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
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
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:
A historical analysis of how local banks performed after four natural
disasters that have struck the United States since 1989. Although no banks
failed, it is not yet clear how applicable these experiences will be to
the case of Hurricane Katrina;
A summary of the financial 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; and
A discussion of the challenges that banks located in the hardest-hit
areas of New Orleans and the Mississippi Gulf Coast now face in the
longer-term associated with credit quality and franchise value.
Congress created the Federal Deposit Insurance Corporation
in 1933 to restore public confidence in the nation's banking system.
FDIC insures deposits at the nation's 8,854 banks and savings associations
and it promotes the safety and soundness of these institutions by
identifying, monitoring and addressing risks to which they are exposed.
The FDIC receives no federal tax dollars – insured financial
institutions fund its operations.
FDIC press releases and other information are available on the Internet
at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html)
and may also be obtained through the FDIC’s Public Information
Center (877-275-3342 or (703) 562-2200). PR-2-2006