Pub. 10 2020-2021 Issue 1

2 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S www.coloradobankers.org BY DON CHILDEARS, CEO, COLORADO BANKERS ASSOCIATION Banks Have Been a Source of Strength, Support Amid Covid-19 Pandemic A WORD FROM CBA B ankers have faced unprecedented challenges over the past few months, work ing t i relessly to ser ve t hei r customers amid the specter of contagion and constant confusion, and CBA is proud to say they have prevailed. COVID-19 forced banks and their customers alike to shut their doors, hunker down and find new ways of conducting essential business while simultaneously mitigating risk as much as possible. Because bankers are innovative, their customers experienced limited disruptions in service. Rather than walking into their bank branch, they used drive-thru lanes or mobile banking tools. When necessary, some made appointments to visit with their banker. Because bankers care about their customers and communities, they stepped up to the plate and fronted billions of dollars to business borrowers on behalf of the United States Small Business Administration via PPP loans, keeping them afloat when governments forced them to close their doors. They persevered through a chaotic rollout of PPP. Colorado financial institutionsmade just over 104,402 PPP loans to the tune of $10.3 billion and another 39,244 Economic Injury Disaster Loans were made for a total of $2.4 billion. Banks made those loans without clear guidance or assurance about how the funds would be recouped. Bankers worked through night s and weekends to get those funds into the hands of waiting borrowers — even when their banks’ profitability was being hit. FDIC-insured banks and savings institutions earned $18.5 billion in the first quarter of 2020, the smallest figure since 2010 and a 69.6% decline from a year prior, the FDIC reported in mid-June. FDIC Chairman Jelena McWilliams noted, however, that despite the decline in profitability, “the banking industry has been a source of strength for the economy in the first quarter despite unexpected shocks.” American Bankers Association Senior Economist Rob St rand echoed her sentiments. “Prudent risk management measures were largely responsible for sharply lower industry earnings in the first quarter as banks provisioned for the anticipated impact of the coronavirus on their loan portfolios.” “With significantly higher loan-loss reserves, banks remainwell prepared for the evolving outlook. Nearly all banks, 99.8%, have capital ratios that exceed the most rigorous regulatory standards.” While the initial wave of COVID-19 appears to have passed, banks’ work is far from over. Questions remain on PPP loan forgiveness for borrowers as well as those funds being backfilled to lenders. Lawmakers and advocates are working together to secure deminimis language and hold harmless language to ensure those things happen. Here in Colorado, at the direction of our new Chairman Nathan Ewert, we have formed a task force to focus our work on issues related to the COVID-19pandemic and its economic impact. We’re reviewing our needed CBA response to help banks cope with pressing issues. Colorado’s three top industries have been hit hard: agriculture already had several tough years before COVID-19, O&G has seen a hostile Colorado state government and plummeting prices, and COVID-19 f lattened tourism. Retail and other small business have beenhit hard.Working the last several months remotely is undermining demand for CRE, banks are watching residential real estate carefully, and we continue to cope with record unemployment, voluminous business failures and unknown consequences of government reaction to economic stresses. But rest assured, we’re trying to help banks to themaximum. Like banks have done for their communities and customers, CBA will continuetoworkdiligentlytoensureour membersnotonlyweatherthiscrisisbut emerge from it even stronger. n