DATE: March 18, 2020
TO: Chief Executive Officer
FROM: Candace Franks, Bank Commissioner
SUBJECT: Coronavirus Contingency Plans – UPDATE – March 18, 2020
The Arkansas State Bank Department (Bank Department) recognizes the potential for the Coronavirus Disease (referred to as COVID-19) to adversely affect the customers and operations of financial institutions. The Bank Department encourages financial institutions to take steps to meet the financial services needs of affected customers and communities. The Bank Department will provide appropriate regulatory assistance to affected financial institutions subject to their supervision, as warranted.
Working with Customers: The Bank Department encourages financial institutions to work with affected customers and communities. The Bank Department recognizes that such efforts serve the long-term interests of communities and the financial system when conducted with appropriate management oversight and consistent with safe and sound banking practices and applicable laws. These efforts may include, but are not limited to:
· Waiving certain fees, such as:
o Automated teller machine (ATM) fees for customers and non-customers,
o Overdraft fees,
o Late payment fees on credit cards and other loans, and
o Early withdrawal penalties on time deposits;
· Increasing ATM daily cash withdrawal limits;
· Easing restrictions on cashing out-of-state and non-customer checks;
· Increasing credit card limits for creditworthy borrowers; and
· Offering payment accommodations, such as allowing borrowers to defer or skip some payments or extending the payment due date, which would avoid delinquencies and negative credit bureau reporting caused by COVID-19-related disruptions.
The Bank Department emphasizes that prudent efforts to modify the terms on existing loans for affected customers will not be subject to examiner criticism. For example, when appropriate, a financial institution may restructure a borrower's debt obligations due to temporary hardships resulting from COVID-19 related issues. Such cooperative efforts can ease cash flow pressures on affected borrowers, improve their capacity to service debt, and facilitate the financial institution’s ability to collect on its loans.
Financial institutions may also ease terms for new loans to affected borrowers, consistent with prudent banking practices. Such practices may help borrowers to recover or maintain their financial capacity and enhance their ability to service their debt.
The Bank Department recognizes there may be other accommodations that could assist customers and communities in responding to challenges from COVID-19. The Bank Department supports and will not criticize efforts to accommodate customers in a safe and sound manner. The Bank Department encourages financial institutions to work with their regulator regarding additional actions that may more effectively manage or mitigate any adverse impact due to COVID-19.
Financial Condition Review, Supervisory Response, and Regulatory Relief: The Bank Department appreciates that some financial institutions with customers affected by COVID-19 related issues may experience an increase in their levels of delinquent and nonperforming loans. Consistent with long-standing practices, the Bank Department will consider the unusual circumstances these financial institutions face when reviewing an institution’s financial condition and determining any supervisory response. As needed, the Bank Department will work with affected financial institutions to reduce burden when scheduling examinations or inspections, including making greater use of off-site reviews, consistent with applicable legal and regulatory requirements.
Regulatory Reporting Requirements: Financial institutions affected by COVID-19 related issues that expect to encounter difficulty meeting regulatory reporting requirements, including audited financial statements and related reports, as applicable, are encouraged to contact the Bank Department to discuss their situation. The Bank Department's staff stands ready to work with affected financial institutions that may experience problems fulfilling their reporting responsibilities, considering each financial institution’s circumstances.
Alternative Service Options for Customers: The Bank Department understands that financial institutions may need to temporarily close a facility due to staffing challenges or to take precautionary measures. The Bank Department encourages financial institutions to reduce disruptions to their customers, provide alternative service options when practical, and reopen affected facilities when it is safe to do so. Affected financial institutions are asked to notify the Bank Department and their customers of temporary closure of an institution’s facilities and the availability of any alternative service options as soon as practical.
Lastly, I would like to provide you with additional resources for industry information. The Conference of State Bank Supervisors (CSBS) has developed a webpage dedicated to Coronavirus-COVID-19 information. The link is provided here:
The federal bank regulatory agencies have also provided additional guidance to encourage banks to support the U.S. economy and allow banks to continue lending to households and businesses. The link is provided here:
The FDIC has also released new documents for frequently asked questions to assist both banks and customers. The links are provided here:
I want to thank each of you for your timely communication to our office and your responsiveness to this ever changing and unprecedented health and public emergency. If we can be of any assistance to you and your institution, please do not hesitate to contact us at 501-324-9019.
Candace A. Franks