BANKING CONSTRUCTION & FINANCE OVERVIEW
As of February, 2021, 20,559 PPP loans had been issued to New Jersey businesses ( ) to more than 20,000 New Jersey businesses, totaling $2.0 billion and an average loan value of $100,220. This was above the national average of close to $82,000 per business. To add a further layer of protection for small businesses, New Jersey made the decision to make PPP loans tax-free. All expenses paid through PPP funds will be tax-deductible. The huge effort by banks in getting this money to struggling businesses cannot be overstated. As soon as the SBA made the financial lifelines available to struggling businesses, New Jersey banks had all hands on deck to process the vital resources. But even before the PPP program set in, New Jersey banks were already heavily engaged in lending to small businesses. Eight Garden State banks made the Top SBA lender list in the agency’s fiscal year 2019. TD Bank came out on top of the list of 20 banks by approving 604 small-business loans across the state totaling $79.4 million. Regional Business Assistance Corp ranked third at 100 loans for $58 million; UCEDC was sixth with 69 loans for $3.4 million; Cooperative Business Assistance Corp was eighth with 59 loans for $1.4 million; Peapack-Gladstone Bank came in 10th with 31 loans for $22.3 million; The 504 Co. ranked 11th with 30 loans for $33 million; New Millennium Bank was 24th with 25 loans for $23.2 million and First Commerce Bank came in 18th with 20 loans for $5.6 million. As the pandemic wore on, other financial institutions relied on strategic partnerships to distribute as many loans as possible. Cross River, a New Jersey-based community bank, leveraged its fintech partnerships to process 105,000 PPP loans worth an aggregate $4.5 billion as of June 6, 2020, ranking 15th in the SBA’s list of top lenders by value and fourth by the number of loans processed, only behind financial behemoths JPMorgan Chase, Bank of America and Wells Fargo. Regulations The speedy acceleration in 2020 toward the
John Herring New Jersey Market President Liberty Bell Bank - A Division of The Bank of Delmarva
How has demand for the bank’s services shifted with the pandemic? Loan demand has continued to grow. There’s been a great amount of activity in the construction industry, both commercial and residential, rehabs and flips, and contract building. The real estate market has been crazyhot and that has presented some nice opportunities. We had developed a bit of a niche in construction lending before our merger and we were fairly active in the construction business. That has continued throughout the pandemic. The bank’s pipeline has performed extremely well. Overall, I would say we’re back very close to 100% in terms of business compared to prepandemic levels. What impact have you seen from the increased focus on digital platforms? We’ve definitely seen an increase in demand for our digital banking services. We’ve always used remote deposit capture to expand our reach in this market as we have a limited number of branches. I think there’s definitely less branch traffic and most of us expect that to be the new normal. A lot of young people are banking from everywhere and it’s great to have those options and opportunities. A lot of people have been surprised by the amount of business you can do over Zoom and on a remote basis without being in the office five days a week, so I do think there are some changes that will stay in place. What is behind the consolidation in the industry? If you’re a smaller bank and you’ve been around for a while but you don’t have a ton of capital, it’s difficult to navigate the regulatory and the compliance aspects of the business. Larger banks have entire departments dedicated to those issues. With smaller community banks, that isn’t always the case. Another factor driving consolidation is the opportunity to be a part of a larger organization and to take advantage of the opportunities that it affords. www.capitalanalyticsassociates.com
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