Small banks and credit unions fear heavier toll from new lockdowns

For smaller financial institutions — where an entire department could be just one employee — COVID-19 poses a much higher risk to operations than at large banks, since closing a single location due to infection could leave customers and members without alternatives.

Additionally, the limited resources small banks and credit unions have compared to what big banks utilize makes it hard to determine who should work remotely when the technology might not be in place to handle back-office tasks or customer service outside the branch.

The outlook on office openings seems to change day by day. Even at large banks like Wells Fargo and U.S. Bancorp, back-to-office dates are getting pushed out amid the growing threat of the COVID-19 delta variant. Credit unions that may have previously given the all-clear to come in are struggling with whether to implement their own delays, particularly if doing so deprives their members of the human touch that smaller institutions offer.

“The difficulty for these institutions is that their identity and competitive advantage is wrapped up in customer service and personal interaction,” said Greyson Tuck, an attorney and consultant at the Memphis-based law firm Gerrish Smith Tuck who has been working with community-based financial institutions for nearly 15 years. “So how do you maintain your identity and competitive advantage in a world where close contact is difficult?”

Questions like these are on the minds of the credit union and bank executives, who’ve expressed concerns over the delay in all staff returning to work in-person, as well as a fear that the overall state of the pandemic could prompt further lockdowns.

'Vax & Relax'

“My biggest worry is that cases return to prior peak levels and we end up taking a step backwards to lose the gains we’ve had,” said Brian Schools, CEO of the $2.5 billion-asset Chartway Federal Credit Union based in Virginia. The Virginia Department of Health has reported that more than 9.5 million doses of the coronavirus vaccine have been administered, with over 54% of the population being fully vaccinated.“We have done so much with vaccinations and other matters we’re currently working on. If this delta variant knocks all of that back, it’s going to be a gut punch to have to start over.”

To protect employees and keep operations stable, Chartway has kept the plexiglass barriers erected to assist with social distancing, and is incentivizing employees to get vaccinated.

“We are asking those who have been vaccinated to share their status with us for tracking and so that we can credit our non-exempt team members with an extra day of sick leave to recover from possible vaccine side effects and / or to assist with vaccine scheduling,” Schools said. “Additionally, we are hosting a ‘Vax & Relax’ raffle. If we reach our goal of at least 70% of team members vaccinated by October 1, we will raffle off 10 prizes: each package will include $1,000 and five days of [time off] to rest and rejuvenate.”

The $2.5 billion-asset CAMPUS USA Credit Union in Jonesville, Florida, is also working to help employees get vaccinated.

“Over the summer we hosted non-mandatory vaccination clinics on-site for employees who were interested in receiving the COVID-19 vaccine,” said Pam Johnson, who serves as the vice president of operations for the credit union. “We are still utilizing plexiglass barriers at the teller windows and in our member service areas.”

These efforts are important not only for the health of employees and members, but also because credit unions and small banks risk alienating their members and customers if they can't keep their doors open.

“Our clients are really focused on multiple delivery channels,” Tuck said. “There are customers who say ‘I’ll be darned, I still want to go into the bank branch and I don’t want to wear a mask.’ and you want to do what you can to certainly preserve health and safety, but also not to offend that customer. Financial institutions are really focusing right now on multiple delivery channels that provide the opportunity for service across all the spectrums of where the services may be needed, or how the services may be wished to be received by customers.”

Employees also want to be accommodated based on their ability and desire to return to the office.

Alerus Financial , which has $3.2 million of assets and is based in Grand Forks, North Dakota, shifted more than 75% of its workforce to home offices at the start of the pandemic. As branches began the re-opening process, the bank allowed employees to come back in phases.

“While many of our employees are very happy to be back in the office, we also provided employees flexibility with their return dates,” said Karin Taylor, chief risk management officer at Alerus. “When rapidly improving conditions in our markets allowed us to adjust our 'return to work' date from September to July, we provided employees the flexibility to continue working remotely through the summer.”

In consideration for the health of employees and customers, the heads of Alerus paid close attention to guidance from the federal and state level. Grand Forks County, where Alerus is headquartered, reported a cumulative total of over 61,000 vaccinations.

“We have closely followed CDC guidance since the onset of the pandemic,” Taylor said. Because the bank operates in various markets throughout North Dakota, Minnesota and Arizona, it also tailored its response to each market. “In response to updated CDC guidance issued in late July, we are reinstating a face mask policy for employees working in offices located within areas experiencing substantial or high transmission rates and encouraging our clients to wear face masks when visiting these locations.”

A cautious comeback

CAP COM Federal Credit Union, which has $2.6 billion of assets and is based in Albany, New York, is allowing all employees in back-office positions to work from home for the foreseeable future.

“While we keep a close eye on transmission rates, we are currently planning to have more staff come back on-site in the fall, offering fully on-site, fully remote, and hybrid work options as determined by team managers,” said Chris McKenna, CEO and president of the credit union. Albany county has reported that over 191,000 residents have completed a full series of vaccines, but like many other areas in the state is reporting a rise in cases since July.

Data reported to the CDC shows that vaccinations against the coronavirus peaked early in the second quarter of the year, and have been on the decline since. Now, as new variants make their way across the country, some are fearful that widespread office closures are imminent.

“We have not discussed shutting branches down, and hopefully it isn't necessary, but the masking and distancing situation in society is very fluid,” Schools said. “We learned in March of 2020 that there are some things we need to do differently that we'd never done before, and if things got really bad, I guess we would look at doing them again. I'm just hopeful that we can have the vaccination protocols in society and such to kind of get us beyond this without having to take a step back.”

Outside of the health concerns that both workers and customers face, there are the HR concerns that the heads of the financial institutions need to be wary of as well. These considerations make some smaller institutions hesitant to shift to fully remote work once again.

“We're addressing this unknown of trying to figure out from an employment perspective, how do we balance the interest of ensuring that we have employees that are here to run the business to serve the customer, but also making sure that from an employment perspective, we're doing what we need to do to support our customers or our employees, both from a legal standpoint, and from a practical standpoint,” Tuck said.