Tyndall FCU Weathers a Storm

Six months after Hurricane Michael devastated the Panama City, Fla., area, Tyndall Federal Credit Union is still serving many members in the area from temporary branches as it rebuilds.

The storm took at least 72 lives, including 35 in Florida, and destroyed hundreds of homes and businesses. For Tyndall, the costs led to a $2.3 million loss in the three months that ended Dec. 31, but President/CEO Jim Warren said it has strengthened the morale of its employees and built loyalty among members.

Other Panhandle credit unions are also still rebuilding.

Bay Credit Union in Panama City ($111.5 million in assets, 9,246 members) had two of its three branches in the county shut down by the storm, including its corporate headquarters.

Bob Little, president/CEO, wrote a letter posted on Facebook Feb. 7 to thank members and announce plans to bring in mobile offices for the two closed branches.

“This has been a difficult time for all of us in this section of the Panhandle,” Little wrote. “Although the national media never mentions Hurricane Michael anymore, we know that we are far from recovering from the devastation that occurred.”

Tyndall and other credit unions responded to the disaster by providing generous benefits to members and employees. In Tyndall’s case, it took a hit to net income of roughly $5 million in the fourth quarter.

Scott Derks, a retired banker who helped a regional bank respond to Hurricane Hugo in 1989, said the responses to a disaster by credit unions like Tyndall have long-lasting benefits.

“It reflects long-term thinking, not quarter-to-quarter issues,” Derks said. “In a highly competitive world, it builds loyalty that you can’t buy with ads, only earn on the ground when the people need you and you respond.”

Derks, who was director of marketing for C&S bank in Columbia, S.C., when Hurricane Hugo struck, said the feelings of pride in the work he and others at his bank performed in the wake of the disaster have not faded in the 30 years that have passed.

“For me personally, it was one of the proudest moments I had as a banker,” he said. “I saw people responding to people’s needs.”

Warren has lived all of his 56 years on the Gulf Coast. “I’ve been through quite a number of tropical storms.”

This, he said, was different.

“It was a surreal, humbling event.”

The storm that struck the Florida Panhandle on Wednesday, Oct. 10, 2018 formed and moved quickly. It had not risen to a level to reach mention in The Washington Post until Sunday, Oct. 7, under the headline: “Tropical Storm Michael threatens to strike Florida’s Gulf Coast as a hurricane midweek.”

Florida Gov. Rick Scott announced that Sunday he would be declaring a state of emergency, if necessary.

Tyndall Chief Information Officer Tom Llewellyn was watching this unfold on television that day while on vacation in Maine. He was on a plane the next day and back in Panama City Monday night.

On Monday, the National Weather Service issued Hurricane and Tropical Storm Warnings and Watches for the Gulf Coast. Officials in Bay, Gulf and Wakulla counties issued mandatory evacuation orders to those living near the coast or living in mobile homes. Eventually, 375,000 people were asked to evacuate.

That same Monday, Tyndall announced  it would close its branches starting Tuesday at Port St. Joe, Thomas Drive, Panama City Beach and Tyndall Air Force Base. On Tuesday morning it announced all five of its other branches in Florida would close at noon Tuesday.

James Davis, chief human resources officer, said he didn’t get concerned until the storm was reaching shore. And Jim Warren recalled telling his wife Wednesday morning, “Honey, we’ll be home by noon.”

He was not.

Before employees left on Tuesday, they had covered their personal computers with tarps. On Wednesday morning, Llewellyn’s team also covered the core computer racks at the administrative building with tarps before they were shut down at 11 a.m. as the hurricane was reaching the coast.

Then, remaining staff and others – including a half-dozen dogs, a few crated cats and one large pet bird – hunkered down in an old, 2,000-square-foot vault from about 11 a.m. to 2 p.m. The vault was housed in a partly vacant annex by the corporate office called “Warehouse 13.”

About three inches of rain fell in the first half hour. The hurricane first struck Mexico Beach, 27 miles to the east of the vault, as a Category 4 hurricane, with wind speeds of up to 155 mph. But the western half of Michael’s eyewall passed directly over Panama City.

“When we got out it looked like a war zone,” Llewellyn said.

Warehouse 13 and its occupants were safe. While the corporate office was so badly damaged that it had to be closed, the annex was habitable. Soon communications wires were dangling from the ceiling, and pink foam boards were used to provide temporary office cubicle partitions.

The hurricane affected about half of Tyndall’s members and damaged more than 15,000 homes in its core market.

Tyndall’s branches at Tyndall Air Force Base, Parker and Panama City were so badly damaged that mobile offices were wheeled into place to act as temporary branches while rebuilding continues. Lynn Haven had slight damages that have since been repaired.

Tyndall’s corporate office and operations center is still operating out of Warehouse 13 while the main building is being rebuilt.

Tyndall’s disaster communication plan allowed it to account for 100% of employees within three days after the storm, even with cell phone service being limited and roads being blocked by fallen trees and electrical poles.

Within two weeks of the storm, Tyndall had 87% of employees reporting to work.

Tyndall turned to help members and residents by distributing fast-food meals, Thanksgiving turkeys, groceries, Visa gift cards and 10,000 gallons of gasoline.

“The immediate need was cash,” Rebecca D. Bonner, Tyndall’s assistant vice president of marketing, said. “They were trying to get as much cash as they could.”

Tyndall and other credit unions also launched financial relief efforts in October, including discounted personal loans, payment deferrals and forbearance for mortgage loan payments.

The day before Thanksgiving, Tyndall deposited over $2.7 million into the accounts of active members residing in the FEMA-declared disaster areas. Those members woke up to find $50 in their savings accounts.

Credit unions outside the area stepped in to help too. Bay reported help from the League of Southeastern Credit Unions, Pen Air Federal Credit Union of Pensacola, Fla. ($1.5 billion in assets, 103,549 members) and Suncoast Credit Union of Tampa, Fla. ($9.3 billion in assets, 811,218 members).

“These organizations showed the true meaning of credit unions,” Little wrote. “They brought us anything that our staff members were in need of – water, food, generators, gas, diapers. They brought AT&T burner phones with hotspots so that we could get two branches operational so that our membership could make withdrawals and deposits, and apply for loans.”

Suncoast loaned Bay its mobile branch with a satellite ATM, which it parked at Bay’s main office. America’s First Federal Credit Union of Birmingham, Ala. ($1.6 billion in assets, 163,732 members) drove its mobile ATM to Panama City and let Tyndall use it at its Parker branch.

Warren said Tyndall had a great disaster recovery plan, but it had a few gaps. “We learned,” he said.

For example, he said, “I never thought we would have nearly all our branches go down.”

Also, the plan was that Tyndall would switch to a backup data center at its branch in Chipley, Fla., 40 miles inland. But that center depended on a generator fueled by a natural gas utility line. The credit union never imagined that the utility would be cut. It was.

Instead, Tyndall workers loaded up the computers and drove them 180 miles west to their Daphne, Ala., branch, just east of Mobile, Ala. The new computer center was opened 50 hours after shutting down in Panama City.

Meanwhile, Tyndall relocated 165 employees to its annex.

Employees who could not work were still paid. About 50 to 60 employees in the disaster area who did work were paid double for about 30 days after the storm.

Some employees had to walk to work. Some employees housed colleagues temporarily. A few slept in the administration building on air mattresses for about a week. Tyndall bought tarps for employees to put on their houses.

“Our team was amazing,” Warren said. “It was humbling. The resilience of our employees was phenomenal.”

The benefits have extended to employee morale. “Everyone is going through the same thing. The bond has grown exponentially,” Warren said.

Financially, the disaster created a swirl of odd results. There was the immediate rush for cash, then a rush of large deposits as members received checks from their insurance companies.

While membership held steady from Sept. 30 to Dec. 31, 2018, assets spiked 26%, deposits spiked 31% and the rate of loans delinquent at least 60 days nearly tripled to 0.64%.

In the three months ending Dec. 31, Tyndall had a net loss of $3.6 million, the 11th biggest fourth-quarter loss among federal credit unions. Its fourth-quarter ROA was -0.99%, down 174 basis points from 2017’s fourth quarter. For the year, Tyndall was still solidly in the black, but the storm’s effects could be seen as net income fell 32% to $5.8 million, and ROA fell 27 bps to 0.40%.

“With every decision that is made at a financial institution, there is number crunching and ROI calculating. In this situation, there was none of that,” Bonner said. “It was just, what do our members need and how quickly can we get it for them?”