WASHINGTON–Five federal regulatory agencies, including NCUA, and respective state regulators have issued a statement saying they recognize the serious impact of Hurricane Laura and the California wildfires on the customers/members and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision.
The agencies said they are encouraging institutions operating in the affected areas to meet the financial services needs of their communities. Along with NCUA, the other agencies issuing the statement include the Office of the Comptroller of the Currency, the Federal Reserve, the FDIC and state regulators.
The statement touched on several issues, including:
Lending
“Financial institutions should work constructively with borrowers in communities affected by Hurricane Laura and the California wildfires. Prudent efforts to adjust or alter terms on existing loans in affected areas should not be subject to examiner criticism. Modifications of existing loans should be evaluated individually to determine whether they represent troubled debt restructurings,” the statement reads. “This evaluation should be based on the facts and circumstances of each borrower and loan, which requires judgment, as not all modifications will result in a troubled debt restructurings. In supervising institutions affected by these disasters, the agencies will consider the unusual circumstances these institutions face. The agencies recognize that efforts to work with borrowers in communities under stress can be consistent with safe-and-sound practices as well as in the public interest.”
Temporary Facilities
The agencies said they understand that many financial institutions face staffing, power, telecommunications, and other challenges in re-opening facilities after Hurricane Laura and the California wildfires. In cases in which operational challenges persist, the primary federal and/or state regulator will expedite, as appropriate, any request to operate temporary facilities to provide more convenient availability of services to those affected by these disasters. In most cases, a telephone notice to the primary federal and/or state regulator will suffice initially to start the approval process, with necessary written notification being submitted shortly thereafter, the agencies said.
Publishing Requirements
The agencies understand that the damage caused by Hurricane Laura and California wildfires may affect compliance with publishing and other requirements for branch closings, relocations, and temporary facilities under various laws and regulations. Institutions experiencing disaster-related difficulties in complying with any publishing or other requirements should contact their primary federal and/or state regulator, the agencies said.
Regulatory Reporting Requirements
Institutions affected by Hurricane Laura and California wildfires that expect to encounter difficulty meeting the agencies’ reporting requirements should contact their primary federal and/or state regulator to discuss their situation. The agencies do not expect to assess penalties or take other supervisory action against institutions that take reasonable and prudent steps to comply with the agencies’ regulatory reporting requirements if those institutions are unable to fully satisfy those requirements because of these disasters, according to the statement.
The agencies said their staffs stand ready to work with affected institutions that may be experiencing problems fulfilling their reporting responsibilities, taking into account each institution’s particular circumstances, including the status of its reporting and recordkeeping systems and the condition of its underlying financial records.
Community Reinvestment Act (CRA)
Financial institutions may receive CRA consideration for community development loans, investments, or services that revitalize or stabilize federally designated disaster areas in their assessment areas or in the states or regions that include their assessment areas.
Flood Insurance Comment
Separately, the five agencies also issued a joint statement they are extending the to revise the Interagency Questions and Answers Regarding Flood Insurance until Nov. 3.
The agencies said they are extending the comment period because of the extent of the revisions proposed by the agencies and in light of the challenges associated with the COVID-19 pandemic.
“The extension will allow interested parties additional time to analyze the issues and to prepare comments,” the agencies said.
The proposed Interagency Questions and Answers, which were issued in July 2020, provide information addressing technical flood insurance-related compliance issues.
The previous deadline for comments was Sept. 4.