Unsung Heroes of 2020

Unsung Heroes of 2020

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As we gladly say goodbye to 2020 and head into the unknown of 2021, BAUERFINANCIAL, Inc., the nation’s premier Bank and Credit Union rating firm, would like to recognize the hard work of the employees of our nation’s financial institutions. As essential workers, these men and women worked long hours every day, especially after the CARES Act Paycheck Protection Plan (PPP) passed, to get people through the toughest financial times of 2020. We know they will continue to be there for us in 2021 as well. And we want to thank them.

Our nation’s financial institutions spent the last decade beefing up after the Great Recession. And it has been paying off. Bauer has just released new bank and credit union ratings and data based on September 30, 2020 financial data, and is pleased to report how well the industry is holding up. At $51.2 billion, net income for the nation’s banks, although down 10.7% from a year earlier, was up 173% from second quarter. That was due to large amounts of provisioning for loan losses in the second quarter.

As of September 30th, loan quality is still holding up quite well. As a whole, banks and credit unions are not experiencing high delinquencies or charge-offs. Of course that is subject to change. The next few months will be critical in determining the direction they take in the new year. In the meantime, thank your healthcare workers, thank your grocery personnel, your delivery drivers… and thank your banker. They’ve had a long year too.

One of the ways to see just how hard bank employees are working these days is to look at average assets per employee. As a rule, and with technological advances, we are accustomed to seeing average assets per full-time equivalent (FTE) employee on the rise. But generally that rise is incremental—less than ten basis points in any given quarter.

In the third quarter of this atypical year, average assets per employees at the nation’s community banks reached a record high of $6.3 million. That’s a 14.4% jump from third quarter 2019.

The 10.97% annualized asset growth rate can largely be attributed to the PPP loans that bank employees worked so hard to get out to their communities. As a result of their efforts, Commercial & Industrial (C&I) lending was up 71% from a year ago! And that was done with a 3% drop in the number of community bank employees nationwide.

If you think that all sounds too good to be true, take a look at the community banks listed on page 7. The 50 community banks each posted year over year asset growth AND much higher assets per employee than the average. Let’s take a look at the first one.

4-Star Texas Exchange Bank, SSB, Crowley, TX nearly doubled in asset size during the 12 month period ending September 30th and its loans grew even more. Texas Exchange has always catered to local businesses so it is no surprise they looked to it for help during COVID. At September 30, 2019. Texas Exchange Bank had $270.474 million in total loans of which 74.8% was C&I. Twelve months later—total loans have soared to $573 million with 85.7% invested in local C&I. And, its loan to deposit ratio is just 41.6% so there is plenty more to lend.

As for its underwriting: Although the bank did have a couple of charge-offs this year, no delinquent loans are reported as of September 30th, nor are any past due. So we can just say, “keep up the good work.” And that goes for the other banks listed on page 7 as well. Most are Recommended by Bauer (5-Stars or 4-Stars) and all are working hard for their neighbors and friends.

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