The tax reform legislation approved by Congress on Wednesday and expected to be signed by President Trump soon is mostly good news for banks, but many will have to take big charges in the fourth quarter as a result.

The blows are temporary — the lower corporate tax rate in the legislation will sharply lower the value of tax-deferred assets, forcing write-downs — but significant.

Citigroup is estimated to take a $16 billion to $17 billion hit, but even for regional banks, the charges could be sizable. Capital One Financial, for example, may record a charge of about $976 million, according to an estimate by FIG Partners.

Among large banks, only Citi has indicated the size of its charge. However, FIG Partners estimated that U.S. Bancorp’s charge could total $514 million; the $19 billion-asset First National Bank of Omaha may record a $50 million charge; the $30 billion-asset Associated Banc-Corp may take a $36 million charge; and the $27 billion-asset Hancock Holding in Gulfport, Miss., could record a $29 million charge.

Impact of tax deferred asset declines on banks

“Banks are going to have to shrink the size of an asset on their balance sheets,” said Bill Reilly, an accountant at Grant Thornton who advises banks. “Their future tax deductions will be worth less.”

To be sure, banks will ultimately gain under the bill, which lowers the corporate income tax to 21% from 35%. Banks are expected to reap significant benefits next year as a result.

“It’s not that terrible in the scheme of things,” said FIG Partners analyst Chris Marinac. “We think of it as noise, but we think that people should pay attention to it.”

But the impact is expected to be widespread. Nearly all banks are expected to be affected since a tax-deferred asset is generated through loan-loss reserves, though the amount will vary considerably based on the level of reserves and other factors.

The FIG Partners’ estimates of DTA-related charges may also vary from what banks actually report, Marinac said. That’s because banks are not required to disclose all of the details needed to generate a more precise estimate. However, most banks’ charges will be based largely on their loan-loss reserves and thus the FIG Partners’ estimates are probably a good indicator, he said.

One remaining question is when President Trump signs the bill. The House and Senate both passed the bill Wednesday and the president is expected to sign it later in the day. At the very least, he will sign it before Christmas, which would mean banks have to record the charge in the fourth quarter.

Soon after Jan. 1, many banks will issue regulatory filings disclosing the amount of their DTA-related charges, Marinac said. Others will wait to disclose the amount of their charges when they report fourth-quarter earnings.

Most banks haven’t sweated the looming write-downs.

“Tax reform … will be very, very beneficial to us,” David Duprey, chief financial officer at the $72 billion-asset Comerica in Dallas, said during a Dec. 5 conference sponsored by Goldman Sachs.

Moreover, the charges that banks will record represent only a small portion of their total capital. For example, if Capital One records a $976 million charge, that represents 3.65% of its total equity capital. Since the charge is likely to equate to a minor portion of their total capital, bank stocks are unlikely to drop as a result, Marinac said.

Some banks hold deferred tax liabilities, instead of deferred tax assets, and thus will record a gain as a result of the lower tax rate. Fifth Third Bancorp in Cincinnati is expected to report a benefit of between $240 million and $265 million because of its deferred tax liability.

While banks may prefer to take the charge in 2017, that’s not the case for their accountants. They can see their holiday time off swirling down the drain.

“If I’m a tax accountant, it doesn’t feel like a Christmas present,” said Sheryl Vander Baan, an accountant at Crowe Horwath who advises banks. “My life will be miserable if [Trump] signs it this year.”