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Florida banks are preparing for a surge in deposits and a voracious demand for loans in the aftermath of the estimated $15 billion of economic destruction by Hurricane Charley. “Florida banks will get a huge inflow of deposits once these billions of dollars in insurance checks are sent out,” said Richard Bove, a banking analyst with Hoefer & Arnett Inc. “The hurricane could become a bonanza for them because customers will ask for loans as well.” Bank of America and Wachovia, both based in Charlotte, N.C., along with Atlanta-based SunTrust Banks Inc., SouthTrust Corp. of Birmingham, Ala., and Seattle-based Washington Mutual Inc. are the biggest banks in Florida, according to Federal Deposit Insurance Corp. data. The banks are offering numerous disaster loan and services programs to current and potential customers. But South Florida institutions are likely to be shut out of much of that activity other than loaning employees as needed or assisting clients that own property or operate businesses in the counties affected by the Category 4 storm, many bankers said. Few South Florida-based banks have operations in the counties directly affected by Charley, which hit the West Coast of Florida Friday, carving a path of devastation across the state. Charley destroyed thousands of homes and the death toll stood at 19 by late Tuesday. Because local banks have a limited presence in places like Punta Gorda and Fort Myers, their involvement in the rebuilding process will be lessened, bankers said. BankAtlantic of Fort Lauderdale closed down three loan production offices in Punta Gorda, Orlando and Tampa and two branches in Tampa because of power outages caused by the storm, said bank president and chief executive Alan Levan. The bank’s one-person Punta Gorda office was damaged, and will be reopened with additional personnel. “The bank is not thinking about maximizing the opportunity,” Levan said. “The bank is thinking about making sure that we continue to give great customer service because there are special needs there.” Out-of-state institutions that operate in South Florida and the hurricane-effected areas all seem to be relying on Gulf Coast bankers, with support coming from offices in Tampa rather than South Florida, bankers said. Jefferson Harralson, an Atlanta-based analyst for Keefe Bruyette & Woods, says the hurricane is a “perverse positive” for the banks. “While I don’t think there’s a way to really quantify the benefit the banks would get, it’s also a good time for banks to step up and cement customer relationships.” He said construction loans would likely increase and deposits could rise, even if it were only temporary. Wachovia’s consumer offices in the areas hardest hit by the hurricane have started selling new consumer loans geared toward storm victims and have made it easier to cash insurance checks, said Kevin Bezner, a bank spokesman. The bank is also sending five mobile homes that will be used as branches. Colonial Bank, which has operations throughout the areas affected by Charley may rely on help from its South Florida offices to handle a surge in business. “We have four regions in the state,” said Israel Velasco, South Florida market president for Colonial Bank. “We were the only region that was not affected. They have sufficient personnel to respond. I have offered our assistance for whatever needs that they will have.” Bank of America has sent three regional leaders into the area, but has avoided bringing in too many staffers because resources including fuel and hotel rooms are limited, said the bank’s Florida spokesman George Owen. “We don’t want to have people driving around using the gas,” he said, referring to fuel shortages in some areas. Banks are preparing for the initial needs of customers by waiving fees, allowing borrowers to defer monthly payments, providing credit line extensions and expediting the underwriting process for additional loans. Washington Mutual is offering “quick approval” of its personal lines of credit up to $10,000 and reducing the interest rate on its home equity loans by one quarter of 1 percent, said bank spokeswoman Nova Barnett in Atlanta. “We are doing our very best to respond to customer requests for financial loans,” she said. Wachovia is offering special consumer loans of between $3,000 and $15,000 for 36 months to help victims of the hurricane survive financially until their insurance payouts arrive or to help cover large windstorm insurance deductibles, Bezner said. He said the bank has also waived check-cashing fees for nonaccount holders in anticipation of the insurance checks that should soon be coming. “We are not looking to make money off of this disaster,” Bezner said. “That is not our goal.” Goal or not, the destruction caused by Hurricane Charley will provide a boost for banks operating around the affected region. It is too early to tell the economic stimulus that Charley will create, but if Hurricane Andrew in 1992 is any indication it could be huge for banks. Charley hit a wealthier part of the state populated by retirees than did Andrew, BankAtlantic’s Levan said. He said many homes that Charley destroyed will probably prove to be better insured than those destroyed in the lower-middle class areas of southern Miami-Dade County. As a result the insurance payoffs and the deposit surge could be larger on the West Coast after Charley. Three weeks after Andrew buzzsawed through south Miami-Dade, savings balances more than tripled at nearby BankAtlantic branches as people deposited their insurance claim checks. Levan said the challenge of managing the increased deposits is making sure the cash is there when people need it. He said most of the Andrew-related funds were withdrawn within six months to a year after being deposited as people used the funds to buy or build new homes. “From the bank’s standpoint, it takes a very sophisticated cash model to be able to take the money in and also to make sure it is available,” Levan said. Levan expects Charley’s victims to take the next three weeks getting over the “shock and horror” and then begin the cleanup in earnest. He said people are already probably reassessing their lifestyles and will begin to rebuild once insurance checks start to be issued. Levan said banks on the Gulf Coast would probably need to hire additional staffers to meet the upcoming demand of Charley’s victims for banking services, especially loans. “It is devastating, heartbreaking and then you have all of the aftermath of the cleanup,” Levan said. “I think we learned a lot in Andrew that we can apply to this situation.” This report was supplemented with information from Bloomberg News.

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