Banks in hurricane zone redraw preparedness playbooks
Planning for hurricane season is daunting enough in a normal year — but preparing in the midst of a pandemic has introduced a new set of challenges for bankers.
Emergency planning typically consists of testing phone lines, tuning up generators and inspecting properties for potential storm-related hazards. Tracking storms is a process that often begins as early as March.
Adjustments made because of coronavirus, including work-from-home situations and social distancing, are forcing experts to reevaluate everything from evacuation plans and recovery efforts to meeting the communication and electrical needs of far-flung employees.
Bankers along the Gulf Coast will face their first major tests in coming days as Hurricane Marco and Tropical Storm Laura draw closer to the area.
“It makes for quite a different scenario,” said Andy Lapierre, manager of enterprise business continuity at Frost Bank, a unit of Cullen/Frost Bankers in San Antonio.
“It’s hurricane season, we’ve got the pandemic we’re dealing with, we’ve got people working from home,” Lapierre added. “There are so many variables we have to take into consideration and think about.”
“While communications networks have largely been up to the task, despite so many people working from home during COVID, the additional stress of a catastrophic storm could be problematic,” said Edward DeMarco Jr., chief administrative officer at the Risk Management Association.
Contingency planning typically involves mutual aid agreements with other banks and power companies. Employees often plan to evacuate to hotels or a central location, if needed. Larger banks would usually usher critical employees to business continuity centers powered by generators run on stockpiled fuel.
The pandemic is forcing bankers to rethink those plans.
“We’ve got a whole confluence of events that are making it really challenging to frankly know what resources are going to be available,” said Paul Benda, senior vice president of risk and cybersecurity policy at the American Bankers Association.
Some larger banks still plan to use business continuity centers, but at reduced capacity to allow for social distancing.
Truist Financial in Charlotte, N.C., has established sites where employees can work remotely if they lose power or internet access during a storm, said Brant Standridge, the $504 billion-asset company's head of retail community banking. Unlike in prior years, however, Truist will use new safety protocols like social distancing, wellness checks and mask requirements.
Regions Financial in Birmingham, Ala., got word in April that it might need to prepare for extended periods of time without power, said Kyle Puchta, the $144 billion-asset company’s vice president of incident response and workplace safety.
Power companies typically rush in after a storm, with workers bunking together in tent cities, doubling up in hotel rooms, and working shoulder to shoulder to restore the grid as quickly as possible, Puchta said.
Social distancing could alter those plans, creating uncertainty about the ability to fire up laptops or turn on the lights.
It makes sense for banks to assess which employees have underground power lines or generators at their homes because they will be the ones most likely to bounce back quickly after a storm, Benda said.
Banks would also be well-advised to test their virtual private network capacity in advance of a hurricane, DeMarco said.
The $312 million-asset Marine Bank & Trust in Vero Beach, Fla., typically gives each employee a half-day off during the week before a storm, said Bill Penney, its chairman, president and CEO. That allows each employee to make their own personal preparations.
“We always made it a practice to stay open as long as we possibly can to serve the weekly paycheck people who … may not have money for three or four days or longer if the bank’s not open,” Penney said. “Giving the employees time off earlier has been well received and you don’t have everybody angling to get out of there on the last day.”
Lapierre said the $39 billion-asset Cullen/Frost typically starts talking to its own employees before June 1 about the types of supplies they need in their hurricane preparedness kits. This year, those kits will include masks and hand sanitizer, he said.
Branch bankers with Synovus Financial in Columbus, Ga., will call customers to make sure they have cash, said Jarred Overcash, a regional retail sales manager in Charleston, S.C. The practice, which the $54 billion-asset Synovus began in the earliest days of the pandemic, has proved useful in planning for a storm.
“The whole pandemic has been like the pre-planning for a hurricane that’s just never stopped,” Overcash said. “You almost feel like you’re in that cone of uncertainty all the time now.”
Many clients that are expected to struggle with a hurricane are already grappling with the economic fallout of the pandemic, Standridge said.
Much of the hurricane planning process at Truist has been identifying ways to accomodate customers, like fee waivers or mortgage forbearances, before the storm makes landfall. The company has also stashed emergency supplies, mobile banking units and portable showers near the areas expected to be most vulnerable to a storm.
“Given the challenges that COVID has created from an economic perspective, those are even more important now,” Standridge said.
Executives as HomeTown Bank in Galveston, Tex., met Monday afternoon to discuss the $730 million-asset bank’s plan as concern shifted from Marco to Laura, based on each storm’s projected trajectory, said President and CEO Jimmy Rasmussen.
HomeTown has historically provided bridge loans to restaurants, hotels and other tourist businesses until insurance payments come in. Many of those clients are counting on Labor Day vacationers for much-needed revenue as they try to hang on during the pandemic, Rasmussen said.
The approaching storms have already led to come cancellations.
"A bad hurricane is the last thing we need right now," Rasmussen said.
Jon Prior contributed to this article.