WASHINGTON (MNI) – The following is the text of a joint statement
released Wednesday by Federal and state bank regulators regarding
financial institutions affected by the Deepwater Horizon oil spill:

The federal financial institution regulatory agencies and the state
supervisors (collectively, the “regulators”) are issuing this statement
to assist financial institutions and their customers being affected by
the explosion and oil spill related to the Deepwater Horizon Mobile
Offshore Drilling Unit in the Gulf of Mexico (Gulf Oil Spill).

The regulators encourage financial institutions to work with their
customers and consider measures to assist borrowers affected by this
situation and its subsequent impact on local communities. Substantial
business disruption and damage to businesses along the Gulf Coast Region
have occurred. In response to this disaster, financial institutions can
take measures to meet the critical financial needs of their customers
and their communities.

Efforts taken by financial institutions to work with their
borrowers and customers in affected communities, if conducted in a
reasonable and prudent manner, are consistent with safe and sound
banking practice. In this regard, the regulators encourage institutions
to consider alternatives for customers who can demonstrate they are
affected by the disaster; such alternatives may include:

– Temporarily waiving late payment charges, ATM fees, and penalties
for early withdrawal of savings;

– Expediting lending decisions when possible, consistent with
safety and soundness;

– Extending or restructuring borrower debt obligations in
anticipation of the receipt of funds based on claims the borrower may
have filed with BP; and

– Easing credit terms or fees for loans to certain borrowers,
consistent with prudent banking practice.

These measures could help customers recover financially and be
better positioned to honor their obligations. In the affected areas,
these efforts can contribute to the health of the local community and
the long-term interests of the institution and its customers. Giving
consideration to the terms of any modification or workout agreement,
examiners will expect institutions to appropriately recognize credit
losses as soon as a loss can be reasonably estimated.

Moreover, examiners will expect an institution to preserve the
integrity of its internal loan grading methodology and maintain
appropriate accrual status and reserves on affected credits.

Consistent with the regulators’ longstanding practice in assessing
the financial condition of institutions directly affected by natural and
other disasters, examiners will consider the unusual circumstances banks
and credit unions in affected areas may have with respect to
safety-and-soundness issues in determining the appropriate supervisory
response.

If significant declines in an affected institution’s capital ratios
have occurred or are projected, examiners will consider whether the
institution’s board of directors has developed a satisfactory capital
restoration plan that provides for capital augmentation in a timely
manner.

The regulators are committed to working with the industry to
respond to issues that arise in the aftermath of the Gulf Oil Spill and
to minimize disruption and burden on banks and credit unions in affected
areas.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MGU$$$,MMUFE$,MK$$$$]