CU Structure Diagram, PPP Update, Reopening Guidelines and More

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The California Credit Union League has created a two-page diagram — "Credit Unions: Structure, Capital, Liquidity, and Economic Effects" — to help educate California assemblymembers and senators whenever the opportunity arises during this difficult period as credit unions continue serving their members.

This visual explainer provides key information on how state policies during economic downturns can negatively impact credit unions and their members. It also shows what a credit union is, the industry’s philosophy, how retained capital is the industry’s foundation, and how the detrimental provisions of legislation such as Assembly Bill 2501 would undermine income, liquidity, accounting, reserves, and the ability to provide quality products and services.

While the League’s advocacy team will be using this diagram in discussions with California legislators, the League encourages credit unions to keep it front and center in personal communication with state lawmakers as well. If a credit union has modeled the impact of legislation, it can use that data and highlight areas pertaining to the credit union within this informational piece.

In addition, the League is asking credit unions to provide their own page detailing current data on COVID-19 financial relief efforts from March to present, including the number of loan extensions, emergency loans made, and U.S. Small Business Administration Paycheck Protection Program (PPP) loans facilitated (with total dollar amounts for each). They can also include the number of fees the credit union has waived.

The League knows many credit unions display the industry’s philosophical difference routinely when they have an opportunity to meet with state leaders. The League wants to make sure the industry speaks with one voice to Sacramento as credit union leaders educate them on the harmful impact of proposed legislation.

SBA Issues Two Interim Final Rules
On May 22, the SBA and Treasury Department issued two interim final rules (IFRs) providing guidance to help PPP borrowers prepare and submit loan forgiveness applications as provided for in Section 1106 of the CARES Act; help PPP participating lenders who will be making the loan forgiveness decisions; and inform borrowers and lenders of SBA's process for reviewing PPP loan applications and PPP loan forgiveness applications. Read a synopsis here.

Guidance for Reopening Your Credit Union
While there are many reopening strategies being shared with financial institutions, the California and Nevada Credit Union Leagues wanted to offer one that is particularly well thought-out from CUNA Mutual’s Risk and Compliance Solutions division entitled “Rise Above Your Risk: Branch Reopening Playbook.” Feel free to use it as a resource as your credit union incorporates local requirements coming from your state’s officials, as well as federal requirements.

A credit union in Michigan has also released a three-part comprehensive guide. The "Returning to Work with Confidence Leader Guide" can assist credit union executives and managers, and the "Returning to Work with Confidence COVID-19 Operating Strategy Guide" can help educate staff. Additionally, the "Re-entry Plan" slide presentation includes expectations, strategies, priorities, requirements and procedures for any credit union to consider.

Also, technology solutions and payments firm Jack Henry & Associations has released a helpful "Return to the Office Guide" that credit unions can glean from.

NCUA on LID: Qualification of Military Personnel
On May 7, the National Credit Union Administration announced it was updating and improving its approach to determining whether a credit union qualifies for the low-income designation by fully considering military personnel. The NCUA has released Letter to Credit Unions (LCU) 20-CU-16 to provide guidance on how the agency will account for military personnel with Army/Air Post Office (APO) or Fleet Post Office (FPO) mailing addresses in their geocoding process used to determine low-income status.

The new methodology will be applied on a go-forward basis. However, credit unions who do not want to wait until the next normal cycle for this analysis to occur may contact the Office of Credit Union Resources and Expansion (CURE) to arrange the submission of a new AIRES download file. The LCU also provides alternative methods credit unions may choose to use to account for military members who do not have an APO or FPO mailing address.

NV Employers: Guidance from Governor and OSHA
At this time, Nevada has not adopted any specific inclusion of COVID-19 as an occupational disease in statute or administration. Additionally, there has not been any specific regulation or guidance released by Governor Steve Sisolak’s Office or the Nevada Division of Industrial Relations (DIR), the entity that oversees worker’s compensation regulations in the state, relating to COVID-19 claims.

On May 7, Sisolak issued guidance for Phase One Reopening in Directive 018 (Message from the League May 12, 2020).  Section 9 of the directive reads: “All employers must take proactive measures to ensure compliance with the social distancing and sanitation guidelines. All employers shall require employees who interact with the public to wear face coverings, to the maximum extent possible, and shall abide by all other guidelines promulgated by the Nevada State Occupational Safety and Health Administration (NV OSHA).” Additionally, Section 10 of the directive requires employers to “adopt measures that meet or exceed the standards promulgated by NV OSHA to minimize the risk of spread of COVID-19.” Section 10 also encourages businesses to permit “work from home” where possible.

As mandated by Section 8 of Directive 018, Nevada OSHA released updated guidance for Essential Businesses & Phase 1 Businesses on May 8. The guidance includes requirements for all general operations, proper social distancing, and additional resources for employers to refer to if necessary.

Loan Modifications Tip Sheet
The Leagues have compiled a three-page Troubled Debt Restructure — Accounting for Loan Modifications tip sheet for credit unions navigating compliance of mortgage forbearances under Sections 4013 and 4021 of the CARES Act.
 
Topics include TDR accounting under Section 4013 versus not under Section 4013; reporting past-due loans to credit reporting agencies under Section 4021; and reporting delinquent loans on call reports. We’ve also included sample reporting guidelines in a table format for CARES Act Section 4013 scenarios and non-CARES Act Section 4013 scenarios.
 
Credit unions should also consult with their own accounting practitioner regarding accounting for loan modifications.

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