Having apparently weathered the Covid storm, most business sectors are now considering their place not only in the present but also in the post-pandemic future ”” and banking is no exception.
“Most community banks are coming out of this stronger, certainly from a reputation perspective,” Union Savings Bank President and CEO Cynthia Merkle told the Business Journal.
Merkle, who also chairs the Connecticut Bankers Association, gave much of the credit for that to the Paycheck Protection Program ”” and the flexibility that smaller banks showed in processing PPP loans, especially during its initial phase last spring.
“That first phase was challenging for everyone,” she said, “with the regulations seeming to change on a daily, if not hourly, basis. And a lot of people were in a panic in the early days, but eventually customers settled down and became less frenzied.”
USB originated close to $200 million in PPP loans, Merkle said, adding that its board also acted quickly to deploy funds to hospitals, food pantries and visiting nurse associations in a matter of weeks, rather than wait for the usual culmination of its grant cycle in the fall. As a result, $650,000 was bequeathed last year.
For such efforts, the Danbury-based bank was named the top-ranked bank in Fairfield and Litchfield counties in a recent national survey, an unexpected honor that Merkle said was due entirely to USB”™s staff.
Nearly 200 of those staffers worked from home for much of the past 15 months or so, and are only now being brought back to its 26 branches. Seven employees have been tapped to serve on a customer contact committee to determine how best to protect customers and employees moving forward.
Eight others make up a second committee tasked with making recommendations on what the bank”™s future work environment might look like.
“I never believed that people could be as productive working from home as they were,” Merkle said. “It became very clear very quickly that they could still deliver for our customers.”
Merkle expects that more flexibility for working parents and long-haul commuters could become a new standard.
“We have some team members who live in Poughkeepsie,” she said. “Saving them two hours a day in commuting would be of great value to them and to us.”
Meanwhile, the bank is also continuing to try to stay ahead of the technology curve, something that Merkle admitted can be a tall order. While recent innovations such as contactless debit cards and an instant debit card issuance program have received high marks from customers, significant challenges remain.
“Sometimes we never even see our customers,” Merkle said. “Our Net Promoter Scores have gone up dramatically during the pandemic began.”
Still, “our competition today is so different than what it was in the past,” she continued. “The Venmos, fintechs, what have you ”” they all mean that banks have to cut through their silos to implement new products quickly. We hired a new core processor in 2017 and they use us a lot for beta-testing of new products.”
Although USB”™s loan delinquency rate is “probably the lowest we”™ve seen in years,” Merkle said she has “a nagging feeling that something”™s got to give at some point.
“A couple of years ago, we had tenants in buildings that were being threatened by internet sales,” she recalled. “Places like restaurants and nail and hair salons didn”™t have to worry about that. But then the pandemic comes and it”™s the restaurants, nail and hair salons that ended up getting hurt the most.”
The low-interest rate environment is also likely to change, Merkle noted. “Deposit rates probably can”™t go down any further, and yet lending rates have flattened. Interest rates are going to be an enormous challenge for us all.”
And of course there”™s the whole question of a return to “normalcy.”
“A lot depends on how quickly people go back to their old behaviors,” Merkle acknowledged.
