Suntell CEO Corner
Who is ready for 2020 to be over? I am quite certain that I am not alone when I say this year cannot end soon enough! Fatigue is sitting in on all things related to Covid 19. For our banker friends that fatigue is likely related to PPP loans and forgiveness and the volume of headaches that came with this hastily issued government funding.
Yet, despite Covid 19 and its negative impact on certain sectors of the economy and the disruption on how we do business, it appears community financial institutions are going to have a good year financially in 2020. Even with narrowing interest margins, PPP fee income and continued strong loan demand and lower cost of funds are leading to stronger earnings. The PPP program was a success for both community financial institutions and the small business customers impacted by the Covid 19 shutdown.
Optimism among bankers appears to be strong about the future. Most expect that some loan problems will arise, but most think it will be manageable. Bank regulators have shown patience thus far but expect the bank examiners in the near future to begin requiring documented plans for customers coming out of payment deferrals approved due to Covid 19. Per interagency guidance issued June 23 2020 – FIL-64-2020, regulators will want to see your institutions plan for the identification and management of problem loans including systems to more effectively monitor and manage loan portfolio risks. Component downgrades could occur if an institution is not effectively managing risk with appropriate systems in place to ‘identify, mitigate & monitor’ credit and portfolio risks.
I believe that once stimulus impact runs dry, unless renewed, 2021 will see an increase in business bankruptcies and credit issues related to select areas of commercial real estate (retail, office and hospitality). It is important to be prepared and ahead of the game before this economic impact impacts your commercial loan portfolio and before your next bank exam.
Contact us if you would like us to discuss or review if you are getting the most out of Square 1 Credit Suite and its host of loan portfolio set of tools including specifically the tools built in the ‘Collections and Workout” areas of your system.
We celebrated 24 years of business in August. After 24 years, we have never wavered from our focus on enabling community financial institutions and its commercial lenders in working more efficiently while mitigating credit risk through effective underwriting and portfolio servicing. Square 1 Credit Suite continues to serve that purpose.
After a 3-year development investment, we announced earlier this year the release of our new product add on ‘SET Reader’. The SET Reader is able to read all electronically filed business and personal tax returns and supporting schedules into the tax return analysis in Square 1. Per the IRS, with over 90% of tax returns being filed electronically, the SET Reader is an affordable add on system to reduce the heavy workload of manually inputting all of the tax returns submitted annually. If you have not had a chance to take a look, I encourage you to do so in the coming year. What you need right now after PPP is a break from all of your manual hard work! Let us help.
My next message will be in early 2021. After the year we have had this year in 2020, I am optimistic the tide is turning on Covid 19 and business and personal life can resume to some level of previous pre-Covid 19 normalcy in 2021. We look forward to new cases falling, better treatment plans treating Covid 19 and finally, the distribution of a vaccine. Whatever the next challenge might be for your institution, we stand ready to help.
Suntell CEO and Founder
Makers of the Square 1 Credit Suite