KBRA Releases Research – Coronavirus (COVID-19): CECL and Q1 2020 Provisions

NEW YORK--()--Kroll Bond Rating Agency (KBRA) releases a survey of Q1 2020 provisions for credit loss by domestic commercial banks, comparing institutions that adopted the new Current Expected Credit Loss (CECL) accounting rule versus peers who continue to report under the old accounting incurred loss method (ILM).

Banks that adopted CECL saw their average Q1 2020 provision expense increase more than 64% QoQ than for banks that follow ILM accounting. This report looks at reasons behind these differences as well as possible reasons to account for the wide variance. The analysis also compares regional and community banks by their provision expense versus past credit cycles and discusses why the sudden jump in macroeconomic factors, such as the unemployment rate, complicates the operation of CECL estimation models.

Click here to view the report.

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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA. Kroll Bond Rating Agency Europe Limited is located at 6-8 College Green, Dublin 2, Ireland.

Contacts

Analytical Contact

Ethan M. Heisler, CFA, Senior Director
+1 (516) 359-0975
eheisler@kbra.com

Business Development Contact

Nish Kumar, Senior Director
+1 (646) 731-3372
nkumar@kbra.com

Contacts

Analytical Contact

Ethan M. Heisler, CFA, Senior Director
+1 (516) 359-0975
eheisler@kbra.com

Business Development Contact

Nish Kumar, Senior Director
+1 (646) 731-3372
nkumar@kbra.com