Community banks were open when D.C. was not

The government may have been shut down, but these community banks were lifelines for federal workers facing weeks without pay.

By William Atkinson

During the federal government shutdown earlier this year, tens of thousands of federal workers went without pay for over a month, leading to financial struggles for many of them. However, a number of the nation’s community banks stepped up to make things easier for these workers.

One such bank was $467 million-asset National Capital Bank (NCB) of Washington in Washington, D.C. “We recognized each situation may be different, so we encouraged our customers to contact us to discuss their individual needs, so we could work together to find the best solution,” says Robin Robertson, senior vice president, retail banking and marketing director.

The community bank posted a message on its homepage with a link to its online contact form and made its employees aware of the programs available. NCB offered concessions for fee waivers and no early withdrawal penalties on CDs for deposit accounts. It also offered a temporary rate reduction on its overdraft coverage, as well as options to skip a payment on a home equity line of credit (HELOC) or consumer mortgage. “Assistance was considered for current NCB deposit and loan customers only who were furloughed government employees,” Robertson says. “They just needed to present proof of employment by showing their federal ID.”

Burke & Herbert Bank in Alexandria, Va., also got the message out through its website and frontline staff. “We provided information to all of our customer-facing team members and encouraged them to identify opportunities for us to assist customers in need,” says Terry Cole, executive vice president, director of products, marketing and sales for the $3 billion-asset community bank. For customers with existing mortgages or other loans or lines of credit, the bank provided some payment relief and/or waived late fees or other charges. If a customer needed funds to pay bills or other living expenses, the bank expedited the process for obtaining a personal line of credit or a line increase if they met Burke & Herbert’s credit criteria. “On a case-by-case basis, we also waived overdraft and other fees,” Cole says.

Support for consumers

Another bank reaching out was $824 million-asset Plumas Bank in Quincy, Calif. “Plumas Bank allowed consumer deposit clients, with verified direct deposit from an affected government agency, to overdraw their DDA account up to 80 percent of their monthly paycheck for a period of up to three months during the shutdown, and overdraft fees were waived,” says Elizabeth Kuipers, vice president, marketing manager and investor relations officer.

Plumas Bank allowed consumer loan clients who were documented government employees, or employees of a government contractor, to defer up to three monthly payments during the shutdown and waived deferral fees.

In addition, the community bank allowed consumer HELOC clients with no funds left on their line to take advantage of a three-month deferral with the agreement that the finance charges would be paid current and the balance brought down to an amount equal to or lower than the note amount when the shutdown was over. “For commercial clients, a separate line of credit with a maturity date of three to four months was used to fund government A/R [accounts receivable] during the shutdown,” Kuipers says.

With a customer base heavy on military and government employees, $1 billion-asset Old Point National Bank in Hampton, Va., had its work cut out for it. “We offered options for customers to be able to skip a payment or make a smaller interest-only payment on their loans without a fee by means of a one-page notification agreement,” says Joseph R. Witt, senior executive vice president and chief business development officer. “We also communicated that additional relief would be available in the event of a longer-term shutdown.”

Vista Bank in Lubbock, Texas, found that the end result of its offering was happy customers. During the shutdown, it offered a loan with 0 percent interest, zero fees and zero payments for 90 days. One customer who took advantage of the loan offer was considered “essential personnel” for the Transportation Security Administration (TSA) and was therefore working without pay. “He was very grateful for our loan program to help him pay for his living expenses and get through this time,” says Matt Willis, director of strategic initiatives/investor relations at the $802 million-asset community bank.

Burke & Herbert Bank also had a TSA employee customer who was working without pay and was in danger of missing her rent payment. In addition, her mother, who lived out of the area, suffered a stroke, and the customer did not have the funds to travel to see her. “We were able to expedite a line of credit that gave her the assistance that she needed to pay her rent, maintain her credit score and enable her to visit her mother,” says Cole. “She said that she will be forever grateful to Burke & Herbert Bank.”

A potential missed HELOC payment was the concern of one of Plumas Bank’s clients. “We offered her a three-month extension without any fees,” says Kuipers. “She opted for a one-month extension but was tremendously relieved, exclaiming, ‘This is why I bank with Plumas. I am a customer for life!’”

Treating non-customers like customers

Some community banks reached out not only to their own customers but also to non-customers. Vista Bank in Lubbock, Texas, opened up its fee-free, 0 percent interest loan offer to all west Texas government employees who were affected by the government shutdown, even if they weren’t current customers. “We were there for any government employee who needed this assistance,” says Matt Willis, director of strategic initiatives/investor relations.

Another bank reaching out beyond its own customer base was $380 million-asset the Bank of Marion in Marion, Va. Chris Snodgrass, the community bank’s CFO, says, “The assistance included waiving all fees, late charges and NSF fees, as well as reduced interest rates on loans and loan skip payments.”


William Atkinson is a writer in Illinois.

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