TCF Financial Executives Discuss Pandemic Response and Merger Mainstreaming

TCF Financial Corp. approved more than 16,000 loans from the U.S. Small Business Administration’s Paycheck Protection Program for $ 2 billion, while adapting to the COVID-19 pandemic, while most out-of-branch employees are switched to working from home.

Meanwhile, Detroit-based TCF Financial continued to make progress in integrating TCF Bank and Chemical Bank following the $ 3.6 billion merger with the former. Chemical Financial Corp. on August 1, 2019. After the integration, the offices of the Chemical Bank will change to the name TCF.

TCF President and CEO Craig Dahl and Executive Chairman Gary Torgow
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MiBiz recently spoke with TCF CEO Craig Dahl and Executive Chairman Gary Torgow about PPP, pandemic management and ongoing integration.

The SBA put nearly $ 350 billion on the ground in a week for the first round of the PPP and worked with many banks. What was the biggest challenge in setting it up and making it work so quickly?

Torgow: The SBA and the Treasury operate the system. The SBA has never had this kind of volume. It was a much smaller producer, and the challenge for us was being able to get into their system, get some advice from them on what to do and what kind of app (to use). They went through a couple of application processes before we got the right one from them. I think the biggest challenge was just getting into the SBA system and making sure we were compliant with the documents. We had a number of iterations until they got to the final app. Once we got into the system the SBA worked fine with us. … I think it worked pretty seamlessly.

What surprised you about PPP?

Dahl: This was intended to fund about two and a half months of small business payroll. I agree with how quickly the money was spent because it had to be. If these business owners weren’t sure they were getting the money, there was no way to keep the employees on the payroll. We had over 220,000 employees affected by the loans we made. Take that all over the system, and it’s a big deal. There had never been anything done so fast, but it was something that required it to be fast.

What did the huge demand for PPP loans tell you?

Torgow: The COVID-19 pandemic has hit the country economically in a way that without this really important government infusion, without banking cooperation, without everyone coming together, the economic damage would be worse than it is. What he told us was that the government reacted quickly and intelligently. They were also in very uncharted territory. We haven’t seen anything like it in a stimulus package.

The continued stimulus opportunities will be very essential to keeping the economy, businesses and people afloat until this pandemic is over and we can witness an economic recovery.

What have you learned from the past two months?

Dahl: I don’t think everyone is aware of how little cash these small businesses operate with. They are spending tomorrow’s income today in some of them. So this is the big takeaway that people need to understand. They will not operate with a cash cushion that will allow them to withstand (the effects of a major income disruption).

The other thing I want to highlight (is that it’s) different from the last recession where companies could be criticized for taking action or whatever. Even at TCF the first two months (of 2020) we had good normal months. We were right about our plan. Suddenly all these plans came out of the window. These companies were in the same boat. They weren’t making mistakes leading to this cash crunch. Their income fell to zero overnight.

If Congress decides to do another round of PPP or some other form of stimulus, what advice do you have?

Torgow: What we want Congress to focus on is what we believe is the bedrock of communities, i.e. small businesses, little mom-pop shops, restaurants, small apartment building. apartments with four or five residences. We want to make sure that the foundations of the community are supported through this, and we don’t want to see businesses shut down. We want to see businesses strengthened. I think if the government continues to target, it should target those who are suffering the most from the economic decline we are in. If I spoke in Congress, I would speak of urban centers, city centers, the places hardest hit by the health crisis and the economic crisis. These are the people who need help the most.

How have the lessons of the last financial crisis affected decisions in this crisis?

Torgow: The lessons we learned from the systemic debacle of ’08, ’09 and ’10 were that we, at least in our industry, recognized that banks must remain strong and healthy and very united as a community, and we must work and act fast. We had to be concerned about the health of our employees. We had to make sure everyone was safe and no one got sick, and we kept 85% of our branches open so people could access their accounts and feel the bank was responding to them. These were very important lessons. There was a very slow reaction in 2008 and 2009 and in many ways it was the banks that were suffering the most during that time which turned out to be the suffering of customers and communities.

How has the pandemic changed the way you run the business?

Torgow: A number of things will happen. One of those really is who can work from home, as opposed to working in the office, and where their comfort level is. The second is that we have recognized that for the next period, customers will need continued support. We’re going to have to keep doing what we were doing before, which was approving loans so people can develop the businesses they want, and we want to make sure we’re there for them. This will cause us to take a very close look at the situation of the employees and the situation of the customers to make sure that we are responding very well.

What is the status of the integration of Chemical Bank and TCF Bank after the company merger last year?

Dahl: Despite all the obstacles that have come up over the past 60 days, we are really proud of the response from our team. Over 90 percent of our non-branch staff now work from home and it has gone very well. We remain on track for our integration, which is in the third quarter. We are delighted to offer the One System and One Solution to all of our customers. Everything is always on the right track.

How do you see the pandemic constantly changing your industry?

Dahl: Some things have already happened. What will the role of the branch be? How well are your digital tools working? And how do your customers accept and adopt them? There were a lot of people who criticized that our branch system had all these drive-ups, and yet that was the key for us to be able to serve our customer base by having this drive-up feature at a time when we kept over 80 percent of our branches are open. We understand that change management will be very important on the other side as well.

Is the current situation accelerating the use of digital banking options?

Torgow: Every part of the digital experience is going to be advanced here. You see the way we conduct meetings, you see the way we communicate with each other. I think there will be less travel. I think people are going to use the tools that were provided to them during the pandemic, and customers will be more skilled. We’re going to be in a good position with this conversion to advance our technology opportunities for customers, and more and more customers are going to use it and appreciate it and feel more comfortable. They are going to go to these areas because of what has happened.


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