WASHINGTON—NCUA has joined with the Office of the Comptroller of the Currency, Federal Reserve and the FDIC in issuing separate joint statements encouraging institutions operating in areas affected by two natural disasters, Hurricane Ida and California’s ongoing wildfires, to “meet the financial services needs of their communities.”
While there were separate statements related to the hurricane and the wildfires, the text was largely the same. Meeting the needs of members/customers, the agencies stated, includes addressing the following issues:
Lending
The agencies said they are encouraging financial institutions to work constructively with borrowers in communities affected by Hurricane Ida/wildfires.
“Prudent efforts to adjust or alter terms on existing loans in affected areas should not be subject to examiner criticism,” the statement reads. “Institutions should individually evaluate modifications of existing loans to determine whether they represent troubled debt restructurings according to U.S. generally accepted accounting principles. Institutions should consider the facts and circumstances of each borrower and loan, and apply judgment, as not all modifications will result in a troubled debt restructuring.”
In supervising institutions affected by Hurricane Ida/wildfires the agencies said they 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,” the statement added.
Temporary Facilities
The agencies said they understand that many financial institutions face staffing, power, telecommunications, and other challenges in re-opening facilities after Hurricane Ida/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 Hurricane Ida,” the joint statement reads. “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.”
Publishing Requirements
Noting damage caused by Hurricane Ida/wildfires may affect compliance with publishing and other requirements for branch closings, relocations, and temporary facilities under various laws and regulations, the agencies said any institution encountering “difficulties” complying with any publishing or other requirements should contact their primary federal and/or state regulator.
Regulatory Reporting Requirements
Institutions affected by Hurricane Ida/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 statement notes.
“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 Hurricane Ida (and the wildfires),” the statement reads
A complete list of the affected disaster areas can be found at https://www.fema.gov/disasters.
Specific To Wildfires
In the statement related to wildfires, where South Lake Tahoe in California is now under an evacuation order and where a branch of Sierra Central Credit Union is located, the agencies, which include the Conference of State Bank Supervisors, also addressed:
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, the agencies said.
Investments
The agencies said institutions are being encouraged to monitor municipal securities and loans affected by California wildfires. The agencies realize local government projects may be negatively affected by the disaster and encourage institutions to engage in appropriate monitoring and take prudent efforts to stabilize such investments.