March 6, 2021 / VOLUME NO. 147
A Grim Anniversary

This month, the United States marks a somber anniversary along with a grim milestone: More than 520,000 Americans have died of the coronavirus one year after many states began their lockdowns. 

“This week, our country tragically passed the half-a-million deaths mark, reminding us of the immense loss our country has suffered due to [C]ovid,” writes Raymond James’ healthcare policy analyst Chris Meekins in a March 1 report. “When we laid out our four potential scenarios last year, little did we know that ‘Failure [is an] Option’ would be the actual outcome.”

In addition to the tragic loss of life, the coronavirus brought economic activity to a halt, triggering massive layoffs and a cascade of small business failures. But the economic devastation was also the catalyst for financial institutions to spring into action.

Without a doubt, widespread loan deferrals and quickly issuing Small Business Administration-backed Paycheck Protection Program loans helped stabilize the economy. Banks scrambled to keep operations going, and their customers and employees safe. And while the U.S. economy is not back to pre-pandemic levels, it could have been a lot worse if it wasn’t for those efforts.

I’m not the only one taking a moment to reflect. Banks proved to be resilient and performed well over the last year, despite a dire outlook in spring 2020, said Pat Mitchell, a senior financial analyst at the Federal Deposit Insurance Corp., during a recent agency podcast. 

Looking ahead, he and fellow FDIC senior analyst Meg Hanrahan said changes in consumer behavior to spend less and save more could be good for banks in the short term but bad for businesses, and the recovery, in the long term.

The uncertain outlook was also on the mind of Federal Reserve Gov. Lael Brainard, who gave two speeches this week reflecting on the pandemic’s impact and the economic outlook ahead.

“The expected path of the U.S. economy has strengthened with the prospect of widespread vaccinations and additional fiscal stimulus, but risks remain, and we are currently far from our goals,” she said in a March 2 speech. Brainard’s words are a reminder that the pandemic isn’t over yet and the recovery isn’t fully here, but the turning point from crisis to recovery could be close.

March 2021 is a month for all of us in the industry to reflect on losses sustained and gains made over the past 12 months, and infuse those lessons and takeaways into operations, approaches and strategy in the years to come. A year marked with tragedy, loss, disruption and uncertainty was met in the bank space with innovation, resiliency, action and adaptation.

• Kiah Lau Haslett, managing editor of Bank Director
A CEO leading one of the most efficient banks in the nation came up with a way to measure how much of a bank’s original revenue turns into profits before taxes and provision expense.

“We favor this new metric since it shows [how] much $1 of revenue is turned into core profits — the higher, the better.”
— Christopher Marinac, Janney Montgomery Scott

• Kiah Lau Haslett, managing editor for Bank Director
Banks that are committed to making their employees’ and customers’ lives better should seriously consider investing in AI capabilities and applications — before the bank is left behind.
The incoming leaders of federal regulatory agencies will face pressures to overhaul compliance.
A look at the performance of the community bank space at the end of 2020 can help institutions prepare for the year ahead.
The keys to understanding a bank’s profitability come from a mindset shift and a single source of information.