The disruption caused by the COVID-19 pandemic last year hit many businesses hard, especially small firms and nonprofits with narrow financial margins.
For many community banks, small businesses and nonprofits are a large part of their customer base. Banks responded quickly to help these clients weather the pandemic, in some cases providing loan payment modification. They also played a key role in dispensing Payroll Protection Program loans, part of the more than $2 trillion Coronavirus Aid Relief and Economic Security Act. The PPP enabled small businesses, nonprofits and other organizations to obtain very low-interest, forgivable loans from the U.S. Small Business Administration so that they could keep their employees on their payrolls.
This speedy, effective response to the economic crunch caused by COVID not only kept many small firms and nonprofits operating; it also helped banks—which received SBA fees for processing the forgivable loans—to log unexpectedly strong results in 2020.
One such community financial institution is Tompkins Bank of Castile, a state-chartered, wholly owned subsidiary of Ithaca-based Tompkins Financial Corp. (NYSE American: TMP). Tompkins Bank has 16 banking offices in a market that spans six counties: Monroe, Livingston, Genesee, Orleans and Wyoming and Erie. Its main business office is in Batavia, and much of its geographic footprint is rural.
Tompkins Bank ended 2020 with total assets of $1.8 billion, total loans of $1.3 billion and total deposits of $1.6 billion. That compares with total assets of $1.5 billion, total loans of $1.2 billion and total deposits of $1.2 billion a year earlier.
John McKenna, president and CEO, says Tompkins Bank processed more than 1,300 PPP loans. As a result, he says, nearly 14,000 jobs in the region Tompkins Bank serves were protected.
While the PPP ended this spring, before the latest surge in COVID cases and hospitalizations driven by the Delta variant, McKenna voices confidence that the resilience demonstrated by small businesses will enable them to stay on track in this latest phase of the pandemic.
The Rochester Beacon posed four questions to McKenna on community banks’ response to the COVID pandemic:
ROCHESTER BEACON: Some have said that when the pandemic struck, community banks acted as “economic first responders.” What volume of Paycheck Protection Program loans did Tompkins Bank of Castile issue and how important were the COVID relief programs for your small-business customers and for the bank itself?
JOHN McKENNA: Between the two rounds of the PPP, we processed more than 1,300 loans for a total of over $156 million reinvested in the community. I am proud to say these efforts resulted in approximately 13,800 protected jobs. Clients needed help fast, and this government sponsored program was offered on a “first come, first serve” basis with limited funds available, so response time was critical.
Keeping with our longstanding commitment to the community, we were happy to do our part to support local businesses, especially during this time of need. Essential bank staff aimed to get ahead of the rush by working extended hours—mostly remotely—to reassure customers, explain the PPP program, and process the loan requests as quickly as possible. Local businesses used the loans to keep employees on their payrolls, and for other qualifying expenses. Our customers were very appreciative of the support, and for some this was the lifeline that kept them in business.
ROCHESTER BEACON: What are some other ways you were able to respond to the needs of small-business customers?
McKENNA: In March 2020, prior to any government mandates, we were one of the first financial institutions to offer a loan payment modification program for customers facing unexpected financial burdens. The program offered various loan deferment options, depending on the loan type and the client’s situation. Our team worked around the clock to deliver this program while also customizing individualized solutions for our customers. Our team has always worked with individual businesses to deliver unique financial solutions specifically tailored to their needs. This did not change during the pandemic.
ROCHESTER BEACON: The PPP ended in May (though loan forgiveness applications can still be filed), and now there is a new surge in Covid cases and hospitalizations. Is the small-business recovery in our region at risk?
McKENNA: While it’s impossible to predict what may happen next, our small business community has continued to demonstrate its resilience. Tompkins is here, as always, to do whatever we can to assist our customers and support the community as we get through this next phase of the pandemic, together.
ROCHESTER BEACON: Tompkins Financial Corp. annually gives more than $1 million to area charities and nonprofits. From your perspective, how are nonprofits weathering the pandemic and what are their greatest needs?
McKENNA: During the height of the pandemic in 2020, it was clear that many businesses and individuals were unable to financially support area nonprofits. Coupled with event cancellations, this was a huge blow to the nonprofit sector. It was crucial that businesses like us continued to support our nonprofit partners, and I am proud to say that our commitment to various charities and organizations remained unchanged. Nonprofits continue to need sponsorships and donations so they can deliver crucial services to the community. We encourage businesses and individuals who are able to contribute to the causes they care about most.
Paul Ericson is Rochester Beacon executive editor.