COVID-19: The community bank point of view

Local banking experts discuss product offerings and precautions

By Amy Sorter

Whether or not COVID-19 is creating physical illnesses, there is little doubt the virus is exerting an influence on individuals and businesses. Amid business lockdowns and furloughs, banks — such as those in Dallas — are offering financial products to provide some relief. 

These banks are ready to help, as the Federal Reserve — the United States’ banking system — put into place various emergency facilities to ensure banks can issue emergency loans and credit to businesses and individuals. For instance, programs such as the Main Street Lending Program (MSLP) provide loans to small and medium-sized businesses that were in good financial standing before the COVID-19 outbreak. Meanwhile, the Term Asset-Backed Securities Loan Facility (TALF) supports flow of credit to consumers and businesses. 

The main resource available to small businesses — and one that has been collecting its share of headlines — is the Paycheck Protection Program, an initiative overseen by the Small Business Administration to provide loans to small businesses as an incentive to keep workers on their payroll. As part of the Coronavirus Aid, Relief and Economic Security Act of 2020 (CARES), the PPP provides funding to qualified small businesses. The loan will be forgiven after eight weeks, as long as the business keeps workers on the payroll. The program’s first wave of funding ran out as of April 16. 

On Monday, the SBA opened its portal for the second round of funding; based on the demand generated from the first wave, “these funds are expected to go quickly,” said James Tipton, North Dallas Bank and Trust Co.’s executive vice president/enterprise risk manager. 

Because of that high demand, “apply for that loan as soon as possible,” said Joe Goyne, chairman and CEO with Pegasus Bank. “This money is going to run out, and whether they are planning a third wave, I don’t know.”

Once the PPP funds are gone, United Texas Bank’s CEO Jarrod S. Beck indicated that other loan products are available, including lines of credit. These and other products are subject to standard underwriting, and are priced according to risk factors. They also require monthly payments, without deferral qualifications. Many also require collateral. 

“Talk to your banker,” Beck advised. “Bank regulators have told banks they have leeway to work with borrowers, and most banks are willing and able to make special arrangements.” 

Added Goyne: “People should call if they want to either increase an existing line of credit or get a new one. Not going face to face with a banker shouldn’t deter any company or individual from trying to get a line of credit.”

Speaking of which, face-to-face banking is less common these days; most bank lobbies are closed, with customers being directed toward drive-thru banking and ATM kiosks. North Dallas Bank is requiring appointments for face-to-face meetings with bankers. Tipton said that in-person customers are pre-screened for COVID-19 symptoms before being allowed into the bank, and “social distancing is required, and all surfaces are disinfected after the customer leaves.” Furthermore, he added, employees continually wear masks and sanitize areas.

United Texas Bank’s Preston Branch is open and operational, according to its website. Beck said the bank is requesting that customers also wear masks before entering the bank. “We encourage all of our customers to use our online banking products and any ATM to get cash,” he said, adding that UTB will refund charges at other ATM outlets to UTB customers. “We have a daily Zoom meeting with all our employees, and remind them to wash their hands several times a day for at least 20 seconds at a time, and to take their temperature twice a day,” he added.

At Pegasus Bank, lobbies are closed, with 35% of the workforce working remotely. Those who are present at the company’s Forest Lane office are taking appropriate precautions. Goyne said the bank is going so far as to bring lunches in, so employees don’t have to go out to be fed, and those employees are observing social distancing requirements. “Most of the population has become accustomed to doing business over the phone or online,” he said.

Loan applications and banking services aside, all three bankers pointed out that now isn’t the time to be shy when it comes to asking for help. “Be honest about your situation,” Tipton said. “Bankers are people, too, and we understand the strain COVID-19 has put on customers, their families and their finances.”

Beck and Goyne said that this period is also a reminder that formulating a relationship with a banker is a good idea. Community banks are relationship-driven. “I always tell people it’s a great idea to start a relationship with your banker before they need help,” Beck said.

Relationships, in fact, are where community banks can have an edge over their larger, national counterparts. “When something like this happens, you need to have banking relationships, a banker you can talk to, and one that knows you,” Goyne said. “When you have a sudden need, you can rely on that individual.” 

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