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IBAT - Independent Bankers Association of Texas

04/08/2020 | News release | Distributed by Public on 04/08/2020 14:27

Federal Stimulus Bill Recap

At 880 pages and an estimated cost of $2 trillion, the CARES Act is a complex and far-reaching piece of legislation for which multiple summaries and analyses are and will be available. For the purposes of Texas community banks, the IBAT team has pulled out the pertinent pieces of the legislation. Please note there are number of areas in which federal agencies will need to provide guidance for some of the provisions of the bill to be finalized. IBAT will continue to provide timely updates as clarity is provided.

Small Business Lending

There is $350 billion allocated for a new 'Paycheck Protection Program' (PPP) through the SBA 7(a) program. As the parameters of this program are extensive, the IBAT team has prepared a separate Q&A document outlining the details of the PPP program as they appear in the CARES Act. It is important to note that the Treasury Department must authorize lenders that are not currently SBA lenders to participate in this program. Details are not yet available on how that authorization will occur.

April 8, 2020 Update on PPP: For your use and convenience, we have developed:

  • A full breakdown of the interim final rule, which includes a list of ongoing concerns and several questions that are, as yet, unanswered; and
  • An FAQ document on the PPP based on questions received earlier this week in IBAT's COVID-19 War Room, updated with information from the interim final rule.

Additionally, we now have available links from the Treasury department to the:

Tax Relief

Among other provisions, notable is a five-year, 100 percent NOL carryback for business losses from tax years after December 31, 2017 and before January 1, 2021. More detailed information is available from a plethora of accounting and law firms, as well as information on our COVID-19 Response Page.

Temporary Relief for Community Banks

IBAT was pleased to see a number of (mostly) temporary provisions enacted specifically aimed at community banks. These provisions are all temporary and will remain in effect until 60 days after the emergency declaration is lifted or December 31, 2020. The provisions include:

  • Authority to guarantee transaction accounts, which provides authority to the FDIC to increase coverage for transaction account deposits, with the approval of the Federal Reserve Board and Treasury. There are still some unknowns on this provision as the FDIC has latitude in setting the parameters, and IBAT will continue to strongly push for expanded coverage of both business and consumer deposits. At this juncture, there is disagreement regarding FDIC's authority for the full coverage of interest-bearing accounts. Clarity is forthcoming. We believe this is critical for consumer confidence and stability of funding sources.
  • Authority for waivers of legal lending limit restrictions by the OCC.
  • The Community Bank Leverage Ratio (CBLR) threshold for a 'well-capitalized' designation is decreased to 8 percent.
  • Credits impacted in a negative manner and restructured due to the impact of the coronavirus do not have to be designated as a 'troubled debt restructuring' or TDR.
  • Banks 'shall not be required to comply' with CECL. Efforts to make this moratorium permanent until Congress proactively approves implementation were unsuccessful, but initiatives continue in other legislative vehicles.