About a quarter of U.S. publicly traded commercial banks have inadequate ACL levels

September 17, 2024

About a quarter of U.S. publicly traded commercial banks have inadequate ACL levels

Cybiont models our expectations for the allowance for credit loss (ACL) levels at publicly traded U.S. banks¹ each quarter. As of 2Q24, our models estimate that about a quarter of U.S. Commercial banks are inadequately reserved under CECL, up from 16% of banks in 1Q24. Most of this change in our view of adequacy occurred in this quarter since year-over-year changes (not shown) were minor.

The extent of under-reserving remains digestible for most banks. Only about 7% of banks would need to deplete Tangible Common Equity (TCE) by more than 5% to bring reserves up to expected levels, but even that statistic is up substantially.

This quarter we were able to model 739 commercial banks. ↩︎

Author

Allen Puwalski

30-year career as a Bank & FinTech sector stakeholder with substantive roles as investor, policy maker, regulator, operator, analyst, strategist, and advisor.
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Bank Regulation & Supervision, Commentary, Industry Analysis

Bank Earnings, Banks, Community Banks, Credit Risk

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Allen Puwalski

30-year career as a Bank & FinTech sector stakeholder with substantive roles as investor, policy maker, regulator, operator, analyst, strategist, and advisor.

One response to “About a quarter of U.S. publicly traded commercial banks have inadequate ACL levels”

A Closer Look at Amarant Bank’s (AMTB’s) Change in Modeled Reserve Adequacy from the Previous Quarter (1Q24) – Cybiont Capital, LLC

September 19, 2024 at 11:58 am

[…] the release of Cybiont’s 2Q24 Reserve Adequacy Modeling Report, we received several requests to walk through an example explaining the circumstances that might […]

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