Investor Presentaiton
Q2 Allowance For Credit Loss (ACL) and Provision for Credit Losses
Allowance for Loan &
Reserve for Unfunded
Commitments
Lease Losses
$ in millions
1/1/2020 CECL
Opening Balance %
of loans
.71%
$90MM
$5MM
.04%
Allowance for
Credit Losses
$95MM
.75%
CECL Adoption
through Q1 2021
+$53MM
Increase attributable to
COVID-19 induced
recession; large
increase for COVID-19
sensitive portfolios
+$8MM
Increase due to
higher expected loss
related to COVID-19
environment
+$61MM
$61 million build ($73
million provision for
credit losses less $12
million net charge-offs)
•
3/31/2021
Ending Balance %
of loans
Q2 2021
6/30/2021
Ending Balance %
of loans
$143MM
(1.00%;
1.12% excl. PPP loans)
-$25MM
Decrease due to
improved baseline
economic outlook and
continued strong credit
metrics
$118MM
(.86%;
$13MM
(.09%;
.10% excl. PPP loans)
-$3MM
Decrease due to
lower expected loss
rates, attributable
primarily to improved
economic outlook.
$10MM
(.07%;
.92% excl. PPP loans)
.08% excl. PPP loans)
$156MM
(1.09%;
1.22% excl. PPP loans)
-$28MM
$27 million benefit
from Provision for
Credit Losses and
minimal net charge-
offs
$128MM
(.94%;
1.00% excl. PPP loans)
Q2 Macroeconomic Forecast
Moody's June Baseline Forecast
•
.
.
US GDP averages 6.9% growth
in 2021 and 5% in 2022. The
unemployment rate averages
5.4% in 2021 and 3.7% in 2022.
Virginia's unemployment rate
averages 3.2% over the 2-year
forecast, declining to 2.8% by Q2
2023; compares to a March
forecast of 4% average and
ending at 3.5%.
2-year reasonable and
supportable period; followed by
reversion to the historical loss
average over 2 years.
Q2 Additional Considerations
Additional qualitative factors for
COVID-19 sensitive portfolios
and adjustments to account for
the probability of worse-than
Baseline economic performance.
Regulatory Capital: Opted into 2 year CECL adoption capital impact delay with 25% of cumulative Day 2 impact added back to Common
Equity Tier 1 capital through 2021. 3-year regulatory CECL capital phase-in begins in 2022.
Union Bankshares
Note: Figures may not foot due to rounding
20View entire presentation