This was the Special Focus section for the May 2020 Compliance Journal, click here to view the entire edition.

Title II, Subpart B of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) consists of provisions that affect retirement account distributions, charitable contributions, and employer payments on student loans. The following is a summary of the provision affecting retirement accounts. 

Several sections of Subpart B effect distributions from retirement accounts including: temporary treatment for coronavirus-related distributions, limited repayment and income tax treatments for qualified individuals, and waivers from required minimum distributions.

Coronavirus-related Distributions  

The new law allows for temporary treatment for distributions referred to as “coronavirus-related distributions” (CRDs). For a distribution to be considered a CRD, the distribution need be:  

  1. Made on or after January 1, 2020 and before December 31, 2020; and 
  2. Made to an individual:   
    • Who is diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (COVID-19) by a test approved by the Centers for Disease Control and Prevention;  
    • Whose spouse or dependent (as defined in section 152 of the Internal Revenue Code) is diagnosed with such virus or disease by such a test; or 
    • Who experiences adverse financial consequences as a result of being: 
      • Quarantined;  
      • Furloughed or laid off or having work hours reduced due to such virus or disease; or 
      • Unable to work due to lack of childcare due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury. 

CRDs are permitted for up to $100,000 (in the aggregate) from eligible retirement accounts and are not subject to the standard 10% withholding tax penalty that would otherwise apply to a distribution taken before the participant was 59½. Eligible retirement accounts include qualified defined contribution retirement plans, including 401(k), 403(b), 457(b), and IRAs.  

The new law does allow for retirement plan administrators to rely upon an employee certification that he/she meets the CARES Act conditions to make a CRD. There is no further detail in the CARES Act regarding what specific certification should be made for reliance there upon.  

CRDs will automatically be included as qualified individual taxable income ratably over a 3-taxable year period beginning with the year withdrawn. The participant may voluntarily elect income treatment differently—such as including CRDs as qualified taxable income all in one tax year.  

The CARES Act also allows participants to repay CRDs back to eligible retirement plans and IRAs for which they are beneficiaries and for which a rollover contribution of such distributions can be made. The repayment period is three years from date the distribution was received. Repayments will be treated as satisfying general 60-day rollover requirements and will generally require the participant to file an amended tax return.  

Loans from Qualified Retirement Plans 

Separate from options available for CRDs, the CARES Act increases the amount qualified individuals may borrow from a qualified retirement plan. From the date of enactment until 180 days thereafter, qualified individuals may borrow up to 100% of the individual’s vested account balance or $100,000, whichever is less. This is an increase from current thresholds of 50% and $50,000. A qualified individual is someone that meets the criteria listed in item 2. above. Not all retirement plans allow for participant loans; plan participants should discuss loan options with retirement plan administrators.  

In the case of a qualified individual with an outstanding loan from a qualified retirement plan on or after the date of enactment of the CARES Act (March 27, 2020), if the due date for any repayment of the outstanding loan occurs during the period beginning March 27, 2020 and ending December 31, 2020, such due date is delayed for one year. In determining the traditional 5-year period for when a loan from a qualified retirement plan must be repaid, the traditional time period disregards the delayed period.   

Waiver of Required Minimum Distribution for 2020 

The rules for required minimum distributions (RMDs) for defined contribution plans (such as 403(b) and certain 457(b) accounts) and IRAs have also been impacted by the CARES Act. Under section 2203 of the Act, RMDs are waived for 2020. Due to the changes, an accountholder who was otherwise required to take an RMD in 2020 is no longer required to take the RMD. Additionally, an accountholder who turned 70½ in 2019 but had not yet taken the first RMD by April 1, 2020, is not required to take the first RMD; nor is that accountholder required to take a 2020 RMD.  

The RMD changes also impact inherited IRA-holders. If an accountholder inherited an IRA from a person who died before January 1, 2020, the accountholder is not required to take a 2020 RMD. If the accountholder inherited an IRA as a designated beneficiary, the accountholder is generally required have the IRA funds distributed to him/her within a ten-year time period. Under the CARES Act, if the death occurred after December 2019, the ten-year period does not start until 2021—skipping 2020. A non-designated beneficiary (i.e., estate, charity) normally is required to receive the inherited IRA funds over a 5-year period. Under the CARES Act, 2020 is skipped giving the non-designated beneficiary six years to have the IRA funds fully distributed.  

A change made by the CARES Act is independent of the Setting Every Community up for Retirement Enhancement Act (SECURE Act). The CARES Act made no changes to the new timing rules of the SECURE Act. Thus, under the SECURE Act, it remains that if an IRA-holder reached 70½ prior to January 1, 2020, or if the IRA-holder is not yet 70½, once the IRA-holder reaches 72 after December 31, 2019, he/she must take an RMD.  

Bank Considerations 

Given the new distribution flexibilities for retirement accounts, banks should consider whether further tracking of withdrawals should be implemented for distributions made pursuant to the CARES Act. For example, is the bank be able to track the amount of CRDs taken by a qualified individual from an IRA to help ensure the customer did not exceed the $100,000 threshold. Or whether the bank should track CRDs to then anticipate repayments thereof and perhaps monitor both the timing and amount of repayment.   

Bank should also consider whether any type of automatic RMD activity need be ceased before an otherwise pre-arranged RMD is disbursed to the customer. Banks should be in contact with those IRA customers in distribution regarding the changes made to RMDs. IRA customers may still decide to voluntarily receive an RMD even though the CARES Act waives the distribution requirement for 2020. 

Banks should also become familiar with the frequently asked questions released by the Internal Revenue Service (IRS) regarding the changes made by the CARES Act. In the guidance, IRS references past guidance issued after Hurricane Katrina. It is expected IRS will use the practices implemented in that past disaster in its implementation of the CARES Act changes. IRS needs to issue further guidance for some of the changes made by the CARES Act; banks should keep an eye on the IRS website for that further guidance. The IRS guidance may be viewed at: https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers  

Conclusion 

Title II, Subpart B of CARES Act affect retirement account distributions, charitable contributions, and employer payments on student loans. The changes made to retirement accounts include CRDs, limited repayment and income tax treatments for certain withdrawals made by qualified individuals, and waivers from RMDs for 2020. 

Banks should be familiar with guidance issued by the IRS, including a series of frequently asked questions and should consider how the changes may impact IRA operations. Bank should also consider reaching out to IRA customers currently in distribution regarding the opportunity to waive RMDs for 2020.

By, Ally Bates

This was the Special Focus section for the May 2020 Compliance Journal, click here to view the entire edition.

On March 9, 2020, the federal financial institution agencies (agencies) issued a joint press release to encourage financial institutions to meet the financial needs of customers affected by the coronavirus (COVID-19 emergency). Since then, the agencies have issued additional guidance, clarification, and in some instances, relief, to aid financial institutions to better assist their customers and continue to meet regulatory requirements.

Many financial institutions currently offer deferral or modification agreements to borrowers experiencing financial hardship caused by the COVID-19 emergency. Such arrangements may trigger the rules governing loans in areas having special flood hazards. This article covers the resources provided by the agencies, which discuss how financial institutions can help borrowers affected by the COVID-19 emergency and continue to meet the flood insurance requirements.

General Requirements 

The Flood Disaster Protection Act (FDPA), as implemented by the agencies’ rulemaking, requires that each time a financial institution makes, increases, extends, or renews (MIRE event) a loan it must determine whether the property is in a special flood hazard area (SFHA). Flood insurance is generally required for the term of the loan for buildings or mobile homes when in a SFHA. If, at any time during the life of the loan, flood insurance is deficient, the financial institution must initiate force placement procedures.  

Over the past months, many financial institutions have worked with struggling borrowers affected by the COVID-19 emergency by offering various forms of modifications, extensions, and deferral agreements. When these agreements trigger a MIRE event, such as by extending the loan term, then flood insurance requirements apply. For example, if a financial institution offers aid to an affected borrower by deferring payments and extending their loan’s maturity, this action “extends” the loan and results in a MIRE event. Such agreements could thus trigger requirements such as establishing escrow for flood insurance payments and fees, making a flood zone determination on the property securing the loan, or providing the notice of special flood hazards to the borrower. The FDPA and the agencies’ implementing regulations do not provide for a waiver of these requirements in emergency situations. However, the Board of Governors of the Federal Reserve (FRB) and the Federal Deposit Insurance Corporation (FDIC) have issued guidance regarding flood requirements, to help banks meet the needs of their borrowers. 

Agency Guidance 

FRB has stated that when exercising supervisory and enforcement responsibilities, it will take into account the unique circumstances impacting borrowers and institutions resulting from the COVID-19 emergency. Financial institutions should make good-faith efforts demonstrably designed to support consumers and comply with the flood insurance requirements. In addition, supervisory feedback for institutions will be focused on identifying issues, correcting deficiencies, and ensuring appropriate remediation to consumers. FRB does not expect to take a public enforcement action against an institution, provided that the circumstances were related to the COVID-19 emergency and that the institution made good faith efforts to support borrowers and comply with the flood insurance requirements, as well as responded to any needed corrective action. 

  • FDIC has acknowledged that as financial institutions work to accommodate borrowers during the COVID-19 emergency, meeting flood requirements could pose challenges for lenders and delay relief for borrowers in need. Therefore, FDIC has stated that when working with borrowers impacted by the COVID-19 emergency triggers a MIRE event, lenders may, if applicable: 
  • Rely temporarily on a loan’s previous flood hazard determination on file rather than obtain a new one during the COVID-19 emergency; 
  • Delay the establishment of escrow accounts for applicable loans until after the COVID-19 emergency; and 
  • Delay providing a written flood notice to a borrower until after the COVID-19 emergency if a property is located in a Special Flood Hazard Area (SFHA) and informing consumers about the availability for special disaster relief assistance in the event of a flood. Prior to providing written notice, the lender may, at its discretion, choose to use another method to inform the borrower of this information (e.g. by email or telephone). 

FDIC has stated that lenders should have a system in place to ensure deferred flood insurance requirements are addressed as soon as reasonably practicable. FDIC examiners, under the FDIC’s discretionary examination authority, will not criticize lenders’ good faith flood insurance compliance efforts to accommodate borrowers in a safe and sound manner during the COVID-19 emergency. 

National Flood Insurance Program Renewal 

On March 28, 2020, the Federal Emergency Management Agency (FEMA) issued Bulletin W-20002 (Bulletin) to extend the grace period to renew the National Flood Insurance Program (NFIP) policies that expire between February 13, 2020 and June 15, 2020 from 30 days to 120 days. Thus, a borrower will be covered by the NFIP policy if the flood insurance premium is paid before the 120-day grace period expires. 

As discussed above, the FDPA provides requirements and procedures for the force placement of flood insurance when a designated loan is not covered by a sufficient amount of flood insurance. The rules require that under force placement procedures, the lender must notify the borrower when adequate flood insurance is not in place. If the borrower does not provide evidence of sufficient coverage within 45 days after notification, the lender must force place flood insurance in an amount that will satisfy the regulatory requirements. However, in light of the Bulletin, FRB has stated that for NFIP policies expiring during the FEMA emergency period: 

  • A lender may provide the required notice to the borrower after determining the policy has expired with an indication that the NFIP grace period has been extended for 120 days. Lenders may inform borrowers that, in light of the Bulletin, force placement will not occur until after the end of the 120-day period. 
  • Alternatively, a lender may provide the required notice to the borrower at least 45 days before the end of the 120-day grace period.
  • For either alternative, the lender must force place flood insurance on the borrower’s behalf if the borrower does not pay the premium by the end of the 120-day grace period. 
  • As discussed above, FRB does not expect to take supervisory or enforcement action against the lender for violating the flood insurance force placement requirements, provided that the circumstances were related to COVID-19, and that the lender has made good-faith efforts to support borrowers and comply with the flood insurance requirements, as well as responded to any needed corrective action. 
  • Lenders should be aware that if they force place flood insurance for NFIP policies that expire during the FEMA emergency period prior to the expiration of the 120-day grace period and the borrower pays the premium by the end of the 120-day grace period, consistent with the flood insurance regulatory requirements, the lender would be required to refund the borrower for any overlapping flood insurance coverage. 

Conclusion 

The flood rules have not been waived. However, FRB and FDIC have encouraged financial institutions to assist customers affected by the COVID-19 emergency. In order to better assist financial institutions accomplish those goals and meet borrower needs while complying with the flood rules, both agencies have issued the guidance discussed in this article. Additionally, FEMA allows greater flexibility to affected borrowers covered by certain NFIP policies. Financial institutions should consider the appropriate guidance when determining how to meet existing flood requirements for borrowers affected by the COVID-19 emergency. When relying upon such guidance to make a decision with respect to complying with flood requirements, financial institutions should carefully document the circumstances, the steps the institution took to comply with the flood rules, and the considerations leading to the decision. 

Additional Resources

FRB Flood Insurance Compliance in Response to the Coronavirus 
FDIC Coronavirus FAQ 
FEMA Bulletin W-20002

By, Ally Bates

Bank branches reopening, may request customers lower masks briefly for identification

MADISON – The health and safety of customers and employees remains a top concern for Wisconsin banks as the state carefully begins reopening. As essential businesses, Wisconsin’s banks remained open throughout the Safer-At-Home order, serving their customers in the drive-through, over the phone, and via online and mobile banking.

In a recent Wisconsin Bankers Association member survey, the majority of respondents indicate they will either require or encourage employees to wear masks (59% total). Additionally, in order to help their customers feel safe and comply with CDC and State health recommendations, some banks may allow (or even require) branch visitors to wear masks.

However, safety and security collide when it comes to customers wearing masks, as banks are historically and understandably uncomfortable with people disguising their faces while in the bank. Out of an abundance of caution and to protect staff and customers, banks have historically prohibited masks and other face coverings. With many customers anxious about health concerns, many banks are shifting those rules to be more flexible.

“Banks’ highest priority is the health and safety of their customers and their staff,” said Rose Oswald Poels, president/CEO of the WBA. “Each bank will weigh its unique risks and determine their procedures for permitting customers to wear masks while in the branch. Customers should remember that banking services remain available online and through mobile applications as well as drive-throughs.”

Bank customers should consider what their bank’s guidelines may be related to masks. WBA’s member banks are employing a variety of strategies, so customers may be asked to:

  1. Lower their mask for a few seconds while facing a security camera
  2. Lower their mask for a few seconds to allow staff to identify them
  3. Answer security/identification verification questions (similar to using phone banking services)
  4. Use the drive-through if they are unwilling or unable to comply with the bank’s guidelines for masks

WBA encourages consumers to contact their bank directly with specific questions about wearing masks and/or other face coverings in the branch.

By, Amber Seitz

This was the Special Focus section for the May 2020 Compliance Journal, click here to view the entire edition.

On Tuesday, April 28, 2020, the Board of Governors of the Federal Reserve System (FRB) issued an interim final rule to amend Regulation D to delete the numeric limits on certain kinds of transfers and withdrawals that may be made each month from “savings deposits” (interim final rule or IFR). The interim final rule is effective immediately. 

Background 

The Federal Reserve Act authorizes FRB to impose reserve requirements on certain types of deposits of depository institutions. Regulation D distinguishes between reservable “transaction accounts” and non-reservable “savings deposits” based on the ease with which the depositor may make transfers or withdrawals from the account. Prior to the interim final rule, Regulation D defined the term “savings deposit” to require, under the terms of the deposit contract or by practice of the depository institution, that the depositor be permitted to make no more than six transfers or withdrawals (in any combination) per calendar month or statement cycle of at least four weeks (six transfer limit).

In January 2019, the Federal Open Market Committee (FOMC) announced its intention to implement monetary policy in an ample reserves regime. Considering that shift, on March 15, 2020, FRB reduced reserve requirement ratios to zero percent effective March 26, 2020, eliminating reserve requirements for all depository institutions. Because of the elimination of reserve requirements on all transaction accounts, the regulatory distinction between reservable “transaction accounts” and non-reservable “savings deposits” is no longer necessary. Thus, FRB issued the IFR to delete the six transfer limit from the definition of “savings deposit.”

Impact of the Change and Considerations for Banks 

The IFR allows depository institutions to immediately suspend enforcement of the six transfer limit, but does not require any mandatory changes. Because the six transfer limit was deleted, financial institutions may, but are not required to, permit their customers to make an unlimited number of convenient transfers and withdrawals from their savings deposits. 

Many financial institutions have questioned whether the deletion of the six transfer limit is permanent. FRB has stated that, as discussed above, the underlying reason enabling the changes in Regulation D is the FOMC’s choice of monetary policy framework of an ample reserve regime. In such a regime, reserve requirements are not needed. Thus, the distinction made by the transfer limit between reservable and non-reservable accounts is also not necessary. The FOMC’s choice of a monetary policy framework is not a short-term choice. FRB does not have plans to re-impose transfer limits but may make adjustments to the definition of savings accounts in response to comments received on its interim final rule and, in the future, if conditions warrant. 

In short, based upon the IFR, and FRB’s clarifying statements above, the deletion of the six transfer limit is indefinite. The interim final rule amends Regulation D with no time limitations. FRB could later re-implement the six transfer limit, but would be required to issue a new rule. As discussed above, FRB currently has no plans to re-implement the six transfer limit. 

FRB has answered additional frequently asked questions. Some of the more common questions and answers are provided below: 

  1. May depository institutions continue to report accounts as “savings deposits” on their FR 2900 reports even after they suspend enforcement of the six-transfer limit on those accounts? 
    Yes. Depository institutions may continue to report these accounts as “savings deposits” on their FR 2900 reports after they suspend enforcement of the six-transfer limit on those accounts. 
  2. If a depository institution suspends enforcement of the six-transfer limit on a “savings deposit,” may the depository institution report the account as a “transaction account” rather than as a “savings deposit”? 
    Yes. If a depository institution suspends enforcement of the six-transfer limit on a “savings deposit,” the depository institution may report that account as a “transaction account” on its FR 2900 reports. A depository institution may instead, if it chooses, continue to report the account as a “savings deposit.” 
  3. May depository institutions suspend enforcement of the six-transfer limit on a temporary basis, such as for six months? 
    Yes. 
  4. How did the recent amendments to Reg D impact Reg CC? 
    Regulation CC provides that an “account” subject to Regulation CC includes accounts described in 12 CFR 204.2(e) (transaction accounts) but excludes accounts described in 12 CFR 204.2(d)(2) (savings deposits). Because Regulation CC continues to exclude accounts described in 12 CFR 204.2(d)(2) from the Reg CC “account” definition, the recent amendments to Regulation D did not result in savings deposits or accounts described in 12 CFR 204.2(d)(2) now being covered by Regulation CC. 

In its FAQs, FRB states that the IFR does not specify the manner in which depository institutions that choose to amend their account agreements may do so. Meaning, the IFR, and Regulation D in general, does not require or prescribe how a financial institution must modify its account agreements with respect to the six transaction limitation. However, WBA reminds financial institutions to consider Regulation DD, which implements the Truth in Savings Act.  

Regulation DD requires a depository institution to give its consumers 30 calendar days advance notice of any change in a term if the change may reduce the annual percentage yield or adversely affect the consumer. The notice shall include the effective date of the change. If a financial institution decides to remove the six transaction limitation, such a change is positive to the customer and would not require advance notice. Financial institutions might still decide to provide notice of the change from a customer service standpoint, however. 

There are other situations that might necessitate advanced notice of a change in terms under Regulation DD. As discussed above, the deletion of the six-month transaction limitation is indefinite. However, financial institutions have the flexibility to choose how to act on that change. Financial institutions could choose to maintain their current policies, procedures, and account agreements, or modify them, and could do so on a temporary basis. For example, a financial institution might decide to permit its customers to make unlimited transactions for a period of six months. At the end of the six-month period, if the financial institution decides to re-implement the six transaction limitation, 30 days advance notice would be required as the change would be adverse to the customer. 

Conclusion 

FRB’s interim final rule deletes the six transaction limit from Regulation D without further limitation. The amendments are intended to allow depository institution customers more convenient access to their funds and to simplify account administration for depository institutions. The IFR permits, but does not require, depository institutions to suspend enforcement of the six transfer limit. Thus, financial institutions have the flexibility to determine whether, and how, to act upon the deletion of the six transfer limit. 

Additional Resources 

FRB’s Interim Final Rule 
FRB’s Monetary Policy and Reduction of Reserve Requirements 
FRB’s FAQ on Reserves 
FRB’s FAQ on Savings Deposits 
FRB on Reporting Changes

By, Ally Bates

Banks should prepare for the worst, but data leaves room for optimism 

On April 22, the Federal Housing Finance Agency (FHFA) announced Fannie Mae and Freddie Mac would purchase single-family mortgages in forbearance, provided the loans meet certain criteria. By allowing the purchase of these previously ineligible loans by GSEs, FHFA hoped to “provide liquidity to mortgage markets and allow originators to keep lending." 

However, mortgages in forbearance will also be “priced to mitigate the heightened risk of loss,” according to FHFA’s press release. This additional fee, called a loan-level price adjustment (LLPA), is set at 5% of the unpaid principal balance for first-time homebuyers and 7% of the unpaid principal balance for all other borrowers. Since the loans in question have already closed, the lender, not the borrower, is responsible for paying the additional fee. 

And for many banks, that price will be too steep, forcing them to choose between continuing to lend and paying extra costs for forborne loans. 

Servicers lost in the shuffle 

With the fallout of the COVID-19 pandemic decimating household incomes in a number of sectors—weekly unemployment claims are greater than any time in history by a factor of five—government agencies, lawmakers, and the media (for the most part) have all focused on the impact on consumers. We’ve never needed to measure weekly unemployment claims in millions before, and the front page of the New York Times March 27 edition shows just how stark the historical comparison is. Relief programs should absolutely seek to help struggling individuals. 

Accordingly, on April 27 FHFA announced borrowers in forbearance will not need to make a lump sum payment at the end of the forbearance period, which is typically required under the forbearance agreement. Instead, the payments may be added to the end of the mortgage or the borrower may elect an alternative repayment plan. While this announcement only affects GSE-backed mortgages, FHFA Director Mark Calabria encouraged all mortgage lenders to "adopt a similar approach.” 

Non-bank businesses have also received attention and support via lending programs like EIDL and PPP. “Essential” businesses including food suppliers and healthcare facilities are recipients of public accolades and community support campaigns. Financial institutions have mostly stayed out of the spotlight, helping their customers and communities from behind the scenes. 

Banks entered this crisis in a position of strength, so it’s understandable that COVID-19's impact on them hasn’t been a high priority. But regarding loan deferrals and forbearance, that lack of attention may have catastrophic consequences. 

What’s the worst that could happen? 

Mortgage bonds’ rapid collapse in value precipitated the global financial meltdown in 2008. Now that various state and federal moratoriums on foreclosures are lifted, the financial system will start to see the impact of several months of payments disappearing. 

The CARES Act provides protections for borrowers, but not lenders. Banks and other mortgage servicers still must make payments to investors for mortgages sold to the secondary market, whether or not the borrowers are paying their mortgages. With money going out but not coming in, servicers may need to dip into capital reserves to keep disbursing money to bond investors, and those reserves may not be adequate to sustain the industry long term. Some servicers, especially non-bank entities with fewer lines of business driving revenue, may need to close. 

With no one collecting payments on those mortgages and returning money to bond investors, a significant portion of the mortgage infrastructure would collapse, devaluing mortgage bonds… Sound familiar? 

What’s actually going to happen? 

The economic fallout from COVID-19 is impossible to predict accurately. The situation is unprecedented. However, regulators and lawmakers learned their lesson from the Great Recession: financial markets are intricately intertwined, so pending trouble in one area will impact everything else. 

With that in mind, the Federal Reserve has already taken steps to shore up the mortgage market by purchasing over $200 billion in mortgage-backed securities, and the FHFA announced that servicers are only required to advance four months of missed payments for all GSE-backed loans. 

The industry may not need extravagant government support, either. The Mortgage Bankers Association (MBA) reports 4.2 million homeowners are in forbearance plans as of May 17, but week-over-week increases have slowed. 

According to the Census Bureau’s ongoing American Community Survey, the median family income of homeowners with a mortgage is $93,000, much higher than that of renters ($41,000) or those without a mortgage ($55,000). An April Pew survey reported that 52% of low-income workers reported taking a pay cut or losing a job due to COVID-19 compared to just 32% of upper-income workers and 42% of middle-income workers. The same survey showed 53% of low-income workers say they cannot pay their bills in full, and only 11% of upper-income and 26% of middle-income workers say the same. 

Source: Pew Research Center

Given that data, COVID-19's impact on homeowners—who tend to be more well-established financially—could be smaller than the current number of loans in forbearance suggests. 

Bottom Line: 

Following Murphy’s Law, banks should model and stress-test for the worst-case scenario (dramatic upheaval in MBS bond markets). However, the more likely forecast is for mild-to-moderate distress in single-family mortgages and greater—but not cataclysmic—risk in multi-family/CRE markets. 

Seitz is WBA operations manager and senior writer.

 

By, Amber Seitz

Throughout the coronavirus pandemic, Wisconsin’s banks have redoubled their efforts to support their communities. As an industry, banks have always been the cornerstone of the villages, towns, and cities they serve, but the ongoing challenges presented by COVID-19 provided extra motivation to help. WBA has collected stories from many member banks about their community support efforts. While there aren’t enough pages to show them all, we hope the sampling below demonstrates their dedication.

Don't see your bank's efforts? Let us know what you're doing! Send announcements, press releases, and/or photos to BulletinBoard@wisbank.com


Berlin 

Fortifi Bank announced that they will award $1,000 COVID Relief Grants to 20 non-profit organizations in May. Together with the Federal Home Loan Bank of Chicago (FHLBC), this money is intended to assist groups with the financial strain presented by COVID-19. “We are lucky to have such a strong partner with aligned values to accommodate this relief program,” stated Greg Lundberg, president of Fortifi Bank. “Together, we will be able to help 20 non-profit organizations who are undoubtedly struggling as the effects of COVID are rampant.” 


Brookfield

North Shore Bank has donated of a total of $7,500 to eight local food pantries across the state to help the food pantries handle a surge of community members in need due to the COVID-19 pandemic. Food pantries receiving a donation from the bank during the pandemic include: Milwaukee Christian Center; Milwaukee’s Hunger Task Force; Appleton’s St. Joseph’s Food Program; Love, Inc. in Burlington; Paul’s Pantry in Green Bay; Feed & Clothe My People in Sturgeon Bay; and Racine County Food Bank. These food pantries received their donation, as well as coffee and treats for their staff and volunteers as part of North Shore Bank’s Bank on Kindness initiative. 


Cross Plains

State Bank of Cross Plains (SBCP) has disbursed $20,000 in Relief Grants to five nonprofit organizations with missions aimed at helping communities cope with economic uncertainty due to COVID-19 by providing humanitarian support in various forms. The five nonprofits equally sharing these funds include: Waunakee Neighborhood Connection Corp.; Mount Horeb Community Foundation; Middleton Outreach Ministry (MOM); Home of Our Own Inc. in New Glarus; and Community Action Inc. of Rock and Walworth Counties in Beloit. State Bank of Cross Plains applied for and received the grant funding through the Federal Home Loan Bank of Chicago’s COVID-19 Relief Grant Program for members to use in support of small businesses and/or nonprofit organizations affected by the pandemic.


Denmark

The Board of Directors of Denmark State Bank has approved donations totaling $100,000 in support of local food pantries and other non-profit organizations dedicated to those who have been most affected by the COVID-19 pandemic. A total of $62,500 has already been distributed in each of the bank's markets. “Community is at the heart of who we are,” stated Scot Thompson, CEO and President of Denmark State Bank, “with a history that spans over 110 years, we’ve survived a lot of ups and downs, but we come together in support of one another and are grateful that we are able to provide some support during this crisis.” Additionally, in an effort to both recognize essential workers and support local businesses, the bank partnered with the Federal Home Loan Bank of Chicago to distribute $20,000 in meals and gift cards to essential workers in the communities it serves.


Fond du Lac

Fox Valley Savings Bank (FVSBank), in partnership with the Federal Home Loan Bank (FHLB) of Chicago, is excited to announce a total of $20,000 in grants has been distributed to local charities. Each charity received $4,000 to assist the organization in meeting its 2020 goals amid the COVID-19 pandemic. Those organizations include: The Boys & Girls Club of Fond du Lac, The Children’s Museum of Fond du Lac, Fond du Lac Community Theatre, Community Christian Child Care in Oshkosh, and REACH Waupun. Each of these organizations play a vital role in the neighborhoods they serve.

National Exchange Bank & Trust, in partnership with the Federal Home Loan Bank of Chicago, is proud to announce a $10,000 grant to ADVOCAP of Fond du Lac and a $10,000 grant to The Arc of Fond du Lac as these two pillars of community support continue to serve the needs of our communities during this health crisis. The Federal Home Loan Bank of Chicago is offering a COVID-19 Relief Program to support all its member institutions and the communities they serve as they respond to the COVID-19 Pandemic. ADVOCAP is a non-profit community action agency (CAA) serving Fond du Lac, Green Lake and Winnebago Counties with a mission to create opportunities for people and communities to reduce poverty and increase self-sufficiency. The Arc is a human service organization that empowers adults and youth with intellectual and developmental disabilities to become independent and integrated into the community through advocacy, education, training and support. The Arc provides services to families and individuals with disabilities living in Fond du Lac, Dodge, and Winnebago Counties.


Fort Atkinson

PremierBank, through its partnership with the Federal Home Loan Bank of Chicago, is awarding $23,000 to COVID-19 relief. Grants will be given to the Fort Atkinson Community Foundation, United Way of Jefferson and Northern Walworth Counties, and the Blackhawk United Way for use in COVID-19 relief efforts in our local communities. Russ Turk, President/CEO/Chief Lending Officer said, “As a community bank, we will always go the extra mile for our customers. This pandemic has been an especially trying time for our communities and it brings us great joy to be able to offer some additional relief."


Green Bay 

Associated Bank announced a $300,000 commitment to support COVID-19 recovery efforts in its three-state footprint. The company will donate $150,000 to local United Way chapters in Wisconsin, Illinois, and Minnesota to fund community-based programs and support services that provide basic needs. A commitment of $50,000 each will be provided to the Give to MKE Responds Fund, the Chicago Community COVID-19 Response Fund, and the Minnesota Disaster Recovery Fund (MDRF) to assist with housing and small business relief efforts. 


Horicon

Horicon Bank recently partnered with the Federal Home Loan Bank of Chicago to provide financial support for food pantries and relief organizations in eight local communities. The bank secured a $20,000 grant as part of the FHLB’s COVID-19 Relief Program and split this grant among the communities served by Horicon Bank. The bank asked the organizations to consider using the funds to also support the local agricultural and dairy industry if possible. "The organizations we are donating to, like many others, are doing all they can to respond to the pandemic’s effects in their communities," said Fred F. Schwertfeger, president of Horicon Bank. "As a community bank, we want these local organizations to take advantage of funding opportunities as much as possible."


Ixonia

Ixonia Bank is happy to announce it has gifted a total of $20,000 between four local pantries. This was helped made possible by the bank's partnership with the Federal Home Loan Bank of Chicago. "During this crisis, our local food pantries have been vital community partners," stated Dan Westrope, Ixonia Bank Chairman & CEO. "After reaching out and hearing stories of the need, the choice was an easy one. The impact that food insecurity can have on individuals and families in our communities needs to be addressed, and we ask anyone who can, to consider supporting their local food pantries by donating funds or giving food and non-perishable items."


Luxemburg

Bank of Luxemburg received a $20,000 federal grant as part of FHLBank Chicago’s COVID-19 Relief Program. The bank dispersed funds to Paul's Pantry, Help of Door County, Violence Intervention Project, and more. "Our mission is to have a positive impact on people’s lives," said Bank of Luxemburg President Tim Treml. "We feel fortunate to continue to be able to provide support during a time when some may need it most."


Madison 

Wisconsin Bank & Trust is proud to announce it will commit $100,000 to support six local community initiatives related to Wisconsin’s COVID-19 crisis. The Wisconsin-based bank will make significant contributions to the Boys & Girls Club of Dane County: Dane County COVID-19 Emergency Fund, Greater Green Bay Community Foundation: Emergency Response Fund, Greater Milwaukee Foundation: MKE Responds Fund, Green County Emergency Medical Service, Sheboygan County Food Bank: Sheboygan County Hunger Relief Food Fund, and the University of Wisconsin – Platteville: Pioneers Helping Pioneers Fund. 

Capitol Bank sponsored lunch on Wednesday, April 22 for 175 essential healthcare workers at the neighboring SSM Health Dean Medical Group – North High Point Road Location. In response, SSM Health workers invited Capitol Bankers out into the parking lot and held a “Thank You” sign from the roof of the clinic (pictured below). The large lunch order provided support to five area restaurants, and thank you notes from Capitol Bank were included for the SSM Health employees. 

In addition, Capitol Bank, through their partnership with the Federal Home Loan Bank of Chicago (FHLBank Chicago), has received a $20,000 grant for the purpose of providing donations to organizations in the Madison area. “An important part of being a community bank is our involvement at the local level. We are fortunate to receive this grant, allowing us to further our community support at a critical time,” said Ken Thompson, President and CEO of Capitol Bank. An internal group of employees, the “Capitol Cares Committee” determines each year how Capitol Bank’s donation budget will be dispersed in the community. In addition to the $20,000 grant, Capitol Bank is contributing an additional $5,000 to organizations providing COVID-19 relief in Dane County.

Old National Bank is joining #GivingTuesdayNow in a global day of giving and unity and responding to meet the needs of communities by committing $1.2 million for COVID-19 relief. In Wisconsin, ONB is donating $77,840 to Wisconsin non-profit organizations. An additional $8,840 was redeployed from local event sponsorships to straight donations to five other Dane County non-profit organizations who canceled events due to COVID-19. “Old National has a long history of community commitment, and we are pleased to support our communities in this urgent time of need,” said Kevin Anderson, market president. “These organizations are providing such valuable services in our communities, and we are pleased to partner with them and assist those who need it most.” 


Marshfield 

The team at Forward Bank, Insurance and Investment Services has come together to work non-stop to help customers and communities find the best relief options for the impact COVID-19 has on businesses and families. “We all stand together in helping our communities,” commented Bill Sennholz, CEO of Forward Bank. “That is why Forward is giving each of our employees $120 gift cards and certificates for their choice of local restaurants to be used now for takeout or later when we can gather at these businesses. We want this infusion of over $20,000 into the local economy to be the next step in helping small businesses, like many of our customer owners, survive until we return to normal.” 


Manitowoc 

Investors Community Bank recently launched a special program to feed frontline health care workers in Manitowoc County and support the bank’s restaurant customers. Employees at Aurora Two Rivers and Holy Family Memorial received meals courtesy of ICB as part of the bank’s Fueling the Frontline initiative (pictured below). The purpose of this initiative is two-fold: to thank those essential employees who are working in the health care field during this pandemic and to support restaurant customers by placing takeout orders. On Thursday, April 23 Aurora received 160 meals from Spudz, Waterfront Wine Bar, and Dairy Queen, and on Friday, April 24, Holy Family Memorial received 250 meals from Luigis, Pack’er Inn, and Perkins.

Bank First is pleased to announce they recently purchased $100,000 in gift cards from over 140 restaurants located within their footprint. The bank will be donating the gift cards back to local families, non-profit organizations, and businesses through various programs once the Safer-At-Home restrictions are lifted. “We strongly believe that as a community bank, we have a social responsibility and moral obligation to meet the financial needs of the communities we serve, whether that is through providing innovative products and services that are value driven or giving back to those in need,” said Mike Molepske, chief executive officer at Bank First. “Purchasing gift cards from our restaurant customers not only helps them get through this challenging time, but also allows us to put food on the table for hundreds of families in the communities we serve.” In addition to purchasing gift cards, Bank First is also buying lunch for its employees weekly from local restaurants impacted by COVID-19. 


Marinette

The COVID-19 pandemic has affected many local food pantries. To assist them and their patrons during this difficult time, The Stephenson National Bank & Trust (SNBT) worked with locally owned Hoppe Dairy to provide dairy products to local pantries, while also helping to support area farms. SNBT has been able to help fill the gaps to provide butter, eggs, cheese, and milk to ten local food banks. Along with these donations to food pantries, SNBT has been focused on making an impact on the entire community through a variety of other methods. SNBT and the Federal Home Loan Bank of Chicago made monetary donations totaling over $40,000 to non-profits in Wisconsin and Michigan.SNBT and the Federal Home Loan Bank of Chicago made monetary donations totaling over $40,000 to non-profits in Wisconsin and Michigan. Read about the depth of the bank’s community commitment by visiting www.snbt.com/community-impact.


Monona

Monona Bank announced it will donate $82,300 to 15 area food pantries and four other Madison-area non-profits who are working to assist our neighbors in need during the COVID-19 crisis. The donation was made possible through the bank’s “Strength in Neighbors” campaign which was initiated by a $20,000 grant the bank received from the Federal Home Loan Bank of Chicago’s (FHLB Chicago) COVID-19 Relief Program. “We’ve seen a dramatic increase in requests for COVID-19 assistance, specifically asking for help in providing meals for area residents,” Paul Hoffmann, President & CEO of Monona Bank, said. “As a locally-owned community bank with close ties to many non-profits in our communities, we are in a unique position to notice the needs facing our communities quickly,” Hoffmann added. “Monona Bank knew they needed to get involved, especially since we believe we are only truly successful when the communities we serve prosper.” Hoffmann and the Monona Bank Board of Directors quickly decided to create a “Strength in Neighbors” campaign to help our neighbors survive the COVID-19 crisis. Monona Bank increased its total contribution to $82,300 through a combination of bank, board, and employee contributions. The hardest part for the bank was deciding where to donate the grants due to the numerous worthy requests the bank had received for assistance.


New London 

Through its partnership with the Federal Home Loan Bank of Chicago, First State Bank recently received a $20,000 COVID-19 Relief Grant to support non-profit organizations who have been impacted by the pandemic. The bank has chosen to distribute the funds to 13 food pantries throughout its market area for the purchase of Wisconsin-produced dairy products. “By designating these funds for the purchase of cheese, milk, and other Wisconsin dairy products, these dollars can benefit not only families in need but our local dairy producers as well,” commented First State Bank Vice President of Marketing Brenda Hansen. “We are grateful to the Federal Home Loan Bank for making this grant opportunity available.” 


Oconomowoc 

Bank Five Nine has partnered with the Federal Home Loan Bank of Chicago to provide two local organizations with $10,000 grants to assist them during the COVID-19 pandemic. The two organizations receiving grants are the Oconomowoc Food Pantry and the Lake Area Free Clinic. The mission of the Oconomowoc Food Pantry is to provide food items to individuals and families in need who reside within the Oconomowoc Area School District. The Lake Area Free Clinic welcomes families and individuals who lack health insurance and whose income is below 250% of the federal poverty level. 


Port Washington

The Federal Home Loan Bank (FHLB) of Chicago recently offered bank partners a COVID-19 Relief Program consisting of zero-rate advances and grants to support all of its member institutions and the communities they serve as they respond to the COVID-19 pandemic. The COVID-19 Relief Program opened on Monday, April 27, with funding available through Friday, May 22. As a FHLB bank partner, PWSB was awarded $20,000. The bank chose to distribute the funds to local chambers of commerce and other business associations in the Ozaukee County area. Each of these organizations will each receive $2,500 to determine how to best support their business members, including Port Washington Main Street, Cedarburg Chamber of Commerce, Grafton Chamber of Commerce, Belgium Area Chamber of Commerce, Saukville Chamber of Commerce, Mequon Thiensville Chamber of Commerce, and the Thiensville Business Association. 


Waldo

Waldo State Bank recently donated $20,000 funds received from FHLB to local community organizations[https://m.facebook.com/story.php?story_fbid=10207650831505048&id=1719507487&sfnsn=mo], including: 

  • Adell Fire Department
  • Adell First Responders
  • Camo Quilt Project
  • Cascade Fire Department
  • Cascade First Responders
  • Mental Health American in Sheboygan County
  • Plymouth Food Pantry
  • Project Angel Hugs
  • Random Lake Adell Food Pantry
  • Safe Harbor
  • Samaritan’s Hands
  • Waldo Fire Department


Waukesha 

Waukesha State Bank, in partnership with the Federal Home Loan Bank of Chicago (FHLB Chicago), is proud to announce the Waukesha County non-profit winners of its 20 $1,000 COVID-19 relief grants to organizations including the Adaptive Community Approach Program, Alano Club of Waukesha, Donna Lexa Art Centers, Family Promise of Waukesha County, Habitat for Humanity of Waukesha County, Hope Center, Inc., Lad Lake, Muwonanago Food Pantry, Project WisHope, and the Waukesha Free Clinic. The COVID-19 relief grants were created specifically for Waukesha County 501(c)(3) non-profit organizations. Non-profit organizations entered by filling out an application, which highlighted the mission of their organizations, who they serve, how they have been impacted by COVID-19 and what they would do with the grant funding. A Waukesha State Bank committee judged the applications with the top 20 scoring non-profits receiving a $1,000 grant.


Wauwatosa 

WaterStone Bank has donated $20,000 to local organizations in need due to COVID-19. The bank donated $5,000 to four separate organizations: Hunger Task Force, Feeding America Eastern Wisconsin, Lift for the 22, Inc. & the Wisconsin Veterans Chamber of Commerce, and the Milwaukee County Sheriff’s Office. “WaterStone Bank has always strongly believed in giving back to the local community. During these challenging times, we felt even more compelled to help,” said WaterStone Bank President & CEO Doug Gordon. “We are pleased to further support our local food banks, first responders and our veterans who are in need during this time.” 

In addition, WaterStone Bank has contributed $10,000 to the Waukesha County Community Foundation’s COVID-19 Relief Fund. To help support increased need, the Waukesha County Community Foundation (WCCF) has identified agencies that are working locally and county-wide to ensure food access during the COVID-19 pandemic. WCCF launched an online crowdfunding opportunity to support 13 participating organizations, all of which are food pantries or other nonprofits providing meals during the pandemic. Individuals who are interested in donating can visit www.waukeshafoundation.org/covid to make a difference right in their own community. WaterStone Bank’s contribution was split equally among all 13 charities benefiting from the WCCF’s crowdfunding opportunity. Since the campaign was launched, WCCF has raised $41,250 to support food access in Waukesha County.

By, Amber Seitz

Reconstruct coronavirus-busted budgets to find new insights, opportunities 

Banking, like many other industries, has a “downturn playbook,” a set of common strategies designed to help individual institutions weather economic dips. However, today’s circumstances are different from every previous recession and depression, both in speed and in the sense that the economic dive is (in large part) voluntary. The novelty has resulted in some very interesting and impressive moves by the Federal Reserve (a new version of QE, MMLF, lending to securities firms, repo operations, etc.), but also an “oldie-but-goodie": slashing the federal funds rate. 

Karen MitchellHowever, interest rates seem more all over the map than they really are, according to Karen Mitchell, senior manager – risk advisory at Wipfli LLP (pictured, right). The pivot point was when rates went down in both August and October 2019, and then the two emergency cuts in April 2020 pushed things over the edge. “Balance sheets have been fairly stable, for community banks especially, with steady loan growth over the past few years which were largely offset by a decline in AFS securities,” said Mitchell. “The banks were in a fairly decent position at the beginning of the crisis.” 

Marc GallDuring the last rising rate cycle, bank cost of funds moved up slowly relative to the Federal Funds rate. Many community banks faced risk to margin compression in a very low rate environment, as asset yields could fall more than liability cost savings would offset. With the rapid decline in market rates, many banks have been quick to drop deposit rates, according to Marc Gall, vice president at BOK Financial Corporation (pictured, right). In addition, alternative deposit funds have become less costly, which will help banks reduce interest expense and minimize margin compression. More banks may turn to brokered deposits, FHLB, or the Federal Reserve’s PPP Liquidity Facility for low-cost funding options. 

Perhaps the biggest risk for bank leadership is getting stuck in the moment. Putting out fires often feels productive and has many rewards—praise from coworkers and customers, and even media attention—but comes at the expense of evaluating long-term concerns and focusing on future opportunities. 

Reconstructing a 2020 budget is an essential exercise to help bank management pay attention to the line items that will lead to long-term success, even as they triage immediate concerns (such as credit quality and margin compression). “You have to figure out what you should be focused on for longer-term success instead of constantly putting out fires,” said Gall. “Spending the time to put together a new budget will force you to think about those other elements that may not otherwise be top-of-mind.” 

Rebuilding Your Budget 

The majority of banks craft budgets in alignment with the calendar year, which means most 2020 budgets are now completely defunct. On the loan side of the balance sheet, PPP and other crisis-relief lending will create a spike in loan balances, intensified by consumers and businesses drawing on existing lines of credit in order to maintain cash flow. 

On the deposit side of the balance sheet, Mitchell says cash will move around based on consumer perceptions of strength and stability. “Just like in the great recession, there could be a flight to quality, so banks that are perceived as being strong may see an influx of deposits,” she explained. In addition, fee income (especially NSF and ATM fees) are likely to fall sharply. 

On the investment side, Gall cautioned against becoming too conservative. “Having excess liquidity on the balance sheet in this environment will ultimately become more and more expensive,” he said. “Even though investment yields have come down, the takeaway is that you need to realize where we’re actually at… We’re in a super-low rate environment.” 

All of this means one thing for 2020 budgets: “Redo them,” said Gall. Keep a copy for comparison purposes, but nearly every line item has changed significantly. The key to bank survival, as with every time of disruption, is to act. “Doing nothing is not a great strategy,” said Gall. “What will help banks through this is making decisions.” 

If making decisions feels impossible because of all the uncertainty, it’s not getting better anytime soon (it’s a Presidential election year, on top of everything else). Get unstuck by thinking of this exercise as forecasting, rather than budgeting. After all, if a weather forecast for the week is 70% right, everybody thinks that’s pretty good! Also, forecasts are designed to be revised as new information becomes available. As Mitchell put it, “budgets are static, but forecasts can be a more dynamic tool.” 

What’s Next?
Both Gall and Mitchell said banks should anticipate changes in consumer behavior in their forecasts. “Don’t use old assumptions about how consumers will behave in the new normal,” Mitchell warned. Two months of sheltering in place has disrupted old habits and formed new ones for most people. For example, banks can expect that the transition to online and/or mobile banking will accelerate. “This will change the landscape of banking, so don’t get left behind,” said Gall. 

5 Questions Bank Leaders Must Answer Now to Reconstruct 2020 Budgets: 

1. What’s our appetite for risk in this environment? 

The bank’s risk appetite throughout the COVID-19 crisis and recovery will determine loan pricing and which markets and/or sectors the bank is ready and willing to serve (for both loans and deposits), as well as how much the bank funds its loan loss provision, according to Gall. 

From an enterprise risk management perspective—the service line Mitchell leads at Wipfli—evaluating the full context of the current environment is key. “Look for the appropriate strategy in context of the risks this situation is presenting,” Mitchell advised. “Risk isn’t always a bad thing. It can be a good thing if you find the opportunities to serve your customers.” 

Banks should evaluate their credit risk, in particular, in the wake of the Paycheck Protection Program. “PPP might create some good opportunities, but the profitability of those loans is different from regular loans,” Mitchell said. 

2. Where can we increase income? 

Recalibrated 2020 budgets should incorporate new sales objectives that reflect today’s market. For example, while rates have been pushed down, banks could potentially make up some of that loss in volume. “There’s so much focus on PPP that it’s a bit lost that mortgage rates are extremely low,” Gall explained. “That could potentially be a nice additional revenue source this year if banks continue to focus on it.” 

3. What do we know about our customers? 

“Evaluate the current situation for your bank, your community, and your customers,” Mitchell advised. “Understand your customers’ experience right now and you might find strategies you wouldn’t normally have seen. You don’t need to stay on defense.” The detailed data banks can glean by being proactive with their struggling customers will also help generate models that can be used to craft stress scenarios, perform sensitivity testing, and conduct non-parallel rate shock scenarios. 

4. What ratio should we use for IRR management? 

Typically, net interest margin is measured as a ratio (cash divided by total assets). Gall recommends measuring return on equity instead. “Otherwise you could be making less dollars, that is, shrinking the bank, in order to get a better ratio,” he explained. “Unless they need to for a capital reason, we’re advocating banks not shrink at this time.” 

Whichever tools and tactics (ratios, models, etc.) the bank uses, Mitchell emphasized the need to avoid taking outcomes at face value. “Keep a critical eye on reviewing the results you’re getting [from current actions],” she said. “You’ll be using tools in new ways, so make sure the results make sense.” 

5. What’s fair for our staff? 

“At many banks, compensation is tied to performance and staff have been working around the clock to serve their customers under adverse conditions,” Gall pointed out. "Making your forecast more achievable for the rate and operating environment you’re in is a fairer way of looking at things.” Adjusting sales and other revenue metrics to be achievable in the current market may also lead to discovering new areas to pursue (see question #2). 

Save the date! Margin Management Workshop, Oct. 6-7 at the WBA Office in Madison

Time is running out! Access WI-specific compensation tool: 
To ensure your bank receives the information you need to take the right compensation strategy, you need competitive data. The 2019 Wisconsin Banking Industry Compensation & Benefits Survey is the largest Wisconsin-specific survey for banks, with salary and benefit information for 117 different jobs. The only way to purchase this information is to participate! Deadline: June 12.

BOK Financial Institutional Advisors is a WBA Gold Associate Member. 
Wipfli LLP is a WBA Silver Associate Member. 

Seitz is WBA operation manager and senior writer. 

By, Amber Seitz

WBA recently submitted comments to the federal banking agencies expressing support for changes made to regulatory capital rules. The interim rule impacts banks that participate in the Federal Reserve Banks’ Payment Protection Program Lending Facility (PPPLF).

Wisconsin’s banks have been leaders in offering PPP loans to their small business customers. Many of those banks, especially small community banks, need flexibility in liquidity options such as that offered by the PPPLF program. 

To participate in the PPPLF program, banks must originate and hold PPP covered loans on their balance sheets. This could result in the bank being required to increase regulatory capital. This potential result could cause some banks to not use the lending facility. The changes made in the interim rule negate the possibility of increased capital requirements for participating banks. Regulatory capital requirements are treated the same for both PPPLF and the Money Market Mutual Fund Liquidity Facility (MMLF)

Read the full comment letter

By, Amber Seitz

IMPORTANT: Following the Supreme Court’s decision invalidating DHS Secretary-Designee Andrea Palm’s order, several counties and municipalities are putting in place local ordinances. Due to the considerable confusion regarding the impact that the Wisconsin Supreme Court decision in Wisconsin Legislature v. Palm has on the authority of local health officers, Attorney General Josh Kaul has issued an immediate interim opinion

The opinion provides four main guidances to local authorities:

  1. Because the court's decision addressed only DHS's authority (found in Wis. Stat. § 252.02) it is not directly controlling on powers of local authorities, which are set out in Wis. Stat. § 252.03(1)-(2).
  2. Local authorities should limit enforcement of local orders to ordinances or administrative enforcement, because of specifics within the court decision regarding criminal penalties.
  3. Local authorities should ensure that any measures that direct people to stay at home, forbid certain travel, or close certain businesses speak specifically to the local authority's statutory power to "prevent, suppress, and control communicable diseases" and "forbid public gatherings when deemed necessary to control outbreaks or epidemics."
  4. The court's decision does not limit other measures directed by a local authority under Wis. Stat. § 252.03.

 


All 72 Wisconsin counties are listed below. If they have publicized their local decision to extend or not to extend Safer-At-Home orders, it has been noted below. If the "Issued Order" is blank, it's because there has been no public response as of yet. Contact information for each county is provided in case you wish to communicate directly with your local offices for more information.

The information regarding restrictions is rapidly changing. We'll continue updating as information is received. The latest updates are in red text.

If you do have any questions about your local restrictions, contact your local authorities for clarification.

Regardless of local restrictions, public health officials still recommended people follow social distancing guidelines.

This list was updated on June 5, 2020 at 1:00 p.m.

Population Rank County Phone Website Issued Order
53 Adams County 608-339-4200 http://www.co.adams.wi.gov No Restrictions
60 Ashland County 715-682-7000 http://www.co.ashland.wi.us No Restrictions
31 Barron County 715-537-6200 https://www.barroncountywi.gov/  
64 Bayfield County 715-373-6184 https://www.bayfieldcounty.org/ No Restrictions
4 Brown County 920-448-4000 http://www.co.brown.wi.us/ Rescinded Yes – through May 20
67 Buffalo County 608-685-6234 http://www.buffalocounty.com/ No Restrictions
62 Burnett County 715-349-2173 http://www.burnettcounty.com/ No Restrictions
29 Calumet County 920-849-2361 http://www.calumetcounty.org Rescinded Yes – Phases announced
24 Chippewa County 715-726-7985 http://www.co.chippewa.wi.us  
41 Clark County 715-743-5148 http://www.co.clark.wi.us No Restrictions
26 Columbia County 608-742-2191 https://www.co.columbia.wi.us/ColumbiaCounty/default.aspx No Restrictions
59 Crawford County 608-326-0201 http://www.crawfordcountywi.org No Restrictions
2 Dane County 608-266-4311 http://www.countyofdane.com/ Reopening Under Phase 1 (click to view)
19 Dodge County 920-386-3600 http://www.co.dodge.wi.gov Phase 1 guidance (click to view)
45 Door County 920-746-2200 http://www.co.door.wi.gov/ Reopening with guidelines (click to view)
33 Douglas County 715-395-1341 http://www.douglascountywi.org Yes – Follow WEDC guidelines
32 Dunn County 715-232-2429 https://www.co.dunn.wi.us/ Reopening with order (click to view)
15 Eau Claire County 715-839-4801 http://www.co.eau-claire.wi.us Yes until May 28
72 Florence County 715-728-3201 http://www.florencecountywi.com Reopening under Phase 1
16 Fond du Lac County 920-929-3000 http://www.fdlco.wi.gov No Restrictions
68 Forest County 715-478-2422 http://www.co.forest.wi.gov No Restrictions
27 Grant County 608-723-2675 http://www.co.grant.wi.gov/ No Restrictions
39 Green County 608-328-9430 http://www.co.green.wi.gov/ Rescinded Yes – through May 26
55 Green Lake County 920-294-4005 http://www.co.green-lake.wi.us No Restrictions
48 Iowa County 608-935-0399 http://www.iowacounty.org No Restrictions
70 Iron County 715-561-3375 http://www.co.iron.wi.gov No Restrictions
50 Jackson County 715-284-0201 http://www.co.jackson.wi.us No Restrictions
20 Jefferson County 920-674-7144 https://www.jeffersoncountywi.gov/ No Restrictions
46 Juneau County 608-847-9300 http://www.co.juneau.wi.gov No Restrictions
8 Kenosha County 262-653-2664 http://www.co.kenosha.wi.us Rescinded Yes – through May 26
51 Kewaunee County 920-388-4410 http://www.kewauneeco.org No Restrictions
12 La Crosse County 608-785-9573 http://www.lacrossecounty.org No Restrictions
57 Lafayette County 608-776-4850 http://www.lafayettecountywi.org  No Restrictions
54 Langlade County 715-627-6200 http://www.co.langlade.wi.us No Restrictions
44 Lincoln County 715-539-1019 http://www.co.lincoln.wi.us No Restrictions
21 Manitowoc County 920-683-4004 http://www.co.manitowoc.wi.us No Restrictions
10 Marathon County 715-261-1000 http://www.co.marathon.wi.us No Restrictions
37 Marinette County 715-732-7406 http://www.marinettecounty.com No Restrictions
63 Marquette County 608-297-3100 http://www.co.marquette.wi.us Yes – through May 15
71 Menominee County 715-799-3311 http://www.co.menominee.wi.us No Restrictions
1 Milwaukee County 414-278-4067 https://county.milwaukee.gov/ Reopening with Guidelines (click to view)
30 Monroe County 608-269-8705 http://www.co.monroe.wi.us No Restrictions
38 Oconto County 920-834-6800 http://www.co.oconto.wi.us No Restrictions
40 Oneida County 715-369-6143 http://www.co.oneida.wi.gov  
6 Outagamie County 920-823-1684 http://www.outagamie.org Rescinded Yes – through May 20
17 Ozaukee County 262-238-6400 http://www.co.ozaukee.wi.us No Restrictions
69 Pepin County 715-672-8857 http://www.co.pepin.wi.us  
35 Pierce County 715-273-3531 http://www.co.pierce.wi.us No Restrictions
34 Polk County 715-485-9226 http://www.co.polk.wi.us/  
23 Portage County 715-346-1351 http://www.co.portage.wi.us No Restrictions
66 Price County 715-339-3325 http://www.co.price.wi.us No Restrictions
5 Racine County 262-636-3121 http://www.racinecounty.com Reopen with enforceable order (click to view)
56 Richland County 608-647-2197 http://www.co.richland.wi.us No Restrictions
9 Rock County 608-757-5660 http://www.co.rock.wi.us Reopening Under Recommended Phase 1
65 Rusk County 715-532-2100 http://www.ruskcounty.org  
25 Sauk County 608-356-5581 http://www.co.sauk.wi.us No Restrictions
58 Sawyer County 715-634-4866 https://www.sawyercountygov.org/ No Restrictions
36 Shawano County 715-562-9150 http://www.co.shawano.wi.us No Restrictions
13 Sheboygan County 920-459-3003 https://www.sheboygancounty.com/ No Restrictions
18 St. Croix County 715-386-4600 www.sccwi.gov  
52 Taylor County 715-748-1400 http://www.co.taylor.wi.us No Restrictions
43 Trempealeau County 715-538-2311 http://www.tremplocounty.com No Restrictions
42 Vernon County 608-537-5380 http://www.vernoncounty.org No Restrictions
49 Vilas County 715-479-3600 http://www.vilascountywi.gov No Restrictions
14 Walworth County 262-741-4241 http://www.co.walworth.wi.us/ No Restrictions
61 Washburn County 715-468-4600 http://www.co.washburn.wi.us No Restrictions
11 Washington County 262-335-4400 http://www.co.washington.wi.us No Restrictions
3 Waukesha County 262-548-7010 http://www.waukeshacounty.gov/ No Restrictions
28 Waupaca County 715-258-6200 http://www.co.waupaca.wi.us/ Under WEDC guidelines until June 15
47 Waushara County 920-787-0442 http://www.co.waushara.wi.us No Restrictions
7 Winnebago County 920-236-4888 http://www.co.winnebago.wi.us/ Rescinded Yes – through May 20
22 Wood County 715-421-8400 http://www.co.wood.wi.us/ No Restrictions
         
  City of Appleton 920-832-6173 https://www.appleton.org/ Rescinded Yes
  City of Mensha 920-967-3600 https://www.cityofmenasha-wi.gov/ Yes
  City of Milwaukee 414-286-2489 https://city.milwaukee.gov/ Yes until rescinded (click to view)
  City of Racine 262-636-9101 https://www.cityofracine.org/Home/ Yes until May 26 until rescinded (click to view)
  Ho-Chunk Nation     Yes – No end date
  Lac Du Flambeau Band Of Lake Superior Chippewa     Yes until rescinded
  Menominee Indian Tribe Of Wisconsin     Yes until rescinded
  South Milwaukee/St. Francis 414-762-2222 https://smwi.org/ Yes, through May 21
  Cudahay   http://www.cudahy-wi.gov/ Rescinded Yes, through May 21
  Frankin   https://www.franklinwi.gov/ Yes, through May 21
  Greenfield   https://www.ci.greenfield.wi.us/ Yes, through May 21
  Hales Corners   https://www.halescorners.org/ Yes, through May 21
  Oak Creek   https://www.oakcreekwi.org/ Yes, through May 21
  Bayside, Brown Deer, Fox Point, Glendale   https://www.nshealthdept.org/ Yes, through May 21
  Shorewood   https://www.villageofshorewood.org/ Yes, through May 21
  Whitefish Bank   https://www.wfbvillage.org/ Yes, through May 21
  Wauwatosa   https://www.wauwatosa.net/ Reopen with guidelines (click to view)
  West Allis, West Milwaukee    https://www.westalliswi.gov/ Yes, through May 21

The map below was created and is maintained by Wisconsin Public Radio.

 

By, Eric Skrum

Q: When are the Reg CC inflation adjustments effective?

A: The Reg CC threshold adjustments due to inflation are effective on July 1, 2020.

On June 24 2019, the agencies issued a final rule amending Reg CC to adjust dollar amounts for inflation, expand coverage to certain United States territories, and make technical corrections to Reg DD. The effective date for the threshold adjustments is July 1, 2020. However, banks are permitted to implement those changes sooner if so desired.

To summarize the inflation adjustments:

  • The first $200 becomes $225.
    • Reg CC requires the first $100 made by check be made available on the next business day. This “first $100” rule was adjusted to $200 in 2011 and becomes $225 in 2020.
  • The $5,000 of the “large deposit” exception hold becomes $5,525.
    • Reg CC permits an exception hold on large deposits in excess of $5,000 which becomes $5,525.
  • The $400 for non-next day items becomes $450.
    • Reg CC provides that cash withdrawals from local and nonlocal checks need not be available for cash withdrawal until 5:00 p.m. on the day specified in the schedule, but no later than 5:00 p.m., $400 of the deposit must be made available for cash withdrawal, which becomes $450.
  • As of July 1, 2020 the amounts for civil liability in an individual action shall not be greater than $1,100 and $552,500 for class action.

Change in terms notification to customers will be required as well. Reg CC requires notice to customers at least 30 days before implementing a change to the bank’s availability policy regarding such accounts, except that a change that expedites the availability of funds may be disclosed not later than 30 days after implementation. Because the threshold adjustments mean that more funds are available to the borrower sooner, the change will expedite availability. Thus, customers must be notified of the changes no later than July 31, 2020. However, nothing is prohibiting a bank from sending a notice sooner if it chooses to do so.

Birrenkott is WBA assistant director – legal. For legal questions, please email wbalegal@wisbank.com.

Note: The above information is not intended to provide legal advice; rather, it is intended to provide general information about banking issues. Consult your institution's attorney for special legal advice or assistance.

Related Webinar Recording:

Countdown to Reg CC Rule Changes Effective July 1, 2020
The July 1, 2020, launch date for Reg CC rule changes is fast approaching. Last year the CFPB and the Federal Reserve Board jointly published Reg CC amendments that adjust for inflation the dollar amounts that depository institutions must make available to accountholders. Have your systems been updated? Disclosures changed? Staff trained? This jam-packed session will prepare you for these changes and provide a toolkit of charts and examples to make implementation smooth sailing. Purchase the recording today!

By, Amber Seitz