Significant Damage To CUs Already Being Uncovered

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Insurers and regulators are still sorting through the damage from Hurricane Katrina, but one analyst is conceding that when the waters recede, it will be significant.

"We are still very early in the assessment phase, but we already know damages are far more substantial than we expected," according to Mike Retelle, claims manager of CUNA Mutual Group's Credit Union Protection Solutions Group.

CUNA Mutual Group reported more than 1,500 credit union locations, representing approximately 600 credit unions, are located in the four-state area battered by Katrina.

"Our preliminary estimates are about half of these locations sustained some type of damage, up to and including total destruction," Retelle offered.

CMG said it had no new numbers at press time, but added that it had confirmed the various types of coverages for 100% of the effected credit unions, and it had already begun to pay out on some of those claims. The firm has also offered IT assistance to help get CU's back online and has delivered supplies, including generators, to credit unions in the beleaguered region, as well.

"Virtually all of them carry our CUPOP bond, which is our protection package," explained CMG spokesperson Phil Tschudy. "We have more than two-dozen of our people out there, plus another hundred or so in auto and other fields. We staged our people before the storm so that they could go in immediately. About the only place we haven't been able to get into are some restricted areas in New Orleans."

The Mississippi CU Association continues to work to contact and help credit unions in some of the hardest-hit areas.

"Although we have heard from almost all Mississippi credit unions, communication continues to be difficult due to massive power and phone outages throughout the impacted region," the league said.

An RV Full Of Supplies

MCUA CEO Charles Elliott drove a recreational vehicle loaded with emergency supplies to the affected areas along with MCUA Vice President Sonny Green. Among the areas they visited were Hattiesburg and the Gulf Coast. The RV and supplies were donated by Merrimack Valley FCU of North Andover, Mass.

According to the league, CUs from Central Mississippi south were impacted by the hurricane. Credit unions in the Meridian and Jackson areas sustained wind damage and extended power and phone line outages.

"Almost every credit union in the Biloxi, Pascagoula, Gulfport and other gulf coast areas have reported some type of damage to their buildings and branches," the league reported. "Jackson County Employees FCU suffered a complete loss of their building and have been operating out of the back of a pick-up truck in an effort to continue to provide service to their members. Singing River FCU, based in Moss Point, has offered Jackson County Employees FCU space for operations until other arrangements can be made. Singing River FCU also sustained damage at two of their three branches."

In addition to the physical damage to credit unions, many credit union staff and volunteer homes have either been completely destroyed or are uninhabitable due to severe wind and water damage. MCUA is working to compile a list of these employees and volunteers in order to provide them assistance.

As search and rescue teams began using force to continue the evacuation of New Orleans, there were still more than a dozen credit unions in the area that had not been contacted. "There are still some credit unions that we haven't heard from," according to the Louisiana CU League's Alicia Blanda. "NCUA, the state regulator, CUNA Mutual Group and the league are sharing information, so in some cases, where we haven't heard from a credit union, one of them has, and we have the information that way. But there are still about a dozen that none of us have been in contact with."

Bayou FCU has offered office space to the Louisiana league, whose own offices in Harahan, La., are still in an evacuation area. League staff have been working out of the league's service centers in Baton Rouge and Shreveport, as well as out of the home of one of its staffers who lives in Baton Rouge.

Creative Service

A number of credit unions in the battered region have found creative ways to get up and running to serve their members. While many of them are operating out of space donated to them by credit unions that were spared the full wrath of the storm, still others have had to think outside of the branch.

"We've got one credit union that actually spent three days operating out of a truck," said Charles Elliott, president of the Mississippi CU League.

But finding space out of which to operate was only half the battle: then there's the liquidity issue. "We can't get cash from the Louisiana Fed, so we've had to look elsewhere for liquidity," Elliott told The Credit Union Journal.

Southwest Corporate FCU, Plano, Texas, said it is working to get cash delivered to credit unions and noted most Louisiana CUs likely will get their cash from the Houston branch of the Federal Reserve Bank of Dallas.

But in some cases, the actual delivery of that cash is the bigger issue.

"Once we've got it, the question is how to get it to the people who need it. We may end up sticking it in the trunks of cars and driving it down," said Eliott, only half-jokingly.

Of course, that assumes you can get gas.

"One of the biggest problems with evacuees here right now is the lack of gas," Blanda reported. "The prices really aren't all that bad, but finding gas is a problem. Most of the credit unions and banks are running out of temporary locations, so people are in fairly good shape in terms of being able to get their money, but they're having a hard time buying any gas with it."

Siphoning Gas

And Blanda would know-she was temporarily stranded in Jackson, Miss., when she was trying to make her way back to Baton Rouge from Tifton, Ga., where she evacuated before the storm hit.

The plan was to get as far as Jackson, Miss., and then have part of the family caravan head down to Gulfport to assess damage to Blanda's mother's home, and then head towards Baton, Rouge.

"We had to siphon the gas from all the vehicles to put into the one vehicle that was going down to Gulfport," she related. "Then we were stuck in Jackson because we couldn't get more gas."

But eventually, supplies came in, and after a short-by Katrina standards-45-minute wait in line, the Blandas were able to gas up and head to Louisiana.

Easily the brightest sport for the Louisiana League is that it finally discovered the fate of the one staffer in the New Orleans area who, at last report, had decided not to evacuate before the storm and had not been heard from for about a week and a half.

Gayle Boudreaux, a veteran bookkeeper at LCUL, chose to ride out the storm in a house she owns with her ex-husband in River Ridge in Jefferson Parish, just a few miles west of beleaguered New Orleans (see related story, page 1).

"We were really worried about her," Blanda related. "We just kept hoping that she was OK but just unable to contact us."

'Incredibly Lucky'

And that was exactly the case. Boudreaux's house suffered some flooding, and the electricity was still out at press time, but with phone service restored, she was able to contact the league to let them know she was all right.

Blanda said she believed that Boudreaux would be allowed to remain in her home, though Jefferson Parish officials are not recommending it.

Jefferson Parish is one of the areas surrounding New Orleans that has allowed residents to return to their homes just long enough to assess the damage and pick up some belongings. Blanda, like so many other evacuees, was anxious to see how her house fared.

"We were incredibly lucky," she told The Credit Union Journal. "We have some water damage from a window that blew out, but we had no flood waters in the house because we're located on the west bank of the [Mississippi] river."

Blanda said she was thrilled to be able to check out her house but was unable to assess the damage in any of the neighboring parishes. "The National Guard has the area locked down neighborhood by neighborhood, so all you can do is get in to your own home and get right back out," she related. "I'm so glad the National Guard is here. You're able to get in to your house until 6 p.m., and then you have to get out. Technically, you could choose to stay, but if you do, you're told you are on your own, no 911 service, nothing."

Incredibly, Blanda's mother, who lives in Gulfport, Miss., which was practically flattened by Katrina, has already moved back into her home.

"Her house had some damage. There's a giant hole in the roof where the chimney used to be," she described. "But her neighborhood is sort of on a hill, and she had just put new siding on the house, and I think that helped, because her house is the least damaged in the whole neighborhood."

The Alabama CU League reported minimal damage to credit unions in this state, but the league's foundation has created a disaster relief fund for CU members and employees who were impacted by Katrina.

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