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ALEXANDRIA, Va.-NCUA recently provided all the credit unions it regulates with the same guidance given to examiners with regard to evaluating credit unions impacted by Hurricane Katrina. NCUA enclosed in a Letter to Credit Unions (06-CU-01) the Supervisory Letter all Federal Financial Institutions Examination Council member regulators and Alabama, Louisiana, and Mississippi state supervisory authorities issued to their respective examiners. It emphasizes, “This guidance also applies to examinations of institutions that may be located outside the disaster area, but have loans or investments to individuals or entities located in the disaster area.” “Hurricane Katrina had a devastating effect on the U.S. Gulf Coast region that will continue to affect the business activities of the financial institutions serving this area for the foreseeable future,” the letter read. “Some of these institutions may face significant loan quality issues caused by business failures, interruptions of borrowers’ income streams, increases in borrowers’ operating costs, the loss of jobs, and uninsured or underinsured collateral damage. Further, as a result of the significant loss in their tax and revenue base, state and local governments face major challenges in paying their obligations, which could adversely affect financial institutions with large investments in county/parish and municipal securities and loans.” Examiners will continue to assign CAMEL codes and consideration will be given in any supervisory response.

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