When, Not If, Disaster Strikes

Texas’ HomeTown Bank CEO credits having an up-to-date disaster plan with its recovery efforts after Hurricane Harvey closed two branches.

By Toni Lapp, Senior Editor

If the recent hurricanes taught bankers anything, it is the importance of preparedness. Disasters don’t plan ahead, but banks can and should. On Texas’s Gulf Coast, Jimmy Rasmussen, president and CEO of HomeTown Bank, said lessons learned during Hurricanes Katrina and Ike impressed upon him the need to have an action plan. Every spring, the bank revisits the plan and updates it if gaps are discovered.

Water damage from Hurricane Harvey destroyed all of the furniture in the HomeTown Bank’s League City office.

But Hurricane Harvey revealed some gaps that just couldn’t be anticipated, said Rasmussen, even by a bank with headquarters on the barrier island of Galveston. He certainly didn’t expect 50 inches of rain to flood two HomeTown locations. Those branches remain closed for the foreseeable future, and the employees have been reassigned to nearby locations.

Nor did he expect floodwaters to reach the safety-deposit boxes in those branches. (Fortunately, signage advised customers that the boxes weren’t waterproof.)

Lastly, he didn’t expect to have so many employees — 12 — be displaced from flooded homes, as well as three directors.

HomeTown’s action plan includes all employees’ contact information and instructs on how communication will be disseminated in the event of power failure. Rasmussen noted that cell towers were not always reliable, and therefore, social media became a key channel for communication in the aftermath of Harvey.

The action plan also calls for making contact with customers. Rasmussen notes that loan officers contacted all the borrowers in their portfolios to find out how they had weathered the storm and determine if the bank could be of assistance. A newer loan officer who did not yet have much of a portfolio was redirected, using his time to coordinate grant applications that could assist several employees who had been displaced from their homes.

This HomeTown Bank branch in Friendswood, Texas, was also affected by Harvey’s surge water. Even after waters receded, the high-water mark can be seen on the desks.

Another lesson learned from Hurricane Ike was the power of collaboration — even among competing banks. Rasmussen said that when the 2008 storm flooded Galveston, the mayor brought all local bankers together, and said that the best way banks could help the community get back on its feet was by extending financing to help local businesses reopen.

This time around, Rasmussen said that area banks are offering gap loans — 180-day duration loans at a 4 percent APR until the borrowers can collect insurance funds or FEMA assistance.

Lastly, Rasmussen credits disaster-preparedness sessions he attended at a Independent Community Bankers of America convention with reinforcing the need to have generators — fueled with natural gas. He advises finding generators with enough power to run the entire facility — including air conditioning — and not just banking equipment. Doing so enabled HomeTown to be able to distribute bottled water to residents, he said.

“You can be an oasis in your community,” he added.






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