Credit quality

Banks had an opportunity to delay compliance with the new accounting standard, but many opted to move forward to get ahead of credit issues that could arise from the coronavirus outbreak.

After more than tripling its loan-loss provision, the $182 billion-asset company became the first large U.S. bank to report a quarterly loss as a result of the coronavirus pandemic.

Net income fell 46% in the first quarter as the company added nearly $5 billion to its loss reserves in anticipation of a wave of loan defaults.

With the coronavirus pandemic bringing economic activity to a virtual standstill, BofA, like Wells Fargo and JPMorgan Chase, is shoring up its reserves to brace for a likely recession.

Its prediction that business conditions will remain weak this year — and into next year — stands in stark contrast to forecasts from political leaders that the economy will rebound quickly from the coronavirus pandemic.

Though hopeful for a second-half bounceback in the economy, JPMorgan Chase is prepared for 20% unemployment, lackluster GDP and losses in its loan portfolio that could reach tens of billions of dollars.

The Pennsylvania company said it faces $7.5 million in potential exposure from a commercial lending relationship.

By helping borrowers now, banks hope customers can quickly catch up on payments once the coronavirus pandemic ends. If they can’t, interest income will remain low and charge-offs could pile up if the crisis drags on.

Closed showrooms, temporary bans on repossessions and a sudden spike in unemployment have dimmed the prospects of a sector that has boomed since the last recession.

TrueAccord has expanded a platform, originally designed for banks, to assist borrowers hurt by the coronavirus pandemic.