[Congressional Record Volume 155, Number 106 (Wednesday, July 15, 2009)]
[Extensions of Remarks]
[Page E1790]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                COMMUNITIES REBUILD AFTER HURRICANE IKE

                                 ______
                                 

                             HON. RON PAUL

                                of texas

                    in the house of representatives

                        Wednesday, July 15, 2009

  Mr. PAUL. Madam Speaker, at a time when the financial headlines are 
dominated by stories of financial institutions seeking taxpayer funds 
and other special privileges, I am pleased to call my colleagues' 
attention to a story from the Galveston Daily News about how four 
community banks came together to help their friends, neighbors and 
customers begin to recover and rebuild from Hurricane Ike.
  Last fall, as the people of Galveston were assessing the damage from 
Hurricane Ike and Congress was beginning debate on spending billions of 
taxpayer funds to bail out irresponsible financial institutions, 
representatives of Frost, HomeTown, Moody National and Texas First 
banks meet to discuss how these banks could help jumpstart hurricane 
recovery efforts. The four banks agreed to make unsecured bridge loans 
to Galveston businesses to ensure these businesses had access to 
capital while they waited for federal assistance and insurance 
payments.
  The four banks made more than $40 million in recovery loans. These 
loans provided lifelines to many businesses struggling with both the 
devastation of Hurricane Ike and the credit crisis. Without the efforts 
of these four banks, several Galveston businesses would have had to 
shut their doors.
  In conclusion, Madam Speaker, I extend my thanks to management and 
employees of Frost, HomeTown, Moody National, and Texas First banks for 
their efforts to help the businesses and people of Galveston recover 
from Hurricane Ike.

             [From the Galveston Daily News, May 24, 2009]

             Banks Stepped Up When Chips, Economy Were Down

                            (By Laura Elder)

       Just days after Hurricane Ike, as failing Wall Street 
     institutions roiled the U.S. financial system, civic leaders 
     and representatives of four banks forged an agreement that 
     would profoundly shape the island's economic recovery.
       After several meetings, some in storm-swamped buildings 
     under generator-powered lights, representatives of Frost, 
     HomeTown, Moody National and Texas First banks agreed to make 
     unsecured bridge loans to island businesses for rebuilding 
     until federal money and insurance payments materialized.
       The community banks made more than $40 million in recovery 
     loans at a time when lending by industry giants had all but 
     ground to a halt. The 180-day loans, at 5 percent interest, 
     were a lifeline to local businesses hoping to recover quickly 
     from a hurricane that inflicted $11.4 billion in damage along 
     the upper Texas Coast.
       Some island business owners said their livelihoods would 
     have been lost for good had it not been for the help of 
     community bankers.


                             Line Of Credit

       Charley DiBella, owner of DiBella's Italian Restaurant, 
     which took in 4 feet of storm surge, was helped by HomeTown 
     Bank not once but twice after Hurricane Ike, which struck 
     Sept. 13.
       DiBella credits the bank and Gary Gilliland, chief 
     commercial lending officer, for providing a line of credit to 
     the restaurant.
       With the loan, DiBella's was able to make storm repairs and 
     open in November. But in January, disaster struck again when 
     a fire broke out on the second floor of the 20-year-old 
     restaurant. HomeTown Bank helped again, DiBella said. 
     DiBella's Italian Restaurant plans to reopen Tuesday.
       ``Without HomeTown Bank and Gary Gilliland, there wouldn't 
     be a DiBella's Restaurant,'' DiBella said. ``I had insurance, 
     but you know what that's like.''
       Gilliland, who checked on properties for his clients who 
     had evacuated and weren't allowed back on the island for days 
     after the storm, was in May named Indie Banker of the Month 
     by Independent Banker Magazine for his work during Hurricane 
     Ike.


                           Bridge Of Dollars

       HomeTown Bank, at last count, had made more than $6 million 
     in bridge loans to area businesses after the storm, said 
     Jimmy Rasmussen, president and chief executive officer.
       Two days after Ike struck, Wall Street institution Lehman 
     Brothers filed for Chapter 11 bankruptcy, deepening a 
     financial crisis and already painful credit crunch that had 
     stalled lending. Fast-and-loose credit practices by the 
     banking giants had come home to roost.


                          No `Voodoo' Products

       But independent and community banks were never caught 
     holding a bundle of bad loans.
       ``We're not sitting here selling voodoo products to peddle 
     to people,'' said Matt Doyle, vice chairman of Texas First 
     Bank.
       That local competing banks got together in one room after 
     the hurricane wasn't so unusual, Doyle said.
       ``We may be competitors, but we're community bankers,'' 
     Doyle said. ``When our community is suffering, all that goes 
     out the window, and it's never really even in the house.''
       Texas First Bank lent $8.5 million in recovery loans.
       Bankers are the first to say their efforts weren't without 
     self-interest. They certainly earned money from the loans. 
     And they made loans based on credit history, long-standing 
     relations and with the understanding they would be repaid.


                             In It Together

       And if a lot of local businesses failed, the local banks 
     were going to feel it, so they had an interest in the success 
     of their neighbors.
       ``If Galveston business didn't recover, we're all going to 
     be damaged, all going to take losses,'' said Vic Pierson, 
     president of Moody National Bank, which made about $21 
     million in recovery loans after the storm.
       ``It was in our best interest to do whatever we could to 
     assist as rapidly as we could for business recovery on the 
     island.''


                          Strong Relationships

       Those who didn't have strong relationships with their 
     bankers were left waiting for help from the Small Business 
     Administration and the Federal Emergency Management Agency, 
     Pierson said.
       ``Those programs are very good, but to finally get some 
     dollars can take 90 to 120 days or longer,'' Pierson said.
       ``A business couldn't wait three or four months to get 
     started and I think that's where the local community banks 
     came in.''
       Watching a business rebuild can encourage others to follow, 
     Pierson said.
       ``It was absolutely critical that people started putting 
     their businesses back together and making a statement,'' 
     Pierson said.


                              Need Remains

       Albert Shannon, Frost Bank's group president in this 
     region, and other bankers interviewed for this story credited 
     Mayor Lyda Ann Thomas and Jeff Sjostrom, president of 
     Galveston Economic Development Partnership, for the idea of 
     recovery loans. Island businessman Gerald Sullivan, who early 
     after the storm was appointed by Thomas to help with 
     recovery, also played a role in encouraging recovery loans, 
     bankers said.
       Frost Bank, headquartered in San Antonio, made $5 million 
     in recovery loans, Shannon said.
       Sjostrom recently traveled to Manatee, Fla., to share ideas 
     with officials there about recovery efforts.
       ``They were just amazed at the response of our local 
     lenders,'' Sjostrom said.
       Still only about 75 percent of the island's 2,500 business 
     have returned, Sjostrom said. Many were uninsured for flood 
     damage when Ike struck.
       Businesses that aren't able to turn to the banks are doing 
     what they can to recover, Sjostrom said,
       ``They're not sitting back waiting and crying,'' Sjostrom 
     said. ``They're going forward doing what they have to make it 
     work. We still have a lot of businesses that need financial 
     help.''

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