large banks to estimate the potential losses over a loan's lifetime and record those losses at origination. Many banks have been providing insight into CECL's potential impact ahead of implementation.

BankUnited is currently in a parallel run, and its estimates are based on its current portfolio and economic forecast, Lunak said.