Day Pitney remains committed to providing quality legal counsel, while protecting our clients and employees, and transforming our communities into more just, equal and equitable spaces. For more information, please visit our COVID-19 Resource Center | Racial Justice and Equity Task Force.
On June 23, the federal financial institution regulatory agencies (the Federal Deposit Insurance Corporation, the Federal Reserve Board, the Office of the Comptroller of the Currency and the National Credit Union Administration) jointly issued examiner guidance to outline the supervisory principles for assessing the safety and soundness of institutions given the ongoing impact of the COVID-19 pandemic.
The guidance provides that examiners should consider the unique, evolving and potentially long-term nature of the COVID-19 issues confronting institutions and exercise appropriate flexibility in their examination findings. Examiners may provide supervisory feedback or downgrade an institution's composite or component ratings when conditions have deteriorated.
When examiners are conducting their supervisory assessment, the guidance requires them to consider whether institution management has handled risk adequately, including taking appropriate actions in response to stresses caused by COVID-19 impacts.
Banking agencies have issued numerous statements related to supervisory policy since the declaration of the COVID-19 national emergency. Appropriate actions taken by institutions in good-faith reliance on these statements within the applicable time frames described in the statements will not be subject to criticism or other supervisory action. It will be important for management to stay abreast of these policy statements and to take necessary actions to follow the guidance.
Among the other items addressed, the guidance indicates that examiners, when assessing management, will consider management's effectiveness in responding to the changes in the institution's business markets and whether the institution has addressed these issues in its longer-term business strategy.
In considering whether to take formal or informal enforcement action in response to pandemic-related issues, the examiners will consider whether an institution's management has planned appropriately for financial resiliency and continuity of operations, implemented prudent policies, and is pursuing a realistic resolution of the issues confronting the institution.
With regard to credit modifications, examiners will not criticize institutions for working with borrowers as part of a risk-mitigation strategy intended to improve existing loans, even if the restructured loans have or develop weaknesses that ultimately result in adverse credit classification. In assessing an institution's safety and soundness, examiners will not criticize management for engaging in prudent loan modifications and working with borrowers in a safe and sound manner.
As part of the institution's risk management assessment, examiners will evaluate management based on the reasonableness of management's response to the pandemic. As additional information becomes available, examiners expect management to update risk assessments, measure the effectiveness of the response and adjust as necessary.
If you have any questions regarding this guidance or any other bank regulatory issues, please reach out to any of the attorneys in Day Pitney's Financial Services Regulation practice group.
For more Day Pitney alerts and articles related to the impact of COVID-19, as well as information from other reliable sources, please visit our COVID-19 Resource Center.
COVID-19 DISCLAIMER: As you are aware, as a result of the COVID-19 pandemic, things are changing quickly and the effect, enforceability and interpretation of laws may be affected by future events. The material set forth in this document is not an unequivocal statement of law, but instead represents our best interpretation of where things stand as of the date of first publication. We have not attempted to address the potential impacts of all local, state and federal orders that may have been issued in response to the COVID-19 pandemic.
Day Pitney hosted its annual invitation-only Palm Beach Family Office Forum at the PGA National Resort and Spa.
On April 24, Francine Esposito and Laura Schuman delivered a Business & Legal Resources (BLR)'s webinar entitled "New Laws with Major Impact on Employers Operating in New Jersey Taking Effect: What You Need to Know to Comply."
Day Pitney Alert
VCV Digital Technology announced that it plans to become a publicly traded company via a business combination with Fortune Rise Acquisition Corporation (NASDAQ: FRLAW, FRLA and FRLAW), a special purpose acquisition corporation.
On January 6, 2022, 1st Constitution Bancorp and Lakeland Bancorp, Inc. completed a merger in which Lakeland acquired 1st Constitution, creating the fifth-largest bank headquartered in New Jersey.
Day Pitney LLP represented TriStruX LLC in its successful sale to Huron Capital, a middle-market private equity firm.
Day Pitney Press Release
New York partner Eliza Sporn Fromberg was featured in a Law360 article discussing the potential impact of the SEC's first enforcement action on crowdfunding portals.
Day Pitney Attorneys Alfred Marks and Michael Lane co-authored an article, "Spokeo, Inc. v. Robins: An Underutilized Defense Against Claims Brought Under Federal Consumer Finance Statutes," for The Banking Law Journal.
This website may use cookies, pixel tags and other passive tracking technologies, including Google Analytics, to improve functionality and performance. For more information, see our Privacy Policy. By using our website, you are consenting to our use of these tracking technologies. You can alter the configuration of your browser to refuse to accept cookies, but if you do so, it is possible that some areas of web sites that use cookies will not function properly when you view them. To learn more about how to delete and manage cookies, refer to the support instructions for each browser (e.g., see AllAboutCookies.org). You may locate Google Analytics' currently available opt-outs for the web here.
This website may use cookies, pixel tags and other passive tracking technologies, including Google Analytics, to improve functionality and performance. For more information, see our Privacy Policy. By using our website, you are consenting to our use of these tracking technologies. You can alter the configuration of your browser to refuse to accept cookies, but if you do so, it is possible that some areas of web sites that use cookies will not function properly when you view them. To learn more about how to delete and manage cookies, refer to the support instructions for each browser (e.g., see AllAboutCookies.org). You may locate Google Analytics' currently available opt-outs for the web here.