FDIC Advisory Committee on 

Community Banking 

July 28, 2020 

Supervision Update 
FDIC 

 

 

 

Loan Modifications 

Interagency Statement on Loan Modifications by Financial Institutions 

Working with Customers Affected by the Coronavirus 

 Encourages institutions to work constructively with borrowers 

affected by COVID-19. 

 Notifies institutions that the agencies will not criticize supervised 

institutions for prudent loan modifications. 

2 See FIL-36-2020, issued April 7, 2020 
FDIC 

 

 

 

 

Loan Modifications 

Interagency Statement on Loan Modifications by Financial Institutions 

Working with Customers Affected by the Coronavirus 

 Describes accounting for COVID-19 related loan modifications, 

including clarifying the interaction between accounting 

standards and the temporary relief provided by Section 4013 of 

the CARES Act. 

 Provides supervisory views on past-due and nonaccrual 

regulatory reporting and regulatory capital considerations. 

3 See FIL-36-2020, issued April 7, 2020 
FDIC 

 

 

 

 

 

Accounting for Loan Modifications 

Financial institutions may elect to 

account for an eligible loan 

modification under 

Section 4013 of the CARES Act 

Related to COVID-19 

Current as of 12/31/2019 

Executed during applicable period* 

or Interagency Statement** 

Related to COVID-19 

Current at time of modification program 

Short-term (e.g., six months) 

*Applicable period: Between March 1, 2020 and earlier of 1) 60 days after the date of termination of the 

National Emergency or 2) December 31, 2020 

**Interagency statement is an interpretation of ASC Subtopic 310-40, Receivables—Troubled Debt 

4 Restructurings by Creditors, in the context of COVID-19. 
 

 

 

 

Examination Considerations 

Pandemic Impacts 

Interagency Examiner Guidance for Assessing Safety and Soundness 

Considering the Effect of the COVID-19 Pandemic on Institutions 

 Issued to promote consistency and flexibility in the supervision 

and examination of institutions. 

 Acknowledges that stresses caused by COVID-19 can impact 

financial and operational condition even when management has 

appropriate governance and risk management systems in place 

to identify, monitor, and control risk. 

5 See FIL-64-2020, issued June 23, 2020 
 

 

 

 

Examination Considerations 

Pandemic Impacts 

Interagency Examiner Guidance for Assessing Safety and Soundness 

Considering the Effect of the COVID-19 Pandemic on Institutions 

 Instructs examiners to: 

• Consider the unique, evolving, and potentially long-term nature of the 

issues confronting institutions and exercise flexibility in their supervisory 

response. 

• Assess institutions in accordance with existing policies and procedures 

and provide feedback, or downgrade ratings, when conditions have 

deteriorated. 

6 
 

 

 

 

 

Examination Considerations 

Pandemic Impacts 

Interagency Examiner Guidance for Assessing Safety and Soundness 

Considering the Effect of the COVID-19 Pandemic on Institutions 

 Instructs examiners to: 

• Consider whether institution management has managed risk 

appropriately, including taking appropriate actions in response to the 

pandemic. 

• Consider the challenges involved in assessing risk in real time given the 

level of information available and the stage of local economic recovery. 

• Consider the institution’s asset size, complexity, risk profile, and business 

focus of customers. 

7 
FDIC 

 

 

 

 

Community Bank Leverage Ratio 

Temporary Changes to the Community Bank Leverage Ratio Framework 

 On April 23, 2020, the agencies published in the Federal Register 

two interim final rules that make temporary changes to the CBLR 

(interim final rules) 

 The interim final rules take effect in the second quarter of 2020 

8 See FIL-35-2020, issued April 6, 2020 
FDIC 

 

 

 

 

 

 

Community Bank Leverage Ratio 

Temporary Changes to the Community Bank Leverage Ratio Framework 

 The interim final rules make two key changes: 

• CBLR will be 8 percent beginning in the second quarter and for the 

remainder of calendar year 2020, 8.5 percent for calendar year 2021, and 

9 percent thereafter 

• Maintains a two-quarter grace period for a qualifying community banking 

organization 

 Implements section 4012 of the Coronavirus Aid, Relief, and 

Economic Security Act of 2020 

9 See FIL-35-2020, issued April 6, 2020 
FDIC 

 

 

Community Bank Leverage Ratio Schedule of CBLR Requirements 

Calendar Year CBLR Leverage Ratio under 

the Applicable Grace 

Period 

2020 8 percent 7 percent 

2021 8.5 percent 7.5 percent 

2022 9 percent 8 percent 

10 See FIL-35-2020, issued April 6, 2020 
FDIC 

 

 

 

 

 

 

Appraisals 

Appraisal and Evaluation Deferral Interim Final Rule (IFR) 

 The IFR defers for 120 days the agencies’ appraisal and 

evaluation requirement for commercial and residential real 

estate loans (except ADC). 

 Agencies provided this temporary relief to allow regulated 

institutions to extend financing to creditworthy borrowers 

quickly due to economic strains caused by COVID-19. 

 These temporary provisions will expire on December 31, 2020, 

unless extended by the federal banking agencies. 

11 See FIL-43-2020, issued April 14, 2020 
FDIC 

 

 

 

 

 

Appraisals 

Interagency Statement on Appraisals and Evaluations for Real Estate 

Related Financial Transactions Affected by COVID-19 

 Outlines existing flexibilities in industry appraisal standards and 

agencies’ appraisal regulations on property inspections and 

appraisal exceptions. 

 Describes temporary changes to Fannie Mae and Freddie Mac 

appraisal standards that can assist lenders during this 

challenging time. 

12 See FIL-43-2020, issued April 14, 2020 
FDIC 

 

 

 

 

 

 

Regulatory Reporting Revisions Related to COVID-19 

Call Report Revisions for June 30, 2020 

 Includes revisions associated with several interim final rules and 

a final rule issued by one or all of the agencies in response to the 

impact on the financial markets and strains on the U.S. economy 

as a result of COVID-19. 

 New data items related to these rulemakings and the CARES Act 

have been added to the Call Report this quarter. 

See FIL-69-2020, issued July 10, 2020 13 
FDIC 

 

 

 

 

Regulatory Reporting Revisions Related to COVID-19 

Call Report Revisions for June 30, 2020 

 Institutions should refer to the separate standalone June 2020 

COVID-19 Related Supplemental Instructions addressing these 

revisions. 

 In addition, a number of Call Report revisions are taking effect for 

the June 30, 2020, report date to implement certain recent 

changes to the agencies’ capital rule (FIL-10-2020). 

See FIL-69-2020, issued July 10, 2020 

14 See FIL-10-2020, issued February 18, 2020 
FDIC 

 

 

 

 

 

 

 

Regulatory Reporting Revisions Related to COVID-19 

New items on Call Report Schedule RC-C, Part I, Loans and Leases, and 

Schedule RC-M, Memoranda, to collect data on: 

 Eligible loan modifications under Section 4013, Temporary Relief 

from Troubled Debt Restructurings, of the 2020 CARES Act, with 

these items collected on a confidential basis; 

 U.S. Small Business Administration (SBA) Paycheck Protection 

Program (PPP) loans and borrowings under the Federal Reserve 

PPP Liquidity Facility (PPPLF); and 

 Holdings of assets purchased under the Money Market Mutual 

Fund Liquidity Facility (MMLF). 

15 
FDIC 

 

 

 

See FIL-58-2020, issued May 20, 2020

Interagency Guidance for Responsible Small-Dollar Loans 

Interagency Lending Principles for Offering 

Responsible Small-Dollar Loans 

 Issued May 20, 2020 

 Agencies encourage institutions to offer responsible small-dollar 

credit products. 

 Institutions should refer to the separate guidance addressing 

small-dollar loans to customers affected by COVID-19. 

See FIL-58-2020, issued May 20, 2020 

16 See FIL-26-2020, issued March 26, 2020 
FDIC 

 

 

 

 

 

 

See FIL-58-2020, issued May 20, 2020

Interagency Guidance for Responsible Small-Dollar Loans 

Interagency Lending Principles for Offering 

Responsible Small-Dollar Loans 

 Principles include: 

• Loan products are consistent with safe and sound banking, treat 

customers fairly, and comply with applicable laws and regulations. 

• Financial institutions effectively manage the risks associated with the 

products they offer, including credit, operational, and compliance. 

• Loan products are underwritten based on prudent policies and practices 

governing the amounts borrowed, frequency of borrowing, and 

repayment requirements. 

See FIL-26-2020, issued March 26, 2020 

17 See FIL-58-2020, issued May 20, 2020 
Questions?