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Baton Rouge CUs say flooding will result in myriad lending opportunities

Historicflooding across manyparts of Louisiana has left thousands homeless and without transportation butcould lead to an array of lending opportunities for credit unions in the areawhen the rebuilding begins.

"Thetype of flooding we've experienced has never been seen in anyone'slifetime," said NeighborsFederal Credit Union President and CEO Steve Webb Jr. He said oneof his neighbors who has lived in the area for more than 70 years said hisproperty had never seen flood waters before this week. In Denham Springs, justeast of Baton Rouge, estimates said 85% of commercial and residentialproperties experienced flooding, Webb said.

Earlyestimates suggest the total number of damaged homes to be in the tens ofthousands. In two of the hardest hit areas, Central and Denham Springs,officials estimate that as many as 90% of the homes may have been damaged bythe flood waters, The (Baton Rouge,La.) Advocate reportedAug. 17.

Webbsaid Wednesday the credit union had four of its Baton Rouge branches runningfully and anticipated two others coming back online Thursday. Only one branchwas hit by the flooding but the bigger challenge has been staffing. He said 66out of Neighbors' 230 employees had flood waters in their homes and aredisplaced. "They don't have a place to live," he said. One boardmember lost his business and his home to the flooding, and the credit union hasthus far been unable to make contact with a board member emeritus whose homeflooded.

President and CEO Jeffrey Conrad said in an interview that the credit unionemployees are "doing what we have to do to keep our heads abovewater." He said the credit union's branch in Denham Springs was underwater and will be closed for several months. All of its other Baton Rouge-areabranches were expected to be open by Thursday. Pelican has also set up an ATMin the parking lot of its Baton Rouge headquarters for the convenience of itsmembers and the public.

Conrad,like Webb, said the biggest operational challenge is staffing the branches."The number of people impacted by the flooding is just unbelievable,"he said. "I've never seen a disaster of this scale."

Conradsaid part of the problem is that places people would normally go to in anemergency — the homes of relatives and even shelters that were set up — werealso flooded.

Pelicanis reaching out to vendors in other states for clean-up materials and bottledwater because stores in the area are under water. Conrad said Pelican willfirst help its impacted employees and then will reach out to the greatercommunity.

Oncethe recovery begins, auto lending will boom because so many cars were damaged,Conrad said. The flood waters came up so fast that people barely had time toescape their homes and had to leave their vehicles in place. Webb said four cardealerships in the area lost their entire inventory. "There are literallytens of thousands of cars under water," he said. Neighbors anticipates asurge of payoffs from insurance companies but there will also be a large demandfor new vehicle loans.

Conradsaid Pelican is working on an expedited system to process home equity loanswith no closing costs. Homeowners in declared disaster areas in many cases maybe able to get about $30,000 in FEMA assistance, but that will not be enough tocover all that needs to be replaced, Conrad said. Pelican will also offer a90-day payment deferral program so that borrowers can take that money and useit for supplies and repairs. Pelican is also exploring offering unsecured$5,000 loans at 5% interest for five years "no questions asked.""So if you qualify you get it no matter what your credit score is,"he said.

Webbsaid the credit union is getting employees who do not typically interact withmembers, including the employee training department, up to speed so that theycan be used to field calls. "It's all hands on deck," he said. Thoseworkers are fielding questions on topics ranging from extensions and defermentson loans to waivers of early-withdrawal penalties on some funds.

Anymortgages on properties in federally designated flood zones are required tohave flood insurance, but those not in flood zones may not have thatrequirement depending on who wrote the mortgage, Webb said. Neighbors is nowtrying to determine how many such mortgage holders may have been impacted.

Neighborsis also working on programs that would provide members a few thousand dollarsto work through the cleanup. People will also be shopping for large itemsincluding furniture and appliances and will need loans, Webb said.

Andwhile homes and businesses can and will be rebuilt, the after effects from theflooding will linger for years. "It's going to be a while for ourorganization to rebound from this," Webb said.