The Federal Deposit Insurance Corporation (FDIC) today released the Winter 2005 edition of FDIC Outlook, which focuses on the unique challenges banks face after Hurricanes Katrina and Rita. It also examines the impact that four previous natural disasters have had on the local banking industry.

"Banks have historically been resilient to the challenges posed by natural disasters and have actually showed a tremendous ability to rebound from them," said FDIC Chief Economist Richard A. Brown. "Clearly, however, the economic losses associated with Hurricane Katrina will be of a much greater magnitude than our recent historical examples." The greatest long-term challenges facing banks affected by Hurricanes Katrina and Rita, according to the report, will be exposure to higher credit losses and lower long-term earnings capacity.

While concluding that the banking sector, like many others, will be dealing with the aftereffects of the storms for some time, FDIC analysts examined available data to draw preliminary conclusions about the hurricanes’ effects on local FDIC-insured banks and the regional and national economies. The latest FDIC Outlook features: