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New Jersey issues bulletin permitting licensees to work from home due to Covid-19
On March 19, the Commissioner of the Department of Banking and Insurance (Department) signed Bulletin No. 20-06 setting forth the Department’s no-action position regarding licensure for certain branch office locations due to individuals temporarily working from home as a result of Covid-19. Licensees must submit a list of all individuals working from home, a certification that the individuals are working from home due to Covid-19, and a certification that the locations will maintain certain data security and privacy protections. The no-action position is effective through April 30. In addition, the Department requested prompt notice for any changes to the operating hours of branch locations.
Massachusetts DOB instructs licensees on temporary branch closures
On March 19, the Massachusetts Division of Banks issued guidance to licensees for temporary closures necessitated by Covid-19. Licensees are encouraged to provide alternative service options to customers when feasible and notify customers about closures and alternatives as soon as practicable. In addition, licensees should notify the Division of any closures, business disruptions or other significant Covid-19-related developments, including significant staff or liquidity shortages or issues with funding closed loans to consumers.
Nebraska publishes a statement about working with customers affected by Covid-19
On March 17, the Nebraska Department of Banking and Finance (Department) published a statement for financial institutions working with customers affected by Covid-19 along with regulatory assistance. The statement addresses: (i) establishing emergency branch locations with notice; (ii) clearing back room operations; (iii) moving examinations offsite; (iv) digital applications, audits, and correspondence when working with the Department; (v) using ACH for payments sent to the Department; (vi) delaying credit union annual meetings; and (vii) audit turn around times. The statement also encourages financial institutions to work with affected customers, and provides examples of efforts to be considered by financial institutions. The statement also addresses regulatory reporting requirements and financial condition review, supervisory response, and regulatory relief.
Kansas Office of the State Bank Commissioner temporarily closed
On March 16, the Kansas Office of the State Bank Commissioner (OSBC) announced it would be closed until March 23 with staff working remotely. In addition, all OSBC on-site exams have been suspended at least until the end of March. The OSBC suggested visiting their website (www.osbckansas.org) for additional information regarding temporary bank closures and relocations.
Nebraska issues guidance to credit unions regarding annual meetings
On March 16, the Nebraska Department of Banking and Finance (Department) issued guidance authorizing Nebraska state-chartered credit unions to postpone their annual meetings of members if their meetings are to be held in March, April, May, or June 2020. Board of directors of credit unions are instructed to reschedule the postponed annual meeting so that it is held in July or August 2020 and provide members with 30 days prior written or electronic notice of the rescheduled meeting. Records related to the rescheduling must be kept for the Department’s review.
New York requires regulated institutions to submit Covid-19 response plans by April 9
The New York Department of Financial Services (DFS) has created a webpage providing information for industry and regulated entities.
On March 12, the New York Superintendent of Financial Services issued an order providing that regulated entities may temporarily relocate an authorized place of business and close any of their branch offices or locations if adversely affected by Covid-19 upon prompt written notice and compliance with the law, among other things.
On March 10, the New York State Department of Financial Services issued several industry letters related to the novel coronavirus known as “COVID-19.” Two of those letters require responses from New York regulated institutions no later than April 9, 2020. Responses must be submitted via e-mail to banking.covid19@dfs.ny.gov.
In one letter, the NYSDFS encourages New York licensed lenders, among others, to evaluate how they may assist businesses that have been adversely impacted by COVID-19. Specifically, it suggests that such lenders consider easing new loan terms and waiving late fees, among other measures. Further, the NYSDFS explains that reasonable and prudent efforts to provide assistance to affected businesses are “consistent with safe and sound banking practices as well as in the public interest.”
In another letter, the NYSDFS requires New York regulated institutions to provide a response on the institution’s plans to manage the potential financial risk stemming from COVID-19. According to the letter, the plans should include, at a minimum, an assessment of the following:
- Credit risk ratings of the customers, counterparties, and business sectors impacted by COVID-19.
- Credit exposure to customers, counterparties, and business sectors impacted by COVID-19 arising from lending, trading, investing, hedging, and other financial transactions, including any credit modifications, extensions, and restructurings (including capitalizations of interest).
- Scope and size of credits adversely impacted by COVID-19 that currently are in, or potentially may move to, non-performing/delinquent status, including consideration of stress testing and/or sensitivity analysis of loan portfolios and the adequacy of loan loss reserves.
- Valuation of assets and investments that may be, or have been, impacted by COVID-19.
- Overall impact of COVID-19 on earnings, profits, capital, and liquidity (including impact on loan-to-deposit ratio) of the institution.
- Reasonable and prudent steps to assist those adversely impacted by COVID-19 (such as those described in the letter referenced immediately below).
In a third letter, the NYSDFS requires New York regulated institutions to provide a response on the institution’s plans to manage the risk of disruptions to its services and operations caused by COVID-19. According to the letter, the plans should include, at a minimum, the following:
- Preventative measures tailored to the institution’s specific profile and operations to mitigate the risk of operational disruption, which should include identifying the impact on customers and counterparts.
- A documented strategy addressing the impact of the outbreak in stages, so that the institution’s efforts can be appropriately scaled, consistent with the effects of a particular stage of the outbreak, which includes an assessment of how quickly measures could be adopted and how long operations could be sustained under different stages of the outbreak.
- Assessment of all facilities (including alternative or back-up sites), systems, policies, and procedures necessary to continue critical operations and services if members of the staff are unavailable for long periods or are working off-site, including an assessment and testing as to whether large scale off-site working arrangements can be activated and maintained to ensure operational continuity. This would also include an assessment and testing of the capacity of the existing information technology and systems in light of a potential increased remote usage.
- An assessment of potential increased cyber-attacks and fraud.
- Employee protection strategies, critical to sustaining an adequate workforce during the outbreak, including employee awareness and steps employees can take to reduce the likelihood of contracting COVID-19.
- Assessment of the preparedness of critical outside-party service providers and suppliers.
- Development of a communication plan to effectively communicate with customers, counterparties, and the public, and to deliver important news and instructions to employees, along with establishing forums for questions to be asked and addressed.
- Testing the plan to ensure the plan policies, processes, and procedures are effective.
- Governance and oversight of the plan, including identifying the critical members of a response team, to ensure ongoing review and updates to the plan, including the tracking of relevant information from government sources and the institution’s own monitoring program.
DFS published a fourth industry letter to institutions engaged in virtual currency business activity setting forth guidance and a request for assurance to ensure that such regulated institutions have preparedness plans in place to address operational risk posed by Covid-19. In the guidance, DFS required every regulated institution to submit a response to DFS describing the plan of preparedness to manage the risk of disruption to its services and operations as soon as possible and no later than April 9, 2020 (30 days from the date of the guidance).
West Virginia regulator permits financial institution employees to work remotely
On March 13, the West Virginia Division of Financial Institutions issued temporary guidance permitting employees of regulated entities to work from home or another remote location approved by the financial institution. Temporary assignments under the guidance are permitted from March 13 through May 1. The Division emphasized that regulated institutions should ensure that privacy and security issues are adequately addressed. The Division reminded depository entities of the prior notice requirements for branch closures or limited service, and requested that they review and implement pandemic preparedness plans. The guidance also addressed requirements specific to mortgage loan originators, indicating that they must, among other things, maintain records identifying the dates and locations where each licensed originator worked remotely and have current and approved policies for access to secure origination systems. In addition, MLOs and other employees working remotely may not meet with borrowers at an unlicensed branch location.
New Hampshire regulator provides guidance on branch closures, annual meetings, and examinations
On March 13, the New Hampshire Banking Department (NHBD) issued a memorandum to state-chartered banks, credit unions, and trust companies encouraging them to work constructively with customers experiencing difficulty due to Covid-19 and offering guidance on branch closures, annual meetings, examinations, and liquidity. Banks and credit unions do not need prior authorization to use only the drive-through portion of a branch or adjust normal business hours but must submit applications to the NHBD for branch closures in excess of 48 hours. If necessary, credit unions may conduct annual meetings via video or teleconference and both banks and credit unions may request adjustments to examination schedules or additional time to respond to consumer complaints. Finally, institutions are asked to closely monitor liquidity levels in the event of higher than normal consumer cash withdrawals and ensure sources of liquidity are readily available.
Regulatory agencies issue pandemic planning statement
On March 6, the Federal Reserve, FDIC, OCC, NCUA, Conference of State Bank Supervisors, and the CFPB—through the Federal Financial Institutions Examination Council—issued an Interagency Statement on Pandemic Planning, which, among other things, updates 2006 and 2007 guidance on the need for business continuity plans (BCPs) that address the effects of pandemics. The interagency statement encourages banks to develop plans that, among other things, limit disruption of operations, minimize staff contact by utilizing remote access, and plan for staffing challenges by cross-training bank staff. The statement recommends that the BCPs of financial institutions should include: (i) a preventive program; (ii) a documented strategy that applies to the stages of the pandemic; (iii) a “comprehensive framework of facilities, systems, or procedures to ensure that the institution’s critical operations will continue” (iv) a testing program; and (v) an oversight program to ensure ongoing review and updates to the plan.” The statement also lists websites that offer information on pandemic planning activities. The FDIC and the OCC also published advisories, FIL-14-2020, and OCC 2020-13, respectively.
On March 9, the agencies issued a joint press release encouraging the financial institutions to “meet the financial needs of customers and members affected by” COVID-19. Also, the U.S. Senate sent a letter to trade associations encouraging them to provide job security for employees who self-quarantine or must miss work to take care of sick family members, and to ensure staff will not be required to use all sick leave/vacation leave or “report for work when such leave is exhausted.” The letter urges the entities to work with their customers by waiving late fees and overdraft fees among other measures. The Connecticut Department of Banking issued its own guidance as well regarding temporary remote work, and on March 5, the Washington Department of Financial Institutions issued similar guidance.
South Dakota regulator encourages pandemic planning
On March 12, the South Dakota Division of Banking issued a memorandum encouraging state-chartered banks to review recent pandemic planning guidance issued by the Federal Financial Institutions Examination Council and then revise or establish appropriate pandemic plans. The Division advised that the plans should be integrated into business continuity plans and consider ways to maintain essential financial services for customers while limiting impact to employees. Finally, the Division indicated that it will monitor the impact of Covid-19 and alter onsite examination activities as needed.