Professor Yoder Talks about the Storms' Impact on the Banking Industry

Poultry-farm_280Professor Steve Yoder is quoted in The Birmingham Business Journal about the storms' impact on the banking industry-

As individuals start to deal with the widespread damage and destruction of their homes and businesses, financial institutions might start to see an uptick in delinquencies on loans.“If you’re not living in your house, you’re probably not going to pay your mortgage on it or you’re going to be waiting for your insurance money to come in to help you pay it,” said Stephen Yoder, assistant professor at the University of Alabama at Birmingham’s School of Business. “Also, if you’re a business owner and your customers are not shopping with you because their houses are damaged, then that could affect a business’ ability to pay back loans. Loans can have a ripple effect when there’s an affect on the borrower or the borrower’s customers.”While banks are watching their bottom lines, they might notice an increase in noninterest revenue in the upcoming months. Banks might see temporary boosts in their deposits as customers fill their accounts with money received from insurance companies.“When insurance companies settle with individuals on their homeowners’ insurance policies, money might sit in their checking accounts before they can start rebuilding,” Yoder said.Fees and other income banks receive from credit card usage will probably increase, as well.Some banks had to temporarily close branches due to power outages and structural damage, but those issues shouldn’t impact banks, Yoder said.“Power outages are not going to have a material affect on these banks,” he said. “Even if there’s structural damage, a bank is usually able to get itself up and running pretty fast with a temporary branch or by sending customers to another branch location.”

The storms’ statewide impact to key industries

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Date: Friday, May 6, 2011, 5:00am CDT