Happy new year! This time I sincerely mean it. I always say that year went really fast, however 2020 was the exception. We found ourselves, like many of you, adapting quickly to the rapid changes brought on by COVID-19. While we were fortunate to have adapted remote work culture and technology over a decade ago, we were challenged by the stand still in our market, while our customers focused on how to work remotely and process a large volume of PPP loan applications. But we adapted like so many other times in our nearly 25-year company history and look forward to better times ahead. I am pleased to report that after all that was endured, we ended 2020 as strong as ever. 

We are encouraged by the new vaccines being rolled out at the present time. By the middle of 2021, I hope and envision we will have a strong majority of the population vaccinated with herd immunity at levels that will permit some normalcy to return to our personal and working lives by the 2nd half of 2021. As such, 2021 will be bumpy and a hybrid between 2020 and the pre-Covid 19 world. While we saw unemployment reach 14.7% and thousands of businesses closed and whole industries shut down like travel and tourism in 2020, we will see in 2021 a gradual improvement in unemployment and likely bursts of strong GDP growth of 5% to 8% in the 2nd half of the year. The government just approved a 2nd stimulus package and money for a 2nd round of PPP loans for $284 Million. The Fed will continue interest rates at 0% with continued buying of government and mortgage debt and extension of lending facilities. The combined government and federal reserve support of the economy has really blunted what could have been a disastrous situation for financial institutions and their loan portfolios. 

Digital and remote work system technologies and telecommuting will continue into 2021 with some hesitation by workers to return to a typical office full time. This will likely stress office CRE. E-commerce rapidly accelerated for goods in 2020 and will continue in 2021 which will continue to replace traditional brick and mortar retail, placing additional pressure on retail strip center type investments and loans. Travel and tourism will return slowly in 2021, however loans on hotels and hospitality need to be re-assessed (stress tested) in 2021. Will life ever resume to pre-Covid-19 style of work and play? I highly doubt it, which means we all need to continue to adapt and move forward. 

I am pleased to report that our customers that had a fully operational Square 1 Credit suite for loan originations, document imaging with a suite of loan management and servicing tools, weathered the COVID-19 impact better than those without such systems in place. Processing volumes of PPP loans while managing commercial credit risk is much more efficient with centralized data management systems like Square 1 Credit suite. I felt sorry for the lenders that were forced to work remotely for months with no remote digital access to these centralized systems with supporting document images to rely upon. Those that delayed the implementation of such systems are now scrambling to get those in place to support the new ways in which work and lending has evolved with COVID-19. Paper credit files in a central loan vault and credit originations and analysis all managed via Microsoft Word and Excel internally designed templates, need to be finally scrapped once and for all. These systems need to go on the museum shelf alongside 8 track tape players, VHS tapes, Blackberry phones, Fax machines and……well you get my drift. Forgive me, but if you are responsible for your institution continuing to cling to these old systems and way of doing things, it’s likely time to think about how to get out of the way of progress so your institution can thrive into the next decade of rapid changes. 

Our analysis indicates that over half of all community financial institutions continue to use these antiquated internal systems for commercial lending originations and servicing. COVID-19 taught us all we cannot continue to operate like this in the future. It exposed many institutions to how inefficiently they were set up and structured to handle a mass volume of loan originations by not having access to digital files and centralized data and processes. 

In 2020 we released our new SET Reader product to read data from electronically filed individual, partnership and corporate tax returns and supporting schedules into the credit analysis and spreads of our financial analysis area of the Square 1 Credit suite. This is a tremendous time saver for credit analysts and lenders enabling an increased focus on the actual meaning of the numbers and trends associated with your borrower. Per the IRS, over 90% of tax returns are filed electronically, which means a strong majority of tax returns filed by your customers can be read by the SET Reader. 

In 2021 we will be releasing our own Square 1 Loan Portal to support the secure collaboration between customer and lending institution of loan documents. This will further support the front-end digital management and efficiency of the collection and management of documents to originate and close loans. Please watch out for future announcements in early 2021. 

Here is to a prosperous 2021!

Thank you,

Duane Lankard
Suntell CEO and Founder

Makers of the Square 1 Credit Suite