COVID-19 Member Perspectives – May 7, 2020

The following includes information from RMA’s Coronavirus Blog, which provides market intelligence on how financial institutions are managing coronavirus risks in various ways. For access to this blog, which is updated regularly and includes peer sharing by experienced risk managers, become an RMA member.

Last week’s calls with member institutions brought discussions on PPP new funding updates,  payment deferrals, return-to-work plans, and much more. (For insight into these calls, click here. If you would like to join any of these calls, reach out to the host listed.) Below is a small sampling of what was discussed:

  • Chief credit officers discussed PPP updates, the changing rules for the Main Street Lending program, questions about risk rating the credit portfolios, and the growing need for loan workout resources.  

  • Banks reported widespread technical issues with the SBA E-Tran system. Some banks reported having been asked by Fed banks to join a registry of banks that would lend to borrowers who are not current customers, in an effort to expand lending to underserved parties and smaller businesses. Banks reported outreach from the Department of Justice about potential fraud problems in the PPP process, specifically, multiple applications and other gaming of the system.

  • Banks are getting more requests for payment deferrals and are becoming concerned with lack of communication from those that have not. Some borrowers may assume deferrals are automatic. Banks are considering follow-up actions to the deferrals granted 30 days ago and wonder how many loans will be able to service debt after 90 days. There were questions about how TDR policy and the current stance toward changes in risk ratings will evolve as the year goes on.

  • Banks are beginning to plan phased-in return to the office by key bank functions. Decisions are being made on mask usage, screening, spacing, and other requirements. Experiences of the “early open” states are being watched closely by banks in states that are behind the curve. Some banks in “early open” states are choosing stricter protocols than their states’ minimum standard.

Please visit RMA’s Risk Readiness Special Coverage web page for webinar recordings on the pandemic.

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