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Subsequent Events Related to the COVID-19 Pandemic | 3 Months Ended
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Mar. 31, 2020
Subsequent Events Related to the COVID-19 Pandemic |
Subsequent Events Related to the COVID-19 Pandemic | 20. Subsequent Events Related to the COVID-19 Pandemic Paycheck Protection Program The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020, and provides over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic. The CARES Act authorized the Small Business Administration (SBA) to temporarily guarantee loans under a new 7(a) program called the Paycheck Protection Program (PPP). As a qualified SBA lender, the Company was automatically authorized to originate PPP loans. An eligible business can apply for a PPP loan up to the greater of: (1) 2.5 times its average monthly “payroll costs;” or (2) $10.0 million. PPP loans will have: (a) an interest rate of 1.0%, (b) a two-year loan term to maturity; and (c) principal and interest payments deferred for six months from the date of disbursement. The SBA will guarantee 100% of the PPP loans made to eligible borrowers. The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be reduced by the loan forgiveness amount under the PPP so long as employee and compensation levels of the business are maintained and 75% of the loan proceeds are used for payroll expenses, with the remaining 25% of the loan proceeds used for other qualifying expenses. As of May 4, 2020, the Company has obtained SBA approval for approximately 400 PPP loans totaling in excess of $61 million. These loans will generate approximately $1.9 million in fee income for the Company. Loan Modifications Related to COVID-19 Under section 4013 of the CARES Act, loans less than 30 days past due as of December 31, 2019 will be considered current for COVID-19 modifications. A financial institution can then suspend the requirements under GAAP for loan modifications related to COVID-19 that would otherwise be categorized as a troubled debt restructuring (TDR), and suspend any determination of a loan modified as a result of COVID-19 as being a TDR, including the requirement to determine impairment for accounting purposes. Financial institutions wishing to utilize this authority must make a policy election, which applies to any COVID-19 modification made between March 1, 2020 and the earlier of either December 31, 2020 or the 60 th day after the end of the COVID-19 national emergency. Similarly, the Financial Accounting Standards Board has confirmed that short-term modifications made on a good-faith basis in response to COVID-19 to loan customers who were current prior to any relief are not TDRs. In response to the COVID-19 pandemic, the Company has begun to prudently execute loan modifications for existing loan customers. The following table presents information regarding loans for which payment relief has been requested, as of May 4, 2020, related to COVID-19.
|  |  | Balance |  | % of Outstanding |
|  |  | (in thousands) |  | Loans |
CRE/Commercial |  | $ | 201,658 |  | 31.2 | %
Home Equity/Consumer |  |  | 5,551 |  | 5.5 |
Residential Mortgage |  |  | 4,033 |  | 3.1 |
Total |  | $ | 211,242 |  | 24.1 |
Requested modifications primarily consist of the deferral of principal and/or interest payments for a period of three to six months. The following table presents the composition of the types of payment relief that have been granted.
|  | Number |  |  | Balance
|  | of Loans |  |  | (in thousands)
Type of Payment Relief |  |  |  |  |
Interest only payments |  | 84 |  | $ | 96,163
Complete payment deferrals |  | 304 |  |  | 115,079
Total |  | 388 |  | $ | 211,242

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -URI http://asc.fasb.org/topic&trid=2122774 + Details
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