SBA Pays Banks Billions in PPP Fees

YOUNGSTOWN, Ohio – With information on every Paycheck Protection Program loan released Dec. 1 by the U.S. Small Business Administration, a clearer picture of how each bank performed has emerged.

In the early days of the program – all $349 billion in the first phase of funding was distributed in 14 days – bank staff worked morning, noon and night to ensure clients got their applications into the SBA.

And, in some cases, banks worked with borrowers well outside their usual footprint. Consumers National Bank in Salem, for example, made a loan to a business in North Chester, Va., while Valley Economic Development Partners lent to a small business in San Diego and Cortland Bank found a single client in Kansas City, Kan.

But by and large, PPP loans were awarded to existing clients and new ones within each lending institution’s usual footprint. Overall, by the time the program closed Aug. 8, some $649 billion was disbursed nationally. Of those loans, 92% were under $250,000.

For their work in processing the loans, financial institutions were paid fees by the SBA. For loans above $2 million, they earned 1% of the total, as well as 3% for loans totaling between $350,000 and $2 million and 5% for loans under $350,000.

All fee totals included in this article are based on this fee schedule. Banks were barred from collecting fees from borrowers on Paycheck Protection Program loans.

JPMorgan Chase and Bank of America, by way of being the country’s two largest PPP lenders – $29 billion to 280,000 businesses for Chase and $26 million to 343,000 businesses for Bank of America – both report earning large fees from the SBA.

For Chase, the bank earned more than $1 billion, while Bank of America collected $947 million in fees.

Both institutions have said they will donate all fees.

In July, however, Chase’s chief financial officer, Jennifer Piepszak, said PPP profits will “be near zero” and Bank of America’s CFO Paul M. Donofrio said at the same time he didn’t expect much profit “if any.”

“We have committed that net proceeds from the fees will be dedicated to supporting small businesses and the communities and nonprofits we serve,” Bank of America spokesman Bill Haldin told The New York Times Dec. 2. JPMorgan Chase declined to comment for that story.

Of institutions with a major local presence, PNC Bank and Huntington National Bank easily topped the chart for PPP loans provided.

PNC, with its nearly 2,300 branches in 21 states and the District of Columbia, offered a wide footprint to work in. The bank made 73,909 loans totaling $13.941 billion, or 2.1% of all money provided through the program. Its median loan was $70,700 and the bank collected $439,191,484.84 in fees.

Consistently the nation’s top SBA lender, Huntington Bank also fared well in the Paycheck Protection Program as it provided 35,625 loans totaling $6.45 billion. The median loan through the bank was $42,602. Huntington collected $198,011,179.14 in fees.

With its merger last year with Michigan-based Chemical Bank, TCF National Bank did well in the Midwest, providing 8,556 loans nationally to the tune of $1.89 billion. Of all banks operating in the Mahoning and Shenango valleys, TCF had the highest median loan size: $86,233.75. The bank collected $50,486,412.96 in fees from the SBA.

First National Bank of Pennsylvania, which has been expanding into the Carolinas and the rest of the Southeast in recent years, garnered a substantial portion of its fees from those areas. In total, the Pittsburgh-based bank provided 19,857 PPP loans totaling $2.59 billion; its median was $29,800. First National Bank of Pennsylvania collected $85,439,420.44 in fees.

Following was First Commonwealth Bank, based in Indiana, Pa., with 4,907 loans totaling $589.15 million, for a median size of $31,200. It collected $20,228,724.45 in SBA fees.

Next was the newly-named Premier Bank – formed from the merger of Home Savings Bank and First Federal Bank of the Midwest in the midst of the Paycheck Protection Program application period – totaling 2,880 loans for $443.3 million. This resulted in earning $14.8 million in fees, according to the bank’s third-quarter earnings report.

The data from the SBA, however includes 1,335 loans valued at $186.4 million attributed to Premier Bank that are far outside the bank’s usual footprint of Ohio, Pennsylvania, Michigan and Indiana. These loans include a substantial number made to companies in Iowa, Nebraska and South Dakota.

It’s possible the data were entered into the SBA system incorrectly; another bank participating in the Paycheck Protection Program is Premier Bank Inc. in West Virginia, covering that state along with Virginia and Washington, D.C.

A list of the 1,335 questioned entries was sent to Premier Bank for clarification. But an answer was not provided by press time.

It’s here the gap between national and regional banks and community banks emerges, both in the number of loans provided and the loan volume.

Following Premier in the number of loans provided is Farmers National Bank. The Canfield-based bank provided 1,715 loans for $199.85 million – a median of $37,600 – collecting $7,689,271.55 in fees.

Next was The Middlefield Banking Co. with 1,414 loans valued at $143.63 million. Its median loan size was $20,832 and the bank, based in Middlefield, collected $5,363,419.87 in fees.

Consumers National Bank, with its headquarters in Salem, had 607 PPP loans totaling $68.7 million, a median of $32,400. The bank collected $2,512,798.25 million in fees from the SBA.

Mercer County State Bank, Sandy Lake, Pa., and Cortland Bank in Cortland, Ohio, each had 420 Paycheck Protection Program loans.

Mercer County State Bank disbursed $27.39 million in loans – a median of $23,402.50 – and collected $1,201,488.27 in fees.

Cortland Bank, meanwhile, disbursed $56.47 million and collected $2,180,053.10 in fees. Its median loan size was $47,350.

While not a traditional financial institution, Valley Economic Development Partners – formerly Mahoning Valley Economic Development Corp., as its listed on SBA data – provided 120 PPP loans totaling $2.32 million. Its median loan size was the smallest in the area: $9,145. The economic development agency  collected $116,020.39 from the SBA for processing the loans.

Finally, Greenville Savings Bank in Greenville, Pa., provided 22 Paycheck Protection loans totaling $805,300. Its median loan size was $29,800. The bank collected $40,265 in fees.