Banks Scramble to Provide Hurricane Relief
With the blessing and some guidance from the Federal Deposit Insurance Corporation, banks across areas affected by the recent severe weather and related flooding have come up with a number of ways to help their customers and their communities.After the first several hurricanes and storms, the Federal Deposit Insurance Corporation issued an advisory reminding banks that the agency will take into consideration the unusual circumstances disaster creates. "The agency recognizes that efforts to work with borrowers in communities under stress can be consistent with safe and sound banking practices as well as in the public interest," the guidance states. It goes on to tell banks what they need to report to regional offices and what they should do when disaster gets in the way of publishing and other branch closing requirements. Go to www.fdic.gov to see the advisory.
Meanwhile, reports have come in from across the South/East/Midwest about programs banks are putting together to help those affected. Many have created special loans for victims of the storms and worked with local charities to set up funds to collect donations for relief efforts. Here are a few examples (an Internet search reveals that this list just scratches the surface):
- In Pittsburgh, where flooding has destroyed many homes and businesses, Mellon Financial Corporation donated $50,000 to several organizations set up to help, including the American Red Cross, the Salvation Army, the Catholic Charities of the Diocese of Pittsburgh, and the local food bank, which was wiped out by the storm.
- Colonial Bank in Montgomery, AL authorized the presidents of its banks to make decisions on a case-by-case basis to assist both consumers and businesses affected by the tornados and hurricanes. The bank offered special annual percentage yields on 3- and 5-month certificates of deposit to give those affected a secure place to deposit insurance funds. It also raised yields on those funds to 1.8 percent on 3-month and 2 percent on 5-month CDs. Colonial also committed up to $10 million in recovery relief loans for homeowners for home equity lines of credit up to $25,000 per household at no interest through December, 2004.
- Regions Financial Corporation announced it would accept donations for hurricane relief efforts at Regions Banks and Union Planters Bank branches across the company's 15-state footprint in the South, Midwest and Texas. The company waived automated teller machine and check-cashing fees in communities hit hardest and offered free incoming and outgoing wire transfers. It also deferred payment on some consumer loans and credit cards in impacted areas.
- Bank One announced special loan programs in counties in West Virginia affected by flooding and tornadoes. Qualified individuals could receive unsecured, personal installment loans up to $25,000, and businesses could apply for unsecured loans up to $35,000. The bank also extended account due dates for qualified existing customers with loans or lines of credit.
- USAA, a diversified financial services provider, announced a package of services available for relief including reversal of late fees/finance charges, special payment deferral programs for up to 90 days, lines of credit where appropriate, a rate as low as 1.9 percent on special purchases and transferred balances, existing balances repriced to an annual percentage rate as low as prime plus zero percent, unsecured loans up to $25,000 and special rates and terms on auto payments.
- Wachovia Corp., which has a strong presence in Florida, waived automated teller machine fees for people in affected areas. The bank also created a disaster customer loan package designed to help people bridge the financial gap between immediate repairs and arrival of insurance checks. The bank provided loans of $3,000 to $15,000 with interest rates of about 9.99 percent, no origination fees and deferred first payment for 60 days.
Copyright © 2004 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 14, No. 07, 10/04
First published on 10/01/2004