Steps to Help Rebuild Areas Affected by Hurricane Opal
The Federal Deposit Insurance Corporation has announced a series of steps intended to
facilitate the process of rebuilding the areas of Florida, Alabama and Georgia damaged by
Hurricane Opal. As noted in the attached guidelines, the FDIC is encouraging banks it
regulates to work constructively with borrowers who are experiencing difficulties due to
conditions beyond their control. The FDIC guidelines suggest that extending repayment
terms, restructuring existing loans or easing terms for new loans, if done in a manner
consistent with sound banking practices, can both contribute to the health of the
community and serve the long-term interests of the lending institution. The guidelines
also address other types of regulatory relief.
For guidance on these and related matters, please contact the FDIC's Atlanta Regional
Office at (404) 817-1300.
Nicholas J. Ketcha Jr.
Distribution: Selected FDIC-Supervised Banks (Commercial and Savings)
SUPERVISORY PRACTICES REGARDING DEPOSITORY INSTITUTIONS AND BORROWERS
AFFECTED BY HURRICANE DAMAGE ON THE GULF COAST
The Federal Deposit Insurance Corporation recognizes the serious impact of Hurricane
Opal on the operations of financial institutions in Florida, Alabama and Georgia and will
provide regulatory assistance to institutions subject to its supervision. These
initiatives are being taken to provide regulatory relief and facilitate recovery. The FDIC
encourages depository institutions in the affected disaster area to meet the financial
services needs of their communities.
Lending. Lenders should work constructively with borrowers in communities
affected by the hurricane. The agency realizes that the effects of such natural disasters
on local businesses and individuals are often transitory, and that prudent efforts to
adjust or alter terms on existing loans in areas affected by the hurricane should not be
subject to examiner criticism. The FDIC in supervising institutions impacted by the
disaster will take into consideration the unusual circumstances they face. The agency
recognizes that efforts to work with borrowers in communities under stress can be
consistent with safe and sound banking practices as well as in the public interest.
Loan Documentation. The FDIC reminds lenders of its program on documentation of
loans to small and medium-sized businesses and farms. If an institution has adequate
capital and is rated 1 or 2, it may designate a basket of loans that examiners will
evaluate solely on the basis of performance and will be exempt from criticism for
documentation. The program also extends to certain 3-rated institutions. Lenders may
discuss the details of the policy with the Atlanta regional office.
Reporting Requirements. Institutions affected by the hurricane should notify the
Atlanta regional office if they expect a delay in filing their quarterly Reports of Income
and Condition (Call Reports), or other reports. The FDIC will take into consideration any
causes beyond the control of a reporting institution in considering how long a delay in
filing can be accepted.
Publishing Requirements. The agency understands that the hurricane may affect
compliance with publishing and other requirements for branch closings, relocations and
temporary facilities under various laws and regulations. Institutions that have
hurricane-related difficulties in complying with any publishing or other requirements
should contact the Atlanta regional office.
Consumer Laws. Regulation Z provides consumers an option to waive or modify the
three-day rescission period when a "bona fide personal financial emergency"
exists. To exercise this option, the consumer must provide the lender with a statement
describing the emergency in accordance with the regulation.
For guidance on these and related matters, please contact the Atlanta regional
office at (404) 817-1300.