9 ways financial organizations are aiding battle against coronavirus

By Allissa Kline, Jim Dobbs, John Reosti, Laura Alix, Jon Prior and Alan Kline

From the start of the novel coronavirus crisis, it became clear that banks had major challenges on their hands yet a real opportunity.

The pandemic dealt a swift blow to public health and economic livelihood, driving many customers (consumers and business owners) into desperate situations and making it harder for bank employees to do their jobs.

Banks insisted that they were not the cause of the financial meltdown this time (unlike a decade ago), that they were highly capitalized by historical standards and that they could help. They obviously realized they had an opportunity to redeem themselves after a decade of withering criticism from politicians, protestors and academics following the Great Recession.

The jury is still out on whether banks have seized the moment. The headlines have not been kind, raising questions about whether lenders dispensing federal aid favored their clients, especially large ones with other means of raising money, over the neediest small businesses. Banking industry officials have been quick to complain about emergency-loan programs and to demand regulatory rollbacks.

However, this cardshow is about the other side of the moral ledger — very creative efforts by banks of all sizes, and nonprofits that work with them, to help clients and the broader public fight for survival amid the pandemic. A community bank in Virginia has steered a portion of fees earned from the Paycheck Protection Program to help medical workers and the hungry; the nonprofit Operation Hope is hiring financial counselors in anticipation of “getting slammed” with requests for advice from the newly unemployed; and CIT Group has helped customers retrofit their businesses to produce personal protective gear for those on the front lines of the crisis.

Here are nine examples of outside-the-box thinking and resourcefulness that could make a positive difference in the country's time of need.

Trustar redirects some PPP fee income to health care, feeding the hungry

Founder and CEO Shaza Andersen said employees of Trustar Bank in Great Falls, Va., wanted to help out with the coronavirus crisis response. They hit on a different approach, donating a tenth of the fee income the $132 million-asset Trustar earns from its participation in the Paycheck Protection Program to two Washington-area service organizations.

Trustar, a de novo that opened in July, is supporting Inova Health Foundation, which funds medical care and health education, and Washington Nationals Philanthropies, which has focused on combating hunger. “We’re addressing the medical side and the human side of the crisis,” Andersen said.

“There’s a lot of need out there,” Andersen added.

The PPP was created to give small businesses with 500 or fewer employees the means to continue paying workers while the economy is largely idled by the pandemic. Trustar made more than 200 loans to local businesses during the program’s first phase, from April 3 to April 16. The bank picked up where it left off Monday, when the paycheck program resumed. Trustar’s loan count had reached 350 Tuesday afternoon, Andersen said.

“We were here until 2 a.m. working on applications,” Andersen said.

The Small Business Administration, which is managing the PPP, pays a fee for each loan lenders originate, so as Trustar’s loan count ticks up, the funds earmarked for Inova and the Nationals grow.

According to Andersen, “there’s no science” behind the 10% figure in Trustar’s pledge. “We felt 10% was sizable and makes a difference,” she said. — John Reosti

Citi recycles PPP profits back into small businesses

Citigroup will donate the profits it earns from the PPP to a relief program for community development financial institutions and small businesses, the company said Tuesday.

Earlier in April, Citi’s philanthropic arm launched a $7.5 million relief fund for CDFIs working with small businesses that might not fully qualify for coronavirus rescue funding from the federal government. The fund is specifically targeted to CDFIs working with diverse and minority-owned businesses.

This week, Citi said it would add any net profits it receives from participating in the PPP to that initial pot of money. Banks that participate in the federal government’s small-business emergency loan program are entitled to keep origination fees, as well as a small amount of interest earned on any unforgiven portion of those loans.

“By partnering with mission-based entities like CDFIs and [minority depository institutions], Citi and the Citi Foundation can combine scale with local market expertise, community knowledge and often long-established relationships to serve important communities in a larger and more effective way,” the company said in its announcement.

Citi said it will tally those additional funds once the PPP has concluded. — Laura Alix

Operation Hope adds counselors, goes virtual to meet rush for financial advice

Even with the coronavirus pandemic upending its business model, Operation Hope, a provider of financial education, is on pace to serve a record number of clients this year.

The Atlanta-based nonprofit usually does its work in mini offices inside bank branches, where its trained counselors provide guidance to typically low-income men and women looking to buy homes, start businesses or improve their credit scores. “Private bankers for poor people” is how founder and CEO John Hope Bryant often describes Operation Hope’s mission.

But with most bank lobbies now closed, Operation Hope’s counselors are helping clients over the phone or through FaceTime and other virtual channels. And Bryant says that demand for its services has never been greater.

Last year, Operation Hope served about 170,000 people in the 22 states where it has offices. Through the first four months of this year, it has already helped 73,000 people, many of whom have lost their jobs as nationwide stay-at-home orders have shut down much of the economy.

Bryant says that, historically, people have turned to Operation Hope for one thing, such as guidance on how to boost their credit score. “Now we have one client coming to us for six things,” Bryant said. “How do I get my stimulus money? I need to apply for the earned income tax credit. How do I apply for unemployment? I need help negotiating with the mortgage holder and my credit card company. And, oh, can you help me create a budget?”

Perhaps the biggest challenge Operation Hope faces, Bryant said, is finding enough coaches to serve all those newly unemployed or underemployed workers. The real estate data firm CoreLogic has donated some call center space in Orange County, Calif., and Operation Hope is actively hiring counselors to staff it. It is also looking to bring on 10,000 volunteers from the banking industry over the next three months to help meet what Bryant expects will be a surge of demand.

He said the nonprofit has largely been able to meet demand so far because many would-be clients are dealing with their own health issues or those of loved ones, he said. Eventually, those same people are going to need help with their finances. “We are four to six weeks away from getting slammed,” Bryant said. — Alan Kline

KeyBank’s Laurel Road delivers food, cheer and special pricing to medical workers

KeyBank’s digital lending platform, Laurel Road, is going the extra mile for health care professionals.

The national provider of student loan refinancing and mortgages — whose customers primarily are medical personnel — is taking multiple steps to help them get through the pandemic, financially and emotionally. For starters, Laurel Road now offers specialized pricing on its student loan refinancing product to all doctors, dentists, physician assistants and nurses.

At the same time, it has partnered with BetterHelp, an online therapy resource, to match health care professionals with licensed therapists who will provide free, online counseling for one month. And don’t forget about care packages. In addition to making weekly donations for the next month to Food for the Front Lines, an organization providing restaurant meals for health care workers in the Bridgeport, Conn., area, Laurel Road is also sending weekly care packages to the break rooms of 16 hospitals around the country in an effort to “rejuvenate and motivate” hospital employees working long hours.

Starting Friday, approximately 200 packages containing 100 different snacks and personal care products will be delivered over a two-month period to hospitals in cities such as Seattle, New York, Detroit, Washington and New Orleans. Hospital workers in the U.S. can request to receive one of these packages for their team by reaching out to Laurel Road via direct message on Instagram. — Allissa Kline

CIT backs a special kind of makeover

Several of CIT Group’s business clients involved in clothing and furniture have received financing from the New York bank to reconfigure their operations and produce personal protective equipment as supplies became scarce.

The fashion designers Sanctuary Clothing and Karen Kane in Los Angeles are making protective masks. Aria Designs, a furniture importer in Lenoir, N.C., is using its supply chain to procure N95 masks for health care workers and has tapped CIT to finance the orders from manufacturers.

"We explained the situation and CIT immediately said: 'Let's go. How can we help?' " Aria Designs CEO Jeff Arditti said in a release announcing the funding. "That gave us the confidence to go forward.”

New York-based BCI Brands, which is making protective gowns for health workers in the city, also received financing from the $58.9 billion-asset bank. Another New York company, Lafayette 148, a women’s fashion brand, is making masks and gowns for workers at the Brooklyn Navy Yard with CIT’s help.

"When we learned of this opportunity to help our client and join the fight against COVID-19, we jumped right in,” said Mike Hudgens, Southeast regional manager for CIT's commercial services group. — Jon Prior

Citizens, Chime offer consumers early access to federal relief

A pair of lenders took a creative approach to ensure customers get quick access to the federal government’s coronavirus relief funds: They distributed the money before the payments were even deposited.

Citizens Bank of Edmond in Oklahoma and Chime, a challenger bank in San Francisco, each created a program through which customers could receive a portion or the entirety of their checks before the funds were technically available. Citizens’ version is a no-interest overdraft line that customers repay when they receive checks. Chime originally opened up its program to 1,000 customers, but later expanded that to 100,000 and said it would limit advances to $200 per customer.

A spokeswoman for Chime said the lender made more than $1.1 billion of government relief payments available to its members before the money actually arrived from the government.

Last week, Citizens CEO Jill Castilla said her team provided information about the program to approximately 400 other lenders who were interested in the details.

And while the number of customers who actually took advantage was small — given the bank’s already “liberal” overdraft policy, Castilla said — it “lays the framework for the future” if there is a second round of direct payments from the government, she added.

“It really helped the staff see the impact they can make on [customers] going through the crisis, that the bank will quickly act to make sure we’re good community stewards,” Castilla said. — Allissa Kline

Cathay finds ‘micro’ solution to a big problem

Cathay General Bancorp in Los Angeles created a small-dollar loan program to help its smaller commercial clients.

The $18.3 billion-asset company’s Smart Relief Loan Program offers small businesses microloans of $5,000 to $10,000. The effort is operated separately from any federal government initiatives.

The company has processed more than 100 Smart Relief applications totaling roughly $1 million for borrowers across nine states, Chang Liu, president and chief operating officer of its Cathay Bank unit, said during an earnings call in late April.

Cathay, which has a large concentration of Chinese-American clients, has also been an active participant in the Paycheck Protection Program. As of April 27, the company had submitted more than 900 applications totaling $220 million. — Paul Davis

Washington Trust employees drop everything to meet ‘staggering’ PPP demand

Washington Trust Bank in Spokane reassigned staff to increase the size of its SBA lending team from four people to 30 in a matter of days to handle surging PPP volume in April.

In the first round of PPP, the $7.2 billion-asset bank processed 3,800 applications totaling $1.1 billion — nearly a fourth of its pre-virus total loan book — to assist a wide swath of small businesses hammered by the early and relatively severe coronavirus outbreak in Washington state. Dozens more employees across all departments are cross-training to help meet demand for emergency loan assistance.

“The demand has been staggering,” Jack Heath, the bank’s president and chief operating officer, said in an interview.

“A big concern is that our people on the front lines need a break,” he said. “But there’s such a sense of urgency, everyone just wants to keep pushing forward. We’re on fumes, but we’re also rallying to do whatever we can to help get us all to the other side of this.”
— Jim Dobbs

Texas Capital creates ‘home away from home’ for medical staff

On top of pledging $100,000 to help its local health care system fight the coronavirus, Texas Capital Bank in Dallas deployed its community service vehicle to a mobile testing site at American Airlines Center.

For how long? Indefinitely.

The $35.9 billion-asset bank offered the Wi-Fi-equipped vehicle to Parkland Health & Hospital System as a “home away from home” for nurses and other medical staff in need of a private rest area with fully equipped facilities. The truck — which was transformed into a full-service banking center after Hurricane Harvey struck Texas in August 2017 — can also serve as a COVID-19 test analysis site, if need be.

In March, Effie Dennison, Texas Capital’s director of community development and corporate social responsibility, told American Banker that the bank reallocated about $500,000 in charitable funds to help nonprofits respond to the pandemic.

“We see this not as a sprint, but a marathon,” Dennison said. “We’re going to be at it for a while. — Allissa Kline