North Bay financial experts help keep businesses out of money pit amid economic toll of the coronavirus
A topsy-turvy stock market, double-digit unemployment, emergency relief funding, delayed loan payments, tax postponements and companies closing while others fill out new business applications — these conditions represent reoccurring themes for the financial industry at the hands of the COVID-19 crisis in 2020.
With the Federal Reserve maintaining low interest rates and injecting the economy with money — a lesson learned after the Great Recession of 2008-09, executives in many financial institutions proved time and time again the importance of relationship banking.
“When I look back at 2020, it was an intense ride — a buckle-your-seatbelt type of volatility,” said April Kupper, a managing director with JPMorgan Chase Private Bank in San Francisco, while referencing major swings in the market. “We were constantly reminding our clients to be prepared.”
Following her colleague’s lead, the bank’s Northern California Head Christine Leong emphasized how “diversification” was important, but confidence proved essential as well.
“We helped our clients feel comfortable with their outlook,” Leong said. “This is why we build long-term portfolios — to account for unprecedented times.”
Even with such widespread uncertainty and adversity in the region, banking proved it’s about much more than money.
JPMorgan Chase’s commercial lending division saw this first hand when their business customers were faced with government shutdowns that for some cut their revenue in half.
“In commercial banking, we worked with companies to improve cash flow and raise capital,” said Manoj Asnani, a managing director with the bank’s commercial banking division.
Asnani assembled a quasi financial think tank with his employees to figure out how to best guide the accounts of these business owners who stood to lose so much as consumer spending plummeted to new depths.
Getting back to normal is the goal at a minimum.
“Will it come back? Yes. I think there’s going to be vast changes,” he said.
A state panel of economists used a LaborCUBE study to warn a virtual conference audience in June that 37% of jobs in California will not return. About a quarter of this permanent job loss appears to fall in the accommodations and food service arenas — critical industries in the North Bay.
Survive and thrive at all costs
North Bay-based financial institutions such as Bank of Marin, Exchange Bank and Summit State Bank participated in massive efforts to keep their business clientele on track to weather this historic storm.
Stories mounted of bank employees working into the wee hours to process loans for their clients in July through the $660 billion U.S. Small Business Administration’s Paycheck Protection Program. To many, the loans — which are forgiven with a separate submitted application — were a lifeline to companies trying to keep at least three-quarters of their workforces employed amid a lack of business.
Banks were ground zero for the mass-scale efforts.
More than 4,100 federally supported, low interest loans totaling $1.4 billion were processed in Sonoma, Napa, Marin, Mendocino and Solano counties. Santa Rosa’s Exchange Bank alone processed more than 1,600 PPP applications.
A majority of the companies have already rifled through these loans designed to keep them afloat as the pandemic rages on.
For some economists, the question remains whether government help is the end-all answer. They claim the public debt will saddle generations to come.