Loan-loss provisions

Just a few months after signaling that provisions for loan losses had peaked, many banks are planning to once again add to reserves to guard against pandemic-related defaults, according to a survey released by IntraFi Network.

The company's Silicon Valley Bank unit reduced its loan-loss cushion by $52 million. Private-equity and VC clients have warmed to the practice of doing deals virtually, which increases lending opportunities, SVB executives said.

The Cincinnati company, one of just a handful of lenders to reduce its cushion against bad credits in the third quarter, was grilled by analysts who suggested it was being too optimistic about the long-term effects of the pandemic recession.

Revenue at each of Goldman Sachs’s four divisions rose from a year earlier, pushing earnings per share to a record that was almost twice as high as analysts predicted.

The company posted a surprise increase in third-quarter expenses as it set aside almost $1 billion for customer remediation and $718 million in restructuring charges.

Third-quarter net income dropped nearly 16% from a year earlier as revenues at the company's consumer unit declined at about the same pace and trading revenue gains were below estimates.

The company defied expectations by cutting its reserve for loan losses by $569 million, after adding $20 billion to the allowance in the first half.

At a time when the industry is focused on serving members and assisting with the economic recovery, executives shouldn't be burdened by a costly new credit loss methodology.

The regulator approved a proposal that mirrors a rule banking regulators implemented in February 2019 to cushion the Current Expected Credit Losses standard's impact on capital levels.

Other regionals set more aside for loan losses than the Cleveland bank did in the second quarter, and its ratio of reserves to total loans is slightly lower, too. But Key executives say the portfolio is balanced and holding up well despite the pandemic’s economic toll.

The Dallas bank set aside less in the second quarter for credit losses than analysts expected. Executives cited action in Texas and California to reverse reopenings and said they're still committed to the oil and gas business.

The Birmingham, Ala., company more than doubled its loan-loss provision from three months earlier and its chief financial officer said that more than half of its loans to oil and gas companies could eventually become criticized.

The company said it recorded a large loan-loss provision in the second quarter to reflect Coex Coffee International's pending liquidation.

Second-quarter earnings fell by more than 50% from the same period last year after the company allocated $5.1 billion for potential loan losses.

The Pittsburgh bank says fewer borrowers are asking for help and that many borrowers who received assistance are making payments again. But with the coronavirus pandemic still raging in much of the country, CEO William Demchak and other bankers are tempering their optimism.

The energy sector, retail and hospitality are among the industries that are faring poorly during the pandemic. The bank expects loan losses to remain elevated well into 2021.

Megabanks like JPMorgan Chase boosted loan-loss provisions to record levels in the second quarter in preparation for what could be a wave of loan defaults.

The firm set aside a record $9.5 billion for credit losses, about $4 billion more than analysts had expected, as it braces for a wave of coronavirus-related defaults.

Bankers had asserted in April that they could handle a slump in oil prices tied to the coronavirus pandemic. Continued volatility, combined with declining collateral values and a rise in bankruptcies for exploration companies, is denting their confidence.

While elevated loan-loss provisions are expected to eat into all banks’ earnings, midsize banks could suffer more than their big-bank rivals because they have fewer revenue drivers. Meanwhile, investors will be watching closely for any signs of dividend cuts stemming from the Federal Reserve’s caps on payouts.