As Floridians pick up the pieces after four hurricanes in a month, loan volume is rising, and so, to a lesser extent, are deposits.
Bankers said they are making more fee and interest income as customers begin to fund the rebuilding.
Take the $1.4 billion-asset Seacoast Banking Corp. of Florida, in Stuart. Its market was in the paths of both Frances and Jeanne, which destroyed the homes of many customers.
In response, the company started offering special deals on home equity loans, including short-term loans of up to $25,000 at 0%.
Meanwhile customers have been depositing insurance payments, chief executive officer Dennis S. Hudson 3d said last week. He spoke by phone at an investors conference that Hurricane Jeanne kept him from attending.
Special home equity loan packages have also increased loan volume at the $8.3 billion-asset BankUnited Financial Corp. in Coral Gables, executive vice president Carlos Fernandez-Guzman said.
But deposits have not risen much, he said, and he doubts that they will. Insurers are being more tightfisted with payouts than after Hurricane Andrew in 1992 when they wrote big checks to victims, he said. Insurance adjusters are being more cautious, and deductibles are now much higher, he said.
“After Andrew we saw a large ramp-up in deposits, as people were getting amounts over and above the cost of their homes,” Mr. Fernandez-Guzman said. “But this time I think there will be a real need for asset-based relief through loans as people make up the difference.”
Christopher Marinac, an analyst with FIG Partners in Atlanta, agreed that post-hurricane deposits are unlikely to be as high as after Andrew. But he added another reason: the explosion of investment options for consumers with excess funds. “Customers are more sophisticated and have more tools than they did in 1992,” he said.
Loans are growing at United Heritage Bank in Orlando too. Since Hurricane Charley hit, the $366 million-asset bank has been offering high-yielding deposit accounts for customers looking for a place to park their insurance money. But CEO David Powers said there have been few takers.
On the other hand, he said, United Heritage is making more home equity loans related to hurricane damage.
To be sure, much of the income from this jump in loans and moderate increase in deposits will be offset by expenses the hurricanes have imposed on Florida’s banks. Such expenses include cleanup and repair costs as well as money lost because branches were closed.
Also, some banks lost entire branches, which will cost millions of dollars to replace.
Still, Mr. Marinac said that in the long run the increase in deposits and loans will probably outweigh the short-term expenses.
“It may take them through October to get back on their feet,” he said. “But over all, I think banks will have a more valuable franchise, as deposits are a key factor in measuring value.”
Michael J. Brown Sr., the president and CEO of the $2.6 billion-asset Harbor Florida Bancshares Inc. in Fort Pierce, agreed. Hurricane Jeanne severely damaged one of its branches, so “obviously we are going to have great costs in the short term,” Mr. Brown said.
“But it was actually the first branch we built, in 1968,” he said, so Jeanne “gives us a chance to make it newer and better and more convenient.”
