Kirk Malmrose, Executive Vice President and Director of Commercial Real Estate and Construction Lending, joined the Los Angeles Business Journal providing insights on the aftermath of the California Wildfires.
The discussion covers business and community rebuilding efforts, proactive measures to mitigate future wildfire risks, and the impact on the banking industry.
Read the full article here.
As financial services providers in the communities we serve, banks can have a central role in supporting businesses affected by the devastating fires. We created a Client Assistance Program with components such as loan deferment plans, special loan assistance and workshops to help our affected business clients rebuild. Since each situation is unique, our bankers can determine on a case-by-case basis what kind of business assistance we are able to provide.
I think there can be no question that the effects of climate change are here and may only increase over the long term. In our area, this means fires are an increasing threat to our populated areas. Each business needs to assess its readiness — physically and financially — to survive if a wildfire strikes its area. Unfortunately, we have an insurance problem in California, with many companies already having left. The state needs to do something to ensure those who work and live here have access to affordable insurance coverage.
The Cathay Bank Foundation raised more than $600,000 to directly support essential non-profit organizations that are actively providing emergency aid, shelter and resources to impacted communities. The beneficiaries of those funds were California Community Foundation — Wildfire Recovery Fund, Dream Center Foundation, Pasadena Community Foundation — Eaton Canyon Fire Relief & Recovery Fund, World Central Kitchen, LA Fire Department Foundation, Door of Hope, Habitat for Humanity Greater LA and Sherwood Forestry Service — Watch Duty.
I think it’s likely banks will tighten up their policies and be more restrictive in how they lend given the fact that climate change has resulted in catastrophic events like this one coming closer to urban areas. Property owners — commercial and residential — may be required to take steps to better protect their structures such as making sure vegetation near them is trimmed back and more fire-resistant building materials are used in the construction process. Banks may also want to investigate the public infrastructure that is in place to put out sparks before they turn into conflagrations.
This tragedy was personal to us. Many of us know people who lost their homes and all their material possessions or even lost their lives. For that reason, helping people rebuild by providing construction loans through our homeowner relief program is high on our list of priorities — especially since we know how tough it is to find temporary accommodations near the affected areas. We are aware insurance may not fully cover the cost to rebuild for everyone so we can try to help with gap financing as well.
I think business owners need to be aware that no one is immune from becoming victims to a wildfire. “It won’t happen to me” is not an appropriate attitude to have. No one would have ever predicted the widespread destruction that resulted from the latest wildfires — and no one can predict what area may be affected next. With that in mind, be aware of any preventive measures you can take to protect your building, like keeping vegetation trimmed away from it and properly storing any flammable materials you may have onsite. You will also want to ensure you have as much insurance as you can afford so you will be able to rebuild if the worst happens.
This article does not constitute legal, accounting or other professional advice. Although the information contained herein is intended to be accurate, Cathay Bank does not assume liability for loss or damage due to reliance on such information.
