Some events occur that are so large, and affect so many people, that they become engrained in our national consciousness forever. One such event occurred on the morning of August 29th 2005, as Hurricane Katrina made landfall as a violent Category 3 storm, ravaging the coasts of Louisiana, Alabama, and Mississippi. At least 1,836 people lost their lives to Katrina and the subsequent flooding, and countless more lost their homes and livelihoods. The storm is estimated to have been responsible for $81.2 billion in damage (2005 dollars), making it the costliest natural disaster in U.S. history. Navigator Credit Union ($197 million), based out of Pascagoula, MS, operates in an area that was directly in the storm’s destructive path.
Pascagoula was devastated by a 20-foot storm surge and waves that reached the height of 55 feet. Nearly 92% of the town was flooded, with most of the homes near the beach completely destroyed. Disruption of communications was a huge problem, as most of the telecommunications systems were rendered inoperable. Navigator had been through three other declared disasters prior to Katrina, but they found themselves unprepared for the magnitude of devastation that this storm would ultimately inflict. Basically, their disaster recovery plan had largely been an IT function, and for Katrina, that wasn’t enough…
Each of Navigator’s 11 branches was immediately rendered inoperable, with 8 sustaining heavy damage. The credit union worked hard to clean up one of their branches, submerged under nearly a foot of standing water, and re-opened it within 3 days of Katrina. Initially, the branch was running off of generated electricity, the employees were using laptops, and there was no carpeting or air conditioning, but Navigator was able to provide their members a point of financial access that they sorely needed in their time of crisis.
Not only were the credit union branches and members affected, but so were the employees. Robert Fertitta, CEO of Navigator said, “I am completely amazed by the number of employees who showed up, ready to work so soon after the storm. Their actions speak volumes - many came to work even though their homes were totally destroyed. People truly came together in a time of crisis to help others, and our credit union certainly demonstrated that in the aftermath of Hurricane Katrina.”
Providing Member Service in a Time of Crisis
Navigator set up their IT services at a ‘hot site’ in Smyrna, GA to restore their core systems and data-processing capabilities. Credit and debit cards were largely rendered useless in the region, so cash was extremely important to their members immediately following the storm. To meet the need for currency, Navigator used money from ATMs and vaults that had been submerged by flood water. The credit union actually resorted to literally laundering money- employees washed it, dried it, and delivered it to their members. Unable to obtain enough cash locally, Navigator had to work with a supplier from Atlanta, GA. They also waived all fees for 30 days, increased the daily withdrawal limits on ATMs, and did not issue surcharge fees when a member used a foreign ATM.
Without phone lines, the credit union was unable to transmit any data electronically from the hot site to branches. To get new trial balances to branches daily, employees used their personal vehicles to transport files back and forth between their branches and the location where the files were received, a daily distance of nearly 300 miles. Also traveling 100 miles each day were Member Service Center
employees who drove six days a week to a make-shift call center. Because new furniture was in short supply, these employees often used cardboard boxes as desks while taking a record number of phone calls from extremely anxious members.
Although attempting to meet all of their members needs, Navigator was forced to set a daily personal cash-withdrawal limit of $300 per day because of the limited local availability of cash. However, the credit union took special considerations into account for members who demonstrated a specific need for more. Members could also come back the next day and withdraw again as needed. For the most part, Navigator’s membership was very understanding, and very grateful that the credit union was operating and willing to help under such trying circumstances.
“You’ve really got to consider the human element in these types of situations. Some of our members were coming into the branch with literally the clothes on their backs and nothing else. Initially, everyone was concerned with only their very basic needs” said Fertitta. Members’ financial obligations were not initially very high on the priority list for those reeling from the hurricane. Navigator’s lending policies were liberal before Katrina, and this flexibility continued in its aftermath. Their collections department made an extra effort to work as closely as possible with members. They also set up a disaster loan category to specifically respond to member needs by automatically extending due dates on every member loan. “While banks and other financial institutions made their customers ask for a deferral, we knew that members were out of work and needed to use their money for more immediate concerns. You can’t imagine the relief members felt when they learned we had already taken care of deferring their loans for them. It freed them to focus on more urgent matters,” said Fertitta.
Cooperative Aid/Brothers in Arms
Navigator also experienced the true cooperative spirit of the industry, as credit unions from across the county reached out to provide critical assistance in their time of need. Redstone FCU (Huntsville, Al), Tinker FCU (Oklahoma City, OK), and Boeing Wichita CU (Wichita, KS) loaned mobile ATM units and personnel to help Navigator provide additional access points for their members. When office space in the region was scarce, University FCU (Austin, TX) provided a rent-free location for three months. Western FCU (Manhattan Beach, CA) donated 10 cell phones and paid for the service while Navigator’s phone system was being restored. Lockheed Georgia Employees FCU (Atlanta, GA) helped deliver and retrieve Navigator’s ACH draft files from the Federal Reserve. The membership of Sun CU (Hollywood, FL) shipped 30 boxes of clothes, water, and supplies to aid in Navigator’s relief efforts. These experiences ably demonstrate the value and mutual reward of developing relationships with other credit unions.
Fertitta relayed an adage: “There is a phenomenon that usually occurs following a disaster. The positive or negative growth that a specific area was experiencing before a disaster will be greatly amplified after a calamity strikes.” Fortunately, the Pascagoula region experienced robust growth during the years leading up to the hurricane, and this growth intensified in the years following the disaster. The population recently reached pre-Katrina levels. In fact, Fertitta explained that the area actually lacks enough local labor to meet the booming market demand. The credit union has experienced a surge in commercial and real estate lending as they have helped facilitate new member construction projects.
Three years after Katrina, day-to-day business has largely returned to normal for Navigator, but they learned from the experience, and have since developed a comprehensive business continuity plan. Fertitta added, “The support services that are a standard part of many credit union disaster recovery plans, such as the US postal service or UPS, had their own problems to deal with. All the other Industry and government service providers were in the same boat. So you have to factor that challenge into your continuity plan. It is important for every credit union to know that disaster can strike anywhere at any time, not just here on the Gulf Coast. To continue to serve member needs in a time of crisis, credit unions need to be able to answer the question: What would you do if you showed up at work one day, and your work wasn’t there?”
Does your credit union have an answer?