The COVID-19 pandemic continues to create significant challenges for the banking sector and the U.S. economy as a whole. Though bankers are somewhat less negative about the economy than they were in the second quarter of 2020, nearly two-thirds reported that overall conditions for their bank were worse than at the same time last year, and almost 40% believed they would worsen over the 12 months ahead.
With regards to how COVID-19 has impacted bank operations, almost all respondents (98%) indicated that monthly foot traffic at their branches dropped in comparison to pre-COVID-19 levels. Ninety-seven percent of bankers saw visits to their bank's mobile app rise, mirroring the percent of those that reported a decline in in foot traffic at branches.
Despite the almost universal decline in branch traffic, only 7% indicated their institutions plan to reduce the number of branches following the pandemic.
Anticipating the expiration of loan forbearance periods related to COVID-19, slightly more than two-thirds (67%) expected a need for increased reserves and a similar number (66%) predicted a need for troubled debt restructurings. Only 11% projected a need for increased capital. Finally, more than a third (37%) believed the credit reserve build resulting from the economic impact of COVID-19 would most likely peak in the first half of 2021...