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Minnesota Commerce Department instructs credit unions on annual meeting scheduling
On March 16, the Minnesota Commerce Department issued guidance for credit unions considering delaying or rescheduling their annual meetings because of Covid-19. The Department instructs credit unions to consult their bylaws for requirements on meeting timing, noting that Bylaws adopted prior to 2018 will require that annual meetings be scheduled prior to May 31. The guidance continues to instruct credit unions to provide as much notice as possible to members regarding date changes as possible and to notify the Department if a decision to reschedule must be made in the best interests of members and employees that does not comply with bylaws.
Illinois Division of Financial Institutions and Division of Banks reschedule certain hearings
On March 16, the Illinois Department of Financial and Professional Regulation, Divisions of Financial Institutions and Banking, issued a general orders rescheduling all Status and Preliminary Hearings scheduled for Wednesday, March 25, 2020, to Wednesday, May 27, 2020 at 9:30 AM and all All Status and Preliminary Hearings scheduled for Wednesday, April 22, 2020, to Wednesday, May 27, 2020 at 9:30 AM.
Louisiana issues guidance on branch closures due to Covid-19
On March 16, Louisiana’s Commissioner of Financial Institutions issued an emergency declaration granting financial institutions temporary authority to close branches within the state or to limit hours, reduce functions, or close certain days of the week. The declaration expressly waives the standard requirements for branch closures and instead instructs institutions to post a notice for public view at the physical location and provide email notice to the Office of Financial Institutions as soon as practicable and no more than five days after closure.
Vermont Department of Financial Regulation issues guidance to Vermont chartered banks and credit unions
On March 16, the Vermont Department of Financial Regulation issued guidance to Vermont chartered banks and credit unions regarding working with affected customers. Financial institutions are encouraged to, among other things, waive certain fees (e.g., ATM, overdraft, late payment fees), ease restrictions on cashing out-of-state and non-member checks, increase credit card limits for credit worthy borrowers, and offer payment accommodations. Prudent efforts to modify the terms on existing loans for affected customers will not be subject to examiner criticism and, generally, the department supports and will not criticize efforts to accommodate customers in a safe and sound manner. The guidance also addresses: (i) financial condition review, supervisory response, and regulatory relief; (ii) regulatory reporting requirements; and (iii) alternative service options.
Utah Department of Financial Institutions issues guidance to credit unions
On March 16, the Utah Department of Financial Institutions issued a statement encouraging credit unions to take steps to meet the financial services needs of members and communities affected by Covid-19. Credit unions are encouraged to, among other things, waive certain fees (e.g., ATM, overdraft, late payment fees), increase ATM daily cash withdrawal limits, ease restrictions on cashing out-of-state and non-member checks, increase credit card limits for credit worthy borrowers, and offer payment accommodations. Prudent efforts to modify the terms on existing loans for affected members will not be subject to examiner criticism and, generally, the department supports and will not criticize efforts to accommodate members in a safe and sound manner. The guidance also addresses: (i) financial condition review, supervisory response, and regulatory relief; (ii) regulatory reporting requirements; and (iii) alternative service options.
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).
Massachusetts DOB issues guidance to assist consumers affected by Covid-19
On March 15, the Massachusetts Division of Banks issued guidance for financial institutions on working with consumers affected by Covid-19 and regulatory assistance available from the Division. The Division encourages financial institutions to work with affected customers and communities, including by: (i) waiving fees; (ii) increasing ATM cash withdrawal limits; (iii) easing restrictions on cashing checks; (iv) increasing credit card limits; and (v) offering payment accommodations to assist members having payment difficulty. The guidance notes that “prudent efforts” to modify loan terms would not be subject to examiner criticism, and institutions can ease their terms for new loans consistent with prudential banking practices. In the guidance, the Division also committed to work with affected institutions to reduce the burden when scheduling examinations and inspections, utilize off-site reviews, and work with institutions experiencing difficulties fulfilling reporting requirements. It further acknowledged that institutions may need to temporarily close facilities and encouraged them to offer alternative service options where practical and notify the Division regarding business disruptions or other significant developments, such as staff shortages, rapid withdrawal of deposits or other signs of erosion in consumer confidence.
Mississippi banking regulator issues memorandum on pandemic preparedness
On March 14, the Mississippi Department of Banking and Consumer Finance (DBCF) issued a memorandum to remind licensees to review risk management plans, including business continuity and pandemic plans, to ensure continuity of services. In addition, the guidance recommends licensees to: work with consumers impacted by Covid-19, be prepared for disruptions to availability of key personnel, and notify DBCF of any issues relating to events caused by Covid-19.
Michigan Office of Credit Unions issues letter to CEOs and board leaders
On March 13, the Michigan Office of Credit Unions Director Denice Schultheiss issued a letter to credit union CEOs and chairpersons providing guidance for annual meetings and closure notifications during the Covid-19 crisis. The guidance allows credit unions to cancel or postpone annual meetings without being penalized, and encourages remote meetings via video conferencing, if possible. Credit unions were also instructed to inform the office in the event of location closures, providing as much detail on the closure as possible and how the closure could impact services to members. In addition to addressing annual meetings and closures, the letter encouraged credit unions to be vigilant of heightened cyber risk during the crisis.
Alabama releases Covid-19 guidance for credit unions
On March 13, the Alabama Credit Union Administration issued guidance for credit unions on pandemic planning. The guidance encourages credit unions to review their business continuity plans and to notify the agency of issues arising from Covid-19, including staffing issues, difficulties obtaining cash, and temporary branch or office closures. The agency also agrees to consider requests from credit unions to postpone their annual meetings and to conduct regulatory, supervision and examination work offsite as much as possible.