The federal financial institutions regulatory agencies and the Alabama, Louisiana, and Mississippi state supervisory authorities have developed the attached supervisory guidance to assist their examiners in the examination of regulated institutions affected by Hurricane Katrina.
The supervisory guidance outlines the factors that examiners should consider when assessing the condition of a state member bank affected by the hurricane. Examiners are expected to assess the true financial condition of the bank in accordance with current examination policies. While this may result in a lower composite rating, examiners retain flexibility in assigning the management rating, given this unprecedented disaster, and in determining an appropriate supervisory response. The supervisory response should be tailored to the management’s capabilities and efforts in resolving the institution’s problems, recognizing the extent to which weaknesses were caused by problems arising from the hurricane and its aftermath.
Examiners are reminded that additional guidance is available on the FFIEC Katrina webpage. This guidance has been organized in question and answer format by topic, including past due and nonaccrual reporting, payment deferral arrangements, temporary hardship programs for non-credit card retail lending, and treatment of municipal bond obligations. The agencies will continue to update these questions and answers as necessary.
Reserve Banks are asked to provide this supervisory guidance to appropriate supervision staff. Additional hurricane-related guidance is available on the Board’s Hurricane Katrina webpage. Questions should be directed to Molly Wassom, Associate Director, at (202) 452-2305 and Virginia Gibbs, Senior Supervisory Financial Analyst, at (202) 452-2521.