INTERVIEW WITH BOB JONES
Twenty-twenty was quite a year, to say the least. How was United Bank positioned and what was the focus at the beginning of the year?
We came out of 2019 in a strong position. The economy was in good shape, interest rates were rising and we had some important initiatives planned for 2020. We were very positive, upbeat and then, like the rest of the country, we hit a brick wall. It was sudden and unprecedented. It was severe, it affected everyone — businesses, individuals, families — we really had no idea what was going on. It was troubling.
Being such an unprecedented event, there really was no road map to follow. How did United Bank prioritize and make decisions in the face of such sudden, universally destabilizing circumstances?
Our first priority was to protect the health and safety of our employees. Like most businesses, we had to move quickly and we worked hard to support our employees during this transition and after.
Then, we had to turn our attention to business continuity and the needs of our customers. We had to address issues of staffing, offices, communicating with customers and the continuity of services.
We certainly reaped the benefits of the technology infrastructure we’d put into place at the end of 2019. With the installation of our last Smart ATM just before the pandemic disruption, we immediately started communicating to customers about how to use them. We were keenly focused on figuring out the best way to keep serving our customers.
United Bank decided to participate in PPP (Paycheck Protection Program), even while dealing with many other challenges. Why did United Bank make this decision?
We made the decision to participate because we value our small business relationships. We wanted to be a resource to help them navigate the program. Most of the big banks decided only to work with bigger businesses. These bigger businesses typically have a controller and accounting staff which offers them the capacity to complete the applications faster. Small businesses don’t have those resources. They were getting left out, and we felt a duty to be a trusted advisor. As a result, we learned even more about the power of relationships. We came through for our customers when others abandoned theirs.
How did United Bank organize the team to handle all the competing demands?
At the same time we were addressing business continuity, the uncertainty of the pandemic, and the implementation of the PPP program, we also had to address forbearance — helping our customers modify their existing loans.
To address all of these demands, we modified operations and evaluated inventory. We had to see what we were capable of accomplishing. As a result, we deployed our staff into areas to address the company demands. We moved audit staff to forbearance and set up three teams for PPP — one team for applications, one for information and one for documentation.
We needed to be prepared for whatever was coming — while still trying to keep continuity and facing manpower issues at the same time. We were learning in real time and making decisions every day.
It sounds like the team really came through.
It was like a ship going through hazards and finding a way to navigate. The technology was already in place. We held Zoom calls daily and worked every day (except Easter Sunday), sometimes all night long.
Our people figured out ways to overcome challenges. I was so pleased to watch our group learning and exchanging solutions. I watched them grow in real time.
They really grew as a team. We have an employee based in Birmingham who has previously felt detached from the rest of the team. After working so closely with his colleagues over the past months, he said now he really feels like he’s part of the team. We did what we could to make it easier for our people to do their jobs. We offered $500 grants to all employees and they didn’t abuse them. If they didn’t need them, they didn’t take them. We offered complimentary telehealth services to all employees, absorbed the cost for employees to upgrade computer equipment, advanced sick and vacation time, allowed flexible work schedules and many other things.
We adapted to circumstances in support of our team as they occurred. In Monroe County, we set up computer stations for employees’ children to use for distance learning while their parents worked. Many areas of Monroe County have limited internet access, which posed a real hardship for kids to participate in virtual learning. Not only did it help the parents and the kids, but it was the right thing to do operationally. If they couldn’t take care of their kids, they couldn’t work. And we needed them to be an active part of our team.
In addition to COVID-19, we also endured two hurricanes that devastated our area. But we kept going. Our employees were front line workers for the financial sector. They adapted and kept things going.
Is it true United Bank had a pandemic plan?
It is. Years ago we had a very thorough security chief, John Brantley — he’s now retired — who had us develop and implement a pandemic plan in response to the bird flu. When COVID-19 hit, I remembered it, dug around and found the plan. We realized there were boxes at each branch with PPE. We had an abundance of inventory to protect our staff at all the branches. We had hundreds of N95 masks, hand sanitizer, brochures and information about what to do during a pandemic. It was something. I actually called John and told him we were using it.
Obviously, the pandemic has had an impact on the financial performance of many businesses. How did it affect United Bank?
In response to the pandemic, the Federal government lowered interest rates to zero to support the economy. To us, lowered rates meant falling margins. For example, PPP loans were 1 percent, whereas our loans before were 4 percent. We completed 950 PPP loans that ranged from $400 to $2 million, but the fees from those aren’t realized until the loan is forgiven.
We were making fewer loans due to COVID-19 and also dealing with forbearance. As a result, our revenue was negatively affected.
We also assumed during these unprecedented times there would be major credit problems so we increased our reserves. Normally we put $50,000 to $70,000 a month into reserves to allow for loan losses, but we felt it was necessary to increase reserves to $1.6 million.
We had a strong profitable year. Despite not meeting budget, we exceeded our targeted income with the announcement of several CDFI awards. Our net income was strong, but our margins were compressed because of interest rates, and our expenses were higher because of the additional reserves. NSF fees decreased but interchange fees increased because of online shopping.
Truth is, the diversity of our income sources gives us the ability to offset trends, helps us weather disruption and gives us stability.
After such a rocky year — and with COVID-19 still impacting many aspects of our lives — what is in the future for United Bank?
I ran into a hedge fund manager at a meeting once who referred to United Bank as his “safe haven.” He said we were resilient and adaptive. That we consistently faced challenges, adapted and moved forward. We have, over the year, confronted challenges, assessed risk, developed a strategy and moved forward. Our attitude is to adapt and evolve.
Looking forward, we realize consumer personal behaviors changed and will be forever altered. Our foundation, workforce and customer has changed and will not go back. But we will respond. Even though our employees aren’t all together as they were in the past, it’s important for us to stay connected and keep our culture intact. Zoom calls help, but until the pandemic is stabilized and contained, we’ll work hard to keep our company culture together. It’s very important to me.
The new economic model will mean we have to price products differently and focus our efforts on deepening relationships with customers. For example, our bankers have always seen loans as transactional. But lower rates mean less spread on loans. Profit has always been a factor to loan transactions, but there equally needs to be a focused effort on deepening relationships. This can be accomplished by exploring alternative revenue streams. We’ll work to find ways to add value to our services, help our clients save money and strengthen relationships.
These are unstable times, but there are so many good things and opportunities to capture. There are areas of concern but also areas of opportunity. We have the tools to take advantage of them. We feel optimistic and look forward to growth. There will be other challenges, but we are prepared and positioned to adapt and overcome.