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The federal financial institution regulators, including the NCUA, and state regulators Tuesday issued interagency guidance directing examiners to consider how the coronavirus pandemic has impacted institutions as they assess safety and soundness.

"Examiners will consider the unique, evolving, and potentially long-term nature of the issues confronting institutions and exercise appropriate flexibility in their supervisory response," the guidance states. "Stresses caused by COVID-19 can adversely impact an institution’s financial condition and operational capabilities, even when institution management has appropriate governance and risk management systems in place to identify, monitor, and control risk."

The guidance indicates that examiners "will continue to assess institutions in accordance with existing agency policies and procedures and may provide supervisory feedback, or downgrade an institution's composite or component ratings, when conditions have deteriorated."

It further outlines:

• overall supervisory assessment;
• effectiveness of institution's assessment of risk;
• CAMELS or ROCA component ratings, including capital adequacy, asset quality and more; and
• risk management of a branch or agency of an FBO.

The regulators have released several interagency statements to guide financial institutions through the coronavirus pandemic. The NCUA last week issued a Letter to Credit Unions detailing its multi-phase approach to resuming on-site operations and conducting voluntary on-site examinations.

NAFCU is working closely with the NCUA to identify areas of relief for credit unions throughout the coronavirus pandemic and will continue to advocate that the agency do more to ensure institutions can meet the urgent needs of members.