Editor's note: Following Hurricane Katrina in 2005, then-American Banker reporter Damian Paletta reported from the region on the storm's aftermath for Louisiana banks.
This story from Sept. 15 of that year focused on the efforts of the state's commissioner of financial institutions, John P. Ducrest, to help local institutions — reeling from closed branches in storm-affected areas — recover. Ducrest oversaw the openings of new emergency branches, organized meetings for bankers to help each other and assisted with other logistics.
Katrina's Impact: Louisiana Bank Official's Routine Is Far from It
By Damian Paletta
BATON ROUGE, La. - John P. Ducrest stood in the corner of a crowded room talking quietly on his cell phone as nearly two dozen bankers dressed in shorts or blue jeans rushed around him.
For the Louisiana commissioner of financial institutions, the event last week was small but symbolic. Omni Bank of Metairie, which was forced to close 11 branches after Hurricane Katrina, was opening a branch here. The ribbon-cutting ceremony was meant to be a show of confidence in the local banking system and demonstrate that institutions were getting back on their feet.
"We'll make it," Mr. Ducrest told a reporter in his soft-spoken but serious manner that several bankers said mirrors his approach behind closed doors. "I'm real optimistic where we're going with this. The first thing is to make sure that the customers can hook back up with their banks."
But he had little time to savor the moment. He shook Omni president James Hudson's hand as a blue ribbon was cut, said goodbye, and walked to his car. Gulf Coast Bank and Trust Co. was opening an emergency branch of its own across town in less than an hour, and Mr. Ducrest was supposed to be there as well.
The hurricane flashed through three states Aug. 29, claiming hundreds of lives and destroying homes and businesses. As rescue efforts focused on finding survivors, Mr. Ducrest (pronounced doo-CRAY) quietly mounted a campaign to get local banks running again.
One week after New Orleans' levees broke, almost all the branches in the affected areas were still closed. Customers - and bankers - were nervous. This had never happened before.
Just hours after Katrina carved its way across eastern Louisiana, Mr. Ducrest and several of his examiners huddled at their offices in Baton Rouge and started making phone calls to bankers and other regulators to find out what needed to be done.
"One of the first things we did was call Florida" banking regulators, he said last week during one of his brief respites from his cell phone. "After their hurricanes last year, we figured …" (At that point he politely excused himself to answer his ringing phone.)
Several days after the hurricane, regulators in Washington still had not heard from more than a dozen bankers, but Mr. Ducrest's office contacted representatives from all banks operating in Louisiana that were in the disaster area.
"I want to tell you, if anyone deserves an award during this whole thing, it's this gentleman right here," Dan Digby, the president of the Community Bankers of Louisiana, said at the Omni branch opening. He slapped his hand on Mr. Ducrest's shoulder. "He's been the glue that holds the whole thing together."
Mr. Ducrest and his 60 staff members have faced several challenges during the crisis, including tensions among bankers, fears of a bank run, and sheer exhaustion. Louisiana has a lot at stake; its 123 state-chartered banks have nearly 41% of the state's $55.3 billion of banking assets.
Many of the banks are still struggling to reopen branches. The Federal Deposit Insurance Corp. said Wednesday that 361 Louisiana, Mississippi, and Alabama branches in the disaster area remained closed.
To get banks get operating again, Mr. Ducrest has been organizing meetings to bankers to help each other, and he has been assisting them with logistics and supplies. His office has tracked down diesel fuel for branch power generators, called phone companies to set up Internet connections, and lined up state police escorts to take bank officials in to inspect damage.
Mr. Ducrest held repeated meetings with bankers over the Labor Day weekend - sometimes well into the night - to assess the damage to branches and discuss security issues amid fears of looting and violence when branches did begin to reopen.
Since then he has been on the phone constantly with federal regulators and bankers to try and ensure things are running smoothly. He called the FDIC two weeks ago to help set up a database to help displaced customers find contact information for local banks.
"That's when I spoke to Chairman [Donald] Powell for the first time, and then 30 times since then," Mr. Ducrest said.
On Wednesday he hosted Mr. Powell at a reopened Omni branch in Jefferson Parish. Temporarily, Omni officials will share the branch's lobby with three other banks, for four hours a day, five days a week.
"I think he has exemplified the very best of public service," Mr. Powell said in a phone interview after he met with Mr. Ducrest in New Orleans. "We've worked very closely with him. We have the best partnership you can have."
Mr. Powell said he expects to issue guidelines based on his meetings with Mr. Ducrest and local bankers soon to address emerging questions, such as how to deal with loans for which all the collateral has been destroyed.
Community bankers on the ground in Louisiana and officials in Washington call Mr. Ducrest a "hero" who has provided them critical aid.
"He's been there for every issue that comes up. He's been operating on two hours' sleep a night," said John Ryan, the executive vice president of the Conference of State Bank Supervisors. "He's been able to cut through the bureaucracy, put aside the rule book, and get things done."
The $100-million asset Mississippi River Bank reopened one of its three branches Monday. "John has the right kind of personality for these problems," said Michael Bush, the bank's president. "He's not excitable. He can sit there, listen, comprehend, and then react. It's not like he reacts and then he comprehends. That's the kind of personality you need in this situation."
Days after the hurricane Mr. Ducrest spent a night sleeping in his office, because his hectic schedule made it impossible for him to pull off the 75-minute car ride to his home in Lafayette and make it back in time for meetings in the morning. He spent another night sleeping on the couch of Louisiana Bankers Association chief executive officer Peter Gwaltney.
He also helped quell tension between small and large banks jockeying for position as branches began to reopen. At a meeting last week Jefferson Parish officials said they would let only about a dozen branches open for the time being. According to one participant, banks argued over which companies would get to open first, and a large bank wanted to open half the available branches.
A deal was worked out where branches of both community and large banks were allowed to open, and banks were allowed to put staff members in other banks' branches to cash checks.
Also, Mr. Ducrest has been working with community bankers to help stem fears that public hysteria could cause a bank run. Some nervous customers have already withdrawn deposits and put them in larger, more geographically diverse banks. The situation was made worse when, according to several bankers here and officials in Washington, a radio personality told a worried caller that depositing money in larger banks was safer during times of crisis.
Mr. Ducrest said he is approving branch applications as quickly as he can outside the area affected by the hurricane. "We've taken a 45-day [application] period down to a day or two," he said. "We're telling bankers, 'Open your branch.' "
This year is his 20th in the banking department; Gov. Kathleen Blanco, a Democrat, appointed him to be the commissioner last summer. He worked his way through the system as a field examiner and was part of the team that had to close 75 financial institutions in the 1980s when a drop in oil prices hit Louisiana and Texas. In 1994 he was promoted to deputy chief examiner.
He said bankers and regulators saw how vulnerable the financial services industry was in the 1980s and had since protected the banks from taking another hit.
"A lot of the present bank presidents were loan officers during the 1980s," he said. "They know about the risk."
Despite his relatively short tenure as the commissioner, Mr. Ducrest is already brandishing his reputation outside the state. He is the incoming chairman of the Conference of State Banking Supervisors Legislative Committee.
Many banks across the country prepared for such emergencies during Y2K system upgrades, he said; those models are being tested now for the first time.
"All these banks had contingency plans, they are implementing them, and it's helping them get back up," he said.
For now Mr. Ducrest is worried about banks' short-term survival.
At the Gulf Coast branch opening a week ago, he shook hands with more bankers, including Gulf Coast president Guy Williams, who spent three days after the hurricane rescuing survivors on a small boat.
Even though his cell phone continued to ring, Mr. Ducrest put it away and help hold the ribbon - a series of $1 bills taped together - as the branch was officially opened. Despite the day's optimism, he did not directly answer a question on whether Katrina would cause some small banks to close their doors permanently.
"Right now we are just focusing on getting everybody open," he said. "That's our immediate need right now. … We have extreme confidence in banks being able to get back in operation."
