December 2020

Pandemic Provisioning Reflects Economic Stress

This publication is a part of:

Collection: On Point

Abstract

The COVID-19 pandemic brought economic activity to a halt in the second quarter of 2020. Lockdowns affected all but the most essential businesses, causing unprecedented economic disruption, which persists in varying degrees today. Oil and gas and "high-touch" industries, particularly leisure and hospitality, transportation, and retail, which were directly affected by social distancing measures, experienced more economic stress than other industries in which remote work and other accommodations mitigated the adverse pandemic effects. These stresses remain and are reflected in how small banks are approaching credit loss provisioning for these industries.

Author

Anne Kerttula, Eleni Sherman and Paul Moloney