CBAI Guidance During COVID-19 Crisis
The CBAI team is mostly working from home to comply with the "Stay at Home Order" while still providing the level of service our members have come to expect over the last half century. It has been a busy weekend as conversations with state and federal regulators continue and new guidance is issued almost hourly. Here is a quick recap of the latest major developments.
Federal Regulators Offer Guidance on Loan Modifications
CBAI and the ICBA are communicating with banking regulators multiple times a day. During these communications, we have been stressing the need for regulatory relief and written guidance, so community banks are better able to support their customers and communities.
Over the weekend, federal and state regulators issued the following inter-agency guidance that addresses several important aspects of working with customers including accounting for loan modifications, past due reporting, non-accrual status and charge offs, and Discount Window borrowing. The statement applies to all FDIC insured institutions and states that the FDIC:
- Encourages financial institutions to work constructively with borrowers affected by COVID-19;
- Will not criticize institutions for prudent loan modifications and will not direct supervised institutions to automatically categorize COVID-19-related loan modifications as troubled debt restructurings (TDRs);
- Confirmed with staff of the Financial Accounting Standards Board (FASB) that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs;
- Views that modification efforts described in the inter-agency statement for borrowers of one-to-four family residential mortgages where loans are prudently underwritten and not past due or carried in non-accrual status do not result in loans being considered restructured or modified for the purpose of respective risk-based capital rules; and
See FDIC Guidance »
- Views prudent loan modification programs to financial institution customers affected by COVID-19 as positive actions that can effectively manage or mitigate adverse impacts on borrowers due to COVID-19, and lead to improved loan performance and reduced credit risk.
The regulators are stressing the importance of prompt action by the community bank and their borrower to minimize the negative impact of problem situations, particularly approaching the end of the quarter.
The regulators have also asked us to encourage our members to reach out and stay in contact with their regulators about their concerns and questions.
Please contact email@example.com
if you have any observations and recommendations about what the regulators are doing or not doing to help you through this crisis. Our message will reinforce what community bankers are personally telling their regulators, and we have already seen how this coordinated messaging is making a difference.
There is a steady flow of information coming from the federal regulators – far too many to adequately summarize here. Please visit their websites for the most current information from your particular regulator(s). Here are the links to their websites:
Federal Reserve »
CBAI COVID-19 Survey Results
We want to share the results to date of CBAI’s survey regarding community bankers’ response to the COVID-19 crisis. Our objective as an association is to provide you with benchmark data from your peers across the state that you can use to evaluate your own best practices. Our immediate goal at CBAI during this crisis is to provide you timely and accurate information that is convenient to digest. We understand that you have a bank to run, while not only focusing on the health and well-being of your employees and community, but assisting and reassuring your customers during these challenging times. These results will be updated as more information is gathered.
Survey Results »
CBAI Partners with State Treasurer’s Office to Develop “Supporting Illinois Small Businesses” Loan Program
Last week the Illinois Treasurer’s Office reached out to CBAI for assistance on making up to $250 million in state funding immediately available for small business loans. The Treasurer’s Office will make capital available to community bankers who will administer the program. We finalized details late this weekend, and the program was announced this morning.
See Small Business COVID-19 Relief Program »
Read Full Press Release »
Through this program, the Treasurer's Office would partner with approved financial institutions to provide loans, either lower rate loans, or loans to a business or non-profit that would not otherwise qualify, to Illinois small businesses impacted by the COVID-19 pandemic. State funds would be deposited with qualified financial institutions for a one-year term at a near-zero deposit rate of 0.01% (0.0001).
- Deposits could be drawn in $1 or $5 million increments, up to a maximum of $25 million per financial institution.
- Deposited funds would facilitate affordable loans (not to exceed 4.75%) to small businesses and non-profits that could be used to provide bridge funding, pay fixed debts, payroll, accounts payable and other bills.
- Eligible Illinois businesses or non-profits must: (1) have been shut down or limited due to COVID-19, (2) have less than $1 million in liquid assets or $8 million average annual receipts (per SBA standards) and (3) be headquartered in the state of Illinois or agree to use the funds in Illinois.
- Deposits would be renewable as determined by the Treasurer’s Office.
- Financial institutions would be required to provide reports to the Treasurer's Office regarding the usage of program funds, including the number and types of loans provided and the economic impact of such loans.
We realize that this program isn’t necessarily a magic bullet, but it does give community bankers one more tool to assist our small business customers. We often joke about the speed of state government, but in this case, it is remarkable how quickly the Treasurer’s Office has acted to make funds available. CBAI continues to work with the Treasurer’s Office on additional initiatives to assist our customers during the crisis.
SBA Disaster Relief Loans
The SBA has received authorization to provide small business assistance through the Economic Injury Disaster Loan (EIDL) program for businesses impacted by COVID-19. This program can provide low interest loans of up to $2 million to businesses and private non-profits. This document outlines the EIDL program and provides high-level information related to the loan caps, use of proceeds and interest rates.
See Document »
The state of Illinois has applied for EIDL program assistance and is awaiting SBA approval. Once this approval is received, SBA disaster loan funds will be available to Illinois businesses.Please stay informed by visiting www.sba.gov/updates
. The SBA has a broad range of programs that can help small businesses through these challenging times including business advisory and lending services.
List of Programs »
ICBA: Money is Safe in Community Banks
The ICBA issued a national press release reminding consumers and community banking customers that their insured deposits are safe and backed by the full faith and credit of the federal government through the FDIC. “Community banking customers can continue to bank with confidence knowing their money is safe because it is insured by the FDIC," ICBA President and CEO Rebeca Romero Rainey said. "Since the FDIC was founded in 1933, no one has ever lost a penny of FDIC-insured funds.”
The release noted that the FDIC fully insures funds in community banks up to $250,000 per depositor and $250,000 for certain retirement accounts.
Read ICBA Press Release »
Guidance on Essential Critical Infrastructure Workforce
Governor JB Pritzker’s "Stay at Home Order" specifically identifies banks as essential businesses.
Read Official Executive Order »
Read Full Message from CBAI Regarding JB Pritzker's "Stay at Home Order" »
A letter from Treasury Secretary Steven Mnuchin offers guidance on the federal designation of community bankers as a critical workforce:
Consistent with the President’s guidelines “if you work in a critical infrastructure sector, as defined by the Department of Homeland Security, you have a special responsibility to maintain your normal work schedule.” The Essential Critical Infrastructure for the financial services sector includes workers who are needed to process and maintain systems for processing financial transactions and services, such as payments, clearing and settlement services, wholesale funding, insurance services, including ATMs, movement of currency (e.g. armored cash carriers); support financial operations, such as those staffing data and security operations centers; and, key third party providers who deliver core services. These individuals are critical to maintaining safe and efficient financial services and ensuring citizens have access to these services that are necessary to conduct their daily lives.
Read Letter »
See Guidance from the Department of Homeland Security on the Critical Infrastructure Workforce »
Talking Points and Best Practices
CBAI is also communicating with Community Bankers Associations in neighboring states sharing recommendations for best practices during the outbreak. Below are some of those suggestions:
Talking Points »
Best Practices »
Should you need additional resources on the COVID-19 pandemic, please consider the following:
CBAI Additional Resources »
FDIC Coronavirus Information »
ICBA Center for Crisis Response and Preparedness »
OCC COVID-19 Information Page »
Centers for Disease Control »
White House News »
CBAI COVID-19 Related Webinars Available
FREE to CBAI Members - Pandemic Preparedness: Managing Coronavirus & Other Epidemics On-Demand Only »
New FMLA Families First Requirements for Paid Leave Effective April 1, 2020 Webinar »
Interagency Statement on Loan Modifications: Working with Borrowers Impacted by COVID19 »
CBAI will continue serving community banks throughout this crisis. Circumstances have shifted our focus from
traditional lobbying efforts and in-person educational seminars to helping
community bankers weather this storm. We are in discussions daily with
state and federal officials and regulators. Please know that our team
remains available to assist you during this period. Please don’t hesitate
to let us know if we can assist you with any individual questions or concerns.
A Note from CBAI President, Kraig Lounsberry:
This crisis only intensifies the value the community banking
profession provides for our society. We are here to assist you with your
important work of supporting your employees, your customers and your
community. Please stay healthy and keep up the great work.