Bankers across the region have been working more like bartender’s hours, or, in some cases something akin to the lifestyle of a partying college student. Some are staying at the office until 2 a.m., and many are coming in on weekends. Some are wearing shorts and flip-slops to work, while others are eating pizza straight out of the box — practicing social distancing — and humming along to rock music while they crunch numbers. One more similarity to the college kid-bartender image: Bankers, normally a close-cropped and well-coiffed group, aren’t getting haircuts. (They don’t have time, and no places are open anyway.)
‘I know people are scared and tensions are high. I get that. We want to help businesses.’ Neil McCurry, Sabal Palm Bank
The reason for all work? The CARES Act. The federal legislation, passed March 29, has $349 billion in totally forgivable loans for businesses that put 75% of the money toward payroll. Known as the Paycheck Protection Program, the goal is to allow businesses to stay open — and pay employees — in what would otherwise be a likely closure, courtesy of the coronavirus pandemic.
Funds are from the federally backed Small Business Administration. In an average year, the SBA does some 60,000 loans worth about $30 billon. Under PPP, the agency is being asked to handle $120 billion in loans — a month.
The hours of frantic work bankers have been logging since April 3 stems, obviously, from the vast interest in the funds given the widespread impact of the economic shutdown. For business owners and executives seeking the money, it has played out like trying to get tickets to the Super Bowl: lines are long, the process is time-consuming and, for some opaque, and many worry the program will run out of money before it’s their turn. (As of April 13, Congress was debating putting an additional $250 billion into the program; other funds for PPP could be coming from the Federal Reserve.)
But for the most part, area bankers have been pragmatic about the program’s launch.
“The SBA has never had the infrastructure to handle this sort of volume,” says Neil McCurry, president of Sarasota-based Sabal Palm Bank. “Obviously, there’s going to be problems.”
Bank of Tampa President and CEO Bill West agrees, saying: “This was a mammoth program, unlike anything the government has ever done or anyone has ever seen. So there’s no way the rollout was going to be smooth.”
Tom Zernick, president of the SBA lending division at Seminole-based First Home Bank, branded CreditBench, uses a car analogy to illustrate the blitzkrieg of banking work that appeared almost overnight. “We’ve had a solid four-door Ford pickup,” says Zernick of CreditBench, one of the largest SBA lenders in Florida and the country. It’s handled about 4,500 SBA loans in the past five years, worth more than $1 billion. “Now we are building a racecar.”
McCurry, a longtime Sarasota-area banker, saw, or at least heard, the crunch the PPP put on the SBA up close. McCurry was on the phone with someone in the Miami SBA office the second day of the program when the employee said: “Wait, hold on. Our system just completely shut down.”
Get through it
Despite the never-before-seen volume of work, and long hours, five community bank executives in the region agree: The PPP is put up or shut up time for a community bank to do the things for customers — personalized service, fast response, no haggle-decisions — it says it was designed for.
‘We are in a difficult situation. We have almost no revenue coming in and 150 employees.’ Jason Woody, Lions Eye Institute for Transplant & Research
“I know people are scared, and tensions are high,” says McCurry, whose bank, Sabal Palm, had $253.8 million in assets through Dec. 31, 2019. “I get that. We want to help businesses.”
Craig Albert, president and CEO of Sanibel Captiva Community Bank, with $450.86 million in assets, says he’s been going to work, like many others, with a heavy heart. On his drive in on Periwinkle Way, normally bustling in March and April, he sees the devastation in closed bed and breakfasts and mom-and-pop restaurants.
“A lot of these businesses are staying positive, and they want to be able to fight through this,” says Albert, who has been in banking for nearly 40 years and adds this crisis easily trumps the chaos of Hurricane Charley in 2004 and the recession in 2008. “My goal is to get them through to Thanksgiving.”
Just like bankers are entering new territory with the CARES Act and PPP, so too are some clients — business blindsided by the pandemic-led collapse in customers. Dr. Toni Richards-Rowley, a pediatrician and owner of Kids First Pediatric Care in the Fishhawk Ranch area of east Hillsborough County, says patient visits, both well and sick, have fallen up to 75%. “It’s been horrible,” Richards-Rowley says.
She heard about PPP from physician and pediatrician groups and went over the application with her banker, Bank of Tampa Senior Vice President Tim Mann, the first day it was available. She sought $80,000, enough, she reasons, to get her three-employee practice through the next eight weeks. “It’s going to be tight,” she says.
“I really appreciate all the work Bank of Tampa has put into this,” Richards-Rowley adds. “Without it, I won’t be able to survive.”
Fellow Bank of Tampa client Jason Woody, president and CEO of the Lions Eye Institute for Transplant & Research, a Tampa nonprofit, faces a similar predicament. Lions Eye, which provides ocular transplant services and operates on an annual budget of about $20 million, is losing $600,000 a month in lost medical services during the pandemic. “We are in a difficult situation,” says Woody, a well-known Tampa civic leader and outspoken supporter of keeping the Tampa Bay Rays in Tampa Bay. “We have almost no revenue coming in and 150 employees.”
Lions Eye sought $1.4 million from PPP, which, Woody says, will allow the organization to keep all its employees on the payroll, at salary cuts of up to 25%. He prefers that to furloughs, which would create new problems in patient care and retraining people when they come back to work. “We don’t want to be greedy,” he says. “We just wanted to be able to maintain payroll through June 30.”
Community banks in the region, for the most part, have taken a similar strategy to handle the increased workload. Most have shifted employees from a variety of departments to PPP/SBA roles.
At American Momentum Bank in Tampa it’s “all hands on deck” to handle the wave of work, says Heather Karamitsos, a senior vice president and director of the bank’s association banking program. “We're not a huge bank, and we have limited resources,” Karamitsos says. “Our commercial lenders, my team, our treasury team and even our office managers are all working on these SBA loans to accommodate our current clients.”
First Home, with $531.1 million in assets, and Sabal Palm are among the banks that reconfigured cubicles and desks to accommodate social distancing. And the sheer volumes have shattered anything most of these banks have ever done in such a short period of time.
Within the first week, for example, Bank of Tampa, with $1.87 billion in assets, was doing 100 PPP loans a day and had cleared $70 million by the program’s second day. “We’re like an assembly line,” says West, taking a break from the surge. “We moved some people over to one side and moved some others, so we can have all the right pieces in place.”
Sabal Palm, meanwhile, had done 250 PPP loans worth some $30 million in the program’s initial days. Several were over $1 million, McCurry says, while one was $1,500. “We call ourselves a community bank and this is our time to shine,” McCurry says. “I’m really proud of the team.”
Ditto for Albert at Sanibel Captiva. His bank moved nine branch and assistant branch managers to the main office, then divided up the bank’s 360 PPP loan applications to 40 per person. That leader then created other teams to process the loans. “I thought I’d be retired when the next crisis hit,” Albert quips.
Banks focused first on current customers, but several executives say they would consider doing PPP loans for non-clients next. Under the rules of the CARES Act, banks can’t charge fees for the work, and there’s no interest to collect. But banks are still getting compensated: The SBA says it will pay 5% for loans under $350,000, 3% for loans from $350,000 to less than $2 million and 1% for loans over $2 million.
Zernick, with First Home Bank’s CreditBench, says since SBA loans are one of the bank’s strengths, it intends to do as many PPP loans as it can over three months of the program. The bank aims to close PPP loans in five days or less — normally it takes 60 to 90 days to do an SBA loan. “We think we can move very quickly on these,” Zernick says.
Bank of Tampa will also be hyper-focused on PPP loans for the duration of the program, and McCurry was considering opening a call center to handle PPP overflow. “This started as a health crisis and has become a financial crisis,” McCurry says. “Everyone has to do their part.”