The OCC advises banks in the wake of COVID-19

The Office of the Comptroller of the Currency released a bulletin on March 13 advising banks to work with customers and communities affected by COVID-19.

The OCC encouraged banks to:

  • Waive certain fees, such as ATM fees for customers and non-customers; overdraft fees; late payment fees on credit cards and other loans; and early withdrawal penalties on time deposits,
  • Increase ATM daily cash withdrawal limits,
  • Ease restrictions on cashing out-of-state and non-customer checks,
  • Increase credit card limits for creditworthy borrowers, and
  • Offer payment accommodations, such as allow borrowers to defer or skip some payments or extend the payment due date, which would avoid delinquencies and negative credit bureau reporting caused by COVID-19-related disruptions.

The OCC said the efforts to modify terms on existing loans for affected customers won’t be subject to examiner criticism. For example, when appropriate, a bank may restructure a borrower’s debt obligations due to temporary hardship resulting from COVID-19-related issues. 

Such cooperative efforts can accommodate temporary medical conditions or the inability of affected borrowers to access their normal payment methods, ease cash flow pressures on affected borrowers, improve their capacity to service debt, and facilitate the bank’s ability to collect on its loans, the OCC said in a release.

Modifications of loans and whether they represent troubled debt restructurings, though subjective and require judgement, should be based on the facts and circumstances of each borrower and the terms of the loan modification, the OCC said.

“The OCC supports and generally will not criticize efforts to accommodate customers in a safe and sound manner,” the release said.

The OCC acknowledged some banks 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 OCC will consider the unusual circumstances these banks face when reviewing a bank’s financial condition and determining any supervisory response,” the OCC said in a release.

As needed, the OCC will work with affected banks to reduce burden when scheduling examinations or inspections, including making greater use of off-site reviews, consistent with applicable legal and regulatory requirements.

Banks affected by COVID-19-related issues that expect to encounter difficulty meeting regulatory reporting requirements, including audited financial statements and related reports, were encouraged to contact their OCC supervisory office to discuss their situation. 

The OCC will work with banks that may experience problems fulfilling their reporting responsibilities, taking into account each bank’s particular circumstances.

The OCC recognized that banks may need to temporarily close or otherwise reduce access to a facility because of staffing challenges or to take precautionary measures. The OCC encourages banks to reduce disruptions to their customers, provide alternative service options when practical, and reopen affected facilities when it is safe to do so. 

Banks are encouraged to notify their OCC supervisory office and their customers of temporary closure of a bank’s facilities and the availability of any alternative service options as soon as practical, the release said.

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