HOLLYWOOD—When is a breakout session timely? When two credit union CEOs are discussing disaster preparedness while a major wildfire destroys a branch of one institution and sends smoke into another as the panel takes place.
With wildfires growing in frequency and severity in recent years as the American West endures a second decade of drought, Redwood Credit Union has been uniquely positioned. The $4.4 billion-asset CU is based in Santa Rosa, Calif., deep in the heart of California Wine Country.
Major fires erupted in Redwood’s service area in 2015 and 2016, both of which were topped by Tubbs fire in October 2017. The Tubbs fire would make history as the most destructive fire ever in California, decimating parts of Napa, Sonoma and Lake Counties. The city of Santa Rosa was particularly hard hit.
“We thought we were going to lose our corporate office,” recalled President and CEO Brett Martinez, speaking Thursday at the California and Nevada CU Leagues’ annual conference. “The fire started at 11 o’clock at night, and it moved so fast most people got out just wearing what they wore to bed – no purses, no wallets, no cars. Those people need access to debit cards and cash. We were there for those people because we practice our disaster plan all the time.”
Among the precautions Redwood CU practices is having back-up generators on site to keep operations going in case of an emergency. It also prepaid for diesel, so every morning in the weeks after the fire the first responders got diesel first and then the credit union received its delivery.
“We had 150 employees, many of whom had to disperse to wherever they had family, so we had to immediately find them places to stay,” Martinez explained. “Hotel rooms are the first thing to go in a situation like that.”
After the fire, every day was a “completely different problem,” Martinez continued. Schools were closed, so management told employees to bring kids to the credit union. This patch worked for a few days, until the staffers said their kids were “driving them crazy.” Redwood CU responded by opening an impromptu day care service in a nearby community room – which went on for three weeks.
“One day the wind shifted and our building filled with smoke,” he said. “If your employees are there but they can’t breathe, they can’t work, so we had to pay for air purifiers.”
Even after the flames were extinguished, the Tubbs fire had a deep psychological impact, as 7,000 people lost their homes and many thousands more were evacuated. “When something devastating happens you have to do things without people asking you – waiving ATM fees no matter where people use them,” Martinez said as an example.
Redwood CU already had experience raising money for fire victims in 2015 and 2016, so within 24 hours of the Tubbs fire sweeping through Santa Rosa it established a disaster-relief fund, raising $32 million in just four months.
“Collecting the money was the easy part, distributing funds was the hard part,” Martinez said. “It was pretty insane, but it feels good to be able to do something to help our community.”
Fire and flood
John Cassidy is president and CEO of $982 million-asset Sierra Central Credit Union in Yuba City, Calif., approximately 76 miles northwest of Santa Rosa. Cassidy and his CU have had to deal with threats of both fire and water in the past two years, he told attendees.
In February 2017, during an abnormally wet winter due to El Nino atmospheric conditions, many of Northern California’s reservoirs swelled to their capacity. Just 34 miles north of Yuba City, the main spillway of the massive Oroville Dam experienced a catastrophic failure than threatened the integrity of the dam, which could have unleashed a torrent of 500,000 cubic feet of water per second. For perspective, one cubic foot is about the size of a basketball.
“Our local authorities ordered 180,000 people to evacuate,” Cassidy recalled. “Even with turning all lanes of Highway 70 southbound, it took people nine-and-a-half hours to go 30 miles. If the dam failed, they could have been hit with a 30-foot wall of water.”
More than 100 dams in California are not certified, meaning the never have had annual oversight, said Cassidy. One good outcome of the Oroville Dam crisis, he added, was the legislature passed a bill mandating dam inspections throughout the Golden State.
Sierra Central CU has seen three major fires in its service area in just the past two years: a Susanville, Calif. arson in July 2017, the Yuba County Cascade fire in October 2017 and the Carr fire from July 23 to Aug. 30, 2018. In total, said Cassidy, 10,000 SCCU members were affected by the fires, with 1,604 buildings destroyed, including 103 belonging to credit union members, and three SCCU branches were directly affected.
A Sierra Central branch was destroyed in a wildfire Thursday after Cassidy’s remarks.
“The first thing we did every time there was a major fire was lock up hotel rooms for our employees,” Cassidy said. “After a disaster, your employees become social workers for a while. They have members coming in all day long telling horror stories, so take care of their meals. For the first 24-to-48 hours, don’t expect a lot of help from local government because they are scrambling. Have all the cell phone numbers for your employees. Have the cell numbers for their spouses, too, because batteries die.”
Lessons learned
If there’s a silver lining to any of this, it’s that both CEOs and their institutions say they have learned plenty of lessons. According to Martinez, people need their financial institution more than ever in a disaster situation.
“And ‘disaster’ can mean more than one type of situation,” he noted. “If branches fill with smoke from a faraway fire, that is a disaster. Today, the utility companies are shutting down power to keep fire from spreading. Not having power in your branches is a disaster.”
“Keep your board in the loop during a disaster,” Cassidy added. “They might get calls so they need to know what is going on.”
One audience member pointed out both RCU and SCCU are larger credit unions, and asked how can smaller CUs afford to respond to a major disaster?
“We helped smaller credit unions in our area,” Martinez said.
“It is about building relationships ahead of time,” offered Cassidy.
Asked about the Tubbs fire’s financial impact on Redwood CU, Martinez said contributions to the disaster relief fund alone were $1 million.
“We had to adjust our Allowance for Loan Losses to account for people losing their homes and their jobs, plus we offered a lot of skip-a-pays on loans. Some of the hard costs were covered by insurance, but it was millions of dollars,” he said.
“You can try to work out the details ahead of time, but each situation is different,” Martinez continued. “We just installed technology we can use to reach all of employees during an emergency and they can check back in to let us know they are okay.”
“Disasters happen pretty quick,” said Cassidy.
