OCC 97-5
 Subject: Working with Borrowers Affected by Recent Natural Disasters 
Description: Message to Bankers and Examiners


TO:  Chief Executive Officers of all National Banks, Department
         and Division Heads, and all Examining Personnel


PURPOSE

This issuance is intended to encourage bankers to work with
borrowers in communities affected by recent natural disasters,
including the recent floods, ice storms, and related disaster
conditions in the Western and Midwestern parts of the United
States.  The OCC recognizes that the effects of natural disasters
on local individuals and businesses are often temporary, and that
prudent efforts to adjust or alter terms on existing loans in
areas affected by the floods and related problems should not be
subject to examiner criticism.

POLICY

One of the principal objectives of the supervision by risk
approach is to achieve an accurate assessment of a bank's risk
management practices.   The assessment includes an evaluation of
how a bank identifies, monitors, manages, and controls risks when
a segment of its loan portfolio is affected by external factors,
such as a natural disaster.

The OCC recognizes that efforts by banks to work with borrowers
in communities under stress, if conducted in a reasonable manner,
are consistent with safe and sound banking practice, effective
risk management, and in the public interest.

Banks may, as part of effective risk management, choose to work
with borrowers by extending the terms of repayment or otherwise
restructuring the borrower's debt obligations.  Such cooperative
efforts can ease pressures on troubled borrowers, improve their
capacity to service debt, and strengthen the bank's ability to
collect on its loans.  Banks may also ease credit-extension terms
for new loans to certain borrowers, consistent with prudent
banking and risk management practices.  This will help such
borrowers recover their financial strength and place them in a
better position to service their debts.

With proper risk controls and management oversight, these steps
can contribute to the health of the local community and serve the
long-term interests of the bank as well.  Consistent with long-standing OCC practice, such efforts by lenders will not be
subject to examiner criticism, if carried out in a prudent
manner.

The OCC district office in San Francisco, (415) 545-5900, is the
point of contact for national banks in need of assistance in
dealing with customers affected by this current disaster in the
Western states.  For disaster assistance in Minnesota and areas
in the Midwest, please contact the OCC district office in Kansas
City at (816) 556-1800.

OTHER RELATED OCC RELEASES

The following banking and examining issuances contain additional
guidance for dealing with troubled loan situations:

Banking Circular 255 --  Troubled Loan Workouts and Loans to
                         Borrowers in Troubled Industries
Examining  Circular 222 -- Agricultural Loan Classification 
Banking Bulletin 93-12 -- Interagency Policy Statement on Credit
Availability
News Release 93-58 -- Federal Regulators Announce Additional
Credit Availability Initiatives.

Questions about this OCC bulletin, or any of the issuances listed
above, should be directed to the Office of the Chief National
Bank Examiner at (202) 874-5350.





                               
Eugene A. Ludwig
Comptroller of the Currency
Date: January 10, 1997