With wildfires in California still raging, analysts are unsure of the financial impact to banks, but they say that natural disasters like this could eventually present opportunities in the form of deposit inflows and reconstruction efforts.
Large banks dominate deposit market share in the three counties the Federal Emergency Management Agency has designated for emergency assistance. Bank of America Corp. has the most deposits at $83.13 billion, or 19.04% of the market share. The bank has 24 branches in zip codes touching the burn area of the fires. Wells Fargo & Co. has slightly more branches, with 30 in the area.
"There tends to be a positive impact to banks from deposits as insurance proceeds come through," said Gary Tenner, a D.A. Davidson analyst who covers Southern California banks.
Jeff Rulis, an analyst with D.A. Davidson who covers banks in Northern California, said that smaller banks may have an advantage over bigger banks when it comes to cleanup and relief efforts from natural disasters. "The visibility is [higher] there than you would see for a national bank," Rulis said.
Chico, Calif.-based TriCo Bancshares has set up two funds to help with disaster relief, according to Michael Murphy, the bank's marketing director. One fund started with $25,000 and is using a GoFundMe account to raise additional money, with 100% going to victims with immediate needs. The second fund is more internal and goes directly to bank employees who have suffered losses.
TriCo has five branches in zip codes that touch the burn area. According to Murphy, one branch was near the fire, but the building still stands. TriCo had $6.32 billion in total assets at Sept. 30.
Murphy said past experience with fires has made the bank "more nimble at responding to these crises and helping people through it. Unfortunately, we're very experienced."
Did you enjoy this analysis? Click here to set up real-time alerts for data-driven articles on the U.S. financial sector? Click here to view a webinar on best practices for bank branch analysis. |
