Thursday, June 20, 2024

Pandemic, PPP, and Pivoting

by BIZ Magazine

Banks, others navigate 2020’s challenges

Emerging from the COVID-19 pandemic shutdowns, slowdowns, layoffs and altogether shutterings, Louisiana’s banks not only emerged intact but also helped other companies keep from falling apart.

“Louisiana banks went into the pandemic with very strong capital, and it remains so,” revealed Robert Taylor, CEO of the Louisiana Bankers Association.

According to Taylor, the most recent data of June 30, 2020, showed Louisiana banks had an average of 10.84% Tier 1 capital — which bank regulators use as an indication of strength against potential losses — and that is higher than the national average of 10.65%.

Additionally, Taylor does not see a knock-on effect of the pandemic influencing mergers and acquisitions in Louisiana.  

“The trends pushing the industry to further consolidation have been in place for a very long time. Community banks have shown their value during the pandemic and strengthened their position,” he said.

Community banks are a huge resource for small businesses in Louisiana. With the carnage caused by an economic shutdown for large swaths of the economy due to the COVID-19 pandemic, these banks stepped up to the plate to help small businesses via the Paycheck Protection Program (PPP) and forbearance on loan payments. 

According to the U.S. Small Business Administration, there are 70,257 small businesses in Louisiana that received a PPP loan through a bank. In addition, 777,424 jobs were saved and $7.46B was distributed by banks in Louisiana. 

“Congress decided bankers were the best distribution channel to inject money quickly, professionally and safely into crippled small businesses in need of help. And banks in Louisiana did exactly that,” Taylor said in an editorial letter to BIZ. Magazine.

It’s clear from these SBA numbers that community banks throughout Louisiana played a crucial role in keeping the economy churning during the pandemic, via PPP loan applications. 

While it’s not clear what lessons were learned from this influx of loans, with Louisiana in Stage 3 of reopening, the banking industry continues to help businesses that may not have had income for months on end. 

“Both the customer and the bank want to make it to the other side of the pandemic and that goal drives both parties,” Taylor explained. “Helping those with PPP loans to apply for and get forgiveness on those loans so they do not need to repay them, continuing to work with customers who have had forbearance on loan payments (achieves that).”

Overall, he noted that the banking industry handled this difficult, challenging time extremely well.  

“Most had never worked with the SBA and the learning curve was steep. The events of 2020, with a pandemic, the collapse of the energy sector and hurricanes have presented unique challenges, but also an opportunity for bankers to show they are not just a business but integral in the success of their community,” Taylor said.

Editor’s Note: BIZ. Magazine reached out to the Lousiana Credit Union League, but did not receive responses to questions.

BIZ. Magazine

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