Navigating the Storm: Disaster Contingency and Post-Event Strategies Following the Recent California Disasters

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1 Navigating the Storm: Disaster Contingency and Post-Event Strategies Following the Recent California Disasters Laurel Sykes, CRCM SVP, Chief Risk Officer Montecito Bank & Trust

2 Objectives Current State Employees Resources Communication Compensation Infrastructure Business Continuity Alternative Strategies Serving Clients Regulatory Considerations

3 Current State

4 Natural Disasters Are Mandating Robust Contingency Plans Individual Assistance Applications Approved: 729 Total Individual & Households Program Dollars Approved: $4,695, Total Public Assistance Grants Dollars Obligated: $95,525, Designated Counties (Individual Assistance): Los Angeles, San Diego, Santa Barbara, Ventura Individual Assistance Applications Approved: 4,513 Total Individual & Households Program Dollars Approved: $16,598, Total Public Assistance Grants Dollars Obligated: $308,115, Designated Counties (Individual Assistance): Butte, Lake, Mendocino, Napa, Nevada, Orange, Sonoma, Yuba

5 Natural Disasters Are Mandating Robust Contingency Plans Individual Assistance Applications Approved: 246 Total Individual & Households Program Dollars Approved: $1,525, Total Public Assistance Grants Dollars Obligated: $277, Designated Counties (Individual Assistance): Honolulu, Kauai

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8 During a Disaster

9 #1 Employees are the First Priority Think beyond the walls of the office: what impacts THEM? Road closures Hazardous conditions at work locations Personal injury Housing and personal property Food and water Caring for children, loved ones or pets Loss of a loved one Dismissal programs Remote work environment capabilities Is your contact information updated?

10 #1 Employees are the First Priority

11 Consider Resources for Employees Expect that services such as power, phone, water and sewage will be disrupted for an extended time. Remember to: Refill your gas tank and, if evacuating, stock your vehicle with emergency supplies and a change of clothes. Get prescription refills if needed. Have cash on hand. Turn around. Don t drown. Don t drive around barricades, or through high water.

12 #2 You Can t Communicate too Much Consider multiple channels to reach employees Recorded messages SMS and emergency alerts Status updates during non-work hours Power outages Health and safety issues Road closures Management, Board, and Vendors Schedule regular updates Special conference lines and hotlines Clients Branch closures and reduced hours Available shelters and housing Temporary loan availability: Our Disaster Assistance webpage had 445 sessions

13 #2 You Can t Communicate too Much

14 #2 You Can t Communicate too Much

15 #2 You Can t Communicate too Much Social Media to Provide Information for the Community # of posts from Dec through Feb 2018: 54 Average Total Reach: 610 Average Total Impressions: 954 Consider Community Messaging Supportive services Where to go for information Road closures Efforts within your branches Gratitude for First Responders #805Strong Scam warnings Opportunities to donate to people in distress, relief

16 #3 How do you Serve your Clients? Access to money during a disaster Cash needs Credit card processing Fee waivers Identification and financial documents Mail Safe deposit boxes Disaster loans Small business owner needs Small personal loans Participate in recovery centers or consider office hours Handling insurance proceeds

17 Regulatory Guidance for Affected Customers Long-term or widespread disruption of critical services Waiving or reducing ATM fees Temporarily waiving late payment fees or early withdrawal penalties Working with borrowers who have been affected by the event Restructuring loans (generally should not exceed 90 days) Safely and soundly expediting lending decisions when possible Helping meet credit needs by originating or participating in sound loans to rebuild damaged property Contacting state and federal agencies, as well as other financial institutions, to help mitigate the effects of the event CRA consideration for disaster loans, investments, and services: Section 12(g)(4)(ii)

18 #4 Telecommunications Backup plans for network connectivity / outages Analog phone lines if network phones? Buddy branches to check balances? Diversity Cable / internet connections Consider carrier diversity Bank-issued devices Personal devices Plan for extended power outages Generators need fuel Power in branches alarms, cameras, lights Investigate calling tree limitations

19 Following a Disaster

20 #5 Business / Economic Impact

21 #6 Testing Consider critical processes first What are your objectives? Backup procedures? Alternate site? How is it tested? Include transaction testing Ensure tests evaluate against Recovery Time Objectives (RTOs) Testing against key vendor contract obligations Periodic tabletops, including pandemic Calendar of regular and comprehensive tests Track changes made to plans based on test results Board Reporting on results of tests and incidents

22 #7 Consider Lessons Learned Examine all potential disastrous events that could occur Consider recent events Tabletop exercises Develop preemptive strategies to combat these situations and ensure remediation strategies are in place Is your building and operations prepared for unanticipated threats like tornadoes and more forecasted disasters like hurricanes? Do you have access to the necessary equipment to complete your disaster preparations? Does your corporate insurance plan cover all appropriate disasters? Geographic diversity of employees? Allocate knowledgeable personnel Employees are aware and trained

23 #8 Continue to Assess Long-Term Impacts on Employees Assess impact on employees Proactive plans to meet needs

24 #8 Continue to Assess Long-Term Impacts on Employees Consider health implications (e.g. air quality, safe drinking water, etc.) Counseling and other supportive services Childcare Damaged or destroyed homes Personal injuries Loss of a loved one Compassion fatigue Extended absence plans Celebrate your own internal heroes

25 #9 Steps to Update Your Plans Review your business impact analysis Review your business continuity plans Contact information for third party service providers Determine remote site and disaster recovery location Consider a disaster recovery hotline Property assessment protect your property Also consider Necessary supplies Backups and retention of important documents and information Communication plan to ensure human safety Cash ordering and liquidity issues How much capital could be at risk Regulatory notification process

26 Resources FS-ISAC activated information sharing and coordination in Hawaii and regional coalitions to prepare for and respond to Hurricane Lane in the Hawaiian Islands. Lessons learned from the 2017 hurricanes by holding prelandfall crisis support calls, monitoring power outages and credit card processing of merchants to provide member financial institutions and government agencies situational awareness and support.

27 Other Resources FEMA Business Protection Toolkit

28 Interagency Examiner Guidance Communicate before, during, and after a major disaster, including: Addressing staffing issues Operating with limited staff due to personnel needing to respond to personal concerns Identifying and informing essential personnel on how and where they will operate Keeping staff informed of plans to share information throughout the major disaster Apprising customers on ways to receive information regarding operational capabilities Notifying key third-party service providers and suppliers of potential need to take preemptive action before the event and initiate business continuity plans after Deal with extensive damage to facilities, equipment, and records, if needed Establishing temporary facilities; Obtaining replacement equipment and supplies; Handling and reproducing contaminated loan files and legal and collateral documents; Replacing contaminated cash and coins; and Handling contaminated safe deposit boxes and their contents. Retrieve and restore data systems, electronic data, and operational capabilities

29 Questions? Laurel Sykes, CRCM SVP, Chief Risk Officer (805) Montecito Bank & Trust 29