One striking thing you see in the chart is that the relationship between loss reserves and serious delinquency has flipped. As a percentage of total loans, loss reserves were once higher than serious delinquencies from around 1993 until 2008. Then delinquencies moved sharply upward, crossing over loss reserves. Now both are falling together.
They do not, however, seem to be on a path to resuming the relationship that held for the 25 years prior to the financial crisis.
The data only goes back as far as 1988 so there's no way of telling whether what's happened is a reversion to normal. Was the 1993-2008 relationship a deviation? Or will we someday get back to loss reserves exceeding actual delinquencies?
I'm only speculating here but it seems very likely that the relationship between loss reserves and delinquencies observed in the late 1980s and early 1990s was the result of the savings and loan crisis. If that's right, then what we may have now is just what typically happens to loss reserves and delinquencies following a financial crisis.