SR 17-14:

Interagency Supervisory Examiner Guidance for Institutions Affected by a Major Disaster



SR 17-14
December 15, 2017



Interagency Supervisory Examiner Guidance for Institutions Affected by a Major Disaster

Applicability: This guidance applies to financial institutions directly affected by an event that results in a Presidential declaration of a major disaster. The guidance also applies to institutions that may be located outside the disaster area, but have loans or investments to individuals located in the disaster area.

The Federal Reserve and the other federal financial institutions regulatory agencies,1 in consultation with the Conference of State Bank Supervisors, have issued the attached examiner guidance to highlight the supervisory practices to be followed after a major disaster.2 The supervisory approach described in the guidance provides examiners flexibility to conduct supervisory activities and formulate their supervisory responses, considering the issues confronting institutions affected by a major disaster.

The interagency guidance describes factors that examiners should consider when assessing the financial condition of a supervised institution affected by a major disaster. In addition to providing information on assessing the various ratings components, the guidance directs examiners to review management's effectiveness in addressing the immediate aftermath of the disaster as well as longer-term changes to an institution's business markets and strategy. In assessing a financial institution's management of problems related to a major disaster, examiners should consider the institution's asset size, complexity, and risk profile. Examiners should also distinguish problems caused by the financial institution's management and those caused by a major disaster.

In implementing the guidance, the Federal Reserve recognizes that each financial institution affected by a major disaster will appropriately need to focus on recovery efforts associated with its own staff and facilities. The Federal Reserve, as necessary, will reschedule examinations (consistent with statutory requirements), increase reliance on off-site monitoring, and consider requests to extend the time to file Call Reports and other regulatory reports.

The Federal Reserve also recognizes that major disasters and their aftermath may adversely affect asset quality. Examiners should consider the increased amount of time needed for a financial institution to evaluate the effect of the disaster on the ability of borrowers to repay, assess the condition of collateral, or determine insurance proceeds in comparison to pre-disaster operations. Importantly, examiners should not criticize institutions' efforts to prudently work with their borrowers, even though those efforts may result in some individual loans being adversely classified.

The interagency guidance directly applies only to insured depository institutions and branches and agencies of foreign banking organizations. However, examiners should apply the same principles, as appropriate, to other institutions affected by a major disaster that are supervised by the Federal Reserve, including bank holding companies, savings and loan holding companies, and Edge Act and agreement corporations.

Reserve Banks should distribute this letter to appropriate supervisory and examination staff and to supervised institutions when a major disaster affects them. For questions related to this guidance, please contact Kwayne Jennings, Manager, Firm Oversight, at (202) 452-3088; and Rebecca Aldenderfer, Supervisory Financial Analyst, Regional Bank Supervision, at (202) 452-3160. In addition, questions may be sent via the Board's public website.3

signed by
Maryann F. Hunter
Deputy Director
Division of
Supervision and Regulation

  1. The other federal financial institution regulatory agencies include: the Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and the National Credit Union Administration. Return to text
  2. Under section 401(a) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 12 U.S.C. 5170(a), the President may declare that a major disaster exists in a state. A "major disaster" is defined as any natural catastrophe (including any hurricane, tornado, storm, high water, wind driven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, or drought), or, regardless of cause, any fire, flood, or explosion, in any part of the United States, which in the determination of the President causes damage of sufficient severity and magnitude to warrant major federal disaster assistance to supplement the efforts and available resources of states, local governments, and disaster relief organizations in alleviating the damage, loss, hardship, or suffering caused thereby, 12 U.S.C. 5122(2). A "state" means any state of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands, 12 U.S.C. 5122(4). Return to text
  3. See Return to text
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Last Update: December 15, 2017