KBRA Financial Intelligence

Analyzing Hurricane Helene’s Lasting Impact on Southeastern Banks

Welcome to KFI’s Monthly Insight. In this edition, we highlight the following key topics:

• The National Hurricane Center’s final report on Hurricane Helene and the storm’s lasting impact on community banks exposed to the most devastated areas across six southeastern states

• Certain loan categories, including commercial real estate (CRE), which have exhibited a correlation between rising delinquency rates and proximity to Helene’s path

• A continued slow pace of mergers and acquisitions (M&A) activity among U.S. lenders, with just five deals announced in March

Assessing the Scope of Helene’s Impact

Almost six months on from the devastating impact of Hurricane Helene, the National Hurricane Center issued its final report on the storm in March, ranking it as the seventh-costliest hurricane in U.S. history. Total monetary damages were estimated at $78.7 billion, and this sum may manifest in local banks’ loan portfolios over the next several quarters.

Between September 26 and October 2, all 372 counties across Alabama, Georgia, North Carolina, and South Carolina, as well as 31 more in portions of Florida and Tennessee, were declared to be experiencing a disaster as a result of Hurricane Helene by the Federal Emergency Management Agency (FEMA). Disasters can be segmented on a county-by-county basis and are denoted as either an emergency declaration (EM) or major disaster declaration (DR) by FEMA, with the latter being a more severe categorization. Throughout the 403 impacted counties, 110 (27.36% of the total) were classified as DR.

In the immediate wake of Hurricane Helene in October 2024, KBRA Financial Intelligence (KFI) cross-referenced FEMA’s information with our datasets, mapping out all impacted counties across six southeastern U.S. states and identifying which had the highest number of physical bank locations. We also utilized KFI’s platform to quickly generate a customized deposit summary report covering the entire perimeter of counties under a FEMA disaster declaration. Our interactive deposit map can be used to visualize the layout of bank branches across the country or within specific regions. Multiple institutions can be added to these maps at the same time, and areas of interest can be selected by state, county, city, area code, and metropolitan statistical area (MSA).

Defining Banks’ Exposure to Hurricane-Hit Regions

Our initial analysis concluded that Bank of America, National Association (KFI Score: B) was the leading institution in custody of deposits, carrying a 28.96% market share in all counties experiencing Helene-related disaster conditions. Truist Bank (KFI Score: B) had the largest physical footprint in this area at 769 branches. However, we note that both of these banks are of significant size and their thousands of branches are relatively well dispersed throughout the country, but more than two-thirds of 463 banking institutions with offices in the Helene disaster area have more than 90% of deposits and/or branch locations concentrated within the perimeter. Many of these institutions are community banks–defined by the Federal Reserve as those with less than $10 billion in assets–which tend to maintain a much smaller number of branches clustered in a narrow geographic location.

To gauge the potential impact on these institutions, KFI has generated two cohorts of community banks that reported more than 50% of their offices and deposits concentrated within Helene-impacted counties. The larger cohort, which includes banks highly concentrated in all 403 impacted counties, includes 340 banks and will be referred to as the impact zone (IZ) banks. The smaller cohort will be referred to as the major disaster zone (MDZ) banks and includes 102 that are highly concentrated in the 110 counties classified by FEMA as DR. Further, these two cohorts can be compared against a universe of 4,045 peer group (PG) banks that are not highly concentrated within the IZ or MDZ to assess whether there has been any divergence between the performance of loans held by banks broadly exposed to counties hit hardest by Hurricane Helene versus those that felt no severe impact.

Hurricane Helene made landfall on September 26, 2024, just prior to the end of the third quarter, leaving the fourth quarter as a window into the most immediate impact of the storm on banks via FFIEC Call Report data. Call Reports capture bank data as of the end of each quarter, leaving just over 90 days between the initial impact of Helene and the reported data for 4Q 2024. This would be enough time for a performing loan to fall into delinquency or non-accrual, but generally not enough time for it to be charged off. As such, this analysis will primarily be concerned with increasing rates of delinquency.

Delinquency Rises More Aggressively for Banks in Disaster Zone

Indeed, the rate of delinquency in total loans held by IZ banks did increase faster than those of the PG institutions between the end of 3Q and 4Q 2024, rising by 11 basis points (bps) and 7 bps, respectively. Delinquency among all loans held by MDZ banks jumped even more steeply than both of those groups, increasing 14 bps. Though it appears there may be some link between community banks’ overall rate of delinquent loans and proximity to Hurricane Helene’s path through the U.S. southeast, a deeper look uncovers stronger correlations within specific loan categories.

In October, Although CRE delinquency was unchanged among PG banks, IZ banks saw the delinquency rate of their CRE loans increase 7 bps quarter-over-quarter. MDZ institutions experienced a 17-bp increase. CRE properties are not only likely to be vulnerable to natural disasters, but they also constitute the largest proportion of bank loans among all three bank samples, ranging between 44.7% and 48%.

The widest discrepancy between the PG banks and MDZ cohort was observed in the construction and development (C&D) loan category. Though delinquency of C&D loans among PG banks declined 1 bp between 3Q and 4Q 2024, increases of 15 bps and 58 bps occurred among IZ and MDZ banks, respectively. C&D loans make up between 7.7%-10.6% of total loans in each cohort, making them an important component of many banks’ lending business. It makes sense that construction lending could be immediately impacted by storm damage, but it should be noted that local banks may soon be able to benefit from a wave of new construction projects tied to rebuilding and recovery efforts.

As more quarterly data becomes available, KFI will continue to track the impact on banks most likely to have been impacted by Hurricane Helene, as well as other natural disasters across the U.S. Individual bank and credit union exposure to CRE lending and other loan categories can be identified by utilizing the Data Wizard in KFI’s Excel add-in. The performance of these institutions’ loans, as well as their KFI Scores, can be compared against their peers in the Loan Category and Delinquency Report template from our Template Library. KFI Scores are proprietary quarterly financial assessment scores that measure the financial health of all U.S. banks and credit unions on an A through E scale using Call Report data. Our models incorporate various asset quality, capital adequacy, earnings performance, and liquidity and funding measures for managing counterparty risk and robust peer analysis. To access our full library of KFI Scores and data tools, request a demo with KFI.

Recent M&A

Joliet, Illinois-based NuMark Credit Union (KFI Score: B) announced in a March 13 press release that the $850 million credit union will acquire Lemont, Illinois-based $52 million The Lemont National Bank (KFI Score: C+) for an undisclosed price. The deal is expected to close in 2Q 2025.

Doraville, Georgia-based MetroCity Bankshares, Inc. (NASDAQ: MCBS) (KFI Score: A-), the parent company of $3.6 billion Metro City Bank (KFI Score: B) announced in a March 17 press release that the company will acquire Doraville, Georgia-based First IC Corporation and its $1.2 billion bank subsidiary First IC Bank (KFI Score: B+) in a 54% cash and 46% stock transaction valued at $206 million. The deal is expected to close in 4Q 2025.

OakNorth, a commercial digital bank announced in a March 17 press release that the company will acquire Birmingham, Michigan-based $62 million Community Unity Bank (KFI Score: NI) in an all-stock transaction for an undisclosed price. The expected close date of the deal was also undisclosed.

Macon, Mississippi-based BankFirst Capital Corporation, the parent company of $2.7 billion BankFirst Financial Services (KFI Score: B) announced in a March 21 press release that the company will acquire Bay Springs, Mississippi-based The Magnolia State Corporation and its $456 million bank subsidiary Magnolia State Bank (KFI Score: B) for an undisclosed price. The deal is expected to close in 3Q 2025.

Syracuse, Kansas-based Dream First Bank (KFI Score: B) announced in a March 24 press release that the $690 million bank will acquire $268 million Alva, Oklahoma-based BancCentral, National Association for an undisclosed price. The expected close date of the deal was also undisclosed.

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