Regulators granted credit unions and banks extra time to file their call reports amid the COVID-19 pandemic — a move that credit union trade groups say provided welcome flexibility for an industry working overtime to serve members and grant small business loans under the government's Paycheck Protection Program.

The industry's regulator, the National Credit Union Administration, extended the deadline for federally insured credit unions that file call reports on Form 5300 to May 26 from April 26. More than 90% of credit unions had filed call reports as of May 15, according to an S&P Global Market Intelligence analysis.

As of May 15, the largest that had not yet filed was State Employees' CU, which was the U.S. credit union that had the second-highest asset total at year-end 2019 with $41.38 billion. State Employees' declined to comment. The other credit unions that used the grace period were far smaller, averaging just $250 million in assets.

Even credit unions that did not use the extension appreciated the flexibility at a time when they are dealing with the pandemic while trying to serve members and issue loans, trade group representatives said.

"Everyone is practicing social distancing and abiding by the CDC's guidelines, which means a lot of credit union staff are working from home or isolating themselves," said Ann Kossachev, director of regulatory affairs at the National Association of Federally-Insured Credit Unions, an industry trade group. "So it may be the case that the staff member who was responsible for putting together a lot of the call report data and information might be in a rural area where broadband Internet is not readily available. And that could pose a significant challenge to uploading that information and putting it together in a timely fashion."

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Credit Union National Association Chief Economist Mike Schenk noted that roughly 40% of the industry operates with five or fewer full-time equivalent employees. "Staff is under a lot of pressure. Many of the branches are closed and people have been shuffled around to do various tasks that they're not used to doing," he said.

One such task is issuing loans under the Paycheck Protection Program, which offers forgivable Small Business Administration loans as part of a sweeping coronavirus relief law. The government added $310 billion to the PPP after the initial authorization of $350 billion was allocated in about two weeks during April.

"It's just a crisis atmosphere in some respects and to take time away from trying to serve people and help them get through the mess to file the call report would have been a challenge for some," said Schenk, who is also chairman of Summit CU, a credit union with $3.88 billion in assets based in Wisconsin. Summit, one of the largest credit union SBA lenders in the state before the pandemic, had 1.5 FTE employees dedicated to that small business loan process, but the total increased to about 12 FTE employees after the PPP got underway, Schenk said.

"These are people that mostly weren't doing anything related to SBA lending or in some cases not even business lending," he said. "It was a real time-intensive, resource-intensive operation for us to do this. We had people basically working around the clock for three days."

That meant pulling people off of their normal duties, including employees normally helping to produce call reports.

"We are really in uncharted waters," Schenk said. "Just taking loan applications and getting signatures and so forth has drive-up facilities backed up in many cases for long periods of time just to process those loans that people need."

Historical precedent

For banks, the call report deadline is sacrosanct and industry observers describe the grace period as an unprecedented step. But in the credit union industry, the NCUA has provided additional time to complete regulatory reporting in the past due to disasters like hurricanes, a spokesperson for the regulator noted. The NCUA has also previously extended filing deadlines as a result of regulatory changes and system upgrades.

In normal times, credit unions filing late face penalties based on the size of the institutions, how late they file and whether they have missed the deadline previously. But filing late is relatively uncommon. According to Schenk, just six small credit unions filed late in the second quarter of 2019 and all faced penalties of less than $1,000.