Wilber National Bank in Oneonta, N.Y., is suffering along with its customers from the June floods that wreaked havoc in much of the Northeast.
Two of Wilber’s branches, in Sidney and Walton, were flooded with nearly four feet of water when a tropical storm slowly moved across the region June 25-28.
The $320,000 of damage was a big reason second-quarter earnings at the bank’s parent, Wilber Corp. in Oneonta, fell 32.3% from a year earlier, to $1.35 million.
On top of that, last week the $746 million-asset company warned shareholders it might have to increase its loan-loss provisions over the next several months, to cover possible defaults by customers whose homes or businesses were destroyed.
“In about six to eight weeks we’ll have some idea of how much people will actually receive from their flood insurance,” Douglas C. Gulotty, Wilber Corp.’s president and chief executive, said last week in an interview. “The cost of the damages may have exceeded a lot of people’s coverage, especially near the Susquehanna River.”
His bank likely will not be the only one to work out flood-related credit problems over the coming months.
The cost of repairing flood damage in New York, Pennsylvania, and New Jersey could top $1 billion, according to the Federal Emergency Management Agency. Banks in those states say they are working with customers whose homes or businesses were damaged or destroyed, deferring loan payments or making emergency loans to house customers in temporary facilities or keep businesses afloat.
Florence Doller, vice president of marketing at the $5 billion-asset NBT Bancorp Inc. in Norwich, N.Y., said 30 of its branches were closed June 28; most were open the next day. Two flooded ones in Oneonta and Great Bend, Pa., are being renovated, but the automated teller machines and drive-through lanes are open. The bank’s operations center in Canajoharie, N.Y., was also damaged and should be renovated this quarter or next, she said.
Insurance covered most of the damage, but Ms. Doller would not say how much the company had to pay to cover the rest.
Like Wilber Corp., NBT is deferring loan payments for customers with damaged or destroyed properties, but Ms. Doller could not say whether it expects to increase its loan-loss provisions as a result of the problems.
In its second-quarter earnings release, NBT said that it does not expect the floods to have a significant financial effect on the company.
John A. Zawadski, the president and CEO of the $3.8 billion-asset Partners Trust Financial Group Inc. in Utica, said 16 of its branches in and around Binghamton were closed June 28, and all but one reopened the next day. For customers who could not deposit funds on those days, Partners paid all checks drawn on their accounts and waived any insufficient funds fees.
It also is deferring loan payments for a number of customers, but Mr. Zawadski said he did not know how many.
All the bankers said that service interruption was minimal, because of the effectiveness of their disaster recovery plans. One reason they worked, they said, was because their plans had already identified alternative branch or operations facilities, and had detailed emergency duties for many of their employees.
“After all of the recent disasters — both natural and those caused by the terrorists — there’s a heightened awareness about the importance of these plans,” said Michael P. Smith, the president and CEO of the New York Bankers Association.
