Loyal Trust Bank

Loyal Trust Bank in Johns Creek enjoyed a booming first quarter until the coronavirus pandemic slowed business in mid-March, according to President and CEO Charlie Brown. Loyal Trust first opened its doors in January.

NORTH METRO ATLANTA — Georgia banks are in better shape heading into this year’s looming financial crisis than they were 12 years ago at the outset of the Great Recession.

That’s the word from David Oliver, senior vice president with the Georgia Bankers Association, who says the 160 FDIC-insured banks based in Georgia finished 2019 reporting excellent growth in earnings, loans and deposits compared to 2018. The aggregate results for those banks show that in 2019 loans were up by 28.3 percent, deposits were up by 24 percent and net income was up 18.6 percent.

“The capital is out there to backstop against potential losses,” Oliver said. “They’re at very high levels. Their liquidity, in terms of cash they have available to deploy to customers, is very strong also.”

Oliver said capital and liquidity among Georgia banks is at nearly twice the levels they were in 2008, when the Great Recession hit. From January 2008 through August 2011, Georgia led the nation in bank failures with 67, far more than any other state.

GBA membership includes 183 of the little more than 200 banks who do business in the state. All the 158 banks based in Georgia, as well as out-of-state banks, like Wells Fargo, Bank of America, Regions and BB&T, are members.

Oliver emphasized that banks are continuing operation. All deposits are insured up to $250,000 per individual per institution.

“No one has ever lost a penny of insured deposits,” he said. “That’s just a great message. It’s important for people to understand that.”

Oliver said many banks have switched to appointment-only services, emphasizing use of drive-thru and online services.

“They’re still making loans,” he said. “I haven’t heard any direct anecdotal evidence of any slowdown in lending per se.”

He said banks understand many people are facing financial difficulty and are deploying resources to help. That could come in the form of things like fee waivers or requiring interest-only payments. Some are giving payment deferrals for up to 90 days, Oliver said.

A young upstart braces itself

Charlie Brown, president and CEO of Loyal Trust Bank in Johns Creek, said he is rotating staff to keep the head count down in his building.

The bank, which just opened in January, still has the lobby open to customers, but traffic is slower, Brown said.

“Business has slowed, certainly it’s slowed as far as new loan requests,” Brown said. “People are staying home and not moving their accounts that often.”

There is one advantage to being a small startup bank, though, Brown said.

“We called all our customers to sign them up for online banking — every single one — so, they may not need to come into the offices as often,” Brown said.

During its three months of operation, Brown said Loyal Trust has seen brisk business.

“Things have moved very quickly this first quarter, up until about two weeks ago [when] we saw a slowdown,” he said. “In fact, we hit our first quarter numbers halfway through March.”

Since then, he said, things have slowed down due to the virus. There are not a lot of people, buying, selling or closing on new loan deals or wanting to move accounts, he said.

Wave of SBA loans on tap

Right now, banks are turning their attention to handling a wave of small business loans being made available through the Coronavirus Aid, Relief and Economic Security Act passed in late March. The $2.2 trillion measure includes a $350 billion loan program for businesses with fewer than 500 employees (including sole proprietors, independent contractors and anyone otherwise self-employed).

Under the bill, loans can be used to meet payroll and cover certain other expenses like utilities or insurance premiums. And, borrowers will be able to apply for loan forgiveness.

The new loans will be available through a wide range of banks and credit unions, beyond the normal list of preferred Small Business Administration lenders.

The GBA’s Oliver said banks are being called on to be the primary conduit for distributing those loans to small businesses.

Although full details have not been worked out, the application material will likely require businesses to supply:

  • Payroll records from 2019 through present
  • Number of employees, their wages and other costs
  • Employee healthcare benefits and premiums
  • Tax returns from 2019
  • Balance sheets
  • Mortgage or rent payments, utilities records

Businesses will want to have all the records to ensure they have good credit and are reasonably well underwritten, Oliver said. The better the business prepares, he said, the smoother the loan process will be.

“The key thing we’re trying to emphasize to the small businesses is get all your details ready,” Oliver said.

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