Credit union regulator joins banking supervisors in disaster-response guidance for examiners

Issued in concert with federal banking regulators, a letter providing guidance for institutions affected by a major disaster – including hurricanes and flooding – has been published by the federal regulator of credit unions.

Overall, the guidance issued by the National Credit Union Administration (NCUA) outlines the practices examiners will follow in the assessing financial and operational conditions of credit unions that have been directly affected by an event which results in a presidential declaration of a major disasters – including hurricanes and flooding.

The guidance, NCUA stated, highlights the importance of examiner flexibility in addressing issues credit unions face, and the “critical need to accurately portray the financial and operating condition of those institutions.”

The guidance also encourages examiners to retain flexibility in their follow up supervisory plans, “given the unique and long-term nature of the problems these institutions face,” NCUA said.

The NCUA “Letter to Credit Unions” 17-CU-08 providing guidance is similar to the letter that was published last week by the Federal Deposit Insurance Corp. (FDIC), Office of the Comptroller of the Currency (OCC) and the Federal Reserve for banks and savings institutions.

In its letter, NCUA noted that “a significant number of credit unions have been impacted by major disasters in 2017, including severe hurricanes and record-breaking flooding in Texas, Florida, Georgia, Puerto Rico, and the U.S. Virgin Islands.

“The NCUA recognizes that disasters of this type present unique challenges for credit union management as you seek to mitigate the disaster’s impact on the health and stability of your institutions.”

The letter, NCUA stated, provides all federally insured credit unions with guidance given to the NCUA field staff concerning examinations of credit unions affected by a major disaster. Noting that the guidance was produced jointly by the four federal financial institution regulators, NCUA advised that it is formatted for the banking regulators’ CAMELS rating system. However, the credit union regulator added, the guidance applies equally to the NCUA CAMEL rating system.

Interagency Supervisory Guidance for Institutions Affected by a Major Disaster