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Operating in Orleans, Jefferson and St. Bernard parishes, Gulf Coast Bank and Trust Co. was basically left homeless when Hurricane Katrina deluged New Orleans in August 2005.

“By the time the storm came, we had nine branches in the New Orleans area,” says Guy Williams, Gulf Coast CEO and president of the bank founded in 1990. “We thought we were progressing already and thought, for a small company, we had expanded fast. With the traditional storm, it’s three days and you’re back. The experience had never been that bad and there was no reason to think otherwise.”

Naturally, that’s when the unthinkable struck. Katrina’s high water came and stayed for weeks, leaving many areas of New Orleans inaccessible for months—and even longer in some places.

When it became clear Gulf Coast Bank and Trust wasn’t going to return to its offices in the usual time frame, Williams says they hurriedly rented space, assembled furniture, borrowed cash and headed for Baton Rouge. A week after Katrina hit, Gulf Coast Bank had a new temporary location in Bocage Shopping Center, easing longtime customers’ concerns that losing a physical bank meant lost money. By March 2006, they had added another branch at Perkins Road and Siegen Lane.

“Katrina taught [banks not to] put all your eggs in one basket,” says Sid Seymour, chief examiner with the Louisiana Office of Banking. “Pre-Katrina, they were aware of it, but nothing like Katrina hit before, so they didn’t realize how important it was until the storm hit. With previous hurricanes, they typically reopened in other neighboring branches, but with a Katrina-like event where entire areas became inaccessible it drove the point home about risk diversification.”

Banks are building risk diversification into their hurricane preparation. Seymour says if a Katrina-type storm happens again, banks have other locations from which to operate until they can re-establish branches shut down in a particular area.

The lesson was expensive for some banks. Seymour says banks had significant write-offs and expenses in 2005 associated with relocating main offices, branches and staff to Baton Rouge.

“What do you do when your customers are driving up and you can’t service them?” he says. “One of the positive things was they were able to reopen so quickly with temporary facilities here or partnering with other financial institutions.”

Like many who came to Baton Rouge, Gulf Coast Bank’s temporary locations are now becoming permanent locations as part of their disaster recovery plans and expansion into new territories.

In eight months, Williams says they’ll finish construction on an 8,400-square-foot, two-story main office on Jefferson Highway that will house their mortgage operation. They have also bought property on Perkins Road for a new branch.

“Now we’re in Baton Rouge and beginning to advertise there, building staff and a strong presence,” he says. “It gives us a whole new group of customers. We have mortgage and investment operations in Baton Rouge and we’re now doing business in five parishes.”

Also, Williams says Katrina changed where banking is done. Even with flooded main and branch buildings, Internet banking kept many customers afloat with bank accounts by giving them computer access to their money throughout the disaster.

“Our computer system didn’t go down during the storm, but now we have remote hosting in New England to ensure the systems remain up, which is added precaution that resulted from Katrina,” he says. “Now we have three backups with remote hosting.”

Omni Bank was already building a new facility on Corporate Boulevard to expand into Baton Rouge as part of their disaster recovery plan when Katrina hit, says bank spokesman Todd Murphy. Despite their main office in Metairie suffering severe damage, Omni quickly shifted operations to Baton Rouge.

“We looked at where most of our customers will be in the event of a disaster and that line went across I-10, I-49 and I-55 corridors,” Murphy says. “These became targeted locations as part of the disasters, whereas I-12 is about growth.”

Omni Bank has since bought property on Jamestown Avenue to develop an emergency preparedness site that will house all central operations and customer service operations to ensure customers have access to cash when needed.

Murphy says boosting communications also became a critical issue with Katrina, particularly after the storm knocked them out for three weeks. “It was really primitive within an 80-mile radius of New Orleans.”

At New Orleans-based Fidelity Homestead Savings Bank, president and CEO Boyd Boudreaux says Katrina was the driving force in their arrival in Baton Rouge.

“It definitely taught us we didn’t want to have all our operations in one location,” Boudreaux says. “We had branches in Metro New Orleans and Katrina hit so many of our market territories, but we realized we were lucky. Had the levee break occurred on both sides of the 17th Street Canal, then we wouldn’t have had any offices with the exception of the two on the Northshore.”

When Katrina struck, Boudreaux says they also left thinking they’d be back in a few days and also realized they needed a fast alternative. A week after the storm struck, Fidelity was operating a temporary office in Baton Rouge.

As they resumed operations, he says they also realized they needed “other presence” and applied to the Office of Financial Institutions for a permanent branch in Baton Rouge. They bought and renovated a vacant building at the corner of Corporate Boulevard to house their entire data processing and purchasing operations, relocating them from New Orleans.

“We were founded in 1908, so next year we’ll celebrate our 100th anniversary as a financial institution,” Boudreaux says. “We’re still committed to New Orleans, but we recognize we can’t have all of our eggs in one basket anymore. We made it through the Great Depression, through the wars, through the banking crisis of the 1980’s and Hurricane Katrina. We expect to be here the next 100 years.”