Severe Weather Analysis: U.S. Hurricane Season, Harvey and Irma Designated Disaster Areas
In the following report, we look at the U.S. Unsecured Consumer Lending industry data for the designated disaster areas for hurricanes Harvey and Irma. Harvey affected areas in metropolitan Houston, southern Texas, and Louisiana, while Irma affected southern Georgia and Florida. Approximately 91% outstanding loans in Florida were in designated FEMA disaster areas including metropolitan areas Tampa, Orlando, Miami, and Jacksonville.
The table above shows the percentage of loans originated and outstanding within the most affected states, Florida and Texas. The two states represent 16-17% of loans originated and 15-16% of loans outstanding from May 2017 to August 2017.
Note: The dotted lines in the charts below signify the month of landfall for the hurricanes.
The population of loans in the areas affected by Harvey experienced a 3x increase from July 2017 to September 2017. All consumer unsecured loans in Texas experienced a 170 bps increase in Current to 30 Roll Rate over the same period. Irma made landfall on September 10th, but the Florida and Irma designated areas within Florida and Southern Georgia already show signs of distress, with the Current to 30 Rate increasing from 1.5% to 2.5%. The total population had an uptick of 30 bps from August to September.
The percentage of loans categorized as non-performing has increased for the geographical areas affected by both hurricanes. As of September, 9.5% of outstanding balances in the Harvey-affected areas are delinquent. In general, the distressed areas experienced an increase of the non-performing rate from 4-5% to 6.5% or greater.
In the chart above, I separated the Current to 30 Rate for the affected regions into different origination FICO cohorts. All FICO cohorts experienced stress.
This post is an initial review of the unsecured consumer loans in the designated affected areas for Harvey and Irma and provides a snapshot of their performance. Even within the short period of time since these events, the designated loans demonstrate significant stress. We will be following up with future posts to see how the population of loans in the designated disaster areas perform months from the hurricane events.