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Volume 31, Issue 2

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Banks are required to have a business continuity plan by federal regulations. In the past, these plans were developed to cover the main office and the computer systems. In large cities, there is usually another branch nearby. But in rural America, it may be many miles between branches.

On Sunday, May 4, 2003, several tornadoes struck two such towns in Southwestern Missouri. Branch banks in Pierce City and Stockton suffered major damage. Just 17 days after the tornadoes struck, I visited both towns to determine how well the banks’ disaster plans worked.

Pierce City, Mo.

The First State Bank of Purdy is a privately owned bank with five locations. The main office is in Monett, Mo., with other offices in the towns of Purdy, Pierce City, Cassville, and a facility in a Wal-Mart store. I met with Thom Conus, senior vice president and security officer to discuss the tornado that struck their Pierce City branch office.

The tornado struck about 7 p.m. on Sunday, May 4, 2003. Conus and three other executives – Ron Smith, vice president; Rich Scheihing, vice president and branch manager; and Glen Garrett, owner of the bank – went to Pierce City and secured the branch in less than an hour. Pierce City is just a short drive from Monett.

The branch is located one block north of the main street (Commercial Street) of

Pierce City. It was the only commercial building that was salvageable. The windows were blown out and a gash was torn in the roof. The officers of the bank stayed on-site for the next 48 hours, in four-hour shifts, securing the facility until the glass windows were replaced on Tuesday afternoon and the building could be secured.

The same storm also caused electrical and communications problems throughout Lawrence County, including Monett, where the bank’s computer system is located. The bank took their back-up tapes over to a nearby disaster recovery services vendor and brought their system up on Monday morning. The systems were running on back-up generators until electrical power could be restored. The Cassville and the Wal-Mart locations of First State Bank were open on Monday morning, and the Monett and Purdy locations opened on Tuesday after power was restored. Pierce City did not open until 10 days following the storm.

The main reason for the delay in Pierce City was the telephone connections. The branch had to replace the telephone switch and get the lines repaired. The bank had a crew in, cleaned up the facility and took a survey of the damage starting Monday morning. It rained Tuesday night, and because the roof had not yet been fixed, they had a setback in their recovery efforts. The bank replaced monitors and keyboards for their CRT terminals, adding machines, telephone switch and telephones.

Pierce City lost one life during the storm. The husband of long-time bank employee Deborah Taumton, assistant cashier, was killed when they took shelter in the town’s armory, which collapsed during the storm.

The bank exercised their disaster plan and did not find anything they wished they had done differently.

Stockton, Mo.

Stockton took a bigger hit from the storms, with three deaths and damage to every downtown business. The tornado went from west to east, right through town, destroying downtown Stockton. I noticed four banks in town, one far enough south of town to escape damage, another had the roof damaged and sign torn off, and the other two were completely destroyed.

The Great Southern Bank, headquartered in Springfield, was totally destroyed. It had three partial walls still standing but no roof. The bank encountered problems getting a state permit to pull the mobile facility into Stockton, so they used an RV until the permit could be obtained. The mobile facility was equipped with a safe, teller windows and customer service desks.

According to Doug Marrs from Great Southern Bank, their BCP worked as planned. One of their competitors, Liberty Bank on the south edge of town, even offered the Great Southern Bank office space until their mobile facility was up and running.

Mid-Missouri Bank was also totally destroyed, with only the safe left standing after the storm. A picture of this branch made many newspapers. Mid-Missouri Bank is also headquartered in Springfield.


A mobile facility was set up in the parking lot of a grocery store outside of the devastation area. This facility had a branch safe, a safe deposit safe, teller windows, customer service desk, and a drive-up ATM as well as a drive-up window. Mark Maples from Mid-Missouri Bancshares confirmed that this support was in their plan and it worked as designed.

 

 


Milan A. Paddock is president of Business Continuity Planners, Inc, specializing in disaster recovery planning for community banks. The company Web site is www.Bus-Com-Plan.com.