Banks’ Loan Losses Looked Bad Enough. Then Came Coronavirus.

First-quarter bank earnings were going to be rough enough without the coronavirus pandemic.

Implementing a new accounting rule on Jan. 1 that required them to estimate and record loan losses before they happen, the nation’s four largest banks added $10.4 billion to their reserves. Then came the spikes in unemployment and shuttering of much of the economy, raising doubts about whether customers could keep up with their credit cards and mortgages.

By the time the banks reported last week, they had piled on another $17.9 billion in loan-loss reserves in addition to initial adjustments for the current expected credit losses ...