Coronavirus Makes Its Mark On Bank Of America As Loss Provisions, Revolver Draws Surge

Bank of America followed JPMorgan in reporting a huge provision for credit losses as the country's most important financial institutions rush to quantify the likely domino effect of a near-total economic shutdown to arrest the spread of the coronavirus. The reserve build for Q1 was $3.6 billion at Bank of America. The total credit loss provision rose to $4.8 billion. "Despite increasing our loan loss reserves, we earned $4 billion this quarter, maintained a significant buffer against our most

Join institutional investors, analysts and strategists from the world's largest banks: Subscribe today

View subscription options

Already have an account? log in

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

3 thoughts on “Coronavirus Makes Its Mark On Bank Of America As Loss Provisions, Revolver Draws Surge

  1. LOL.

    The April 1 mortgage payments were made (for the most part), even though many tenants did not pay their April 1 rent. So easy for borrowers to draw down on their LOC to make April 1 mortgage payment to bank. This had to be done under any circumstance – to secure negotiating position with bank for any necessary workouts/give back the keys. In most cases, those LOC’s are collateralized- so no matter how this turns out – the borrowers will be forced (by the lender) to give up that pledged collateral.

    Like I said before, lets see what happens May 1. Most borrowers have started their documentation trail regarding “I can not keep on paying you” and the banks “automated” response is- “we are currently overwhelmed and will respond to you in the order received”. Most commercial bankers (who interface with borrowers) can not even sneeze without getting approval from 2-3 levels up the bureaucracy chain. This is a slow moving train wreck. IMO, there is no way the reserves established for Q1 ( before the May 1 payment date) are adequate.

  2. FWIW, I, like many others, am in a cash crunch, so I applied for mortgage forbearance from my lender, Wells Fargo, last Thursday. There was a button on my mortgage statement page “Need assistance due to COVID19?” Pressed the button, took approximately 60 seconds to apply for and receive a 3-month forbearance. They are still undecided about how I have to pay them back – lump sum, structured payments, loan extension or refinance. YMMV.