CECL Reserving and Credit Benchmarking Quarterly Study | Q4 2020

COVID-19’s adverse impact on loan performance and current Coronavirus Aid, Relief, and Economic Security (CARES) Act financial reporting and disclosure relief arrived simultaneous to the implementation of the controversial Current Expected Credit Losses (CECL) accounting standard for loan-loss reserving. Analysis and comparisons would have been difficult under any of these circumstances. However, the interplay of all three factors has made analyzing bank loan performance and reserving levels even more difficult.

In a continuing effort to provide financial statement preparers and users more insightful information to benchmark activity better across a representative cross-section of banks (given asset size, geographic location, and business mix), Berkeley Research Group’s (BRG) Financial Institution Advisory practice created the quarterly CECL Reserving and Credit Benchmarking Study. The study compares allowance levels, charge-offs, nonperforming loans (based on CARES Act classification/reporting relief), COVID deferrals. and other key credit metrics across multiple predominately domestic US institutions.

This third study in our series continues to analyze the same twelve representative banks that appeared in our first two studies. These banks have total assets as of December 31, 2020, ranging from $30 billion to $467 billion (and a $102 billion median).