April 30, 2020
Authored by: Jim McAlpin
In March, I dialed into the first ever “conference call only” meeting of a 14 year old community bank. The main office of the bank is located in Philadelphia and there was growing concern about the rapidly increasing number of Coronavirus cases in New York and New Jersey, and the spread of new cases into eastern Pennsylvania. I recalled that our board had reviewed an updated version of the bank’s pandemic policy in December but I couldn’t remember the details. Suddenly that policy had relevance in a way I could never have imagined. In April, our board held its second conference call only meeting, and we are likely to continue that pattern for several more months.
We are all aware of the circumstances that led to pandemic policies being retrieved from file folders and read with interest for the first time. What we don’t yet know is how severe the resulting economic shock will be, and the degree to which loan portfolios of community banks will be adversely impacted. It is clear, however, that the adverse impact on small to medium sized businesses across the U.S. has been considerable. As the CEO of one of our law firm’s bank clients in the Southwest recently remarked, we are experiencing the first ever government imposed recession.
God willing, the banking industry will remain strong and be a source of support for the nation’s economy as we recover from the onslaught of COVID-19. In that context, the boards of community banks could benefit from recalling some hard learned lessons from the recent Great Recession.