By Sarah Snell Cooke, Principal, Cooke Consulting Solutions
Your credit union can be as prepared as you think you possibly can be to recover from catastrophe, but if your employees are also affected by the disaster, you could have bigger troubles. Who’s going to implement the plans?
That was the situation Redwood Credit Union faced, President/CEO Brett Martinez said, when record-setting wildfires struck the North Bay area. “We’ve been affected in every way imaginable, and probably some you can’t imagine,” he said.
Fortunately—or unfortunately—Redwood CU has a lot of experience in this scenario. Martinez advised others to ensure their disaster recovery plans cover four key elements: the credit union, its employees, the members and the larger community. “I didn’t want to be good at this, but we’re good at this,” he quipped. “I always knew we had a good time. That they arose to, what people did, was amazing.”
The credit union has an existing 501(c)(3) for ongoing efforts, like financial education, but it’s bulked up for major disasters, like the fires that caused $9 billion dollars in insurance damages, according to The Press Democrat, and killed dozens of people in October. More than 6,000 homes were destroyed and 150 businesses in and around Sonoma County.
About 7,000 homes were destroyed within a 3-mile radius of Redwood CU’s headquarters, Martinez said, some financed by the credit union. Twenty-three of the homes caught in the devastation were those of Redwood employees. Plus, buildings were burning near a couple of Redwood’s, and the credit union had to evacuate at times, too. And 150 employees were evacuated from their homes.
One of the key issues for the Underground in 2018 is social disaster recovery. Click here to learn more about the Underground.
The credit union put employees up in hotels, bought them food, and even provided a temporary daycare, run by Martinez’ wife and board members and their spouses, for employees while schools were shut down a few weeks, which was not part of the original disaster recovery plan.
Redwood partnered long ago with California Senator Mike McGuire and the local paper, The Press Democrat, to coordinate disaster relief for the community. While it’s no longer taking donations, the North Bay Fire Relief Fund raised more than $31 million dollars from about 39,000 donors in 21 countries. More than $20 million had been distributed as of this writing, and the credit union told donors exactly where the money was going to on its site:
The credit union foot the entire bill for administering the fund, so 100% of donations would go to the victims. Additionally, the informational website included useful information like check distribution information, fire recovery info, mortgage loan FAQs and other relevant resources.
In the short term, the credit union also provided affected members with 0% loans for quick cash, low-rate car loans, automatic 90-day extensions on loans, waived ATM and late fees, a 90-day hold on reporting to credit bureaus and grants to repair minor damages, plus a single point of contact on a specialized team operating from a single database so victims didn’t have to go through their stories over and over again. Some members barely got out with the pajamas they were wearing, so cards had to be reissued quickly.
When you’re in a strong position, there’s a sense of comfort in making decisions quickly. The journey we’re on and the situation we’re in is the perfect example of why [modeling for crisis situations] is important. –Brett Martinez
“It’s been completely insane, 24-by-7, for the past three months,” Martinez acknowledged. “Not that I wasn’t a fan of disaster plans before, but I’m a fan of disaster plans now.” He added that the feedback from the members was that they couldn’t even tell Redwood was directly affected by the fires. That’s because the credit union had a backup power generator and a plan for fuel that placed them in line right behind first responders, and a business member dropped everything to bring over $70,000 worth of air purifiers (not in the plan) when the winds shifted and the headquarters filled with smoke. The credit union moved some things to its disaster site in Sacramento.
In stressful situations, people often resort to humor to ease their pain. Martinez said, “The joke was if we all survived this we’d be doing great, but first we have to survive.”
Members found Redwood CU to be one point of certainty in the chaos. “You want to be the solutions for those things (frustrations with insurance companies, lack of builders, etc.) rather than being one more thing they’re pissed off about,” Martinez stressed. The numbers show it. In December alone, assets at the $3.6 billion-asset credit union grew $150 million, and nearly that the two preceding months. The credit union had modeled out various scenarios, and because it’s financially sound, it was able to withstand the anticipated and unanticipated side effects of the worst fires in California’s history.
“When you’re in a strong position, there’s a sense of comfort in making decisions quickly,” Martinez explained. “The journey we’re on and the situation we’re in is the perfect example of why [modeling for crisis situations] is important.” Even though he was working at a furious pace, Martinez added, “I updated the board regularly. Their support was huge. I know it’s not like that everywhere.”
Nonmembers were contacting Redwood to refinance their homes, saying they’d been meaning to and never got around to it. But when there’s no home left to refinance, Martinez said, that’s a tough conversation to have—especially when they’re in crisis and the big banks they have their mortgages with aren’t very helpful.
While Redwood CU works to serve its members in all situations, the public relations angle of its wildfire recovery efforts is undeniable, particularly by partnering with a state senator and the local newspaper, not to mention word of mouth. “The buzz is crazy. Certainly, it’s strengthened our brand and credit unions overall, globally.”
Long-Term Effects on the Community
Although the infernos are all out now, they left unfathomable destruction in their wake. The 90-day loan extensions are coming due, and being handled on a case-by-case basis. The area already had a housing shortage, and now nearly 15,000 more are without homes. Recovery for the community will take years.
Despite the insurance checks, for those that had insurance, there aren’t enough construction workers in the area to rebuild very quickly. Businesses burnt down, which means jobs were lost. The tourists that usually flock to wine country will choose other locations, leaving those in the hospitality industry reeling. The weddings that would have been held there, the catered events, gone. The homes that were lost also mean landscaping and pool cleaning jobs literally went up in smoke.
Some members of the community will be waiting it out, but others will move because they’ve lost their jobs or are taking the insurance check and rebuilding elsewhere.
“Redwood is always call upon by the community as a solution to the problem,” Martinez said with pride. Redwood will have a seat at the table when the dust settles and be there with resources and funding to help the community rebuild.