Regional Banks Allocate Funds for Hurricane-Stricken Florida

Regional banks operating in Florida are setting aside loan loss provisions in the third quarter to prepare for the financial impact of recent hurricanes. These provisions aim to cover potential defaults by borrowers affected by extreme weather events. Florida experienced two devastating hurricanes at the end of September and the beginning of October, resulting in loss of life, property damage, and widespread disruptions to the lives of millions of residents.

Valley National Bancorp (NASDAQ: VLY), which has approximately $62 billion in assets and 230 branches nationwide, including 40 in Florida, has specifically allocated $8 million in reserves for the impact of Hurricane Helene. The bank stated earlier this month that it may see a significant increase in hurricane-related reserves, loan loss write-offs, and provisions in the fourth quarter due to Hurricanes Milton and Helene.

Seacoast Banking Corporation of Florida, with 77 branches and $15.2 billion in assets, anticipates provisions between $5 million and $10 million in the fourth quarter due to Hurricane Milton. However, the company noted that the full impact in the most affected areas remains uncertain.

First Bancorp (NASDAQ: FBNC) and United Community Banks (NYSE: UCBI) have set aside $13 million and $9.9 million respectively due to Hurricane Helene. Florida-based BankUnited (NYSE: BKU) is in the process of finalizing its assessment regarding the impact of Hurricane Milton.

The financial impact of the hurricanes extends beyond the banking sector, with insurers expected to face losses exceeding $100 billion. Hurricane Milton resulted in at least 10 fatalities and widespread power outages, following Hurricane Helene, which struck as a Category 4 storm and left a trail of destruction across several states.

Despite the immediate challenges, banks may see an increase in business in the coming quarters as individuals and businesses seek financing for rebuilding. Typically, after such disasters, there is an uptick in loans due to high demand for mortgages, small business loans, and consumer credit. Banks may offer incentives such as lower interest rates, deferred payments, and income-based repayment plans to alleviate the financial burden on affected borrowers.