As Keith Pollek drove to work the morning of July 12, 2017 on flooded streets. There had been a huge rainstorm the evening before, but the rain had stopped at about 7 o’clock that morning and the sun had come out.
“When I got to the bank, the parking lot was flooded and water was coming in the front door. We got a squeegee and a broom, and pushed the water back out the door,” said Pollek, president and CEO of Fox River State Bank in Burlington. The bank may have hoped that was all they would need, but the rainstorm from the night before had come after weeks of rain in the area. Burlington sits at the juncture of the Fox and White rivers; news started to come in that the rivers were way past the flood stage upriver.
The bank started sandbagging, trying to beat the oncoming floods, but the water rose too quickly, so the staff put as many things up high and on top of tables as they could. Then the branch was closed and employees sent home before water started pouring into the bank in every possible way. The building ended up under 21 inches of water.
At 6 p.m., all the bank officers who could make it gathered at Pollek’s home, where they reviewed Fox River State Bank’s disaster recovery plan with flashlights and candles. One key person was missing: Jeff Schmid, the disaster recovery officer, was on a train coming back from New Mexico. Fortunately, Schmid was able to call in to the meeting via cell phone. There was a lot of work to be done to address the flooding, and to get the bank up and running again they needed to get to work right away.
Having a solid plan was critical to the bank’s flood response. “Have a sound disaster recovery plan and execute it,” explained Schmid. Considering how critical having a solid plan was to the bank’s flood response, Schmid made sure to emphasize that “the disaster recovery plan was not something I just sat down and penned one day,” he continued. The bank had used Lesson’s Learned from Katrina from FFIEC and FDIC to develop the plan, because Schmid knew that if anything was going to happen to the bank, it would most likely be a flood, and so that greatly factored into the plan. This careful planning resulted in an effective recovery effort, and after this real test of the disaster recovery plan, neither Schmid or Polleck feel that any major changes need to be made to it.
Fox River State Bank’s disaster recovery plan called for a disaster recovery team made up of officers. The disaster recovery team brought personal laptops and printers; each member had a flash drive with key information and websites that they use frequently. The bank was able to operate out of their second branch in nearby Lake Geneva, which was mostly operational except for access to files and its in-house phone system that was based in Burlington.
Although the people of Burlington were well aware of the flooding, the bank had to make sure to get the word out. Relationship bankers had bank-owned cell phones they used to notify customers that they’d need to go to the Lake Geneva branch if they needed something, and announcements were posted to the bank’s Facebook page and website.
Integral to the recovery efforts was a business impact analysis conducted a few years prior, which ranked critical functions of the bank and how long they could do without each. Every member of the disaster recovery team had a copy, and they met every four hours to compare their progress to the analysis. Throughout the recovery, they found that they were on or ahead of schedule. The bank’s relationship with vendors, some of whom were able to respond within an hour, proved key to keeping on schedule.
It took three days for the waters to recede from the building, leaving behind a mess. There are very few things in this world built to withstand soaking in river water for several days. Massive amounts of wet confidential documents could not be salvaged and needed to be destroyed; the bank’s shredding company brought bins for these documents right away so they could be hauled away to their facility that was able to handle wet paper. All these documents were backed up and the bank’s backup company was on standby and able to send anything the bank needed electronically. Another vendor brought a cube truck that staff could use to secure items, and the bank also brought in a vendor to clean up the lobby so that customers could return. All of these were among the key relationships that kept the recovery process moving.
The recovery process was transformative in many ways. Carpeting had to be ripped out, all the furniture had to be thrown away, and the bottom four feet of drywall had to be cut out of all the walls, but amazingly the bank only lost two out of the thirty computers in the building. The new furniture replacing the flood-damaged items have “80 percent fewer drawers,” explained Schmid, to reduce paper documents, and everything at the bank is now stored and retrieved electronically.
Although there is never an opportune time for a branch to flood, mid-July with the Call Report due at the end of the month added another challenge. Fox River State Bank reached out to the Federal Reserve to see if they could get a deadline extension, but unfortunately, since there had not been a state of emergency declared at the federal level (Governor Scott Walker did declare a state of emergency at the state level), the Fed could not give them an extension. The Fed was able to work closely with the bank as they got the report in late. Another regulator, DFI Secretary Jay Risch, reached out to Fox River State Bank to check in and make sure the bank was doing well, a gesture that Pollek attributes to the relationship built during Risch’s time with the WBA.
Another important set of relationships were those amongst community banks. “About a dozen small community banks reached out to ask what they could do to help,” said Pollek. Other banks offered to share teller lines and lend equipment. Although the recovery went longer, Fox River State Bank was only closed for four days. Both Pollek and Schmid give a great amount of credit to employees, directors, and their families for helping achieve that. The bank was able to make the best of a rather unfortunate situation thanks to careful planning and developing relationships with customers, vendors, and the banking community.
Bates is WBA administrative/ communications assistant – legal.
Readers are encouraged to reach out to Polleck and Schmid at 262-767-8600 with questions.
Lessons Learned from Katrina may be viewed at: https://www.fdic.gov/regulations/resources/lessons/