Despite Billions in Fees, Banks Predict Meager Profits on P.P.P. Loans


Zions, one of the rare banks to break down its lending in detail, said it anticipated fees of $210 million to $220 million on its $7 billion in loans. That money will be “a nice cushion for us” amid a decline in lending because of the pandemic, said Scott J. McLean, the bank’s president.

Zions will profit from the program, but it, too, incurred heavy costs, said James Abbott, a bank spokesman. Loan officers and technology teams worked 24 hours a day in shifts, and the bank spent “tens of millions of dollars” on outside vendors and consultants, he said. Still, Zions said it would donate $30 million of its fees from the program to its charitable foundation.

Bank of America and JPMorgan declined to comment on what charitable donations, if any, they plan to make with their proceeds. (Each has made other large corporate donations in response to the pandemic.)

Some nonprofits, though, are starting to reap the rewards that banks promised. Citi, which made loans totaling $3.5 billion, has so far donated $25 million it earned in fees to the Citi Foundation, which funds community organizations focused on economic empowerment. And Wells Fargo, which is still struggling to rebuild its image after a sales scandal, is funding a philanthropic bonanza.

Wells Fargo is operating under a restriction imposed by the Federal Reserve that curbed its growth, but it struck a deal with the Fed in April to relax the limit so that it could expand its Paycheck Protection Program lending. That agreement required the bank to turn over its “benefits” from the program to either the United States Treasury or nonprofits focused on supporting small businesses.

The bank picked the second option: It is donating about $400 million in loan fees — without subtracting its costs — to a new fund to support Community Development Financial Institutions. Those lenders, known as C.D.F.I.s, focus on underserved communities and play a vital role in funding businesses and entrepreneurs that traditional banks avoid.

Wells Fargo expects to fund about 200 organizations through its donation, said Jenny Flores, the bank’s head of small-business growth philanthropy. Nearly all of the money will be spent within the next year, she said.



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