Loans – Banks earn $14 million in fees on local paycheck protection loans | Business
Financial institutions pulled in $14.1 million in fees for issuing loans to Luzerne County businesses in the first round of the Paycheck Protection Program.
FNCB earned the most, receiving more than $1.9 million for distributing 454 loans totaling nearly $54.3 million. Ranking second was Community Bank, National Association, earning a little over $1.5 million on $47.1 million in loans to 240 businesses. Third was PNC Bank, National Association, bringing in nearly $1.4 million for loaning $53.8 million to 321 businesses.
As for the most loans processed for Luzerne County businesses, FNCB, PNC and Fidelity Deposit and Discount Bank topped the list. Fidelity earned a little more than $1 million for processing 312 loans totaling nearly $23.2 million in the county.
These banks were among 109 lenders that issued 3,901 loans totaling $386.4 million to businesses in Luzerne County. The fees were based on a sliding scale, with the financial institutions earning 5% on loans of $350,000 or less, 3% loans over $350,000 but less than $2 million and 1% on loans over $2 million.
The fees do not represent the total amount the banks earned, as they also loaned a substantial amount to businesses in other counties.
Officials with Fidelity and FNCB said they do not know yet what percentage of the fees will be profit as the total costs associated with the loans remains to be seen.
Daniel Santaniello, president of Fidelity, said banks incurred significant costs as they rushed to process an avalanche of applications when the first round opened up in April. Fidelity alone received about 1,600 applications.
“We don’t get 1,600 business applications in five years. This was done in the course of three months. It took a lot of the bank’s resources to bring this program to fruition,” he said.
Jerry Champi, FNCB president and CEO, said administering the loan program was “a herculean task,” with 25% to 35% of banking staff working from home and often being available “24/7” to keep customers updated on changing rules and answer their questions.
Michael Cummings, FNCB spokesman, said the amount of profit will be largely dependent upon how much of the loans are forgiven. Further details may be released as part of the bank’s filings with the Securities and Exchange Commission, he said.
FNCB, which is owned by Dunmore businessman Louis DeNaples, did not issue loans to any business owned by DeNaples or other bank directors, Cummings said.
In Luzerne County, the majority of loans FNCB, Community and PNC issued were to the healthcare industry. But the industries that received the most total funding from those banks varied.
FNBC distributed over $10 million to healthcare organizations, Community Bank distributed $12.5 million to the retail trade industry, and PNC loaned nearly $15.3 million to accommodation and food service businesses. Individual loan amounts ranged from $200 lent to a hair salon to $10 million lent to a culinary management company.
Champi said there was “no strategy” to size of loans or type of business to which they were awarded, so long as businesses met program requirements.
“We really did not target this to any specific industry,” Champi said. “We went into this with one simple goal — to assist our small business community … to get to the other side of the pandemic.”
Of the 408 loans FNCB distributed in Luzerne County, 47 were for less than $5,000.
Santaniello said Fidelity specifically sought smaller businesses and sole proprietors, even though in some cases the fees earned would not cover the bank’s cost to issue them. Of the 312 total loans Fidelity issued locally, 23 were for less than $5,000.
“Our goal was to help clients of any size,” he said. “We did not turn away a single application.”
Santaniello said the bank is again targeting smaller businesses for the second round of loans, applications for which opened up on Jan. 15 and will run through March 31.
“I’m really passionate about this,” he said. “We want to get these folks the loans they need to continue to fund their operations and keep employees working.”