FALL 2020 RESOURCE Interim Commissioner, Rhoshunda Kelly
The Examiner Tips, Tools & Insight from the Field
TOP QUESTIONS AMONG EXAMINERS
Exam Findings-Total Banks Cited (December 31, 2019-June 30, 2020)
• What is the overall impact of Federal COVID-19 (pandemic) lending programs (PPP, Main Street, etc.)? • Is bank management appropriately identifying pandemic-related risk with respect to lending, operations, and any other affected areas of the bank? • Does management develop risk mitigating strategies to address identified pandemic risks? • Has the bank adapted to virtual operations due to employees and customers being offsite? • Is staffing adequate to cover pandemic-related absences? • Have employee absences caused issues with internal controls and ensuring the proper separation of duties? • Are appropriate back-up employees in place with respect to operations, Bank Secrecy Act, Information Technology, and any other pertinent areas? • How are Board meetings being conducted, and is the Board adequately informed of all pertinent operational issues and risks? • As unemployment and Federal consumer assistance payments end, what will be the effect on loan portfolios? • Are banks maintaining appropriate reserves to reflect pandemic impacts? • Have appraisal practices been impacted due to the pandemic, and are bankers aware of current pandemic-related appraisal guidance? TAKE-AWAYS FROM MAY 2020-COVID-19 SURVEY (Survey sent every 6 months) CREDIT QUALITY & PRACTICES • Most banks indicated no changes to the bank’s lending strategy or underwriting practices. • Banks that did make changes included tightening standards on certain industries, establishing new parameters for extensions and renewals, and limiting new business to well established customers. • Bankers viewed the following as the most affected industry or customer types:
BSA COMPLIANCE LOAN POLICY CREDIT ADMIN. LIQUIDITY MANAGEMENT STRATEGIC PLANNING SUCCESSION PLANNING WEAK EARNINGS SEPARATION OF DUTIES EXCEPTION TRACKING OTHER REAL ESTATE… POOR ASSET QUALITY ALLL METHODOLOGY
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Violations-Total Banks Cited ( December 31, 2019-June 30, 2020) AppraisalViolations
BSAViolations
FDICAppendixAtoSubpart AofPart365 MS Code of 1972 Section 81-5-1(4) MS Code of 1972 Section 91-13-6 FRBRegulationO
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MS Code of 1972 Section 81-1-91
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Hospitality
Retail
Restaurants
Banks with a Composite 3 or Worse
CRE/ rental properties Entertainment/ gaming
Oil & gas Churches
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Auto dealers
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• Past due loans for Mississippi chartered banks have remained relatively consistent over the past several years, with a slight uptick noted recently. • Almost every bank indicated no changes to LOC usage, and no unusual large draws on borrowing lines were noted. • Bankers noted little to no increase in charge-offs, and the majority of banks had not made any additional provisions to their ALLL.
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June 30, 2017 June 30, 2020
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