Katrina It is August 26th, 2005 ASI Federal Credit Union is feeling so good about its operations! $200M in assets – a new high! 9% capital – also a new high! 250 employees 14 branch locations Involved in a year long strategic planning process Holding focus groups Analyzing members’ surveys to improve products and services Involved in many civic and charitable organizations The force and dollars behind an initiative to bring the Manchester Craftsman’s Guild replication to New Orleans (Bill Strickland) Involved with both Local and State Governments to make this happen Awaiting CDFI certification Awaiting IRS determination on non- profit WE WERE GOOD AND WE WERE PROUD OF THE WORK WE WERE DOING! And then……. All weather reports indicate that we could be in the path of a deadly hurricane! On the afternoon of August 26th the MT meets We begin to implement our disaster recovery plan We make a decision to keep our system up as long as it is practical to do so We raise our off line limits for ATM customers We get in touch with our disaster recovery site in California We will send our employee with back-up tapes there once we have to close down We check to make sure we have correct contact information We leave expecting to be back in 2 or 3 days to resume operations We spend the week- end in cities and states far from our homes watching weather reports On Monday, August 29th, it hits! By that night, we realize no one is going back to our office for a long time. By August 31st, most of the MT has found each other We are in Baton Rouge, Louisiana – 80 miles from our main office The MT convenes at DOW Federal Credit Union Our database has been restored at our disaster recovery site in California We open our Ville Platte Office in South Central Louisiana It is now August 31st and we are up and running from DOW Credit Union ACH transactions including members’ pay are posting Checks are clearing Audio response is working Our web site is up and members can access their balances Credit and debit cards are working We are meeting our members’ needs, right? The 100 phone lines that we had prior to the hurricane are now reduced to 6 We have 12 people trying to answer the phones, update the web site, wire money for 100- 150 members per day, look for a more permanent location, bring other branches on line, work with other credit unions to serve our members, handle off line postings, review reports, etc. On September 2nd we get our first indication that the switch and the disaster site are not communicating Members are calling looking for the free money that ASI is providing - $300 a day! We realize that they are referring to our off line limits! We are working frantically to get communication established AND IN COMES NCUA! Pressure is applied to join the shared branch network Although all credit unions that we have contacted are cooperating, NCUA wants a commitment to get shared branching up and running NCUA wants us to obtain additional lines to answer our members’ calls And so do we but as you can imagine the phone companies are inundated with similar requests September 3rd – we find a larger location to move our operations to We will get additional phone lines – up to 12- by September 6th We have reduced off line limits for ATM transactions Switch is slow to implement change All this time, members are overdrawing their accounts September 4th – NCUA Special Actions arrive I’m summoned to their hotel to explain how we will improve service to our members Meanwhile we are promised that the connectivity problem will be solved over the Labor Day week-end The switch will be authorizing from a live data base September 7th – we are now a part of Credit Union Shared Service Centers We open our branch in Thibodaux, in South West Louisiana We open our Causeway Branch in Mandeville Louisiana September 8th – our members have overdrawn their accounts to the tune of $3 million dollars We have hundreds of off line transactions to be posted This will overdraw the accounts even more We don’t have the manpower to get this done September 9th – NCUA wants to know how overdrawn the accounts are What are we doing to stop the out flow of money from accounts that are negative? We are continuing to get assurances that connectivity is going to happen – SOON! We are getting branches on line The service centers are doing off line transactions – burying us! September 10th – 2 more offices open – off line Transactions are being authorized by personnel at the 4 locations that are on line Shared branching still not on line September 11th – worked all day and evening to move our command headquarters to a new, larger location with more phone lines and more employees September 12th – NCUA is at the new location How many phone lines do you have now? When will you stop the overdrafts? We do our best to answer questions that have no answers. September 14th – The shared service centers are live! No more off line transactions! All open branches are on line – able to authorize withdrawals! Employees have been coming back to branch offices! We have almost stopped the flow of shares from overdrawn accounts – except for the ATM transactions. September 19th – we are back home! We are now switching our own ATM transactions! It has been 24 days since an ATM transaction was done against a live file. We have finally completely stopped the ability to overdraw What’s left is to assess the damage and work on recovery What has happened since returning home? Assets grew $110M – from $200M to $310M as members deposited FEMA checks and Insurance checks Overdrawn accounts which reached over $6 million are now at $2.8 million Loan charge offs reached nearly $2 million 4 branches are destroyed 1 branch is damaged 50 employees are not coming back Our bank statement contains so many transactions that our treasurer, responsible for balancing, retires We begin to look for ways to trim our operations Things that we thought necessary before Katrina are now luxuries We implement cost cuts –no year end bonus – raises for some key personnel eliminated – some take pay cuts We look for ways to build capital quickly We sell one branch We look for secondary capital We write grants We explore selling our Visa portfolio We look for and receive help from the Credit Union community We hire additional collectors Our capital, though growing again, is below 6%! Red flags go up in the financial arena and companies that we have done business with for many years are questioning our viability. Visa is requiring a compensating balance account of $3.5M although we have been a member in good standing for over 25 years Corporates are reviewing our line of credit agreements NCUA is requiring that we fund the NCUSIF an additional $1 million to cover the shares that both they and we know are temporary Good News? Our friends have come to our aid! Cliff is getting our story out to the financial world. He’s opening doors for us in Washington so that we can plead our case. With his help, people begin to listen. Our work is paying off too and our capital is growing. On July 31st 2005, the last month end before the hurricane this was our capital ratio: Capital Ratio = 8.75% On December 31, 2005 our capital ratio was: Capital Ratio= 4.58% Now, 5 months later, May 31, 2006 Capital Ratio= 5.25% WE ‘re coming on strong! We are now certified as a CDFI! Our Non-Profit is recognized by IRS! We are determined to be part of the rebuilding! We look for property to purchase and rebuild. We look for community partners. We renew contact with Bill Strickland and his project. This is our city! These are our people! WE WILL MAKE A DIFFERENCE! ¡SÍ SE PUEDE!
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