Hawaii storm damage prompts amended disaster area, guidance

Banks in Hawaii are urged to work constructively with borrowers experiencing difficulties beyond their control because of damage caused by severe weather in the state, where a federal disaster declaration was amended June 27 for selected areas.

In a financial institution letter (FIL 35-2018) issued Tuesday, the Federal Deposit Insurance Corp. (FDIC) said a May 8 disaster area declaration for areas of the 50th state had been amended. The agency said additional disaster designations may be made after damage assessments are completed in the affected areas.

That original disaster declaration was made in the wake of severe storms, flooding, landslides and mudslides that caused significant property damage in areas of Hawaii from April 13 through April 16.

The deposit insurer said a current list of designated areas is available at www.fema.gov.

“Extending repayment terms, restructuring existing loans, or easing terms for new loans, if done in a manner consistent with sound banking practices, can contribute to the health of the local community and serve the long-term interests of the lending institution,” the FDIC stated in its letter.

The agency also noted that banks may receive favorable Community Reinvestment Act (CRA) consideration for community development loans, investments, and services in support of disaster recovery. The FDIC said it would also consider regulatory relief from certain filing and publishing requirements.

The storm disaster amendments are in addition to guidance offered last month by the FDIC to insured institutions to facilitate recovery in areas of Hawaii affected by the eruption of Kilauea Volcano, which began on May 3 and continues.

FIL-35-2018 Regulatory Relief: Guidance to Help Financial Institutions and Facilitate Recovery in Areas of Hawaii Affected by Severe Storms, Flooding, Landslides and Mudslides

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