May 5, 2020
Joining the List of Heroes: Our Community Banks
Bank of Zachary, Bank of St. Francisville, Landmark Bank, Feliciana Bank
By Patricia Rachal Stallman
For The Feliciana Explorer and The Zachary Post
rachal2743 at gmail dot com
The PPP Fights COVID-19
On December 31, 2019, the World Health Organization reported a “mysterious pneumonia” in Wuhan, China, and on January 30, 2020, declared it “a public health emergency of international concern.”
By early January, the coronavirus had already begun spreading throughout the United States.
As governors imposed quarantines and shuttered all non-essential businesses, the prospect rose of people escaping the virus with their lives, but not their jobs. The pandemic had brought with it an economic crisis.
The U. S. Congress earmarked, first, $350 billion and, later, another $310 billion for the Payroll Protection Program under the Small Business Administration. The intent: to keep employees on the payroll for eight weeks. Businesses could prepare for reopening; essential businesses could remain open, though customers were fewer; and employees could pay their bills, buy food, and avoid losing their homes.
As long as borrowers used at least 75 percent of the loan to pay their employees’ salaries, benefits, and related expenses, and no more than 25 percent to pay the business mortgage, rent and utilities costs, the government would forgive the loans.
But Here’s What Happened
The first round of loans began April 3, 2020.
The SBA’s list of “existing lenders” did not initially include most community banks.
The megabanks jumped in.
The money ran out in less than two weeks.
The community banks prevailed on behalf of small business.
Nothing prohibited any bank from handling larger loans first. As the program unfolded, SBA officials learned that some large companies with multiple locations had applied more than once and received multiple loans. Further, the office of the treasury announced that it had never intended the PPP to benefit publicly traded companies that could negotiate their own loans. Voices rose from the halls of Congress and the public at large, calling for repayment of the funds.
The best assessment of the first loan roll-out: It was fast.
During the first week of the first wave of the program, however, some of the community banks lost time scrambling to join the list of approved lenders, then worked through nights and weekends from kitchen tables and home offices to submit their clients’ applications while observing the governor’s call to sequester during the pandemic. It was a case of David versus Goliath.
Commitment and Passion
Mark Marionneaux, Bank of Zachary, noted, “Knowing how important these loans were to our customers, we worked around the clock—nights, holidays, and weekends—to get it done. When the PPP reopened at 9:30 a.m. on April 27, we were 100 percent ready to submit. We had worked until 1 a.m. that morning to ensure that 100 percent of our applications were submitted. If there was ever a time when where you bank matters, it’s this pandemic. The loan program has been a monumental lift for the community banking industry across the country.
“While a lot of our economy has shifted to a transactional environment, community banks work off of relationships…and good, honest, hardworking people is what we thrive on, not only our communities and our customers but our employees as well.”
Feliciana Bank’s president, Jaye Bunch, agrees with that portrayal of the people of Zachary and the Felicianas. Still, he was a bit surprised—but just a bit—when some of his customers who could have qualified for a PPP loan—the forgivable loan, remember—explained that they “didn’t want to take funds from those who needed the money more.”
Knowing the people the bank serves, Marionneaux says, “having a good relationship with our business community is what we’re about, what makes us who we are.
“Behind every great team is a really strong culture of passionate and committed people. I’m proud that the employees of the Bank of Zachary are passionate and committed to the communities we serve and to the relationships we hold near and dear to our hearts here locally.”
Echoing that commitment, Landmark Bank’s Ben Cavin reports that, like the officers and employees of the other community banks, he and his staff “have consistently worked 12-hour days, including weekends and holidays, to make sure we were taking care of all of our customers. We prioritized the loans in the order we received the completed applications, as opposed to putting those who had the most money in the bank at the head of the line…because in small communities like ours, every job is essential.”
Carter Leak IV of Bank of St. Francisville adds, “While we’re not quite first responders, we feel that the government made a wise move in partnering the treasury and the SBA with the banking industry, primarily the community banks.” Community banks know their customers and their customers’ needs, he explains, and will fight to help them come out the other side of the pandemic with both health and income intact. The people of the community are what is important, not loan amounts and processing fees.
He emphasizes that PPP applicants don’t have to be customers of the bank. “Our goal is to help the entire community.”
Different Methods, Same End
Marionneaux describes more than a few customers who dealt with other banks—or tried to—and came back to Bank of Zachary. Elsewhere, they discovered, they were the small fish in the big pond. “Here, in our pond, they’re the big fish.”
Ben Cavin, of Landmark, had a similar experience. “We have had several customers who got their applications in early, but as money ran out, they received generic emails or letters from the larger banks, telling them they had not been processed during the first round.
“We have had approximately 10 customers come back to us during this second round and ask if we would consider processing their request, because they have had no indication from the larger banks on their status. They were beginning to worry that the second round would run out and their applications would remain unprocessed.
“We have been able to handle their requests, in many cases before the big banks even returned their calls.”
Standing up to the megabanks meant outsmarting them, not only by investing more time processing applications—and at odd times of the night and day—but by calling upon individual strengths as well. The community banks developed processes that worked for each of them. The Bank of St. Francisville, Leak says, emphasized technology; it began with a communication that included “informative links with summaries about the program and answers to frequently asked questions.”
Next, “we used our website to put out videos that explained exactly what our customers needed to do so that we could process the applications efficiently. If we had limited ourselves to one-to-one conversations, we couldn’t have helped as many people.”
In one video, Aimee Cook, vice president of commercial and residential lending at Bank of St. Francisville, takes the viewer through the PPP application form, cell by cell, line by line, explaining exactly which pitfalls to avoid and how to provide the correct information. She cautions the viewer, for example, to use a font small enough to fit the entire social security number within the cell that calls for it. Many applicants, she learned, stalled their application simply by using a font that was not readable.
To demonstrate how to arrive at the loan eligibility amount, she explains how to enter payroll and other figures.
“The beauty of community banking when using the program,” Mr. Leak says, “is that we already know the businesses, and they know us. It’s easier for all of us—the banks and the businesses—to work with people we know.”
Landmark, too, has “taken a lot of steps to make this process as easy as possible for those who have applied with us.” Cavin designated Brandon Noel “our primary source for PPP information” and provided Mr. Noel’s telephone contact. “He emailed the application form and supporting information and walked each customer through the process.
“We have allowed customers to sign the forms in their cars at our drive-through locations. We have delivered documents to their businesses while waiting outside to avoid exposure. We have done and will do anything necessary to make sure the process is as easy as possible.”
That gulf between the big banks and the local lenders just grew a few more miles.
Cavin offers another difference between community banks and the giants: During the opening days of that first wave of loans, when Landmark Bank and Feliciana Bank were busy working through those “system issues”—calling the government numbers to ask for inclusion on the list of official lenders—rather than hold up their customers, they referred them to what Cavin calls their “peer banks.”
Mr. Bunch says he too “had to battle through the government telephone system for almost a week before we could reach a telecommunications officer for the SBA website…only to find out that all that person could do was answer the phone. You don’t want to tell your customers to wait on something you have no control over,” he says, explaining that successful loan applications for his customers was more important than who guided them through the process.
“We have direct dialogue,” Cavin continues, “with the other community banks to ensure that we are taking care of everyone.”
While the larger lenders certainly fill a niche or two, Cavin doubts “you would ever see Chase and Bank of America calling each other to share ideas and help each other work through system issues.
“That, however, is exactly what we have done with our local peers, and as a result, we have taken care of our communities, which is the most important thing.”
A Few Figures
Bank of Zachary’s Marionneaux shares a few figures: “In the first wave, we made 145 loans for a little more than $18 million; in the second, we made 84 loans for a little over $7 million.
“Eighty-two percent of the loans we made in the first round were under $150,000, and the average amount was $127,000.” Those figures are an indication that the PPP funds went to small businesses, as intended.
Though bank employees are still working to determine the number of loans “relative to the actual number of paychecks,” he estimates that Bank of Zachary loans could affect 1,500 to 2,000 paychecks. “That’s where the program is having its impact.”
At Landmark, Mr. Cavin estimates “approximately 50 applications since the program began, and another 20 to 25, depending on how long the PPP money lasts.” He estimates as well that the loans provided salaries for between 425 and 450 jobs.
“We have worked applications from a wide range of businesses, including, but not limited to, contractors, retailers, industrial customers, restaurants, and churches.”
Landmark has processed loans “primarily from East Feliciana—including Clinton, Jackson, Slaughter and Ethel—and from East Baton Rouge, but also from Zachary, Greensburg, Amite, Pride, and several others in between.”
Bank of St. Francisville processed over 100 loans in round one, and again over 100 in round two. Amounts ranged from a few thousand to several hundred thousand, and affected the paychecks for a “wide range of businesses…from those with a sole proprietor to those with several hundred employees.” The types of businesses the Bank of St. Francisville served include retail, the hospitality industry, realtors, interior designers, hospitals, contractors, and churches.”
Jaye Bunch reports that Feliciana Bank approved 34 loans in amounts of $2,000 to $250,000 for a total of $1,360,000, for an average of $40,000 per loan. He predicts that the bank “will probably end up with about 50 loans before the money runs out.” A typical loan was $2,000 to a small local trucking company.
The present moment, he says, “is not all gloom and doom.” Grocery stores and gas stations are “doing well,” and the local hardware store, while open fewer hours, is doing a pre-pandemic level of business. He calls attention to the many non-profits in East Feliciana, including RKM Clinic in Clinton and Dixon Correctional Institute, the veterans home, and Eastern Louisiana Mental Health System in Jackson, all of which employ large numbers of people. “Business is picking up,” he reports. “We’ve had a really strong month and a half.”
He lauds the banks as “pillars of their communities,” noting, “These four small-town banks have about 400 years of combined time serving this area. That’s impressive.”
Doing Their Part
Though nationwide the smaller lenders processed most of the PPP loans, Marionneaux cautions, “Numbers and statistics tell only a piece of the story. The anxiety our small businesses are going through now, and then the elation and relief they experience when they get that call at 10:30 at night…and just cry, just show raw emotion, because they won’t have to lay off their employees….
“Whether we do 10 loans or a thousand, we are going to do the best we can with all those who come to us—the best we can until the money runs out.”
Echoing the other bank presidents, he puts the efforts of the community banks into perspective: “We are in the middle of a huge medical crisis, and there’s a medical community out there fighting a much harder fight than ours.”
The four say they are honored to do their part.