Financial institutions aim to aid battered customers

  • Downtown Anchorage was quiet as people stayed away hours before a city “hunker down” order took effect on March 22. Banks and credit unions are working with individuals and businesses to help cushion the economic punches brought on by mandatory closures and travel restrictions intended to slow the spread of the coronavirus. (Photo/Bill Roth/Anchorage Daily News)

Alaska’s financial institutions are doing what they can to help businesses and individuals through the economic consequences of the response to COVID-19 and they’re largely doing it from a position of strength.

“We’ve got plenty of funds to lend,” Northrim Bank Chief Lending Officer Michael Huston said March 24.

The state’s largest banks were all growing and nearly all of them had significant net income increases and strong loan portfolio performance based on third quarter results. Northrim, for example, had a 45 percent year-over-year increase at $7.8 million in net income.

Anchorage Economic Development Corp. CEO Bill Popp said the state’s banks and credit unions are “in the best possible situation we could’ve hoped for” given the dire economic situation facing thousands of Alaskans and people worldwide brought on by government-mandated business closures and event cancellations aimed at limiting the spread of the virus.

“There’s great leadership in our financial institutions and they have the resources to stay solvent,” he said.

Popp is also a co-chair of the Economic Resiliency Task Force formed by Anchorage Mayor Ethan Berkowitz to help city leaders navigate the unprecedented situation and minimize its impact on Anchorage’s economy.

It’s unclear exactly how many workers will ultimately be impacted by attempting to pause the state and national economies, but what is certain is the numbers will be painfully large.

State Labor Department officials reported roughly a six-fold increase in unemployment claims in the days after the state and local governments began restricting public gatherings and closing bars and restaurants in mid-March.

Popp said he’s heard numerous lenders are aggressively working to modify business loans, refinance mortgages and defer payments and interest for businesses that have had to close and individuals who have had their income cut off so quickly.

He stressed a need for an immediate cash infusion into the economy. Popp said the explosion of the pandemic and the quick nature of the subsequent government responses left many business owners without time to react.

“Businesses have been caught without sufficient cash resources to ride this out,” he said.

Based on information the task force is receiving, Popp said the group expects the virus and resulting movement restrictions to be in place for months, not weeks.

A survey published by the National Federation of Independent Business indicated that as of March 24, more than three-quarters of Alaska small businesses were being negatively impacted by the response to the virus.

Approximately 5 percent of mall businesses have been positively impacted. At the time, 68 percent of small business owners said they were very concerned about the potential impact to their business, according to the survey.

Gov. Mike Dunleavy said on March 20 his administration had reached an “understanding” with members of the state’s banking community to partner on a program to offer state-backed bridge loans to small businesses.

Bank executives said they are generally supportive of the concept but they are waiting to hear more details about it.

A spokesman for Dunleavy did not respond to questions about the loan program in time for this story.

In a March 23 statement, officials with the Alaska Industrial Development and Export Authority encouraged its borrowers in need of assistance to contact the private lender that participated in the loan with AIDEA.

“The authority can then work with the lender to help achieve a positive solution for the client,” the AIDEA statement reads.

The state-owned development bank regularly participates in private commercial loans at up to 90 percent of the loan, many of which are in the tourism and hospitality sectors.

Some of the lending Northrim is doing is in the form of short-term loans to businesses that are trying to pay their employees through the work stoppage, Huston said.

Northrim is providing 90-day payment deferrals and 120 days of interest-only payments on business loans, according to Huston. The statewide bank has different options for individuals with loans or mortgages, he said.

“We have significant resources to assist any borrower that is having difficulty as a result of this pandemic,” Huston said.

James Wileman, president of Anchorage-based Credit Union 1, said his institution is offering loan extensions, reduced monthly payments, 60-day deferrals and giving borrowers 1 percent back on new loans.

Credit Union 1 workers search the cooperative’s records when local companies announce layoffs, Wileman said, in an attempt to determine if any members have been impacted and reach out to them for assistance if need be.

“We’re just looking for ways to help,” he said, noting the juxtaposition of needing to help fuel the economy in any way we can while also severely restricting nearly all activity.

Popp additionally noted that waiving late fees and other payment-related penalties during extraordinary times can prevent compounding an already difficult situation.

Aside from more traditional means of assistance, on March 24 CU1 began encouraging members to support certain local restaurants with takeout and delivery orders, and each time someone posts a photo of their food on social media with the #cu1foodie hashtag, the credit union will donate $50 to that restaurant.

Steve Lundgren, president of Denali State Bank, said his institution is handling each borrower independently.

The Fairbanks-based bank first began hearing from Aurora-centric and winter tourism operations impacted by initial international travel restrictions before many other businesses were hit by state and local government mandates.

“We’ve made a lot of concessions in terms of payment modifications with those borrowers,” Lundgren said.

He implored state officials in a March 24 interview to issue a strict “stay at home” mandate across Alaska in an attempt to blunt the impact of the pandemic as quickly as possible. Lundgren said he believes sharp immediate measures will prevent the COVID-19 pandemic from lingering any longer than it needs to.

“The quicker we can get this issue resolved the quicker we can help our economy recover,” Lundgren said.

Elwood Brehmer can be reached at [email protected].

03/25/2020 - 4:44pm