More banks than ever have disaster plans.

With all the hurricanes, floods, and earthquakes in the past three years, regulators have made disaster recovery an important compliance issue.

Next week, comment letters are due at the Treasury Department on how effective the federal banking agencies have been in the recent disasters. The department must produce a final report for Congress by next Feb. 12.

Under the Depository Institutions Disaster Relief Act of 1992, agencies can temporarily waive certain regulations if it would help banks recover. For example, an agency could make exceptions to appraisal rules or Truth-in-Lending requirements.

Since 1989, regulators have required banks to have a disaster recovery plan in place. Agencies said then that banks were lax in creating contingency plans, a factor that could threaten their safety and soundness.

But with the recent spate of disasters and examiners emphasizing recovery plans, more banks than ever have disaster strategies. And many institutions have turned to outside vendors for help.

Recovery plans focus on how to get the bank back into operating condition after a tire, flood, robbery, or other disaster. They are also designed to minimize loss, such as a plan to protect equipment or files.

Plans typically set up a chain of command, and include contact lists of customers and employees and maps of evacuation areas, all in advance of any problem.

Charles Gottas, chief executive of Systematic Savings, Springfield, Mo., said that when a disaster hits, "You're not going to have time to figure out who's going to do what."

In the past two years, Mr. Gottas' institution has experienced a robbery hostage situation and severe ice and water damage. He credits his plan, which he designed with the help of a guide published by St. Paul Fire and Marine Insurance Co., with getting the bank back to business.

Disaster recovery guides and computer software to help banks plan ahead are in greater demand then ever.

In the past two years, St. Paul Fire and Marine has sold 4,000 copies of its guide to banks. Recovery Management Inc., Littleton, Mass., has seen its disaster software company boom in the past few years. It now has 1,500 clients, 30% of which are banks.

Mark Avery, vice president of Recovery Management, said that when he started the company in 1982, he had to explain to banks what a disaster recovery plan was and why they would need it.

"Now, they need it not only because it is prudent, but because it is required," he said.

Business started picking up with the First Interstate Bank fire six years ago, then came Hurricane Andrew and the bombing of the World Trade Center. Recovery Management's clients now include Barnett Bank, Pittsburgh National Bank, and Boatmen's Bancshares.

Robert Driesch, loss control manager at St. Paul, said banks are better at disaster recovery planning than his other clients, which include hospitals and museums. St. Paul produces separate guides for different businesses.

"Bankers have a more proactive approach than other industries," Mr. Driesch said. "We no longer have to convince them it's a smart thing to do." However, not every bank is up to speed, said Mr. Avery of Recovery Management. One reason is that examiners are not known for strict enforcement of the requirement, he said.

"They are not going to close a bank because it doesn't have a contingency plan," Mr. Avery said.

Some bankers still point to a three-ring binder on a shelf as evidence of a plan when regulators come in, he said. "It's possible to fake out examiners," Mr. Avery said.

Dean Debuck, a spokesman for the Comptroller's office, said examiners ride the line between insisting banks have a viable plan in place and being realistic about the risk level of smaller banks. "We have to balance the cost and the risk," Mr. Debuck said.

The agency has 63 examiners, out of a total 2,500, who spend most of their time on disaster recovery, he said. The newest trend both Mr. Gottas and Mr. Avery have noticed is that examiners are now asking for practice demonstrations of disaster recovery plans.

One important thing to remember, said Mr. Avery, is to update the plan. Many banks that had workable plans have simply let them become outdated, he said.

Mr. Driesch also said it,s vital to keep a plan current. "Once you have it, test it," he said. "It's still a process."

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