FDIC to Banks: Work With Borrowers Impacted by Hurricane Milton

Federal regulators are encouraging banks and financial institutions to work with borrowers impacted by Hurricane Milton.

The Federal Deposit Insurance Corp. (FDIC) and other agencies and regulators issued an advisory Tuesday (Oct. 15) encouraging financial institutions in areas affected by the storm to work with customers in those areas.

“Prudent efforts to adjust or alter terms on existing loans in affected areas are supported by the agencies and should not be subject to examiner criticism,” the statement said.

“In accordance with U.S. generally accepted accounting principles, institutions should individually evaluate modifications of existing loans to determine whether they represent troubled debt restructurings or modifications to borrowers experiencing financial difficulty, as applicable.”

The agencies also encourage banks to monitor municipal securities and loans affected by Hurricane Milton, recognizing that local government projects might be negatively impacted by the disaster. The FDIC says it encourages “institutions to engage in appropriate monitoring and take prudent efforts to stabilize such investments.”

The statement was issued by the FDIC, Federal Reserve, Florida Office of Financial Regulation, National Credit Union Administration and Office of the Comptroller of the Currency.

The agencies also say that state and federal regulators are prepared to expedite requests by banks to set up temporary facilities, and advise financial institutions to contact regulators if the storm is preventing them from complying with publishing or regulatory reporting requirements.

Lastly, the statement notes that financial institutions may receive Community Reinvestment Act 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.”

The advisory comes days after the White House warned against price gouging in areas affected by Milton and the earlier Hurricane Helene.

It’s also happening at a time when big banks and neobanks are competing for the business of lower income consumers, as PYMNTS wrote earlier this month.

“Digital banks garnered a 47% share of new account openings in the first half of 2023, up from 36% in 2020,” that report said.

“Traditional banks’ strategy, to capture some share of new account openings again, rests on building out a physical footprint that has been extant for decades — this time building branches where they’d not been before — which opens up the competition for lower-income households on a new front.”