Bank CFO on PPP: ‘We Had To Learn On The Fly’

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PCSB's Jeff Helf talks PPP challenges and rewards, and how the program gave the community bank an edge over big bank competitors.

PCSB Bank, subsidiary of $1.79 billion-asset PCSB Financial Corp., has been heavily involved in the federal government’s Paycheck Protection Program. StrategicCFO360 spoke with CFO Jeff Helf about how the program is helping PCSB’s customers, how the bank’s overall loan portfolio is faring and why the community bank chose to go public in 2017.

How is PPP going?

Within this program, the SBA has already originated 30 times its normal annual loan originations – that’s a huge undertaking. Then layer on a health crisis that’s impacting government just as much as it’s impacting businesses, so I certainly understand some of the early challenges with the PPP program administration.

Many community banks may have shied away from the program because early on it was clear the requirements to get up and running required some effort. A bank had to go through an application process to be registered with the SBA, but we were happy to get involved with this program because a lot of our customers have been significantly impacted, and this gives us an opportunity to serve our small business customers.

When the program started, we had to learn on the fly how to get up and running, as in the beginning the requirements kept changing. We wanted to ensure that any PCSB customer who needed a loan received one.

My role in PPP was playing backup – doing all of the administrative work to enable our lenders and retail bankers to serve their customers with as little friction as possible. That meant maintaining loan origination data and managing workflow processes, as well as anticipating the system needs of lenders and making sure everyone is coordinated on that front. I also have had to keep up with the SBA’s regulatory reporting requirements, which early on were changing often.

Then there were early reporting requirements for the New York State’s Department of Financial Services, to make sure our PPP loans were going to small businesses and not large companies with multi-million dollar sources of other financing. New York State also required reports on the types of industries involved in the program, how many employees within each company, whether they were in low to middle-income Census tracks – they wanted all of this information, and rightfully so.

Regarding the loan forgiveness process, our retail bankers are currently working with borrowers to proceed with applications, but I will be making sure the SBA is making those reimbursement payments to us.

How have the pandemic shutdowns and resulting slowdown in the economy impacted the credit quality of your overall loan portfolio?

We’ve actually been able to maintain good asset quality because the government has allowed banks to provide payment deferrals. That really gave us some extra ammunition to work with our customers, and most of those loans that were in deferral are now paying again. A lot of those businesses are back up and running, though some still have restrictions.

We have $30 million of loans still on deferral, but we don’t see those as problem assets. The CARES Act says we don’t have to deem them as troubled debt restructurings, though we do need to grade them appropriately. Many of those loans are classified, but we don’t expect them to become nonaccrual post-pandemic when everything reopens fully.

Why did PCSB go public in 2017?

We were a mutual savings bank, but we converted to a stock holding company and then we went public in 2017. It has been a big change for an organization like ours. We were able to raise quite a bit of capital in our IPO, providing us a springboard to grow our bank. We’ve been able to make the necessary investments in our business to provide the best products we can, and to position ourselves better against larger regional banks, as well as the national banks operating in our communities.

While I wasn’t CFO at the time, I was still heavily involved in the IPO process. I reported information to regulators, both the New York State’s DFS and the FDIC, for their vetting processes. I was also instrumental in building up our SEC reporting processes for when we went public, as my background is in public accounting.

What is it like working at a community bank?

My background is working with large multinational financial institutions so when I joined PCSB, I was taken aback that even though it was a small organization, it was very powerful within its communities.

PCSB, which used to be named Putnam County Savings Bank, has been a leading bank in our area for 150 years, and to see the impact that this type of organization has had was a little shocking to me. In all of the organizations I’ve worked at, the term “customer service” seemed to be used as more of a tagline. But after being here almost eight years – and particularly during the pandemic, I see the role a community bank plays in meeting the needs of the local communities.

For example, going back to the PPP, businesses that had banked with larger financial institutions came to us for help because they said they couldn’t get their bank to call them back. They were then pleasantly surprised that we not only called them back, but we also helped them through the PPP application process, including helping them collect the necessary documentation.

Working here has really been an eye-opener for me. This is the type of organization where you can really see the difference your work has on the community.

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