How banks are helping customers withstand coronavirus shock

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By Laura Alix and John Prior

Seattle has practically been a ghost town the last two weeks as the COVID-19 outbreak has infected hundreds of people and small business there are suffering mightily. Restaurants have been hit particularly hard, with some seeing revenue drop by as much as 70%.

To help these businesses stay afloat, the city’s largest local bank, WaFd (formerly Washington Federal Bank), announced a plan on Thursday to provide capital to small firms hit hard by the virus scare. The $16.4 billion-asset company will offer credit lines for small businesses up to $200,000 interest free for 90 days and will expedite loans up to $30,000 to business owners who have been in operation for at least two years and can show a 10% drop in revenue tied to the outbreak.

In total, WaFd bank has readied $100 million in credit to impacted businesses to meet the demand.

“Businesses are already struggling as our neighbors limit shopping and eating at restaurants to follow public health orders to avoid large crowds. We want to offer these impacted business owners a lifeline to help them make it through this crisis,” President and CEO Brent Beardall said in a press release announcing the program.

Brent Beardall, left, is CEO at WaFd, which is fast-tracking loans to customers whose revenues are down at least 10%. Reading Co-operative CEO Julieann Thurlow said the bank is exploring a plan to operate branches exclusively through drive-up windows. HomeStreet CEO Mark Mason said his bank is offering to defer or modify customers’ loan payments.
Brent Beardall, left, is CEO at WaFd, which is fast-tracking loans to customers whose revenues are down at least 10%. Reading Co-operative CEO Julieann Thurlow said the bank is exploring a plan to operate branches exclusively through drive-up windows. HomeStreet CEO Mark Mason said his bank is offering to defer or modify customers’ loan payments.

The loan program is one example of how U.S. banks are responding to the spread of the novel coronavirus, also known as COVID-19. As the virus has spread, banks of all sizes have begun to ready relief plans for consumers and small businesses in their markets. Those might include special loan programs, overdraft forgiveness or limiting human interaction in branches.

Wednesday evening, President Trump convened a dozen executives of major financial services companies at the White House to discuss how the financial industry could help consumers and small businesses affected by the pandemic.

“Banks have implemented emergency measures to assist impacted customers and small businesses and appreciate statements from regulators allowing for increased flexibility to do so,” Consumer Bankers Association CEO Richard Hunt said in a statement after attending the White House meeting.

Banking executives have stressed that the crisis is not is not yet a financial one. Moody’s said on Tuesday that banks had generally good credit quality and capital levels. However, the outlook could turn negative if the U.S. sees a “significant” spread of the virus leading to economic slowdown and rising unemployment, the ratings agency said.

To help businesses and consumers feeling the strain, banks are taking such steps as waiving certain fees, increasing credit lines and implementing forbearance programs.

JPMorgan Chase and the PNC Financial Services Group in Pittsburgh both told American Banker they would work with customers on an individual basis.

Citigroup said on March 6 that it was waiving monthly service fees and penalties for early certificate of deposit withdrawals for small business and retail customers. The company is also raising lines of credit and halting collections for some credit card customers.

As of Thursday, the U.S. had reported 1,215 confirmed cases of coronavirus, including 36 deaths. Regional and community banks near outbreaks in Boston; New Rochelle, N.Y.; and Seattle said that while they were still keeping branches open, they were also encouraging customers to use mobile and digital channels whenever possible.

In Washington State, where there have so far been 29 deaths linked to the illness, Democratic Gov. Jay Inslee has announced a ban on gatherings of 250 or more people in King, Pierce and Snohomish counties.

Read more: Complete coverage of the coronavirus impact

WaFd is not closing branches in the area but has restricted lobby access at some locations in Seattle, a spokesman said.

Mark Mason, CEO of HomeStreet in Seattle, said in an email that the $6.8 billion-asset company has activated its pandemic plan and is working with clients.

“For customers whose businesses may be impacted by the virus — think hospitality or restaurants — we will be working with those borrowers to help them in situations where it's appropriate and reasonable to defer or modify payments,” Mason said.

Massachusetts was among at least a dozen states to declare a state of emergency in response to the virus. By Thursday morning, the state had confirmed 95 cases of the virus, of which 70 were traced directly back to one biotech conference in Boston.

Julieann Thurlow, president and CEO of Reading Co-operative Bank, said she has not yet heard that customers are experiencing financial difficulties because they’ve been sick or self-quarantined. Still, the $597 million-asset bank has begun to ready its own pandemic plans.

One immediate priority, she said, is figuring out how to continue to operate branches while minimizing human contact as much as possible, to limit the spread of the virus. In a memo to customers, the bank said it would offer assistance to any who needs help setting up online or mobile banking.

But because some customers will still need to visit a branch for one reason or another, Thurlow said the bank is also exploring a plan to potentially operate branches exclusively via the drive-through window.

“If you have a customer who doesn’t have a laptop and doesn’t have access to online banking, maybe they do need to visit in person. We want to make sure that every socioeconomic segment has access to cash,” she said. “When you talk about an hourly worker that may be living paycheck to paycheck, having access to cash on payday may be very important to them.”

The $27.8 billion-asset Pinnacle Financial Partners in Nashville, Tenn., is approaching the outbreak as it did a string of tornadoes that struck the area earlier in March.

Financial advisers “are proactively reaching out to clients who could be affected by the pandemic to see how we can help and assess any potential impact,” a spokesman said in an email. “Right now it’s largely case by case and person to person, which is how we usually do business.”

For existing customers facing unexpected expenses who nonetheless don’t want to dip into savings, Ridgewood Savings Bank in New York will offer interest-free loans secured by customers’ deposit balances, said Chief Banking Officer Carlos Sanchez. The $5.8 billion-asset bank is also exploring forbearance on interest payments for borrowers, but had not yet finalized that plan.

Sanchez said the bank is also temporarily re-assigning employees, both in back office and customer-facing, to new locations to limit their commutes and time spent on mass transit.

Though it’s taking extra precaution and sanitizing branches daily, Ridgewood Savings has not yet closed any of its branches at this point, even in New Rochelle where a containment zone was recently established.

“This is a bit unnerving to the population,” Sanchez said. “Whenever people are seeing uniformed men providing these services, it is of course natural for them to say, ‘hey, what does this mean for me?’"

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Consumer lending Loan modifications Small business lending Coronavirus Restaurant industry Community banking