Kentucky banks have been essential partners to small businesses the past year, writing more than $5 billion in Paycheck Protection Program (PPP) loans and implementing other programs specifically to support clients managing their way through COVID-19’s impact on financial health.
“We knew it was going to be a roller coaster year for us,” Kentucky Bankers Association President/CEO Ballard Cassady said regarding the onset of the pandemic last March.
The Small Business Administration (SBA) announced PPP in early April 2020 under the then-week-old Coronavirus Aid, Relief and Economic Security (CARES) Act, outlining $349 billion in loans to be disseminated by banks around the country. Rather than provide the money, government committed to pay off the loans businesses took if they complied with PPP rules.
“The banks were making these loans out of their own capital. They get their money back when the loan is forgiven or paid off through the SBA guarantee,” Cassady said.
SBA programs had previously guaranteed as much as $35 billion in one year. In April 2020 it guaranteed 10 times that in 14 days.
“It was gone in a heartbeat,” Cassady said.
Some Kentucky bankers slept in their offices or lobbies, he said, to log on to the SBA portal in the middle of the night to get clients’ loans backed by PPP’s guarantees.
Founded in 1891, Louisville-based KBA is a 501(c)(6) with 155 member institutions. Its 23 full-time employees and two part-time staff members stay in touch with the federal government, the Federal Deposit Insurance Corp. (FDIC), the Office of the Controller of Currency (OCC), the Department of Financial Institutions (DFI) and other agencies, keeping up with regulations and compliance issues for 162 financial institutions that operate across Kentucky. Of those, 134 are headquartered in the commonwealth, representing $131 billion in assets
“All the banks, they’re the ones that put the herculean effort in, working 24 hours a day getting these things done, seven days a week,” Cassady said. ‘I’m not exaggerating.”
Bank executives say it has been exciting to help people over the past year. It was also frustrating: Rules got revised multiple times a day, there were technical snafus with the online portal, and there was a unexpected qualification issue for businesses (retail, in particular) because employees could make more with expanded unemployment benefits than staying employed.
Three weeks after the first round, a second PPP tranche added another $310 billion for loans. As the roller coaster dipped and climbed, it ended in August with $139 billion left over.
Nationally, the SBA estimates that 5.2 million loans totaling $523 billion helped support 50 million jobs.
“We were pretty much on track for our population,” Cassady said. Kentucky represents 1.3% of the U.S. population and Kentucky financial institutions loaned just over 1% of the SBA dollars: $5 billion. Banks made 95% of the loans, with the other 5% made by credit unions, farm credit cooperatives, fintechs or microlenders.
With appropriate borrower documentation, most banks now can review and approve applications in less than an hour and then submit them to the SBA for its 48-hour hold. Funds typically are available to the borrower in four days.
The $139 billion remaining from 2020’s Round 2 now has been added to a new $145 billion for a total $284 billion in PPP loans as of January 2021.
From Jan. 11-14, the first $15 billion of this third tranche was earmarked for community development financial institutions (CDFI), minority-owned banks and those owned by women and veterans.
“They (federal financial authorities) really wanted to make sure the underserved areas got attention this time,” Cassady said.
On Jan. 15, banks with assets under $1 billion got involved, and on Jan. 19 the round was open to all financial institutions. As of Feb. 7, Kentucky bankers had made 19,500 loans for $1.12 billion.
Here is what a variety of banks say they did for Kentucky small business in the past year.
Fifth Third Bank
Founded in 1858 and headquartered in Cincinnati, Fifth Third operates 49 banking centers in Kentucky and 1,085 more in 10 other states. The bank offered several COVID hardship programs for business owners, including a range of loan modification options, deferring some payments for up to 90 days and refunding select fees. Within the first three weeks of Round 3, Fifth Third funded $21 million in PPP loans in Kentucky for 188 businesses.
“We have invested a considerable amount of time, energy and expense diligently working to maintain technology solutions that help customers automate and streamline the PPP process in order to minimize the time from application to funding. This also helps clients with the forgiveness process,” said Mary-Alicha Weldon, senior vice president, market president Lexington.
CITY NATIONAL Bank
City National Bank has 96 branches in Kentucky, West Virginia, Virginia and Ohio. At the onset of the pandemic, City National offered extensions on loan payments, waived overdraft fees, increased supplies of personal protective equipment (PPE)—ordering locally when possible—and bought lunch weekly for employees from local restaurants.
“The PPP loans have been very beneficial to our small businesses. Some would not have survived without these loans,” said Lori Cooksey, Kentucky region manager and first vice president. “Small-business owners are the backbone of our communities in Kentucky, providing jobs, innovative products/services and contributing to the overall well-being of our citizens. Small businesses are resilient and run by dedicated people who got where they are by sweat, hard work and creativity. We need them.”
COMMONWEALTH CREDIT UNION
Headquartered in Frankfort, Commonwealth Credit Union helped members during the pandemic by allocating $5 million for a program that funded 1,286 loans and over 5,500 loan payment deferrals. “I wanted our members to know that we were focused on their health and well-being, including their financial well-being,” said President and CEO Karen Harbin. “On top of that, we offered members the option to skip up to three months of payments on any and all loans they had with us, and we even extended that to our mortgage products.”
SOUTH CENTRAL BANK
Founded in 1972 in Monroe County and still solely owned by the Bale family, South Central Bank has 28 locations in Kentucky and Tennessee. Over the past year, South Central has worked with regulators on practical ways to adjust services for customers, such as partial or complete payment deferrals. The bank also ramped up its SBA Lending Department. “We recognize and understand that the pandemic has caused significant disruption to our borrower’s cash flow and balance sheets, and it may take some time to fully understand how much damage has been created to our economy and industries,” said President and CEO Tommy Ross. “Our long-term goal is to have an effective SBA Department that can navigate these programs to provide resources to our customers and communities.”
Headquartered in Minneapolis, U.S. Bank has over 100 branches across Kentucky. During the first round of PPP, U.S. Bank processed more than 1,900 PPP loans totaling over $126 million in Kentucky.
U.S. Bank helped small-business owners apply for PPP and the Main Street Lending Program in addition to offering other services ranging from “tips on how to protect their businesses against coronavirus-related scams to saving time with mobile apps for business finances,” said Regional Executive Bill Jones. The bank also spearheaded a “Support Local” campaign “where we supported local businesses by buying meals from them to donate to front-line employees,” Jones said. “We hope that by showing up for our business community in this way, we can all get through these unprecedented times together.”
WesBanco Inc. operates more than 200 financial centers in Indiana, Kentucky, Maryland, Ohio, Pennsylvania and West Virginia.
“Early on, WesBanco implemented a software package that gave our customers more visibility and control of where their loan request was in process. In turn, the software has streamlined the bank’s entire workflow,” said Jeff Koonce, market president for Central and Southern Kentucky. “It’s really allowed us to operate with great speed and accuracy and has given our bankers more time to service our customers. Now that we are in the new (PPP) authorization, we’ve really honed our process. We’ve received some great feedback from our customers about the flow of the process.”
REPUBLIC BANK & TRUST CO.
Headquartered in Louisville, Republic Bank & Trust Co. operates 28 full-service banking centers in Kentucky and another 14 centers in Indiana, Tennessee, Ohio and Florida. “According to the Small Business Administration, we helped retain 39,488 jobs in Kentucky through PPP loans in 2020, the most of any bank in the commonwealth,” said Todd Ziegler, market president, Central Kentucky. In 2020, Republic Bank also launched a $3 million community loan fund to provide more support and promote business development and job creation in low- to moderate-income communities.
German American BANK
German American Bank, headquartered in Jasper, Ind., operates 17 full-service banking locations and one loan production office in eight Kentucky counties and 55 centers in Indiana. “Communicating frequently with all of our customers has been paramount over the last year,” said Michael Beckwith, Kentucky divisional president. The bank has enhanced its technology platforms and continued to allow business customers to use their credit cards the same as before the pandemic, not reducing their access to line availability.
“We believe that when a community thrives, its people prosper,” Beckwith said. “It has long been a focus of German American to promote the areas of overall education, financial literacy, the arts, economic development, sports and recreational programs, and community festivals.”
Citizens commerce BANK
Founded in 1996 in Versailles, Ky., Citizens Commerce Bank also has locations in Lexington, Nicholasville and Frankfort. In the first PPP round, Citizens Commerce processed 475 applications totaling $21.7 million. The bank is assisting with loan concessions when necessary via payment modifications or deferrals.
“We have been very proactive on the forgiveness component. Of the loans we made in the first round, 99% have been submitted to the SBA for forgiveness, with 96% having already been forgiven,” said President and CEO Michelle Oxley. “We understand businesses are struggling. We take great pride in getting to know our clients and offering custom solutions to fit their needs. Often, it is as simple as understanding a business’s cash flow and how to structure a transaction to better suit their needs.”
FIELD & MAIN BANK
Field & Main was formed in 2015 through the merger of Ohio Valley Financial Group and Bank Trust Financial. Headquartered in Henderson, Ky., the bank has six locations throughout Henderson, Cynthiana and Lexington, as well as Evansville, Ind.
In addition to PPP, Field & Main has been active with traditional SBA lending through the SBA 7(a) and SBA 504 programs and has provided many customers with one-on-one financial counseling. “I would say that businesses, and individuals for that matter, should not underestimate the value of the relationship with their bank,” said Danny Garness, senior loan officer, first senior vice president.
There are not as many applicants in this third tranche, “but the people that need it, need it badly,” Garness said. “This round, it feels as though we are doing the most good for the businesses who have been hit the hardest.”
Truist Financial Corp., headquartered in Charlotte, N.C., was formed in December 2019 by the merger of BB&T and SunTrust. Truist has a retail presence in 15 states and the District of Columbia. The bank has helped its small-business customers in a variety of different ways, from restructuring payments to consultative conversations. “One of the most impressive initiatives for Kentucky small business is the accommodation of the Small Business Administration. The SBA 504 and 7(a) programs have been meaningfully enhanced to support small businesses,” said Laura Boison, market president, Central Kentucky. “I am grateful as a country we collectively recognize that our nation’s economy is dependent upon all of our businesses, from single-owner small businesses to publicly traded Fortune 500 corporations.”
Central Bank is headquartered in Lexington, Ky., serving Central Kentucky, Northern Kentucky and Louisville with 28 full-service banking centers. Founded by Garvice D. Kincaid in 1946, Central Bank is celebrating its 75th anniversary in 2021.
“As business owners continue to navigate a fluctuating business environment, we have seen a need to accelerate planned advancements to our online and mobile banking products. Today, we offer a robust commercial online banking platform, but plans are underway to upgrade to a new platform by late summer,” said Chairman Luther Deaton.
Central Bank opened its PPP process to customers and noncustomers alike. “We have seen many new relationships form because we were able to help noncustomers that were not sure where to turn at the time to get their loan processed,” Deaton said. For existing clients, the PPP process “has allowed us to gain an understanding of their business operations in way that we might not have had otherwise.”