NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) releases this month’s edition of The Bank Treasury Newsletter, The Bank Treasury Chart Deck, and Bank Talk: The After-Show.
This issue of the newsletter, Bank Treasurers Discover Work From Home, notes the banking industry’s successful adjustment to working remotely as business continues as usual, including trading and settling securities as well as other banking operations. As a prime example, bank regulators originated and processed $342 billion worth of loans under the Paycheck Protection Program (PPP) in less than two weeks. The newsletter also looks at highlights from Q1 2020 earnings, most notably the sharp rise in provisions for loan losses, which management warned may go higher in Q2, and reviews management expectations for net interest margin compression and revenue generation in 2020.
In addition to the PPP, the newsletter discusses the new Main Street Lending Program (MSLP), which is intended to provide lending to small and midsize businesses. However, as the newsletter reports, the requirement to tie MSLP loans to the Secured Overnight Financing Rate (SOFR) could hinder the participation of smaller regional and community banks, which are not as prepared versus their larger peers at this point for the transition from LIBOR to SOFR.
The theme of the April edition of the Bank Treasury Newsletter Chart Deck is the Fed’s balance sheet, which expanded in the last month by roughly 50%, to over $6 trillion. In addition to tracing the spike up in currency in circulation as well as the rally in the price of gold and Bitcoin since the middle of March, one of the slides shows that in March the Federal Bureau of Investigation logged a record number gun permit applications. One of the last slides compares the upward inflection in the industry’s funded commercial and industrial loans in just the last month, while consumer loans edged lower.
In this month’s Bank Talk: The After-Show, Banking and the Super Virus, Ethan Heisler and Van Hesser look at some of the details under the PPP. Ethan, previewing Q1 2020 earnings earlier this month, discussed his concerns around asset quality disclosures, given recent guidance from bank regulators to avoid classifying loans in forbearance as nonaccrual loans.
Click below to view the reports:
- The Bank Treasury Newsletter Chart Deck: April 2020
- Bank Talk: The After-Show: Banking and the Super Virus
- The Bank Treasury Newsletter: April 2020
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