Crawling Out Of The Wreckage

Gulfport's Hancock Bank had planned for Katrina -- and foresees a rebuilding boom

What's it like to run a 103-branch bank using cell phones, white boards, and borrowed furniture? Ask executives of Hancock Bank (HBHC ) in Gulfport, Miss. Its once-plush 15-story headquarters, sitting just a quarter mile from the Gulf of Mexico, was shattered when Hurricane Katrina sent a 30-foot wall of water crashing through the lower floors.

Now, with the verve of a startup and like so many storm-ravaged businesses, Hancock is determined to reopen. "We see ourselves as an essential service, just like hospitals and drugstores," says Vice-Chairman and Chief Executive George A. Schloegel. He and his staff are operating out of temporary digs in the bank's former training center three blocks away. Across the street lies the city's makeshift morgue, which as of Sept. 13 was still receiving bodies. The walls of the stand-in offices are plastered with notes offering everything from baby-sitting to generators; the bank has rented apartments for those among its 2,000 employees who had to abandon their homes.

At the new headquarters, staffers are mostly nourished by granola bars and Gatorade. For nearly two weeks there was no running water, and even now the place is overcrowded, so three Porta Potties remain outside. Some executives sit at card tables in dimly lit rooms approving multimillion-dollar reconstruction loans. During the second week, a few set up shop in the parking lot of a Wal-Mart (WMT ) 20 miles north of Gulfport. Other employees are trying to get power back on at branches and to communicate with those who had to flee the storm or the chaos that followed. "We're so excited," says Joy L. Phillips, Hancock's general counsel. "We just got fax service."

On four giant white boards, bank executives have sketched out the state of all 103 branches: 80 are back in operation, although in some cases that's a generous description. As for the four locations in New Orleans, bright red X's show that all services are still down.

Schloegel and his team followed the company's drill for disaster recovery. With $4.7 billion in assets and branches throughout Florida, Louisiana, and Mississippi, 106-year-old Hancock Bank is a local institution in a region regularly pounded by storms. Years ago bank executives developed a hurricane plan to protect crucial data. In this instance, they tracked Katrina for a full week before it hit the Gulf Coast. Back-office staff in Baton Rouge went on alert. Then, the Friday before the storm hit, more than 200 backup tapes containing all the bank's records were shipped to Chicago, where they were put on secure servers. "We anticipate hurricanes -- and pulled the trigger," says Chief Financial Officer Carl J. Chaney.


Still, Hancock was a wreck: 75% of its branches were knocked out by the storm; six may have to be rebuilt altogether. With power out, cash machines were useless, and business clients could not electronically deposit pay checks into workers' accounts. But Schloegel, a gruff Gulfport native who has run Hancock since 1991, refused to close up shop, even temporarily. He persuaded Federal Reserve officials in Birmingham, Ala., to send down $15 million in cash in an armored truck on Aug. 31 to bolster reserves while the power was out. That covered the payroll for the local school system, trucking companies, and the sheriff's department. With some semblance of order now restored at the bank, Schloegel has let homeowners skip this month's mortgage payments.

Bank executives readily admit such friendly machinations -- along with the reconstruction of Gulfport -- could prove a boon. After Hurricane Camille hit Gulfport in 1969, Hancock saw a storm of business. Its assets grew 43% in four months. Already, there are indications that Katrina may do the same. On Sept. 7 the bank arranged $2.7 million worth of new loans, all closed by weary underwriters in that Wal-Mart parking lot. Since then, a local company took out a $5 million loan. ``We feel very comfortable that the economy is going to explode,'' says Chaney.

On the streets of Gulfport today, National Guard soldiers direct traffic, and crews clear debris. Work has started on rebuilding Route 90. But Hancock Bank's headquarters, once Gulfport's tallest building, has been gutted. It won't be habitable for another year.

By Brian Grow in Gulfport, Miss.

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