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Banks learn a lot in months after Katrina

Cash on the line as plans made for hurricane season

Banks in Mississippi are using the lesson of Hurricane Katrina in preparing for the next hurricane season in a way that assures their customers have access to cash needed to evacuate and be prepared for the after-storm economy.

Chevis Swetman, president and CEO, People’s Bank, Biloxi, said because of what happened after Katrina with credit card machines not working due to electricity and phone lines being down, having adequate cash on hand for a hurricane is one of the best precautions that can be taken.

“If you are going to leave out of town, we say take a lot of extra cash,” Swetman said. “Because of that, we want to make sure our ATMs along the evacuation routes are filled with cash.”

Getting out earlier

One difference from last year is that a lot of people who lived in what they thought were secure homes are now living in FEMA trailers. Now there is an assumption that if a hurricane is in the Gulf of Mexico and the Mississippi Gulf Coast is in the projected path, people will leave early.

“We don’t think you will have to worry about people leaving at the last minute,” Swetman said. “We assume that residents, including our employees, are going to leave much sooner. We are looking at downsizing some of our branch operations, and might have to consolidate branches and have only one or two branches open per county. We will probably draw back to a narrower footprint. We are trying to anticipate what strain this will have on our manpower so we can adequately take care of customer needs while we are trying to evacuate.”

Last year, for the first time ever, People’s Bank sandbagged its operations center. After seeing water flooding down Lameuse Street, they were very glad they had done so. The sand bags did a good job keeping water out of the building. Now sandbagging is part of the plan. A dike has been build around the main office generator, and they are also hardening their other facilities.

“We have a number of generators ordered for our other branches that did not flood,” he said. “We also have some portable generators in case some branches flood so we can get them electricity to help with cleanup and restoration.”

Hancock Bank has been making significant investments in technology upgrades including its 24-hour call center and online banking.

“We have upgraded the technology such that all of our banking systems including the 24-hour call center and online banking are operational before the storm strikes, and within four hours after a direct hit from a storm,” said Paul Maxwell, corporate communications manager, Hancock Bank. “We already had this in place before Katrina, but we have enhanced it even more so in that we have established redundant operating centers in remote areas across the four-state market because, of course, we have branches from New Orleans to Tallahassee. We have in place backup teams of essential operation personnel that can activate redundant operating centers at least 72 hours before the anticipated landfall in a Hancock market.”

Hancock Bank is planning special “lighthouse branches” in each coastal county featuring a generator designed to support essential banking functions if power should fail. Like all sorts of businesses, communications were very difficult after the storm with satellite based networks providing the most reliable communications. Essential Hancock Bank employees will be provided with satellite phones in the event of an anticipated hurricane strike. The bank also has pre arranged contracts for delivery of emergency supplies such as water, food, ice and fuel. Even if communications are down, supplies will be delivered.

About 10% of Hancock Bank employees lost everything they owned in Katrina. Yet they showed up to work within 24 hours after the storm passed.

“One of the things that we learned is just how resilient the people of the area are,” Maxwell said. “We already knew we had a strong team of associates, but that was reinforced to see that kind of spirit. Really and truly, our associates are the keys to our recovery and our success following a storm.”

Making sure adequate cash is available to customers is also critical. Maxwell said the bank operates under the “last to close, first to open” philosophy to meet the needs of customers while assuring the safety and welfare of employees.

“We have established relationships with local civil defense and law enforcement so we can make prudent decisions,” he said.

Ronnie Smith, AmSouth’s Mississippi Area Executive, said AmSouth was pleased with how well their recovery plan worked after Katrina.

“We also learned that we need to encourage customers to make arrangements in advance so that their financial house is in order even if they have to evacuate,” Smith said. “That could mean signing up for free Internet banking, so they can pay bills and transfer funds from anywhere, or switching to e-statements, so they can get their account statements even if the post office isn’t delivering mail.”

Overlooking financial preparedness

Smith said something many people forget about when preparing for a storm is financial preparedness, gathering the documents and records they will need in case they have to evacuate. “Hurricane Financial Preparedness” tips are posted on www.amsouth.com, and a Natural Disaster Financial Preparedness Kit will be available at all of their coastal branches by the beginning of June. These kits are folders with a checklist of important documents to pack, and pockets to store them in.

At Regions Bank, lessons were learned last year that will impact how they plan for the future. But, overall, the bank’s disaster plan worked well, said Sonya Smith, corporate communications manager, Regions Bank

“We aren’t really doing anything differently than before,” Smith said. “Overall we responded very quickly and appropriate to that disaster. We have always had a crisis communications team in place that meets frequently. Because our team was so well repaired when Katrina came through last fall, we were able to respond immediately. When the storm forms, the team comes together, tracks the storm, and makes plans for operations, associates and customers.”

Chris Axton, business continuity manager for BancorpSouth in Tupelo, said their worst case scenario planning did not include such a long-term impact to locations as far north as the Jackson division. Axton said their disaster hotline did not deliver the services they had planned, generators to supplement power were not as accessible as they had anticipated, and widespread fuel shortages impacted several areas of the recovery effort

“Access to disaster areas south of Jackson was greatly restricted,” Axton said. “This impacted our ability to retrieve deposited items as quickly as we had planned. The well-being of personnel in heavily impacted areas was difficult to obtain as many evacuated and non-evacuated employees did not have a reliable means for checking in to headquarters. The widespread effects of the storm increased the volume of impacted customers causing a delay in detailing lost collateral and loans in progress.”

Looking ahead to this year’s hurricane season, scenarios were developed to determine the impact to their corporate headquarters should an event of this magnitude effect their Tupelo locations.

“A five-phase strategic direction was developed for the business continuity program to enhance BancorpSouth’s overall resiliency,” Axton said. “An additional continuity coordinator was hired to interface with the corporate department and end-user recovery needs. A 24/7/365 toll-free employee hotline was established with each employee receiving procedures for use and a ‘hot card’ to keep with them at all times. Arrangements were made to allow human resources to access the information gathered through the hotline.

“All new procedures executed during Katrina and developed since Katrina will be added to the Hurricane Preparation and Response Plan and will be distributed in mid-May to all locations,” Axton said. “On-site meetings between corporate and local recovery teams will be held on the Gulf Coast in May to discuss enhancements to our recoverability and discuss any outstanding issues.”

Backup communications

Nancy Lestrade, vice president of BancorpSouth, Biloxi, said an important improvement has been putting in place a plan of alternate communications in the event of another complete breakdown of phone lines and cell towers.

“In the event of another emergency, the Gulf Coast headquarters will be the Cedar Lake Branch,” Lestrade said. “Facts considered in choosing this location is that it is close to the interstate, was high and dry after Katrina, and is in middle of our market. In Gulfport, Cowan Road will be the primary branch and in Ocean Springs, Ocean Springs Main will be the alternate.”

Employees will be instructed to report to the branch closest to them. They will be able to view updates on a communications board. The bank has coordinated the Emergency Operation Center line.

“Hopefully this will give each employee a consistent message from local management,” Lestrade said. “During the past storm, inconsistent information was given to employees. We will pre-stock supplies vital to our staff in an offsite storage facility. These will include water, non-perishable food, paper products, basic medical supplies, batteries, radios.”

Plans also call for securing fuel contracts that will provide gas and diesel for vehicles and generators. And BancorpSouth will survey their employees prior to the storm and ask questions concerning their evacuation plans, multiple contact numbers, plans to return, directions to their homes, and issues that would keep them out of town for an extended period of time.

Trustmark Corp.’s Business Continuity Department, along with other critical departments, has integrated various contingency plans from other agencies such as the American Banker’s Association, Mississippi Department of Homeland Security, Mississippi Emergency Management Agency (MEMA), FEMA, the Office of the Comptroller of the Currency and the Federal Reserve.

“Trustmark’s business continuity plans are constantly updated with contact lists and management responsibilities in order to provide awareness to our disaster mitigation plan,” said Harold Hardin, director of business continuity planning, Trustmark Corp. “Because Katrina was such a major regional event and affected every type of business, we are more attuned to the need for planning for essential food, fuel and other required services on a short term basis. Among the lessons learned, one in particular is that in a regional event such as Katrina, managing people is just as critical as the operation of a physical plant. When the branches are able to open, getting our associates to the assigned work locations becomes a priority.”

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.


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