2021 CSBS Community Bank Case Study Competition Journal

2021 COMMUNITY BANK CASE STUDY COMPETITION

outside of the program. The increase in commercial lending through the paycheck protection program was partially funded by the increase in deposits from the stimulus program. Additionally, the bank experienced an increase in deposits from commercial DDA’s through the paycheck protection program. Given the economic uncertainty from the pandemic, SBB immediately granted requests from its borrowers of loan deferrals up to three months. The bank also granted loan deferrals for specific industries, and some were granted an interest-only repayment period of up to six months. SBB added an additional $6 million to loan loss reserves to prepare for a slowing economy and upcoming losses on assets. However, the net chargeoff rate decreased from 0.30% in 2019 to 0.18% in 2020. The nonperforming loan ratio decreased from 1.11% in 2019 to 0.68% in year 2020, showing that the loans have performed well during the pandemic and credit risk decreased. The bank’s net income also grew during the pandemic. Profits increased from $13.8 million in 2019 to $14.0 million in 2020. The leading cause for this growth was an increase in net interest income, which rose by $5.7 million. Total interest income rose by $2.7 million while total interest expense decreased by $3.0 million. Despite the challenges from the pandemic, SBB’s robust profitability allowed them to continue their mission to aid the community. A Story During the Pandemic One great story from SBB that exemplifies a community bank serving its community during

Despite the challenges from the pandemic, SBB’s robust profitability allowed them to continue their mission to aid the community.

Impact on the Balance Sheet Over the course of the pandemic, SBB’s assets grew from $1.5 billion at the end of 2019 to $1.68 billion at the end of 2020. This increase of 12 percent in total assets over the course of the year compares with a growth rate of 7.9 percent in 2019. The primary reason for the increase in total assets was an increase in net loans and leases of 14.6 percent. PPP loans made up 17.8 percent of total loans at year-end 2020, and most of these loans were C&I loans, which increased by 59.1 percent from end of 2019 to end of 2020. Liabilities increased 12.6 percent in 2020, led by an increase in total deposits of 11.6 percent. Bank equity increased 10.7 percent to $187.6 million. The PPP and funds from the stimulus program resulted in a flow of cash onto the bank’s balance sheet. Despite the increase in lending due to the paycheck protection program, SBB had a five percent increase in loan growth

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