The trials and tribulations of Singing River and Navigator Federal Credit Unions in Mississippi have been well documented in The Credit Union Journal. This was not favoritism, but due to the fact that they were the only two credit unions an outsider could locate two weeks after Hurricane Katrina hit the region on Aug. 29, 2005.
Reaching the six-month point after the largest natural disaster in U.S. history, The Credit Union Journal spoke with CUs from flooded-out Pascagoula to simply-smashed Gulfport. Each has war stories of rising flood waters and destroyed homes, working long hours for weeks on end to ensure members had access to funds, and the huge influx of cash from FEMA and insurance payments. Some CU officials say they are moving cash out the door and others say they have too much in deposit; some ran special loan rates while others didn't feel the need.
Gulfport, Mississippi
As reported in the Hurricane Katrina special edition of The Credit Union Journal (Sept. 26, 2005), Gulfport was ransacked by Katrina. Memorial FCU Manager and 18-year board member Janice Patenotte feared the worst. With just 1,497 members and $6.5 million in assets, it operates out of Memorial Hospital where most of its members are employed. Patenotte had initially heard that the hospital was flooded, but later learned it had gotten lucky.
"We didn't have any damage to the credit union," Patenotte said. "The hospital had about $10 million in damage."
Memorial Hospital never shut down, she said, and had power throughout the disaster. However, the credit union didn't reopen until a week after the hurricane since Interstate 90 was closed and several bridges in the area were unstable or destroyed.
A constant theme throughout Gulf States credit unions is the explosion of car loans and deposits. Parked cars don't stand a chance against flood waters with CU officials reporting some member-families losing as many as three cars. In January 2005, Patenotte said outstanding loans were $2.9 million, but by January that piece of the portfolio had grown to $3.6 million with nearly 50 new car loans on the books. "For us that's a lot," Patenotte said.
Patenotte's deposits increased to $5.4-million from $4.9-million due to insurance and FEMA claims or members selling property after a home was destroyed by Katrina. While Mississippi CUs aren't facing a melting membership like New Orleans, Memorial FCU lost a few members who have not returned.
Patenotte said so far 2006 is looking good, even though her members are struggling to find contractors and paying $10 per sheet for wallboard to fix their homes.
Biloxi, Mississippi
While neighboring Memorial FCU in Gulfport lost some members, Municipal Credit Union VP Vera Alston in Biloxi said she gained 125 members after the Veterans Affairs hospital in Gulfport was wiped out. The VA transferred the employees to a Biloxi VA hospital and Municipal took them in.
"They were right on the beach and they were completely destroyed," Alston said.
The $9.1-million Municipal CU serves 2,300 civil service employees in assets in three counties. Alston said she never lost power but couldn't transfer data as the transmission lines traveled through New Orleans, which was underwater from the levee breach. Ten of her members lost everything, 75 had homes damaged, and one couple has left the area and is uncertain of returning.
Alston opened Wednesday morning after the storm and stayed open with three employees for the next two weeks. Alston said her staff reviewed outstanding loans every month and delayed payments as needed, on a case-by-case basis. Alston said a loan special of up to $1,000 was offered that could be paid back in six months or a year. Alston said there wasn't time to run credit scores of members in need. "We just hand-wrote the loans."
Alston said the quick loans were for necessities such as gas and food. Of $125,000 loaned out, Alston said she has seen trouble with only two of the loans. Alston said Municipal had a 12% increase in car loans representing $500,000 from August to January 2005.
Meanwhile, it's looking forward. Municipal CU still plans to open a new branch and is also wrestling with the high deposits. One unique challenge to such balances is that members are often sitting on those deposits awaiting a contractor. But when they find a good one, they move instantly.
"Our ratios are all out of whack. We're asking 'What are we going to do with this?' You can't long-term invest it. They need their cash when they need it," she said.
Alston singled out the Mississippi CU Association and Singing River FCU President James Smith for providing cash in a timely manner during the crisis. "I don't know where he got it, but he shared it with everyone," she said.
For a while, nearby Biloxi Teachers FCU was literally an island among the debris and floodwaters, according to Manager Betty Jean Hughes, who said there was so much rubble it might have actually blocked the rising tide from entering the building.
"It was high and dry. Everything was fine. It was total devastation all around us," Hughes said.
Biloxi Teachers reopened Sept. 6 with full power and a working computer and got busy with deposits and a flurry of new car loans. Hughes noted that in Biloxi, in addition to insurance and FEMA emergency payments, members have begun to deposit money that casinos have paid for their property as the casinos seek future building sites where homes had previously stood. Hughes said the small, 1,800-member credit union increased deposits from $6 million to $8 million in only one month, and echoed Alston's remarks regarding members holding onto emergency money and then quickly withdrawing it. Hughes said one couple was paid $800,000 by a casino company and then promptly paid out $200,000 for another home.
Hughes said Biloxi Teachers is facing an uncertain 2006 as so many students left the area after the storm. Two brand new schools were closed and merged leaving many teachers, and CU members, in limbo until next August. "We don't know what to expect day to day," Hughes said.
Hughes said she placed $1 million in a managed investment account with Southeast Corporate last month for a total of $3 million earning 4.1%. Hughes said she holds $300,000 in a daily account to cover costs in case a member is set to start rebuilding. For now, the retired 44-year schoolteacher and her assistant Charlotte Breal are holding down the fort as best they can. "We don't give up here," Hughes said.
Another island in the storm was Biloxi Municipal CU run by Nancy K. Boney, who oversees 1,000 members and $7.9 million in assets. Boney reports offering full services the week after the hurricane and is managing the now normal flood of insurance deposits. Boney said the CU suffered no damage but most members had a hard time simply reaching Biloxi Municipal due to the huge amount of debris.
"It hasn't affected how the CU was run. We made sure of that," she said.
In the near future she might start looking for more loans to offer but is maintaining the status quo for now. Boney said new car loans tapered off by January while her deposits are remaining static as members chart their futures. "They don't know what to do. A majority of them are still disputing insurance," she said. "I don't see a lot of activity any time soon."
Pascagoula, Miss.
The $3.7-million Jackson County Credit Union has one branch to serve its 650 members. But what it will be best remembered for from Katrina is the "temporary" branch out of which it operated for a while-a black SUV with armed guards standing nearby. "It pretty much wiped us out," said CU CEO Lora Michaels.
JCCU had three feet of water inside that destroyed all the furniture, computer and financial records. Three out of four CU employees had major damage to their homes and six out of eight CU volunteers lost everything.
Before Katrina made landfall, Michaels and two other employees literally split the CU records and cash three ways hoping at least one could make it back to help the membership. "We knew our members needed money. We just sucked it up and did it," she said.
Michaels and crew reopened the Thursday after Katrina and worked everyday for the next two weeks. Signs were posted to let members know she was in business while Charles Fuqua, an employee's husband,x stood close by with an automatic pistol in his belt. Even city police told her they couldn't guarantee her safety, but they opened every day for four hours. Michaels said members routinely drove by to check on employees' safety and have mailed flowers and cards in appreciation.
Michaels praised the aid she received from fellow credit union officials, namely Betty Hutchinson at Hospital Systems CU and James Smith at Singing River FCU.
After shutting down the "SUV branch," Jackson County served members with hand-written loans and withdrawal slips from the drive-thrus at Hospital Systems and Singing River until moving into a trailer near their old branch location.
She also credited Bethpage CU in New York and Bellco CU in Colorado for obtaining office equipment from Office Depot and for sending volunteers to help assemble new desks and shelves.
Located within a refinery on the Mississippi coastline, Chevron Pascagoula FCU has grown to $27-million from $19 million from storm-related deposits and was working nearly 70 car loans per month due to the massive storm surge that hit the small town, according to manager Patricia Crawford.
"The majority of our loans are vehicles. Some people lost two or three cars. Neighborhoods that had never flooded, did," observed Crawford.
Help From Friends
Crawford said all new and used car loans were offered at 3.95% and it disbursed $3 million in October 2005 alone. Loan payments were suspended for two months and Crawford said no loan defaults or vehicle repossessions have occurred.
Chevron Pascagoula needed a little help from its friends and got it from Charles Elliott and the Mississippi CU Association, CUNA Mutual and its future merger partner, the $875-million Chevron FCU in California, with which it had planned to merge prior to the storms.
Crawford serves a closed membership of 2,500 and kept backoffice operations going with a wireless laptop computer running in an employee's home located in nearby Ocean Springs.
At the end of each day, Crawford's employee would take the daily transactions home, log them and transmit to the core processor. At one point, however, the cash crunch became so critical that another Chevron-affiliated credit union, Chevron FCU, flew in $100,000 on a corporate jet that helped Chevron Pascagoula stay open, even on Labor Day.
