Encouraging institutions to alter loan terms, easing of regulatory reporting requirements, and other supervisory practices in response to the impact of the Texas winter storms were outlined Monday by the federal financial institution regulators in a joint letter.
The letter was in response to the impact of the bitter cold temperatures spawned by the storms, which led to widespread power outages and water shortages throughout the state. It was released jointly by the Federal Reserve, Federal Deposit Insurance Corp. (FDIC), National Credit Union Administration (NCUA), Office of the Comptroller of the Currency (OCC), and state regulators.
According to the letter, the agencies “recognize the serious impact of Texas Winter Storms on the customers and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision. The agencies encourage institutions operating in the affected areas to meet the financial services needs of their communities.”
Among the actions on supervisory actions the agencies outlined are:
Lending: The agencies encourage financial institutions to work constructively with borrowers in communities affected by Texas Winter Storms. Prudent efforts to adjust or alter terms on existing loans in affected areas should not be subject to examiner criticism. 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 Texas Winter Storms, 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 understand that many financial institutions face staffing, power, telecommunications, and other challenges in re-opening facilities after Texas Winter Storms. 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 Texas Winter Storms.
Publishing requirements: The agencies understand that the damage caused by Texas Winter Storms 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.
Regulatory reporting requirements: Institutions affected by Texas Winter Storms 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 them because of Texas Winter Storms.
“The agencies’ 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,” the letter states.
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. For additional information, refer to the Interagency Questions and Answers Regarding Community Reinvestment at https://www.ffiec.gov/cra/qnadoc.htm.
Investments: Institutions are encouraged to monitor municipal securities and loans affected by Texas Winter Storms. 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.