Business & Economy

Banks, credit unions work to process loans under new conditions

First National Bank of Orwell
The First National Bank of Orwell is using an old, long unused telegraph window that opens to its vestibule for customers to conduct transactions. Photo by Anne Wallace Allen/VTDigger

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It’s been more than a century since the telegraph window at Orwell National Bank last saw this much action.

The window has pretty much served as an historical artifact since the 19th-century technology was replaced by the telephone. Bank customers stopped using the telegraph for long-distance communication almost a century ago.

But when President Bryan Young was looking for ways to keep the small, family-owned bank running while minimizing the risk of COVID-19 transmission, he brought the small window back into service. Now customers slide their documents through the bottom of the window, which shares space with an ATM in the tiny vestibule.

“It was mostly just there as a historical design feature,” said Young, the fifth generation of his family to run the state’s smallest bank.

Like most people, bankers and credit union managers are adjusting to a new way of life as coronavirus cases multiply in Vermont.

Vermont has 23 banks, 21 with a physical presence in the state, with about 2,800 employees. The 19 credit unions with branches in the state are also open. 

Even before he issued his sweeping “stay home” order on March 24, Gov. Phil Scott had begun to shut down regular life in the state, starting with schools and then businesses. Now only businesses deemed essential – which includes banks and credit unions – or those that can be conducted entirely by remote work are permitted to continue operating. Bank lobbies are closed; most bank business is undertaken through drive-throughs.

Everybody is taking a fairly similar approach,” said Chris D’Elia, the president of the Vermont Bankers Association. “Obviously the challenge is being available for customers, without compromising on the necessary health controls.”

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D’Elia has been holding weekly calls with most of the bank leaders since the COVID-19 crisis started in early March. In the panicked early days of the crisis, as schools closed and the governor issued orders closing businesses, bank leaders talked about the possibility of seeing a run on banks.

They didn’t see any sign one was likely, said D’Elia — despite the panic that was illustrated by runs on groceries and toilet paper earlier this month. 

The North Country Federal Credit Union in Berlin instructs customers to use the drive-thru. Photo by Mike Dougherty/VTDigger

“The safest place for your money is in the bank, because you have FDIC insurance,” he said. “The banks are in a very strong financial position.” 

Despite the crisis, banks still have an array of mortgages in some stage of processing, and D’Elia said one thing bank officials have been adapting to in the last few weeks is getting the paperwork completed under the new social distancing guidelines.  

The closure of so many businesses makes it difficult to carry out those closings the conventional way. Just two or three weeks ago, banks were working with a busy pipeline of people who wanted to refinance because the interest rates were so low, said D’Elia.

But real estate appraisers haven’t been deemed essential, and neither have title companies.

“If a lawyer doesn’t have the capacity to work from home, they’re not able to do the work,” he said, noting that some people don’t have the Wi-Fi at home that they need to carry on business as usual. “The other issue we’re running up against is the town clerk offices. Are they open by appointment only? Are they closed? Are they recording documents? That is mixed across the state.”

While it’s permissible for appraisers to do their work without visiting the home, D’Elia said appraisers shouldn’t even be doing that if they haven’t been deemed essential.

“That’s the challenge we’ve been working on,” said D’Elia. “We’ve had conversations with the Agency of Commerce about this, and with (Mike Pieciak, commissioner of the Vermont Department of Financial Regulation), and all have been very understanding.”

D’Elia also thinks the crisis will spur people to refinance their homes because they need the cash. In that way, he said, bank loans could be a lifesaver for a family that just lost income. He added that he doesn’t place banks in the same categories as other sectors working on the front lines. 

“Is a real estate transaction, somebody buying a home, absolutely critical compared to what others are facing right now? Probably not,” he said. “But for some people who are stressed and have limited income coming in, that refinancing could make a big difference to them. I’m not comparing it to the heroic work our doctors and our nurses are doing.”

First National Bank of Orwell
President Bryan Young is the fifth generation of his family to run the First National Bank of Orwell, the state’s smallest bank. Photo by Anne Wallace Allen/VTDigger

Working conditions are much the same for the credit unions, said Rob Miller, CEO of the Vermont State Employees Credit Union, Vermont’s largest state chartered credit union. VSECU has closed its lobbies and conducts all business through the drive-through. If people need to get into a safe deposit box, they meet staff and enter individually. VSECU mobile and online banking, as well as call center service channels, also remain open. 

VSECU has also launched an emergency loan fund for members.

“The last time we looked, we had received 200 applications over two days,” he said. “We’re trying to figure out how to get capacity, because there clearly is demand.”

VSECU is working closely with its members to modify loans and accommodate late payments, said Miller.

“We have a fair amount of small businesses, some of which are family businesses, a lot in the hospitality industry or retail, that were hit hard and quick,” Miller said. “It’s not just the severity of the issue, it literally happened overnight. They went from operating at a very good pace to zero.”

Individual members also were laid off or had their hours reduced, Miller said.

“We’re making modifications to loans to allow them some time,” he said.

Online banking is suddenly the easiest way for most people to manage their money. D’Elia and Miller emphasized that those who don’t want to bank online should call the bank.

Young’s bank does offer online banking, but he has many elderly customers who prefer to do things the traditional way. The First National Bank of Orwell has just $75 million in assets and a few thousand checking accounts, though it did add a second branch in Shoreham in 2006.

“Being kind of old school, we don’t send email blasts,” Young said. “We have signage up letting people know what is going on. And people come in and ask.”

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Anne Wallace Allen

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