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| BANKING & FINANCE | Digital alerts aim to avoid overdrafts

PNC customers now have more about for some time and had the power over their checking technology to do,” Hansen said. accounts. “COVID in particular has increased

The bank, which has five branch- the growth of digital banking: 79% es in the Wilmington market, has of our consumer transactions are announced Low Cash Mode for its now digital.” customers who Hansen added that PNC is also JENNY CALLISON use the bank’s digital Virtual Wallet bank acin the midst of regulatory oversight related to its planned acquisition of Houston-based BBVA USA count and money Bancshares Inc. and its U.S. banking management subsidiary BBVA USA. program. “That pushed us to get this prod“Low Cash uct capability in our clients’ hands,” Mode digital he said. “While overdraft protection offering … is offered across the industry today expected to help allows critical payments to be proVirtual Wallet cessed, overdraft fees are a systemic customers avoid frustration that drives dissatisfaction overdraft fees for all customers regardless of their through unprecedented account financial situation.” transparency and control to man- PNC expects to help its customers age through low-cash moments avoid about $125 million to $150 or mistimed payments,” the Pitts- million in overdraft fees annually, burgh-based financial institution the release stated. In a pilot involvannounced last month in a news ing nearly 20,000 customers, Low release. While some customers al- Cash Mode saved participants more ready have access to it, PNC expects than 60% in overdraft fees, accordthe program to launch nationwide in ing to the release. June and July. PNC’s full year 2021 revenue

Simply put, the new patent-pend- outlook anticipated this fee reducing tech offering lets customers tion, and as a result is not impacted know when a pending payment will by this change, the release further cause an overdraft. stated.

Customers can choose to pause “PNC is fortunate to have a the payment until sufficient funds diversified revenue stream. We’ve are in the account, or go ahead with been developing this product and the payment and incur an overdraft forecasting our revenue numbers for fee. the year,” Hansen said. “We are fore-

It’s an improvement from the casting a $125 million to $150 milstandard bank lion drop per year as a result of Low approach to auto- Cash Mode. We’re not significantly matically covering impacted by this and, long term, we an overdraft but think it will grow our client base. charging a fee, Moreover, we believe we believe they according to Jim will be very happy clients.” Hansen, PNC regional president for

Hansen Eastern Carolinas. Low Cash Mode is part of Virtual Wallet’s Spend (checking) account and gives customers the ability to prioritize by determining whether certain debits (checks and ACH transactions) are processed that otherwise might result in overdrafts, rather than the common industry practice of the bank making the decision. Real-time alerts let customers know when their balance is low and – if it is negative – Low Cash Mode provides a grace period of at least 24 hours to prevent or address overdrafts before fees are charged.

“It’s something we’ve been talking

Live Oak reports lower losses than expected

During Live Oak Bancshares’ first-quarter earnings call in late April, officials announced that their actual losses as a result of the COVID-19-related economic downturn were far less than anticipated.

Chairman and CEO James “Chip” Mahan said that Chief Credit Officer Steve Smits had predicted the bank’s losses from loan writeoffs could top $100 million. The bank identified and isolated six of its lending verticals at greatest risk for economic impact – they came to be known as the COVID 6 – and gave special attention to those, including making numerous site visits.

The COVID 6 industries are entertainment centers, hotels, wine and craft beverages, educational services, fitness centers and quick-service restaurants.

“I was probably in the $34 million loss expectation in the early days, but today, we’ve taken $11.6 million in charges related to COVID. However, $9.8 million of that was related to our hotel markdown,” Smits said during the call. “So if you exclude the hotels, we’ve charged off $1.7 million in loans that are directly a result of COVID stress. And of that, $1.2 million was in the COVID 6 industries and only $600,000 has been in the non-COVID industry.

“I do think it’s important to note, however, that we’ve already reserved an additional $5 million on top of that for loans that were impacted by COVID. They may ultimately turn into charge-offs, but we’re working very closely with them,” Smits continued. “We’ve also reserved another $10.8 million for loans that are experiencing some level of stress due to COVID, but I’m pretty cautiously optimistic as they are trending favorably today, so the expectation is we can avoid losses on most of this.”

Smits acknowledged that businesses are “not completely out of the woods” and that the bank does need to be prepared for “potential surprises,” but he said that current information leads him to believe that charge-offs for the remainder of 2021 will be more reflective of preCOVID levels.

“We continue to work with borrowers still experiencing stress due to COVID, but at the same time, we’re seeing a notable gain in credit quality across the rest of our portfolio,” he added. “Many businesses are actually stronger today than they were pre-COVID and that’s thanks in large part to the government programs.”

Mahan noted that two of the COVID 6 industries – restaurants and wine and craft beverage – may get assistance from the $28 million Restaurant Revitalization Fund that is being administered by the Small Business Administration.

Smits said that most of Live Oak’s quick-service restaurant borrowers have fared well during the pandemic, thanks to delivery and drive-through models. But while those businesses may not even need a Restaurant Revitalization grant, the bank’s wine and craft borrowers could receive critical help from the fund.

“This program can be very meaningful to really our smallest breweries who have historically relied pretty heavily on on-site sales in taprooms, for example,” Smits said.

Fintech firm Apiture partners with Zelle

Financial technology firm Apiture has inked an alliance with Zelle, the largest bank-sponsored person-to-person payments service in the United States. The new partnership, announced in a late April news release, will incorporate the Zelle feature into the firm’s Apiture Xpress platform.

Zelle offers a secure and easy way to send and receive money directly between bank accounts in the U.S., typically within minutes, between enrolled users, the release stated, adding, “By using an email address or U.S. mobile number, customers can send, request and receive money or split the cost of bills with those they know and trust, regardless of where they bank in the U.S.”

The new partnership will result in an enhanced experience for customers of banks and credit unions that use Apiture Xpress, Apiture’s Chief Operating Officer Chris Cox said. Currently hundreds of financial institutions and financial technology partners use Apiture Xpress.

“We saw an effortless synergy between Apiture and Zelle [that complements] Apiture’s mission to empower financial institutions to accelerate their digital transformation. It’s part of our effort to ensure that our clients have all the capabilities they need to serve their customers,” Cox said. “Zelle provides them with an option that allows their customers to receive and send money to and from other people. Zelle will be inside the mobile banking [solution].”

Cox said that Zelle is not yet coupled with the company’s Apiture Open platform, which primarily serves larger financial institutions, but he expects it will be.

Wilmington-based Apiture, a joint venture between Live Oak Bancshares and Atlanta-based First Data, was established in 2017 and now employs 233 people at its local headquarters and its Austin, Texas, offices.