Hurricane Katrina: The Aftermath

March 1, 2006

Hurricane Katrina: The Aftermath

By Bill Merrick

'At first light, the devastation is greater than our worst fears. It's just totally overwhelming,'

Louisiana Gov. Kathleen Babineaux Blanco, board member at La Capitol Federal Credit Union, Baton Rouge, La., told The New York Times (Aug. 30) during Hurricane Katrina's immediate aftermath.

Anne Cochran

More than six months later, electricity and other utilities have yet to be restored to parts of New Orleans, reports Anne Cochran, Louisiana Credit Union League

CEO. She describes how affected credit unions and the league are coping.

CU Mag: What stands out most from the hurricane aftermath?

Cochran: The first time I saw the destruction Hurricane Katrina caused. Visiting New Orleans East and the Lakeview areas, the 9th Ward, and St. Bernard Parish, is an image that will be imprinted in my brain forever. It was eerie, desolate, and void of human life.

CU Mag: What's it like in Greater New Orleans today?

Cochran: Depending on what part of the city you live in, you may or may not have electricity and other utilities. Hard-hit areas still are in the dark. Utilities in other areas of the city that sustained flooding are hit or miss. A lot of people have to redo the wiring in their homes and businesses. Those that have been completely rewired and inspected by a licensed electrician are back online.

Credit unions located in areas of the city without electricity are serving their members from alternate locations, including other area credit unions, through the mail, by telephone, and through the shared branching network.

CU Mag: How are you and other league staff recovering?

Cochran: With two exceptions, the league staff all have returned to their homes. My home still is being repaired and I continue to live in Baton Rouge with my son. Idie Rodriguez, our assistant vice president of electronic funds transfer sales and service, lost her home in St. Bernard Parish and also is living with her son.

CU Mag: How do you cope with these hardships?

Cochran: I'm happy to report we're back in our pre-Katrina offices. The league staff and I worked from the Summa Avenue branch of Bayou Federal Credit Union


in Baton Rouge for more than three months.

It's not easy to be displaced from my home and function normally. However, there never was a choice. The league, credit unions, and members come first. My personal life went on the back burner and remains there.

To help my staff, we recently held a stress management/grief counseling course paid for through the generosity of the National Credit Union Foundation (NCUF).

It was an opportunity for us to come together and to talk about how we've been feeling.

CU Mag: What challenges do CUs, members, and the league face now?

Cochran: Depending on where members lived, some are back in their homes and their lives are getting back to normal. Some members continue to live out of state because their homes aren't habitable or they're still without power and water. Others are living in Federal Emergency Management Agency (FEMA) trailers in their driveways, gutting their homes in their free time, and surviving as best they can.

We're working with NCUF to assist credit union staffers who have lost everything or have had catastrophic damage to their homes. Credit union staffers received financial assistance through phases I and II of [NCUF's] grant process. As part of phase III, NCUF will assist credit union staffers, possibly by subsidizing the cost of apartments and transportation.

Other challenges affected credit unions continue to face:

  • Field-of-membership (FOM) issues. We're concerned therewill continue to be FOM issues for credit unions whose members havescattered across the country. There's uncertainty about how manymembers will return to the New Orleans area and what they'll returnto, especially in terms of jobs and housing.
  • Lending. Lending stopped momentarily for some credit unions;a few weeks for others. This will affect their income. Many creditunions waived fees for members during the crisis and this, too, willaffect year-end profitability.
  • Human resource issues. Staffing continues to be a majorchallenge for New Orleans credit unions. They're competing for alimited number of workers with entities such as Burger King andMcDonalds, which are offering $6,500 bonuses and paying up to $10per hour.
  • Delinquencies. Members have been displaced and haven'treturned yet, so delinquencies will increase. With people dispersed,collection efforts may be next to impossible. Whether credit unionswill be able to repossess collateral still is uncertain.In addition, overdrafts and capital/asset ratios may be a problem.There has been an increase in assets due to 'parked' insurance andFEMA monies that eventually will flow out of the credit unions. Inthe meantime, however, these assets are distorting capital/assetratios.How to helpHere's how to help credit unions in the hurricane-ravaged Gulf Coast, saysAnne Cochran, Louisiana Credit Union League CEO:
  • Adopt a credit union through'R.E.S.C.U.'
  • Pay rent for a credit union for several months.
  • Assist with utility and telephone costs. The flooding displaced peoplefrom their homes and businesses for weeks, even months. As a result, manycredit unions face excessive cell phone bills.
  • Pay for the additional transaction fee expenses credit unions incurreddue to the increase in members' use of the shared branching network.
  • Produce and distribute a member newsletter, or help with other marketingneeds.
  • Provide onsite expertise. Hotels now are available in New Orleans.
  • Assist with collections. Because many people aren't returning to NewOrleans, collection needs have increased. This is something you could do fromyour back office.
  • Donate equipment. Flooding claimed many computers, printers, copy machines,fax machines, and office supplies.
  • Pay league and/or Credit Union National Associationmembership dues.
  • Provide a direct donation.
  • Pay for staff or board members to attend educational programs.
CU Mag: How are you dealing with these challenges?

Cochran: The league organized a credit union job fair to help credit unions with staffing issues.

We wanted to get the word out that working in a credit union isn't just a job, it can be a career. Nine credit unions and hundreds of potential employees attended the Jan. 25 job fair. So people are starting to come back.

Potential employees met with the credit unions to learn about careers in the credit union movement and to apply for job openings. Advertised positions included tellers and member service representatives, collection and call center staff, loan officers, managers, and more.

In addition, we offer credit unions free job ads on our Web site. We're planning to hold a group Webinar with HR Value Group [Middleton, Wis.]

for our New Orleans credit unions about how to attract and retain employees.

CU Mag: What are the potential long-term implications for affected CUs?

Cochran: The increase in assets since Katrina from insurance and FEMA monies proves members have confidence in their credit unions. I anticipate that credit unions in the New Orleans area will remain financially strong and viable. However, because of FOM issues (members not returning to the area), some smaller credit unions may have to merge.


CU Mag: What surprises arose during the recovery efforts?

Cochran: The resilience of the credit union spirit, evidenced by our credit union CEOs who took whatever steps necessary to continue serving their members.

The sincere passion displayed by our league and service center staff who counseled and worked with grief-stricken, displaced members to get cash into their hands and point them in the right direction. The sincere kindness and support displayed to us and our credit unions by so many credit unions and credit union organizations throughout the country.

The contributions made by so many individuals, system organizations, and credit unions to the state and national credit union foundations that enabled us to make a difference in the lives of affected credit union employees.

While perhaps not so noticeable on the TV news and in newspapers any longer, New Orleans and the surrounding areas are a long way from total recovery. Recovery will take a long time. I might not see it in my lifetime. The horrific aftermath of Hurricane Katrina lives with us every day.

We continue to need and rely on the generosity and support of the entire credit union movement. We owe a debt of gratitude we never can repay. We hope they're blessed one million times over for all the sincere support they've shown to Louisiana credit unions, employees, and the league. Photos from Hurricane KatrinaPhotos from Hurricane Rita