From the perspective of local banks and co-ops, it seems the COVID-19 recession never happened.

The shutdown of a significant part of the local economy last year and the accompanying temporary layoff of many hospitality and healthcare workers appeared to have had little lasting impact on the capacity of most businesses. local borrowers to meet their loan repayment obligations. ..

Kern County financial institutions recognize two main factors. It is a loan grace agreement that gives people more time to make up their debt.

As a result, the balance sheets of local credit unions and commercial banks in the second quarter became relatively clean. Even lenders are amazed at the rebound.

AJ Anton Giovanni, chairman and CEO of Bakersfield-based Mission Bank, said: “I think people go out and spend money, especially on hospitality, travel, entertainment and of restaurants. “

Chuck Smith, Senior Vice President and Chief Lender of Valley Strong Credit Union, also based in Bakersfield, added:

Lenders say it may be a little too early to declare victory over the recession. The global supply chain has not yet recovered and there are signs of inflation. Not to mention the risk that the highly contagious Delta variant will return to stopping COVID-19.

While there is a major threat to the eyes of some bankers, consumers who wait to pay for the government’s stimulus packages will not be able to catch up once the support ends.

“Wildcards happen when all of the stimuli are gone,” Smith said.

Still, borrowers appear to be doing very well, given how deeply the recession has disrupted society.

Bakersfield-based Safe1 Credit Union’s second quarter financial report showed few signs of a recession.

The loan amount of $ 492,737 that had to be amortized at June 30 due to underpayment was less than half of that of the previous year. And last year at this time was less than a year ago.

In addition, as of June 30, 2019, the number of cooperative members having filed for bankruptcy is 54 to 61 less than during the same period in 2019.

As one of the obvious signs that people were not paying their debts on the same schedule as before, Safe 1’s share of overdue loans in total loans was 3 minutes, 1% as of June 30. She went to a little more than one. Percentage of both at this time in the past two years.

CEO David King said this was expected in light of the credit union’s tolerance agenda. The borrower was given extra time to make the payment and was not technically delayed, but regulations require the credit union to declare it late on its own financial renewal.

He said that only a small portion of credit union loans are still tolerant. In contrast, Safe 1’s loan default rate is the lowest in 10 years and most of its members do not need extra time to repay their loans.

Ironically, perhaps credit unions and banks saw a significant increase in deposits due to those receiving government incentives when King had little opportunity to spend money outside of the House. paddy field.

“People crouched down and the government gave a lot of inspiration,” he said.

Smith of Valley Strong compared this to a consumer who “survives a storm”.

His credit union has seen a decrease in delinquent loans in total loans from the second quarter of last year to the second quarter of this year. Amortization of bad debts also fell 62% year-on-year.

He said much of the credit was directed to government intervention. Generous unemployment benefits and personal payments ended what could have been a disaster, and the federal paycheck protection program helped businesses survive.

At the start of the pandemic, Mission Bank tolerated tolerance agreements, according to Anton Giovanni. He said some customers who did not need it took advantage of the offer only to hold cash, then added that financial institutions had terminated all of those contracts.

Banks currently have less than $ 1 million in loans classified as problematic, which is low by their own historical standards.

For Antongiovanni, the big challenge now is to find a way to release the unemployed from unemployment benefits to help businesses fill vacant positions.

He attributed his bank’s strong overall performance to the fact that consumers who couldn’t leave their homes during California’s stay-at-home order can finally get out there and have some fun.

“I think there was sickening demand and I see people going out and spending money,” he said.

Local lenders see strong recovery from pandemic | News Source Link Local Lenders See Strong Recovery From Pandemic | New


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