Reference: FIL-18-2026
Official publication: Read the full FIL-18-2026 on the agency website
In response to the severe winter storms that recently impacted various regions of Tennessee, the Federal Deposit Insurance Corporation (FDIC) has issued formal guidance providing supervisory relief to affected financial institutions. This move is designed to facilitate a smoother recovery process by acknowledging the operational and financial stresses placed upon both banks and their customers during and after major weather events. Regulatory agencies traditionally offer such relief to ensure that the immediate needs of the community—ranging from cash access to loan modifications—can be met without the looming threat of technical regulatory non-compliance. However, while the FDIC encourages flexibility, it maintains that all actions must be consistent with safe and sound banking practices, creating a nuanced environment for compliance officers and executive leadership to navigate in the coming months.
Executive Summary
- Regulatory Flexibility: The FDIC is encouraging institutions to work constructively with borrowers who may be experiencing temporary financial hardships due to the storm, including those who may face challenges in making timely loan payments.
- CRA Consideration: Financial institutions may receive favorable Community Reinvestment Act (CRA) consideration for providing specialized disaster-related banking services or community development activities that help revitalize or stabilize affected areas.
- Operational Adjustments: Provisions have been made for the temporary closure of offices or the relocation of services without the standard prior notification requirements, provided the institution notifies the FDIC as soon as possible.
- Documentation Requirements: The regulator acknowledges that displaced customers may lack standard identification or documentation; institutions are encouraged to exercise reasonable judgment in verifying identities under these extraordinary circumstances.
- Appraisal Exceptions: In certain federally declared disaster areas, the FDIC may provide temporary exceptions to appraisal requirements for real estate-related transactions, though specific thresholds and conditions apply.
What the Regulator Issued
The FDIC released a Financial Institution Letter (FIL) titled “Supervisory Relief to Help Financial Institutions and Facilitate Recovery in Areas of Tennessee Affected by Severe Winter Storm.” This document serves as the primary guidance for state-member and non-member banks operating within the designated disaster zones. The official issuance can be reviewed at the following URL: https://www.fdic.gov/news/financial-institution-letters/2026/supervisory-relief-help-financial-institutions-and-1. The guidance emphasizes that the FDIC’s primary goal is to minimize the regulatory burden on institutions while they focus on restoring operations and assisting their communities. The letter underscores that supervisory efforts will be adjusted to account for the unique challenges posed by the winter storm, including potential delays in filing required reports or maintaining standard documentation levels for new and existing accounts.
Who Is Impacted
The impact of this supervisory relief extends to several distinct groups within the financial ecosystem. Primarily, it affects any FDIC-insured depository institution that has its main office, branches, or significant lending concentrations in the Tennessee counties identified in the federal disaster declaration. Beyond the institutions themselves, the relief is intended to benefit individuals and small businesses who have suffered property damage, loss of income, or operational disruptions due to the severe weather. This includes mortgage holders, small business owners with lines of credit, and agricultural borrowers whose livestock or infrastructure may have been affected. Additionally, compliance officers and internal auditors must understand these changes to ensure that internal controls are appropriately adjusted during the recovery period, preventing the misclassification of storm-related loan modifications as troubled debt restructurings where appropriate under current accounting standards.
Key Dates and Deadlines
The specific relief period is generally tied to the date of the federal disaster declaration and continues for a duration specified by the FDIC, often lasting 12 to 24 months for certain provisions like CRA credit. Regarding the filing of Consolidated Reports of Condition and Income (Call Reports), the FDIC has indicated that institutions struggling to meet deadlines due to storm-related disruptions should contact their regional office. While no blanket extension for all Tennessee banks has been issued, individual extensions are being considered on a case-by-case basis for those most severely impacted. Institutions should document the specific dates of their operational disruptions to justify any delays in regulatory filings.
Practical Action Checklist
- Identify Affected Borrowers: Conduct a comprehensive review of the loan portfolio to identify borrowers located in the primary and secondary disaster zones.
- Update Disaster Protocols: Activate and document the use of the institution’s Disaster Recovery Plan, ensuring that all temporary deviations from standard policy are recorded.
- Establish Communication Channels: Proactively reach out to customers via digital channels, mail, or temporary signage to explain available relief options, such as fee waivers or payment deferrals.
- Document Fee Waivers: Keep detailed records of any waived ATM fees, late payment charges, or overdraft fees provided as storm relief for future regulatory review.
- Review Identity Verification Procedures: Brief front-line staff on the flexibility allowed under BSA/AML guidelines for displaced persons who may have lost primary identification documents.
- Monitor CRA Activities: Track all staff hours, donations, and specialized lending products dedicated to the recovery effort to ensure full credit is captured during the next CRA examination.
- Notify the FDIC of Office Changes: If any branch or ATM location remains closed or has been temporarily moved, submit the required notification to the FDIC regional office immediately.
- Analyze Loan Classifications: Work with accounting teams to ensure that storm-related loan modifications are evaluated correctly under the latest accounting standards for loan modifications.
- Assess Property Collateral: For new or existing loans, determine if properties serving as collateral have sustained damage and update internal valuation records accordingly.
- Engage with Local Government: Monitor FEMA updates and state-level disaster assistance programs to coordinate private-sector banking relief with public-sector aid.
- Maintain Detailed Audit Trails: Ensure that every decision to grant supervisory relief to a specific borrower is backed by a clear rationale that references the FDIC’s guidance.
- Staff Safety and Training: Ensure staff are trained on how to handle emotional or distressed customers while maintaining the security of the institution’s physical and digital assets.
Open Questions / Watch Items
Despite the clarity provided by the FDIC, several issues remain unresolved and require ongoing monitoring. One primary concern is the potential for long-term credit quality degradation if the economic recovery in specific Tennessee counties is slower than anticipated. Institutions should monitor whether the FDIC will extend the duration of the relief if weather-related damage proves to be more systemic. Another watch item is the interaction between this state-specific relief and broader national regulatory changes that may be occurring simultaneously. There is also the question of how secondary market investors will view loans modified under these disaster relief provisions, which could impact liquidity for certain institutions. Finally, banks should watch for any supplemental guidance regarding specific industries, such as agriculture or local manufacturing, that may have unique recovery timelines.
My Law Tampa publishes this memorandum as a service to the legal and financial community to highlight significant regulatory developments. Our objective is to provide clear, actionable information that assists institutions in maintaining compliance while supporting their local economies during challenging periods.
This memorandum is provided for informational purposes only and does not constitute legal advice. The information contained herein is based on regulatory releases available at the time of publication and should not be relied upon as a substitute for professional legal counsel. No attorney-client relationship is formed by the publication or receipt of this document.
Source Materials
- Official publication: FIL-18-2026
- Regulator archive: FDIC memo archive
- Memo library: browse the full regulatory memo archive
- Related memo: FDIC Issues Supervisory Relief for Mississippi Financial Institutions Following Severe Winter Storms
- Related memo: FDIC FIL-16-2026: Supervisory Relief for Washington Disaster-Affected Institutions
- Related memo: FDIC Revises Interagency Model Risk Management Guidance
