Kentucky Tornadoes: Ag Banks Provide More Than Financial Resources

On Dec. 10-11, 2021, a violent line of tornadoes moved across several states, including Kentucky, Tennessee, Arkansas, Illinois and part of Missouri, leaving a 250-mile path of devastation in their wake. The storms destroyed homes and businesses, killing more than 75 people. Western Kentucky took the brunt of the damage. All too often, rural and agricultural communities are disproportionately affected by natural disasters like this month’s Kentucky tornadoes. And while the response to such disasters is national in scope, they also prove the resilience of communities–individuals and local businesses, such as community banks–that rally to help their friends, family and neighbors get back on their feet.

ABA recently spoke to Josh Bailey, vice president of Agriculture and Commercial Lending at First Community Bank of the Heartland in Fancy Farm, Kentucky, just west of Mayfield, which was heavily damaged by the storm.

ABA: How can banks offer specialized services to agricultural and rural customers, which so often are disproportionately affected by natural disasters?

Bailey: I am not sure the services offered by rural community banks in general can be considered specialized.   We offer the same types of products and services that urban and large national banks offer. However, I would concede that the focus of our activities on agriculture and rural economies is more of a specialization. If anything, it seems that we might specialize more in the human element of the banking model. We take pride in the fact that we know our customer. We know where they lives; we know where they go to church; we know their kids and  hobbies. We strive to create a personal relationship and not just a business relationship. I believe that those efforts pay dividends to both the bank and the communities we serve in the times of disaster.

ABA: How can banks prepare in advance for disaster response needs in their communities?

Bailey: The most important piece of this puzzle for banks lies in the development and testing of their disaster recovery plans to ensure that, even in the event of a total loss, we can continue to serve. As a vital service, we have found that the Federal Emergency Management Agency and other government services in our communities have been more than willing to assist in the development, review and testing of the plans and provide insight and access during and immediately following the event to ensure that we can be operational. Also, establishing multiples lines of communication with employees and our community as a whole has been invaluable. Whether it be a “one-call” type arrangement or group messaging app with employees to social media with the community, keeping all apprised of the situation has proved beneficial.

ABA: What kind of services do agricultural customers most often seek from banks after an unexpected event like a tornado, hurricane or other natural disaster?

Bailey: Over the last decade, our area has endured at least two devastating national disasters, both of which caused loss of life and property. While the recent tornado outbreak across Arkansas, Tennessee and Kentucky spared our physical banking facilities, we serve three separate communities directly that were affected. The needs of our customers immediately following the event remained the same: access to cash. This issue was that our branches were without power and connectivity to our core processor. Having a disaster plan in place that took into account the balance between providing the customer his money, when we had no idea how much they had in accounts with risks that the bank was willing to take was instrumental in building confidence in the institution, management and employees. Continually, as expected, there have been some short-term capital needs in the form of financing to bridge gaps between insurance payouts. Lastly, and perhaps most importantly, they need someone who understands their operation and family dynamic and can provide a listening ear to help them navigate the challenges that are upcoming as they rebuild.

Staying in tune with the needs of the community we serve for the long haul is where a community bank will strive.– Josh Bailey, vice president of Agriculture and Commercial Lending at First Community Bank of the Heartland in Fancy Farm, Kentucky

ABA: How has your institution specifically responded to the needs of communities impacted by natural disasters?

Bailey: The actions that we have taken in the past and in the wake most recent disaster have been similar. In both situations, after ensuring the health of safety of employees, we started casting wider nets to see where we can help. Our actions are fluid and change based on the need within the community. To date, following the tornados, we have attempted to reach out any customers via text, phone call or visit that we know were in the path of the storm. Continually, we have committed financial resources to organizations spearheading the recovery efforts, allowed employees to participate in volunteer opportunities on the clock and provided meals to affected communities. Continually, we are working on an education campaign to make our customers and communities aware of potential scams that might result from the devastation including construction scams, disaster relief scams and identity theft. From an agriculture standpoint, we will be monitoring actions taken by FEMA, the U.S. Department of Agriculture and USDA’s Farm Service Agency regarding programs that may provide assistance. The public response immediately after a disaster of this magnitude is phenomenal, if not overwhelming, however, the process to rebuild lives and communities will take potentially years. Staying in tune with the needs of the community we serve for the long haul is where a community bank will strive.

ABA: In general, what would you say are the biggest challenges and opportunities for banks serving ag and rural customers?

Bailey: The challenges of serving ag and rural customers are not much different than in the typical urban setting. Mitigating risk, no matter the specific type, lies at the forefront of all ag and rural bankers’ mind. Creating effective markets, especially for retail type business is always a concern. Perhaps the vastness of a rural marketplace, however, might be the most challenging aspect. Communication becomes key, unfortunately, there are limiting factors such as inadequate access to high-speed internet and poor cellular infrastructure in areas. Regardless, the opportunities are boundless. Farmers and rural entrepreneurs invest extraordinary amounts of capital annually into their businesses and communities. The key to capturing these opportunities is being able to see the vision and create financing that can balance the needs of the customer with risk tolerance of the bank. I don’t think anyone completes that task better than community bankers.

Josh Bailey is a native of Hickman County, Kentucky. He is a 2003 graduate of Murray State University with a bachelor’s degree in agriculture. Upon graduation, Bailey joined First Community Bank of the Heartland, where he currently serves as vice president of Agriculture and Commercial Lending, working with producers and rural businesses across western Kentucky and northwest Tennessee.


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