July 29, 2020                                                                                                      No copyright infringement intended
 
 
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PPP Loan-Forgiveness Platform Coming Aug. 10           
 
The Small Business Administration will launch a new platform for submitting Paycheck Protection Program loan-forgiveness applications and decisions to the agency. The PPP Forgiveness Platform will go live and begin accepting lender submissions on Monday, Aug. 10.
 
The Platform supports three methods of decision submission:
  1. Lenders may manually submit individual submissions,
  2. Lenders may connect via API to submit decisions, or
  3. Software providers may connect via API and submit decisions on a Lender's behalf
  SBA Procedural Notice 5000-20038 indicates that SBA has partnered with Goldschmitt-CRI to provide the platform to accept loan-forgiveness decisions, supporting documentation, and requests for forgiveness payments. Lenders will be allowed to authorize up to 10 additional users to access the platform to submit and monitor forgiveness requests.
 
All PPP Lender Authorizing Officials in the CAFS/ETRAN system will receive a welcome email from SBA ( PPPForgivenessRequests@SBA.gov) with instructions on how to access the new platform. Any official who does not receive a welcome email should contact SBA's PPP Lender Hotline at 833-572-0502 for instructions.
 
The procedural notice follows SBA's release of an information notice detailing assistance available under SBA's Economic Injury Disaster Loan Program, including advances and direct loans. That notice also alerts financial institutions to the potential for suspicious activity related to EIDL funds deposited into business or personal accounts.


 
Community Bank Earnings Decline?          
 
Community bank earnings could fall more than 50% in 2020 as credit costs spike. Fees from the Paycheck Protection Program, however, could help some institutions buck the trend.
 
Early reporters of second-quarter earnings have not disclosed much deterioration in credit quality yet, but they have signaled that more pain lies ahead. Credit costs should rise notably in the third and fourth quarters of 2020 as the extensive forbearance banks have provided ends and a number of borrowers find themselves unable to service their debts. This will require institutions to build reserves. Some community banks will be well-positioned for those increases, though, as they stand to earn sizable fees from PPP loans.
 
S&P Global Market Intelligence estimates that deferrals comprised 14.3% of community banks' loans at the end of the first quarter. The forbearance and unprecedented government stimulus serve as a short-term bridge over economic turmoil but will not prevent all stress. S&P assumes a significant portion of deferred loans will end up in nonperforming status once the six-month forbearance period provided by the CARES Act ends.
 
For community banks, defined as institutions with less than $10 billion in assets, S&P Global expects nonaccruals to jump to 2.24% of loans in 2020 from 0.63% in 2019 and for net-charge-offs to increase to 0.68% of average loans in the period, more than 3x the level reported in 2019.
 
Community banks provided $229 billion, or 44% of PPP loans, despite holding just 18% of the industry's loans at the end of the first quarter. Fees on the loans range from 1% to 5%, depending on the size of the loan, but Keefe Bruyette & Woods analysts reported in the late May a median fee rate of 3.0%, based on disclosures from nearly 200 banks. Assuming community banks earn 3% fees on their PPP loans, once the loans are forgiven, they could stand to earn $6.87 billion in fees, equating to 15.3% of the pre-provision net revenue in 2019.
 
 
Postal Banking Amendment             
 
There is strong opposition to a pending amendment to a 2021 spending bill that would fund a postal banking pilot program at the U.S. Postal Service. In a letter to House Rules Committee leaders, ICBA said postal banking in any form is an ill-advised idea fraught with unintended consequences.
 
ICBA said the financially challenged USPS has virtually no expertise in providing financial services and would merely introduce another tax-advantaged and lightly regulated entity into the marketplace. "We urge the House not to go down this highly controversial and potentially dangerous path," ICBA said.
 
ICBA and ACB has consistently opposed postal banking. In 2018 ICBA called on a Treasury Department task force to recommend prohibiting an expansion of banking services at USPS. The task force did so in a December 2018 report, noting that USPS has narrow expertise and capital limitations.

 
Garnishment Protections for Stimulus Payments         
 
The Senate passed legislation that would exempt Economic Impact Payments from court-ordered garnishments to pay creditors. The legislation would provide the federal stimulus payments with garnishment protections like those available to Social Security benefits. The bill must still pass the House and be signed into law.
 
 
Fed Maintains Pricing for 2021             
 
The Federal Reserve Board said it plans to maintain the current schedule of prices for most Federal Reserve Bank payment services in 2021 due to the COVID-19 pandemic. The Fed said that later this year it will issue final fee schedules, effective Jan. 2, 2021.
 
 
 
 
 
 
Compliance Event of the Year is On!
 
We know you are tired of staring at a computer. So are we! But, unfortunately, as we evaluate the situation on the ground, and the State of Arkansas expecting Covid-19 cases peaking in September, we have decided to cancel our in-person conference and instead offer the same great training virtually. Nothing is more important to us than your health and safety.

So, lock your calendars in - September 9 and 10

We have a special guest at this year's conference!