2 state banks stand up well in hurricanes

Bank of Ozarks, Centennial tell of Texas, Florida units

Two of Arkansas' largest banks -- Bank of the Ozarks and Home BancShares -- recently had branches in the paths of two hurricanes that were among the most powerful in U.S. history, but neither institution suffered significant damage, company officers said recently.

Hurricane Irma's winds ripped the roof off a Centennial Bank branch in Naples, Fla., and two of the bank's offices remained closed last week. Conway-based Home BancShares is the parent company of Centennial Bank.

Bank of the Ozarks of Little Rock, Arkansas' largest bank with $20 billion in assets, has significant operations in the Houston area, hit by Hurricane Harvey, and also in Florida, where Hurricane Irma hit.

"We did not have any serious branch damage and didn't have any of our people incur serious injuries," said George Gleason, chairman and chief executive officer of Bank of the Ozarks. "We were very fortunate. We had more than 100 offices in the paths of those storms. All of our offices were reopened by [Sept. 18]. We were pretty much back to business as usual."

The hardest areas hit by Irma were the 100-mile-long string of islands in the Florida Keys, although Key West was not damaged seriously, said John Allison, chairman of Home BancShares, who recently returned from a four-day trip to assess the damage.

"It looks like a 100-mile wide tornado hit [the Keys]," Allison said. "Arkansas people can relate to that. Pine trees are stripped. They're not twisted but leaning. There are amazing amounts of debris. Boats scattered. There are lots of refrigerators and freezers stacked up and down the roads. There are debris piles that are 50 to 60 feet tall and 4 to 5 acres wide."

Centennial Bank, with about $14 billion in assets, has about $360 million in loans in the Florida Keys, where Allison has a home. About $200 million of that is in Key West, Allison said.

For Bank of the Ozarks, Florida is the second-largest market for real estate loans with $2.2 billion as of June 30. The Miami metropolitan area was the largest market in Florida with almost $960 million in loans.

Bank of the Ozarks has more than 40 branches in Florida.

Texas was third-largest state for Bank of the Ozarks, with $1.4 billion in real estate loans. The Houston metropolitan area, where more than 50 inches of rain fell in some places, was the second-largest Texas market with $441 million in loans.

Florida and Arkansas are the largest markets for Centennial Bank, each with about $3 billion in loans, Allison said. With the closing on the purchase of Stonegate Bank on Tuesday, Home BancShares has 84 branches in Florida.

For years, Bank of the Ozarks has had contingency plans for such disasters.

"We have a business resilience and business continuity team that manages those processes," Gleason said. "So when a storm or some other event is identified that could have an impact on us, they begin in real time to track and monitor that situation. And implement appropriate plans."

Susan Blair, a Bank of the Ozarks executive vice president, was on that business resilience team, which met up to six times a day.

Bank of the Ozarks' management teams in South Texas, Florida and Georgia were in continuous communication with their employees, Blair said.

"All employees were safe and accounted for throughout the storm and its aftermath," Blair said. "Miraculously, it looks like most of our customers sustained minimal impact. Our banking offices incurred little to no damage, and all offices were open for business soon after the storms had passed and electricity was restored."

Allison and others touring with him visited the Big Pine Key branch on Monday, which still was without power. In middle of the lobby, Allison said, was a generator in a box.

"Our ladies were burning up, sitting there," Allison said. "They told us it was a brand new generator someone had just got. But they didn't know what to do [to get it set up]."

Allison and the crew with him opened the box, hooked up the generator, got the gasoline and went into town to buy oil.

"In 45 minutes, we had power and fans going inside," Allison said. "Then less than an hour later, the electricity came on."

State and federal government employees working disaster relief were everywhere, Allison said.

"There's food, water, C-130s coming and going," Allison said. "They've set up tent medical centers. Nobody goes without water and nobody goes without food."

All banks are required to have federal flood insurance on mortgages for homes in flood plains, but one of Centennial Bank's customers vehemently argued about the requirement when he took out a loan several years ago, Allison recalled.

"He fussed at us, talked bad to us, but we made him buy [flood insurance]," Allison said. "We didn't have any choice. It's a matter of law. He called and thanked us [after Hurricane Irma]. He said, 'I'm so sorry I fussed at y'all the way I did. Thank God I got flood insurance or I'd be wiped completely out.'"

Centennial Bank is trying to evaluate its customers, the ones in trouble and the ones who aren't, Allison said.

"Who can we help and what do we need to do," Allison said. "And what do we need to do for our employees."

Centennial Bank is waiving fees and giving 90-day deferments on loan payments to customers affected by the storms, Allison said. And the bank is likely to set aside money in a reserve for loans that could fail.

Centennial Bank had a disaster plan in place before the hurricane, but it has learned from the storm, Allison said.

"We probably need backup generators in every branch," Allison said. "That's probably $20,000 a branch to do that. But that probably makes a lot of sense for us, because we're up and running."

The Florida economy, with all the recovery necessary, should be booming soon, Allison said.

"I told our people you need to buy stock in Home Depot," Allison said. "They laughed at me because I was at the Home Depot store in Marathon [in the Florida Keys]. It was chaos. There were people everywhere buying stuff right and left. [The Federal Emergency Management Agency] is passing out money, and people are getting [Small Business Administration] loans. The boom has already started. It will last for 24 months, probably."

SundayMonday Business on 10/01/2017

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