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In Focus This Quarter:
A Preliminary Assessment of the Effects of Recent Hurricanes on FDIC-Insured Institutions
Hurricanes Katrina and Rita have taken a heavy toll on the lives and livelihoods
of millions of Gulf Coast residents. Even as Americans responded to the
immediate humanitarian crisis that followed the storms, they gained a
new appreciation for the economic importance of this region to the rest
of the nation. Like other sectors, the region's banking industry was hit
hard by Katrina and will be dealing with its consequences for some time
to come. This issue of FDIC Outlook provides
a preliminary assessment of Katrina's effects on local financial institutions
and the regional and national economies.
Performance after Natural Disasters:
A Historical Perspective
How resilient have banks been in the face of past natural disasters? This
article looks at four natural disasters that have struck the United States
since 1989 and describes how local banks performed in their aftermath.
While no banks are known to have failed as a result of these past natural
disasters, credit quality deteriorated in some cases. Given the unprecedented
scale of destruction and displacement resulting from Katrina, it remains
to be seen how applicable these lessons may be to banks in the hardest-hit
Gulf Coast areas.
Characteristics of Banks Affected by Katrina
Focusing on the 49 counties and parishes in Louisiana, Mississippi, and Alabama designated as eligible for federal disaster assistance, this article summarizes the financial condition and performance of local financial institutions just prior to Katrina.
Challenges Face FDIC-Insured Institutions after Katrina
In the immediate aftermath of Katrina, banks located in the hardest-hit areas of New Orleans and the Mississippi Gulf Coast worked first and foremost to overcome a range of operational difficulties. Depending on the pace and direction of the region's rebuilding effort, individual banks may contend with longer-term issues associated with credit quality and franchise value; however, a complete assessment of these longer-term issues may not be possible for some time.
Also in this issue:
Letter from the Executive Director